Depression and anxiety What is depression? Common symptoms of depression are: · Low mood · Loss of pleasure or interest · Loss of energy or increased tiredness Furthermore, at least two of the following concomitant symptoms must be present: · Loss of self-confidence or self-esteem · Feelings of self-reproach or guilt · Thoughts of death or suicide · Disturbed thoughts or concentration · Restlessness or behavioural inhibition · Sleep problems · Disturbed appetite or weight loss/gain The SSRIs are not only used to treat depression, but have also demonstrated efficacy in treating anxiety disorders. The best known drugs in the group of SSRIs/SNRIs are Cipralex®/ LexaproTM (escitalopram) and Cipramil®/ CelexaTM (citalopram) from Lundbeck, Seroxat® (paroxetine) from GlaxoSmithKline, Zoloft® (sertraline) from Pfizer and Effexor® (venlafaxine) from Wyeth. Market size The antidepressant market is the largest segment of the total market for drugs to treat diseases in the central nervous system (CNS). In 2002, the antidepressant market accounted for 27% of the CNS market, and total antidepressant revenue worldwide was USD 17.1 billion in 2002. Measured by value, the antidepressant market increased by 6% from 2001 to 2002. The global market for antidepressants is unevenly distributed. North America accounts for about 73% of the global market and Europe represents 20%. As anxiety and depression often go hand in hand, and as antidepressants are often used to treat anxiety disorders, it is difficult to assess the size of the anxiety market. However, it is estimated that the anxiety market amounted to USD 2.8 billion in the seven major pharmaceutical markets in 2000. (Source: Morpace, 2001). In 2002, Seroxat®/Paxil® (paroxetine) from GlaxoSmithKline was the best selling antidepressant worldwide. For many years, paroxetine has been the antidepressant with the highest number of approved indications, and it has frequently been used in the treatment of anxiety disorders. In 2003, the first generic versions of paroxetine were marketed in the USA. Lundbeck continues to conduct research to develop new antidepressant that may improve the treatment options for patients suffering from depression. Towards the end of 2003, Lundbeck initiated a new phase I study with Lu AA21004, which has shown antidepressant potential. The compound has a new pharmacological profile where the serotonin reuptake inhibition is combined with other characteristics. Existing treatments and drugs in the market Several types of drugs are used in the treatment of depression. The early generation antidepressants developed in the 1950s and 1960s are still used today on a relatively large scale, but the latest generation drugs for the treatment of depression ­ the SSRIs and, on a smaller scale, the SNRIs (serotonin and norepinephrine reuptake inhibitor) ­ dominate the market. At the end of the third quarter of 2003, the latest generation antidepressants accounted for 86% of the European antidepressant market and 84% of the antidepressant market in the USA. (Source: IMS Health, IMS Dataview Q3 2003). When first developed, the first generation antidepressants represented a major leap forward in the treatment of depression. These drugs were the first to effectively treat the symptoms of depressed patients, but the treatment involved a number of side-effects. Typical side-effects of tricyclic antidepressants are dry mouth, blurred vision, weight gain, nausea and drowsiness. Another problem was that the first antidepressants were toxic in case of overdoses. Compared to the first drugs, the SSRIs have fewer side-effects and are almost atoxic in case of an overdose. Geographical distribution of the antidepressant market 7% North America Europe Rest of world 20% 73% Source: IMS Health, IMS World Review 2003 22 L U N D B E C K A N N UA L R E P O RT 2 0 0 3 SD 107 billion for both the direct and the indirect economic consequences of insomnia It is estimate Contents A process of change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Sup 2 L U N D B E C K A N N UA L R E P O RT 2 0 0 3 A process of change This is a time of change for Lundbeck ­ both inside the company and in the world Supervisory Board Flemming Lindeløv Lars Bruhn Peter Kürstein Mats Pettersson Jes Østergaard J Executive Management Claus Bræstrup Lars Bang Ole Chrintz Hans Henrik Munch-Jensen Stig Løkke P Financial performance in 2003 Group financial highlights 1999-2003 1999 DKKm Revenue 3,991 Research It is managements intention that the shareholders should benefit from the companys strong financial Financial performance in 2003 New dividend policy It is proposed to raise the dividend payment for t Audit committee In connection with the decision to set up an audit committee, the Supervisory Board Important events in 2003 In January, Lundbeck announced the results of phase III clinical studies wi In October, Lundbeck and Teva Pharmaceutical Industries Ltd. announced that a rasagiline regulatory Drugs in clinical development Compound Rasagiline Memantine Sertindole Escitalopram Bifeprunox Gabox Launched drugs Compound Escitalopram Citalopram Memantine Activity SSRI SSRI NMDA-antagonist Indicat Alzheimers disease Alzheimers disease, which is the most common cause of dementia, is a neurological It is estimated that roughly 37 million people around the world will suffer from a form of dementia Alzheimers disease It is estimated that about 30% of the patients treated with acetylcholine esteras Brand name Aricept® Exelon® Reminyl® Akatinol®* Axura®* Ebixa®* Active ingredient donepezil rivasti Depression and anxiety Depression is a disease that affects a large proportion of the population, an WHO estimates that depression will become the second-largest cause of the global health burden by 20 Depression and anxiety What is depression? Common symptoms of depression are: · Low mood · Loss of p Depression treatment options have improved dramatically since the 1950s, and today there are good po Parkinsons disease Parkinsons disease is a progressive neurodegenerative disruption of the central n It is estimated that close to 4 million people worldwide suffer from Parkinsons disease In October Parkinsons disease Market size The market for drugs for the treatment of Parkinsons disease was USD WHO estimates that approx. 1% of the worlds population at some point in life will be affected by sch Schizophrenia Drugs in clinical development Compound Sertindole Bifeprunox Lu 31-130 Launched drugs The latest generation of antipsychotic drugs were launched in the late 1990s. These drugs are charac Schizophrenia Symptoms of the disease Schizophrenia afflicts both sexes equally, and typically start Lundbeck and Merck have signed an agreement for the exclusive US development and commercialisation o Sleep disorders The sleep apnoea diagnosis rate in the USA is well above that for Europe. It is esti addiction. They each have different tolerability profiles, but typical side-effects are drowsiness, Know-how and competencies Lundbecks employees work to improve the quality of life for people sufferi Lundbecks success builds on research, development and marketing of unique pharmaceutical drugs. For Know-how and competencies Distribution by gender, worldwide, 2003 Geographic composition of employee Lundbeck received 3,100 unsolicited job applications during 2003 Age composition of Lundbecks emplo Environmental factors In 2003, Lundbeck focused on enhancing the in-house organisation of environmen The environmental approvals regulate the atmospheric emission of organic solvents. The field is also Summary for the Group 1994-2003 Income statement (DKKm) 1994 Revenue 1,336 Profit before research an Ratios ­ continued Capital employed (DKKm) Capital turnover (%) 1994 1,084 87.0 1995 1,507 91.0 26 Financial review The annual report of H. Lundbeck A/S has been presented in accordance with the prov On recognition of income from sales of citalopram and escitalopram to Forest, the quantities of cita Financial review restructuring and closing down the companys regional sales and administration offic The net currency expense included in net financials amounted to DKK 6 million compared to DKK 29 mil Financial review patents are amortised over the remaining patent period. In 2003, the patents were a Lundbecks total cash resources at 31 December 2003 appear from the table below. Cash resources 2003 Financial review According to the agreement with Forest, Lundbeck is guaranteed a minimum price. The Share price based plan for employees of foreign companies (1999 plan): In 1999, the employees of Lun Financial review Liability ­ 1999 plans Executive Management Executives Other Options employees not 2004 plans Warrants granted Stock Appreciation Rights granted to employees of American subsidiaries Financial review The return on the bond portfolio and money market deposits was DKK 21 million in 20 The companys USD income derives primarily from sales invoiced to Forest. According to the Groups acc Accounting policies The annual report of H. Lundbeck A/S has been presented in accordance with the p matically through the income statement based on an individual assessment of the economic life of the Accounting policies future cash flows are recognised directly in equity (hedge accounting). Income a Development costs are capitalised if the criteria for capitalising these costs in the balance sheet Accounting policies Development projects Clearly defined and identifiable development projects are r Investments in subsidiaries and associates Investments in subsidiaries and associates are measured a Accounting policies Liabilities relating to share options and other employee plans Liabilities relat On acquisitions of companies provisions for restructurings in the acquiree are included in the calcu 66 L U N D B E C K A N N UA L R E P O RT 2 0 0 3 Income statement for the year ended 31 December 2003 PARENT 2002 DKKm 2003 DKKm Notes GROUP 2003 DKK Balance sheet at 31 December 2003 - assets PARENT 2002 DKKm 2003 DKKm Notes GROUP 2003 DKKm 2002 DKK Balance sheet at 31 December 2003 - liabilities PARENT 2002 DKKm 2003 DKKm Notes GROUP 2003 DKKm 200 Equity at 31 December 2003 ­ Group Share capital DKKm Share premium DKKm Retained earnings DKKm Tota Equity at 31 December 2003 ­ Parent 2002 Equity at 1.1.2002 Distribution of dividend 9.4.2002, gross 72 L U N D B E C K A N N UA L R E P O RT 2 0 0 3 Cash flow statement for the year ended 31 December 2003 GROUP Notes 2003 DKKm 2002 DKKm Profit from Management statement The Supervisory Board and the Executive Management have today considered and ad Auditors report To the shareholders of H. Lundbeck A/S We have audited the annual report of H. Lundb Notes 1. Revenue PARENT 2002 DKKm 2003 DKKm 2003 DKKm GROUP 2002 DKKm 284.3 2,976.7 3,172.3 461.0 6 2. Staff costs, continued Employees: PARENT 2002 2003 2003 GROUP 2002 2,015 2,129 Average number Notes 2. Staff costs, continued Share price based plan for employees in foreign subsidiaries (1999 p 3. Depreciation and amortisation PARENT 2002 DKKm 2003 DKKm 2003 DKKm GROUP 2002 DKKm 131.8 39.8 65 Notes 5. Net financials PARENT 2002 DKKm 2003 DKKm 2003 DKKm GROUP 2002 DKKm 37.7 31.7 13.4 5.8 10. 6. Tax on profit for the year PARENT 2002 DKKm 2003 DKKm 2003 DKKm GROUP 2002 DKKm 577.6 (17.5) 8.4 Notes 7. Intangible assets and property, plant and equipment GROUP Goodwill DKKm Patent rights1 DKKm 7. Intangible assets and property, plant and equipment, continued GROUP Land and buildings DKKm Plan Notes 8. Investments in subsidiaries Total DKKm Accumulated Cost revaluations DKKm DKKm Accumulated 8. Investments in subsidiaries, continued Lundbeck Argentina S.A., Argentina Lundbeck Australia Pty Notes 9. Investments in associates Accumulated revaluations/ impairment Cost losses DKKm DKKm Total 12. Share capital The share capital of DKK 1,168.7 million at 31 December 2003 is divided into 233,7 Notes 14. Provision for pensions and similar liabilities PARENT 2002 DKKm 2003 DKKm 2003 DKKm GROUP 14. Provision for pensions and similar liabilities, continued The UK defined benefit plan is funded Notes 15. Provision for deferred tax GROUP Temporary differences between assets and liabilities as s 15. Provision for deferred tax, continued PARENT Temporary differences between assets and liabilitie Notes 16. Other provisions PARENT 2002 DKKm 2003 DKKm 2003 DKKm GROUP 2002 DKKm - 199.7 199.7 Pro 18. Treasury shares PARENT AND GROUP Shares of DKK 5 nom. Number Nominal value DKKm Share of share c Notes 19. Contractual obligations Rental and lease obligations Lundbeck has obligations amounting to 20. Contingent liabilities Incentive plans The Group has an obligation relating to share options gra Notes 21. Financial instruments Currency risks Net forward exchange contracts and currency options o 21. Financial instruments, continued Trading part: Market value (forward exchange contracts) DKKm Lo Notes 21. Financial instruments, continued Interest rate risk The interest rate risk has been calcul 22. Related parties Lundbeck defines related parties as: - The companys principal shareholder, LFI A Notes 24. Earnings per share Earnings per share (EPS) is calculated on the basis of the average numb 27. Acquisitions of companies GROUP Acquisitions of companies: Intangible assets Property, plant and Shareholder information Lundbecks year on the stock exchange H. Lundbeck A/S shares are listed on th The Supervisory Board proposes payment of a dividend of DKK 1.77 per share. This corresponds to 30% Shareholder information Composition of the shareholder group Composition of the shareholder group ex Releases from H. Lundbeck A/S in 2003 No. 119 118 117 116 115 114 113 112 111 110 109 108 107 106 10 Shareholder information Analyst coverage Broker ABG Sundal Collier Analyst Alexander Lindström Peter S U P P L E M E N TA RY R E P O RT 109 Lundbeck worldwide Parent company Denmark H. Lundbeck A/S India Lundbeck Israel Lundbeck Japan Lundb Portugal Lundbeck Portugal - Produtos Farmacêuticos Lda Russia Lundbeck Russia Slovakia Lundbeck Slo H. Lundbeck A/S Annual General Meeting will be held on 30 March 2004 at 4 pm at Copenhagen Congress In the United States, estimates range between USD 92.5 an 37 million people around the According to