Acute ischaemic stroke S troke is the third leading cause of death in the industrialised world and a leading cause of serious, long-term disability. In the USA alone, 600,000 people suffer from a stroke each year, and around 20% of them die within four weeks. Ischaemic stroke is the most common type of stroke and occurs when an artery in the brain is obstructed by a blood clot. The only currently available clot-dissolving agent must be administered within three hours of symptom onset; however, approximately 80% of stroke patients arrive at the hospital after the three-hour limit. Lundbeck is developing desmoteplase for the treatment of acute ischaemic stroke and ­ in collaboration with the American biotech company Warren Pharmaceuticals, Inc. ­ Lu AA24493 for the treatment of acute ischaemic stroke and other diseases with neuronal damage. 57 ANNUAL RePORT 2007 DESTINATION NEXT DECADE DESTINATION NEXT DECADE Cover photo: Eric Wainwright is a psychiatrist and works as Medical Adviso Lundbeck at a glance H. Lundbeck A/S is an international pharmaceutical company with more than 50 ye Lundbeck worldwide Parent company Denmark Iceland Ireland Italy Latvia Lithuania Norway Poland Portu Contents 5 6 12 16 24 26 27 32 36 40 46 51 54 59 Financial highlights 2003-2007 Business review Ma Financial highlights 2003-2007 Revenue DKK 10,985 million Research and development DKK 2,187 million Business review Lundbeck achieved its best ever results and also achieved its target of an EBIT marg 2007: DKK 10,985 million Revenue 2006: DKK 9,221 million Net profit for the year amounted to DKK 1, Revenue growth: +17% +22% +136% +250% I, two pharmaceutical candidates into clinical phase II a Being a research-based company, Lundbeck believes that it is important to be able to expand and stre Neurobiology scientist Lone Helboe is looking at the image of brain structures in an X-ray film, whi Alzheimers disease A lzheimers disease is the most common form of dementia. Alzheimers disease inv Marketed pharmaceuticals Lundbeck markets 14 pharmaceuticals worldwide for the treatment of diseases both depression and anxiety in comparison with a number of other antidepressants. For example, a stu Concurrently with its in-house development activities, Lundbeck dedicates an increasing amount of re Lundbecks pharmaceuticals Compound Melatonin Mechanism of action Regulation of circadian rhythm ASRI Progress in the regions Lundbeck divides its operations into three market regions: Europe, the USA a Europe, revenue, DKKm Q4 07 Cipralex® Ebixa® Azilect® Serdolect® Other revenue Total revenue 720 350 Lundbeck is one of the worlds leading companies in the development of antidepressants. In addition t ered by Lundbeck for the treatment of mood and anxiety disorders. The compounds are Lu AA21004 and L International Markets Revenue from International Markets rose 22% relative to 2006 to DKK 2,194 mill most frequently used pharmaceutical to treat Alzheimers disease, and Ebixa® continues to grow in the In recent years, Lundbecks scientists have invented a number of novel and innovative compounds for t Depression and mood disorders D epression is a serious disease with symptoms that include persiste Strategic focus Lundbeck is a research-based specialist company dedicated to the treatment of disord Partnering Developing new pharmaceuticals today is a more difficult and resource consuming process t Strategic initiatives Lundbeck aims to become a high-growth research-based CNS company. The Groups d Growth through innovation Lundbeck expects to continue to invest heavily in research and development Clinical trials are a key component in the development and approval of new pharmaceuticals. The requ At Lundbeck, research into new pharmaceuticals is the cornerstone of the companys operations. The go 30 Using methods such as microscopy, senior specialist Heidi Lopez de Diego analyses the crystals i Alcohol dependence I t is estimated that more than 30 million people in the USA, Europe and Japan Corporate governance Owing to recent years focus on corporate governance, many listed companies have Lundbeck.com/about us Position on corporate governance Lundbecks Supervisory Board has considered th Lundbeck is developing a novel potential pharmaceutical compound which has demonstrated promising pr Parkinsons disease P arkinsons disease is a progressive, degenerative disorder caused by the degen Risk management To a company conducting research and international operations such as Lundbeck, avoi Prior to obtaining regulatory approval for the sale of a product, Lundbeck must demonstrate for each Nils Ole Dalby works as a scientist in Lundbecks department for electrophysiology. He measures neuro Primary insomnia P rimary insomnia is characterised by a person experiencing inadequate or poor-qu The Lundbeck share In connection with the ongoing share buyback programme, Lundbeck bought back shar Annual General Meeting Lundbecks Annual General Meeting will be held on 22 April 2008 at 10am at H. Website Lundbeck aims to provide a good overview of the companys development to its shareholders and Analyst coverage Company ABG Sundal Collier Blue Oak Capital Carnegie Bank Credit Suisse Dansk Aktie In Lundbecks department for analytical chemistry, senior laboratory technician Rikke García Andrease Schizophrenia and psychotic disorders S chizophrenia is a mental disorder that occurs in varying d Focused efforts: Environment, health and safety Lundbeck aims to conduct its activities in a way tha Lundbeck sets high standards not only for the Groups in-house health, safety and environment initiat 44,100 tonnes, which was slightly less than in 2006. This single figure actually covers two differen Environmental impact under full control The positive trends in the key environmental impact figures Lundbecks HS&E strategy 2010, target status in 2007 and new targets for 2008 Lundbeck HS&E s The right skills for the new decade In 2007, Lundbeck strengthened its efforts to recruit and retain Lundbeck aims to be a workplace at which employees feel comfortable and would like to stay. Marie-Cl will focus on projects in the drug discovery and development organisation. Well-being in the workpl Research and knowledge sharing Lundbeck contributes to societys treatment of patients with disorders The Lundbeck Foundation is one of the largest private financial contributors to public health care r Section leader Lars Torup and molecular biologist Jacob Nielsen are looking at a 3D image of the CEP Acute ischaemic stroke S troke is the third leading cause of death in the industrialised world and 58 Financial statements 2007 Revenue DKK 10,985 million Profit from operations DKK 2,695 million Net pr Summary for the Group 2003-2007 Income statement (DKKm) Revenue Profit before research and developme Share data Average number of shares, excl. treasury shares (million)1 Earnings per share (EPS) (DKK) Financial review 2007 Income statement The Group generated revenue of DKK 10,985 million in 2007, a Income statement for the year ended 31 December 2007 Parent 2006 DKKm Parent 2007 DKKm Notes Group 2 Balance sheet at 31 December 2007 Assets Parent 2006 DKKm Parent 2007 DKKm Notes Group 2007 DKKm Gro Balance sheet at 31 December 2007 Equity and liabilities Parent 2006 DKKm Parent 2007 DKKm Notes Gro Statement of changes in equity at 31 December 2007 ­ Group 2007 Equity at 01.01.2007 Adjustment, def Statement of changes in equity at 31 December 2007 ­ Parent company 2007 Equity at 01.01.2007 Adjust Cash flow statement 1 January ­ 31 December 2007 Parent 2006 DKKm Parent 2007 DKKm Notes Group 2007 Notes to the financial statements 70 77 78 82 83 84 85 86 91 92 93 94 94 95 96 99 101 101 104 104 10 1 Notes 1. Accounting policies The annual report of H. Lundbeck A/S, comprising the financial state Income is recognised in the income statement as earned and includes value adjustments of financial a 1 Notes Exchange differences arising from the translation of foreign associates are recognised in t Tax As from 2005, the Danish companies of the Group are jointly taxed with the parent company LFI a/ 1 Notes Goodwill is amortised through the income statement in those cases where the carrying amount Share-based payment Share-based incentive plans in which employees may opt only to buy shares in the 1-2 Notes Cash flows from acquisitions and divestments of companies are shown separately under cash 2. Revenue Parent 2006 DKKm Parent 2007 DKKm Group 2007 DKKm Group 2006 DKKm 306.5 3,189.8 1,957.6 3 Notes 3. Staff costs Parent 2006 DKKm Parent 2007 DKKm Group 2007 DKKm Group 2006 DKKm Wages and 3. Staff costs ­ continued Supervisory Board Remuneration of members of the Supervisory Board for 20 3 Notes 3. Staff costs ­ continued Warrant scheme for the Executive Management and Danish and forei 3. Staff costs ­ continued Share price based plan for employees in foreign subsidiaries (2002 plan) 3-5 Notes 3. Staff costs ­ continued Executive Management Number Executives Number Other Number Tot 4. Amortisation and depreciation ­ continued 2006 Parent Intangible assets DKKm Parent Property, pla 6-7 Notes 6. Net financials Parent 2006 DKKm Parent 2007 DKKm Group 2007 DKKm Group 2006 DKKm 73.1 7. Tax on profit for the year Parent 2006 DKKm Parent 2007 DKKm Group 2007 DKKm Group 2006 DKKm 320 8 Notes 8. Intangible assets and property, plant and equipment Group Goodwill DKKm Patent rights DK 8. Intangible assets and property, plant and equipment ­ continued Group Land and buildings DKKm Oth 8 Notes 8. Intangible assets and property, plant and equipment ­ continued Parent company Goodwill 8. Intangible assets and property, plant and equipment ­ continued Parent company Land and buildings 8-9 Notes 8. Intangible assets and property, plant and equipment ­ continued Goodwill impairment te 9. Investments in subsidiaries Parent 2007 DKKm Parent 2006 DKKm Cost at 01.01. Capital contributio 10-11 Notes 10. Investments in associates 2007 Parent Parent Accumulated revaluation/ impairment lo 11. Other investments and other receivables Group Receivables from associates DKKm Available-for-sal 12-14 Notes 12. Inventories Parent 2006 DKKm Parent 2007 DKKm Group 2007 DKKm Group 2006 DKKm 207. 13. Trade receivables and other receivables ­ continued Lundbecks products are sold mainly to distri 15 Notes 15. Pension obligations and similar obligations The majority of the employees of the Group 15. Pension obligations and similar obligations ­ continued The pension plan in the USA is funded th 15-16 Notes 15. Pension obligations and similar obligations ­ continued Group 2007 DKKm Group 2006 16. Deferred tax liabilities Group Temporary differences between assets and liabilities as stated in 16-18 Notes 16. Deferred tax liabilities ­ continued Parent company Temporary differences between a 17. Provisions Parent 2006 DKKm Parent 2007 DKKm Group 2007 DKKm Group 2006 DKKm 87.5 (3.3) 84.2 84 18 Notes 18. Mortgage and bank debt ­ continued Group Weighted average effective interest rate Amor 18. Mortgage and bank debt ­ continued Bank debt Parent 2006 DKKm Parent 2007 DKKm Group 2007 DKKm G 19-21 Notes 19. Treasury shares Parent company and Group Shares of DKK 5 nom. Number Nominal value 21. Contingent liabilities Forest See note 2 Revenue in respect of the consequences of any launch of 22 Notes 22. Financial instruments Capital structure Lundbeck operates in an industry characterised 22. Financial instruments ­ continued Net forward exchange contracts and FX swaps outstanding for th 22 Notes 22. Financial instruments ­ continued Trading part Market value (forward exchange contract 22. Financial instruments ­ continued Specification of monetary assets and liabilities for the most 22-23 Notes 22. Financial instruments ­ continued Interest rate risks Interest rate risk management 23. Related parties Lundbecks related parties are - The companys principal shareholder, LFI a/s, Ves 24-28 Notes 24. Segment information Primary segments The Groups activities are exclusively in the b 25. Earnings per share ­ continued Warrants comprised by the warrant schemes established in 2005 and 28-30 Notes 28. Acquisition of company ­ continued Cost of acquisition Cash payment in January 2007 30. Releases from H. Lundbeck A/S in 2007 No. Date 317 21.12.2007 316 20.12.2007 315 18.12.2007 314 Management statement We have today presented the annual report of H. Lundbeck A/S for the financial Independent auditors report To the shareholders of H. Lundbeck A/S We have audited the annual report Supervisory Board At 31 December 2007 Kim Rosenville Christensen Kim Rosenville Christensen Elected Per Wold-Olsen Chairman Elected at the 2007 General Meeting Born 6 November 1947 Chairman, Remunerat Executive Management At 31 December 2007 Claus Bræstrup Born 18 January 1945 President and CEO Direc DESTINATION NEXT DECADE Design: Bysted A/S Annual Report photos: Nicky Bonne and Lars Bech Print: The specialist in psychiatry and pioneer in neurology H. Lundbeck A/S Ottiliavej 9 2500 Copenhagen