Annual Report 1999 1999 Was Both an Eventful and a Successful Year for H

Annual Report 1999 1999 was both an eventful and a successful year for H. Lundbeck A/S.

The year’s biggest event was the flotation of the company on the Copenhagen Stock Exchange on 18 June, which was also the culmination of many months’ hard work. The listing has improved the company’s possibility of continuing the strong growth achieved in the last few years and strengthened Lundbeck’s profile both at home and internationally.

During the year, Lundbeck invested heavily in its research capability. About 100 new, highly qualified employees joined the Research and Development departments. Research spending increased by 32% and accounted for more than 20% of the year’s turnover, which is above the average for the pharmaceutical industry.

The company also strengthened its pipeline significantly in 1999 by licensing new compounds in both preclinical and later phases.

Lundbeck’s next major innovative product – the S-enantiomer – will be launched globally as scheduled in the spring of 2002.

Lundbeck achieved its best-ever financial result in 1999 – a pretax profit of more than DKK 900 million, which is more than double the 1998 figure.

The result was due partly to growing sales in Europe and partly to the success of Cipramil® – under the name Celexa® – on the American market, where marketing and sales are taken care of by Lundbeck’s strategic partner, Forest Laboratories Inc.

Lundbeck thus stands strongly here at the beginning of the new millen- nium, and I would like to take this opportunity of thanking each and every one of our employees for their fine work and commitment in 1999.

Erik Sprunk-Jansen President & CEO

H. Lundbeck A/S Annual General Meeting will be held on 28 March 2000 at 4pm at Valby Hallen. Supervisory Board

Arne V. Jensen Flemming Lindeløv (Chairman)

Lars Bruhn (Vice-Chairman)

Henrik Hertz Sven Dyrløv Madsen

Bent Jakobsen

Jan Gottliebsen Torben Skarsfeldt (Elected by employees) (Elected by employees)

Birgit Bundgaard Rosenmeier (Elected by employees)

Directorships held by the Supervisory Board

Arne V. Jensen Sven Dyrløv Madsen Bent Jacobsen Flügger A/S (Chairman) Reipur Technology A/S (Chairman) Maersk Medical A/S Chr. Hansen Holding A/S Chr. Hansen Holding A/S (Chairman) DISA A/S Rockwool International A/S Castrol A/S (Chairman) Rosti A/S Gudme Raaschou Health Care A/S (Chairman) Lars Bruhn Scandlines A/S (Chairman) Flemming Lindeløv Dagbladet Børsen A/S DAKO A/S (Vice-Chairman) Royal Scandinavia A/S (Chairman) In Wear Group A/S Dernerco Oil A/S Coca-Cola Nordic Beverages A/S Internet Ventures Scandinavia a/s Arvid Nilsson A/S Dansk Olie og Naturgas A/S BRUHN Invest A/S Det Østasiatiske Kompagni A/S Ejendomsaktieselskabet af 3/9 1930 BRUHN NewTech A/S Board of Management

Erik Sprunk-Jansen President & CEO

Flemming Juul Jensen Executive Vice President Commercial Operations

Claus Bræstrup Executive Vice President Research & Development

Directorships held by Senior Vice Presidents the Board of Management Lars Bang Stefan D. Buch Erik Sprunk-Jansen Supply Operations & Engineering Corporate Finance Privathospitalet Hamlet NTR Holding Harald Conradi-larsen Hans Henrik Munch-Jensen Tele Danmark A/S Human Resource Management Corporate Communications

Claus Bræstrup Stig Løkke Pedersen ProFound Pharma A/S (Chairman) Corporate Affairs BRIC (Biotech Research & Innovation Center) (Chairman) Lundbeck International Neuroscience Foundation (Chairman) Contents oe 60 86 59 84 Report1999 Annual 56 Lundbeck A/S TranslationH. of 58 worldwide Lundbeck Information Shareholder 55 Notes 50 Report Auditors' 55 Board Supervisory of Signatures 40 statement flow Cash 32 sheet Balance reserves and capital Movementsin 34 38 account loss and Profit Accountingpolicies 28 26 6 accounts the Commentson 1993-1999 Group the for Summary 24 20 environment good a Growthin products Lundbeck's market world the on Lundbeck society benefits Citalopram 5 depression prevents Cipramil® Development Researchand 6 on Essay Brain,An The 1999 Report 1995-1999 highlights financial Group activities our of basis The n or fMngmn 59 Management of Board and 12 Møllehave Johannes by Acalypha wilkesiana (East Indies). Copperleaf is a foliage plant that is related to the common Poinsettia. It is grown for its beautifully marbled leaves.

4 The basis of our activities

The basis of our activities is the brain and its Nature contains many unique details that are functions – and the diseases that can occur in the normally completely overlooked. brain. Lundbeck develops, produces and markets drugs for treating diseases of the central nervous It is strange to think, for example, that no two system. drops of water are identical, that no two snow- flakes are identical and that no two leaves are We are therefore fascinated by the mysterious identical. And if one goes really close up, one dis- functions and capacity of the human brain. We covers that every phenomenon is an incredibly now know the physical and chemical structure composite system of details, with every nerve and of the central nervous system, but how the brain every vein having its own function and reason for actually functions remains a mystery. We know being. Just like the brain. that all human senses and functions are controlled through an interaction between many For this year’s annual report, we have asked the complicated structures, but we do not know, and Danish author, philosopher and priest Johannes probably never will know, precisely how. Møllehave to write an essay on the brain from a layman’s point of view. Johannes Møllehave is a The brain is a wonderful example of the fact that wonderful story-teller and one of the many who nature is beyond man’s comprehension, but it is have studied – and marvelled at – nature and the not the only example. incredible complexity of the brain.

5 Report 1999

Significant events in the financial year contributing to maintaining Lundbeck’s high substances to be used for ”High Throughput The substantial growth in recent years result- growth rate – increase the span of the com- Screening”. ing from the sale of Cipramil® continued in pany’s product portfolio. 1999. In 1999, turnover amounted to DKK 2.6 In November 1999, Lundbeck and Teva billion, or an increase of 33%. In 1999, Celexa® The development of Lundbeck’s next innova- Pharmaceuticals Industries Ltd. entered into a continued to gain market shares in the US tive pharmaceutical – the S-enantiomer of cooperation agreement regarding joint devel- market. At the end of 1999, the market share citalopram – went on to phase III in August opment and marketing in Europe of two pro- held by Celexa® was 11% of first prescriptions 1999 as scheduled. The application for regi- ducts for the treatment of Parkinson’s disease. for new SSRIs and 9% of all prescriptions for stration is still expected to be filed in the Teva holds the marketing rights in the rest of new SSRIs. spring of 2001, and the product is still expect- the world, including USA. One of the substan- ed to be introduced globally at the end of the ces – TV 1203 – is in phase II and is a so-called In accordance with its objective to strengthen first half of 2002 as planned. prodrug for L-DOPA, which is the substance the company’s pipeline, Lundbeck entered into most frequently used in the treatment of Par- six new license agreements from pre-clinical In November, H. Lundbeck A/S and Novo kinson’s disease. The other substance – rasagi- projects to products in phase III. In-licensing Nordisk A/S entered into an agreement on the line – is in phase III. Rasagiline is a potent and of new projects and products will – besides establishment of a common library of chemical irreversible inhibitor of the enzyme monoaminoxidase type B, MAO-B.

Group Financial Highlights 1995-1999

1995 1996 1997 1998 1999 1999

DKKm EUR mio.* Net turnover 1,849 2,324 2,662 3,231 4,189 563 Research and development costs 257 334 433 619 824 111 Operating profit 223 337 441 384 862 116 Profit for the year 166 237 297 313 616 83 Total assets 2,032 2,452 2,756 2,981 4,458 599 Capital and reserves 1,042 1,257 1,550 1,822 2,907 391 Cash flow from operating and investing activities -174 60 226 414 375 50 Capital investments, gross 306 227 195 278 471 63

% Net profit ratio 12.1 14.5 16.5 11.9 20.6 Return on assets 24.0 24.1 25.8 25.9 43.0 Return on equity 16.2 20.6 21.0 18.2 26.2 Solvency ratio 51.1 51.1 56.1 61.0 65.1

DKK EUR* Earnings per share (EPS) **) 2.82 4.28 5.32 5.56 10.83 1.46 Dividend per share **) 0.40 0.00 0.63 0.82 2.25 0.30 Cash flow per share **) 1.87 5.00 7.38 12.33 14.71 1.98 Net asset value per share **) 18.80 22.68 28.01 32.93 49.82 6.69

Average number of employees 1,545 1,829 2,003 2,286 2,653

*) Translated at the current EUR rate at 31 December 1999 (rate 744.32) **) Calculation based on DKK 20 shares.

Definitions, cf. page 39

6 Report Profit for the year (DKKm) Turnover (DKKm)

650 25% 4.500 1.000 600 4.000 900 550 20% 800 500 3.500 450 700 3.000 400 15% 600 350 2.500 500 300 2.000 250 10% 400 1.500 200 300 150 5% 1.000 200 100 500 50 100 0 0% 0 0 1995 1996 1997 1998 1999 1995 1996 1997 1998 1999

Profit for the year Cipramil®/Seropram®/Celexa® Net profit ratio (%) Other turnover Rate of turnover

In July 1999, Lundbeck entered into a licence At the beginning of June 1999, Lundbeck Profit for the year agreement with the Greek company P. N. entered into a research and development Lundbeck achieved its best-ever financial perform- Gerolymatos S.A. concerning two substances agreement with the Canadian company ance in 1999. Turnover came to DKK 4,189 mil- for the treatment of Alzheimer’s disease and, Neurochem Inc. within the neurological lion, an increase of 30% on 1998, while profit possibly, other neurodegenerative diseases. field. As a result of this agreement, Lundbeck before tax went up by 108% to DKK 926 million. acquired the global rights to a substance In July 1999, Lundbeck acquired the rights in (NC 531) in the pre-clinical phase for the This growth in turnover was due partly to gains Denmark, Sweden, Norway, Finland, Ireland and treatment of Alzheimer’s disease. in market share in the European markets, where the UK to almotriptan – a substance for the Lundbeck intensified its marketing effort consider- treatment of migraine – from the Spanish At the end of May 1999, Lundbeck entered ably in 1999, and partly to the successful marke- company Almirall Prodesfarma S.A. The sub- into an extensive co-marketing agreement ting of Cipramil®, under the name of Celexa®, in stance was approved for marketing purposes with Nycomed Danmark A/S on the sale and both the US and the Canadian markets in 1999. in Spain in December 1999. Lundbeck expects marketing of Cipramil® in the Danish market. to start sales and marketing efforts at the end According to the agreement, Nycomed under- Turnover and earnings of 2000. takes to bring a full sales force into action on Lundbeck’s turnover rose by nearly one billion the Danish market, which will considerably Danish kroner to DKK 4.2 billion in 1999, an Lundbeck was floated on the Copenhagen strengthen the initiatives taken in relation to increase of 30% on 1998. The rapid expansion of Stock Exchange on 18 June at a price of both psychiatrists and general practitioners. the company, which has been 26% on average DKK 175 per share. The flotation resulted in the past five-year period, thereby continued. in revenues of DKK 500 million for the In May 1999, Lundbeck entered into an agree- company. ment with the German company Byk Gulden Lundbeck’s total costs, exclusive of financial items Lomberg Chemische Fabrik GmbH on an in- and tax, were DKK 3.3 billion in 1999, an increase In June 1999, Lundbeck entered into an exten- licensing of the European rights to budipine, of 17% on 1998. sive research and cooperation agreement a product for the treatment of Parkinson’s within the neurological field with the US com- disease. Later in the year, Byk Gulden informed Operating profit more than doubled from DKK pany Cephalon, Inc. The agreement gives Lundbeck that the European approval of the 384 million in 1998 to DKK 862 million in 1999. Lundbeck the European rights to a new and product would be delayed beyond year 2000, unique substance, CEP 1347, with potential as part of the material on which the applica- At the same time, research and development within the treatment of Parkinson’s disease. tion for registration is based must be updated. costs went up 33% to DKK 824 million, represent- In July 1999, CEP 1347 went on to clinical Against this background, Lundbeck decided not ing approx. 20% of turnover. This increase is con- phase I. to market budipine outside Germany. sistent with Lundbeck’s objective of allocating more resources to research and development activities.

7 Report Profit before tax was DKK 926 million, while profit yet another possibility of acquiring capital for Against this background, Lundbeck applies rela- after tax and minority shareholders was DKK 616 continued growth. In addition, the flotation has tively more resources towards research and devel- million, or twice as much as in 1998. contributed to raising the profile of Lundbeck opment than the pharmaceutical industry on nationally and internationally. average. Combined with the fact that the com- Investments pany concentrates its research resources on CNS, Total net investments increased from DKK 267 In the prospectus, which was prepared and pub- Lundbeck, despite its size, has in fact a research million in 1998 to DKK 461 million in 1999. lished in connection with the flotation, Lundbeck budget that measures up to even very large enter- presented its strategy for the next few years: prises’ efforts within the CNS field. Investments were made in both tangible assets Continued focus on CNS research, continued with the primary purpose of expanding the com- expansion and strengthening of research activities, Lundbeck intends to enter into agreements on pany’s research and production capacity, and in increased in-licensing and active Life Cycle research and development collaboration with financial assets. Management efforts to defend Cipramil’s market other pharmaceutical and biotechnological enter- position. prises in the next few years. In 1999, Lundbeck As a consequence of the cooperation agreements entered into a number of research and develop- made, Lundbeck considers it an opportunity also Continued focus on CNS ment agreements, with, among others, Cephalon, to invest in its business partners. In 1999, the Lundbeck aims to be a world leader within Inc., Teva Pharmaceuticals Industries Ltd. and company therefore invested DKK 86 million in research and marketing of integrated treatment Novo Nordisk A/S. Cephalon, Inc., corresponding to 1.0 million shares concepts for psychiatric and neurological diseases. or approx. 3% of Cephalon’s share capital. Considerable human resources were allocated to Lundbeck is today the only pharmaceutical com- research in 1999. Lundbeck’s research activities Cash flows pany concentrating its research resources on the were strengthened during the year through the Lundbeck focuses on ensuring a high cash flow development of new and innovative pharma- employment of nearly 100 researchers and tech- from operating activities to be able to invest in ceuticals for treatment of diseases of the central nicians and through the establishment of two new the continuing expansion of the company. nervous system (CNS). biological research divisions.

Lundbeck’s cash flow from operating activities Traditionally, Lundbeck has been focusing primari- Lundbeck carried out major expansions of its went up DKK 155 million to DKK 836 million in ly on the psychiatric field. Lundbeck’s strategy research facilities, and new facilities for pharma- 1999. is to maintain its focus on research and develop- cological research were put into operation in the ment of drugs for treatment of psychiatric disea- first quarter of 1999. Construction of new facili- Capital and reserves ses, while at the same time extending its focus ties for medicinal chemistry research was initiated As a result of the profit for the year (DKK 616 also to include pharmaceutical preparations for in the second quarter of 1999, and the facilities million) and the revenue resulting from the public treatment of neurological diseases. will become operational in the second quarter of offering and the issue of employee shares (DKK 2000. 514 million), capital and reserves totalled DKK 2.9 The neurological field is characterised by a billion at year-end 1999 against DKK 1.8 billion at large number of unfilled needs; and Lundbeck will, Lastly, Lundbeck’s agreement with Novo Nordisk year-end 1998. based on its core competencies with brain A/S on the establishment of a common library research, be able to achieve far-reaching synergy of chemical substances to be used for ”High Dividend effects within not only research and development, Throughput Screening” has made Lundbeck able The Supervisory Board proposes to the general but also within marketing and sales of innovative to operate on a high international standard in meeting of shareholders distribution of a dividend neurological drugs. this technological field as well. of DKK 2.25 per share to the shareholders, or DKK 130 million. The distribution rate relative to Expansion of research Strengthened in-licensing the profit after tax is 21.1%, which is in accord- Another strategic aim pursued by Lundbeck is Throughout a number of years, the pharmaceuti- ance with the company’s dividend policy to distri- to continuously expand the company’s research cal industry has been characterised by an increas- bute dividend at a rate of between 15 and 25% activities to be able to market a new and innova- ing degree of cooperation, partly between estab- each year. tive phamaceutical preparation every third or fifth lished pharmaceutical enterprises, and partly year globally. Such an ambitious aim requires between biotechnical and pharmaceutical enter- Objectives and strategy allocation of considerable resources to research, prises. Lundbeck was floated on the Copenhagen Stock both financial and human. Exchange on 18 June 1999 following a successful In 1999, Lundbeck enterered into six licensing sale of 20% of the company’s shares to national Accordingly, research and development costs agreements ranging from pre-clinical projects to and international investors. increased in 1999 to a level, which the manage- products in phase III. In-licensing of new projects ment considers to be the optimum allocation. and products will – besides contributing to main- The flotation of Lundbeck is a natural step in Costs now account for approx. 20% of the turn- taining Lundbeck’s rapid growth – strengthen the the company’s continued expansion. As a con- over. scope of the company’s product portfolio and sequence of the flotation, Lundbeck was afforded

8 Report Research and development costs (DKKm) Employees at year-end

900 25% 3,000 1,6

800 1,4 2,500 700 20% 1,2 600 2,000 1,0 15% 500 1,500 0,8 400 10% 0,6 300 1,000 0,4 200 5% 500 100 0,2

0 0% 0 0 1995 1996 1997 1998 1999 1995 1996 1997 1998 1999

Research and development costs Abroad Research and development costs (as % of turnover) Denmark Net turnover per employee (DKKm)

open access to CNS indications, and, in this way, market, as the development from a biotechnologi- The introduction of Cipramil® in the Canadian significantly supplement Lundbeck’s own research cal to a pharmaceutical business depends on the market – under the name of Celexa® – further and development activities. presence of a sales and marketing organisation of contributed to the turnover growth. As in the US their own. market, Celexa® is also in Canada the antidepres- It is a strategic aim of Lundbeck’s to supplement sant having penetrated the market most rapidly. the company’s product portfolio of substances Intensified sales efforts from its own research activities through in-licens- It is Lundbeck’s strategy to market and sell its Besides Cipramil®, Lundbeck markets a number of ing of new substances that are in an early as well products through its own sales and distribution other well-established antidepressants and anti- as in a late stage of development. To arrive at a network in Europe, Canada, South Africa and psychotics. Sales of these products totalled DKK balanced portfolio, the company will in the near Australia. However, the company is going to enter 821 million in 1999, up 6% on 1998. Markets future focus particularly on substances that are in into agreements with major local players if so outside Europe account for the greater part of a late stage of development. needed to increase sales. this increase. The development is consistent with the company’s goal to balance out any declining Lundbeck is a highly attractive partner for com- In recent years, Lundbeck has expanded its sales shares of the European markets through an in- panies wishing to out-license products to the organisation considerably. The Group now has creased focus on new markets outside Europe. European market. Lundbeck’s unique focus on 29 sales subsidiaries employing a total of 1,210 CNS, the company’s long and recognised research people – a rise of 660 on 1994. Cipramil® Life Cycle Management tradition, Lundbeck’s dedicated and focused Citalopram is without discussion the company’s sales strength and, not least, the company’s long- During the last 12-18 months, the company has leading product. Citalopram is marketed under standing cooperation with European CNS specia- particularly increased its sales and marketing the names of Cipramil®, Seropram®, Cipram®, lists are but a few of the qualifications making effort in the major European markets of the UK, Sepram®, Celexa® in Canada and, by Forest Lundbeck an attractive collaborator. France, Germany and Italy. This increased effort Laboratories, Inc. in USA, also under the name has resulted in considerable growth in turnover of Celexa®. Cipramil® sales accounted for 61% Furthermore, due to its sales and distribution net- and market shares, emphasising the fact that of the company’s total turnover in 1999. work and the fact that the company’s products Europe is Lundbeck’s home market. are marketed and sold by Forest Laboratories, Inc. The protection of Cipramil® has been discon- in the US market, Lundbeck can offer small bio- The increase in sales and marketing efforts result- tinued in certain European countries, whereas technical companies active and focused efforts ed in a 33% growth in Cipramil® sales compared protection will not be discontinued until 2002 in in Europe without, at the same time, necessarily to 1998, which means that Lundbeck increased the UK, France, Belgium and Ireland. After 2002, claiming the rights to the US market. Today, US its market share in 1999 as well. Cipramil® sales Cipramil® in Europe will be protected by a process biotechnological companies want, to an increasing amounted to DKK 2.6 billion in 1999. patent until 2005, which, however, does not ex- extent, to market their own products in the US clude the possibility of generic competition.

9 Report Today, manufacturers of generic products are SSRIs and 9% of all prescriptions for new SSRIs, In December 1999, all employees were offered allowed to market and sell generic Cipramil® in making it the most successful introduction ever employee shares. Employees in the Danish com- a number of European countries, provided that of an antidepressant in USA. panies were granted shares, whereas employees the processing method applied does not violate in the foreign subsidiaries were offered a similar any of the many process patents held by Forest Laboratories has entered into a co-promo- plan. Lundbeck. Lundbeck is not at the present time tion agreement with Warner-Lambert, which has aware that any patent applications for the regi- just been taken over by Pfizer. As Pfizer already The employee shares were offered at a price of stration of generic Cipramil® have been filed. have a product competing with Celexa®, Forest DKK 52.50 per share. 97.8% of the Danish em- Against this background, Lundbeck does not anti- Laboratories is presently negotiating a termina- ployees subscribed for shares in Lundbeck, while cipate any generic Cipramil® on the market until tion of the agreement with Warner-Lambert. As 93.5% of the foreign employees joined the foreign the end of 2000 or later. a result, Forest Laboratories has already expanded plan. its sales force from 850 to 1,425 sales people. It is Lundbeck’s strategy to optimise the life cycle In June 1999, Lundbeck purchased 500,000 of of Cipramil® in order to maintain and increase the Termination of Forest Laboratories’ cooperation its own shares to secure and implement the share turnover and market potential of the product as with Warner-Lambert is therefore not expected to option plan. The cost of the shares was DKK 88 much as possible until such time when the com- have any adverse impact on Celexa® sales in the million. In the fourth quarter of 1999, the company will launch a new and innovative product, US market. pany purchased 185,000 of its own shares at which is to take place in connection with the a total cost of DKK 50 million to establish the global introduction of the S-enantiomer in 2002. Serdolect® foreign employee share plan. The marketing permission with regard to Lundbeck is going to extend and optimise the life Lundbeck’s antipsychotic pharmaceutical Serdo- Environment cycle of Cipramil® through focus on the markets lect® is still suspended due to the European Lundbeck aims globally to comply with the rules in which the patent is in force longest and on the health authorities having doubts as to the safety for "Responsible Care®" acceded to by CEFIC, markets in which the company believes the pro- of the product. At a meeting on 23 June 1999, the although at least to act in conformity with the duct has most potential. This will also take place European health authorities discussed the matter individual countries’ legislation in this area. through approval of new indications and, finally, and subsequently informed Lundbeck that the through continuous filing of new process patents suspension of Serdolect® would be extended by Unproblematic year 2000 transition for the protection of the production process. another 12 months. In this period, Lundbeck is Since 1997, Lundbeck has been making prepara- going to complete certain studies for purposes of tions in order to ensure an unproblematic transi- In a situation where the patent protection of further clarifying Serdolect’s safety profile. The tion to year 2000. This end was attained, as the a product such as Cipramil® will soon be discon- company still finds that it is impossible to predict millennial change did not result in any significant tinued, a number of enterprises will, one way when, if ever, Serdolect® may again be marketed. problems for Lundbeck in Denmark or in the or the other, make attempts to circumvent foreign subsidiaries. The total cost of Lundbeck’s Lundbeck’s rights in order to be able to market New incentive plans year 2000 project did not exceed DKK 20 million and sell generic Cipramil®. To ensure that Lundbeck’s management and in the period. employees are focused on creating added value It is Lundbeck’s policy to bring any such for the shareholders of the company, the com- The euro attempts before the courts of law, as Cipramil® pany introduced an executive share option plan In 1998, Lundbeck adopted a euro strategy, in Lundbeck’s opinion in a number of areas – via and issued employee shares in 1999. according to which the subsidiaries in the euro a vast number of very complex patents and intel- countries will convert to the euro by 1 January lectual property rights – is protected against The executive share option plan comprises the 2001. The parent company will not convert to generic competition beyond the date at which Group management, managers in subsidiaries euro, unless Denmark joins the EMU cooperation. the patent expires. in Denmark and abroad as well as other key employees. The plan runs for a five-year period Prospects for 2000 Sale of Celexa® in USA and comprises 45 executives. The options are Lundbeck expects sales of Cipramil® to continue Cipramil® is sold and marketed in USA by Forest earned by one-third a year over a period of three to perform positively in 2000. The major European Laboratories under the name of Celexa®. years, the first portion to be exercised in August markets in France, Italy, Germany, Spain and the 2000. The exercise price will correspond to the UK and in the two overseas countries Canada and Celexa® was introduced in USA in September initial offering price (DKK 175 per share) plus a Australia are expected to account for more than 1998. At the end of 1999, the market share held ”yield element” of 10% per annum. 70% of the growth. by Celexa® was 11% of first prescriptions for new

10 Report Income from Celexa® (DKKm) Turnover-breakdown by market Turnover-breakdown by product

800 18%

16% 700 74% 61% 14% 600 12% 500 10% 400 2% 8% 9% 300 6% 200 14% 4%

100 2% 17% 6% 0 0 17% 1996 1997 1998 1999

Income from Celexa® Europe Cipramil® Income from Celexa® as percentage of net turnover USA Celexa® Rest of world Other antidepressants Antipsychotics Other turnover

As the protection of Cipramil® has expired in all Alliances, in-licensing agreements, technology Against this background, it is Lundbeck’s long- countries with the exception of Belgium, France, purchases and company takeovers may have a term objective to increase its turnover at an the UK and Ireland, competition from generic considerable impact on the profit performance. annual rate of more than 10% and to improve Cipramil® may have an adverse impact on turn- earnings at an annual rate of 12-15%. over and earnings in 2000. However, Lundbeck Expectations for the period after 2000 does not expect generic competition, if any, to Lundbeck’s growth in the period from 2000 to Finally, growth in the period from 2002 to 2005 have any effect until at the end of 2000 at the 2005 will be heavily influenced by the develop- may be positively affected if Lundbeck succeeds in earliest. ment in Cipramil® and Celexa® sales. in-licensing additional products.

Lundbeck expects that the market share held by In the period from 2000 to 2002, growth in Board resolutions and proposals for business Celexa® will continue to increase in the US mar- Europe will depend on the scope of generic com- to be transacted at the Annual General ket even further in 2000. Lundbeck’s income is petition, if any. In USA, growth in the period from Meeting of shareholders expected to rise considerably as a result of the 2000 to 2003 will primarily depend on Forest H. Lundbeck A/S’s Annual General Meeting of increased sales. Lundbeck further anticipates that Laboratories’ success in the highly competitive, shareholders is to be held on 28 March 2000 at Forest Laboratories will continue its stock-building but also expanding US market. Generic Celexa® 4 pm in Valbyhallen. in 2000. If this is not the case, Lundbeck’s turn- is not expected to reach the US market until in over and earnings may be adversely affected. 2004 at the earliest, whereas generic variants of The Board of Directors proposes distribution of competing products may be introduced earlier. a dividend of DKK 2.25 per share, or a total of Lundbeck expects the Group’s total investments DKK 130 million. No dividend is to be distributed in 2000 to be in the order of DKK 500-600 mil- In the period from 2002 to 2005, Lundbeck’s out of the company’s portfolio of own shares. lion. Investments will mainly be made in a con- growth will mainly depend on the introduction The rest of the net profit of DKK 486 million will tinued expansion of the production capacity and of the S-enantiomer. The introduction will depend be appropriated to reserves. in a further expansion of the research laboratories. on the outcome of the clinical studies and on Lundbeck and Forest Laboratories’ success in Against this background, the company expects launching the product in Europe and in USA. further growth in both turnover and sales in 2000. Turnover is expected to increase by approx. 30% Furthermore, growth from 2002 to 2005 will, to on 1999, whereas profit before tax is expected to some extent, be affected by Lundbeck’s success in rise by approx. 35%. marketing products, which are presently in phase II and phase III.

11 Report Agaricus bisporus (Europe). The Portobello mushroom is an ordinary, brown garden mushroom that is grown all over Europe as an edible fungus.

Translated by Professor W. Glyn Jones

An Essay on The Brain by Johannes Møllehave

The world’s leading specialists in the function of number of units at his disposal will correspond pulsating. It is as soft as thick crème caramel, the brain admit that they are far from being able to the stars in the Milky Way, but let that not deeply furrowed and threaded through with blood to maintain that they have understood the brain. be crucial. 100 million is also the number of cells vessels of varying colour and calibre. Far too sen- ”We shall need a hundred, perhaps a thousand, in 1000 livers. But remind him that the number sitive, it is locked safely in behind its hard shell. years in order to understand the brain,” said the of cells is not all that matters. For 1000 livers Swedish-born Nobel prizewinner, the President of produce no consciousness.” So that is what the brain looks like, but for us Rockefeller University in New York, Torsten Wiesel. who have not seen it, the experience of the brain’s ”We have discovered some simple mechanisms in When two brain experts marvel thus at the aptitude, abilities and potential is no less wonder- the brain, but we still do not know how the brain mystery of the brain, what must we others do? ful. develops at the foetal stage, how the brain grows old, and how memory works.” The greatness of the brain consists precisely in the Memory and recollection fact that even the finest experts are too small to Two of the brain’s most important functions are The Danish surgeon and brain specialist, Bjarke á understand it. It is with the help of the brain that memory and recollection. They are related to each Rogvi-Hansen compares the heart and the brain they gain insights, but the mystery of the brain other, but very different. and says: ”But of course, the heart is only a simple evades the understanding of even the greatest little muscle, the function of which can be copied brains! The greatness of the human brain consists Memory remembers a name, a number, a date. by even a mediocre engineer. Ask him instead to in our being able to ask questions that no other construct a network of weak currents – let him living beings have sufficient brain to ask. Recollection more than remembers; it creates a call the thing whatever he likes – with the ability link with happy and painful experiences. Of course to acquire experience, intuition, humour and crea- The surgeon describes the living brain as a mag- we can remember the names of people we have tive ability. From the originals we know that the nificent aesthetic experience: shiny, beige, gently lost, but recollection retains their voices and

12 expressions, their peculiar qualities. Memory can Memory can remember a date; recollection makes put together with someone retailing his recollec- think of a name. But for recollection the name is us smile or weep at that date: perhaps it was the tions, it would be a peculiar performance. It would an existence, a life that has been lived and which birthday of someone we loved, perhaps the day be like asking ”Now when did it happen?” of a we can feel both joy and pain in recollecting. on which that person died. fairy tale.

In this way, memory and recollection relate Recollection is pregnant with sense impressions: Memory is satisfied with being able to think of differently to a name, and in this way they relate sound, small, sight, taste, atmosphere. the right name and the right number and the differently to a figure or a date. Most people will right date. presumably remember whether they had two, When I think of some of the best memoirs I have three or more siblings, whether they have one or read: those of Hans Christian Andersen, Maxim Recollection will discover meaning and coherence. more children – and how many grandchildren Gorki, Carl Nielsen just to name a few, what And it is one of the most overwhelming features they have. moves me is not the concrete memories they pro- about the human brain that it seeks pattern and duce, but the colour they impart to images that continuity. The brain works with stories. We are all However, recollection does not merely experience now only live in the soul. The paradox is that the present in our stories. The story gives us identity. a number, but it sees living pictures, dissolves best memoirs that have been written are recollec- from our own childhood or our children’s and tions of childhood. We recollect best what we In the story, where memory and recollection grandchildren’s childhoods. For that reason we talk remember least. I know, because I have myself work together and the question of meaning, of recollections, not memorisation. written my childhood memoirs and have been happiness or joy in life makes itself felt, we are corrected by people who remember far better human beings. Even by the age of three, a child Memory might need something to jog it; recollec- than I: That’s not what it was like. There wasn’t understands concepts like yesterday, today and tion has no need of such. any snow, or it wasn’t in Jutland. But that is what tomorrow, past, present and future, in which every my recollection tells me. If a memory artist were story is played out.

13 Even in dreams, we seek meaning and coherence When Johannes hears the size of the debt, he The brain enables us to do both. We can experi- through the stories of the dream. There are pays what the dead man owed and continues his ence a work of art, a picture, a cathedral, a piece dreams that ”do not mean anything”, as we say; journey the following day. The two who wanted of sculpture, a novel, a drama or a poem as a they flicker like a film being run too quickly. Other revenge laugh and accept the money and leave whole. dreams are so full of meaning that we wake up the dead man in peace. and know there is something we must retain We can then analyse what it is that makes such – dreams that contained both remains of the day As Johannes goes on, he meets a stranger who a great impression on us, and after having taken and pictures of childhood and the past, symbols joins him as a travelling companion. Andersen the entire thing apart, we can put it all together like fire and bridges and sea and cliffs and deser- keeps the revelation of who the travelling com- again to form the whole by which we were first ted houses. panion is until the end of the story. fascinated.

The brain makes us both dream and attempt to That the dead can join us on our journey between But memory and recollection, dreams and inter- interpret our dreams. Freud spoke of the causality life and death is something we know from our pretation are not the only impulses from the of dream; Jung of the finality of dream. One, then, dreams. brain. There is yet another dimension: the ethical was about the cause of dreaming and the other impulse. about the intention with a dream. Fairy tale and The fairy tale requires an interpretation like any myth have illuminated the idiom of dreams, and good dream. Jung says that in the world of dream Kant called this impulse the categorical impera- the idiom of dream has illuminated fairy tales and we are our own theatre, our own author and tive. I believe this means that it is always required myths. stage director, our own actors and scenographers, of us that we shall be human. But of course, we indeed even our own critics. are all human beings together. A human being is Let us take a single example: travel. Some of the not something we are, but something we must try oldest fairy tales in the world are about departure This means that dreams probably come from the to become. and travel. So are many dreams. On waking up, we creative, imaginative part of the brain, while the are confused because we cannot remember which process of interpreting them requires the critical In everyday language we say in Danish, ”After this town we were in, which streets and which houses. side of the brain, the side containing the ability to he / she will never be a human being again.” think logically and to analyse. Hans Christian Andersen’s first fairy tale, called In Shakespeare’s plays there are human beings The Travelling Companion, is known in countless I am grateful for my teachers in school and at who go totally to pieces after participating in earlier variations. The oldest go back to one of the university. If we had not learned to analyse, inhuman deeds. scripts that were not incorporated into the Old we would be at the mercy of the last speaker, Testament, the so-called apocryphal texts. Here, subject to any cheap propaganda and easy effect. Lady Macbeth is a single example. Her brain the story is told of a son who takes leave of his Heinrich Böll recalls that he had a teacher who cannot encompass all the blood and brutality to father to embark on a great journey to Equatana allowed his pupils to analyse Hitler’s speeches. which she has been a witness. She becomes a to find a wife. It is a dangerous journey, but on There was no need for him to say what he sleepwalker and is worn down by nightmares that the way he meets a travelling companion who thought about Hitler – it was sufficient that he drive her to suicide. presents himself as a human being, but in fact is asked critical, analytical questions of a factual, a disguised angel. academic nature. The speeches could not survive Primo Levi, who was a concentration camp prison- that, and they fell apart. er, tried to write his way out of the inhumanity In Andersen’s story, the travelling companion of which he had been a victim and to which he is a dead man whom the main character, called Long live analysis. had been a witness, but he also chose death. ”If Johannes, once freed from a debt. On his journey, This is a Man”, is the title of one of his shocking Johannes had gone into a church and seen a coffin And yet we seek more than analysis. Analysis of and unforgettable books. It surely means: if this containing the dead man. In the middle of the course means to break up, to loosen in Greek is a human being, why do you treat him as a night two men force their way into the church. – while the Greek word synthesis means putting non-human. Ecce Homo – ”Behold, this, too, is a They want to throw the dead man out as revenge together and creating a whole. human being like you” – were already the words for his not having paid them what he owed them. of Pontius Pilate.

14 Oreocereus doelzianus (The Andes). The hairs protect the cactus against the cold and the strong morning sun. The morning dew is collected via the thorns and led to the roots. The plant is pollinated by the colibri.

15 It seems to me that more than memory and than knowledge. Wisdom is insight into life. ”Edu- On being asked what inherited aptitude he had to recollection it is the ethical impulse that makes cation is the expanded ability to pay attention”. be a writer, Gustav Wied replied that he had the human brain into something unique. I have known and admired people who continued inherited his narrative talent from his mother, but to expand their knowledge when they were at a as the years passed he had come to realise that I have heard that it is possible to remove imagin- very advanced age, but I have even greater respect he had also inherited a good deal from the mid- ary guilt, i.e. a sense of guilt, by means of elec- for those who went on expanding their horizons. wife, who drank, and her husband, who was a troshock therapy, but the treatment does not coffin maker. Gustav Wied was certainly not in a remove the real guilt. Lady Macbeth would not For knowledge is in a certain sense value neutral, cheerful mood when he made this reply, but there have been cured in this way. while wisdom is based on self-insight and expan- is no lack of humour. He ended his life by taking ded horizons, an intellectual openness that often cyanide. Sometimes, it is a secondary character in Shake- evinces itself as a gentle kind of humour. speare who expresses the meaning of the whole Mark Twayne lost his entire fortune by frivolous work. Bjarke á Rogvi-Hansen, the brain surgeon, named speculations and said, ”There are two situations in four qualities when describing the format of the which a man should refrain from speculating on In King Lear there is a servant who attempts to brain: the stock market: When he can afford to do and prevent the two eyes being gouged out of the when he can’t.” Duke of Gloucester – a terrifying scene of torture. 1. The ability to gain experience 2. Intuition Humour in the sense of mood does not demand The servant only has a single line and is naturally 3. Humour humorousness, but it can provide the basis of murdered, and his protest does not prevent the 4. Creative ability humour. appalling deed. But he stands for me as one of the most remarkable figures in the whole of There are two kinds of humour, and they are not As a heart sufferer I have experienced entirely Shakespeare’s production. Rather oppose cruelty the same thing. You can be at a party where the losing my good humour on account of beta in vain than simply let evil happen. humour in the sense of mood is good, but where blocks. They reduce the production of adrenaline there is no humour to amuse the guests. The to the heart, but naturally also to the brain. If you He could not do otherwise. His spontaneous greatest humorists were not always in a good have experienced a down like this, you know impulse from his brain was that he would rather humour; on the contrary, many of them were without any doubt at all that your humour, your die as a human being than live without ever being depressive – but retained their humorous ability. mood, is a product of the brain. A humorous able to be a human being again. Mark Twain and Gustav Wied are two examples approach is a way of looking at things, a modest of how it is possible still to be humorous even form of wisdom; humour in the sense of mood is Knowledge and Wisdom when one’s humour is at a low ebb. a question of being in tune. It is a good thing to have knowledge. It is a good thing to know as many facts as possible – but the Mark Twayne says of one of his characters that We are always attuned in one direction or brain is not only a computer, although its dial-up he looked like a funeral director who had sold his another. In everyday language we talk of being in centre is impressive. However, wisdom is more business two days before an epidemic. a good mood or a bad mood, in high spirits or low spirits, vacillating, melancholy, despondent.

16 A multitude of nuances in language speak of understood what I said. And when I read aloud to but Kierkegaard defines spirit as the personal con- fundamental moods that derive from the brain. her, she reacted with laughter and tears in the sciousness of the self. My brain does not only right places. register that I have pain in my body or mind – it Mood, humour, is only one of them, though an also registers that I am myself and not my father, essential one. We best know how fundamental a It is four years since she died without recovering brother, cousin or neighbour. quality our good humour is when we have known her speech. what it is to lose it. And Kierkegard’s most penetrating analyses indi- She often appears in my dreams, and in those cate what happens when I flee from being what I Again, it is one of the amazing things about the dreams she speaks as she did when she was well. am: the result is angst and despair. brain that it can lose such an incredible number of cells without ceasing to function. Peter Seeberg wrote a short story entitled ”See When brain specialists today agree that all brains the Sparrow Hawk”. A father who lives by his use are different, this surely underlines the fact that all To live is to lose – every day some, and finally the of language is out in the country with his son. people are different – but they have in common lot. He points to show his son that there is a sparrow the need to relate personally to the ”self” that is hawk flying above. But he is unable to say the their own. While others can say, ”You’re not your- But one fact on which modern brain specialists words ”See the sparrow hawk”. He must be con- self now,” and when we can see, as it were from are agreed is that no two brains are identical. tent with the silent movement of his hand. the outside, whether we are ourselves or not ourselves – then how much more must we be able to The differences are seen both in healthy brains The words will not come. The father feels faint know from ”inside” whether or not we are what and sick brains. and is in pain, and the boy realises it is something we pretend to be. serious. A terrible new phase is beginning in his There are aphasia patients who have a positive father’s life. He has been struck by aphasia. Kierkegaard’s fundamental assertion that we must prognosis and manage to gain a command of become the ”self” we are has nothing to do with language again after intensive training. And there Body, Psyche and Consciousness egocentricity. are others who never recover. ”The brain feels pain from the body and the psyche, but is incapable itself of feeling pain,” The teacher, doctor or prison officer who runs I have known three people – two women and writes Bjarke á Rogvi-Hansen, adding: ”A qualified away from getting to know himself will presum- a man – suffering from aphasia after a cerebral truth, say those who are mentally ill. The brain is ably not be a particularly nice person for others to haemorrhage. The man, a head teacher in his equal parts of psyche and soma”. know either. fifties, speaks so well today that it is difficult to believe that he was suffering from aphasia six Psychosomatic conditions were not unknown Kierkegaard’s concept of the self is religious: ”To months ago. Neither of the women recovered. to Søren Kierkegaard (1813-1855). But his funda- have a self, to be a self is the greatest concession One of them, who was a close friend and whom mental argument was that human beings are ever made to a living creature, but at the same I often visited in hospital, had perhaps a word or intended for something other than body and time it is the demand eternity makes on him.” two at her command after a whole year. She psyche; they are also intended to be spirit. This is a difficult concept and perhaps rather obscure,

17 Fucus serratus. Serrated wrack. A form of brown alga. Common in Danish waters.

18 Readers who do not share Kierkegaard’s religious When we talk of the complex nature of a human view of life can nevertheless not get away from being, we imagine a person being composed of Kierkegaard’s familiarity with spiritual and psycho- several parts or functions. But, however strange logical conflicts and his description of human this may sound, it is one being, a rational being awareness. who admittedly has the task of coming to reason and becoming what it is; this was from the begin- Reason and Understanding ning the driving force in all philosophy. However, Villy Sørensen writes in the Brøndum encyclo- we make it difficult for ourselves by virtue paedia on the relationship between reason and of theories, theories of cognition, theories to the understanding. effect that cognition is a matter for the understanding, and that clear and perceptive under- He says: ”Language knows: it speaks (sometimes) standing is disturbed by unclear and obscure of cold understanding and sound reason, not of feelings. sound understanding and cold reason. There is no cold reason and no warm understanding. Man, Understanding divides into parts and understands especially when divided, has a quality of under- them; reason gathers together and perceives the standing and a quality of feeling, not a quality of coherence. ”Where is the seat of reason?” is the reason; reason is not a human quality, but – when question asked in the Thousand and One Nights – it is sound reason – an organ for the entire human receiving the answer: ”In our hearts. And so its being [...]” impulses rise up towards our minds to dwell there.”

19 Research and Development

thus strengthened our total development portfolio In addition, steps were taken during the year Lundbeck aims to be a world leader in in 1999, partly through projects of our own and to establish project cooperation with university psychiatric and neurological disorders. partly through major licensing agreements with centres and pharmaceutical companies. On the Cephalon, Inc. (CEP 1347, Parkinson’s disease), technology side, for example, Lundbeck entered Teva Pharm. Industries Ltd. (rasagiline and TV into long-term collaboration with Novo Nordisk In 1999, we greatly intensified our research 1203, both Parkinson’s disease) and Almirall Pro- on the establishment of a joint library of chem- activities by increasing our staff of highly qualified desfarma S.A. (almotriptan, migraine). ical substances and compounds. This collaboration researchers, establishing new technologies and also means that we have access to the latest research specialities and taking a new research Early in 1999, a new, 8,000 m2 laboratory building and most advanced screening technology (high building into use. This helped bring our research for molecular biology and pharmacology went throughput screening), which enables fast search- spending up to 20% of turnover. Lundbeck’s into use and in the same year work started on the ing in the chemical library in order to identify R&D expenditure is thus above the average in the construction of a new wing on our medicinal substances and compounds that are potential pharmaceutical industry, and we intend to main- chemistry laboratory. The new wing will be ready leads for new pharmaceuticals. The agreement, tain that position. for use in the year 2000 and will provide the which is unique, was made possible by the fact framework for a big expansion of our research that the two companies work within different During the year, the number of employees in in medicinal chemistry. Lastly, we managed to therapeutic fields. Research rose from 160 to 204, and the number attract some highly qualified people, thereby in Development from 359 to 414. Everyone in strengthening our research staff, both in the labo- We expect to have our research organisation fully Research is engaged in inventing new pharma- ratories and at management level. developed within the next couple of years and ceuticals, while Development’s staff have the thus be able to handle a suitable number of task of developing pharmaceutical candidates for Technological progress research projects simultaneously. Our goal is to registration and marketing. Lundbeck’s research in medicinal chemistry was launch a new pharmaceutical every 3-5 years. also strengthened during the year through the One of the main reasons for the rise in research introduction of new technology. For example, a Psychiatry spending is a strategic decision to extend many large proportion of our pharmaceutical candidates Lundbeck has several preclinical projects in pro- years’ successful activity within psychiatric are now produced by means of new, so-called gress within treatment of psychotic disorders research with similar activity within neurological combinatorial techniques, in which many different and depression. A pharmaceutical candidate research. Lundbeck’s new strategy also means that substances are synthesised at the same time. (Lu 35-138) was under early preclinical develop- new projects will be initiated through a combina- ment in 1999 and is expected to be ready to be tion of in-house research and licensing of pharma- Lundbeck’s Screening Department has been moved into phase I some time in the year 2000. ceutical candidates from other companies. We restructured and upgraded, resulting in a consider- At the same time, basic research projects are in able increase in capacity.

20 Report Rebutia heliosa (Bolivia). A rather hardy, conical cactus that has adapted to great heights and a harsh climate.

21 progress with the aim of uncovering new mole- agreement gives Lundbeck the right to the com- that the same clinical effect can be achieved with cular mechanisms involved in the development pound NC-531 and to backup compounds with an S-enantiomer dosage that is only half the of depression and schizophrenia. the same action mechanism. Cipramil® dosage, thereby putting less stress on the organism. Neurology Lastly, we signed a contract with a Greek firm, Supplementing a number of in-house project ac- P.N. Gerolymatos S.A., giving us the right to use The preclinical studies also show that the S-enan- tivities, Lundbeck signed an agreement on 1 June compounds that act on certain metal complexes tiomer has a very promising profile with respect 1999 with the American firm Cephalon, Inc. on that are believed to play a part in the develop- to both safety and side effects. research and development of compounds that ment of such neurodegenerative diseases as are effective against neurodegenerative diseases. Alzheimer’s. With a view to achieving registration of the These compounds act by inhibiting intracellular S-enantiomer for treatment of depression in processes, which are involved in so-called pro- Development portfolio Europe and USA, several large, controlled clinical grammed cell death (apoptosis) – a kind of self- phase III studies are in progress. The studies, extinction mechanism that is inherent to all cells. Psychiatry controlled by placebo and reference treatments, These processes are affected by very complicated Lundbeck’s leading position as a specialist in drugs commenced, as planned, in August 1999. In all, cascades of biochemical reactions. Cephalon, Inc. for treating psychiatric diseases is supported by they are expected to comprise over 2,000 patients is one of the leading firms within exploration and highly prioritised development projects in this from more than 18 European countries, USA and mapping of these intracellular processes, which field. In addition, we are still seeking to increase Canada. Enrolment of patients is proceeding are presumed to play a role in several types of the market for citalopram by consolidating its according to plan and we expect the clinical slowly progressing cell loss, as seen, for example, patent situation and by developing new formula- studies to be completed, as scheduled, at the in Parkinson’s disease, Alzheimer’s disease and tions. beginning of 2001. The first results will also start Huntington’s chorea. coming through at that time. S-enantiomer During the year, Lundbeck also entered into a Citalopram, which is the active ingredient in We therefore plan to apply for registration in cooperative agreement with the Canadian firm Cipramil®, is a racemate, i.e., a mixture of two 2001 in both Europe and USA with a view to Neurochem Inc. on compounds presumed to slow substances that are mirror images of each other, parallel marketing of the S-enantiomer in these down the development of Alzheimer’s disease. so-called enantiomers. Studies in animal models regions in 2002. The compounds in question attack the very have shown that the pharmacological action of mechanism by which the precipitation of amy- citalopram resides solely in the S-enantiomer. The S-enantiomer for treatment of depression loid-beta-peptide takes place in the brain in is being developed in close cooperation with our patients with Alzheimer’s disease. It has been The results from phase I studies with healthy American partner Forest Laboratories, which will proven that amyloid-beta-peptide plays a central volunteers have shown that the absorption and be responsible for sales and marketing of the pro- role in the development of the disease, and the metabolism of the S-enantiomer are entirely as duct on the American market. expected from those of citalopram. This indicates

22 Report Development portfolio

Compound Activity Indication 2000 2001 2002 2003 2003+

Almotriptan 5HT-1 Triptan Migraine Launch

S-enantiomer SSRI Depression III NDA Launch

Rasagiline MAO-B Parkinson’s III NDA Launch desease TV 1203 L-DOPA Parkinson’s II/III NDA Launch desease

Siramesine Sigma 2 Ligand Anxiety+ I/II III NDA

Gaboxadol GABAA agonist Sleep disorder I/II III NDA

Lu 35-138 DA D4 antagonist Psychosis PC/I II III CEP 1347 Kinase inhibitor Parkinson’s I II III desease+

Siramesine increased its involvement in neurology and added achieved with the usual therapy. We expect to Siramesine is a selective sigma-2 ligand that new development projects concerning Parkinson’s commence phase III studies with TV1203 in 2000. Lundbeck is developing for treatment of anxiety disease to its development portfolio. disorders. Use of sigma ligands for this type of Rasagiline treatment is a completely new principle. Sirame- CEP-1347 Rasagiline is a selective MAO-B inhibitor that is sine is an extremely potent compound that has CEP-1347 has been licensed to Lundbeck by the expected to have a favourable effect in Parkinson’s proven effective against both anxiety and depres- American firm Cephalon, Inc. and is under devel- patients in the early stages of the disease. Rasagi- sion in a number of animal models. opment in collaboration with Cephalon, Inc. for line has also been licensed from Teva Pharm. treatment of Parkinson’s disease. In animal models, Industries Ltd. Preclinical studies indicate that The project is now in clinical phase I, and we the compound has greatly reduced de-generation rasagiline has a favourable side effect profile com- expect the first phase II study with patients suf- of dopamine neurons in the brain, indicating that pared with other forms of treatment such as fering from panic anxiety to commence in the it may delay or completely stop the progress of dopamine agonists. The phase III programme is far year 2000. Parkinson’s disease. The primary clinical target advanced. of the development programme is therefore to Lu 35-138 inhibit or possibly prevent the neurodegeneration Gaboxadol - Lu 02-030

Lundbeck has several compounds under evalua- associated with Parkinson’s disease. Gaboxadol is a GABAA agonist which, in preclinical tion for treatment of psychotic disorders. studies, has demonstrated an improvement in Lu 35-138 is the leading compound in the devel- The first clinical phase I study was completed, the sleep pattern. Lundbeck has signed a licence opment process. This compound is unique as in- as planned, at the end of 1999, and the clinical agreement with Garching Innovation (the Max dicated by preclinical studies showing rapid onset development programme is continuing here at the Planck Institute) on development of the com- of action against both the positive and the nega- beginning of the year 2000. pound. tive symptoms of schizophrenia, without extra- pyramidal or cardiovascular side effects. Lundbeck and Cephalon, Inc. are co-operating Almotriptan closely on the entire development programme. Lundbeck has licensed almotriptan from the Neurology Spanish company Almirall Prodesfarma S.A., In 1999, Lundbeck’s declared goal of being a pio- TV1203 which developed it up to the registration stage. neer within the treatment of neurological diseases TV1203 is a prodrug of L-DOPA – the most wide- Almotriptan is a 5-HTID receptor agonist that translated into targeted licensing of new develop- ly sold pharmacological therapy for Parkinson’s has proved efficacious in clinical trials in the ment compounds. disease – that has been licensed to Lundbeck by treatment of acute migraine attacks. The product Teva Pharm. Industries Ltd., Israel. TV1203 is ex- launch in Europe is expected to take place in Lundbeck’s involvement pected to have a particularly favourable effect on 2000. Lundbeck has the marketing rights in the in Parkinson’s disease patients in advanced stages of Parkinson’s disease, Scandinavian countries, Ireland and UK. Through licence agreements with Cephalon, Inc. including more rapid onset of action than can be and Teva Pharm. Industries Ltd., Lundbeck has

23 Report Cipramil® prevents depression

Lundbeck has carried out two studies of the pro- with Cipramil®, while the other half received third – the real study of Cipramil’s prophylactic phylactic effect of Cipramil® against new depres- placebo. The results showed that the patients effect – was with double-blind treatment, i.e., sive episodes. The studies show clearly that Cipra- who received placebo for one year had an approx- neither the doctors nor the patients knew which mil® prevents these when administered prophy- imately threefold or fourfold greater risk of a patients were receiving active treatment and lactically. new depressive episode than those treated with which were receiving placebo. Cipramil® for the same length of time. In 1998, Lundbeck completed a clinical study with All the patients in the study were moderately to Cipramil® as a prophylactic treatment for recur- The reason for the latest study was a survey carri- severely depressive. In period I, which lasted eight rent depression. The study comprised patients in ed out by Copenhagen Municipal Hospital of the weeks, the patients were put on an individually the 18-65 year age group, and the result showed incidence of depression and dementia in a group prescribed dose of Cipramil® (20, 30 or 40 mg). a convincing effect. of elderly people (77-82 years) in the Brønshøj/ The patients that responded continued the treat- Husum suburb of Copenhagen. The survey showed ment openly in period II. That meant 16 weeks In the period 1996-1999, a similar study was that about 10% of the elderly who responded to with a regular daily dose of Cipramil® correspond- carried out at the Psychiatric Research Clinic at the hospital’s questionnaire were depressive to a ing to the dose the patients had been receiving Frederiksberg Hospital in a population of elderly varying degree, while approx. 7% suffered from at the end of period I. Since a depressive episode patients aged 65 years and over. Of 230 patients varying degrees of dementia. usually lasts six to eight months, the original who participated in the study, 121 responded depression was expected to be over by the end of to open treatment with Cipramil® and were The study at Frederiksberg Hospital was divided period II, so the real test of Cipramil’s prophylactic randomised into two groups for double-blind into three periods. The first two periods were with effect could then begin. treatment; half the patients were thus treated open, known treatment with Cipramil®, while the

24 Report The patients were then randomised – in accordance with a code – for double-blind treatment 1,0 with either an unchanged daily dose of Cipra- 0,9 mil® or placebo for at least 48 weeks (period III). 0,8 There were some patients, however, who received 0,7 double-blind treatment for up to 120 weeks in 0,6 period III. 0,5 Patients who suffered a new depressive episode 0,4 were taken out of the study for immediate, 0,3 adequate treatment. However, steps were taken 0,2 to ensure against random mood swings by carry- 0,1 ing out a new evaluation after 3-7 days to verify 0,0 . that the patient really was suffering from a new 0 100 200 300 400 500 600 700 Day episode. Cipramil® Before commencement, the entire study was Placebo described in a so-called study protocol, which was The figure shows the probability of not suffering a new depressive episode, i.e., of remaining well. submitted in November 1995 to the National Continued treatment with Cipramil® increases that probability. For example, patients treated continuously Board of Health’s Pharmaceuticals Department with Cipramil® for one year have a 67% probability of not suffering a new depressive episode. The corres- (now the Pharmaceuticals Agency) and to ponding probability for patients who stop the treatment is 27%. The method used for calculating the curves the Scientific Ethics Committee for the City of – a so-called survival analysis – takes account of patients who have left the study for other reasons than a Copenhagen and Frederiksberg Municipality. new depressive episode. Approval was received from both bodies at the end of February 1996.

Plactranthus coleus (tropical plant). Formerly Coleus. A typical and widely grown ornamental plant.

25 Report Citalopram benefits society

Depression is a severe disease that results in a rarely diagnosed and too rarely treated, and today massive loss of working days among young people more is being done to identify those patients (Murray & Lopez, 1996). Although not yet general- who are suffering from depression and need treat- ly accepted, depression in the elderly is also a very ment. Because SSRIs have fewer side effects, they common disease that impairs the quality of life of can be used to treat patients with chronic depres- the sufferers. sion over longer periods of time – in some cases, for the rest of the patient’s life. One thing is The most serious complication in depression is very important: with the new preparations having the risk of suicide. Around 60% of young people fewer side effects, we may now include elderly who commit suicide do so because of depression. patients in the pharmacological treatment of In the elderly, the incidence of suicide is rising, depression. and in the elderly, too, depression is often the reason for attempted suicide. In this age group, Dementia and depression C. G. Gottfries it is mainly men who take their own lives. 5% of all people over the age of 65 years suffer Medical doctor, Lund Universitet, 1958 from dementia – a group of disorders that is very Ph.D., 1968 Approximately 10 to 20 years ago, the selective frequently accompanied by depression or anxiety Professor of psychiatry and head physician serotonin reuptake inhibitors, also called SSRIs, symptoms. For example, 25% of patients suffering at the Psychiatric Clinic, University of were introduced in the treatment of depression. from Alzheimer’s dementia in fact meet the crite- Umeå, 1971-77 This treatment was a greater advance than was ria for major depression. Professor and head physician at realised at the time. In the USA, consumption of St. Jörgen’s Hospital, Department of antidepressants has increased threefold in the last If less severe forms of depression are included, the Psychiatry and Neurochemistry, 10 years, and this is due to the increased use of percentage goes up to 50. When such symptoms Göteborg University, 1977-91 SSRIs. In Sweden, consumption of antidepressants as restlessness, anxiety, fear/panic and aggression Secretary in WPA’s biological section, quadrupled in the period 1991 to 1999. There, are included, 85% of Alzheimer patients suffer 1976-81 the most widely used preparation is citalopram, from emotional disturbances. Controlled double- Professor of geriatric neuropsychiatry, which is also the leading treatment in many other blind studies have shown that citalopram has Göteborg University, Institute of Clinical European countries. Citalopram is now marketed a favourable effect not only on depressive symp- Neuroscience, Department of Psychiatry throughout Europe, including the former Eastern toms in dementia patients, but also on anxiety and Neurochemistry, Sahlgrenska Bloc, in Canada, the USA and Australia, and in a and other emotional disturbances (Nyth & University Hospital / Mölndal, Sweden, large number of countries in Asia and Latin Gottfries, 1990). This is extremely important 1992. America. because it is actually the emotional symptoms that cause suffering in dementia patients. Also effective against anxiety Murray, C.J.L.; Lopez, A.D.: The global burden The widespread use of SSRIs has revealed that The aim in the treatment of dementia patients of disease: A comprehensive assessment of they can be used to treat not only depression should be not only to improve the patients’ mortality and disability from diseases, injuries, but also anxiety disorders such as panic disorder, memory – this may be achieved using acetylcho- and risk factors in 1990 and projected to 2020. social phobias, generalised anxiety, OCD (obses- linesterase inhibitors – but also to alleviate the 1996. Cambridge Harvard University Press. sional thoughts/compulsive acts), and what is for emotional symptoms. Cognitive (memory and many women the very unpleasant premenstrual learning) disturbances and depression are the Nyth, A.L.; Gottfries, C.G.: The clinical efficacy dysphoric disorder (PMDD). most frequent reasons for referring patients to in treatment of emotional disturbances in an institution. It is evident that treatment with dementia disorders: a Nordic multicentre Unfortunately, the introduction of SSRIs has not citalopram is able to postpone the transfer of study. 1990. Br J Psychiatry 157:894-901. given us more effective antidepressants. SSRIs elderly patients to an institution. This is important are just as effective as the so-called tricyclic anti- for the patients and their families, as well as for depressants, which have been in use for a long society. time. However, SSRIs have fewer side effects and are also very effective in the treatment of anxiety Increased use in the elderly disorders. In Sweden, there has been a distinct change in the consumption of antidepressants in both men and What is the reason for the widespread use of women in the different age groups. Previously, SSRIs? It is now apparend that depression is too they were used mainly by patients between 50

26 Alocasia odora (tropical Asia). Green foliage plant. Grown for its appearance.

and 60 years of age, whereas their use in the elderly was low. In the last 6-7 years, there has been a marked increase in the consumption of antidepressants among elderly patients, and in the last couple of years, we have seen a very high level of use among patients between 80 and 90 years of age. At the same time, consumption of benzodiazepines (anxiety drugs) and antipsychotics has fallen, albeit slowly.

A study including a large number of patients who had committed suicide has shown that only 15% of them were treated with an antidepressant. This clearly demonstrates that far too few patients in a high-risk group with respect to suicide receive treatment. In Sweden, the number of suicides has decreased in the last 10 years. Has the increased use of SSRIs contributed to this? Does long-term treatment with SSRIs have a preventive effect against suicide? There is no clear answer to these questions because many factors might contribute to the reduced number of suicides. However, there is much to indicate that SSRIs have had a major impact.

Openness about depression Physicians, nurses and care-givers are now doing more to identify patients who are suffering from depression. Fortunately people are nowadays more open about depression and are willing to discuss its symptoms. This means that depressive patients now dare to seek medical help. Just 10-20 years ago, it was regarded as shameful to admit to depression and thoughts of suicide. Now, not only psychiatrists, but also medical practitioners and district nurses can diagnose depressive disorders, particularly in the elderly. And today, patients can be asked directly about their mental state of health.

It is absolutely clear that the introduction of SSRIs – especially citalopram for the elderly – has improved the quality of life of both patients and their relatives and that of the care personnel. Treatment with citalopram and other SSRIs also extends the time period where an elderly is self- reliant – to the benefit of both the individual and society as a whole.

27 Fucus serratus. Serrated wrack. A form of brown alga. Common in Danish waters.

Lundbeck on the world market

Drugs for depression and schizophrenia There are several reasons for the growing use of Lundbeck is a leading supplier of antide- In 1998, global sales of antidepressants exceeded SSRIs for treatment of major depression: pressants and antipsychotics in Europe, USD 9 billion – a 20% increase over the previous Use of SSRIs is increasing because they have and in 1999 the company also gained a year. Antidepressants are the largest CNS therapy fewer side effects than TCAs (tricyclic anti- solid footing in the North American class. However, it is important to remember that depressants). market. The world market for drugs for antidepressant sales cover other indications than Public awareness of depression is growing treating diseases of the central nervous just severe depression since SSRIs (selective and so is willingness both to seek and to give system (CNS) is growing more rapidly serotonin-reuptake inhibitors), in particular, have treatment (but there are still many patients than the rest of the global pharmaceu- been approved for treatment of OCD (obsessive- in need of treatment who are not receiving it). tical market, but there are many manu- compulsive disorders), panic disorder, social pho- Diagnosis of depression has improved. facturers and competitors. Here, a review bias, etc. More prolonged treatment can be given of the market situation is supplemented because of fewer side effects and growing by a look at future needs concerning Lundbeck’s Cipramil® (citalopram), which is mar- awareness of the importance of prophylactic antipsychotics. keted in USA by Forest Laboratories under the treatment. trademark Celexa®, belongs to the leading class Increasing use is being made of WHO’s of antidepressants, the SSRIs, which accounted for guidelines on diagnosis and treatment. 70% of global antidepressant sales in 1998. In this class, products with which Cipramil® is competing include Eli Lilly’s Prozac®, SmithKline Beecham’s Seroxat® and Pfizer’s Zoloft®

28 Report Despite the growing use of antidepressants, the macologically active ingredient of citalopram, and Most patients suffer from more than one anxiety market will be affected in the years ahead by the on the basis of the results so far, it is expected to disorder at any point in time, and many of them expiration of SSRI patents in a number of coun- have a favourable and cleaner side-effect profile. also suffer from severe depression. As in the case tries. Generic SSRIs will be introduced and gain of severe depression, only a minority of patients market shares through lower prices. Anxiety are properly diagnosed and treated. It is difficult Anxiety is the most common form of psychiatric to assess accurately the size of the anxiety mar- Future needs concerning treatment illness. Around 15% of the general population is ket. Some of the products used for anxiety are Although considerable progress has been made in estimated to suffer from anxiety in any given also prescribed for other indications – for depres- the treatment of depression in the last 10 years, year. Anxiety is categorised into different diagno- sion, for example. Physicians also commonly there are still challenges and unaddressed needs. ses on the basis of the clinical symptoms. The prescribe antidepressants, beta-blockers, etc. for Depression is still underdiagnosed and often un- main diagnoses are panic disorder, obsessive- anxiety. Furthermore, the diagnostic assessment treated, and there is therefore a need to increase compulsive disorder (OCD, obsessional thoughts/ and labelling of anxiety disorders vary from one awareness, diagnosis and understanding of the compulsive acts), social phobias, specific phobias, country to another. disorder. Around 30% of patients do not respond generalised anxiety and post-traumatic stress to treatment, and the onset of action of antide- disorder. These disorders are characterised by Both pharmacological and non-pharmacological pressants is relatively slow. panic attacks of varying intensity, fear of when therapies are used in the treatment of anxiety the next panic attack is going to come, phobic disorders. The main classes of drugs are the SSRIs, Lundbeck has a new, potent drug, the S-enan- avoidance of situations that provoke anxiety, TCAs (tricyclic antidepressants), SNRIs (serotonin- tiomer, for treatment of depression. It is being exaggerated worrying that is out of proportion noradrenaline reuptake inhibitors), benzodiazepi- developed for treatment of both depression and with the realities, and difficulties in concentrating. nes and 5-HT1A modulators. anxiety disorders. The S-enantiomer is the phar-

29 Report In the 1960s, treatment of anxiety was revoluti- Parkinson’s disease L-DOPA is effective during the initial treatment onised with the introduction of benzodiazepines, Parkinson’s disease is a progressive, degenerative of the disease, but the effect diminishes after which rapidly became the mainstay of drug treat- neurological disorder that affects nerve cells in some time. This has led to the emergence of a ment. Benzodiazepines are efficacious for treat- deep parts of the brain called the substantia nigra. new group of products that act in the same ment of some anxiety disorders, but they can lead The disease affects about 1% of people over the way as dopamine or that inhibit the reduction to physical and psychological addiction and are age of 65 years and 50% of people over the age of dopamine levels in the brain. associated with a number of side effects, including of 80 years. The average life expectancy after the sedation and reduced concentration and mental outbreak of the disease is estimated to be 10 to Even since the appearance of these new drugs, activity. 15 years. L-DOPA remains the principal therapy for Parkin- son’s disease. The dopamine agonists and the The SSRIs have had a big impact on the treatment In 1998, global sales of antiparkinson drugs reach- other preparations can be used alone or together of anxiety, having replaced to some extent both ed a figure of around USD 1.2 billion, with annual with L-DOPA, depending on the age of the patient the old antidepressants and benzodiazepines. They growth of about 10%. and the stage of the disease. have also increased the number of patients treated because their proven efficacy and safety have The conventional treatment consists of Levodopa Future needs concerning treatment motivated many physicians to prescribe these pre- (L-DOPA), which was introduced by Roche at the There is an immense need for better preparations parations and many patients to seek treatment. end of the 1960s, and which is converted into for treating Parkinson’s disease. There are as yet The SSRIs are currently approved for a variety of dopamine in the brain. When L-DOPA is converted no preparations on the market that can slow indications, including panic disorder, OCD (obses- into dopamine outside the brain, it causes nausea down or stop the development of the disease sional thoughts/compulsive acts), social phobias and vomiting. This problem was alleviated by by protecting the dopamine neurons against de- and post-traumatic stress disorder. administering, at the same time as L-DOPA, the generation. There is also a need for drugs that peripherally acting drug DOPA decarboxyl inhibi- will reduce severe movement symptoms such as Future needs concerning treatment tor – carbidopa, DuPont’s Sinemet® or bensera- akinesia (temporary paralysis), dyskinesia (distor- Within the treatment of anxiety, there is a need zide, Roche’s Madopar®. In 1998, these two pro- tion or impairment of voluntary movement) and for new drugs that combine fast onset of action ducts, combined with L-DOPA, were the leading the so-called on-off cycles, which are alternating with fewer side effects than the existing drugs. drugs in the treatment of Parkinson’s disease. periods of good effect from L-DOPA treatment Particularly undesirable is the risk of drug depen- and no effect. There is also a great need to im- dence.

30 Report prove diagnosis of the disease. It is estimated linearly related to age. In both sexes, it increases ducts, ergotamins and triptans. Prophylactic treat- that, within any given year, around 25% of up to the age of 40 years and then decreases. ment, which may reduce the frequency and patients with Parkinson’s disease are not diag- The frequency is greatest in the age group 35-44 severity of attacks, comprises beta-blockers, sero- nosed as having the disease. This applies parti- years, in which about 24% of women and 7% of tonin agonists, the anti-epileptic drug valproate cularly to patients with slight to moderate symp- men suffer from migraine. and amitriptylin, which is an antidepressant. toms. One reason for this is a lack of suitable diagnostic tools. The appearance of sumatriptan, which is a sero- Future needs concerning treatment tonin agonist, represented a major advance in the Despite the clinical and commercial success of Lundbeck has three pharmaceutical candidates treatment of acute migraine. Patients experienced sumatriptan and improvements in other triptans under development for treatment of Parkinson’s rapid and almost complete alleviation of pain with already marketed or soon to be marketed, there disease: CEP-1347, which is in clinical phase I, has very few side effects – unlike other anti-migraine is still a need for improvements in the treatment demonstrated a neuroprotective effect in earlier products. Migraine is alleviated by sumatriptan of migraine. In 20-30% of sufferers, the triptans pharmacological tests. whose mechanism of action is via the serotonin have no effect. In addition, preparations that start receptor, thus implying a neurological aspect of working faster are wanted. Lastly, a large propor- TV 1203 is a prodrug of L-DOPA that has an migraine. tion of patients who have benefited from treat- earlier onset effect than the L-DOPA therapy ment with triptans suffer a relapse within 24 and thus reduces the time that passes before the A number of triptans have been marketed: hours. In the development of new products for patient’s parkinsonian symptoms diminish. Zeneca’s Zomig® (zolmitriptan), Glaxo Wellcome’s treatment of migraine, the focus will therefore Naramig® (naratriptan) and Merck’s Maxalt® be on more efficacious compounds with faster Rasagiline is a potent compound that irreversibly (rizatriptan). Lundbeck expects to market almo- onset of action, a longer-lasting effect and fewer inhibits monoaminoxidase type B, MAO-B. triptan in selected countries in Northern Europe side effects. at the end of 2000. Migraine Migraine is a neurological disorder and one of There are two present forms of therapy: acute the most widespread forms of severe headache. and prophylactic. Acute treatment comprises pain- About 10% of people suffer from migraine within killers, including the so-called NSAIDs (non-steroid any given year. The occurrence of migraine is not anti-inflammatory preparations), anti-nausea pro-

31 Report Hibiscus (tropical plant). Better known in Denmark as the Hawaii flower. The beautiful stamens can be seen clearly here.

32 Lundbeck’s products

Antidepressants Antipsychotics Fluanxol® Depot/Depixol® Inj. (cis(Z)-flupenthixol decanoate) Cipramil®/Seropram®/Cipram®/Celexa®/Sepram® Buronil®/Bunil® Indication: maintenance treatment of (citalopram) (melperone) chronic psychotic disorders Indication: depression, panic disorder, OCD, Indication: psychotic disorders prevension of relapse/recurrence Lyogen® Buteridol® (fluphenazine) Deprilept® (haloperidol) Indication: psychotic disorders (maprotiline) Indication: schizophrenia and other Indication: depression psychotic disorders Lyogen® Depot (fluphenazine decanoate) Deanxit® Cisordinol®/Clopixol®/Ciatyl-Z® Indication: maintenance treatment of (flupenthixol + melitracene) (zuclopenthixol) chronic psychotic disorders Indication: mild depression Indication: schizophrenia and other psychotic disorders, anxiety, restlessness and insomnia Serdolect®/Serlect® Dixeran® (sertindole) (melitracene) Cisordinol® Depot/Clopixol® Depot/ Indication: schizophrenia Indication: depression Ciatyl-Z® Depot (zuclopenthixol decanoate) Taxilan® Fluanxol®/Fluanxol® Mite Indication: maintenance treatment of (perazine) (0.25 mg, 0.50 mg, 1 mg) chronic psychotic disorders Indication: psychotic disorders (flupenthixol) Indication: mild depression Cisordinol-Acutard®/Clopixol-Acutard®/ Truxal®/Truxaletten® Clopixol-Acuphase®/Ciatyl-Z-Acuphase® (chlorprothixene) Noritren®/Nortrilen®/Sensaval® (zuclopenthixol acetate) Indication: schizophrenia and other (nortriptyline) Indication: acute psychotic episodes, psychotic disorders, anxiety and restlessness, Indication: depression exacerbation of psychotic disorders withdrawal symptoms in drug addicts

Saroten®/Sarotex®/Redomex® Fluanxol®/Depixol® (amitriptyline) (flupenthixol) Anti-Parkinson’s products Indication: depression Indication: schizophrenia and other psychotic disorders Parkinsan® Tymelyt® (budipine) (lofepramine) Indication: symptomatic treatment of Indication: depression Parkinson’s disease

33 Report Brassica oleracea. Better known as red cabbage. An edible cultivated plant that has been known since ancient times.

34 Growth in a good environment

Lundbeck regards it as vital that fast growth and facility in Seal Sands in England is at present with temporary conditions for discharge to the continuous improvement of our health, safety and working at becoming certificated to this quality atmosphere. As a result of a thorough examina- environmental performance go hand in hand. standard. tion of the conditions, the system is being replaced with a more reliable technology that cleans the With planning as the key word, Lundbeck seeks Implementation of the management system air more efficiently and uses less energy. to prevent problems and use experience for the commenced in selected, significant areas in the benefit of health, safety and the environment. company. These include the production facilities At the Seal Sands facility, work started during It is of vital importance that our rapid growth in Seal Sands and Lumsås as well as the pharma- the year on the design of a new plant for produc- be accompanied by a high level of protection for ceutical production and the engineering and ser- tion of the active pharmaceutical ingredient for people and the environment, no matter where vice departments in Valby. Other areas will follow. S-enantiomer. Since LUMAS is being used in the in the world Lundbeck operates. This is a natural project, systematic attention will be paid to consequence of our health and safety and en- 1999 was a busy year, with enlargement and health, safety and environmental factors, which vironmental policies. alteration of buildings and equipment. This involv- are thus being integrated in the project from the ed a considerable amount of work on preparation very start. In the past year, Lundbeck continued implement- of the necessary applications and following up ing its corporate health, safety and environmental on approvals at both the environmental and the In 1999, Lundbeck also decided to strengthen management system, LUMAS. The aim with health and safety authorities. communication concerning health, safety and the LUMAS is to achieve improvements through environment. In mid-2000 the company will pub- systematic and targeted efforts, with the empha- Before the summer vacation, an explosion occur- lish a separate environmental report containing a sis on prevention. The system is based on the red in an air-treatment system at the production number of articles and the green accounts for our established standard ISO 14001. Our production facility in Lumsås – which fortunately caused only production facilities. The communication strategy material damage. Following negotiations with the will be continuously developed in order to provide environmental authorities, Lundbeck was issued both internal and external stakeholders with the information they need and desire.

35 Report Accounts Accounts

Accounts Summary for the Group 1993-1999

Profit and loss account (DKKm) 1993 19941995 1996 1997 1998 1999

Net turnover 933 1,336 1,849 2,324 2,662 3,231 4,189

Profit before research and development costs 206 348 471 670 791 989 1,683

Research and development costs 181 189 257 334 433 619 824

Operating profit 23 174 223 337 441 384 862

Profit before tax 64 159 253 342 438 446 926

Profit for the year 46 112 166 237 297 313 616

Minority interests’ share of the profit - 4 10 1 3 60

Assets (DKKm) 1993 19941995 1996 1997 1998 1999

Fixed assets 449 593 783 930 1,028 1,165 1,495

Stocks 157 185 265 371 348 356 427

Receivables 210 287 430 496 580 643 894

Cash and securities 404 471 554 655 800 817 1,642

Total assets 1,220 1,536 2,032 2,452 2,756 2,981 4,458

Liabilities (DKKm) 1993 19941995 1996 1997 1998 1999

Capital and reserves 801 887 1,042 1,257 1,550 1,822 2,907

Minority interests’ share of capital and reserves - 4 4 5 4 44

Provisions 68 110 143 203 246 274 413

Long-term debt 66 122 405 40 92 29 24

Short-term debt 285 417 442 952 868 856 1,114

Total liabilities 1,220 1,536 2,032 2,452 2,756 2,981 4,458

Cash flow statement (DKKm) 1993 19941995 1996 1997 1998 1999

Cash flow from operating activities 94 192 103 276 407 681 836

Cash flow from investing activities - 134 - 219 - 277 - 216 - 182 - 267 - 461

Cash flow from operating and investing activities - 40 - 28 - 174 60 226 414 375

Cash flow from financing activities 1 95 257 38 - 80 - 401 243

Interest-bearing net cash, year-end 291 274 89 115 332 714 1,412

38 Accounts Ratios 1993 19941995 1996 1997 1998 1999

Net profit ratio (%) 2.4 13.0 12.1 14.5 16.5 11.9 20.6

Return on assets (%) 8.7 20.2 24.0 24.1 25.8 25.9 43.0

Return on equity (%) 5.9 12.9 16.2 20.6 21.0 18.2 26.2

R&D costs as a percentage of turnover 19.5 14.1 13.9 14.4 16.3 19.2 19.7

Solvency ratio (%) 65.7 57.5 51.1 51.1 56.1 61.0 65.1

Capital employed (DKKm) 915 1,084 1,507 1,798 2,019 1,925 2,934

Capital turnover (%) 76.5 87.0 91.0 94.8 96.6 108.4 94.0

Tangible and intangible capital investments, gross (DKKm)141 218 284 224 188 272 375

Financial capital investments, gross (DKKm) 1 4 22 3 7 696

Average number of employees 978 1,205 1,545 1,829 2,003 2,286 2,653

Share data 1993 19941995 1996 1997 1998 1999

Average number of shares (millions) *) 55.0 55.0 55.0 55.0 55.0 55.0 56.84

Earnings per share (EPS) (DKK) *) 0.83 1.97 2.82 4.28 5.32 5.56 10.83

Proposed dividend per share (DKK) *) 0.40 - 0.40 - 0.63 0.82 2.25

Cash flow per share (DKK) *) 1.70 3.47 1.87 5.00 7.38 12.33 14.71

Net asset value per share (DKK) *) 14.51 15.99 18.80 22.68 28.01 32.93 49.82

Market value (DKKm) ------17,251

Price / Earnings (DKK) ------27.32

Price / Cash flow (DKK) ------20.14

Price / Net asset value (DKK) ------5.94 *) Calculation based on DKK 20 per share

Definitions

Interest-bearing net cash Cash and cash equivalents less holding of own shares less interest-bearing debt

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. minority interests

Solvency ratio **) Capital and reserves excl. minority interests, year-end, as a percentage of liabilities, year-end

Capital employed **) Total liabilities less non-interest-bearing liabilities

Capital turnover Net turnover as a percentage of total assets, year-end

Earnings per share (EPS) **) Profit after tax and minority interests’ share divided by average number of shares

Proposed 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

Market capitalisation Total number of shares, year-end, multiplied by the official price quoted on the Copenhagen Stock Exchange, y ear-end

Price / Earnings **) The official price quoted on the Copenhagen Stock Exchange, year-end, divided by the year’s earnings per share

Price / Cash flow **) The official price quoted on the Copenhagen Stock Exchange, year-end, divided by cash flow per share Price / Net asset value **) The official price quoted on the Copenhagen Stock Exchange, year-end, divided by capital and reserves per share **) Definitions according to the Danish Association of Financial Analysts’ “Recommendations & Ratios 1997” (4th rev. edition)

39 Accounts Comments on the accounts

Accounting policies The other IAS implemented as from the financial incentive plans are accounted for as described in The Accounts have been prepared in accordance year 1999 have no material impact on the profit the section "Incentive plans". with International Accounting Standards (IAS). and loss account or capital and reserves.

Due to the implementation of IAS 10 (revised In other respects, the accounting policies remain Profit for the year 1999), the accounting for dividend to share- unchanged relative to previous years. Lundbeck's growth accelerated in 1999, when the holders has been changed. The company has company achieved its best-ever financial result. decided to implement IAS 10 for consistency The company's accounting policies have been with international practice, and because the amplified in the following areas: Turnover came to DKK 4,189 million, an increase Danish Company Accounts Act is expected to be of 30% on 1998. Operating profit went up by revised along the same lines. As the company assesses that it meets the 124% to DKK 862 million. Profit before tax rose accounting criteria for hedge accounting as from by 108% to DKK 926 million, and profit after tax As from 1999, dividend is no longer provided for the beginning of 1999, exchange losses and gains and minority interests improved 101% to DKK as a liability in the annual accounts; instead, on forward contracts made for hedging purposes 616 million. dividend will not be charged to capital and are therefore deferred and included in the profit reserves until the year of distribution based on and loss account at the same time as the hedged In connection with its financial reporting for the the final approval by the general meeting of the transactions. The section on "Financial items" first three quarters of the year, Lundbeck expected company. The change has no effect on the profit describes the accounting treatment of hedge the rate of growth in turnover to be approx. 25%, and loss account. Compared to the previous accounting. equivalent to a full-year turnover of DKK 4.0 policy, the effect on capital and reserves at billion. The final turnover was almost DKK 200 31 December 1999 is an increase of DKK 130 The company has acquired own shares to hedge million higher, however, due to better sales of million, corresponding to the anticipated dividend its share option plan for the Group management Cipramil® in several markets, including particularly distributed for 1999. The effect on capital and and key employees and its incentive plan based the UK, Canada and France. The revenue from reserves at 31 December 1998 is an increase of on the share price introduced for the employees Celexa® sales also exceeded expectations. DKK 45 million. of its foreign subsidiaries. Own shares acquired and the company's commitments related to the

1998 Lundbeck's turnover by product group 1999

60% 61%

Cipramil® Celexa® Other antidepressants Antipsychotics Other turnover 2% 8%

14% 5%

20% 7% 6% 17%

40 Comments on the accounts In addition, Lundbeck expected a profit before tax The growth in turnover is also the result of increased by 6% from 1998 to 1999. Markets out- above DKK 900 million, which is consistent with encouraging sales trends in the markets in side Europe account for the greater part of this the realised profit. Australia and Canada, where Cipramil® was increase. The development is consistent with the introduced in January 1998 and March 1999, company's goal to balance out stagnant sales of respectively. mature products in the European markets through Turnover sales growth in markets outside Europe. Lundbeck's turnover rose by nearly one billion In USA, the sales of Celexa® were very positive Danish kroner from DKK 3,231 million in 1998 throughout 1999. Lundbeck's US partner, Forest The Group's sales of other products dropped from to DKK 4,189 million in 1999. Laboratories, Inc., achieved sales totalling approx. DKK 272 million to DKK 87 million, of which an USD 340 million in 1999. Lundbeck's royalty from amount of DKK 96 million is attributable to the The sales of Cipramil® and Celexa® rose by 57% these sales and income from the supply of bulk transfer of non-CNS products in Germany back to to DKK 3,281 million. This growth in turnover was products for future sales totalled DKK 710 million Byk Gulden Lomberg Chemische Fabrik GmbH at due to continued sales growth in the markets in in 1999 against DKK 157 million in 1998. Of this 1 January 1999 in accordance with the agreement which Lundbeck sells Cipramil® through its own amount, income from Forest's stockbuilding with this company. Furthermore, the turnover for marketing organisation and the very encouraging accounted for approx. DKK 275 million, cf. 1998 included an amount of DKK 96 million sales performance of Celexa® in USA, where the "Accounting for income from Forest" on page 45. received as down payments and other payments product was launched in September 1998 and, At the end of 1999, the market share held by from Forest related to the research cooperation. thus, was on the market throughout 1999. Celexa® was 11% of first prescriptions for new This revenue amounted to just DKK 23 million in SSRIs and 9% of all prescriptions for new SSRIs. 1999. Lundbeck's sales of Cipramil® rose by 33% to DKK 2,571 million in 1999, principally due to The Group's sales of other antidepressants and If Lundbeck's total turnover is adjusted for the loss gains in market share in the major European antipsychotics totalled DKK 821 million in 1999, of income from Serdolect®, non-CNS products markets of France, Italy, Spain, Germany and the compared to DKK 863 million in 1998. The sales and research cooperation payments from Forest, UK, where Lundbeck has intensified its marketing figure for 1998 included Serdolect® sales of DKK etc., Lundbeck's growth in turnover was 41% from effort considerably during the past 18 months. 87 million. Adjusted for these sales, the turnover 1998 to 1999. Particularly the UK had a significant growth rate, of other antidepressants and antipsychotics and the market share doubled in 1999.

1998 Lundbeck's turnover by geographical area 1999

15% 9% 3% 3% 3% 10% 2% 9%

UK France 8% 10% Germany Spain Italy 6% Rest of Europe 40% USA 9% Rest of world 8%

48% 17%

41 Comments on the accounts Comments on the accounts

Costs In addition, research and development costs Distribution costs were DKK 1,038 million, up Lundbeck's total costs, exclusive of financial items increased as a result of comprehensive phase III 14% on 1998. The increase is due to the stronger and tax, were DKK 3,327 million, an increase of studies of the S-enantiomer of citalopram, which efforts to market Cipramil® in a number of major 17% on 1998. were initiated as scheduled in August 1999. A European markets and in Canada and Australia. total of eight phase III studies are conducted in Research and development costs rose to DKK 824 USA, Europe and Canada. The total number of Administration costs went up by 18% to DKK 675 million, an increase of 33% compared with 1998. patients involved is 2,350. million as a result of expansion of the capacity of the sales subsidiaries and, to a minor degree, the In 1999, research and development costs account- Lastly, Lundbeck greatly expanded and strength- reinforcement of central corporate functions with- ed for 20% of turnover against 19% in 1998. This ened its own research and development organisa- in corporate communication, human resource strong growth is in accordance with the Group's tion in 1999. management and IT. objective of strengthening its pipeline by expansion of the Group's own research and develop- Production costs were DKK 794 million, an ment activities and through cooperation and in- increase of just 4% on 1998. The development in Financial items licensing agreements. production costs is affected by the inclusion of a In 1999, the Group had net financial income of DKK 34 million writedown of Serdolect® stocks in DKK 64 million, about the same level as in 1998. The most important activities behind the increase the 1998 accounts, and by the fact that the 1999 Of the net income, DKK 16 million, against DKK include a new research and development agree- accounts do not include the production costs of 38 million in 1998, was net interest income and ment with Cephalon, Inc., an agreement with non-CNS products transferred back to Byk market value adjustments of cash equivalents and Novo Nordisk A/S on sharing research technology Gulden. These products were characterised by bonds. Compared to 1998, market value adjust- and a development and marketing agreement having a relatively low contribution margin. If the ments were adversely affected in 1999 by falling with Teva Pharmaceutical Industries Ltd. 1998 figures are adjusted for these facts, the prices in the Danish bond market. growth in production costs from 1998 to 1999 was 11%. Unrealised net capital gains on the company's own shares and on mortgage debt amounted to

Turnover (DKKm) Cost structure

4,500 100%

4,000 90%

3,500 80% 70% 3,000 60% 2,500 50% 2,000 40% 1,500 30%

1,000 20%

500 10%

0 0% 1995 1996 1997 19981999 1995 1996 1997 19981999

Cipramil® Production costs Other antidepressants Distribution costs Antipsychotics Administration costs Other turnover Research and development costs

42 Comments on the accounts DKK 7 million in 1999, against a net loss of DKK 2 The operating profit is affected by a net currency accounting are not considered to have been ful- million in 1998. expense of DKK 116 million compared to a non- filled in 1998. hedging situation. The net currency impact is Net currency income included in financial items distributed on the items in the profit and loss was DKK 41 million in 1999 compared to DKK 26 account, based on a specific assessment of the Ta x million in 1998. nature of the hedging. The year's corporation tax totalled DKK 311 million, against DKK 133 million in 1998. The The company aims to hedge its anticipated for- At the end of the year, Lundbeck had entered effective tax rate for 1999 was 33.5% compared eign currency cash flow for any future 12-month into forward contracts to hedge income in 2000 to 29.9% in 1998. One reason is that the 1998 period. This means that during periods of increas- equivalent to DKK 2.4 billion, primarily in USD accounts included non-recurring income relating ing exchange rates against the Danish krone, the and EUR. These contracts comprise a deferred to deferred tax, equivalent to a tax reduction of company will not benefit from this increase until exchange loss of DKK 60 million, which was not 2% due to the reduction of the Danish corpora- later. Likewise, it will not record the adverse taken to the profit and loss account in 1999. If tion tax rate from 34% to 32% in 1998. impact of declining exchange rates against the the exchange rates at the time of the realisation Danish krone until at a later stage. of the underlying transactions of the forward In addition, dividend distributed to The Lundbeck contracts are the same as the end-of-1999 rates, Foundation, previously the company's sole share- After the adoption of the Group's new operational future profits will be reduced by the said DKK 60 holder, will not be deducted by the company from currency management policy, the Group is now million. The exchange loss is primarily attributable 1999 onwards. In 1998, the effective tax rate was assessed to meet the accounting criteria for to the rising USD exchange rate in 1999 and will reduced by 3% due to this dividend distribution. applying the hedge accounting principle. be booked as the hedged transactions are entered in the profit and loss account over the next 12 The current tax charge for the year, including prior By this hedging principle, exchange losses and months in 2000. year adjustments, amounted to DKK 258 million, gains on forward exchange contracts used to corresponding to an effective tax rate of 27.9%, hedge cash flows are not included in the profit The comparatives for 1998 and capital and while the increase in deferred tax corresponds to and loss account until the time when the hedged reserves at the end of 1998 are not affected, an effective tax rate of 5.6%. transactions are realised. because the accounting criteria for hedge

Capital structure (DKKm)

5,000 100%

4,500 90%

4,000 80%

3,500 70%

3,000 60%

2,500 50%

2,000 40%

1,500 30%

1,000 20%

500 10%

0 0% 1995 1996 1997 1998 1999

Short-term debt Long-term debt Provisions Capital and reserves Solvency ratio (%)

43 Comments on the accounts Comments on the accounts

Cash flow Investments in the second quarter of 1999, and the facilities Lundbeck's cash flow from operating activities Total net investments rose from DKK 267 million are expected to become operational in the second amounted to DKK 836 million, against DKK 681 in 1998 to DKK 461 million in 1999. quarter of 2000. million in 1998. Tangible and intangible net capital investments In 1999, financial investments totalled DKK 96 The significant improvement was due principally increased from DKK 261 million in 1998 to million, against DKK 6 million in 1998. to the strong profit performance. The improve- DKK 365 million in 1999 as a result of the expan- ment is accentuated by the fact that the 1998 sion of the company's research and production In June, in connection with the agreement on cash flow was positively affected by a prepayment capacity. research and development with Cephalon, of approx. DKK 150 million in connection with the Lundbeck acquired 1,000,000 shares, correspond- conclusion of an agreement on development To meet the steeply growing demand for ing to approx. 3% of the share capital of cooperation. Cipramil® and Celexa®, the production facilities Cephalon, for an amount of DKK 86 million. The at Lumsås (Denmark) and Seal Sands (UK) are value of the shares is stated in the accounts at Net investments in 1999 were DKK 194 million being expanded. In addition, the establishing of a cost (USD 12.0 per share). At year-end 1999, larger than in 1998, and the cash flows from Simulated Moving Bed (SMB) unit for production Cephalon's shares were quoted at USD 34.6 per operating and investing activities therefore of the S-enantiomer of citalopram was com- share. declined from DKK 414 million in 1998 to DKK menced in 1999. The SMB unit was put into test 375 million in 1999. Without the impact of the production in February 2000 as planned. prepayment referred to above on the 1998 cash Capital and reserves flows, the 1999 cash flows from operating and The company has carried out major expansions At the end of 1998, capital and reserves amount- investing activities would have been approx. of its research facilities, and new facilities for ed to DKK 1,818 million after adjustment for the DKK 100 million higher in 1999 than the 1998 pharmacological research were inaugurated in the change of accounting policy in 1999. Capital and figure. first quarter of 1999. Construction of new facili- reserves increased to DKK 2,903 million in 1999. ties for medicinal chemistry research was initiated The movements in capital and reserves are shown in the table below.

Cash flow (DKKm) Investments (DKKm) Movements in capital and reserves (DKKm)

900 500 20% Capital and reserves at 800 450 18% 700 1 January 1999 1,818 600 400 16% Distributed dividend for 1998 - 45 500 350 14% Share issue on 17 June 1999 500 400 Employee share issue on 300 300 12% 200 10 December 1999 14 250 10% 100 Profit for the year 616 0 200 8% Capital and reserves at - 100 150 6% 31 December 1999 2,903 - 200 - 300 100 4% - 400 50 2% - 500 - 600 0 0% 1995 1996 1997 1998 1999 1995 1996 1997 1998 1999

Cash flow from operating activities Tangible assets Cash flow from investing activities Intangible assets Cash flow from operating and investing activities Financial assets Investments as percentage of turnover (%)

44 Comments on the accounts The Supervisory Board proposes distribution of a Lundbeck is therefore carefully monitoring move- dividend of DKK 2.25 per share, or DKK 130 mil- ments in Forest's stocks and its net selling price, lion. Capital and reserves will amount to DKK continuously assessing the risk of the price 2,773 million after the distribution. adjustment clause becoming applicable. Further, Lundbeck evaluates on an ongoing basis whether Costs in connection with the capital increase on to make provisions for the commitment inherent 17 June 1999 totalled DKK 25.7 million, which in the price adjustment clause. have been set off against the issue premium. At the end of 1999, this potential commitment amounted to DKK 254 million at a maximum, Accounting for income from Forest computed as the difference between the mini- The income from sales of citalopram to Forest mum price and the invoiced price of the stocks. amounted to DKK 710 million, as stated above, In the accounts, the full extent of the commit- or 17% of Lundbeck's total turnover. This share is ment is shown under contingent liabilities. expected to grow considerably in the next years. The method used to account for Lundbeck's Provisions will be made for this commitment in income from Forest is, therefore, of considerable accordance with the company's accounting poli- importance. cies, if the risk that it will materialise is estimated to be significant. Future provisions may be According to the accounting polices applied by required if Forest's stockbuilding is estimated to the company, invoiced sales are recognised at the involve a material risk of price adjustments, either time of invoicing. The invoiced price is agreed because stocks are held for a very long period of between Forest and Lundbeck at the beginning sales, or because the risk of major price reductions of each calendar year. The price is calculated on in USA becomes greater in the selling period. the basis of the expectations of the coming year's Provisions may also be required if the sales of development in the elements included in the Celexa® are estimated to be declining substantial- royalty calculation agreed by the agreement with ly, for example when the S-enantiomer of citalo- Forest. These elements are: Forest's net selling pram is launched on the US market in 2002-2003. prices, quantities used in sold products, quantities used in samples, quantities expected to be wasted Estimated at the end of 1999, there is no risk that during processing, and the various dosage levels the price adjustment clause will be applied. of the finished goods. Of the total income of DKK 710 million from At the end of each quarter, the invoiced amount Forest, revenue from stockbuilding sales to Forest is adjusted according to the actual size of these in 1999 accounted for approx. DKK 275 million. elements. Any differences between calculated and The stockbuilding reflects Forest's expectations final prices are settled between Forest and for the future sales performance. Lundbeck. The general effect of Forest's stockbuilding is that According to the agreement with Forest, Lundbeck Lundbeck's income from bulk citalopram sales will is guaranteed a minimum royalty, meaning that in grow faster and be recognised earlier than Forest's a situation of significant reduction of Forest's net own income from Celexa® sales. However, this selling price, Lundbeck will be ensured a minimum timing difference between Lundbeck's and Forest's level of revenue. It also means that, if the sale of income will also mean that Lundbeck's income Celexa® should be discontinued, Lundbeck will be from Forest will decline earlier and more rapidly ensured a minimum income from the materials than Forest's income from Celexa® sales. and products that Forest may have in stock at such time.

45 Comments on the accounts Comments on the accounts

Incentive plans Management share option plan The options are earned by one-third a year over a Three new incentive plans were introduced at In June 1999, Lundbeck introduced a share option three-year period, the first portion for exercise in Lundbeck in connection with its public offering plan for Group management and key employees. August 2000. The right to exercise all the granted and stock exchange flotation in June 1999. All the At 31 December 1999, the plan comprised 45 options expires in September 2004. The exercise plans reflect the goal of ensuring that Lundbeck's executives, including 22 managers in subsidiaries price has been fixed at the initial offering price of management and employees are focused on in Denmark and abroad. the shares at 17 June 1999 (DKK 175 per share) creating added value for the shareholders of the plus a yield element of 10% p.a. company.

Effect of the incentive plans Own shares/ Commitment/ Staff costs/ Financial items/ current provisions profit and profit and assets loss account loss account No of shares Price DKK DKKm DKKm DKKm DKKm Holding of own shares Shares for the plan for Group management and key employees: Acquisition at 17 June 1999 500,000 175.00 87.5 Yield element 500,000 9.45 4.7 4.7 Revaluation to market value 500,000 111.58 55.8 - 55.8 500,000 296.03 148.0

Shares for the plan for employees of foreign companies: Acquisition 15 Nov. - 10 Dec. 1999 185,000 272.68 50.5 Revaluation to market value 185,000 23.35 4.3 - 4.3 185,000 296.03 54.8 Holding at 31 December 1999 685,000 296.03 202.8 - 60.1

Commitments Share options Group management and key employees: Market value at 31 December 1999 500,000 296.03 148.0 Exercise price 500,000 184.45 92.2 Commitment at 31 December 1999 500,000 111.58 55.8 55.8

Commitment, employees of foreign companies: Market value at 31 December 1999 167,300 296.03 49.5 Special price 167,300 52.50 8.8 Commitment, employees of foreign companies: 167,300 243.53 40.7 Derived social security costs 8.3 Commitment at 31 December 1999 49.0 49.0 Commitment, option and foreign plans at 31 December 1999 104.8 104.8 Yield element of share options for Group management and key employees included as income in financial items 4.7

Net expense of option and foreign plan commitments included in staff costs in the profit and loss account 44.7

46 Comments on the accounts The company has authorisation to grant 500,000 the plan will trigger an amount calculated as the GmbH from Lundbeck products is equal to the options. On 17 June 1999, the company pur- difference between the special price of DKK 52.50 contribution margin from Byk Gulden products. chased 500,000 of its own shares to secure and per share and the stock market price of the shares The take-over must take place by the end of implement the share option plan. The cost of at 3 January 2005. The value of the plan is equiva- 2009, except that (i) until 31 December 2000, the shares was DKK 87.5 million. At 31 December lent to 167,300 shares. Byk Gulden has the right to demand purchase by 1999, the number of granted options was Lundbeck of Byk Gulden's interest, if the two 470,333. To cover the increase in the company's commit- companies agree that the profits from Lundbeck ments and the associated social security costs, products will not equal the profits from Byk The value of the shares is fixed at the stock the company has purchased 185,000 of its own Gulden products before the end of 2009. Further- market price ruling at the balance sheet date, shares at a total cost of DKK 50.4 million. more, (ii) Lundbeck can extend the time for its and they are accounted for as a current asset. take-over until 2014, if the market value of The difference between the calculated exercise The value of the shares is stated at the stock Lundbeck GmbH (determined by an independent price of the share options and the market price market price ruling at the balance sheet date, and valuation) is below a specified threshold by the of the underlying shares is stated as a provision they are booked as a current asset. The commit- end of 2009. in the balance sheet. ment, stated as the difference between the special price and the stock market price of the underlying The purchase price will be an already agreed The increase in the estimated option commitment shares, including amounts added to cover social factor multiplied by Lundbeck GmbH's turnover corresponds to the increase of the company's own security costs, is stated as a provision in the in the year of acquisition, which means that it shares to stock market value, and is therefore balance sheet. cannot be determined at present. A purchase price profit neutral, apart from the annual yield element for Byk Gulden's interest in Lundbeck GmbH of 10%, totalling DKK 4.7 million, which is includ- The table on page 46 gives a summary of the calculated at 31 December 1999 would be an ed in financial income in the profit and loss effect of the plans for the management and for amount between DKK 700 million and DKK 1 account. the employees of foreign companies as well as billion. the effect on the company's balance sheet and profit and loss account. Lundbeck GmbH is managed by Lundbeck and is Employee share plan for the employees of therefore fully consolidated in Lundbeck's consoli- Danish companies dated annual accounts, and Byk Gulden's interest On 10 December 1999, the company carried out Lundbeck GmbH & Co is accounted for as a minority interest. an employee share issue, and the employees in In 1994, H. Lundbeck A/S made an agreement the parent company and its Danish subsidiaries with Byk Gulden Lomberg Chemische Fabrik subscribed for shares at a special price of DKK GmbH to establish the 50/50 owned company, Employees 52.50 per share. Of the employees entitled, 97.8% Promonta Lundbeck Arzneimittel GmbH & Co. In 1999, the average number of full-time employ- subscribed for a total of 275,175 employee shares On 1 April 1999, the company changed its name ees totalled 2,653, an increase of 367 employees at an amount of DKK 14.4 million in total. to Lundbeck GmbH & Co. compared to 1998. In 1999, the number of employees increased in connection with the Lundbeck GmbH & Co. markets the CNS products strengthened sales force in the major European Stock market price based plan for the of Lundbeck and Byk Gulden on the German markets and the company's expanded capacity employees of foreign companies market. for research, development and production. The rest of the Group's employees were offered an incentive plan based on the share price, which Lundbeck has undertaken to acquire 100% owner- At the end of 1999, the number of full-time was a reflection of the Danish plan. It was offered ship of Lundbeck GmbH at a later date. Under the employees was 2,823. according to the same principles as those used for existing arrangements, Lundbeck has agreed to the offering of employee shares in Denmark. For purchase Byk Gulden's interest when the total, employees employed in the Group throughout the accumulated contribution margin of Lundbeck Shareholders period from 1 September 1999 to 3 January 2005, The Lundbeck Foundation, situated at 9 Ottiliavej, 2500 Valby, Denmark, is the only shareholder which owns more than 5% of the share capital.

47 Comments on the accounts Comments on the accounts

Managing financial risks The amount placed in Danish bonds averaged Loan portfolio Lundbeck's growing internationalisation through DKK 514 million, a reduction relative to 1998, Lundbeck has a variety of credit facilities and the past few years has made the Group's profit when the amount invested was DKK 622 million. committed loan facilities which, in combination and balance sheet more exposed to various finan- with the company's cash and cash equivalents cial risks. The average amount placed in the money market and bond portfolio, constitute Lundbeck's first-line in 1999 was DKK 284 million, whereas the corre- financial resources. The aim of Lundbeck's overall financial manage- sponding amount for 1998 was DKK 149 million. ment is to minimise these financial risks, including In 1999, the Group borrowed funds to a very foreign currency and interest rate risks in particu- The return on the bond portfolio and money mar- modest extent, and its total borrowing at the end lar. ket deposits in 1999 was DKK 17 million, equal to of 1999 amounted to DKK 27 million, compared a yield of 2.0% p.a. Lundbeck's benchmark is a to DKK 103 million at the end of 1998. Bond portfolio and money market deposits bond portfolio with a maturity of three years. In Lundbeck's securities management strategy is 1999, the yield on the benchmark portfolio was The borrowing at the end of 1999 consisted designed to ensure the best possible return on its 0.7% p.a. primarily of a 20-year fixed-rate serial loan at a cash and cash equivalents without exposing the nominal interest rate of 5.7% and a term to Group to unnecessary risks. The Group's interest rate risk on the bond portfo- maturity of 12 years. Both the nominal outstand- lio was approx. DKK 26 million at 31 December ing debt on the loan and the market value was To minimise credit risks, Lundbeck invests exclu- 1999, if interest rates move up 1 percentage DKK 27 million. sively in liquid Danish Government and mortgage point. The interest rate exposure was reduced credit bonds. In addition, Lundbeck has only from approx. DKK 30 million at the end of 1998. In addition, Lundbeck has committed mortgage placed money market deposits with banks that loan facilities equivalent to DKK 346 million. Of have been approved according to the company's this amount, DKK 295 million is for 20-year loans internal credit rating policy. and DKK 51 million for 10-year loans. This committed loan facility, which is renewed annually, was last confirmed at 31 December 1999.

1998 Currencies of the cash inflows 1999 of H. Lundbeck A/S and its Danish 48% subsidiaries in 1998 and 1999 35%

EUR Other European currencies USD and other non-European currencies

27%

15%

37% 38%

48 Comments on the accounts Foreign currency risk The greater part of the hedging of expected cash currency, show that USD and other non-European Foreign currency exposure is a result of Lundbeck's flows for 1999 was carried out at the beginning of currencies totalled 38% in 1999. In 1998, the cor- international activities. Until Celexa® was intro- the year to secure revenue in accordance with the responding rate was 15%. duced on the US market, the Group's foreign exchange rates estimated in the budget. currency exposure was primarily associated with Throughout 1999, the hedging was continuously In 1999, the Lundbeck Currency Index, which European currencies, which are traditionally more kept at a high level, making it possible to adopt reflects Lundbeck's long-term competitive power, stable against the Danish krone. With the success- hedge accounting. rose 7.0%. This sharp gain is due primarily to the ful marketing of Celexa® in USA, the Group's rising USD, GBP and SEK rates. The currency index currency risk profile has shifted towards a more Due to the company's continuous hedging in is calculated as the reciprocal DKK rate index, volatile combination of currencies. To ensure 1999, the positive effect of the rising rate of USD weighted with the expected turnover shares of efficient foreign currency management, all sub- was not fully reflected in the earnings level, com- Lundbeck's subsidiaries and business partners. The sidiaries are as a main rule invoiced in their pared to a non-hedging situation. index is rebalanced on an annual basis to reflect national currencies, providing the advantage of changes in the currency composition of the centralised foreign currency management by the At the end of 1999, just under 75% of the turnover. parent company. Group's budgeted net cash flows for the year 2000 had been hedged by means of forward The changes in the index figures shown by the Hedging is carried out in conformity with the exchange contracts. graph below, are an approximated illustration of company's foreign currency policy adopted by its how much the turnover would have been affected Supervisory Board. The instruments used in 1999 The foreign currency composition of the turnover by exchange rate movements if no currency were exclusively forward exchange contracts, of H. Lundbeck A/S and its Danish subsidiaries is hedging had taken place. acquired for shorter or longer periods and changing as a result of the growing sales of renewed on an ongoing basis. Celexa® in the US market. The charts on page 48, illustrating Lundbeck's cash inflows analysed by

Lundbeck Currency Index (1988=100)

104

102

100

92 ‘88 ‘89 ‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘99 (Dec)

49 Comments on the accounts Accounting policies

General The consolidated accounts are prepared on the Foreign currencies The annual accounts and the consolidated basis of the accounts of the parent company and Transactions denominated in foreign currencies accounts have been prepared in accordance with the subsidiaries, which are all prepared in accor- are translated by using standard rates which the Danish Company Accounts Act, current Danish dance with the Group's accounting policies. The essentially reflect the exchange rates ruling at the accounting standards, current International consolidated accounts are prepared by adding up transaction date. Exchange rate differences arising Accounting Standards (IAS), and the requirements items of a uniform nature. In the consolidation, between the rate at the transaction date and otherwise imposed by the Copenhagen Stock intercompany income and expenses, intercompa- the rate at the date of payment are included in Exchange on the presentation of accounts for ny shareholdings, balances and dividends as well the profit and loss account as financial items. listed companies. as unrealised gains and losses on transactions between the consolidated companies are elimi- Balances denominated in foreign currencies are The accounts have been presented in accordance nated. Account is taken of deferred tax on these translated at the exchange rates ruling at the with the IAS standards applicable to the financial eliminations. balance sheet date. year 1999 and IAS 10 (revised 1999) and IAS 37, which apply to financial years starting after 1 July In the consolidated accounts, the book value of Forward contracts and other derivative financial 1999 or later. the parent company's shareholdings in the sub- instruments are stated at market value. Both sidiaries has been set off against the parent com- realised and unrealised exchange rate differences To facilitate the reading of the accounts, some of pany's share of the net asset value at the time of are included in the profit and loss account as the information required by IAS has been included acquisition, calculated at the market value of financial items. However, gains and losses on in the comments on the accounts, which in this assets and liabilities. If the purchase price exceeds financial instruments executed to hedge cash context are regarded as an integral part of the the share of the net asset value thus computed, flows denominated in foreign currencies are annual accounts and the consolidated accounts. the difference is shown as Group goodwill in the deferred so that they are included in the profit balance sheet. Group goodwill is written off sys- and loss account at the same time as and to- Change of accounting policies tematically through the profit and loss account gether with the hedged item. Deferred gains and In accordance with IAS 10, which is implemented based on an individual assessment of the eco- losses on hedging instruments are stated in the and adopted for the first time for the 1999 finan- nomic life of the asset, however with a maximum balance sheet. cial year, no dividend will be set aside for share- of 20 years. holders until it has been finally approved by the Non-monetary assets, including Group goodwill, general meeting. The change has no effect on the So far no Group goodwill has been recorded in acquired in foreign currencies are translated at the profit and loss accounts for the years ended 1999 connection with the acquisition of subsidiaries. exchange rates ruling at the time of acquisition. and 1998. The effect on capital and reserves at 31 December 1999 is an increase of DKK 130 million, Newly acquired subsidiaries are included in the All foreign subsidiaries are regarded as integral corresponding to the anticipated dividend distrib- profit and loss account from the date of acquisi- entities, which means that the transactions are uted for 1999 (31 December 1998: increase of tion. Subsidiaries sold or wound up are included dealt with as if they had been executed in the DKK 45 million). The other IAS implemented as up to the time of sale or winding up. Comparative parent company. For consolidation purposes, from the financial year 1999 have no significant figures are not restated for subsidiaries newly the accounts of foreign subsidiaries are translated impact on the profit and loss account, and capital acquired or sold/wound up. according to an adapted temporal method. and reserves. Profit and loss account items are translated at the average exchange rates ruling during the year Consolidation because these essentially reflect the exchange The consolidated accounts comprise H. Lundbeck rates ruling at the transaction date. Exchange A/S (the parent company) and companies (sub- rate differences arising from the translation of sidiaries) controlled by the parent company. both the balance sheets and the profit and loss Control is achieved where the parent company accounts of the foreign entities are included in the directly or indirectly holds more than 50% of the Group's profit and loss account as financial items. voting rights or is otherwise able to exercise or actually exercises a controlling influence. A list of the subsidiaries is shown in note 9.

50 Accounts Ta x Further, provision is made for deferred tax Distribution costs The parent company is jointly taxed with the two on reversal of tax benefit arising from assets Distribution costs comprise costs relating to Danish and some of the foreign subsidiaries. The in jointly taxed foreign subsidiaries. distribution and sales of the Group's products, tax payable computed on the joint taxation including direct distribution and marketing costs, income is included in the parent company's profit Deferred tax on investments in subsidiaries is salaries, etc. for the sales and marketing functions, and loss account in accordance with the parent not disclosed because the calculations are very as well as depreciation and other indirect costs. company method. The jointly taxed Danish resource consuming and comprehensive with companies are included in the Danish provisional many alternatives, and the usefulness to the Administration costs tax scheme. users is limited compared with the amount of Administration costs comprise salaries, etc. of the work involved. management and the administrative functions, Tax on the profit or loss for the year comprises office expenses as well as depreciation and other current tax and the year's change in deferred tax. indirect costs. Additions, deductions and allowances relating to Segment information the Danish provisional tax scheme are included The company is only engaged in the business Research and development costs in current tax. Tax on the profit or loss for the year segment "Drugs for Treatment of Illnesses in the Research and development costs comprise costs relates to the profits or losses on ordinary and Field of CNS". Turnover, segment assets and attributable to the Group's research and develop- extraordinary activities. additions to tangible and intangible segment ment functions, including wages and salaries as assets are disclosed within the secondary geo- well as depreciation and other indirect costs. Current tax comprises tax payable calculated graphical segments. on the basis of the expected taxable income for Research costs are always charged to the profit the year and any adjustment of tax payable for and loss account as incurred. previous years. Profit and loss account Development costs are also charged to the profit Provision is made for deferred tax according to Net turnover and loss account as incurred if the conditions for the balance sheet oriented liability method on all Net turnover comprises invoiced sales for the year capitalising development costs in the balance temporary differences between valuations as less returned goods and turnover taxes consisting sheet are not deemed to have been met. In the stated in the accounts and as computed for taxa- mainly of value added taxes and foreign drug opinion of the Group, development costs should tion purposes, with the exception of differences taxes. Sales subject to a price adjustment clause not be capitalised until the product has been relating to shareholdings in subsidiaries and are recognised as income at the time of invoicing completed and all the necessary public registra- Group goodwill which are not deductible for tax if there is not estimated to be any risk of signifi- tion and marketing approvals have been obtained. purposes. The tax value of losses expected to be cant price adjustments. Moreover, net turnover available for set-off against future taxable income includes licence income and royalties from is set off against the deferred tax within the same licensed products as well as non-refundable down- legal tax unit and jurisdiction. Any deferred tax payments and payments relating to research assets (net) are stated on the basis of a conser- cooperation from research partners. vative valuation in the balance sheet.

Deferred tax is calculated on the basis of the Production costs current tax rules and tax rates in the respective Production costs comprise the cost of goods sold. countries, and the effect on deferred tax of any The cost includes the cost of raw materials, changes in tax rates is included in the profit and consumables and goods for resale, direct wages loss account. and indirect production costs, including the cost of operating and depreciating manufacturing facilities. Production costs moreover include costs in connection with quality certification of sold products and any writedown to net realisable value of unsaleable and slow moving items.

51 Accounts Accounting policies

Public loans and grants Balance sheet Tangible fixed assets are written off on a straight- State development loans with a forgivable clause line basis over the expected useful lives of the are recognised as income in the profit and loss Intangible fixed assets assets, which are expected to be as follows: account as the research and development costs Intangible fixed assets are stated at purchase price relating to the project are incurred. These costs less accumulated amortisation. Costs relating to Buildings 30 years are charged to the profit and loss account if, as intangible fixed assets manufactured by the com- Installations 10 years mentioned above, they are not found to satisfy pany are charged to the profit and loss account as Plant and machinery 3-10 years the conditions for capitalisation in the balance incurred. Other fixtures and fittings, sheet. tools and equipment 3-10 years Group goodwill is written off systematically In the event of repayment, the repayments through the profit and loss account based on an Writedowns are made on tangible fixed assets including interest are charged to the profit and individual assessment of the economic life of the whose utility value is believed permanently to be loss account as the related income is recognised asset, however with a maximum of 20 years. So much lower than the book value based on the as income. far no Group goodwill has been recorded in con- above periods of depreciation. Writedowns are nection with the acquisition of subsidiaries. charged to the profit and loss account under the Other operating income and expenses same items as the associated depreciation. Other operating income and expenses comprise, Product rights are written off over the lives of among other things, gains on sales of rights. the underlying products, however with a maxi- Acquisitions at a cost not exceeding DKK 50,000 mum of 20 years. per unit are charged to the profit and loss account Financial items in the year of acquisition. Financial items include interest income and Other rights are written off over the lives of the expenses, which are included in the profit and loss rights, however with a maximum of 20 years. Gains or losses on the disposal or scrapping of account at the amounts relating to the financial tangible fixed assets are calculated as the differ- year. Leasehold improvements are written off over the ence between book value and sales price reduced term of the lease, however with a maximum of by dismantling and sales costs. Gains and losses Financial items include writedowns of financial 10 years. are included in the profit and loss account under fixed assets and realised and unrealised gains and the same items as the associated depreciation. losses on securities, items denominated in foreign Tangible fixed assets currencies as well as forward contracts and other Tangible fixed assets are stated at purchase price Financial fixed assets derivative financial instruments not used for or at cost less accumulated depreciation and Shareholdings in subsidiaries are stated in the hedging purposes. writedowns. parent company's accounts according to the equity method. This means that the shareholdings Costs in connection with the raising of loans are The cost of new buildings and erection by the are included in the balance sheet at the parent charged to the profit and loss account at the time company of its own technical installations and company's proportional share of the companies' of the raising of the loan. machinery includes the cost of materials, direct net asset value plus Group goodwill. wages and a share of indirect costs. Interest Extraordinary items relating to tangible fixed assets during the period The parent company's share of the companies' Extraordinary items include significant income or of building and erection is not capitalised. results after deduction of unrealised intercompany expenses from events or transactions that are gains and losses and after deduction of write-off clearly distinct from the ordinary activities of the on Group goodwill is included in the parent com- Group. pany's profit and loss account as the result of shareholdings before tax and as tax on the result for the year, respectively.

52 Accounts The net revaluation of shareholdings in sub- Own shares The present value of the Group's commitments sidiaries is taken to the reserve for net revaluation The holding of own shares is valued at the stock relating to future pension payments according to according to the equity method under capital and market price ruling at the balance sheet date and defined benefit pension plans is calculated on an reserves. is included under current assets if they have been actuarial basis at intervals of not more than three acquired for the purpose of hedging and comply- years on the basis of the pensionable period of Other shareholdings and receivables are valued ing with share option plans and other plans based employment up to the time of the actuarial at purchase price less writedown as a result of a on share prices. valuation. significant diminution in value. The purchase price of shares denominated in foreign currencies is Other securities Provision is made in the balance sheet for the translated at the exchange rates ruling at the Other securities shown as current assets are present value of plans which are not financed. balance sheet date. Exchange rate adjustments valued at the stock market price ruling at the are included in the profit and loss account as balance sheet date. Both realised and unrealised The present value of the commitment according financial items. capital gains and losses are included in the profit to defined benefit plans which are financed by and loss account under financial items. independent pension funds is calculated less the Stocks market value of the assets associated with the Raw materials, packaging and goods for resale are Debt plan, and any net commitment is included as valued at the latest known purchase price at the Mortgage debt and other debt where there is a a provision in the balance sheet. If the calculation balance sheet date, which approximates purchase difference between the nominal value and the shows a net asset, that asset will normally be price computed according to the FIFO principle. market value are valued at the stock market included in the balance sheet. price ruling at the balance sheet date or any Work in progress and goods produced by the other market value. Other liabilities are stated The year's changes in the provisions relating to company are valued at cost, i.e. the cost of at nominal value. defined benefit pension plans are included in the materials, direct wages and a share of indirect profit and loss account. production costs, including the cost of operating Pension commitments and depreciating manufacturing facilities. The Group has entered into pension agreements Commitments relating to the executive and similar agreements with most of the Group's share option plan and other employee plans Writedown to net realisable value is made if it is employees. The difference between the stock market price of lower than the purchase price or production cost, the underlying shares ruling at the balance sheet respectively. Periodical payments to defined contribution date and the calculated exercise price of share pension plans are included in the profit and loss options is shown as a provision in the balance Receivables account at the due date and any contributions sheet. Receivables are stated at nominal value less payable are included in the balance sheet under writedowns to counter the risk of loss calculated other debt. Commitments relating to employees in foreign on the basis of an individual evaluation. companies under the share price based plan are included as a provision in the balance sheet.

Guarantee commitments Provision is made to cover return obligations imposed on the industry when these are found to have a material effect on the accounts.

53 Accounts Accounting policies

Cash flow statement Cash and cash equivalents include liquid funds. The consolidated cash flow statement is present- Cash and cash equivalents also include securities ed according to the indirect method and shows shown as current assets in the balance sheet, the composition of the Group's cash flow, divided except own shares. These securities are mainly into operating, investing and financing activities, Danish listed bonds. Despite the fact that they respectively, and the Group's cash and cash involve a risk of price changes, these bonds are equivalents at the beginning and at the end of included in cash because they actually function the year. as cash due to the special liquid nature of the Danish stock market. Cash flow from operating activities is calculated as the Group's results before financial items Cash flow denominated in foreign currencies, adjusted for non-cash operating items, any including cash flow in foreign subsidiaries, is change in the operating capital, financial and translated at the average exchange rates ruling extraordinary items paid and corporation taxes during the year, because they essentially reflect paid. the rates ruling at the date of payment. Cash at year-end is translated at the rates ruling at the Cash flow from investing activities includes balance sheet date, and the effect of exchange payments in connection with purchases and rate adjustments on cash is shown as a separate sales of fixed assets. item in the cash flow statement.

Cash flow from financing activities includes payments to and from shareholders and raising of and repayments on mortgage debt and other long-term debt.

54 Accounts Profit and loss account

for the year ended 31 December 1999

Parent Company Group

1998 1999 1999 1998 DKKm DKKm Notes DKKm DKKm

2,095.5 2,911.5 Net turnover1, 23 4,189.3 3,231.1 702.5 759.4 Production costs2-4 794.1 764.5 325.9 420.5 Distribution costs2-4 1,037.9 906.8 281.1 328.9 Administration costs2-5 674.8 570.9

786.0 1,402.7 Profit before research and development costs 1,682.5 988.9 617.0 818.8 Research and development costs2-4 824.3 619.4

169.0 583.9 Profit before other operating items 858.2 369.5 14.6 3.5 Other operating income 14.2 18.9 2.2 2.7 Other operating expenses 10.1 4.1

181.4 584.7 Operating profit 862.3 384.3 206.0 280.1 Income from shares in subsidiaries before tax7,9 - - 52.9 61.5 Financial items, net6 64.0 61.6

440.3 926.3 Profit before tax 926.3 445.9 133.3 310.5 Tax on the profit for the year7 310.5 133.3

307.0 615.8 Profit for the year before minority interests 615.8 312.6 Minority interests' share of the profit 0.0 5.6

307.0 615.8 Profit for the year 615.8 307.0

Which is proposed to be appropriated as follows: 7.3 64.0 Transfer to reserve for net revaluation by the equity method - - 299.7 551.8 Transfer to distributable reserves 615.8 307.0 307.0 615.8 615.8 307.0

Movements in capital and reserves

1,511.2 1,773.2 Capital and reserves at 1.1. 1,773.2 1,511.2 35.0 45.0 Impact of accounting policy change for dividends 45.0 35.0 1,546.2 1,818.2 Adjusted capital and reserves at 1.1. 1,818.2 1,546.2

- 35.0 - 45.0 Distribution of dividend - 45.0 - 35.0 - 499.3 Share issue 17.6.1999 499.3 - - 14.4 Employee share issue 10.12.1999 14.4 - 262.0 486.2 Profit for the year less proposed dividend 486.2 262.0 45.0 129.6 Proposed dividend for the financial year 129.6 45.0

1,818.2 2,902.7 Capital and reserves at 31.12. 2,902.7 1,818.2

DKK DKK Earnings per share (EPS) 24 10.83 5.56 Proposed dividend per share 2.25 0.82

55 Accounts Balance sheet at 31 December 1999

Assets

Parent Company Group

1998 1999 1999 1998 DKKm DKKm Notes DKKm DKKm

15.7 8.2 Product rights 8.2 15.7 - - Other rights 6.5 5.5 25.7 55.0 Leasehold improvements 62.6 30.0 41.4 63.2 Intangible fixed assets 8 77.3 51.2

503.8 644.7 Land and buildings 666.8 515.9 168.6 228.8 Plant and machinery 277.9 212.9 113.7 144.4 Other fixtures and fittings, tools and equipment 180.9 144.5 182.5 133.5 Assets in course of construction 140.3 191.2 968.6 1,151.4Tangible fixed assets 8 1,265.9 1,064.5

271.4 474.2 Shares in subsidiaries 9 - - 313.4 342.4 Accounts receivable from subsidiaries 10 - - 9.6 103.2 Other shareholdings 10 103.3 9.7 7.5 9.0 Other receivables 10 13.8 11.5 - - Value of tax assets 15 35.2 27.9 601.9 928.8 Financial fixed assets 152.3 49.1

1,611.9 2,143.4 Total fixed assets 1,495.5 1,164.8

108.6 81.3 Raw materials and consumables 82.5 109.3 148.0 202.5 Work in progress 207.8 157.2 70.0 94.8 Finished goods and goods for resale 136.2 89.9 326.6 378.6 Stocks 11 426.5 356.4

53.4 71.2 Accounts receivable 680.4 502.6 115.9 228.4 Accounts receivable from subsidiaries - - - - Corporation tax receivable 11.1 13.2 30.6 86.4 Other receivables 136.8 72.7 19.6 36.8 Prepayments and accrued income 65.6 54.9 219.5 422.8 Receivables 893.9 643.4

- 202.8 Own shares 12 202.8 - 593.4 570.5 Other securities 570.8 594.0 593.4773.3 Securities 773.6 594.0

36.7 563.2 Cash at bank and in hand 868.3 222.6

1,176.2 2,137.9 Total current assets 2,962.3 1,816.4

2,788.1 4,281.3 Total assets 4,457.8 2,981.2

56 Accounts Balance sheet at 31 December 1999

Liabilities

Parent Company Group

1998 1999 1999 1998 DKKm DKKm Notes DKKm DKKm

110.0 1,165.5 Share capital 1,165.5 110.0 - 448.2 Share premium account 448.2 - 205.9 269.9 Reserve for net revaluation by the equity method - - - 202.8 Reserve for own shares 202.8 - 1,457.3 686.7 Profit brought forward less proposed dividend 956.6 1,663.2 45.0 129.6 Proposed dividend for the financial year 129.6 45.0 1,818.2 2,902.7 Capital and reserves 13 2,902.7 1,818.2

Minority interests 4.0 4.0

- - Provisions for pensions and similar commitments 14 62.5 48.8 138.0 206.7 Provision for deferred tax 15 245.2 174.5 31.9 66.2 Other provisions 16 104.8 50.9 169.9 272.9 Provisions 412.5 274.2

28.6 24.4 Mortgage debt 24.4 28.6 204.1 304.9 Debt to subsidiaries - - 232.7 329.3 Long-term debt 17 24.4 28.6

10.4 0.8 Bank debt 0.8 72.1 2.1 2.1 Mortgage debt 2.1 2.1 181.9 302.5 Trade creditors 390.2 247.8 55.0 60.6 Debt to subsidiaries - - 24.8 7.0 Corporation tax 69.1 47.0 92.6 164.4 VAT, taxes and holiday pay commitments 277.3 164.5 40.4 148.4 Other debt 284.1 157.0 160.1 90.6 Accruals and deferred income 18 90.6 160.1 - - Minority interests’ share of the profit 0.0 5.6 567.3 776.4Short-term debt 1,114.2 856.2

800.0 1,105.7 Total debt 1,138.6 884.8

2,788.1 4,281.3 Total liabilities 4,457.8 2,981.2

Contractual obligations 19

Contingent liabilities 20

Financial derivatives 21

Related party transactions 22

Segment information 23

57 Accounts Cash flow statement

for the year ended 31 December 1999

Group

1999 1998 Notes DKKm DKKm

Operating profit 862.3 384.3 Adjustments 25 153.0 189.9 Working capital movement 26 - 4.0 227.5

Cash flow from operating activities before financial items 1,011.3 801.7

Financial receipts 93.7 71.4 Financial payments - 42.7 - 41.3

Cash flow from ordinary activities 1,062.3 831.8

Corporation tax paid - 226.0 - 150.9

Cash flow from operating activities 836.3 680.9

Investments, tangible/intangible fixed assets - 375.2 - 272.0 Sales of assets 10.3 11.1 Investments, financial fixed assets - 96.4 - 5.7

Cash flow from investing activities - 461.3 - 266.6

Cash flow from operating and investing avtivities 375.0 414.3

Proceeds of share issues 513.7 - Loan proceeds 0.0 6.7 Loan instalments - 81.8 - 369.5 Profit shares distributed to minority interests - 5.6 - 2.7 Purchase of own shares - 137.9 - Dividend paid in the financial year - 45.0 - 35.0

Cash flow from financing activities 243.4 - 400.5

Increase in cash and cash equivalents 618.413.8

Cash and cash equivalents at 1.1. 816.6 800.3 The year's unrealised exchange rate adjustments 4.1 2.5 Increase for the year 618.4 13.8 Cash and cash equivalents at 31.12. 27 1,439.1 816.6

Interest-bearing net cash is composed as follows:

Cash and cash equivalents excluding own shares 1,439.1 816.6 Interest-bearing debt 27.3 102.8

Interest-bearing net cash at 31.12 1,411.8 713.8

58 Accounts Signatures

Copenhagen, 29 Februrary 2000

The Supervisory Board and the Board of Management have today considered and adopted the annual report, the consolidated accounts and the annual accounts for 1999.

The consolidated accounts and the annual accounts have been presented in accordance with current accounting policies. 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 acco unts 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 Bundgaard Rosenmeier Torben Skarsfeldt Elected by employees Elected by employees Elected by employees

Auditors’ report

We have audited the consolidated accounts and misstatement. Based on an evaluation of materi- Opinion the annual accounts of H. Lundbeck A/S for 1999 ality and risk our audit has included an examina- In our opinion, the consolidated accounts and the presented by the management. tion of evidence supporting the amounts and dis- annual accounts have been presented in accor- closures in the annual accounts. We have dance with the Danish Company Accounts Act, assessed the accounting policies applied and the Danish accounting standards and international Basis of opinion estimates made by the management as well as accounting standards and give a true and fair We have planned and conducted our audit in evaluated the overall annual accounts presenta- view of the group’s and the parent company’s accordance with generally accepted audit stand- tion. assets and liabilities, financial position and result. ards to obtain reasonable assurance about whether the annual accounts are free of material Our audit has not given rise to qualifications. Copenhagen, 29 Februrary 2000.

Deloitte & Touche Grothen & Perregaard Statsautoriseret Revisionsaktieselskab Statsautoriseret Revisionsaktieselskab

Stig Enevoldsen Carsten Vaarby Jørgen Frank Jakobsen Steen Høedt Thomsen State Authorised State Authorised State Authorised State Authorised Public Accountant Public Accountant Public Accountant Public Accountant

59 Accounts Notes

1. Net turnover

Parent company Group

1998 1999 1999 1998 DKKm DKKm DKKm DKKm

281.4 308.8 Denmark 180.2 165.3 1,490.9 1,750.1 Rest of Europe 2,912.8 2,604.9 253.1 732.5 USA*) 732.5 253.1 70.1 120.1 Rest of world 363.8 207.8 2,095.5 2,911.5 Total 4,189.3 3,231.1

Including: 41.3 - Down-payments - 41.3 55.1 23.0 Payments towards shared research 23.0 55.1 53.3 191.2 Royalty 191.3 54.1

*) Turnover in USA is invoiced via Ireland

2. Staff costs Wages and salaries etc.

Parent company Group

1998 1999 1999 1998 DKKm DKKm DKKm DKKm

433.2 510.1 Wages and salaries 963.1 769.1 33.0 39.5 Contribution to pension plans 68.4 55.9 7.0 7.2 Other social security costs 91.9 81.9 473.2 556.8 Total 1,123.4 906.9

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

193.9 238.0 Production costs 260.4 209.0 4.9 4.8 Distribution costs 327.2 241.8 97.5 121.1 Administration costs 298.9 244.4 176.9 192.9 Research and development costs 236.9 211.7 473.2 556.8 Total 1,123.4 906.9

Supervisory Board and Board of Management:

Total fees to the parent company's Supervisory Board for the 1999 financial year amounted to DKK 1.5 million (DKK 1.4 million in 1998). Total fees to the Group Board of Management for the 1999 financial year amounted to DKK 7.1 million (DKK 4.9 million in 1998). In the course of 1998, the Group Board of Management increased to three members.

60 Accounts 2. Staff costs - continued Incentive plans:

In 1999, the company introduced a share option plan for Group management and key employees and a share price based plan for the employees of its foreign companies.

Group management and key employees, 45 in total, received 470,333 share options in 1999. The share options are earned by one-third a year over a three-year period and may be exercised successively in the period from August 2000 to September 2004. The exercise price is DKK 175 (the offering price at 17 June 1999) + 10% p.a.

The employees of foreign companies have received a plan based on share price, according to which employees employed by the Group during the period from 1 September 1999 to 3 January 2005 will receive a cash amount. The amount will be calculated as the difference between the price of DKK 52.50 per share and the stock market price of the Lundbeck share at 3 January 2005.

Share option plan Share price based plan for Group management for the employees and key employees of foreign companies Number Number Allotment beginning of year - - Allotments for the year 470,333 167,300 Allotment end of year 470,333 167,300

Hereof 110,000 share options were granted to the Board of Management.

The share options carry no dividend entitlement or voting rights. The share price based plan for the employees of foreign companies cannot be converted into shares. The value of the plan will be distributed as a cash payment.

Both plans are secured by the company's holding of own shares. The shares are accounted for as current assets at the stock market price ruling at the balance sheet date, whereas the commitments under the plans are stated under provisions in the balance sheet.

The total net expense relating to commitments in respect of the above plans, which is included in the wages and salaries item, amounts to DKK 44.7 million.

Employees information:

Parent company Group

1998 1999 1999 1998

Average number of full-time employees 1,186 1,356 in the financial year 2,653 2,286

Number of full-time employees at the end of the financial year: 1,267 1,445 In Denmark 1,495 1,316 - - Outside Denmark 1,328 1,167 1,267 1,445 Total 2,823 2,483

61 Accounts Notes

3.Writedowns and provisions for Serdolect®

Parent company Group

1998 1999 1999 1998 DKKm DKKm DKKm DKKm

The year's writedowns and provisions 66.1 - in respect of Serdolect® - 85.1

The writedowns and provisions are distributed as follows:

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

The company has made no provision in respect of Serdolect® at the end of 1999. Expenses of DKK 15 million relating to Serdolect® were charged to the profit and loss account in 1999.

4. Depreciation

Parent company Group

1998 1999 1999 1998 DKKm DKKm DKKm DKKm Depreciation for the year is broken down as follows:

52.7 71.2 Production costs 79.9 60.5 - - Distribution costs 6.1 3.7 23.5 21.5 Administration costs 31.6 34.1 25.1 28.6 Research and development costs 28.8 25.4 101.3 121.3 Total 146.4 123.7

62 Accounts 5. Audit fees

Parent company Group

1998 1999 1999 1998 DKKm DKKm DKKm DKKm

Deloitte & Touche: 0.7 0.9 Auditing services 3.1 2.6 1.8 3.0 Non-auditing services 3.8 2.4 2.5 3.9 Total 6.9 5.0

Grothen & Perregaard: 0.2 0.3 Auditing services 0.3 0.2 - 0.2 Non-auditing services 0.2 - 0.2 0.5 Total 0.5 0.2

63 Accounts Notes

6. Financial items, net

Parent company Group

1998 1999 1999 1998 DKKm DKKm DKKm DKKm

49.3 41.9 Interest, cash and securities, etc. 46.5 54.6 5.1 12.0 Interest income, subsidiaries - - 43.7 56.2 Exchange gains 67.5 58.0 Realised and unrealised capital gains, 12.8 3.2 bonds 3.2 12.9 - 4.7 Unrealised capital gains, own shares 4.7 - - 2.4 Unrealised capital gains, mortgage debt 2.4 - 110.9 120.4 Total financial income 124.3 125.5

18.9 4.6 Interest, bank and mortgage debt, etc. 8.5 24.5 8.4 10.0 Interest expenses, subsidiaries - - 23.9 18.6 Exchange losses 26.1 32.5 4.8 25.2 Realised and unrealised capital losses, bonds 25.2 4.9 - 0.5 Unrealised capital losses, other shareholdings 0.5 - 2.0 - Unrealised capital losses, mortgage debt - 2.0 58.0 58.9 Total financial expenses 60.3 63.9

52.9 61.5 Financial items, net 64.0 61.6

64 Accounts 7. Tax on the profit for the year

Parent company Group

1998 1999 1999 1998 DKKm DKKm DKKm DKKm

131.6 154.0 Current tax 255.3 190.2

- 2.2 1.4 Prior year adjustment 2.8 - 2.9

Corporation taxes paid between jointly taxed - 2.6 - 5.8 subsidiaries and parent company - - 66.7 102.2 Tax in subsidiaries - -

- 51.6 58.7 Provision for deferred tax 52.4 - 45.4

Change of deferred tax as a result of reduction - 8.6 - of the corporation tax rate from 34% to 32% - - 8.6 133.3 310.5 Total 310.5 133.3

109.8 154.1 Taxes paid 226.0 150.9

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

Group 1999 1998

DKKm % DKKm %

Profit before tax 926.3 445.9

Tax on pre-tax profit, 32% (34%) 296.4 32.0 151.6 34.0

Tax impact of: 65 Differences of the tax rates of foreign subsidiaries from the Danish rate of 32% (34%) - 9.3 - 1.0 - 19.9 - 4.5

Non-deductible costs/non-taxable income 20.9 2.2 27.4 6.1

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

Prior year tax adjustments, etc. 2.5 0.3 - 1.9 - 0.4

Effective tax for the year 310.5 33.5 133.3 29.9

This effect is not shown separately for the parent company as the parent company's and the Group's tax costs are identical.

65 Accounts Notes

8. Intangible and tangible fixed assets

Group

Product Other Leasehold Intangible rights rights improvements fixed assets total DKKm DKKm DKKm DKKm

Purchase price at 1.1.1999 40.1 6.0 43.7 89.8 Foreign currency translation - 0.2 0.4 0.6 Reclassification - - 0.7 0.7 Additions - 3.4 36.4 39.8 Disposals - - 0.7 0.7 Purchase price at 31.12.1999 40.1 9.6 80.5 130.2

Depreciation and amortisation at 1.1.1999 24.4 0.5 13.7 38.6 Foreign currency translation - - 0.2 0.2 Reclassification - - - - Depreciation and amortisation for the year 7.5 2.6 4.7 14.8 Depreciation on assets sold - - 0.7 0.7 Depreciation and amortisation at 31.12.1999 31.9 3.1 17.9 52.9

Book value at 31.12.1999 8.2 6.5 62.6 77.3

Parent company

Product Other Leasehold Intangible rights rights improvements fixed assets total DKKm DKKm DKKm DKKm

Purchase price at 1.1.1999 40.1 - 34.9 75.0 Reclassification - - 0.6 0.6 Additions - - 32.5 32.5 Disposals - - 0.7 0.7 Purchase price at 31.12.1999 40.1 - 67.3 107.4

Depreciation and amortisation at 1.1.1999 24.4 - 9.2 33.6 Reclassification - - - - Depreciation and amortisation for the year 7.5 - 3.8 11.3 Depreciation on assets sold - - 0.7 0.7 Depreciation and amortisation at 31.12.1999 31.9 - 12.3 44.2

Book value at 31.12.1999 8.2 - 55.0 63.2

The assessed value at 1 January 1999 or later of real property for property tax purposes aggregated DKK 289.0 million (DKK 289.1 million in 1998).

The book value of mortgaged fixed assets in the parent company and the Group is DKK 632.7 million (DKK 493.5 million in 1998).

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

687.8 372.5 350.5 191.2 1,602.0 1,691.8 1.8 9.1 1.8 1.1 13.8 14.4 - 0.8 - 0.1 - - 0.7 0.0 194.7 99.6 93.1 127.5 514.9 554.7 5.3 3.6 35.1 179.5 223.5 224.2 878.2 477.6 410.4 140.3 1,906.5 2,036.7

171.9 159.6 206.0 - 537.5 576.1 0.2 3.9 1.1 - 5.2 5.4 - - - - - 0.0 43.5 39.3 48.6 - 131.4 146.2 4.2 3.1 26.2 - 33.5 34.2 211.4 199.7 229.5 - 640.6 693.5

666.8 277.9 180.9 140.3 1,265.9 1,343.2

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

674.0 301.3 274.6 182.5 1,432.4 1,507.4 - 0.6 - 0.1 0.1 - - 0.6 0.0 185.6 92.1 70.3 124.5 472.5 505.0 5.3 3.6 20.0 173.5 202.4 203.1 853.7 389.7 325.0 133.5 1,701.9 1,809.3

170.2 132.7 160.9 - 463.8 497.4 - - - - - 0.0 43.0 31.3 34.9 - 109.2 120.5 4.2 3.1 15.2 - 22.5 23.2 209.0 160.9 180.6 - 550.5 594.7

644.7 228.8 144.4 133.5 1,151.4 1,214.6

67 Accounts Notes

9. Shares in subsidiaries

Total Purchase Accumulated Accumulated price revaluation writedown DKKm DKKm DKKm DKKm

Book value at 1.1.1999 56.6 132.5 93.8 - 169.7 Adjustment due to changed accounting policy on dividends 154.3 - 112.1 42.2 210.9 132.5 205.9 - 127.5

Capital contribution 178.3 178.3 - -

Dividend received from subsidiaries - 154.3 - - 113.2 - 41.1 Profits in subsidiaries 216.0 - 169.7 46.3 Losses in subsidiaries - 38.2 - - 3.1 - 35.1 Foreign currency translation 9.9 - 10.6 - 0.7 Total 422.6 310.8 269.9 - 158.1

Set off against accounts receivable from subsidiaries 51.6 Total 474.2

68 Accounts 9. Shares in subsidiaries - continued

Currency Nominal capital Ownership ‘000

H. Lundbeck A/S, Norway NOK 200 100% H. Lundbeck AB, Sweden SEK 1,000 100% OY H. Lundbeck AB, Finland FIM 200 100% Lundbeck Eesti AS, Estonia EEK 400 100% SIA Lundbeck Latvia, Latvia LVL 5 100% UAB Lundbeck Lietuva, Lithuania LTL 60 100% Lundbeck Pharma A/S, Denmark DKK 500 100% A/S Lundbeck Overseas, Denmark DKK 5,000 100% LB Arzneimittel Produktrechte GmbH, Germany DEM 50 51% Lundbeck Holding GmbH, Germany including: DEM 100 100% - Lundbeck Beteiligungs GmbH, Germany DEM 500 100% - Lundbeck GmbH & Co., Germany* DEM 2,000 50% - Promonta Lundbeck Arzneimittel Beteiligungs GmbH, Germany DEM 50 50% Lundbeck Group Limited, UK including: GBP 9,000 100% - Lundbeck Limited, UK GBP 6,400 100% - Lundbeck Pharmaceuticals Limited, UK GBP 4,900 100% Lundbeck Ireland Limited, Ireland IEP 50 100% Lundbeck B.V., Netherlands NLG 75 100% Lundbeck N.V., Belgium BEF 10,000 100% Lundbeck S.A., France FRF 6,000 100% Lundbeck Espanã S.A., Spain ESP 80,000 100% Lundbeck (Schweiz) AG, Switzerland CHF 350 100% Lundbeck Italia S.p.A, Italy ITL 1,000,000 100% Lundbeck Arzneimittel Ges.m.b.H., Austria ATS 3,000 100% Lundbeck Poland Sp.z.o.o., Poland PLN 50 100% Lundbeck Hungária KFT, Hungary HUF 3,000 100% Lundbeck Ceska Republika s.r.o., Czech Republic CZK 450 100% Lundbeck Slovensko s.r.o., Slovakia SKK 500 100% Svetovalno Podjetje D.O.O., Slovenia SIT 9,458 100% Lundbeck Hellas S.A., Greece GRD 1,883,000 100% Lundbeck Ilac Tic. Ltd. Sti, Turkey TRL 37,500,000 100% Lundbeck South Africa (Pty) Limited, South Africa ZAR 400 100% Lundbeck Canada Inc., Canada CAD 913 100% Lundbeck Australia Pty Limited, Australia AUD 150 100% Lundbeck New Zealand Limited, New Zealand NZD 150 100%

* The parent company exercises a controlling influence.

69 Accounts Notes

10. Other shareholdings and other receivables

Parent company Group

Other Receivables Other Other Other share- from receivables share- receivables holdings subsidiaries holdings DKKm DKKm DKKm DKKm DKKm

9.6 313.4 7.5 Accumulated purchase price at 1.1.1999 9.7 11.5 94.3 29.0 1.9 Additions 94.3 2.7 - 4.9 - - 0.4 Disposals - 4.9 - 0.4 4.2 - - Exchange rate adjustment 4.2 -

103.2 342.4 9.0 Accumulated purchase price at 31.12.1999 103.3 13.8

284.3 342.4 9.0 Market value at 31.12.1999 284.3 13.8

11. Stocks

Parent company Group

1998 1999 1999 1998 DKKm DKKm DKKm DKKm

123.9 171.8 Indirect production costs 185.3 129.5

12. Own shares

Parent company and Group

Number of Nominal value % of share shares DKKm capital

Holding at 1.1.1999 - - - Additions 685,000 13.7 1.2 Disposals - - - Holding at 31.12.1999 685,000 13.7 1.2

The market value of own shares held at 31.12.1999 was DKK 202.8 million.

The purchase price of additions in the financial year was DKK 137.9 million.

The shares were acquired to secure the Group management and key employees’ share option plan, and the share price based plan for the employees of foreign companies.

70 Accounts 13. Capital and reserves

Group

Share Share premiun Reserve for Profit Total capital account own shares brought forward DKKm DKKm DKKm DKKm DKKm

Capital and reserves at 1.1.1998 110.0 1,401.2 1,511.2 Adjustment due to changed accounting policy for dividends - 35.0 35.0 Adjusted capital and reserves at 1.1.1998 110.0 - - 1,436.2 1,546.2

Dividend distribution 24.4.1998 - 35.0 - 35.0 Appropriation of profit - 307.0 307.0 Capital and reserves at 1.1.1999 110.0 - - 1,708.2 1,818.2

Capitalisation issue 990.0 - 990.0 0.0

Dividend distribution 29.4.1999 - 45.0 - 45.0

Share issue on 17.6.1999 60.0 439.3 499.3 Employee share issue on 10.12.1999 5.5 8.9 14.4

Transfer to reserve for own shares 202.8 - 202.8 0.0

Appropriation of profit after deduction of proposed dividend 486.2 486.2 Proposed dividend for the financial year 129.6 129.6 Capital and reserves at 31.12.1999 1,165.5 448.2 202.8 1,086.2 2,902.7

71 Accounts Notes

13. Capital and reserves - continued

Parent company

Share Share Reserve for net Reserve Profit brought Total capital premium revaluation for own shares forward by the equity method DKKm DKKm DKKm DKKm DKKm DKKm

Capital and reserves at 1.1.1998 110.0 77.7 1,323.5 1,511.2 Adjustment due to changed accounting policy for dividends - 120.9 - 85.9 35.0 Adjusted capital and reserves at 1.1.1998 110.0 - 198.6 - 1,237.6 1,546.2

Dividend distribution 24.4.1998 - 35.0 - 35.0 Appropriation of profit - 7.3 299.7 307.0 Capital and reserves at 1.1.1999 110.0 - 205.9 - 1,502.3 1,818.2

Capitalisation issue 990.0 - 990.0 0.0

Dividend distribution 29.4.1999 - 45.0 - 45.0

Share issue on 17.6 1999 60.0 439.3 499.3 Employee share issue on 10.12.1999 5.5 8.9 14.4

Transfer to reserve for own shares 202.8 - 202.8 0.0

Appropriation of profit after deduction of proposed dividend 72 64.0 422.2 486.2 Proposed dividend for the financial year 129.6 129.6 Capital and reserves at 31.12.1999 1,165.5 448.2 269.9 202.8 816.3 2,902.7

The share capital of DKK 1,165.5 million is divided into 58,275,175 shares of a nominal value of DKK 20 each.

The DKK 25.7 million costs of the public offering on 17 June 1999 have been set off against the share premium because the amount concerns the issue of new shares only.

The Supervisory Board proposes distribution of dividend for 1999 at an amount of DKK 2.25 per share, equivalent to DKK 129.6 million exclusive of dividend on own shares.

72 Accounts 14. Provisions for pensions and similar commitments

Group

The majority of the employees of the Group are covered by pension plans paid for by the companies of the Group. The types of plan vary according to regulatory 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 For the defined contribution plans, the employer undertakes to pay a defined contribution such as a fixed amount or a fixed percentage rate of the pay. Under a defined contribution plan, the employees will usually bear the risk related to future developments in interest rates, inflation etc.

The major defined contribution plans cover employees in Finland, Sweden, Switzerland and the UK and also salaried staff and hourly paid workers in Denmark. The cost of defined contribution plans, representing contributions to the plans, totalled DKK 49.5 million in 1999. (DKK 44.5 million in 1998).

Defined benefit plans For the defined benefit plans, the employer undertakes to pay a specified benefit (e.g. a retirement pension at a fixed amount or a fixed percentage of the employee's final salary). Under the defined benefit plan, the company usually bears the risk relating to future developments in interest and inflation rates, etc.

For defined benefit plans, the present value of future benefits, which the company is liable to pay under the plan, is computed using actuarial principles. The computation of present value is based on assumptions on basic interest rates, increases in pay rates and pensions, investment yield, staff resignation rates, mortality and disability. Present value is computed exclusively for the benefits to which the employees have earned entitlement through their employment with the company.

The Group's most important defined benefit plans cover employees in the UK and Germany.

The UK defined benefit plan is funded by means of an independent pension fund. According to the latest actuarial calculation, carried out at 31 December 1998, the pension liability amounted to DKK 66.4 million. The actuarial calculation was based on a discount rate of 9% p.a., a pay rate increase of 6.5% p.a., a pension increase of 4.25% p.a. and an age-weighted73 staff resignation rate of 2-13% p.a. The assets of the plan amounted to DKK 86.8 million at 31 December 1998. The value of the overfunding of the plan, which is declining and amounted to DKK 20.4 million at 31 December 1998, is in principle to be stated in the balance sheet. It will, however, only be included after the next actuarial calculation to be made in 2000. The impact is estimated to be insignificant for the annual accounts.

The German defined benefit plan is not funded. The liability under the plan calculated on an actuarial basis is stated in the Group balance sheet at 31 December 1999 at an amount of DKK 47.6 million (DKK 36.0 million in 1998). The actuarial calculation is based on a discount rate of 5.5% p.a., a pay rate increase of 3.5% p.a., a pension increase of 6.2% every third year and an age-weighted staff resignation rate of 0-5% p.a. The Group profit and loss account for 1999 includes an expense of DKK 11.6 million for the plan (DKK 7.4 million in 1998).

In addition, the Group has defined benefit plans in the Netherlands, Austria and Belgium, which are also unfunded. The liability un der these plans determined on an actuarial basis is stated in the Group balance sheet at 31 December 1999 at an amount of DKK 6.6 million (DKK 5.9 million in 1998). The Group profit and loss account for 1999 includes an expense on the plans of DKK 2.8 million (DKK 1.4 million in 1998).

Severance pay schemes In 1999, the Group made a provision of DKK 8.2 million (DKK 6.9 million in 1998) to cover severance pay in Germany, Austria, Italy and Greece. The severance payments are conditional upon specified requirements being met. The total cost of the schemes was DKK 2.1 million in 1999 (DKK 2.6 million in 1998).

Other payments In addition to the above plans, the companies of the Group make payments to certain statutory or contract-based benefit schemes for employees of a nature similar to social, pension and insurance plans. The annual contributions to these plans are charged as part of the Group's overall staff costs. The costs paid in 1999 totalled DKK 91.9 million (DKK 81.9 million in 1998).

73 Accounts Notes

15. Provisions for deferred tax

Group

Temporary differences between calculations for Balance Adjustment Foreign Movement Balance at accounting and tax purposes at 1.1.1999 relating currency during 31.12.1999 to 1998 *) translation the year DKKm DKKm DKKm DKKm DKKm

Intangible fixed assets 5.4 - - - 2.8 2.6 Tangible fixed assets 432.0 - 4.1 38.2 474.3 Stocks 124.6 - - 1.0 31.2 154.8 Prepayments - 152.8 - - 62.7 - 90.1 Other items 29.5 31.3 - 29.5 90.3 Tax provisions in subsidiaries 95.2 - - 26.6 121.8 Taxable loss carry-forwards - 51.0 - - - 8.5 - 59.5

Total temporary differences 482.9 31.3 3.1 176.9 694.2

Provisions for deferred tax 146.6 10.0 1.0 52.4 210.0

*) Adjustment relating to differences between deferred tax and current tax

1999 1998

Deferred Deferred Net Deferred Deferred Net tax assets tax liabilities tax assets tax liabilities DKKm DKKm 74 DKKm DKKm DKKm DKKm Intangible fixed assets 0.1 0.9 0.8 0.6 2.3 1.7 Tangible fixed assets 4.3 155.0 150.7 2.5 140.2 137.7 Stocks 6.5 55.0 48.5 7.7 47.3 39.6 Prepayments 28.8 - - 28.8 48.9 - - 48.9 Other items 19.8 47.5 27.7 0.9 10.4 9.5 Deferred tax in respect of tax provisions in subsidiaries - 34.1 34.1 - 26.6 26.6 Tax value of loss carry-forwards 23.0 - - 23.0 19.6 - - 19.6

Tax assets/(liabilities) 82.5 292.5 210.0 80.2 226.8 146.6

Set-off within legal tax entities and jurisdictions - 47.3 - 47.3 0.0 - 52.3 - 52.3 0.0

Total net tax assets/(liabilities) 35.2 245.2 210.0 27.9 174.5 146.6

The figures stated above show gross deferred tax assets and liabilities at a corporation tax rate of 32%.

74 Accounts 15. Provisions for deferred tax - continued

Parent company

Temporary differences between statements Balance at Adjustment Movement Balance at for accounting and tax purposes 1.1.1999 relating during 31.12.1999 to 1998 *) the year DKKm DKKm DKKm DKKm

Intangible fixed assets 7.0 - - 4.4 2.6 Tangible fixed assets 407.0 - 40.6 447.6 Stocks 148.0 - 23.7 171.7 Prepayments - 152.8 - 62.7 - 90.1 Other items 22.4 31.3 60.6 114.3

Total temporary differences 431.6 31.3 183.2 646.1

Provisions for deferred tax 138.0 10.0 58.7 206.7

*) Adjustment related to difference between deferred and current tax

1999 1998

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

Intangible fixed assets - 0.875 0.8 - 2.2 2.2 Tangible fixed assets - 143.2 143.2 - 130.2 130.2 Stocks - 55.0 55.0 - 47.4 47.4 Prepayments 28.8 - - 28.8 48.9 - - 48.9 Other items 4.8 41.3 36.5 - 7.1 7.1

Tax assets/(liabilities) 33.6 240.3 206.7 48.9 186.9 138.0

Set-off within legal tax entities and jurisdictions - 33.6 - 33.6 0.0 - 48.9 - 48.9 0.0

Total net tax assets/(liabilities) 0.0 206.7 206.7 0.0 138.0 138.0

The figures stated above show gross deferred tax assets and liabilities at a corporation tax rate of 32%.

75 Accounts Notes

16. Other provisions

Group

Share options Share price based Serdolect® Total for Group plan for management and employees of key employees foreign companies DKKm DKKm DKKm DKKm

Provisions at 1.1.1999 - - 50.9 50.9 Provision for the year, gross 55.8 49.0 - 104.8 Reduction of provision as costs are paid - - - 50.9 - 50.9 Reduction of provision by reversal - - - -

Provisions at 31.12.1999 55.8 49.0 0.0 104.8

Parent company

Share options Share price based Serdolect® Total for Group plan for management and employees of key employees foreign companies DKKm DKKm DKKm DKKm

Provisions at 1.1.1999 - - 31.9 31.9 Provision for the year, gross 55.8 10.4 - 66.2 Reduction of provision as costs are paid - - - 31.9 - 31.9 Reduction of provision by reversal - - - -

Provisions at 31.12.1999 55.8 10.4 0.0 66.2

The commitment related to share options for Group management and key employees is stated as the difference between the stock ma rket value of the underlying shares and the calculated exercise price of the share options. The provision is expected to materialise by the end of September 2004, but will not involve cash payments, since the commitment is secured by the company's holding of own shares accounted for as current assets. The value of the shares by which the option plan is secured was DKK 148.0 million at 31.12.1999.

The commitment related to the share price based plan for the employees of foreign companies is stated as the difference between the stock market value of the underlying shares and the special price at which the company issued employee shares plus any resulting social security costs. The provision is expected to materialise by 3.1.2005. The provision will be paid as a cash amount to the relevant employees. However, the simultaneous realisation of the holding of own shares purchased to secure the commitment will produce matching receipts. The value of the shares by which the plan for the employees of foreign companies is secured amounted to DKK 54.8 million at 31.12.1999.

The factor of uncertainty in the commitment relating to the two plans is the performance of the Lundbeck share, and in respect of the share price based plan also the decline in the number of employees covered by the plan until the end of the period, 3.1.2005.

76 Accounts 17. Long term debt

Parent company Group

1998 1999 1999 1998 DKKm DKKm DKKm DKKm

20.1 15.9 Mortgage debt due after five years 15.9 20.1

18. Accruals and deferred income

Parent company Group

1998 1999 1999 1998 DKKm DKKm DKKm DKKm

152.8 90.2 Prepayments from business partners 90.2 152.8 7.3 0.4 Other items 0.4 7,3 160.1 90.6 Total 90.6 160.1

77 Accounts Notes

19. Contractual obligations

Rental and leasing obligations Lundbeck has commitments amounting to DKK 248.3 million (DKK 218.1 million in 1998) in the form of rentals and leasing of operating equipment, primarily cars. The future rentals and leasing payments can be broken down as follows:

1999 1998

Land and OperatingTotal Land and OperatingTotal buildings equipment buildings equipment DKKm DKKm DKKm DKKm DKKm DKKm

Less than 1 year 47.4 31.2 78.6 36.5 28.0 64.5 Between 1 and 5 years 96.9 25.5 122.4 93.3 27.4 120.7 More than 5 years 47.3 0.0 47.3 32.9 0.0 32.9 191.6 56.7 248.3 162.7 55.4 218.1

Rentals and leasing payments charged to the profit and loss account in 1999 amounted to DKK 84.3 million (DKK 67.2 million in 1998).

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 Lundbeck GmbH & Co. (previously Promonta Lundbeck Arzneimittel GmbH & Co.).

Under the agreement, H. Lundbeck A/S is to take over the partner's share, when a set of specified conditions have been fulfilled, though not later than 2009. H. Lundbeck A/S has thus undertaken to buy its partner's share in 2009. However, Lundbeck's purchase obligation is subject t o a valuation guarantee ensuring that H. Lundbeck A/S can extend the cooperation for five years if the price fixed at the time of acquisition is not in line with the general pricing for pharmaceutical companies in Germany. 78 The possible purchase price made up at 31 December 1999 would range between DKK 700 million and DKK 1 billion. The purchase pric e will depend on the CNS turnover achieved by Lundbeck GmbH & Co. in the year of acquisition, constituting a fixed proportion of such sales. The 2009 purchase price will thus depend on the future sales performance of Lundbeck GmbH & Co. and cannot therefore be determined at the present time.

Any price in excess of the book value of the company's assets and liabilities will be treated as goodwill and product rights. Ac cording to current German tax law, goodwill and product rights are amortisable for tax purposes.

Other purchase obligations The parent company has undertaken to purchase tangible fixed assets, goods and services to the extent of DKK 130.3 million (DKK 55.0 million in 1998).

Research cooperation The Group is part of multi-year research cooperation projects comprising research as well as contractual obligations in order of DKK 200 million to DKK 300 million. The amount of the obligation will depend on how the cooperation develops.

Obligations in respect of development loans with forgiveable clauses The parent company has also accepted liabilities in an amount of DKK 52.9 million (DKK 55.7 million in 1998) for two development loans received successively in the period from 1989 to 1997. One loan will be repaid in the period from 1999 to 2001. Depending on the marketing potential of the underlying development project, the second loan will be repaid or, alternatively, forgiven.

Other contractual obligations The parent company has capital contribution obligations amounting to DKK 5.2 million (DKK 5.7 million in 1998) and has entered into various service agreements amounting to DKK 28.9 million (DKK 24.6 million in 1998).

78 Accounts 20. Contingent liabilities

Letters of intent The parent company has issued letters of intent to subsidiaries in a total amount of DKK 91.8 million (DKK 72.8 million in 1998). In addition, the parent company has issued general letters of intent to subsidiaries.

Pending legal proceedings The Group is involved in a few lawsuits. In the opinion of the management, the outcome of these proceedings will not have any mat erial impact on the Group's financial position.

Industry obligations The Group has return obligations normal for the industry. The management expects no loss on these obligations.

Price adjustment clause The Group supplies products to Forest subject to a price adjustment clause. The maximum price adjustment obligation relative to the minimum price was DKK 253.7 million at 31 December 1999 (DKK 54.9 million in 1998). In the opinion of the management, the obligation will not m aterialise.

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

79 Accounts Notes

21. Financial derivatives

Currency risk Net forward exchange contracts outstanding at 31 December 1999:

Hedge value according Market Gain/loss with deferred Gain/loss included Total gain/loss Maturity to the hedge value inclusion in the in the profit period accounting principle profit and loss account and loss account DKKm DKKm DKKm DKKm DKKm

USD 1,112.7 1,155.9 - 43.2 - 73.1 - 116.3 Jan/Dec 2000 EUR 683.3 684.4 - 1.1 3.6 2.5 Jan/Nov 2000 SEK 270.7 269.4 1.3 - 19.0 - 17.7 Jan/Dec 2000 CHF 98.8 98.7 0.1 1.5 1.6 Feb/Dec 2000 NOK 62.6 64.4 - 1.8 - 4.3 - 6.1 Jan/Mar 2000 AUD 56.8 60.2 - 3.4 - 4.8 - 8.2 Jan/Apr 2000 Other currencies 102.5 114.1 - 11.6 - 20.0 - 31.6 Jan/Mar 2000 Total 2,387.4 2,447.1 - 59.7 - 116.1 - 175.8

The exchange rate adjustment between the contract value and the market value of the concluded forward exchange contracts is DKK -39.9 million at 31.12.1999 (DKK 17.9 million in 1998).

Credit risk The primary financial instruments shown in the balance sheet are trade receivables, securities and cash at bank and in hand.

The amounts of these balance sheet items are identical to the maximum credit risk. The Group has no major concentration of credit risk, as the risk is spread over a large number of creditworthy trading partners.

The securities portfolio consists exclusively of Danish Government and mortgage credit bonds in addition to own shares.

The credit risk of cash at bank and in hand and financial derivatives (forward exchange contracts) is limited because the Group deals only with banks with a high credit rating.

Lundbeck's products are sold mainly to drug distributors and hospitals. Historically, the losses sustained on receivables have been insignificant. This was the case in 1999, too.

80 Accounts 21. Financial derivatives - continued

Interest rate risk The interest rate risk has been calculated based on due dates. If reassessments or interest rate adjustments have been made before the respective due dates, the interest rate risk is calculated on the basis of the adjustment dates.

1999 Less than Between More than Total Effective 1 year 1 and 5 years 5 years interest rates DKKm DKKm DKKm DKKm % Assets Receivables *) 942.9 - - 942.9 0 Securities **) 19.9 185.1 469.1 674.1 4-6 Cash at bank and in hand 868.3 - - 868.3 0-4 Total financial assets 1,831.1 185.1 469.1 2,485.3

Liabilities Mortgage debt 2.1 8.5 15.9 26.5 4-6 Other debt 1,111.3 - - 1,111.3 0 Bank debt 0.8 - - 0.8 5-9 Total financial liabilities 1,114.2 8.5 15.9 1,138.6

1998 Less than Between More than Total Effective 1 year 1 and 5 years 5 years interest rates DKKm DKKm DKKm DKKm % Assets Receivables *) 682.8 - - 682.8 0 Securities **) 8.7 79.1 515.9 603.7 4-6 Cash at bank and in hand 222.6 - - 222.6 0-4 Total financial assets 914.1 79.1 515.9 1,509.1

Liabilities Mortgage debt 2.1 8.5 20.1 30.7 4-6 Other debt 782.0 - - 782.0 0 Bank debt 72.1 - - 72.1 5-9 Total financial liabilities 856.2 8.5 20.1 884.8

*) Including other receivables and the value of tax assets under financial fixed assets.

**) Including other shareholdings of DKK 103.3 million in 1999 (DKK 9.7 million in 1998). Own shares are not included in the figure.

81 Accounts Notes

22. Related party transactions

Lundbeck defines related parties as: - The company's principal shareholder, The Lundbeck Foundation - Companies in which the principal shareholder has a controlling influence and their subsdiaries such as the Chr. Hansen Group - The company's Supervisory Board and Group Board of Management In 1999, the following significant transactions were made between the defined related parties and Lundbeck: In connection with the stock exchange flotation of the company, The Lundbeck Foundation and the company split the costs of the t ransaction other than the commission to the consortium banks on a 50/50 basis. The company's share of these costs amounted to DKK 10.0 million, which has been set off against the proceeds because the amount concerns the issue of new shares only. In connection with the stock exchange flotation, H. Lundbeck A/S purchased 500,000 shares from The Lundbeck Foundation to secure its management share option plan. The Lundbeck Foundation and the Chr. Hansen Group lease a few premises from the Group. The members of the Group Board of Management Board received 110,000 share options, and acquired 2,325 employee shares at a price of DKK 52.50 per share. Otherwise, the company has only made few transactions of marginal importance with its related parties.

23. Segment information

Primary segments: The company's activities are exclusively in the business segment of "Drugs for treatment for illness in the field of CNS diseases".

Secondary segments: The company's turnover is divided into the following secondary, geographical segments:

Turnover

1999 1998 DKKm DKKm

Denmark 180.2 165.3 Rest of Europe 2,912.8 2,604.9 USA 732.5 253.1 Rest of world 363.8 207.8 4,189.3 3,231.1

The company's assets and additions to tangible and intangible fixed assets, broken down by secondary geographical segments, are a s follows:

The year’s additions, Segments assets *) fixed assets **)

1999 1998 1999 1998 DKKm DKKm DKKm DKKm

Denmark 3,315.4 2,264.3 355.8 241.5 Rest of Europe 1,002.2 560.4 16.9 27.8 USA 0.0 0.0 0.0 0.0 Rest of world 105.0 128,6 2.5 2.7 4,422.6 2,953.3 375.2 272.0

*) Excl. deferred tax assets

**) Intangible and tangible fixed assets.

82 Accounts 24. Earnings per share (EPS)

Earnings per share (EPS) is calculated as: (profit after tax and minority interests / average number of shares in the year)

The average number of shares in 1999 is calculated as the weighted number of shares in the year adjusted for the effects of the employee share issue in December 1999, which was carried out at a discount relative to the market price. No adjustments are made for the company's holding of own shares, since it accounts for less than 2% of the total capital.

The average number of shares in the year has been calculated at 56,839,000. This number has been adjusted by an adjustment facto r of 0.9962, equivalent to 201,000 shares, which represent the effect of the employee share issue.

The comparative figures for prior years, which include the number of shares, have also been adjusted by an adjustment factor of 0.9962 for the effect of the employee share issue.

25. Adjustments

Group

1999 1998 DKKm DKKm

Depreciation and amortisation 146.4 123.9 Unrealised value adjustment of own shares - 60.1 - Increase in pension commitment 13.7 15.1 Increase in other commmitments 53.0 50.9 Adjustments 153.0 189.9

26. Increase/(decrease) in working capital

Group

1999 1998 DKKm DKKm

Increase in stocks - 68.7 - 9.9 Increase in receivables - 242.0 - 47.0 Increase in short-term debt 306.7 284.4 Increase/(decrease) in working capital - 4.0 227.5

27. Cash and cash equivalents

Group

1999 1998 DKKm DKKm

Securities with a maturity of less than three months 19.9 8.7 Securities with a maturity of more than three months 550.9 585.3 Securities included as cash and cash equivalents *) 570.8 594.0 Cash and cash equivalents 868.3 222.6 Cash and cash equivalents at 31.12 1,439.1 816.6

*) The holding is stated exclusive of own shares.

83 Accounts Shareholder Information

Market value 1999 The employee shares account for approx. 0.5% of the Tentative dates for release of financial The allotment of shares in connection with the flo- company's share capital. statements: tation of the company on 18 June 1999 took place 23 May 2000 at a price of DKK 175. Since then, the shares have Share capital Interim report for the first quarter of 2000 risen to DKK 296.03 at the end of the year, corre- As at 31 December 1999, the company's share capi- 15 August 2000 sponding to a 69% rise. For comparison, the KFX tal comprised 58,275,175 DKK 20 shares, correspond- Interim report for the first six months of 2000 index rose by 16.6%, while the Copenhagen Stock ing to a nominal share capital of DKK 1,165,503,500. Exchange's all-share index rose by 21.5% in 7 November 2000 the same period. Dividend Interim report for the third quarter of 2000 In connection with the flotation of the company, the From flotation to the end of 1999, H. Lundbeck A/S's Supervisory Board set out its policy on dividends, 27 February 2001 market value has risen from DKK 10.2 billion to DKK which was to pay a yearly dividend of between 15 Financial statement for 2000 and 25% of the profit after tax. 17.2 billion. 15 May 2001 Interim report for the first quarter of 2001 Measured by market value, H. Lundbeck A/S was the The dividend has to be approved by the company in tenth largest company on the Copenhagen Stock general meeting. At the coming Annual General Statements to the Copenhagen Stock Exchange Exchange at the end of 1999, and the company's Meeting, the Supervisory Board will propose that a in 1999: shares constitute 1.75% of the total market value of dividend of DKK 2,25 be paid per DKK 20 share, cor- No 1 1 June 1999 all shares listed on the Copenhagen Stock Exchange. responding to 21.1% of the net profit for the year. H. Lundbeck A/S to be listed on the Copenhagen Stock Exchange

No 2 In just over six months, from the flotation on 18 June The dividend for the year will be paid automatically 18 June 1999 1999 to the end of the year, 22.4 million shares were via the Danish Securities Centre not later than 5 Initial public offering of H. Lundbeck A/S sold, corresponding to a market value of DKK 4,956 banking days after the Annual General Meeting. No 3 2 July 1999 million. Release of semi-annual report Annual General Meeting No 4 As a result of the company's market value and the The Annual General Meeting will be held at 4pm on 22 July 1999 liquidity of the company's shares, the shares were Tuesday, 28 March, at Valbyhallen. Lundbeck and Cephalon commence phase I clinical trials included in the KFX index in connection with a No 5 29 July 1999 review of the indexes on 20 December 1999. Shareholders Lundbeck licenses the migraine drug almotriptan and enters into The Lundbeck Foundation, 9 Ottiliavej, DK-2500 agreement with P.N. Gerolymatos Shares Valby, Denmark is the only shareholder holding more No 6 The company has only one class of shares, and no than 5% of the share capital. 17 August 1999 Interim report for the six months ended 30 June 1999 shares have special rights. The shares are negotiable No 7 instruments with no restrictions on their transferabili- Investor enquiries 9 November 1999 ty. The company's shares are registered shares and Shareholders, analysts, representatives of banks, Lundbeck enters Collaboration Agreement with the Israelian company Teva must thus be listed in the register of shareholders. stockbrokers, etc. and other interested parties requir- ing information about Lundbeck and its business No 8 10 November 1999 Lundbeck wishes to serve its shareholders in the best areas are requested to contact Lundbeck's Investor Publication of Third Quarter 1999 Earnings Report possible way and to provide them with information Relations Department: No 9 about the company. That is why, according to our 12 November 1999 Interim report for the third quarter of 1999 Articles of Association, all shares must be registered H. Lundbeck A/S in the register of shareholders. Shareholders who Investor Relations No 10 26 November 1999 have not already registered their shareholding are 9 Ottiliavej Lundbeck has decided not to market the Anti Parkinson drug therefore requested to do so. DK-2500 Valby budipine outside Germany Denmark No 11 29 November 1999 Employee shares H. Lundbeck A/S and Novo Nordisk A/S to collaborate on use of At the beginning of December, Lundbeck issued Phone: +45 36 30 13 11 Drug Discovery Technology 275,175 shares at a price of DKK 52.50 to its Danish Fax: +45 36 30 57 42 No 12 employees. The shares have the same rights and E-mail: [email protected] 10 December 1999 97.8% of the employees entitled subscribed for employee shares obligations as the company's other shares. in H. Lundbeck A/S

84 Report Salvinia natans (tropical/subtropical plant) and Lemna (worldwide). Floating water ferns and duckweed, respectively.

85 Lundbeck worldwide

For further information please see our homepage: The UK Region The Overseas Region www.lundbeck.com UK Denmark Parent company Lundbeck Limited A/S Lundbeck Overseas South Africa Denmark Lundbeck South Africa (Pty) Limited H. Lundbeck A/S The France-Benelux Region Canada Lundbeck Canada Inc. Syntheses factories Belgium Australia Lundbeck S.A. Lundbeck Australia Pty Ltd. Denmark France New Zealand H. Lundbeck A/S Lundbeck SA Lundbeck New Zealand Limited United Kingdom The Netherlands Lundbeck Pharmaceuticals Ltd. Lundbeck B.V. Representative offices

Subsidiaries The Central European Region Russia Iceland The Scandinavian Region + Ireland Austria Bulgaria Lundbeck Arzneimittel Ges.m.b.H. Israel Sweden Poland Saudi Arabia H. Lundbeck AB Lundbeck Poland Sp.z.o.o. United Arab Emirates Norway Hungary Pakistan H. Lundbeck A/S Lundbeck Hungária KFT India Denmark The Czech Republic Mexico Lundbeck Pharma A/S Lundbeck CZ s.r.o. Japan Ireland Slovakia P.R. China Lundbeck (Ireland) Limited Lundbeck Slovensko s.r.o. Singapore Slovenia Ukraine Lundbeck Pharma d.o.o. The Baltic Region Greece Lundbeck Hellas S.A. Finland Turkey OY H. Lundbeck AB Lundbeck Ìlaç Ticaret Limited Sirketi Foundations Estonia Lundbeck International Neuroscience Foundation Lundbeck Eesti A/S Latvia The South West European Region SI A Lundbeck Latvia Lithuania Switzerland UAB Lundbeck Lietuva Lundbeck (Schweiz) AG Italy Lundbeck Italia S.p.A. The German Region Spain Lundbeck España S.A. Germany Portugal Lundbeck GmbH & Co Lundbeck Portugal

86 Report

Photos Thomas Grøndahl, Rigmor Mydtskov, et al.

Design and production CreaVision A/S

Reproduction Normann Prepress

Printed by From & Co

March 2000 H. Lundbeck A/S Tel: +45 3630 1311 9 Ottiliavej Fax: +45 3630 1940 DK-2500 Copenhagen - Valby www.lundbeck.com Denmark [email protected] CVR no. 56759913