12 ! Facts on Cipralex® Cipralex® is the third-most prescribed original antidepressant in Europe. Lundbeck expects Cipralex® to continue to conquer market shares in Europe in the years ahead. It all started with Truxal® Lundbeck has launched a number of products for the treatment of schizophrenia. Truxal® was registered as far back as in 1959. Serdolect® is the most recently launched pharmaceutical, but Lundbeck has more drug candidates in its research pipeline for the treatment of schizophrenia. Y www.lundbeck.com/products Y www.lundbeck.com/products During the past couple of years, Lundbecks marketing initiatives have increasingly targeted physicians who treat the highest number of patients, leading to more dedicated resource consumption efforts. Ebixa® (memantine) ­ the second-most prescribed anti-Alzheimers drug in Europe Sales of Ebixa® in 2005 rose to DKK 1,003 million, up 48% on 2004. At the end of 2005 Lundbeck and our business partner Merz GmbH had a combined 20.4% share of the market for pharmaceuticals to treat Alzheimers disease in Europe. At year end 2004, the corresponding market share was 18.2%, while at 30 September 2005 it was 19.7%. Ebixa® accounted for 67% of total memantine sales at year end 2005, while Lundbecks partner Merz accounted for the remaining memantine sales. In October, Ebixa® was approved by the European health authorities for the treatment of moderate Alzheimers disease, making it the only drug approved for the treatment of moderate, moderately severe and severe Alzheimers disease. This approval allows for Ebixa® to be used in about 80% of all Alzheimers patients (source: Morpace Pharma Group). Cipralex® (escitalopram) fully available in Europe In 2005, sales of Cipralex® for the treatment of depression and anxiety amounted to DKK 2,131 million, which was DKK 727 million or 52% higher than in 2004. In May 2005, Lundbeck was granted the final price approval by the French authorities, allowing us to initiate the launch of Cipralex® in one of Europes largest antidepressant markets. The launch in France has been successful, and after seven months Cipralex® commands a share of 5.3% of the French market. By the end of 2005, Cipralex® held a combined share of 9.9% of the European antidepressant market, which was 55% more than at the end of 2004. At year-end 2004, we held 6.4% of the market as compared with 9.2% at 30 September 2005. In the course of 2005, the Cipralex® foundation was gradually strengthened as additional clinical data became available. In particular, the results of a study published in 2005 confirm that Cipralex® is significantly more effective than citalopram in the treatment of depression and that both pharmaceuticals are particularly well-tolerated. In addition, other studies show that Cipralex® is effective in the treatment of the anxiety disorder Obsessive-Compulsive Disorder (OCD). Depression and various anxiety disorders are closely related, and since the launch of Cipralex® in 2002, Lundbeck has given priority to supporting Cipralex® for the treatment of anxiety disorders. It is estimated that more than half of the patients suffering from anxiety also suffer from another psychiatric disorder, primarily depression. Consequently, it is important that we provide a pharmaceutical that physicians know to be safe and effective in the treatment of both types of disorders. Cipralex® has currently been approved for the treatment of depression, panic disorder, social anxiety disorder and generalised anxiety disorder, allowing for Cipralex® to be used in the treatment of the most common anxiety disorders. Lundbeck expects to file a registration application with the European health authorities during the first six months of 2006 for approval for the treatment of Obsessive-Compulsive Disorder (OCD). Launch of Azilect® (rasagiline) for the treatment of Parkinsons disease In June 2005, Lundbeck and its business partner Teva Pharmaceutical Industries Ltd. launched Azilect® for the treatment of Parkinsons disease both as monotherapy for patients with early-stage Parkinsons and as adjunct treatment in moderate-to-advanced Parkinsons disease. Azilect® has now been rolled out in several European countries, and Lundbeck is negotiating with local health authorities in a number of countries in respect of prices and subsidies. In 2005, Azilect® had generated revenue of DKK 6 million net of license fees to Teva. Azilect® was launched in Germany ­ the largest single market for Parkinsons disease in Europe ­ during the summer of 2005, and by the end of the year, the drug held 1.2% of the German market. We expect to launch Azilect® in several European markets in 2006. Serdolect® (sertindole) for the treatment of schizophrenia Serdolect® is an effective antipsychotic drug for the treatment of schizophrenia without sedative effect and with placebo-level extra pyramidal side effects. Serdolect® has an inhibitory effect on central dopamine D2 and serotonin 5HT2 receptors as well as on alpha-adrenergic receptors. Serdolects clinical and pharmacological profile indicates that the pharmaceutical will be able to improve the patients possibilities of carrying out day-to-day activities and thereby increase their quality of life and reduce the remission rate. ANNUAL REPORT 2005 We improve the quality of life for those suffering from psychiatric and neurologi 2005 IN BRIEF Financial ratios DKKm Revenue by geography, DKKm 9,070 1,782 2,170 1,589 7.11 2.10 20 4 CONTENTS Overskrift Financial performance Financial forecast and targets Europe ­ Lundbecks large Lundbeck Annual Report 05 2-3 5 lundbeck.com Financial figures in Excel On Lundbecks website you 6 Financial performance in 2005 2005 was an eventful and financially satisfactory year for Lundbec Lundbeck Annual Report 05 4-5 7 1,488 million, corresponding to 16% of revenue. Depreciation and 8 lundbeck.com Annual reports going back 10 years In 1996, Lundbeck generated revenue of DKK 2,326 Lundbeck Annual Report 05 6-7 9 Financial forecast and targets Lundbeck deviates from previously 10 lundbeck.com Partner relationship Lundbeck collaborates with a number of partners both in the fi Lundbeck Annual Report 05 8-9 11 Europe ­ Lundbecks largest business area Revenue from our Europ 12 ! Facts on Cipralex® Cipralex® is the third-most prescribed original antidepressant in Europe. L Lundbeck Annual Report 05 10 - 11 13 14 Since CHMPs (Committee for Medicinal Products for Human Use, under EMEA) temporary suspension of Lundbeck Annual Report 05 12 - 13 15 The US market ­ a strategic opportunity Representing 45% of 16 Lexapro® website Forest Laboratories has set up a website for everyone who wishes to know more a Lundbeck Annual Report 05 14 - 15 17 A market share of 22.5% makes Zoloft® the current market lea 18 ! Partnership with Merck Lundbeck formed its alliance with Merck in February 2004 to develop and Lundbeck Annual Report 05 16 - 17 19 Under the terms of the agreement, Lundbeck will start buildi 20 International Markets ­ long-term potential Revenue from markets outside Europe and the USA ­ I Lundbeck Annual Report 05 18 - 19 21 In 2005, the International Markets were characterised by inc 22 ! Ebixa® for specialists Lundbeck has prepared a special website for GPs and specialists who wis Lundbeck Annual Report 05 20 - 21 23 Conditions in International Markets The protection of intell 24 Developing new pharmaceuticals Lundbecks long-term goal is to become the worlds leader in the f Lundbeck Annual Report 05 22 - 23 ! CNSforum Read more about research and development in drugs in 26 Bifeprunox is a new compound (a D2 and 5-HT1A partial agonist) in phase III clinical development Lundbeck Annual Report 05 24 - 25 27 lundbeck.com Research literature Lundbecks employees have au 28 Launched pharmaceuticals in the market First Approved, registration no of countries 2001 82 Com Lundbeck Annual Report 05 26 - 27 29 Corporate governance Control is good, trust is better The p 30 Corporate governance Corporate governance at Lundbeck On 6 October 2005, the Copenhagen Stock E Lundbeck Annual Report 05 lundbeck.com Position on corporate governance Lundbecks Supervisory Board 32 Supervisory Board Flemming Lindeløv Chairman Elected at the 1998 General Meeting Born 20 August Lundbeck Annual Report 05 30 - 31 33 Remuneration of and shares held by members of the Supervisor 34 Remuneration of and shares held by members of the Executive Management Remuneration paid to the Lundbeck Annual Report 05 32 - 33 35 Organisation 36 Risk management In the individual business units, Lundbeck takes a systematic approach to monit Lundbeck Annual Report 05 34 - 35 37 4. Risks associated with foreign currency, interest rate and 38 Developing global competencies Human resources (HR) play a key strategic role at Lundbeck. Duri Lundbeck Annual Report 05 36 - 37 ! Lundbeck sought after Lundbecks HR department received almost 40 International career Lundbeck has subsidiaries and representative offices in 55 countries around Lundbeck Annual Report 05 38 - 39 41 New health, safety and environment strategy successfully imp 42 show that actual emissions have been reduced. Accordingly, the higher figures for Valby reflect Lundbeck Annual Report 05 40 - 41 43 Other initiatives enhanced efficiency in Lundbecks health, s 44 A Strategy for Health, Safety & Environment Read more about Lundbeck Health, Safety & En Lundbeck Annual Report 05 42 - 43 45 Overview of strategic objectives 2005-2010, target status 20 46 Lundbeck Annual Report 05 44 - 45 47 Focus on creating shareholder value Lundbecks shares are li 48 ! Annual General Meeting Lundbecks Annual General Meeting will be held on 24 April 2006 at 4 pm Lundbeck Annual Report 05 46 - 47 49 Releases from H. Lundbeck A/S in 2005 No. Date 50 lundbeck.com Archive of financial information The Lundbeck website provides announcements to the FINANCIAL REPORT 2005 51 2 Summary for the Group 2001-2005 Income statement (DKKm) Revenue Profit before research and devel Lundbeck Annual Report 05 12 - 13 50 - 51 3 Share data Average number of shares (millions) Earnin 4 Lundbeck Annual Report 05 12 - 13 52 - 53 5 Income statement for the year ended 31 December 2005 6 Balance sheet at 31 December 2005 Assets Parent 2004 DKKm Parent 2005 DKKm Notes Group 2005 D Lundbeck Annual Report 05 12 - 13 54 - 55 7 Balance sheet at 31 December 2005 Equity and liabilit 8 Statement of changes in equity at 31 December 2005 Group 2004 Equity at 31.12.2003 Effect of IFR Lundbeck Annual Report 05 12 - 13 56 - 57 9 Statement of changes in equity at 31 December 2005 Pa 10 Lundbeck Annual Report 05 12 - 13 58 - 59 58 11 Cash flow statement for the year ended 31 Decembe 12 Note 1 1. Accounting policies The annual report of H. Lundbeck A/S is presented in accordance w Lundbeck Annual Report 05 60 - 61 13 carrying amount of investments in subsidiaries and equity at 14 Note 1 The consolidated financial statements are prepared by adding together uniform items and Lundbeck Annual Report 05 62 - 63 15 Derivative financial instruments Forward exchange contracts 16 Note 1 Research and development costs Research and development costs comprise expenses incurred Lundbeck Annual Report 05 64 - 65 17 protected by intellectual property rights, the maximum amort 18 Note 1 Investments in associates in the consolidated financial statements Investments in associ Lundbeck Annual Report 05 66 - 67 19 Share-based incentive programmes in which employees receive 20 Notes 1-3 Debt Mortgage debt and debt to credit institutions are recognised at the time of the Lundbeck Annual Report 05 68 - 69 21 2. Revenue Parent 2004 DKKm Parent 2005 DKKm Group 2005 DKKm 22 Note 3 3. Staff costs, continued Employees Parent 2004 Parent 2005 Group 2005 Group 2004 1,985 Lundbeck Annual Report 05 12 - 13 70 - 71 23 3. Staff costs, continued Warrant scheme for the Exe 24 Notes 3-4 3. Staff costs, continued Share price based plan for employees in foreign subsidiarie Lundbeck Annual Report 05 12 - 13 72 - 73 25 3. Staff costs, continued Executive Management Numbe 26 Notes 5-7 5. Audit fees Parent 2004 DKKm Parent 2005 DKKm Group 2005 DKKm Group 2004 DKKm 1.7 Lundbeck Annual Report 05 12 - 13 74 - 75 27 7. Tax on profit for the year Parent 2004 DKKm Paren 28 Note 8 8. Property, plant and equipment and intangible assets Group Land and buildings DKKm Pla Lundbeck Annual Report 05 12 - 13 76 - 77 29 Goodwill DKKm Patent rights DKKm Product rights DK 30 Note 8 8. Property, plant and equipment and intangible assets, continued Parent Land and buildi Lundbeck Annual Report 05 12 - 13 78 - 79 31 Goodwill DKKm Patent rights DKKm Product rights DK 32 Notes 8-9 8. Property, plant and equipment and intangible assets, continued Goodwill impairmen Lundbeck Annual Report 05 12 - 13 80 - 81 33 9. Investments in subsidiaries, continued Share of 34 Notes 10-11 10. Investments in associates 2005 Parent Parent Accumulated revaluation/ impairmen Lundbeck Annual Report 05 12 - 13 82 - 83 35 10. Investments in associates, continued Financial h 36 Notes 12-15 12. Inventories Parent 2004 DKKm Parent 2005 DKKm Group 2005 DKKm Group 2004 DKKm Lundbeck Annual Report 05 12 - 13 84 - 85 37 15. Provisions for pensions and similar liabilities 38 Notes 15-16 15. Provisions for pensions and similar liabilities, continued Furthermore, the Gro Lundbeck Annual Report 05 12 - 13 86 - 87 39 16. Provision for deferred tax Group Temporary diffe 40 Notes 16-18 16. Provision for deferred tax, continued Parent Temporary differences between asse Lundbeck Annual Report 05 12 - 13 88 - 89 41 17. Other provisions Parent 2004 DKKm Parent 2005 DK 42 Note 18 18. Mortgage and bank debt, continued Group Weighted average effective interest rate Fi Lundbeck Annual Report 05 12 - 13 90 - 91 43 18. Mortgage and bank debt, continued Parent 2004 DK 44 Notes 19-21 19. Treasury shares Parent and Group Shares of DKK 5 nom. Number Nominal value DKKm Lundbeck Annual Report 05 12 - 13 92 - 93 45 20. Contractual obligations, continued Other purchas 46 Note 22 22. Financial instruments Currency risks Net forward exchange contracts outstanding for Lundbeck Annual Report 05 12 - 13 94 - 95 47 22. Financial instruments, continued Trading part Ma 48 Note 22 22. Financial instruments, continued Credit risks The primary financial instruments sho Lundbeck Annual Report 05 12 - 13 96 - 97 49 22. Financial instruments, continued Interest rate r 50 Notes 23-24 23. Related parties Lundbecks related parties are - The companys principal sharehol Lundbeck Annual Report 05 12 - 13 98 - 99 51 23. Related parties, continued Transactions and bala 52 Notes 25-28 25. Earnings per share 2005 2004 Profit for the year (DKKm) Minority interests (DK Lundbeck Annual Report 05 100 - - 13 12 101 53 27. Working capital changes Parent 2004 DKKm Paren 54 Management statement We have today presented the annual report of H. Lundbeck A/S for 2005. The Lundbeck Annual Report 05 102 - - 13 12 103 55 Auditors report To the shareholders of H. Lundbec Lundbeck worldwide Parent company Denmark H. Lundbeck A/S Synthesis factories Denmark H. Lundbeck Design: Bysted A/S Photo: Thomas Busk Print: Quickly Tryk A/S March 2006 The specialist in psychiatry and pioneer in neurology H. Lundbeck A/S Ottiliavej 9 DK-2500 Copenhag