At the end of each quarter, the invoiced amount is adjusted according to the actual size of the elements included in the contractually agreed royalty calculation. Any differences between calculated and final prices are settled between Forest and Lundbeck. According to the agreement with Forest, Lundbeck is guaranteed a minimum price. The guarantee means that in a situation of significant reduction of Forests net selling price, Lundbeck will be ensured a minimum level of revenue. It also means that, if the sale of Celexa®, and LexaproTM should be discontinued, Lundbeck will be ensured a minimum income from the materials and products that Forest might have in stock at such time. Income from sales of citalopram and escitalopram to Forest is recognised as follows: · Sales of both citalopram and escitalopram are invoiced at the agreed price but it is only the contractual minimum price that is recognised as income at the time of delivery. · The difference between the invoiced price and the minimum price of Forests inventories is recorded in the balance sheet as prepayment. · After the end of each quarter, the final contractual settling price is calculated. The difference between the minimum price already recognised as income and the final calculated settling price is recognised as income. At the same time, the prepayment is reduced correspondingly. This means that the inventories of citalopram and escitalopram held by Forest are only included in Lundbecks revenue at the minimum price. The difference between the invoiced price and the minimum price of Forests inventories was DKK 1,041 million at year-end 2001 compared to DKK 829 million at year-end 2000. Lundbeck follows the movements in Forests inventories and its net selling price closely, continuously assessing the risk of the price adjustment clause becoming applicable, and repayment consequently required. There is still not believed to be any risk that the price adjustment clause will be applied, and thus repayment required. 1999 (DKK 43.75 per share of DKK 5) plus a yield element of 10% per annum. The company has authorisation to grant 2,000,000 options at DKK 5 each. On 31 December 2001, 1,960,700 options had been granted compared to 1,939,668 at 31 December 2000. In 2001, the number of options granted was 21,032 net. After 362,332 options had been exercised in 2001, corresponding to 33% of the exercisable number, there were 1,334,368 options outstanding at 31 December 2001. The Supervisory Board is not comprised by the share option plan. In 1999, the company purchased 2,000,000 treasury shares at a total cost of DKK 87.5 million to secure and implement the share option plan. This holding included 1,657,368 shares at 31 December 2001. The companys holding of treasury shares was reduced by 78,632 shares in connection with the exercise of options. The table on page 60 specifies the incentive plans by group of persons. Share price based plan for the employees of foreign companies In 1999, the employees of Lundbecks foreign companies were offered a share price based plan, which was a reflection of the Danish employee share plan. It was offered according to the same principles as those used for the offering of employee shares in Denmark. For employees employed by the Group throughout the period from 1 September 1999 to 3 January 2005, the plan will trigger an amount calculated as the difference between the special price, DKK 13.13 per share of DKK 5, of the employee shares issued in 1999 and the market price of the shares at 3 Incentive plans In 1999, Lundbeck introduced a share option plan for the companys Management and executives, an employee share plan for the employees of the Danish companies and a share price based plan for the employees of the foreign companies. Management share option plan At 31 December 2001, Lundbecks share option plan comprised 53 executives in Denmark and abroad. The options are earned by one-third a year over a three-year period. The first portion could be exercised in August 2000. The right to exercise all the granted options expires in September 2004. The exercise price has been fixed at the initial offering price of the shares on 17 June 59
A N N UA L R E P O RT 2 0 01 COMPETENCE COMMITMENT INNOVATION CIPRALEX® GROWTH
Lundbecks mission is to improve the quality of life for people suffering from psychiatric and neurol
S U P E RV I S O RY B OA R D Arne V. Jensen Lars Bruhn Peter Kürstein Sven Dyrløv Madsen Bent J
B OA R D O F M A N A G E M E N T Erik Sprunk-Jansen Lars Bang Harald Conradi-Larsen Stig Løkke P
CONTENTS Report The CNS market Lundbecks core competencies Lundbecks growth potential Competent and
R E P O RT GROUP FINANCIAL HIGHLIGHTS 1997-2001 1997 DKKm 1998 DKKm 1999 DKKm 2000 DKKm 2001 DK
Revenue and profit Lundbeck had a very satisfactory year, the Group achieving its best-ever financia
R E P O RT Investments Investments in 2001 were affected partly by the purchase of Byk Gulden Lombe
well as other movements in capital and reserves of DKK -63 million. As a result, capital and reserve
R E P O RT Suspension of Serdolect® lifted The Groups drug for treatment of schizophrenia, Serdolec
Poland, Slovakia, the Czech Republic, Hungary, Slovenia, Croatia, Bulgaria, Ukraine and Russia. The
R E P O RT Lundbeck expects to introduce Ebixa® for treatment of moderately severe to severe Alzhei
The exercise price of the option is determined on the basis of a tradeweighted average share price f
THE CNS MARKET 10
Diseases of the central nervous system affect millions of people all over the world 450 million peo
THE CNS MARKET The CNS market In 2000, the total world market for pharmaceuticals amounted to USD 3
Depression is the single disease that causes the highest number of years of life with disability CNS
T H E C N S M A R K E T P S Y C H I AT R I C D I S O R D E R S Antidepressants the largest CNS
Antidepressant sales 2000 Brandname Active Ingredient(s) Marketing Corporation(s) Sales 2000 (mUSD)
T H E C N S M A R K E T P S Y C H I AT R I C D I S O R D E R S In the American market, where cita
antipsychotic drugs. With the development of Serdolect® (sertindole), Lundbeck was once again a fron
T H E C N S M A R K E T N E U RO L O G I C A L D I S E A S E S 20 million people suffer from Alzh
In 2002, Lundbeck is going to market Ebixa® Anti-Alzheimer products value market share of class USA
T H E C N S M A R K E T N E U RO L O G I C A L D I S E A S E S Parkinsons disease affects 1% of t
World audited anti-Parkinson market by region in 2000 North America Europe Rest of world 32% 35%
LUNDBECKS CORE COMPETENCIES 22
Each year, Lundbeck invests around 20% of turnover in R&D Modern pharmaceutical research In the
LUNDBECKS CORE COMPETENCIES Lundbecks drug development organisation has the critical mass needed to
Competitive sales force A competitive sales strategy includes developing and optimising a marketing
L U N D B E C K S G ROW T H P OT E N T I A L The launch of Cipralex® will strengthen Lundbecks pos
Before the end of 2002, Cipralex® is expected to be launched in many European countries and in the U
L U N D B E C K S G ROW T H P OT E N T I A L Depression Alzheimers disease Schizophrenia Multiple
2002 2003 2004 2004+ Launch Launch PMS-studies III/NDA* III III II II/III I/II I/II Launch Launc
L U N D B E C K S G ROW T H P OT E N T I A L The main purpose in developing CEP-1347 is to slow do
Memantine is a non-competitive NMDAantagonist that has proven in clinical trials to be a safe and ef
C O M P E T E N T A N D C O M M I T T E D E M P L OY E E S Lundbeck has doubled its staff in the pa
Lundbecks many competent and committed employees have been crucial to the success of the company in
E N V I RO N M E N TA L P E R F O R M A N C E Environmental Report 2001 Lundbeck has experienced st
Lundbeck will certify its environmental management in the chemical production in accordance with ISO
E N V I RO N M E N TA L P E R F O R M A N C E Raw materials consumption Tonnes 14,000 12,000 10,000
Facilities in the UK certified In 2001, the facilities in the UK gained certification of its environ
E N V I RO N M E N TA L P E R F O R M A N C E equipment, which can be used for all the usual types
E N V I RO N M E N TA L S TAT E M E N T F RO M D E L O I T T E & TO U C H E We have been engage
L U N D B E C K S P RO D U C T S Antidepressants Cipralex®/LexaproTM (escitalopram) Indication: de
41
S H A R E H O L D E R I N F O R M AT I O N For the 2001 financial year, the companys Supervisory Bo
H. Lundbecks shares, which are listed on the Copenhagen Stock Exchange, continued to rise in 2001 wh
S H A R E H O L D E R I N F O R M AT I O N The dividend for the year will be paid automatically via
Investor Relations contact For enquiries to Investor Relations interested parties should contact: St
S H A R E H O L D E R I N F O R M AT I O N Analyst coverage Broker Analyst Contact Financial calen
Announcements from H. Lundbeck A/S in 2001 Nr. Date Subject 56 55 54 53 52 51 50 49 48 47 46 45 44
F I N A N C I A L R E P O RT 2 0 0 1 48
49
S U M M A RY F O R T H E G RO U P 1 9 9 3 - 2 0 0 1 Income statement (DKKm) Revenue Profit before r
Ratios Net profit ratio (%) Return on assets (%) Return on equity (%) R & D costs as a percentag
FINANCIAL REVIEW Changes in accounting policies Lundbeck has implemented the International Accounti
and Spain as well as Canada and Australia where increased sales and marketing efforts again result
FINANCIAL REVIEW At the end of 2001, forward exchange and option contracts had been entered into to
Depreciation and amortisation charges, which are included in the individual cost categories, totalle
FINANCIAL REVIEW Investments Lundbecks total net investments amounted to DKK 2,045 million in 2001
In 2001, Lundbeck continued its investments in improvements and expansion of the research facilities
FINANCIAL REVIEW Cash flows from financing activities amounted to DKK -119 million net, most of whi
At the end of each quarter, the invoiced amount is adjusted according to the actual size of the elem
FINANCIAL REVIEW Obligations Board of Management Other executives Options not granted Total options
January 2005. The value of the plan at the time of subscription was equivalent to 669,200 shares exc
FINANCIAL REVIEW The companys cash and cash equivalents at 31 December 2001 were DKK 1,031 million
value are recorded as financial items as they arise. The companys USD income derives primarily from
AC C O U N T I N G P O L I C I E S General The parent financial statements and the consolidated fin
Newly acquired subsidiaries are included in the income statement from the date of acquisition. Subsi
AC C O U N T I N G P O L I C I E S of raw materials, consumables and goods for resale, direct labou
Deferred tax on investments is provided depending on the companys intention of holding them. The tax
AC C O U N T I N G P O L I C I E S Financial assets Investments in subsidiaries are recognised in t
Obligations relating to the Management share option plan and other employee plans Obligations relati
70
I N C O M E S TAT E M E N T for the year ended 31 December 2001 PARENT 2000 DKKm 2001 DKKm Notes G
B A L A N C E S H E E T AT 3 1 D E C E M B E R 2 0 0 1 ASSETS PARENT 2000 DKKm 2001 DKKm Notes GRO
B A L A N C E S H E E T AT 3 1 D E C E M B E R 2 0 0 1 LIABILITIES PARENT 2000 DKKm 2001 DKKm Notes
C A S H F L OW S TAT E M E N T for the year ended 31 December 2001 GROUP Notes 2001 DKKm 2000 DKKm
S I G N AT U R E S Statement of the Supervisory Board and the Board of Management The Supervisory B
76
N OT E S 1. Revenue PARENT 2000 DKKm 2001 DKKm GROUP 2001 DKKm 2000 DKKm 295.6 2,304.7 1,167.3 28
N OT E S 2. Staff costs - continued In 2001, the company granted an additional 84,000 share options
2. Staff costs - continued Employees information: PARENT 2000 DKKm 2001 DKKm GROUP 2001 DKKm 2000 D
N OT E S 5. Finance income, net PARENT 2000 DKKm 2001 DKKm GROUP 2001 DKKm 2000 DKKm 73.9 14.3 81
6. Income tax expense PARENT 2000 DKKm 2001 DKKm GROUP 2001 DKKm 2000 DKKm 498.7 (0.5) (12.3) 85.7
N OT E S 7. Intangible and tangible assets GROUP Goodwill DKKm Product rights DKKm Other rights DKK
7. Intangible and tangible assets - continued GROUP Land and buildings DKKm Plant and machinery DKKm
N OT E S 8. Investments in subsidiaries Accumulated impairment loss DKKm Total DKKm Accumulated C
8. Investments in subsidiaries - continued Currency Nominal capital 000 Ownership H. Lundbeck AS, N
N OT E S 9. Other investments and other receivables PARENT Receivables from subsidiaries DKKm Other
12. Capital and reserves GROUP Share capital DKKm Share premium DKKm Reserve for treasury shares DKK
N OT E S 12. Capital and reserves - continued PARENT Share capital DKKm Reserve for net revaluation
13. Retirement benefit obligations Group The majority of the employees of the Group are covered by r
N OT E S 14. Deferred tax liabilities GROUP Temporary differences between assets and liabilities as
14. Deferred tax liabilities - continued PARENT Temporary differences between assets and liabilities
N OT E S 15. Non-current liabilities PARENT 2000 DKKm 2001 DKKm GROUP 2001 DKKm 2000 DKKm 14.2 1
17. Contingent liabilities Incentive plans The Group has an obligation relating to share options gra
N OT E S 18. Financial instruments Curency risk Net forward exchange contracts and currency options
18. Financial instruments - continued Currency options (zero-cost options): Contract amount calculat
N OT E S 18. Financial instruments - continued Interest rate risk The interest rate risk has been c
19. Related parties Lundbeck defines related parties as: - The companys principal shareholder, LFI A
N OT E S 21. Adjustments GROUP 2001 DKKm 2000 DKKm Depreciation and amortisation Unrealised value
23. Acquisitions of companies 2001 DKKm 2000 DKKm Acquisitions of companies: Intangible assets Tang
L U N D B E C K WO R L D W I D E For further information please see our homepage www.lundbeck.com P
Representative offices Bulgaria Hong Kong Iceland India Israel Malaysia P.R. China Russia Saudi Arab
Our vision is to become a world leader in the development of pharmaceuticals for psychiatric and neu
H. Lundbeck A/S Ottiliavej 9 DK-2500 Valby Copenhagen Tlf.: +45 3630 1311 Fax: +45 3630 1940 www.lu
