August 10, 2011 / 7:05 AM / 6 years ago

UPDATE 3-Lundbeck cuts R&D jobs as Q2 beats consensus

* Q2 EBIT 1.1 billion Danish crowns vs forecast 992 mln

* Sees 2011 results at upper end of guided range

* Sees rising pressure from generic drugs, healthcare reforms

* Says to cut up to 12.5 pct of R&D jobs, hire sales staff

* Shares rise 7 pct, outperforming wider market (Adds details, CEO, analyst quotes, updates share price)

By Mette Fraende

COPENHAGEN, Aug 10 (Reuters) - Danish drugmaker Lundbeck reported consensus-beating second-quarter profit, driven by strong sales, and said full-year results would be at the upper end of its guided range.

Yet the group warned of increasing generic competition and healthcare reforms, forcing it to cut research and development staff by up to 12.5 percent.

Operating profit rose to 1.1 billion Danish crowns ($210 million) in the April-June quarter, from 936 million in the same period last year, exceeding analysts' average forecast for 992 million in a Reuters poll.

Lundbeck's shares were up 7 percent at 1047 GMT, against a 1 percent rise in the STOXX Europe 600 healthcare index and a 1.2 percent gain in the Copenhagen bourse's benchmark index.

"The first half has been the best half-year in Lundbeck's history," Chief Executive Ulf Wiinberg said on Wednesday.

New products such as Xenazine, which treats chorea associated with Huntington's disease, and Sabril, used to treat seizures and infantile spasms, continued to see positive sales development, Lundbeck said.

Revenue from Xenazine rose 42 percent to 209 million crowns while Sabril grew 113 percent to 80 million.

"We are experiencing increasing pressure from generic competition and from healthcare reforms in many countries, and therefore it is necessary for us to focus sharply on keeping our costs under control," said Wiinberg.

In response to those challenges, the company said it would cut 125-175 research and development jobs and add 200-300 sales staff in the U.S. and international markets. The company employs 1,400 staff in its research and development division.

Last year, the global drug industry cut its research spending for the first time, after decades of relentless increases. The pace of decline looks set to quicken this year in the industry.

The world's biggest drugmaker Pfizer , has taken the most dramatic step with plans to slash around a quarter of its R&D budget over two years.

"We (will) do it partly due to healthcare reforms and the world economic crisis, which will probably lead to more healthcare reforms," Wiinberg told Reuters.

The company said it saw 2011 operating profit of 3.3 billion to 3.6 billion crowns, unchanged from its earlier forecast.

But it said full-year earnings before interest, tax, depreciation and amortisation (EBITDA) should be at the upper end of an earlier guided range of 4.3-4.6 billion crowns, and revenue at the high end of guidance for 15.3-15.8 billion.

"Lundbeck's Q2 looks a lot stronger than the market expected ... It is rare we see Lundbeck upgrade to the high end of a guidance range this early in the year, so there is no doubt it is going well," said Alm. Brand analyst Michael Jorgensen.

The group gets most of its revenue from antidepressant Cipralex, sold as Lexapro in the U.S. and marketed by Forest Laboratories . Cipralex sales rose to 1.53 billion crowns, just missing analysts' average estimate of 1.55 billion.

Lexapro sales rose to 715 million crowns from 630 million a year ago, beating an average 567 million forecast by analysts.

"The result is a positive surprise, primarily due to stronger Lexapro sales," said Jyske Bank analyst Frank Andersen.

The company has warned it stands to lose about 90 percent of U.S sales of Lexapro when it enters 2013 due to generic competition, as patents expire in 2012-2014.

Last year, generic drugs competing with Cipralex were launched in Spain, Norway and Finland, hurting Lundbeck's sales.

Also price cuts and healthcare reforms in some European countries have capped sales of the antidepressant, and the group is looking for new drugs to drive sales.

$1 = 5.239 Danish Crowns Additional reporting by Shida Chayesteh; Editing by Dan Lalor, Mike Nesbit and David Hulmes

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