May 13, 2009 / 7:06 AM / in 10 years

UPDATE 2-Lundbeck Q1 beats forecasts, cuts profit outlook

* Up 2.4 pct at 947 mln DKK ($173 mln), above consensus

* Record quarterly sales beat average forecast

* Ups 2009 sales forecast but cuts EBIT forecast as expected

* CFO dismisses market talk of Lundbeck mulling Elan bid

* Shares rise 7 pct

(Adds details, company, analyst comments, background)

By Anna Ringstrom

COPENHAGEN, May 13 (Reuters) - Danish pharmaceutical group Lundbeck (LUN.CO) posted a surprise rise in first-quarter operating profit on Wednesday as sales of its antidepressant Cipralex boosted revenues, sending its shares up.

Lundbeck, which recently bought U.S. peer Ovation Pharmaceuticals [OVAPH.UL] to boost growth and build a North American platform, raised its full-year sales outlook but cut its operating profit forecast. Operating profit rose 2 percent to 947 million Danish crowns ($173 million) from a year ago, ahead of the mean forecast of 782 million in a Reuters survey.

“This is a positive set of numbers. The company is taking market share and they show momentum on sales,” said Michael Jorgensen, analyst at Alm Brand Markets.

Jyske Bank analyst Frank Horning Andersen said profits matched his forecast but the firm probably booked less research and development costs in the quarter than the market had expected. R&D costs were 717 million crowns in the quarter, making up 22 percent of total revenue, Lundbeck said.

The pharmaceutical industry, unlike other sectors, sis not seen as cyclical and is taking a relatively soft hit from the global economic downturn.

RAISES SALES FORECAST

Lundbeck’s new 2009 sales forecast of 13.1 billion to 13.6 billion crowns now includes Ovation, which is being renamed Lundbeck Inc. Its new forecast on operating profit includes 183 million crowns in one-off acquisition costs and stands at 2.8 billion and 3.0 billion.

Lundbeck’s previous forecasts, excluding Ovation, had been for full-year sales of 12 billion to 12.5 billion crowns and an operating profit of 3.0 billion to 3.2 billion.

Analysts said the revisions on the sales and profit forecasts had been expected.

They said the costs for the Ovation acquisition, and writedowns of immaterial assets prompted the profit forecast cut. “That takes out more than Ovation brings in. But the numbers still look pretty good,” Jorgensen said.

Shares in Lundbeck rose 7 percent to 122 crowns at 1006 GMT while the DJ Stoxx Health Care Index .SXDP was up 3 percent.

CIPARLEX SALES UP

Lundbeck Inc. generated sales of 396 million crowns in the quarter, of which 61 million was booked as Lundbeck revenue.

“The newly acquired company is expected to deliver more than 25 percent top-line growth on a standalone basis in 2009,” the company said.

Group sales — half of which were generated in Europe — rose more than expected to a quarterly record of 3.23 billion crowns from 2.88 billion and versus a forecast 3.16 billion.

Lundbeck generates most of its revenue from Cipralex, sold in the United States as Lexapro. The patents on Cipralex expire in major markets from 2012 to 2014 and the company has struggled to find new products.

Cipralex sales rose 12 percent, matching expectations, and its market share in Europe rose to 17.9 percent in value terms.

Lexapro sales fell a bigger-than-expected 9 percent but market share rose to 24.6 percent in value terms. In volume terms, however, Lexapro’s market share fell, Lundback’s Chief Financial Officer Anders Gotzsche told Reuters.

Lexapro competes with Eli Lilly’s (LLY.N) Cymbalta as well as generic drugs.

Gotzsche said Lundbeck would currently not be able to borrow enough money to buy a firm the size of Irish biotech company Elan ELN.I, after market talk Lundbeck was mulling a bid. [ID:nDKT002516] ($1=5.464 Danish crowns)

Additional reporting by Karin Jensen, Teis Jensen and Peter Levring; Editing by Greg Mahlich and David Cowell

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