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Lundbeck sheds 1,000 jobs in £284 million restructure

Published on 20/08/15 at 09:05am

Lundbeck is cutting a thousand jobs globally as part of a restructuring programme to significantly lower its cost and focus its business more on its mental illness treatments.

The Danish firm says the cuts are “in order to significantly improve profitability and improve the company's value creation”. It hopes it can reduce its total cost base by nearly 3 billion Danish Krone (£284 million) by 2017.

Lundbeck will restructure its headquarter functions and commercial operations in Europe and other markets, cutting 1,000 employees from its workforce.

Kåre Schultz, president and chief executive of Lundbeck says: “In the past few years, Lundbeck has gone through major restructurings of its European commercial infrastructure. However, it has become necessary for further adjustment to be made to the commercial set-up, primarily in Europe. Lundbeck intends to emphasise focus on its following products: Abilify Maintena (aripiprazole), Brintellix (vortioxetine), Northera (droxidopa), Onfi (clobazam) and Rexulti (brexpiprazole).

"I am pleased with the sales growth of our new products but I am not satisfied with our profitability. Together with my leadership team, I believe this programme will make Lundbeck drive sustainable value creation for all our stakeholders. We are aware that these decisions will affect many of our employees and we will strive to support these employees as we implement the changes.”

Lundbeck also plans to make savings through minimising general and administrative functions, and expanding its newly established business service centre in Krakow, Poland. It has allocated 1.1 billion Krone (£248 million) for severance payments and restructuring costs.

In the first half of 2015, Lundbeck’s core revenue reached DKK 7.2 billion (£681 million), a decrease of 7% in local currency. It was particularly hard-hit by poor sales in Europe, where revenue declined by 35% to DKK 2.0 billion (£185 million) ‘following generic erosion’.

As a result the company has downgraded its financial guidance for 2015. Lundbeck says it now expects revenue for the year to be around DKK 14.0 billion (£1.3 bn). It adds: “Once the restructuring programme is finalised, the expectation is to significantly improve the company's profitability.”

Yasmita Kumar

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