The Supervisory Boards Report Lundbeck International Psychiatric Institute As a specialist in psychiatry, Lundbeck sees it as its task to help disseminate the latest knowledge of various psychiatric diseases and therapeutic methods. Therefore, in 1996, the Group decided to establish the Lundbeck International Neuroscience Foundation. This foundation acts as guarantor that the activities of the Lundbeck International Psychiatric Institute are therapy-oriented, product-independent and have a high scientific content. In 1997, the Institute developed and hosted training programmes, symposia and seminars on specific psychiatric diseases. Among other activities during the year, the Institute conducted seven training programmes in the field of schizophrenia. The Institutes activities are addressed to specialists from all over the world and have been extremely favourably received. In time, the activities will also cover neurology. addition, capital investments for research and development and investments in new technologies amounted to just over DKK 75 million in 1997. In the future, Lundbecks research projects will continue on a scientific basis and with a market-driven focus. At the same time, the company continually assesses the possibilities of licensing new technologies and potential pharmaceuticals early in their development phase to ensure effective use of its research resources. accounting policies that are internationally recognised. The changes in the accounting policies have had very little effect on the result for 1997, reducing this by DKK 3 million. Another effect was an increase of the companys capital and reserves by DKK 106 million. Prospects for 1998 Lundbeck expects the Groups positive business development to continue in 1998. Marketing of Cipramil®/Seropram® in both established and new markets will continue to have high priority. The same applies to the continued launch of Serdolect®/Serlect®. Consequently, Lundbecks European sales organisation will be strengthened. For both products, increased market shares in the large European markets constitute a major challenge as well as a big potential. Lundbeck expects continued growth in sales. In 1998, sales are estimated to exceed DKK 3 billion, corresponding to an increase of 20% to 25%. A continued improvement in the operating result is also expected. Important activities planned for 1998 include: Implementation of a distribution strategy for the American market. Completion of clinical development phases I and II for several development projects, providing knowledge about the effects of the substances on patients. Possible stock exchange listing of H. Lundbeck A/S. Production The growth in sales in the last few years has led to a need for increased production capacity. The chemical production facilities at Seal Sands (England) and Lumsås and the pharmaceutical production facility at Valby have therefore undergone continuous enlargement to keep up with demand. Lundbeck has optimised its product assortment with a view to further improving productivity. To supplement the increased capacity, production and supply agreements have been entered into with a number of sub-suppliers. In doing this, Lundbeck has ensured that it can adjust rapidly to the demands of the market. In 1997, parts of the production plant at Seal Sands were approved by the FDA for the production of bulk supplies for the American market. Research and development As a natural consequence of its vision, Lundbeck has intensified its efforts in research and development, concentrating its activities on the core areas of psychiatry and neurology. Ongoing research and development projects cover epilepsy, depression, panic disorders, Alzheimers disease and Parkinsons disease. Lundbeck plans to continue expanding its Research & Development with a view to strengthening the companys position as a leading specialist in CNS diseases. To ensure both compliance with international standards and high quality in development work, the subsidiaries clinical departments have been strengthened and integrated into an international clinical development function. Lundbeck spent a total of DKK 433 million on research and development in 1997, corresponding to 16% of turnover, compared with 14% in 1996. The increase is due to expansion of the search for new molecules (potential pharmaceuticals) and to the fact that the companys development projects have reached the costly clinical phases. In Investments In the last few years, improving and developing the Groups infrastructure have required major investments. In 1997, total capital investments amounted to DKK 188 million. The important investments are, and will continue to be, focused on facilities for research and development. The Supervisory Board The Vice-Chairman of the Supervisory Board of H. Lundbeck A/S, Jørgen Fakstorp, who reached the age of 75 on 2 January 1998, will resign from the Board at the coming annual general meeting owing to the age limit for Board members. As a member of the Board since 1983, and in recent years as ViceChairman, Jørgen Fakstorp has contributed to Lundbecks fine progress. His insight and long experience in the pharmaceutical industry have been of vital importance to the Groups development. Changes in accounting policies Lundbecks accounts for 1997 have been prepared in accordance with the International Accounting Standards. Growing globalisation makes it essential for Lundbeck to use 16 Contents Supervisory Board and Board of Management A clear vision The way forward A continuously dev Supervisory Board Arne V. Jensen (Chairman) Jørgen Fakstorp (Vice-Chairman) Lars Bruhn Henrik He Board of Management Erik Sprunk-Jansen President Eva Steiness Executive Vice President Research an Georgios Peros, Abstract, 1990 A clear vision Lundbeck has a clear vision. We intend to become one The way forward Strategy is planning - the ability to see where we are, where we are going and how A visionary goal Our goal is to become one of the worlds leading companies in the treatment of psych A continuously developing organisation Lundbeck is a continuously developing company. Growing inter Group structure The Lundbeck Foundation H. Lundbeck A/S Synthesis factories Region Scandinavia &am The pharmaceutical industry Market conditions in the pharmaceutical industry In 1996, the global ph K. Nathanael, Sunset, 1997 Sales and marketing The sales figure for 1997 places Lundbeck as one of Lundbecks products Lundbecks research and development activities are concentrated on developing new Koprianos, Town, 1996 Lastly, Lundbeck has a promising substance under development for treatment of The Supervisory Boards Report Net turnover (DKKm) 3,000 2,662 Net turnover 2,500 2,000 1,500 1,000 During the last few years, the pharmaceutical industry has undergone marked changes, resulting in a The Supervisory Boards Report Average number of employees 2,500 Subsidiaries Parent companies 2,000 At the annual general meeting on 16 May 1997, the employee bonus/profit distribution scheme that had The Supervisory Boards Report Lundbeck International Psychiatric Institute As a specialist in psych Spyros Loukidis, Windows, 1995 17 Environmental Report The Managements Declaration Lundbeck regards openness about the companys healt Environmental Report 1997 In 1997, Lundbeck continued developing a health, safety and environmental Environmental Report Lundbeck - general Lundbeck has its headquarters, with its management, adminis K. Fyra, Abstract, 1994 The first steps in the process are often carried out in Seal Sands, while t Environmental Report Summary of the Groups environmental status Below a short summary is given of t the waste water, while the remaining approx. 1,200 tonnes are sent to a special chemical waste dispo The Lundbeck International Psychiatric Institute The Lundbeck International Psychiatric Institute Ex ment, education of patients and their families, and Quality Management within psychiatric treatment. Art can overcome prejudices In Greece, as in many other countries, the general attitude to psychiat Giannis Papadakis, Abstract, 1997 Strengthening local collaboration The exhibitions are held in col PsychiatryLink an Internet introduction http://www.psychiatrylink.com will give you the possibility Lundbeck presents http://www.psychiatrylink.com The development of the first version of Lundbecks ne EPOS EPOS: European Post-marketing Observational Serdolect®/Serlect® project: increasing our unders Giannis Pachis, Excommunication, 1997 Unlike controlled clinical trials, the EPOS project has been My dream changes from colour to black and white Depression is about the worst thing anyone can exper The pieces fall into place That was the start of a life with changing psychopharmacological drugs, a Lundbeck worldwide Parent company H. Lundbeck A/S Ottiliavej 9 DK-2500 Copenhagen - Valby Tel: +45 Slovenia Lundbeck Pharma AS Presernova 1 (2. nadstropje) SLO-2000 Maribor Tel/Fax: +386 62 221 943 R The Lundbeck Foundation Award for Outstanding Research The Lundbeck Foundation, which makes substant V. Kafivas, Garden, 1996 Accounts 37 Summary for the Group 1993-1997 Profit and loss account (DKKm) Net turnover Profit before R&D c Key figures Average number of employees Average number of shares (million)*) Earnings per share (DKK Comments on the accounts Profit for the year In 1997, profit developed positively. Profit for the y The limited effect of the policy changes in 1997 is due to the movement in the size and composition Comments on the accounts Under the changed accounting policies, the results of foreign subsidiaries At the end of 1997, Lundbecks new antipsychotic drug, Serdolect®/Serlect®, had been launched in 10 E Comments on the accounts Other operating income, net Other operating income, net, amounted to DKK 8 In 1997, capital investments totalled DKK 188 million against DKK 224 million in 1996. As in 1996, t Financial comments General In 1997, the Lundbeck Groups financial income and expenses were affected The Groups loans on mortgage credit-like terms at 31 December 1997 Outstanding debt CIBOR-based loan Financial comments At the present moment it is very likely that Italy, Spain and Portugal will also Lundbecks exchange rate index (1988 = 100) 104 102 100 98 96 94 92 90 88 (Jan.) 89 90 91 92 93 94 95 Accounting policies General The annual accounts and the consolidated accounts have been prepared in The consolidated accounts are prepared on the basis of the accounts of the parent company and the su Accounting policies Provision is made in the balance sheet for the present value of plans which are The cost of new buildings and erection by the company of its own technical installations and machine Profit and loss account for the year ended 31 December 1997 Parent company 1996 DKKm 1,411.1 503.6 Per share ratios (DKKm) 150 137 Net asset values Cash flow 125 100 80 82 114 Earnings per share Balance sheetat Assets Parent company 1996 DKKm 18.0 9.6 27.6 386.1 140.4 101.5 146.6 774.6 95.4 5. Balance sheetat Liabilities Parent company 1996 DKKm 110.0 56.1 1,086.2 1,252.3 1997 DKKm 110.0 77. Statement of sources and application of funds for the year ended 31 December 1997 Group Notes Oper Signatures Copenhagen, 12 March 1998 The Supervisory Board and the Board of Management have today c Notes to the profit and loss account 1 Net turnover Parent company 1996 DKKm 263.0 874.7 176.9 96.5 Production, distribution, administration, and research and development costs incl. depreciation etc. Notes to the profit and loss account 4 Other operating income Parent company 1996 DKKm 3.1 3.1 1997 6 Tax on the profit for the year Parent company 1996 DKKm 1.3 0.8 1997 DKKm 49.7 - 0.1 Tax due on th Notes to the balance sheet 7 Intangible and tangible fixed assets Group: Research and development c Land and buildings DKKm Technical plant and machinery DKKm Other fixtures and fittings, tools and Notes to the balance sheet 8 Shares in subsidiaries Total DKKm Book value at 1.1.1997 Adjustment du 8 Shares in subsidiaries - continued Net asset value at 31.12.1997 DKKm H. Lundbeck A/S, Norway H. L Notes to the accounts 9 Other shareholdings and other receivables Parent company Other shareholding 11 Capital and reserves Group 1996: Share capital DKKm Capital and reserves at 1.1.1996 Adjustment d Notes to the accounts 11 Capital and reserves - continued Parent company 1996: Share capital Revalu 12 Provisions for pensions Group: The Group operates with two types of pension plans: defined contri Notes to the accounts 13 Provisions for deferred tax Group: Temporary differences between calculati 13 Provisions for deferred tax - continued Parent company: Temporary differences between calculation Notes to the accounts 15 Contractual obligations Rentals and leasing obligations Lundbeck has commi Notes to statement of sources and applicational funds 17 Adjustments Group: 1997 DKKm Depreciation e Michalis Manolopoulos, Landscape, 1997 Lundbecks new logo Lundbeck has introduced a new logo that clearly expresses our identity, vision an