IHS Global Insight Perspective | |
Significance | Danish pharmaceutical firm Lundbeck achieved sales of 3.849 billion Danish kroner in the first quarter of 2010, up 15% year-on-year (y/y) in the reported currency as its blockbuster Cipralex (escitalopram, Lexapro in the U.S.) scored a 7% y/y growth in European sales and an impressive 16% y/y increase in U.S. sales. |
Implications | Positively affected by the integration of U.S. Ovation Pharmaceuticals, now Lundbeck Inc., the Danish company can count on five flagship products to drive its growth and on stronger U.S. operations to cement its presence in the sought-after U.S. market where first-quarter sales rose to 1 billion kroner. |
Outlook | Lundbeck has confirmed its 2010 guidance saying revenue of 14.3–14.8 billion kroner could be expected in 2010. In the long term, Parkinson's disease drug Azilect (rasagiline), epilepsy treatment Sabril (vigabatrin) and Huntington's disease-associated chorea drug Xenazine (tetrabenazine) are likely to become Lundbeck's main growth drivers in future and should help partly offset losses induced by the entry of generic competition, notably on the escitalopram market. |
Danish pharmaceutical firm Lundbeck has posted a 15% y/y increase in first-quarter revenues to 3.8 billion Danish kroner (US$662 million), driven by revenues derived from the integration of Ovation Pharmaceuticals (now Lundbeck Inc.) in the United States. Lundbeck's U.S. operations grew 52% y/y over the period to bring in 1.044 billion kroner while European sales were up 12% y/y in the reported currency to 1.982 billion kroner as the company's three best-selling products—Cipralex (escitalopram), Ebixa (memantine) and Azilect (rasagaline)—achieved double-digit growth rate in the region. On the expenses side, costs of sales increased by 22% y/y to reach 698 million kroner while R&D expenses were down 12% y/y to 629 million kroner. Meanwhile, the company's operating income—calculated by IHS Global Insight as revenues minus cost of goods sold, selling, R&D, and general and administration expenses—rose 32% y/y over the period to reach 1.2 billion kroner while its net profit was up 36% y/y to 945 million kroner.
Lundbeck: Q1 2010 Results | ||
| Q1 2010 (Danish kroner mil.) | % Change Y/Y * |
Total Revenue | 3,849 | 16 |
Cost of Sales | 698 | 22 |
Distribution & Administration | 1,268 | 18 |
Research and Development (R&D) | 629 | -12 |
Operating Income ** | 1,254 | 32 |
Operating Margin (%) | 32.6 | 4.0 pp higher |
R&D as % of Net Sales | 16.3 | 5.3 pp lower |
Net Income | 945 | 36 |
Source: Lundbeck | ||
Lundbeck's revenues were again fuelled by its best-selling product Cipralex (escitalopram), marketed as Lexapro by its partner Forest Laboratories in the United States. The drug achieved sales of 1.4 billion kroner in Europe, up 7% y/y and of 727 million kroner in the United States, up 16% y/y in the reported currency. In second position comes Alzheimer's disease (AD) treatment Ebixa (memantine) which generated revenues of 611 million kroner, up 16% y/y over the period. The strongest growth was however scored by Parkinson's disease drug Azilect (rasagiline) whose sales increased 47% y/y in the reported currency to 240 million kroner. Epilepsy treatment Sabril (vigabatrin), which was rolled out in the United States during the third quarter of 2009, brought in 34 million kroner over the first quarter while Huntington's disease-associated chorea drug Xenazine (tetrabenazine) contributed 119 million kroner to Lundbeck's performance in the first quarter. Both drugs were acquired via the takeover of Ovation by Lundbeck in February 2009 (see Denmark: 10 February 2009: Lundbeck Boosts CNS Portfolio, Pipeline Through Acquisition of Ovation Pharmaceuticals).
Net Sales of Lundbeck's Top Products, Q1 2010 | |||
Brand* | Q1 2010 Net Sales (Danish kroner mil.) | % Change Y/Y* | % Change, Y/Y at constant exchange rate |
Cipralex | 1,454 | 7 | 5 |
Lexapro | 727 | 16 | 9 |
Ebixa | 611 | 16 | 17 |
Azilect | 240 | 47 | 46 |
Xenazine | 119 | - | - |
Sabril | 34 | - | - |
Other Pharmaceuticals | 575 | 23 | 26 |
Other Revenue | 89 | -43 | -42 |
Total Revenue | 3,849 | 16 | 15 |
Source: Lundbeck, | |||
Outlook and Implications
Despite an unexpected good performance in the first quarter, Lundbeck remains prudent on the future and maintained its guidance for the year 2010. The Danish company reaffirmed it was expecting revenue to increase to 14.3-14.8 billion kroner in 2010. The acquisition of Ovation, which is successfully boosting Lundbeck's U.S. operations, is obviously a key growth driver for the Danish company which derives more than a quarter of its revenues from the U.S. market. The U.S. healthcare reform, completed during the first quarter of 2010, should have a marginal impact on Lundbeck's operations according to the company.
In the long term, the addition of epilepsy treatment Sabril (vigabatrin) and Huntington's disease-associated chorea drug Xenazine (tetrabenazine) to Lundbeck's central nervous system (CNS) portfolio is likely to be a relief for the company which will be facing significant threat on the generic front in coming years (see Denmark: 19 April 2010: Lundbeck Succeeds in Blocking Generic Versions of Escitalopram in Denmark, Sees Generic Entry in Spain). Meanwhile, Parkinson's disease drug Azilect (rasagiline), which is believed to hold a 9% market share in the European Parkinson's disease market, is building momentum and should continue to gain market share in future as an increasing number of countries agree to reimburse the drug (see Denmark: 11 January 2010: Lundbeck and Teva Launch Parkinson's Disease Treatment Azilect in France). However, the drug is believed not to provide any additional response to the need to improve the management of Parkinson's disease, according to some healthcare watchdogs, including France's Transparency Commission (Haute Authorité de Santé, HAS). In that context, Lundbeck is currently looking at other compounds that could bring a therapeutic improvement in the field of Parkinson's disease (see Denmark: 12 April 2010: Lundbeck Advances Novel Parkinson's Disease Agent Into Clinical Trial).