Lundbeck cuts 600 positions in Europe

H. Lundbeck A/S (OMX: LUN) says it is cutting around 600 jobs with most of the redundancies in Europe. The pharmaceutical company spins this to be because it wants to ”establish a more flexible commercial organization” and ”maintain cost control” and that the initiative ”aims at paving the way for a successful and profitable transition of Lundbeck’s product portfolio in Europe with several potential product launches in the coming years”.

Now if that was the only thing changing, it would be hard to see the need for this but alas those issues that truly do justify such a shift, aka increased pressure from healthcare reforms, generic competition (as the company also faces patent expirations, mainly that of Cipralex, which as Lexapro in the US already did that and revenues fell off a cliff while in Europe the protection is lost gradually depending on the region in the next couple of years), and pricing/reimbursement uncertainty in Europe facing more austerity are mentioned towards the end. Lundbeck continues to expect EBITDA of 3-35 billion DKK and EBIT of 2-2.5 billion before non-recurring costs from this restructuring. Those costs are estimated to amount to half a billion kroner depending on negotiations with employer representative groups and the timing of the cuts.