February 8, 2012 / 7:50 AM / 9 years ago

UPDATE 3-Lundbeck warns earnings will stall until 2015

* Q4 EBIT 326 mln DKK vs average forecast 400 mln

* Sees 2012 EBIT of 2.0-2.5 bln DKK vs 3.39 bln in 2011

* Sees 2012 revenue of 14.5-15.2 bln DKK vs 16.01 bln in 2011

* Earnings to stall as key antidepressant comes off patent

* Shares down 1.2 pct vs European sector down 0.4 pct (Adds CEO comments, updates share price)

By Mette Fraende and Henriette Jacobsen

COPENHAGEN, Feb 8 (Reuters) - Danish drugmaker Lundbeck warned earnings will stall until 2015 as its key antidepressant comes off patent and it invests in new product launches to secure future growth.

The company said on Wednesday sales and operating profits would fall this year after fourth-quarter earnings missed analysts’ forecasts due to higher costs.

“Growth in earnings will come in 2015, realistically,” Chief Executive Ulf Wiinberg told Reuters.

“2012 to 2014 will be years which will see product launches at a speed not seen before,” he added.

Lundbeck gets most of its revenue from Cipralex, sold as Lexapro in the United States by Forest Laboratories, but has warned it stands to lose about 90 percent of U.S. sales of Lexapro from 2013 due to generic competition.

For this year alone, Lundbeck expects sales of Lexapro, which runs off patent in the coming months, to drop by about 2 billion crowns. Sales of the drug stood at 2.54 billion in 2011.

Fourth-quarter operating profit rose 1.6 percent to 326 million crowns ($58.1 million), missing analysts’ average forecast of 400 million in a Reuters poll, as higher costs offset strong sales of medicines to treat Alzheimer’s, Parkinson’s and Huntington’s diseases.

Sales of Lexapro also rose by a better-than-expected 11 percent, underscoring its importance, while Cipralex sales fell to 1.43 billion crowns from 1.46 billion in the same quarter last year, slightly below analysts’ estimate of 1.45 billion.

“Lexapro sales really shine in the fourth quarter. Clearly better than forecasts. What will be the challenge is that Lexapro runs off patent in the U.S. in March 2012 and will lose practically all of its sales,” Sydbank analyst Soren Hansen said.

Lundbeck said it expected 2012 earnings before interest and tax (EBIT) of 2.0-2.5 billion crowns and revenue of 14.5-15.2 billion, a decline from 2011 EBIT of 3.39 billion and revenue of 16.01 billion.

It forecast 2013 and 2014 revenue of at least 14 billion crowns and EBIT of at least 2 billion crowns.

Shares in Lundbeck were down 1.2 percent at 1232 GMT, against a 0.4 percent fall in the STOXX Europe 600 healthcare index and 0.1 percent rise in the Copenhagen’s bluechip index of 20 most traded and most valuable stocks.


Wiinberg said Lundbeck would invest more this year than ever before in research and development, product launches and early marketing to secure future growth.

“We will thereby create the foundation for growth from 2015 and beyond,” he said.

Lundbeck is working on finding replacements for Cipralex and Lexapro in products such as Xenazine, which treats chorea associated with Huntington’s disease, and Sabril, used to treat seizures and infantile spasms.

In 2010, generic drugs competing with Cipralex were launched in Spain, Norway and Finland, hurting Lundbeck’s sales. On the other hand, Lexapro was launched in Japan in August by partners Mochida and Mitsubishi Tanabe Pharma.

Price cuts and healthcare reforms in some European countries and heavy generic competition, have also capped sales of the antidepressant.

“Looking at the cost levels for the fourth quarter, sales and distribution costs were 16 percent higher than our forecasts, administration costs some 24 percent higher and R&D some 26 percent higher,” Nordea said in a note to clients.

Sales for the October-December quarter rose to 3.83 billion crowns from 3.53 billion in the same period a year earlier, above an average 3.65 billion estimate in the Reuters poll.

Lundbeck proposed a dividend of 3.49 crowns per share. ($1 = 5.6135 Danish crowns) (Editing by Jodie Ginsberg and Mark Potter)

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