Annual Report 1998 Contents

Supervisory Board and Board of Management 2

It’s all about people 3

Preface 4

Group financial highlights 1994-1998 5

Report 1998 6

Six-year summary for the Group 1993-1998 14

Comments on the accounts 16

Accounting policies 26

Profit & Loss Account 31

Balance Sheet 32

Cash Flow Statement 34

Signatures of Supervisory Board and Board of Management 35

Auditors’ Report 35

Notes to the Accounts 36

Environmental Report 56

Human Resource Management 64

Research and Development 66

Success in the USA 70

Lundbeck’s position in the global market 72

Lundbeck’s products 74

Lundbeck worldwide 76

www.lundbeck.com 78

The Lundbeck Foundation’s Award for Outstanding Research 80

H. Lundbeck A/S Tel: +45 3630 1311 H. Lundbeck A/S Annual General Meeting will be held on 29 April 1999 at 3pm at Valby Hallen. 9 Ottiliavej Fax: +45 3630 1940

DK-2500 Copenhagen - Valby e-mail: [email protected]

Denmark Reg. no. 22.472 Contents

Supervisory Board and Board of Management 2

It’s all about people 3

Preface 4

Group financial highlights 1994-1998 5

Report 1998 6

Six-year summary for the Group 1993-1998 14

Comments on the accounts 16

Accounting policies 26

Profit & Loss Account 31

Balance Sheet 32

Cash Flow Statement 34

Signatures of Supervisory Board and Board of Management 35

Auditors’ Report 35

Notes to the Accounts 36

Environmental Report 56

Human Resource Management 64

Research and Development 66

Success in the USA 70

Lundbeck’s position in the global market 72

Lundbeck’s products 74

Lundbeck worldwide 76 www.lundbeck.com 78

The Lundbeck Foundation’s Award for Outstanding Research 80

H. Lundbeck A/S Annual General Meeting will be held on 29 April 1999 at 3pm at Valby Hallen. Supervisory Board

Arne V. Jensen Lars Bruhn Flemming Lindeløv (Chairman) (Vice-Chairman)

Henrik Hertz Bent Jakobsen Sven Dyrløv Madsen

Jan Gottliebsen Birgit Bundgaard Torben Skarsfeldt (Elected by employees) Rosenmeier (Elected by employees) (Elected by employees) Board of Management

Erik Sprunk-Jansen President & CEO

Flemming Juul Jensen Executive Vice President Commercial Operations

Claus Bræstrup Executive Vice President Research & Development

Senior Vice Presidents:

Ole Antonsen Harald Conradi-Larsen Stefan D. Buch Licensing Division Human Resource Management Corporate Finance Lars Bang Stig Løkke Pedersen Hans Henrik Munch-Jensen Supply Operations Corporate Affairs Corporate Communications & Engineering Lundbeck is a specialist in research, develop- Thanks to the high quality of our products, Our role in that connection is to develop ment, production and marketing of drugs for Lundbeck is today an internationally well more effective drugs with fewer side-effects, treatment of diseases of the central nervous established and respected company whose to work for greater acceptance of psychiatric system. activities are all characterised by quality, diseases and, especially, to help disseminate creativity and high ethical standards. knowledge globally of the latest treatment Respect is not something one gets but concepts. something one earns. It is of vital importance for Lundbeck to improve the quality of life of people suffering from psychiatric and neurological diseases. We do so in close co-operation with psychiatrists and neurologists. It’s all about people

3 Preface

Lundbeck’s coming flotation is the culmina- The real breakthrough came at the end However, 1998 also brought tion of the very considerable development of of the 1980s, when Cipramil® was approved some disappointments the company in the past 10 years. The basis for sale – first in Denmark and later in 66 of this development has been – and remains countries around the world. In a very surprising move, the Dutch author- – a focused strategy of concentrating the ities decided in November to suspend Group’s research resources on the develop- In step with the constantly growing inter- marketing permission for Lundbeck’s ment of new and innovative pharmaceuticals national success, Lundbeck has in the past antipsychotic drug Serdolect®. The reason for treatment of diseases of the central 10 years increased the number of its sub- given was that Serdolect® was suspected nervous system (CNS). So although, inter- sidiaries from nine in 1987 to 30 today. of causing serious cardiac problems for a nationally, Lundbeck is only a small pharma- The Group thus now has its own subsidiaries very small group of schizophrenic patients. ceutical company, the Group is among the in all European countries, Australia, New Zea- world leaders within CNS research. land, South Africa and Canada. The Dutch initiative led to several other European countries following suit, and on 26 As a result of our success, the Group has November Lundbeck decided to withdraw increased its turnover in the last 10 years USA entry in 1998 Serdolect® temporarily in all countries in from DKK 524 million in 1987 to DKK 3.2 order to give the European health authorities billion in 1998, while the pre-tax profit in The Group achieved its first-ever approval in time to analyse the many scientific studies the same period has increased from DKK the USA for a product preparation in 1998. and reports on Serdolect® prepared by inter- 9 million to DKK 446 million in 1998. In cooperation with Forest Laboratories, our national, independent experts – cardiologists, strategic partner in the USA, we achieved epidemiologists and psychiatrists. Ever since the mid-1950s the Group has the approval of US Food and Drug Admini- been centred on research. The constant focus stration (FDA) for Cipramil®. The preparation Regardless of the fact that Serdolect® in on research and development has enabled is being marketed in the USA under the Lundbeck’s opinion is a good and safe drug Lundbeck to develop and market a substan- name Celexa®. for treatment of schizophrenia, the ongoing tial number of new and innovative drugs for arbitration process could result in the drug treatment of psychiatric diseases. Sales began on 1 September with a sales being withdrawn from the market. force of 1,500 medical representatives. In as little as four months, Celexa® achieved a market share of 4.3% of new prescriptions, making it one of the most successful intro- ductions on the American market for several years.

In 1998 Lundbeck entered into strategic cooperation with Forest Laboratories. This agreement and the launch of Celexa® in the USA represent a milestone in the history of Lundbeck. We now have a solid footing in the world’s largest and most attractive single market, where – thanks to our partner’s unique knowledge of the market - we have ensured ourselves an effective sales channel.

4 Year 2000 under control All decentralised systems will be tested and systems will not be able to cope with the analysed by the end of the first half of 1999. change. There is much talk at the present time about the coming millennium and the associated We have contacted all our main suppliers But I am convinced that year 2000 will be computer problems. and been assured by them that their systems a challenge for Lundbeck, not a problem. are year 2000 compliant. A challenge which I am sure will be tackled At Lundbeck, thanks to a timely and effective successfully by Lundbeck’s many skilled and “Year 2000 project”, our central IT systems Although Lundbeck in this way has taken all loyal employees around the world. have already all been analysed, updated and possible measures to protect the company made year 2000 compliant. against the technical consequences of the turn of the millenium, we evidently cannot Erik Sprunk-Jansen issue any guarantee that a few peripheral President

Key figures for the Group1994 -1998

1994 1995 1996 1997 1998 1998

DKKm EURm* Net turnover 1,336 1,849 2,324 2,662 3,231 433 Research and development costs 189 257 334 433 619 83 Operating profit 174 223 337 441 384 52 Profit after tax 112 166 237 297 313 42 Total assets 1,536 2,032 2,452 2,756 2,981 400 Capital and reserves 887 1,020 1,257 1,515 1,777 238 Cash flow from operating and investing activities -28 -174 60 226 414 56 Capital investments, gross 219 284 224 188 272 36

% Net profit ratio 13.0 12.1 14.5 16.5 11.9 11.9 Return on assets 20.4 24.2 24.3 26.0 26.4 26.4 Return on equity 13.1 16.4 20.8 21.3 18.7 18.7 Solvency ratio 57.5 50.0 51.1 54.8 59.5 59.5

DKK Earnings per share ** 19.73 28.27 42.93 53.44 55.82 7.48 Dividend per share ** 0.00 4.00 0.00 6.36 8.18 1.10 5 Cash flow per share ** 34.85 18.76 50.16 74.07 123.80 16.60 Net asset value per share ** 160.49 184.76 227.69 274.76 322.40 43.22

Average number of employees 1,205 1,545 1,829 2,003 2,286

*) Converted to “EUR exchange rate” per 31 December 1998 at 745.94. **) Calculation based on DKK 20 shares. Definitions ref. page 15. Report 1998

The year’s result The pre-tax profit rose to DKK 446 million As a consequence of the agreement between from DKK 438 million in 1997 – an increase Forest and Lundbeck to collaborate on the The rapid expansion of the Lundbeck Group of 2%. development of three Lundbeck products, in recent years continued in 1998. Turnover Lundbeck received a payment of DKK 219 for the year amounted to DKK 3.2 billion The profit for 1997 was affected by non- million in 1998. The amount covers costs – up 21% on 1997. recurring revenue of DKK 77 million from which have already been paid as well as sale of the rights to Ketogan® and Bleomy- future development costs. Of this money, cin® and a stock write-down of DKK 75 DKK 55 million were credited in 1998. Net turnover (DKKm) million in respect of Serdolect®. In 1998, on the basis of a prudence principle, Serdolect® The payment from Forest increased Lund- 3,500 600 stocks were fully written off and provisions beck’s available cash flow by 83% to DKK 3,000 500 of DKK 85 million were made for Serdolect®. 414 million. 2,500 400 2,000 After adjustment in the two years for the 300 1,500 above-mentioned non-recurring effects, the 200 rise in pre-tax profit is 22%. 1,000 100 500 In July 1998, Cipramil®, which is Lundbeck’s 0 0 biggest product, was approved for sale on 1994 1995 1996 1997 1998 the American market. The product is being sold through Lundbeck’s partner in the USA, Cipramil®/Celexa® Forest Laboratories. Other turnover Annual turnover growth

6 Investments Major events Sales

Capital investments in 1998 amounted to In March 1998, Lundbeck entered into a Europe is Lundbeck’s home market. With the DKK 272 million. strategic alliance with Forest Laboratories. establishment of subsidiaries in Canada, The alliance offers Lundbeck a platform for Australia, New Zealand, and South Africa, The biggest single investment was the con- the company’s future activities on the and a number of overseas representation struction of a new pharmacology building. American market. offices in the last few years, Lundbeck is The total investment in the building, spread becoming an increasingly global player. over several years, is DKK 125 million. Citalopram was registered in July 1998 and subsequently launched by Forest Labora- In 1998, Lundbeck established subsidiaries tories under the name Celexa®. in Poland, Lithuania, Slovenia, the Czech Capital investments (DKKm) Republic and Slovakia. At the end of the year, 400 18% By the end of the year, Celexa® had gained Lundbeck had subsidiaries in 28 countries. 350 16% a market share of 4.3% of new prescriptions 300 14% for recent antidepressants and 2.7% of all The sales force was enlarged in the autumn prescriptions for recent antidepressants. of 1998, primarily with a view to promoting 250 12% 10% Cipramil® to general practitioners, especially 200 8% This market penetration after only four in the large markets: the UK, France, 150 6% months on the market is regarded as very Germany, Spain, Italy and Canada. A further 100 4% satisfactory. enlargement of the sales force is expected 50 2% in 1999. 0 0% However, in November 1998, Serdolect® 1994 1995 1996 1997 1998 was temporarily withdrawn from all markets. The 21% improvement in turnover is due After several countries had suspended to the continued success of Cipramil®. Capital investments in 1998 permission to market Serdolect®, Lundbeck Today, Cipramil® is the market leader in Investments in percent of turnover itself chose to suspend marketing of the seven European countries. It is, without product in the rest of the world while comparison, Lundbeck’s greatest success arbitration was going on between Lundbeck ever. and the European registration authorities. In the coming years as well, Lundbeck The reason for the decision taken in several expects a substantial proportion of turnover countries to suspend Serdolect® was doubt to come from Cipramil®. Particularly in the as to whether Serdolect® could cause cardiac large markets in which Cipramil® has been problems in a small group of patients. launched in the last four years, the rapid rise in sales already experienced is expected to A decision in the arbitration case is expected continue. By the end of 1998, Cipramil® was in the middle of 1999. registered in 67 countries.

Sales of active citalopram substance to Forest Laboratories also contributed to the rise in sales in 1998. Income from this source is expected to increase very considerably in 1999. 7 Sales – breakdown Partnerships Research and Development by product In 1995, Lundbeck entered into an agree- Lundbeck has increased its research and ment with Forest Laboratories on the development activities considerably in the marketing of citalopram in the USA. Forest last few years. Laboratories launched the product in September 1998 under the name Celexa®. The activities are concentrated in the core areas psychiatry and neurology. Research In 1998, the collaboration with Forest and development projects are in progress Laboratories was extended to a number of within depression, schizophrenia, anxiety, products from Lundbeck’s research. The Parkinson’s disease and sleep disturbance. agreement will run until 2010 and can be extended for five years at a time. Spending on research and development in 1998 amounted to DKK 619 million. This strategic alliance gives Lundbeck a solid Cipramil®/Celexa® ...... 65% platform for the Group’s future activities on Serdolect® ...... 3% the American market. Research & Development costs (DKKm) Other antidepressants ...... 7% 600 20% Other antipsychotics ...... 17% In January 1999, Lundbeck entered into an 18% Other turnover ...... 8% agreement with the Canadian company 500 16% Biovail Corporation International on the 400 14% 12% development of a controlled release version 300 10% As will be seen from the above chart, Cipra- of citalopram, primarily with a view to 8% mil® accounts for about 65% of all sales. launch in Canada. 200 6% Sales of Cipramil® rose by 31% from 1997 100 4% to 1998. Lundbeck is collaborating with Bayer 2% 0 0% (Germany), Almirall Prodesfarma (Spain) and Sales of Lundbeck’s other products rose by Recordati (Italy) on co-marketing of citalo- 1994 1995 1996 1997 1998 5% in relation to 1997. pram in these countries. Research & Development costs Research & Development costs (as % of turnover) Sales – breakdown by market Research and development costs in 1998 accounted for 19% of turnover – an increase of 3%-points in relation to 1997.

The completion of the Group’s new pharma- cology building means that Lundbeck will in future be able to carry out two preliminary projects at the same time instead of only one. The building, which has a floor area of 8,300 m2, was inaugurated by the Danish 8 Minister of Research, Jan Trøjborg, on 14 January 1999. Europe ...... 86% USA ...... 8% Other world ...... 6%

The USA now contributes 8% as a result of the sales to Forest. A decision has been made to build a new, Lundbeck’s research and development These facilities will be enlarged in the years 3,500 m2 building for Medicinal Chemistry projects are need-oriented and market- ahead in step with sales growth. Research. The building is scheduled for driven. In addition to projects from our own completion in mid-2000. research, we continuously assess possibilities The introduction of Celexa® on the American of licensing new projects. market has set its clear stamp on the year’s Clinical phase I studies are in progress with a chemical production. The active substance product for anxiety (Lu 28-179). The product Both licensing and strategic alliances will for the American market accounted for a has a selective effect on the brain’s sigma- bring Lundbeck new development projects very large part of our entire chemical pro- receptors and has had a surprisingly potent and give us access to new technologies. This duction. effect in a number of animal studies. will strengthen our research still further and help ensure continued growth. At the production facility in Valby (Denmark) Lundbeck plans to initiate a large phase II – Pharmaceutical Bulk Production and programme for this product together with At the end of 1998, Research and Develop- packing of finished goods – the increase in Forest Laboratories in 1999. ment had 543 employees. volume is the result of increased productiv- ity. A new version of citalopram is under development. The so-called citalopram Production To improve productivity still further, action enantiomer will contain considerably less is being taken to improve both control of the substance, and the daily dosage can thus The improvement in sales has resulted in entire flow of goods and the coordination be reduced. increased production in Chemical Production between production and sales. and Pharmaceutical Bulk Production and in Phase I studies have commenced and we the packing of finished goods. The capacity Reducing through-times is a key parameter expect to launch the product in 2002. of all three areas has therefore been increas- in our efforts to increase flexibility and ed correspondingly. productivity. This will at the same time At the end of 1998, Lundbeck acquired the reduce the amount of tied-up Lundbeck rights to a substance with regard to treat- The increase in chemical production at both capital. ment of sleep disturbances from the Max Seal Sands (UK) and Lumsås (Denmark) has Planck Institute in Munich. The substance is been achieved through increased productiv- In addition, Lundbeck expanded its collabora- in the preclinical development phase. ity and the introduction of more shifts. tion with its sub-suppliers still further during the year, thereby ensuring itself access to As mentioned earlier, in January 1999, external production capacity. This will enable Lundbeck entered into an agreement with more flexible production planning in the Biovail Corporation International on the future. development of a controlled release version of citalopram.

A development project (Lu 25-109) against Alzheimer’s disease was discontinued when the results from clinical phase II studies showed no therapeutic effect.

9 Employees Job satisfaction is essential for a committed All our main suppliers have been contacted and extraordinary effort for the company. and have declared that their systems are The average number of full-time employees Lundbeck must therefore be an attractive year 2000 compliant. in the Group rose by 283 in 1998 to a total workplace. Lundbeck believes that companies of 2,286, with 1,244 in Denmark and 1,042 with a good working environment find it In the second quarter of 1999, Lundbeck will in other countries. At the end of 1998 the easier to attract and keep well-qualified draw up a contingency plan to help ensure Group as a whole had 2,483 employees. employees. that any year 2000 problems are quickly identified and remediated. The plan will Employees (number of employees, DKKm.) Human Resource Management is also devel- focus particularly on areas that support pro- oping programmes for professional develop- duction of Lundbeck’s main products. 2,500 1.4 ment of our employees. For example, in 1.2 2,000 1998, a Sales Academy was established for The total costs connected with the year 1.0 training Lundbeck sales managers and medi- 2000 problem will not exceed DKK 20 mil- 1,500 0.8 cal representatives. lion, most of which was expensed in 1998. 1,000 0.6 The company’s management believes that 0.4 500 The year 2000 problem the measures implemented and planned 0.2 to deal with the problems relating to the 0 0.0 In 1997, Lundbeck initiated a year 2000 proj- change of the millennium are sufficient, 1994 1995 1996 1997 1998 ect with a view to identifying any problems but knows that, in the nature of things, in the Group’s existing IT systems etc. and all risks cannot be covered. If, contrary to Other countries ensuring that the systems are year 2000 the management’s expectations, serious Denmark compliant. problems do arise, they could have a nega- Net turnover per employee tive impact on the company’s earnings. By the end of 1998, our central database At the beginning of 1998 Human Resource technology had been checked and remedi- Management was made into a separate ated or replaced and is now deemed to be Euro division. year 2000 compliant. If Denmark joined the Euro it would simplify One of Human Resource Management’s It has not been possible to test all produc- administrative procedures and thus save tasks in 1998 was to formulate the philoso- tion and laboratory equipment for year 2000 costs and reduce our exchange rate risks. phy and values that will guide management compliance. Instead, statements and declara- at all levels at Lundbeck in future. tions have been obtained from most of the suppliers. Looking ahead Lundbeck sees its employees as one of its principal assets in the task of achieving the Local information technology, i.e. PCs, fax In the coming years, Lundbeck will continue ambitious goals it has set itself. machines, telephones and similar, have been to focus on the CNS market. Our market checked and made compliant. The remaining position and the fact that we have been computers, machines and small IT systems researching and developing products within will undergo the same process during the the central nervous system for a very long first half of 1999. time mean that we have a level of knowl- edge and know-how within this area that other pharmaceutical companies have 10 difficulty in matching. Through organic growth and strategic meas- ures, Lundbeck will continue building up a global network for distribution and market- ing of its products.

Alliances covering new products in both early and late stages of development and access to the latest technologies will be of vital importance to the company’s con- tinued growth in the years ahead.

Radical changes have taken place in the pharmaceutical industry in the last few years, resulting in far tougher competition. Health authorities are increasingly trying to reduce their expenditure on medicine and their health costs in general.

The development time for a new product is becoming shorter and shorter, while development costs are moving sharply upwards - it typically costs around DKK 2 billion to develop a new product.

These changes are making it increasingly necessary for Lundbeck to make effective use of new technologies for research and development.

Research collaboration with biotechnology companies and universities will be among the measures taken by Lundbeck in the coming years to increase research efficiency.

Prospects for 1999

In 1999, growth in turnover is expected to exceed 20% again. Earnings growth is expected to be considerably higher than the growth in turnover. It should be noted, however, that earnings could be reduced if Lundbeck enters into licensing agreements during the year. 11 The level of investment is expected to be Lundbeck’s geographical expansion will con- higher in 1999 than in previous years. tinue in 1999. It will include the establish- ment of a subsidiary in Turkey. To meet the growing global demand for Cipramil®, we are planning to increase our As mentioned earlier, Serdolect® is at production capacity. In addition, investments present the subject of an arbitration case, in modern research facilities will increase the result of which will probably be known Lundbeck’s ability to find and develop new, mid 1999. Although Lundbeck’s faith in innovative drugs. the product’s qualities is unaffected by the case, the arbitration could result in Ser- Cipramil® is being marketed in Canada at dolect® being permanently withdrawn from the beginning of 1999 and is thus being the market. introduced in yet another large market.

1999 will be the first full year in which Flotation Celexa® is on the market in the USA. The product is expected to gain further market We plan to get H. Lundbeck A/S listed on shares and thus increase Lundbeck’s income the stock exchange in 1999. Preparations for quite considerably. this are well under way. A listing will provide Lundbeck with more flexible access to capital The planned enlargement of our sales force for use in the continuing expansion of the will continue in 1999, and we expect to have company. around 1,100 medical representatives by the end of the year.

12 Accounts Summary for the Group 1993-1998

Profit and loss account (DKKm) 1993 1994 1995 1996 1997 1998

Net turnover 933 1,336 1,849 2,324 2,662 3,231 Profit before R&D costs 206 348 471 670 791 989 R&D costs 181 189 257 334 433 619 Operating profit 23 174 223 337 441 384 Profit before tax 64 159 253 342 438 446 Profit after tax 46 112 166 237 297 313 Minority interests’ share of the profit - 4 10 1 3 6

Assets (DKKm) 1993 1994 1995 1996 1997 1998

Fixed assets 449 593 783 930 1,028 1,165

Stocks 157 184 265 371 348 356

Receivables 210 288 430 496 580 643

Cash and securities 404 471 554 655 800 817

Total assets 1,220 1,536 2,032 2,452 2,756 2,981

Liabilities (DKKm) 1993 1994 1995 1996 1997 1998

Capital and reserves 779 887 1,020 1,257 1,515 1,777

Minority interests’ share of capital and reserves - 4 4 5 4 4

Provisions 68 110 143 203 246 274

Long-term debt 66 122 405 40 92 29 Short-term debt 307 417 464 952 903 901 Total liabilities 1,220 1,536 2,032 2,452 2,756 2,981

Cash flow statement (DKKm) 1993 1994 1995 1996 1997 1998

Cash flow from operating activities 94 192 103 276 407 681 Cash flow from investing activities - 134 - 219 - 277 - 216 - 182 - 267 14 Cash flow from operating and investing activities - 40 - 28 - 174 60 226 414

Cash flow from financing activities 1 95 257 38 - 80 - 401

Interest-bearing net cash, year-end 291 274 89 115 332 714 Ratios 1993 1994 1995 1996 1997 1998

Net profit ratio (%) 2.4 13.0 12.1 14.5 16.5 11.9 Return on assets (%) 8.8 20.4 24.2 24.3 26.0 26.4 Return on equity (%) 5.9 13.1 16.4 20.8 21.3 18.7 R&D costs as a percentage of turnover 19.5 14.1 13.9 14.4 16.3 19.2 Average number of shares (million)*) 5.5 5.5 5.5 5.5 5.5 5.5 Earnings per share (EPS) (DKK) *) 8.29 19.73 28.27 42.93 53.44 55.82 Dividend per share (DKK) *) 4.00 0.00 4.00 0.00 6.36 8.18 Cash flow per share (DKK) *) 17.04 34.85 18.76 50,16 74.07 123.80 Net asset value per share (DKK) *) 141.69 160.49 184.76 227.67 274.76 322.40 Solvency ratio (%) 63.9 57.5 50.0 51.1 54.8 59.5 Capital employed 893 1,084 1,485 1,798 1,983 1,880 Capital turnover (%) 76.4 87.0 91.0 94.8 96.6 108.4 Capital investments, gross (DKKm) 143 219 284 224 188 272.0 Capital investments as a percentage of turnover 15.3 16.4 15.4 9.6 7.1 8.4 Average number of employees 978 1,205 1,545 1,829 2,003 2,286

*) Calculation based on DKK 20 shares.

Definitions according to the Danish Association of Financial Analysts’ “Recommendations & Ratios 1997” (4th rev. edition): Net profit ratio Operating profit as a percentage of net turnover Return on assets Operating profit plus financial income as a percentage of average capital employed Return on equity Profit after tax and minority interests’ share as a percentage of average capital and reserves excl. minor. interests Earnings per share (EPS) Profit after tax and minority interests’ share divided by average number of shares Dividend per share (Dividend rate multiplied by nominal value of share) divided by 100 Cash flow per share Cash flow from operating activities divided by average number of shares Net asset value per share Capital and reserves excl. minority interests, year-end, divided by number of shares, year-end Solvency ratio Capital and reserves excl. minority interests, year-end, as a percentage of total liabilities, year-end Capital employed Total liabilities less non-interest-bearing liabilities

Other definitions: Interest-bearing net cash Cash and cash equivalents less interest-bearing debt 15 R&D costs as a percentage of turnover R&D costs as a percentage of net turnover Capital turnover Net turnover as a percentage of total assets, year-end Capital investments as a percentage of turnover Intangible and tangible gross investments as a percentage of net turnover Comments on the accounts

General and benefits in collaboration with the European regulatory authorities. In March The strong growth in turnover, which has 1999, it is still uncertain when and to what characterised Lundbeck for many years, extent Serdolect® will achieve commercial continued in 1998. With the Group’s largest success. Lundbeck remains fully confident in ever increase in turnover of DKK 569 million, the product but, in the present circum- turnover improved to DKK 3.2 billion. stances, has elected to make a full write- down of DKK 34 million on the Group’s 1998 was also the year when Lundbeck stocks of Serdolect® in the accounts based recorded its best-ever financial performance. on the prudence principle. In addition, Profit before and after tax came to DKK 446 Lundbeck has made a DKK 12 million million and DKK 313 million, an increase of provision in respect of commitments in 2% and 5% on the previous year. 1999 relating to the marketing of Serdolect®, a DKK 14 million provision in Lundbeck’s results in both 1997 and 1998 respect of expected returns in 1999 of were affected by substantial non-recurring Serdolect® finished products, and a DKK 25 expenses and income, which to some extent million provision in respect of commitments blur the underlying encouraging trend in the in 1999 relating to clinical studies. The total Group’s profit performance. In both 1997 effect on the 1998 accounts of the conser- and 1998, profit for the year was affected vative accounting treatment of Serdolect® is negatively due to the special writedown of thus DKK 85 million. In 1997, a provisional DKK 75 million and DKK 85 million respec- writedown of DKK 75 million was made on tively made in the accounts in respect of the Serdolect® stocks. schizophrenia product, Serdolect®. In 1997, profit for the year included a special income of DKK 77 million from the sale of the rights in respect of the products, Ketogan® and Bleomycin®.

When adjustments are made for these items, Lundbeck’s profit before tax increased by DKK 95 million, or 22%, from 1997 to 1998.

Considering the substantial amount of resources devoted in 1998 to researching and developing future products and selling and marketing Cipramil®, the increase in Lundbeck’s profit is satisfactory. The strengthening of these areas and the launching of Cipramil® under the sales name Celexa® in the USA are expected to make a substantial contribution to Lundbeck’s financial performance in the coming years.

As mentioned, the profit for the year was significantly affected by Lundbeck’s decision to treat its schizophrenia product, Serdolect®, on a conservative basis in the 16 accounts. At year-end 1998, as a result of several European countries having suspended the marketing authorisation, Lundbeck voluntarily withdrew the product from the market pending a full evaluation of its risks Turnover (DKKm) Cipramil®/Seropram®/Celexa® 3,500 Serdolect®/Serlect® Other antidepressants 3,000 Other antipsychotics Other turnover 2,500

2,000

1,500

1,000

500

0 1994 1995 1996 1997 1998

Turnover American partner, Forest Laboratories Inc., The company is only engaged in the business In 1998, Lundbeck achieved a turnover of started its marketing activities in the third segment “Drugs for treatment of illnesses in DKK 3.2 billion, an increase of DKK 569 quarter of 1998. In1998, income from the field of CNS “ (the central nervous million, or 21%, on 1997. The growth in Forest’s sales amounted to DKK 157 million, system). turnover was due to the continued very or 7% of total Cipramil® sales. encouraging development in sales of Cipramil®. From 1997 to 1998, Cipramil® At year-end 1997, Lundbeck’s new drug for sales rose by 31%, from DKK 1.6 billion to the treatment of schizophrenia, Serdolect®, DKK 2.1 billion, because of increased sales had been launched in 13 countries. In 1998, in all the markets in which Lundbeck has Serdolect® was launched in another five subsidiaries. The major European markets - countries. Sales of Serdolect® totalled DKK the UK, France, Germany, Spain and Italy - in 101 million in 1998 against DKK 25 million which Cipramil® was introduced three or in 1997. Despite the good sales progress, four years ago, accounted for 41% of the sales did not match Lundbeck’s expectations. growth. Small markets in most of which Cipramil® has been available for five to ten Sales of Lundbeck’s other products dropped years accounted for 29% of the growth. by 4% from 1997 to 1998. Despite the fact that Cipramil® is the best-selling antidepressant in most of these Turnover for 1998 included down payments markets, Lundbeck managed to increase its of DKK 96 million from Forest. Down pay- sales from 1997 to 1998 due partly to an ments consist partly of payments received expansion of the market and partly to by Lundbeck in connection with the registra- increased market shares. The remaining 30% tion of Celexa® in the USA in 1998 and of the growth from 1997 to 1998 came partly payments received by Lundbeck as 17 primarily from growth in markets in which part of the agreement made in March 1998 Cipramil® has been introduced within the concerning joint development of drugs for last few years. The most important introduc- the treatment of anxiety and dementia. tion was in the USA where Lundbeck’s Comments on the accounts

Costs European markets in which it is believed that Research and development there are considerable possibilities for costs Total production, distribution and adminis- increasing the Cipramil® share of the market tration costs went up by 20% from 1997 to for antidepressants. In 1998, Lundbeck Being a research-based business, Lundbeck 1998. increased its sales force by just under 40% attaches great importance to strengthening compared with 1997. Lundbeck’s sales and research and development activities that are Production costs totalled DKK 764 million, earnings are expected to benefit from this to form the basis for the company’s future up 7% on 1997. The 1997 accounts included investment already in 1999. Another reason products and earnings. With a profit before a special DKK 75 million writedown on for the increase in distribution costs in 1998 research and development costs of DKK 989 Serdolect® stocks while the 1998 accounts was the introduction of Cipramil® in the million in 1998 against DKK 791 million in include a DKK 34 million writedown on the Australian and Canadian markets. Cipramil® 1997, it was possible for Lundbeck to expand remaining stocks of Serdolect®. Adjusted for went on sale in Australia in 1998 and will go research and development activities signifi- these writedowns, production costs rose on sale in Canada in March 1999. cantly in 1998. from DKK 639 million to DKK 730 million, an increase of 14% from 1997 to 1998. Administration costs went up by 21% to Total research and development costs rose Compared with the increase in turnover, the DKK 571 million in 1998. The growth was from DKK 433 million in 1997 to DKK 619 rate of increase in production costs is mod- due to capacity increases at a number of million in 1998, up 43%. This means that the est, the main reason being that an increasing new and existing sales subsidiaries in 1998. annual rate of increase in research and share of sales is made up of products with a In addition, the corporate functions were development costs of more than 30% was relatively high contribution ratio, including strengthened with the establishment of maintained at the 1994-1997 level. In 1998, particularly Cipramil®. A change of the esti- divisions for human resource management research and development costs accounted mate of indirect production costs for the and internal/external communications for 19% of turnover against 16% in 1997. company’s stocks has reduced the year’s respectively in 1998. Lastly, IT costs rose, production costs by DKK 15 million. due partly to the process of making the Research and development costs include a Group’s IT systems Year 2000 compliant. cost of DKK 54 million relating to the In 1998, distribution costs rose by 33% to development of a drug for the treatment of DKK 907 million, due primarily to Lundbeck’s dementia. In 1998, it was decided to stop decision at the beginning of 1998 to intensify the development of this product. Lundbeck’s its sales and marketing efforts in the major partner, Forest, is considering the possibility

Developments in costs Production costs 100% Distribution costs 90% Administration costs 80% Research and development costs 70% 60% 50% 40% 30% 18 20% 10% 0% 1994 1995 1996 1997 1998 of using this drug and the compiled data in Profit for the year connection with a registration of the product for the indication urinary incontinence. Profit before tax was DKK 446 million, an increase of 2% on 1997. In 1998, research and development costs were devoted to research within CNS as well The year’s tax was DKK 133 million against as development activities and indication DKK 141 million in 1997. The effective tax extensions for existing products, including rate was reduced from 32% in 1997 to 30% the development of a citalopram enan- in 1998, due in part to the lowering of the tiomer. In addition, efforts to develop a drug Danish corporation tax rate from 34% to for the treatment of anxiety continued in 32%. 1998. The year’s tax is affected by the fact that the distribution of dividend to the company’s Other operating income, net owner, The Lundbeck Foundation, was taxed at The Lundbeck Foundation as in 1997, Other operating income, net, amounted to entitling H. Lundbeck A/S to deduct the DKK 15 million in 1998 against DKK 83 amount distributed. This resulted in a DKK million in 1997. The income in 1997 arose 15 million reduction in tax in 1998 against a mainly from the sale of rights in respect of DKK 12 million reduction in 1997. the analgesics, Ketogan® and Ketodur®, and the rights in respect of the cancer product, Current tax for the year, including prior year Bleomycin®. 1998 includes payment of the adjustment, amounted to DKK 187 million, remaining amount relating to the sale of corresponding to an effective tax share of Bleomycin® and compensation for losses in 42%, while the reduction in deferred tax connection with the strike in the Danish corresponds to an effective tax share of labour market in spring 1998. -12%. The reason for this is a temporary difference between the accounting treat- ment and the tax treatment of prepayments Financial items, net received.

In 1998, the Group recorded a substantial Profit for the year after tax and minority financial net income of DKK 62 million interests was DKK 307 million, an increase of compared with an expense of DKK 3 million 4% compared with 1997. in 1997. Of the net income of DKK 62 million, DKK 36 million was net interest income and market value adjustments, which Investments were positively affected by a substantial improvement in interest-bearing net cash Total net investments grew from DKK 182 and by rising prices in the Danish bond million in 1997 to DKK 267 million in 1998. market. The increase was due mainly to an expansion of research and production facilities in 1998 In 1998, net currency income was DKK 26 with the purpose of increasing capacity and million compared with an expense of DKK 4 efficiency within these two areas. The million in 1997. The income reflects company’s assets in course of construction increased foreign currency hedging in 1998 amounted to DKK 191 million in 1998 when the Danish krone strengthened in against DKK 62 million in 1997. Assets in relation to the foreign currencies making up course of construction at year-end 1998 Lundbeck’s currency index (described in the comprise a new building and facilities for 19 following section on currency management). pharmacological research. Comments on the accounts

Cash flow (DKKm) Cash flow statement

700 In 1998, Lundbeck’s net cash flow from ope- rating and investing activities was DKK 414 600 million, which is an increase of DKK 188 500 million compared with 1997. The positive development in cash flow was due primarily 400 to the fact that Lundbeck’s business partner, Forest, prepaid its share of the expected joint 300 research costs for the coming years when it entered into the agreement on development 200 co-operation. This payment contributed 100 about DKK 150 million to Lundbeck’s operat- ing capital. To this should be added that the 0 negative effect on cash flow from a growing investment level is more than offset by -100 reduction in working capital.

-200 As a result of the positive cash flow and the -300 Group’s generally good liquidity, debt in the amount of DKK 355 million was repaid at -400 year-end 1998. At the end of 1998, cash and 1994 1995 1996 1997 1998 cash equivalents totalled DKK 817 million compared with DKK 800 million at the end of 1997. In the course of 1998, Lundbeck’s Cash flow from operating activities interest-bearing net cash (the company’s Cash flow from investing activities cash at bank and in hand and securities less Cash flow from financing activities interest-bearing debt) improved by DKK 382 Net cash flow million to DKK 714 million.

Capital structure (DKKm) Capital and reserves 3,000 In 1998, capital and reserves rose by the 2,500 profit for the year, DKK 313 million, less the minority shareholder’s share of DKK 6 2,000 million and less the proposed dividend of DKK 45 million to the company’s owner, The Lundbeck Foundation. At year-end 1998, 1,500 capital and reserves totalled DKK 1,773 million against DKK 1,511 million at year- 1,000 end 1997. The return on equity was 18.7% in 1998 against 21.3% in 1997. 500

0 1994 1995 1996 1997 1998 20 Short-term debt Long-term debt Provisions Capital and reserves Promonta Lundbeck The Lundbeck Group’s consolidated accounts Arzneimittel GmbH & Co. comprise full consolidation of the accounts of Promonta Lundbeck on equal terms with In 1994, H. Lundbeck A/S entered into an the Group’s wholly-owned subsidiaries. The agreement with Byk Gulden Lomberg reason for this is the influence that the Chemische Fabrik GmbH concerning the Lundbeck Group has on the company’s establishment of the 50/50 owned joint development. According to the agreement company, Promonta Lundbeck Arzneimittel made, the company’s manager and a number GmbH & Co. of executive employees are appointed by Lundbeck. Promonta Lundbeck is responsible for sales of Lundbeck’s products in the German mar- On 1 April 1999, Promonta Lundbeck ket, sales of Byk Gulden’s CNS products, and Arzneimittel GmbH & Co will change its until this year also for a number of non-CNS name to Lundbeck GmbH & Co. products. In 1998, the company’s turnover totalled DKK 401 million compared with DKK 334 million in 1997, an increase of Employees 20%. In 1998, the average number of full-time According to the agreement, Lundbeck is to employees totalled 2,286. Compared with take over Byk Gulden’s share at a later date 1997, this is an increase of 283 full-time when a number of conditions have been employees. The appointments made in 1998 satisfied, which is expected to be in the year were mainly related to the expansion of the 2009. The purchase price will be based on sales force in the major European markets the turnover in the year of purchase and and the expansion of Lundbeck’s research, cannot, therefore, be calculated today. At a development and production capacity. conservative estimate this price would, if the purchase was made today, be a triple-figure At the end of 1998, the Group had 2,483 million amount of not less than DKK 500 full-time employees. million. The difference between the purchase price and the share of net assets will be treated as goodwill and product rights and be capitalised in the balance sheet. If the purchase price is not in line with the general market price for similar businesses, Lundbeck may extend the corporation at five-year intervals. Up to the time of purchase the company will continue to sell both Byk Gulden and Lundbeck products in the German market, and Lundbeck will get income from sales to the German company and a share of the company’s profit.

21 Comments on the accounts

Accounting policies Bond portfolio Loan portfolio Lundbeck’s securities management is The company has a number of loan facilities Lundbeck’s accounts have been presented in intended to ensure that the Group’s liquid and loan offers which together with the accordance with the International funds produce the best possible return with- company’s cash and bond portfolio con- Accounting Standards (IAS), and the out exposing the company to any unneces- stitute the company’s cash reserve. accounting policies applied are consistent sary risk. with those of the previous year. In 1998, IAS In 1998, the major part of the Group’s loan 14 concerning segment information was In1998, the company’s benchmark for the portfolio was based on relatively short-term applied for the first time. Lundbeck will bond portfolio was bonds with a maturity of CIBOR-based (Copenhagen-Inter-Bank- adjust its future accounting policies as new three years. Due to this focus, the portfolio Offered-Rate) loans because the intention IAS standards become operative. has been maintained even during periods of was to repay most of the company’s loans. major interest rate fluctuations. This has Thus the largest mortgage credit loan of DKK prevented inexpedient conversions in 346 million and a small bank loan of DKK 9 Shareholders response to price movements which were million have been repaid. The Group’s 20- already past. The amount placed in Danish year loan is a fixed rate serial loan with a With reference to section 28A of the Danish bonds averaged DKK 622 million, producing term to maturity of 13 years and a nominal Companies Act, it is disclosed that The a total return of DKK 48 million, including interest rate of 5.7%. The nominal outstand- Lundbeck Foundation, Ottiliavej 9, DK-2500 market value adjustments corresponding to ing debt and the market value amount to Valby, owns 100% of the share capital. a rate of return of 7.8% p.a. DKK 28.7 million and DKK 30.7 million respectively. Lundbeck has a mortgage credit The modified interest rate risk expressed in loan offer equal to an amount of DKK 346 Managing financial risks terms of the BPV (Basis Point Value) million, ie DKK 295 million relating to 20- indicates the expected price change on an year loans and DKK 51 million relating to Lundbeck considers cash flow optimisation interest rate increase of 1 percentage point. 10-year loans. This offer was made on 31 and currency and interest rate management At year-end 1998, the BPV was 5.0, corre- December 1998 and is applicable for one to be an integral part of the overall financial sponding to an increase of 0.9 compared year at a time. management and continued in 1998 its with the beginning of the year. An interest efforts to optimise the Group’s cash rate increase of 1 percentage point would Short-term borrowing was favourable due to management. lead to a reduction in the value of the port- the relatively low short-term interest rate. folio of approx DKK 30 million. The total financing cost was kept at a level To ensure stability in the efforts to control below 4.8% p.a. interest rate and currency risks Lundbeck In 1998, the amount placed in the money decided in 1998 to establish benchmarks, market was on average DKK 149 million. The against which risk management is measured. total interest income was DKK 6 million cor- The positive results will be used in connec- responding to a yield rate of 4.2% p.a. tion with an expansion of the system in 1999.

22 Currency risk From 1999 the Group’s budgeted cash flows The currency policy sets out the framework in euro currencies will be converted into EUR for the use of financial instruments, hedging in order to achieve maximum benefit from horizons, choice of bankers etc. The Group’s the single European currency. All forward currency management is undertaken central- exchange contracts made which include a ly by the parent company, which means that euro currency will be converted into EUR all subsidiaries are normally invoiced in local contracts. In this way, the currency hedging currency. Currency exposure is hedged on will be spread over fewer but larger forward the basis of a commercial judgement, and contracts. hedging is carried out by means of forward exchange contracts only. At the end of 1998, net outstanding forward exchange contracts totalled DKK 1,165 Lundbeck’s currency exposure has been million. At the balance sheet date, the con- covered through continuous hedging, which tracts are made up at market value and the for 1998 meant that the profit for the year total unrealised exchange gain of DKK 22 was not affected significantly by falling million is included in the profit and loss exchange rates in Lundbeck’s markets. account. The average term to maturity of the contracts is 1.1 months, and extensions and The benchmark for currency exposure is full adaptations are made continuously. hedging using a hedging horizon of twelve months. Limits have been set for the hedging in the form of minimum and maximum hedging percentages based on expected risk, and currencies are divided into “EUR”, “other European currencies” and “USD and other non-European currencies”. At year-end 1998, just over 54% of the Group’s budgeted cur- rency exposure in foreign currency for 1999 had been hedged by means of forward con- tracts. The hedging mainly concerned curren- cy exposures in ATS, BEF, CHF, DEM, FIM, FRF, GBP, SEK and USD. Net outstanding forward exchange contracts at 31 December 1998 (DKKm)

Contract value Market value Unrealised result

SEK 197.7 184.8 12.9

FRF 165.8 164.7 1.1

USD 160.9 158.8 2.1

CHF 118.4 116.6 1.8

ATS 106.7 106.7 0.0

BEF 101.9 101.5 0.4

FIM 94.9 92.7 2.2

GBP 56.4 56.2 0.2

DEM 53.6 53.3 0.3 23 Other 130.2 129.3 0.9

Total 1,186.5 1,164.6 21.9 Comments on the accounts

The incoming currency cash flows of The incoming currency cash flows of H. Lundbeck A/S and its Danish H. Lundbeck A/S and its Danish subsidiaries - realised 1998 subsidiaries - budget 1999

“EUR” ...... 48% EUR ...... 38% Other European currencies ...... 37% Other European currencies ...... 32% USD and other USD and other non-European currencies ...... 15% non-European currencies ...... 30%

The foreign currency composition of In 1998, Lundbeck’s exchange rate index, from the graph, are an approximated illustra- Lundbeck’s incoming cash flows has changed which reflects Lundbeck’s long-term compet- tion of how much the result would have substantially as a result of the introduction itive power, dropped by 2.7%, due primarily been affected by exchange rate changes if no of Celexa® in the American market. From to the fall in SEK, NOK, GBP and USD. The currency hedging had taken place. comprising less than 10% in 1997 and 15% exchange rate index is calculated on the in 1998 the proportion of “USD and other basis of the expected turnover shares of non-European currencies” will rise to 30% in Lundbeck’s subsidiaries and trading partners. the budgeted cash flows for 1999. Changes in index figures, which can be read

Lundbeck’s exchange rate index (1988=100)

104

102

100

98

96

24 94

92 ‘88 ‘89 ‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘98 (Dec) Credit risk The credit risk on cash at bank and in hand Euro The principal financial instruments shown in and derivative financial instruments (forward In 1998, Lundbeck adopted a euro strategy, the balance sheet are trade debtors, securi- exchange contracts) is limited because the the most important element of which is that ties and cash at bank and in hand. The Group deals only with banks with a high the subsidiaries in the euro countries will amounts at which the said balance sheet creditworthiness. convert to the EUR by 1 July 2000 at the items are stated are identical to the maxi- latest. The parent company will not convert mum credit risk. The Group does not have a Lundbeck’s products are mainly sold to drug to the EUR unless Denmark joins the EMU major concentration of credit risk but has distributors and hospitals. Historically, the co-operation. spread it over a large number of creditwor- losses suffered by the Group on receivables thy trading partners. have been insignificant. This is also true of 1998. The securities portfolio consists of Danish Government and mortgage credit bonds only.

Interest rate risk

The interest rate risk has been calculated on the basis of the due date. If a revaluation or interest adjustment is made before the due date, the interest rate risk has been calculated on the basis of that time.

Interest rate risk at 31 December 1998 Between Effective DKKm Less than 1 and 5 More than rates of 1 year years 5 years Total interest% Assets:

Receivables *) 654.9 0.0 0.0 654.9 0

Securities **) 8.7 79.1 515.9 603.7 4-6

Cash at bank and in hand 222.6 0.0 0.0 222.6 0-4

Total financial assets 886.2 79.1 515.9 1,481.2

Liabilities:

Mortgage debt 2.1 8.5 20.1 30.7 4-6

Other debt 827.0 0.0 0.0 827.0 0

Bank debt 72.1 0.0 0.0 72.1 7-9

Total financial liabilities 901.2 8.5 20.1 929.8 25

*) Including other receivables under financial fixed assets. **) Including other shareholdings of DKK 9.7 million. Accounting policies

General The consolidated accounts are prepared on Foreign currencies the basis of the accounts of the parent The annual accounts and the consolidated company and the subsidiaries, which are all Transactions denominated in foreign cur- accounts have been prepared in accordance prepared in accordance with the Group’s rencies are translated by using standard rates with the Danish Company Accounts Act, accounting policies. The consolidated which essentially reflect the exchange rates current Danish accounting guidelines, current accounts are prepared by adding up items of ruling at the transaction date. Exchange rate International Accounting Standards (IAS), a uniform nature. In the consolidation, inter- differences arising between the rate at the and the requirements otherwise imposed by company income and expenses, intercom- transaction date and the rate at the date of the Copenhagen Stock Exchange on the pany shareholdings, balances and dividends payment are included in the profit and loss presentation of accounts for listed companies. as well as unrealised gains and losses on account as financial items. transactions between the consolidated The accounts are presented in accordance companies are eliminated. Account is taken Balances denominated in foreign currencies with the standards applicable to the financial of deferred tax on these eliminations. are translated at the exchange rates ruling at year 1998 and IAS 1 (revised 1997) and IAS the balance sheet date. 14 (revised 1997), which will enter into force In the consolidated accounts, the book value for financial years starting after 1 July 1998. of the parent company’s shareholdings in Forward contracts and other derivative finan- IAS 14 (revised 1997) concerning segment the subsidiaries has been set off against the cial instruments are stated in the balance information are applied for the first time in parent company’s share of the net asset sheet at market value. Both realised and 1998. value at the time of acquisition, calculated at unrealised exchange rate differences are the market value of assets and liabilities. If included in the profit and loss account as To facilitate the reading of the accounts, the cost exceeds the share of the net asset financial items. some of the information required by the IAS value thus computed, the difference is shown has been included in the comments on the as Group goodwill in the balance sheet. Non-monetary assets, including Group good- accounts, which in this context are regarded Group goodwill is written off systematically will, acquired in foreign currencies are trans- as an integral part of the annual accounts through the profit and loss account based on lated at the exchange rates ruling at the and the consolidated accounts. an individual assessment of the economic time of acquisition. life of the asset, with a maximum of 20 The accounting policies applied are consist- years. All foreign subsidiaries are regarded as ent with those of last year. A few linguistic integral entities, which means that the trans- amendments have been made in the descrip- So far no Group goodwill has been recorded actions are dealt with as if they had been tion of accounting policies, which has also in connection with the acquisition of sub- executed in the parent company. For con- been made more clear on some points. sidiaries. solidation purposes, the accounts of foreign subsidiaries are translated according to an Newly acquired subsidiaries are included in adapted temporal method. Consolidation the profit and loss account from the date of acquisition. Subsidiaries sold or wound up Profit and loss account items are translated The consolidated accounts comprise are included up to the time of sale or wind- at the average exchange rates ruling during H. Lundbeck A/S (the parent company) and ing up. Comparative figures are not restated the year as these essentially reflect the companies (subsidiaries) controlled by the for newly acquired or sold businesses. exchange rates ruling at the transaction date. parent company. Control is achieved where Exchange rate differences arising from the the parent company directly or indirectly translation of both the balance sheets and holds more than 50% of the voting rights or the profit and loss accounts of the foreign is otherwise able to exercise or actually entities are included in the Group’s profit exercises a controlling influence. A list of the and loss account as financial items. subsidiaries is shown in note 10.

26 Ta x Deferred tax on investments in subsidiaries Segment information or associated companies is not disclosed The parent company is jointly taxed with because the calculations are very resource The company is only engaged in the business the two Danish and some of the foreign sub- consuming and comprehensive with many segment “Drugs for treatment of illnesses in sidiaries. The tax payable computed on the alternatives, and the usefulness to the users the field of CNS”. Turnover, segment assets joint taxation income is included in the is limited compared with the amount of and additions to tangible segment assets are parent company’s profit and loss account in work involved. disclosed within the secondary geographical accordance with the parent company segments. method. The jointly taxed Danish companies are included in the Danish provisional tax Pension commitments scheme. Profit and loss account The Group has entered into pension agree- Tax on the profit or loss for the year com- ments and similar agreements with most of Net turnover prises current tax and the year’s change in the Group’s employees. Net turnover comprises invoiced sales for deferred tax. Additions, deductions and the year less returned goods and turnover allowances relating to the Danish provisional Periodical payments to defined contribution taxes, consisting mainly of value added taxes tax scheme are included in current tax. Tax pension plans are included in the profit and and foreign drug taxes. Turnover subject to a on the profit or loss for the year relates to loss account at the due date and any contri- price adjustment clause is recognised as the profits or losses on ordinary and extra- butions payable are included in the balance income in the profit and loss account at the ordinary activities. sheet under other debt. time of invoicing if no risk of substantial price adjustments is expected to exist. Current tax comprises tax payable calculated The present value of the Group’s commit- Moreover, net turn-over includes licence on the basis of the expected taxable income ments relating to future pension payments income and royalties from licensed products for the year and any adjustment of tax according to defined benefit pension plans is as well as non-refundable down payments payable for previous years. calculated on an actuarial basis at intervals and payments relating to research coopera- of not more than three years on the basis of tion from research partners. Provision is made for deferred tax according the pensionable period of employment up to to the balance sheet oriented liability the time of the actuarial valuation, using the Production costs method on all temporary differences projected unit credit method. Production costs comprise the cost of goods between valuations as stated in the accounts sold. Cost includes the cost of raw materials, and as computed for taxation purposes, with Provision is made in the balance sheet for consumables and goods for resale, direct the exception of differences relating to the present value of plans which are not wages and indirect production costs, includ- shareholdings in subsidiaries and Group funded. ing the cost of operating and depreciating goodwill which are not deductible for tax manufacturing facilities. Production costs purposes. The tax value of losses expected to The present value of the commitment moreover include costs in connection with be available for set off against future taxable according to defined benefit plans which are quality certification of sold products and any income is set off against the deferred tax funded in independent pension funds is writedown to net realisable value of within the same legal tax unit and jurisdic- calculated less the market value of the assets unsaleable and slow moving items. tion. Any deferred tax assets (net) are stated associated with the scheme, and any net on the basis of a conservative valuation in commitment is included as a provision in Distribution costs the balance sheet. the balance sheet. If the calculation shows Distribution costs comprise costs relating to a net asset, that asset is not included in the distribution and sales of the Group’s Deferred tax is calculated on the basis of the balance sheet but disclosed in a note. products, including direct distribution and current tax rules and tax rates in the respec- marketing costs, salaries for the sales and tive countries, and the effect on deferred tax The year’s changes in the provisions relating marketing functions as well as depreciation of any changes in tax rates is included in the to defined benefit pension plans are included and other indirect costs. profit and loss account. in the profit and loss account.

Further, provision is made for deferred tax on 27 reversal of tax benefit arising from assets in jointly taxed foreign subsidiaries. Accounting policies

Administration costs Financial items Tangible fixed assets Administration costs comprise salaries for Financial items include interest income and Tangible fixed assets are stated at purchase the management and the administrative expenses, which are included in the profit price or production cost less accumulated functions, office expenses as well as and loss account at the amounts relating to depreciation and writedowns. depreciation and other indirect costs. the financial year. The cost of new buildings and erection by Research and development costs Financial items include writedowns of finan- the company of its own technical install- Research and development costs comprise cial fixed assets and realised and unrealised ations and machinery includes the cost of costs attributable to the Group’s research gains and losses on securities, items denomi- materials, direct wages and a share of and development functions, including wages nated in foreign currencies, forward contracts indirect costs. Interest relating to tangible and salaries as well as depreciation and other and other derivative financial instruments. fixed assets during the period of building indirect costs. and erection is not capitalised. Costs in connection with the raising of loans Research costs are always charged to the are charged to the profit and loss account at Tangible fixed assets are written off on a profit and loss account as incurred. the time of the raising of the loan. straight-line basis over the expected useful lives of the assets, which are expected to be Development costs are also charged to the Extraordinary items as follows: profit and loss account as incurred if the Extraordinary items include significant conditions for capitalising development costs income or expenses from events or transac- Buildings ...... 30 years in the balance sheet are not deemed to have tions that are clearly distinct from the ordi- Installations ...... 10 years been met. In the opinion of the Group, nary activities of the Group. Plant and machinery ...... 3-10 years development costs should not be capitalised Other fixtures and fittings, until the product has been completed and tools and equipment ...... 3-10 years all the necessary public registration and Balance sheet marketing approvals have been obtained. Writedowns are made on tangible fixed Intangible fixed assets assets whose utility value is believed perma- Public loans and grants Intangible fixed assets are stated at purchase nently to be much lower than the book value State development loans with a forgivable price less accumulated amortisation. Costs based on the above periods of depreciation. clause are recognised as income in the profit relating to intangible fixed assets manu- Writedowns are charged to the profit and and loss account as the research and factured by the company are charged to the loss account under the same items as the development costs relating to the project profit and loss account as incurred. associated depreciation. are incurred. These costs are charged to the profit and loss account if, as mentioned Group goodwill is written off systematically Acquisitions at a cost not exceeding DKK above, they are not found to satisfy the through the profit and loss account based on 50,000 per unit are charged to the profit and conditions for capitalisation in the balance an individual assessment of the economic loss account in the year of acquisition. sheet. life of the asset, with a maximum of 20 years. So far no Group goodwill has been Gains or losses on the disposal or scrapping In the event of repayment, the repayments recorded in connection with the acquisition of tangible fixed assets are calculated as the including interest are charged to the profit of subsidiaries. difference between book value and sales and loss account as the related income is price reduced by dismantling and sales costs. recognised as income. Product rights are written off over the lives Gains and losses are included in the profit of the underlying products, with a maximum and loss account under the same items as Other operating income and expenses of 20 years. the associated depreciation. Other operating income and expenses include gains on sales of rights. Other rights are written off over the lives of the rights, with a maximum of 20 years. Leasehold improvements are written off over the term of the lease, with a maximum of 10 years. 28 Financial fixed assets indirect production costs, including the cost Group’s cash and cash equivalents at the Shareholdings in subsidiaries are stated in of operating and depreciating manufacturing beginning and at the end of the year. the parent company’s accounts according to facilities. the equity method. This means that the Cash flow from operating activities is calcu- shareholdings are included in the balance Writedown to net realisable value is made if lated as the Group’s result before financial sheet at the parent company’s proportional it is lower than the purchase price or produc- items adjusted for non-cash operating items, share of the companies’ net asset value plus tion cost, respectively. any change in the operating capital, financial Group goodwill. The parent company’s share and extraordinary items paid and corporation of the companies’ results after deduction of Receivables taxes paid. unrealised intercompany gains and losses Receivables are stated at nominal value less and after deduction of write-off on Group writedowns to counter the risk of loss calcu- Cash flow from investing activities includes goodwill is included in the parent company’s lated on the basis of an individual evalua- payments in connection with purchases and profit and loss account as the result of tion. sales of fixed assets. shareholdings before tax and as tax on the result for the year, respectively. Securities Cash flow from financing activities includes Securities shown as current assets are valued payments to and from shareholders and The net revaluation of shareholdings in at the stock market price ruling at the balance raising of and repayments on mortgage debt subsidiaries is taken to the reserve for net sheet date. Both realised and unrealised and other long-term debt. revaluation according to the equity method capital gains and losses are included in the under capital and reserves to the extent the profit and loss account under financial items. Cash and cash equivalents include liquid net revaluation exceeds the dividends funds. Cash and cash equivalents also include declared by the companies. Debt securities shown as current assets in the Mortgage debt and other debt where there is balance sheet. These are mainly Danish listed Other shareholdings and receivables are a difference between the nominal value and bonds. Despite the fact that they involve a valued at purchase price less writedown as a the market value are valued at the stock risk of price changes, these bonds are included result of a significant diminution in value. market price ruling at the balance sheet date in cash because they actually function as The purchase price of shares denominated in or any other market value. Other liabilities cash due to the special liquid nature of the foreign currencies is translated at the are stated at nominal value. Danish stock market. exchange rates ruling at the balance sheet date. Exchange rate adjustments are included Guarantee commitments Cash flow denominated in foreign currencies, in the profit and loss account as financial Provision is made to cover return obligations including cash flow in foreign subsidiaries, is items. imposed on the industry when these are translated at the average exchange rates found to have a material effect on the ruling during the year, because they essen- Stocks accounts. tially reflect the rates ruling at the date of Raw materials, packaging and goods for payment. Cash at year-end is translated at resale are valued at the latest known purchase the rates ruling at the balance sheet date, price at the balance sheet date, which Cash flow statement and the effect of exchange rate adjustments approximates purchase price computed on cash is shown as a separate item in the according to the FIFO principle. The consolidated cash flow statement is pre- cash flow statement. sented according to the indirect method and Work in progress and goods produced by shows the composition of the Group’s cash the company are valued at cost, ie the cost flow, divided into operating, investing and of materials, direct wages and a share of financing activities, respectively, and the

29 Profit and loss account for the year ended 31 December 1998

Parent company Group

1997 1998 1998 1997 DKKm DKKm Notes DKKm DKKm

1,720.3 2,095.5 Net turnover1, 22 3,231.1 2,661.9 619.2 702.5 Production costs2-4 764.5 714.3 255.6 325.9 Distribution costs2-4 906.8 683.8 203.6 281.1 Administration costs2-5 570.9 473.2

641.9 786.0 Profit before research and development costs 988.9 790.6 431.6 617.0 Research and development costs2-4 619.4 432.8

210.3 169.0 Profit before other operating items 369.5 357.8 82.1 14.6 Other operating income6 18.9 85.8 1.2 2.2 Other operating expenses6 4.1 3.1

291.2 181.4 Operating profit 384.3 440.5

150.1 206.0 Income from shares in subsidiaries, before tax8,10 - - - 6.2 52.9 Financial items, net7 61.6 - 2.7

435.1440.3 Profit before tax 445.9 437.8

141.2 133.3 Tax on the profit for the year8 133.3 141.2

293.9 307.0 Profit for the year before minority interests 312.6 296.6

Minority interests’ share of the profit 5.6 2.7

293.9 307.0 Profit for the year 307.0 293.9

Which is proposed to be appropriated as follows: 35.0 45.0 Distribution of dividend 45.0 35.0 Transfer to reserve for net revaluation according to 21.6 16.2 the equity method - - 237.3 245.8 Carried forward to next year 262.0 258.9 293.9 307.0 307.0 293.9

Movements in capital and reserves

1,147.4 1,511.2 Capital and reserves at 1.1. 1,511.2 1,147.4 104.9 - Effect of changes in accounting policies applied - 104.9 1.252.3 1,511.2 Adjusted capital and reserves at 1.1. 1,511.2 1,252.3

293.9 307.0 Profit for the year 307.0 293.9 - 35.0 - 45.0 Dividend - 45.0 - 35.0

1,511.2 1,773.2 Capital and reserves at 31.12. 1,773.2 1,511.2 31

DKK DKK Earnings per share (EPS)* 55.82 53.44 Dividend per share* 8.18 6.36

*) The calculation is based on DKK 20 shares. Balance sheet at 31 December 1998 Assets

Parent company Group

1997 1998 1998 1997 DKKm DKKm Notes DKKm DKKm

23.7 15.7 Product rights 15.7 23.7 - - Other rights 5.5 - 20.1 25.7 Leasehold improvements 30.0 25.2 43.8 41.4 Intangible fixed assets 9 51.2 48.9

503.7 503.8 Land and buildings 515.9 516.9 159.8 168.6 Technical plant and machinery 212.9 210.6 109.9 113.7 Other fixtures and fittings, tools and equipment 144.5 145.0 60.9 182.5 Assets in course of construction 191.2 62.4 834.3 968.6 Tangible fixed assets 9 1,064.5 934.9

98.0 117.1 Shares in subsidiaries 10 - - 9.8 9.6 Other shareholdings 11 9.7 9.9 4.6 7.5 Other receivables 11 11.5 8.3 238.5 313.4 Accounts receivable from subsidiaries 11 - - - - Value of tax assets 15 27.9 26.2 350.9 447.6 Financial fixed assets 49.1 44.4

1,229.0 1,457.6 Total fixed assets 1,164.8 1,028.2

100.3 108.6 Raw materials and consumables 109.3 103.4 115.8 148.0 Work in progress 157.2 133.3 75.3 70.0 Finished goods and goods for resale 89.9 111.0 291.4 326.6 Stocks 12 356.4 347.7

75.1 53.4 Trade debtors 502.6 506.4 163.0 115.9 Accounts receivable from subsidiaries - - 134.3 146.8 Dividend receivable - - 6.4 - Corporation tax receivable 13.2 11.0 7.3 30.6 Other receivables 72.7 35.7 11.4 19.6 Prepayments and accrued income 54.9 26.5 397.5 366.3 Receivables 643.4 579.6

365.7 593.4 Securities 594.0 366.3

305.5 36.7 Cash at bank and in hand 222.6 434.0

1,360.1 1,323.0 Total current assets 1,816.4 1,727.6

2,589.1 2,780.6 Total assets 2,981.2 2,755.8

32 Balance sheet at 31 December 1998 Liabilities

Parent company Group

1997 1998 1998 1997 DKKm DKKm Notes DKKm DKKm

110.0 110.0 Share capital 13 110.0 110.0 77.7 93.9 Reserve for net revaluation according to the equity method 13 - - 1,323.5 1,569.3 Profits brought forward 13 1,663.2 1,401.2 1,511.2 1,773.2 Capital and reserves 1,773.2 1,511.2

Minority interests 4.0 4.0

- - Provisions for pensions and similar commitments 14 48.8 33.7 183.1 138.0 Provisions for deferred tax 15 174.5 211.8 0.0 31.9 Other provisions 16 50.9 0.0 183.1 169.9 Provisions 274.2 245.5

28.7 28.6 Mortgage debt 28.6 28.7 - - Other debt - 63.5 189.4 204.1 Debt to subsidiaries - - 218.1 232.7 Long-term debt 17 28.6 92.2

367.9 10.4 Bank debt 72.1 374.0 2.1 2.1 Mortgage debt 2.1 2.1 9.6 55.0 Debt to subsidiaries - - 127.8 181.9 Trade creditors 247.8 177.4 0.0 24.8 Corporation tax 47.0 29.0 104.7 92.6 VAT, taxes and holiday pay commitments 164.5 169.6 25.6 32.9 Other debt 157.0 109.1 4.0 160.1 Accruals and deferred income 18 160.1 4.0 - - Dividend to minority interests 5.6 2.7 35.0 45.0 Dividend for the financial year 45.0 35.0 676.7 604.8 Short-term debt 901.2 902.9

894.8 837.5 Total debt 929.8 995.1

2,589.1 2,780.6 Total liabilities 2,981.2 2,755.8

Contractual obligations 19

Contingent liabilities 20

Related party transactions 21

Segment information 22

33 Cash flow statement for the year ended 31 December 1998

Group

1998 1997 Notes DKKm DKKm

Operating profit 384.3 440.5 Adjustments 23 189.9 109.8 Working capital movement 24 227.5 - 8.7

Cash flow from operating activities before financial items 801.7 541.6

Financial receipts 71.4 48.8 Financial payments - 41.3 - 54.1

Cash flow from ordinary activities 831.8 536.3

Corporation tax paid - 150.9 - 128.9

Cash flow from operating activities 680.9 407.4

Capital investments - 272.0 - 187.9 Sales of assets 11.1 10.2 Other financial investments - 5.7 - 3.9

Cash flow from investing activities - 266.6 - 181.6

Cash flow from operating and investing activities 414.3 225.8

Loan proceeds 6.7 274.9 Loan instalments - 369.5 - 354.0 Dividend paid to minority interests - 2.7 - 1.2 Dividend paid during the financial year - 35.0 -

Cash flow from financing activities - 400.5 - 80.3

Increase/(decrease) in cash and cash equivalents 13.8 145.5

Cash and cash equivalents at 1.1. 800.3 655.3 The year’s unrealised exchange rate adjustments 2.5 - 0.5 Increase/(decrease) for the year 13.8 145.5

Cash and cash equivalents at 31.12. 25 816.6 800.3

Interest-bearing net cash is composed as follows:

Cash and cash equivalents 816.6 800.3 Interest-bearing debt 102.8 468.3 34 Interest-bearing net cash at 31.12. 713.8 332.0 Signatures

Copenhagen, 22 March 1999

The Supervisory Board and the Board of Management have today considered and adopted the annual report, the consolidated accounts and the annual accounts for 1998.

The consolidated accounts and the annual accounts have been presented in accordance with current accounting provisions. In our opinion, the accounting policies elected are appropriate and the accounts give a true and fair view. We recommend that the Annual General Meeting adopt the consolidated accounts and the annual accounts.

The Board of Management

Erik Sprunk-Jansen Claus Bræstrup Flemming Juul Jensen Stefan D. Buch President Executive Vice President Executive Vice President Senior Vice President, Corporate Finance

The Supervisory Board

Arne V. Jensen Lars Bruhn Henrik Hertz Chairman Vice-Chairman

Bent Jakobsen Flemming Lindeløv Sven Dyrløv Madsen

Jan Gottliebsen Birgit Rosenmeier Torben Skarsfeldt Elected by employees Elected by employees Elected by employees Auditors’ report

We have audited the consolidated accounts of material misstatement. Based on an eval- Opinion and the annual accounts of H. Lundbeck A/S uation of materiality and risk our audit has for 1998 presented by the management. included an examination of evidence sup- In our opinion, the consolidated accounts porting the amounts and disclosures in the and the annual accounts have been present- annual accounts. We have assessed the ed in accordance with the Danish Annual Basis of opinion accounting policies applied and the esti- Accounts Act, Danish accounting standards mates made by the management as well as and international accounting standards and We have planned and conducted our audit in evaluated the overall annual accounts pre- give a true and fair view of the group’s and accordance with generally accepted audit sentation. the parent company’s assets and liabilities, standards to obtain reasonable assurance financial position and result. about whether the annual accounts are free Our audit has not given rise to qualifications.

Deloitte & Touche Grothen & Perregaard Statsautoriseret Revisionsaktieselskab Statsautoriseret Revisionsaktieselskab 35

Stig Enevoldsen Carsten Vaarby Jørgen Frank Jacobsen Steen Høedt Thomsen State Authorised Public Accountants State Authorised Public Accountants Notes

1 Net turnover

Parent company Group

1997 1998 1998 1997 DKKm DKKm DKKm DKKm

289.8 281.4 Denmark 165.3 175.2 1,306.3 1,490.9 Rest of Europe 2,604.9 2,213.4 58.0 253.1 USA* 253.1 58.0 66.2 70.1 Rest of world 207.8 215.3 1,720.3 2,095.5 Total 3,231.1 2,661.9 including 26.5 41.3 Down payments 41.3 26.5 - 55.1 Down payments related to joint development 55.1 - 25.5 53.3 Royalty 54.1 26.3

* Turnover in the USA is invoiced via Ireland.

2 Staff costs

Wages and salaries, etc.:

Parent company Group

1997 1998 1998 1997 DKKm DKKm DKKm DKKm

346.2 433.2 Wages and salaries 769.1 632.3 27.4 33.0 Contributions to pension plans 55.9 41.5 5.7 7.0 Other social security costs 81.9 64.1 379.3 473.2 Total 906.9 737.9

The year’s staff costs are broken down as follows:

Parent company Group

1997 1998 1998 1997 DKKm DKKm DKKm DKKm

172.2 193.9 Production costs 209.0 184.8 4.8 4.9 Distribution costs 241.8 199.5 70.4 97.5 Administration costs 244.4 197.3 36 131.9 176.9 Research and development costs 211.7 156.3 379.3 473.2 Total 906.9 737.9 Supervisory Board and Board of Management:

Total fees to the parent company’s Supervisory Board for the 1998 financial year amounted to DKK 1.4 million (DKK 1.3 million in 1997). Total fees to the Group’s Board of Management for the 1998 financial year amounted to DKK 4.9 million (DKK 4.6 million in 1997).

Employee information:

Parent company Group

1997 1998 1998 1997

Average number of full-time employed 1,073 1,186 persons in the financial year 2,286 2,003

Number of full-time employed persons at the end of the financial year 1,105 1,267 In Denmark 1,316 1,173 - - Abroad 1,167 917 1,105 1,267 Total 2,483 2,090

37 Notes

3 Writedowns and provisions in connection with Serdolect®

Parent company Group

1997 1998 1998 1997 DKKm DKKm DKKm DKKm

75.0 34.2 Writedown on stocks 34.2 75.0 - 8.5 Provision for returned goods 14.0 - - 21.7 Provision for clinical studies 24.5 - - 1.7 Provision for marketing obligations 12.4 - 75.0 66.1 Total 85.1 75.0

Writedowns and provisions for the year can be broken down as follows:

Parent company Group

1997 1998 1998 1997 DKKm DKKm DKKm DKKm

75.0 42.7 Production costs 48.2 75.0 - - Distribution costs 10.7 - - 1.7 Administration costs 1.7 - - 21.7 Research and development costs 24.5 - 75.0 66.1 Total 85.1 75.0

4 Depreciation

Depreciation for the year is broken down as follows:

Parent company Group

1997 1998 1998 1997 DKKm DKKm DKKm DKKm

54.9 52.7 Production costs 60.5 62.3 - - Distribution costs 3.7 3.5 15.6 23.5 Administration costs 34.1 26.8 14.1 25.1 Research and development costs 25.4 14.8 84.6 101.3 Total 123.7 107.4 38 5 Audit fees

Parent company Group

1997 1998 1998 1997 DKKm DKKm DKKm DKKm

Deloitte & Touche: 0.7 0.7 Audit 2.6 2.6 1.2 1.8 Fees for services other than audit 2.4 1.5 1.9 2.5 Total 5.0 4.1

Grothen & Perregaard: - 0.2 Audit 0.2 - - - Fees for services other than audit - - - 0.2 Total 0.2 -

6 Other operating income, net

Parent company Group

1997 1998 1998 1997 DKKm DKKm DKKm DKKm

Other operating income: 77.3 3.5 Income on disposal of marketing and product rights 3.5 77.3 - 6.1 Compensation in connection with strike 6.1 - 4.8 5.0 Other income 9.3 8.5 82.1 14.6 Total 18.9 85.8

Other operating expenses: 1.2 2.2 Other expenses 4.1 3.1 1.2 2.2 4.1 3.1 80.9 12.4 Other operating income, net 14.8 82.7

39 Notes

7 Financial items, net

Parent company Group

1997 1998 1998 1997 DKKm DKKm DKKm DKKm

34.8 49.3 Interest, cash and securities, etc. 54.6 39.3 2.5 5.1 Interest income, subsidiaries - - 30.6 43.7 Exchange gain 58.0 30.6 12.1 12.8 Realised and unrealised capital gains, bonds 12.9 12.1 80.0 110.9 Total financial income 125.5 82.0

20.6 18.9 Interest, bank and mortgage debt, etc. 24.5 26.2 7.1 8.4 Interest expenses, subsidiaries - - 34.6 23.9 Exchange losses 32.5 34.6 23.2 4.8 Realised and unrealised capital gains, bonds 4.9 23.2 0.7 2.0 Unrealised capital losses, mortgage debt 2.0 0.7 86.2 58.0 Total financial expenses 63.9 84.7

- 6.2 52.9 Financial items, net 61.6 - 2.7

40 8 Tax on the profit for the year

Parent company Group

1997 1998 1998 1997 DKKm DKKm DKKm DKKm

49.7 131.6 Current tax 190.2 115.4 - 0.1 - 2.2 Prior year adjustment - 2.9 1.4 Corporation taxes paid between jointly - 2.4 - 2.6 taxed subsidiaries and parent company - - 56.2 66.7 Tax in subsidiaries - - 37.8 - 51.6 Provisions for deferred tax - 45.4 24.4 Change of deferred tax as a result of reduction - - 8.6 of the corporation tax rate from 34% to 32% - 8.6 - 141.2 133.3 Total 133.3 141.2

54.2 109.8 Taxes paid 150.9 128.9

Group reconciliation of the Danish tax rate relative to the Group’s effective tax rate:

Group 1998 1998 1997 1997 DKKm % DKKm %

Profit before tax 445.9 437.8

Tax calculated on pre-tax profit 34% 151.6 34.0 148.9 34.0

Tax effect of:

Differences in foreign subsidiaries’ tax rates relative to the Danish tax rate of 34% - 19.9 - 4.5 - 10.3 - 2.4

Non-deductible costs/non-taxable income 27.4 6.1 13.4 3.1

Change of deferred tax as a result of reduction of the corporation tax rate from 34% to 32% - 8.6 -1.9 - -

Effect of taxation at The Lundbeck Foundation of the distribution of dividend for the year - 15.3 - 3.4 - 11.9 - 2.7

Prior year adjustment etc. - 1.9 - 0.4 1.1 0.2

Effective tax for the year 133.3 29.9 141.2 32.2 41

The effect is not shown separately for the parent company as the parent company’s and the Group’s tax costs are identical. Notes

9 Intangible and tangible fixed assets

Group: Product Other Leasehold Intangible rights rights improvements fixed assets, total DKKm DKKm DKKm DKKm

Purchase prices at 1.1.1998 40.1 - 34.8 74.9 Foreign currency translation - - - 0.4 - 0.4 Reclassifcation - - 0.4 0.4 Additions - 6.0 9.1 15.1 Disposals - - 0.2 0.2 Purchase prices at 31.12.1998 40.1 6.0 43.7 89.8

Depreciation at 1.1.1998 16.4 - 9.6 26.0 Foreign currency translation - - - 0.1 - 0.1 Reclassification - - 0.2 0.2 Depreciation for the year 8.0 0.5 4.1 12.6 Disposals - - 0.1 0.1 Depreciation at 31.12.1998 24.4 0.5 13.7 38.6

Book value at 31.12.1998 15.7 5.5 30.0 51.2

Parent company: Product Other Leasehold Intangible rights rights improvements fixed assets, total DKKm DKKm DKKm DKKm

Purchase prices at 1.1.1998 40.1 - 26.4 66.5 Reclassification - - 0.2 0.2 Additions - - 8.3 8.3 Disposals - - - - Purchase prices at 31.12.1998 40.1 - 34.9 75.0

Depreciation at 1.1.1998 16.4 - 6.3 22.7 Reclassification - - - - Depreciation for the year 8.0 - 2.9 10.9 Disposals - - - - Depreciation at 31.12.1998 24.4 - 9.2 33.6

Book value at 31.12.1998 15.7 - 25.7 41.4 42 Land and Technical plant Other fixtures, Assets in Tangible Total buildings and machinery fittings, tools course of fixed assets, and equipment construction total DKKm DKKm DKKm DKKm DKKm DKKm

656.1 341.3 324.0 62.4 1,383.8 1,458.7 - 0.9 - 4.6 - 2.3 - 0.1 - 7.9 - 8.3 - 2.6 - - 0.2 2.4 - 0.4 0.0 35.3 37.9 57.2 168.4 298.8 313.9 0.1 2.1 28.2 41.9 72.3 72.5 687.8 372.5 350.5 191.2 1,602.0 1,691.8

139.2 130.7 179.0 - 448.9 474.9 - - 1.7 - 1.2 - - 2.9 - 3.0 - - - 0.2 - - 0.2 0.0 32.8 31.3 48.5 - 112.6 125.2 0.1 0.7 20.1 - 20.9 21.0 171.9 159.6 206.0 - 537.5 576.1

515.9 212.9 144.5 191.2 1,064.5 1,115.7

Land and Technical plant Other fixtures, Assets in Tangible Total buildings and machinery fittings, tools course of fixed assets, and equipment construction total DKKm DKKm DKKm DKKm DKKm DKKm

641.5 269.3 245.1 60.9 1,216.8 1,283.3 - 2.6 - - 2.4 - 0.2 0.0 35.3 34.1 41.8 161.1 272.3 280.6 0.2 2.1 12.3 41.9 56.5 56.5 674.0 301.3 274.6 182.5 1,432.4 1,507.4

137.9 109.4 135.2 - 382.5 405.2 ------32.4 24.0 34.2 - 90.6 101.5 0.1 0.7 8.5 - 9.3 9.3 170.2 132.7 160.9 - 463.8 497.4 43 503.8 168.6 113.7 182.5 968.6 1,010.0

The taxable value of the Danish recorded properties at 1 January 1998 or later is DKK 289.1 million (DKK 286.3 million in 1997). The book value of mortgaged fixed assets in the parent company and the Group is DKK 493.5 million (DKK 482.2 million in 1997). Notes

10 Shares in subsidiaries

Total Purchase price Accumulated Accumulated revaluations writedowns DKKm DKKm DKKm DKKm

Book value at 1.1.1998 52.0 103.7 77.7 - 129.4

Capital contribution 28.8 28.8 - -

Declared dividend from subsidiaries - 154.3 - - 110.6 - 43.7 Profits in subsidiaries 168.6 - 139.4 29.2 Losses in subsidiaries - 29.3 - - 0.9 - 28.4 Foreign currency translation - 9.2 - - 11.8 2.6 Total 56.6 132.5 93.8 - 169.7

Set off against accounts receivable from subsidiaries 60.5 Total 117.1

44 10 Shares in subsidiaries - continued

Net asset value Profit/(loss) Ownership Net asset value Profit/(loss) at 31.12.1998 for 1998 for 1997 at 31.12.1997 DKKm DKKm DKKm DKKm

H. Lundbeck A/S, Norway 5.5 1.7 100% 6.4 8.7 H. Lundbeck AB, Sweden 70.0 64.7 100% 66.6 65.7 OY H. Lundbeck AB, Finland 1.5 10.9 100% 1.5 12.6 Lundbeck Eesti AS, Estonia 0.6 0.7 100% 0,0 - 0.5 SIA Lundbeck Latvia, Latvia - 0.3 0.3 100% - 0.6 - 0.6 UAB Lundbeck Lietuva, Lithuania 0.1 0,0 100% - - Lundbeck Pharma A/S, Denmark - 7.3 - 8.0 100% 0.7 0.9 A/S Lundbeck Overseas, Denmark 5.1 3.6 100% 5.1 2.8 LB Arzneimittel Produktrechte GmbH, Germany 0.1 0,0 51% 0.1 0.0 Lundbeck Holding GmbH, Germany including: 0.4 5.6 100% 1.1 4.7 - Lundbeck Beteiligungs GmbH, Germany 100% - Promonta Lundbeck Arzneimittel GmbH & Co., Germany * 50% - Promonta Lundbeck Arzneimittel Beteiligungs GmbH, Germany 50% Lundbeck Group Limited, UK including: - 28.5 3.8 100% - 0.7 - 3.7 - Lundbeck Limited, U.K. 100% - Lundbeck Pharmaceuticals Limited, U.K. 100% Lundbeck Ireland Limited, Ireland 1.1 1.6 100% 1.1 0.7 Lundbeck B.V., Netherlands - 15.3 - 12.1 100% - 3.2 - 6.3 Lundbeck S.A., Belgium 12.4 8.1 100% 4.3 1.9 Lundbeck S.A., France 0.0 - 4.9 100% - 5.0 - 7.3 Lundbeck España S.A., Spain 3.3 0.0 100% 3.3 2.9 Lundbeck (Schweiz) AG, Switzerland 3.2 41.4 100% 3.2 30.0 Lundbeck Italia S.p.A, Italy 3.6 3.9 100% 2.4 0.2 Lundbeck Arzneimittel Ges.m.b.H., Austria 2.8 1.4 100% 2.5 11.9 Lundbeck Poland Sp.z.o.o., Poland 0.1 - 100% - - Lundbeck Hungária KFT, Hungary 0.1 2.5 100% - - Lundbeck Ceska Republika s.r.o., Czech Republic 0.1 - 100% - - Lundbeck Slovensko s.r.o., Slovakia 0.1 - 100% - - Svetovalno Podjetje D.O.O., Slovenia 0.4 0.0 100% - - Lundbeck Hellas S.A., Greece 5.1 - 6.1 100% - 6.3 - 7.3 Lundbeck South Africa (Pty) Limited, South Africa 2.8 2.6 100% 0.6 1.2 Lundbeck Canada Inc., Canada 3.8 - 0.3 100% 4.7 2.2 Lundbeck Australia Pty Limited, Australia - 0.5 4.8 100% - 5.8 - 1.2 Lundbeck New Zealand Limited, New Zealand 0.5 0.0 100% - -

Total 70.7 126.2 82.0 119.5 Total Group eliminations - 14.1 13.1 - 30.0 - 25.6 Book value, year-end / Profit for the year 56.6 139.3 52.0 93.9

45 Group eliminations primarily consist of eliminations in respect of unrealised intercompany profits on stocks and taxes.

At the end of 1998, a subsidiary is under establishment in Turkey.

* The parent company exercises a controlling influence. Notes

11 Other shareholdings and other receivables

Parent company Group

Other Receivables Other Shareholdings Receivables shareholdings from receivables subsidiaries

DKKm DKKm DKKm DKKm DKKm

9.8 238.5 4.6 Accumulated purchase price at 1.1.1998 9.9 8.3 4.1 74.9 3.1 Additions 4.2 3.4 - 4.3 - - 0.2 Disposals - 4.4 - 0.2

9.6 313.4 7.5 Accumulated purchase price at 31.12.1998 9.7 11.5

9.6 313.4 7.5 Market value at 31.12.1998 9.7 11.5

12 Stocks

Parent company Group

1997 1998 1998 1997 DKKm DKKm DKKm DKKm

104.9 123.9 Indirect production costs 129.5 111.8

The Serdolect® stock valued at net realisable value amounts to DKK 0 (DKK 39 million in 1997).

46 13 Capital and reserves

Group:

Share Revaluation Profits brought Group capital reserves forward total DKKm DKKm DKKm DKKm

Capital and reserves at 1.1.1997 110.0 14.7 1,022.7 1,147.4 Adjustment due to changed accounting policies - - 14.7 119.6 104.9 Adjusted capital and reserves at 1.1.1997 110.0 0.0 1,142.3 1,252.3

Appropriation of profit - - 258.9 258.9

Capital and reserves at 1.1.1998 110.0 0.0 1,401.2 1,511.2

Appropriation of profit - - 262.0 262.0

Capital and reserves at 31.12.1998 110.0 0.0 1,663.2 1,773.2

Parent company:

Share Revaluation Reserve for net Profits brought Parent capital reserves revaluation forward company, according to total the equity method DKKm DKKm DKKm DKKm DKKm

Capital and reserves at 1.1.1997 110.0 14.7 56.1 966.6 1,147.4 Adjustment due to changed accounting policies - - 14.7 - 119.6 104.9 Adjusted capital and reserves at 1.1.1997 110.0 0.0 56.1 1,086.2 1,252.3

Appropriation of profit - - 21.6 237.3 258.9

Capital and reserves at 1.1.1998 110.0 0.0 77.7 1,323.5 1,511.2

Appropriation of profit - - 16.2 245.8 262.0

Capital and reserves at 31.12.1998 110.0 0.0 93.9 1,569.3 1,773.2

The share capital of DKK 110.0 million is composed as follows: A-shares, 187 100.0 B-shares, 1 10.0 110.0 47

The A-shares are divided into ten share denominations. The A-shares carry ten votes and the B-shares one vote per nom. DKK 100. Notes

14 Provisions for pensions and similar commitments

Group:

Most of the Group’s employees are covered by pension plans paid for by the Group’s companies. The type of plan varies according to statutory requirements, tax rules and economic conditions in the countries in which the employees are employed. A summary of the most important plans is given below.

Defined contribution plans The major defined contribution pension plans cover employees in Finland, Sweden, Switzerland, the UK and salaried and hourly paid employees in Denmark. The total cost of defined contribution plans covered contributions to the plans, a total of DKK 44.5 million in 1998 (DKK 34.6 million in 1997).

Defined benefit plans The Group’s major defined benefit plans cover employees in the UK and Germany.

In the UK, the defined benefit plan is funded through an independent pension fund. The latest calculation of the pension obligation was conducted at 01.01.1998 on the basis of a discount rate of 8% p.a., an expected rate of return on the fund assets of 9% p.a., and an expected rate of increase in future wages of 6.5% p.a. The market value of the fund assets was DKK 76.9 million at 01.01.1998, corre- sponding to 131% of the obligations at the same date determined on an actuarial basis. The value of the plan’s overfunding is not entered in the balance sheet but is used for reducing the future contributions to the pension plan.

In Germany, the defined benefit plan is not funded. The actuarially calculated obligation under the plan is entered in the Group balance sheet at 31.12.1998 at an amount of DKK 36.0 million (DKK 28.6 million in 1997). The latest calculation of the pension obligation was undertaken at 31.12.1998 on the basis of a discount rate of 6.5% p.a. and an expected rate of increase in future wages and salaries of 2% p.a.

In addition, the Group operates defined benefit pension plans in the Netherlands, Austria and Belgium, which are also unfunded. The obli- gations under these plans determined on an actuarial basis were entered in the Group balance sheet at 31.12.1998 at an amount of DKK 5.9 million (DKK 5.1 million in 1997).

The total cost of defined benefit plans for 1998 was DKK 8.8 million (DKK 5.3 million in 1997). The provision at 31.12.1998 for defined benefit plans was DKK 41.9 million (DKK 33.7 million in 1997).

Severance pay schemes The Group has made a provision of DKK 6.9 million (DKK 4.3 million in 1997) to cover severance pay in Germany, Austria, Italy and Greece. Payments of severance pay are conditional upon specified conditions being satisfied. The total cost of the schemes for 1998 amounted to DKK 2.6 million in 1998 (DKK 1.6 million in 1997).

Other plans In addition to the above plans, the Group’s companies operate certain statutory or contractually agreed employee benefit plans of a social security, pension or insurance nature. The annual contributions to these plans are charged as part of the Group’s overall staff costs. The cost for 1998 totalled DKK 81.9 million (DKK 64.1 million in 1997).

48 15 Provisions for deferred tax

Group:

Temporary differences between calculations for accounting and for taxation purposes

Balance at Adjustment Foreigncurrency Movement Balance at 1.1.1998 relating to1997* translation during year 31.12.1998 DKKm DKKm DKKm DKKm DKKm

Intangible fixed assets 14.1 - - - 8.7 5.4 Tangible fixed assets 388.4 - - 2.1 45.7 432.0 Stocks 27.2 44.7 1.9 50.8 124.6 Prepayments - - - - 152.8 - 152.8 Other 80.7 - - - 51.2 29.5 Tax provisions in subsidiaries 84.7 - - 10.5 95.2 Taxable loss carry-forwards - 31.6 - - - 19.4 - 51.0

Total temporary differences 563.5 44.7 - 0.2 - 125.1 482.9

Provisions for deferred tax 185.6 15.1 - 0.1 - 45.4 155.2

Effect of tax rate reduction from 34% to 32% - 8.6

Total provisions for deferred tax (32%) 146.6

*) Adjustment relating to movement between deferred tax and current tax.

1998 1997

Deferred Deferred Net Deferred Deferred Net tax assets tax liabilities tax assets tax liabilities DKKm DKKm DKKm DKKm DKKm DKKm

Intangible fixed assets 0.6 2.3 1.7 3.4 8.2 4.8 Tangible fixed assets 2.5 140.2 137.7 1.5 132.5 131.0 Stocks 7.7 47.3 39.6 19.2 28.5 9.3 Prepayments 48.9 - - 48.9 - - - Other 0.9 10.4 9.5 16.8 47.9 31.1 Deferred tax in respect of tax provisions in subsidiaries - 26.6 26.6 - 23.7 23.7 Tax value of loss carry-forwards 19.6 - - 19.6 14.3 - - 14.3

Tax assets/(liabilities) 80.2 226.8 146.6 55.2 240.8 185.6

Set-off within legal tax 49 units and jurisdictions - 52.3 - 52.3 - - 29.0 - 29.0 -

Net tax assets/(liabilities), total 27.9 174.5 146.6 26.2 211.8 185.6

The above figures show deferred tax assets and deferred tax liabilities respectively gross at a corporation tax rate of 32% (34% in 1997). Notes

15 Provisions for deferred tax - continued

Parent company:

Temporary differences between calculations for accounting and taxation purposes

Balance at Adjustment Movement Balance 1.1.1998 relating to1997* during year at 31.12.1998 DKKm DKKm DKKm DKKm

Intangible fixed assets 14.1 - - 7.1 7.0 Tangible fixed assets 356.7 - 50.3 407.0 Stocks 76.6 44.7 26.7 148.0 Prepayments - - - 152.8 - 152.8 Other 91.2 - - 68.8 22.4

Total temporary differences 538.6 44.7 - 151.7 431.6

Provisions for deferred tax 183.1 15.1 - 51.6 146.6

Effect of tax rate reduction from 34% to 32% - 8.6

Total provision for deferred tax (32%) 138.0

*) Adjustment relating to movement between deferred tax and current tax.

1998 1997

Deferred Deferred Net Deferred Deferred Net tax assets tax liabilities tax assets tax liabilities DKKm DKKm DKKm DKKm DKKm DKKm

Intangible fixed assets - 2.2 2.2 3.4 8.1 4.7 Tangible fixed assets - 130.2 130.2 - 121.3 121.3 Stocks - 47.4 47.4 - 26.1 26.1 Prepayments 48.9 - - 48.9 Other - 7.1 7.1 - 31.0 31.0

Tax assets/(liabilities) 48.9 186.9 138.0 3.4 186.5 183.1

Set-off within legal tax units and jurisdictions - 48.9 - 48.9 0.0 - 3.4 - 3.4 0.0

Net tax assets/(liabilities), total 0.0 138.0 138.0 0.0 183.1 183.1 50

The above figures show deferred tax assets and deferred tax liabilities respectively gross at a corporation tax rate of 32% (34% in 1997). 16 Other provisions

Parent company Group

1997 1998 1998 1997 DKKm DKKm DKKm DKKm Provision for possible winding up of - 31.9 ongoing activities in connection with Serdolect® 50.9 -

17 Long-term debt

Parent company Group

1997 1998 1998 1997 DKKm DKKm DKKm DKKm

20.2 20.1Mortgage debt due after five years 20.1 20.2

18 Accruals and deferred income

Parent company Group

1997 1998 1998 1997 DKKm DKKm DKKm DKKm

- 152.8 Prepayment from business partners 152.8 - 4.0 7.3 Other 7.3 4.0 4.0 160.1 Total 160.1 4.0

51 Notes

19 Contractual obligations

Rentals and leasing obligations Lundbeck has commitments amounting to DKK 218.1 million (DKK 173.5 million in 1997) in the form of rentals and leasing of operating equipment, particularly cars. The future rentals and leasing payments can be broken down as follows:

1998 1997

Land and Operating Total Land and Operating Total buildings equipment buildings equipment DKKm DKKm DKKm DKKm DKKm DKKm

Less than 1 year 36.5 28.0 64.5 27.3 18.4 45.7 Between 1 and 5 years 93.3 27.4 120.7 74.3 18.1 92.4 More than 5 years 32.9 - 32.9 35.4 - 35.4 162.7 55.4 218.1 137.0 36.5 173.5

Commitments under operating leases charged as an expense in the profit and loss account amounted to DKK 67.2 million for 1998 (DKK 53.4 million in 1997).

Purchase obligations In 1994, H. Lundbeck A/S entered into an agreement with Byk Gulden Lomberg Chemische Fabrik GmbH on the establishment of the 50/50 owned company Promonta Lundbeck Arzneimittel GmbH & Co.

Under the agreement Lundbeck is to take over the partner’s share when specific conditions have been fulfilled, although not later than in the year 2009. Lundbeck has thus undertaken to buy the partner’s share. However, Lundbeck’s purchase obligation is subject to a valuation guarantee that ensures that Lundbeck can extend the cooperation at five-year intervals if the price fixed at the time of acqui- sition is not in line with the general pricing for pharmaceutical companies in Germany.

The purchase price is dependent on Promonta Lundbeck’s CNS turnover in the year of acquisition, constituting a fixed proportion of same. The purchase price in the year 2009 is thus dependent on the future turnover trend in Promonta Lundbeck and cannot be deter- mined at the present time. The purchase price at 31 December 1998 would be a three-figure million amount exceeding DKK 500 million.

Any excess over the book values of assets and liabilities will be treated as goodwill and product rights. Under current German tax law, goodwill and product rights can be amortised for tax purposes.

Other purchase obligations The parent company has undertaken DKK 55.0 million (DKK 99.6 million in 1997) purchase obligations in respect of tangible fixed assets.

Research cooperation The Group is a party to multi-year research cooperation projects involving research and contractual obligations.

Obligations in respect of development loans with forgivable clauses The parent company has also accepted liabilities amounting to DKK 55.7 million (DKK 57.7 million in 1997) in respect of two develop- ment loans received successively in the period from 1989 to 1997. One of the loans will be repaid in the period from 1998 to 2001. The other loan is repayable or, alternatively, will be forgiven, depending on the marketing potential of the underlying development project.

52 Other contractual obligations The parent company has capital contribution obligations amounting to DKK 5.7 million (DKK 3.4 million in 1997) and entered into various service agreements amounting to DKK 24.6 million (DKK 19.5 million in 1997). 20 Contingent liabilities

Letters of intent The parent company has issued letters of intent to subsidiaries amounting to DKK 72.8 million (DKK 64.8 million in 1997). The parent company has also issued general letters of intent to subsidiaries.

Pending legal proceedings The Group is involved in a few lawsuits. The management does not believe that the outcome of any of these proceedings will have a material effect on the Group’s financial position.

Industry obligations The Group has normal industry return obligations. With the exception of Serdolect®, in respect of which provision has been made, see note 3, the Group does not expect material losses in this connection.

Price adjustment clause The Group supplies goods subject to a price adjustment clause to certain customers. The management does not anticipate material loss- es in this connection.

Joint taxation The company is jointly and severally liable with the other jointly taxed companies for the total corporation tax under the joint taxation.

21 Related party transactions

In 1998, the Group concluded a few transactions of minor importance with related parties.

53 Notes

22 Segment information

Primary segments: The company is only engaged in the business segment “Drugs for treatment of illnesses in the field of CNS”.

Secondary segments: The company’s sales are divided into the following secondary geographical segments: Turnover

1998 1997 DKKm DKKm

Denmark 165.3 175.2 Rest of Europe 2,604.9 2,213.4 USA 253.1 58.0 Rest of world 207.8 215.3 3,231.1 2,661.9

The company’s assets and additions to intangible and tangible fixed assets broken down by secondary geographical segments are as follows:

The year’s Segment assets* additions**

1998 1997 1998 1997 DKKm DKKm DKKm DKKm

Denmark 2,264.3 2,111.4 283.4 293.4 Rest of Europe 560.4 508.9 27.8 14.7 USA - - - - Rest of world 128.6 109.3 2.7 5.1 2,953.3 2,729.6 313.9 313.2

* Excl. value of tax assets. ** Intangible and tangible fixed assets.

54 23 Adjustments

Group: 1998 1997 DKKm DKKm

Depreciation 123.9 107.4 Increase/(decrease) in pensions and similar commitment 15.1 2.4 Increase/(decrease) in other provisions 50.9 - Adjustments 189.9 109.8

24 Working capital movement

Group: 1998 1997 DKKm DKKm

Increase/(decrease) in stocks - 9.9 25.6 Increase/(decrease) in receivables - 47.0 - 79.5 Increase/(decrease) in short-term debt 284.4 45.2 Increase/(decrease) in working capital 227.5 - 8.7

25 Cash and cash equivalents

Group: 1998 1997 DKKm DKKm

Securities, term to maturity less than three months 8.7 - Securities, term to maturity more than three months 585.3 366.3 Securities entered as cash and cash equivalents 594.0 366.3 Cash and cash equivalents 222.6 434.0 Cash and cash equivalents at 31.12 816.6 800.3

55 Environmental report

The Management’s declaration Lundbeck is a fast-expanding company. In 1998 Lundbeck’s health, safety and en- Consequently 1998 saw a large number of vironmental management system has been To Lundbeck internal and external openness production and facility modifications and tested in a pilot project and experiences about the company’s health, safety and extensions, which in turn resulted in a heavy have been gained, which will be useful when environmental activities is an integral part workload in order to ensure the necessary the management system is implemented of the company culture. health, safety and environmental approvals. at the Danish and English chemical produc- tion sites next year. We were therefore very pleased to learn During 1998 the health, safety and environ- that Lundbeck’s 1997 report received high mental strategies that amplify our health, The steadily increasing competition makes praise following a comparison with several safety and environmental policies were heavy demands on productivity. To Lund- other environmental reports prepared by drawn up. A very important element of the beck it is of vital importance that neither Danish and foreign companies. Spurred strategies is the necessity of integrating employees nor the surrounding environment by this positive outcome we have this year health, safety and environmental aspects are unduly inconvenienced by the increased invited independent review and as a result at the earliest possible stage of any com- productivity. To ensure this, health, safety this environmental report carries the pany activity. This could concern planning, and the environment must be integrated as signature of the auditor who has appraised development or management of projects a natural part in the company’s planning the presented work and data. related to development substances, build- processes. ings, equipment or utilities. It is our target to anticipate problems and possibly prevent Erik Sprunk-Jansen them from arising. President

56 Environmental policy

Our environmental policy, which guides all our activities, contains five pillars: We will continuously assess the environmental impact of our activities. We will seek to improve our environmental performance (subject to cost-benefit analyses); - by using environmentally sound processes and cleaner technology; - by making optimal use of raw materials and energy; - by reducing emissions from our facilities. Environmental requirements must be complied with before our production objectives can be regarded as met. We will be as open as possible about environmental aspects in our co-operation with authorities and the local community. We will provide our employees with the necessary training to ensure that they act in an environmentally responsible way and comply with in-house and external environmental requirements.

Health and safety policy

Lundbeck will do its utmost to ensure that work activities do not harm employees, either physically or mentally. Lundbeck regards compliance with working environment legislation as a minimum requirement that does not in itself fulfil the aim of our health and safety policy.

Approved by Lundbeck’s Supervisory Board, 1994

Statement from Deloitte & Touche

We agreed with the Company’s management to perform a review of certain figures in the H. Lundbeck A/S Environmental Report 1998 (the ”Report”). The Report is the responsibility of and has been approved by the management of the company.

The scope of our work and the procedures that we performed were agreed with the Company’s management and our work has been per- formed according to Professional Standards applied to State Authorised Public Accountants in Denmark. We have examined 1998 figures in the Report on the following environmental parameters: consumption of raw materials, energy and water, and waste and emissions related to the consumption of energy. We visited the company’s corporate office and the sites in Valby and Lumsås (Denmark) and Seal Sands (UK). Our procedures included interviews with staff in the environmental department and those employees at the sites who have been responsible for compiling the figures mentioned above as well as a review of documentation for these figures.

For the above mentioned environmental parameters we have: Assessed the procedures used by the environmental department to collect the figures from the sites. Examined the Report and compared the figures for 1998 presented in the Report to the figures that were submitted as a result of the data collection procedures. Compared the figures for 1998 presented in the Report to the company’s internal registrations and other supporting documentation. Assessed whether figures reported for 1998 are appropriately reflected in the Report. The work performed does not constitute an audit and does not provide the same level of assurance to the correctness of the figures reported as an audit would have done. We conclude that the company has applied detailed data collection procedures for the purpose of collecting 1998 figures on the environ- mental parameters for consumption of raw materials, energy and water, and waste and emissions related to the consumption of energy for inclusion in the Report. Further we find, that figures for 1998 submitted on the above mentioned environmental parameters are con- sistent with the source documentation presented to us and that these figures are appropriately reflected in the Report. Copenhagen, March 22, 1999 Deloitte & Touche Statsautoriseret Revisionsaktieselskab

Carsten Vaarby Preben J. Sørensen State Authorised Public Accountant (Denmark) State Authorised Public Accountant (Denmark)

57 In the following we summarise Lundbeck’s Strategies and management As a research-based company Lundbeck environmental performance. Details of our system develops and plans its own products and activities at Valby, Lumsås and Seal Sands work processes. The strategies focus in parti- can be found in the individual environmental During 1998 Lundbeck’s health, safety and cular on the fact that the preventive health, reports, which are annexed to the annual environmental strategies were edited further safety and environmental effort starts at the report and available from our headquarters and are now the foundation of our health, development and planning phases of any on request. safety and environmental management activity. Health, safety and the environment system. must therefore be integrated in the develop- The summary includes the most significant ment and planning phases, irrespective of environmental impacts resulting from Lund- With the strategies Lundbeck wants to stress activity type (pharmaceuticals, buildings or beck’s activities. This comprises conditions the importance of preventive health, safety utilities). regulated by our environmental approvals as and environmental efforts and a continual well as consumption of raw materials and improvement. This must be ensured by During the last couple of years Lundbeck has energy. means of a systematic approach, a well- been developing a management system defined organisational framework, and which combines health & safety with envi- Two health and safety indicators are being a qualified and dedicated effort rendered by ronment. From now on this system will be a introduced in this report, as they will both managers and employees. central tool in our health, safety and envi- contribute to the 1999 assessment of Lund- ronmental effort and it is meant to ensure beck’s health and safety efforts. Work- that we comply with our health, safety and imposed injuries as an indicator are not Key words from the environmental policies and strategies. included in this report. health, safety and environmental strategies In the development of the system we have focused on incorporating existing company Commitment and recognition management principles, which is why the Responsibility and environmental line organisation has a central position. awareness Furthermore we expect to benefit from Organisation and co-operation the extensive and well functioning quality Development and planning assurance systems already in place at Prevention and improvement Lundbeck. Communication Qualification of the entire organisation Follow up Global approach

Systematic approach

Mapping out Assessment Targets Execution Management & prioritising & action plans & follow-up reporting

Lundbeck’s health, safety and environmental management system is based on an international standard for environmental management systems (ISO 14001).

58 The core of the management system is the based on cleaner technology and substitu- As we value openness in all environmental systematic approach, which is applied to the tion of materials, the investments related to aspects we aim at reflecting this attitude continual effort at all organisational levels. the environment are difficult to single out. in the environmental reports prepared each As it is Lundbeck’s strategy with regard year. The manual and guidelines of the system to the environment to focus on prevention were written during 1998. They represent the rather than remedy, an account of the Lundbeck is engaged in several health, safety framework for the group’s health, safety and purification measures does not give a true and environmental activities. environmental efforts and have been tested picture of the total environmental invest- in a pilot project at the Lumsås site. The pilot ments. The company has joined the Responsible project has demonstrated how the system Care programme established by CEFIC can be applied locally and experience has (Federation of Chemical Industries in been gained which will be used at the imple- Organisation Europe). The programme provides guidelines mentation of the system at other sites. for the development of the chemical indus- The Environmental department and the try’s policy on health, safety and the envi- In 1999 the management system will be Health & Safety department are grouped in ronment. Our health, safety and environ- implemented at the chemical production a division that holds the responsibility of co- mental management system is an efficient sites at Lumsås and Seal Sands. ordinating the Group’s health, safety and tool in ensuring compliance with these environmental effort. The division reports to guidelines. The health and safety strategy has already the Senior Vice President, Supply Operations been translated into central targets for 1999. & Engineering. Lundbeck has signed a voluntary agreement These targets regard training and education on the reduction of VOC (Volatile Organic of the entire organisation and recording of The sites at Lumsås and Seal Sands have Compounds) emission to the atmosphere by data on chemical substances and materials. locally employed environmental staff. the chemical industry, an agreement that the Association of Danish Chemical Industries (FDKI) has entered with the Minister for Environmental economy Obligations and commitment the Environment. Collectedly the chemical industry fulfils the targets of the agreement, Operational costs include certain environ- Lundbeck’s environmental aspects are regu- but due to its rapid expansion Lundbeck has mental costs such as the staffing of our lated by approvals granted under stringent not been able to comply with its submitted environmental department, measurements environmental legislation. The approvals lay forecasts. and analyses, air and waste water treatment, down a number of conditions for the compa- handling and disposal of solid waste, envi- ny’s activities, together with action plans for In line with the company strategy of ronmental taxes, etc. However these costs environmental performance improvement. influencing the trend of affairs as well as have not been singled out in this report. the health, safety and environmental During 1998 one single breach of the regula- debate, Lundbeck holds a seat in a number It is difficult to give a true account of tory limit values occurred. This concerned of committees e.g. in the Confederation of Lundbeck’s investments related to the envi- the atmospheric emission of solvents and Danish Industries (DI), the Danish Association ronment. Most investments in cleaning or occurred at the Lumsås site. Improved sur- of the Pharmaceutical Industry (LIF), CEFIC purification measures such as waste water veillance measures are now in place in order and FDKI. treatment plants, funnels and other end-of- to predict and prevent such problems. pipe solutions can be singled out. But when it comes to investments in e.g. new produc- Working environment legislation and con- tion facilities or facility renovations, which ditions laid down in a number of approvals include preventive environmental measures regulate Lundbeck’s health and safety activities.

59 In the EU, attention is being paid to the fate In the design phase of the health and safety The handling of chemicals and substances of drug residues in the environment. Under indicators the starting point has been that is a main activity. Therefore an indicator the auspices of the EU, work has commen- an indicator might be connected to a condi- reflecting ways to prevent hazards related ced on the determination of investigation tion for improvement in the working envi- to the handling of chemicals and substances methods and preparation of guidelines on ronment. Improvements that are based on has been chosen. The indicator is based how to describe expected environmental prevention rather than remedy. A condition on the relation between the number of impacts from new products. Lundbeck fol- for improvement could be training and edu- chemicals used at Lundbeck and the lows this work which is expected to be some cation or improved tools for the assessment assessed chemicals entered into the data- years from completion. of health, safety and environmental aspects base maintained by the Health, Safety & such as the handling of chemicals and sub- Environment division. stances. Health and safety indicators The health and safety strategy as well as the During 1998 a search has been carried out main documents of the management system for indicators which directly or indirectly underline the fact that employees must be reflect the changes in Lundbeck’s health and qualified in order to solve health and safety safety standard. problems. As a consequence qualification, i.e. training and education, has been chosen as The search is based on the fact that tradi- an indicator. A registration of the overall tional health and safety indicators such as qualification level regarding health and safe- the number of work-imposed injuries do not ty will be carried out in 1999 based on the in a sufficiently detailed way describe the registration of completed educational activi- health and safety aspects that are relevant ties within health and safety. To raise the to Lundbeck, where accidents seldom occur health and safety standard a catalogue of and those that do occur rarely relate to the accessible educational and training activities company’s main activities. will be established.

Lundbeck’s activities

The chemical production sites at Lumsås, Denmark, and Seal Sands, UK, produce active pharmaceutical ingredients that are used for the manufacture of pharmaceuticals at the Valby production site. The Valby headquarters also house research and development activities.

Active pharmaceutical ingredients are manufactured by means of a series of organic syntheses. Simple compounds gain in complexity at each synthesis, which takes place in a chemical reactor with a solvent as reagent. The subsequent separation and isolation processes yield the desired substance. A large number of ancillary substances such as acids, bases and filter coal form part of the manufacturing process that also results in atmospheric and waste water emissions and production of chemical waste. Relative to the output of active pharmaceutical ingredients a rather large amount of raw materials is used.

The transformation from active pharmaceutical ingredient to finished pharmaceutical requires a number of excipients – mostly fillers such as starch and sugar. The active ingredient typically contributes with less than one fourth of the tablet weight.

60 Lundbeck’s activities and production sites

Research Chemical production: Pharmaceutical Sales & marketing & development Lumsås production: and Seal Sands Valby

Summary of the Group’s environmental impact

The summary deals with resource consump- tion and emissions related to the activities of the Lundbeck Group.

Summarised data on resource comsumption and emissions from Lundbeck’s 1998 activities at Valby, Lumsås and Seal Sands

Lundbeck Energy Atmospheric emission Oil: 20,540 MWh from production Gas: 3,000 MWh Solvents: 111 t Electricity: 24,900 MWh District heating: 15,720 MWh

Raw materials for production Waste Active pharmaceutical ingredients Chemical waste: 4,640 t Organic solvents: 2,290 t Other waste: 740 t Other raw materials: 2,960 t

Water Waste water: 239,000 m3 Potable water: 121,000 m3 Solvents: 23 t Raw water: 126,000 m3 Organic matter, COD: 102 t Nitrogen: 0.5 t

Product 23 million packs of pharmaceuticals 61 Net turnover (DKKm)

3,000 2,500 2,000 1,500 1,000 500 0 1994 1995 1996 1997 1998

The rapid growth experienced by the Lundbeck Group in 1998 is also reflected in resource consumption and emissions.

Water consumption Raw materials for production Energy consumption 1,000 m3 1,000 tonnes 1,000 MWh 250 6 70 60 200 5 50 4 150 40 3 100 30 2 20 50 1 10 0 0 0 1995 1996 1997 1998 1995 1996 1997 1998 1995 1996 1997 1998 Valby Valby Valby Seal Sands Seal Sands Seal Sands Lumsås Lumsås Lumsås

Lundbeck’s water consumption rose by As a result of the production increase the In 1998 Lundbeck’s energy consumption almost 20% to around 247,000 m3, out of 1998 raw materials consumption reached totalled almost 64,000 MWh, which is an in- which the majority was raw water from a record height of 5,280 tonnes – up 40% crease of 10%. Extended research and devel- Lundbeck’s own wells used primarily for on 1997. Solvents account for 50% of the opment activities have led to increased ven- process cooling, but potable water for steam total consumption. The majority of the raw tilation and heating requirements, whereas production and sanitary use also contributed. materials are used at the production of production extensions did not to the same The increase is caused by extensions in pro- active pharmaceutical ingredients. extent contribute to the increase as these duction as well as research and development. extensions were counterbalanced by a more At Lumsås initiatives have been taken to The majority of active pharmaceutical intensive use of the production facilities. reduce the consumption of water by intro- ingredients are produced at Lundbeck’s own ducing cooling systems with re-circulation production plants, but some are subcontract- and the expected result is a considerable ed. In total 33 tonnes were used for the reduction in the coming years. manufacture of pharmaceuticals. A small part of the active pharmaceutical ingredients produced by Lundbeck were delivered to other pharmaceutical companies as bulk products.

62 Solvent emission to the atmosphere Waste water Chemical waste Tonnes 1,000 m3 1,000 tonnes 120 250 5

100 200 4 80 150 3 60 100 2 40 20 50 1

0 0 0 1995 1996 1997 1998 1995 1996 1997 1998 1995 1996 1997 1998 Valby Valby Valby Seal Sands Seal Sands Seal Sands Lumsås Lumsås Lumsås

Solvent emission saw a rise of 55% on 1997 The discharge of waste water increased by Chemical waste totalled 4,640 tonnes, up to 111 tonnes, mainly due to changes in the around 15% to 239,000 m3. Cooling water almost 30% on 1997. It mainly derives from production composition together with a pro- from the production of active pharmaceu- the production of active pharmaceutical duction increase. The emission is regulated tical ingredients which does not require ingredients and is discharged in accordance by the environmental approvals but in addi- treatment prior to emission accounts for the with local regulations. Other waste, deriving tion we continuously strive to reduce solvent majority of the waste water. The remainder from other company activities, totalled 740 emission. of the waste water from the three produc- tonnes. Of this 25% were recycled, around tion sites is treated prior to emission. 50% were incinerated and the remainder was landfilled.

Environmental reports on the sites at Valby, Lumsås and Seal Sands are annexed to the annual report. 63 Human Resource Management

To live up to our vision we must be target- A special role Lundbeck wishes to provide an ed and proactive in our work. We must attractive and inspiring working ensure that Lundbeck remains an attractive The managers at Lundbeck have a very environment. We want to create and workplace, where the development of new special obligation. They must be the natural promote a corporate culture that pharmaceuticals goes hand in hand with representatives of our values and attitudes. is based on respect for the individual, a commercially oriented management phi- motivation and quality of life. losophy. Lundbeck is an internationally oriented com- pany. Our managers therefore know, work Lundbeck’s overall vision is the driving force with and respect people from all continents for all employees in the organisation. On and cultures. this basis we plan the development of the organisation’s greatest asset: our employees. We seek continuous training and develop- ment. In 1998 the first step was taken to strengthen management training and other Our social responsibility in-house training through the establishment of a department for Human Resource Lundbeck has a social responsibility for its Development. This department will develop, employees and lives up to that through a coordinate and offer training programmes management philosophy that is based on for all our employees so that everyone at “Respect for the Individual”. Lundbeck can help the company to achieve the goals we have set ourselves. Lundbeck wishes to be known as: We are going to introduce a personal an attractive and respected company appraisal system in order to identify each employee’s precise need for development, a company whose fundamental principle supplementary training and a satisfying is ”Respect for the Individual” career.

an international, modern and profes- We shall gradually establish training and sionally managed company exchange jobs in the organisation as a recruitment base for coming managers and a company whose management specialists, both nationally and internation- philosophy is based on delegation of ally. Lundbeck wants to be able to offer a responsibility and authority and on number of jobs that provide training and confidence and faith in its employees experience as a recruitment base for selected and their skills specialist functions.

a company with a structure that is characterised by fast and flexible decision-making processes

a company in which everyone works together to achieve the common goals.

64

65 Research and Development

Lundbeck aims to be a world leader Research is the very basis of Lundbeck’s within research and development of activities. Only through targeted, effective integrated treatment concepts for and focused research can we ensure that psychiatric and neurological diseases. we shall be able to continue to bring new, epoch-making pharmaceuticals to the market to the benefit of the many people suffering from psychiatric and neurological diseases.

By concentrating solely on research and development within psychiatry and neurol- ogy we are able to attract and keep the highly skilled employees – both Danish and other nationals – on whom fulfilment of our vision depends.

66 As a result of our targeted action within New research facilities All chemistry-related disciplines are now selected fields of research, we are today housed in a 3,000 m2 chemistry laboratory. members of the international elite. We are Lundbeck has a long-standing and inter- Owing to the company’s rapid growth, thus living up to our goal of quality, crea- nationally recognised tradition for drug Lundbeck’s present medicinal chemistry tivity and the highest ethical standards in discovery and research in diseases of the laboratory is already fully utilised. Construc- everything we do. central nervous system, CNS. In the last tion of a new 3,000 m2 chemistry laboratory few years Lundbeck has strengthened this wing has therefore been started and is ex- In the last 10 years, Lundbeck has increased research still further by improving its pected to be completed in mid-2000. its research and development activities by facilities for Medicinal Chemistry and an average of 24% per year. In 1998, these strengthening Computational Chemistry At the beginning of 1999 Pharmacological activities accounted for 19% of turnover, and, lastly, by introducing new disciplines, Research moved into a new 8,300 m2 labo- corresponding to DKK 619 million. such as combinatory chemistry and High ratory building and now has three times as Throughput Screening. much laboratory space as before. Our aim is for the growth in our research spending to continue to exceed the growth in turnover until such spending, in relation to turnover, clearly exceeds the industry average.

67 New paths to Development projects Lu 28-179 has a selective effect on the new pharmaceuticals brain’s sigma-receptors and, in a number of S-citalopram generally recognised animal studies, it has In the last few years the selection of shown a surprisingly potent effect, with even pharmaceutical candidates has been The drug citalopram is a racemate, i.e. a mix- very small doses producing activity. optimised by using a large number of ture of two substances - called enantiomers pathophysiological animal models that - which are mirror images of each other. We expect to commence phase II clinical are able to predict the clinical effect in The serotonin reuptake inhibitor activity, studies at the end of 1999. patients. Increased focus on area-related which is the active mechanism for treatment methods has also improved selection of depression, is found in only one of the Sleep disturbance - THIP of substances with new pharmacological enantiomers. In animal models, it has been profiles. found that the active enantiomer - S-cita- In collaboration with the German Max lopram - has an effect corresponding to that Planck Institute in Munich, Lundbeck has Although Lundbeck has invested heavily of the drug citalopram. commenced a new project for treatment in research for many years, we plan to of certain forms of sleep disturbance. intensify our research activities in the S-citalopram is now in clinical development time ahead, partly by increasing our phase I. Changing from the racemate to The project is based on the substance THIP, own research and partly by entering into the enantiomer of citalopram is expected to which has been known since the end of the more cooperation agreements with ex- result in a considerable reduction of the 1970s when Lundbeck mapped potential ternal research bodies, both in Denmark daily dose, whereby the risk of possible inter- applications for the substance in cooperation and elsewhere. actions will also be reduced. with the Royal Danish School of Pharmacy.

One of the reasons for doing that is Separating the two forms so that only the Recent studies have proved that the sub- to strengthen our neurochemical and active molecule is included in the finished stance has a beneficial effect on the quality molecular biology research in order to drug will result in an improved and purer of sleep. ensure that in this field, too, Lundbeck drug that we shall be able to offer patients has access to the latest technologies from year 2002, onwards. Discontinuation of Lu 25-109 within drug discovery. We expect S-citalopram to take over a sub- In August 1998 we had to discontinue a stantial part of the present use of Cipramil® development project within the treatment of and similar drugs, because it is unique in Alzheimer’s disease. In phase II studies in Alz- offering patients optimum effect at lowest heimer patients, the substance in question, dose and with less impact on the organism. Lu 25-109, proved ineffective in the treat- ment of Alzheimer’s disease, despite having Anxiety - Lu 28-179 an optimum and extremely interesting phar- macological profile. Lundbeck has commenced clinical phase I studies on a substance, Lu 28-179, which is However, Lu 25-109, which is characterised based on a new pharmacological principle pharmacologically as an M1 agonist and an for treatment of anxiety. M2/M3 antagonist, has such an interesting biochemical profile that it is at present being investigated whether the substance is effective within other indications.

68 69 Success in the USA

In 1998 citalopram was successfully launched Competition in the American market is in- on the American market under the name credibly tough, and since Celexa® is the Celexa®. most recent of five SSRI products, a hard battle will have to be fought for every single Lundbeck’s strategic partner in the USA, market share. Forest Laboratories, is responsible for intro- duction and sale of the product in the Forest Laboratories does not do any research American market. With sales of antidepres- itself but has instead specialised in develop- sants expected to reach USD 6 billion in ing and selling other companies’ products 1998, the USA is the biggest single market on the American market. This made Forest in the world. Laboratories the natural choice when Lund- beck was deciding to whom it should entrust the marketing and sale of its products in the USA.

70 Sales of Celexa® since the introduction in September 1998

Number of new Market share of new prescriptions prescriptions 40,000 6% 5.5% 35,000 5% 30,000 4.5% 4% 25,000 3.5% 20,000 3% 2.5% 15,000 2% 10,000 1.5% 1% 5,000 0.5% 0 0% Week 36 40 45 50 1 2 3 4 5 6 7 Number of new prescriptions Market share of new prescriptions

In March 1998 Lundbeck and Forest ex- 1,500 medical representatives Lundbeck’s American partner, Forest panded their cooperation agreement to Laboratories, develops, produces and include coming products from Lundbeck’s In July 1998 the American health authorities sells both prescription and OTC drugs, research. The agreement is based on a approved citalopram, under the name primarily on the American market. In mutually voluntary principle concerning Celexa®, for sale on the American market. the 1997/1998 financial year, Forest inclusion of products in the cooperation. In September 1998 a sales force of more had a turnover of USD 474 million and Two of Lundbeck’s products, Lu 25-109 and than 1,500 medical representatives from a profit of USD 36.6 million. Lu 28-179, have already been included. Forest Laboratories and Parke-Davis – with whom Forest has entered into a co-promo- Forest Laboratories is listed on the Under the agreement the two parties share tion agreement – began selling Celexa® all American Stock Exchange. Its share both the revenue from the products and the over the USA. price reached USD 55 3/16 at the end development costs. of 1998, having risen by 117% during Since then, we have been able to follow the the year. successful introduction of Celexa® week by week. By the end of 1998 the drug had achieved a market share of no less than 2.7% of the total SSRI market, while the share of new prescriptions was 4.3%.

71 Lundbeck’s position in the global market

The situation in the Lundbeck’s pharmaceutical market market position

In 1997 the global pharmaceutical market Lundbeck is one of Europe’s leading suppliers amounted to USD 244 billion. North of antidepressants and antipsychotic drugs. America accounted for 39% of the market, Europe for 30%, and the rest of the world for Cipramil®, which has been introduced in 31%. all the European markets, was one of the first SSRIs (Selective Serotonin Reuptake On average, the European pharmaceutical Inhibitors) and represents a milestone in the market grew by 2% per year in USD from treatment of depression. 1992 to1997, and 6% measured in local currency. The North American market, on the In 1998 Cipramil® had a market share of other hand, grew by 9% per year in USD. around 10% in Europe and was the third biggest product within antidepressants. In Europe the five largest markets – Germany, France, Italy, the UK and Spain – Cipramil® is the leading antidepressant account for more than 70% of the market. in seven European countries, with market shares ranging from 20% to 44%. At the There are many reasons for the higher same time, its market position is improv- growth in North America than in Europe. ing in all the large European countries They include the fact that the American – Germany, France, the UK, Spain and Italy – market is more homogeneous than the where Cipramil® has only been on the mar- European market and that health authorities ket for a few years. have forced prices down in several European countries, while in the American market, In 1998 the European market for antidepres- drug prices rise more in step with inflation sants grew 15%. Taken together, SSRIs have than they do in Europe. a market share of more than 64% in Europe.

In 1997 the global CNS market had a value I 1998 Cipramil® was also launched success- of USD 34 billion, corresponding to 14% of fully in the USA under the name Celexa®. the total pharmaceutical market. The CNS The American market for antidepressants is market grew by 7% in USD, and 12% in local the largest market in the world, with total currency. sales in 1998 expected to be USD 6 billion.

Geographically, the largest CNS markets are Today, Lundbeck’s product assortment within North America and Europe, with 51% and antipsychotics includes drugs for both acute 30%, respectively, of the world market. and maintenance treatment of patients with schizophrenia and other psychiatric diseases. While the total pharmaceutical market stagnated in 1997, with growth at only In 1998 the introduction of new, atypical 0.4%, the CNS market grew by 7%. The antipsychotics with a more favourable bigger growth reflects the introduction of side-effect profile led to 25% growth in the new and improved drugs for treatment European market for these drugs. of depression, schizophrenia, Parkinson’s disease, dementia, etc. Lundbeck has about 30% of the market for depot antipsychotics in Europe. This market accounts for around 20% of the total European market for antipsychotics. With Serdolect® and other oral antipsychotic products, Lundbeck is one of the leading suppliers in Europe.

72 73 Lundbeck’s products

Lundbeck’s research is concentrated on the Lundbeck GmbH & Co. in Germany also development of new and improved pharma- markets three antipsychotic drugs: Bute- ceuticals for treatment of diseases of the ridol®, Lyogen® and Taxilan®. Of these, central nervous system. Lyogen® in particular has contributed to Lundbeck GmbH & Co.’s position in the Thirty years ago there were about 50 psy- German antipsychotic drug market. chopharmacological drugs on the markets, six of which were developed by Lundbeck. Each preparation has meant an advance Cipramil® now registered in the medicinal treatment of psychiatric in 67 countries diseases. In 1998 Cipramil® gained approval in 10 Today, Lundbeck has preparations for effec- more countries, including the USA, and was tive treatment of a number of diseases of registered in 67 countries by the end of the the central nervous system, such as schizo- year. phrenia, depression and panic disorder, and more preparations are in development. Cipramil® is marketed as a preparation that is particularly suitable for elderly, depressive The primary aim of Lundbeck’s research patients. The reason for this is that the prod- and development activities is to develop uct has significant advantages for precisely products that improve the quality of life of this group of patients. Cipramil® is the most the patients. selective of the SSRI preparations on the market. Cipramil® has a remarkably low risk Serdolect® is the latest antipsychotic drug of interaction with other drugs, making it developed by Lundbeck. It differs distinctly particularly suitable for elderly patients. from the traditional antipsychotic drugs by acting on both the so-called positive Cipramil® is marketed in collaboration with symptoms and the negative symptoms of Bayer in Germany, Recordati in Italy and schizophrenia. The traditional preparations Almirall Prodesfarma in Spain. act only on the positive symptoms. The substance is thus considerably more effec- tive than the classic preparations for treat- ment of schizophrenia and does not have their unpleasant side-effects, which are reminiscent of Parkinson’s disease. These side-effects are often the reason why patients stop taking the medicine they need to protect them against relapses.

Lundbeck’s first antipsychotic drug, Truxal®, was marketed as long ago as 1958. Later, the drugs Cisordinol® and Fluanxol® were added to the assortment. These drugs are available in several forms, making it possible to use the same active substance in all phases of the psychotic disease, from the acute episode to the maintenance phase, when the purpose of the treatment is to prevent a relapse.

74 Lundbeck’s products Antipsychotics Lyogen® (fluphenazine) Antidepressants Buronil®/Bunil® Indication: psychotic disorders (melperone) Cipramil®/Seropram®/Cipram®/Celexa® Indication: psychotic disorders Lyogen® Depot (citalopram) (fluphenazine decanoate) Indication: depression, panic disorder Buteridol® Indication: maintenance treatment of (haloperidol) chronic psychotic disorders Deprilept® Indication: schizophrenia and other (maprotiline) psychotic disorders Serdolect®/Serlect® Indication: depression (sertindole) Cisordinol®/Clopixol®/Ciatyl-Z® Indication: schizophrenia Deanxit® (zuclopenthixol) (flupenthixol + melitracene) Indication: schizophrenia and other psychotic Taxilan® Indication: mild depression disorders, together with anxiety, restlessness (perazine) and insomnia Indication: psychotic disorders Dixeran® (melitracene) Cisordinol® Depot/Clopixol® Depot/ Truxal®/Truxaletten® Indication: depression Ciatyl-Z® Depot (chlorprothixene) (zuclopenthixol decanoate) Indication: schizophrenia and other Fluanxol®/Fluanxol® Mite Indication: maintenance treatment of psychotic disorders, anxiety and restlessness, (0.25 mg, 0.50 mg, 1 mg) chronic psychotic disorders withdrawal symptoms in drug addicts (flupenthixol) Indication: mild depression Cisordinol-Acutard®/Clopixol-Acutard®/ Clopixol-Acuphase®/Ciatyl-Z-Acuphase® Anti-Parkinson’s products Noritren®/Nortrilen®/Sensaval® (zuclopenthixol acetate) (nortriptyline) Indication: acute psychotic episodes, Parkinsan® Indication: depression exacerbation of psychotic disorders (budipine) Indication: symptomatic treatment of Saroten®/Sarotex®/Redomex® Fluanxol®/Depixol® Parkinson’s disease (amitriptyline) (flupenthixol) Indication: depression Indication: schizophrenia and other psychotic disorders Tymelyt® (lofepramine) Fluanxol® Depot/Depixol® Inj. Indication: depression (cis(Z)-flupenthixol decanoate) Indication: maintenance treatment of chronic psychotic disorders

75 Lundbeck worldwide

For further information Parent company Belgium please see our homepage: Lundbeck S.A. www.lundbeck.com Denmark Canada H. Lundbeck A/S Lundbeck Canada Inc. The Czech Republic Lundbeck Ceska Republika s.r.o. Synthesis factories: Denmark Lundbeck Pharma A/S Denmark A/S Lundbeck Overseas H. Lundbeck A/S Estonia United Kingdom Lundbeck Eesti AS Lundbeck Pharmaceuticals Ltd. Finland OY H. Lundbeck AB France Subsidiaries: Lundbeck SA Germany Australia Lundbeck GmbH & Co Lundbeck Australia Pty Ltd Greece Austria Lundbeck Hellas S.A. Lundbeck Arzneimittel Ges.m.b.H.

76 Hungary Slovakia Representative offices: Lundbeck Hungary Ltd. Lundbeck Slovensko s.v.o. Ireland Slovenia Bulgaria Lundbeck (Ireland) Limited Svetovalno Podjetje D.O.O. P.R. China Italy Spain Egypt Lundbeck Italia S.p.A. Lundbeck España S.A. Iceland Latvia Sweden India SIA Lundbeck Latvia H. Lundbeck AB Israel Lithuania Switzerland Japan UAB Lundbeck Lietuva Lundbeck (Schweiz) AG Mexico The Netherlands South Africa Pakistan Lundbeck B.V. Lundbeck South Africa (Pty) Limited Russia New Zealand United Kingdom Saudi Arabia Lundbeck New Zealand Limited Lundbeck Limited Singapore Norway United Arab Emirates H. Lundbeck A/S USA Poland Lundbeck Poland Sp.z.o.o. Portugal Foundations Lundbeck Portugal Lundbeck International Neuroscience Foundation

77 www.lundbeck.com

78 From electronic visiting card Besides having the benefit of accessibility well visited, a homepage must be updated to active information channel and independence of time zones, visitors to frequently. That will happen with Lundbeck’s our homepage can: homepage in 1999. In a world in which hardware is stand- ardised and software is outdated obtain information on psychiatric and The first big measure will be the develop- within a few months, one thing is neurological diseases, obtain more ment of an independent Investor Relations certain: the use of web-based technol- information about PsychiatryLink and Service, where both national and interna- ogy for communication in modern com- the Lundbeck International Psychiatric tional shareholders and investors can follow panies is rapidly gaining ground. This Institute the development of Lundbeck’s share price technology is a catalyst for optimisa- after its flotation. tion of the principal strategic resource look for job vacancies at Lundbeck and of many companies including Lundbeck: read about recruitment procedures Knowledge. analyse Lundbeck’s financial situation and For several years now, Lundbeck has been development, find detailed contact data using the Intranet for sharing knowledge for our subsidiaries, subscribe to press within the Group, for exchanging experience releases and for distributing information. read about Lundbeck’s vision, mission Lundbeck launched its password protected and strategy, Lundbeck‘s history and the homepage www.psychiatrylink.com in Lundbeck Foundation, find out about the 1997. This homepage is addressed primarily composition of the Group Supervisory to doctors and psychiatrists. Board and the Board of Management.

Lundbeck’s first homepage was a rather One of the main arguments for investing modest ”electronic visiting card” on the time and resources in a well-functioning Internet. homepage is precisely the potential and many uses offered by the Internet to highly In 1998 we found that the technology and qualified job-seekers all over the world. the Internet itself were ripe for a more distinctive presence. Therefore, in December As one of the world’s leading companies 1998, Lundbeck launched a redesigned within research and development of homepage with greatly improved function- integrated treatment concepts for psy- ality for the new electronic public. chiatric and neurological diseases, it is of vital importance for Lundbeck to have the Our new homepage gives users all over the absolutely best employees. world direct 24-hour access to information about Lundbeck’s activities and continued Homepages are a flexible and dynamic news development. and information medium that develop on the basis of constructive suggestions and input from their users. To work well and be

79 The Lundbeck Foundation’s Award for Outstanding Research

The Lundbeck Foundation’s Award for Out- standing Research was established in 1987 in memory of P. V. Petersen, M.Sc., who had been the head of Lundbeck’s research for many years. The foundation was set up in 1954 by Grete Lundbeck, the widow of the company’s founder. Each year, the Lundbeck Foundation makes substantial donations to research projects at universities and other institutes of higher education.

This year, the Lundbeck Foundation’s Award for Outstanding Research, amounting to DKK 300,000, has gone to Professor Lars Farde, M.D., of the Karolinska Institute, Stockholm, for his very extensive and original scientific work, which has added greatly to our understanding of how antipsychotic drugs affect the brain in people suffering from schizophrenia.

In his work, Professor Lars Farde has con- tributed particularly to the development and use of the so-called molecular imaging techniques, including especially Positron Emission Tomography (PET), which is used in studies of the brain’s signalling systems.

Using PET in clinical studies, Professor Lars Professor Lars Farde was awarded The Lundbeck Foundation research prize in 1999. Farde has shown how antipsychotic drugs affect the brain’s dopamine systems in psychiatric patients in active treatment. Recently, Professor Lars Farde has again Award. These were followed by Poul Janssen’s This work has not only aroused considerable attracted international attention by demon- Schizophrenia Award in 1994 and The Leber international attention but has also resulted strating for the first time ever a relation- Prize, NARSAD, New York, in 1997. in the formulation of new international ship between the distribution of the brain’s guidelines for treatment of schizophrenia, dopamine receptors and the individual Professor Lars Farde is a member of several including particularly the use of lower patient’s personality traits. These research scientific societies and has produced a sub- dosages for treatment of the disease, which results will be of particular importance in stantial body of scientific literature, having means fewer side-effects. the attempts to understand why people published no fewer than 127 original works. suffering from schizophrenia almost always also suffer from social isolation and an Professor Lars Farde is the 12th research inability to maintain close relationships. scientist to receive the Lundbeck Founda- tion’s Award for Outstanding Research. The In 1990 Lars Farde received Ole J. Rafaelsen’s award has previously gone to researchers Award for Young Researchers in Copenhagen. within organic chemistry, pharmacology, In 1992 he received both Max Hamilton’s basic biomedicine and neuroscience. Memorial Award and Marie Curié’s Research

80 In the past 12 years, the Lundbeck Foundation research prize has been awarded to:

1987 1991 1996 P.V. Petersen, M.Sc. Professor Lars-Inge Larsson Professor Per Andersen Development of psychopharmacological Molecular cell biology Neurophysiology and other medical drugs 1993 1997 1988 Professor Carl-Gerhard Gottfries Research Professor Peter E. Nielsen Professor Mogens Schou Psychiatry and neuropathology Molecular biology Psychopharmacology 1994 1998 1989 Professor Niels A. Lassen Professor Thue W. Schwartz Professor Povl Krogsgaard-Larsen Neurophysiology Molecular pharmacology Pharmacology 1995 1999 1990 Professor Arvid Carlsson Professor Lars Farde Professor Erik Strömgren Psychopharmacology Neurophysiology Psychiatry

81 Photos: Thomas Grøndahl, et al. Design and production: CreaVision Reproduction: Wilken Repro Printed by: From & Co

March 1999 H. Lundbeck A/S Tel: +45 3630 1311

9 Ottiliavej Fax: +45 3630 1940

DK-2500 Copenhagen - Valby e-mail: [email protected]

Denmark Reg. no. 22.472 Environmental report 1998 Lundbeck, Valby

This report is part of the Lundbeck Group’s environmental report for 1998. The environmental report comprises a general part, which features in Lundbeck’s annual report, and three separate reports on Lundbeck’s production sites at Valby, Lumsås and Seal Sands, respectively. This report concerns the Valby site and contains a management report on the general aspects, followed by an account of the actual environmental performance.

Management report tion of raw materials and energy, and and development activities. The number production size. Together these aspects of employees has risen and we have We are pleased to present our 1998 reflect resource consumption and enlarged our premises. This has also led environmental report as information for emission, and thus picture the environ- to increased emission and resource companies, institutions, employees and mental impact related to production. consumption. others interested in our environmental The Environmental department prepared performance. this environmental report in co-opera- tion with employees from the Valby Noise abatement plan In the report we have aimed at present- site, who have contributed with data ing the significant environmental im- and other information. In 1998 we completed the first step pacts of our activities. This comprises in our noise abatement plan as a conditions regulated by our environ- In 1998 the production of pharmaceu- consequence of our overall environmen- mental approvals as well as consump- ticals increased and so did our research tal approval. Noise emission from some

Statement from Deloitte & Touche

The 1998 figures in the environ- mental report on the environ- mental parameters: consumption of raw materials, energy and water, waste and emissions related to the consumption of energy were included in the review performed by Deloitte & Touche. See the full Statement from Deloitte & Touche on page 52 in Lundbeck’s annual report.

Appendix to Lundbeck’s Annual Report 1998

12 1 sources was eliminated and consequent- Soil contamination has been ascertained Substitution Health & safety Address ly the noise level in the surroundings in connection with several building H. Lundbeck A/S was reduced by 5 dB(A). The final phase activities. Considerable amounts of soil The project of dichloromethane substi- During 1998 we defined two indicators 9 Ottiliavej of the noise abatement plan will be have been transported to a treatment tution is ongoing and the consumption which directly or indirectly reflect the DK-2500 Copenhagen-Valby effected by the end of the year 2000. plant according to instructions from the has fallen considerably. Introducing fil- changes in Lundbeck’s health and safety Telephone: +45 3630 1311 Copenhagen municipality. tration of the exhaust air by means of standard. Both indicators are connected active carbon filters has reduced labora- to a condition for improvement in the Company profile New boiler unit tory emissions. working environment. The company is headquartered in the municipality of Copenhagen, Denmark. Energy savings Situated in an industrial area at Valby the company headquarters contain In 1998 a new boiler unit for steam Qualification i.e. training and education administration, sales, marketing, research, development and pharmaceutical production was established after the During 1998 energy savings were in Packaging related to health and safety has been production. In the pharmaceutical production pharmaceuticals are produced environmental approval had been focus. An energy savings committee chosen as indicator. The other indicator from active pharmaceutical ingredients manufactured at our chemical pro- obtained. The unit has a high environ- has been nominated with the aim of As environmental aspects related to reflects ways to prevent hazards related duction sites at Lumsås, Denmark, and Seal Sands, UK, or delivered by external mental standard. The emission of nitro- drawing up an energy savings action packaging are in focus Lundbeck intends to the handling of chemicals and sub- suppliers. gen oxides is minimized by means plan, and a mapping-out of the most to strengthen its efforts in this area. stances, and it bases on the relation of waste gas re-circulation. The unit energy consuming installations has Requirements related to patient safety, between the number of chemicals used Supervisory authorities feeds on gas oil with a very low sulphur commenced. product shelf life and user-friendliness at Lundbeck and the general knowledge Copenhagen municipality content (0.05%) which contributed of the packaging must however not be of chemicals and substances presented to a considerable reduction in the emis- Furthermore training of employees in neglected. by the Health, Safety & Environment Trade and main activities sion of sulphur. Due to the granted charge of energy consuming utilities has division. Trade: Pharmaceutical industry. limit values for emission, noise and been carried out. The aim is an improved In 1999 the drawing up of a packaging The main activity is development and laboratory testing of new active self-inspection some external stake- understanding of and commitment to policy as well as a strategy and an pharmaceutical ingredients and production of pharmaceuticals from active holders challenged the environmental energy savings. action plan will commence. This has a Limit values pharmaceutical ingredients and inactive excipients. approval of the unit. dual purpose: To minimize the consump- A number of energy savings have been tion of packaging and to ensure that The Valby site received neither com- Environmental approvals effected, such as improved heat re- the necessary packaging is made from plaints nor injunctions from authorities Lundbeck’s activities at Valby are regulated by three environmental approvals: Cleaning out of soil circulation in the largest dehydration environmentally friendly materials. or external stakeholders and no limit One covering chemical development; unit and extended re-circulation of value breaches occurred in 1998. One covering a new boiler unit; Co-operation on the handling of con- condensed steam from the research An overall environmental approval covering all other activities. taminated soil has been agreed with the premises. municipality of Copenhagen in order to Significant environmental impacts render the cleaning out more effective The research and development of new pharmaceutical substances together and ease the administrative burdens. with the production of pharmaceuticals involve consumption of water, energy Due to former industrial activity more and chemical substances including organic solvents. Additional aspects are than 50% of Lundbeck’s premises at chemical waste, atmospheric emission of organic solvents, noise, waste water Valby are registered as chemical waste discharge, soil and groundwater. depots.

Number of employees 1295

2 3 sources was eliminated and consequent- Soil contamination has been ascertained Substitution Health & safety Address ly the noise level in the surroundings in connection with several building H. Lundbeck A/S was reduced by 5 dB(A). The final phase activities. Considerable amounts of soil The project of dichloromethane substi- During 1998 we defined two indicators 9 Ottiliavej of the noise abatement plan will be have been transported to a treatment tution is ongoing and the consumption which directly or indirectly reflect the DK-2500 Copenhagen-Valby effected by the end of the year 2000. plant according to instructions from the has fallen considerably. Introducing fil- changes in Lundbeck’s health and safety Telephone: +45 3630 1311 Copenhagen municipality. tration of the exhaust air by means of standard. Both indicators are connected active carbon filters has reduced labora- to a condition for improvement in the Company profile New boiler unit tory emissions. working environment. The company is headquartered in the municipality of Copenhagen, Denmark. Energy savings Situated in an industrial area at Valby the company headquarters contain In 1998 a new boiler unit for steam Qualification i.e. training and education administration, sales, marketing, research, development and pharmaceutical production was established after the During 1998 energy savings were in Packaging related to health and safety has been production. In the pharmaceutical production pharmaceuticals are produced environmental approval had been focus. An energy savings committee chosen as indicator. The other indicator from active pharmaceutical ingredients manufactured at our chemical pro- obtained. The unit has a high environ- has been nominated with the aim of As environmental aspects related to reflects ways to prevent hazards related duction sites at Lumsås, Denmark, and Seal Sands, UK, or delivered by external mental standard. The emission of nitro- drawing up an energy savings action packaging are in focus Lundbeck intends to the handling of chemicals and sub- suppliers. gen oxides is minimized by means plan, and a mapping-out of the most to strengthen its efforts in this area. stances, and it bases on the relation of waste gas re-circulation. The unit energy consuming installations has Requirements related to patient safety, between the number of chemicals used Supervisory authorities feeds on gas oil with a very low sulphur commenced. product shelf life and user-friendliness at Lundbeck and the general knowledge Copenhagen municipality content (0.05%) which contributed of the packaging must however not be of chemicals and substances presented to a considerable reduction in the emis- Furthermore training of employees in neglected. by the Health, Safety & Environment Trade and main activities sion of sulphur. Due to the granted charge of energy consuming utilities has division. Trade: Pharmaceutical industry. limit values for emission, noise and been carried out. The aim is an improved In 1999 the drawing up of a packaging The main activity is development and laboratory testing of new active self-inspection some external stake- understanding of and commitment to policy as well as a strategy and an pharmaceutical ingredients and production of pharmaceuticals from active holders challenged the environmental energy savings. action plan will commence. This has a Limit values pharmaceutical ingredients and inactive excipients. approval of the unit. dual purpose: To minimize the consump- A number of energy savings have been tion of packaging and to ensure that The Valby site received neither com- Environmental approvals effected, such as improved heat re- the necessary packaging is made from plaints nor injunctions from authorities Lundbeck’s activities at Valby are regulated by three environmental approvals: Cleaning out of soil circulation in the largest dehydration environmentally friendly materials. or external stakeholders and no limit One covering chemical development; unit and extended re-circulation of value breaches occurred in 1998. One covering a new boiler unit; Co-operation on the handling of con- condensed steam from the research An overall environmental approval covering all other activities. taminated soil has been agreed with the premises. municipality of Copenhagen in order to Significant environmental impacts render the cleaning out more effective The research and development of new pharmaceutical substances together and ease the administrative burdens. with the production of pharmaceuticals involve consumption of water, energy Due to former industrial activity more and chemical substances including organic solvents. Additional aspects are than 50% of Lundbeck’s premises at chemical waste, atmospheric emission of organic solvents, noise, waste water Valby are registered as chemical waste discharge, soil and groundwater. depots.

Number of employees 1295

2 3 Environmental performance At the selection stage we have focused The data on the consumption of raw The production gives rise to emission of Water on the production chain and to a lesser materials is derived from production solvents to the atmosphere and the Pharmaceutical activities This part is an account of Lundbeck’s extent on research and development. management systems and supplier waste water, but the majority of the dis- The water consumption at Valby totalled at Valby activities at Valby in 1998. To cover the Production of raw materials, transport, information. Data regarding energy and carded solvents end as chemical waste. 99,000 m3, up 40% on 1997. Water is Research is concentrated on most significant environmental impacts use and disposal of products have water consumption and waste disposal Pharmaceuticals, which are discarded used in the pharmaceutical production identifying and developing new we have chosen to present develop- environmental impacts, but these are has been transferred from internal and due to stringent quality control proce- for equipment cleaning, in scrubber active pharmaceutical ingredients. ments in production volume and in the not included in this report. external accounts. Spot checks and dures, are collected as chemical waste. plants for air cleaning and for sanitary New substances are produced in resource consumption and emissions calculations yielded the emission data. purposes. In addition certain amounts of small quantities and submitted to regarding: Whenever possible the environmental We have tried to obtain the highest In addition to the chemical waste the de-ionised water are used at the labora- preliminary testing. Of the select- performance is presented in real num- possible degree of accuracy. activities at Valby also generate other tories. ed substances larger amounts Consumption of water, energy and bers and in a perspective of six years. waste types such as cardboard and are produced for clinical trials. The raw materials The environmental indices are used to The figure illustrates resource consump- paper. Energy from various sources is Production increase, employee growth production methods are devel- Consumption of packaging relate the environmental impacts to the tion and emissions related to Lundbeck’s consumed for production and ventila- and extended facilities influenced the oped at Valby, whereas the final Emissions to water and the production size and visualise the trends. activities at Valby. tion purposes in particular. consumption of water. scaling-up takes place at our pilot atmosphere plant at Lumsås. Waste At the production of pharmaceuticals Noise only a minor amount of the raw mate- Production trend Pharmaceutical Bulk Production Soil and groundwater. rials end as waste. manufactures pharmaceuticals in Production of pharmaceuticals the form of tablets. At the tablet calculated in million packs increased production the active pharmaceu- Compilation of resource consumption and emissions for 1998 by almost 12%, reflecting the growth tical ingredient is mixed with in- experienced by the Group in 1998. active excipients and liquids with Lundbeck suitable binders. The substance is then dried and compressed into Energy Valby Atmospheric emissions Production tablet cores, which are then film Gas oil: 7,370 MWh from production Million packs of pharmaceuticals or sugar coated. District heating: 15,720 MWh Solvents: <2 t Gas: 1,280 MWh 25 In the Liquid & Sterile Production Electricity: 16,810 MWh 20 solutions are made from active pharmaceutical ingredients and 15 water, alcohol or oil. The solutions are filled into ampoules or vials. Raw materials for production Waste 10 At the Packaging department the Active pharmaceutical Chemical waste: 121 t 5 tablets, ampoules and vials are ingredients: 33 t Other waste: 692 t packed in glass or plastic con- Excipients: 159 t 0 tainers, blister packs or other Solvents: 12 t 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 types of packaging.

Water Waste water: 99,000 m3 Potable water: 99,000 m3

Product 23 million packs of pharmaceuticals

4 5 Environmental performance At the selection stage we have focused The data on the consumption of raw The production gives rise to emission of Water on the production chain and to a lesser materials is derived from production solvents to the atmosphere and the Pharmaceutical activities This part is an account of Lundbeck’s extent on research and development. management systems and supplier waste water, but the majority of the dis- The water consumption at Valby totalled at Valby activities at Valby in 1998. To cover the Production of raw materials, transport, information. Data regarding energy and carded solvents end as chemical waste. 99,000 m3, up 40% on 1997. Water is Research is concentrated on most significant environmental impacts use and disposal of products have water consumption and waste disposal Pharmaceuticals, which are discarded used in the pharmaceutical production identifying and developing new we have chosen to present develop- environmental impacts, but these are has been transferred from internal and due to stringent quality control proce- for equipment cleaning, in scrubber active pharmaceutical ingredients. ments in production volume and in the not included in this report. external accounts. Spot checks and dures, are collected as chemical waste. plants for air cleaning and for sanitary New substances are produced in resource consumption and emissions calculations yielded the emission data. purposes. In addition certain amounts of small quantities and submitted to regarding: Whenever possible the environmental We have tried to obtain the highest In addition to the chemical waste the de-ionised water are used at the labora- preliminary testing. Of the select- performance is presented in real num- possible degree of accuracy. activities at Valby also generate other tories. ed substances larger amounts Consumption of water, energy and bers and in a perspective of six years. waste types such as cardboard and are produced for clinical trials. The raw materials The environmental indices are used to The figure illustrates resource consump- paper. Energy from various sources is Production increase, employee growth production methods are devel- Consumption of packaging relate the environmental impacts to the tion and emissions related to Lundbeck’s consumed for production and ventila- and extended facilities influenced the oped at Valby, whereas the final Emissions to water and the production size and visualise the trends. activities at Valby. tion purposes in particular. consumption of water. scaling-up takes place at our pilot atmosphere plant at Lumsås. Waste At the production of pharmaceuticals Noise only a minor amount of the raw mate- Production trend Pharmaceutical Bulk Production Soil and groundwater. rials end as waste. manufactures pharmaceuticals in Production of pharmaceuticals the form of tablets. At the tablet calculated in million packs increased production the active pharmaceu- Compilation of resource consumption and emissions for 1998 by almost 12%, reflecting the growth tical ingredient is mixed with in- experienced by the Group in 1998. active excipients and liquids with Lundbeck suitable binders. The substance is then dried and compressed into Energy Valby Atmospheric emissions Production tablet cores, which are then film Gas oil: 7,370 MWh from production Million packs of pharmaceuticals or sugar coated. District heating: 15,720 MWh Solvents: <2 t Gas: 1,280 MWh 25 In the Liquid & Sterile Production Electricity: 16,810 MWh 20 solutions are made from active pharmaceutical ingredients and 15 water, alcohol or oil. The solutions are filled into ampoules or vials. Raw materials for production Waste 10 At the Packaging department the Active pharmaceutical Chemical waste: 121 t 5 tablets, ampoules and vials are ingredients: 33 t Other waste: 692 t packed in glass or plastic con- Excipients: 159 t 0 tainers, blister packs or other Solvents: 12 t 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 types of packaging.

Water Waste water: 99,000 m3 Potable water: 99,000 m3

Product 23 million packs of pharmaceuticals

4 5 In order to control and maximise the ing. Oil is used for steam production Raw materials Raw materials consumption and wood accounted for more than Environmental index utilisation of water we have in 1998 in the boiler unit. The produced steam Tonnes Index: 1992=100 50% of the packaging volume. The environmental index ex- established electronic surveillance of is utilised for process and space heat- The consumption of raw materials in presses the environmental impact the most important water meters. Con- ing and for humidity regulation in the pharmaceutical bulk production 250 100 In 1999 the drawing up of a packaging (i.e. resource consumption or sumption of water used for reduction the production areas. Gas is used in a amounted to 204 tonnes. The consump- 200 80 policy as well as a strategy and an emissions) per produced unit. The of the ethanol concentration in the ex- steam generator to maintain the correct tion of active pharmaceutical ingredi- action plan will commence in order to 1992 impact level corresponds to haust air from the pharmaceutical pro- humidity in the Pharmaceutical ents amounted to 33 tonnes and that 150 60 minimize the consumption of packaging index 100. A decreasing environ- duction has been reduced by means of Development laboratories. of solvents to 12 tonnes. The majority of and ensure that the necessary packaging mental index figure signifies an process optimisation. Furthermore the the solvents consumption consisted of 100 40 is made from environmentally friendly improvement and a reduced re-circulation of condensed steam into An energy savings committee has been ethanol, which was used as an actual 50 20 materials. environmental impact in relative the boiler unit has been increased. nominated with the aim of drawing up solvent or in solutions or for cleaning terms. an energy savings action plan, and a purposes. The consumption of exipients 0 0 mapping-out of the most energy con- amounted to 159 tonnes out of which 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 Water consumption Number of produced packs suming installations has commenced. around 70% were tablets fillers such as Active pharmaceutical ingredients 3 of pharmaceuticals m glucose or starch while binders, colours Excipients The concept “Number of pro- 100,000 A number of other energy savings etc. constituted the remainder. Organic solvents duced packs of pharmaceuticals” initiatives have been taken, such as the Environmental index, is used in this report to enable 80,000 rebuilding of the dehydration unit in Raw materials consumption rose by all raw materials comparisons. However as the con- the pharmaceutical production and the around 35% on 1997. The environmen- cept does not apply to all activi- 60,000 new re-circulation of condensed steam tal index was 55 in 1998 as opposed ties at Valby it is used sparingly. 40,000 from some buildings. Training in energy to 46 the previous year. This is due to For research and development purposes Paper and cardboard ...... 46% savings has been effected for specific changes in the production composition. 24 tonnes of chemicals were used Wood ...... 6% 20,000 groups of employees. Altogether these out of which 21 tonnes were organic Aluminium ...... 2% initiatives are expected to reduce the solvents. Glass ...... 14% 0 energy consumption with more than Plastics and rubber ...... 32% 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 300 MWh per year. The production of de-ionised water required only 72 tonnes of chemicals Energy consumption (hydrochloric acid and sodium hydrox- Atmospheric emissions Energy consumption MWh ide) in 1998 as opposed to 111 tonnes in 1997. The introduction of a new Around three tonnes of organic solvents 45,000 The 1998 energy consumption came to technology – reverse osmosis – enabled were emitted to the atmosphere. The 40,000 the decrease. pharmaceutical production accounted 41,180 MWh, up almost 10% on 1997. 35,000 Increased cooling requirements and 30,000 for two-thirds, with the majority being the need for additional ventilation in 25,000 ethanol from drying processes, ink production premises and laboratories 20,000 Packaging dilution processes in the packaging primarily caused this. 15,000 department and cleaning purposes. The 10,000 The consumption of packaging came laboratories emitted approximately one The major energy sources are electricity 5,000 to 773 tonnes, almost the same figure tonne of organic solvents, which equals and district heating, accounting for 75% 0 as in 1997. However the consumption 5% of the consumption. The rest is col- of the total energy consumption. 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 of PVC increased by 25% to 108 tonnes lected as chemical waste together with Electricity is mainly used for ventilation Electricity due to an increased number of blister the other chemicals used. and electric lighting, whereas district Gas packs. heating is used primarily for space heat- District heating The use of dichloromethane has been Fuel oil The most important packaging materials reduced by means of substitution. In Gas oil for pharmaceuticals are wood, paper, addition the major points of use have cardboard, rubber, aluminium, glass and been fitted with active carbon filters so plastics (polyvinylchloride, polypropy- that emission was kept within the limit lene, polyethylene and other types). The value of the environmental approval. The circle diagram reflects the distribution annual consumption now lies at around of packaging materials. Paper, cardboard 500 kg - a reduction of more than 80% since 1996.

6 7 In order to control and maximise the ing. Oil is used for steam production Raw materials Raw materials consumption and wood accounted for more than Environmental index utilisation of water we have in 1998 in the boiler unit. The produced steam Tonnes Index: 1992=100 50% of the packaging volume. The environmental index ex- established electronic surveillance of is utilised for process and space heat- The consumption of raw materials in presses the environmental impact the most important water meters. Con- ing and for humidity regulation in the pharmaceutical bulk production 250 100 In 1999 the drawing up of a packaging (i.e. resource consumption or sumption of water used for reduction the production areas. Gas is used in a amounted to 204 tonnes. The consump- 200 80 policy as well as a strategy and an emissions) per produced unit. The of the ethanol concentration in the ex- steam generator to maintain the correct tion of active pharmaceutical ingredi- action plan will commence in order to 1992 impact level corresponds to haust air from the pharmaceutical pro- humidity in the Pharmaceutical ents amounted to 33 tonnes and that 150 60 minimize the consumption of packaging index 100. A decreasing environ- duction has been reduced by means of Development laboratories. of solvents to 12 tonnes. The majority of and ensure that the necessary packaging mental index figure signifies an process optimisation. Furthermore the the solvents consumption consisted of 100 40 is made from environmentally friendly improvement and a reduced re-circulation of condensed steam into An energy savings committee has been ethanol, which was used as an actual 50 20 materials. environmental impact in relative the boiler unit has been increased. nominated with the aim of drawing up solvent or in solutions or for cleaning terms. an energy savings action plan, and a purposes. The consumption of exipients 0 0 mapping-out of the most energy con- amounted to 159 tonnes out of which 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 Water consumption Number of produced packs suming installations has commenced. around 70% were tablets fillers such as Active pharmaceutical ingredients 3 of pharmaceuticals m glucose or starch while binders, colours Excipients The concept “Number of pro- 100,000 A number of other energy savings etc. constituted the remainder. Organic solvents duced packs of pharmaceuticals” initiatives have been taken, such as the Environmental index, is used in this report to enable 80,000 rebuilding of the dehydration unit in Raw materials consumption rose by all raw materials comparisons. However as the con- the pharmaceutical production and the around 35% on 1997. The environmen- cept does not apply to all activi- 60,000 new re-circulation of condensed steam tal index was 55 in 1998 as opposed ties at Valby it is used sparingly. 40,000 from some buildings. Training in energy to 46 the previous year. This is due to For research and development purposes Paper and cardboard ...... 46% savings has been effected for specific changes in the production composition. 24 tonnes of chemicals were used Wood ...... 6% 20,000 groups of employees. Altogether these out of which 21 tonnes were organic Aluminium ...... 2% initiatives are expected to reduce the solvents. Glass ...... 14% 0 energy consumption with more than Plastics and rubber ...... 32% 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 300 MWh per year. The production of de-ionised water required only 72 tonnes of chemicals Energy consumption (hydrochloric acid and sodium hydrox- Atmospheric emissions Energy consumption MWh ide) in 1998 as opposed to 111 tonnes in 1997. The introduction of a new Around three tonnes of organic solvents 45,000 The 1998 energy consumption came to technology – reverse osmosis – enabled were emitted to the atmosphere. The 40,000 the decrease. pharmaceutical production accounted 41,180 MWh, up almost 10% on 1997. 35,000 Increased cooling requirements and 30,000 for two-thirds, with the majority being the need for additional ventilation in 25,000 ethanol from drying processes, ink production premises and laboratories 20,000 Packaging dilution processes in the packaging primarily caused this. 15,000 department and cleaning purposes. The 10,000 The consumption of packaging came laboratories emitted approximately one The major energy sources are electricity 5,000 to 773 tonnes, almost the same figure tonne of organic solvents, which equals and district heating, accounting for 75% 0 as in 1997. However the consumption 5% of the consumption. The rest is col- of the total energy consumption. 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 of PVC increased by 25% to 108 tonnes lected as chemical waste together with Electricity is mainly used for ventilation Electricity due to an increased number of blister the other chemicals used. and electric lighting, whereas district Gas packs. heating is used primarily for space heat- District heating The use of dichloromethane has been Fuel oil The most important packaging materials reduced by means of substitution. In Gas oil for pharmaceuticals are wood, paper, addition the major points of use have cardboard, rubber, aluminium, glass and been fitted with active carbon filters so plastics (polyvinylchloride, polypropy- that emission was kept within the limit lene, polyethylene and other types). The value of the environmental approval. The circle diagram reflects the distribution annual consumption now lies at around of packaging materials. Paper, cardboard 500 kg - a reduction of more than 80% since 1996.

6 7 Ventilation exhaust air from dust Energy consumption causes energy- Waste water Waste Noise Soil and groundwater generating processes passes through related emissions of CO2,SO2 and absolute filters prior to emission. Filters NOx; substances that might contribute Waste water discharge amounted to The 1998 chemical waste volume In 1995 all noise sources were mapped Almost 60% of the premises at Valby have been mounted at all work places to global warming and acidification. The almost 99,000 m3, which equals the totalled 121 tonnes, which is 35% and the total noise load calculated. Out are situated on registered chemical where active pharmaceutical ingredients energy-related emissions at Valby ori- total water consumption. The waste higher than in 1997. The rise is mainly of 38 buildings there are noise sources waste depots. As a consequence the in powder form are handled in amounts ginate from an oil-driven boiler plant water derives from cleaning processes due to additional activities in the affecting the neighbouring environment authorities must be asked for directions exceeding 100 grams at one time. In and a gas-driven steam generator. in the pharmaceutical production, an pharmaceutical production and the in nine. Together with the authorities we regarding any activity which implies total 32 absolute filters are installed and Emission also takes place at the pro- air scrubbing system and sanitary laboratories. Around 57 tonnes of the have drawn up a noise abatement plan, handling of soil. entered in the systematic maintenance ducers of electricity, district heating and purposes. As a result of cleaning around chemical waste were sent to Special which has been incorporated in our programme. Out of these twenty are gas. As consumption increased so did seven tonnes of detergent together with Waste System for destruction and the environmental approval. The abatement Several areas with contaminated soil constantly monitored. As a result of this energy-related emissions, with the five tonnes of ethanol were emitted. same waste disposal contractor reused measures will run over a four-year were opened and treated during 1998. filtration the total dust emission is very exception of the emission of SO2, which The waste water was directed to the three tonnes of oil. The remainder was period and fall in two stages. As a result In total 1,329 tonnes of contaminated low. On the basis of measurements it is fell as a result of a switch to gas oil with municipal waste water treatment plant. treated at Kommunekemi, another we have reduced the noise load from soil were removed for treatment at an calculated to be below 18 milligrams per a low sulphur content (0.05%). Danish waste disposal contractor. 16 sources during 1998 which has con- approved contractor. At the construction hour for the entire site. The discharge of waste water rose by tributed to reducing the noise load in of a new building for Pharmacological almost 40% due to production expan- The volume of non-chemical waste the neighbouring environment by Research a leak in an oil-storage tank sion, an increased number of employees came to 692 tonnes, almost identical to 5 dB(A). To ensure continued compliance was discovered. and extended facilities. that of 1997. The recycling percentage with the noise limit values of our en- was 24 based on waste types such as vironmental approval, all new facilities Limited soil contamination was dis- Waste water cardboard, paper, glass, metal shredding, are subject to stringent requirements covered at the digging of a trench for m3 garden rubbish and food waste. A well- regarding noise loads and existing a cooling pipe and at the levelling of Energy-related emissions, functioning reuse system has been facilities are subject to regular moni- the area next to a newly constructed 100,000 tonnes implemented, which handles the separa- toring. building. When clearing out an under- 80,000 tion into specific waste fractions as ground oil tank a minor amount of oil- Internal External required by the authorities. contaminated soil was removed. Finally 60,000 a minor oil spillage occurred when the CO2 2,300 13,100 Waste heating/cooling system in Chemical SO 13140,000 2 Tonnes Development was filled up with oil. NOx 331 20,000 1,000 Basis of calculation: 0 800 Electricity and district heating: 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 1998 key figures from SK Power 600 Company, Denmark Gas oil: 1994 key figures for 400 typical Danish industrial 200 consumption. The SO2 figure has been adjusted to accommodate a 0 sulphur content of 0.05% instead 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 of 0.2%. Chemical waste Gas: 1997 key figures from the Other waste Copenhagen gas and electricity service.

8 9 Ventilation exhaust air from dust Energy consumption causes energy- Waste water Waste Noise Soil and groundwater generating processes passes through related emissions of CO2,SO2 and absolute filters prior to emission. Filters NOx; substances that might contribute Waste water discharge amounted to The 1998 chemical waste volume In 1995 all noise sources were mapped Almost 60% of the premises at Valby have been mounted at all work places to global warming and acidification. The almost 99,000 m3, which equals the totalled 121 tonnes, which is 35% and the total noise load calculated. Out are situated on registered chemical where active pharmaceutical ingredients energy-related emissions at Valby ori- total water consumption. The waste higher than in 1997. The rise is mainly of 38 buildings there are noise sources waste depots. As a consequence the in powder form are handled in amounts ginate from an oil-driven boiler plant water derives from cleaning processes due to additional activities in the affecting the neighbouring environment authorities must be asked for directions exceeding 100 grams at one time. In and a gas-driven steam generator. in the pharmaceutical production, an pharmaceutical production and the in nine. Together with the authorities we regarding any activity which implies total 32 absolute filters are installed and Emission also takes place at the pro- air scrubbing system and sanitary laboratories. Around 57 tonnes of the have drawn up a noise abatement plan, handling of soil. entered in the systematic maintenance ducers of electricity, district heating and purposes. As a result of cleaning around chemical waste were sent to Special which has been incorporated in our programme. Out of these twenty are gas. As consumption increased so did seven tonnes of detergent together with Waste System for destruction and the environmental approval. The abatement Several areas with contaminated soil constantly monitored. As a result of this energy-related emissions, with the five tonnes of ethanol were emitted. same waste disposal contractor reused measures will run over a four-year were opened and treated during 1998. filtration the total dust emission is very exception of the emission of SO2, which The waste water was directed to the three tonnes of oil. The remainder was period and fall in two stages. As a result In total 1,329 tonnes of contaminated low. On the basis of measurements it is fell as a result of a switch to gas oil with municipal waste water treatment plant. treated at Kommunekemi, another we have reduced the noise load from soil were removed for treatment at an calculated to be below 18 milligrams per a low sulphur content (0.05%). Danish waste disposal contractor. 16 sources during 1998 which has con- approved contractor. At the construction hour for the entire site. The discharge of waste water rose by tributed to reducing the noise load in of a new building for Pharmacological almost 40% due to production expan- The volume of non-chemical waste the neighbouring environment by Research a leak in an oil-storage tank sion, an increased number of employees came to 692 tonnes, almost identical to 5 dB(A). To ensure continued compliance was discovered. and extended facilities. that of 1997. The recycling percentage with the noise limit values of our en- was 24 based on waste types such as vironmental approval, all new facilities Limited soil contamination was dis- Waste water cardboard, paper, glass, metal shredding, are subject to stringent requirements covered at the digging of a trench for m3 garden rubbish and food waste. A well- regarding noise loads and existing a cooling pipe and at the levelling of Energy-related emissions, functioning reuse system has been facilities are subject to regular moni- the area next to a newly constructed 100,000 tonnes implemented, which handles the separa- toring. building. When clearing out an under- 80,000 tion into specific waste fractions as ground oil tank a minor amount of oil- Internal External required by the authorities. contaminated soil was removed. Finally 60,000 a minor oil spillage occurred when the CO2 2,300 13,100 Waste heating/cooling system in Chemical SO 13140,000 2 Tonnes Development was filled up with oil. NOx 331 20,000 1,000 Basis of calculation: 0 800 Electricity and district heating: 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 1998 key figures from SK Power 600 Company, Denmark Gas oil: 1994 key figures for 400 typical Danish industrial 200 consumption. The SO2 figure has been adjusted to accommodate a 0 sulphur content of 0.05% instead 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 of 0.2%. Chemical waste Gas: 1997 key figures from the Other waste Copenhagen gas and electricity service.

8 9 Test animals trials, which involve humans. The pre- The number of test animals has been clinical trials are either in vitro (in reduced by 8%. Mice, rats and guinea Environmental data 1992 1993 1994 1995 1996 1997 1998 The use of test animals is based on test tubes) or in vivo (in animals). As pigs still account for the majority. Production (million packs) 10.44 11.21 13.49 16.45 19.80 20.48 22.96 requirements from the public health test tube trials become increasingly Certain trial procedure changes reduced authorities. Any trial involving test important in the preliminary phases, the number of mice by almost 9,000 Raw materials for production (tonnes) 169 154 180 187 220 151 204 animals is designed to match these re- it is possible to carry out tests on an and increased the number of rats by Active pharmaceutical ingredients (tonnes) 25 24 27 31 33 23 33 quirements. Testing is required to docu- increasing number of new pharmaceu- almost 5,000. Excipients (tonnes) 135 121 144 146 175 117 159 ment the efficacy and safety of a new ticals without increasing the number pharmaceutical, prior to the clinical of test animals correspondingly. Organic solvents (tonnes) 9 9 9 10 12 11 12 Laboratory chemicals (tonnes) 25 24 24 Organic solvents (tonnes) 23 22 21 Other chemicals (tonnes) 2 2 3 Chemicals for de-ionisation (tonnes) 111 72

3 Test animals 1992 1993 1994 1995 1996 1997 1998 Water consumption (m ) 56,000 42,000 54,000 60,000 65,000 72,000 99,000 Energy consumption (MWh) 18,900 21,460 23,970 26,970 29,430 37,030 41,180 Mice 15,674 14,116 14,346 21,546 20,406 27,980 18,808 Gas oil (MWh) 540 510 640 1,430 5,560 8,380 7,370 Rats 18,554 18,999 23,145 18,631 21,637 21,977 27,308 Fuel oil (MWh) 3,950 3,500 4,480 4,660 0 0 0 Guinea pigs 469 324 246 290 352 779 563 District heating (MWh) 6,810 8,890 9,960 10,000 11,230 12,290 15,720 Doves 0 0 17 0 0 0 0 Gas (MWh) 0 0 0 0 0 1,090 1,280 Rabbits 56 65 48 87 65 21 182 Electricity (MWh) 7,590 8,560 8,890 10,880 12,640 15,270 16,810 Cats 10 45 45 54 14 0 0 Chemical waste (tonnes) 102 81 80 91 102 89 121 Dogs 25 24 105 13 35 43 61 Other waste (tonnes) 708 924 671 685 692 Pigs 0 0 0 2 0 0 0 Recycling (tonnes) 143 154 133 179 169 Total 34,788 33,573 37,952 40,623 42,509 50,800 46,922 Landfill (tonnes) 65 122 60 63 99 Incineration (tonnes) 500 648 478 443 424 Atmospheric emission, solvents (tonnes) < 2 < 2 < 2 < 2 < 2 < 2 <2 Atmospheric emission from laboratories (tonnes) 11 1 Waste water (m3) 51,000 37,000 48,000 52,000 57,000 72,000 99,000

Note: The following figures have been adjusted in relation to the figures in the 1997 environmental report due to changed accounting methods: the 1997-figure for laboratory chemicals, the 1994-97-figures for recycled and incinerated non-chemical waste, the 1997-figures for chemical waste and landfilled non-chemical waste. In addition the 1993-figure for gas oil and the 1994-figure for fuel oil have been rounded off.

10 11 Test animals trials, which involve humans. The pre- The number of test animals has been clinical trials are either in vitro (in reduced by 8%. Mice, rats and guinea Environmental data 1992 1993 1994 1995 1996 1997 1998 The use of test animals is based on test tubes) or in vivo (in animals). As pigs still account for the majority. Production (million packs) 10.44 11.21 13.49 16.45 19.80 20.48 22.96 requirements from the public health test tube trials become increasingly Certain trial procedure changes reduced authorities. Any trial involving test important in the preliminary phases, the number of mice by almost 9,000 Raw materials for production (tonnes) 169 154 180 187 220 151 204 animals is designed to match these re- it is possible to carry out tests on an and increased the number of rats by Active pharmaceutical ingredients (tonnes) 25 24 27 31 33 23 33 quirements. Testing is required to docu- increasing number of new pharmaceu- almost 5,000. Excipients (tonnes) 135 121 144 146 175 117 159 ment the efficacy and safety of a new ticals without increasing the number pharmaceutical, prior to the clinical of test animals correspondingly. Organic solvents (tonnes) 9 9 9 10 12 11 12 Laboratory chemicals (tonnes) 25 24 24 Organic solvents (tonnes) 23 22 21 Other chemicals (tonnes) 2 2 3 Chemicals for de-ionisation (tonnes) 111 72

3 Test animals 1992 1993 1994 1995 1996 1997 1998 Water consumption (m ) 56,000 42,000 54,000 60,000 65,000 72,000 99,000 Energy consumption (MWh) 18,900 21,460 23,970 26,970 29,430 37,030 41,180 Mice 15,674 14,116 14,346 21,546 20,406 27,980 18,808 Gas oil (MWh) 540 510 640 1,430 5,560 8,380 7,370 Rats 18,554 18,999 23,145 18,631 21,637 21,977 27,308 Fuel oil (MWh) 3,950 3,500 4,480 4,660 0 0 0 Guinea pigs 469 324 246 290 352 779 563 District heating (MWh) 6,810 8,890 9,960 10,000 11,230 12,290 15,720 Doves 0 0 17 0 0 0 0 Gas (MWh) 0 0 0 0 0 1,090 1,280 Rabbits 56 65 48 87 65 21 182 Electricity (MWh) 7,590 8,560 8,890 10,880 12,640 15,270 16,810 Cats 10 45 45 54 14 0 0 Chemical waste (tonnes) 102 81 80 91 102 89 121 Dogs 25 24 105 13 35 43 61 Other waste (tonnes) 708 924 671 685 692 Pigs 0 0 0 2 0 0 0 Recycling (tonnes) 143 154 133 179 169 Total 34,788 33,573 37,952 40,623 42,509 50,800 46,922 Landfill (tonnes) 65 122 60 63 99 Incineration (tonnes) 500 648 478 443 424 Atmospheric emission, solvents (tonnes) < 2 < 2 < 2 < 2 < 2 < 2 <2 Atmospheric emission from laboratories (tonnes) 11 1 Waste water (m3) 51,000 37,000 48,000 52,000 57,000 72,000 99,000

Note: The following figures have been adjusted in relation to the figures in the 1997 environmental report due to changed accounting methods: the 1997-figure for laboratory chemicals, the 1994-97-figures for recycled and incinerated non-chemical waste, the 1997-figures for chemical waste and landfilled non-chemical waste. In addition the 1993-figure for gas oil and the 1994-figure for fuel oil have been rounded off.

10 11 Environmental report 1998 Lundbeck, Lumsås

This report is part of the Lundbeck Group’s environmental report for 1998. The environmental report comprises a general part, which features in Lundbeck’s annual report, and three separate reports on Lundbeck’s production sites at Valby, Lumsås and Seal Sands, respectively. This report concerns the Lumsås site and contains a management report on the general aspects, followed by an account of the actual environmental performance.

Management report production size. Together these aspects During the year much time has there- reflect resource consumption and fore been allocated to the preparation We are pleased to present our 1998 emission, and thus picture the environ- of environmental approval applications. environmental report as information for mental impact related to production. The necessary approvals have all been companies, institutions, employees and The Environmental department prepared granted. Another focus point has others interested in our environmental this environmental report in co-opera- been health, safety and environmental performance. tion with employees from the Lumsås management, and in 1998 a pilot site, who have contributed with data project concerning such a management In the report we have aimed at present- and other information. system was effected. ing the significant environmental impacts of our activities. This comprises In 1998 the production of Citalopram Raw material consumption, chemical conditions regulated by our environ- (Cipramil®) soared. In addition Lundbeck waste and atmospheric emission of mental approvals as well as consump- has staked much on development of solvents increased by around 25% on tion of raw materials and energy, and new products, resulting in an increased 1997, whereas the consumption of number of trial productions.

Statement from Deloitte & Touche

The 1998 figures in the environ- mental report on the environ- mental parameters: consumption of raw materials, energy and water, waste and emissions related to the consumption of energy were included in the review performed by Deloitte & Touche. See the full Statement from Deloitte & Touche on page 52 in Lundbeck’s annual report.

Appendix to Lundbeck’s Annual Report 1998

12 1 water and energy and the waste water areas, the drawing up of targets and ac- and production of a new solvent to reflects ways to prevent hazards related Address discharge remained unchanged. However tion plans, and the integration of health, recycling or reuse. The assessment to the handling of chemicals and sub- H. Lundbeck A/S as the production volume saw a 40% safety and environmental considerations turned out in favour of our present stances, and it bases on the relation 182 Oddenvej, Lumsås increase, the resource consumption and in development and planning. waste handling method operated by between the number of chemicals used DK-4500 Nykøbing Sjælland emission per produced unit actually Kommunekemi, a Danish waste disposal at Lundbeck and the general knowledge Telephone: +45 5932 1171 decreased. The management system will become contractor. of chemicals and substances presented a central tool in the health, safety and by the Health, Safety & Environment Company profile environmental activities and is intended Safety report and relief division. The chemical production site is situated at Lumsås in the north-western region Environmental approvals to ensure a continuous improvement by fire station of Zealand, Denmark. means of a targeted approach. During 1998 our permission for produc- The updating of the company safety Limit value breaches, Together with our production site at Seal Sands, UK, the Lumsås site is tion of Citalopram was extended so that report commenced in co-operation with accidents and complaints responsible for the production of active pharmaceutical ingredients, which it now covers all production units and Reduced water the Danish consulting engineering firm, are either used in the pharmaceutical production at Valby or sold as bulk permission was given for trial production consumption Cowi. The revised report should be ready During 1998 one breach of the products to the pharmaceutical industry. of four new products. These production at the beginning of 1999. Furthermore regulatory limit values occurred. The extensions were accommodated within To reduce the water consumption we our emergency plan is being revised average value for atmospheric emission Supervisory authorities the existing overall environmental intend to have all cooling water systems in co-operation with the Trundholm of solvents was exceeded in March, The West Zealand county: Environmental conditions in general. approval. changed into re-circulated systems municipal fire brigade. At the end of the however without exceeding the maxi- Trundholm municipality: Waste. within the next two years. This will year Lundbeck entered an agreement mum allowable ambient air concentra- At the end of the year we submitted an also have a positive influence on the with the local municipality about the tion. Improved surveillance measures Trade and main activities application for permission to build a ground water resources at Sjællands establishment of a relief fire station at are now in place in order to predict and Trade: Pharmaceutical industry. purification facility including a tank farm Odde, where the company is situated. our premises. The fire station should prevent such problems. The main activity is production of active pharmaceutical ingredients, which for production of Citalopram. It is a fully be in operation from July or August takes place in five factory units. Process development is carried out in a automatic facility with closed systems 1999 and will form part of Lundbeck’s We experienced a minor accident in development laboratory housing a pilot plant. In addition there is a laboratory and has a very high standard as regards Improved air cleaning emergency force. which around 100 litres of tetrahydro- dedicated to production control, together with ancillary facilities, warehouses the environment. furan were spilled during drum reload- and administration. We have improved our cleaning ing. The majority of the spillage was As a result of the above-mentioned capacity in the air incineration plants by Visible health, safety and contained in the factory’s safety basin. Environmental approvals activities the planned revision of the separating the most polluted air streams environmental efforts There was no registered environmental The Lumsås chemical production site is regulated by an overall approval overall environmental approval was followed by immediate incineration. This effect. granted by the West Zealand country in 1988 and subsequent amendments. postponed. also led to a reduction in the related During the year we have focused our energy consumption. Improved opera- efforts on making health & safety We received a complaint about disturb- Significant environmental impacts tional stability has been achieved by ex- aspects as well as environmental aspects ing mechanical noise deriving from the The production of active pharmaceutical ingredients involves consumption of Health, safety and changing a worn out incineration plant more visible at the factory. Our new factory main gate. Alleviating measures water, energy and chemical substances including organic solvents. Additional environmental with a new one. Despite these measures environmental employee and our new were taken. We also received an inquiry aspects are chemical waste, atmospheric emission of organic solvents, noise management system the atmospheric emission of solvents in house organ named the Pulse contri- regarding a discoloration near our waste and waste water emission as well as aspects related to risks, soil contamina- real numbers rose, but relative to pro- buted to heightening the information water outlet. It turned out to have no tion and groundwater. During the second half of 1998 a pilot duction the emission declined. level regarding health, safety and the connection with any of our activities. project on the implementation of a environment. Number of employees health, safety and environmental 180 management system was carried out at Waste assessment During 1998 we also defined two the Lumsås site. The purpose of the pilot indicators which directly or indirectly project was to gather experience and In 1998 we applied the principle of life reflect the changes in Lundbeck’s health prepare the actual implementation of cycle assessment at an evaluation of the and safety standard. Both indicators such a system. The immediate result overall consequences on the energy are connected to a condition for im- was a more comprehensive view of consumption and the risks related to provement in the working environment. all health, safety and environmental various methods of solvent waste treat- Qualification i.e. training and education aspects and their interaction with ment. We assessed the whole cycle from related to health and safety has been present production procedures. The transportation over discharge of waste chosen as indicator. The other indicator implementation is scheduled to 1999, starting with the definition of focus

2 3 water and energy and the waste water areas, the drawing up of targets and ac- and production of a new solvent to reflects ways to prevent hazards related Address discharge remained unchanged. However tion plans, and the integration of health, recycling or reuse. The assessment to the handling of chemicals and sub- H. Lundbeck A/S as the production volume saw a 40% safety and environmental considerations turned out in favour of our present stances, and it bases on the relation 182 Oddenvej, Lumsås increase, the resource consumption and in development and planning. waste handling method operated by between the number of chemicals used DK-4500 Nykøbing Sjælland emission per produced unit actually Kommunekemi, a Danish waste disposal at Lundbeck and the general knowledge Telephone: +45 5932 1171 decreased. The management system will become contractor. of chemicals and substances presented a central tool in the health, safety and by the Health, Safety & Environment Company profile environmental activities and is intended Safety report and relief division. The chemical production site is situated at Lumsås in the north-western region Environmental approvals to ensure a continuous improvement by fire station of Zealand, Denmark. means of a targeted approach. During 1998 our permission for produc- The updating of the company safety Limit value breaches, Together with our production site at Seal Sands, UK, the Lumsås site is tion of Citalopram was extended so that report commenced in co-operation with accidents and complaints responsible for the production of active pharmaceutical ingredients, which it now covers all production units and Reduced water the Danish consulting engineering firm, are either used in the pharmaceutical production at Valby or sold as bulk permission was given for trial production consumption Cowi. The revised report should be ready During 1998 one breach of the products to the pharmaceutical industry. of four new products. These production at the beginning of 1999. Furthermore regulatory limit values occurred. The extensions were accommodated within To reduce the water consumption we our emergency plan is being revised average value for atmospheric emission Supervisory authorities the existing overall environmental intend to have all cooling water systems in co-operation with the Trundholm of solvents was exceeded in March, The West Zealand county: Environmental conditions in general. approval. changed into re-circulated systems municipal fire brigade. At the end of the however without exceeding the maxi- Trundholm municipality: Waste. within the next two years. This will year Lundbeck entered an agreement mum allowable ambient air concentra- At the end of the year we submitted an also have a positive influence on the with the local municipality about the tion. Improved surveillance measures Trade and main activities application for permission to build a ground water resources at Sjællands establishment of a relief fire station at are now in place in order to predict and Trade: Pharmaceutical industry. purification facility including a tank farm Odde, where the company is situated. our premises. The fire station should prevent such problems. The main activity is production of active pharmaceutical ingredients, which for production of Citalopram. It is a fully be in operation from July or August takes place in five factory units. Process development is carried out in a automatic facility with closed systems 1999 and will form part of Lundbeck’s We experienced a minor accident in development laboratory housing a pilot plant. In addition there is a laboratory and has a very high standard as regards Improved air cleaning emergency force. which around 100 litres of tetrahydro- dedicated to production control, together with ancillary facilities, warehouses the environment. furan were spilled during drum reload- and administration. We have improved our cleaning ing. The majority of the spillage was As a result of the above-mentioned capacity in the air incineration plants by Visible health, safety and contained in the factory’s safety basin. Environmental approvals activities the planned revision of the separating the most polluted air streams environmental efforts There was no registered environmental The Lumsås chemical production site is regulated by an overall approval overall environmental approval was followed by immediate incineration. This effect. granted by the West Zealand country in 1988 and subsequent amendments. postponed. also led to a reduction in the related During the year we have focused our energy consumption. Improved opera- efforts on making health & safety We received a complaint about disturb- Significant environmental impacts tional stability has been achieved by ex- aspects as well as environmental aspects ing mechanical noise deriving from the The production of active pharmaceutical ingredients involves consumption of Health, safety and changing a worn out incineration plant more visible at the factory. Our new factory main gate. Alleviating measures water, energy and chemical substances including organic solvents. Additional environmental with a new one. Despite these measures environmental employee and our new were taken. We also received an inquiry aspects are chemical waste, atmospheric emission of organic solvents, noise management system the atmospheric emission of solvents in house organ named the Pulse contri- regarding a discoloration near our waste and waste water emission as well as aspects related to risks, soil contamina- real numbers rose, but relative to pro- buted to heightening the information water outlet. It turned out to have no tion and groundwater. During the second half of 1998 a pilot duction the emission declined. level regarding health, safety and the connection with any of our activities. project on the implementation of a environment. Number of employees health, safety and environmental 180 management system was carried out at Waste assessment During 1998 we also defined two the Lumsås site. The purpose of the pilot indicators which directly or indirectly project was to gather experience and In 1998 we applied the principle of life reflect the changes in Lundbeck’s health prepare the actual implementation of cycle assessment at an evaluation of the and safety standard. Both indicators such a system. The immediate result overall consequences on the energy are connected to a condition for im- was a more comprehensive view of consumption and the risks related to provement in the working environment. all health, safety and environmental various methods of solvent waste treat- Qualification i.e. training and education aspects and their interaction with ment. We assessed the whole cycle from related to health and safety has been present production procedures. The transportation over discharge of waste chosen as indicator. The other indicator implementation is scheduled to 1999, starting with the definition of focus

2 3 Environmental performance At the selection stage we have focused sumption, atmospheric and waste water In relation to the output the production Production trend on the production chain. Production emissions, and from substance flow of active pharmaceutical ingredients Production processes This part is an account of Lundbeck’s of raw materials, transport, use and analyses and calculations. Production requires a large number of ancillary Production of active pharmaceutical Active pharmaceutical ingredients activities at Lumsås in 1998. To cover disposal of products have environmental management systems yielded informa- substances, such as solvents. Having ingredients soared in 1998. In equivalent are produced by a number of the most significant environmental impacts, but these are not included in tion on the consumption of raw mate- contributed to the production, the tonnes production increased by almost organic syntheses, during which impacts we have chosen to present this report. rials whereas data regarding waste dis- majority end as chemical waste and a 40% on 1997, reflecting an increased the chemical compound gains developments in production volume posal derived from related invoices minor part is emitted to the atmosphere production capacity as a result of a in complexity at each step. A syn- and in the resource consumption and Whenever possible the environmental from waste treatment contractors. We or discharged as waste water. reduced number of individual products thesis is a chemical reaction in emissions regarding: performance is presented in real num- have tried to obtain the highest possible manufactured in greater volumes. a solvent. After each step the pro- bers and in a perspective of six years. degree of accuracy. Water is needed for the production duct undergoes several separation Consumption of water, The environmental indices are used to processes and for process cooling in and purification processes such energy and raw materials relate the environmental impacts to the The figure on page 4 illustrates resource particular. Energy from various sources as extraction, distillation, filtration Emissions to water production size and visualise the trends. consumption and emissions related is of course also required. The produc- Production and drying. and the atmosphere to the 1998 activities at the Lumsås tion activities generate noise as well as Equivalent tonnes Waste The data is derived from continual chemical production site. minor amounts of non-chemical waste. 300 Environmental index Noise monitoring of water and energy con- The environmental index Soil and groundwater expresses the environmental Risks. 200 impact (i.e. resource consump- tion or emissions) per produced 100 unit. The 1992 impact level Compilation of resource consumption and emissions for 1998 corresponds to index 100. A decreasing environmental 0 index figure signifies an improve- Lundbeck 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ment and a reduced environ- Energy Lumsås Atmospheric emissions mental impact in relative terms. Gas oil: 8,500 MWh Solvents: 76 t Gas: 1,720 MWh Equivalent tonnes Electricity: 5,170 MWh The concept equivalent tonnes has been introduced to enable production size comparisons, as production complexity may vary considerably from one year to Raw materials consumption Waste another. An equivalent tonne con- Organic solvents: 1,470 t Chemical waste: 3,270 t siders the produced units in rela- Other raw materials: 1,280 t Other waste: 50 t tion to time consumption and capacity utilisation. Simple pro- ductions contribute with few equivalent tonnes per tonne, whereas more complex produc- tions contribute with more Water Waste water: 126,000 m3 equivalent tonnes per tonne. Potable water: 14,200 m3 Solvents: 22 t Raw water: 115,000 m3 Organic matter, COD: 73 t Nitrogen: 0.5 t

Product Active pharmaceutical ingredients: 27 t

4 5 Environmental performance At the selection stage we have focused sumption, atmospheric and waste water In relation to the output the production Production trend on the production chain. Production emissions, and from substance flow of active pharmaceutical ingredients Production processes This part is an account of Lundbeck’s of raw materials, transport, use and analyses and calculations. Production requires a large number of ancillary Production of active pharmaceutical Active pharmaceutical ingredients activities at Lumsås in 1998. To cover disposal of products have environmental management systems yielded informa- substances, such as solvents. Having ingredients soared in 1998. In equivalent are produced by a number of the most significant environmental impacts, but these are not included in tion on the consumption of raw mate- contributed to the production, the tonnes production increased by almost organic syntheses, during which impacts we have chosen to present this report. rials whereas data regarding waste dis- majority end as chemical waste and a 40% on 1997, reflecting an increased the chemical compound gains developments in production volume posal derived from related invoices minor part is emitted to the atmosphere production capacity as a result of a in complexity at each step. A syn- and in the resource consumption and Whenever possible the environmental from waste treatment contractors. We or discharged as waste water. reduced number of individual products thesis is a chemical reaction in emissions regarding: performance is presented in real num- have tried to obtain the highest possible manufactured in greater volumes. a solvent. After each step the pro- bers and in a perspective of six years. degree of accuracy. Water is needed for the production duct undergoes several separation Consumption of water, The environmental indices are used to processes and for process cooling in and purification processes such energy and raw materials relate the environmental impacts to the The figure on page 4 illustrates resource particular. Energy from various sources as extraction, distillation, filtration Emissions to water production size and visualise the trends. consumption and emissions related is of course also required. The produc- Production and drying. and the atmosphere to the 1998 activities at the Lumsås tion activities generate noise as well as Equivalent tonnes Waste The data is derived from continual chemical production site. minor amounts of non-chemical waste. 300 Environmental index Noise monitoring of water and energy con- The environmental index Soil and groundwater expresses the environmental Risks. 200 impact (i.e. resource consump- tion or emissions) per produced 100 unit. The 1992 impact level Compilation of resource consumption and emissions for 1998 corresponds to index 100. A decreasing environmental 0 index figure signifies an improve- Lundbeck 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ment and a reduced environ- Energy Lumsås Atmospheric emissions mental impact in relative terms. Gas oil: 8,500 MWh Solvents: 76 t Gas: 1,720 MWh Equivalent tonnes Electricity: 5,170 MWh The concept equivalent tonnes has been introduced to enable production size comparisons, as production complexity may vary considerably from one year to Raw materials consumption Waste another. An equivalent tonne con- Organic solvents: 1,470 t Chemical waste: 3,270 t siders the produced units in rela- Other raw materials: 1,280 t Other waste: 50 t tion to time consumption and capacity utilisation. Simple pro- ductions contribute with few equivalent tonnes per tonne, whereas more complex produc- tions contribute with more Water Waste water: 126,000 m3 equivalent tonnes per tonne. Potable water: 14,200 m3 Solvents: 22 t Raw water: 115,000 m3 Organic matter, COD: 73 t Nitrogen: 0.5 t

Product Active pharmaceutical ingredients: 27 t

4 5 Water The consumption of potable water Energy consumption Raw materials from 3.6 t in 1997 to 2.2 t in 1998. Raw materials consumption totalled 14,200 m3. Process optimisation Another considerable decrease is MWh Index: 1992=100 Tonnes Index: 1992=100 The water consumption at the Lumsås and changed production composition The consumption of raw materials expected after 1999, when the produc- 3 16,000 3,000 200 site totals 129,000 m . Of this almost contributed to keeping the consumption amounted to 2,750 tonnes out of which tion in which it is used will be closed 100 115,000 m3 was raw water from Lund- of potable water down relative to pro- 14,000 25 tonnes were used in development down. 2,500 beck’s own wells used primarily for duction size. 12,000 80 projects. The raw materials consist of 150 2,000 process and equipment cooling. The 10,000 chemicals produced from oil or mineral The heading “Other raw materials” 60 local waterworks supplied potable water As the Lumsås groundwater resources 8,000 sources and the majority is considered covers key raw materials and other 1,500 100 for production processes, steam produc- are threatened by salt-water ingress, 6,000 40 harmful to health or environment. The ancillary substances than solvents. These 1,000 tion and sanitary use. we aim at a total elimination of the use 4,000 choice and quantities of raw materials ancillary substances include acids, bases, 50 20 500 of cooling water. The establishment of 2,000 to be used in productions are carefully filtration material etc. Key raw materials Water consumption an ammonium-based cooling system 0 0 specified and documented in production are the building blocks from which the 0 0 m3 Index: 1992=100 together with re-circulation of cooling 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 procedures. active pharmaceutical ingredients are 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 water in all factory units has high prior- built. The 1998 consumption of “Other 160,000 120 Electricity Other raw materials ity in 1999. The project will be finished Raw materials consumption rose by raw materials” saw an almost 30% in- 140,000 Gas Organic solvents 100 in the year 2000. around 25% on 1997 but relative to crease to 1,280 tonnes, but the environ- 120,000 Gas oil Environmental index, other raw materials production the trend is decreasing with mental index decreased from 61 in 1997 Environmental index, organic solvents 100,000 80 Environmental index, total energy consumption an environmental index of 86 in 1998 to 57 in 1998. Environmental index, all raw materials 80,000 60 Energy as opposed to 94 the previous year. 60,000 The total energy consumption is on 40 Solvents consumption 40,000 The energy consumption came to level with that of the last couple of Organic solvents are essential as reac- 20 Ethanol 277 t 20,000 15,390 MWh, of which approximately years. However relative to production tion media, in separation and purifica- Atmospheric emission Acetone 314 t 0 0 75% were used for production and the consumption shows a rapid decline tion processes and for cleaning pur- Tetrahydrofuran 177 t 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 space heating, while exhaust air cleaning with the environmental index dropping poses. Ethanol, acetone, tetrahydrofuran Solvents constitute the majority of the Toluene 388 t accounted for 25%. from 93 in 1997 to 66 in 1998. This is and toluene are the most commonly atmospheric emission, whereas dust Raw water Other 314 t mainly due to an increased production used. Despite an almost 25% consump- emission is almost non-existent. These Potable water Total 1,470 t Environmental index, Gas oil is used for steam production in which has been more consistent with tion increase, the consumption relative atmospheric emissions are regulated total water consumption our boiler unit. The produced steam longer campaigns and hence less change to production decreased, as reflected by limit values in our environmental is utilised for process and space heat- over between products; but is also by the fall in the environmental index approval. The total consumption increased. How- ing. Gas is used as a supplementary caused by the fact that some of the for solvents from 173 in 1997 to 153 ever relative to production the decreas- energy source in one of the exhaust air energy consumption, such as ventila- Solvents are found in vapours emitted in 1998. The reason behind this trend is Consumption of ing trend continues with the environ- incinerators. Electricity is used for pro- tion, is independent of production size. from filtration, drying and distillation a more uniform production composition Other raw materials mental index dropping from 64 in 1997 duction and ventilation purposes, A reduction in the consumption of gas with fewer production changes and processes. Two exhaust air incinerators Key raw materials, approx. 150 t to 48 in 1998. Cooling water re-circula- cleaning measures and electric lighting. for the air scrubbing system was effect- fewer cleaning operations involving take care of the most polluted air Sodium hydroxide 609 t tion in our newest and largest factory ed on the basis of an energy-saving solvents. streams. The solvent emissions are Sulphuric acid 159 t unit together with improved use of the programme partially financed by the measured continuously. Efficient filtra- Acetic acid 105 t cooling capacity in the other units made Danish Energy Agency. Organic solvents are reused in the pro- tion is ensured of dust from all dust- Hydrochloric acid 48 t this possible. duction to the largest possible extent, generating processes. Ammonia water 74 t This is a very positive trend and Lund- but reuse is limited by stringent require- Other, approx. 135 t beck will continue to assess the pos- ments to purity and raw materials In 1998, 76 tonnes of solvents were Total 1,280 t sibilities of a further reduction in its control. As a large amount of acetone emitted into the air - a 30% increase on energy consumption. required for a particular production 1997. Relative to production the emis- process was unsuitable for reuse, only sion fell from an environmental index of around 54% were reused in 1998 as 67 in 1997 to an index of 62 in 1998. opposed to a reuse percentage of 60 in 1997.

Dichloromethane is the only chlorinated solvent used. Consumption dropped

6 7 Water The consumption of potable water Energy consumption Raw materials from 3.6 t in 1997 to 2.2 t in 1998. Raw materials consumption totalled 14,200 m3. Process optimisation Another considerable decrease is MWh Index: 1992=100 Tonnes Index: 1992=100 The water consumption at the Lumsås and changed production composition The consumption of raw materials expected after 1999, when the produc- 3 16,000 3,000 200 site totals 129,000 m . Of this almost contributed to keeping the consumption amounted to 2,750 tonnes out of which tion in which it is used will be closed 100 115,000 m3 was raw water from Lund- of potable water down relative to pro- 14,000 25 tonnes were used in development down. 2,500 beck’s own wells used primarily for duction size. 12,000 80 projects. The raw materials consist of 150 2,000 process and equipment cooling. The 10,000 chemicals produced from oil or mineral The heading “Other raw materials” 60 local waterworks supplied potable water As the Lumsås groundwater resources 8,000 sources and the majority is considered covers key raw materials and other 1,500 100 for production processes, steam produc- are threatened by salt-water ingress, 6,000 40 harmful to health or environment. The ancillary substances than solvents. These 1,000 tion and sanitary use. we aim at a total elimination of the use 4,000 choice and quantities of raw materials ancillary substances include acids, bases, 50 20 500 of cooling water. The establishment of 2,000 to be used in productions are carefully filtration material etc. Key raw materials Water consumption an ammonium-based cooling system 0 0 specified and documented in production are the building blocks from which the 0 0 m3 Index: 1992=100 together with re-circulation of cooling 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 procedures. active pharmaceutical ingredients are 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 water in all factory units has high prior- built. The 1998 consumption of “Other 160,000 120 Electricity Other raw materials ity in 1999. The project will be finished Raw materials consumption rose by raw materials” saw an almost 30% in- 140,000 Gas Organic solvents 100 in the year 2000. around 25% on 1997 but relative to crease to 1,280 tonnes, but the environ- 120,000 Gas oil Environmental index, other raw materials production the trend is decreasing with mental index decreased from 61 in 1997 Environmental index, organic solvents 100,000 80 Environmental index, total energy consumption an environmental index of 86 in 1998 to 57 in 1998. Environmental index, all raw materials 80,000 60 Energy as opposed to 94 the previous year. 60,000 The total energy consumption is on 40 Solvents consumption 40,000 The energy consumption came to level with that of the last couple of Organic solvents are essential as reac- 20 Ethanol 277 t 20,000 15,390 MWh, of which approximately years. However relative to production tion media, in separation and purifica- Atmospheric emission Acetone 314 t 0 0 75% were used for production and the consumption shows a rapid decline tion processes and for cleaning pur- Tetrahydrofuran 177 t 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 space heating, while exhaust air cleaning with the environmental index dropping poses. Ethanol, acetone, tetrahydrofuran Solvents constitute the majority of the Toluene 388 t accounted for 25%. from 93 in 1997 to 66 in 1998. This is and toluene are the most commonly atmospheric emission, whereas dust Raw water Other 314 t mainly due to an increased production used. Despite an almost 25% consump- emission is almost non-existent. These Potable water Total 1,470 t Environmental index, Gas oil is used for steam production in which has been more consistent with tion increase, the consumption relative atmospheric emissions are regulated total water consumption our boiler unit. The produced steam longer campaigns and hence less change to production decreased, as reflected by limit values in our environmental is utilised for process and space heat- over between products; but is also by the fall in the environmental index approval. The total consumption increased. How- ing. Gas is used as a supplementary caused by the fact that some of the for solvents from 173 in 1997 to 153 ever relative to production the decreas- energy source in one of the exhaust air energy consumption, such as ventila- Solvents are found in vapours emitted in 1998. The reason behind this trend is Consumption of ing trend continues with the environ- incinerators. Electricity is used for pro- tion, is independent of production size. from filtration, drying and distillation a more uniform production composition Other raw materials mental index dropping from 64 in 1997 duction and ventilation purposes, A reduction in the consumption of gas with fewer production changes and processes. Two exhaust air incinerators Key raw materials, approx. 150 t to 48 in 1998. Cooling water re-circula- cleaning measures and electric lighting. for the air scrubbing system was effect- fewer cleaning operations involving take care of the most polluted air Sodium hydroxide 609 t tion in our newest and largest factory ed on the basis of an energy-saving solvents. streams. The solvent emissions are Sulphuric acid 159 t unit together with improved use of the programme partially financed by the measured continuously. Efficient filtra- Acetic acid 105 t cooling capacity in the other units made Danish Energy Agency. Organic solvents are reused in the pro- tion is ensured of dust from all dust- Hydrochloric acid 48 t this possible. duction to the largest possible extent, generating processes. Ammonia water 74 t This is a very positive trend and Lund- but reuse is limited by stringent require- Other, approx. 135 t beck will continue to assess the pos- ments to purity and raw materials In 1998, 76 tonnes of solvents were Total 1,280 t sibilities of a further reduction in its control. As a large amount of acetone emitted into the air - a 30% increase on energy consumption. required for a particular production 1997. Relative to production the emis- process was unsuitable for reuse, only sion fell from an environmental index of around 54% were reused in 1998 as 67 in 1997 to an index of 62 in 1998. opposed to a reuse percentage of 60 in 1997.

Dichloromethane is the only chlorinated solvent used. Consumption dropped

6 7 During 1998 one breach of the regula- Waste water Waste water Waste Chemical waste tory limit values occurred. The average 3 Energy-related emissions m Index: 1992=100 Tonnes Index: 1992=100 value for atmospheric emission of tonnes Waste water discharge amounted to Chemical waste amounted to solvents was exceeded in March, how- 126,000 m3. Of this around 4,600 m3 160,000 120 3,270 tonnes, mainly discarded solvents, 3,000 100 Internal External 140,000 90 ever without exceeding the maximum consisted of treated process water while 100 evaporation residues, polluted process 2,500 80 120,000 allowable ambient air concentration. The cooling water constituted the remainder. water and packaging from chemicals. 70 CO2 2,700 2,800 80 2,000 oldest exhaust air incinerator was later Most of the process water is treated in 100,000 670 tonnes of process water with high 60 SO2 17 replaced to ensure better operational the company’s own waste water treat- 80,000 60 contents of nitrogen and organic matter 1,500 50 NOx 47 stability and the surveillance measures ment plant, whereas heavily polluted 60,000 were sent for biological treatment at a 40 40 1,000 30 40,000 have been improved. Basis of calculation: sub-flows are collected and sent for waste water treatment plant on 20 20,000 20 500 Electricity: 1998 key figures from approved off-site waste water treat- Zealand, Stigsnæs Industrimiljø. Thirty 10 0 0 0 A system for separation and immediate SK Power Company, Denmark ment. 0 tonnes of contaminated oil were reused incineration of particularly polluted air Oil and gas: 1994 key figures for 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 by a regional waste handling contractor, 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 from vacuum pumps has been installed. typical Danish industrial The locally treated waste water contain- Waste water Dansk Oliegenbrug Kalundborg. The rest Chemical waste This gives a better purification ratio and ing traces of inorganic salts and organic of the chemical waste was sent for consumption. The SO2 figure has Environmental index Environmental index reduces the energy consumption. been adjusted to accommodate matter, mainly solvents and acetic acid, destruction at either Kommunekemi or a sulphur content in the oil of is discharged together with the cooling Special Waste System. Waste water: Solvents Energy consumption causes energy- 0.05% instead of 0.2%. water. related emissions of CO2,SO2 and Tonnes Index: 1992=100 The 1998 chemical waste figure is NO ; substances that might contribute Total waste water discharge is almost around 20% higher than that of 1997 x 30 120 to global warming and acidification. Our unchanged on the previous year, but whereas the environmental index fell energy-related emissions stem from a with a declining trend relative to pro- 100 from 59 to 51. The relative reduction Atmospheric is mainly caused by a more consistent new oil-driven boiler plant and a gas- duction illustrated by an environmental 20 80 driven air incineration unit. Emission emission index of 48 in 1998 as opposed to 65 production with reduced change over 60 also takes place regionally at the county Tonnes Index: 1992=100 in 1997. between products and hence reduced power plant. The SO2 emission fell by 10 40 consumption of chemicals for cleaning 80 120 around 30% and the emission of NOx The waste water breakdown shows a purposes. Improved separation of the 70 20 and CO2 by around 5%. The decline in 100 solvent discharge on level with 1997, chemical waste from the waste water 60 0 0 the SO2 emission is mainly caused by 80 a minimal discharge of ammonium contributed to reducing the water the fact that Lundbeck at the beginning 50 and a declining discharge of organic ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 content in the actual chemical waste. 40 60 of 1998 switched to gas oil with a lower matter, COD. Discharge relative to pro- Solvents 30 sulphur content (0.05% as opposed 40 duction also declined as reflected by Environmental index Our activities caused minor amounts of to 0.2%). Another reason is that the 20 the environmental indices. other waste types such as cardboard, 20 character of the energy supply has 10 paper and metal shredding for reuse; undergone changes. 0 0 During 1998 we have focused on isolat- Waste water: Organic matter, COD wood, food waste etc. for incineration; 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ing heavily polluted sub-flows. This has Tonnes Index: 1992=100 building materials etc. for landfill. This enabled us to comply with all limit waste amounted to almost 50 tonnes. Solvent emission 120 120 Environmental index values on waste water at a time when production increased. 100 100 80 80 The presence of ozone depleting Since 1997 we have surveyed the refrigerants is limited to around 300 chemical and eco-toxicological compo- 60 60 kilograms as all major cooling systems sition of the waste water and the result 40 40 use water or ammonia as coolants. of the project will be a total environ- 20 20 mental assessment of the waste water discharge and a model for the assess- 0 0 ment of new production processes. ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 Organic matter, COD Environmental index

8 9 During 1998 one breach of the regula- Waste water Waste water Waste Chemical waste tory limit values occurred. The average 3 Energy-related emissions m Index: 1992=100 Tonnes Index: 1992=100 value for atmospheric emission of tonnes Waste water discharge amounted to Chemical waste amounted to solvents was exceeded in March, how- 126,000 m3. Of this around 4,600 m3 160,000 120 3,270 tonnes, mainly discarded solvents, 3,000 100 Internal External 140,000 90 ever without exceeding the maximum consisted of treated process water while 100 evaporation residues, polluted process 2,500 80 120,000 allowable ambient air concentration. The cooling water constituted the remainder. water and packaging from chemicals. 70 CO2 2,700 2,800 80 2,000 oldest exhaust air incinerator was later Most of the process water is treated in 100,000 670 tonnes of process water with high 60 SO2 17 replaced to ensure better operational the company’s own waste water treat- 80,000 60 contents of nitrogen and organic matter 1,500 50 NOx 47 stability and the surveillance measures ment plant, whereas heavily polluted 60,000 were sent for biological treatment at a 40 40 1,000 30 40,000 have been improved. Basis of calculation: sub-flows are collected and sent for waste water treatment plant on 20 20,000 20 500 Electricity: 1998 key figures from approved off-site waste water treat- Zealand, Stigsnæs Industrimiljø. Thirty 10 0 0 0 A system for separation and immediate SK Power Company, Denmark ment. 0 tonnes of contaminated oil were reused incineration of particularly polluted air Oil and gas: 1994 key figures for 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 by a regional waste handling contractor, 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 from vacuum pumps has been installed. typical Danish industrial The locally treated waste water contain- Waste water Dansk Oliegenbrug Kalundborg. The rest Chemical waste This gives a better purification ratio and ing traces of inorganic salts and organic of the chemical waste was sent for consumption. The SO2 figure has Environmental index Environmental index reduces the energy consumption. been adjusted to accommodate matter, mainly solvents and acetic acid, destruction at either Kommunekemi or a sulphur content in the oil of is discharged together with the cooling Special Waste System. Waste water: Solvents Energy consumption causes energy- 0.05% instead of 0.2%. water. related emissions of CO2,SO2 and Tonnes Index: 1992=100 The 1998 chemical waste figure is NO ; substances that might contribute Total waste water discharge is almost around 20% higher than that of 1997 x 30 120 to global warming and acidification. Our unchanged on the previous year, but whereas the environmental index fell energy-related emissions stem from a with a declining trend relative to pro- 100 from 59 to 51. The relative reduction Atmospheric is mainly caused by a more consistent new oil-driven boiler plant and a gas- duction illustrated by an environmental 20 80 driven air incineration unit. Emission emission index of 48 in 1998 as opposed to 65 production with reduced change over 60 also takes place regionally at the county Tonnes Index: 1992=100 in 1997. between products and hence reduced power plant. The SO2 emission fell by 10 40 consumption of chemicals for cleaning 80 120 around 30% and the emission of NOx The waste water breakdown shows a purposes. Improved separation of the 70 20 and CO2 by around 5%. The decline in 100 solvent discharge on level with 1997, chemical waste from the waste water 60 0 0 the SO2 emission is mainly caused by 80 a minimal discharge of ammonium contributed to reducing the water the fact that Lundbeck at the beginning 50 and a declining discharge of organic ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 content in the actual chemical waste. 40 60 of 1998 switched to gas oil with a lower matter, COD. Discharge relative to pro- Solvents 30 sulphur content (0.05% as opposed 40 duction also declined as reflected by Environmental index Our activities caused minor amounts of to 0.2%). Another reason is that the 20 the environmental indices. other waste types such as cardboard, 20 character of the energy supply has 10 paper and metal shredding for reuse; undergone changes. 0 0 During 1998 we have focused on isolat- Waste water: Organic matter, COD wood, food waste etc. for incineration; 1992 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ing heavily polluted sub-flows. This has Tonnes Index: 1992=100 building materials etc. for landfill. This enabled us to comply with all limit waste amounted to almost 50 tonnes. Solvent emission 120 120 Environmental index values on waste water at a time when production increased. 100 100 80 80 The presence of ozone depleting Since 1997 we have surveyed the refrigerants is limited to around 300 chemical and eco-toxicological compo- 60 60 kilograms as all major cooling systems sition of the waste water and the result 40 40 use water or ammonia as coolants. of the project will be a total environ- 20 20 mental assessment of the waste water discharge and a model for the assess- 0 0 ment of new production processes. ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 Organic matter, COD Environmental index

8 9 Noise Risks Environmental data 1992 1993 1994 1995 1996 1997 1998 The site has both mobile and fixed noise The Lumsås chemical production site is Production (equivalent tonnes) 64 79 99 132 154 155 218 sources such as ventilation systems, covered by section six of the Directive compressors and vehicles. To control on control of major hazards, which will Raw materials consumption (tonnes) 930 990 1,270 1,780 2,240 2,130 2,750 the noise level and prevent problems all be translated into Danish law during Organic solvents (tonnes) 280 430 530 770 1,030 1,180 1,470 noise sources have been assessed and 1999. In preparation of this Lundbeck Other raw materials (tonnes) 650 560 740 1,010 1,210 960 1,280 the results fed into a model, which asked the Danish consulting engineering calculates the consequences of new firm, Cowi, to prepare a safety report Water consumption (m3) 78,000 99,000 105,000 151,000 138,000 121,000 129,000 or modified utilities. The model was describing worst-case accidents at the Potable water (m3) 4,600 4,400 5,600 7,600 10,000 12,200 14,200 brought up-to-date in 1998 at the com- Lumsås site. Furthermore an emergency Raw water (m3) 73,000 95,000 99,000 143,000 128,000 109,000 115,000 missioning of new utilities, and all emis- plan, which will be implemented during sions were within the permitted limits. 1999, has been drawn up. Energy consumption (MWh) 6,790 8,170 10,520 12,480 15,440 15,440 15,390 Gas oil (MWh) 4,290 5,140 5,410 5,950 7,740 8,260 8,500 Soil and groundwater Gas (MWh) 0 0 1,680 2,250 2,670 1,910 1,720 Electricity (MWh) 2,500 3,030 3,430 4,280 5,030 5,270 5,170 No soil or groundwater contamination Chemical waste (tonnes) 1,860 1,360 2,040 2,150 2,860 2,680 3,270 was registered in 1998. Other waste (tonnes) - - 56 252 59 33 50 Recycling (tonnes) - - 33 162 21 15 16 Landfill (tonnes) - - 10 54 14 0 4 Incineration (tonnes) - - 13 36 23 18 30 Atmospheric emission, solvents (tonnes) 36 49 38 57 54 58 76 Waste water (m3) 76,000 96,000 103,000 150,000 133,000 120,000 126,000 Emission of organic solvents (tonnes) 15 20 15 16 22 21 22 Emission of organic matter, COD (tonnes) 51 66 48 64 82 88 73 Nitrogen (tonnes) 2.7 2.2 2.0 2.8 3.7 2.3 0.5

Note: The following 1997-figures have been adjusted in relation to the figures in the 1997 environmental report: Solvents (1,170 t), electricity (5,060 MWh) and chemical waste (2,650 t).

10 11 Noise Risks Environmental data 1992 1993 1994 1995 1996 1997 1998 The site has both mobile and fixed noise The Lumsås chemical production site is Production (equivalent tonnes) 64 79 99 132 154 155 218 sources such as ventilation systems, covered by section six of the Directive compressors and vehicles. To control on control of major hazards, which will Raw materials consumption (tonnes) 930 990 1,270 1,780 2,240 2,130 2,750 the noise level and prevent problems all be translated into Danish law during Organic solvents (tonnes) 280 430 530 770 1,030 1,180 1,470 noise sources have been assessed and 1999. In preparation of this Lundbeck Other raw materials (tonnes) 650 560 740 1,010 1,210 960 1,280 the results fed into a model, which asked the Danish consulting engineering calculates the consequences of new firm, Cowi, to prepare a safety report Water consumption (m3) 78,000 99,000 105,000 151,000 138,000 121,000 129,000 or modified utilities. The model was describing worst-case accidents at the Potable water (m3) 4,600 4,400 5,600 7,600 10,000 12,200 14,200 brought up-to-date in 1998 at the com- Lumsås site. Furthermore an emergency Raw water (m3) 73,000 95,000 99,000 143,000 128,000 109,000 115,000 missioning of new utilities, and all emis- plan, which will be implemented during sions were within the permitted limits. 1999, has been drawn up. Energy consumption (MWh) 6,790 8,170 10,520 12,480 15,440 15,440 15,390 Gas oil (MWh) 4,290 5,140 5,410 5,950 7,740 8,260 8,500 Soil and groundwater Gas (MWh) 0 0 1,680 2,250 2,670 1,910 1,720 Electricity (MWh) 2,500 3,030 3,430 4,280 5,030 5,270 5,170 No soil or groundwater contamination Chemical waste (tonnes) 1,860 1,360 2,040 2,150 2,860 2,680 3,270 was registered in 1998. Other waste (tonnes) - - 56 252 59 33 50 Recycling (tonnes) - - 33 162 21 15 16 Landfill (tonnes) - - 10 54 14 0 4 Incineration (tonnes) - - 13 36 23 18 30 Atmospheric emission, solvents (tonnes) 36 49 38 57 54 58 76 Waste water (m3) 76,000 96,000 103,000 150,000 133,000 120,000 126,000 Emission of organic solvents (tonnes) 15 20 15 16 22 21 22 Emission of organic matter, COD (tonnes) 51 66 48 64 82 88 73 Nitrogen (tonnes) 2.7 2.2 2.0 2.8 3.7 2.3 0.5

Note: The following 1997-figures have been adjusted in relation to the figures in the 1997 environmental report: Solvents (1,170 t), electricity (5,060 MWh) and chemical waste (2,650 t).

10 11 Environmental report 1998 Lundbeck, Seal Sands

This report is part of the Lundbeck Group’s environmental report for 1998. The environmental report comprises a general part, which features in Lundbeck’s annual report, and three separate reports on Lundbeck’s production sites at Valby, Lumsås and Seal Sands, respectively. This report concerns the Seal Sands site and contains a management report on the general aspects, followed by an account of the actual environmental performance.

Management report production size. Together these aspects real numbers. Relative to production, reflect resource consumption and emis- however, emission and resource con- We are pleased to present our 1998 sion, and thus picture the environmental sumption declined. environmental report as information for impact related to production. The companies, institutions, employees and Environmental department prepared this Environmental approvals others interested in our environmental environmental report in co-operation performance. with employees from the Seal Sands Our environmental approvals have been Health, Safety & Environmental depart- collected in an overall approval granted In the report we have aimed at present- ment. in 1997. In line with the conditions ing the significant environmental im- of this approval we have during 1998 pacts of our activities. This comprises In 1998 production increased consider- reviewed the possibilities of reducing conditions regulated by our environ- ably as a result of increasing demand for solvent emission and taking measures to mental approvals as well as consump- intermediates. This has led to increased minimise waste discharges. tion of raw materials and energy, and emission and resource consumption in

Statement from Deloitte & Touche

The 1998 figures in the environ- mental report on the environ- mental parameters: consumption of raw materials, energy and water, and waste were included in the review performed by Deloitte & Touche. See the full Statement from Deloitte & Touche on page 52 in Lundbeck’s annual report.

Appendix to Lundbeck’s Annual Report 1998

8 1 Health, safety and Environmental performance At the selection stage we have focused The data is derived from continual Address environmental on the production chain. Production of monitoring of water and energy con- Lundbeck Pharmaceuticals Ltd. management system This part is an account of Lundbeck’s raw materials, transport, use and sumption, atmospheric and waste Seal Sands, Middlesbrough activities at Seal Sands in 1998. To cover disposal of products have environmental water emissions, and substance flow Cleveland TS2 1UB Lundbeck has decided to implement the most significant environmental im- impacts, but these are not included in analyses and calculations. Production England a health, safety and environmental pacts we have chosen to present devel- this report. management systems yielded informa- Telephone: +44 16 42 54 6 574 management system in 1999 based on opments in production volume and in tion on the consumption of raw mate- the company guidelines for manage- the resource consumption and emissions Whenever possible the environmental rials whereas data regarding waste Company profile ment of health, safety and the environ- regarding: performance is presented in real num- disposal derived from records kept on The chemical production site at Seal Sands produces active pharmaceutical ment and moulded over an interna- bers and in a perspective of four years. site. We have tried to obtain the highest ingredients (API’s) as well as pharmaceutical intermediates to the API produc- tional standard for environmental Consumption of water, energy The environmental indices (see explana- possible degree of accuracy. tion at the Lumsås chemical production site. API’s are used for the production management systems (ISO 14001). and raw materials tion on page 5) are used to relate the of pharmaceuticals at the Valby pharmaceutical production site or sold as bulk The system will incorporate existing Emissions to water and the environmental impacts to the produc- The figure illustrates resource consump- products to the pharmaceutical industry. In 1998 the Seal Sands production management principles. In preparation atmosphere tion size and visualise the trends. tion and emissions related to the 1998 range included seven intermediates and API’s. for the implementation of the system Waste disposal. activities at the Seal Sands chemical an external auditor carried out an production site. Supervisory authorities environmental audit in 1998. The Environment Agency, Dales Area, Swan House, Merchants Warf, West Point Road, Thornaby, TS17 6PB Process improvements

Compilation of resource consumption and emissions for 1998 Trade and main activities Process improvements in the manu- Trade: Pharmaceutical industry. facture of pharmaceutical intermediates The main activity is production of pharmaceutical intermediates for active during 1998 included the re-use of a Lundbeck pharmaceutical ingredients. The production takes place in two factory units. previously classified waste stream, Energy Seal Sands Atmospheric emissions In addition there is a laboratory dedicated to production control, together with together with a number of other process Gas oil: 4,670 MWh Organic solvents: 33 t ancillary facilities, warehouses and administration. improvements to reduce further our Electricity: 2,920 MWh environmental impact. Environmental approvals The Seal Sands chemical production site is regulated by an overall approval Capacity extensions covering production of pharmaceutical intermediates and active pharmaceu- tical ingredients. The approval was granted by the Environment Agency in In 1998 our plant for the manufacture 1997. of pharmaceutical intermediates was Raw materials Waste upgraded. The vacuum systems were Organic solvents: 810 t Chemical waste: 1,248 t Significant environmental impacts improved and scrubbing capacity was Other raw materials: 1,520 t The production of active pharmaceutical ingredients involves consumption increased to allow for the increased pro- of water, energy and chemical substances including organic solvents. Additional duction of pharmaceutical intermediates aspects are chemical waste, atmospheric emission of organic solvents and and at the same time control our emis- waste water discharge. sions to atmosphere.

Number of employees Limit values Water Waste water: 14,400 m3 64 Potable water: 7,800 m3 Organic solvents: 0.5 t No breaches occurred of the limit values Raw water: 10,700 m3 Organic matter, COD: 29 t in our environmental approval.

Training and education

All personnel at Lundbeck Pharmaceu- ticals receive detailed SHE training, in order that they understand their roles both in Health and Safety and in Products Environmental protection. 141 t

2 3 Health, safety and Environmental performance At the selection stage we have focused The data is derived from continual Address environmental on the production chain. Production of monitoring of water and energy con- Lundbeck Pharmaceuticals Ltd. management system This part is an account of Lundbeck’s raw materials, transport, use and sumption, atmospheric and waste Seal Sands, Middlesbrough activities at Seal Sands in 1998. To cover disposal of products have environmental water emissions, and substance flow Cleveland TS2 1UB Lundbeck has decided to implement the most significant environmental im- impacts, but these are not included in analyses and calculations. Production England a health, safety and environmental pacts we have chosen to present devel- this report. management systems yielded informa- Telephone: +44 16 42 54 6 574 management system in 1999 based on opments in production volume and in tion on the consumption of raw mate- the company guidelines for manage- the resource consumption and emissions Whenever possible the environmental rials whereas data regarding waste Company profile ment of health, safety and the environ- regarding: performance is presented in real num- disposal derived from records kept on The chemical production site at Seal Sands produces active pharmaceutical ment and moulded over an interna- bers and in a perspective of four years. site. We have tried to obtain the highest ingredients (API’s) as well as pharmaceutical intermediates to the API produc- tional standard for environmental Consumption of water, energy The environmental indices (see explana- possible degree of accuracy. tion at the Lumsås chemical production site. API’s are used for the production management systems (ISO 14001). and raw materials tion on page 5) are used to relate the of pharmaceuticals at the Valby pharmaceutical production site or sold as bulk The system will incorporate existing Emissions to water and the environmental impacts to the produc- The figure illustrates resource consump- products to the pharmaceutical industry. In 1998 the Seal Sands production management principles. In preparation atmosphere tion size and visualise the trends. tion and emissions related to the 1998 range included seven intermediates and API’s. for the implementation of the system Waste disposal. activities at the Seal Sands chemical an external auditor carried out an production site. Supervisory authorities environmental audit in 1998. The Environment Agency, Dales Area, Swan House, Merchants Warf, West Point Road, Thornaby, TS17 6PB Process improvements

Compilation of resource consumption and emissions for 1998 Trade and main activities Process improvements in the manu- Trade: Pharmaceutical industry. facture of pharmaceutical intermediates The main activity is production of pharmaceutical intermediates for active during 1998 included the re-use of a Lundbeck pharmaceutical ingredients. The production takes place in two factory units. previously classified waste stream, Energy Seal Sands Atmospheric emissions In addition there is a laboratory dedicated to production control, together with together with a number of other process Gas oil: 4,670 MWh Organic solvents: 33 t ancillary facilities, warehouses and administration. improvements to reduce further our Electricity: 2,920 MWh environmental impact. Environmental approvals The Seal Sands chemical production site is regulated by an overall approval Capacity extensions covering production of pharmaceutical intermediates and active pharmaceu- tical ingredients. The approval was granted by the Environment Agency in In 1998 our plant for the manufacture 1997. of pharmaceutical intermediates was Raw materials Waste upgraded. The vacuum systems were Organic solvents: 810 t Chemical waste: 1,248 t Significant environmental impacts improved and scrubbing capacity was Other raw materials: 1,520 t The production of active pharmaceutical ingredients involves consumption increased to allow for the increased pro- of water, energy and chemical substances including organic solvents. Additional duction of pharmaceutical intermediates aspects are chemical waste, atmospheric emission of organic solvents and and at the same time control our emis- waste water discharge. sions to atmosphere.

Number of employees Limit values Water Waste water: 14,400 m3 64 Potable water: 7,800 m3 Organic solvents: 0.5 t No breaches occurred of the limit values Raw water: 10,700 m3 Organic matter, COD: 29 t in our environmental approval.

Training and education

All personnel at Lundbeck Pharmaceu- ticals receive detailed SHE training, in order that they understand their roles both in Health and Safety and in Products Environmental protection. 141 t

2 3 In relation to the output the production Water Energy The total energy consumption increased Organic solvents are reused in the pro- of active pharmaceutical ingredients in 1998. However relative to production duction to the largest possible extent, Production processes requires a large number of ancillary The total water consumption rose by The energy consumption came to 7,590 the consumption shows a rapid decline but reuse is limited by stringent require- A variety of active pharmaceutical substances such as solvents. Having around 20% on 1997. However relative MWh. Gas oil is used for steam produc- with the environmental index dropping ments to purity and raw materials con- intermediates and API’s are contributed to the production, the to production the consumption tion in our boiler unit. The produced from 66 in 1997 to 37 in 1998. An im- trol. Based on data regarding purchase produced by organic synthesis, majority end as chemical waste and a decreased. The environmental index steam is utilised for process heating portant reason is the increased produc- and use of solvents the calculated reuse in which simple chemical com- minor part is emitted to the atmosphere dropped from 74 in 1997 to 42 in 1998. (45%) and space heating (55%). tion which has been more consistent percentage lies around 40. pounds are built up step by step or discharged as waste water. Electricity is used for production and with longer campaigns and hence less into more complicated com- Lundbeck is currently collecting informa- ventilation purposes (85%), electric change over between products. The heading ‘Other raw materials’ covers pounds using a number of Water is needed for the production tion on the various uses of water on site lighting and space heating (15%). key raw materials and other ancillary ancillary substances and standard processes and for process cooling. In This is a very positive trend and substances than solvents. These ancillary procedures. Each step usually addition energy is consumed, especially Lundbeck Pharmaceuticals will continue substances include acids, bases, filtration starts with a chemical reaction in gas oil and electricity. Water consumption Energy consumption to assess the possibilities of a further material etc. Key raw materials are the a solvent. The product then m3 Index: 1995=100 MWh Index: 1995=100 reduction in the energy consumption. building blocks from which the active undergoes repeated separation Production trend A consultant analysis of the energy pharmaceutical ingredients are built. and purification processes, such 20,000 100 8,000 consumption has been commissioned The 1998 consumption of ‘Other raw as extraction, distillation, filtrat- 18,000 7,000 100 Production of active pharmaceutical 16,000 80 for 1999. materials’ increased by almost 25%, ion and drying, until it has 6,000 ingredients and intermediates increased 14,000 80 but the environmental index decreased been isolated from the other sub- significantly in 1998. The production 12,000 60 5,000 from 53 in 1997 to 31 in 1998. stances used. Production takes 60 volume in tonnes increased by 114% on 10,000 4,000 Raw materials place in batches and campaigns. 8,000 40 1997. 3,000 40 Raw materials consumption 6,000 2,000 The consumption of raw materials Environmental index 4,000 20 20 Tonnes Index: 1995=100 2,000 1,000 amounted to 2,330 tonnes. The figure The environmental index 2,500 120 Production 0 0 0 0 covers both organic solvents and other expresses the environmental Tonnes 1995 1996 1997 1998 1995 1996 1997 1998 raw materials. The choice and quantities 2,000 100 impact (i.e. resource consump- of raw materials to be used in produc- 160 Raw water Electricity 80 tion or emis-sions) per produced Potable water Gas oil tions are carefully specified and docu- 1,500 unit. The 1995 impact level 140 60 Environmental index, Environmental index, mented in production procedures. corresponds to index 100. 100 1,000 total water consumption energy consumption 40 A decreasing environmental 80 Raw materials consumption rose by index figure signifies an improve- 500 20 60 around 50% on 1997 but relative to ment and a reduced environ- and from this the intention is to opti- production the trend is decreasing with 0 0 mental impact in relative terms. 40 mise the use of water through process an enviromental index of 34 in 1998 as 1995 1996 1997 1998 20 improvement and recycling of cooling opposed to 48 the previous year. Organic solvents Production size 0 water. Other raw materials The production size is expressed 1995 1996 1997 1998 Organic solvents are essential as reac- Environmental index, by the actual produced amounts tion media, in separation and purifica- all raw materials of intermediates and active tion processes and for cleaning pur- pharmaceutical ingredients. poses. Consumption in real numbers increased by 145%, corresponding to a rise in the enviromental index from 38 to 43.

4 5 In relation to the output the production Water Energy The total energy consumption increased Organic solvents are reused in the pro- of active pharmaceutical ingredients in 1998. However relative to production duction to the largest possible extent, Production processes requires a large number of ancillary The total water consumption rose by The energy consumption came to 7,590 the consumption shows a rapid decline but reuse is limited by stringent require- A variety of active pharmaceutical substances such as solvents. Having around 20% on 1997. However relative MWh. Gas oil is used for steam produc- with the environmental index dropping ments to purity and raw materials con- intermediates and API’s are contributed to the production, the to production the consumption tion in our boiler unit. The produced from 66 in 1997 to 37 in 1998. An im- trol. Based on data regarding purchase produced by organic synthesis, majority end as chemical waste and a decreased. The environmental index steam is utilised for process heating portant reason is the increased produc- and use of solvents the calculated reuse in which simple chemical com- minor part is emitted to the atmosphere dropped from 74 in 1997 to 42 in 1998. (45%) and space heating (55%). tion which has been more consistent percentage lies around 40. pounds are built up step by step or discharged as waste water. Electricity is used for production and with longer campaigns and hence less into more complicated com- Lundbeck is currently collecting informa- ventilation purposes (85%), electric change over between products. The heading ‘Other raw materials’ covers pounds using a number of Water is needed for the production tion on the various uses of water on site lighting and space heating (15%). key raw materials and other ancillary ancillary substances and standard processes and for process cooling. In This is a very positive trend and substances than solvents. These ancillary procedures. Each step usually addition energy is consumed, especially Lundbeck Pharmaceuticals will continue substances include acids, bases, filtration starts with a chemical reaction in gas oil and electricity. Water consumption Energy consumption to assess the possibilities of a further material etc. Key raw materials are the a solvent. The product then m3 Index: 1995=100 MWh Index: 1995=100 reduction in the energy consumption. building blocks from which the active undergoes repeated separation Production trend A consultant analysis of the energy pharmaceutical ingredients are built. and purification processes, such 20,000 100 8,000 consumption has been commissioned The 1998 consumption of ‘Other raw as extraction, distillation, filtrat- 18,000 7,000 100 Production of active pharmaceutical 16,000 80 for 1999. materials’ increased by almost 25%, ion and drying, until it has 6,000 ingredients and intermediates increased 14,000 80 but the environmental index decreased been isolated from the other sub- significantly in 1998. The production 12,000 60 5,000 from 53 in 1997 to 31 in 1998. stances used. Production takes 60 volume in tonnes increased by 114% on 10,000 4,000 Raw materials place in batches and campaigns. 8,000 40 1997. 3,000 40 Raw materials consumption 6,000 2,000 The consumption of raw materials Environmental index 4,000 20 20 Tonnes Index: 1995=100 2,000 1,000 amounted to 2,330 tonnes. The figure The environmental index 2,500 120 Production 0 0 0 0 covers both organic solvents and other expresses the environmental Tonnes 1995 1996 1997 1998 1995 1996 1997 1998 raw materials. The choice and quantities 2,000 100 impact (i.e. resource consump- of raw materials to be used in produc- 160 Raw water Electricity 80 tion or emis-sions) per produced Potable water Gas oil tions are carefully specified and docu- 1,500 unit. The 1995 impact level 140 60 Environmental index, Environmental index, mented in production procedures. corresponds to index 100. 100 1,000 total water consumption energy consumption 40 A decreasing environmental 80 Raw materials consumption rose by index figure signifies an improve- 500 20 60 around 50% on 1997 but relative to ment and a reduced environ- and from this the intention is to opti- production the trend is decreasing with 0 0 mental impact in relative terms. 40 mise the use of water through process an enviromental index of 34 in 1998 as 1995 1996 1997 1998 20 improvement and recycling of cooling opposed to 48 the previous year. Organic solvents Production size 0 water. Other raw materials The production size is expressed 1995 1996 1997 1998 Organic solvents are essential as reac- Environmental index, by the actual produced amounts tion media, in separation and purifica- all raw materials of intermediates and active tion processes and for cleaning pur- pharmaceutical ingredients. poses. Consumption in real numbers increased by 145%, corresponding to a rise in the enviromental index from 38 to 43.

4 5 Atmospheric emission Waste water Waste water breakdown Chemical waste Chemical waste Tonnes Index: 1995=100 Tonnes Index: 1995=100 Solvents mainly deriving from filtration, Waste water discharge amounted to Chemical waste amounted to 1,248 drying and distillation processes consti- 14,400 m3. The amount and composition 30 120 tonnes, out of which around 30% were 1,600 120 tute the majority of the atmospheric vary considerably in course of time due 25 100 recycled to enable reuse of solvents and 1,400 100 emission. The exhaust air passes through to different production processes. The sulphuric acid. Of the total amount, 1,200 20 80 80 a scrubber system prior to emission. The waste water is collected and treated in mainly used packaging and filter aids, 1,000 content of solvents in the atmospheric the company’s own waste water treat- 15 60 almost two-thirds were landfilled while 800 60 emissions is monitored regularly as ment plant, where pH-adjustment takes 10 40 the rest was incinerated. 600 40 required by the Environment Agency. place prior to discharge in the River Tees. 400 5 20 20 In addition to the waste water treated 200 In 1998, 33 tonnes of solvents were in-house, 1,965 m3 of waste water with 0 0 0 0 emitted into the air - a 175% increase a high content of organic matter, COD, 1995 1996 1997 1998 1995 1996 1997 1998 on 1997. Relative to production the was sent for off-site biological waste Organic matter, COD Chemical waste emission rose from environmental index water treatment. Solvents Environmental index of 37 in 1997 to an index of 47 in 1998. Environmental index, solvents The total waste water discharge rose by Environmental index, Atmospheric emission around 20% on the previous year, but organic matter, COD of solvents relative to production the discharge Environmental Data 1994 1995 1996 1997 1998 Tonnes Index: 1995=100 decreased as illustrated by an environ- mental index of 39 in 1998 as opposed Production (tonnes) 17 32 77 66 141 35 120 to 68 in 1997. Raw materials consumption(tonnes) 550 1,540 1,760 1,540 2,330 30 100 25 Organic solvents (tonnes) 120 430 450 330 810 80 20 Waste water Other raw materials (tonnes) 430 1,110 1,310 1,210 1,520 60 15 m3 Index: 1995=100 Water consumption (m3) 9,200 9,900 16,200 15,100 18,500 40 10 16,000 120 Potable water (m3) 2,300 2,100 4,800 5,300 7,800 5 20 14,000 100 Raw water (m3) 6,900 7,800 11,400 9,800 10,700 0 0 12,000 80 Energy consumption (MWh) 750 4,600 6,310 6,270 7,590 1995 1996 1997 1998 10,000 8,000 60 Gas oil (MWh) 730 2,590 3,600 3,920 4,670 Solvents 6,000 Environmental index 40 Electricity (MWh) 20 2,010 2,710 2,350 2,920 4,000 Chemical waste (tonnes) 434 718 1,507 808 1,248 2,000 20 0 0 Recycling (tonnes) 39 224 169 175 363 1995 1996 1997 1998 Landfill (tonnes) 354 329 727 565 803 Waste water Incineration (tonnes) 41 165 611 68 82 Environmental index Other waste (tonnes) 6 24 0 0 0 Atmospheric emission, solvents (tonnes) 1,5 16 16 12 33 The chart of the waste water breakdown Waste water (m3) 6,800 8,300 10,900 11,800 14,400 shows increased discharge of solvents and COD loaded waste water in real Emission of organic solvents (tonnes) 1.2 1.0 0.6 0.3 0.5 numbers but a declining discharge Emission of organic matter, COD (tonnes) 15 21 22 20 29 relative to production as reflected in the COD loaded waste water for external biological treatment (m3) 0 200 1,208 1,444 1,965 environmental indices.

6 7 Atmospheric emission Waste water Waste water breakdown Chemical waste Chemical waste Tonnes Index: 1995=100 Tonnes Index: 1995=100 Solvents mainly deriving from filtration, Waste water discharge amounted to Chemical waste amounted to 1,248 drying and distillation processes consti- 14,400 m3. The amount and composition 30 120 tonnes, out of which around 30% were 1,600 120 tute the majority of the atmospheric vary considerably in course of time due 25 100 recycled to enable reuse of solvents and 1,400 100 emission. The exhaust air passes through to different production processes. The sulphuric acid. Of the total amount, 1,200 20 80 80 a scrubber system prior to emission. The waste water is collected and treated in mainly used packaging and filter aids, 1,000 content of solvents in the atmospheric the company’s own waste water treat- 15 60 almost two-thirds were landfilled while 800 60 emissions is monitored regularly as ment plant, where pH-adjustment takes 10 40 the rest was incinerated. 600 40 required by the Environment Agency. place prior to discharge in the River Tees. 400 5 20 20 In addition to the waste water treated 200 In 1998, 33 tonnes of solvents were in-house, 1,965 m3 of waste water with 0 0 0 0 emitted into the air - a 175% increase a high content of organic matter, COD, 1995 1996 1997 1998 1995 1996 1997 1998 on 1997. Relative to production the was sent for off-site biological waste Organic matter, COD Chemical waste emission rose from environmental index water treatment. Solvents Environmental index of 37 in 1997 to an index of 47 in 1998. Environmental index, solvents The total waste water discharge rose by Environmental index, Atmospheric emission around 20% on the previous year, but organic matter, COD of solvents relative to production the discharge Environmental Data 1994 1995 1996 1997 1998 Tonnes Index: 1995=100 decreased as illustrated by an environ- mental index of 39 in 1998 as opposed Production (tonnes) 17 32 77 66 141 35 120 to 68 in 1997. Raw materials consumption(tonnes) 550 1,540 1,760 1,540 2,330 30 100 25 Organic solvents (tonnes) 120 430 450 330 810 80 20 Waste water Other raw materials (tonnes) 430 1,110 1,310 1,210 1,520 60 15 m3 Index: 1995=100 Water consumption (m3) 9,200 9,900 16,200 15,100 18,500 40 10 16,000 120 Potable water (m3) 2,300 2,100 4,800 5,300 7,800 5 20 14,000 100 Raw water (m3) 6,900 7,800 11,400 9,800 10,700 0 0 12,000 80 Energy consumption (MWh) 750 4,600 6,310 6,270 7,590 1995 1996 1997 1998 10,000 8,000 60 Gas oil (MWh) 730 2,590 3,600 3,920 4,670 Solvents 6,000 Environmental index 40 Electricity (MWh) 20 2,010 2,710 2,350 2,920 4,000 Chemical waste (tonnes) 434 718 1,507 808 1,248 2,000 20 0 0 Recycling (tonnes) 39 224 169 175 363 1995 1996 1997 1998 Landfill (tonnes) 354 329 727 565 803 Waste water Incineration (tonnes) 41 165 611 68 82 Environmental index Other waste (tonnes) 6 24 0 0 0 Atmospheric emission, solvents (tonnes) 1,5 16 16 12 33 The chart of the waste water breakdown Waste water (m3) 6,800 8,300 10,900 11,800 14,400 shows increased discharge of solvents and COD loaded waste water in real Emission of organic solvents (tonnes) 1.2 1.0 0.6 0.3 0.5 numbers but a declining discharge Emission of organic matter, COD (tonnes) 15 21 22 20 29 relative to production as reflected in the COD loaded waste water for external biological treatment (m3) 0 200 1,208 1,444 1,965 environmental indices.

6 7