Good year for Lundbeck, Lexapro U.S. patent expiry looms

H. Lundbeck A/S (OMX:LUN) 2011 revenue was just over 16 billion (+8%), EBITDA 4.63 billion (+5%) and EBIT 3.4 billion (+1%), meaning that margins were down somewhat. The numbers are the highest so far for the company. Revenue growth was seen in all regions. The company feels that late stage pipeline progress (4 registration applications submitted) and partnership in 2011 have improved growth prospects going forward.

Blockbuster antidepressant Escitalopram sold 2% more in Europe and Japan (brand name Cipralex in Europe) and 2% more in the US (brand name Lexapro marketed by Forest Laboratories) in local currencies during 2011. The growth tamed towards the end of the year. The two other major products selling north of a billion DKK per year Ebixa (Memantine) for Alzheimer's disease and Azilect (Rasagiline) for Parkinson’s disease grew in double digits. Azilect (Tetrabenazine) marketed for chorea associated with Huntington’s disease in the US by Lundbeck was fast approaching one billion DKK level as well.

Escitalopram (Lexapro) patent expires in the USA in March 2012, which is expected to result in a revenue decline for the product. Lexapro was launched in Japan in 2011 together with Mochida Pharmaceutical Co., Ltd. Lexapro revenue from Japan is included in Cipralex sales number. Geographical expansion to China, where the company has a new research centre, with Lexapro, Axilect and Ebixa is also a focus area in cooperation with Xian-Janssen Pharmaceutical Ltd sales force.

While the underlying strong trend is seen to persist, guidance for 2012 shows a reduction in sales and earnings due to above mentioned patent expiring. Lundbeck guides for revenue between 14.5 and 15.2 billion, EBITDA of 3-3.5 billion and EBIT of 2.0-2.5 billion in 2012. The suggested dividend for 2011 is DKK 3.49 per share (30% payout ratio). For 2013-2014 the Danish pharmaceutical company expects revenue above 14 billion and profit from operations (EBIT) above 2 billion DKK. In 2014 the company faces Cipralex's EU patent expiration. The stock was down ever so slightly for the week.