Lundbeck Restructures: Plans 1,000 Job CutsBy
Lundbeck A/S, headquartered in Valby, Denmark, is initiating a restructuring program to reduce its total cost base by approximately DKK 3 billion ($447 million) in 2017. Lundbeck will restructure headquarter functions and commercial operations in Europe and other markets that are expected to lead to a reduction of around 1,000 employees.
In a statement, Lundbeck President and CEO KÃ¥re Schultz said: “Together with my leadership team, I believe this program will make Lundbeck drive sustainable value creation for all our stakeholders. We are aware that these decisions will affect many of our employees and we will strive to support these employees as we implement the changes.”
Over the past few years, Lundbeck has gone through major restructurings of its European commercial infrastructure, but said that the additional restructuring is necessary to further adjust its commercial set-up, primarily in Europe. With the restructuring, Lundbeck said it intends to emphasize the focus on the following products: Abilify Maintena (aripiprazole extended-release injectable suspension) for treating schizophrenia; Brintellix (vortioxetine), an antidepressant; Northera (droxidopa) for treating neurogenic orthostatic hypotension, a rare, chronic and often debilitating drop in blood pressure upon standing that is associated with Parkinson’s disease, multiple-system atrophy, and pure autonomic failure; Onfi (clobazam), an adjunctive treatment of seizures associated with Lennox-Gastaut syndrome; and Rexulti (brexpiprazole), an adjunctive treatment for adults with major depressive disorder and as a treatment for adults with schizophrenia, which was launched in August 2015. Reported revenue from key products (Abilify Maintena, Brintellix, Northera, and Onfi) grew 190% (143% in local currencies) to DKK 1.456 billion ($217 million) in the first six months of 2015, representing 20% of the company’s total revenue.
Furthermore, Lundbeck plans to capture savings through restructuring of all headquarter functions, further minimize general and administrative functions at affiliates, and also expand its newly established Business Service Center in Krakow in Poland. In R&D, a number of cost-reduction initiatives have been identified, including closure of selected early-stage projects. In connection with the restructuring program, the company plans write-downs of DKK 1.7 billion ($254 million) in the third quarter of 2015.
Lundbeck is making these changes as it faces declining revenues in Europe. In the fist half of 2015, the company’s revenue in Europe declined 35% to DKK 1.952 billion ($291 million) following generic erosion, including for its antidepressant Cipralex (escitalopram). Overall, tn the first half of 2015, core revenue reached DKK 7.192 billion ($1.072 billion), representing an increase of 2% on reported basis (7% decline in local currencies). The performance was driven by the launch of new products, but also by strong performance from Onfi and Xenazine (tetrabenazine), a drug to treat chorea (a movement disorder) that is caused by Huntington disease.
which mitigated the effect of generic erosion. Reported US revenue increased 77% (46% in local currencies) and reached DKK 2.882 billion ($430 million), representing 40% of Lundbeck’s revenue. International markets, representing 30% of revenue, was stable at DKK 2.141 million ($319 million) (declined 8% in local currencies) as generic erosion of Cipralex was partly mitigated by growth of other products.
Source: Lundbeck (press release one) and Lundbeck (press release two)