H. Lundbeck Slashing 1,000 Employees as Company Faces Declining Revenue Due to Generic Competition
Approximately 1,000 jobs will be eliminated at H. Lundbeck A/S (LUN.CO) as the psychiatric drugmaker faces increased competition from generic medications, the Danish company announced this morning.
Kåre Schultz, Lundbeck’s new chief executive officer, said the company’s new restructuring program will improve its fiscal position so it can “invest in future profitable growth initiatives.” Schultz, who came to Lundbeck from Novo Nordisk (NVO), said the restructuring moves are expected to save the company about $3 billion Danish Kroner, or about $444 million by 2017. The restructuring program includes minimizing general and administrative functions, costs reductions in research and development and the closure of early-stage projects, Schultz said in a statement. The restructuring program will also include a reclassification of 4.8 billion Danish Kroner in research and development costs, the company said. “When the restructuring programme (sic) is finalized, we expect to significantly improve the company’s profitability and we expect to see positive reported operating profit already in 2016 with further improvement in 2017,” Schultz said.
Lundbeck employs approximately 6,000 people in 57 countries. The company maintains R&D centers in the United States, Denmark and China. It also maintains production facilities in China, Denmark, France and Italy.
Lundbeck has seen approximately a seven percent decline in revenue due to generic competition for its antidepressant Cipralex and Alzheimer’s treatment Ebixa, Bloomberg said. The company revised its forecast for about 14 billion Danish Kroner, or about $2 billion.
Following the restructuring plan, Lundbeck will focus on several key products, including Abilify Maintena, Brintellix, Northera, Onfi and Rexulti. The U.S. Food and Drug Administration (FDA) approved Rexulti as a therapy for adults battling depression as well as for adults battling schizophrenia. Rexulti was co-developed by Lundbeck and Otsuka Pharmaceutical of Japan. The drug is expected to be available sometime this month. The company expects Rexulti to generate approximately $750 million in sales.
Lundbeck has undergone several rounds of reorganization over the past few years. In 2012, the company eliminated 600 jobs and the next year the company divided itself into multiple global districts. Lundbeck said the latest restructuring is necessary to “further adjust the commercial set-up primarily in Europe.”
While the company is eliminating about 17 percent of its workforce, Lundbeck is expanding its new business service center in Krakow, Poland.
Shultz joined the company as CEO in May following the abrupt resignation of Ulf Winberg after he failed to tell the company’s board of directors he received shares of Stratified Medical, a company in which Lundbeck had invested.
August 19, 2015
By Alex Keown, BioSpace.com Breaking News Staff