2
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Our Business Model 3
Patient perspective: Navigating the waves 4
2023 IN BRIEF
Financial Key Figures
1
6
Key Events 7
Sustainability Key Figures 8
Letter to Shareholders 9
OUR BUSINESS
Strategy Update 12
Performance Review and Outlook 2024 14
Business Performance 15
Science and Innovation 19
Markets and Products 26
Summary for the Group 2019-2023 29
GOVERNANCE
Corporate Governance 33
Sustainability 35
Business Ethics and Code of Conduct 37
Risk Management 38
Board of Directors 40
Executive Management 43
The Lundbeck Share 45
Consolidated Financial Statements 50
Financial Statements of the Parent
Company 92
Management Statement 102
Independent Auditor’s Reports 103
ADDITIONAL INFORMATION (PART
OF MANAGEMENT REVIEW)
Adjusted EBITDA Reconciliation 107
Also find our Sustainability Report,
Remuneration Report and Corporate
Governance Report on → Lundbeck.com
Contents
MANAGEMENT REVIEW
FINANCIAL STATEMENTS
OTHER REPORTS
cole is from the U.S. and was diagnosed with migraine
Read her story on page 4.
graphy: Søren Svendsen and Lundbeck.
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OUR BUSINESS MODEL
At Lundbeck, we discover,
develop and commercialize
treatments that make a difference
to people affected by psychiatric
and neurological disorders.
We have more than 70 years of experience in
neuroscience
and in improving the lives of
people with brain disorders
.
We cover the full value chain:
•
We research to build a strong pipeline consisting of promising
molecules and antibodies.
•
We develop our drug candidates into new medicines.
•
We manufacture our medicines at state-of-the-
art production sites
and continue to supply our drugs to patients in need.
•
We make our medicines available through healthcare systems in
more than 100 countries.
We are
around 5,600 highly specialized
employees across +50 countries
.
We are one of the few biopharmaceutical
companies in the world working exclusively
within
neuroscience.
We focus
our innovation within psychiatry and neurology:
•
Psychiatry covers psychotic disorders like schizophrenia, mood
and anxiety disorders like depression, bipolar disorder, and post-
traumatic stress disorder.
•
Neurology covers disorders like migraine, dementia, and
movement disorders like Parkinson’s disease, epilepsy, and
multiple system atrophy (MSA).
•
Neuroscience is an exciting growing area with large unmet
medical needs. We see growth and rapidly evolving technologies
and methodologies.
We
work in partnerships to fight stigma and
address
the large unmet medical needs.
Everywhere we operate, we strive to create
long
-term value and make a positive
contribution to
people and societies.
We ensure outcomes to p
eople and societies:
•
+8 million patients around the world are helped by our medicines
daily.
•
We reinvest around 20% of our revenue in R&D to continue our
development of new, innovative drugs.
•
Throughout our value chain, we incorporate patient insights by
talking to and learning from those with lived experiences.
•
We create shareholder value ensuring sustainable and profitable
growth.
We act
to improve health equity for the p
atients
we serve and the
communities we are part of.
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Growing up along the sunny shores of
southwest Florida, Nicole and her family looked
forward to the arrival of summer. However, what
should have been carefree days of sandcastles
and seashells took an unexpected turn when
Nicole began experiencing migraine. What she
used to look forward to, now often culminated in
throbbing headaches. The picturesque seaside
scenes were overshadowed by the persistence
of migraine that impacted Nicole's experience
for the next +30 years.
As Nicole transitioned from childhood to
adolescence, she began to uncover the threads
connecting her migraine attacks. Certain
triggers emerged – gym class, chocolate,
caffeine, lights and sounds. Seeking answers,
Nicole consulted her doctor, who diagnosed her
with migraine at the age of 15. Through her late
teens and early 20s, migraine persisted, with the
frequency increasing from two attacks a month
to an alarming 18, accompanied by debilitating
symptoms including nausea and aura.
The haze of brain fog that preceded and
followed these attacks cast a shadow over her
ability to communicate effectively, leaving her
grappling with sentence formation and
articulation.
A WAVE OF HOPE
Nicole's journey took a transformative turn
during her late 20s when she visited a
neurologist. The revelation that she had never
consulted a specialist for her migraine and then
did so set the stage for a new phase in her
journey. Over the course of three decades,
Nicole would cross paths with ten different
neurologists, each contributing to her
understanding of her condition. This journey of
discovery eventually led to significant progress
in the treatment of her migraine over the past
five years.
Participation in a clinical trial introduced a new
treatment option that helped break the grip
migraine had on her life. Gradually, migraine
became more manageable, allowing her to
return to resume pursuing her degree and, in
August 2023, proudly secure her bachelor’s in
health and human services.
Nicole recently accepted a new job as a case
manager working with new mothers to prevent
childhood neglect and abuse, rejoining the
workforce.
This is my dream job,
and I am thrilled to
have the opportunity
after all these years.
TIDES OF CHANGE
When reflecting upon her journey spanning
three decades, Nicole mentions, in her opinion,
the profound transformations in migraine care
marked by an expanded array of available
treatments and decreased stigma surrounding
migraine.
Nicole's valuable experience boils down to
practical advice for anyone living with migraine:
"Find a neurologist who listens and works with
you. Understand your triggers and keep looking
until you find the right treatment for you."
PATIENT PERSPECTIVE
Navigating the waves
We are sharing the
voices
of people living with brain
diseases, because patients
are at the heart of all we do.
Read Nicole
’s full story on
→ www.lundbeck.com
After three decades of managing migraine, N
icole recently graduated
with her degree and landed her dream job. She
is proof that with
unwavering determination, anyone can reclaim control of their life
.
Nicole,
living with migraine
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2023 in Brief
IN THIS SECTION
0
6 Financial Key Figures
0
7 Key Events
0
8 Sustainability Key Figures
0
9 Letter to Shareholders
Christine Utzon
Synthesis Operator
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Financial Key Figures
1
2023 saw exceptional growth of our strategic brands.
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1 Unless otherwise stated, information is at reported rates.
2 Constant Exchange Rates (CER) previously denominated Local Currencies (LC). Change at CER does not include effects from hedging.
3 For details of the non-IFRS measure ‘adjusted EBITDA’, see Adjusted EBITDA Reconciliation.
4 For definition of the measure “EBITDA”, see Summary for the Group 2019-2023.
TOTAL REVENUE
DKKm
19,912
8% CER
2
Revenue reached DKK 19,912 million
representing a growth of
9% compared to 2022.
ADJUSTED EBITDA
3
DKKm
5,652
7% CER
2
A
djusted EBITDA increased 17%.
Adjusted EBITDA margin increased from 26.4% to 28.4%.
NET PROFIT
DKKm
2,290
20%
S
trong increase in net profit from 2022 to 2023.
REVENUE FROM STRATEGIC BRANDS
DKKm
13,733
16% CER
2
I
n aggregate, strategic brands grew 13% compared to 2022,
representing 69% of total revenue.
EBITDA
4
DKKm
5,207
0% CER
2
E
BITDA increased 12%.
EBITDA-margin
in 2023 increased from 25.6% to 26.2%.
NET CASH
DKKm
711
Net debt of DKK 2,183 million at year-end 2022 transitioned into
net cash in 2023.
19,912
18,246
16,299
2023 2022 2021
5,652
4,823
3,990
2023 2022 2021
2,290
1,916
1,318
2023 2022 2021
13,733
12,135
9,287
2023 2022 2021
5,207
4,663
3,720
2023 2022 2021
711
-2,183
-3,189
2023 2022 2021
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Key Events
1
1 The list of events is ordered chronologically.
In February, Thomas Gibbs joined
Lundbeck as Executive Vice
President and Head of Lundbeck in
the United States based in
Lundbeck’s U.S. head office in
Chicago.
Lundbeck’s HOPE trial with Lu
AG09222 met its primary endpoint
in migraine prevention. Patients
treated with this monoclonal
antibody had a statistically
significantly greater reduction in the
number of monthly migraine days
from baseline to weeks 1 to 4 of
treatment compared to placebo.
The U.S. Food and Drug
Administration (FDA) approved the
New Drug Application (NDA) for
Abilify Asimtufii
®
(aripiprazole)
extended-release injectable
suspension for intramuscular use, a
once-every-two-months injection for
the treatment of schizophrenia in
adults or for maintenance
monotherapy treatment of bipolar I
disorder in adults.
Alloy Therapeutics, a biotechnology
ecosystem company, announced it
is collaborating with Lundbeck in
the discovery of novel biologic
therapies.
Neuro3 Therapeutics, a
biotechnology company, acquired
exclusive worldwide rights to
develop and commercialize clinical
stage KCNQ2 activators from
Lundbeck.
The FDA approved the
supplemental New Drug Application
(sNDA) of Rexulti
®
(brexpiprazole)
for use in the treatment of agitation
associated with dementia due to
Alzheimer’s disease (AADAD). This
approval makes Rexulti
®
the first
and only pharmacological treatment
approved in the U.S. for AADAD.
Lundbeck released new data
confirming the long-term benefit of
treatment with Vyepti
®
(eptinezumab) in migraine
prevention. The findings from the
DELIVER extension study were
presented at the 65
th
Annual
Scientific Meeting of the American
Headache Society.
Lundbeck took over as chair of the
Danish Lighthouse Life Science
expanding its focus to include mental
health. Through public-private
partnerships the purpose is to find
new innovative welfare technology
solutions, and currently 300 partners
are involved including knowledge
institutions, municipalities, regions,
and small-medium and large
companies. Chairing the partnership,
Lundbeck’s vision is to align the
lighthouse with political priorities and
develop innovative solutions that
assist individuals facing mental
challenges, promote mental well-
being and inspire global solutions for
mental health.
The Board of Directors appointed
Charl van Zyl as the new President
and CEO of Lundbeck, announcing
that Deborah Dunsire had chosen
to retire from Lundbeck after having
successfully strengthened
Lundbeck’s position since her
appointment in 2018.
Charl van Zyl joined Lundbeck in
September.
Lundbeck and Otsuka
Pharmaceutical announced topline
results from two phase III trials of
brexpiprazole as combination
therapy with sertraline for the
treatment of post-traumatic stress
disorder in adults. Overall, the safety
and tolerability results were
consistent with the profile of
brexpiprazole as observed in the
clinical trials for schizophrenia,
AADAD, and adjunctive treatment of
major depressive disorder (MDD). In
a flexible dose trial
, significant effects
were seen on the primary endpoint,
while the fixed dose trial missed its
primary endpoint. Lundbeck is
discussing the results with the FDA.
Lundbeck presented clinical
advances in migraine prevention with
positive trial results at the
International Headache Congress in
Seoul, Korea. The data supports Lu
AG09222 as a potential preventive
treatment of migraine and based on
these positive outcomes, Lu
AG09222 will progress into further
development.
Lundbeck established the ‘Lundbeck
Biotech Incubator’. The pilot project
will give selected biotech companies
working in the field of the central
nervous system access to
Lundbeck’s research facilities and
experts in drug design and brain
disorders. The target group is
scientists, innovators, and
entrepreneurs in early-stage
biotechnology companies.
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Sustainability Key Figures
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PATIENTS WE SERVE
+8 million
O
ur portfolio of products reaches more than 8 million people
on a daily average
1
.
BUSINESS ETHICS COMPLIANCE
99.9%
Of employees completed the annual e-learning
on our Code of Conduct.
CLIMATE ACTION
▼
34
%
Reduction in scope 1 & 2
carbon emissions vs. 2019
SBTi target baseline.
▲
8
%
Increase in scope 3 carbon
emissions vs. 2019 SBTi
target baseline.
CHEMICAL RECYCLING
59%
Rec
overy and reuse of the organic compounds used in
chemical production
2
.
WOMEN IN SENIOR MANAGEMENT
36%
Gen
der split for senior managers globally of 36%
women and 64% men.
HEALTH & SAFETY
2.8
.
F
requency of lost time accidents per one million
working hours for all employees. Scope has been expanded in
2023
3
.
1
Estimated patient years, based on 2023 sales data for Lundbeck products, excluding partner products.
2
Targets are set annually based on expected production volume and mix.
3
Scope has been expanded to include all employees globally in 2023. 2022 and 2021 rates cover production sites only.
Read more in our Sustainability Report
59%
65%
65%
2023 2022 2021
35.9%
33.8%
31.5%
2023 2022 2021
2.8
5.8
6.5
2023
2022³⁾ 2021³⁾
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Lundbeck Annual Report 2023
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In 2023, we saw robust sales growth and the
launch of Vyepti
®
in numerous markets, along
with the launch of Rexulti
®
with the additional
indication AADAD and the launch of Abilify
Asimtufii
®
. They all provide an additional growth
opportunity.
We have expanded our therapeutic reach and
have a firm focus on neurology and psychiatry,
having made investments in our research and
development activities. Over time, our pipeline
has been strengthened through internal
transformations, strategic acquisitions and in-
licensing transactions, establishing a strong
foundation for future progress.
RECENT CHANGES
During Q3 2023, Lundbeck smoothly executed
the planned transition from Deborah Dunsire to
Lundbeck’s new CEO, Charl van Zyl.
Now, together with the Executive Management
team, we are in the process of strengthening
Lundbeck’s position as a focused innovator to
ensure a sustainable long-term future for our
products, innovation, R&D and profitability.
As we are witnessing the results of the ‘Expand
and Invest to Grow’ strategy, implemented in
2019, we are now looking into how we can
accelerate our business further.
We are striving to build and develop a rich
pipeline through a combination of organic
growth and strategic initiatives, such as
partnerships, in-licensing and acquisitions.
Lundbeck has a proven track record of
successfully integrating new molecules and
licenses into our portfolio, and we intend to build
further on this, embracing our role as
innovators.
PROMISING SCIENTIFIC DEVELOPMENTS
In 2023, we continued to rethink and de-risk our
pipeline and how clinical trials are carried out.
We have been redirecting our research focus to
areas where we have a profound understanding
of biology and, importantly, biomarkers that can
help us understand and reduce risks during
development. More products in the portfolio are
developed using biomarkers, allowing for further
de-risking of our clinical development.
Life-cycle management activities around our
strategic brands are also yielding results. We
are pleased that the U.S. Food and Drug
Administration (FDA) approved brexpiprazole
(Rexulti
®
/Rxulti
®
) for the treatment of AADAD.
Our strategic choices
will focus on the R&D
environment and
embrace our role as
innovators
T
his is the first drug proven to address this
indication in a debilitating disease impacting
both patients and their caregivers. In addition,
with the FDA, we are discussing data from two
phase III trials of brexpiprazole as combination
therapy with sertraline for the treatment of post-
traumatic stress disorder in adults. We
concluded the trials in September.
The FDA also approved the two-month, long-
acting injectable formulation of aripiprazole as a
long-acting injectable for the treatment of
schizophrenia in adults and as a maintenance
monotherapy treatment of bipolar I disorder in
adults.
On migraine prevention, results showed that Lu
AG09222 met its primary endpoint in the HOPE
trial; patients had a statistically significantly
greater reduction in the number of monthly
migraine days. The data supports this anti-
pituitary adenylate cyclase-activating
polypeptide (anti-PACAP mAb) as a potential
preventive treatment of migraine. We believe
this is another promising pathway to addressing
migraine and other pain disorders, and we are
excited about the potential to help patients who
may require a new approach for migraine
prevention.
Letter to Shareholders
In 2023,
Lundbeck continued to deliver solid performance, primarily
driven by our strategic brands. We have expanded both our therapeutic
and patient reach. We are seeing strong momentum for our business
and are committed to investing further in our pipeline.
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Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
We are also encouraged by the recent results in
the phase II study for Lu AF82422 where a trend
towards slowing MSA disease progression was
observed. Lundbeck plans to initiate a phase III
study, following further dialogue with health
authorities.
MAINTAINING STEADY GROWTH
We see the strong momentum for our business
to continue as stated in our mid-term financial
targets issued at the beginning of 2023. Thus,
both in the short-term and mid-term, we see
very good growth prospects for the company. In
the longer term, the emerging scientific
developments are promising, and we will invest
to realize the full potential of our R&D engine.
RESILIENCE IN UNCERTAIN TIMES
We live in unprecedented times, in which, within
a few short years, we have had to navigate our
business through a global pandemic, wars in
Ukraine and Israel/Gaza, high levels of inflation
and other global uncertainties.
To us, it has been of utmost importance to
support our employees who are impacted by
unfortunate circumstances, but also to ensure
that we serve patients in need, regardless of the
circumstances. We remain agile, are investing
further in our pipeline and technology, and are
taking the right decisions to secure the long-
term, sustainable future of the business, despite
the uncertain times.
Employees’ hard work
and dedication are
making a real
difference in the lives
of so many people
living with brain
diseases.
Charl van Zyl
President and CEO
THANKS TO OUR DEDICATED TEAM
We want to take this opportunity to thank
Lundbeck’s more than 5,000 employees. Their
hard work and dedication are making a real
difference in the lives of so many people living
with brain diseases.
We believe that an open dialogue and a shared
vision powers value creation and growth. We
thank everyone for keeping up the outstanding
execution of our objectives and for continuing to
innovate and serve people who need new
medicines to conquer brain diseases.
Together, we will drive positive change and
propel our company to new heights.
Lars Søren Rasmussen
Chair of the Board
Charl van Zyl, President and CEO
and
Lars Søren Rasmussen, Chair of the Board
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Our Business
IN THIS SECTION
12
Strategy Update
14
Performance Review and Outlook 2024
19
Science and Innovation
26
Markets and Products
2
9 Summary for the Group 2019-2023
Yusuf Tufail
Principal Scientist
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Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
OUR CURRENT STRATEGY IN BRIEF
Over the last couple of years, we have taken
significant strides to expand our operating space
through the acquisitions of Abide and Alder in
2019 and the 2021 acquisition of the CD40L
inhibitor from AprilBio, which gave us the
platforms needed to expand our areas of focus
in neuroscience. With the 2020 launch
of Vyepti
®
 in the U.S. and the global roll-out to
many more markets globally through 2021-
2023, we are establishing a new frontier in
migraine prevention for the patients who need it
the most. The expansion into the migraine field
also provides a commercial platform for future
growth in specialty neurology.
Furthermore, we have strengthened our R&D
capabilities to enable us to broaden our focus in
four biologies and ensure that we de-risk our
internal pipeline compounds in early
development.
We utilize an experimental medicine approach
to identify the effects of a drug in carefully
selected patient populations, to find the most
efficient clinical pathway powered by biomarkers
and study designs and to advance the most
promising drug candidates into full
development. 
The geographical expansion of Vyepti
®
 and
the continuing efforts to grow and expand
strategic brands, along with several other life-
cycle management projects, are all crucial to
our future. We are also committed to pursuing a
programmatic approach to M&A deals to boost
innovation and growth in the mid-term and to
invest further in enhanced R&D productivity to
drive the next decade of growth.
We have made choices on where to accelerate
and enhance the use of digital solutions within
our operations and R&D. We have also taken
steps to fortify our winning culture with
increased agility, collaboration, diversity and
inclusion. 
Strategy Update
Our results continue
d a strong growth trajectory in 2023, supported by
our people and commitment to providing innovative treatments for
patients suffering from diseases
within neuroscience, which are
managed by specialists. Our
focus for the future is to invest in long-
term sustainable growth.
Charl van Zyl,
President and CEO
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Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
These are just a few of the many actions that
are helping us deliver on the promise of our
strategy to yield sustainable, long-term
profitable growth.
CREATING VALUE THROUGH OUR
UNIQUE POSITION
Our goal continues to be providing innovative
treatments for patients suffering from diseases
within
neuroscience, which are managed by
specialists.
Achieving our fullest potential as a mid-size,
highly specialized pharmaceutical company
requires that we thoughtfully concentrate our
efforts where we can make the most difference
to patients. 
While we maximize the great medicines and
brands that we already have, we simultaneously
focus on growing our pipeline with treatments
for diseases within
neuroscience for which there
are few, if any, treatment options.
B
y focusing on diseases within
neuroscience,
managed by specialists in neurology and
psychiatric indications, we can best take
advantage of our mid-sized scale and good
relationships with key stakeholders to deliver
powerful solutions to challenging diseases. 
We continue to seek partnerships with both
academia and biopharma along the value chain
of discovery and development of new innovative
molecules and commercialization, with the
ambition of being the preferred partner of choice
within neuroscience. Leveraging external
innovation and technologies is an integral part of
being a successful pharma company.
We currently promote medicines in 54 countries
and will continue to review our optimal
commercial footprint with or without partners to
serve as many patients as possible who need
our treatments.
Just as important to growing our pipeline and
selling our medicines is the manufacturing of our
medicines, whether internally or via external
contract manufacturing.
We have excellent internal capabilities within
small and large molecules to support our R&D
pipeline, including monoclonal antibody design,
process and formulation development
capabilities, as well as end-to-end internal small
molecule manufacturing facilities.
Our three priorities across ‘Production,
Development & Supply’ remain quality, reliability
and cost. We have a robust track record on all
three parameters and ambitious goals to
continuously improve performance with a
determined focus on operational excellence and
sustainable sourcing. 
We aim to build on what we have achieved and
capitalize further on the solid fundamentals that
are deeply ingrained in Lundbeck: our rich
heritage of developing and producing life-
changing treatments for patients, our deep
scientific knowledge in psychiatry and
neurology, and our patient-centric mindset.
We will focus on embracing new biologies and
technologies, adjusting and learning as we forge
ahead. In the future, we will work with even more
agility, collaboration across geographies and
digitalization to simplify our processes and
accelerate our ability to test and learn for faster,
higher-quality decision-making.
This will fully leverage our diverse talent,
knowledge and skillsets so that we can pursue
solving some of the biggest brain disease
challenges with the greatest patient rewards. 
OUR LONG-TERM AMBITION
We aim to establish solutions for patients which
provide differentiation over standard of care.
This will be our core purpose as a focused
innovator in the field of neuroscience, and we
continuously evaluate our strategic choices as
to where to invest our capital to achieve our
long-term goals.
Our ambition is to establish long-term and
sustainable growth to the end of this decade
and beyond. The long-term success will depend
on discovering new treatments for unmet
medical needs and a series of potential
acquisitions, while an enhanced R&D pipeline
and productivity will help contribute to driving
the next decade of growth.
We believe in educating influential stakeholders
so more people suffering from chronic diseases
in neuroscience can get access to the care they
need.   
Our strengths
We have a premier neuroscience pipeline that
will make a difference to our patients.  
We have an established commercial
footprint around commercially attractive patient
segments in diseases within neuroscience,
which are managed by specialists.
We are a company leveraging diversity, in
which top talents within neuroscience aspire to
work.
What we strive for
We strive to serve the people who need new
medicines to help them conquer brain
diseases.
We strive to continue to deliver long-term
sustainable growth in revenue and profitability.
And we strive to be carbon neutral before
2050.
14
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Overall, 2023 revenue is in line with the
guidance provided in February 2023 and
updated on 8 November 2023 to reach DKK
19.8 to 20.1 billion. The EBITDA guidance was
changed to Adjusted EBITDA in May 2023 and
was expected to reach DKK 5.6 to 5.8 billion.
ACCELERATED REVENUE GROWTH
Revenue reached DKK 19,912 million in 2023
compared to DKK 18,246 million in 2022, driven
mainly by growth in the U.S. and Europe.
STRATEGIC BRANDS RECORD
The revenue of Lundbeck’s strategic brands
increased by 13% (+16% CER), reaching DKK
13,733 million, representing 69% of total
revenue.
We continue to see strong growth in our
strategic brands which include Rexulti
®
/Rxulti
®
(depression/schizophrenia), Brintellix
®
/Trintellix
®
(depression), Abilify Maintena
®
/Asimtufii
®
(schizophrenia) and Vyepti
®
(prevention of
migraine).
EBITDA grew 12% (+0% CER) compared to
2022 and reached DKK 5,207 million.
Adjusted EBITDA grew 17% (+7% CER)
compared to 2022 and reached DKK 5,652
million. Adjusted EBITDA margin reached
28.4%.
Earnings per share (EPS) reached DKK 2.31
equivalent to an increase of 20%.
Adjusted earnings per share (EPS) reached
DKK 4.22 equivalent to an increase of 13%.
Performance Review and
Outlook
2024
Revenue strategic brands
• Rexulti
®
/Rxulti
®
: DKK 4,525 million (+16%;
+20% CER
1
)
• Brintellix
®
/Trintellix
®
: DKK 4,324 million
(+1%; +5% CER
1
)
• Abilify Maintena
®
/Asimtufii
®
: DKK 3,187
million (+8%; +10% CER
1
)
• Vyepti
®
: DKK 1,697 million (+69%; +74%
CER
1
)
In 2023, Lundbeck reached a record revenue of DKK 20 billion. We
continue to present sustainable growth and we already see results of the
successful R&D transformation. Currently, we are strengthening
Lundbeck’s position as a focused innovator to ensure a sustainable
long-term future for our products, innovation, R&D and profitability.
Revenue per region
• United States: DKK 9,829 million (+8%;
+11% CER
1
)
• Europe: DKK 4,628 million (+9%; +11%
CER
1
)
• International Markets: DKK 4,991 million
(-4%; +2% CER
1
)
Key figures
DKKm
2023
2022
Growth
Growth (CER
1
)
Revenue
19,912
18,246
9%
8%
EBITDA
5,207
4,663
12%
0%
Adjusted EBITDA
5,652
4,823
17%
7%
EPS (DKK)
2.31
1.93
20%
Adjusted EPS (DKK)
4.22
3.74
13%
1 Constant Exchange Rates (CER).
15
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
REVENUE BY PRODUCT
Revenue reached DKK 19,912 million
representing a growth of 9% (+8% CER). The
revenue growth is driven by the strong
performance of the strategic brands reaching
DKK 13,733 million, representing a growth of
13% (+16% CER) and equivalent to 69% of total
revenue. The largest markets for the strategic
brands are the U.S., Canada, Spain, Italy and
Australia.
STRATEGIC BRANDS
Rexulti
®
revenue reached DKK 4,525 million
representing a growth of 16% (+20% CER) as a
result of strong demand and price increases as
well as a negative currency impact in the U.S.
The revenue distribution by region was 93%, 1%
and 6% in the U.S., Europe and International
Markets, respectively. The largest markets are
the U.S., Canada, Brazil, Australia and Mexico.
Brintellix
®
/Trintellix
®
revenue reached DKK
4,324 million representing a growth of 1% (+5%
CER) driven by higher demand and sales in
Europe and in International Markets such as
Japan, Spain, Brazil and Canada. This
performance is offset by lower demand in the
U.S., and COVID-19 impact as well as access
restrictions for the industry in China during
2023. The revenue distribution by region was
33%, 35% and 32% in the U.S., Europe and
International Markets, respectively. The largest
markets for the product are the U.S., Canada,
Spain, Italy and Brazil.
Abilify Maintena
®
and Abilify Asimtufii
®
revenue reached DKK 3,187 million
representing a growth of 8% (+10% CER) driven
by higher demand in all regions and a price
increase in the U.S. Additionally, the revenue in
the U.S. was affected by a negative currency
impact. The revenue distribution by region was
37%, 45% and 18% in the U.S., Europe and
International Markets, respectively. The largest
markets are the U.S., Spain, Canada, Australia
and Italy.
Vyepti
®
delivered significant growth in 2023 and
revenue reached DKK 1,697 million following an
increase of 69% (+74% CER) mainly driven by a
demand uptake in the U.S. as well as continued
launches across the world. Vyepti
®
was initially
launched in April 2020 in the U.S. and has since
been launched in around 25 markets in total. In
October 2023, Vyepti
®
received public formulary
coverage from certain provinces in Canada.
Combined, this coverage allows more than 80%
of eligible Canadian patients living with migraine
to have access to Vyepti
®
. The revenue
distribution by region was 93%, 5% and 2% in
the U.S., Europe and International Markets,
respectively.
MATURE BRANDS
Cipralex
®
/Lexapro
®
revenue reached DKK
2,135 million representing a decline of 10%
(-4% CER) mainly due to generic competition in
Japan since the loss of exclusivity at end of
2022, partially offset by higher in-market sales in
China and price increase in Turkey. The
revenue distribution by region was 68% and
32% in International Markets and Europe,
respectively. The largest markets are China,
South Korea, Italy, Brazil and Canada.
Sabril
®
revenue reached DKK 336 million
representing a decline of 47% (-47% CER)
mainly driven by generic erosion and the
continued supply outage as a consequence of a
third-party manufacturing quality issue.
Revenue from Other pharmaceuticals, which
comprises the remainder of Lundbeck’s
products, reached DKK 3,244 million
representing a decline of 5% (-2% CER), mainly
due to lower sales of certain mature products
such as Northera
®
and Deanxit
®
. As of 1
January 2023, Onfi
®
is being reported together
with Other pharmaceuticals, comparative figures
for 2022 have been adjusted accordingly.
The largest markets for Other pharmaceuticals
are the U.S, China, France, South Korea and
Spain.
REVENUE BY GEOGRAPHICAL AREA
Lundbeck’s largest markets are the U.S., China,
Canada, Spain and Italy.
United States revenue reached DKK 9,829
million representing a growth of 8% (+11%
CER). The strategic brands reached DKK 8,398
million increasing by 15% (+18% CER),
representing 85% of the revenue in 2023. The
revenue growth of Vyepti
®
, Rexulti
®
and Abilify
Maintena
®
/Asimtufii is mainly driven by strong
demand and price increases as well as a
negative currency impact. Sales of Trintellix
®
continues to be negatively impacted by declining
demand and higher gross-to-net following a shift
Business Performance
TOTAL REVENUE
DKKm
2023
2022
Growth
Growth (CER)
Rexulti
®
/Rxulti
®
4,525
3,890
16%
20%
Brintellix
®
/Trintellix
®
4,324
4,277
1%
5%
Abilify Maintena
®
/Asimtufii
3,187
2,964
8%
10%
Vyepti
®
1,697
1,004
69%
74%
Strategic brands
13,733
12,135
13%
16%
Cipralex
®
/Lexapro
®
2,135
2,360
(10%)
(4%)
Sabril
®
336
636
(47%)
(47%)
Other pharmaceuticals
3,244
3,426
(5%)
(2%)
Mature brands
5,715
6,422
(11%)
(7%)
Other revenue
327
277
18%
18%
Total revenue before hedging
19,775
18,834
5%
8%
Effects from hedging
137
(588)
Total revenue
19,912
18,246
9%
8%
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Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
in the payer mix, offset by price increase.
Revenue development in the U.S. is furthermore
impacted by the erosion of mature brands such
as Northera
®
and Sabril
®
as well as the
continued supply outage of Sabril
®
as a
consequence of a third-party manufacturing
quality issue as communicated last year.
Europe revenue reached DKK 4,628 million
representing a growth of 9% (+11% CER). The
strategic brands reached DKK 3,088 million
increasing by 12% (+14% CER), representing
67% of revenue. The revenue growth is driven
by higher sales across all strategic brands.
Mature brands revenue increased reaching DKK
1,540 million and representing a growth of 2%
(+6% CER), mainly driven by price increases.
The largest markets in Europe are Spain, Italy,
France and Switzerland.
International Markets comprises all
Lundbeck’s markets outside the U.S. and
Europe. Revenue reached DKK 4,991 million
representing a decline of 4% (+2% CER). The
strategic brands reached DKK 2,247 million
increasing by 9% (+15% CER), representing
45% of revenue. The development is mainly
driven by higher sales in Canada, Brazil and
China, partially offset by the erosion of Lexapro
®
in Japan following the entry of generic
competition since the end of 2022 as well as a
negative currency impact in China and Canada.
The biggest markets are China, Canada, Brazil,
Australia and South Korea. China and Canada
constitute approximately 43% of the regional
revenue from Other pharmaceuticals.
GROSS PROFIT
Cost of sales reached DKK 4,485 million,
increasing by 14% (+17% CER) mainly driven
by higher sales, the Vyepti
®
provision for
inventory obsolescence of DKK 312 million, and
an increased Vyepti
®
amortization recognized in
2023 related to the European approval of
Vyepti
®
and environmental provisions.
Gross profit reached DKK 15,427 million,
increasing by 8% (+6% CER) in 2023. The
gross margin was 77.5% representing a decline
of 0.8 percentage points.
Adjusted gross profit is the gross profit
excluding depreciation and amortization and
other adjustments linked to sales. The adjusted
gross margin was 88.3% representing a
decrease of 0.1 percentage points.
Amortization of product rights was DKK 1,559
million, increasing by 14% (+15% CER) mainly
driven by an increase in the Vyepti
®
amortization.
EBIT AND ADJUSTED EBITDA
Total operating expenses (OPEX) reached
DKK 12,232 million corresponding to an
increase of 7% (+10% CER) mainly driven by
higher sales and distribution costs as well as
administrative expenses offset by lower R&D
costs. The OPEX-ratio declined by 1.3
percentage points.
Sales and distribution costs reached DKK
7,482 million corresponding to an increase of
13% (+18% CER) mainly driven by higher
Rexulti
®
and Vyepti
®
sales and promotion
activities in the U.S., global roll-out of Vyepti
®
and restructuring provisions related to
commercial structure in certain international
markets. Sales and distribution costs
corresponded to 37.6% of revenue, representing
an increase of 1.4 percentage points.
Administrative expenses reached DKK 1,293
million, increasing by 20% (+21% CER) and
corresponding to 6.5% of total revenue mainly
driven by higher legal provisions for ongoing
litigations, expenses from digital investments,
and the CEO transition.
Research and development costs reached
DKK 3,457 million with an R&D ratio of 17.4%.
Lower R&D costs of 8% (-7% CER) reflect a
reduced late development and phase IV
activities in 2023 compared to 2022. The phase
IV trials on Brintellix
®
/Trintellix
®
were completed
TOTAL REVENUE
DKKm
2023
2022
Growth
Growth (CER)
United States
Rexulti
®
4,206
3,645
15%
19%
Vyepti
®
1,578
982
61%
66%
Trintellix
®
1,432
1,650
(13%)
(10%)
Abilify Maintena
®
/Asimtufii
1,182
1,047
13%
16%
Strategic brands
8,398
7,324
15%
18%
Mature brands
1,431
1,778
(20%)
(18%)
Revenue – United States
9,829
9,102
8%
11%
Europe
Brintellix
®
1,507
1,311
15%
16%
Abilify Maintena
®
1,445
1,382
5%
6%
Vyepti
®
77
11
600%
574%
Rexulti
®
59
41
44%
43%
Strategic brands
3,088
2,745
12%
14%
Mature brands
1,540
1,507
2%
6%
Revenue – Europe
4,628
4,252
9%
11%
International Markets
Brintellix
®
1,385
1,316
5%
12%
Abilify Maintena
®
560
535
5%
11%
Rexulti
®
260
204
27%
34%
Vyepti
®
42
11
282%
288%
Strategic brands
2,247
2,066
9%
15%
Mature brands
2,744
3,137
(13%)
(7%)
Revenue – International Markets
4,991
5,203
(4%)
2%
Other revenue
327
277
18%
18%
Total revenue before hedging
19,775
18,834
5%
8%
Effects from hedging
137
(588)
Total revenue
19,912
18,246
9%
8%
17
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
and the pivotal trials on Rexulti
®
were finalized
in 2022. Further decreases in 2023 can be
attributed to lower costs for the Lu AG09222
phase IIa HOPE trial and the Lu AF82422 phase
II AMULET trial.
EBIT reached DKK 3,195 million, increasing by
12% (-6% CER) reflecting the operating
leveraging effect of higher revenue, partially
impacted by the higher expenses.
Amortization of product rights amounted to
DKK 1,559 million corresponding to an increase
of 14% (+15% CER). Total amortization,
depreciation and impairment losses reached
DKK 2,012 million representing an increase of
11% (+12% CER) mainly driven by an increase
in the Vyepti
®
amortization.
Adjusted EBITDA reached DKK 5,652 million
representing a growth of 17% (+7% CER)
reflecting EBIT and EBITDA development in
addition to adjustments of DKK 312 million of
the Vyepti
®
inventory obsolescence, DKK 69
million regarding higher legal provisions for
ongoing litigations and DKK 64 million of
commercial restructuring costs.
NET PROFIT
Net financial expenses reached DKK 202
million equivalent to a decline of 47% due to the
positive impact from higher interest rates on
underlying positive bank balances. The positive
development is offset by losses from currency
revaluation. Additionally, 2022 was impacted by
the European approval of Vyepti
®
which
triggered a fair value adjustment of contingent
consideration of CVR to former Alder
shareholders amounting to DKK 278 million.
The effective tax rate for 2023 was 23.5%
(22.6% for 2022). The tax rate is in line with the
full-year expectation, reflecting the reduced
deduction benefit from the Danish research &
development incentive of 108% (130% in 2022).
Net profit reached DKK 2,290 million
corresponding to a growth of 20%.
ADJUSTED NET PROFIT AND EPS
Adjusted net profit is the net profit excluding
depreciation and amortization and other
adjustments, net of taxes. Adjusted net profit
reached DKK 4,192 million, representing an
increase of 13%. The adjustments are mainly
related to amortization of product rights,
provisions for restructuring, legal provisions for
ongoing litigations and the Vyepti
®
provision for
obsolescence.
Adjusted EPS was DKK 4.22 corresponding to
an increase of 13%.
CASH FLOW
Cash flows from operating activities
amounted to an inflow of DKK 4,080 million
compared to an inflow of DKK 3,519 million in
2022. The positive development is primarily
driven by higher revenue and EBIT, which was
partly offset by higher working capital. The net
working capital was mainly driven by a decrease
in short-term liabilities due to the Rexulti
®
milestone payment in 2023 combined with a
decrease in other short-term liabilities.
Lundbeck’s net cash flows from investing
activities were an outflow of DKK 498 million
mainly due to milestone payments in 2023
compared to an outflow of DKK 1,892 million in
2022 related to the CVR payment triggered by
the European approval of Vyepti
®
.
Lundbeck’s net cash flows from financing
activities were an outflow of DKK 2,085 million
compared to an outflow of DKK 387 million in
2022. The financing cash flows in 2023 mainly
relate to repayment of debt and dividend
payment approved at the Annual General
Meeting in March 2023. The development of
financing cash flow is affected in 2022 by a cash
inflow mainly related to the drawing on the RCF
used for the milestone payment triggered by the
European approval of Vyepti
®
.
The net cash inflow reached DKK 1,497 million
compared to an inflow of DKK 1,240 million in
2022. Net debt has decreased from DKK 2,183
million at the end of December 2022 to net
cash of DKK 711 million at the end of
December 2023. Net debt/EBITDA ratio is -0.1x
at the end of December 2023 compared to 0.5x
at the end of December 2022. Interest-bearing
debt was DKK 4,299 million at the end of
December 2023 compared to DKK 5,731 million
at the end of December 2022.
DIVIDEND
The Board of Directors proposes to pay a
dividend of approximately 30% of net profit for
2023 in line with Lundbeck’s pay-out policy of 30
– 60%. This corresponds to DKK 0.70 per share
or a total of DKK 697 million compared to DKK
578 million in 2022. The dividend pay-out is
subject to approval at the Annual General
Meeting on 20 March 2024.
FINANCIAL
GUIDANCE 2024
For the financial guidance 2024 and going
forward, Lundbeck will focus on revenue and
adjusted EBITDA at constant exchange rates
(CER), instead of revenue and adjusted EBITDA
at reported rates, to provide a more focused
view of the underlying operational performance.
In 2024, revenue is expected to grow 7% to
10% at CER when compared to revenue of the
prior year excluding effects from hedging. The
growth reflects the continued and sustainable
growth driven mainly by the demand of the
strategic brands. Assuming the current
exchange rates versus DKK, the revenue
growth reported in DKK is expected to be
around 4 percentage points lower than at CER.
The guidance range reflects continued strong
growth of Vyepti
®
in the U.S. and the continued
global roll-out. Additionally, the guidance
expects robust growth of Rexulti
®
following
AADAD indication in the U.S. Furthermore, the
guidance range comprises growth of Brintellix
®
in Europe and International Markets as well as
slight growth for Abilify Maintena
®
/Asimtufii in
the U.S.
The mature brands are expected to face
increased generic erosion, especially
Cipralex
®
/Lexapro
®
, Deanxit
®
and Sabril
®
.
Adjusted EBITDA is expected to grow 10% to
16% at CER in 2024 when compared to
adjusted EBITDA of the prior year excluding
effects from hedging. The financial guidance
2024 reflects higher R&D costs driven by the
progression of the pipeline and higher sales and
distribution costs due to increased Vyepti
®
and
Rexulti
®
promotion activities. Assuming the
current exchange rates versus DKK, the
adjusted EBITDA growth reported in DKK is
expected to be around 9 percentage points
lower than at CER.
All the above expectations are based on
assumptions that the global or regional
18
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
macroeconomic and political environment will
not significantly change business conditions for
Lundbeck during 2024, including the impact of
any potential material business development
activities and the potential implications.
In the table below, the expectations and
additional relevant information have been
summarized.
MID-TERM TARGETS
Lundbeck’s mid-term targets communicated in
February 2023 remain unchanged. Lundbeck is
in a period with limited impact from major
regional losses of exclusivity and anticipates
solid growth of its strategic brands.
In 2024 and 2025, Lundbeck plans targeted
investments behind the potential blockbuster
opportunity for Rexulti
®
in the treatment of
AADAD. Based on organic growth, we expect
revenue to show a mid-single digit compound
annual growth rate (CAGR) over the next three
years.
At the same time, we remain focused on driving
efficiencies and being prudent in our spending.
Based on these assumptions, we target an
adjusted EBITDA-margin of 30-32% for the
current business, excluding any material
business development activities, by the end of
the mid-term period and despite increased
investments in R&D.
DKK
FY 2024 guidance
Total r
evenue
growth at CER
7% to 10%
Adjusted EBITDA
growth at CER
10% to 16%
Forward looking
statements
Forward-looking statements are subject to
risks, uncertainties, and inaccurate
assumptions. This may cause actual results
to differ materially from expectations.
Various factors may affect future results,
including interest rates and exchange rate
fluctuations, delay or failure of development
projects, production problems, unexpected
contract breaches or terminations,
governance-mandated or market-driven
price decreases for products, introduction of
competing products, Lundbeck’s ability to
successfully market both new and existing
products, exposure to product liability and
other lawsuits, changes in reimbursement
rules and governmental laws, and
unexpected growth in expenses.
OTHER RELEVANT FINANCIAL INFORMATION FOR 2024 AT REPORTED RATES
Total revenue (IFRS) growth
1
Around 4 percentage points lower than at CER
Adjusted EBITDA growth
1
Around 9 percentage points lower than at CER
Adjusted gross margin
2
88% to 89%
R&D costs
DKK 3.9 to 4.1 billion
Depreciation & amortization
DKK 1.8 to 2.0 billion
Net financials, expenses
DKK 50 to 100 million
Effects from hedging
DKK -50 to -75 million
Effective tax rate
22% to 24%
Net cash/(net debt)
3
DKK 4.0 to 4.5 billion
1 Includes effects from hedging and exchange rate impact.
2 Adjusted gross margin is the gross margin excluding
depreciation and amortization and other adjustments linked to sales.
3 Net cash/(net debt) is defined as Interest-bearing debt, cash, bank balances and securities, net.
REVENUE AT CER
DKK million
2023
2022
Total revenue (IFRS)
19,912
18,246
Effects from hedging
137
(588)
Total revenue (IFRS) before hedging
19,775
18,834
Effects from exchange rate
(645)
1,364
Total revenue at CER
20,420
17,470
Increase/(decrease) in total revenue (IFRS)
9%
12%
Increase/(
decrease) in total revenue at CER
1
8%
8%
1
Total revenue at CER for the period divided by total revenue (IFRS) before hedging for the comparative period.
ADJUSTED EBITDA AT CER
DKK million
2023
2022
Adjusted EBITDA
5,652
4,823
Effects from hedging
137
(588)
Adjusted EBITDA before hedging
5,515
5,411
Effects from exchange rate
(268)
663
Adjusted EBITDA at CER
5,783
4,748
Increase/(decrease) in adjusted EBITDA
17%
21%
Increase/(
decrease) in adjusted EBITDA at CER
1
7%
21%
1 Adjusted EBITDA at CER for the period divided by adjusted EBITDA before hedging for the comparative period
19
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Being dedicated to neuroscience, we have the
heritage, expertise and passion to translate
leading science into transformative treatment
outcomes for patients. Opportunities to make a
difference are huge; the unmet patient needs
are enormous and the number of affected
people is rising, while scientific progress in the
area opens new possibilities to develop
impactful treatments.
EXECUTING THE R&D STRATEGY
The unmet medical needs of the patients we
serve guide everything we do in R&D, spanning
from early research to support of marketed
products.
In 2023, Lundbeck advanced towards becoming
a leader in neuroscience. By nurturing a
dedicated, flexible and diverse working
environment, maintaining focus on programs
with a strong biological rationale,
integrating patient insights in everything we do,
and building close external collaborations, we
are successfully progressing our pipeline.
In April 2023, the HOPE phase II trial with Lu
AG09222 (anti-PACAP mAb) successfully met
its primary endpoint in migraine prevention.
Patients failing prior therapy and treated with
this monoclonal antibody had a statistically
significantly greater reduction vs. placebo in the
number of monthly migraine days.
In April 2023, the U.S. Food and Drug
Administration (FDA) approved the New Drug
Application (NDA) for Abilify Asimtufii
®
(aripiprazole) extended-release injectable
suspension for intramuscular use, a once-every-
two-months injection for the treatment of
schizophrenia in adults or for maintenance
monotherapy treatment of bipolar I disorder in
adults.
In May 2023, the FDA approved the
supplemental New Drug Application (sNDA) of
Rexulti
®
(brexpiprazole) for use in the treatment
of agitation associated with dementia due to
Alzheimer’s disease (AADAD). This approval
made Rexulti
®
the first and only pharmacological
treatment approved for AADAD and the first full
approval of a new chemical entity within
Alzheimer’s disease in 20 years in the U.S.
In June 2023, new data confirmed the long-term
benefit of treatment with Vyepti
®
(eptinezumab)
in migraine prevention.
In September 2023, the two phase III trials of
brexpiprazole as combination therapy with
sertraline for the treatment of post-traumatic
stress disorder in adults were concluded.
Overall, the safety and tolerability results were
consistent with the profile of brexpiprazole as
observed in the clinical trials for schizophrenia,
AADAD and adjunctive treatment of major
depressive disorder (MDD). The flexible dose
phase III trial met its primary endpoint, while the
fixed dose phase III trial missed its primary
endpoint. Lundbeck is now discussing the data
with the FDA to determine the next steps.
Science and Innovation
Four biological clusters
Through pursuit of novel targets within four
biological clusters, Lundbeck advances
innovative solutions to areas of significant
unmet medical needs within neuroscience.
The four biology clusters are:
Hormonal / neuropeptide signaling:
Targeting selected pathways of pain
signaling, stress and other neurohormonal
responses.
Circuitry / neuronal biology:
Targeting neurotransmission / synaptic
dysfunction to restore brain circuits and
reduce neurological, psychiatric and pain
symptoms.
Neuroinflammation / neuroimmunology:
Targeting neuronal loss due to an overactive
immune system, relevant across many niche
and rare neurological disorders.
Protein aggregation, folding and
clearance:
Targeting neurodegenerative
proteinopathies involved in a range of
neurodegenerative conditions, e.g.,
Alzheimer’s dementia and Parkinson’s
disease as well as rare diseases
characterized by proteinopathy, such as
multiple system atrophy (MSA).
Read more on the following pages.
Over the past year, we have consistently demonstrated leadership in the
neuroscience
field through innovative programs and ways of working.
It
is an approach rooted in our commitment to deliver impactful
medicines for very complex and devastating diseases
within
neuroscience
. This dedication is shaped by our agile mindset and
defined by our bold ambition to
deliver on unmet medical needs.
20
Lundbeck Annual Report 2023
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DEVELOPMENT PORTFOLIO
HORMONAL / NEUROPEPTIDE SIGNALING
Eptinezumab - development and regulatory
status
In December 2020, Lundbeck initiated a phase
III clinical trial investigating the efficacy of
eptinezumab in patients with episodic cluster
headache (ALLEVIATE).
In this trial (NCT04688775), patients received
treatment consisting of two infusions of either
eptinezumab or placebo in a cross-over manner.
The total duration of the trial was 24 weeks,
including a safety follow-up period of eight
weeks.
During 2021, Lundbeck further initiated a one-
year safety and tolerability trial in participants
with chronic cluster headache (CHRONICLE).
The CHRONICLE trial (NCT05064397) has
completed recruitment and results show that
patients with chronic cluster headache receiving
open-label treatment with eptinezumab report
reductions in attack frequency, pain severity and
improvement on patient global impression.
In the ALLEVIATE trial, further recruitment was
halted following a planned interim analysis. Full
data for eptinezumab in cluster headache will be
shared with the scientific community at
upcoming meetings.
Lu AG09222 – phase II
Lu AG09222 represents a potential new
therapeutic option for the treatment of migraine,
which, unlike the recently available calcitonin
gene-related peptide (CGRP) migraine
treatment drug class, targets pituitary adenylate
cyclase-activating polypeptide (anti-PACAP
mAb). PACAP and its receptors are broadly
expressed in the nervous systems and
inflammation cells offering the possibility for the
interference of PACAP signaling to affect
multiple symptoms of headache disorders.
In November 2021, Lundbeck initiated the
HOPE trial, a randomized, double-blind, phase
II, proof of concept study to assess efficacy,
safety and tolerability of Lu AG09222 as a
treatment for the prevention of migraine
(NCT05133323). This trial recently reported
results.
The target population for this trial was defined
as patients diagnosed with migraine as outlined
in the International Classification of Headache
Disorders Third Edition (ICHD-3) and with
unsuccessful prior preventive treatments.
A total of 237 patients were randomly allocated
to one of three treatment groups: high/low dose
of Lu AG09222 or placebo.
The primary analysis concluded that there was a
statistically significant difference between Lu
AG09222 and placebo in the mean change from
baseline in the number of monthly migraine
days over weeks 1 to 4. Lu AG09222 was
generally well-tolerated.
A phase IIb trial is planned to start in the first
half of 2024 with the purpose of establishing the
dose range relationship when Lu AG09222 is
given after subcutaneous multiple dosing. The
trial will be conducted across the world with a
target population of patients diagnosed with
migraine as outlined in the ICHD-3 and with
unsuccessful prior preventive treatment.
Lu AG13909 – phase I
Lundbeck’s first neurohormonal clinical
development program was initiated in December
2022 with a phase I first-in-human trial
(NCT05669950) in patients with Congenital
Adrenal Hyperplasia (CAH). The first-in-class
monoclonal antibody has the potential to offer a
treatment alternative to patients suffering from
conditions related to the hypothalamic-pituitary-
adrenal (HPA) axis, leading to increased levels
of ACTH, adrenocorticotropic hormone.
Plain language
summaries
To support a broader understanding of
Lundbeck’s clinical research, and to make
our R&D efforts more accessible to patients
and carers, Lundbeck creates plain language
summaries of our clinical trial results.
A plain language summary explains what
happened during a clinical trial in easy-to-
understand language. It includes information
about the purpose, results and other facts
about the trial. These are made available to
all patients who participate in a Lundbeck-
sponsored clinical trial in the same language
as their signed Informed Consent Form. We
post our plain language summaries on
Lundbeck.com.
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CIRCUITRY / NEURONAL BIOLOGY
Brexpiprazole
Brexpiprazole was discovered by Otsuka and is
being co-developed by Otsuka and Lundbeck.
The mechanism of action of brexpiprazole is still
unknown, however the efficacy of brexpiprazole
may be mediated through a combination of
partial agonist activity at serotonin 5-HT1A and
dopamine D2 receptors, antagonist activity at
serotonin 5-HT2A receptors, as well as
antagonism of alpha 1B/2C receptors.
Brexpiprazole was approved in the U.S. in 2015
as an adjunctive therapy to antidepressants in
adults with major depressive disorder (MDD)
and as a treatment for schizophrenia in adults.
In May 2023, brexpiprazole was approved in the
U.S. for the treatment of AADAD.
Brexpiprazole – phase III in patients with
AADAD
Following the FDA approval for the use of
brexpiprazole in AADAD, the product has been
submitted for review by additional regulatory
agencies. A supplemental New Drug
Submission (sNDS) was formally accepted by
Health Canada for review as of 12 April 2023,
with anticipated action in 2024, while a joint
application using the Access pathway was
submitted on 31 May 2023 for Australia,
Singapore and Switzerland with anticipated
action during the second quarter of 2024.
Furthermore, regulatory applications were
submitted for Malaysia in Q3 and Israel in Q4
2023.
The submissions were based on two positive
phase III, 12-week, randomized, double-blind,
placebo-controlled fixed-dose trials that
evaluated the frequency of agitation symptoms
in patients with dementia due to Alzheimer’s
disease based on the Cohen-Mansfield
Agitation Inventory (CMAI) total score.
Brexpiprazole – phase III in adolescent
patients (13-17 years old) with schizophrenia
The phase III trial 331-10-234 in adolescent
patients with schizophrenia (NCT03198078)
read out during the second quarter of 2023, with
the trial meeting its primary endpoint, and
demonstrating a significant improvement for
brexpiprazole compared to placebo.
The active reference for the study, aripiprazole,
also separated from placebo on the primary
efficacy analysis, thus validating the study
methodology and patient population.
Brexpiprazole was generally well tolerated in the
trial, and the safety profile was similar to that
observed in adult patients with schizophrenia.
The trial forms part of the brexpiprazole
European Medicines Agency (EMA) Paediatric
Investigation Plan (PIP), as well as an FDA Post
Marketing Requirement (PMR) following the
U.S. approval of brexpiprazole for treatment of
schizophrenia in adolescent patients. Results of
the study were submitted to the EMA in Q4
2023.
The EMA PIP includes two further studies that
are currently ongoing. Firstly, a phase III open-
label two-year extension trial 331-10-236
(NCT03238326) enrolling patients completing
trial 331-10-234.
Secondly, an extrapolation study 3331-201-
00185 assessing the long-term efficacy in
adolescents with schizophrenia, by extrapolating
data from completed brexpiprazole trials in both
adolescents and adult subjects with
schizophrenia.
Brexpiprazole – phase III in post-traumatic
stress disorder (PTSD)
On 7 September 2023, Lundbeck announced
topline results from two phase III trials of
brexpiprazole as combination therapy with
sertraline for the treatment of PTSD in adults,
namely the flexible dose trial 071
(NCT04124614) and the fixed dose trial 072
(NCT04174170).
The flexible dose trial met its primary endpoint,
while the fixed dose phase III trial missed its
primary endpoint. The safety and tolerability
results were consistent with the profile of
brexpiprazole as observed in the clinical trials
for schizophrenia, AADAD and adjunctive
treatment of MDD.
Lundbeck and Otsuka are in continued
interactions with FDA to determine the next
steps with respect to the brexpiprazole PTSD
program.
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Aripiprazole – two-month Injectable (LAI)
formulation
Aripiprazole once-every-two-months, ready-to-
use (RTU), long-acting injectable (LAI) is
provided in a single-chamber, prefilled syringe
(PFS) that does not require reconstitution. It is
intended for dosing once-every-two-months via
intramuscular (IM) injection in the gluteal muscle
in the same patient populations as indicated for
once-monthly Abilify Maintena
®
.
Results from the pivotal trial 031-201-00181,
that enrolled 266 patients, demonstrated that
aripiprazole once-every-two-months LAI 960 mg
met the primary endpoint criteria, establishing
similarity of aripiprazole plasma concentrations
and thus comparable effectiveness to Abilify
Maintena
®
400 mg over a two-month dosing
interval.
Multiple-dose administrations of aripiprazole
once-every-two-months LAI 960 mg were
generally safe and well-tolerated in subjects with
schizophrenia or bipolar I disorder and showed
comparable safety to aripiprazole once-monthly
400 mg.
On 27 April 2023, the FDA approved
aripiprazole once-every-two-months LAI under
the brand name Abilify Asimtufii
®
as the first
once-every-two-months LAI for the treatment of
schizophrenia or maintenance monotherapy
treatment of bipolar I disorder in adults.
This new two-month formulation is an innovative
addition to the LAI franchise and has patent
protection until the early part of the next decade.
Lundbeck and Otsuka submitted the Marketing
Authorization Application (MAA) for aripiprazole
as a once-every-two months RTU LAI for the
maintenance treatment of schizophrenia in adult
patients stabilized with aripiprazole to the EMA
on 26 May 2022.
Due to a Committee for Medicinal Products for
Human Use (CHMP) procedural objection,
Lundbeck withdrew its MAA under the ‘hybrid’
procedure and re-submitted to the EMA in June
2023, under the ‘line-extension’ procedure. This
change is procedural only, and unrelated to
product quality or safety. On 25 January 2024,
aripiprazole once-every-two-months, long-acting
injectable was recommended for approval in the
EU by the CHMP for the maintenance treatment
of schizophrenia in adult patients stabilized with
aripiprazole. A decision by EMA is expected
during Q1 2024.
A supplemental New Drug Submission (sNDS)
was filed with Health Canada for the treatment
of schizophrenia and bipolar I disorder in the
third quarter of 2022. In July 2023, Lundbeck
received a drug product data-related Notice of
Deficiency (NOD) from Health Canada. The
NOD related questions will be addressed in
further detail with the agency, anticipating a re-
submission for a new review cycle.
Lu AF28996 – phase I
The small molecule with agonistic properties
towards dopamine D1 and D2 receptors is a
potential oral symptomatic treatment for
Parkinson's disease patients experiencing motor
complications.
The clinical phase I studies (NCT03565094 and
NCT04291859) will enable a decision to enter
phase II in 2024.
Additionally, the Company has
Monoacylglycerol Lipase inhibitor (MAGLi)
Dejan Siljanoski,
Operator
23
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Management Review 2023 in Brief Our Business Governance Financial Statements
programs in phase I experimental medicine
studies, exploring the potential in neurology
indications.
NEUROINFLAMMATION /
NEUROIMMUNOLOGY
Lu AG22515 – phase I
In October 2021, Lundbeck acquired an
exclusive license for Lu AG22515 (formerly
APB-A1) from AprilBio Co. Ltd in South Korea.
Lu AG22515 holds potential in the treatment of
autoimmune-related CNS disorders and
neurological diseases which involve so-called
lymphocyte immune system cells, that form
auto-reactivity (body self-reactions) responses
through cellular and antibody reactions.
A first-in-human trial (NCT05136053) testing
single ascending doses of Lu AG22515 in
healthy volunteers was initiated in the U.S. in
March 2022.
Results showed Lu AG22515 to be well-
tolerated at all dose levels tested. Furthermore,
free soluble serum L showed a sharp, robust
and sustained dose-dependent decrease,
indicating target engagement when binding to
human serum albinum. This program has
potential in several neuro-immune indications,
and it is planned to progress into PoC studies in
Thyroid Eye Disease in 2024.
PROTEIN AGGREGATION, FOLDING,
AND CLEARANCE
Lu AF82422 – phase II
Lu AF82422 is a monoclonal antibody (mAb)
targeting the pathological form of the protein
alpha-synuclein that is believed to play a pivotal
role in the development and progression of
neurodegenerative diseases such as multiple
system atrophy (MSA), Parkinson’s disease
(PD) and other synucleinopathies. Lu AF82422
is being developed by Lundbeck under a joint
research and licensing agreement between
Lundbeck and Genmab A/S.
By targeting pathological alpha-synuclein with
an antibody that will inhibit aggregation and
potentially clear pathological alpha-synuclein
from the brain, the project aims to demonstrate
delay of disease progression and therapeutic
effect on disease burden and function.
A phase II trial (AMULET) testing Lu AF82422 in
MSA patients was initiated in November 2021
(NCT05104476) in the U.S and Japan.
In January 2024, Lundbeck announced results
of the AMULET PoC trial, a randomized, double-
blind, placebo-controlled exploratory proof-of-
concept trial. The trial included 61 MSA patients
randomized 2:1 (40 on Lu AF82422 versus 21
on placebo) and treated for 48-72 weeks. The
primary endpoint in the trial measured slowing
of progression of MSA as measured by Unified
Multiple System Atrophy Rating Scale
(UMSARS) Total Score Part I and II, while the
key secondary endpoint was Modified UMSARS
Part I. The primary statistical approach
consisted of a Bayesian slope analysis. In
addition, the trial included several other clinical
outcome measures and biomarkers. While the
trial did not reach statistical significance on its
primary endpoint, a trend towards slowing MSA
disease progression was observed in the group
exposed to Lu AF82422 compared to the
placebo group, and additional signals of efficacy
were observed across other clinical and
biomarker endpoints. Lu AF82422 was generally
well tolerated. Lundbeck plans to initiate a
phase III study, following further dialogue with
health authorities.
Orphan drug designation for Lu AF82422 in
M
SA was granted by the EMA in April 2021, and
SAKIGAKE pioneering drug designation was
granted by the Japanese Health Authorities in
March 2023.
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OTHER PROJECTS
Lundbeck’s long experience and continuous
work within diseases of the brain have provided
us with a global network in preclinical and
clinical neuroscience research. It is essential for
us to maintain our strong internal R&D
capabilities and to build external alliances to
supplement our internal capabilities, taking
advantage of the increased opportunities
provided by innovative technologies.
With the support from the world-renowned
Michael J. Fox Foundation, Lundbeck is
combining its biomarker discoveries with leading
microfluidic experts at the Danish Technical
University (DTU) to develop a state-of-the-art
biomarker assay for PD. With a second grant
from the Michael J. Fox Foundation, Lundbeck
is leading the discovery of a radioligand as a
marker of neuroinflammation for PD and other
brain diseases in collaboration with experts in
positron emission tomography (PET) at Aarhus
University.
PATIENTS SHARE THEIR PERSPECTIVES
In 2023, Lundbeck continued its ‘Let the patient
speak’ events focusing on innovative ways of
integrating patients’ perspectives into our
migraine and PD development programs. We
invite patients and caregivers to share their
perspectives at two events, ultimately helping
Lundbeck to incorporate insights into innovation
and integrated evidence generation efforts.
Lundbeck’s development organization identified
and implemented internal frameworks that help
the Company operationalize Patient-Focused
Drug Development by bringing the patient voice
closer to research and development efforts,
describing how to seek patient input to trial
designs, informing patient-centric outcome
assessment strategies, and fostering an
integrated, patient-centered approach to
evidence development throughout the drug life
cycle.
In partnership with the Danish Knowledge
Centre for Headache, we aim to explore novel
ways of generating real-world evidence directly
from patients via digital applications. The
purpose of this pilot project is to deliver scientific
evidence to improve migraine treatment in
Denmark.
Such an initiative enables Lundbeck to learn
and strengthen internal capabilities to lead
future innovative digital engagement initiatives
developing patient-centered, real-world
evidence in support of our current and future
portfolio.
COOPERATION IN NEUROSCIENCE
Together with the European Health Data and
Evidence Network (EHDEN), we began
formative stages of neuroscience research with
potential partners, including other
pharmaceutical companies.
The EHDEN network provides Lundbeck with a
unique platform for collaboration with data
partners specializing in specific disease areas,
ensuring access to real-world data, such as
Electronic Health Records from healthcare
systems and registries, helping us to gain much
deeper insight into disease progression,
identifying biomarkers for patient stratification
and monitoring treatment responses and
disease outcomes, etc. We hope to use this
knowledge to advance our drug development.
Data is also core in our different artificial
intelligence-related (AI) projects. Lundbeck is
implementing AI in different parts of its
business. We use AI to e.g., reshape drug
discovery, accelerate drug development, and for
target qualification and validation, exploring
neuropeptides and their connections to specific
disorders.
Commitment to diversity
in clinical trials
Lundbeck understands that brain diseases
wreak havoc without bias. Whether it be
genetics, age, race, sex, ethnicity,
socioeconomics or access to healthcare,
understanding and fully evaluating the
multitude of factors that influence a person’s
health are key to both the development of
good medicine and equitable advances in
brain health. As part of our ongoing
commitment to sustain a diverse clinical trial
infrastructure, we have established the below
Clinical Trial Diversity Principles and
committed to tracking and monitoring progress
against them.
Develop and execute a clear strategy to
achieve diversity in our trials globally
We aim for each trial to be designed with the
intention to ensure participants mirror the full
diversity of the patient population in the
country or region AND the disease we are
studying. This will require a concentrated effort
to involve underrepresented populations in our
marketed regions through focused patient-
inclusion criteria; attention to the diversity of
clinical trial sites and investigators, removal of
barriers that could impede the participation of
certain groups in clinical trials and use of real-
world data to inform development efforts and
improve understanding of diseases and
products.
Collaborate with patient advocacy groups
choosing to make diversity a priority
Lundbeck has a long-standing focus on
community outreach, and we are committed to
expanding partnerships with organizations
that possess a like-minded focus on diversity.
In collaboration with external partners, we
strive to establish trust with diverse patient
and caregiver populations, gain deeper insight
into unmet patient needs, and build
awareness about open clinical trials to further
enhance the diversity of our clinical trials.
Implement integrated oversight approach
to inform, analyze and act
We aim to continuously inform and evolve our
internal thinking and processes by actively
monitoring clinical trial diversity targets and
utilizing real-world data to ensure we are
driving inclusion of underrepresented
populations in our clinical trials.
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PROJECT
BIOLOGY
AREA
PHASE I
PHASE II
PHASE III
FILI
NG / LAUNCH
Eptinezumab (anti
-CGRP mAb)
1
Hormonal /
neuropeptide
signaling
Migraine prevention
2
Eptinezumab (anti
-CGRP mAb)
1
C
luster headache
Lu AG09222 (anti
-PACAP mAb)
3
Migraine prevention
Lu AG13909 (anti
-ACTH mAb)
4
Neurohormonal dysfunctions
Aripiprazole 2
-month injectable formulation
5
Schizophrenia & bipolar I disorder
Brexpiprazole
6
Circuit
ry /
neuronal biology
Agitation in Alzheimer’s d
isease (AADAD)
7
Brexpiprazole
6
PTSD
8
Lu AF28996 (D1/D2
agonist)
9
Parkinson’s disease
MAGLi program
s
10
N
eurology
Lu AF82422 (anti
-α-synuclein mAb)
Protein aggregation,
folding and clearance
Synucleinopathies (MSA)
11
Lu AG22515 (CD40L
12
antagonist)
Neuroinflammation /
neuroimmunology
Neurology
1 CGRP: Calcitonin gene-related peptide.
2
Three phase III clinical trials (SUNLIGHT, SUNRISE, and SUNSET) are related to the Asia registration activities.
3
PACAP: Pituitary adenylate cyclase activating peptide.
4
ACTH: Adrenocorticotropic hormone.
5
Life-cycle management in partnership with Otsuka Pharmaceutical. Approved in the U.S.
6
Acts as a partial agonist at 5-HT1A and dopamine D2 receptors at similar potency, and an antagonist at 5-HT2A and
noradrenaline alpha1B/2C receptors.
7 AADAD: Agitation Associated with Dementia due to Alzheimer’s Disease. Approved in the U.S. and Canada.
8
Post-traumatic stress disorder.
9
Dopamine receptor D1 and D2.
10
MAGLi: Monoacylglycerol lipase (“MAGlipase”) inhibitor.
1
1 Multiple system atrophy.
12
CD40L/serum-albumin bispecific antibody-fragment ((scFv)2-Fab)) based on AprilBio’s SAFA™ technology platform.
Pipeline
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Markets
Lundbeck’s products are registered in
more than 100 countries
, and we have
employees in more than 50 countries.
Our largest markets are the U.S., China,
Canada, Spain, Italy, France,
Brazil
Australia, South Korea
and Switzerland.
Markets
U.S.
1
EUROPE
1
INTERNATIONAL MARKETS
1
REVENUE (DKKm)
9,
829
REVENUE FROM STRATEGIC
BRANDS
(DKKm)
8,398
SHARE OF GROUP REVENUE
51
%
STRATEGIC BRANDS
Abilify Maintena
®
/
Abilify Asimtufii
®
Trintellix
®
Rexulti
®
Vyepti
®
REVENUE (DKKm)
4,628
REVENUE FROM
STRATEGIC BRANDS
(DKKm)
3,088
SHARE OF GROUP REVENUE
23
%
STRATEGIC BRANDS
Abilify Maintena
®
Brintellix
®
Rexulti
®
/Rxulti
®
Vyepti
®
REVENUE (DKKm)
4,991
REVENUE FROM STRATEGIC
BRANDS
(DKKm)
2,247
SHARE OF GROUP REVENUE
2
6%
STRATEGIC BRANDS
Abilify Maintena
®
Brintellix
®
/Trintellix
®
Rexulti
®
Vyepti
®
1 The figures above are excluding Other revenue of DKK 327 million and positive hedging effects of DKK 137 million.
27
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Products
Products
STRATEGIC BRANDS
Abilify Mainten
a
®
/Abilify Asimtufii
®
(aripiprazole once
monthly/every two months)
Abilify Maintena
®
has been marketed since
2013 as a monthly intramuscular injection
indicated for the treatment of schizophrenia
and bipolar I disorder in adults
.
In
2023, Lundbeck launched Abilify Asimtufii
®
as
an intramuscular injection every two
months
. It was launched in the U.S. in
collaboration with Otsuka
Pharmaceutical
and
is expected to be approved and launched in
Europe
and International Markets from 2024
as a maintenance treatment
for
schizophrenia
in adults. Lundbeck will launch Abilify
Asimtufii
®
either alone or in collaboration with
Otsuka
Pharmaceutical.
Brintellix
®
/Trintellix
®
(vortioxetine)
Indicated for the
treatment of major
depressive
disorder (MDD)
Lundbeck markets
Brintellix
®
/Trintellix
®
in Europe and
International Markets. In the U.S.
and Japan,
Takeda is our co
-
promotion partner. Launched
in the first markets in 2014 and now available
in approximately 6
0 countries.
Rexulti
®
/Rxulti
®
(brexpiprazole)
Indicated for adjunctive therapy for the
treatment of adults with MDD and as a
treatment for adults with schizophrenia. In
2023
, further approved for the treatment of
agitation associated with dementia due to
Alzheimer's disease. Launched in the U.S. in
2015 in collaboration with Otsuka
Pharmace
utical, and subsequently in several
other countries
.
Vyepti
®
(epti
nezumab)
Indicated for the preventive treatment of
migraine in adults. Lundbeck markets Vyepti
®
across all three regions in
the U.S., EU and
International Markets. Launched
in the U.S. at
the beginning of 2020, and now available in
2
4 countries across the world.
REVENUE (DKKm)
3,187
% OF TOTAL REVENUE
16
%
REVENUE (DKKm)
4,324
% OF TOTAL REVENUE
22
%
REVENUE (DKKm)
4,525
% OF TOTAL
REVENUE
23
%
REVENUE (DKKm)
1,697
% OF TOTAL REVENUE
8
%
▲10%
CER
▲5%
CER
▲20%
CER
▲74%
CER
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Products
MATURE BRANDS
Cipralex
®
/Lexapro
®
(escitalopram)
Indicated for the treatment of depression. First
launched in 2002 and today available in close
to 100 countries around the world.
Sabril
®
(vigabatrin)
Indicated for the treatment of refractory
complex partial seizures (rCPS) and infantile
spasms (IS). Launched in the U.S. in 2009.
Other pharmaceuticals
Northera
®
(symptomatic neurogenic
orthostatic hypotension (nOH)), Onfi
®
(epilepsy), Ebixa
®
(dementia), Azilect
®
(Parkinson’s disease), Xenazine
®
(chorea),
Deanxit
®
(depression), Cipramil
®
(depression
and anxiety), and Cisordinol
®
(psychosis) are
among the biggest of our other mature
brands.
REVENUE (DKKm)
2,135
% OF TOTAL REVENUE
11
%
REVENUE (DKKm)
336
% OF TOTAL REVENUE
2
%
REVENUE (DKKm)
3,244
% OF TOTAL REVENUE
16
%
▼4%
CER
▼47%
CER
▼2%
CER
Xue Bing,
living with depression
29
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Summary for the Group 2018-2022
Summary for
the Group
2019
-2023
Statement of profit or loss (DKKm)
2023
2022
2021
2020
2019
1
Revenue
19,912
18,246
16,299
17,672
17,036
Gross profit
15,427
14,295
12,651
13,506
13,196
Adjusted gross profit
2,3
17,580
16,133
14,173
15,101
14,505
Research and development costs
3,457
3,754
3,823
4,545
3,116
Profit from operations (EBIT)
3,195
2,852
2,010
1,990
3,153
Operating profit before depreciation and amortization (EBITDA)
5,207
4,663
3,720
4,783
4,823
Adjusted operating profit before
depreciation and amortization (Adjusted
EBITDA)
2,3
5,652
4,823
3,990
5,681
5,337
Net financials, expenses
202
378
429
84
127
Profit before tax
2,993
2,474
1,581
1,906
3,026
Profit for the year
2,290
1,916
1,318
1,581
2,313
Assets (DKKm)
2023
2022
2021
2020
2019
1
Non-current assets
24,118
26,040
26,041
25,924
29,095
Inventories
4,427
4,046
3,031
2,163
2,204
Receivables
3,852
3,818
3,302
4,018
3,822
Cash, bank balances and securities
4
5,010
3,548
2,279
3,924
3,012
Total assets
37,407
37,452
34,653
36,029
38,133
Equity and liabilities (DKKm)
2023
2022
2021
2020
2019
1
Equity
22,045
20,779
18,279
16,973
16,782
Non-current liabilities
7,372
8,474
7,556
9,044
11,071
Current liabilities
7,990
8,199
8,818
10,012
10,280
Total equity and liabilities
37,407
37,452
34,653
36,029
38,133
Statement of cash flows (DKKm)
2023
2022
2021
2020
2019
1
Cash flows from operating activities
4,080
3,519 2,272 3,837 2,609
Cash flows from
investing activities
(498)
(1,892)
(610)
(467)
(7,755)
Cash flows from operating and investing activities (free cash flow)
3,582
1,627 1,662 3,370 (5,146)
Cash flows from financing activities
(2,085)
(387)
(3,336)
(2,394)
4,548
Interest
-bearing debt, cash, bank balances and securities, net, year-end
– net cash/(net debt)
4
711
(2,183)
(3,189)
(4,106)
(6,566)
1 2019 has been restated to reflect the reversal of an impairment loss on the Rexulti
®
product rights in 2017.
2 For details of the non-IFRS measure ‘adjusted EBITDA’, see Adjusted EBITDA Reconciliation.
3 New key figures were introduced from 2023 and disclosed comparatively for 2022 and 2021. Pro forma calculations have been applied for 2020 and 2019.
4 In 2020-2023, securities amounted to DKK 0 million.
30
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Summary for
the Group
2019
-2023
Continued
Key figures
2023
2022
2021
2020
2019
1
Adjusted gross margin (%)
2
88.3
88.4 87.0 85.5 85.1
EBIT margin (%)
16.0
15.6 12.3 11.3 18.5
EBITDA margin (%)
26.2
25.6 22.8 27.1 28.3
Adjusted EBITDA margin (%)
2
28.4
26.4 24.5 32.1 31.3
Research and development ratio (%)
17.4
20.6 23.5 25.7 18.3
Return on equity (%)
10.7
9.8
7.5
9.4
13.8
Equity ratio (%)
58.9
55.5 52.7 47.1 44.0
Invested capital (DKKm)
21,334
22,962 21,468 21,079 23,348
Return on invested capital (%)
11.0
9.9
7.9
7.4
14.2
Net debt/EBITDA
(0.1)
0.5 0.9 0.9 1.4
Effective tax rate (%)
23.5
22.6 16.6 17.0 23.6
Purchase of intangible
assets, gross (DKKm)
224
449 202 114 88
Purchase of property, plant and equipment, gross (DKKm)
277
371 410 364 356
Purchase of financial assets, gross (DKKm)
-
- - 17 18
Average number of employees
5,566
5,399
5,488
5,717
5,475
Share data
2023
2022
2021
2020
2019
1
Earnings per share, basic (EPS) (DKK)
3
2.31
1.93
1.33
1.59
2.33
Earnings per share, diluted (DEPS) (DKK)
3
2.31
1.93
1.33
1.59
2.33
Adjusted
earnings per share, basic (EPS) (DKK)
2
4.22
3.74
2.88
4.76
4.07
Number of shares for the calculation of EPS (millions)
3
999.2
992.9
993.3
993.7
993.5
Cash flow from operating activities per share, diluted (DKK)
4.11
3.54
2.29
3.86
2.63
Proposed dividend per share (DKK)
0.70
0.58
0.40
0.50
0.82
Dividend payout ratio (%)
30
30
30
31
35
Dividend yield (%)
2.2
2.2
1.2
1.2
1.6
Net asset value per share, diluted (DKK)
3
22.22
20.93
18.40
17.08
16.89
Market capitalization (DKKm)
31,812
25,507
33,626
41,582
50,660
1 2019 has been restated to reflect the reversal of an impairment loss on the Rexulti
®
product rights in 2017.
2 New key figures were introduced from 2023 and disclosed comparatively for 2022 and 2021. Pro forma calculations have been applied for 2020 and 2019.
3 The calculation of EPS is based on a share denomination of DKK 1 as a result of the share split completed on
8 June 2022. Comparative figures have been restated to reflect the
change in trading unit from a nominal value of DKK 5 to DKK 1.
31
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Summary for
the Group
2019
-2023
Continued
Definitions
Interest-bearing debt
Debt and financial instruments (including financial leases) carrying interest.
Interest-bearing net cash
Cash, bank balances and securities less interest-bearing debt.
Adjusted gross profit
Adjusted gross profit is the gross profit excluding depreciation and amortization
and other adjustments linked to sales.
Adjusted gross margin
Adjusted gross profit as a percentage of revenue.
EBIT margin
1
Profit from operations as a percentage of revenue.
EBITDA
Profit before interest, tax, depreciation, amortization and gain on
divestment of
properties.
EBITDA margin
EBITDA as a percentage of revenue.
Adjusted EBITDA
Adjusted EBITDA is defined as EBITDA adjusted by certain items
3
.
Adjusted EBITDA margin
Adjusted EBITDA as a percentage of revenue.
Research and development ratio
Research and development cost as a percentage of revenue.
Return on equity
1
Net profit/(loss) for the year as a percentage of shareholders' equity (average).
Equity ratio
1
Shareholders' equity, year-end, as a percentage of total assets.
Invested capital
Shareholders' equity, year-end, plus net interest-bearing debt.
Return on invested capital
Profit from operations after tax as a percentage of average invested capital.
Net debt
Interest-bearing debt less cash, bank balances and securities.
Net debt/EBITDA
Net interest-bearing debt divided by EBITDA.
Earnings per share, basic (EPS)
1,2
Net profit/(loss) for the year divided by average number of shares, excl. treasury
shares.
Earnings per share, diluted (DEPS
)
1,2
Net
profit/(loss) for the year divided by average number of shares, excl. treasury
shares, incl. warrants, fully diluted.
Adjusted earnings per share, basic (EPS)
Adjusted earnings per share, basic (EPS) is defined as EPS, basic adjusted by
certain items.
Cash flows from operating activities per share, diluted
1
Cash flows from operating activities divided by average number of shares, excl.
treasury shares, incl. warrants, fully diluted.
Dividend payout ratio
Total dividends for the year as a percentage of net profit/(loss).
Dividend yield
Dividend per share as percentage of official price quoted on Nasdaq
Copenhagen, year-end.
Net asset value per share, diluted
Shareholder's equity, year
-end, divided by number of shares, year-end, excl.
treasury shares, incl. warrants, fully diluted.
Market capitalization
1
Total number of shares, year
-end, multiplied by the official price quoted on
Nasdaq Copenhagen, year-end.
1 Definitions according to the Danish Finance Society's Recommendations & Financial Ratios.
2 The calculation of EPS is based on a share denomination of DKK 1 as a result of the share split completed on 8 June 2022. C
omparative figures have been restated to reflect the
change in trading unit from a nominal value of DKK 5 to DKK 1.
3 For the definition of certain items, see Adjusted EBITDA Reconciliation
32
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Governance
IN THIS SECTION
33
Corporate Governance
35
Sustainability
37
Business Ethics and Code of Conduct
38
Risk Management
40
Board of Directors
43
Executive Management
45
The Lundbeck Share
Annette Villumsen
Head of Medical Education & Lundbeck Institute
33
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
The supreme governing body of Lundbeck is the
general meeting, in which the shareholders of
Lundbeck exercise their rights. Some matters
are always handled by the general meeting,
e.g., adoption and amending of the Company’s
Articles of Association, approval of the annual
report, and election of members of the Board of
Directors among other things.
Any shareholder has the right to raise questions
and suggestions at general meetings.
Resolutions can generally be passed by a
simple majority. However, resolutions to amend
the Articles of Association require two-thirds of
the votes cast and capital represented, unless
other adoption requirements are imposed by the
Danish Companies Act.
Lundbeck has a two-tier board structure
consisting of the Board of Directors and the
Executive Management. The two bodies are
separated, and no person serves as a member
of both.
The Board of Directors has 12 members, of
which eight are elected at the Annual General
Meeting for a one-year term and four are
elected by Lundbeck’s employees for a four-
year term. The current eight non-employee
members of the Board of Directors bring deep
industry knowledge and solid top management
experience to Lundbeck, which are essential for
the Board to perform its tasks.2
Lundbeck’s Board of Directors is responsible for
approving the corporate strategy and its
implementation, setting goals for Executive
Management, and for ensuring that members of
Executive Management and other senior
managers have the right qualifications.
The Board of Directors also evaluates
management performance and remuneration.
Furthermore, the Board of Directors has the
overall responsibility for ensuring that adequate
internal and external controls are in place, and
for identifying and addressing any relevant risks.
These responsibilities are defined in the Danish
Companies Act and stipulated in the rules of
procedures for the Board of Directors.
The Board of Directors regularly evaluates
Lundbeck’s strategy, business, performance,
financial strategies, and policies, and ensures
that day-to-day management is carried out in
accordance with such policies.
Following initial analysis and proposal from
Executive Management, the Board of Directors
assesses Lundbeck’s need for capital on an
ongoing basis, and regularly reviews
Lundbeck’s capital structure.
There is no universal answer to the question of
what the optimum capital structure is for a
specific company because the relationship
between equity and interest-bearing debt relies
on the specific characteristics that apply within
the particular industry in which the business
operates and, by extension, the operating and
financial risk.
However, companies in the pharmaceutical
industry are often particularly well-funded which
may be explained by the extended development
projects and risks associated with research
activities.
Our dividend policy is currently to pay out 30-
60% of the net profits as dividend to the
shareholders. The Board of Directors pursues
the policy that equity beyond the level which,
based on a conservative estimate, would be
considered sufficient to support the underlying
business should be distributed to the
shareholders. The distribution to our
shareholders takes place through annual
dividends and if appropriate share buyback
programs.
The Board of Directors has established a self-
evaluation procedure covering, among other
things, board composition, contribution and
results, board agenda and discussions,
cooperation between the Board of Directors and
Executive Management, committee work and
structure.
The 2023 Board evaluation was rescheduled
due to CEO change but will be finalized by
February 2024. The evaluation was conducted
internally and was an assessment, in which the
Board of Directors and Executive Management
Corporate Governance
Corporate governance concerns the way Lundbeck is managed and
controlled, while creating value for both the
Company and its
stakeholders. More information on the mandatory annual Corporate
Governance report is disclosed on www.lundbeck.com
1
in accordance
w
ith section 107(b) of the Danish Financial Statements Act.
1
https://www.lundbeck.com/content/dam/lundbeck-com/masters/global-site/pdf/corporate-governance/2023/corporate_governance_report.pdf.
2
Detailed description of the Board members and their competencies and qualifications can be found on
https://www.lundbeck.com/global/about-us/our-leadership/board-of-directors.
34
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
answered a brief questionnaire and were
interviewed individually by the Chair.
More details regarding the work performed by
the Board of Directors, the evaluation procedure
and results hereof can be found at
www.lundbeck.com.
1
Also, the remuneration of Lundbeck’s Executive
Management and Board of Directors can be
found at www.lundbeck.com.
2
DISCLOSURE REGARDING CHANGE
OF CONTROL
The EU Takeover Bids Directive, as partially
implemented in the Danish Financial Statements
Act, requires listed companies to disclose
information about significant agreements that
may be affected in case of a completed
takeover bid, particularly in relation to the
disclosure of change-of-control provisions.
Lundbeck discloses that the Group has a major
partnership agreement in place under which an
acquiring entity must divest any competing
product according to an agreed process and,
in the absence of such divesture, Lundbeck’s
partner may terminate the agreement.
In case Lundbeckfond Invest A/S holds less
than 50% of the share capital or voting rights in
H. Lundbeck A/S (change of control), Lundbeck
may be met with demands for repayment on any
existing debt portfolio.
In the event Lundbeck is acquired or merges,
certain Executive Management members may,
depending on the impact on their position, be
entitled to terminate employment with Lundbeck
with three (3) months’ notice and receive a
compensation of up to eighteen (18) months’
remuneration.
Given the ownership structure of Lundbeck the
risks are considered remote. For information
about the ownership structure of Lundbeck,
see pages 45-46.
1 Detailed descriptions of the Board of Directors’ work, evaluation procedure and results can be found on
https://www.lundbeck.com/global/about
-us/corporate-governance/board-tasks.
2
Detailed descriptions of the remuneration can be found on
https://www.lundbeck.com/global/about-us/corporate-governance/remuneration.
Aysel Özel,
Senior Operator
35
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
OUR APPROACH TO SUSTAINABILITY
Sustainability is an integral part of how we do
business at Lundbeck. In our annual
Sustainability Report, we present detailed
information on our impacts, risks, strategy,
activities during the year, progress on our
targets, as well as metric and material
sustainability information. Our mandatory annual
statutory sustainability reporting, complying with
99a, 99d,107d of the Danish Financial
Statements Act and the EU Sustainable Finance
Taxonomy, can be found in our Sustainability
Report.
1
OUR MOST MATERIAL SUSTAINABILITY
MATTERS
Our most material sustainability matters are
reflected in the SDGs on which our business
model has significant impact. Our biggest
contribution to sustainable development is our
innovative medicines and the benefits they bring
to people living with psychiatric and neurological
diseases. Closely related to this is ensuring that
we provide high-quality medicinal products,
safeguard patient safety and combat counterfeit
medicine. We also take a strict stance on anti-
corruption in our own operations as well as in
our dealings with business partners, healthcare
professionals and regulators.
Our strategy includes taking a leading role in
climate action, environmental management in
general, and promoting an ethical, safe,
motivating and inclusive culture in our own
operations and full value chain.
In 2024, we will be updating our sustainability
strategy to ensure it reflects the disclosure and
due diligence requirements set out in the EU
Directives related to corporate sustainability
conduct and reporting, including the Corporate
Sustainability Reporting Directive and the EU
Taxonomy for sustainable activities.
CORPORATE SUSTAINABILITY
REPORTING DIRECTIVE
Since 2022, Lundbeck has had a cross
functional working group in place to ensure that
Lundbeck is ready to comply with the Corporate
Sustainability Reporting Directive (CSRD)
requirements starting in 2024. The working
group regularly reports on the progress to
Executive Management, the Audit Committee,
and the Board of Directors. Lundbeck has also
established an Environmental, Social, &
Governance (ESG) Reporting team that will be
responsible for overseeing the sustainability
reporting. This ESG Reporting team is working
closely together with the Corporate
Sustainability team to implement the new
requirements.
Lundbeck has also reviewed and updated its
governance for the sustainability reporting
processes taking effect in 2024 to reflect the
responsibilities for the new requirements across
the various levels of the company.
GOVERNANCE AND MANAGEMENT OF
SUSTAINABILITY
Executive Management defines and owns
Lundbeck's sustainability strategy and priorities.
A share of their short-term incentive program is
linked to performance on targets related to the
sustainability strategy.
The CEO has the highest responsibility for the
sustainability strategy and presents major
decisions to the Board of Directors when
relevant.
A dedicated Corporate Sustainability team is
responsible for improving, monitoring, and
reporting on Lundbeck’s sustainability
performance in close collaboration with relevant
functions in the organization. The approach
taken is to integrate and disseminate ownership
of sustainability to the relevant line functions.
SUSTAINABILITY TARGETS
We continuously set ambitious targets, report
progress on the targets and disclose a set of
externally reviewed non-financial metrics across
all areas of sustainability.
All in all, eight out of the 10 sustainability targets
for 2023 were achieved or are on track as
shown in the table on the following page.
GENDER BALANCE
In our sustainability strategy, we have chosen
the metric of share of women in senior
management as our key performance indicator
for gender balance. Senior management is
Sustainability
1 https://www.lundbeck.com/content/dam/lundbeck-com/masters/global-site/pdf/Sustainability_Report_2023.pdf.
Sustainability is an imperative to Lundbeck and an integral part of our
strategy and culture. Lundbeck’s sustainability activities aim to mitigate
risks and adverse impacts related to our business activities and
contribute to solving societal challenges where we can. We remain
committed to the UN Global Compact Principles and contribute to
addressing seven of the S
ustainable Development Goals (SDGs).
36
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
comprised of all EVPs, SVPs and VPs. We have
annual targets to increase this share of
underrepresented gender (currently women)
year on year. We are happy to have achieved
this annual target for 2023. It is one of our 10
Sustainability targets for 2023. More detail on
this can be found in the Sustainability Report.
Lundbeck also has a long-term target for its
representation of the underrepresented gender
of at least 40% by 2026. This target applies to
all management levels in the Company,
including the Board of Directors and Upper
management, defined as Executive
Management and their direct reports with people
management responsibilities. This definition
aligns with the Danish Company Law.
We have not yet achieved the 2026 target of a
40% representation of the underrepresented
gender in any of these groups.
2023
Board of
Directors
Upper
management
1
Senior
management
2
Total number
8
55
78
Share of women
25%
38%
36%
Target
40%
40%
40%
Target year
2026
2026
2026
In 2023, we reviewed and updated our DE&I
strategy to emphasize that we firmly believe that
DE&I are key cornerstones to being a
successful company and helping us deliver on
our purpose of restoring brain health.
As part of our DE&I policy, we have embedded
DE&I in our recruitment process through
education and tools to minimize unconscious
bias, attract a more diverse talent pool, and
ensure fair assessment of all candidates.
Subsequently, we have embedded bias blockers
in our organizational review process by
introducing tools that consider different
dimensions of diversity. In 2023, we ran e-
learnings on unconscious bias and on cultural
awareness bias for all employees. In Q3, we ran
a pilot on inclusive leadership training as a part
of our leadership development programs to
enable us to develop a plan for inclusive
leadership training in 2024.These actions taken
in 2023 were applied across the organization to
ensure a diverse and inclusive culture for all
employees including top, upper- and senior
managements.
This section on gender balance constitutes our
mandatory annual statutory sustainability
reporting in accordance with 99b of the Danish
Financial Statements Act. In the Sustainability
Report, you can read more about the work we
do to ensure diversity, equity and inclusion at
Lundbeck.
Achieved
Not achieved
On track
Priorities
2023 Sustainability targets
ACCESS TO HEALTH
Scoping a global
approach to measuring the impact of
and access to medical education of health care
professionals we are funding
Donate treatment for at least 1,500 patients in low and
middle
income countries through product donation
partnership
BUSINESS
ETHICS
Annual Code of Conduct training completed by all
employees at work globally
Increase the share of employees stating in the annual
Employer Satisfaction Survey
(ESS) that they are
confident in raising an ethical or compliance concern
CLIMATE CHANGE &
CIRCULARITY
Reduce total carbon footprint across own operations,
supply and distribution in line with our 15
-year Science-
B
ased Target
3
Recycle 64% of the organic compounds used in chemical
production
Recycle 73% of general waste
PEOPLE &
COMMUNITIES
Increase in share of underrepresented gender at senior
management level year
on year
2
Reduce lost time accident frequency ≤ 4
Not more than three high
-consequence work-related
accidents with absence
1 Executive Management (EVP) and their direct reports with people management responsibilities.
2
EVP, SVP and VP.
3 We report progress annually on our 15-year targets in Scope 1 & 2 (own produced energy and purchased energy) and Scope 3 (emissions from supply, services, distribution, and business travel).
37
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
As a global pharmacetical company we operate
in a constantly changing regulatory landscape.
Our business activities and application of
technologies also evolve in the pursuit of
meeting patient needs and offering efficacious
treatment options. These conditions call for a
responsive and risk-based Compliance Program
that helps our employees globally to operate
ethically and in accordance with applicable laws
and regulations.
COMMITMENT IN TIMES OF CHANGES
In 2023, our network of regional compliance
officers and our global compliance functions
evolved, and we now have 18 regional
compliance officers present across our global
commercial organization.
Together with senior management they help
prevent misconduct, detect compliance issues
and take prompt corrective and preventive
action.
Our priorities remained unchanged. At
Lundbeck we are committed to driving a culture
of ethics and compliance throughout the
organization, as well as safeguarding the
Company and our business relations from
corruption and bribery in all its forms.
DOING THE RIGHT THING
The annual Code of Conduct training at
Lundbeck aims to empower our employees to
make informed and ethical decisions. During
this training employees are guided through and
practice some of the topics from the Code of
Conduct, including anti-bribery and corruption,
use of social media and personal data
protection.
The training is supported by videos and
testimonials from the CEO and our colleagues,
reminding us that our culture of ethics is firmly
grounded in Lundbeck’s five beliefs: being
patient-driven, courageous, ambitious,
passionate and responsible.
COLLABORATING WITH STAKEHOLDERS
We believe our interactions with healthcare
professionals, healthcare organizations, patients
and patient organizations have a profound and
positive influence on the quality of patient care
and the value of future research. These
interactions are well regulated, and we are
committed to enhancing transparency.
At Lundbeck we believe in a consistent and
ethical approach to compensate for the work
undertaken, and in 2023 we revisited the
methodology for how we compensate for work
performed as well as the applicable rates we
pay.
Our continued improvement efforts are
supplemented by our internal audits and
monitoring activities that aim to validate the
understanding of the requirements, identify
risks, and capture suggestions for how we can
enhance processes and controls.
OPEN DIALOGUE
We encourage everyone to have an ongoing
dialogue on compliance and ethics with their
colleagues and manager. However, we realize
that some questions, dilemmas, or concerns
might not be discussed openly. Our Compliance
Hotline
1
is a secure line that is open for
everyone to raise concerns about a potential
violation of the Code of Conduct or any other
misconduct. It is a cornerstone in our
Compliance Program that helps protect
Lundbeck.
All reports are investigated in line with our global
procedure that safeguards individuals who
report concerns or otherwise participate in
investigations. Our investigations are guided by
principles that manifest Lundbeck’s beliefs:
• Protection of good-faith reporters against
retaliation
• Confidentiality
• Cooperation
• Proportionality
• Communication
• Independence
OVERSIGHT OF BUSINESS ETHICS
Lundbeck’s ethical standards are defined by
Executive Management, who are also
responsible for ensuring the proper roll out and
implementation of these ethical standards. This
is done via the Compliance Program.
Lundbeck’s Audit Committee oversees the
effectiveness of the Compliance Program.
Our Chief Ethics & Compliance Officer provides
regular updates on current developments to
relevant stakeholders, such as Executive
Management, the Compliance Committee, and
the Audit Committee.
Business Ethics and Code of Conduct
At Lundbeck
, we pursue our business purpose guided by our Code of
Conduct. The Code of Conduct shows us the way
if acting with integrity
and doing the right thing in everything we do.
1 https://www.lundbeck.com/global/compliance-hotline.
38
Lundbeck Annual Report 2023
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RISK MANAGEMENT GOVERNANCE
STRUCTURE
Lundbeck is exposed to risks throughout the
value chain, from the initial stages of developing
innovative pharmaceuticals in our in-house
facilities to the proven pharmaceuticals reaching
the patients. Lundbeck’s risk management
processes are continually updated and adapted
to match internal and external requirements, in
which risks related to trends, global economic
developments, geopolitics and long-term
forecasts are assessed as part of Lundbeck’s
long-term strategic planning.
With this understanding of the wider context and
an accurate and complete overview of
Lundbeck’s activities and resources, Executive
Management has a clear basis for decision-
making on our overall risk exposure and
mitigating actions.
The Board of Directors is overall responsible for
ensuring that Lundbeck has implemented the
necessary risk management procedures. The
oversight of compliance within the established
enterprise risk management framework has
been delegated to the Audit Committee.
RISK MANAGEMENT FRAMEWORK
At Lundbeck, enterprise risk management is
considered an integral part of doing business,
which is reflected in the risk management
process.
The process starts in the decentralized teams
within each executive management area. The
teams have detailed and extensive knowledge
of the risks within their areas of responsibility.
They systematically identify, quantify, respond
to and monitor risks. They are ideally placed to
mitigate our risk exposure in the first instance.
Each area shares the risks with the central Risk
Office when material updates occur, and at least
on a semi-annual basis.
The central Risk Office provides the risk
framework and conducts interviews with
management, risk contributors and risk-
responsible individuals. This represents an
integral part in the alignment of risks reported to
the Risk Office. In cooperation with each
executive management area, the Risk Office
assesses the likelihood of an event occurring
and the potential impact on the Group. The key
risk overview is presented to Executive
Management for their assessment and approval
before it is reported to the Audit Committee and
approved by the Board of Directors.
The corporate risk register kept by the Risk
Office provides a consolidated overview of
Lundbeck’s risk exposure by detailing each risk,
risk category and type. The risk descriptions
provide details on the event, its current status,
the status of the response, and the likelihood
and potential impact. Our reporting process
defines six risk categories:
• Research and Development
• Market, Commercial and Strategy
• Supply, Quality and Product Safety
• IT security
• Legal and Compliance
• Financial
Lundbeck has developed a concise process
covering day-to-day risk identification,
monitoring, mitigation and reporting within each
executive management area all the way to the
final reporting to Executive Management. This
process enables Executive Management to
control Lundbeck’s risk appetite when deciding
strategy and practice, and when making day-to-
day decisions.
Risk Management
Lundbec
k’s risk management processes ensure close monitoring,
systematic risk assessment and the ability to identify, manage and
report internal and external risks in a changing environment.
Dejan Siljanoski,
Operator
39
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Key Risks
Key Risks
Yuichi Mitsui
Medical Representative
RISK AREA
DESCRIPTION POTENTIAL CONSEQUENCES MITIGATING ACTIONS
RESEARCH AND
DEVELOPMENT
Exposure to delays of regulatory approval
or failure in the development of new and
innovative medicines.
Increased regulatory requirements for
clinical trials.
Data requirements from production of non-
clinical and clinical studies.
Delays or failure of new products could impact patients who cannot benefit
from these products and decrease earnings expectations for Lundbeck
and its shareholders.
Delay in regulatory approval may impact the patient’s drug access.
Issues with data integrity could lead to delays in studies and production –
ultimately leading to withdrawals and failure to gain approval.
Clinical trials are run and evaluated throughout the research and
development phase.
Ongoing evaluation of the product pipeline, regulatory requirements and
product benefit.
Robust quality management system is in place to ensure consistent quality,
data integrity and the compliance of clinical trials and clinical safety activities.
MARKET,
COMMERCIAL AND
STRATEGY
Price pressure, new legislation, regulation
of reimbursement and healthcare reforms
in key markets, etc.
Changes in market and economic
dynamics derived from geopolitical
instability.
Effects from mergers and acquisitions.
Market restrictions could impact patients’ access to Lundbeck products.
Changes in market and economic conditions and healthcare reforms could
affect the pricing landscape as well as rebates and discounts.
Differences in business performance and WACC vs. assessment at the
time of mergers and acquisitions deals can lead to impairment losses.
These changes could decrease earnings for Lundbeck and its
shareholders.
Understanding the price development in main markets.
Working with healthcare authorities around the world to document the value
of our pharmaceuticals.
Monitor political developments and requirements.
Robust merger and acquisitions implementation tracking processes.
SUPPLY, QUALITY
AND PRODUCT
SAFETY
Disruption of production or supply or
unpredictable demand and stock-out.
Loss of licenses to manufacture or sell
pharmaceuticals.
Defects in product quality or safety.
Product shortage, not giving patients needed access to the
pharmaceuticals they require.
Systems, policies and procedures are in place to ensure product supply,
quality and safety.
Dual sourcing strategy and high level of safety stock of key products.
Robust pharmacovigilance system.
IT SECURITY
Cyber attacks and cyber fraud.
System down-time.
Disruption or compromise of IT security could affect all parts of Lundbeck’s
operations and product supply to patients.
Data loss, including patient-, employee-, proprietary business- and other
sensitive data.
IT policies and procedures are in place to safeguard systems and data.
Cyber defenses are tested on a regular basis.
Annual testing of IT disaster recovery plan.
LEGAL AND
COMPLIANCE
Loss, expiration or infringement of
intellectual property rights.
Non-compliance with laws, industry
standards, regulations and our Code of
Conduct.
Exposure to legal claims or investigations.
Loss, expiration, infringement, or invalidation of intellectual property rights
could decrease earnings for Lundbeck and its shareholders.
Non-
compliance with laws, industry standards, regulations, or our Code of
Conduct could affect our ‘license to operate’, result in litigations or
investigations, expose Lundbeck to significant fines, and impact our
reputation and earnings for Lundbeck and its shareholders.
Policies and processes are in place to safeguard intellectual property rights.
The Code of Conduct, Compliance Program and global compliance
organization are pivotal in sustaining our compliance culture. The Code of
Conduct Compliance Program includes global activities and ensures key
risks are identified and managed, continuous internal
reviews and monitoring
of compliance with laws and industry standards, and annual training to all
employees.
Third parties are committed to observing our legal and ethical standards in
mutually binding agreements and are subject to due diligence monitoring.
Global Compliance Hotline and investigation procedure.
FINANCIAL
Fluctuations in interest rates and
exchange
rates incl. impact from currency
devaluations.
Lundbeck’s cash flow and earnings could be impacted in cases of
fluctuations in key currencies.
Treasury policy.
Monitoring the financial exposure and hedging a significant part of
Lundbeck’s currency risk up to 18 months in advance.
40
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
B of Directors
Board of Directors
1
Per 31 December 2023.
C = Chair, DC = Deputy Chair, M = Member
.
1
For more information about the Board of Directors and their competencies, please visit https://www.lundbeck.com/global/about-us/our-leadership/board-of-directors.
2 Board positions included in the position as CEO of the Lundbeck Foundation.
SANTIAGO ARROYO
JEFFREY BERKOWITZ
Elected 2013
Considered independent
Audit Committee (M)
Remuneration & Nomination Committee (C)
Coloplast A/S (C); Danish Industry Committee on
Diversity (C); Danish Committee of Corporate
Governance (C); Equalis (C); Life Science
Council under the Danish Ministry of Industry (C);
Business & Financial Affairs (C); Gyldendal A/S
(M), Copenhagen University (M)
-shares
-shares
CEO, the Lundbeck Foundation
Elected 2015
Considered non-independent
Remuneration & Nomination Committee (M)
Scientific Committee (M)
ALK-Abelló A/S (DC)
2
Falck A/S (DC)
2
Ørsted A/S (DC)
Nordea Bank Abp (DC)
The Committee on Foundation Governance (DC)
-shares
-shares
• Born 1960
•
Chief Development Officer, Bicycle Therapeutics
•
Elected 2021
•
Considered independent
Lundbeck Committees
•
Scientific Committee (M)
Directorships
•
GlycoEra AG (M)
Holding of A
-shares
None
Holding of B
-shares
None
• Born 1966
•
CEO, Real Endpoints
•
Elected 2018
•
Considered independent
Lundbeck Committees
•
Remuneration & Nomination Committee (M)
•
Scientific Committee (M)
Directorships
•
PharmaTwoB (C)
•
Click Therapeutics (M)
•
Zealand Pharma A/S (M)
•
Uniphar PLC (M)
Holding of A
-shares
None
Holding of B
-shares
None
41
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Board of Directors
1
JAKOB RIIS
ILSE DOROTHEA WENZEL
Elected 2015
Considered non-independent
Committees
Audit Committee (M)
Biovica International AB (C)
The Lundbeck Foundation (M)
ALK-Abelló A/S (M)
Vitrolife AB (M)
Life Healthcare (M)
-shares
-shares
CEO, Ovid Therapeutics
Elected 2017
Considered independent
Scientific Committee (C)
Ovid Therapeutics (C)
Opthea (C)
BIO (the Biotechnology Innovation Organization)
(M)
-shares
-shares
• Born 1966
•
CEO, Falck Danmark A/S and Adelca ApS
•
Elected 2023
•
Considered non-independent
Lundbeck Committees
•
Scientific Committee (M)
Directorships
•
Falck Healthcare A/S (C)
•
Response A/S (C)
•
Danish Chamber of Commerce (M)
•
Falck Danmark A/S (M)
Holding of A
-shares
None
Holding of B
-shares
54,138
• Born 1969
•
Elected 2021
•
Considered independent
Lundbeck Committees
•
Audit Committee (C)
Directorships
•
Dentsply Sirona Inc. (M)
•
Servier Pharmaceuticals (M)
Holding of A
-shares
None
Holding of B
-shares
None
Per 31 December 2023.
C = Chair, DC = Deputy Chair, M = Member.
1 For more information about the Board of Directors and their competencies, please visit https://www.lundbeck.com/global/about-us/our-leadership/board-of-directors.
42
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Board of Directors
1
DORTE CLAUSEN
LASSE SKIBSBYE
Director, Corporate Health, Safety & Environment
Elected by employees in 2022
Industrial Sectorial Board of Occupational Health
and Safety (DI) (M)
Specialized Committee of Chemistry (DI) (M)
Environment, Health & Safety Expert Group
(EFPIA) (M)
-shares
-shares
Research Technician
Elected by employees in 2022
-shares
-shares
• Born 1984
•
Clinical Trial Manager, Specialist, Psychiatry
•
Elected by employees in 2022
Directorships
•
Pharmadanmark (M)
•
Training & Conference Center Pharmakon (M)
Holding of A
-shares
220
Holding of B
-shares
880
• Born 1983
•
Principle Scientist
•
Elected by employees in 2022
Directorships
•
Safety Pharmacology Society (M)
Holding of A
-shares
None
Holding of B
-shares
None
Per 31
December 2023.
C = Chair, DC = Deputy Chair, M = Member
.
1 For more information about the Board of Directors and their competencies, please visit https://www.lundbeck.com/global/about-us/our-leadership/board-of-directors.
43
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Executive Management
1
& CEO
THOMAS GIBBS
2
Executive Vice President,
Head of Lundbeck U.S.
ELISE HAUGE
2
Executive Vice President,
People & Communication
Joined Lundbeck in 2023
-shares
-shares
Joined Lundbeck in 1988
-shares
9,232
-shares
76,928
• Born 1971
•
Joined Lundbeck in 2023
Directorships
None
Holding of A
-shares
None
Holding of B
-shares
None
• Born 1967
•
Joined Lundbeck in 2019
•
Left Lundbeck as of 31 December 2023
Directorships
•
CBS Executive Fonden (M)
Holding of A
-shares
5,414
Holding of B
-shares
12,656
Per 31
December 2023.
C = Chair, DC = Deputy Chair, M = Member
.
1
For more information about Executive Management and their competencies, please visit https://www.lundbeck.com/global/about-us/our-leadership/executive-management.
2
Thomas Gibbs (Executive Vice President, Head of Lundbeck U.S.), Elise Hauge (Executive Vice President, People & Communication) and Keld Flintholm Jørgensen (Executive Vice
President, Corporate Strategy & Business Development) are part of Executive Management in their respective roles but are not members of Executive Management as registered with
the Danish Business Authority.
44
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Executive Management
Executive Management
1
& Executive Vice President,
2
Business Development & Strategy
PER JOHAN LUTHMAN
Executive Vice President,
Research & Development
JACOB TOLSTRUP
Executive Vice President,
Commercial Operations
Joined Lundbeck in 2022
-shares
-shares
Joined Lundbeck in 2019
Scandion Oncology (M)
-shares
669
-shares
• Born 1959
•
Joined Lundbeck in 2019
Directorships
•
Brain+ (M)
Holding of A
-shares
1
9,312
Holding of B
-shares
85,647
• Born 1972
•
Joined Lundbeck in 1999
Directorships
•
Pharmacosmos A/S (C)
Holding A
-shares
None
Holding B
-shares
2
,144
Per 3
1 December 2023.
C = Chair, DC = Deputy Chair, M =
Member.
1
For more information about Executive Management and their competencies, please visit https://www.lundbeck.com/global/about-us/our-leadership/executive-management.
2
Thomas Gibbs (Executive Vice President, Head of Lundbeck U.S.), Elise Hauge (Executive Vice President, People & Communication) and Keld Flintholm Jørgensen (Executive Vice
President, Corporate Strategy & Business Development) are part of Executive Management in their respective roles but are not members of Executive Management as registered with
the Danish Business Authority.
45
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
At the outset of the year, the Lundbeck share
price began at DKK 23.88 for A-shares and DKK
26.05 for B-shares, based on the closing prices
at the end of 2022 (ref. Bloomberg). Throughout
the year, the B-share price reached its peak at
DKK 39.50 [22 May 2023], and its lowest point
was recorded at DKK 25.35 [24 January 2023].
By the close of the year, the B-share price
ended at DKK 32.76 marking a 26% increase
over the course of the year. In contrast, the
Danish OMXC25 index experienced an increase
of 7%, and the MSCI European Pharmaceutical
Index also increased slightly by 3%.
TURNOVER
Total trading in Lundbeck A-shares amounted to
DKK 792.5 million in 2023, while the average
daily turnover was DKK 3.2 million. Total trading
in Lundbeck B-shares amounted to DKK 6.0
billion in 2023, while the average daily turnover
was DKK 24.1 million.
SHARE CAPITAL
Lundbeck shares are listed on the Copenhagen
Stock Exchange, Nasdaq Copenhagen. The
shares are negotiable and there are no
restrictions on their transferability. At the end of
2023, Lundbeck’s total share capital amounted
to DKK 996 million, which is equivalent to 996
million shares.
COMPOSITION OF SHAREHOLDERS
According to the Lundbeck share register, the
company had approximately 57,000
shareholders at the end of 2023, representing
approximately 99% of the outstanding shares.
The Lundbeck Foundation (Lundbeckfond Invest
A/S) is the Company’s largest shareholder and
holds approximately 80% of the A-shares and
approximately 66% of the B-shares. The total
share capital held by the foundation is
approximately 69% and the total voting rights
held by the foundation in Lundbeck is
approximately 76%.
The Lundbeck Foundation is the only
shareholder to report a holding in excess of 5%
of the share capital. At the end of 2023,
investors in North America held 34% of the free
float compared to 34% in 2022; European (excl.
Danish) investors held 46% compared to 46% in
2022; Danish investors held 18% compared to
18% in 2022; rest of the world held 2%,
compared to 2% in 2022.
In order to fund our long-term share-based
incentive programs, Lundbeck has 3,730,140
shares held as treasury shares at the end of
2023. The holding is split in 466.028 A-shares
and 3,264,112 B-shares.
At the end of 2023, Lundbeck’s Board of
Directors and Executive Management held a
total of 127,049 Lundbeck A-shares and a total
of 700,147 B-shares compared to a total of
116,588 Lundbeck A-shares and a total of
541,342 B-shares at the end of 2022. The total
number of shares in 2023 corresponds to 0.06%
of the total A-shares outstanding and 0.09% of
the total B-shares outstanding.
LUNDBECK AND THE EQUITY MARKET
Within Lundbeck, our Investor Relations (IR)
function is dedicated to maintaining transparent
and accurate communication with both
prospective and existing shareholders, as well
as equity analysts. We achieve this through a
continuous dialogue, providing insights into our
vision, objectives, business segments and
financial progress.
In the year 2023, Lundbeck's Investor Relations
team successfully conducted over 250
meetings, with most of these interactions taking
place via digital platforms, including Teams and
Zoom. Additionally, Lundbeck actively engaged
in 12 investor conferences, primarily in person.
Lundbeck is currently covered by 16 sell-side
analysts, including leading global investment
banks. These analysts regularly publish
research reports on Lundbeck, and a
comprehensive list of these analysts is
accessible on our website at
www.lundbeck.com.
1
Following the release of our interim and full-year
reports, key members of Lundbeck's Executive
Management and Investor Relations team
embark on roadshows to update investors and
analysts on the latest developments within the
company. Our investor presentations are
available for download at www.lundbeck.com.
2
The Lundbeck Share
In 2023, Lundbeck experienced yet another year marked by significant
achievements, robust financial performance and promising
developments in our R&D pipeline. However, it is important to
acknowledge that the year also brought increased uncertainties that
significantly influenced the global financial markets, and which
are
outside our control.
1 https://www.lundbeck.com/global/investors/the-share/analyst-coverage.
2 https://
www.lundbeck.com/global/investors/reports-and-presentations.
Financial calendar 2024
20 March 2024
Annual General Meeting 2024
25 March 2024
Dividends for 2023 at the disposal of shareholders (if approved)
15 May 2024
Financial statements for the first three months of 2024
21 August 2024
Financial statements for the first six months of 2024
13 November 2024
Financial statements for the first nine months of 2024
46
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
STOCK PERFORMANCE 2023
STOCK PERFORMANCE A- AND B-SHARES 2023
STOCK PERFORMANCE 2019-2023
COMPOSITION OF OWNERSHIP, END 2023
COMPOSITION OF FREE FLOAT, END 2023
60
80
100
120
140
160
180
jan feb mar apr maj jun jul aug sep okt nov dec
Lundbeck OMXC25 Index MSCI Europe Pharmaceuticals Index
20
25
30
35
40
45
j an feb mar apr maj j un j ul aug sep okt nov dec
Lundbeck B Shares Lundbeck A shares
0
50
100
150
200
250
2019 2020 2021 2022 2023
Lundbeck OMXC25 Index MSCI Europe Pharmaceuticals Index
69%
7%
10%
4%
0%
10%
The Lundbeck Foundation
North America
Europe, excl. Denmark
Denmark, excl. the Lundbeck Foundation
Rest of the world
Others, incl. private
34%
46%
18%
2%
North America
Europe, excl. Denmark
Denmark, excl. the Lundbeck Foundation
Rest of the world
LUNDBECK’S TOTAL NUMBER OF VOTING RIGHTS AND TOTAL SHARE CAPITAL
Number of shares
(nominal
value of DKK 1 each)
Nominal value (DKK)
Number of votes
A-shares
199,148,222
199,148,222
1,991,482,220
B
-shares
796,592,888
796,592,888
796,592,888
Total
995,741,110
995,741,110
2,788,075,108
47
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Share Data
2023
2022
2021
2020
2019
Share price (A-shares), year-end (DKK) 28.70 23.88 - - -
Share price (A-shares), high (DKK) 37.90 37.70 - - -
Share price (A-shares), low (DKK) 23.52 22.49 - - -
Share price (B-shares), year-end (DKK) 32.76 26.05 - - -
Share price (B-shares), high (DKK) 39.50 37.86 - - -
Share price (B-shares), low (DKK) 25.35 24.24 - - -
Share price (old share structure), year-end (DKK) - - 168.85 208.80 254.40
Share price (old share structure), high (DKK) - - 258.10 302.40 306.90
Share price (old share structure), low (DKK) - - 152.45 178.15 217.20
48
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Share Facts
Number of A-shares, year-end 199,148,222
Number of B-shares, year-end 796,592,888
Total 995,741,110
Share capital, year-end (DKK) 995,741,110
Nominal value per share (DKK) 1
Number of treasury A-shares 466,028
Number of treasury B-shares 3,264,112
Total number of treasury shares 3,730,140 (0.37%)
Free float (%) 31%
IPO 18 June 1999
Stock exchange Nasdaq Copenhagen
ISIN code DK0061804697 (A), DK0061804770 (B)
Ticker HLUNa / HLUNb (Reuters), HLUNA DC / HLUNB DC (Bloomberg)
49
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Financial
S
tatements
IN THIS SECTION
50
Consolidated Financial Statements
92
Financial Statements of the Parent Company
102
Management Statement
103
Independent Auditor’s Reports
Aki Mizukoshi
Director, People & Communication
Michelle Wilson
Vice President, People &
Communication
50
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
CONTENTS
Statement of profit or loss 51
Statement of comprehensive income 51
Statement of financial position 52
Statement of changes in equity 53
Statement of cash flows 54
Adjusted EBITDA Reconciliation (part of
Management Review – not audited) 107
NOTES
1 Basis of preparation 55
2 Revenue and segment information 58
3 Employee costs 59
4 Financial income and expenses 60
5 Income taxes 60
6 Intangible assets 64
7 Property, plant and equipment 66
8 Right-of-use assets and lease liabilities 67
9 Inventories 68
10 Trade receivables 68
11 Cash resources 69
12 Equity 70
13 Retirement benefit obligations and similar obligations 72
14 Incentive programs 74
15 Provisions 75
16 Contingent assets and contingent liabilities 75
17 Bank debt, bond debt and borrowings 77
18 Other payables 77
19 Financial instruments 78
20 Audit fees 82
21 Contractual obligations 83
22 Related parties 83
23 List of subsidiaries 84
24 Subsequent events 85
25 Material accounting policy information 85
Consolidated Financial Statements
51
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
2023
2022
Notes
DKKm
DKKm
Revenue
2
19,912
18,246
Cost of sales
3
4,485
3,951
Gross profit
15,427
14,295
Sales and distribution costs
3
7,482
6,610
Administrative expenses
3
1,293
1,079
Research and development costs
3
3,457
3,754
Profit from operations (EBIT)
3,195
2,852
Financial income
4
94
124
Financial expenses
4
296
502
Profit before tax
2,993
2,474
Tax on profit for the year
5
703
558
Profit for the year
2,290
1,916
Earnings per share, basic (EPS) (DKK)
12
2.31
1.93
Earnings per share, diluted (DEPS) (DKK)
12
2.31
1.93
Statement of profit or loss
2023
2022
Notes
DKKm
DKKm
Profit for the year
2,290
1,916
Actuarial gains/losses
13
(24)
134
Tax
12
4
(19)
Items that will not be reclassified subsequently to profit or loss
(20)
115
Exchange rate gains/losses on investments in foreign subsidiaries
(336)
670
Exchange rate gains/losses on additions to net investments in foreign
subsidiaries
(7)
25
Hedging of net investments in foreign subsidiaries
19
17
(163)
Deferred gains/losses on cash flow hedge, exchange rate
19
117
(347)
Deferred gains/losses on cash flow hedge, interest rate
19
(21)
39
Deferred gains/losses on cash flow hedge, price
19
(78)
128
Exchange gains/losses, hedging (transferred to revenue)
19
(137)
588
Tax
12
23
(58)
Items that may be reclassified subsequently to profit or loss
(422)
882
Other comprehensive income
(442)
997
Total comprehensive income
1,848
2,913
Statement of comprehensive income
Statement of profit or loss
1 January
– 31 December
Statement of comprehensive income
1 January
– 31 December
52
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
2023
2022
Notes
DKKm
DKKm
Intangible assets
6
20,692
22,500
Property, plant and equipment
7
2,499
2,515
Right-of-use assets
8
382
427
Other financial assets
99
173
Other receivables
208
195
Deferred tax assets
5
238
230
Financial and other assets
545
598
Non-current assets
24,118
26,040
Inventories
9
4,427
4,046
Trade receivables
10
2,965
2,709
Income taxes receivable
73
98
Other receivables
588
756
Prepayments
226
255
Receivables
3,852
3,818
Cash and bank balances
11
5,010
3,548
Current assets
13,289
11,412
Assets
37,407
37,452
Statement of financial position - assets
2023
2022
Notes
DKKm
DKKm
Share capital
12
996
996
Foreign currency translation reserve
1,109
1,438
Hedging reserve
19
63
156
Retained earnings
19,877
18,189
Equity
22,045
20,779
Retirement benefit obligations
13
216
213
Deferred tax liabilities
5
2,283
2,152
Provisions
15
388
190
Bank debt and bond debt
17
3,714
5,096
Lease liabilities
8
351
395
Other payables
18
420
428
Non-current liabilities
7,372
8,474
Retirement benefit obligations
13
1
1
Provisions
15
934
1,132
Trade payables
4,410
4,251
Lease liabilities
8
86
88
Income taxes payable
571
535
Other payables
18
1,988
2,192
Current liabilities
7,990
8,199
Liabilities
15,362
16,673
Equity and liabilities
37,407
37,452
Statement of financial position – equity and liabilities
Statement of financial position –
assets
At 31 December
Statement of financial position –
equity and liabilities
At 31 December
53
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
Statement of changes in equityp
Statement of changes in equity
At 31 December
Share capital
Foreign currency
translation reserve
Hedging
reserve
Retained earnings
Total equity
Notes DKKm DKKm DKKm DKKm DKKm
2023
Equity at 1 January
996
1,438
156
18,189
20,779
Profit for the year
-
-
-
2,290
2,290
Other comprehensive income
12
-
(329)
(93)
(20)
(442)
Comprehensive income
-
(329)
(93)
2,270
1,848
Distributed dividends, gross
12
-
-
-
(578)
(578)
Dividends received, treasury shares
12
-
-
-
2
2
Buyback of treasury shares
12
-
-
-
(43)
(43)
Incentive programs
14
-
-
-
38
38
Tax on other transactions in equity
5
-
-
-
(1)
(1)
Other transactions
-
-
-
(582)
(582)
Equity at 31 December
996
1,109
63
19,877
22,045
2022
Equity at 1 January
996
874
(162)
16,571
18,279
Profit for the year
- - - 1,916 1,916
Other comprehensive income
12
-
564
318
115
997
Comprehensive income
-
564
318
2,031
2,913
Distributed dividends, gross
-
-
-
(398)
(398)
Dividends received, treasury shares
-
-
-
1
1
Buyback of treasury shares
12
-
-
-
(45)
(45)
Incentive programs
14
- - - 29 29
Other transactions
-
-
-
(413)
(413)
Equity at 31 December
996
1,438
156
18,189
20,779
54
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
2023
2022
Notes
DKKm
DKKm
Profit from operations (EBIT)
3,195
2,852
Adjustment for non-cash items:
Amortization, depreciation and impairment losses
2,012
1,811
Incentive programs
38
30
Change in provisions
37
(244)
Other adjustments
265
18
Change in working capital:
Change in inventories
(760)
(979)
Change in receivables
(167)
(504)
Change in short-term debt
(2)
1,078
Cash flows from operations before financial receipts and payments
4,618
4,062
Financial receipts
84
29
Financial payments
(156)
(643)
Cash flows from ordinary activities
4,546
3,448
Income taxes paid
(466)
71
Cash flows from operating activities
4,080
3,519
Contingent consideration payment from acquisition of company
-
(1,076)
Purchase of intangible assets
6
(224)
(449)
Purchase of property, plant and equipment
7
(277)
(371)
Sale of property, plant and equipment
3
4
Cash flows from investing activities
(498)
(1,892)
Cash flows from operating and investing activities (free cash flow)
3,582
1,627
Statement of cash flows
2023
2022
Notes
DKKm
DKKm
Proceeds from loans and issue of bonds
17
-
1,234
Repayment of bank loans and borrowings
17
(1,377)
(1,086)
Repayment of lease liabilities
8
(89)
(93)
Buyback of treasury shares
12
(43)
(45)
Dividends paid in the financial year, net
(576)
(397)
Cash flows from financing activities
(2,085)
(387)
Net cash flows for the year
1,497
1,240
Cash and bank balances at 1 January
3,548
2,279
Unrealized exchange gains/losses on cash and bank balances
(35)
29
Net cash flows for the year
1,497
1,240
Cash and bank balances at 31 December
5,010
3,548
Interest
-bearing debt, cash and bank balances, net,
is composed as follows:
Cash and bank balances
11
5,010
3,548
Interest-bearing debt
(4,299)
(5,731)
Interest
-bearing debt, cash and bank balances, net,
at 31 December – net cash/(net debt)
711
(2,183)
Statement of cash flows
At 31 December
55
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
1 BASIS OF PREPARATION
1.1 Reporting entity
H.
Lundbec
k A/S (herein denominated the “Parent Company” or “Company”) is domiciled in Denmark. The
Company’s registered office is at Ottiliavej 9, 2500 Valby. These consolidated financial statements compris
e
t
he Parent Company and its subsidiaries (together referred to as the “Group” or “Lundbeck”). The Group is
engaged in research, development, production and sale of pharmaceuticals for the treatment of psychiatric
and neurological disorders. See note 2 Revenue and segment information.
1.
2 Basis of accounting
The consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as
adopted by the EU and further requirements in the Danish Financial Statements Act. The consolidated financial
statements was approved by the Board of Directors and authorized for issue on 7 February 2024.
T
he statement of financial position is also referred to as the “balance sheet”.
D
etails of the Group’s accounting policies are included in note 25 Material accounting policy information and
in note 1.7 Changes in material accounting policy information.
1
.3 Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of
the primary economic environment in which the entity operates (“the functional currency”).
T
he consolidated financial statements are presented in Danish kroner (DKK), which is also the functional and
presentation currency of the Parent Company. All amounts have been rounded to the nearest DKK million,
unless otherwise indicated.
1.
4 Principal accounting policies
The consolidated financial statements have been prepared to give a true and fair view of the Group’s financial
position at 31 December 2023 and financial performance for the year. The material accounting policies are
described in note 25 Material accounting policy information. Management believes that the accounting policies
listed in note 1.5 Use of judgments and estimates are principal to the financial statements.
1.
5 Use of judgments and estimates
In preparing the consolidated financial statements, Management has made estimates and judgments that affect
the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions of estimates are
recognized prospectively.
Management believes that the following accounting estimates, assumptions and judgments are significant to
the consolidated financial statements.
Principal accounting policies Key accounting estimates, assumptions and judgments Notes Provision for discounts and rebates Estimate of discounts and rebates in the U.S. 15 Income taxes and deferred Judgment and estimate of deferred tax assets and liabilities and provision income taxesfor uncertain tax positions5 Impairment of product rightsEstimate of the value-in-use methodology for impairment of product rights 6 Inventory obsolescence Judgment and estimate of the provision for obsolescence 9 Provisions and contingent Estimate of ongoing legal disputes, environmental provisions, litigations assets and liabilities and investigations 15, 16 Other payables - contingent Assumptions and estimates used in the calculation of the fair value related considerationto contingent consideration from the businesses acquired in 2019 18
1.6 Measurement of fair values
Some of the Group’s accounting policies and disclosures require the measurement of fair values, for both
financial and non‑financial assets and liabilities.
T
he fair values of quoted investments are based on current bid prices at the end of the reporting period.
Financial assets for which no active market exists are carried at fair value based on a valuation methodology.
T
he fair value of derivative financial instruments is measured on the basis of quoted market prices of financial
instruments traded in active markets. If an active market exists, the fair value is based on the most recently
observed market price at the end of the reporting period. If a financial instrument is quoted in a market that is
not active, the Group bases its valuation on the most recent transaction price.
I
f an active market does not exist, the fair value of standard and simple financial instruments, such as foreign
exchange forward contracts, interest rate swaps, currency swaps and unlisted bonds, is measured according
to generally accepted valuation techniques. Market-based parameters are used to measure the fair value.
Note 1
56
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
1 BASIS OF PREPARATION - CONTINUED
When measuring the fair value of an asset or a liability, the Group uses observable market data to the extent
possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in
the valuation techniques as follows.
Level 1:Quoted prices (unadjusted) in active markets for identical assets or liabilities Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either Level 2:directly (i.e., as prices) or indirectly (i.e., derived from prices) Level 3:Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period
during which the change has occurred.
1.7 Changes in material accounting policy information
New and amended standards adopted by the Group
Effective 1 January 2023, a number of amendments to the accounting standards were implemented.
None of the amendments have a material impact on the accounting policies and/or on the consolidated financial
statements. Consequently, no material changes to the accounting policies or retrospective adjustments have
been made as a result of adopting these standards and/or amendments. For details, see below.
Global minimum top-up tax (Pillar II)
The Group has adopted the International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12) upon
their release on 23 May 2023. The amendments provide a temporary mandatory exception from deferred tax
accounting for the top-up tax, which is effective immediately, and require new disclosures about Pillar Two
exposure, see note 5 Income taxes.
The mandatory exception applies retrospectively. However, because no new legislation to implement the top-
up tax was enacted or substantively enacted at 31 December 2023, in any jurisdiction in which the Group
operates and no related deferred tax was recognized at that date, the retrospective application has no impact
on the Group’s consolidated financial statements.
Material accounting policy information
The Group adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
from 1 January 2023. Although the amendments did not result in any changes to the accounting policies
themselves, they impacted the accounting policy information disclosed in the financial statements.
The amendments require the disclosure of ‘material’, rather than ‘significant’, accounting policies. The
amendments also provide guidance on the application of materiality to disclosure of accounting policies,
assisting entities to provide useful, entity-specific accounting policy information that users need to understand
other information in the financial statements.
Management reviewed the accounting policies and made updates to the information disclosed in note 25
Material accounting policy information (2022: Significant accounting policies) in certain instances in line with
the amendments.
In addition, the following amendments did not have a material impact on the amounts recognized in prior
periods and are not expected to significantly affect current or future periods, the accounting policies and/or the
consolidated financial statements.
• Definition of Accounting Estimate – Amendments to IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to
IAS 12 Income Taxes
Note 1
57
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
1 BASIS OF PREPARATION - CONTINUED
1.8 New standards and amendments issued but not yet effective
A number of new standards and amendments are effective for annual periods beginning after 1 January 2023
though not mandatory for annual reporting periods ending on 31 December 2023. Earlier application is
permitted; however, the new or amended standards have not been early adopted by the Group.
The amended standards are as follows:
• Classification of liabilities as current or non-current and non-current liabilities with covenants
(Amendments to IAS 1 Presentation of Financial Statements)
• Supplier finance arrangements (Amendments to IAS 7 Statement of Cash Flows and IFRS 7
Financial Instruments: Disclosures)
• Lease liability in a sale and leaseback (Amendments to IFRS 16 Leases)
• Lack of exchangeability (Amendments to IAS 21 The Effects of Changes in Foreign Exchange
Rates)
The Group expects to adopt the new standards, improvements, amendments and interpretations when they
become mandatory.
None of the amended standards are expected to significantly impact the accounting policies and/or on the
consolidated financial statements.
1.9 European Single Electronic Format (ESEF)
The Annual Report is prepared in XHTML format, and the consolidated financial statements are tagged using
inline eXtensible Business Reporting Language (iXBRL). The iXBRL tags comply with the ESEF taxonomy,
which is included in the ESEF Regulation and developed based on the IFRS taxonomy published by the IFRS
Foundation. Where a financial statement line item is not defined in the ESEF taxonomy, an extension to the
taxonomy has been created. Extensions are anchored to elements in the ESEF taxonomy, except for
extensions which are subtotals.
The Annual Report submitted to the Danish Financial Supervisory Authority consists of the XHTML document
together with certain technical files, all included in a ZIP file named HLUNDBECK-2023-12-31-en.zip.
Note 1
58
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
2 REVENUE AND SEGMENT INFORMATION
The Group is engaged in research, development, production and sale of pharmaceuticals for the treatment of
psychiatric and neurological disorders, which is the Group’s single business (operating) segment. The business
segment reflects the way in which Management makes decisions and assesses the business performance.
The Group is organized in geographical regions. The tables below show the Group’s revenue from external
customers broken down by key products and geographical regions.
International Europe United States Markets Group 2023 DKKm DKKm DKKm DKKm ®Abilify Maintena/Asimtufii 1,445 1,182 560 3,187 ®/Trintellix®Brintellix1,507 1,432 1,385 4,324 ®/Lexapro®Cipralex687 - 1,448 2,135 ®/Rxulti®Rexulti59 4,206 260 4,525 ®Sabril- 336 - 336 ®Vyepti77 1,578 42 1,697 Other pharmaceuticals 853 1,095 1,296 3,244 Revenue by product 4,628 9,829 4,991 19,448 Other revenue327 Effects from hedging137 Total revenue 19,912 Of this amount: Royalty694 Down payments and milestone received7
As of 1 January 2023, Onfi
®
is being reported together with Other pharmaceuticals, comparative figures for
2022 have been adjusted accordingly.
®
International Europe United States Markets Group 2022 DKKm DKKm DKKm DKKm ®Abilify Maintena 1,382 1,047 535 2,964 ®/Trintellix®Brintellix 1,311 1,650 1,316 4,277 ®/LexaproCipralex 662 - 1,698 2,360 ®/Rxulti®Rexulti 41 3,645 204 3,890 ®Sabril - 636 - 636 ®Vyepti 11 982 11 1,004 Other pharmaceuticals 845 1,142 1,439 3,426 Revenue by product 4,252 9,102 5,203 18,557 Other revenue 277 Effects from hedging (588) Total revenue 18,246 Of this amount: Royalty 881 Down payments and milestone received 2
In 2023, Denmark generated revenue from external customers in the amount of DKK 13,752 million (DKK
12,159 million in 2022) of which DKK 14 million (DKK 15 million in 2022) is generated from customers in the
country of domicile. The U.S. generated revenue from external customers located in the U.S. in the amount of
DKK 3,603 million (DKK 3,629 million in 2022).
The U.S. and Denmark are the only countries where sales contribute 10% or more of the total revenue.
In 2023 and 2022, no single customer contributed 10% or more of the total revenue.
2023 2022 Intangible assets and property, plant and equipment by geographic region DKKm DKKm Denmark 10,021 10,782 United States 12,026 13,108 Other countries 1,526 1,552 Total 23,573 25,442
Note 2
59
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
3 EMPLOYEE COSTS
2023 2022 Breakdown of employee costs DKKm DKKm Short-term employee benefits 4,588 4,170 Retirement benefits 278 265 Social security costs 372 348 Equity- and cash-settled incentive programs 41 32 Severance and restructuring costs 59 - Total 5,338 4,815
For details on payments related to share-based incentive programs, see note 14 Incentive programs.
Employee costs for the year are included in the following functions in the statement of profit or loss:
2023 2022 Employee costs DKKm DKKm Cost of sales 828 758 Sales and distribution costs 2,755 2,445 Administrative expenses 750 603 Research and development costs 1,005 1,009 Total 5,338 4,815
Information on employees
2023
2022
Number Number
Average number of full-time employees in the financial year
5,566
5,399
Number of full-time employees at 31 December
In Denmark 1,897 1,790 In other countries 3,784 3,660 Total 5,681 5,450
Remuneration of registered Executive Management and key management personnel
Registered Executive Management Key management personnel1)2023 2022 2023 2022 DKKm DKKm DKKm DKKm Short-term staff benefits 62 39 157 129 Retirement benefits 4 4 13 14 Other social security costs - - 1 1 Equity- and cash-settled incentive programs 12 10 24 - Severance and other costs 36 - 40 21 Total 114 53 235 165
1) Key management personnel are defined as Registered Executive Management and people who report directly to the Registered Executive
Management.
Severance and other costs includes severance payment of DKK 33.6 million to former President and CEO
Deborah Dunsire who left Lundbeck by the end of August 2023 and an extraordinary sign-on compensation of
DKK 2.5 million to Charl Van Zyl, who joined Lundbeck in September 2023 as new CEO, for lost incentives
from his previous employer. The compensation is earned over the period 2024-2026 up to a total of DKK 22.2
million before taxes and subject to certain conditions. In addition, a severance payment to another former
member of Executive Management (not part of the Registered Executive Management) was paid in the amount
of DKK 4.1 million.
Remuneration of the Board of Directors
The total remuneration of the Board of Directors for 2023 amounted to DKK 9.6 million (DKK 9.0 million in
2022). The amount includes fees for participation in the Audit Committee of DKK 0.7 million (DKK 0.7 million
in 2022), the Remuneration Committee of DKK 0.7 million (DKK 0.7 million in 2022), the Scientific Committee
of DKK 1.1 million (DKK 0.9 million in 2022) and travel allowances of DKK 1.2 million (DKK 1.2 million in 2022)
for board members with permanent residence outside of Europe. The total remuneration of the chair of the
Board of Directors amounted to DKK 1.7 million (DKK 1.7 million in 2022). The total remuneration of the deputy
chair of the Board of Directors amounted to DKK 1.2 million (DKK 1.2 million in 2022). These amounts include
fees for participation in Board committees. The remuneration for 2023 is consistent with the remuneration
presented at the Annual General Meeting held on 21 March 2023.
The members of the Board of Directors held a total of 292,518 Lundbeck shares at 31 December 2023
(238,380 shares at 31 December 2022).
Note 3
60
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
4 FINANCIAL INCOME AND EXPENSES
2023 2022 DKKm DKKm Interest income from financial assets measured at amortized cost 86 22 Gain on other financial assets, measured at fair value through profit or loss 4 31 Fair value adjustment of contingent consideration 4 71 Financial income 94 124 Interest expenses from financial liabilities measured at amortized cost 43 96 Interest expenses relating to lease liabilities 11 7 Loss on other financial assets, measured at fair value through profit or loss 25 7 Fair value adjustment of contingent consideration 10 300 Exchange losses (net) 164 30 Other financial expenses 43 62 Financial expenses 296 502 Net financials, expenses 202 378
Fair value adjustment of contingent consideration for 2022 comprises DKK 278 million related to the increase
of the probability of success of milestone payments from 83.2% to 100% which occurred in the first quarter of
2022 following EMA approval.
5 INCOME TAXES
Tax on profit for the year
2023 2022 DKKm DKKm Current tax 520 356 Prior-year adjustments, current tax¹⁾7 (311) Prior-year adjustments, deferred tax¹⁾(23) 307 Change in deferred tax for the year 172 278 Change in deferred tax as a result of changed income tax rates 1 5 Total tax for the year 677 635 Tax for the year is composed of: Tax on profit for the year 703 558 Tax on other comprehensive income (27) 77 Tax on other transactions in equity 1 - Total tax for the year 677 635
1)
For 2022, movements from prior-year adjustments, deferred tax to prior-year adjustments, current tax, primarily relate to the utilization of tax
losses from prior years by jointly taxed companies not controlled by the Parent Company.
For a specification of tax on comprehensive income, see note 12 Equity.
Uncertain tax positions
The Group operates in a multinational tax environment. Complying with tax rules can be complex as the
interpretation of legislation and case law may not always be clear or may change over time. In addition, transfer
pricing disputes with tax authorities may occur. Management’s judgments are applied when estimating the
expected outcome of disputes or interpretational uncertainties. Provisions for uncertain tax positions are
determined by using the ‘most probable outcome’ or ‘single best estimate’-method depending on the type of
uncertainty.
In 2023, uncertain tax positions comprise a liability of DKK 521 million and an asset of DKK 52 million (a liability
of DKK 535 million and an asset of DKK 57 million in 2022). Management believes that the provision is
adequate. However, the actual obligation may differ from the provision made and depends on the outcome of
litigations and settlements with the relevant tax authorities.
Notes 4-5
61
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Management Review Consolidated Financial Statements Financial Statements of the Parent Company
5 INCOME TAXES – CONTINUED
Explanation of the Group’s effective tax rate
DKKm % 2023 Profit before tax 2,993 Calculated tax, 22% 658 22.0 Tax effect of: Differences in the income tax rates of foreign subsidiaries from the Danish corporate income tax rate 70 2.3 Non-deductible expenses/non-taxable income and other permanent differences 56 1.8 Research and development incentives (52) (1.7) Foreign-derived intangible income benefit (31) (1.0) Change in valuation of net tax assets 17 0.6 Change in deferred tax as a result of changed income tax rates 1 0.0 Prior-year tax adjustments etc., total effect on operations (16) (0.5) Effective tax/tax rate for the year 703 23.5
DKKm % 2022 Profit before tax 2,474 Calculated tax, 22% 544 22.0 Tax effect of: Differences in the income tax rates of foreign subsidiaries from the Danish corporate income tax rate 47 1.9 Non-deductible expenses/non-taxable income and other permanent differences 107 4.3 Research and development incentives (82) (3.3) Foreign-derived intangible income benefit (33) (1.3) Change in valuation of net tax assets (26) (1.0) Change in deferred tax as a result of changed income tax rates 5 0.2 Prior-year tax adjustments etc., total effect on operations (4) (0.2) Effective tax/tax rate for the year 558 22.6
Note 5
62
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
5 INCOME TAXES – CONTINUED
Deferred tax balances
Note 5
Effect of foreign Adjustment of Balance at exchange deferred tax at Movements Balance at 1 January differences beginning of year during the year 31 December Temporary differences between assets and liabilities as stated in the consolidated financial statements and in the tax base DKKm DKKm DKKm DKKm DKKm 2023 Intangible assets 13,902 (254) 3 (57) 13,594 Property, plant and equipment 679 (7) (2) (10) 660 Inventories (70) 14 8 44 (4) Provisions (1,772) 43 (217) (629) (2,575) Other items¹⁾(402) 40 55 (74) (381) Tax loss carryforwards etc. (3,543) 34 53 1,505 (1,951) Total temporary differences 8,794 (130) (100) 779 9,343 Deferred (tax assets)/tax liabilities 2,059 (32) (23) 174 2,178 Research and development incentives (137) 5 - (1) (133) Deferred (tax assets)/tax liabilities 1,922 (27) (23) 173 2,045 2022 Intangible assets 12,999 495 2 406 13,902 Property, plant and equipment 780 7 (5) (103) 679 Inventories (131) (2) 3 60 (70) Provisions (1,606) (45) (141) 20 (1,772) Other items¹⁾(634) (6) 33 205 (402) Tax loss carryforwards etc. (5,838) (109) 1,482 922 (3,543) Total temporary differences 5,570 340 1,374 1,510 8,794 Deferred (tax assets)/tax liabilities 1,342 86 307 324 2,059 Research and development incentives (87) (9) - (41) (137) Deferred (tax assets)/tax liabilities 1,255 77 307 283 1,922
1) Movements during the year include DKK 15 million (DKK 28 million in 2022) recognized in other comprehensive income.
63
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
5 INCOME TAXES – CONTINUED
Management estimates future income according to budgets, forecasts, business plans and initiatives
scheduled for the coming years supporting the recognition of deferred tax assets. When forecasting the
utilization of tax assets, the Group applies the same assumptions as for impairment testing. See note 6
Intangible assets.
Accordingly, at 31 December 2023, all deferred tax assets relating to tax losses carried forward in Denmark
from 2016, 2018 and 2021 were capitalized in the amount of DKK 314 million (DKK 509 million at 31 December
2022).
U.S. tax losses and tax credits stemming from acquisitions have been recognized at an amount of DKK 242
million (DKK 424 million in 2022), equaling the expected utilization within a foreseeable future, whereas an
amount of DKK 15 million (DKK 15 million in 2022) has not been recognized in the balance sheet.
Global minimum top-up tax (Pillar II)
The Group operates in Denmark, which has enacted new legislation to implement the global minimum top-up
tax. The Group expects to be subject to the top-up tax in relation to its operations in Hong Kong, where a two-
tiered tax rate regime results in an effective tax rate of approximately 12.5%, and in Panama, where income
from foreign jurisdictions is not subject to tax, thus reducing the effective tax rate to below 15%.
However, since the newly enacted tax legislation in Denmark is only effective from 1 January 2024, there is no
current tax impact for the year ended 31 December 2023.
The Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the top-
up tax and accounts for it as a tax payable when incurred, see note 1.7 Changes in material accounting policy
information. If the top-up tax had been applied in 2023, the tax on profits relating to the Group’s operations in
the countries subject to top-up tax would have had an insignificant impact.
Unrecognized deferred tax assets 2023 2022 DKKm DKKm Unrecognized deferred tax assets at 1 January 76 102 Additions 20 18 Recognized (3) (44) Unrecognized deferred tax assets at 31 December 93 76
Unrecognized deferred tax assets primarily relate to net operating losses and tax credits not expected to be
utilized within the foreseeable future.
Note 5
2023 2023 2023 2022 2022 2022 Deferred tax Deferred tax Deferred tax Deferred tax assets liabilities Net assets liabilities Net Deferred (tax assets)/tax liabilities DKKm DKKm DKKm DKKm DKKm DKKm Intangible assets (95) 3,274 3,179 (99) 3,364 3,265 Property, plant and equipment (8) 159 151 (6) 163 157 Inventories (89) 76 (13) (86) 58 (28) Provisions (613) - (613) (423) - (423) Other items (164) 61 (103) (186) 71 (115) Tax loss carryforwards etc. (423) - (423) (797) - (797) Research and development incentives (133) - (133) (137) - (137) Deferred (tax assets)/tax liabilities (1,525) 3,570 2,045 (1,734) 3,656 1,922 Offset within legal tax entities and jurisdictions 1,287 (1,287)- 1,504 (1,504)- Total net deferred (tax assets)/tax liabilities (238) 2,283 2,045 (230) 2,152 1,922
64
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
6 INTANGIBLE ASSETS
Total Product Other Projects in intangible Goodwill rights¹⁾ rights²⁾ progress²⁾ assets Intangible assets DKKm DKKm DKKm DKKm DKKm 2023 Cost at 1 January 5,667 32,719 1,836 131 40,353 Effect of foreign exchange differences (160)(499)(3)- (662)Transfers - - 39 (39)- Additions - 112 6 106 224 Disposals - - (20)- (20)Cost at 31 December 5,507 32,332 1,858 198 39,895 Amortization and impairment losses at 1 January - 16,130 1,723 - 17,853 Effect of foreign exchange differences - (260)(4)- (264)Amortization - 1,559 60 - 1,619 Disposals - - (5)- (5)Amortization and impairment losses at 31 December - 17,429 1,774 - 19,203 Carrying amount at 31 December 5,507 14,903 84 198 20,692
1) In 2023, product rights not yet commercialized amounted to DKK 1,973
million (DKK 1,973 million in 2022).
2) Other rights and projects in progress include items such as the IT system SAP.
In 2023, Abilify Maintena
®
achieved a sales milestone of EUR 300 million triggering the recognition of an
addition in the product rights of Abilify Maintena
®
of DKK 112 million (EUR 15 million). The milestone has been
paid in 2023.
Total Product Other Projects in intangible Goodwill rights¹⁾ rights²⁾ progress²⁾ assets Intangible assets DKKm DKKm DKKm DKKm DKKm 2022 Cost at 1 January 5,377 31,474 1,839 133 38,823 Effect of foreign exchange differences 290 886 7 1 1,184 Transfers - - 57 (57)- Additions - 359 16 74 449 Disposals - - (83)(20)(103)Cost at 31 December 5,667 32,719 1,836 131 40,353 Amortization and impairment losses at 1 January - 14,377 1,696 - 16,073 Effect of foreign exchange differences - 382 7 - 389 Amortization - 1,371 63 - 1,434 Disposals - - (43)- (43)Amortization and impairment losses at 31 December - 16,130 1,723 - 17,853 Carrying amount at 31 December 5,667 16,589 113 131 22,500
In November 2022, Rexulti
®
achieved a sales milestone of USD 1 billion triggering the recognition of an addition
in the product rights of Rexulti
®
of DKK 359 million (USD 50 million). The milestone was paid in the first quarter
of 2023.
Note 6
65
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
6 INTANGIBLE ASSETS - CONTINUED
Description of material product rights
Vyepti
®
The eptinezumab product rights (Vyepti
®
), which is an investigational monoclonal antibody (mAb) for migraine
prevention targeting the calcitonin gene-related peptide (CGRP), were acquired in 2019. The value of the
product rights was DKK 13,421 million at the time of acquisition. At 31 December 2023, the carrying amount,
net of amortization, was DKK 10,667 million (DKK 11,840 million at 31 December 2022). The remaining
amortization period of the Vyepti
®
product rights is around 12 years.
Rexulti
®
Rexulti
®
is a prescription medication used as an adjunctive therapy to antidepressants for the treatment of MDD
and as a treatment for adults with schizophrenia in certain markets. Rexulti
®
is co-marketed in a partnership
collaboration with Otsuka Pharmaceuticals Co., Ltd. The total carrying amount of the Rexulti
®
product rights
amounted to DKK 2,143 million, net of amortization, at 31 December 2023 (DKK 2,524 million at 31 December
2022). The remaining amortization period of the Rexulti
®
product rights is around six years.
Family of MAGLi compounds
A family of compounds; a first-in-class, small-molecule inhibitor of monoacylglycerol lipase (MAGLi/MGLL)
currently being investigated in clinical trials for the treatment of neurological disorders, and various compounds
in the pre-clinical phase, was acquired in 2019. The value of the family of compounds recognized as product
rights was DKK 1,853 million at the time of acquisition. At 31 December 2023, the carrying amount was DKK
1,871 million (DKK 1,871 million at 31 December 2022). The family of compounds is not yet commercialized,
consequently amortization has not commenced.
Amortization and impairment losses
Amortization and impairment losses for the year are included in the following functions in the statement of profit
or loss:
2023 2022 Amortization and impairment losses DKKm DKKm Cost of sales 1,593 1,395 Sales and distribution costs 14 16 Administrative expenses 5 3 Research and development costs 23 33 Total 1,635 1,447
Impairment testing
Goodwill
The Group is considered a single cash-generating unit (CGU) as this is how Management makes decisions
and assesses business performance. All subsidiaries are considered fully integrated into the Group as no entity
has a significant independent or separately identifiable inflow of cash. Most cash inflows are based on the
output from research and development activities performed by headquarters on behalf of the entire Group.
Accordingly, an impairment test is performed annually based on Lundbeck being one single CGU.
Product rights
In addition to the impairment test for goodwill (based on the CGU), the Group performs impairment tests of
product rights not yet commercialized and for product rights available for use, in case a significant indication of
impairment is identified.
Methodology
Goodwill
In the impairment test of the CGU, based on the fair value less cost of disposal, the market price of Lundbeck
is compared with its carrying amount.
Product rights
In the impairment tests of product rights, based on the value-in-use, the discounted expected future cash flows
for the specific asset tested are compared with the carrying amount of the intangible asset. The expected future
cash flows are based on a forecast period, which is the period used by Management for decision-making, with
due consideration of patent expiry.
The assumptions used in the impairment test are based on benchmarked external data and historical trends.
The key parameters in the calculation of the value-in-use are revenue, earnings, working capital, discount rate
and the preconditions for the cash flow period.
Significant assumptions and estimates are applied to the discounted expected future cash flows from the
product rights.
Note 6
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6 INTANGIBLE ASSETS - CONTINUED
The four category elements in the table below are considered when determining the key parameters for the
value-in-use calculation.
Financial elements Market elements PricesHealthcare reformsRebates Price reforms QuantitiesMarket accessPatient population Pharma restrictions Market sharesLaunch successCompetition Product positioning Fill ratesCompeting pharmaceuticalsPrescription rates Generics on the market Lundbeck costs (including promotion costs)R&D elements Other elements R&D spend Supply chain effectiveness CollaborationsStrength and abilities of partnersPipeline success rate Product labelingLiaison with regulatory bodies
The assumptions are based on experience, external source of information and industry-relevant observations
for each product right.
The calculation of the value-in-use for product rights is based on a weighted average discount rate pre-tax of
8.64% (9.36% in 2022).
2023 testing outcome
The impairment tests performed in 2023 did not result in the recognition of any impairment loss.
2022 testing outcome
The impairment tests performed in 2022 did not result in the recognition of any impairment loss.
Impact of possible changes in key assumptions (product rights not yet commercialized)
If the budgeted revenue had been 5% lower than Management's estimates, the headroom would have
continued to be positive. If the discount rate after tax applied to cash flows had been 0.5% higher, the headroom
would have continued to be positive.
The sensitivity analyses are based on a change in an assumption while holding all other assumptions constant.
The method and types of assumptions used in preparing the sensitivity analyses did not change compared to
the prior period. The potential changes in key assumptions are considered within historic variations
experienced by the Group and thus considered reasonably possible.
7 PROPERTY, PLANT AND EQUIPMENT
Other fixtures Prepayments Total and fittings, and assets property, Land and Plant and tools and under plant and buildings¹⁾ machinery equipment construction equipment Property, plant and equipment DKKm DKKm DKKm DKKm DKKm 2023 Cost at 1 January 3,685 2,049 849 706 7,289 Effect of foreign exchange differences 1 - (5)- (4)Transfers 130 60 59 (249)- Additions 13 54 32 178 277 Disposals - (28)(23)- (51)Cost at 31 December 3,829 2,135 912 635 7,511 Depreciation and impairment losses at 1 January 2,449 1,614 711 - 4,774 Effect of foreign exchange differences 1 - (3)- (2)Depreciation 120 108 61 - 289 Disposals - (28)(21)- (49)Depreciation and impairment losses at 31 December 2,570 1,694 748 - 5,012 Carrying amount at 31 December 1,259 441 164 635 2,499
1) No land and buildings were mortgaged at 31 December 2023 and at 31 December 2022.
Notes 6-7
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7 PROPERTY, PLANT AND EQUIPMENT - CONTINUED
Other fixtures Prepayments Total and fittings, and assets property, Land and Plant and tools and under plant and buildings machinery equipment construction equipment Property, plant and equipment DKKm DKKm DKKm DKKm DKKm 2022 Cost at 1 January 3,537 2,050 844 612 7,043 Effect of foreign exchange differences - 2 2 -4 Transfers 159 46 20 (225)- Additions 9 28 11 323 371 Disposals (20)(77)(28)(4)(129)Cost at 31 December 3,685 2,049 849 706 7,289 Depreciation and impairment losses at 1 January 2,358 1,583 679 - 4,620 Effect of foreign exchange differences (1) 1 - - - Depreciation 108 105 57 - 270 Impairment losses 3 1 - - 4 Disposals (19)(76)(25)- (120)Depreciation and impairment losses at 31 December 2,449 1,614 711 - 4,774 Carrying amount at 31 December 1,236 435 138 706 2,515
Depreciation and impairment losses
Depreciation and impairment losses for the year are included in the following functions in the statement
of profit or loss:
2023 2022 Depreciation and impairment losses DKKm DKKm Cost of sales 212 194 Sales and distribution costs 23 27 Administrative expenses 11 10 Research and development costs 41 44 Total 287 275
8 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
2023 2022 Land and buildings DKKm DKKm Cost at 1 January 731705 Effect of foreign exchange differences (12)6 Additions 15 13 Disposals (15)(9)Adjustment to right-of-use assets during the year¹⁾ 37 16 Cost at 31 December 756 731 Depreciation and impairment losses at 1 January 304 221 Effect of foreign exchange differences (7) 1 Depreciation 90 89 Disposals (13) (7) Depreciation and impairment losses at 31 December 374 304 Carrying amount at 31 December 382 427 1) Comprises reassessment of lease terms and renewal of lease agreements. 2023 2022 Amounts recognized in profit or loss DKKm DKKm Expenses relating to short-term leases, not capitalized 1 2 Depreciation of right-of-use assets, land and buildings 90 89 Interest expenses relating to lease liabilities 11 7Total recognized in profit or loss 102 98
Notes 7-8
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8 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES - CONTINUED
Balance at Non-cash Balance at 1 January Cash outflow flow 31 December Development in lease liabilities DKKm DKKm DKKm DKKm 2023 Lease liabilities 483 (89)43 437 Total lease liabilities 483 (89) 43 437 2022 Lease liabilities 539 (93) 37 483 Total lease liabilities 539 (93) 37 483 2023 2022 DKKm DKKm Current lease liabilities 86 88 Non-current lease liabilities 351 395 Total lease liabilities 437 483
The total cash outflow from recognized lease agreements amounted to DKK 100 million (DKK 100 million in
2022) and includes repayment of lease liabilities and interest.
The maturity analysis of lease liabilities is provided in the table ‘Classification of and contractual maturity dates
for financial assets and financial liabilities’ in note 19 Financial instruments.
9 INVENTORIES
2023 2022 DKKm DKKm Raw materials and consumables 214 209 Work in progress 2,580 2,207 Finished goods and goods for resale 1,633 1,557 Prepayments - 73 Total 4,427 4,046
Inventories recognized as cost of sales amounted to DKK 2,919 million (DKK 2,581 million in 2022).
Inventories have been reduced by DKK 470 million (DKK 236 million in 2022) as a result of the write-down to
net realizable value in the year. Out of the total, DKK 312 million (DKK 228 million in 2022) relates to a Vyepti
provision for obsolescence recognized in Cost of sales in the year as a consequence of a fixed batch quantity
supply agreement effective for five years up to 30 June 2023, which was acquired as part of the acquisition of
Alder BioPharmaceuticals Inc. in 2019, a planned transition of the antibody cell line, higher than originally
expected production yields and a slower launch ramp-up as a consequence of the pandemic. Management’s
estimate takes into consideration assumptions on inventory-estimated usage, approval dates, expected shelf
life, etc. Total balance of Vyepti provision for obsolescence is DKK 540 million (DKK 228 million in 2022).
Inventories of DKK 2,277 million (DKK 1,651 million in 2022) are expected to be recovered after more than 12
months, mostly due to the Vyepti fixed batch quantity supply agreement.
10 TRADE RECEIVABLES
2023 2022 DKKm DKKm Trade receivables 2,990 2,733 Write-downs (25) (24) Trade receivables, net 2,965 2,709
Credit risks
Lundbeck’s products are sold primarily to distributors of pharmaceuticals, pharmacies and hospitals. The
payment conditions for the customers, including credit periods and any payment of interest in case of non-
payment, vary, but are always based on industry practice in the relevant market. Due to special trading
conditions in specific markets, the credit period may be up to about 200 days and for one customer 360 days.
The weighted average credit period is approximately 50 days.
Changes to the Group’s customer portfolio are limited. When collaboration is established with a new customer,
credit assessment is done either by Lundbeck or an external credit rating agency. At the time of revenue
recognition, Lundbeck assesses the full lifetime-expected credit losses. In addition, undue and due receivables
are analyzed in an ongoing process. Based on the credit assessment, receivables analysis, historical and
industry experience, it is estimated whether the receivables are recoverable, or write-downs are needed.
Historically, losses on debtors have been insignificant.
Notes 8-10
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10 TRADE RECEIVABLES - CONTINUED
Fluctuations in foreign exchange rates, including the impact from currency devaluations, represent an inherent
risk as Lundbeck also operates in volatile economies. Lundbeck monitors and takes action to mitigate risks
associated with receivables.
Market risks
The pharmaceutical market is characterized by authorities aiming to reduce or cap healthcare costs in general.
Market changes, such as price reductions and the ever-earlier launch of generics, may have a considerable
impact on the earnings potential of pharmaceuticals.
11 CASH RESOURCES
1)2023 2022DKKm DKKm Cash and bank balances 5,010 3,548
1) In 2022, cash and bank balances included DKK 127 million which was held as restricted cash.
Liquidity risk and capital structure
The credit risk on cash and bank balances and derivatives (forward exchange contracts, currency options and
interest rate swaps) is limited as Lundbeck only deals with banks with a solid credit rating. The counterparty
risk towards banks with a short-term credit rating lower than A-1 (Standard & Poor’s) is kept to a minimum,
only allowing balances necessary for operating needs within the immediate future. To further limit the risk of
loss, internal limits have been defined for the credit exposure accepted towards the banks with whom Lundbeck
collaborates. Credit lines are part of the Treasury Policy.
The Treasury Policy covers financial resources, foreign currency exposure, interest rate risk, securities, loan
and bond portfolios as well as capitalization of subsidiaries. The Treasury Policy is presented to the Audit
Committee annually for subsequent approval by the Board of Directors. In addition, the Board of Directors
approves the framework for selecting financial collaboration partners and the credit lines and types of
transactions allowed.
Pursuant to its Treasury Policy, Lundbeck must ensure that a minimum of DKK 1.0 billion is held in cash or
cash equivalents. If this amount is not available in cash, fixed-term deposits or bonds, Lundbeck will enter into
committed credit facilities with its banking partners.
In 2019, Lundbeck entered into a revolving credit facility (RCF) of EUR 1.5 billion with its strategic banks. The
RCF expires in 2026. The flexible structure of the RCF enables Lundbeck to repay the debt in full at short
notice, normally not more than three months, and still maintain the facility until expiration of the credit
commitment. The RCF is subject to covenants, and no breaches were encountered during the year.
At 31 December 2023, Lundbeck had unutilized committed credit facilities of DKK 11.2 billion.
In addition, Lundbeck has a number of uncommitted credit facilities to cover its day-to-day operations. At 31
December 2023 and 31 December 2022, these credit facilities were unutilized.
In October 2020, Lundbeck issued a seven-year eurobond in the amount of EUR 500 million with a fixed
coupon of 0.875%. The bond was issued under Lundbeck´s euro medium-term note (EMTN) program of EUR
2 billion.
When managing the capital structure, Lundbeck’s main objective is to support the ‘Expand and Invest to Grow’
strategy; use capital resources for required research and development and for investments to realize the
strategy; and to generate long-term attractive return for the shareholders. Lundbeck also wishes to be a strong
financial counterparty to debt providers and other stakeholders by maintaining an investment grade credit rating
(BBB-).
To maintain or adjust the capital structure, Lundbeck may adjust dividends paid to shareholders, return capital
to shareholders, issue new shares, sell assets to reduce debt or increase debt. To minimize the refinancing
risk, Lundbeck strives to have diversified funding, both in terms of duration and source.
Lundbeck defines capital as total equity and net interest-bearing debt (see notes 17 Bank debt, bond debt and
borrowings and 8 Right-of-use assets and lease liabilities) and after deducting cash resources. At 31 December
2023, total equity amounted to DKK 22,045 million (DKK 20,779 million at 31 December 2022).
As of 31 December 2023, the net cash position was DKK 711 million, compared to a net debt position of DKK
2,183 million at 31 December 2022.
Notes 10-11
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12 EQUITY
Share capital
On 8 June 2022, a share split of Lundbeck’s existing shares was approved at an extraordinary general meeting.
The approval entailed that each existing Lundbeck share with a nominal value of DKK 5 was split into one A-
share with a nominal value of DKK 1 and four B-shares, each with a nominal value of DKK 1. The A-share is
carrying ten votes, and the B-share is carrying one vote. The A-shares and the B-shares are ordinary, fully paid
shares carrying equal economic rights in all respects.
Share capital
2023 2022 Share capital DKKm DKKm At 1 January 996 996 At 31 December 996 996 A-shares B-shares Total issued shares Issued shares Number Number Number At 1 January 2022 199,148,222 796,592,888 995,741,110 At 31 December 2022 199,148,222 796,592,888 995,741,110 At 31 December 2023 199,148,222 796,592,888 995,741,110
Treasury shares
A-shares of B-shares of Nominal Proportion of DKK 1 nom. DKK 1 nom. value share capital Cost Treasury shares Number Number DKKm % DKKm 2023 Shareholding at 1 January 580,280 2,321,120 3 0.29 120 Share buyback - 1,400,000 1 0.14 43 Shares used for funding incentive programs (114,252)(457,008)(1)(0.06)(30)Shareholding at 31 December 466,028 3,264,112 3 0.37 133 2022 Shareholding at 1 January 502,115 2,008,460 3 0.25 138 Share buyback 282,000 1,128,000 1 0.14 45 Shares used for funding incentive programs (203,835)(815,340)(1)(0.10)(63)Shareholding at 31 December 580,280 2,321,120 3 0.29 120
In 2023, the Parent Company acquired treasury shares at a value of DKK 43 million (DKK 45 million in 2022),
corresponding to 1,400,000 B-shares (282,000 A-shares and 1,128,000 B-shares in 2022). The shares were
acquired to fund Lundbeck’s long-term share-based incentive programs. A total of 114,252 A-shares and
457,008 B-shares were used for this purpose in 2023 (203,835 A-shares and 815,340 B-shares in 2022).
The Board of Directors is authorized to issue new shares and raise the share capital of the Parent Company
as set out in article 4 of the Parent Company’s Articles of Association.
The share capital is following the capital requirements of the Danish Companies Act and the rules of Nasdaq
Copenhagen.
Distribution of profit
The Board of Directors is proposing distribution of dividends for 2023 of 30% (30% in 2022) of the net profit for
the year allocated to the shareholders, equivalent to DKK 0.70 per share (DKK 0.58 per share in 2022) or DKK
697 million (DKK 578 million in 2022), inclusive of dividends on treasury shares. Total dividends are based on
the current share capital.
Earnings per share
2023 2022 Profit for the year (DKKm) 2,290 1,916 Average number of shares (‘000 shares) 995,741 995,741 Average number of treasury shares (‘000 shares) (3,506) (2,874) Average number of shares, excl. treasury shares (‘000 shares) 992,235 992,867 Earnings per share, basic (EPS) (DKK) 2.31 1.93 Earnings per share, diluted (DEPS) (DKK) 2.31 1.93
Note 12
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12 EQUITY - CONTINUED
Tax on other comprehensive income
Before tax Tax After tax DKKm DKKm DKKm 2023 Other comprehensive income recognized under foreign currency translation reserve in the statement of changes in equity Exchange rate gains/losses on investments in foreign subsidiaries (336) - (336) Exchange rate gains/losses on additions to net investments in foreign subsidiaries (7) 1 (6) Hedging of net investments in foreign subsidiaries 17 (4) 13 Total (326) (3) (329)
Other comprehensive income recognized under hedging reserve in the statement of changes in equity Deferred gains/losses on cash flow hedge, exchange rate 117 (26) 91 Deferred gains/losses on cash flow hedge, interest rate (21) 5 (16) Deferred gains/losses on cash flow hedge, price (78) 17 (61) Exchange gains/losses, hedging (transferred to revenue) (137) 30 (107) Total (119) 26 (93) Other comprehensive income recognized under retained earnings in the statement of changes in equity Actuarial gains/losses (24) 4 (20) Total (24) 4 (20) Recognized in other comprehensive income (469) 27 (442)
Before tax Tax After tax DKKm DKKm DKKm 2022 Other comprehensive income recognized under foreign currency translation reserve in the statement of changes in equity Exchange rate gains/losses on investments in foreign subsidiaries 670 - 670 Exchange rate gains/losses on additions to net investments in foreign subsidiaries 25 (4) 21 Hedging of net investments in foreign subsidiaries (163) 36 (127) Total 532 32 564 Other comprehensive income recognized under hedging reserve in the statement of changes in equity Deferred gains/losses on cash flow hedge, exchange rate (347) 76 (271) Deferred gains/losses on cash flow hedge, interest rate 39 (9) 30 Deferred gains/losses on cash flow hedge, price 128 (28) 100 Exchange gains/losses, hedging (transferred to revenue) 588 (129) 459 Total 408 (90) 318 Other comprehensive income recognized under retained earnings in the statement of changes in equity Actuarial gains/losses 134 (19) 115 Total 134 (19) 115 Recognized in other comprehensive income 1,074 (77) 997
Exchange rate gains/losses on investments in foreign subsidiaries, a loss of DKK 336 million (gain of DKK 670
million in 2022), and exchange rate gains/losses on additions to net investments in foreign subsidiaries, a loss
of DKK 7 million (gain of DKK 25 million in 2022), are primarily driven by developments in USD/DKK and
GBP/DKK exchange rates.
Note 12
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13 RETIREMENT BENEFIT OBLIGATIONS AND SIMILAR OBLIGATIONS
Defined contribution plans
The major defined contribution plans cover employees in Australia, Canada, China, Denmark, Finland, South
Korea, Sweden, the UK and the U.S. The cost of defined contribution plans, representing contributions to the
plans, amounted to DKK 269 million in 2023 (DKK 253 million in 2022).
Defined benefit plans
The Group has defined benefit plans in a few countries. The most significant plans comprise current and former
employees in Germany and the UK.
The defined benefit plan in Germany is unfunded and administered by Lundbeck Germany. The defined benefit
plan in the UK is funded and constituted under a trust, whose assets are legally separated from the Group.
Both plans entitle the employees to an annual pension on retirement based on the service and salary level until
retirement.
2023 2022 Retirement benefit obligations and similar obligations DKKm DKKm Present value of defined benefit plans 425 392 Fair value of plan assets (293) (277) Limitations due to asset ceiling - 3 Defined benefit plans at 31 December 132 118 Other obligations of a retirement benefit nature 31 38 Retirement benefit obligations and similar obligations at 31 December 163 156 Retirement benefit obligations and similar obligations break down as follows: Non-current assets (54)(58)Non-current obligations 216 213 Current obligations 1 1 Net retirement benefit obligations and similar obligations at 31 December 163 156
Actuarial assumptions
The following were the key actuarial assumptions at the reporting date.
2023 2022 Key assumptions for the most significant plans % % Discount rate 3.30-4.50 3.70-5.20 Inflation rate 2.25-3.05 2.35-3.65 Assumptions regarding future longevity are set based on actuarial advice in accordance with published statistics and experience in each country. The longevities underlying the values of the defined benefit obligation for the most significant plans were as follows: 2023 2022 Longevity at age 65 for current pensioners Years Years Female 23.90-24.20 24.00-24.20 Male 20.80-21.40 21.00-21.80 Longevity at age 65 for current members aged 45 Female 25.30-26.40 25.60-26.00 Male 22.60-23.50 23.00-23.10
Sensitivity analysis
The most significant assumptions used in the calculation of the obligation for defined benefit plans are discount
rate, inflation rate and mortality. The sensitivity of the defined benefit obligation to changes in the most
significant assumptions is shown below:
2023 2022 Effect in DKKm Increase¹⁾ Decrease¹⁾ Increase¹⁾ Decrease¹⁾ Discount rate (0.25% movement) 12 (13) 11 (12) Inflation rate (0.25% movement) (5) 5 (4) 4 Life expectancy (1 year movement) (15) 14 (14) 13
1) Positive amounts indicate a decrease in the actuarial obligations. Negative amounts indicate an increase in the actuarial
obligations
The sensitivity analysis indicates how a change in the individual assumptions would change the obligation.
However, the assumptions will most likely be correlated and consequently result in a different obligation.
Note 13
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13 RETIREMENT BENEFIT OBLIGATIONS AND SIMILAR OBLIGATIONS – CONTINUED
2023 2022 Fair value of plan assets DKKm DKKm Shares 100 99 Bonds 55 48 Property 38 35 Insurance contracts 65 67 Other assets 35 28 Total 293 277
Shares, bonds, property and other assets are measured at fair value based on quoted prices in an active
market. Insurance contracts are not based on quoted prices in an active market.
The amounts recognized in the balance sheet and the movements in the net defined benefit obligation over
the year are as follows.
2023 2022 Change in present value of defined benefit plans DKKm DKKm Present value of defined benefit plans at 1 January 392 539 Effect of foreign exchange differences 9 (7)Pension expenses 5 8 Interest expenses relating to the obligations 17 8 Experience adjustments (2)22 Adjustments relating to financial assumptions 25 (166)Adjustments relating to demographic assumptions (2)- Benefits paid (20)(14)Employee contributions 1 1 Other - 1 Present value of defined benefit plans at 31 December 425 392
2023 2022 Change in fair value of plan assets DKKm DKKm Fair value of plan assets at 1 January 277 285 Effect of foreign exchange differences 11 (8)Interest income on plan assets 14 5 Experience adjustments (6)(7)Administration fees (1)(1)Contributions 8 8 Benefits paid (11)(6)Employee contributions 1 1 Fair value of plan assets at 31 December 293 277
2023 2022 Net expense recognized in profit or loss DKKm DKKm Pension expenses 5 8 Finance costs 3 3 Administrative fees 1 1 Total 9 12 2023 2022 Amount recognized in other comprehensive income DKKm DKKm Actuarial (gains)/losses 24(134) 2023 2022 DKKm DKKm Realized return on plan assets 8 (2)
The benefit under unfunded defined benefit plans is paid directly by the Group. In some countries, the future
contribution to funded defined benefit plans depends on the development in salaries, administrative fees and
regular premiums, and in other countries on the surplus/deficit according to local requirements. The weighted
average duration of the obligation is 12 years (12 years in 2022). The expected contribution to defined benefit
plans for 2024 is DKK 16 million (DKK 15 million for 2023).
Other obligations of a retirement benefit nature
In 2023, an obligation of DKK 31 million (DKK 38 million in 2022) was recognized to cover other obligations of
a retirement benefit nature, which primarily include post-employment benefits in a number of subsidiaries.
These benefit payments are conditional upon specified requirements being met.
Note 13
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14 INCENTIVE PROGRAMS
To attract, retain and motivate key employees and align their interests with those of its shareholders, Lundbeck
has established a number of long-term incentive programs. Lundbeck uses equity- and cash-settled programs.
Equity-settled programs
As from 2023, the Group has established a performance share units (PSU) program in substitution for the
previous restricted share units (RSU) program for Lundbeck’s Registered Executive Management and key
employees, as part of Lundbeck’s recurring long-term incentive program. The general terms and conditions for
the PSU program are similar to those applying to the RSU program. In 2023, five of the members of the
Registered Executive Management and some key employees employed with the Group were granted PSUs.
The total number of options granted to the above-mentioned employees are disclosed below. The participants
were selected based on job level. All the PSUs and RSUs vest three years after grant. Vesting is subject to the
Board of Directors’ decision on vesting, to Lundbeck achieving certain strategic and financial targets specified
by the Board of Directors and to continuing employment with the Group during the vesting period. The fair
value of PSUs and RSUs has been calculated based on the share price reduced by an expected dividend yield
of 2.00% p.a. The fair value is disclosed below for each date of grant.
1)PSU and RSU programs2023 2022 2021 2020 2019 Number of people included in the program 166 176 139 135 139 Total number of PSUs/RSUs granted 1,738,514 1,592,060 801,365 695,595 639,495 Number of PSUs/RSUs granted to the Registered Executive Management 407,514 385,659 173,905 149,615 140,640 Vesting date 01.02.26 01.02.25 01.02.24 01.02.23 01.02.22 Fair value at the date of grant, DKK 28.29 28.43 47.24 51.68 53.94
1) The Group introduced a performance share units (PSU) program in 2023. Consequently, information for 2023 comprises details on PSUs and
information for 2019-2022 comprises details on RSUs.
Comparative figures for 2019 to 2021 have been restated to reflect the result of the share split completed on 8
June 2022.
Cash-settled programs
In 2023, the cash-settled programs consisted of performance cash units (PCUs) and restricted cash units
(RCUs). The cash-settled programs cannot be converted into shares as this program is settled in cash.
As from 2023, the Group has established a PCU program in substitution for the RCU program for a few key
employees in the subsidiaries. The general terms and conditions for the PCU program are similar to those
applying to the RCU program. At 31 December 2023, the PCUs granted to key employees totaled 39,152
PCUs (14,205 RCU for the 2022 program). All PCUs and RCUs will vest three years after the grant. Vesting is
subject to the Board of Directors’ decision on vesting, to Lundbeck achieving certain strategic and financial
targets specified by the Board of Directors and to continuing employment with the Group during the vesting
period. The size of the amount depends on the value of the Lundbeck share on the vesting date. The fair value
at the time of the initial grant was DKK 28.29 per PCU (DKK 28.43 per RCU for the 2022 program).
Fair value, liability and expense recognized in the statement of profit or loss
The PSUs/RSUs granted are recognized in profit or loss for 2023 and 2022 at an expense corresponding to
the fair value at the time of grant for the part of the vesting period attributable to each one. The total expense
recognized in respect of equity-settled programs amounted to DKK 36 million (DKK 30 million in 2022).
At 31 December 2023, the fair value of the remaining equity-settled programs was DKK 120 million (DKK 84
million at 31 December 2022).
The PCUs/RCUs granted are recognized in the statement of profit or loss at an expense corresponding to the
value adjustment for the year based on the performance of the Lundbeck share. The total expense recognized
in respect of cash-settled programs amounted to DKK 5 million (DKK 4 million in 2022) and covers all cash-
settled programs in force at 31 December 2023. At 31 December 2023, the total liability in respect of cash-
settled programs was DKK 1 million (DKK 10 million at 31 December 2022).
The total expense recognized in profit or loss for all incentive programs amounted to DKK 41 million in 2023
(DKK 34 million in 2022).
Note 14
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15 PROVISIONS
3)
Discounts Product Other 1)2)and rebatesreturnsprovisionsTotal DKKm DKKm DKKm DKKm 2023 Provisions at 1 January 890 146 286 1,322 Effect of foreign exchange differences (24)(6)(4)(34)Additional provisions recognized 1,629 86 309 2,024 Provisions used during the year (1,877)(20)(83)(1,980)Reversal of unused provisions - - (10)(10)Provisions at 31 December 618 206 498 1,322 Provisions break down as follows: Non-current provisions - 113 275 388 Current provisions 618 93 223 934 Provisions at 31 December 618 206 498 1,322
1) For discounts and rebates, the most significant sales deductions are in the U.S. and comprise discounts and rebates given in connection with
sales under the U.S. Federal and State Government Healthcare programs, primarily Medicaid.
2) For product returns, the Group has product return obligations normal for the industry. Management does not expect any major losses from
these obligations apart from the amount already recognized.
3) Other provisions comprise provisions relating to legal disputes, environmental provisions, obligations in relation to employee benefits,
restructuring provision, etc.
Discounts and rebates
Management’s estimate of discounts and rebates is based on a calculation which includes a combination of
historical product/population utilization mix, price increases, program/market growth and state-specific
information. Further, the calculation of rebates involves legal interpretation of relevant regulations and is subject
to changes in interpretive guidance from governmental authorities. The obligations for discounts and rebates
are incurred at the time the sale is recorded; however, the actual rebate related to a specific sale may be
invoiced by the authorities six to nine months later. In addition to this billing time lag, there is no statute of
limitations for states to submit rebate claims; thus, rebate adjustments in any particular period may relate to
sales from a prior period. Moreover, when a product loses exclusivity, shifts in payer mix may cause Medicaid
claims/estimates to be more volatile.
16 CONTINGENT ASSETS AND CONTINGENT LIABILITIES
Pending legal proceedings
Lundbeck is involved in a number of legal proceedings, including patent disputes and environmental matters,
the most significant of which are described below. Some of these involve significant amounts and are subject
to considerable uncertainty. Management continuously assesses the risks associated with the legal
proceedings, and their likely outcome. Management is of the opinion that, apart from items recognized in the
financial statements, the outcome of these legal proceedings and disputes are not probable or cannot be
reliably estimated in terms of amount or timing. Such proceedings may, however, develop over time, and new
proceedings may occur, in a way which could have a material impact on the Group’s financial position and/or
cash flows.
In June 2013, Lundbeck received the European Commission’s decision that agreements concluded with four
generic competitors concerning citalopram violated competition law. The decision included fining Lundbeck
EUR 93.8 million (approximately DKK 700 million). Lundbeck paid and expensed the fine in the third quarter
of 2013. In March 2021, the European Court of Justice rejected Lundbeck’s final appeal of the European
Commission’s decision. So-called ‘follow-on claims’ for reimbursement of alleged losses, resulting from
violation of competition law, often arise when decisions and fines issued by the European Commission are
upheld by the European Court of Justice. The below mentioned ‘follow-on claims’ are ongoing or threatened.
Lundbeck disagrees with all claims and intends to defend itself against them.
At the end of first quarter 2023, the UK health authorities served their claim form on Lundbeck and several
generic companies, and Lundbeck filed its defense in the third quarter of 2023. In September 2023, a Case
Management Conference was held, at which the Competition Appeal Tribunal approved an application for a
preliminary issue hearing on whether the claim is time-barred. The preliminary issue hearing is expected to be
held in the second quarter of 2024 and a ruling on time-barring is expected in 2024.
In late October 2021, Lundbeck received a writ of summons from a German health-care company claiming
compensation for an alleged loss of profit plus interest payments, allegedly resulting from Lundbeck’s
conclusion of agreements with two of the four generic competitors, which were comprised by the EU Court of
Justice ruling. Lundbeck filed its first defense in May 2022, and the parties have subsequently exchanged
additional pleadings. The first instance court hearing has been postponed to the first quarter of 2024. It may
take several years before a final conclusion is reached by the German courts.
Lundbeck has been informed about potential claims in a number of other European countries, however, it is
still uncertain whether the potential claims will be actively pursued.
Notes 15-16
76
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16 CONTINGENT ASSETS AND CONTINGENT LIABILITIES - CONTINUED
In Canada, Lundbeck is involved in three product liability class-action lawsuits relating to Cipralex
®
/Celexa
®
(two cases alleging various Celexa-induced birth defects and one case against several SSRI manufacturers
(incl. Lundbeck) alleging that SSRI (Celexa
®
/Lexapro
®
) induces autism birth defect), three relating to Abilify
Maintena
®
(alleging i.a. failure to warn about compulsive behavior side effects) and one relating to Rexulti
®
(also alleging i.a. failure to warn about compulsive behavior side effects). The cases are in the preliminary
stages and as such there is significant uncertainty as to how these lawsuits will be resolved. Lundbeck strongly
disagrees with the claims.
In 2018, Lundbeck entered into settlements with three of four generic companies involved in an Australian
federal court case, in which Lundbeck was pursuing patent infringement and damages claims over the sale of
escitalopram products in Australia. Lundbeck received AUD 51.7 million (DKK 242 million) in 2018. Lundbeck’s
case against the last of the four generic companies, Sandoz Pty Ltd, went up to the High Court of Australia,
who has now decided that Sandoz Pty Ltd infringed Lundbeck’s escitalopram patent between 2009 and 2012.
The High Court has now sent the case back to the first instance court for recalculation of the damages awarded
to Lundbeck in first instance which amounted to AUD 26.3 million (DKK 121 million). In the meantime,
Lundbeck’s appeal of the Australian Patent Office’s decision to grant Sandoz a license will be heard on 24
August 2024, and if a license is maintained in any form, the first instance court will have to decide if such a
license can have impact on the damage awarded by the High Court.
Together with Takeda, Lundbeck instituted patent infringement proceedings against 16 generic companies in
response to their filing of Abbreviated New Drug Applications (“ANDAs”) with the FDA seeking to obtain
marketing approval for generic versions of Trintellix
®
in the U.S. Two opponents have since withdrawn and
Lundbeck has settled with eight opponents. As communicated by Lundbeck in company release no. 706 dated
1 October 2021, the cases against the six remaining opponents (the “ANDA Filers”) have been decided by the
U.S. District Court for the District of Delaware (the ‘Court’). The Court found that Lundbeck’s compound patent
(U.S. Patent No. 7,144,884) is valid. The compound patent expires 17 December 2026. Assuming the ruling is
confirmed at appeal, final approval will not be granted to the relevant ANDA Filers until after expiration of the
compound patent, including any extension or additional periods of exclusivity. A total of seven other patents
asserted at trial were found by the Court to be valid, or their validity was not challenged during the trial. The
Court decided that none of the seven other patents was infringed by the relevant ANDA Filers, except that
Lupin was found to infringe a patent covering Lundbeck’s process for manufacturing Trintellix. The patents
found not infringed by a particular ANDA Filer will not prevent that ANDA Filer from receiving final approval.
For details on each of the patents comprised by the case, please see company release no. 706. The U.S.
Court of Appeals for the Federal Circuit has affirmed the District Court decision on 7 December 2023, which is
now final.
Lundbeck and Otsuka have received a Paragraph IV certification from Mylan Pharmaceuticals with respect to
certain of the patent listed for Abilify Maintena
®
in the U.S., and Lundbeck and Otsuka have instituted patent
infringement proceedings against Mylan and Viatris Inc. The FDA cannot grant marketing authorization in the
U.S. to Mylan or Viatris Inc. before the patents expire unless they receive a decision in their favor. The trial has
been re-scheduled to start on 17 June 2024 and a District Court decision is currently expected by October
2024. Abilify Maintena
®
is covered by several U.S. patents relating to specific forms of the active ingredient,
formulations, processes, devices, indications and methods of use, which will expire in different years, with the
latest patent expiry date in the U.S. being in 2034.
Lundbeck received a Civil Investigative Demand (“CID”) from the U.S. Department of Justice (“DOJ”) in March
2020. The CID seeks information regarding the sales, marketing, and promotion (including the promotional
speaker program) of Trintellix
®
. Lundbeck is cooperating with the DOJ.
1)
In June 2022 in the U.S., several entities, created for the purpose of receiving assignment of claims from payors
providing health insurance coverage pursuant to Medicare Parts C and D and Medicaid, filed a complaint
against Lundbeck and others. The complaint alleges that Lundbeck and the other defendants conspired to
increase the unit price and quantity dispensed of Xenazine
®
. The case was dismissed with prejudice earlier in
2023 and is currently under appeal.
1)
In June 2023 in the U.S., Humana Inc., an insurer, filed a complaint against Lundbeck U.S. legal entities. The
complaint alleges that Lundbeck engaged in an illegal kickback scheme to increase the sales and sale price
of Lundbeck’s Xenazine
®
. The complaint alleges that Lundbeck’s activities targeted Humana Inc. and other
private Medicare insurers who were forced to bear the costs of the alleged illegally subsidized drug sales.
Lundbeck denies the allegations in the complaint and intends to defend itself.
1)
1) Legal case not related to the Parent Company.
Joint taxation
H. Lundbeck A/S and Danish subsidiaries are part of a Danish joint taxation scheme with Lundbeckfonden
(Lundbeckfond Invest A/S including subsidiaries of Lundbeckfond Invest A/S), according to which the Company
partly has a joint and several liability and partly a secondary liability with respect to corporate income taxes etc.
for the jointly taxed companies. In addition, H. Lundbeck A/S partly has a joint and several liability and partly a
secondary liability with respect to any obligations to withhold tax on interest, royalties and dividends for these
companies. However, in both cases the secondary liability is capped at an amount equal to the share of the
capital of the Company directly or indirectly owned by the ultimate Parent Company. The total tax obligation
under the joint taxation scheme is shown in the financial statements of Lundbeckfond Invest A/S.
Note 16
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17 BANK DEBT, BOND DEBT AND BORROWINGS
2023 2022 Bank debt and bond debt maturing within below periods from the balance sheet date DKKm DKKm Between one and five years 3,714 5,096 Bank debt and bond debt at 31 December 3,714 5,096 Bank debt and bond debt break down as follows: Non-current bank debt and bond debt 3,714 5,096 Bank debt and bond debt at 31 December 3,714 5,096
For maturity analysis of loans, see note 19 Financial instruments.
Weighted average Expiry of Fixed/ effective Amortized Nominal Fair Currency commitment floating interest rate cost value value % DKKm DKKm DKKm 2023 Issued bonds EUR Oct 2027 Fixed 0.88 3,714 3,727 3,385 Total 3,714 3,727 3,385 2022 Bank loan USD Jun 2026 Floating 5.09 1,393 1,393 1,393 Issued bonds EUR Oct 2027 Fixed 0.88 3,703 3,718 3,155 Total 5,096 5,111 4,548
The eurobond is issued with a fixed coupon until October 2027.
Amortized cost is calculated as the proceeds received less instalments paid, plus or minus amortization of
capital gains or losses.
Development in bank debt, bond debt and borrowings
Balance at Non-cash Balance at 1 January Cash inflow Cash outflow flow¹⁾ 31 December Development in bank debt, bond debt and borrowings DKKm DKKm DKKm DKKm DKKm 2023 Bank loans 1,393 - (1,377)(16) - Issued bonds 3,703 - - 11 3,714 Total bank debt and bond debt 5,096 - (1,377) (5) 3,714 2022 Bank loans 1,083 1,234 (1,086)162 1,393 Issued bonds 3,700 - - 3 3,703 Total bank debt and bond debt 4,783 1,234 (1,086) 165 5,096
1) Non-cash flow comprises development in the exchange rates and amortizations.
18 OTHER PAYABLES
2023 2022 DKKm DKKm Contingent consideration 338 344 Other payables 82 84 Non-current payables 420 428 Employee costs payable 985 855 Milestone payable - 359 Debt with public authorities 236 185 Financial instruments 51 204 Other 716 589 Current payables 1,988 2,192
Notes 17-18
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18 OTHER PAYABLES - CONTINUED
Contingent consideration recognized through acquisitions
As part of the acquisition of Alder BioPharmaceuticals, Inc. (subsequently renamed Lundbeck Seattle
BioPharmaceuticals, Inc.), Lundbeck has recognized a sales milestone dependent on predefined milestones
being reached. At 31 December 2023, the fair value of the sales milestone amounted to DKK 306 million (DKK
306 million at 31 December 2022).
As part of the acquisition of Abide Therapeutics, Inc., (subsequently renamed Lundbeck La Jolla Research
Center, Inc.), Lundbeck has recognized a payable related to sales milestones dependent on predefined
milestones being reached. At 31 December 2023, the fair value of the contingent consideration amounted to
DKK 32 million (DKK 38 million at 31 December 2022).
Contingent considerations are recognized at fair value. The calculation of the fair value is based on the
discounted cash flow method (DCF method) which comprises significant assumptions and estimates. Expected
timing of payment (using a specific discount rate) and probability of success are key inputs to the fair value of
the contingent considerations.
The fair value adjustment of all contingent considerations amounted to a net loss of DKK 6 million, being DKK
10 million of financial expenses and DKK 4 million of financial income.
19 FINANCIAL INSTRUMENTS
Market risks
Credit risks
Credit risks are predominantly associated with Trade receivables and Cash and bank balances. The structure,
policies and the approach established by the Group to manage and monitor those risks are disclosed in notes
10 Trade receivables and 11 Cash resources.
Foreign currency risks
Foreign currency management is handled centrally by the Parent Company. Currency management focuses
on risk mitigation and is carried out in conformity with the Group's Treasury Policy, as approved by the Board
of Directors. The overall objective is to assess and mitigate foreign currency risks to protect Lundbeck against
impacts from changing conditions in the foreign exchange markets. Foreign currency risks managed by
derivatives and loans in 2023 comprise cash flow risk in several currencies and USD translation risk emanating
from net investments in foreign subsidiaries.
The Parent Company hedges part of the Group’s anticipated revenue in selected currencies for a period of 12-
18 months, using forward exchange contracts and currency options. The majority of foreign currency risk arises
from USD, CAD, CNY and KRW. Hedging is performed on a rolling basis each month. The forward exchange
contracts and currency options are classified as hedging instruments when meeting the accounting criteria for
hedge accounting according to IFRS 9 Financial Instruments. Unhedged cash flows are sold spot. Changes in
the fair value of all instruments meeting the criteria for hedge accounting are recognized in the statement of
comprehensive income as they arise, together with the forward points and option premiums. At maturity of the
hedge contracts, the final effect is transferred from other comprehensive income and recognized in the profit
or loss or balance sheet together with the hedged item.
Forward exchange contracts and currency options that do not meet the hedge accounting criteria are classified
as trading contracts, and changes in the fair value are recognized under financial income or financial expenses
as they arise.
Cash flow timing and changes to the forecasted amounts are the main sources for evaluating the risk of hedge
ineffectiveness. When concluding a hedge transaction, and each time presenting the financial statements
thereafter, it is assessed whether the hedged exposure and the hedging instrument are still financially
correlated. If the hedged cash flows are no longer expected to be realized, the accumulated value change is
transferred to financial income or financial expenses.
Lundbeck did not have any hedge ineffectiveness in 2023 or 2022.
Net foreign exchange contracts, trading
There were no outstanding forward exchange contracts relating to trading at 31 December 2023 and no
material impact from trading contracts was recognized in financial income or financial expenses in 2023.
Notes 18-19
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19 FINANCIAL INSTRUMENTS - CONTINUED
The Group’s hedge position at the end of the reporting period was as follows:
Realized exchange gains/losses Fair value for the year at year-end Fair value recognized in recognized in at year-end the statement Average Contract the statement recognized in of profit or hedge prices amount of comprehen- the statement loss/ of existing according to sive income/ of comprehen- statement forward hedge other sive income/ of financial exchange accounting receivables other payables position contracts Maturity Forward exchange contracts (against DKK) DKKm DKKm DKKm DKKm DKK 2023 CAD (sell position) 550 1 (3)6 502.33 Nov. 2024 CNY (sell position) 364 12 (1)43 98.04 Oct. 2024 KRW (sell position) 230 3 (2)4 0.53 Dec. 2024 USD (sell position) 4,009 52 (4)120 676.06 Nov. 2024 Other currencies 1,123 9 (28)(34) Dec. 2024 Total 77 (38) 139 2022 CAD (sell position) 237 9 -(36)526.29 Nov. 2023 CNY (sell position) 584 12 (1)(55)102.83 Nov. 2023 KRW (sell position) 227 3 (7)28 0.56 Dec. 2023 USD (sell position) 3,895 116 (35)(343)711.45 Dec. 2023 Other currencies 1,057 14 (26)(87) Dec. 2023 Total 154 (69) (493)
Realized exchange gains/losses Fair value for the year at year-end Fair value recognized in recognized in at year-end the statement Average Contract the statement recognized in of profit or hedge price amount of comprehen- the statement loss range according to sive income/ of comprehen- /statement of existing hedge other sive income/ of financial option accounting receivables other payables position contracts¹⁾ Maturity Currency option contracts (against DKK) DKKm DKKm DKKm DKKm DKK 2023 CAD (sell position) 137 - (3)8 482.97 - 495.64 Apr. 2024 USD (sell position) 1,855 7 (10)(11)654.31 - 708.61 Nov. 2024 Other 204 - - 1 7 (13) (2)
1) Lundbeck's option structures
for 2023 and 2022 all consist of a (1) purchased put option and a sold call option which protect against
downside movements in currency and limits the upside or a (2) purchased put option which protects against downside movements. The
hedge price range is shown net of premium.
Realized exchange gains/losses Fair value for the year at year-end Fair value recognized in recognized in at year-end the statement Average Contract the statement recognized in of profit or hedge price amount of comprehen- the statement loss range according to sive income/ of comprehen- /statement of existing hedge other sive income/ of financial option accounting receivables other payables position contracts¹⁾ Maturity Currency option contracts (against DKK)DKKm DKKm DKKm DKKm DKK 2022 CAD (sell position) 214 7 (6) (9) 525.87 - 567.14 Nov. 2023 USD (sell position) 1,028 6 (37) (84) 665.42 - 728.74 Sep. 2023 Other - - - (2) 13 (43) (95)
Note 19
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Management Review Consolidated Financial Statements Financial Statements of the Parent Company
19 FINANCIAL INSTRUMENTS - CONTINUED
Estimated impact from financial instruments on profit for the year and equity from a 5% increase in
year-end exchange rates of the major currencies
CAD¹⁾ CNY¹⁾ USD¹⁾ DKKm DKKm DKKm 2023 Profit for the year 1 - 37 Equity (22) (29) (207) 2022 Profit for the year - (2) 28 Equity (21) (37) (366)
1) An immediate 5% decrease would have the opposite impact of the above.
The sensitivities shown only comprise impact from Lundbeck’s financial instruments and reflect a relative
change of the exchange rates at 31 December 2023 and 2022. The sensitivity analysis includes derivatives,
bank loans, trade receivable, trade payables, intercompany lending and borrowing as those are the financial
instruments to which the Group has the most currency exposure.
The profit impact comprises financial instruments that remained open at the balance sheet date and which
have an impact on profit in the current financial year. It includes foreign exchange differences relating to intra-
group balances that are not eliminated in the consolidated financial statements. The calculation of the
estimated impact is based on the functional currency of the entities in which the financial instruments are
located.
The profit impact is limited as the largest liabilities are the exchange rate adjusted in other comprehensive
income, being part of Lundbeck’s hedging structure.
The equity impact includes financial instruments that remained open at the balance sheet date and which are
exchange rate adjusted in other comprehensive income. The equity effect in 2023 and 2022 primarily consists
of exchange rate adjustments on bank loans in USD designated as hedges of net investments and foreign
exchange differences on outstanding cash flow hedging contracts.
Due to Denmark’s long-standing fixed exchange rate policy against the euro and the expected continuation of
this policy, the foreign currency risk for euro is considered immaterial, and euro is therefore not included in the
table above.
Interest rate risks
Lundbeck ensures that the interest rate risk is managed according to the Treasury Policy. Interest rate risk
relates mainly to outstanding interest-bearing debt with floating interest rates. Interest rate risk management is
handled centrally by the Parent Company. Through the Group’s Treasury Policy, the Board of Directors has
approved the limits for borrowing and investment. Loans secured by property must be approved by the Board
of Directors. Only a limited part of the total loan portfolio is allowed to have floating interest rates, and to hedge
the interest rate risk on loans, the Board of Directors has approved the use of Interest Rate Swaps (IRS), Caps,
Floors and Forward Rate Agreements (FRAs).
Lundbeck’s exposure to interest rate risk is low, as the EUR 500 million bond has a fixed coupon. For more
information see note 17 Bank debt, bond debt and borrowings.
See note 18 Other payables for details on the obligations relating to contingent consideration and note 17 Bank
debt, bond debt and borrowings for details on the bank debt and bond debt.
The table below includes undiscounted cash flows, including interest payments, and assumes liabilities to be
repaid at their contractual maturity dates.
Note 19
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19 FINANCIAL INSTRUMENTS - CONTINUED
Classification of and contractual maturity dates for financial assets and financial liabilities
Between Effective 1 and 5 interest Within 1 year years After 5 years Total rates 2023 DKKm DKKm DKKm DKKm % Financial assets Derivatives to hedge future cash flows – exchange rate85 - - 85 - Derivatives to hedge future cash flows - price 10 39 - 49 - Financial assets measured at FVTOCI¹ 95 39 - 134 Other financial assets - - 60 60 - Other financial assets measured at FVTPL² - - 60 60 Receivables³ 3,037 154 - 3,191 - Cash and bank balances 5,010 - - 5,010 0-10 Financial assets measured at amortized cost 8,047 154 - 8,201 Total financial assets 8,142 193 60 8,395 Financial liabilities Derivatives to hedge future cash flows – exchange rate 51 - - 51 - Financial liabilities measured at FVTOCI¹ 51 - - 51 Contingent consideration⁴ - - 338 338 Other financial liabilities measured at FVTPL² - - 338 338 Bank and bond debt 33 3,824 - 3,857 0-1 Lease liabilities 86 203 148 437 0-13 Trade and other payables 5,037 82 - 5,119 - Financial liabilities measured at amortized cost 5,156 4,109 148 9,413 Total financial liabilities 5,207 4,109 486 9,802
1) Fair value through other comprehensive income.
2) Fair value through profit or loss.
3) Including other receivables recognized in non
-
current assets.
Excluding financial
instruments measured at fair value or
designated as hedge.
4) See note 18 Other payables.
Between Effective 1 and 5 interest Within 1 year years After 5 years Total rates 2022 DKKm DKKm DKKm DKKm % Financial assets Derivatives to hedge future cash flows – exchange rate167 - - 167 - Derivatives to hedge future cash flows – interest rate30 - - 30 4-6 Derivatives to hedge future cash flows - price 36 76 16 128 - Financial assets measured at FVTOCI¹ 233 76 16 325 Other financial assets - - 81 81 - Other financial assets measured at FVTPL² - - 81 81 Receivables³ 2,795 137 - 2,932 - Cash and bank balances 3,548 - - 3,548 0-10 Financial assets measured at amortized cost 6,343 137 - 6,480 Total financial assets 6,576 213 97 6,886 Financial liabilities Derivatives to hedge future cash flows – exchange rate114 - - 114 - Derivatives to hedge future cash flows – interest rate9 - - 9 0-2 Financial liabilities measured at FVTOCI¹ 123 - - 123 Contingent consideration⁴ - - 344 344 Other financial liabilities measured at FVTPL² - - 344 344 Bank and bond debt 114 5,428 - 5,542 1-6 Lease liabilities 88 234 161 483 1-8 Trade and other payables 5,112 78 - 5,190 - Financial liabilities measured at amortized cost 5,314 5,740 161 11,216 Total financial liabilities 5,437 5,740 505 11,682
1) Fair value through other comprehensive income.
2) Fair value through profit or loss.
3) Including other receivables recognized in non-current assets.
Excluding financial
instruments measured at fair value or
designated as hedge.
4) See note 18 Other payables.
Note 19
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19 FINANCIAL INSTRUMENTS - CONTINUED
Level 1 Level 2 Level 3 Financial assets and financial liabilities measured or disclosed at fair valueDKKm DKKm DKKm 2023 Financial assets Other financial assets¹ 33 - 27 Derivatives¹ - 84 49 Total 33 84 76 Financial liabilities Contingent consideration¹ - - 338 Derivatives¹ - 51 - Bond debt² 3,380 - - Total 3,380 51 338 2022 Financial assets Other financial assets¹ 54 - 27 Derivatives¹ - 277 128 Total 54 277 155 Financial liabilities Contingent consideration¹ - - 344 Derivatives¹ - 204 - Bank debt² - 1,393 - Bond debt² 3,155 - - Total 3,155 1,597 344
1) Measured at fair value.
2) Disclosed at fair value.
The fair value of listed securities is based on publicly quoted prices of the invested assets.
The fair value of derivatives is calculated by applying recognized measurement techniques, whereby
assumptions are based on the market conditions prevailing at the balance sheet date.
The fair value of contingent consideration is calculated as the discounted cash outflows (DCF method) from
future milestone payments, taking probability of success into consideration. The fair value of other financial
assets is calculated through the financial performance of the market inputs and other market conditions
prevailing at the balance sheet date. For more details regarding contingent consideration see note 18 Other
payables.
The carrying amount of other receivables, trade receivables, prepayments, bank debt, other debt, trade
payables and other payables is believed to be equal to or close to fair value.
There are no changes in the valuation techniques to determine the fair values of assets recognized and
disclosed.
20 AUDIT FEES
2023 2022 DKKm DKKm Statutory audit 11 11 Assurance engagements other than audit 1 1 Tax advisory 2 2 Other services 1 5 Fee to PricewaterhouseCoopers 15 19
The fee for non-audit services provided to the Group by PricewaterhouseCoopers Statsautoriseret
Revisionspartnerselskab, Denmark, amounted to DKK 1 million (DKK 5 million in 2022) and consisted of other
assurance services and other accounting and tax advisory services.
Certain subsidiaries of the Group are not subject to audit by PricewaterhouseCoopers.
Notes 19-20
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21 CONTRACTUAL OBLIGATIONS
Research and development milestones and collaborations
The Group has entered into a number of agreements relating to research and development of new products
and intellectual property rights from acquisitions, as well as other collaborations. According to these
agreements, Lundbeck is committed to pay certain milestones.
At 31 December 2023, potential future milestone payments amounted to DKK 1,106 million (DKK 1,095 million
at 31 December 2022).
Sales milestones, royalties and other payments
Lundbeck is committed to paying certain commercial sales milestones, royalties or other payments based on
a percentage of sales generated from the sale of goods following marketing approval. These amounts are
excluded from the contractual obligations because of their contingent nature, being dependent on future sales.
Other purchase obligations
The Group has undertaken purchase obligations relating to property, plant and equipment in the amount of
DKK 692 million (DKK 32 million in 2022).
22 RELATED PARTIES
Lundbeck’s related parties
• The Parent Company’s principal shareholder, Lundbeckfonden (Lundbeckfond Invest A/S), Scherfigsvej 7,
2100 Copenhagen, Denmark.
• Companies in which Lundbeckfonden exercises controlling influence, including ALK-Abelló A/S
and Falck A/S.
• Members of the Parent Company’s Registered Executive Management and Board of Directors as well as
close relatives of these people.
• Companies in which members of the Parent Company’s Registered Executive Management and Board of
Directors as well as close relatives of these people exercise controlling influence.
Transactions and balances with Lundbeckfonden
There have been the following transactions and balances with Lundbeckfonden:
• Payment of dividends of DKK 398 million in 2023 (DKK 275 million in 2022).
• Payment of on account tax of DKK 140 million in 2023 (DKK 46 million in 2022) for the Parent Company and
Danish subsidiaries.
• Refund of residual tax of DKK 14 million in 2023 (DKK 292 million in 2022) for the Parent Company and
Danish subsidiaries.
• Interest expenses of DKK 0 million in 2023 (interest income of DKK 4 million in 2022).
Lundbeckfonden exercises controlling influence on H. Lundbeck A/S.
Transactions and balances with the ALK group
There have been no transactions or balances with the ALK group.
Transactions and balances with the Falck group
There have been no material transactions or balances with the Falck group.
Transactions and balances with the Registered Executive Management and the Board of Directors
In addition to the transactions with members of the Registered Executive Management and the Board of
Directors outlined in notes 3 Employee costs and 14 Incentive programs, the Parent Company has paid
dividends on shares held by members of the Registered Executive Management and the Board of Directors in
H. Lundbeck A/S.
Transactions and balances with other related parties
Other than the above, there have been no material transactions or balances with other related parties.
Notes 21-22
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23 LIST OF SUBSIDIARIES
The list below shows the subsidiaries in the Group.
Share of voting rights and ownership Purpose % Lundbeck Argentina S.A., Argentina Sales and distribution 100 Lundbeck Australia Pty Ltd, Australia, including Sales and distribution 100 - CNS Pharma Pty Ltd, Australia Sales and distribution 100 Lundbeck Austria GmbH, Austria Sales and distribution 100 Lundbeck S.A., Belgium Sales and distribution 100 Lundbeck Brasil Ltda., Brazil Sales and distribution 100 Lundbeck Canada Inc., Canada Sales and distribution 100 Lundbeck Chile Farmacéutica Ltda., Chile Sales and distribution 100 Lundbeck (Beijing) Pharmaceuticals Consulting Co., Ltd., China Sale services 100 Lundbeck Colombia S.A.S., Colombia Sales and distribution 100 Lundbeck Croatia d.o.o., Croatia Sale services 100 Lundbeck Czech Republic s.r.o., Czech Republic Sales and distribution 100 Lundbeck Export A/S, Denmark Sales and distribution 100 Lundbeck Pharma A/S, Denmark Sales and distribution 100 Lundbeck Eesti A/S, Estonia Sales and distribution 100 OY H. Lundbeck AB, Finland Sales and distribution 100 Lundbeck SAS, France Sales and distribution 100 Sofipharm SAS, France, including Other 100 - Elaiapharm SAS, France Production 100 Lundbeck GmbH, Germany Sales and distribution 100 Lundbeck Hellas S.A., Greece Sales and distribution 100 Lundbeck HK Limited, Hong Kong Sales and distribution 100 Lundbeck Hungária KFT, Hungary Sales and distribution 100 Lundbeck India Private Limited, India Sales and distribution 100 Lundbeck (Ireland) Ltd., Ireland Sales and distribution 100 Lundbeck Israel Ltd., Israel Sales and distribution 100 Lundbeck Italia S.p.A., Italy Sales and distribution 100 Lundbeck Pharmaceuticals, Italy S.p.A., Italy, including Production 100 - Archid S.A., Luxembourg Sales and distribution 100 Lundbeck Japan K.K., Japan Sale services 100 Lundbeck Korea Co., Ltd., Republic of Korea Sales and distribution 100 SIA Lundbeck Latvia, Latvia Sale services 100
Share of voting rights and ownership Purpose % UAB Lundbeck Lietuva, Lithuania Sale services 100 Lundbeck Malaysia SDN. BHD., MalaysiaSales and distribution 100 Lundbeck México, SA de CV, MexicoSales and distribution 100 Lundbeck B.V., The NetherlandsSales and distribution 100 Prexton Therapeutics B.V., The Netherlands, including Other 100 - Prexton Therapeutics S.A., Switzerland Other 100 Lundbeck New Zealand Limited, New ZealandOther 100 H. Lundbeck AS, NorwaySales and distribution 100 Lundbeck Pakistan (Private) Limited, Pakistan Sales and distribution 100 Lundbeck America Central S.A., PanamaSales and distribution 100 Lundbeck Peru S.A.C., PeruSales and distribution 100 Lundbeck Philippines Inc., PhilippinesSales and distribution 100 Lundbeck Business Service Centre Sp.z.o.o., Poland Other 100 Lundbeck Poland Sp.z.o.o., PolandSales and distribution 100 Lundbeck Portugal - Produtos Farmacêuticos Unipessoal Lda, PortugalSales and distribution 100 Lundbeck Romania SRL, RomaniaSales and distribution 100 Lundbeck RUS LLC, Russian FederationSale services 100 Lundbeck Singapore PTE. LTD., SingaporeSales and distribution 100 Lundbeck Slovensko s.r.o., SlovakiaSales and distribution 100 Lundbeck Pharma d.o.o., SloveniaSales and distribution 100 Lundbeck South Africa (Pty) Limited, South Africa, includingSales and distribution 100 - H. Lundbeck (Proprietary) Limited, South Africa Other 100 Lundbeck España S.A., SpainSales and distribution 100 H. Lundbeck AB, SwedenSales and distribution 100 Lundbeck (Schweiz) AG, SwitzerlandSales and distribution 100 Lundbeck İlaç Ticaret Limited Şirketi, TurkeySales and distribution 100 Lundbeck Group Ltd. (Holding), UK, includingOther 100 - Lundbeck Limited, UK Sales and distribution 100 - Lundbeck Pharmaceuticals Ltd., UK Other 100 - Lifehealth Limited, UK Other 100 )- Lundbeck UK LLP, UK¹Other 100
Note 23
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23 LIST OF SUBSIDIARIES – CONTINUED
Share of voting rights and ownership Purpose % Lundbeck USA Holding LLC, USA, includingOther 100 - Lundbeck LLC, USA, including Sales and distribution 100 - Chelsea Therapeutics International, Ltd., USA, including Other 100 - Lundbeck NA Ltd., USA Other 100 - Lundbeck Pharmaceuticals LLC, USA Other 100 - Lundbeck Research USA, Inc., USA Other 100 - Lundbeck La Jolla Research Center, Inc., USA, including Research and development 100 - Abide Therapeutics (UK) Limited, UK Other 100 - Lundbeck Seattle BioPharmaceuticals, Inc., USA, including Research and development 100 - Alder Biopharmaceuticals Pty., Ltd., Australia Other 100 - Alderbio Holdings LLC ("ANEV"), USA Other 100 Lundbeck de Venezuela, C.A., VenezuelaSales and distribution 100
1) Lundbeck UK LLP is owned by Lundbeck Group Ltd. (Holding), Lundbeck Limited and Lifehealth Limited, all of which have H.
Lundbeck A/S
as their direct or ultimate parent company.
24 SUBSEQUENT EVENTS
No subsequent events have occurred after the balance sheet date that required adjustment to or disclosure in
the consolidated financial statements.
25 MATERIAL ACCOUNTING POLICY INFORMATION
The Group has consistently applied the following accounting policies to all periods presented in these
consolidated financial statements, unless otherwise mentioned (see note 1.8 New standards and amendments
issued but not yet effective).
Basis of consolidation
The consolidated financial statements comprise the Parent Company H. Lundbeck A/S and entities controlled
by the Parent Company.
Foreign currency
On initial recognition, transactions denominated in foreign currencies are translated at standard rates which
approximate the exchange rates at the transaction date. Exchange differences arising between the exchange
rates at the transaction date and the exchange rates at the date of payment are recognized in profit or loss
under financial income or financial expenses.
Receivables, payables and other monetary items denominated in foreign currencies that have not been settled
at the balance sheet date are translated at the exchange rates at the balance sheet date. The differences
between the exchange rates at the balance sheet date and the rates at the time of recognition or settlement
are recognized in profit or loss under financial income or financial expenses.
On recognition of foreign subsidiaries having a functional currency different from the one used by the Parent
Company, items in the profit or loss are translated at monthly average exchange rates, and non-monetary and
monetary balance sheet items are translated at the exchange rates at the balance sheet date. Exchange
differences arising when translating the profit or loss and the balance sheet of foreign subsidiaries, are
recognized in other comprehensive income.
Exchange gains/losses on translation of receivables from and payables to subsidiaries that are considered part
of the Parent Company’s overall net investment in subsidiaries are recognized in other comprehensive income.
Exchange gains/losses on that part of the bank debt in foreign currency which is used for hedging of the net
investments in subsidiaries, and which provides an effective hedging of the exchange gains/losses of the net
investments are recognized in other comprehensive income.
Statement of cash flows
The consolidated statement of cash flows is presented in accordance with the indirect method and shows the
composition of cash flows, divided into operating, investing and financing activities, and cash and bank
balances at the beginning and end of the year.
Cash comprises cash and bank balances.
Cash flows denominated in foreign currencies, including cash flows in foreign subsidiaries, are translated at
the average exchange rates for the year as they approximate the actual exchange rates at the date of payment.
Cash and bank balances at year-end are translated at the exchange rates at the balance sheet date, and the
effect of exchange gains/losses on cash and bank balances is shown as a separate line item in the statement
of cash flows.
Notes 23-25
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Financial instruments
Forward exchange contracts and other derivatives are initially recognized in the balance sheet at fair value on
the contract date and subsequently remeasured at fair value at the balance sheet date. The fair value of
derivatives is determined by applying recognized measurement techniques, whereby assumptions are based
on the market conditions prevailing at the balance sheet date. Positive and negative fair values are included in
other receivables and other payables, respectively.
Changes in the fair value of derivatives classified as hedging instruments and meeting the criteria for hedge
accounting are recognized in other comprehensive income. On recognition of hedged items, income and
expenses relating to such hedging transactions are transferred from other comprehensive income and
recognized in the same line item as the hedged item.
Changes in the fair value of derivatives not qualifying for hedge accounting are recognized in the statement of
profit or loss under financial income or financial expenses as they arise.
Securities, equity investments recognized in other financial assets, derivatives and contingent consideration
measured at fair value are classified according to the fair value hierarchy as belonging to levels 1-3 depending
on the valuation method applied.
Statement of profit or loss
Revenue
Revenue comprises invoiced sales less expected return of goods for the year, discounts, rebates and revenue-
based taxes. Revenue is recognized when the goods are released from the Group’s warehouse, meaning that
control of products has transferred to the buyer, and it is probable that the Group will collect the consideration
to which it is entitled for transferring the products.
Revenue is measured at the amount of consideration to which the Group expects to be entitled in exchange
for transferring the products. Revenue is recognized net of sales deductions, including product returns as well
as discounts, rebates and revenue-based taxes.
Moreover, revenue includes licensing income and royalties from out-licensed products, non-refundable down
payments and milestone payments relating to research and development collaborations, and income from
collaborations on commercialization of products.
Sales-based licensing income and royalties from out-licensed products are recognized in profit or loss under
revenue, when the Group provides access to its product rights as they exist throughout the license period.
Revenue from sales-based licensing income is recognized when the performance obligation is satisfied, i.e.,
when transferred to the customer. For royalties, revenue is recognized when the subsequent sale occurs.
As the performance obligations are satisfied over time, revenue is also recognized over time.
When the Group provides a customer the right to use the product rights as they exist at the point in time at
which the license is granted, revenue is recognized at a point in time when control is transferred to the licensee
and the license period begins when the customer's right to the intellectual property is transferred.
Non-refundable down payments and milestone payments received relating to research collaborations are
recognized in profit or loss under revenue as other revenue.
Cost of sales
Cost of sales comprises cost of goods sold, which includes the cost of raw materials, transportation costs,
consumables and goods for resale, direct labor and indirect costs of production, including operating costs, and
amortization/depreciation and impairment losses relating to product rights and manufacturing facilities.
Sales and distribution costs
Sales and distribution costs comprise costs incurred for the sale and distribution of the Group’s products sold
during the year. This includes costs incurred for sales campaigns, training and administration of the sales force
and for direct distribution, marketing and promotion. Sales and distribution also include salaries and other costs
for the sales, distribution and marketing functions, amortization/depreciation and impairment losses and other
indirect costs.
Administrative expenses
Administrative expenses comprise expenses incurred for the management and the administration of the Group,
i.e., salaries and other expenses relating to, for example, management, HR, IT and finance functions as well
as amortization/depreciation and impairment losses and other indirect costs.
Research and development costs
Research and development costs comprise costs incurred for the Group’s research and development
functions, i.e., employee costs, amortization/depreciation and impairment losses and other indirect costs as
well as costs relating to research and development collaborations.
Research costs are always recognized in profit or loss as they incur.
Due to a very long development period and the significant uncertainties inherent in the development of new
products, development costs are expensed as incurred in line with industry practice. Consequently, the
Note 25
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development costs do not qualify for capitalization as intangible assets until marketing approval by a regulatory
authority is obtained or considered highly probable.
Other operating expenses
Other operating expenses comprise other income and expenses relating to operating activities of a secondary
nature to the Group. Other operating expenses include integration and transaction costs relating to material
acquisitions, income and expenses relating to legal settlements and material gains and losses on the sale or
retirement of items of property, plant and equipment.
Financial income and financial expenses
Financial income and financial expenses include interest income and expenses, net gain or loss on securities
and other financial assets, including dividends, fair value adjustment of contingent consideration, fair value
adjustment of other financial liabilities, foreign currency gains or losses and other financial income and
expenses. Interest income or expenses are recognized using the effective interest method.
Income tax
The Parent Company and Danish subsidiaries are jointly taxed with the principal shareholder, Lundbeckfonden
(Lundbeckfond Invest A/S), and its Danish subsidiaries. The current Danish corporate income tax liability is
allocated among the companies of the tax pool in proportion to their taxable income (full allocation subject to
reimbursement in respect of tax losses). At the time of the preparation of the financial statements, the allocation
of the reimbursement from jointly taxed companies not controlled by the Parent Company is not finalized.
Consequently, adjustments to the initial estimates made, if any, will be included as adjustments to prior years
in the following financial year.
Tax for the year, which consists of the year’s current tax and the change in deferred tax, is recognized in the
statement of profit or loss as regards the amount that can be attributed to the net profit or loss for the year, in
other comprehensive income as regards the amount that can be attributed to items in other comprehensive
income, and in equity as regards the amount that can be attributed to items in equity. The effect of foreign
exchange differences on deferred tax is recognized in the statement of financial position as part of the
movements in deferred tax.
The Group has determined that the global minimum top-up tax, which it is required to pay under Pillar Two
legislation, is an income tax in the scope of IAS 12. The Group has applied a temporary mandatory relief from
deferred tax accounting for the impacts of the top-up tax and will account for it as a current tax when it incur.
The current income tax charge is calculated based on the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the Group operates and generates taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation and considers whether it is probable that a tax authority will accept an uncertain tax
treatment. The Group measures its tax balances based on either the most likely amount or the expected value,
depending on which method provides a better prediction of the resolution of the uncertainty.
Current tax for the year is calculated based on the income tax rates and rules applicable at the reporting date.
Current tax payables and receivables, including contributions payable and receivable under the Danish joint
taxation scheme, are recognized in the balance sheet, computed as tax calculated on the taxable income for
the year adjusted for provisional tax paid.
On initial recognition, the amendments to IAS 12 require companies to recognize deferred tax on transactions
that give rise to equal amounts of taxable and deductible temporary differences.
Deferred tax is recognized on all temporary differences between the carrying amounts of assets and liabilities
and their tax bases. However, deferred tax is not recognized on temporary differences arising either on initial
recognition of goodwill or from a transaction that is not a business combination, if the temporary difference
ascertained at the time of the initial recognition affects neither the financial result nor the taxable income. The
tax value of the assets is calculated based on the planned use of the individual assets.
Deferred tax is measured based on the income tax rates and tax rules in force in the respective countries at
the balance sheet date. Changes in deferred tax resulting from changed income tax rates or tax rules are
recognized in profit or loss.
Deferred tax assets, including the tax value of tax loss carryforwards, are recognized in the balance sheet at
the value at which the assets are expected to be realized, either through an offset against deferred tax liabilities
or as net tax assets to be offset against future positive taxable income.
Changes in deferred tax concerning expenses for share-based payments are generally recognized in profit or
loss. However, if the amount of the tax deduction exceeds the related cumulative expense, it indicates that the
tax deduction relates not only to an operating expense, but also to an equity item. In such a case, the excess
of the associated current or deferred tax is recognized directly in equity.
Deferred tax in respect of recaptured losses previously deducted in foreign subsidiaries is recognized based
on a specific assessment of each individual subsidiary.
Note 25
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Balances on interest deductibility limitations calculated according to the provisions of the Danish Corporation
Tax Act are allocated between the jointly taxed companies according to a joint taxation agreement and are
allocated between the companies that are subject to limitation of deductibility in proportion to their share of the
total limitation. Deferred tax liabilities in respect of these balances are recognized in the balance sheet, whereas
deferred tax assets are recognized only if the criteria for recognition of deferred tax assets are met.
Statement of financial position
Intangible assets
Goodwill
On initial recognition, goodwill is measured and recognized as the excess of the cost over the fair value of the
acquired assets, liabilities and contingent liabilities.
Development projects
Development costs are recognized in profit or loss as they incur unless the conditions for capitalization have
been met. Development costs are capitalized only if the development projects are clearly defined and
identifiable and where the technical rate of utilization of the project, the availability of adequate resources and
a potential future market or development opportunity can be demonstrated. Furthermore, such costs are
capitalized only where the intention is to manufacture, market or use the project, when the cost can be
measured reliably and when it is probable that future earnings can cover production, sales and distribution
costs, administrative expenses and development costs.
After completion of the development work, development costs are amortized over the estimated useful life. The
maximum amortization period for development projects protected by intellectual property rights is consistent
with the remaining patent protection period of the rights concerned. Ongoing development projects are tested
for impairment at least annually or when there is indication of impairment.
Product rights and other intangible assets
Acquired intellectual property rights in the form of product rights, patents, licenses, customer relationships and
software are measured at cost less accumulated amortization and impairment losses. The cost of software
comprises the cost of planning, labor and costs directly attributable to the project.
Product rights are amortized over the economic lives of the underlying products, which in all material aspects
follow the patent terms, which are currently between five and fifteen years. Other rights are amortized over the
period of agreement. Amortization commences when the asset is ready to be brought into use.
Amortization is recognized in profit or loss under cost of sales and research and development costs,
respectively.
Borrowing costs to finance the manufacture of intangible assets are recognized in the cost price, if such
borrowing costs relate to the production period. Other borrowing costs are expensed.
Gains and losses on the disposal of development projects, patents and licenses are measured as the difference
between the selling price less cost to sell and the carrying amount at the time of sale. Gains and losses are
recognized in profit or loss; normally in a separate line item or, if considered immaterial to the understanding
of the consolidated financial statements, in the same line item as the associated amortization. In general,
amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment
losses. Land is not depreciated.
Cost includes the costs of acquisition and expenses directly attributable to the acquisition until the asset is
ready for use. The cost of self-constructed assets includes costs directly attributable to the construction of the
asset.
Borrowing costs to finance the construction of property, plant and equipment are recognized in the cost price,
if such borrowing costs relate to the production period. Other borrowing costs are expensed.
Items of property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets: • Buildings 30 years • Installations 10 years • Plant and machinery 3-10 years • Other fixtures and fittings, tools and equipment 3-10 years • Leasehold improvements, max. 10 years
Depreciation methods, useful lives and residual values are reassessed annually and adjusted if appropriate.
Costs incurred that increase the recoverable amount of an asset are added to the value of the asset as an
improvement and are depreciated over the estimated useful life of the improvement.
Gains or losses on the sale or retirement of items of property, plant and equipment are calculated as the
difference between the carrying amount and the selling price less cost to sell or discontinuance costs. Gains
Note 25
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and losses are recognized in profit or loss; normally in a separate line item or, if considered immaterial to the
understanding of the consolidated financial statements, in the same line item as the associated depreciation.
Right-of-use assets are initially measured at cost, which comprises the initial amount of the liability adjusted
for any lease payments made at or before the commencement date, plus any initial direct costs incurred and
an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site
on which it is located, less any lease incentives.
Subsequently, the right-of-use asset is depreciated using the straight-line method from the commencement
date to the end of the lease term. Depreciation is recognized in profit or loss. Right-of-use assets are presented
as part of property, plant and equipment.
Impairment
Intangible assets with indefinite useful lives and intangible assets not yet commercialized are not subject to
amortization and are tested annually for impairment, or more frequently if events or changes in circumstances
indicate that they may be impaired. The annual impairment test is performed irrespective of whether there is
any indication of impairment.
Intangible assets and property, plant and equipment in use with finite useful lives are tested for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets
(cash-generating unit). Non-financial assets other than goodwill that suffered an impairment are reviewed for
possible reversal of the impairment at the end of each reporting period.
Impairment losses are reversed only if the assumptions and estimates underlying the impairment calculation
have changed. Indications of impairment or reversal of impairment include the following:
• Research and development results for a product
• Changes in expected cash flows due to lower sales expectations
• Changes in technology
• Changes in assumptions about future use
• Changes in market and legal risks
• Changes in cost structure
Other financial assets
Equity investments that are not investments in associates are classified as other financial assets.
On initial recognition, equity investments are measured at fair value. Subsequently, they are measured at fair
value at the balance sheet date, and changes to the fair value are recognized under financial income or
financial expenses or in other comprehensive income according to an individual decision for each equity
investment.
Inventories
Raw materials, packaging and goods for resale are measured at the latest known cost at the balance sheet
date, which is equivalent to cost computed according to the FIFO method. Work in progress and finished goods
manufactured by Lundbeck are measured at cost, i.e., the cost of raw materials, consumables, direct labor and
indirect costs of production. Indirect costs of production include materials, labor, maintenance of and
depreciation on machines, factory buildings and equipment used in the manufacturing process as well as the
cost of factory administration and management. Indirect costs of production are allocated based on the normal
capacity of the production plant.
Inventories are written down to net realizable value if it is lower than the cost price. The net realizable value of
inventories is calculated as the selling price less costs of completion and costs incurred to execute the sale.
The net realizable value is determined having regard to marketability, obsolescence and expected selling price
developments.
Receivables
Current receivables comprise trade receivables and other receivables arising in the Group’s normal course of
business.
Other receivables recognized in financial assets are financial assets with fixed or determinable cash flows that
are not quoted in an active market and are not derivative financial instruments.
On initial recognition, receivables are measured at fair value and subsequently at amortized cost, which usually
corresponds to the nominal value less write-downs to counter the risk of losses. Write-downs are calculated
using the ‘full lifetime-expected credit losses’ method, whereby the likelihood of non-fulfilment throughout the
lifetime of the financial instrument is taken into consideration. A provision account is used for this purpose.
Securities
On initial recognition, securities (including the bond portfolio), which are included in the Group’s documented
investment strategy for excess liquidity and recognized under current assets, are measured at fair value.
Subsequently, the securities are measured at fair value at the balance sheet date. The fair value is based on
Note 25
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publicly quoted prices of the invested assets. Both realized and unrealized gains and losses are recognized in
profit or loss under financial income or financial expenses.
Equity
Dividends
Proposed dividends are recognized as a liability at the time of adoption of the dividend resolution at the Annual
General Meeting (the time of declaration). Dividends expected to be paid in respect of the year are included in
the line item Profit for the year in the statement of changes in equity.
Treasury shares
Acquisition and sale of treasury shares as well as dividends are recognized directly in equity under retained
earnings.
Share-based payments
Share-based incentive programs in which shares are granted to employees and in which employees may opt
to buy shares in the Parent Company (equity-settled programs) are measured at the equity instruments’ fair
value at the date of grant and recognized under employee costs as and when the employees obtain the right
to receive/buy the shares. The offsetting item is recognized directly in equity under retained earnings.
Share price-based incentive programs in which employees have the difference between the agreed price and
the actual share price settled in cash (cash-settled programs) are measured at fair value at the date of grant
and recognized under employee costs as and when the employees obtain the right to such difference
settlement. The cash-settled programs are subsequently remeasured on each balance sheet date and upon
final settlement, and any changes in the fair value of the programs are recognized under employee costs. The
offsetting item is recognized under liabilities until the time of the final settlement.
Retirement benefit obligations and similar obligations
Defined contribution plans
Payments to defined contribution plans are recognized in profit or loss at the due date, and any contributions
payable are recognized in the balance sheet under current liabilities.
Defined benefit plans
The present value of the Group’s liabilities relating to future pension payments under defined benefit plans is
measured on an actuarial basis once a year based on the pensionable period of employment up to the time of
the actuarial valuation. The calculation of present value is based on assumptions of future developments of
salary, interest, inflation, mortality and disability rates and other factors. Present value is computed exclusively
for the benefits to which the employees have earned entitlement through their employment with Lundbeck.
Pension expenses, finance costs and administration fees are recognized in profit or loss under employee costs.
Actuarial gains and losses are recognized in other comprehensive income as they are calculated and cannot
subsequently be recycled through profit or loss.
The present value of the defined benefit plan liability is recognized less the fair value of the plan assets, and
any net obligation is recognized in the balance sheet under non-current liabilities. Any net asset is recognized
in the balance sheet as a financial asset, considering, where relevant, the provisions of IFRIC 14 The Limit on
a Defined Benefit Asset, Minimum Funding Requirements and their Interaction.
Provisions
Provisions mainly consist of provisions for discounts and rebates, product returns, pending lawsuits and
restructuring. A provision is a liability of uncertain timing or amount.
Unsettled discounts and rebates are recognized as provisions, when the timing or amount is uncertain. Where
absolute amounts are known, the discounts and rebates are recognized as trade payables.
Return obligations imposed on the Group are recognized as provisions in the balance sheet.
Amounts relating to pending lawsuits are recognized when the outflow is probable and the amount is measured
as the best estimate of the costs required to settle the liabilities at the balance sheet date.
In connection with restructurings in the Group, provisions are made only for liabilities set out in a specific
restructuring plan based on which the parties affected can reasonably expect that the Group will carry out the
restructuring, either by starting to implement the plan or announcing its main components.
Debt
Bank debt and bond debt are recognized at the time of the raising of a loan/issuing of bonds at the fair value
of the proceeds received less transaction costs paid. In subsequent periods, the financial liabilities are
measured at amortized cost, which is equivalent to the capitalized value when the effective rate of interest is
used. The difference between the proceeds and the nominal value is recognized in profit or loss under financial
income or financial expenses over the loan period.
Other payables
Other payables include employee costs payables, contingent consideration, derivative financial instruments,
debt to public authorities, payables to shareholders, etc.
Contingent consideration is recognized as part of the business combination and is recognized at fair value
considering the passage of time and changes in the applied probability of success. The fair value is assessed
Note 25
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at each reporting date and the effect of any adjustments relating to the timing of payment and the probability
of success is recognized under financial income or financial expenses.
Payables to shareholders and other payables are measured at amortized cost.
Lease liabilities
Lease liabilities are recognized at the present value of future payments in accordance with the lease
agreements and include the present value of future payments relating to reasonably certain extensions. Interest
on the lease liabilities is calculated using Lundbeck’s incremental borrowing rate and recognized under
financial income or financial expenses. The lease liabilities are reduced by any instalments paid to the lessor.
Lundbeck uses the same incremental borrowing rate for lease agreements with similar characteristics.
Changes to lease agreements after initial recognition are accounted for either as a modification to an existing
agreement, a separate agreement or a partial disposal depending on the nature of the change. Changes will
result in changes to both the lease liability and the right-of-use asset.
Note 25
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CONTENTS
Statement of profit or loss 93
Statement of financial position 94
Statement of changes in equity 95
Financial Statements of the Parent Company
NOTES
1 Revenue 96
2 Employee costs 96
3 Investments in subsidiaries 96
4 Financial income and expenses 97
5 Income taxes 97
6 Distribution of profit 97
7 Intangible assets 98
8 Property, plant and equipment 98
9 Right-of-use assets and lease liabilities 99
10 Inventories 99
11 Provisions 99
12 Contingent assets and contingent liabilities 99
13 Bank debt and bond debt 100
14 Payables to subsidiaries 100
15 Financial instruments 100
16 Audit fees 100
17 Contractual obligations 100
18 Related parties 101
19 Subsequent events 101
20 Material accounting policy information 101
Financial Statements
of the Parent
Company
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2023
2022
Notes DKKm DKKm
Revenue
1
14,117
12,722
Cost of sales
2
3,633
3,005
Gross profit
10,484
9,717
Sales and distribution costs
2
4,313 3,598
Administrative expenses
2
941
789
Research and development costs
2
3,066
3,428
Profit from operations (EBIT)
2,164
1,902
Income from investments in subsidiaries
3
2,155
345
Financial income
4
564 415
Financial expenses
4
736
461
Profit before tax
4,147
2,201
Tax on profit for the year
5
456
345
Profit for the year
6
3,691
1,856
Statement of profit or loss
Statement of profit or loss
1 January
– 31 December
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2023
2022
Notes DKKm DKKm
Intangible assets
7
8,493
9,233
Property, plant and equipment
8
1,720
1,724
Right-of-use assets
9
157
174
Investments in subsidiaries
3
10,468
10,508
Receivables from subsidiaries
5,918
6,028
Other financial assets
98
172
Other receivables
4
3
Financial assets
16,488
16,711
Non-current assets
26,858
27,842
Inventories
10
3,226
2,671
Trade receivables
776
787
Receivables from subsidiaries
3,810
4,647
Other receivables
349
531
Prepayments
120
24
Receivables
5,055
5,989
Cash and bank balances
4,341
2,626
Current assets
12,622
11,286
Assets
39,480
39,128
Statement of financial position - assets
2023
2022
Notes DKKm DKKm
Share capital
996
996
Proposed dividends
697
578
Hedging reserve
144
237
Retained earnings
16,744
13,826
Equity
18,581
15,637
Deferred tax liabilities
5
1,182
923
Provisions
11
219
70
Bank debt and bond debt
13
3,714
5,096
Lease liabilities
9
147
161
Payables to subsidiaries
14
8,827
9,402
Other payables
12
20
Non-current liabilities
14,101
15,672
Provisions
11
77
20
Trade payables
1,796
1,790
Lease liabilities
9
12
14
Payables to subsidiaries
4,112
4,860
Income tax payables
74
6
Other payables
727
1,129
Current liabilities
6,798
7,819
Liabilities
20,899
23,491
Equity and liabilities
39,480
39,128
Statement of financial position – equity and liabilities
Statement of financial position –
assets
At 31 December
Statement of financial position –
equity and liabilities
At 31
December
95
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
Share
capital
Proposed
dividends
Hedging
reserve
Retained
earnings
Equity
Notes DKKm DKKm DKKm DKKm DKKm
Equity at 1 January
996
578
237
13,826
15,637
Profit for the year
6
-
697
-
2,994
3,691
Distributed dividends, gross
-
(578)
-
-
(578)
Dividends received, treasury shares
-
-
-
2
2
Deferred
gains/losses on cash flow
hedge, exchange rate
-
-
117
-
117
Deferred gains/losses on cash flow
hedge, interest rate
-
-
(21)
-
(21)
Deferred gains/losses on cash flow
hedge, price
-
-
(137)
-
(137)
Exchange gains/losses, hedging
(transferred to revenue)
-
-
(78)
-
(78)
Buyback of treasury shares
- - - (43)
(43)
Incentive programs
-
-
-
33
33
Tax on transactions in equity
5
-
-
26
1
27
Other transactions on equity
-
-
-
(69)
(69)
Equity at 31 December
996
697
144
16,744
18,581
See note 12 Equity in the consolidated financial statements.
Statement of changes in equity
Statement of changes in equity
At 31 December
96
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Management Review Consolidated Financial Statements Financial Statements of the Parent Company
1 REVENUE
2023
2022
Revenue by region
DKKm DKKm
Europe
4,759
4,423
United States
7,028
6,454
International markets
2,090
2,347
Total
13,877
13,224
Other revenue
103
86
Effects from hedging
137
(588)
Total revenue
14,117
12,722
2 EMPLOYEE COSTS
2023
2022
Breakdown of employee costs
DKKm
DKKm
Short
-term employee benefits 1,594 1,447
Retirement benefits
133
129
Social security costs
18 17
Equity
- and cash-settled incentive programs 33 24
Severance and other costs from restructuring activities
59
-
Total
1,837
1,617
Employee costs for the year are included in the following functions in the statement of profit or loss:
2023
2022
Employee costs
DKKm DKKm
Cost of sales
512
448
Sales and distribution costs
126
99
Administrative expenses
450
318
Research and development costs
749
752
Total
1,837
1,617
Information on employees
2023
2022
Number Number
Average number of full-time employees in the financial year
1,822
1,751
Number of full-time employees at 31 December
1,875
1,769
Remuneration of the Registered Executive Management
See notes 3 Employee costs and 14 Incentive programs in the consolidated financial statements.
Remuneration of the Board of Directors
See note 3 Employee costs in the consolidated financial statements.
Incentive programs
See note 14 Incentive programs in the consolidated financial statements.
3 INVESTMENTS IN SUBSIDIARIES
2023
DKKm
Cost at 1 January
10,772
Capital reduction in subsidiaries
(40)
Cost at 31 December
10,732
Impairment at 1 January
264
Impairment at 31 December
264
Carrying amount at 31 December
10,468
In 2023, income from investments in subsidiaries relates to dividends of DKK 2,155 million. In 2022, income
from investments in subsidiaries related to dividends received, and impairment losses amounted to DKK 345
million.
See note 23 List of subsidiaries in the consolidated financial statements for an overview of subsidiaries.
Notes 1-3
97
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Management Review Consolidated Financial Statements Financial Statements of the Parent Company
4 FINANCIAL INCOME AND EXPENSES
2023
2022
DKKm DKKm
Financial income
564
415
Financial expenses
736
461
Net financials, expenses/(income)
172
46
In 2023, out of total financial income and financial expenses, DKK 483 million (DKK 369 million in 2022) and
DKK 616 million (DKK 173 million in 2022) relate to intra-group interest income and expenses, respectively.
In 2023, financial income and financial expenses are impacted by a net exchange loss of DKK 4 million (gain
of DKK 20 million in 2022) relating to translation of receivables from and payables to subsidiaries that are
considered part of the overall investment in subsidiaries.
Further, in 2023, financial income and financial expenses are impacted by a gain of DKK 17 million (loss of
DKK 163 million in 2022) relating to the translation of external loans used for hedging net investments in foreign
operations in the U.S.
5 INCOME TAXES
Tax on profit for the year
2023
2022
DKKm
DKKm
Current tax, joint taxation contribution
164 27
Prior
-year adjustments, current tax¹⁾ 6 (276)
Prior-year adjustments, deferred tax¹
⁾
(4)
266
Change in deferred tax for the year
263 418
Total tax for the year
429
435
Tax for the year is composed of:
Tax on profit for the year
456 345
Tax on transactions in equity
(27)
90
Total tax for the year
429
435
1) For 2022, movements from prior
-year adjustments, deferred tax to prior-year adjustments, current tax, primarily relate to the utilization of tax
losses from prior years by jointly taxed companies not controlled by the Parent Company.
Deferred tax balances
Balance at
1 January
Adjustment of
deferred
tax at
beginning
of year
Movements
during
the year
Balance at
31 December
Temporary differences between assets and liabilities as
stated in the financial statements and in the tax base
DKKm
DKKm
DKKm
DKKm
Intangible assets
5,836
-
569
6,405
Property,
plant and equipment 429 - 9 438
Inventories
412 - 69 481
Other items
(166)
(70)
(290)
(526)
Tax loss carryforwards etc.
(2,314)
53 836 (1,425)
Total temporary differences
4,197
(17)
1,193
5,373
Deferred (tax assets)/tax liabilities
923
(4)
263
1,182
The major assumptions relating to the recognition and measurement of tax assets are described in
note 5 Income taxes in the consolidated financial statements.
2023
2022
Movements in deferred tax
DKKm
DKKm
Balance at 1 January
923
239
Movements related to transactions recognized in profit or loss
276 656
Movements related to
transactions recognized in equity (17)
28
Balance at 31 December
1,182
923
6 DISTRIBUTION OF PROFIT
2023
2022
Proposed distribution of profit for the year
DKKm DKKm
Proposed dividends for the year
697
578
Transferred to/from distributable reserves
2,994
1,278
Total profit for the year
3,691
1,856
Proposed dividend per share (DKK)
0.70
0.58
See note 12 Equity in the consolidated financial statements for details on treasury shares.
Notes 4-6
98
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
7 INTANGIBLE ASSETS
Product
rights¹⁾
Other
rights²⁾
Projects in
progress²⁾
Total
intangible
assets
Intangible assets
DKKm
DKKm
DKKm
DKKm
Cost at 1 January
16,813
1,753
103
18,669
Transfers
- 20 (20)
-
Additions
111 4 90 205
Cost at 31 December
16,924
1,777
173
18,874
Amortization and impairment losses at 1 January
7,785 1,651 - 9,436
Amortization
891 54 - 945
Amortization and impairment losses at 31 December
8,676
1,705
-
10,381
Carrying amount at 31 December
8,248
72
173
8,493
1) In 202
3, product rights not yet commercialized amounted to DKK 2,322 million (DKK 2,322 million in 2022).
2) Other rights and projects in progress primarily include items such as the IT system SAP.
For details on material product rights and impairment testing, see note 6 Intangible assets in the consolidated
financial statements.
8 PROPERTY, PLANT AND EQUIPMENT
Land and
buildings
Plant and
machinery
Other
fixtures
and fittings,
tools and
equipment
Prepayments
and assets
under
construction
Total
property,
plant and
equipment
Property, plant and equipment
DKKm
DKKm
DKKm
DKKm
DKKm
Cost at 1
January 3,338 1,055 504 445 5,342
Transfers
88 30 57 (175)
-
Additions
6
8
3
146
163
Disposals
-
(26)
-
- (26)
Cost at 31 December
3,432
1,067
564
416
5,479
Depreciation and impairment losses at
1 January
2,278
877
463
-
3,618
Depreciation
103 40 24 - 167
Disposals
-
(26)
-
- (26)
Depreciation and impairment losses at
31 December
2,381
891
487
-
3,759
Carrying amount at 31 December
1,051
176
77
416
1,720
Pledged assets
No land and buildings were mortgaged at 31 December 2023. No other assets have been pledged.
Notes 7-8
99
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Management Review Consolidated Financial Statements Financial Statements of the Parent Company
9 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
2023
2022
Land and buildings
DKKm DKKm
Cost at 1 January
227
227
Additions
2
-
Disposals during the year
(1)
-
Adjustment to right-of-use assets during the year¹
⁾
(6)
-
Cost at 31 December
222
227
Depreciation and impairment losses at 1 January
53
39
Depreciation
13 14
Depreciation and impairment on disposals
(1)
-
Depreciation and impairment losses at 31 December
65
53
Carrying amount at 31 December
157
174
1) Comprises reassessment of lease term and renewal of lease agreements.
2023
2022
Amounts recognized in profit or loss
DKKm
DKKm
Expense relating to
short-term leases, not capitalized 1 1
Depreciation of right-of-use assets, land and buildings
13
14
Interest expense relating to lease liabilities
3 -
Total recognized in profit or loss
17
15
2023
2022
Maturity analysis of lease liabilities
DKKm
DKKm
Within one year
12 14
Between one year and five years
50 54
After five years
97
107
Lease liabilities at 31 December
159
175
10 INVENTORIES
2023
2022
DKKm DKKm
Raw materials and consumables
192
185
Work in progress
2,540
2,066
Finished goods and goods for resale
494
420
Total
3,226
2,671
11 PROVISIONS
2023
DKKm
Provisions at 1 January
90
Additional provisions recognized
216
Provisions used during the year
(10)
Provisions at 31 December
296
The Parent Company has entered into agreements with individual subsidiaries, under which it will cover
expected losses and obligations concerning restructuring programs. The provisions in the Parent Company
therefore cover such losses and obligations.
At 31 December 2023, the total restructuring provision amounted to DKK 59 million (DKK 20 million at 31
December 2022). In 2023, DKK 10 million of the restructuring provision was used and DKK 49 million was
recognized.
In addition, provisions comprise liabilities relating to items such as legal disputes and environmental provisions.
12 CONTINGENT ASSETS AND CONTINGENT LIABILITIES
Pending legal proceedings
See note 16 Contingent assets and contingent liabilities in the consolidated financial statements for details on
pending legal proceedings.
Notes 9-12
100
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
12 CONTINGENT ASSETS AND CONTINGENT LIABILITIES - CONTINUED
Joint taxation
The Parent Company is part of a Danish joint taxation scheme with Lundbeckfonden (Lundbeckfond Invest
A/S including subsidiaries), according to which the Parent Company partly has a joint and several liability and
partly a secondary liability with respect to corporate income taxes, etc. for the jointly taxed companies. In
addition, the Parent Company partly has a joint and several liability and partly a secondary liability with respect
to any obligations to withhold tax on interest, royalties and dividends for these companies. However, in both
cases the secondary liability is capped at an amount equal to the share of the capital of the company directly
or indirectly owned by the ultimate parent company. The total tax obligation under the joint taxation scheme is
shown in the financial statements of Lundbeckfond Invest A/S.
Letters of intent
The Parent Company has entered into agreements to cover operating losses in certain subsidiaries.
As collateral for bank guarantees, the Parent Company has issued letters of intent to the banks in the amount
of DKK 4 million (DKK 7 million in 2022) on behalf of subsidiaries.
13 BANK DEBT AND BOND DEBT
There is no bank debt or bond debt falling due after more than five years from the balance sheet date at 31
December 2023 and 2022, respectively.
14 PAYABLES TO SUBSIDIARIES
Payables to subsidiaries falling due after more than five years from the balance sheet date amounted to DKK
8,827 million at 31 December 2023 (DKK 9,402 million at 31 December 2022).
15 FINANCIAL INSTRUMENTS
Foreign currency management is handled by the Parent Company. See note 19 Financial instruments in the
consolidated financial statements.
The fair value of derivatives at year-end is disclosed in note 19 Financial instruments in the consolidated
financial statements. The fair value adjustment recognized in equity is disclosed in the statement of changes
in equity in the financial statements of the Parent Company. All fair value adjustments are initially recognized
in equity.
16 AUDIT FEES
2023
2022
DKKm
DKKm
Statutory audit
4 4
Assurance engagements other than audit
1
1
Other services
1 4
Fee to PricewaterhouseCoopers
6
9
The fee for non-audit services provided to the Parent Company by PricewaterhouseCoopers Statsautoriseret
Revisionspartnerselskab, Denmark, amounted to DKK 1 million (DKK 5 million in 2022) and consisted of other
assurance services and other accounting and tax advisory services.
17 CONTRACTUAL OBLIGATIONS
Research and development milestones and collaborations
The Parent Company has entered into a number of agreements relating to research and development of new
products and intellectual property rights from acquisitions, as well as other collaborations. According to the
agreements, Lundbeck is committed to paying certain milestones.
At 31 December 2023, potential future milestone payments totaled DKK 1,106 million (DKK 1,095 million at 31
December 2022).
Sales milestones
The Parent Company is committed to paying certain commercial sales milestones, royalties or other payments
based on a percentage of sales generated from the sale of goods following marketing approval. These amounts
are excluded from the contractual obligations because of their contingent nature, being dependent on future
sales.
Other purchase obligations
The Parent Company has undertaken purchase obligations relating to property, plant and equipment in the
amount of DKK 688 million (DKK 24 million in 2022).
Notes 12-17
101
Lundbeck Annual Report 2023
Management Review Consolidated Financial Statements Financial Statements of the Parent Company
18 RELATED PARTIES
For information on related parties exercising controlling influence on the Parent Company, see note 22 Related
parties in the consolidated financial statements.
The Parent Company is included in the consolidated financial statements of Lundbeckfonden.
The Parent Company had transactions with subsidiaries during 2023. The Parent Company’s share of
ownership of all subsidiaries is 100%. The Parent Company did not enter into any transactions with other
related parties that were not on an arm’s length basis.
19 SUBSEQUENT EVENTS
No subsequent events have occurred after the balance sheet date that required adjustment to or disclosure in
the financial statements of the Parent Company.
20 MATERIAL ACCOUNTING POLICY INFORMATION
The financial statements of the Parent Company H. Lundbeck A/S have been prepared in accordance with the
Danish Financial Statements Act applying to enterprises in reporting class D. The financial statements are
presented in Danish kroner (DKK). All amounts have been rounded to the nearest DKK million, unless
otherwise indicated.
Assets and liabilities are presented in the balance sheet according to a current/non-current classification.
The accounting policies for the financial statements of the Parent Company remain unchanged from the
previous financial year.
Differences relative to the accounting policies for the consolidated financial statements
The Parent Company’s accounting policies for recognition and measurement are consistent with the
accounting policies for the consolidated financial statements with the exceptions stated below. For a description
of the accounting policies of the Group, please refer to the consolidated financial statements.
Statement of profit or loss
Income from investments in subsidiaries
Income from investments in subsidiaries includes dividends from subsidiaries, which are recognized in the
Parent Company’s statement of profit or loss when the Parent Company’s right to receive such dividends has
been approved. Further, income from investments in subsidiaries includes proceeds from liquidation of
subsidiaries and any impairment losses or reversals of impairment losses on investments in subsidiaries.
Exchange gains/losses
Exchange gains/losses on translation of receivables from and payables to subsidiaries that are considered part
of the overall investment in subsidiaries are recognized in profit or loss under financial income or financial
expenses.
Exchange gains/losses on that part of the bank debt in foreign currency which is used for hedging of the net
investments in subsidiaries and which provides an effective hedging of the exchange gains/losses of the net
investments are recognized in profit or loss under financial income or financial expenses.
Statement of financial position
Investments in subsidiaries
Investments in subsidiaries are measured at cost in the Parent Company’s financial statements. Where the
recoverable amount of the investments is lower than cost, the investments are written down to this lower value.
In addition, cost is written down to the extent that dividends distributed exceed the accumulated earnings in
the subsidiary since the acquisition date.
Other financial assets
On initial recognition, investments are measured at cost, corresponding to fair value plus directly attributable
costs. Subsequently, they are measured at fair value at the balance sheet date. Any fair value adjustments on
equity investments recognized in other comprehensive income in the consolidated financial statements are
recognized under financial income or financial expenses in the Parent Company’s statement of profit or loss.
Statement of changes in equity
Pursuant to the Danish Financial Statements Act, entries recognized in the statement of comprehensive
income in the consolidated financial statements are recognized directly in the statement of changes in equity
in the Parent Company’s financial statements, except for entries concerning exchange gains/losses on
translation of receivables from and payables to subsidiaries, entries providing an effective hedge against
foreign exchange gains/losses on the net investment and entries concerning other financial assets.
Statement of cash flows
In accordance with the exemption clause in section 86(4) of the Danish Financial Statements Act, no separate
statement of cash flows has been prepared for the Parent Company as it is included in the consolidated
statement of cash flows.
Notes 18-20
102
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
The Board of Directors and the Registered Executive
Management have today considered and adopted the
Annual Report of H. Lundbeck A/S for the financial
year 1 January to 31 December 2023.
The Consolidated Financial Statements have been
prepared in accordance with IFRS Accounting
Standards as adopted by the EU and further
requirements in the Danish Financial Statements Act,
and the Parent Company Financial Statements have
been prepared in accordance with the Danish
Financial Statements Act. The Management Review
has been prepared in accordance with the Danish
Financial Statements Act and Article 8 of Regulation
(EU) 2020/852 (EU Taxonomy Regulation).
In our opinion, the Consolidated Financial Statements
and the Parent Company Financial Statements give a
true and fair view of the financial position at 31
December 2023 of the Group and the Parent
Company and of the results of the Group and Parent
Company operations and consolidated cash flows for
the financial year 1 January to 31 December 2023.
In our opinion, the Management Review includes a
true and fair account of the development in the
operations and financial circumstances of the Group
and the Parent Company, of the results for the year
and of the financial position of the Group and the
Parent Company as well as a description of the most
significant risks and elements of uncertainty facing the
Group and the Parent Company.
In our opinion, the Annual Report of H. Lundbeck A/S
for the financial year 1 January to 31 December 2023
with the file name HLUNDBECK-2023-12-31-en.zip
has been prepared, in all material respects, in
compliance with the ESEF Regulation.
We recommend that the Annual Report be adopted at
the Annual General Meeting.
Management Statement
Management Statement
Copenhagen,
7 February 2024
REGISTERED EXECUTIVE MANAGEMENT
Charl Gerhard Van Zyl
President and CEO
Lars Bang
Executive Vice President,
Product, Development & Supply
Joerg Hornstein
Executive Vice President,
CFO
Per Johan Luthman
Executive Vice President,
Research & Development
Jacob Tolstrup
Executive Vice
President,
Commercial Operations
BOARD OF DIRECTORS
Lars Søren Rasmussen
Chair of the Board
Lene Skole
-Sørensen
Deputy Chair
Santiago Arroyo
Jeffrey Berkowitz
Lars Erik Holmqvist
Jeremy Max Levin
Jakob Riis
Ilse Dorothea
Wenzel
Hossein Armandi
Employee representative
Lasse Skibsbye
Employee representative
Dorte Clausen
Employee representative
Camilla Gram Andersson
Employee representative
103
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Independent Auditor’s Reports
TO THE SHAREHOLDERS
OF H. LUNDBECK A/S
Report on the audit of
the financial statements
Our opinion
In our opinion, the Consolidated Financial Statements
(pages 50-91) give a true and fair view of the Group’s
financial position at 31 December 2023 and of the
results of the Group’s operations and cash flows for
the financial year 1 January to 31 December 2023 in
accordance with IFRS Accounting Standards as
adopted by the EU and further requirements in the
Danish Financial Statements Act.
Moreover, in our opinion, the Parent Company
Financial Statements (pages 92-101) give a true and
fair view of the Parent Company’s financial position at
31 December 2023 and of the results of the Parent
Company’s operations for the financial year 1 January
to 31 December 2023 in accordance with the Danish
Financial Statements Act.
Our opinion is consistent with our Auditor’s Long-form
Report to the Audit Committee and the Board of
Directors.
What we have audited
The Consolidated Financial Statements of H.
Lundbeck A/S for the financial year 1 January to 31
December 2023 comprise the consolidated statement
of profit or loss and statement of comprehensive
income, the consolidated statement of financial
position, the consolidated statement of changes in
equity, the consolidated statement of cash flows and
the notes, including summary of material accounting
policy information.
The Parent Company Financial Statements of H.
Lundbeck A/S for the financial year 1 January to 31
December 2023 comprise the statement of profit or
loss, the statement of financial position, the statement
of changes in equity, and the notes, including
summary of material accounting policy information.
Collectively referred to as the “Financial Statements”.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (ISAs) and the
additional requirements applicable in Denmark. Our
responsibilities under those standards and
requirements are further described in the Auditor’s
responsibilities for the audit of the Financial
Statements section of our report.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the Group in accordance with
the International Ethics Standards Board for
Accountants’ International Code of Ethics for
Professional Accountants (IESBA Code) and the
additional ethical requirements applicable in
Denmark. We have also fulfilled our other ethical
responsibilities in accordance with these
requirements and the IESBA Code.
To the best of our knowledge and belief, prohibited
non-audit services referred to in Article 5(1) of
Regulation (EU) No 537/2014 were not provided.
Appointment
We were first appointed auditors of H. Lundbeck A/S
on 24 March 2020 for the financial year 2020. We
have been reappointed annually by shareholder
resolution for a total period of uninterrupted
engagement of 4 years including the financial year
2023.
Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the Financial Statements for 2023. These
matters were addressed in the context of our audit of
the Financial Statements as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
Independent Auditor’s Reports
104
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Independent Auditor’s Reports
Continued
Key audit matter
How our audit addressed the key audit matter
Sales deductions in the U.S.
The Group provides rebates and discounts to customers in the
U.S. that fall under certain
government mandated reimbursement arrangements, of which the most significant is Medicaid.
These arrangements result in deductions to gross sales in arriving at net revenue. The period
passing between the sales to distributors
and payment of the related rebates under the U.S.
Federal and State Government Healthcare programs may be several months and requires the
unsettled amounts to be recognized as a provision. The provision for rebates and discounts is
based on several signifi
cant assumptions, including estimated rebate percentages and estimation
of time from sale of the individual products to receipt of invoice under the U.S. Federal and State
Government Healthcare programs.
We focused on these arrangements because they are c
omplex and require significant estimation
by Management in establishing an appropriate provision for the unsettled amounts. This included
estimation of sales volumes subject to the rebates, estimation of applicable rebate rates, and
estimation of the lag t
ime described above.
We refer to note 1.5, 15 and 25 in the Consolidated Financial Statements.
We performed risk assessment procedures to obtain an understanding of the IT systems, business processes and relevant
controls for rebates and discounts in the
U.
S. We assessed whether the controls were designed and implemented to
effectively address the risk of material misstatements. For selected controls, which we planned to rely on, we tested whether
these were performed on a consistent basis.
We obtained Management’s calculations under the reimbursement arrangements and evaluated the accuracy of the
calculations made. Further, we assessed, tested and challenged key data inputs and the significant assumptions applied
by management, including the estimate of
the period from sale to receipt of invoice.
We considered the Group’s historical provisions by comparing the actual rebate with the rebate percentage estimate used
by Management to recognize the provision, including performing a retrospective review of the prior period provisions
compared to subsequent payments to evaluate the accuracy of Management’s estimate and to identify any potential
management bias.
We evaluated the presentation and disclosures of sales deductions in the U.S. in the
Consolidated Financial Statements.
Impairment of product rights
Product rights are tested when there is an indication of impairment, and product rights not yet
commercialized are tested annually for impairment.
The recoverability of the carrying value of product rights is contingent on future cash flows and/or
the outcome of research and development activities. The determination of the recoverable
amounts includes significant estimates, which are highly sensitive
and depend upon key
assumptions and judgments, including the probability of technical and regulatory success, amount
and timing of projected future cash flows, patent expiry, and discount rate assumptions. Changes
in these assumptions could have an impact
on the recoverable amount of product rights.
We focused on this area as the amounts involved are material and there is a risk that the product
rights will be impaired if the key assumptions deviate negatively from the expectations.
We refer to note 1.5
, 6 and 25 in the Consolidated Financial Statements.
We performed risk assessment procedures to obtain an understanding of the business processes and relevant controls for
impairment indicators and the determination of the recoverability amount of product
rights. We assessed whether the
controls were designed and implemented to effectively address the risk of material misstatements. For selected controls,
which we planned to rely on, we tested whether these were performed on a consistent basis.
For produc
t rights with impairment indicators and product rights not yet commercialized, we among others:
•
Tested Management’s process for determining the recoverable amount;
•
Evaluated the appropriateness of the methodology used in the impairment tests;
•
Evaluated Management’s key assumptions and judgments used in the impairment tests, including probability of
technical and regulatory success, amount and timing of projected future cash flows, and expected impact of loss
of exclusivity;
•
Tested the underlying data used in the impairment tests; and
•
Included our in-house valuation experts to assess the valuation techniques used and to assist with the evaluation of
certain key assumptions, including the discount rates applied.
We evaluated the disclosures of impairment testing in the Financial Statements.
105
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Statement on Management review
Management is responsible for Management Review
(pages 3-48 and page 107, respectively).
Our opinion on the Financial Statements does not
cover Management Review, and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the Financial
Statements, our responsibility is to read Management
Review and, in doing so, consider whether
Management Review is materially inconsistent with
the Financial Statements or our knowledge obtained
in the audit, or otherwise appears to be materially
misstated.
Moreover, we considered whether Management
Review includes the disclosures required by the
Danish Financial Statements Act and Article 8 of
Regulation (EU) 2020/852 (EU Taxonomy
Regulation).
Based on the work we have performed, in our view,
Management Review is in accordance with the
Consolidated Financial Statements and the Parent
Company Financial Statements and has been
prepared in accordance with the requirements of the
Danish Financial Statements Act and the disclosure
requirements of Article 8 of Regulation (EU) 2020/852
(EU Taxonomy Regulation). We did not identify any
material misstatement in Management Review.
Management’s responsibilities for the financial
statements
Management is responsible for the preparation of
consolidated financial statements that give a true and
fair view in accordance with IFRS Accounting
Standards as adopted by the EU and further
requirements in the Danish Financial Statements Act
and for the preparation of parent company financial
statements that give a true and fair view in
accordance with the Danish Financial Statements
Act, and for such internal control as Management
determines is necessary to enable the preparation of
financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the Financial Statements, Management
is responsible for assessing the Group’s and the
Parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of
accounting unless Management either intends to
liquidate the Group or the Parent Company or to
cease operations, or has no realistic alternative but to
do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance
about whether the Financial Statements as a whole
are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs and the additional
requirements applicable in Denmark will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of
these Financial Statements.
As part of an audit in accordance with ISAs and the
additional requirements applicable in Denmark, we
exercise professional judgment and maintain
professional skepticism throughout the audit. We
also:
• Identify and assess the risks of material
misstatement of the Financial Statements, whether
due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of
internal control.
• Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the
effectiveness of the Group’s and the Parent
Company’s internal control.
• Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting
estimates and related disclosures made by
Management.
• Conclude on the appropriateness of Management’s
use of the going concern basis of accounting and
based on the audit evidence obtained, whether a
material uncertainty exists related to events or
conditions that may cast significant doubt on the
Group’s and the Parent Company’s ability to
continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw
attention in our auditor’s report to the related
disclosures in the Financial Statements or, if such
disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report.
However, future events or conditions may cause the
Group or the Parent Company to cease to continue
as a going concern.
• Evaluate the overall presentation, structure and
content of the Financial Statements, including the
disclosures, and whether the Financial Statements
represent the underlying transactions and events in
a manner that gives a true and fair view.
• Obtain sufficient appropriate audit evidence
regarding the financial information of the entities or
business activities within the Group to express an
opinion on the Consolidated Financial Statements.
We are responsible for the direction, supervision
and performance of the group audit. We remain
solely responsible for our audit opinion.
Independent Auditor’s Reports
Continued
106
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
We communicate with those charged with
governance regarding, among other matters, the
planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with relevant
ethical requirements regarding independence, and to
communicate with them all relationships and other
matters that may reasonably be thought to bear on
our independence and, where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the Financial
Statements of the current period and are therefore the
key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes
public disclosure about the matter.
Report on compliance with the
ESEF Regulation
As part of our audit of the Financial Statements we
performed procedures to express an opinion on
whether the annual report of H. Lundbeck A/S for the
financial year 1 January to 31 December 2023 with
the filename HLUNDBECK-2023-12-31-en.zip is
prepared, in all material respects, in compliance with
the Commission Delegated Regulation (EU)
2019/815 on the European Single Electronic Format
(ESEF Regulation) which includes requirements
related to the preparation of the annual report in
XHTML format and iXBRL tagging of the
Consolidated Financial Statements including notes.
Management is responsible for preparing an annual
report that complies with the ESEF Regulation. This
responsibility includes:
• The preparing of the annual report in XHTML format;
• The selection and application of appropriate iXBRL
tags, including extensions to the ESEF taxonomy
and the anchoring thereof to elements in the
taxonomy, for all financial information required to be
tagged using judgment where necessary;
• Ensuring consistency between iXBRL tagged data
and the Consolidated Financial Statements
presented in human-readable format; and
• For such internal control as Management
determines necessary to enable the preparation of
an annual report that is compliant with the ESEF
Regulation.
Our responsibility is to obtain reasonable assurance
on whether the annual report is prepared, in all
material respects, in compliance with the ESEF
Regulation based on the evidence we have obtained,
and to issue a report that includes our opinion. The
nature, timing and extent of procedures selected
depend on the auditor’s judgment, including the
assessment of the risks of material departures from
the requirements set out in the ESEF Regulation,
whether due to fraud or error. The procedures include:
• Testing whether the annual report is prepared in
XHTML format;
• Obtaining an understanding of the company’s
iXBRL tagging process and of internal control over
the tagging process;
• Evaluating the completeness of the iXBRL tagging
of the Consolidated Financial Statements including
notes;
• Evaluating the appropriateness of the company’s
use of iXBRL elements selected from the ESEF
taxonomy and the creation of extension elements
where no suitable element in the ESEF taxonomy
has been identified;
• Evaluating the use of anchoring of extension
elements to elements in the ESEF taxonomy; and
• Reconciling the iXBRL tagged data with the audited
Consolidated Financial Statements, including notes.
In our opinion, the annual report of H. Lundbeck A/S
for the financial year 1 January to 31 December 2023
with the file name HLUNDBECK-2023-12-31-en.zip is
prepared, in all material respects, in compliance with
the ESEF Regulation.
Independent Auditor’s Reports
Continued
Hellerup,
7 February 2024
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
CVR no. 33 77 12 31
Lars Baungaard
Torben Jensen
State Authorized Public Accountant
State Authorized Public Accountant
mne23331
mne18651
107
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation
(part of Management Review – not audited)
For financial guidance for 2023, Lundbeck focuses on
revenue performance and adjusted EBITDA.
Lundbeck’s previous performance measure (Core EBIT)
adjusted for amortization of product rights and for each
non-recurring item that Management deemed exceptional
and/or which accumulates or was expected to
accumulate to DKK 100 million.
Adjusted EBITDA provides an improved and more
consistent indicator, measuring the underlying
operational profitability. Adjusted EBITDA enables a
better understanding of the underlying operational
performance, as the operating result is adjusted to
exclude depreciation and amortization, impairment losses
and reversals of impairment losses, as well as
adjustments restricted to the following categories:
Integration expenses
Restructuring costs
Gains/losses on divestment of businesses
Acquisition expenses
Other adjustments
Adjusted EBITDA is a non-IFRS performance measure.
2023
2022
Reported
result
Adjusted
Reported
result
Adjusted
Adjusted EBITDA reconciliation
DKKm DKKm DKKm DKKm
Revenue
19,912
19,912
18,246
18,246
Cost of sales
4,485 2,332 3,951 2,113
Gross profit
15,427
17,580
14,295
16,133
Sales and distribution costs
7,482
7,341
6,610
6,637
Administrative expenses
1,293 1,202 1,079 1,000
Research and development costs
3,457
3,385
3,754
3,673
Profit from operations (EBIT)
3,195
-
2,852
-
Depreciation/amortization
2,012
-
1,811
-
EBITDA
5,207 5,652 4,663 4,823
EBITDA margin
26.2%
28.4%
25.6%
26.4%
Adjustments to EBITDA
Integration costs
-
-
-
-
Restructuring expenses
64
-
(138)
-
Gains/losses on divestment of
businesses - - - -
Acquisition expenses
-
-
-
-
Other adjustments
381
-
298
-
Adjusted EBITDA
5,652
5,652
4,823
4,823
Adjusted EBITDA margin
28.4%
28.4%
26.4%
26.4%
108
Lundbeck Annual Report 2023
Management Review 2023 in Brief Our Business Governance Financial Statements
Lundbeck Annual Report 2023
H. Lundbeck A/S
Ottiliavej
9
2500
Valby
Denmark
Global
Communication & Public Affairs
Tel. +
45 36 30 13 11
information@lundbeck.com
www.lundbeck.com
CVR number 56759913
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