Employees The average number of full-time employees in the Group rose by 283 in 1998 to a total of 2,286, with 1,244 in Denmark and 1,042 in other countries. At the end of 1998 the Group as a whole had 2,483 employees. Employees (number of employees, DKKm.) 2,500 2,000 1,500 1,000 500 0 1994 1995 1996 1997 1998 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Job satisfaction is essential for a committed and extraordinary effort for the company. Lundbeck must therefore be an attractive workplace. Lundbeck believes that companies with a good working environment find it easier to attract and keep well-qualified employees. Human Resource Management is also developing programmes for professional development of our employees. For example, in 1998, a Sales Academy was established for training Lundbeck sales managers and medical representatives. All our main suppliers have been contacted and have declared that their systems are year 2000 compliant. In the second quarter of 1999, Lundbeck will draw up a contingency plan to help ensure that any year 2000 problems are quickly identified and remediated. The plan will focus particularly on areas that support production of Lundbecks main products. The total costs connected with the year 2000 problem will not exceed DKK 20 million, most of which was expensed in 1998. The companys management believes that the measures implemented and planned to deal with the problems relating to the change of the millennium are sufficient, but knows that, in the nature of things, all risks cannot be covered. If, contrary to the managements expectations, serious problems do arise, they could have a negative impact on the companys earnings. The year 2000 problem In 1997, Lundbeck initiated a year 2000 project with a view to identifying any problems in the Groups existing IT systems etc. and ensuring that the systems are year 2000 compliant. By the end of 1998, our central database technology had been checked and remediated or replaced and is now deemed to be year 2000 compliant. It has not been possible to test all production and laboratory equipment for year 2000 compliance. Instead, statements and declarations have been obtained from most of the suppliers. Local information technology, i.e. PCs, fax machines, telephones and similar, have been checked and made compliant. The remaining computers, machines and small IT systems will undergo the same process during the first half of 1999. Other countries Denmark Net turnover per employee At the beginning of 1998 Human Resource Management was made into a separate division. One of Human Resource Managements tasks in 1998 was to formulate the philosophy and values that will guide management at all levels at Lundbeck in future. Lundbeck sees its employees as one of its principal assets in the task of achieving the ambitious goals it has set itself. Euro If Denmark joined the Euro it would simplify administrative procedures and thus save costs and reduce our exchange rate risks. Looking ahead In the coming years, Lundbeck will continue to focus on the CNS market. Our market position and the fact that we have been researching and developing products within the central nervous system for a very long time mean that we have a level of knowledge and know-how within this area that other pharmaceutical companies have difficulty in matching. 10 Annual Report 1998 Contents Supervisory Board and Board of Management Its all about people Preface Group financial high Supervisory Board Arne V. Jensen (Chairman) Lars Bruhn (Vice-Chairman) Flemming Lindeløv Henrik Board of Management Erik Sprunk-Jansen President & CEO Flemming Juul Jensen Executive Vice Pres Lundbeck is a specialist in research, development, production and marketing of drugs for treatment o Preface Lundbecks coming flotation is the culmination of the very considerable development of the co Year 2000 under control There is much talk at the present time about the coming millennium and the a Report 1998 The years result The rapid expansion of the Lundbeck Group in recent years continued in Investments Capital investments in 1998 amounted to DKK 272 million. The biggest single investment w Sales ­ breakdown by product Partnerships In 1995, Lundbeck entered into an agreement with Forest L A decision has been made to build a new, 3,500 m2 building for Medicinal Chemistry Research. The bui Employees The average number of full-time employees in the Group rose by 283 in 1998 to a total of 2 Through organic growth and strategic measures, Lundbeck will continue building up a global network f The level of investment is expected to be higher in 1999 than in previous years. To meet the growing Accounts Summary for the Group 1993-1998 Profit and loss account (DKKm) Net turnover Profit before R&D co Ratios Net profit ratio (%) Return on assets (%) Return on equity (%) R&D costs as a percentage Comments on the accounts General The strong growth in turnover, which has characterised Lundbeck for Turnover (DKKm) 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Cipramil®/Seropram®/Celexa® Serdolect®/Se Comments on the accounts Costs Total production, distribution and administration costs went up by 20 of using this drug and the compiled data in connection with a registration of the product for the in Comments on the accounts Cash flow (DKKm) 700 600 500 400 300 200 100 0 -100 -200 -300 -400 Cash fl Promonta Lundbeck Arzneimittel GmbH & Co. In 1994, H. Lundbeck A/S entered into an agreement wit Comments on the accounts Accounting policies Lundbecks accounts have been presented in accordance wi Currency risk The currency policy sets out the framework for the use of financial instruments, hedgi Comments on the accounts The incoming currency cash flows of H. Lundbeck A/S and its Danish subsidia Credit risk The principal financial instruments shown in the balance sheet are trade debtors, securi Accounting policies General The annual accounts and the consolidated accounts have been prepared in Tax The parent company is jointly taxed with the two Danish and some of the foreign subsidiaries. Th Accounting policies Administration costs Administration costs comprise salaries for the management a Financial fixed assets Shareholdings in subsidiaries are stated in the parent companys accounts acco Profit and loss account for the year ended 31 December 1998 Parent company 1997 DKKm 1,720.3 619.2 2 Balance sheet at 31 December 1998 Assets Parent company 1997 DKKm 23.7 20.1 43.8 503.7 159.8 109.9 6 Balance sheet at 31 December 1998 Liabilities Parent company 1997 DKKm 110.0 77.7 1,323.5 1,511.2 19 Cash flow statement for the year ended 31 December 1998 Group 1998 DKKm 384.3 189.9 227.5 801.7 71.4 Signatures Copenhagen, 22 March 1999 The Supervisory Board and the Board of Management have today co Notes 1 Net turnover Parent company 1997 DKKm 289.8 1,306.3 58.0 66.2 1,720.3 26.5 25.5 1998 DKKm 28 Supervisory Board and Board of Management: Total fees to the parent companys Supervisory Board for t Notes 3 Writedowns and provisions in connection with Serdolect® Parent company 1997 DKKm 75.0 75.0 1 5 Audit fees Parent company 1997 DKKm 1998 DKKm Deloitte & Touche: Audit Fees for services other Notes 7 Financial items, net Parent company 1997 DKKm 34.8 2.5 30.6 12.1 80.0 20.6 7.1 34.6 23.2 0.7 8 Tax on the profit for the year Parent company 1997 DKKm 49.7 - 0.1 - 2.4 56.2 37.8 141.2 54.2 1998 Notes 9 Intangible and tangible fixed assets Group: Product rights DKKm Purchase prices at 1.1.1998 Land and buildings DKKm 656.1 - 0.9 - 2.6 35.3 0.1 687.8 139.2 32.8 0.1 171.9 515.9 Technical plant Notes 10 Shares in subsidiaries Total DKKm Book value at 1.1.1998 Capital contribution Declared divi 10 Shares in subsidiaries - continued Net asset value at 31.12.1998 DKKm H. Lundbeck A/S, Norway H. Notes 11 Other shareholdings and other receivables Parent company Other shareholdings Receivables fr 13 Capital and reserves Group: Share capital DKKm Capital and reserves at 1.1.1997 Adjustment due to Notes 14 Provisions for pensions and similar commitments Group: Most of the Groups employees are cov 15 Provisions for deferred tax Group: Temporary differences between calculations for accounting and Notes 15 Provisions for deferred tax - continued Parent company: Temporary differences between calcu 16 Other provisions Parent company 1997 DKKm 1998 DKKm 31.9 Provision for possible winding up of ong Notes 19 Contractual obligations Rentals and leasing obligations Lundbeck has commitments amounting 20 Contingent liabilities Letters of intent The parent company has issued letters of intent to subsi Notes 22 Segment information Primary segments: The company is only engaged in the business segment D 23 Adjustments Group: 1998 DKKm 123.9 15.1 50.9 189.9 1997 DKKm 107.4 2.4 109.8 Depreciation Increa Environmental report The Managements declaration To Lundbeck internal and external openness about th Environmental policy Our environmental policy, which guides all our activities, contains five pillar In the following we summarise Lundbecks environmental performance. Details of our activities at Valb The core of the management system is the systematic approach, which is applied to the continual effo In the EU, attention is being paid to the fate of drug residues in the environment. Under the auspic Lundbecks activities and production sites Research & development Chemical production: Lumsås and Net turnover (DKKm) 3,000 2,500 2,000 1,500 1,000 500 0 1994 1995 1996 1997 1998 The rapid growth e Solvent emission to the atmosphere Tonnes 120 100 80 60 40 20 0 1995 1996 1997 1998 Waste water 1,0 Human Resource Management Lundbeck wishes to provide an attractive and inspiring working environment 65 Research and Development Lundbeck aims to be a world leader within research and development of integ As a result of our targeted action within selected fields of research, we are today members of the i New paths to new pharmaceuticals In the last few years the selection of pharmaceutical candidates ha 69 Success in the USA In 1998 citalopram was successfully launched on the American market under the nam Sales of Celexa® since the introduction in September 1998 Number of new prescriptions 40,000 35,000 Lundbecks position in the global market The situation in the pharmaceutical market In 1997 the globa 73 Lundbecks products Lundbecks research is concentrated on the development of new and improved pharmac Lundbecks products Antidepressants Cipramil®/Seropram®/Cipram®/Celexa® (citalopram) Indication: depr Lundbeck worldwide For further information please see our homepage: www.lundbeck.com Parent company Hungary Lundbeck Hungary Ltd. Ireland Lundbeck (Ireland) Limited Italy Lundbeck Italia S.p.A. Latvia www.lundbeck.com 78 From electronic visiting card to active information channel In a world in which hardware is standard The Lundbeck Foundations Award for Outstanding Research The Lundbeck Foundations Award for Outstandi In the past 12 years, the Lundbeck Foundation research prize has been awarded to: 1987 P.V. Petersen Photos: Thomas Grøndahl, et al. Design and production: CreaVision Reproduction: Wilken Repro Printed H. Lundbeck A/S 9 Ottiliavej DK-2500 Copenhagen - Valby Denmark Tel: +45 3630 1311 Fax: +45 3630 19 Environmental report 1998 Lundbeck, Valby This report is part of the Lundbeck Groups environmental r Address H. Lundbeck A/S 9 Ottiliavej DK-2500 Copenhagen-Valby Telephone: +45 3630 1311 Company profi Soil contamination has been ascertained in connection with several building activities. Considerable Environmental performance This part is an account of Lundbecks activities at Valby in 1998. To cover The production gives rise to emission of solvents to the atmosphere and the waste water, but the maj Environmental index The environmental index expresses the environmental impact (i.e. resource consum Raw materials The consumption of raw materials in the pharmaceutical bulk production amounted to 204 Ventilation exhaust air from dust generating processes passes through absolute filters prior to emis Waste The 1998 chemical waste volume totalled 121 tonnes, which is 35% higher than in 1997. The rise Test animals The use of test animals is based on requirements from the public health authorities. An Environmental data Production (million packs) Raw materials for production (tonnes) Active pharmaceu Environmental report 1998 Lundbeck, Lumsås This report is part of the Lundbeck Groups environmental Address H. Lundbeck A/S 182 Oddenvej, Lumsås DK-4500 Nykøbing Sjælland Telephone: +45 5932 1171 Comp areas, the drawing up of targets and action plans, and the integration of health, safety and environ Environmental performance This part is an account of Lundbecks activities at Lumsås in 1998. To cove In relation to the output the production of active pharmaceutical ingredients requires a large numbe Water The water consumption at the Lumsås site totals 129,000 m3. Of this almost 115,000 m3 was raw Raw materials The consumption of raw materials amounted to 2,750 tonnes out of which 25 tonnes were During 1998 one breach of the regulatory limit values occurred. The average value for atmospheric em Waste water m 3 Waste Index: 1992=100 120 100 80 60 40 20 0 Chemical waste Tonnes 3,000 2,500 2,00 Noise The site has both mobile and fixed noise sources such as ventilation systems, compressors and Environmental data Production (equivalent tonnes) Raw materials consumption (tonnes) Organic solvent Environmental report 1998 Lundbeck, Seal Sands This report is part of the Lundbeck Groups environmen Address Lundbeck Pharmaceuticals Ltd. Seal Sands, Middlesbrough Cleveland TS2 1UB England Telephone: Environmental performance This part is an account of Lundbecks activities at Seal Sands in 1998. To In relation to the output the production of active pharmaceutical ingredients requires a large numbe The total energy consumption increased in 1998. However relative to production the consumption shows Atmospheric emission Solvents mainly deriving from filtration, drying and distillation processes con Chemical waste Chemical waste amounted to 1,248 tonnes, out of which around 30% were recycled to ena