Vi2

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Contents
MANAGEMENT REVIEWFINANCIAL STATEMENTS

OTHER REPORTS

Our Business Model

3

GOVERNANCE

Patient perspective: Navigating the waves

4

Corporate Governance

33

Financial Statements of the Parent

Sustainability

35

Company

92

Business Ethics and Code of Conduct

37

Management Statement

102

Risk Management

38

Independent Auditor’s Reports

103

Board of Directors

40

Executive Management

43

The Lundbeck Share45

Consolidated Financial Statements

50

ADDITIONAL INFORMATION (PARTOF MANAGEMENT REVIEW)
Adjusted EBITDA Reconciliation

107

2023 IN BRIEF
Financial Key Figures1

6

Key Events

7

Sustainability Key Figures

8

Letter to Shareholders

9

OUR BUSINESSStrategy Update

12

Performance Review and Outlook 2024

14

Business Performance

15

Science and Innovation

19

Markets and Products

26

Summary for the Group 2019-2023

29

Also find our Sustainability Report,
Remuneration Report and Corporate
Governance Report on → Lundbeck.com

Cover
Nicole is from the U.S. and was diagnosed with migraine
at the age of 15. Read her story on page 4.
Photography: Søren Svendsen and Lundbeck.

3

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

OUR BUSINESS MODEL

At Lundbeck, we discover,develop and commercialize
treatments that make a difference
to people affected by psychiatricand neurological disorders.

We have more than 70 years of experience inneuroscience and in improving the lives ofpeople with brain disorders.

We are one of the few biopharmaceuticalcompanies in the world working exclusively
within neuroscience.

Everywhere we operate, we strive to create
long-term value and make a positive
contribution to people and societies.

We cover the full value chain:• We research to build a strong pipeline consisting of promising
molecules and antibodies.

We focus our innovation within psychiatry and neurology:• Psychiatry covers psychotic disorders like schizophrenia, moodand anxiety disorders like depression, bipolar disorder, and posttraumatic stress disorder.

We ensure outcomes to people and societies:• +8 million patients around the world are helped by our medicines
daily.

• We develop our drug candidates into new medicines.
• We manufacture our medicines at state-of-the-art production sites
and continue to supply our drugs to patients in need.
• We make our medicines available through healthcare systems in
more than 100 countries.

We are around 5,600 highly specialized
employees across +50 countries.

• Neurology covers disorders like migraine, dementia, andmovement disorders like Parkinson’s disease, epilepsy, andmultiple system atrophy (MSA).

• We reinvest around 20% of our revenue in R&D to continue ourdevelopment of new, innovative drugs.
• Throughout our value chain, we incorporate patient insights bytalking to and learning from those with lived experiences.

• Neuroscience is an exciting growing area with large unmet
medical needs. We see growth and rapidly evolving technologies
and methodologies.

• We create shareholder value ensuring sustainable and profitable
growth.

We work in partnerships to fight stigma andaddress the large unmet medical needs.

We act to improve health equity for the patients
we serve and the communities we are part of.

4

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

PATIENT PERSPECTIVE

We are sharing the voicesof people living with brain
diseases, because patientsare at the heart of all we do.
Read Nicole’s full story on→ www.lundbeck.com

Navigating the waves
After three decades of managing migraine, Nicole recently graduatedwith her degree and landed her dream job. She is proof that withunwavering determination, anyone can reclaim control of their life.
Growing up along the sunny shores ofsouthwest Florida, Nicole and her family looked
forward to the arrival of summer. However, whatshould have been carefree days of sandcastles
and seashells took an unexpected turn when
Nicole began experiencing migraine. What she
used to look forward to, now often culminated inthrobbing headaches. The picturesque seaside
scenes were overshadowed by the persistenceof migraine that impacted Nicole's experience
for the next +30 years.
As Nicole transitioned from childhood toadolescence, she began to uncover the threads
connecting her migraine attacks. Certain
triggers emerged – gym class, chocolate,caffeine, lights and sounds. Seeking answers,
Nicole consulted her doctor, who diagnosed her
with migraine at the age of 15. Through her lateteens and early 20s, migraine persisted, with thefrequency increasing from two attacks a month
to an alarming 18, accompanied by debilitating
symptoms including nausea and aura.
The haze of brain fog that preceded andfollowed these attacks cast a shadow over her

ability to communicate effectively, leaving her
grappling with sentence formation andarticulation.
A WAVE OF HOPE

Nicole's journey took a transformative turn
during her late 20s when she visited aneurologist. The revelation that she had neverconsulted a specialist for her migraine and thendid so set the stage for a new phase in her
journey. Over the course of three decades,
Nicole would cross paths with ten different
neurologists, each contributing to her
understanding of her condition. This journey of
discovery eventually led to significant progressin the treatment of her migraine over the past
five years.

Nicole recently accepted a new job as a casemanager working with new mothers to preventchildhood neglect and abuse, rejoining theworkforce.

This is my dream job,and I am thrilled tohave the opportunity
after all these years.

Participation in a clinical trial introduced a newtreatment option that helped break the grip
migraine had on her life. Gradually, migraine
became more manageable, allowing her toreturn to resume pursuing her degree and, inAugust 2023, proudly secure her bachelor’s inhealth and human services.

Nicole,living with migraine

TIDES OF CHANGE

When reflecting upon her journey spanning
three decades, Nicole mentions, in her opinion,
the profound transformations in migraine caremarked by an expanded array of available
treatments and decreased stigma surrounding
migraine.
Nicole's valuable experience boils down topractical advice for anyone living with migraine:"Find a neurologist who listens and works withyou. Understand your triggers and keep looking
until you find the right treatment for you."

5

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

2023 in Brief
Christine Utzon
Synthesis Operator

IN THIS SECTION

06

Financial Key Figures

07

Key Events

08

Sustainability Key Figures

09

Letter to Shareholders

6

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Financial Key Figures1
2023 saw exceptional growth of our strategic brands.
TOTAL REVENUE

ADJUSTED EBITDA3

DKKm

19,912
8% CER

19,912

NET PROFIT

DKKm

18,246

16,299

2

5,652

DKKm

5,652
4,823

3,990

2022

2021

1,916
1,318

20%

7% CER

2

2023

2,290

2,290

2023

2022

2023

2021

2022

2021

Revenue reached DKK 19,912 million representing a growth of
9% compared to 2022.

Adjusted EBITDA increased 17%.
Adjusted EBITDA margin increased from 26.4% to 28.4%.

Strong increase in net profit from 2022 to 2023.

REVENUE FROM STRATEGIC BRANDSEBITDA4

NET CASH

DKKm

13,733

13,733

12,135
9,287

16% CER

DKKm

5,207

5,207

DKKm

4,663
3,720

0% CER

2

711

711

2023

2022

2021

2

2023

2022

2021

In aggregate, strategic brands grew 13% compared to 2022,
representing 69% of total revenue.

2023

2022

2021

EBITDA increased 12%.
EBITDA-margin in 2023 increased from 25.6% to 26.2%.

1 Unless otherwise stated, information is at reported rates.
2 Constant Exchange Rates (CER) previously denominated Local Currencies (LC). Change at CER does not include effects from hedging.
3 For details of the non-IFRS measure ‘adjusted EBITDA’, see Adjusted EBITDA Reconciliation.
4 For definition of the measure “EBITDA”, see Summary for the Group 2019-2023.

-2,183-3,189Net debt of DKK 2,183 million at year-end 2022 transitioned into
net cash in 2023.

7

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Key Events1
In February, Thomas Gibbs joined
Lundbeck as Executive Vice
President and Head of Lundbeck in
the United States based in
Lundbeck’s U.S. head office inChicago.

Lundbeck’s HOPE trial with Lu
AG09222 met its primary endpointin migraine prevention. Patientstreated with this monoclonal
antibody had a statisticallysignificantly greater reduction in thenumber of monthly migraine days
from baseline to weeks 1 to 4 oftreatment compared to placebo.

The U.S. Food and Drug
Administration (FDA) approved the
New Drug Application (NDA) for
Abilify Asimtufii® (aripiprazole)
extended-release injectablesuspension for intramuscular use, a
once-every-two-months injection for
the treatment of schizophrenia in
adults or for maintenancemonotherapy treatment of bipolar I
disorder in adults.
1 The list of events is ordered chronologically.

Lundbeck released new data
confirming the long-term benefit oftreatment with Vyepti®
(eptinezumab) in migraine
prevention. The findings from the
DELIVER extension study were
presented at the 65th Annual
Scientific Meeting of the American
Headache Society.

Alloy Therapeutics, a biotechnology
ecosystem company, announced it
is collaborating with Lundbeck inthe discovery of novel biologic
therapies.

Neuro3 Therapeutics, abiotechnology company, acquired
exclusive worldwide rights todevelop and commercialize clinicalstage KCNQ2 activators from
Lundbeck.

The FDA approved the
supplemental New Drug Application(sNDA) of Rexulti® (brexpiprazole)for use in the treatment of agitation
associated with dementia due to
Alzheimer’s disease (AADAD). Thisapproval makes Rexulti® the firstand only pharmacological treatment
approved in the U.S. for AADAD.

Lundbeck took over as chair of theDanish Lighthouse Life Science
expanding its focus to include mental
health. Through public-private
partnerships the purpose is to find
new innovative welfare technology
solutions, and currently 300 partners
are involved including knowledge
institutions, municipalities, regions,and small-medium and large
companies. Chairing the partnership,
Lundbeck’s vision is to align thelighthouse with political priorities anddevelop innovative solutions thatassist individuals facing mental
challenges, promote mental wellbeing and inspire global solutions formental health.

The Board of Directors appointed
Charl van Zyl as the new President
and CEO of Lundbeck, announcingthat Deborah Dunsire had chosen
to retire from Lundbeck after having
successfully strengthened
Lundbeck’s position since her
appointment in 2018.
Charl van Zyl joined Lundbeck in
September.

Lundbeck presented clinicaladvances in migraine prevention withpositive trial results at theInternational Headache Congress inSeoul, Korea. The data supports Lu
AG09222 as a potential preventive
treatment of migraine and based onthese positive outcomes, Lu
AG09222 will progress into further
development.

Lundbeck and Otsuka
Pharmaceutical announced topline
results from two phase III trials of
brexpiprazole as combination
therapy with sertraline for thetreatment of post-traumatic stressdisorder in adults. Overall, the safety
and tolerability results wereconsistent with the profile ofbrexpiprazole as observed in theclinical trials for schizophrenia,
AADAD, and adjunctive treatment ofmajor depressive disorder (MDD). Ina flexible dose trial, significant effects
were seen on the primary endpoint,
while the fixed dose trial missed its
primary endpoint. Lundbeck is
discussing the results with the FDA.

Lundbeck established the ‘Lundbeck
Biotech Incubator’. The pilot projectwill give selected biotech companies
working in the field of the central
nervous system access to
Lundbeck’s research facilities andexperts in drug design and brain
disorders. The target group isscientists, innovators, andentrepreneurs in early-stage
biotechnology companies.

8

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Sustainability Key Figures
PATIENTS WE SERVE

BUSINESS ETHICS COMPLIANCE

CLIMATE ACTION

99.9%

Of employees completed the annual e-learningon our Code of Conduct.

+8 million▼

Reduction in scope 1 & 2carbon emissions vs. 2019
SBTi target baseline.

Our portfolio of products reaches more than 8 million people
on a daily average1.
CHEMICAL RECYCLING

59%

65%

34%

WOMEN IN SENIOR MANAGEMENT

35.9% 33.8%

65%

59%
Recovery and reuse of the organic compounds used inchemical production2.

Gender split for senior managers globally of 36%
women and 64% men.

1 Estimated patient years, based on 2023 sales data for Lundbeck products, excluding partner products.
2 Targets are set annually based on expected production volume and mix.
3 Scope has been expanded to include all employees globally in 2023. 2022 and 2021 rates cover production sites only.

HEALTH & SAFETY

5.8

2.8
2023 2022 2021

8%

Increase in scope 3 carbon
emissions vs. 2019 SBTitarget baseline.

31.5%

36%
2023 2022 2021

▲

.

6.5

2.8

2023 2022³⁾ 2021³⁾

Frequency of lost time accidents per one million
working hours for all employees. Scope has been expanded in
20233.

Read more in our Sustainability Report

9Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Letter to Shareholders
In 2023, Lundbeck continued to deliver solid performance, primarily
driven by our strategic brands. We have expanded both our therapeuticand patient reach. We are seeing strong momentum for our businessand are committed to investing further in our pipeline.

In 2023, we saw robust sales growth and thelaunch of Vyepti® in numerous markets, alongwith the launch of Rexulti® with the additional
indication AADAD and the launch of Abilify
Asimtufii®. They all provide an additional growth
opportunity.
We have expanded our therapeutic reach andhave a firm focus on neurology and psychiatry,having made investments in our research anddevelopment activities. Over time, our pipeline
has been strengthened through internaltransformations, strategic acquisitions and inlicensing transactions, establishing a strong
foundation for future progress.
RECENT CHANGES

During Q3 2023, Lundbeck smoothly executed
the planned transition from Deborah Dunsire to
Lundbeck’s new CEO, Charl van Zyl.
Now, together with the Executive Management
team, we are in the process of strengthening

Lundbeck’s position as a focused innovator toensure a sustainable long-term future for our
products, innovation, R&D and profitability.
As we are witnessing the results of the ‘Expand
and Invest to Grow’ strategy, implemented in
2019, we are now looking into how we canaccelerate our business further.
We are striving to build and develop a richpipeline through a combination of organic
growth and strategic initiatives, such as
partnerships, in-licensing and acquisitions.
Lundbeck has a proven track record ofsuccessfully integrating new molecules andlicenses into our portfolio, and we intend to build
further on this, embracing our role as
innovators.
PROMISING SCIENTIFIC DEVELOPMENTS

In 2023, we continued to rethink and de-risk ourpipeline and how clinical trials are carried out.

We have been redirecting our research focus toareas where we have a profound understandingof biology and, importantly, biomarkers that canhelp us understand and reduce risks during
development. More products in the portfolio aredeveloped using biomarkers, allowing for further
de-risking of our clinical development.
Life-cycle management activities around ourstrategic brands are also yielding results. We
are pleased that the U.S. Food and Drug
Administration (FDA) approved brexpiprazole(Rexulti®/Rxulti®) for the treatment of AADAD.

Our strategic choices
will focus on the R&D
environment andembrace our role as
innovators

This is the first drug proven to address thisindication in a debilitating disease impacting
both patients and their caregivers. In addition,with the FDA, we are discussing data from twophase III trials of brexpiprazole as combination
therapy with sertraline for the treatment of posttraumatic stress disorder in adults. We
concluded the trials in September.
The FDA also approved the two-month, longacting injectable formulation of aripiprazole as along-acting injectable for the treatment ofschizophrenia in adults and as a maintenancemonotherapy treatment of bipolar I disorder in
adults.
On migraine prevention, results showed that Lu
AG09222 met its primary endpoint in the HOPE
trial; patients had a statistically significantly
greater reduction in the number of monthly
migraine days. The data supports this antipituitary adenylate cyclase-activating
polypeptide (anti-PACAP mAb) as a potential
preventive treatment of migraine. We believe
this is another promising pathway to addressing
migraine and other pain disorders, and we are
excited about the potential to help patients who
may require a new approach for migraine
prevention.

10

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

We are also encouraged by the recent results inthe phase II study for Lu AF82422 where a trend
towards slowing MSA disease progression wasobserved. Lundbeck plans to initiate a phase III
study, following further dialogue with healthauthorities.

RESILIENCE IN UNCERTAIN TIMESTHANKS TO OUR DEDICATED TEAM

We live in unprecedented times, in which, withina few short years, we have had to navigate ourbusiness through a global pandemic, wars in
Ukraine and Israel/Gaza, high levels of inflationand other global uncertainties.

We want to take this opportunity to thankLundbeck’s more than 5,000 employees. Their
hard work and dedication are making a realdifference in the lives of so many people livingwith brain diseases.

MAINTAINING STEADY GROWTH

To us, it has been of utmost importance tosupport our employees who are impacted byunfortunate circumstances, but also to ensurethat we serve patients in need, regardless of thecircumstances. We remain agile, are investing
further in our pipeline and technology, and aretaking the right decisions to secure the longterm, sustainable future of the business, despite
the uncertain times.

We see the strong momentum for our businessto continue as stated in our mid-term financial
targets issued at the beginning of 2023. Thus,
both in the short-term and mid-term, we seevery good growth prospects for the company. In
the longer term, the emerging scientificdevelopments are promising, and we will invest
to realize the full potential of our R&D engine.

Employees’ hard workand dedication are
making a realdifference in the livesof so many people
living with brain
diseases.

We believe that an open dialogue and a sharedvision powers value creation and growth. We
thank everyone for keeping up the outstanding
execution of our objectives and for continuing toinnovate and serve people who need new
medicines to conquer brain diseases.
Together, we will drive positive change andpropel our company to new heights.

Charl van Zyl
President and CEOCharl van Zyl, President and CEO
andLars Søren Rasmussen, Chair of the Board

Lars Søren Rasmussen
Chair of the Board

11

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Our Business
Yusuf Tufail
Principal Scientist

IN THIS SECTION

12Strategy Update

14

Performance Review and Outlook 2024

19

Science and Innovation

26

Markets and Products

29

Summary for the Group 2019-2023

12

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Strategy Update
Our results continued a strong growth trajectory in 2023, supported byour people and commitment to providing innovative treatments forpatients suffering from diseases within neuroscience, which aremanaged by specialists. Our focus for the future is to invest in longterm sustainable growth.
OUR CURRENT STRATEGY IN BRIEF

Over the last couple of years, we have taken
significant strides to expand our operating space
through the acquisitions of Abide and Alder in2019 and the 2021 acquisition of the CD40L
inhibitor from AprilBio, which gave us theplatforms needed to expand our areas of focus
in neuroscience. With the 2020 launchof Vyepti® in the U.S. and the global roll-out tomany more markets globally through 20212023, we are establishing a new frontier inmigraine prevention for the patients who need it
the most. The expansion into the migraine fieldalso provides a commercial platform for future
growth in specialty neurology.
Furthermore, we have strengthened our R&D
capabilities to enable us to broaden our focus infour biologies and ensure that we de-risk ourinternal pipeline compounds in early
development.
We utilize an experimental medicine approach
to identify the effects of a drug in carefully

selected patient populations, to find the mostefficient clinical pathway powered by biomarkers
and study designs and to advance the mostpromising drug candidates into fulldevelopment.
The geographical expansion of Vyepti® andthe continuing efforts to grow and expand
strategic brands, along with several other lifecycle management projects, are all crucial to
our future. We are also committed to pursuing a
programmatic approach to M&A deals to boost
innovation and growth in the mid-term and toinvest further in enhanced R&D productivity todrive the next decade of growth.
We have made choices on where to accelerate
and enhance the use of digital solutions within
our operations and R&D. We have also taken
steps to fortify our winning culture withincreased agility, collaboration, diversity andinclusion.
Charl van Zyl,
President and CEO

13

Lundbeck Annual Report 2023

These are just a few of the many actions thatare helping us deliver on the promise of ourstrategy to yield sustainable, long-term
profitable growth.
CREATING VALUE THROUGH OURUNIQUE POSITION

Our goal continues to be providing innovative
treatments for patients suffering from diseases
within neuroscience, which are managed by
specialists.
Achieving our fullest potential as a mid-size,
highly specialized pharmaceutical company
requires that we thoughtfully concentrate ourefforts where we can make the most difference
to patients.
While we maximize the great medicines andbrands that we already have, we simultaneously
focus on growing our pipeline with treatments
for diseases within neuroscience for which there
are few, if any, treatment options.
By focusing on diseases within neuroscience,
managed by specialists in neurology andpsychiatric indications, we can best takeadvantage of our mid-sized scale and good
relationships with key stakeholders to deliver
powerful solutions to challenging diseases.
We continue to seek partnerships with bothacademia and biopharma along the value chainof discovery and development of new innovative
molecules and commercialization, with theambition of being the preferred partner of choicewithin neuroscience. Leveraging externalinnovation and technologies is an integral part ofbeing a successful pharma company.

Management Review

2023 in Brief

Our BusinessWe currently promote medicines in 54 countries
and will continue to review our optimalcommercial footprint with or without partners toserve as many patients as possible who need
our treatments.
Just as important to growing our pipeline andselling our medicines is the manufacturing of our
medicines, whether internally or via external
contract manufacturing.
We have excellent internal capabilities withinsmall and large molecules to support our R&D
pipeline, including monoclonal antibody design,
process and formulation development
capabilities, as well as end-to-end internal small
molecule manufacturing facilities.
Our three priorities across ‘Production,
Development & Supply’ remain quality, reliability
and cost. We have a robust track record on all
three parameters and ambitious goals tocontinuously improve performance with adetermined focus on operational excellence andsustainable sourcing.
We aim to build on what we have achieved andcapitalize further on the solid fundamentals thatare deeply ingrained in Lundbeck: our richheritage of developing and producing lifechanging treatments for patients, our deep
scientific knowledge in psychiatry andneurology, and our patient-centric mindset.
We will focus on embracing new biologies andtechnologies, adjusting and learning as we forge
ahead. In the future, we will work with even moreagility, collaboration across geographies anddigitalization to simplify our processes andGovernance

Financial Statements

accelerate our ability to test and learn for faster,higher-quality decision-making.
This will fully leverage our diverse talent,knowledge and skillsets so that we can pursue
solving some of the biggest brain diseasechallenges with the greatest patient rewards.
OUR LONG-TERM AMBITION

We aim to establish solutions for patients which
provide differentiation over standard of care.
This will be our core purpose as a focused
innovator in the field of neuroscience, and wecontinuously evaluate our strategic choices as
to where to invest our capital to achieve ourlong-term goals.

Our ambition is to establish long-term andsustainable growth to the end of this decadeand beyond. The long-term success will dependon discovering new treatments for unmet
medical needs and a series of potential
acquisitions, while an enhanced R&D pipeline
and productivity will help contribute to driving
the next decade of growth.
We believe in educating influential stakeholders
so more people suffering from chronic diseases
in neuroscience can get access to the care theyneed.

Our strengths

What we strive for

We have a premier neuroscience pipeline thatwill make a difference to our patients.

We strive to serve the people who need new
medicines to help them conquer brain
diseases.

We have an established commercial
footprint around commercially attractive patient
segments in diseases within neuroscience,
which are managed by specialists.
We are a company leveraging diversity, inwhich top talents within neuroscience aspire towork.

We strive to continue to deliver long-termsustainable growth in revenue and profitability.
And we strive to be carbon neutral before
2050.

14

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Performance Review and
Outlook 2024
In 2023, Lundbeck reached a record revenue of DKK 20 billion. We
continue to present sustainable growth and we already see results of thesuccessful R&D transformation. Currently, we are strengthening
Lundbeck’s position as a focused innovator to ensure a sustainablelong-term future for our products, innovation, R&D and profitability.
Overall, 2023 revenue is in line with theguidance provided in February 2023 andupdated on 8 November 2023 to reach DKK
19.8 to 20.1 billion. The EBITDA guidance waschanged to Adjusted EBITDA in May 2023 andwas expected to reach DKK 5.6 to 5.8 billion.

ACCELERATED REVENUE GROWTH

Revenue reached DKK 19,912 million in 2023
compared to DKK 18,246 million in 2022, driven
mainly by growth in the U.S. and Europe.

EBITDA grew 12% (+0% CER) compared to2022 and reached DKK 5,207 million.

STRATEGIC BRANDS RECORD

The revenue of Lundbeck’s strategic brands
increased by 13% (+16% CER), reaching DKK
13,733 million, representing 69% of total
revenue.
We continue to see strong growth in our
strategic brands which include Rexulti®/Rxulti®
(depression/schizophrenia), Brintellix®/Trintellix®
(depression), Abilify Maintena®/Asimtufii®
(schizophrenia) and Vyepti® (prevention of
migraine).

Adjusted EBITDA grew 17% (+7% CER)
compared to 2022 and reached DKK 5,652
million. Adjusted EBITDA margin reached28.4%.
Earnings per share (EPS) reached DKK 2.31
equivalent to an increase of 20%.
Adjusted earnings per share (EPS) reachedDKK 4.22 equivalent to an increase of 13%.

Revenue strategic brands
Revenue per region• Rexulti®/Rxulti®: DKK 4,525 million (+16%;+20% CER1)• United States: DKK 9,829 million (+8%;+11% CER1)• Brintellix®/Trintellix®: DKK 4,324 million(+1%; +5% CER1)• Europe: DKK 4,628 million (+9%; +11%
CER1)

• Abilify Maintena®/Asimtufii®: DKK 3,187
million (+8%; +10% CER1)• International Markets: DKK 4,991 million(-4%; +2% CER1)• Vyepti®: DKK 1,697 million (+69%; +74%
CER1)

1 Constant Exchange Rates (CER).

Key figures
DKKm

GrowthGrowth (CER1)

18,246

9%

8%

4,663

12%

0%

5,652

4,823

17%

7%

EPS (DKK)

2.31

1.93

20%

Adjusted EPS (DKK)

4.22

3.74

13%

2023

2022

Revenue

19,912

EBITDA

5,207

Adjusted EBITDA

15Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessBusiness Performance

Governance

Financial Statements

TOTAL REVENUE
DKKm

2023

2022

GrowthGrowth (CER)

Rexulti®/Rxulti®

4,525

3,890

16%

20%

Brintellix®/Trintellix®

4,324

4,277

1%

5%

Abilify Maintena /Asimtufii

3,187

2,964

8%

10%

Vyepti®

1,697

1,004

69%

74%

Strategic brands

13,733

12,135

13%

16%

Cipralex®/Lexapro®

2,135

2,360

(10%)

(4%)

336

636

(47%)

(47%)

Other pharmaceuticals

3,244

3,426

(5%)

(2%)

Mature brands

5,715

6,422

(11%)

(7%)

327

277

18%

18%

19,775

18,834

5%

8%

9%

8%

®

REVENUE BY PRODUCTRevenue reached DKK 19,912 million
representing a growth of 9% (+8% CER). The
revenue growth is driven by the strong
performance of the strategic brands reaching
DKK 13,733 million, representing a growth of
13% (+16% CER) and equivalent to 69% of total
revenue. The largest markets for the strategic
brands are the U.S., Canada, Spain, Italy andAustralia.
STRATEGIC BRANDS

Rexulti® revenue reached DKK 4,525 million
representing a growth of 16% (+20% CER) as aresult of strong demand and price increases aswell as a negative currency impact in the U.S.
The revenue distribution by region was 93%, 1%
and 6% in the U.S., Europe and International
Markets, respectively. The largest markets are
the U.S., Canada, Brazil, Australia and Mexico.
Brintellix®/Trintellix® revenue reached DKK
4,324 million representing a growth of 1% (+5%
CER) driven by higher demand and sales in
Europe and in International Markets such as
Japan, Spain, Brazil and Canada. This
performance is offset by lower demand in the
U.S., and COVID-19 impact as well as access
restrictions for the industry in China during2023. The revenue distribution by region was
33%, 35% and 32% in the U.S., Europe andInternational Markets, respectively. The largest

markets for the product are the U.S., Canada,
Spain, Italy and Brazil.
Abilify Maintena® and Abilify Asimtufii®
revenue reached DKK 3,187 million
representing a growth of 8% (+10% CER) driven
by higher demand in all regions and a priceincrease in the U.S. Additionally, the revenue inthe U.S. was affected by a negative currency
impact. The revenue distribution by region was
37%, 45% and 18% in the U.S., Europe andInternational Markets, respectively. The largest
markets are the U.S., Spain, Canada, Australia
and Italy.
Vyepti® delivered significant growth in 2023 andrevenue reached DKK 1,697 million following an
increase of 69% (+74% CER) mainly driven by ademand uptake in the U.S. as well as continued
launches across the world. Vyepti® was initiallylaunched in April 2020 in the U.S. and has since
been launched in around 25 markets in total. In
October 2023, Vyepti® received public formulary
coverage from certain provinces in Canada.
Combined, this coverage allows more than 80%
of eligible Canadian patients living with migraine
to have access to Vyepti®. The revenue
distribution by region was 93%, 5% and 2% in
the U.S., Europe and International Markets,
respectively.

Sabril®

Other revenue
Total revenue before hedging
Effects from hedging
Total revenue

137

(588)

19,912

18,246

MATURE BRANDS

Cipralex®/Lexapro® revenue reached DKK2,135 million representing a decline of 10%(-4% CER) mainly due to generic competition in
Japan since the loss of exclusivity at end of2022, partially offset by higher in-market sales in
China and price increase in Turkey. The
revenue distribution by region was 68% and
32% in International Markets and Europe,
respectively. The largest markets are China,
South Korea, Italy, Brazil and Canada.
Sabril® revenue reached DKK 336 million
representing a decline of 47% (-47% CER)
mainly driven by generic erosion and thecontinued supply outage as a consequence of athird-party manufacturing quality issue.
Revenue from Other pharmaceuticals, which
comprises the remainder of Lundbeck’s
products, reached DKK 3,244 million
representing a decline of 5% (-2% CER), mainly
due to lower sales of certain mature products

such as Northera® and Deanxit®. As of 1
January 2023, Onfi® is being reported together
with Other pharmaceuticals, comparative figuresfor 2022 have been adjusted accordingly.
The largest markets for Other pharmaceuticals
are the U.S, China, France, South Korea andSpain.
REVENUE BY GEOGRAPHICAL AREA

Lundbeck’s largest markets are the U.S., China,
Canada, Spain and Italy.
United States revenue reached DKK 9,829
million representing a growth of 8% (+11%
CER). The strategic brands reached DKK 8,398
million increasing by 15% (+18% CER),
representing 85% of the revenue in 2023. The
revenue growth of Vyepti®, Rexulti® and Abilify
Maintena®/Asimtufii is mainly driven by strong
demand and price increases as well as anegative currency impact. Sales of Trintellix®
continues to be negatively impacted by declining
demand and higher gross-to-net following a shift

16

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

TOTAL REVENUE
DKKm

in the payer mix, offset by price increase.
Revenue development in the U.S. is furthermore
impacted by the erosion of mature brands suchas Northera® and Sabril® as well as thecontinued supply outage of Sabril® as aconsequence of a third-party manufacturing
quality issue as communicated last year.
Europe revenue reached DKK 4,628 million
representing a growth of 9% (+11% CER). The
strategic brands reached DKK 3,088 million
increasing by 12% (+14% CER), representing
67% of revenue. The revenue growth is driven
by higher sales across all strategic brands.
Mature brands revenue increased reaching DKK
1,540 million and representing a growth of 2%(+6% CER), mainly driven by price increases.
The largest markets in Europe are Spain, Italy,
France and Switzerland.
International Markets comprises all
Lundbeck’s markets outside the U.S. andEurope. Revenue reached DKK 4,991 million
representing a decline of 4% (+2% CER). The
strategic brands reached DKK 2,247 million
increasing by 9% (+15% CER), representing
45% of revenue. The development is mainly
driven by higher sales in Canada, Brazil andChina, partially offset by the erosion of Lexapro®
in Japan following the entry of genericcompetition since the end of 2022 as well as anegative currency impact in China and Canada.
The biggest markets are China, Canada, Brazil,
Australia and South Korea. China and Canada
constitute approximately 43% of the regional
revenue from Other pharmaceuticals.
GROSS PROFIT

Cost of sales reached DKK 4,485 million,
increasing by 14% (+17% CER) mainly driven
by higher sales, the Vyepti® provision for

inventory obsolescence of DKK 312 million, andan increased Vyepti® amortization recognized in
2023 related to the European approval of
Vyepti® and environmental provisions.
Gross profit reached DKK 15,427 million,
increasing by 8% (+6% CER) in 2023. The
gross margin was 77.5% representing a declineof 0.8 percentage points.
Adjusted gross profit is the gross profit
excluding depreciation and amortization andother adjustments linked to sales. The adjusted
gross margin was 88.3% representing adecrease of 0.1 percentage points.
Amortization of product rights was DKK 1,559
million, increasing by 14% (+15% CER) mainly
driven by an increase in the Vyepti®
amortization.
EBIT AND ADJUSTED EBITDA

Total operating expenses (OPEX) reachedDKK 12,232 million corresponding to anincrease of 7% (+10% CER) mainly driven byhigher sales and distribution costs as well as
administrative expenses offset by lower R&D
costs. The OPEX-ratio declined by 1.3
percentage points.
Sales and distribution costs reached DKK
7,482 million corresponding to an increase of
13% (+18% CER) mainly driven by higher
Rexulti® and Vyepti® sales and promotion
activities in the U.S., global roll-out of Vyepti®
and restructuring provisions related tocommercial structure in certain international
markets. Sales and distribution costs
corresponded to 37.6% of revenue, representing
an increase of 1.4 percentage points.

2023

2022

GrowthGrowth (CER)

Rexulti®

4,206

3,645

15%

19%

Vyepti

1,578

982

61%

66%

Trintellix®

1,432

1,650

(13%)

(10%)

Abilify Maintena®/Asimtufii

1,182

1,047

13%

16%

Strategic brands

8,398

7,324

15%

18%

Mature brands

1,431

1,778

(20%)

(18%)

Revenue – United States

9,829

9,102

8%

11%

Brintellix®

1,507

1,311

15%

16%

Abilify Maintena®

1,445

1,382

5%

6%

77

11

600%

574%

United States®

EuropeVyepti®
Rexulti®

59

41

44%

43%

Strategic brands

3,088

2,745

12%

14%

Mature brands

1,540

1,507

2%

6%

Revenue – Europe

4,628

4,252

9%

11%

1,385

1,316

5%

12%

Abilify Maintena

560

535

5%

11%

Rexulti®

260

204

27%

34%

Vyepti®

42

11

282%

288%

Strategic brands

2,247

2,066

9%

15%

Mature brands

2,744

3,137

(13%)

(7%)

Revenue – International Markets

4,991

5,203

(4%)

2%

327

277

18%

18%

19,775

18,834

5%

8%

137

(588)

19,912

18,2469%

8%International Markets
Brintellix®
®

Other revenue
Total revenue before hedging
Effects from hedging
Total revenue

Administrative expenses reached DKK 1,293
million, increasing by 20% (+21% CER) andcorresponding to 6.5% of total revenue mainly
driven by higher legal provisions for ongoing
litigations, expenses from digital investments,
and the CEO transition.

Research and development costs reachedDKK 3,457 million with an R&D ratio of 17.4%.
Lower R&D costs of 8% (-7% CER) reflect a
reduced late development and phase IV
activities in 2023 compared to 2022. The phase
IV trials on Brintellix®/Trintellix® were completed

17

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our Businessand the pivotal trials on Rexulti® were finalized
in 2022. Further decreases in 2023 can be
attributed to lower costs for the Lu AG09222
phase IIa HOPE trial and the Lu AF82422 phase
II AMULET trial.

The effective tax rate for 2023 was 23.5%(22.6% for 2022). The tax rate is in line with thefull-year expectation, reflecting the reduced
deduction benefit from the Danish research &development incentive of 108% (130% in 2022).

EBIT reached DKK 3,195 million, increasing by
12% (-6% CER) reflecting the operating
leveraging effect of higher revenue, partially
impacted by the higher expenses.

Net profit reached DKK 2,290 million
corresponding to a growth of 20%.

Amortization of product rights amounted to
DKK 1,559 million corresponding to an increaseof 14% (+15% CER). Total amortization,
depreciation and impairment losses reachedDKK 2,012 million representing an increase of
11% (+12% CER) mainly driven by an increasein the Vyepti® amortization.
Adjusted EBITDA reached DKK 5,652 million
representing a growth of 17% (+7% CER)
reflecting EBIT and EBITDA development inaddition to adjustments of DKK 312 million of
the Vyepti® inventory obsolescence, DKK 69
million regarding higher legal provisions forongoing litigations and DKK 64 million ofcommercial restructuring costs.
NET PROFITNet financial expenses reached DKK 202
million equivalent to a decline of 47% due to thepositive impact from higher interest rates onunderlying positive bank balances. The positive
development is offset by losses from currency
revaluation. Additionally, 2022 was impacted by
the European approval of Vyepti® which
triggered a fair value adjustment of contingent
consideration of CVR to former Aldershareholders amounting to DKK 278 million.

ADJUSTED NET PROFIT AND EPS

Adjusted net profit is the net profit excluding
depreciation and amortization and otheradjustments, net of taxes. Adjusted net profit
reached DKK 4,192 million, representing an
increase of 13%. The adjustments are mainly
related to amortization of product rights,
provisions for restructuring, legal provisions forongoing litigations and the Vyepti® provision for
obsolescence.
Adjusted EPS was DKK 4.22 corresponding toan increase of 13%.
CASH FLOW

Cash flows from operating activities
amounted to an inflow of DKK 4,080 million
compared to an inflow of DKK 3,519 million in
2022. The positive development is primarily
driven by higher revenue and EBIT, which waspartly offset by higher working capital. The net
working capital was mainly driven by a decreasein short-term liabilities due to the Rexulti®
milestone payment in 2023 combined with adecrease in other short-term liabilities.
Lundbeck’s net cash flows from investing
activities were an outflow of DKK 498 million
mainly due to milestone payments in 2023
compared to an outflow of DKK 1,892 million in
2022 related to the CVR payment triggered by
the European approval of Vyepti®.

Governance

Financial Statements

Lundbeck’s net cash flows from financing
activities were an outflow of DKK 2,085 million
compared to an outflow of DKK 387 million in
2022. The financing cash flows in 2023 mainly
relate to repayment of debt and dividend
payment approved at the Annual General
Meeting in March 2023. The development offinancing cash flow is affected in 2022 by a cash
inflow mainly related to the drawing on the RCF
used for the milestone payment triggered by theEuropean approval of Vyepti®.
The net cash inflow reached DKK 1,497 million
compared to an inflow of DKK 1,240 million in
2022. Net debt has decreased from DKK 2,183
million at the end of December 2022 to net
cash of DKK 711 million at the end of
December 2023. Net debt/EBITDA ratio is -0.1x
at the end of December 2023 compared to 0.5x
at the end of December 2022. Interest-bearing
debt was DKK 4,299 million at the end of
December 2023 compared to DKK 5,731 million
at the end of December 2022.
DIVIDEND

The Board of Directors proposes to pay a
dividend of approximately 30% of net profit for2023 in line with Lundbeck’s pay-out policy of 30– 60%. This corresponds to DKK 0.70 per shareor a total of DKK 697 million compared to DKK
578 million in 2022. The dividend pay-out issubject to approval at the Annual General
Meeting on 20 March 2024.
FINANCIALGUIDANCE 2024

For the financial guidance 2024 and going
forward, Lundbeck will focus on revenue andadjusted EBITDA at constant exchange rates(CER), instead of revenue and adjusted EBITDA

at reported rates, to provide a more focusedview of the underlying operational performance.
In 2024, revenue is expected to grow 7% to
10% at CER when compared to revenue of theprior year excluding effects from hedging. The
growth reflects the continued and sustainablegrowth driven mainly by the demand of thestrategic brands. Assuming the current
exchange rates versus DKK, the revenue
growth reported in DKK is expected to bearound 4 percentage points lower than at CER.
The guidance range reflects continued strong
growth of Vyepti® in the U.S. and the continued
global roll-out. Additionally, the guidance
expects robust growth of Rexulti® following
AADAD indication in the U.S. Furthermore, theguidance range comprises growth of Brintellix®
in Europe and International Markets as well asslight growth for Abilify Maintena®/Asimtufii in
the U.S.
The mature brands are expected to face
increased generic erosion, especially
Cipralex®/Lexapro®, Deanxit® and Sabril®.
Adjusted EBITDA is expected to grow 10% to
16% at CER in 2024 when compared toadjusted EBITDA of the prior year excluding
effects from hedging. The financial guidance2024 reflects higher R&D costs driven by the
progression of the pipeline and higher sales anddistribution costs due to increased Vyepti® and
Rexulti® promotion activities. Assuming thecurrent exchange rates versus DKK, theadjusted EBITDA growth reported in DKK is
expected to be around 9 percentage points
lower than at CER.
All the above expectations are based onassumptions that the global or regional

18

Lundbeck Annual Report 2023

macroeconomic and political environment will
not significantly change business conditions for
Lundbeck during 2024, including the impact ofany potential material business development
activities and the potential implications.
In the table below, the expectations andadditional relevant information have beensummarized.
DKK

FY 2024 guidance

Total revenue
growth at CER

7% to 10%Adjusted EBITDA
growth at CER

10% to 16%

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

OTHER RELEVANT FINANCIAL INFORMATION FOR 2024 AT REPORTED RATES
Total revenue (IFRS) growth1

Around 4 percentage points lower than at CER

Adjusted EBITDA growth1

Around 9 percentage points lower than at CER

Adjusted gross margin2

88% to 89%

R&D costs

DKK 3.9 to 4.1 billion

Depreciation & amortization

DKK 1.8 to 2.0 billion

Net financials, expenses

DKK 50 to 100 million

Effects from hedging

DKK -50 to -75 million

Effective tax rate

22% to 24%

Net cash/(net debt)3

DKK 4.0 to 4.5 billion

1 Includes effects from hedging and exchange rate impact.
2 Adjusted gross margin is the gross margin excluding depreciation and amortization and other adjustments linked to sales.
3 Net cash/(net debt) is defined as Interest-bearing debt, cash, bank balances and securities, net.

REVENUE AT CER
MID-TERM TARGETS

Lundbeck’s mid-term targets communicated in
February 2023 remain unchanged. Lundbeck isin a period with limited impact from major
regional losses of exclusivity and anticipatessolid growth of its strategic brands.
In 2024 and 2025, Lundbeck plans targeted
investments behind the potential blockbuster
opportunity for Rexulti® in the treatment of
AADAD. Based on organic growth, we expect
revenue to show a mid-single digit compound
annual growth rate (CAGR) over the next three
years.
At the same time, we remain focused on driving
efficiencies and being prudent in our spending.
Based on these assumptions, we target an
adjusted EBITDA-margin of 30-32% for thecurrent business, excluding any material
business development activities, by the end of
the mid-term period and despite increased
investments in R&D.

DKK million

2023

2022

Total revenue (IFRS)

19,912

18,246

Effects from hedging

137

(588)

19,775

18,834

Total revenue (IFRS) before hedging
Effects from exchange rate

(645)

1,364

Increase/(decrease) in total revenue (IFRS)

20,4209%17,47012%

Increase/(decrease) in total revenue at CER1

8%

8%

Total revenue at CER

1 Total revenue at CER for the period divided by total revenue (IFRS) before hedging for the comparative period.

ADJUSTED EBITDA AT CER
DKK million

2023

2022

Adjusted EBITDA

5,652

4,823

Effects from hedging

137

(588)

5,515

5,411

Adjusted EBITDA before hedging
Effects from exchange rate

(268)

663

Adjusted EBITDA at CER

5,783
17%

4,748

Increase/(decrease) in adjusted EBITDA
Increase/(decrease) in adjusted EBITDA at CER

1

1 Adjusted EBITDA at CER for the period divided by adjusted EBITDA before hedging for the comparative period

7%

21%
21%

Forward looking
statements
Forward-looking statements are subject torisks, uncertainties, and inaccurate
assumptions. This may cause actual results
to differ materially from expectations.
Various factors may affect future results,
including interest rates and exchange rate
fluctuations, delay or failure of development
projects, production problems, unexpected
contract breaches or terminations,
governance-mandated or market-driven
price decreases for products, introduction ofcompeting products, Lundbeck’s ability tosuccessfully market both new and existingproducts, exposure to product liability andother lawsuits, changes in reimbursement
rules and governmental laws, andunexpected growth in expenses.

19

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Science and Innovation
Over the past year, we have consistently demonstrated leadership in theneuroscience field through innovative programs and ways of working.
It is an approach rooted in our commitment to deliver impactful
medicines for very complex and devastating diseases withinneuroscience. This dedication is shaped by our agile mindset anddefined by our bold ambition to deliver on unmet medical needs.
Being dedicated to neuroscience, we have theheritage, expertise and passion to translateleading science into transformative treatment
outcomes for patients. Opportunities to make adifference are huge; the unmet patient needs
are enormous and the number of affected
people is rising, while scientific progress in thearea opens new possibilities to develop
impactful treatments.
EXECUTING THE R&D STRATEGYThe unmet medical needs of the patients weserve guide everything we do in R&D, spanningfrom early research to support of marketed
products.
In 2023, Lundbeck advanced towards becoming
a leader in neuroscience. By nurturing a
dedicated, flexible and diverse working
environment, maintaining focus on programswith a strong biological rationale,

integrating patient insights in everything we do,
and building close external collaborations, weare successfully progressing our pipeline.
In April 2023, the HOPE phase II trial with Lu
AG09222 (anti-PACAP mAb) successfully met
its primary endpoint in migraine prevention.
Patients failing prior therapy and treated withthis monoclonal antibody had a statisticallysignificantly greater reduction vs. placebo in thenumber of monthly migraine days.
In April 2023, the U.S. Food and Drug
Administration (FDA) approved the New Drug
Application (NDA) for Abilify Asimtufii®
(aripiprazole) extended-release injectablesuspension for intramuscular use, a once-everytwo-months injection for the treatment ofschizophrenia in adults or for maintenancemonotherapy treatment of bipolar I disorder in
adults.

Four biological clusters
Through pursuit of novel targets within fourbiological clusters, Lundbeck advances
innovative solutions to areas of significant
unmet medical needs within neuroscience.

In May 2023, the FDA approved the
supplemental New Drug Application (sNDA) of
Rexulti® (brexpiprazole) for use in the treatmentof agitation associated with dementia due to
Alzheimer’s disease (AADAD). This approval
made Rexulti® the first and only pharmacologicaltreatment approved for AADAD and the first full
approval of a new chemical entity within
Alzheimer’s disease in 20 years in the U.S.
In June 2023, new data confirmed the long-term
benefit of treatment with Vyepti® (eptinezumab)
in migraine prevention.
In September 2023, the two phase III trials of
brexpiprazole as combination therapy withsertraline for the treatment of post-traumaticstress disorder in adults were concluded.
Overall, the safety and tolerability results wereconsistent with the profile of brexpiprazole asobserved in the clinical trials for schizophrenia,
AADAD and adjunctive treatment of major
depressive disorder (MDD). The flexible dose
phase III trial met its primary endpoint, while thefixed dose phase III trial missed its primary
endpoint. Lundbeck is now discussing the datawith the FDA to determine the next steps.

The four biology clusters are:Hormonal / neuropeptide signaling:
Targeting selected pathways of pain
signaling, stress and other neurohormonal
responses.
Circuitry / neuronal biology:
Targeting neurotransmission / synaptic
dysfunction to restore brain circuits andreduce neurological, psychiatric and pain
symptoms.
Neuroinflammation / neuroimmunology:
Targeting neuronal loss due to an overactive
immune system, relevant across many nicheand rare neurological disorders.
Protein aggregation, folding andclearance:
Targeting neurodegenerative
proteinopathies involved in a range ofneurodegenerative conditions, e.g.,
Alzheimer’s dementia and Parkinson’s
disease as well as rare diseases
characterized by proteinopathy, such as
multiple system atrophy (MSA).

Read more on the following pages.

20

Lundbeck Annual Report 2023

DEVELOPMENT PORTFOLIOHORMONAL / NEUROPEPTIDE SIGNALINGManagement Review

2023 in Brief

Our Business

During 2021, Lundbeck further initiated a oneyear safety and tolerability trial in participants
with chronic cluster headache (CHRONICLE).

Eptinezumab - development and regulatory
statusIn December 2020, Lundbeck initiated a phase
III clinical trial investigating the efficacy of
eptinezumab in patients with episodic cluster
headache (ALLEVIATE).

The CHRONICLE trial (NCT05064397) has
completed recruitment and results show thatpatients with chronic cluster headache receiving
open-label treatment with eptinezumab report
reductions in attack frequency, pain severity andimprovement on patient global impression.

In this trial (NCT04688775), patients received
treatment consisting of two infusions of either
eptinezumab or placebo in a cross-over manner.
The total duration of the trial was 24 weeks,
including a safety follow-up period of eightweeks.

In the ALLEVIATE trial, further recruitment was
halted following a planned interim analysis. Fulldata for eptinezumab in cluster headache will beshared with the scientific community at
upcoming meetings.

Governance

Financial Statements

Lu AG09222 – phase II
Lu AG09222 represents a potential new
therapeutic option for the treatment of migraine,
which, unlike the recently available calcitonin
gene-related peptide (CGRP) migraine
treatment drug class, targets pituitary adenylate
cyclase-activating polypeptide (anti-PACAP
mAb). PACAP and its receptors are broadly
expressed in the nervous systems andinflammation cells offering the possibility for theinterference of PACAP signaling to affectmultiple symptoms of headache disorders.
In November 2021, Lundbeck initiated the
HOPE trial, a randomized, double-blind, phaseII, proof of concept study to assess efficacy,
safety and tolerability of Lu AG09222 as atreatment for the prevention of migraine(NCT05133323). This trial recently reported
results.
The target population for this trial was definedas patients diagnosed with migraine as outlinedin the International Classification of Headache
Disorders Third Edition (ICHD-3) and withunsuccessful prior preventive treatments.
A total of 237 patients were randomly allocatedto one of three treatment groups: high/low doseof Lu AG09222 or placebo.
The primary analysis concluded that there was astatistically significant difference between Lu
AG09222 and placebo in the mean change frombaseline in the number of monthly migrainedays over weeks 1 to 4. Lu AG09222 wasgenerally well-tolerated.
A phase IIb trial is planned to start in the firsthalf of 2024 with the purpose of establishing thedose range relationship when Lu AG09222 isgiven after subcutaneous multiple dosing. The
trial will be conducted across the world with atarget population of patients diagnosed with
migraine as outlined in the ICHD-3 and withunsuccessful prior preventive treatment.
Lu AG13909 – phase I
Lundbeck’s first neurohormonal clinicaldevelopment program was initiated in December
2022 with a phase I first-in-human trial(NCT05669950) in patients with Congenital
Adrenal Hyperplasia (CAH). The first-in-classmonoclonal antibody has the potential to offer atreatment alternative to patients suffering fromconditions related to the hypothalamic-pituitaryadrenal (HPA) axis, leading to increased levelsof ACTH, adrenocorticotropic hormone.

Plain language
summaries
To support a broader understanding of
Lundbeck’s clinical research, and to makeour R&D efforts more accessible to patientsand carers, Lundbeck creates plain language
summaries of our clinical trial results.
A plain language summary explains what
happened during a clinical trial in easy-tounderstand language. It includes information
about the purpose, results and other facts
about the trial. These are made available toall patients who participate in a Lundbecksponsored clinical trial in the same languageas their signed Informed Consent Form. We
post our plain language summaries on
Lundbeck.com.

21

Lundbeck Annual Report 2023

CIRCUITRY / NEURONAL BIOLOGY

Brexpiprazole
Brexpiprazole was discovered by Otsuka and isbeing co-developed by Otsuka and Lundbeck.
The mechanism of action of brexpiprazole is still
unknown, however the efficacy of brexpiprazole
may be mediated through a combination ofpartial agonist activity at serotonin 5-HT1A anddopamine D2 receptors, antagonist activity atserotonin 5-HT2A receptors, as well as
antagonism of alpha 1B/2C receptors.
Brexpiprazole was approved in the U.S. in 2015as an adjunctive therapy to antidepressants inadults with major depressive disorder (MDD)
and as a treatment for schizophrenia in adults.
In May 2023, brexpiprazole was approved in the
U.S. for the treatment of AADAD.
Brexpiprazole – phase III in patients with
AADAD
Following the FDA approval for the use of
brexpiprazole in AADAD, the product has been
submitted for review by additional regulatory
agencies. A supplemental New Drug
Submission (sNDS) was formally accepted byHealth Canada for review as of 12 April 2023,
with anticipated action in 2024, while a joint
application using the Access pathway was
submitted on 31 May 2023 for Australia,
Singapore and Switzerland with anticipatedaction during the second quarter of 2024.
Furthermore, regulatory applications were
submitted for Malaysia in Q3 and Israel in Q4
2023.
The submissions were based on two positive
phase III, 12-week, randomized, double-blind,placebo-controlled fixed-dose trials thatManagement Review

2023 in Brief

Our Businessevaluated the frequency of agitation symptoms
in patients with dementia due to Alzheimer’s
disease based on the Cohen-Mansfield
Agitation Inventory (CMAI) total score.
Brexpiprazole – phase III in adolescentpatients (13-17 years old) with schizophrenia
The phase III trial 331-10-234 in adolescentpatients with schizophrenia (NCT03198078)
read out during the second quarter of 2023, withthe trial meeting its primary endpoint, anddemonstrating a significant improvement for
brexpiprazole compared to placebo.
The active reference for the study, aripiprazole,also separated from placebo on the primary
efficacy analysis, thus validating the study
methodology and patient population.
Brexpiprazole was generally well tolerated in thetrial, and the safety profile was similar to thatobserved in adult patients with schizophrenia.
The trial forms part of the brexpiprazole
European Medicines Agency (EMA) PaediatricInvestigation Plan (PIP), as well as an FDA Post
Marketing Requirement (PMR) following the
U.S. approval of brexpiprazole for treatment ofschizophrenia in adolescent patients. Results ofthe study were submitted to the EMA in Q4
2023.
The EMA PIP includes two further studies thatare currently ongoing. Firstly, a phase III openlabel two-year extension trial 331-10-236(NCT03238326) enrolling patients completing
trial 331-10-234.

Governance

Financial Statements

Secondly, an extrapolation study 3331-20100185 assessing the long-term efficacy inadolescents with schizophrenia, by extrapolating
data from completed brexpiprazole trials in bothadolescents and adult subjects withschizophrenia.
Brexpiprazole – phase III in post-traumaticstress disorder (PTSD)
On 7 September 2023, Lundbeck announced
topline results from two phase III trials of
brexpiprazole as combination therapy withsertraline for the treatment of PTSD in adults,
namely the flexible dose trial 071(NCT04124614) and the fixed dose trial 072(NCT04174170).

The flexible dose trial met its primary endpoint,
while the fixed dose phase III trial missed its
primary endpoint. The safety and tolerability
results were consistent with the profile ofbrexpiprazole as observed in the clinical trials
for schizophrenia, AADAD and adjunctive
treatment of MDD.
Lundbeck and Otsuka are in continued
interactions with FDA to determine the next
steps with respect to the brexpiprazole PTSD
program.

22

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Aripiprazole – two-month Injectable (LAI)
formulation
Aripiprazole once-every-two-months, ready-touse (RTU), long-acting injectable (LAI) is
provided in a single-chamber, prefilled syringe(PFS) that does not require reconstitution. It is
intended for dosing once-every-two-months via
intramuscular (IM) injection in the gluteal muscle
in the same patient populations as indicated foronce-monthly Abilify Maintena®.
Results from the pivotal trial 031-201-00181,
that enrolled 266 patients, demonstrated that
aripiprazole once-every-two-months LAI 960 mg
met the primary endpoint criteria, establishingsimilarity of aripiprazole plasma concentrations
and thus comparable effectiveness to Abilify
Maintena® 400 mg over a two-month dosinginterval.
Multiple-dose administrations of aripiprazole
once-every-two-months LAI 960 mg weregenerally safe and well-tolerated in subjects withschizophrenia or bipolar I disorder and showedcomparable safety to aripiprazole once-monthly
400 mg.
On 27 April 2023, the FDA approved
aripiprazole once-every-two-months LAI underthe brand name Abilify Asimtufii® as the firstonce-every-two-months LAI for the treatment ofschizophrenia or maintenance monotherapy
treatment of bipolar I disorder in adults.
This new two-month formulation is an innovative
addition to the LAI franchise and has patent
protection until the early part of the next decade.

Dejan Siljanoski,
Operator

Lundbeck and Otsuka submitted the Marketing
Authorization Application (MAA) for aripiprazole
as a once-every-two months RTU LAI for the

maintenance treatment of schizophrenia in adultpatients stabilized with aripiprazole to the EMA
on 26 May 2022.
Due to a Committee for Medicinal Products for
Human Use (CHMP) procedural objection,
Lundbeck withdrew its MAA under the ‘hybrid’
procedure and re-submitted to the EMA in June
2023, under the ‘line-extension’ procedure. Thischange is procedural only, and unrelated to
product quality or safety. On 25 January 2024,
aripiprazole once-every-two-months, long-acting
injectable was recommended for approval in the
EU by the CHMP for the maintenance treatment
of schizophrenia in adult patients stabilized witharipiprazole. A decision by EMA is expectedduring Q1 2024.
A supplemental New Drug Submission (sNDS)
was filed with Health Canada for the treatment
of schizophrenia and bipolar I disorder in thethird quarter of 2022. In July 2023, Lundbeck
received a drug product data-related Notice of
Deficiency (NOD) from Health Canada. The
NOD related questions will be addressed infurther detail with the agency, anticipating a resubmission for a new review cycle.
Lu AF28996 – phase I
The small molecule with agonistic properties
towards dopamine D1 and D2 receptors is apotential oral symptomatic treatment for
Parkinson's disease patients experiencing motor
complications.
The clinical phase I studies (NCT03565094 andNCT04291859) will enable a decision to enter
phase II in 2024.
Additionally, the Company has
Monoacylglycerol Lipase inhibitor (MAGLi)

23

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

delay of disease progression and therapeutic
effect on disease burden and function.

programs in phase I experimental medicine
studies, exploring the potential in neurology
indications.

A phase II trial (AMULET) testing Lu AF82422 in
MSA patients was initiated in November 2021
(NCT05104476) in the U.S and Japan.

NEUROINFLAMMATION /NEUROIMMUNOLOGYLu AG22515 – phase I
In October 2021, Lundbeck acquired an
exclusive license for Lu AG22515 (formerly
APB-A1) from AprilBio Co. Ltd in South Korea.

In January 2024, Lundbeck announced resultsof the AMULET PoC trial, a randomized, doubleblind, placebo-controlled exploratory proof-ofconcept trial. The trial included 61 MSA patientsrandomized 2:1 (40 on Lu AF82422 versus 21
on placebo) and treated for 48-72 weeks. The
primary endpoint in the trial measured slowingof progression of MSA as measured by Unified
Multiple System Atrophy Rating Scale(UMSARS) Total Score Part I and II, while thekey secondary endpoint was Modified UMSARSPart I. The primary statistical approachconsisted of a Bayesian slope analysis. In
addition, the trial included several other clinicaloutcome measures and biomarkers. While thetrial did not reach statistical significance on its
primary endpoint, a trend towards slowing MSA
disease progression was observed in the group
exposed to Lu AF82422 compared to theplacebo group, and additional signals of efficacy
were observed across other clinical andbiomarker endpoints. Lu AF82422 was generally
well tolerated. Lundbeck plans to initiate aphase III study, following further dialogue withhealth authorities.

Lu AG22515 holds potential in the treatment of
autoimmune-related CNS disorders andneurological diseases which involve so-called
lymphocyte immune system cells, that form
auto-reactivity (body self-reactions) responses
through cellular and antibody reactions.
A first-in-human trial (NCT05136053) testing
single ascending doses of Lu AG22515 inhealthy volunteers was initiated in the U.S. in
March 2022.
Results showed Lu AG22515 to be welltolerated at all dose levels tested. Furthermore,
free soluble serum L showed a sharp, robust
and sustained dose-dependent decrease,indicating target engagement when binding tohuman serum albinum. This program has
potential in several neuro-immune indications,and it is planned to progress into PoC studies inThyroid Eye Disease in 2024.
PROTEIN AGGREGATION, FOLDING,
AND CLEARANCELu AF82422 – phase II
Lu AF82422 is a monoclonal antibody (mAb)targeting the pathological form of the proteinalpha-synuclein that is believed to play a pivotal
role in the development and progression ofneurodegenerative diseases such as multiple

system atrophy (MSA), Parkinson’s disease(PD) and other synucleinopathies. Lu AF82422
is being developed by Lundbeck under a joint
research and licensing agreement between
Lundbeck and Genmab A/S.

By targeting pathological alpha-synuclein withan antibody that will inhibit aggregation andpotentially clear pathological alpha-synucleinfrom the brain, the project aims to demonstrate

Orphan drug designation for Lu AF82422 in
MSA was granted by the EMA in April 2021, and
SAKIGAKE pioneering drug designation was
granted by the Japanese Health Authorities inMarch 2023.

24

Lundbeck Annual Report 2023

OTHER PROJECTS

Lundbeck’s long experience and continuous
work within diseases of the brain have provided
us with a global network in preclinical andclinical neuroscience research. It is essential for
us to maintain our strong internal R&D
capabilities and to build external alliances tosupplement our internal capabilities, taking
advantage of the increased opportunities
provided by innovative technologies.
With the support from the world-renowned
Michael J. Fox Foundation, Lundbeck is
combining its biomarker discoveries with leading
microfluidic experts at the Danish Technical
University (DTU) to develop a state-of-the-art
biomarker assay for PD. With a second grantfrom the Michael J. Fox Foundation, Lundbeck
is leading the discovery of a radioligand as amarker of neuroinflammation for PD and otherbrain diseases in collaboration with experts inpositron emission tomography (PET) at Aarhus
University.
PATIENTS SHARE THEIR PERSPECTIVESIn 2023, Lundbeck continued its ‘Let the patient
speak’ events focusing on innovative ways ofintegrating patients’ perspectives into our
migraine and PD development programs. We
invite patients and caregivers to share theirperspectives at two events, ultimately helping
Lundbeck to incorporate insights into innovationand integrated evidence generation efforts.
Lundbeck’s development organization identified
and implemented internal frameworks that help
the Company operationalize Patient-Focused
Drug Development by bringing the patient voicecloser to research and development efforts,
describing how to seek patient input to trial
designs, informing patient-centric outcome

Management Review

2023 in Brief

Our Businessassessment strategies, and fostering an
integrated, patient-centered approach toevidence development throughout the drug life
cycle.
In partnership with the Danish Knowledge
Centre for Headache, we aim to explore novel
ways of generating real-world evidence directlyfrom patients via digital applications. The
purpose of this pilot project is to deliver scientificevidence to improve migraine treatment in
Denmark.
Such an initiative enables Lundbeck to learn
and strengthen internal capabilities to leadfuture innovative digital engagement initiatives
developing patient-centered, real-world
evidence in support of our current and future
portfolio.
COOPERATION IN NEUROSCIENCE

Together with the European Health Data andEvidence Network (EHDEN), we began
formative stages of neuroscience research withpotential partners, including otherpharmaceutical companies.
The EHDEN network provides Lundbeck with aunique platform for collaboration with data
partners specializing in specific disease areas,
ensuring access to real-world data, such as
Electronic Health Records from healthcare
systems and registries, helping us to gain much
deeper insight into disease progression,
identifying biomarkers for patient stratificationand monitoring treatment responses anddisease outcomes, etc. We hope to use thisknowledge to advance our drug development.
Data is also core in our different artificial
intelligence-related (AI) projects. Lundbeck isGovernance

Financial Statements

implementing AI in different parts of its
business. We use AI to e.g., reshape drug
discovery, accelerate drug development, and fortarget qualification and validation, exploring
neuropeptides and their connections to specificdisorders.

Commitment to diversity
in clinical trials
Lundbeck understands that brain diseases
wreak havoc without bias. Whether it begenetics, age, race, sex, ethnicity,socioeconomics or access to healthcare,
understanding and fully evaluating themultitude of factors that influence a person’shealth are key to both the development ofgood medicine and equitable advances inbrain health. As part of our ongoingcommitment to sustain a diverse clinical trial
infrastructure, we have established the below
Clinical Trial Diversity Principles andcommitted to tracking and monitoring progressagainst them.
Develop and execute a clear strategy toachieve diversity in our trials globally
We aim for each trial to be designed with theintention to ensure participants mirror the full
diversity of the patient population in the
country or region AND the disease we are
studying. This will require a concentrated effort
to involve underrepresented populations in ourmarketed regions through focused patientinclusion criteria; attention to the diversity ofclinical trial sites and investigators, removal of
barriers that could impede the participation ofcertain groups in clinical trials and use of realworld data to inform development efforts andimprove understanding of diseases andproducts.
Collaborate with patient advocacy groups
choosing to make diversity a priority
Lundbeck has a long-standing focus oncommunity outreach, and we are committed to
expanding partnerships with organizations
that possess a like-minded focus on diversity.
In collaboration with external partners, we
strive to establish trust with diverse patientand caregiver populations, gain deeper insight
into unmet patient needs, and build
awareness about open clinical trials to further
enhance the diversity of our clinical trials.
Implement integrated oversight approach
to inform, analyze and act
We aim to continuously inform and evolve ourinternal thinking and processes by actively
monitoring clinical trial diversity targets andutilizing real-world data to ensure we are
driving inclusion of underrepresented
populations in our clinical trials.

25

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Pipeline
PROJECTBIOLOGY

Eptinezumab (anti-CGRP mAb)1
Eptinezumab (anti-CGRP mAb)1
Lu AG09222 (anti-PACAP mAb)3

AREA

PHASE I

Hormonal /neuropeptide
signaling

Migraine prevention

Aripiprazole 2-month injectable formulation5

Schizophrenia & bipolar I disorder

Brexpiprazole6

Agitation in Alzheimer’s disease (AADAD)7Circuitry /neuronal biology

MAGLi programs10

PTSD8
Parkinson’s disease
Neurology

Lu AF82422 (anti-α-synuclein mAb)

Protein aggregation,folding and clearance

Synucleinopathies (MSA)11

Lu AG22515 (CD40L12 antagonist)

Neuroinflammation /neuroimmunology

Neurology

1
2
3
4
5
6

FILING / LAUNCH

Cluster headache

Neurohormonal dysfunctions

Lu AF28996 (D1/D2 agonist)9

PHASE III

Migraine prevention2

Lu AG13909 (anti-ACTH mAb)4

Brexpiprazole6

PHASE IICGRP: Calcitonin gene-related peptide.
Three phase III clinical trials (SUNLIGHT, SUNRISE, and SUNSET) are related to the Asia registration activities.
PACAP: Pituitary adenylate cyclase activating peptide.
ACTH: Adrenocorticotropic hormone.
Life-cycle management in partnership with Otsuka Pharmaceutical. Approved in the U.S.
Acts as a partial agonist at 5-HT1A and dopamine D2 receptors at similar potency, and an antagonist at 5-HT2A andnoradrenaline alpha1B/2C receptors.

7 AADAD: Agitation Associated with Dementia due to Alzheimer’s Disease. Approved in the U.S. and Canada.
8 Post-traumatic stress disorder.
9 Dopamine receptor D1 and D2.
10 MAGLi: Monoacylglycerol lipase (“MAGlipase”) inhibitor.
11 Multiple system atrophy.
12 CD40L/serum-albumin bispecific antibody-fragment ((scFv)2-Fab)) based on AprilBio’s SAFA™ technology platform.

26

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Markets
Lundbeck’s products are registered in
more than 100 countries, and we have
employees in more than 50 countries.
Our largest markets are the U.S., China,
Canada, Spain, Italy, France, Brazil
Australia, South Korea and Switzerland.
Markets

U.S.1

EUROPE1

INTERNATIONAL MARKETS1

REVENUE (DKKm)

SHARE OF GROUP REVENUEREVENUE (DKKm)

SHARE OF GROUP REVENUEREVENUE (DKKm)

SHARE OF GROUP REVENUEREVENUE FROM STRATEGIC
BRANDS (DKKm)

STRATEGIC BRANDSREVENUE FROMSTRATEGIC BRANDS (DKKm)

STRATEGIC BRANDSREVENUE FROM STRATEGIC
BRANDS (DKKm)

STRATEGIC BRANDS

9,829
8,398

51%

Abilify Maintena®/
Abilify Asimtufii®
Trintellix®
Rexulti®
Vyepti®

4,628
3,088

1 The figures above are excluding Other revenue of DKK 327 million and positive hedging effects of DKK 137 million.

23%

Abilify Maintena®
Brintellix®
Rexulti®/Rxulti®
Vyepti®

4,991
2,247

26%

Abilify Maintena®
Brintellix®/Trintellix®
Rexulti®
Vyepti®

27

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Products
STRATEGIC BRANDS

Abilify Maintena®/Abilify Asimtufii®

Brintellix®/Trintellix®

Rexulti®/Rxulti®

Vyepti®

Abilify Maintena® has been marketed since2013 as a monthly intramuscular injection
indicated for the treatment of schizophrenia
and bipolar I disorder in adults.
In 2023, Lundbeck launched Abilify Asimtufii®
as an intramuscular injection every twomonths. It was launched in the U.S. incollaboration with Otsuka Pharmaceutical andis expected to be approved and launched inEurope and International Markets from 2024
as a maintenance treatment for schizophrenia
in adults. Lundbeck will launch Abilify
Asimtufii® either alone or in collaboration with
Otsuka Pharmaceutical.

Indicated for the treatment of major
depressive disorder (MDD) Lundbeck markets
Brintellix®/Trintellix® in Europe andInternational Markets. In the U.S. and Japan,
Takeda is our co-promotion partner. Launchedin the first markets in 2014 and now available
in approximately 60 countries.

Indicated for adjunctive therapy for thetreatment of adults with MDD and as atreatment for adults with schizophrenia. In
2023, further approved for the treatment ofagitation associated with dementia due to
Alzheimer's disease. Launched in the U.S. in2015 in collaboration with Otsuka
Pharmaceutical, and subsequently in several
other countries.

Indicated for the preventive treatment of
migraine in adults. Lundbeck markets Vyepti®
across all three regions in the U.S., EU andInternational Markets. Launched in the U.S. atthe beginning of 2020, and now available in
24 countries across the world.

REVENUE (DKKm)

REVENUE (DKKm)

REVENUE (DKKm)

REVENUE (DKKm)(aripiprazole once monthly/every two months)

3,187% OF TOTAL REVENUE

16%
Products

10%
CER

▲

(vortioxetine)

4,324% OF TOTAL REVENUE

22%(brexpiprazole)

5%
CER

▲

4,525
% OF TOTAL REVENUE

23%(eptinezumab)

20%
CER

▲

1,697
% OF TOTAL REVENUE

8%

74%
CER

▲

28

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Products
MATURE BRANDS

Cipralex®/Lexapro®

Sabril®

Other pharmaceuticals

Indicated for the treatment of depression. First
launched in 2002 and today available in close
to 100 countries around the world.

Indicated for the treatment of refractorycomplex partial seizures (rCPS) and infantile
spasms (IS). Launched in the U.S. in 2009.

Northera® (symptomatic neurogenic
orthostatic hypotension (nOH)), Onfi®
(epilepsy), Ebixa® (dementia), Azilect®
(Parkinson’s disease), Xenazine® (chorea),
Deanxit® (depression), Cipramil® (depression
and anxiety), and Cisordinol® (psychosis) areamong the biggest of our other maturebrands.

REVENUE (DKKm)

REVENUE (DKKm)

REVENUE (DKKm)(escitalopram)

2,135% OF TOTAL REVENUE

11%(vigabatrin)

4%
CER

▼

336

% OF TOTAL REVENUE

2%

47%
CER

▼

3,244

2%
CER

▼

% OF TOTAL REVENUE

16%

Xue Bing,
living with depression

29

Lundbeck Annual Report 2023

Summary for
the Group
2019-2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Statement of profit or loss (DKKm)

2023

2022

2021

2020

20191

Revenue

19,912

18,246

16,29917,672

17,036Gross profit

15,427

14,295

12,651

13,506

13,196

Adjusted gross profit2,3

17,58016,133

14,173

15,101

14,505

Research and development costs

3,457

3,754

3,823

4,545

3,116

Profit from operations (EBIT)

3,195

2,852

2,010

1,990

3,153

Operating profit before depreciation and amortization (EBITDA)

5,207

4,663

3,720

4,783

4,823

Adjusted operating profit before depreciation and amortization (Adjusted
EBITDA)2,3

5,652

4,823

3,990

5,681

5,337

202

378

429

84

127

Profit before tax

2,993

2,474

1,581

1,906

3,026

Profit for the year

2,290

1,916

1,318

1,581

2,313

2023

2022

2021

2020

20191

Non-current assets

24,11826,04026,041

25,92429,095Inventories

4,427

4,046

3,031

2,163

2,204

Receivables

3,852

3,818

3,302

4,018

3,822

Cash, bank balances and securities4

5,010

3,548

2,279

3,924

3,012

Total assets

37,40737,452

34,65336,02938,133

2023

2022

2021

2020

20191

Equity22,045

20,77918,27916,973

16,782

Non-current liabilities

7,372

8,474

7,556

9,044

11,071

Current liabilities

7,990

8,199

8,818

10,012

10,280Total equity and liabilities

37,40737,452

34,65336,02938,133

2023

2022

2021

2020

20191

Net financials, expenses

Summary for the Group 2018-2022

Assets (DKKm)

Equity and liabilities (DKKm)

Statement of cash flows (DKKm)

Cash flows from operating activities

4,080

3,519

2,272

3,837

2,609

Cash flows from investing activities(498)(1,892)

(610)

(467)

(7,755)

Cash flows from operating and investing activities (free cash flow)

3,582

1,627

1,662

3,370

(5,146)

Cash flows from financing activities(2,085)(387)(3,336)(2,394)

4,548

711

(2,183)(3,189)(4,106)(6,566)

Interest-bearing debt, cash, bank balances and securities, net, year-end– net cash/(net debt)4

1 2019 has been restated to reflect the reversal of an impairment loss on the Rexulti® product rights in 2017.
2 For details of the non-IFRS measure ‘adjusted EBITDA’, see Adjusted EBITDA Reconciliation.
3 New key figures were introduced from 2023 and disclosed comparatively for 2022 and 2021. Pro forma calculations have been applied for 2020 and 2019.
4 In 2020-2023, securities amounted to DKK 0 million.

30

Lundbeck Annual Report 2023

Summary for
the Group
2019-2023
Continued

Management Review

2023 in Brief

Our BusinessGovernanceKey figures

Financial Statements

2023

2022

2021

2020

20191

Adjusted gross margin (%)

88.3

88.4

87.0

85.5

85.1

EBIT margin (%)

16.0

15.6

12.3

11.3

18.5

EBITDA margin (%)

26.2

25.6

22.8

27.1

28.3

Adjusted EBITDA margin (%)2

28.4

26.4

24.5

32.1

31.3

Research and development ratio (%)

17.4

20.6

23.5

25.7

18.3

Return on equity (%)

10.7

9.8

7.5

9.4

13.8

2

Equity ratio (%)

58.9

55.5

52.7

47.1

44.0

21,33422,962

21,46821,07923,348Return on invested capital (%)

11.0

9.9

7.9

7.4

14.2

Net debt/EBITDA

(0.1)

0.5

0.9

0.9

1.4

Effective tax rate (%)

23.5

22.6

16.6

17.0

23.6

Purchase of intangible assets, gross (DKKm)

224

449

202

114

88

Purchase of property, plant and equipment, gross (DKKm)

277

371

410

364

356

-

-

-

17

18

5,566

5,399

5,488

5,717

5,475

2023

2022

2021

2020

20191

Earnings per share, basic (EPS) (DKK)

2.31

1.93

1.33

1.59

2.33

Earnings per share, diluted (DEPS) (DKK)3

2.31

1.93

1.33

1.59

2.33

Adjusted earnings per share, basic (EPS) (DKK)2

4.22

3.74

2.88

4.76

4.07

Number of shares for the calculation of EPS (millions)3

999.2

992.9

993.3

993.7

993.5

Cash flow from operating activities per share, diluted (DKK)

4.11

3.54

2.29

3.86

2.63

Proposed dividend per share (DKK)

0.70

0.58

0.40

0.50

0.82

Dividend payout ratio (%)

30

30

30

31

35

Dividend yield (%)

2.2

2.2

1.2

1.2

1.6

Invested capital (DKKm)

Purchase of financial assets, gross (DKKm)
Average number of employees

Share data
3

Net asset value per share, diluted (DKK)3

22.22

20.93

18.40

17.08

16.89

Market capitalization (DKKm)

31,81225,50733,626

41,58250,6601 2019 has been restated to reflect the reversal of an impairment loss on the Rexulti® product rights in 2017.
2 New key figures were introduced from 2023 and disclosed comparatively for 2022 and 2021. Pro forma calculations have been applied for 2020 and 2019.
3 The calculation of EPS is based on a share denomination of DKK 1 as a result of the share split completed on 8 June 2022. Comparative figures have been restated to reflect thechange in trading unit from a nominal value of DKK 5 to DKK 1.

31

Lundbeck Annual Report 2023

Summary for
the Group
2019-2023
Continued

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Definitions

Interest-bearing debt

Debt and financial instruments (including financial leases) carrying interest.

Interest-bearing net cash

Cash, bank balances and securities less interest-bearing debt.

Adjusted gross profit

Adjusted gross profit is the gross profit excluding depreciation and amortizationand other adjustments linked to sales.

Adjusted gross margin

Adjusted gross profit as a percentage of revenue.

EBIT margin1

Profit from operations as a percentage of revenue.

EBITDA

Profit before interest, tax, depreciation, amortization and gain on divestment ofproperties.

EBITDA margin

EBITDA as a percentage of revenue.

Adjusted EBITDA

Adjusted EBITDA is defined as EBITDA adjusted by certain items3.

Adjusted EBITDA margin

Adjusted EBITDA as a percentage of revenue.

Research and development ratio

Research and development cost as a percentage of revenue.

Return on equity1

Net profit/(loss) for the year as a percentage of shareholders' equity (average).

Equity ratio1

Shareholders' equity, year-end, as a percentage of total assets.

Invested capital

Shareholders' equity, year-end, plus net interest-bearing debt.

Return on invested capital

Profit from operations after tax as a percentage of average invested capital.

Net debt

Interest-bearing debt less cash, bank balances and securities.

Net debt/EBITDA

Net interest-bearing debt divided by EBITDA.

Earnings per share, basic (EPS)1,2
Earnings per share, diluted (DEPS)1,2
Adjusted earnings per share, basic (EPS)
Cash flows from operating activities per share, diluted1

Net profit/(loss) for the year divided by average number of shares, excl. treasury
shares.
Net profit/(loss) for the year divided by average number of shares, excl. treasury
shares, incl. warrants, fully diluted.
Adjusted earnings per share, basic (EPS) is defined as EPS, basic adjusted bycertain items.
Cash flows from operating activities divided by average number of shares, excl.
treasury shares, incl. warrants, fully diluted.

Dividend payout ratio

Total dividends for the year as a percentage of net profit/(loss).

Dividend yield

Dividend per share as percentage of official price quoted on Nasdaq
Copenhagen, year-end.

Net asset value per share, diluted

Shareholder's equity, year-end, divided by number of shares, year-end, excl.
treasury shares, incl. warrants, fully diluted.

Market capitalization1

Total number of shares, year-end, multiplied by the official price quoted on
Nasdaq Copenhagen, year-end.

1 Definitions according to the Danish Finance Society's Recommendations & Financial Ratios.
2 The calculation of EPS is based on a share denomination of DKK 1 as a result of the share split completed on 8 June 2022. Comparative figures have been restated to reflect thechange in trading unit from a nominal value of DKK 5 to DKK 1.
3 For the definition of certain items, see Adjusted EBITDA Reconciliation

32

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Governance
Annette Villumsen
Head of Medical Education & Lundbeck Institute

IN THIS SECTION

33

Corporate Governance35

Sustainability

37

Business Ethics and Code of Conduct

38

Risk Management

40

Board of Directors

43

Executive Management

45

The Lundbeck Share

33

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Corporate GovernanceCorporate governance concerns the way Lundbeck is managed andcontrolled, while creating value for both the Company and its
stakeholders. More information on the mandatory annual Corporate
Governance report is disclosed on www.lundbeck.com1 in accordancewith section 107(b) of the Danish Financial Statements Act.
The supreme governing body of Lundbeck is thegeneral meeting, in which the shareholders of
Lundbeck exercise their rights. Some matters
are always handled by the general meeting,e.g., adoption and amending of the Company’s
Articles of Association, approval of the annual
report, and election of members of the Board of
Directors among other things.
Any shareholder has the right to raise questions
and suggestions at general meetings.
Resolutions can generally be passed by asimple majority. However, resolutions to amend
the Articles of Association require two-thirds ofthe votes cast and capital represented, unlessother adoption requirements are imposed by theDanish Companies Act.
Lundbeck has a two-tier board structure
consisting of the Board of Directors and the

Executive Management. The two bodies are
separated, and no person serves as a memberof both.
The Board of Directors has 12 members, ofwhich eight are elected at the Annual General
Meeting for a one-year term and four are
elected by Lundbeck’s employees for a fouryear term. The current eight non-employee
members of the Board of Directors bring deepindustry knowledge and solid top management
experience to Lundbeck, which are essential for
the Board to perform its tasks.2
Lundbeck’s Board of Directors is responsible forapproving the corporate strategy and its
implementation, setting goals for Executive
Management, and for ensuring that members of
Executive Management and other senior
managers have the right qualifications.

1 https://www.lundbeck.com/content/dam/lundbeck-com/masters/global-site/pdf/corporate-governance/2023/corporate_governance_report.pdf.
2 Detailed description of the Board members and their competencies and qualifications can be found on
https://www.lundbeck.com/global/about-us/our-leadership/board-of-directors.

The Board of Directors also evaluates
management performance and remuneration.
Furthermore, the Board of Directors has theoverall responsibility for ensuring that adequate
internal and external controls are in place, andfor identifying and addressing any relevant risks.
These responsibilities are defined in the Danish
Companies Act and stipulated in the rules ofprocedures for the Board of Directors.
The Board of Directors regularly evaluates
Lundbeck’s strategy, business, performance,
financial strategies, and policies, and ensuresthat day-to-day management is carried out inaccordance with such policies.
Following initial analysis and proposal from
Executive Management, the Board of Directors
assesses Lundbeck’s need for capital on an
ongoing basis, and regularly reviews
Lundbeck’s capital structure.
There is no universal answer to the question ofwhat the optimum capital structure is for a
specific company because the relationshipbetween equity and interest-bearing debt relieson the specific characteristics that apply within
the particular industry in which the business
operates and, by extension, the operating andfinancial risk.

However, companies in the pharmaceuticalindustry are often particularly well-funded which
may be explained by the extended development
projects and risks associated with research
activities.
Our dividend policy is currently to pay out 3060% of the net profits as dividend to theshareholders. The Board of Directors pursues
the policy that equity beyond the level which,based on a conservative estimate, would beconsidered sufficient to support the underlying
business should be distributed to theshareholders. The distribution to ourshareholders takes place through annual
dividends and if appropriate share buyback
programs.
The Board of Directors has established a selfevaluation procedure covering, among otherthings, board composition, contribution andresults, board agenda and discussions,cooperation between the Board of Directors andExecutive Management, committee work andstructure.
The 2023 Board evaluation was rescheduled
due to CEO change but will be finalized by
February 2024. The evaluation was conductedinternally and was an assessment, in which theBoard of Directors and Executive Management

34

Lundbeck Annual Report 2023

answered a brief questionnaire and wereinterviewed individually by the Chair.
More details regarding the work performed by
the Board of Directors, the evaluation procedureand results hereof can be found atwww.lundbeck.com.1
Also, the remuneration of Lundbeck’s Executive
Management and Board of Directors can befound at www.lundbeck.com.2
DISCLOSURE REGARDING CHANGE
OF CONTROLThe EU Takeover Bids Directive, as partially
implemented in the Danish Financial Statements
Act, requires listed companies to disclose
information about significant agreements that
may be affected in case of a completed
takeover bid, particularly in relation to thedisclosure of change-of-control provisions.

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

In case Lundbeckfond Invest A/S holds lessthan 50% of the share capital or voting rights in
H. Lundbeck A/S (change of control), Lundbeck
may be met with demands for repayment on any
existing debt portfolio.
In the event Lundbeck is acquired or merges,
certain Executive Management members may,depending on the impact on their position, be
entitled to terminate employment with Lundbeck
with three (3) months’ notice and receive acompensation of up to eighteen (18) months’
remuneration.
Given the ownership structure of Lundbeck therisks are considered remote. For information
about the ownership structure of Lundbeck,see pages 45-46.

Lundbeck discloses that the Group has a major
partnership agreement in place under which anacquiring entity must divest any competingproduct according to an agreed process and,in the absence of such divesture, Lundbeck’s
partner may terminate the agreement.

1 Detailed descriptions of the Board of Directors’ work, evaluation procedure and results can be found on
https://www.lundbeck.com/global/about-us/corporate-governance/board-tasks.
2 Detailed descriptions of the remuneration can be found on
https://www.lundbeck.com/global/about-us/corporate-governance/remuneration.

Aysel Özel,Senior Operator

35

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Sustainability
Sustainability is an imperative to Lundbeck and an integral part of ourstrategy and culture. Lundbeck’s sustainability activities aim to mitigate
risks and adverse impacts related to our business activities andcontribute to solving societal challenges where we can. We remaincommitted to the UN Global Compact Principles and contribute toaddressing seven of the Sustainable Development Goals (SDGs).
OUR APPROACH TO SUSTAINABILITY

Sustainability is an integral part of how we dobusiness at Lundbeck. In our annual
Sustainability Report, we present detailed
information on our impacts, risks, strategy,
activities during the year, progress on ourtargets, as well as metric and material
sustainability information. Our mandatory annual
statutory sustainability reporting, complying with
99a, 99d,107d of the Danish Financial
Statements Act and the EU Sustainable FinanceTaxonomy, can be found in our Sustainability
Report.1
OUR MOST MATERIAL SUSTAINABILITY
MATTERSOur most material sustainability matters arereflected in the SDGs on which our businessmodel has significant impact. Our biggest
contribution to sustainable development is ourinnovative medicines and the benefits they bringto people living with psychiatric and neurologicaldiseases. Closely related to this is ensuring that
we provide high-quality medicinal products,
safeguard patient safety and combat counterfeit
medicine. We also take a strict stance on anticorruption in our own operations as well as inour dealings with business partners, healthcare
professionals and regulators.
Our strategy includes taking a leading role inclimate action, environmental management ingeneral, and promoting an ethical, safe,
motivating and inclusive culture in our own
operations and full value chain.
In 2024, we will be updating our sustainability
strategy to ensure it reflects the disclosure anddue diligence requirements set out in the EU
Directives related to corporate sustainability

1 https://www.lundbeck.com/content/dam/lundbeck-com/masters/global-site/pdf/Sustainability_Report_2023.pdf.

conduct and reporting, including the Corporate
Sustainability Reporting Directive and the EU
Taxonomy for sustainable activities.

A share of their short-term incentive program islinked to performance on targets related to thesustainability strategy.

CORPORATE SUSTAINABILITYREPORTING DIRECTIVE

The CEO has the highest responsibility for thesustainability strategy and presents majordecisions to the Board of Directors whenrelevant.

Since 2022, Lundbeck has had a crossfunctional working group in place to ensure that
Lundbeck is ready to comply with the Corporate
Sustainability Reporting Directive (CSRD)
requirements starting in 2024. The working
group regularly reports on the progress to
Executive Management, the Audit Committee,
and the Board of Directors. Lundbeck has alsoestablished an Environmental, Social, &Governance (ESG) Reporting team that will be
responsible for overseeing the sustainability
reporting. This ESG Reporting team is working
closely together with the Corporate
Sustainability team to implement the newrequirements.
Lundbeck has also reviewed and updated its
governance for the sustainability reporting
processes taking effect in 2024 to reflect the
responsibilities for the new requirements acrossthe various levels of the company.
GOVERNANCE AND MANAGEMENT OFSUSTAINABILITY

Executive Management defines and owns
Lundbeck's sustainability strategy and priorities.

A dedicated Corporate Sustainability team is
responsible for improving, monitoring, andreporting on Lundbeck’s sustainability
performance in close collaboration with relevant
functions in the organization. The approachtaken is to integrate and disseminate ownershipof sustainability to the relevant line functions.
SUSTAINABILITY TARGETS

We continuously set ambitious targets, reportprogress on the targets and disclose a set of
externally reviewed non-financial metrics acrossall areas of sustainability.
All in all, eight out of the 10 sustainability targets
for 2023 were achieved or are on track asshown in the table on the following page.
GENDER BALANCE

In our sustainability strategy, we have chosen
the metric of share of women in senior
management as our key performance indicatorfor gender balance. Senior management is36

Lundbeck Annual Report 2023

Management Review

comprised of all EVPs, SVPs and VPs. We haveannual targets to increase this share ofunderrepresented gender (currently women)
year on year. We are happy to have achieved
this annual target for 2023. It is one of our 10
Sustainability targets for 2023. More detail on
this can be found in the Sustainability Report.
Lundbeck also has a long-term target for its
representation of the underrepresented genderof at least 40% by 2026. This target applies toall management levels in the Company,
including the Board of Directors and Upper
management, defined as Executive
Management and their direct reports with people
management responsibilities. This definitionaligns with the Danish Company Law.
We have not yet achieved the 2026 target of a
40% representation of the underrepresented
gender in any of these groups.
MANAGEMENT GENDER BALANCE
2023

Total number

Board ofDirectors

Uppermanagement1

Seniormanagement2

8

55

78

Share of women

25%

38%

36%

Target

40%

40%

40%

Target year

2026

2026

2026

2023 in Brief

Our BusinessIn 2023, we reviewed and updated our DE&I
strategy to emphasize that we firmly believe that
DE&I are key cornerstones to being a
successful company and helping us deliver on
our purpose of restoring brain health.
As part of our DE&I policy, we have embedded
DE&I in our recruitment process througheducation and tools to minimize unconscious
bias, attract a more diverse talent pool, andensure fair assessment of all candidates.
Subsequently, we have embedded bias blockers
in our organizational review process byintroducing tools that consider different
dimensions of diversity. In 2023, we ran elearnings on unconscious bias and on culturalawareness bias for all employees. In Q3, we ran
a pilot on inclusive leadership training as a partof our leadership development programs toenable us to develop a plan for inclusive
leadership training in 2024.These actions taken
in 2023 were applied across the organization toensure a diverse and inclusive culture for all
employees including top, upper- and senior
managements.

Governance

Financial Statements

Priorities
ACCESS TO HEALTH

2023 Sustainability targets
Scoping a global approach to measuring the impact ofand access to medical education of health care
professionals we are funding
Donate treatment for at least 1,500 patients in low andmiddle income countries through product donation
partnership

BUSINESS ETHICS

Annual Code of Conduct training completed by all
employees at work globally
Increase the share of employees stating in the annual
Employer Satisfaction Survey (ESS) that they are
confident in raising an ethical or compliance concern

CLIMATE CHANGE &CIRCULARITY

Reduce total carbon footprint across own operations,
supply and distribution in line with our 15-year ScienceBased Target3
Recycle 64% of the organic compounds used in chemical
production
Recycle 73% of general waste

PEOPLE &COMMUNITIESThis section on gender balance constitutes ourmandatory annual statutory sustainability
reporting in accordance with 99b of the Danish
Financial Statements Act. In the Sustainability
Report, you can read more about the work wedo to ensure diversity, equity and inclusion at
Lundbeck.

Increase in share of underrepresented gender at senior
management level year on year2

Reduce lost time accident frequency ≤ 4
Not more than three high-consequence work-related
accidents with absence

Achieved

1 Executive Management (EVP) and their direct reports with people management responsibilities.
2 EVP, SVP and VP.
3 We report progress annually on our 15-year targets in Scope 1 & 2 (own produced energy and purchased energy) and Scope 3 (emissions from supply, services, distribution, and business travel).

Not achieved

On track

37

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Business Ethics and Code of Conduct
At Lundbeck, we pursue our business purpose guided by our Code of
Conduct. The Code of Conduct shows us the way if acting with integrity
and doing the right thing in everything we do.

As a global pharmacetical company we operate
in a constantly changing regulatory landscape.
Our business activities and application oftechnologies also evolve in the pursuit of
meeting patient needs and offering efficacious
treatment options. These conditions call for a
responsive and risk-based Compliance Programthat helps our employees globally to operate
ethically and in accordance with applicable laws
and regulations.
COMMITMENT IN TIMES OF CHANGESIn 2023, our network of regional complianceofficers and our global compliance functions
evolved, and we now have 18 regional
compliance officers present across our global
commercial organization.
Together with senior management they help
prevent misconduct, detect compliance issues
and take prompt corrective and preventive
action.

1 https://www.lundbeck.com/global/compliance-hotline.

Our priorities remained unchanged. At
Lundbeck we are committed to driving a cultureof ethics and compliance throughout theorganization, as well as safeguarding theCompany and our business relations from
corruption and bribery in all its forms.
DOING THE RIGHT THING

The annual Code of Conduct training at
Lundbeck aims to empower our employees tomake informed and ethical decisions. During
this training employees are guided through andpractice some of the topics from the Code of
Conduct, including anti-bribery and corruption,use of social media and personal dataprotection.
The training is supported by videos andtestimonials from the CEO and our colleagues,
reminding us that our culture of ethics is firmly
grounded in Lundbeck’s five beliefs: being
patient-driven, courageous, ambitious,
passionate and responsible.

COLLABORATING WITH STAKEHOLDERS

We believe our interactions with healthcare
professionals, healthcare organizations, patientsand patient organizations have a profound andpositive influence on the quality of patient careand the value of future research. These
interactions are well regulated, and we arecommitted to enhancing transparency.
At Lundbeck we believe in a consistent andethical approach to compensate for the work
undertaken, and in 2023 we revisited themethodology for how we compensate for work
performed as well as the applicable rates wepay.
Our continued improvement efforts aresupplemented by our internal audits andmonitoring activities that aim to validate theunderstanding of the requirements, identify
risks, and capture suggestions for how we canenhance processes and controls.
OPEN DIALOGUE

We encourage everyone to have an ongoing
dialogue on compliance and ethics with theircolleagues and manager. However, we realizethat some questions, dilemmas, or concerns
might not be discussed openly. Our Compliance
Hotline1 is a secure line that is open foreveryone to raise concerns about a potential
violation of the Code of Conduct or any othermisconduct. It is a cornerstone in ourCompliance Program that helps protect
Lundbeck.
All reports are investigated in line with our global
procedure that safeguards individuals whoreport concerns or otherwise participate ininvestigations. Our investigations are guided byprinciples that manifest Lundbeck’s beliefs:• Protection of good-faith reporters against
retaliation• Confidentiality• Cooperation• Proportionality• Communication• Independence
OVERSIGHT OF BUSINESS ETHICS

Lundbeck’s ethical standards are defined by
Executive Management, who are also
responsible for ensuring the proper roll out andimplementation of these ethical standards. Thisis done via the Compliance Program.
Lundbeck’s Audit Committee oversees theeffectiveness of the Compliance Program.
Our Chief Ethics & Compliance Officer provides
regular updates on current developments torelevant stakeholders, such as Executive
Management, the Compliance Committee, and
the Audit Committee.

38

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Risk Management
Lundbeck’s risk management processes ensure close monitoring,systematic risk assessment and the ability to identify, manage andreport internal and external risks in a changing environment.
RISK MANAGEMENT GOVERNANCESTRUCTURE

Lundbeck is exposed to risks throughout thevalue chain, from the initial stages of developing
innovative pharmaceuticals in our in-housefacilities to the proven pharmaceuticals reaching
the patients. Lundbeck’s risk management
processes are continually updated and adapted
to match internal and external requirements, inwhich risks related to trends, global economic
developments, geopolitics and long-term

forecasts are assessed as part of Lundbeck’s
long-term strategic planning.
With this understanding of the wider context andan accurate and complete overview of
Lundbeck’s activities and resources, Executive
Management has a clear basis for decisionmaking on our overall risk exposure andmitigating actions.

Dejan Siljanoski,
Operator

The Board of Directors is overall responsible for
ensuring that Lundbeck has implemented thenecessary risk management procedures. The
oversight of compliance within the established
enterprise risk management framework has
been delegated to the Audit Committee.
RISK MANAGEMENT FRAMEWORKAt Lundbeck, enterprise risk management is
considered an integral part of doing business,
which is reflected in the risk management
process.
The process starts in the decentralized teams
within each executive management area. The
teams have detailed and extensive knowledgeof the risks within their areas of responsibility.
They systematically identify, quantify, respondto and monitor risks. They are ideally placed tomitigate our risk exposure in the first instance.
Each area shares the risks with the central Risk
Office when material updates occur, and at least
on a semi-annual basis.
The central Risk Office provides the risk
framework and conducts interviews withmanagement, risk contributors and riskresponsible individuals. This represents an
integral part in the alignment of risks reported to
the Risk Office. In cooperation with each
executive management area, the Risk Officeassesses the likelihood of an event occurringand the potential impact on the Group. The keyrisk overview is presented to Executive
Management for their assessment and approval
before it is reported to the Audit Committee andapproved by the Board of Directors.
The corporate risk register kept by the Risk
Office provides a consolidated overview of
Lundbeck’s risk exposure by detailing each risk,
risk category and type. The risk descriptions
provide details on the event, its current status,
the status of the response, and the likelihood
and potential impact. Our reporting process
defines six risk categories:• Research and Development• Market, Commercial and Strategy• Supply, Quality and Product Safety• IT security• Legal and Compliance• Financial
Lundbeck has developed a concise process
covering day-to-day risk identification,
monitoring, mitigation and reporting within each
executive management area all the way to thefinal reporting to Executive Management. This
process enables Executive Management tocontrol Lundbeck’s risk appetite when deciding
strategy and practice, and when making day-today decisions.

39

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Key Risks
RISK AREADESCRIPTIONPOTENTIAL CONSEQUENCESRESEARCH AND

Exposure to delays of regulatory approvalor failure in the development of new andinnovative medicines.

Delays or failure of new products could impact patients who cannot benefit Clinical trials are run and evaluated throughout the research andfrom these products and decrease earnings expectations for Lundbeck
development phase.
and its shareholders.
Ongoing evaluation of the product pipeline, regulatory requirements andproduct benefit.
Delay in regulatory approval may impact the patient’s drug access.

Key
Risks
DEVELOPMENT

Increased regulatory requirements forclinical trials.

MARKET,
COMMERCIAL AND
STRATEGY

Issues with data integrity could lead to delays in studies and production –Data requirements from production of non- ultimately leading to withdrawals and failure to gain approval.
clinical and clinical studies.

Robust quality management system is in place to ensure consistent quality,
data integrity and the compliance of clinical trials and clinical safety activities.

Price pressure, new legislation, regulationof reimbursement and healthcare reforms
in key markets, etc.

Understanding the price development in main markets.

Changes in market and economic
dynamics derived from geopoliticalinstability.

SUPPLY, QUALITY
AND PRODUCTSAFETY

Market restrictions could impact patients’ access to Lundbeck products.

Changes in market and economic conditions and healthcare reforms could Working with healthcare authorities around the world to document the valueof our pharmaceuticals.
affect the pricing landscape as well as rebates and discounts.
Differences in business performance and WACC vs. assessment at thetime of mergers and acquisitions deals can lead to impairment losses.

Effects from mergers and acquisitions.

These changes could decrease earnings for Lundbeck and its
shareholders.

Disruption of production or supply or
unpredictable demand and stock-out.

Product shortage, not giving patients needed access to thepharmaceuticals they require.

Loss of licenses to manufacture or sell
pharmaceuticals.

LEGAL ANDCOMPLIANCE

Cyber attacks and cyber fraud.

Monitor political developments and requirements.
Robust merger and acquisitions implementation tracking processes.

Systems, policies and procedures are in place to ensure product supply,
quality and safety.
Dual sourcing strategy and high level of safety stock of key products.
Robust pharmacovigilance system.

Defects in product quality or safety.
IT SECURITY

MITIGATING ACTIONS

System down-time.

Disruption or compromise of IT security could affect all parts of Lundbeck’s IT policies and procedures are in place to safeguard systems and data.
operations and product supply to patients.
Cyber defenses are tested on a regular basis.
Data loss, including patient-, employee-, proprietary business- and other
Annual testing of IT disaster recovery plan.
sensitive data.

Loss, expiration or infringement ofintellectual property rights.

Loss, expiration, infringement, or invalidation of intellectual property rights
could decrease earnings for Lundbeck and its shareholders.

Non-compliance with laws, industry
standards, regulations and our Code of
Conduct.

Non-compliance with laws, industry standards, regulations, or our Code of
Conduct could affect our ‘license to operate’, result in litigations orinvestigations, expose Lundbeck to significant fines, and impact our
reputation and earnings for Lundbeck and its shareholders.

Exposure to legal claims or investigations.

Policies and processes are in place to safeguard intellectual property rights.
The Code of Conduct, Compliance Program and global complianceorganization are pivotal in sustaining our compliance culture. The Code of
Conduct Compliance Program includes global activities and ensures key
risks are identified and managed, continuous internal reviews and monitoringof compliance with laws and industry standards, and annual training to all
employees.
Third parties are committed to observing our legal and ethical standards inmutually binding agreements and are subject to due diligence monitoring.
Global Compliance Hotline and investigation procedure.

FINANCIAL

Yuichi Mitsui
Medical Representative

Fluctuations in interest rates and exchange Lundbeck’s cash flow and earnings could be impacted in cases ofrates incl. impact from currency
fluctuations in key currencies.
devaluations.

Treasury policy.
Monitoring the financial exposure and hedging a significant part of
Lundbeck’s currency risk up to 18 months in advance.

40

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Board of Directors1

LARS SØREN RASMUSSEN

LENE SKOLE-SØRENSEN

Chair

Deputy Chair• Born 1959
• Elected 2013
• Considered independent
Lundbeck Committees• Audit Committee (M)• Remuneration & Nomination Committee (C)Directorships• Coloplast A/S (C); Danish Industry Committee on
Diversity (C); Danish Committee of Corporate
Governance (C); Equalis (C); Life Science
Council under the Danish Ministry of Industry (C);Business & Financial Affairs (C); Gyldendal A/S(M), Copenhagen University (M)

SANTIAGO ARROYOJEFFREY BERKOWITZ• Born 1959
• CEO, the Lundbeck Foundation• Elected 2015
• Considered non-independent• Born 1960
• Chief Development Officer, Bicycle Therapeutics• Elected 2021
• Considered independent• Born 1966
• CEO, Real Endpoints• Elected 2018
• Considered independent

Lundbeck Committees• Remuneration & Nomination Committee (M)• Scientific Committee (M)Lundbeck Committees• Scientific Committee (M)Lundbeck Committees• Remuneration & Nomination Committee (M)• Scientific Committee (M)Directorships• ALK-Abelló A/S (DC)2• Falck A/S (DC)2• Ørsted A/S (DC)• Nordea Bank Abp (DC)• The Committee on Foundation Governance (DC)Holding of A-shares
20,000Holding of A-shares
None

Holding of B-shares
80,000Holding of B-shares
61,270

Directorships• GlycoEra AG (M)Directorships• PharmaTwoB (C)• Click Therapeutics (M)• Zealand Pharma A/S (M)• Uniphar PLC (M)Holding of A-shares
None
Holding of B-shares
None

Per 31 December 2023.
C = Chair, DC = Deputy Chair, M = Member.
1 For more information about the Board of Directors and their competencies, please visit https://www.lundbeck.com/global/about-us/our-leadership/board-of-directors.
2 Board positions included in the position as CEO of the Lundbeck Foundation.

Holding of A-shares
None
Holding of B-shares
None

B of Directors

41

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Board of Directors1

LARS ERIK HOLMQVISTJEREMY MAX LEVINJAKOB RIISILSE DOROTHEA WENZEL• Born 1959
• Elected 2015
• Considered non-independent• Born 1953
• CEO, Ovid Therapeutics• Elected 2017
• Considered independent• Born 1966
• CEO, Falck Danmark A/S and Adelca ApS• Elected 2023
• Considered non-independent• Born 1969
• Elected 2021
• Considered independent

Lundbeck Committees• Scientific Committee (C)Lundbeck Committees• Scientific Committee (M)Directorships• Ovid Therapeutics (C)• Opthea (C)• BIO (the Biotechnology Innovation Organization)(M)

Directorships• Falck Healthcare A/S (C)• Response A/S (C)• Danish Chamber of Commerce (M)• Falck Danmark A/S (M)Holding of A-shares
None

Holding of A-shares
None

Holding of A-shares
None

Holding of B-shares
75,000Holding of B-shares
None

Holding of B-shares
54,138Lundbeck Committees• Audit Committee (M)Directorships• Biovica International AB (C)• The Lundbeck Foundation (M)• ALK-Abelló A/S (M)• Vitrolife AB (M)• Life Healthcare (M)Per 31 December 2023.
C = Chair, DC = Deputy Chair, M = Member.
1 For more information about the Board of Directors and their competencies, please visit https://www.lundbeck.com/global/about-us/our-leadership/board-of-directors.

Lundbeck Committees• Audit Committee (C)Directorships• Dentsply Sirona Inc. (M)• Servier Pharmaceuticals (M)Holding of A-shares
None
Holding of B-shares
None

42

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Board of Directors1

CAMILLA GRAM ANDERSSONHOSSEIN ARMANDIDORTE CLAUSENLASSE SKIBSBYE• Born 1972
• Director, Corporate Health, Safety & Environment• Elected by employees in 2022

• Born 1962
• Research Technician• Elected by employees in 2022

• Born 1984
• Clinical Trial Manager, Specialist, Psychiatry• Elected by employees in 2022

• Born 1983
• Principle Scientist• Elected by employees in 2022

Directorships• Industrial Sectorial Board of Occupational Healthand Safety (DI) (M)• Specialized Committee of Chemistry (DI) (M)• Environment, Health & Safety Expert Group(EFPIA) (M)Directorships
None

Directorships• Pharmadanmark (M)• Training & Conference Center Pharmakon (M)Directorships• Safety Pharmacology Society (M)Holding of A-shares
202

Holding of A-shares
None
Holding of B-shares
None

Holding of A-shares
220
Holding of B-shares
880

Holding of B-shares
808

Per 31 December 2023.
C = Chair, DC = Deputy Chair, M = Member.
1 For more information about the Board of Directors and their competencies, please visit https://www.lundbeck.com/global/about-us/our-leadership/board-of-directors.

Holding of A-shares
None
Holding of B-shares
None

43

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Executive Management1

CHARL VAN ZYLLARS BANG

THOMAS GIBBS2

ELISE HAUGE2

President & CEO

Executive Vice President,
Product Development & Supply

Executive Vice President,
Head of Lundbeck U.S.

Executive Vice President,
People & Communication• Born 1967
• Joined Lundbeck in 2023

• Born 1962
• Joined Lundbeck in 1988

• Born 1971
• Joined Lundbeck in 2023

Directorships
None

Directorships
None

Directorships
None• Born 1967
• Joined Lundbeck in 2019
• Left Lundbeck as of 31 December 2023

Holding of A-shares
None

Holding of A-shares
69,232

Holding of A-shares
None

Holding of B-shares
None

Holding of B-shares
276,928

Holding of B-shares
None

Per 31 December 2023.
C = Chair, DC = Deputy Chair, M = Member.
1
For more information about Executive Management and their competencies, please visit https://www.lundbeck.com/global/about-us/our-leadership/executive-management.
2
Thomas Gibbs (Executive Vice President, Head of Lundbeck U.S.), Elise Hauge (Executive Vice President, People & Communication) and Keld Flintholm Jørgensen (Executive Vice
President, Corporate Strategy & Business Development) are part of Executive Management in their respective roles but are not members of Executive Management as registered with
the Danish Business Authority.

Directorships• CBS Executive Fonden (M)Holding of A-shares
5,414
Holding of B-shares
12,656

44

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Executive Management1
Executive Management

JOERG HORNSTEIN

KELD FLINTHOLM JØRGENSEN2PER JOHAN LUTHMANJACOB TOLSTRUP

CFO & Executive Vice President,
Corporate Functions

Executive Vice President,
Corporate Business Development & Strategy

Executive Vice President,
Research & Development

Executive Vice President,
Commercial Operations• Born 1977
• Joined Lundbeck in 2022

• Born 1971
• Joined Lundbeck in 2019

• Born 1959
• Joined Lundbeck in 2019

• Born 1972
• Joined Lundbeck in 1999

Directorships
None

Directorships• Scandion Oncology (M)Directorships• Brain+ (M)Directorships• Pharmacosmos A/S (C)Holding of A-shares
None

Holding of A-shares
12,669Holding of A-shares
19,312

Holding A-shares
None

Holding of B-shares
None

Holding of B-shares
50,676

Holding of B-shares
85,647

Holding B-shares
2,144

Per 31 December 2023.
C = Chair, DC = Deputy Chair, M = Member.
1
For more information about Executive Management and their competencies, please visit https://www.lundbeck.com/global/about-us/our-leadership/executive-management.
2
Thomas Gibbs (Executive Vice President, Head of Lundbeck U.S.), Elise Hauge (Executive Vice President, People & Communication) and Keld Flintholm Jørgensen (Executive Vice
President, Corporate Strategy & Business Development) are part of Executive Management in their respective roles but are not members of Executive Management as registered with
the Danish Business Authority.

45

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our Business

The Lundbeck Share
In 2023, Lundbeck experienced yet another year marked by significant
achievements, robust financial performance and promisingdevelopments in our R&D pipeline. However, it is important toacknowledge that the year also brought increased uncertainties thatsignificantly influenced the global financial markets, and which areoutside our control.
At the outset of the year, the Lundbeck shareprice began at DKK 23.88 for A-shares and DKK
26.05 for B-shares, based on the closing prices
at the end of 2022 (ref. Bloomberg). Throughout
the year, the B-share price reached its peak at
DKK 39.50 [22 May 2023], and its lowest point
was recorded at DKK 25.35 [24 January 2023].
By the close of the year, the B-share priceended at DKK 32.76 marking a 26% increaseover the course of the year. In contrast, theDanish OMXC25 index experienced an increaseof 7%, and the MSCI European PharmaceuticalIndex also increased slightly by 3%.
TURNOVER

Total trading in Lundbeck A-shares amounted to
DKK 792.5 million in 2023, while the average
daily turnover was DKK 3.2 million. Total tradingin Lundbeck B-shares amounted to DKK 6.0
billion in 2023, while the average daily turnover
was DKK 24.1 million.
1 https://www.lundbeck.com/global/investors/the-share/analyst-coverage.
2 https://www.lundbeck.com/global/investors/reports-and-presentations.

SHARE CAPITAL

Lundbeck shares are listed on the Copenhagen
Stock Exchange, Nasdaq Copenhagen. The
shares are negotiable and there are no
restrictions on their transferability. At the end of2023, Lundbeck’s total share capital amounted
to DKK 996 million, which is equivalent to 996
million shares.
COMPOSITION OF SHAREHOLDERS

According to the Lundbeck share register, thecompany had approximately 57,000
shareholders at the end of 2023, representing
approximately 99% of the outstanding shares.
The Lundbeck Foundation (Lundbeckfond Invest
A/S) is the Company’s largest shareholder andholds approximately 80% of the A-shares andapproximately 66% of the B-shares. The total
share capital held by the foundation isapproximately 69% and the total voting rights
held by the foundation in Lundbeck isapproximately 76%.

Governance

Financial Statements

Financial calendar 2024
20 March 2024

Annual General Meeting 2024

25 March 2024

Dividends for 2023 at the disposal of shareholders (if approved)

15 May 2024

Financial statements for the first three months of 2024

21 August 2024

Financial statements for the first six months of 2024

13 November 2024

Financial statements for the first nine months of 2024

The Lundbeck Foundation is the only
shareholder to report a holding in excess of 5%of the share capital. At the end of 2023,
investors in North America held 34% of the free
float compared to 34% in 2022; European (excl.
Danish) investors held 46% compared to 46% in
2022; Danish investors held 18% compared to
18% in 2022; rest of the world held 2%,
compared to 2% in 2022.
In order to fund our long-term share-based
incentive programs, Lundbeck has 3,730,140
shares held as treasury shares at the end of2023. The holding is split in 466.028 A-sharesand 3,264,112 B-shares.
At the end of 2023, Lundbeck’s Board of
Directors and Executive Management held atotal of 127,049 Lundbeck A-shares and a totalof 700,147 B-shares compared to a total of
116,588 Lundbeck A-shares and a total of541,342 B-shares at the end of 2022. The total
number of shares in 2023 corresponds to 0.06%
of the total A-shares outstanding and 0.09% of
the total B-shares outstanding.
LUNDBECK AND THE EQUITY MARKET

Within Lundbeck, our Investor Relations (IR)function is dedicated to maintaining transparent
and accurate communication with bothprospective and existing shareholders, as wellas equity analysts. We achieve this through acontinuous dialogue, providing insights into our
vision, objectives, business segments andfinancial progress.
In the year 2023, Lundbeck's Investor Relations
team successfully conducted over 250
meetings, with most of these interactions taking
place via digital platforms, including Teams andZoom. Additionally, Lundbeck actively engaged
in 12 investor conferences, primarily in person.
Lundbeck is currently covered by 16 sell-side
analysts, including leading global investmentbanks. These analysts regularly publish
research reports on Lundbeck, and acomprehensive list of these analysts isaccessible on our website atwww.lundbeck.com.1
Following the release of our interim and full-year
reports, key members of Lundbeck's Executive
Management and Investor Relations teamembark on roadshows to update investors andanalysts on the latest developments within thecompany. Our investor presentations areavailable for download at www.lundbeck.com.2

46

Lundbeck Annual Report 2023

Management Review

STOCK PERFORMANCE 2023

180
160

2023 in Brief

Our BusinessGovernance

Financial Statements

STOCK PERFORMANCE A- AND B-SHARES 2023

STOCK PERFORMANCE 2019-2023

45

250

40

200

35

150

30

100

25

50

140
120
100
80
60

jan

feb

mar

apr

Lundbeck

maj

jun

jul

aug

OMXC25 Index

okt

nov

dec

20

j an

feb

mar

MSCI Europe Pharmaceuticals Index

COMPOSITION OF OWNERSHIP, END 2023

0%
4%

sep

apr

maj

j un

j ul

aug

Lundbeck B Shares

34%

10%

7%

69%
The Lundbeck Foundation

46%

North America
Europe, excl. Denmark
Denmark, excl. the Lundbeck Foundation
Rest of the world
Others, incl. private

nov

dec

0
2019

2020
Lundbeck

2021
OMXC25 Index

2022

2023

MSCI Europe Pharmaceuticals Index

LUNDBECK’S TOTAL NUMBER OF VOTING RIGHTS AND TOTAL SHARE CAPITAL

2%
18%

okt

Lundbeck A shares

COMPOSITION OF FREE FLOAT, END 2023

10%

sep

North America
Europe, excl. Denmark
Denmark, excl. the Lundbeck Foundation
Rest of the world

Number of shares (nominal
value of DKK 1 each)

Nominal value (DKK)

Number of votes

A-shares199,148,222

199,148,222

1,991,482,220

B-shares796,592,888

796,592,888

796,592,888

Total

995,741,110

995,741,110

2,788,075,108

47

Lundbeck Annual Report 2023

Share DataManagement Review

2023 in Brief

Our BusinessGovernance

Financial Statements

2023

2022

2021

2020

2019

Share price (A-shares), year-end (DKK)

28.70

23.88

-

-

-

Share price (A-shares), high (DKK)

37.90

37.70

-

-

-

Share price (A-shares), low (DKK)

23.52

22.49

-

-

-

Share price (B-shares), year-end (DKK)

32.76

26.05

-

-

-

Share price (B-shares), high (DKK)

39.50

37.86

-

-

-

Share price (B-shares), low (DKK)

25.35

24.24

-

-

-

Share price (old share structure), year-end (DKK)--

168.85208.80254.40Share price (old share structure), high (DKK)--

258.10302.40306.90Share price (old share structure), low (DKK)--

152.45178.15217.20

48

Lundbeck Annual Report 2023

Share Facts

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Number of A-shares, year-end

199,148,222

Number of B-shares, year-end

796,592,888

Total

995,741,110

Share capital, year-end (DKK)

995,741,110

Nominal value per share (DKK)

1

Number of treasury A-shares

466,028

Number of treasury B-shares

3,264,112

Total number of treasury shares

3,730,140 (0.37%)

Free float (%)

31%

IPO

18 June 1999

Stock exchange

Nasdaq Copenhagen

ISIN code

DK0061804697 (A), DK0061804770 (B)Ticker

HLUNa / HLUNb (Reuters), HLUNA DC / HLUNB DC (Bloomberg)

49

Lundbeck Annual Report 2023

Financial
Statements

IN THIS SECTION

50

Consolidated Financial Statements

92

Financial Statements of the Parent Company

102 Management Statement
103 Independent Auditor’s Reports

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Aki Mizukoshi
Director, People & Communication
Michelle Wilson
Vice President, People & Communication

50

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Consolidated Financial Statements
CONTENTSStatement of profit or loss
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows

Adjusted EBITDA Reconciliation (part ofManagement Review – not audited)

NOTES

51
51
52
53
54

107

1 Basis of preparation

55

2 Revenue and segment information

58

3 Employee costs

59

4 Financial income and expenses

60

5 Income taxes

60

6 Intangible assets

64

7 Property, plant and equipment

66

8 Right-of-use assets and lease liabilities

67

9 Inventories

68

10 Trade receivables

68

11 Cash resources

69

12 Equity70

13 Retirement benefit obligations and similar obligations

72

14 Incentive programs

74

15 Provisions

75

16 Contingent assets and contingent liabilities

75

17 Bank debt, bond debt and borrowings

77

18 Other payables

77

19 Financial instruments

78

20 Audit fees82

21 Contractual obligations

83

22 Related parties

83

23 List of subsidiaries

84

24 Subsequent events

85

25 Material accounting policy information

85

51

Lundbeck Annual Report 2023

Consolidated Financial Statements

Management Review

Statement of profit or loss

Financial Statements of the Parent Company

Statement of comprehensive income

1 January – 31 December

1 January – 31 December

2023

2022

Notes

DKKm

DKKm

Revenue2

19,912

18,246

Cost of sales

3

4,485

3,951

15,427

14,295Gross profit

Notes

Profit for the year

4

(19)

Items that will not be reclassified subsequently to profit or loss

(20)

115

(336)

670

Administrative expenses

3

1,293

1,079

Research and development costs

3

3,457

3,754

Exchange rate gains/losses on investments in foreign subsidiaries

3,195

2,852

94

124

Exchange rate gains/losses on additions to net investments in foreignsubsidiaries

4

Profit before tax
Tax on profit for the year

5

Profit for the year

296

502

2,993

2,474

703

558

2,290

1,916

Earnings per share, basic (EPS) (DKK)

12

2.31

1.93

Earnings per share, diluted (DEPS) (DKK)

12

2.31

1.93

Statement of profit or loss

134

(24)

12

6,610

Financial expenses

1,916

13

7,482

4

2,290

Tax

3

Financial income

2022
DKKm

Actuarial gains/losses

Sales and distribution costs

Profit from operations (EBIT)

2023
DKKm

(7)

25

Hedging of net investments in foreign subsidiaries

19

17

(163)

Deferred gains/losses on cash flow hedge, exchange rate

19

117

(347)

Deferred gains/losses on cash flow hedge, interest rate

19

(21)

39

Deferred gains/losses on cash flow hedge, price

19

(78)

128

Exchange gains/losses, hedging (transferred to revenue)

19

(137)

588

Tax

12

23

(58)

Items that may be reclassified subsequently to profit or loss

(422)

882

Other comprehensive income

(442)

997

Total comprehensive income

1,848

2,913

Statement of comprehensive income

52

Lundbeck Annual Report 2023

Consolidated Financial Statements

Management Review

Statement of financial position –assetsFinancial Statements of the Parent Company

Statement of financial position –equity and liabilities

At 31 December

At 31 December
2023

2022

Notes

DKKm

DKKm

Intangible assets

6

20,69222,500Share capital

Property, plant and equipment

7

2,499

2,515

Foreign currency translation reserve

Right-of-use assets

8

382

427

Notes

Hedging reserve

12
19

2023

2022

DKKm

DKKm

996

996

1,109

1,438

63

156

Retained earnings

19,87718,189Equity22,045

20,779Other financial assets

99

173

Other receivables

208

195

238

230

Retirement benefit obligations

13

216

213

545

598

Deferred tax liabilities

5

2,283

2,152

24,11826,040

Provisions

15

388

190

Bank debt and bond debt

17

3,714

5,096

Deferred tax assets

5

Financial and other assets
Non-current assets
Inventories

9

4,427

4,046

Lease liabilities

8

351

395

18

420

428

Trade receivables

10

Other payables

2,965

2,709

Income taxes receivable73

98

Non-current liabilities

7,372

8,474

Other receivables

588

756

Retirement benefit obligations

13

1

1

Provisions

15

934

1,132

4,410

4,251

Prepayments

226

255

Receivables

3,852

3,818

Trade payables

5,010

3,548

Income taxes payable

Current assets

13,28911,412

Assets37,40737,452

Cash and bank balancesStatement of financial position - assets

11

Lease liabilities

8

86

88

571

535

1,988

2,192

Current liabilities

7,990

8,199

Liabilities

15,362

16,673Equity and liabilities

37,40737,452Other payables

Statement of financial position – equity and liabilities

18

53

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Statement of changes in equity
At 31 December

Foreign currencytranslation reserve

Hedging
reserve

Retained earnings

Total equity

DKKm

DKKm

DKKm

DKKm

996

1,438

156

18,18920,779

-

-

-

2,290

2,290

-

(329)

(93)

(20)

(442)

-

(329)

(93)

2,270

1,848
(578)

Share capitalStatement ofchanges in equityp
Notes
DKKm
2023
Equity at 1 January
Profit for the year
Other comprehensive income

12

Comprehensive income
Distributed dividends, gross

12

-

-

-

(578)

Dividends received, treasury shares

12

-

-

-

2

2

Buyback of treasury shares

12

-

-

-

(43)

(43)

Incentive programs

14

-

-

-

38

38

Tax on other transactions in equity

5

-

-

-

(1)

(1)

-

-

-

(582)

(582)

996

1,109

63

19,87722,045

996

874

(162)

16,571

18,279Other transactions
Equity at 31 December

2022
Equity at 1 January
Profit for the year

-

-

-

1,916

1,916

-

564

318

115

997

Comprehensive income

-

564

318

2,031

2,913

Distributed dividends, gross

-

-

-

(398)

(398)

Dividends received, treasury shares

-

-

-

1

1

(45)

(45)

Other comprehensive income

12

Buyback of treasury shares

12

-

-

-

Incentive programs

14

-

-

-

29

29

-

-

-

(413)

(413)

996

1,438

156

18,18920,779Other transactions
Equity at 31 December

54

Lundbeck Annual Report 2023

Consolidated Financial Statements

Management Review

Financial Statements of the Parent Company

Statement of cash flows
At 31 December

Notes

Profit from operations (EBIT)

2023

2022

DKKm

DKKm

3,195

2,852

Adjustment for non-cash items:

Notes

2023

2022

DKKm

DKKm

Proceeds from loans and issue of bonds

17

-

1,234

Repayment of bank loans and borrowings

17(1,377)(1,086)
(93)

2,012

1,811

Repayment of lease liabilities

8

(89)

Incentive programs

38

30

Buyback of treasury shares

12

(43)

(45)

Change in provisions

37

(244)

Dividends paid in the financial year, net

(576)

(397)

Other adjustments

265

18

Cash flows from financing activities(2,085)(387)

Change in inventories

(760)

(979)

Net cash flows for the year

1,497

1,240

Change in receivables

(167)

(504)

(2)

1,078

Cash and bank balances at 1 January

3,548

2,279

4,618

4,062

Amortization, depreciation and impairment losses

Change in working capital:

Change in short-term debt
Cash flows from operations before financial receipts and payments
Financial receipts

84

29

Financial payments

(156)

(643)

Cash flows from ordinary activities

4,546

3,448

Income taxes paid

(466)

71

Cash flows from operating activities

4,080

3,519

-

(1,076)

Contingent consideration payment from acquisition of company
Purchase of intangible assets

6

(224)

(449)

Purchase of property, plant and equipment

7

(277)

(371)

Sale of property, plant and equipment

3

4

Cash flows from investing activities(498)(1,892)

Cash flows from operating and investing activities (free cash flow)

3,582

1,627

Statement of cash flows

Unrealized exchange gains/losses on cash and bank balances

(35)

29

Net cash flows for the year

1,497

1,240

Cash and bank balances at 31 December

5,010

3,548

Interest-bearing debt, cash and bank balances, net,is composed as follows:
Cash and bank balancesInterest-bearing debt
Interest-bearing debt, cash and bank balances, net,
at 31 December – net cash/(net debt)

11

5,010

3,548

(4,299)(5,731)711(2,183)

55

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 1
1 BASIS OF PREPARATION
1.1 Reporting entity
H. Lundbeck A/S (herein denominated the “Parent Company” or “Company”) is domiciled in Denmark. The
Company’s registered office is at Ottiliavej 9, 2500 Valby. These consolidated financial statements comprise
the Parent Company and its subsidiaries (together referred to as the “Group” or “Lundbeck”). The Group is
engaged in research, development, production and sale of pharmaceuticals for the treatment of psychiatricand neurological disorders. See note 2 Revenue and segment information.
1.2 Basis of accounting
The consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as
adopted by the EU and further requirements in the Danish Financial Statements Act. The consolidated financial
statements was approved by the Board of Directors and authorized for issue on 7 February 2024.
The statement of financial position is also referred to as the “balance sheet”.
Details of the Group’s accounting policies are included in note 25 Material accounting policy information andin note 1.7 Changes in material accounting policy information.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions of estimates arerecognized prospectively.
Management believes that the following accounting estimates, assumptions and judgments are significant tothe consolidated financial statements.
Principal accounting policies

Key accounting estimates, assumptions and judgments

Provision for discounts andrebates

Notes

Estimate of discounts and rebates in the U.S.

15

Income taxes and deferredincome taxes

Judgment and estimate of deferred tax assets and liabilities and provision
for uncertain tax positions

5

Impairment of product rights

Estimate of the value-in-use methodology for impairment of product rights

6

Inventory obsolescence

Judgment and estimate of the provision for obsolescence

9Provisions and contingent
assets and liabilities

Estimate of ongoing legal disputes, environmental provisions, litigations
and investigations

Other payables - contingent
consideration

Assumptions and estimates used in the calculation of the fair value related
to contingent consideration from the businesses acquired in 201915, 1618

1.3 Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency ofthe primary economic environment in which the entity operates (“the functional currency”).

1.6 Measurement of fair values
Some of the Group’s accounting policies and disclosures require the measurement of fair values, for bothﬁnancial and non‑ﬁnancial assets and liabilities.

The consolidated financial statements are presented in Danish kroner (DKK), which is also the functional andpresentation currency of the Parent Company. All amounts have been rounded to the nearest DKK million,
unless otherwise indicated.

The fair values of quoted investments are based on current bid prices at the end of the reporting period.
Financial assets for which no active market exists are carried at fair value based on a valuation methodology.

1.4 Principal accounting policies
The consolidated financial statements have been prepared to give a true and fair view of the Group’s financial
position at 31 December 2023 and financial performance for the year. The material accounting policies aredescribed in note 25 Material accounting policy information. Management believes that the accounting policies
listed in note 1.5 Use of judgments and estimates are principal to the financial statements.
1.5 Use of judgments and estimates
In preparing the consolidated financial statements, Management has made estimates and judgments that affectthe application of the Group’s accounting policies and the reported amounts of assets, liabilities, income andexpenses. Actual results may differ from these estimates.

The fair value of derivative financial instruments is measured on the basis of quoted market prices of financial
instruments traded in active markets. If an active market exists, the fair value is based on the most recently
observed market price at the end of the reporting period. If a financial instrument is quoted in a market that is
not active, the Group bases its valuation on the most recent transaction price.
If an active market does not exist, the fair value of standard and simple financial instruments, such as foreignexchange forward contracts, interest rate swaps, currency swaps and unlisted bonds, is measured according
to generally accepted valuation techniques. Market-based parameters are used to measure the fair value.

56

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 1
1 BASIS OF PREPARATION - CONTINUED
When measuring the fair value of an asset or a liability, the Group uses observable market data to the extent
possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in
the valuation techniques as follows.
Level 1:

Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2:

Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (i.e., as prices) or indirectly (i.e., derived from prices)

Level 3:

Inputs for the asset or liability that are not based on observable market data (unobservable inputs)

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value
hierarchy as the lowest level input that is signiﬁcant to the entire measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period
during which the change has occurred.
1.7 Changes in material accounting policy information
New and amended standards adopted by the Group
Effective 1 January 2023, a number of amendments to the accounting standards were implemented.
None of the amendments have a material impact on the accounting policies and/or on the consolidated financial
statements. Consequently, no material changes to the accounting policies or retrospective adjustments havebeen made as a result of adopting these standards and/or amendments. For details, see below.
Global minimum top-up tax (Pillar II)
The Group has adopted the International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12) upon
their release on 23 May 2023. The amendments provide a temporary mandatory exception from deferred tax
accounting for the top-up tax, which is effective immediately, and require new disclosures about Pillar Two
exposure, see note 5 Income taxes.
The mandatory exception applies retrospectively. However, because no new legislation to implement the topup tax was enacted or substantively enacted at 31 December 2023, in any jurisdiction in which the Group
operates and no related deferred tax was recognized at that date, the retrospective application has no impact
on the Group’s consolidated financial statements.

Material accounting policy information
The Group adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
from 1 January 2023. Although the amendments did not result in any changes to the accounting policies
themselves, they impacted the accounting policy information disclosed in the financial statements.
The amendments require the disclosure of ‘material’, rather than ‘significant’, accounting policies. The
amendments also provide guidance on the application of materiality to disclosure of accounting policies,
assisting entities to provide useful, entity-specific accounting policy information that users need to understandother information in the financial statements.
Management reviewed the accounting policies and made updates to the information disclosed in note 25
Material accounting policy information (2022: Significant accounting policies) in certain instances in line withthe amendments.
In addition, the following amendments did not have a material impact on the amounts recognized in priorperiods and are not expected to significantly affect current or future periods, the accounting policies and/or the
consolidated financial statements.
•
Definition of Accounting Estimate – Amendments to IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors•
Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to
IAS 12 Income Taxes

57

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Note 1
1 BASIS OF PREPARATION - CONTINUED
1.8 New standards and amendments issued but not yet effective
A number of new standards and amendments are effective for annual periods beginning after 1 January 2023
though not mandatory for annual reporting periods ending on 31 December 2023. Earlier application ispermitted; however, the new or amended standards have not been early adopted by the Group.
The amended standards are as follows:•
Classification of liabilities as current or non-current and non-current liabilities with covenants(Amendments to IAS 1 Presentation of Financial Statements)•
Supplier finance arrangements (Amendments to IAS 7 Statement of Cash Flows and IFRS 7
Financial Instruments: Disclosures)•
Lease liability in a sale and leaseback (Amendments to IFRS 16 Leases)•
Lack of exchangeability (Amendments to IAS 21 The Effects of Changes in Foreign Exchange
Rates)The Group expects to adopt the new standards, improvements, amendments and interpretations when they
become mandatory.
None of the amended standards are expected to significantly impact the accounting policies and/or on the
consolidated financial statements.
1.9 European Single Electronic Format (ESEF)
The Annual Report is prepared in XHTML format, and the consolidated financial statements are tagged using
inline eXtensible Business Reporting Language (iXBRL). The iXBRL tags comply with the ESEF taxonomy,
which is included in the ESEF Regulation and developed based on the IFRS taxonomy published by the IFRSFoundation. Where a financial statement line item is not defined in the ESEF taxonomy, an extension to thetaxonomy has been created. Extensions are anchored to elements in the ESEF taxonomy, except forextensions which are subtotals.
The Annual Report submitted to the Danish Financial Supervisory Authority consists of the XHTML document
together with certain technical files, all included in a ZIP file named HLUNDBECK-2023-12-31-en.zip.

Financial Statements of the Parent Company

58

Lundbeck Annual Report 2023

Consolidated Financial Statements

Management Review

Financial Statements of the Parent Company

Note 2
2 REVENUE AND SEGMENT INFORMATIONThe Group is engaged in research, development, production and sale of pharmaceuticals for the treatment of
psychiatric and neurological disorders, which is the Group’s single business (operating) segment. The businesssegment reflects the way in which Management makes decisions and assesses the business performance.
The Group is organized in geographical regions. The tables below show the Group’s revenue from externalcustomers broken down by key products and geographical regions.

EuropeUnited States

International
Markets

DKKm

DKKm

DKKm

DKKm

Abilify Maintena®

1,382

1,047

535

2,964

Brintellix®/Trintellix®

1,311

1,650

1,316

4,277

Cipralex®/Lexapro®

662

-

1,698

2,360

Rexulti®/Rxulti®

41

3,645

204

3,890

Sabril®

-

636

-

636

Vyepti®

11

982

11

1,004

2022

Group

Other pharmaceuticals

845

1,142

1,439

3,426

Revenue by product

4,252

9,102

5,203

18,557

EuropeUnited States

International
Markets

DKKm

DKKm

DKKm

DKKm

Other revenue

277

Abilify Maintena®/Asimtufii

1,445

1,182

560

3,187

Effects from hedging(588)

Brintellix®/Trintellix®

1,507

1,432

1,385

4,324

Total revenue

Cipralex®/Lexapro®

687

-

1,448

2,135

Rexulti®/Rxulti®

2023

Group

59

4,206

260

4,525

®

-

336

-

336

®

77

1,578

42

1,697

Other pharmaceuticals

853

1,095

1,296

3,244

Revenue by product

4,628

9,829

4,991

19,448

SabrilVyeptiOther revenue
Effects from hedging
Total revenue

327
137
19,912

Down payments and milestone received

Of this amount:Royalty881

Down payments and milestone received

2

In 2023, Denmark generated revenue from external customers in the amount of DKK 13,752 million (DKK
12,159 million in 2022) of which DKK 14 million (DKK 15 million in 2022) is generated from customers in the
country of domicile. The U.S. generated revenue from external customers located in the U.S. in the amount of
DKK 3,603 million (DKK 3,629 million in 2022).
The U.S. and Denmark are the only countries where sales contribute 10% or more of the total revenue.

Of this amount:Royalty

18,246694
7

As of 1 January 2023, Onfi® is being reported together with Other pharmaceuticals, comparative figures for2022 have been adjusted accordingly.

In 2023 and 2022, no single customer contributed 10% or more of the total revenue.
2023

2022

DKKm

DKKm

Denmark

10,021

10,782

United States

12,026

13,108Other countries

1,526

1,552

Total

23,57325,442Intangible assets and property, plant and equipment by geographic region

59

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 3
3 EMPLOYEE COSTS

Remuneration of registered Executive Management and key management personnel

Breakdown of employee costs

2023

2022

DKKm

DKKm

Short-term employee benefits

4,588

4,170

Retirement benefits

278

265

Social security costs

372

348

Equity- and cash-settled incentive programs

41

32

Severance and restructuring costs

59

-

5,338

4,815

Total

Employee costs for the year are included in the following functions in the statement of profit or loss:

Cost of sales
Sales and distribution costs
Administrative expenses

2023

2022

DKKm

DKKm

828

758

2,755

2,445

750

603

Research and development costs

1,005

1,009

Total

5,338

4,815

Information on employees
2023

2022

NumberNumber

5,566

5,399

In Denmark

1,897

1,790

In other countries

3,784

3,660

Total

5,681

5,450

Average number of full-time employees in the financial year

Key management personnel1)

2023

2022

2023

2022

DKKm

DKKm

DKKm

DKKm

Short-term staff benefits

62

39

157

129

Retirement benefits

4

4

13

14

Other social security costs

-

-

1

1

Equity- and cash-settled incentive programs

12

10

24

-

Severance and other costs

36

-

40

21

Total

114

53

235

165

1) Key management personnel are defined as Registered Executive Management and people who report directly to the Registered Executive
Management.

For details on payments related to share-based incentive programs, see note 14 Incentive programs.

Employee costs

Registered Executive
Management

Number of full-time employees at 31 December

Severance and other costs includes severance payment of DKK 33.6 million to former President and CEO
Deborah Dunsire who left Lundbeck by the end of August 2023 and an extraordinary sign-on compensation of
DKK 2.5 million to Charl Van Zyl, who joined Lundbeck in September 2023 as new CEO, for lost incentives
from his previous employer. The compensation is earned over the period 2024-2026 up to a total of DKK 22.2
million before taxes and subject to certain conditions. In addition, a severance payment to another former
member of Executive Management (not part of the Registered Executive Management) was paid in the amountof DKK 4.1 million.
Remuneration of the Board of Directors
The total remuneration of the Board of Directors for 2023 amounted to DKK 9.6 million (DKK 9.0 million in2022). The amount includes fees for participation in the Audit Committee of DKK 0.7 million (DKK 0.7 million
in 2022), the Remuneration Committee of DKK 0.7 million (DKK 0.7 million in 2022), the Scientific Committeeof DKK 1.1 million (DKK 0.9 million in 2022) and travel allowances of DKK 1.2 million (DKK 1.2 million in 2022)
for board members with permanent residence outside of Europe. The total remuneration of the chair of theBoard of Directors amounted to DKK 1.7 million (DKK 1.7 million in 2022). The total remuneration of the deputy
chair of the Board of Directors amounted to DKK 1.2 million (DKK 1.2 million in 2022). These amounts include
fees for participation in Board committees. The remuneration for 2023 is consistent with the remuneration
presented at the Annual General Meeting held on 21 March 2023.
The members of the Board of Directors held a total of 292,518 Lundbeck shares at 31 December 2023
(238,380 shares at 31 December 2022).

60

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Notes 4-5
4 FINANCIAL INCOME AND EXPENSES

5 INCOME TAXES
2023

2022

DKKm

DKKm

Interest income from financial assets measured at amortized cost

86

22

Gain on other financial assets, measured at fair value through profit or loss

431

Fair value adjustment of contingent consideration

4

71

Financial income

94

124

Tax on profit for the year

Current tax

2022
DKKm

520

356

7

(311)

Prior-year adjustments, deferred tax¹⁾

(23)

307

Change in deferred tax for the year

172

278

Prior-year adjustments, current tax¹⁾

Interest expenses from financial liabilities measured at amortized cost

43

96

Change in deferred tax as a result of changed income tax rates

Interest expenses relating to lease liabilities

11

7

Total tax for the year

Loss on other financial assets, measured at fair value through profit or loss

25

7

Fair value adjustment of contingent consideration

10

300

Exchange losses (net)

164

30

Other financial expenses

43

62

Financial expenses

296

502

Net financials, expenses

202

378

Fair value adjustment of contingent consideration for 2022 comprises DKK 278 million related to the increaseof the probability of success of milestone payments from 83.2% to 100% which occurred in the first quarter of2022 following EMA approval.

2023
DKKm

1

5

677

635

Tax on profit for the year

703

558

Tax on other comprehensive income

(27)

77

Tax on other transactions in equity

1

-

677

635

Tax for the year is composed of:Total tax for the year

1) For 2022, movements from prior-year adjustments, deferred tax to prior-year adjustments, current tax, primarily relate to the utilization of tax
losses from prior years by jointly taxed companies not controlled by the Parent Company.

For a specification of tax on comprehensive income, see note 12 Equity.
Uncertain tax positions
The Group operates in a multinational tax environment. Complying with tax rules can be complex as theinterpretation of legislation and case law may not always be clear or may change over time. In addition, transfer
pricing disputes with tax authorities may occur. Management’s judgments are applied when estimating the
expected outcome of disputes or interpretational uncertainties. Provisions for uncertain tax positions are
determined by using the ‘most probable outcome’ or ‘single best estimate’-method depending on the type of
uncertainty.
In 2023, uncertain tax positions comprise a liability of DKK 521 million and an asset of DKK 52 million (a liabilityof DKK 535 million and an asset of DKK 57 million in 2022). Management believes that the provision isadequate. However, the actual obligation may differ from the provision made and depends on the outcome of
litigations and settlements with the relevant tax authorities.

61

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 55 INCOME TAXES – CONTINUED
Explanation of the Group’s effective tax rate
DKKm

%

2023

DKKm

%

2022

Profit before tax

2,993

Calculated tax, 22%

658

22.0

Tax effect of:Profit before tax

2,474

Calculated tax, 22%

544

22.0

1.9

Tax effect of:Differences in the income tax rates of foreign subsidiaries from the Danish corporate income
tax rate

70

2.3

Differences in the income tax rates of foreign subsidiaries from the Danish corporate income
tax rate47

Non-deductible expenses/non-taxable income and other permanent differences

56

1.8

Non-deductible expenses/non-taxable income and other permanent differences

107

4.3

Research and development incentives

(52)

(1.7)

Research and development incentives

(82)

(3.3)

Foreign-derived intangible income benefit

(31)

(1.0)

Foreign-derived intangible income benefit

(33)

(1.3)

Change in valuation of net tax assets

17

0.6

Change in valuation of net tax assets

(26)

(1.0)

Change in deferred tax as a result of changed income tax rates

1

0.0

Change in deferred tax as a result of changed income tax rates

5

0.2

Prior-year tax adjustments etc., total effect on operations

(16)

(0.5)

Prior-year tax adjustments etc., total effect on operations

(4)

(0.2)

Effective tax/tax rate for the year

703

23.5

Effective tax/tax rate for the year

558

22.6

62

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 55 INCOME TAXES – CONTINUED
Deferred tax balances

Temporary differences between assets and liabilities as statedin the consolidated financial statements and in the tax base

Balance at
1 January

Effect of foreignexchangedifferences

Adjustment ofdeferred tax at
beginning of year

Movements
during the year

Balance at
31 December

DKKm

DKKm

DKKm

DKKm

DKKm

2023
Intangible assets

13,902

(254)

3

(57)

13,594

Property, plant and equipment

679

(7)

(2)

(10)

660

Inventories

(70)

14

8

44

(4)

Provisions(1,772)

43

(217)

(629)

(2,575)

Other items¹⁾

(402)

40

55

(74)

(381)

Tax loss carryforwards etc.

(3,543)

34

53

1,505

(1,951)

Total temporary differences

8,794

(130)

(100)

779

9,343

Deferred (tax assets)/tax liabilities

2,059

(32)

(23)

174

2,178

Research and development incentives

(137)

5

-

(1)

(133)

Deferred (tax assets)/tax liabilities

1,922

(27)

(23)

173

2,045

2022
Intangible assets

12,999

495

2

406

13,902

Property, plant and equipment

780

7

(5)

(103)

679

Inventories

(131)

(2)

3

60

(70)

Provisions(1,606)

(45)

(141)

20

(1,772)Other items¹⁾

(634)

(6)

33

205

(402)

Tax loss carryforwards etc.

(5,838)

(109)

1,482

922

(3,543)

Total temporary differences

5,570

340

1,374

1,510

8,794

Deferred (tax assets)/tax liabilities

1,342

86

307

324

2,059

(87)

(9)

-

(41)

(137)

1,255

77

307

283

1,922

Research and development incentives
Deferred (tax assets)/tax liabilities
1) Movements during the year include DKK 15 million (DKK 28 million in 2022) recognized in other comprehensive income.

63

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 55 INCOME TAXES – CONTINUED

2023

2023

2023

2022

2022

Deferred tax
assetsDeferred tax
liabilities

Net

Deferred tax
assetsDeferred tax
liabilities

Net

DKKm

DKKm

DKKm

DKKm

DKKm

DKKm

Intangible assets

(95)

3,274

3,179

(99)

3,364

3,265

Property, plant and equipment

(8)

159

151

(6)

163

157

Inventories

(89)

76

(13)

(86)

58

(28)

Provisions

(613)

-

(613)

(423)

-

(423)

Other items

(164)

61

(103)

(186)

71

(115)

Tax loss carryforwards etc.

(423)

-

(423)

(797)

-

(797)

Research and development incentives

(133)

-

(133)

(137)

-

(137)

Deferred (tax assets)/tax liabilities(1,525)

3,570

2,045

(1,734)

3,656

1,922

Offset within legal tax entities and jurisdictions

1,287(1,287)-

1,504(1,504)-

Total net deferred (tax assets)/tax liabilities

(238)

2,283

2,045

(230)

2,152

1,922

Deferred (tax assets)/tax liabilities

Management estimates future income according to budgets, forecasts, business plans and initiatives
scheduled for the coming years supporting the recognition of deferred tax assets. When forecasting theutilization of tax assets, the Group applies the same assumptions as for impairment testing. See note 6
Intangible assets.
Accordingly, at 31 December 2023, all deferred tax assets relating to tax losses carried forward in Denmark
from 2016, 2018 and 2021 were capitalized in the amount of DKK 314 million (DKK 509 million at 31 December2022).
U.S. tax losses and tax credits stemming from acquisitions have been recognized at an amount of DKK 242
million (DKK 424 million in 2022), equaling the expected utilization within a foreseeable future, whereas an
amount of DKK 15 million (DKK 15 million in 2022) has not been recognized in the balance sheet.
Global minimum top-up tax (Pillar II)
The Group operates in Denmark, which has enacted new legislation to implement the global minimum top-up
tax. The Group expects to be subject to the top-up tax in relation to its operations in Hong Kong, where a twotiered tax rate regime results in an effective tax rate of approximately 12.5%, and in Panama, where income
from foreign jurisdictions is not subject to tax, thus reducing the effective tax rate to below 15%.

2022

However, since the newly enacted tax legislation in Denmark is only effective from 1 January 2024, there is no
current tax impact for the year ended 31 December 2023.
The Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the topup tax and accounts for it as a tax payable when incurred, see note 1.7 Changes in material accounting policy
information. If the top-up tax had been applied in 2023, the tax on profits relating to the Group’s operations in
the countries subject to top-up tax would have had an insignificant impact.
Unrecognized deferred tax assets
2023

2022

DKKm

DKKm

Unrecognized deferred tax assets at 1 January

76

102

Additions20

18

Recognized

(3)

(44)

Unrecognized deferred tax assets at 31 December

93

76

Unrecognized deferred tax assets primarily relate to net operating losses and tax credits not expected to be
utilized within the foreseeable future.

64

Lundbeck Annual Report 2023

Consolidated Financial Statements

Management Review

Financial Statements of the Parent Company

Note 6
6 INTANGIBLE ASSETS

Intangible assets

Goodwill

Productrights¹⁾

Other
rights²⁾

Projects inprogress²⁾

Total
intangible
assets

DKKm

DKKm

DKKm

DKKm

DKKm

2023

Intangible assets

Goodwill

Productrights¹⁾

Other
rights²⁾

Projects inprogress²⁾

Total
intangible
assets

DKKm

DKKm

DKKm

DKKm

DKKm

5,377

31,474

1,839

133

38,823

290

886

7

1

1,184

2022

Cost at 1 January

5,667

32,7191,836

131

40,353

Effect of foreign exchange differences

(160)

(499)

(3)

-

(662)

Transfers

-

-

39

(39)

-

Transfers

-

-

57

(57)

-

Additions

-

112

6

106

224

Additions

-

359

16

74

449

Disposals

Disposals

Cost at 1 January
Effect of foreign exchange differences

-

-

(20)

-

(20)

5,507

32,332

1,858

198

39,895

Cost at 31 December

Amortization and impairment losses at 1 January-

16,1301,723-

17,853

Effect of foreign exchange differences

-

(260)

(4)

-

(264)

Amortization

-

1,559

60

-

1,619

Disposals

-

-

(5)

-

(5)

Amortization and impairment losses at 31 December-

17,4291,774-

19,203

5,507

14,90384

198

20,692Carrying amount at 31 December

Cost at 31 December

Carrying amount at 31 December

1) In 2023, product rights not yet commercialized amounted to DKK 1,973 million (DKK 1,973 million in 2022).
2) Other rights and projects in progress include items such as the IT system SAP.

In 2023, Abilify Maintena® achieved a sales milestone of EUR 300 million triggering the recognition of anaddition in the product rights of Abilify Maintena® of DKK 112 million (EUR 15 million). The milestone has been
paid in 2023.

-

-

(83)

(20)

(103)

5,667

32,7191,836

131

40,353

Amortization and impairment losses at 1 January-

14,377

1,696-

16,073

Effect of foreign exchange differences

-

382

7

-

389

Amortization

-

1,371

63

-

1,434

Disposals

-

-

(43)

-

(43)

Amortization and impairment losses at 31 December-

16,1301,723-

17,853

5,667

16,589113

131

22,500In November 2022, Rexulti® achieved a sales milestone of USD 1 billion triggering the recognition of an additionin the product rights of Rexulti® of DKK 359 million (USD 50 million). The milestone was paid in the first quarterof 2023.

65

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 6
6 INTANGIBLE ASSETS - CONTINUED
Description of material product rights
Vyepti®
The eptinezumab product rights (Vyepti®), which is an investigational monoclonal antibody (mAb) for migraine
prevention targeting the calcitonin gene-related peptide (CGRP), were acquired in 2019. The value of the
product rights was DKK 13,421 million at the time of acquisition. At 31 December 2023, the carrying amount,net of amortization, was DKK 10,667 million (DKK 11,840 million at 31 December 2022). The remaining
amortization period of the Vyepti® product rights is around 12 years.
Rexulti®
Rexulti® is a prescription medication used as an adjunctive therapy to antidepressants for the treatment of MDD
and as a treatment for adults with schizophrenia in certain markets. Rexulti® is co-marketed in a partnershipcollaboration with Otsuka Pharmaceuticals Co., Ltd. The total carrying amount of the Rexulti® product rights
amounted to DKK 2,143 million, net of amortization, at 31 December 2023 (DKK 2,524 million at 31 December2022). The remaining amortization period of the Rexulti® product rights is around six years.
Family of MAGLi compounds
A family of compounds; a first-in-class, small-molecule inhibitor of monoacylglycerol lipase (MAGLi/MGLL)
currently being investigated in clinical trials for the treatment of neurological disorders, and various compounds
in the pre-clinical phase, was acquired in 2019. The value of the family of compounds recognized as productrights was DKK 1,853 million at the time of acquisition. At 31 December 2023, the carrying amount was DKK
1,871 million (DKK 1,871 million at 31 December 2022). The family of compounds is not yet commercialized,
consequently amortization has not commenced.
Amortization and impairment losses
Amortization and impairment losses for the year are included in the following functions in the statement of profit
or loss:
2023

2022

Amortization and impairment losses

DKKm

DKKm

Cost of sales

1,593

1,395

Sales and distribution costs

1416

Administrative expenses

5

3

Research and development costs

23

33

1,635

1,447

Total

Impairment testing
Goodwill
The Group is considered a single cash-generating unit (CGU) as this is how Management makes decisions
and assesses business performance. All subsidiaries are considered fully integrated into the Group as no entity
has a significant independent or separately identifiable inflow of cash. Most cash inflows are based on the
output from research and development activities performed by headquarters on behalf of the entire Group.
Accordingly, an impairment test is performed annually based on Lundbeck being one single CGU.
Product rights
In addition to the impairment test for goodwill (based on the CGU), the Group performs impairment tests ofproduct rights not yet commercialized and for product rights available for use, in case a significant indication of
impairment is identified.
Methodology
Goodwill
In the impairment test of the CGU, based on the fair value less cost of disposal, the market price of Lundbeck
is compared with its carrying amount.
Product rights
In the impairment tests of product rights, based on the value-in-use, the discounted expected future cash flows
for the specific asset tested are compared with the carrying amount of the intangible asset. The expected future
cash flows are based on a forecast period, which is the period used by Management for decision-making, withdue consideration of patent expiry.
The assumptions used in the impairment test are based on benchmarked external data and historical trends.
The key parameters in the calculation of the value-in-use are revenue, earnings, working capital, discount rate
and the preconditions for the cash flow period.
Significant assumptions and estimates are applied to the discounted expected future cash flows from theproduct rights.

66

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Notes 6-7
6 INTANGIBLE ASSETS - CONTINUED
The four category elements in the table below are considered when determining the key parameters for thevalue-in-use calculation.
Financial elements

Market elements

PricesHealthcare reforms

Rebates

Price reforms

Quantities

Market access

Patient population

Pharma restrictions

Market shares

Launch successCompetition

Product positioning

Fill rates

Competing pharmaceuticals

Prescription rates

Generics on the market

Impact of possible changes in key assumptions (product rights not yet commercialized)
If the budgeted revenue had been 5% lower than Management's estimates, the headroom would havecontinued to be positive. If the discount rate after tax applied to cash flows had been 0.5% higher, the headroom
would have continued to be positive.
The sensitivity analyses are based on a change in an assumption while holding all other assumptions constant.
The method and types of assumptions used in preparing the sensitivity analyses did not change compared tothe prior period. The potential changes in key assumptions are considered within historic variations
experienced by the Group and thus considered reasonably possible.

7 PROPERTY, PLANT AND EQUIPMENT

Lundbeck costs (including promotion costs)

Other
fixtures Prepayments
and assets
and fittings,
undertools andequipment construction

Total
property,plant andequipment

Land andbuildings¹⁾

Plant andmachinery

DKKm

DKKm

DKKm

DKKm

DKKm

3,685

2,049

849

706

7,289

1

-

(5)

-

(4)

Transfers

130

60

59

(249)

-

Product labeling

Additions

13

54

32

178

277

Liaison with regulatory bodies

Disposals

R&D elements

Other elements

R&D spend

Supply chain effectiveness

Collaborations

Strength and abilities of partners

Pipeline success rate

The assumptions are based on experience, external source of information and industry-relevant observations
for each product right.
The calculation of the value-in-use for product rights is based on a weighted average discount rate pre-tax of
8.64% (9.36% in 2022).
2023 testing outcome
The impairment tests performed in 2023 did not result in the recognition of any impairment loss.
2022 testing outcome
The impairment tests performed in 2022 did not result in the recognition of any impairment loss.

Property, plant and equipment
2023
Cost at 1 January
Effect of foreign exchange differences

-

(28)

(23)

-

(51)

Cost at 31 December

3,829

2,135

912

635

7,511

Depreciation and impairment losses at 1 January

2,449

1,614

711

-

4,774

1

-

(3)

-

(2)

120

108

61

-

289

Effect of foreign exchange differences
Depreciation
Disposals

-

(28)

(21)

-

(49)

Depreciation and impairment losses at 31 December

2,570

1,694

748

-

5,012

Carrying amount at 31 December

1,259

441

164

635

2,499

1) No land and buildings were mortgaged at 31 December 2023 and at 31 December 2022.

67

Lundbeck Annual Report 2023

Consolidated Financial Statements

Management Review

Financial Statements of the Parent Company

Notes 7-8
7 PROPERTY, PLANT AND EQUIPMENT - CONTINUED

Property, plant and equipment

8 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
Other
fixtures Prepayments
and assets
and fittings,
undertools andequipment construction

Total
property,plant andequipment

Land andbuildings

Plant andmachinery

DKKm

DKKm

DKKm

DKKm

DKKm

3,537

2,050

844

612

7,043

2022
Cost at 1 January
Effect of foreign exchange differences
Transfers

-

2

2

-

4

159

46

20

(225)

-

Additions

9

28

11

323

371

Disposals

(20)

(77)

(28)

(4)

(129)

Cost at 31 December

3,685

2,049

849

706

Depreciation and impairment losses at 1 January

2,358

1,583

679

-

2022
DKKm

Cost at 1 January

731

705

Effect of foreign exchange differences

(12)

6

Additions15

13

Disposals

(15)

(9)

Adjustment to right-of-use assets during the year¹⁾

37

16

Cost at 31 December

756

731

Depreciation and impairment losses at 1 January

304

221

(7)

1

7,289

Depreciation

90

89

Disposals

(13)

(7)

4,620

Depreciation and impairment losses at 31 December

374

304

Carrying amount at 31 December

382

427

(1)

1

-

-

-

Depreciation

108

105

57

-

270

3

1

-

-

4

Disposals

2023
DKKm

Effect of foreign exchange differences

Effect of foreign exchange differences
Impairment losses

Land and buildings

1) Comprises reassessment of lease terms and renewal of lease agreements.

(19)

(76)

(25)

-

(120)

Depreciation and impairment losses at 31 December

2,449

1,614

711

-

4,774

Amounts recognized in profit or loss

Carrying amount at 31 December

1,236

435

138

706

2,515

Expenses relating to short-term leases, not capitalized

1

2

Depreciation of right-of-use assets, land and buildings

90

89

Depreciation and impairment losses
Depreciation and impairment losses for the year are included in the following functions in the statementof profit or loss:
2023

2022

DKKm

DKKm

Cost of sales

212

194

Sales and distribution costs

23

27

Administrative expenses

11

10

Research and development costs

41

44

Total

287

275

Depreciation and impairment losses

2023

2022

DKKm

DKKm

Interest expenses relating to lease liabilities

11

7

Total recognized in profit or loss

102

98

68

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Notes 8-10
8 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES - CONTINUED
Balance at
1 January

Cash outflow

Non-cashflow

Balance at
31 December

DKKm

DKKm

DKKm

DKKm

Lease liabilities

483

(89)

43

437

Total lease liabilities

483

(89)

43

437

Lease liabilities

539

(93)

37

483

Total lease liabilities

539

(93)

37

483

Development in lease liabilities
2023

2022

2023

2022

DKKm

DKKm

Current lease liabilities

86

88

Non-current lease liabilities
Total lease liabilities

351

395

437

483

Inventories have been reduced by DKK 470 million (DKK 236 million in 2022) as a result of the write-down to
net realizable value in the year. Out of the total, DKK 312 million (DKK 228 million in 2022) relates to a Vyepti
provision for obsolescence recognized in Cost of sales in the year as a consequence of a fixed batch quantity
supply agreement effective for five years up to 30 June 2023, which was acquired as part of the acquisition ofAlder BioPharmaceuticals Inc. in 2019, a planned transition of the antibody cell line, higher than originally
expected production yields and a slower launch ramp-up as a consequence of the pandemic. Management’s
estimate takes into consideration assumptions on inventory-estimated usage, approval dates, expected shelflife, etc. Total balance of Vyepti provision for obsolescence is DKK 540 million (DKK 228 million in 2022).
Inventories of DKK 2,277 million (DKK 1,651 million in 2022) are expected to be recovered after more than 12
months, mostly due to the Vyepti fixed batch quantity supply agreement.

10 TRADE RECEIVABLES

Trade receivables
Write-downs

The total cash outflow from recognized lease agreements amounted to DKK 100 million (DKK 100 million in2022) and includes repayment of lease liabilities and interest.
The maturity analysis of lease liabilities is provided in the table ‘Classification of and contractual maturity dates
for financial assets and financial liabilities’ in note 19 Financial instruments.

9 INVENTORIES
2023

2022

DKKm

DKKm

214

209

Work in progress

2,580

2,207

Finished goods and goods for resale

1,633

1,557

Raw materials and consumables

Prepayments
Total

-

73

4,427

4,046

Inventories recognized as cost of sales amounted to DKK 2,919 million (DKK 2,581 million in 2022).

Trade receivables, net

2023

2022

DKKm

DKKm

2,990

2,733

(25)

(24)

2,965

2,709

Credit risks
Lundbeck’s products are sold primarily to distributors of pharmaceuticals, pharmacies and hospitals. The
payment conditions for the customers, including credit periods and any payment of interest in case of nonpayment, vary, but are always based on industry practice in the relevant market. Due to special trading
conditions in specific markets, the credit period may be up to about 200 days and for one customer 360 days.
The weighted average credit period is approximately 50 days.
Changes to the Group’s customer portfolio are limited. When collaboration is established with a new customer,
credit assessment is done either by Lundbeck or an external credit rating agency. At the time of revenue
recognition, Lundbeck assesses the full lifetime-expected credit losses. In addition, undue and due receivables
are analyzed in an ongoing process. Based on the credit assessment, receivables analysis, historical andindustry experience, it is estimated whether the receivables are recoverable, or write-downs are needed.
Historically, losses on debtors have been insignificant.

69

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Notes 10-11
10 TRADE RECEIVABLES - CONTINUED
Fluctuations in foreign exchange rates, including the impact from currency devaluations, represent an inherent
risk as Lundbeck also operates in volatile economies. Lundbeck monitors and takes action to mitigate risks
associated with receivables.
Market risks
The pharmaceutical market is characterized by authorities aiming to reduce or cap healthcare costs in general.
Market changes, such as price reductions and the ever-earlier launch of generics, may have a considerable
impact on the earnings potential of pharmaceuticals.

11 CASH RESOURCES
2023

Cash and bank balances

20221)

DKKm

DKKm

5,010

3,548

1) In 2022, cash and bank balances included DKK 127 million which was held as restricted cash.

Liquidity risk and capital structure
The credit risk on cash and bank balances and derivatives (forward exchange contracts, currency options andinterest rate swaps) is limited as Lundbeck only deals with banks with a solid credit rating. The counterparty
risk towards banks with a short-term credit rating lower than A-1 (Standard & Poor’s) is kept to a minimum,
only allowing balances necessary for operating needs within the immediate future. To further limit the risk ofloss, internal limits have been defined for the credit exposure accepted towards the banks with whom Lundbeck
collaborates. Credit lines are part of the Treasury Policy.
The Treasury Policy covers financial resources, foreign currency exposure, interest rate risk, securities, loan
and bond portfolios as well as capitalization of subsidiaries. The Treasury Policy is presented to the Audit
Committee annually for subsequent approval by the Board of Directors. In addition, the Board of Directors
approves the framework for selecting financial collaboration partners and the credit lines and types oftransactions allowed.
Pursuant to its Treasury Policy, Lundbeck must ensure that a minimum of DKK 1.0 billion is held in cash or
cash equivalents. If this amount is not available in cash, fixed-term deposits or bonds, Lundbeck will enter into
committed credit facilities with its banking partners.

In 2019, Lundbeck entered into a revolving credit facility (RCF) of EUR 1.5 billion with its strategic banks. The
RCF expires in 2026. The flexible structure of the RCF enables Lundbeck to repay the debt in full at short
notice, normally not more than three months, and still maintain the facility until expiration of the credit
commitment. The RCF is subject to covenants, and no breaches were encountered during the year.
At 31 December 2023, Lundbeck had unutilized committed credit facilities of DKK 11.2 billion.
In addition, Lundbeck has a number of uncommitted credit facilities to cover its day-to-day operations. At 31
December 2023 and 31 December 2022, these credit facilities were unutilized.
In October 2020, Lundbeck issued a seven-year eurobond in the amount of EUR 500 million with a fixedcoupon of 0.875%. The bond was issued under Lundbeck´s euro medium-term note (EMTN) program of EUR
2 billion.
When managing the capital structure, Lundbeck’s main objective is to support the ‘Expand and Invest to Grow’
strategy; use capital resources for required research and development and for investments to realize thestrategy; and to generate long-term attractive return for the shareholders. Lundbeck also wishes to be a strong
financial counterparty to debt providers and other stakeholders by maintaining an investment grade credit rating(BBB-).
To maintain or adjust the capital structure, Lundbeck may adjust dividends paid to shareholders, return capitalto shareholders, issue new shares, sell assets to reduce debt or increase debt. To minimize the refinancing
risk, Lundbeck strives to have diversified funding, both in terms of duration and source.
Lundbeck defines capital as total equity and net interest-bearing debt (see notes 17 Bank debt, bond debt andborrowings and 8 Right-of-use assets and lease liabilities) and after deducting cash resources. At 31 December
2023, total equity amounted to DKK 22,045 million (DKK 20,779 million at 31 December 2022).
As of 31 December 2023, the net cash position was DKK 711 million, compared to a net debt position of DKK
2,183 million at 31 December 2022.

70

Lundbeck Annual Report 2023

Consolidated Financial Statements

Management Review

Financial Statements of the Parent Company

Note 1212 EQUITY
Share capital
On 8 June 2022, a share split of Lundbeck’s existing shares was approved at an extraordinary general meeting.
The approval entailed that each existing Lundbeck share with a nominal value of DKK 5 was split into one Ashare with a nominal value of DKK 1 and four B-shares, each with a nominal value of DKK 1. The A-share iscarrying ten votes, and the B-share is carrying one vote. The A-shares and the B-shares are ordinary, fully paid
shares carrying equal economic rights in all respects.

Share capital

2023

2022

DKKm

DKKm

At 1 January

996

996

At 31 December

996

996

A-sharesB-sharesTotal issued shares

NumberNumberNumberAt 1 January 2022

199,148,222

796,592,888

995,741,110

At 31 December 2022

199,148,222

796,592,888

995,741,110

At 31 December 2023

199,148,222

796,592,888

995,741,110

Issued shares

Earnings per share
Profit for the year (DKKm)
Average number of shares (‘000 shares)

A-shares of
DKK 1 nom.

B-shares of
DKK 1 nom.

Nominalvalue

Proportion ofshare capital

Cost

NumberNumber

DKKm

%

DKKm

120

580,280

2,321,120

3

0.29

-

1,400,000

1

0.14

43

Shares used for funding incentive programs(114,252)(457,008)(1)(0.06)(30)

Shareholding at 31 December

466,028

3,264,112

3

0.37

133

Shareholding at 1 January502,115

2,008,460

3

0.25

138

Share buyback

282,000

1,128,000

1

0.14

45

Shares used for funding incentive programs(203,835)(815,340)(1)(0.10)(63)

Shareholding at 31 December

580,280

2,321,120

3

0.29

120

2022

2023

2022

2,290

1,916

995,741995,741(3,506)(2,874)992,235

992,867

Earnings per share, basic (EPS) (DKK)

2.31

1.93

Earnings per share, diluted (DEPS) (DKK)

2.31

1.93

Average number of shares, excl. treasury shares (‘000 shares)

2023
Share buyback

Distribution of profit
The Board of Directors is proposing distribution of dividends for 2023 of 30% (30% in 2022) of the net profit for
the year allocated to the shareholders, equivalent to DKK 0.70 per share (DKK 0.58 per share in 2022) or DKK
697 million (DKK 578 million in 2022), inclusive of dividends on treasury shares. Total dividends are based on
the current share capital.

Average number of treasury shares (‘000 shares)

Treasury shares

Shareholding at 1 January

The Board of Directors is authorized to issue new shares and raise the share capital of the Parent Company
as set out in article 4 of the Parent Company’s Articles of Association.
The share capital is following the capital requirements of the Danish Companies Act and the rules of Nasdaq
Copenhagen.

Share capital

Treasury shares

In 2023, the Parent Company acquired treasury shares at a value of DKK 43 million (DKK 45 million in 2022),
corresponding to 1,400,000 B-shares (282,000 A-shares and 1,128,000 B-shares in 2022). The shares wereacquired to fund Lundbeck’s long-term share-based incentive programs. A total of 114,252 A-shares and
457,008 B-shares were used for this purpose in 2023 (203,835 A-shares and 815,340 B-shares in 2022).

71

Lundbeck Annual Report 2023

Consolidated Financial Statements

Management Review

Financial Statements of the Parent Company

Note 1212 EQUITY - CONTINUEDTax on other comprehensive income
Before tax

Tax

After tax

Before tax

Tax

After tax

DKKm

DKKm

DKKm

DKKm

DKKm

DKKm

670

-

670

2023

2022

Other comprehensive income recognized under foreign currencytranslation reserve in the statement of changes in equity

Other comprehensive income recognized under foreign currencytranslation reserve in the statement of changes in equity

Exchange rate gains/losses on investments in foreign subsidiaries

(336)

-

(336)

Exchange rate gains/losses on investments in foreign subsidiaries

Exchange rate gains/losses on additions to net investments in foreignsubsidiaries

(7)

1

(6)

Exchange rate gains/losses on additions to net investments in foreignsubsidiaries

25

(4)

21

Hedging of net investments in foreign subsidiaries

17

(4)

13

Hedging of net investments in foreign subsidiaries

(163)

36

(127)

(326)

(3)

(329)

Total

532

32

564

(271)

Total
Other comprehensive income recognized under hedging reserve in thestatement of changes in equity

Other comprehensive income recognized under hedging reserve in thestatement of changes in equity

Deferred gains/losses on cash flow hedge, exchange rate

117

(26)

91

Deferred gains/losses on cash flow hedge, exchange rate

(347)

76

Deferred gains/losses on cash flow hedge, interest rate

(21)

5

(16)

Deferred gains/losses on cash flow hedge, interest rate

39

(9)

30

Deferred gains/losses on cash flow hedge, price

(78)

17

(61)

Deferred gains/losses on cash flow hedge, price

128

(28)

100

Exchange gains/losses, hedging (transferred to revenue)

(137)

30

(107)

Exchange gains/losses, hedging (transferred to revenue)

588

(129)

459

Total

(119)

26

(93)

Total

408

(90)

318

Other comprehensive income recognized under retained
earnings in the statement of changes in equity

Other comprehensive income recognized under retained
earnings in the statement of changes in equity

Actuarial gains/losses

(24)

4

(20)

Actuarial gains/losses

134

(19)

115

Total

(24)

4

(20)

Total

134

(19)

115

Recognized in other comprehensive income

(469)

27

(442)

Recognized in other comprehensive income

1,074

(77)

997

Exchange rate gains/losses on investments in foreign subsidiaries, a loss of DKK 336 million (gain of DKK 670
million in 2022), and exchange rate gains/losses on additions to net investments in foreign subsidiaries, a lossof DKK 7 million (gain of DKK 25 million in 2022), are primarily driven by developments in USD/DKK and
GBP/DKK exchange rates.

72

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 13
13 RETIREMENT BENEFIT OBLIGATIONS AND SIMILAR OBLIGATIONSDefined contribution plans
The major defined contribution plans cover employees in Australia, Canada, China, Denmark, Finland, South
Korea, Sweden, the UK and the U.S. The cost of defined contribution plans, representing contributions to theplans, amounted to DKK 269 million in 2023 (DKK 253 million in 2022).
Defined benefit plans
The Group has defined benefit plans in a few countries. The most significant plans comprise current and former
employees in Germany and the UK.
The defined benefit plan in Germany is unfunded and administered by Lundbeck Germany. The defined benefit
plan in the UK is funded and constituted under a trust, whose assets are legally separated from the Group.
Both plans entitle the employees to an annual pension on retirement based on the service and salary level until
retirement.
2023

2022

DKKm

DKKm

Present value of defined benefit plans

425

392

Fair value of plan assets

(293)

(277)

Retirement benefit obligations and similar obligations

Limitations due to asset ceiling
Defined benefit plans at 31 December

-

3

132

118

Other obligations of a retirement benefit nature

31

38

Retirement benefit obligations and similar obligations at 31 December

163

156

Non-current assets

(54)

(58)

Non-current obligations

216

213

Net retirement benefit obligations and similar obligations at 31 December

1

1

163

156

2023

Key assumptions for the most significant plans

2022

%

%

Discount rate

3.30-4.50

3.70-5.20

Inflation rate

2.25-3.05

2.35-3.65

Assumptions regarding future longevity are set based on actuarial advice in accordance with publishedstatistics and experience in each country. The longevities underlying the values of the defined benefit obligation
for the most significant plans were as follows:
2023

2022

Years

Years

Female23.90-24.20

24.00-24.20

Male

20.80-21.40

21.00-21.80

Female25.30-26.40

25.60-26.00

Male

22.60-23.50

23.00-23.10

Longevity at age 65 for current pensioners

Longevity at age 65 for current members aged 45

Sensitivity analysis
The most significant assumptions used in the calculation of the obligation for defined benefit plans are discountrate, inflation rate and mortality. The sensitivity of the defined benefit obligation to changes in the mostsignificant assumptions is shown below:
2023
Effect in DKKm

Retirement benefit obligations and similar obligations break down as follows:

Current obligations

Actuarial assumptions
The following were the key actuarial assumptions at the reporting date.

Increase¹⁾

2022
Decrease¹⁾

Increase¹⁾

Decrease¹⁾

Discount rate (0.25% movement)

12

(13)

11

Inflation rate (0.25% movement)

(5)

5

(4)

(12)
4

Life expectancy (1 year movement)

(15)

14

(14)

13

1) Positive amounts indicate a decrease in the actuarial obligations. Negative amounts indicate an increase in the actuarial obligations

The sensitivity analysis indicates how a change in the individual assumptions would change the obligation.
However, the assumptions will most likely be correlated and consequently result in a different obligation.

73

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 13
13 RETIREMENT BENEFIT OBLIGATIONS AND SIMILAR OBLIGATIONS – CONTINUED

2023

2022

Change in fair value of plan assets

DKKm

DKKm

2023

2022

Fair value of plan assets at 1 January

277

285

DKKm

DKKm

Shares100

99

Effect of foreign exchange differences

11

(8)

Bonds

55

48

Interest income on plan assets

145

Property

38

35

Experience adjustments

(6)

(7)

Insurance contracts

65

67

Administration fees

(1)

(1)

Other assets

35

28

Contributions8

8

Benefits paid

(11)

(6)

Total

293

277

Fair value of plan assets

Shares, bonds, property and other assets are measured at fair value based on quoted prices in an active
market. Insurance contracts are not based on quoted prices in an active market.
The amounts recognized in the balance sheet and the movements in the net defined benefit obligation over
the year are as follows.

Change in present value of defined benefit plans

2023

2022

DKKm

DKKm

Present value of defined benefit plans at 1 January

392

539

9

(7)

Pension expenses

58Interest expenses relating to the obligations17

8

Effect of foreign exchange differences

Experience adjustments

(2)

22

Adjustments relating to financial assumptions

25

(166)

Adjustments relating to demographic assumptions(2)-

Benefits paid

(20)

(14)

Employee contributions

1

1

Other

-

1

425

392

Present value of defined benefit plans at 31 December

Employee contributions

1

1

Fair value of plan assets at 31 December

293

277

Net expense recognized in profit or loss

2023

2022

DKKm

DKKm

Pension expenses

58

Finance costs

33

Administrative fees

1

1

Total

9

12

Amount recognized in other comprehensive income
Actuarial (gains)/losses

Realized return on plan assets

2023

2022

DKKm

DKKm

24

(134)

2023

2022

DKKm

DKKm

8

(2)

The benefit under unfunded defined benefit plans is paid directly by the Group. In some countries, the futurecontribution to funded defined benefit plans depends on the development in salaries, administrative fees andregular premiums, and in other countries on the surplus/deficit according to local requirements. The weighted
average duration of the obligation is 12 years (12 years in 2022). The expected contribution to defined benefit
plans for 2024 is DKK 16 million (DKK 15 million for 2023).
Other obligations of a retirement benefit nature
In 2023, an obligation of DKK 31 million (DKK 38 million in 2022) was recognized to cover other obligations ofa retirement benefit nature, which primarily include post-employment benefits in a number of subsidiaries.
These benefit payments are conditional upon specified requirements being met.

74

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 14
14 INCENTIVE PROGRAMS
To attract, retain and motivate key employees and align their interests with those of its shareholders, Lundbeck
has established a number of long-term incentive programs. Lundbeck uses equity- and cash-settled programs.
Equity-settled programs
As from 2023, the Group has established a performance share units (PSU) program in substitution for theprevious restricted share units (RSU) program for Lundbeck’s Registered Executive Management and key
employees, as part of Lundbeck’s recurring long-term incentive program. The general terms and conditions for
the PSU program are similar to those applying to the RSU program. In 2023, five of the members of theRegistered Executive Management and some key employees employed with the Group were granted PSUs.
The total number of options granted to the above-mentioned employees are disclosed below. The participants
were selected based on job level. All the PSUs and RSUs vest three years after grant. Vesting is subject to theBoard of Directors’ decision on vesting, to Lundbeck achieving certain strategic and financial targets specified
by the Board of Directors and to continuing employment with the Group during the vesting period. The fairvalue of PSUs and RSUs has been calculated based on the share price reduced by an expected dividend yieldof 2.00% p.a. The fair value is disclosed below for each date of grant.

PSU and RSU programs1)

2023

2022

2021

2020

Number of people included in the program

166

176

139

135

139

1,738,514

1,592,060

801,365

695,595

639,495

Total number of PSUs/RSUs granted

As from 2023, the Group has established a PCU program in substitution for the RCU program for a few key
employees in the subsidiaries. The general terms and conditions for the PCU program are similar to those
applying to the RCU program. At 31 December 2023, the PCUs granted to key employees totaled 39,152
PCUs (14,205 RCU for the 2022 program). All PCUs and RCUs will vest three years after the grant. Vesting issubject to the Board of Directors’ decision on vesting, to Lundbeck achieving certain strategic and financial
targets specified by the Board of Directors and to continuing employment with the Group during the vesting
period. The size of the amount depends on the value of the Lundbeck share on the vesting date. The fair value
at the time of the initial grant was DKK 28.29 per PCU (DKK 28.43 per RCU for the 2022 program).
Fair value, liability and expense recognized in the statement of profit or loss
The PSUs/RSUs granted are recognized in profit or loss for 2023 and 2022 at an expense corresponding to
the fair value at the time of grant for the part of the vesting period attributable to each one. The total expense
recognized in respect of equity-settled programs amounted to DKK 36 million (DKK 30 million in 2022).
At 31 December 2023, the fair value of the remaining equity-settled programs was DKK 120 million (DKK 84
million at 31 December 2022).

2019

Number of PSUs/RSUs granted to theRegistered Executive Management

407,514385,659

173,905

149,615140,640

Vesting date

01.02.26

01.02.25

01.02.24

01.02.23

01.02.22

28.29

28.43

47.24

51.68

53.94

Fair value at the date of grant, DKK

Cash-settled programs
In 2023, the cash-settled programs consisted of performance cash units (PCUs) and restricted cash units(RCUs). The cash-settled programs cannot be converted into shares as this program is settled in cash.

1) The Group introduced a performance share units (PSU) program in 2023. Consequently, information for 2023 comprises details on PSUs andinformation for 2019-2022 comprises details on RSUs.

Comparative figures for 2019 to 2021 have been restated to reflect the result of the share split completed on 8
June 2022.

The PCUs/RCUs granted are recognized in the statement of profit or loss at an expense corresponding to thevalue adjustment for the year based on the performance of the Lundbeck share. The total expense recognized
in respect of cash-settled programs amounted to DKK 5 million (DKK 4 million in 2022) and covers all cashsettled programs in force at 31 December 2023. At 31 December 2023, the total liability in respect of cashsettled programs was DKK 1 million (DKK 10 million at 31 December 2022).
The total expense recognized in profit or loss for all incentive programs amounted to DKK 41 million in 2023
(DKK 34 million in 2022).

75

Lundbeck Annual Report 2023

Consolidated Financial Statements

Management Review

Financial Statements of the Parent Company

Notes 15-16
15 PROVISIONS
Discounts
and rebates1)

Product
returns2)

Otherprovisions3)

Total

DKKm

DKKm

DKKm

DKKm

Provisions at 1 January

890

146

286

1,322

Effect of foreign exchange differences

(24)

(6)

(4)

(34)

Additional provisions recognized

1,629

86

309

2,024

Provisions used during the year

(1,877)

(20)

(83)

(1,980)2023

Reversal of unused provisions

-

-

(10)

(10)

Provisions at 31 December

618

206

498

1,322

388

Provisions break down as follows:
Non-current provisions

-

113

275

Current provisions

618

93

223

934

Provisions at 31 December

618

206

498

1,322

1) For discounts and rebates, the most significant sales deductions are in the U.S. and comprise discounts and rebates given in connection withsales under the U.S. Federal and State Government Healthcare programs, primarily Medicaid.
2) For product returns, the Group has product return obligations normal for the industry. Management does not expect any major losses fromthese obligations apart from the amount already recognized.
3) Other provisions comprise provisions relating to legal disputes, environmental provisions, obligations in relation to employee benefits,
restructuring provision, etc.

Discounts and rebates
Management’s estimate of discounts and rebates is based on a calculation which includes a combination ofhistorical product/population utilization mix, price increases, program/market growth and state-specificinformation. Further, the calculation of rebates involves legal interpretation of relevant regulations and is subject
to changes in interpretive guidance from governmental authorities. The obligations for discounts and rebates
are incurred at the time the sale is recorded; however, the actual rebate related to a specific sale may beinvoiced by the authorities six to nine months later. In addition to this billing time lag, there is no statute oflimitations for states to submit rebate claims; thus, rebate adjustments in any particular period may relate tosales from a prior period. Moreover, when a product loses exclusivity, shifts in payer mix may cause Medicaid
claims/estimates to be more volatile.

16 CONTINGENT ASSETS AND CONTINGENT LIABILITIES
Pending legal proceedings
Lundbeck is involved in a number of legal proceedings, including patent disputes and environmental matters,
the most significant of which are described below. Some of these involve significant amounts and are subject

to considerable uncertainty. Management continuously assesses the risks associated with the legal
proceedings, and their likely outcome. Management is of the opinion that, apart from items recognized in thefinancial statements, the outcome of these legal proceedings and disputes are not probable or cannot be
reliably estimated in terms of amount or timing. Such proceedings may, however, develop over time, and newproceedings may occur, in a way which could have a material impact on the Group’s financial position and/or
cash flows.
In June 2013, Lundbeck received the European Commission’s decision that agreements concluded with four
generic competitors concerning citalopram violated competition law. The decision included fining Lundbeck
EUR 93.8 million (approximately DKK 700 million). Lundbeck paid and expensed the fine in the third quarterof 2013. In March 2021, the European Court of Justice rejected Lundbeck’s final appeal of the European
Commission’s decision. So-called ‘follow-on claims’ for reimbursement of alleged losses, resulting fromviolation of competition law, often arise when decisions and fines issued by the European Commission are
upheld by the European Court of Justice. The below mentioned ‘follow-on claims’ are ongoing or threatened.
Lundbeck disagrees with all claims and intends to defend itself against them.
At the end of first quarter 2023, the UK health authorities served their claim form on Lundbeck and several
generic companies, and Lundbeck filed its defense in the third quarter of 2023. In September 2023, a CaseManagement Conference was held, at which the Competition Appeal Tribunal approved an application for apreliminary issue hearing on whether the claim is time-barred. The preliminary issue hearing is expected to beheld in the second quarter of 2024 and a ruling on time-barring is expected in 2024.
In late October 2021, Lundbeck received a writ of summons from a German health-care company claiming
compensation for an alleged loss of profit plus interest payments, allegedly resulting from Lundbeck’s
conclusion of agreements with two of the four generic competitors, which were comprised by the EU Court ofJustice ruling. Lundbeck filed its first defense in May 2022, and the parties have subsequently exchanged
additional pleadings. The first instance court hearing has been postponed to the first quarter of 2024. It may
take several years before a final conclusion is reached by the German courts.
Lundbeck has been informed about potential claims in a number of other European countries, however, it isstill uncertain whether the potential claims will be actively pursued.

76

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 16
16 CONTINGENT ASSETS AND CONTINGENT LIABILITIES - CONTINUEDIn Canada, Lundbeck is involved in three product liability class-action lawsuits relating to Cipralex®/Celexa®
(two cases alleging various Celexa-induced birth defects and one case against several SSRI manufacturers(incl. Lundbeck) alleging that SSRI (Celexa®/Lexapro®) induces autism birth defect), three relating to Abilify
Maintena® (alleging i.a. failure to warn about compulsive behavior side effects) and one relating to Rexulti®
(also alleging i.a. failure to warn about compulsive behavior side effects). The cases are in the preliminary
stages and as such there is significant uncertainty as to how these lawsuits will be resolved. Lundbeck strongly
disagrees with the claims.
In 2018, Lundbeck entered into settlements with three of four generic companies involved in an Australianfederal court case, in which Lundbeck was pursuing patent infringement and damages claims over the sale ofescitalopram products in Australia. Lundbeck received AUD 51.7 million (DKK 242 million) in 2018. Lundbeck’s
case against the last of the four generic companies, Sandoz Pty Ltd, went up to the High Court of Australia,
who has now decided that Sandoz Pty Ltd infringed Lundbeck’s escitalopram patent between 2009 and 2012.
The High Court has now sent the case back to the first instance court for recalculation of the damages awarded
to Lundbeck in first instance which amounted to AUD 26.3 million (DKK 121 million). In the meantime,
Lundbeck’s appeal of the Australian Patent Office’s decision to grant Sandoz a license will be heard on 24
August 2024, and if a license is maintained in any form, the first instance court will have to decide if such alicense can have impact on the damage awarded by the High Court.
Together with Takeda, Lundbeck instituted patent infringement proceedings against 16 generic companies in
response to their filing of Abbreviated New Drug Applications (“ANDAs”) with the FDA seeking to obtainmarketing approval for generic versions of Trintellix® in the U.S. Two opponents have since withdrawn andLundbeck has settled with eight opponents. As communicated by Lundbeck in company release no. 706 dated
1 October 2021, the cases against the six remaining opponents (the “ANDA Filers”) have been decided by the
U.S. District Court for the District of Delaware (the ‘Court’). The Court found that Lundbeck’s compound patent(U.S. Patent No. 7,144,884) is valid. The compound patent expires 17 December 2026. Assuming the ruling is
confirmed at appeal, final approval will not be granted to the relevant ANDA Filers until after expiration of thecompound patent, including any extension or additional periods of exclusivity. A total of seven other patents
asserted at trial were found by the Court to be valid, or their validity was not challenged during the trial. The
Court decided that none of the seven other patents was infringed by the relevant ANDA Filers, except that
Lupin was found to infringe a patent covering Lundbeck’s process for manufacturing Trintellix. The patents
found not infringed by a particular ANDA Filer will not prevent that ANDA Filer from receiving final approval.
For details on each of the patents comprised by the case, please see company release no. 706. The U.S.
Court of Appeals for the Federal Circuit has affirmed the District Court decision on 7 December 2023, which is
now final.

Lundbeck and Otsuka have received a Paragraph IV certification from Mylan Pharmaceuticals with respect tocertain of the patent listed for Abilify Maintena® in the U.S., and Lundbeck and Otsuka have instituted patent
infringement proceedings against Mylan and Viatris Inc. The FDA cannot grant marketing authorization in the
U.S. to Mylan or Viatris Inc. before the patents expire unless they receive a decision in their favor. The trial has
been re-scheduled to start on 17 June 2024 and a District Court decision is currently expected by October
2024. Abilify Maintena® is covered by several U.S. patents relating to specific forms of the active ingredient,
formulations, processes, devices, indications and methods of use, which will expire in different years, with thelatest patent expiry date in the U.S. being in 2034.
Lundbeck received a Civil Investigative Demand (“CID”) from the U.S. Department of Justice (“DOJ”) in March
2020. The CID seeks information regarding the sales, marketing, and promotion (including the promotional
speaker program) of Trintellix®. Lundbeck is cooperating with the DOJ.1)
In June 2022 in the U.S., several entities, created for the purpose of receiving assignment of claims from payors
providing health insurance coverage pursuant to Medicare Parts C and D and Medicaid, filed a complaint
against Lundbeck and others. The complaint alleges that Lundbeck and the other defendants conspired toincrease the unit price and quantity dispensed of Xenazine®. The case was dismissed with prejudice earlier in
2023 and is currently under appeal.1)
In June 2023 in the U.S., Humana Inc., an insurer, filed a complaint against Lundbeck U.S. legal entities. The
complaint alleges that Lundbeck engaged in an illegal kickback scheme to increase the sales and sale priceof Lundbeck’s Xenazine®. The complaint alleges that Lundbeck’s activities targeted Humana Inc. and otherprivate Medicare insurers who were forced to bear the costs of the alleged illegally subsidized drug sales.
Lundbeck denies the allegations in the complaint and intends to defend itself.1)
1) Legal case not related to the Parent Company.

Joint taxation
H. Lundbeck A/S and Danish subsidiaries are part of a Danish joint taxation scheme with Lundbeckfonden(Lundbeckfond Invest A/S including subsidiaries of Lundbeckfond Invest A/S), according to which the Company
partly has a joint and several liability and partly a secondary liability with respect to corporate income taxes etc.
for the jointly taxed companies. In addition, H. Lundbeck A/S partly has a joint and several liability and partly asecondary liability with respect to any obligations to withhold tax on interest, royalties and dividends for thesecompanies. However, in both cases the secondary liability is capped at an amount equal to the share of thecapital of the Company directly or indirectly owned by the ultimate Parent Company. The total tax obligation
under the joint taxation scheme is shown in the financial statements of Lundbeckfond Invest A/S.

77

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Notes 17-18
17 BANK DEBT, BOND DEBT AND BORROWINGS
2023

2022

Bank debt and bond debt maturing within below periods from the balance sheet date

DKKm

DKKm

Between one and five years

3,714

5,096

Bank debt and bond debt at 31 December

3,714

5,096

Development in bank debt, bond debt and borrowings
Balance at
1 January

Cash inflow

Cash outflow

Non-cashflow¹⁾

Balance at
31 December

DKKm

DKKm

DKKm

DKKm

DKKm

Bank loans

1,393

-

(1,377)(16)-

Issued bonds

3,703

-

-

11

3,714

Total bank debt and bond debt

5,096

-

(1,377)

(5)

3,714

Bank loans

1,083

1,234

(1,086)

162

1,393

Issued bonds

3,700

-

-

3

3,703

Total bank debt and bond debt

4,783

1,234

(1,086)

165

5,096

Development in bank debt, bond debt andborrowings
2023

Bank debt and bond debt break down as follows:
Non-current bank debt and bond debt

3,714

5,096

Bank debt and bond debt at 31 December

3,714

5,096

2022

For maturity analysis of loans, see note 19 Financial instruments.

Currency

Expiry ofcommitment

Fixed/
floating

Weighted
averageeffective
interest rate

Amortized
cost

Nominal
value

Fair
value

%

DKKm

DKKm

DKKm

0.88

3,714

3,727

3,385

3,714

3,727

3,385

1) Non-cash flow comprises development in the exchange rates and amortizations.

2023
Issued bonds

EUR

Oct 2027

Fixed

Total
2022
Bank loan

USD

Jun 2026

Floating

5.09

1,393

1,393

1,393

Issued bonds

EUR

Oct 2027

Fixed

0.88

3,703

3,718

3,155

5,096

5,111

4,548

Total

The eurobond is issued with a fixed coupon until October 2027.
Amortized cost is calculated as the proceeds received less instalments paid, plus or minus amortization ofcapital gains or losses.

18 OTHER PAYABLES
2023

2022

DKKm

DKKm

Contingent consideration

338

344

Other payables

82

84

Non-current payables

420

428

Employee costs payable

985

855

Milestone payable

-

359

236

185

Financial instruments

51

204

Other

716

589

1,988

2,192

Debt with public authorities

Current payables

78

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Notes 18-19
18 OTHER PAYABLES - CONTINUED
Contingent consideration recognized through acquisitions
As part of the acquisition of Alder BioPharmaceuticals, Inc. (subsequently renamed Lundbeck Seattle
BioPharmaceuticals, Inc.), Lundbeck has recognized a sales milestone dependent on predefined milestones
being reached. At 31 December 2023, the fair value of the sales milestone amounted to DKK 306 million (DKK
306 million at 31 December 2022).
As part of the acquisition of Abide Therapeutics, Inc., (subsequently renamed Lundbeck La Jolla ResearchCenter, Inc.), Lundbeck has recognized a payable related to sales milestones dependent on predefined
milestones being reached. At 31 December 2023, the fair value of the contingent consideration amounted to
DKK 32 million (DKK 38 million at 31 December 2022).
Contingent considerations are recognized at fair value. The calculation of the fair value is based on the
discounted cash flow method (DCF method) which comprises significant assumptions and estimates. Expected
timing of payment (using a specific discount rate) and probability of success are key inputs to the fair value ofthe contingent considerations.
The fair value adjustment of all contingent considerations amounted to a net loss of DKK 6 million, being DKK
10 million of financial expenses and DKK 4 million of financial income.

The Parent Company hedges part of the Group’s anticipated revenue in selected currencies for a period of 1218 months, using forward exchange contracts and currency options. The majority of foreign currency risk arises
from USD, CAD, CNY and KRW. Hedging is performed on a rolling basis each month. The forward exchange
contracts and currency options are classified as hedging instruments when meeting the accounting criteria forhedge accounting according to IFRS 9 Financial Instruments. Unhedged cash flows are sold spot. Changes in
the fair value of all instruments meeting the criteria for hedge accounting are recognized in the statement ofcomprehensive income as they arise, together with the forward points and option premiums. At maturity of thehedge contracts, the final effect is transferred from other comprehensive income and recognized in the profit
or loss or balance sheet together with the hedged item.
Forward exchange contracts and currency options that do not meet the hedge accounting criteria are classified
as trading contracts, and changes in the fair value are recognized under financial income or financial expenses
as they arise.
Cash flow timing and changes to the forecasted amounts are the main sources for evaluating the risk of hedge
ineffectiveness. When concluding a hedge transaction, and each time presenting the financial statements
thereafter, it is assessed whether the hedged exposure and the hedging instrument are still financiallycorrelated. If the hedged cash flows are no longer expected to be realized, the accumulated value change istransferred to financial income or financial expenses.
Lundbeck did not have any hedge ineffectiveness in 2023 or 2022.

19 FINANCIAL INSTRUMENTS
Market risks
Credit risks
Credit risks are predominantly associated with Trade receivables and Cash and bank balances. The structure,policies and the approach established by the Group to manage and monitor those risks are disclosed in notes
10 Trade receivables and 11 Cash resources.
Foreign currency risks
Foreign currency management is handled centrally by the Parent Company. Currency management focuseson risk mitigation and is carried out in conformity with the Group's Treasury Policy, as approved by the Boardof Directors. The overall objective is to assess and mitigate foreign currency risks to protect Lundbeck against
impacts from changing conditions in the foreign exchange markets. Foreign currency risks managed byderivatives and loans in 2023 comprise cash flow risk in several currencies and USD translation risk emanatingfrom net investments in foreign subsidiaries.

Net foreign exchange contracts, trading
There were no outstanding forward exchange contracts relating to trading at 31 December 2023 and nomaterial impact from trading contracts was recognized in financial income or financial expenses in 2023.

79

Lundbeck Annual Report 2023

Consolidated Financial Statements

Management Review

Financial Statements of the Parent Company

Note 19
19 FINANCIAL INSTRUMENTS - CONTINUEDThe Group’s hedge position at the end of the reporting period was as follows:

Forward exchange contracts(against DKK)Contract
amountaccording tohedge
accounting
DKKm

Fair value
Fair value
at year-end
at year-end
recognized in
the statement recognized inof comprehen- the statement
sive income/ of comprehensive income/otherreceivables other payables
DKKm

DKKm

Realizedexchange
gains/losses
for the year
recognized in
the statementof profit orloss/
statementof financial
position

Averagehedge prices
of existing
forwardexchange
contracts

DKKm

DKK

Maturity

2023

Currency option contracts (against
DKK)

Contract
amountaccording tohedge
accounting
DKKm

Fair value
Fair value
at year-end
at year-end
recognized in
the statement recognized inof comprehen- the statement
sive income/ of comprehenothersive income/receivables other payables
DKKm

DKKm

Realizedexchange
gains/losses
for the year
recognized in
the statementof profit orloss/statementof financial
position

Averagehedge pricerange
of existing
optioncontracts¹⁾

DKKm

DKK

Maturity2023

CAD (sell position)

550

1

(3)

6

502.33

Nov. 2024

CAD (sell position)

137

-

(3)

8

482.97 - 495.64

Apr. 2024

CNY (sell position)

364

12

(1)

43

98.04

Oct. 2024

USD (sell position)

1,855

7

(10)

(11)

654.31 - 708.61

Nov. 2024

Other

KRW (sell position)

230

3

(2)

4

0.53

Dec. 2024

USD (sell position)

4,009

52

(4)

120

676.06

Nov. 2024

Other currencies

1,123

Total

9

(28)

(34)

77

(38)

139

Dec. 2024

204

-

-

1

7

(13)

(2)

1) Lundbeck's option structures for 2023 and 2022 all consist of a (1) purchased put option and a sold call option which protect against
downside movements in currency and limits the upside or a (2) purchased put option which protects against downside movements. The
hedge price range is shown net of premium.

2022
CAD (sell position)

237

9

-

(36)

526.29Nov. 2023

CNY (sell position)

584

12

(1)

(55)

102.83

Nov. 2023

KRW (sell position)

227

3

(7)

28

0.56

Dec. 2023

USD (sell position)

3,895

116

(35)

(343)

711.45

Dec. 2023

Other currencies

1,057

14

(26)

(87)

154

(69)

(493)

Total

Dec. 2023

Currency option contracts (against
DKK)

Contract
amountaccording tohedge
accounting

Fair value
Fair value
at year-end
at year-end
recognized in
the statement recognized inof comprehen- the statement
sive income/ of comprehenothersive income/receivables other payables
DKKm

Realizedexchange
gains/losses
for the year
recognized in
the statementof profit orloss/statementof financial
position

Averagehedge pricerange
of existing
optioncontracts¹⁾

DKKm

DKK

Maturity

DKKm

DKKm

CAD (sell position)

214

7

(6)

(9)

525.87 - 567.14

Nov. 2023

USD (sell position)

1,028

6

(37)

(84)

665.42 - 728.74

Sep. 2023

-

-

-

(2)

13

(43)

(95)

2022

Other

80

Lundbeck Annual Report 2023

Consolidated Financial Statements

Management Review

Financial Statements of the Parent Company

Note 19
19 FINANCIAL INSTRUMENTS - CONTINUED
Estimated impact from financial instruments on profit for the year and equity from a 5% increase in
year-end exchange rates of the major currencies
CAD¹⁾

CNY¹⁾

USD¹⁾

DKKm

DKKm

DKKm

2023
Profit for the year
Equity

1

-

37

(22)

(29)

(207)

2022
Profit for the year
Equity

-

(2)

28

(21)

(37)

(366)

1) An immediate 5% decrease would have the opposite impact of the above.

The sensitivities shown only comprise impact from Lundbeck’s financial instruments and reflect a relativechange of the exchange rates at 31 December 2023 and 2022. The sensitivity analysis includes derivatives,bank loans, trade receivable, trade payables, intercompany lending and borrowing as those are the financial
instruments to which the Group has the most currency exposure.
The profit impact comprises financial instruments that remained open at the balance sheet date and whichhave an impact on profit in the current financial year. It includes foreign exchange differences relating to intragroup balances that are not eliminated in the consolidated financial statements. The calculation of theestimated impact is based on the functional currency of the entities in which the financial instruments arelocated.
The profit impact is limited as the largest liabilities are the exchange rate adjusted in other comprehensive
income, being part of Lundbeck’s hedging structure.
The equity impact includes financial instruments that remained open at the balance sheet date and which areexchange rate adjusted in other comprehensive income. The equity effect in 2023 and 2022 primarily consistsof exchange rate adjustments on bank loans in USD designated as hedges of net investments and foreignexchange differences on outstanding cash flow hedging contracts.
Due to Denmark’s long-standing fixed exchange rate policy against the euro and the expected continuation ofthis policy, the foreign currency risk for euro is considered immaterial, and euro is therefore not included in thetable above.

Interest rate risks
Lundbeck ensures that the interest rate risk is managed according to the Treasury Policy. Interest rate risk
relates mainly to outstanding interest-bearing debt with floating interest rates. Interest rate risk management ishandled centrally by the Parent Company. Through the Group’s Treasury Policy, the Board of Directors has
approved the limits for borrowing and investment. Loans secured by property must be approved by the Boardof Directors. Only a limited part of the total loan portfolio is allowed to have floating interest rates, and to hedge
the interest rate risk on loans, the Board of Directors has approved the use of Interest Rate Swaps (IRS), Caps,
Floors and Forward Rate Agreements (FRAs).
Lundbeck’s exposure to interest rate risk is low, as the EUR 500 million bond has a fixed coupon. For more
information see note 17 Bank debt, bond debt and borrowings.
See note 18 Other payables for details on the obligations relating to contingent consideration and note 17 Bankdebt, bond debt and borrowings for details on the bank debt and bond debt.
The table below includes undiscounted cash flows, including interest payments, and assumes liabilities to be
repaid at their contractual maturity dates.

81

Lundbeck Annual Report 2023

Consolidated Financial Statements

Management Review

Financial Statements of the Parent Company

Note 19
19 FINANCIAL INSTRUMENTS - CONTINUEDClassification of and contractual maturity dates for financial assets and financial liabilities

2023

Within 1 year

Between1 and 5years

After 5 years

Total

Effective
interest
rates

DKKm

DKKm

DKKm

DKKm

%

Financial assets

2022

Within 1 year

Between1 and 5years

After 5 years

Total

Effective
interest
rates

DKKm

DKKm

DKKm

DKKm

%

Financial assets

Derivatives to hedge future cash flows – exchange
rate

85

-

-

85

-

Derivatives to hedge future cash flows – exchange
rate

167

-

-

167

-

Derivatives to hedge future cash flows - price

10

39

-

49

-

Derivatives to hedge future cash flows – interest rate

30

-

-

30

4-6

Financial assets measured at FVTOCI¹

95

39

-

134

Derivatives to hedge future cash flows - price

36

76

16

128

-

Financial assets measured at FVTOCI¹

233

76

16

325

Other financial assets

-

-

60

60

Other financial assets measured at FVTPL²

-

-

60

60

-

Receivables³

3,037

154

-

3,191

-

Cash and bank balances

5,010

-

-

5,010

0-10

Financial assets measured at amortized cost

8,047

154

-

8,201

Total financial assets

8,142

193

60

8,395

Financial liabilities

Other financial assets

-

-

81

81

Other financial assets measured at FVTPL²

-

-

81

81

-

Receivables³

2,795

137

-

2,932

-

Cash and bank balances

3,548

-

-

3,548

0-10

Financial assets measured at amortized cost

6,343

137

-

6,480

Total financial assets

6,576

213

97

6,886

Financial liabilities

Derivatives to hedge future cash flows – exchange
rate

51

-

-

51

Financial liabilities measured at FVTOCI¹

51

-

-

51

Derivatives to hedge future cash flows – exchange
rate

114

-

-

114

-

Contingent consideration⁴

-

-

338

338

Derivatives to hedge future cash flows – interest rate

9

-

-

9

0-2

Other financial liabilities measured at FVTPL²

-

-

338

338

123

-

-

123

33

3,824

-

3,857

0-1

Bank and bond debt
Lease liabilities-

Financial liabilities measured at FVTOCI¹

86

203

148

437

0-13

Trade and other payables

5,037

82

-

5,119

-

Financial liabilities measured at amortized cost

5,156

4,109

148

9,413

Total financial liabilities

5,207

4,109

486

9,802

1) Fair value through other comprehensive income.
2) Fair value through profit or loss.

3) Including other receivables recognized in non-current assets.
Excluding financial instruments measured at fair value ordesignated as hedge.
4) See note 18 Other payables.

Contingent consideration⁴

-

-

344

344

Other financial liabilities measured at FVTPL²

-

-

344

344

Bank and bond debt

114

5,428

-

5,542

1-6

Lease liabilities

88

234

161

483

1-8
-

Trade and other payables

5,112

78

-

5,190

Financial liabilities measured at amortized cost

5,314

5,740

161

11,216

5,437

5,740

505

11,682

Total financial liabilities
1) Fair value through other comprehensive income.
2) Fair value through profit or loss.

3) Including other receivables recognized in non-current assets.
Excluding financial instruments measured at fair value ordesignated as hedge.
4) See note 18 Other payables.

82

Lundbeck Annual Report 2023

Consolidated Financial Statements

Management Review

Financial Statements of the Parent Company

Notes 19-20
19 FINANCIAL INSTRUMENTS - CONTINUED
Financial assets and financial liabilities measured
or disclosed at fair value

Level 1

Level 2

Level 3

DKKm

DKKm

DKKm

33

-

27

-

84

49

33

84

76

2023
Financial assets
Other financial assets¹
Derivatives¹
Total
Financial liabilities
Contingent consideration¹

-

-

338

Derivatives¹

-

51

-

Bond debt²

3,380

-

-

Total

3,380

51

338

2022
Financial assets
Other financial assets¹
Derivatives¹
Total

54

-

27

-

277

128

54

277

155

The fair value of contingent consideration is calculated as the discounted cash outflows (DCF method) fromfuture milestone payments, taking probability of success into consideration. The fair value of other financial
assets is calculated through the financial performance of the market inputs and other market conditions
prevailing at the balance sheet date. For more details regarding contingent consideration see note 18 Other
payables.
The carrying amount of other receivables, trade receivables, prepayments, bank debt, other debt, trade
payables and other payables is believed to be equal to or close to fair value.
There are no changes in the valuation techniques to determine the fair values of assets recognized anddisclosed.

20 AUDIT FEES
2023

2022

DKKm

DKKm

Statutory audit

11

11

Assurance engagements other than audit

1

1

Tax advisory

2

2

Other services

1

5

Fee to PricewaterhouseCoopers

15

19

Financial liabilities
Contingent consideration¹

-

-

344

Derivatives¹

-

204

-

Bank debt²

-

1,393

-

Bond debt²

3,155

-

-

Total

3,155

1,597

344

1) Measured at fair value.
2) Disclosed at fair value.

The fair value of listed securities is based on publicly quoted prices of the invested assets.
The fair value of derivatives is calculated by applying recognized measurement techniques, whereby
assumptions are based on the market conditions prevailing at the balance sheet date.

The fee for non-audit services provided to the Group by PricewaterhouseCoopers Statsautoriseret
Revisionspartnerselskab, Denmark, amounted to DKK 1 million (DKK 5 million in 2022) and consisted of otherassurance services and other accounting and tax advisory services.
Certain subsidiaries of the Group are not subject to audit by PricewaterhouseCoopers.

83

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Notes 21-22
21 CONTRACTUAL OBLIGATIONS
Research and development milestones and collaborations
The Group has entered into a number of agreements relating to research and development of new products
and intellectual property rights from acquisitions, as well as other collaborations. According to these
agreements, Lundbeck is committed to pay certain milestones.
At 31 December 2023, potential future milestone payments amounted to DKK 1,106 million (DKK 1,095 million
at 31 December 2022).
Sales milestones, royalties and other payments
Lundbeck is committed to paying certain commercial sales milestones, royalties or other payments based ona percentage of sales generated from the sale of goods following marketing approval. These amounts are
excluded from the contractual obligations because of their contingent nature, being dependent on future sales.
Other purchase obligations
The Group has undertaken purchase obligations relating to property, plant and equipment in the amount of
DKK 692 million (DKK 32 million in 2022).

22 RELATED PARTIES
Lundbeck’s related parties• The Parent Company’s principal shareholder, Lundbeckfonden (Lundbeckfond Invest A/S), Scherfigsvej 7,
2100 Copenhagen, Denmark.
• Companies in which Lundbeckfonden exercises controlling influence, including ALK-Abelló A/S
and Falck A/S.
• Members of the Parent Company’s Registered Executive Management and Board of Directors as well as
close relatives of these people.
• Companies in which members of the Parent Company’s Registered Executive Management and Board of
Directors as well as close relatives of these people exercise controlling influence.
Transactions and balances with Lundbeckfonden
There have been the following transactions and balances with Lundbeckfonden:• Payment of dividends of DKK 398 million in 2023 (DKK 275 million in 2022).
• Payment of on account tax of DKK 140 million in 2023 (DKK 46 million in 2022) for the Parent Company andDanish subsidiaries.

• Refund of residual tax of DKK 14 million in 2023 (DKK 292 million in 2022) for the Parent Company andDanish subsidiaries.
• Interest expenses of DKK 0 million in 2023 (interest income of DKK 4 million in 2022).
Lundbeckfonden exercises controlling influence on H. Lundbeck A/S.
Transactions and balances with the ALK group
There have been no transactions or balances with the ALK group.
Transactions and balances with the Falck group
There have been no material transactions or balances with the Falck group.
Transactions and balances with the Registered Executive Management and the Board of Directors
In addition to the transactions with members of the Registered Executive Management and the Board of
Directors outlined in notes 3 Employee costs and 14 Incentive programs, the Parent Company has paid
dividends on shares held by members of the Registered Executive Management and the Board of Directors in
H. Lundbeck A/S.
Transactions and balances with other related parties
Other than the above, there have been no material transactions or balances with other related parties.

84

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 23
23 LIST OF SUBSIDIARIESThe list below shows the subsidiaries in the Group.

PurposeShare of voting rights
and ownership%

PurposeShare of voting rights
and ownership%

UAB Lundbeck Lietuva, Lithuania

Sale services

100

Lundbeck Malaysia SDN. BHD., Malaysia

Sales and distribution

100

Lundbeck México, SA de CV, Mexico

Sales and distribution

100

Lundbeck B.V., The Netherlands

Sales and distribution

100

Prexton Therapeutics B.V., The Netherlands, including

Other

100

- Prexton Therapeutics S.A., Switzerland

Other

100

Lundbeck New Zealand Limited, New Zealand

Other

100

H. Lundbeck AS, Norway

Sales and distribution

100

Lundbeck Pakistan (Private) Limited, Pakistan

Sales and distribution

100

Lundbeck America Central S.A., Panama

Sales and distribution

100

Lundbeck Peru S.A.C., Peru

Sales and distribution

100

Lundbeck Philippines Inc., Philippines

Sales and distribution

100

Lundbeck Business Service Centre Sp.z.o.o., Poland

Other

100

Lundbeck Poland Sp.z.o.o., Poland

Sales and distribution

100

Lundbeck Argentina S.A., Argentina

Sales and distribution

100

Lundbeck Australia Pty Ltd, Australia, including

Sales and distribution

100- CNS Pharma Pty Ltd, Australia

Sales and distribution

100

Lundbeck Austria GmbH, Austria

Sales and distribution

100

Lundbeck S.A., Belgium

Sales and distribution

100

Lundbeck Brasil Ltda., Brazil

Sales and distribution

100

Lundbeck Canada Inc., Canada

Sales and distribution

100

Lundbeck Chile Farmacéutica Ltda., Chile

Sales and distribution

100

Lundbeck (Beijing) Pharmaceuticals Consulting Co., Ltd., China

Sale services

100

Lundbeck Colombia S.A.S., Colombia

Sales and distribution

100

Lundbeck Croatia d.o.o., Croatia

Sale services

100

Lundbeck Czech Republic s.r.o., Czech Republic

Sales and distribution

100

Lundbeck Export A/S, Denmark

Sales and distribution

100

Lundbeck Pharma A/S, Denmark

Sales and distribution

100

Lundbeck Eesti A/S, Estonia

Sales and distribution

100

Lundbeck Portugal - Produtos Farmacêuticos Unipessoal Lda,
Portugal

Sales and distribution

100

OY H. Lundbeck AB, Finland

Sales and distribution

100

Lundbeck Romania SRL, Romania

Sales and distribution

100

Lundbeck SAS, France

Sales and distribution

100

Lundbeck RUS LLC, Russian Federation

Sale services

100

Sofipharm SAS, France, including

Other

100

Lundbeck Singapore PTE. LTD., Singapore

Sales and distribution

100- Elaiapharm SAS, France

Production

100

Lundbeck Slovensko s.r.o., Slovakia

Sales and distribution

100

Lundbeck GmbH, Germany

Sales and distribution

100

Lundbeck Pharma d.o.o., Slovenia

Sales and distribution

100

Lundbeck Hellas S.A., Greece

Sales and distribution

100

Lundbeck South Africa (Pty) Limited, South Africa, including

Sales and distribution

100

Lundbeck HK Limited, Hong Kong

Sales and distribution

100- H. Lundbeck (Proprietary) Limited, South Africa

Other

100

Lundbeck Hungária KFT, Hungary

Sales and distribution

100

Lundbeck España S.A., Spain

Sales and distribution

100

Lundbeck India Private Limited, India

Sales and distribution

100

H. Lundbeck AB, Sweden

Sales and distribution

100

Lundbeck (Ireland) Ltd., Ireland

Sales and distribution

100

Lundbeck (Schweiz) AG, Switzerland

Sales and distribution

100

Lundbeck Israel Ltd., Israel

Sales and distribution

100

Lundbeck İlaç Ticaret Limited Şirketi, Turkey

Sales and distribution

100

Lundbeck Italia S.p.A., Italy

Sales and distribution

100

Lundbeck Group Ltd. (Holding), UK, including

Other

100

Lundbeck Pharmaceuticals, Italy S.p.A., Italy, including

Production

100- Lundbeck Limited, UK

Sales and distribution

100- Archid S.A., Luxembourg

Sales and distribution

100- Lundbeck Pharmaceuticals Ltd., UK

Other

100

Lundbeck Japan K.K., Japan

Sale services

100- Lifehealth Limited, UK

Other

100

Lundbeck Korea Co., Ltd., Republic of Korea

Sales and distribution

100- Lundbeck UK LLP, UK¹)

Other

100

SIA Lundbeck Latvia, Latvia

Sale services

100

85

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Notes 23-25
23 LIST OF SUBSIDIARIES – CONTINUED

PurposeShare of voting rights
and ownership%

Lundbeck USA Holding LLC, USA, including

Other

100

- Lundbeck LLC, USA, including

Sales and distribution

100- Chelsea Therapeutics International, Ltd., USA, including

Other

100

- Lundbeck NA Ltd., USA

Other

100

- Lundbeck Pharmaceuticals LLC, USA

Other

100

- Lundbeck Research USA, Inc., USA

Other

100

- Lundbeck La Jolla Research Center, Inc., USA, including

Research and development

100- Abide Therapeutics (UK) Limited, UK

Other

100

- Lundbeck Seattle BioPharmaceuticals, Inc., USA, including

Research and development

100- Alder Biopharmaceuticals Pty., Ltd., Australia

Other

100

- Alderbio Holdings LLC ("ANEV"), USA

Other

100

Lundbeck de Venezuela, C.A., Venezuela

Sales and distribution

1001) Lundbeck UK LLP is owned by Lundbeck Group Ltd. (Holding), Lundbeck Limited and Lifehealth Limited, all of which have H. Lundbeck A/S
as their direct or ultimate parent company.

24 SUBSEQUENT EVENTS
No subsequent events have occurred after the balance sheet date that required adjustment to or disclosure in
the consolidated financial statements.

25 MATERIAL ACCOUNTING POLICY INFORMATIONThe Group has consistently applied the following accounting policies to all periods presented in these
consolidated financial statements, unless otherwise mentioned (see note 1.8 New standards and amendments
issued but not yet effective).
Basis of consolidation
The consolidated financial statements comprise the Parent Company H. Lundbeck A/S and entities controlled
by the Parent Company.

Foreign currency
On initial recognition, transactions denominated in foreign currencies are translated at standard rates whichapproximate the exchange rates at the transaction date. Exchange differences arising between the exchange
rates at the transaction date and the exchange rates at the date of payment are recognized in profit or loss
under financial income or financial expenses.
Receivables, payables and other monetary items denominated in foreign currencies that have not been settled
at the balance sheet date are translated at the exchange rates at the balance sheet date. The differences
between the exchange rates at the balance sheet date and the rates at the time of recognition or settlement
are recognized in profit or loss under financial income or financial expenses.
On recognition of foreign subsidiaries having a functional currency different from the one used by the Parent
Company, items in the profit or loss are translated at monthly average exchange rates, and non-monetary andmonetary balance sheet items are translated at the exchange rates at the balance sheet date. Exchange
differences arising when translating the profit or loss and the balance sheet of foreign subsidiaries, arerecognized in other comprehensive income.
Exchange gains/losses on translation of receivables from and payables to subsidiaries that are considered partof the Parent Company’s overall net investment in subsidiaries are recognized in other comprehensive income.
Exchange gains/losses on that part of the bank debt in foreign currency which is used for hedging of the net
investments in subsidiaries, and which provides an effective hedging of the exchange gains/losses of the net
investments are recognized in other comprehensive income.
Statement of cash flows
The consolidated statement of cash flows is presented in accordance with the indirect method and shows thecomposition of cash flows, divided into operating, investing and financing activities, and cash and bankbalances at the beginning and end of the year.
Cash comprises cash and bank balances.
Cash flows denominated in foreign currencies, including cash flows in foreign subsidiaries, are translated at
the average exchange rates for the year as they approximate the actual exchange rates at the date of payment.
Cash and bank balances at year-end are translated at the exchange rates at the balance sheet date, and theeffect of exchange gains/losses on cash and bank balances is shown as a separate line item in the statementof cash flows.

86

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 25
25 MATERIAL ACCOUNTING POLICY INFORMATION – CONTINUED
Financial instruments
Forward exchange contracts and other derivatives are initially recognized in the balance sheet at fair value on
the contract date and subsequently remeasured at fair value at the balance sheet date. The fair value ofderivatives is determined by applying recognized measurement techniques, whereby assumptions are basedon the market conditions prevailing at the balance sheet date. Positive and negative fair values are included inother receivables and other payables, respectively.
Changes in the fair value of derivatives classified as hedging instruments and meeting the criteria for hedge
accounting are recognized in other comprehensive income. On recognition of hedged items, income andexpenses relating to such hedging transactions are transferred from other comprehensive income andrecognized in the same line item as the hedged item.
Changes in the fair value of derivatives not qualifying for hedge accounting are recognized in the statement of
profit or loss under financial income or financial expenses as they arise.
Securities, equity investments recognized in other financial assets, derivatives and contingent consideration
measured at fair value are classified according to the fair value hierarchy as belonging to levels 1-3 dependingon the valuation method applied.
Statement of profit or loss
Revenue
Revenue comprises invoiced sales less expected return of goods for the year, discounts, rebates and revenuebased taxes. Revenue is recognized when the goods are released from the Group’s warehouse, meaning that
control of products has transferred to the buyer, and it is probable that the Group will collect the consideration
to which it is entitled for transferring the products.
Revenue is measured at the amount of consideration to which the Group expects to be entitled in exchange
for transferring the products. Revenue is recognized net of sales deductions, including product returns as well
as discounts, rebates and revenue-based taxes.
Moreover, revenue includes licensing income and royalties from out-licensed products, non-refundable down
payments and milestone payments relating to research and development collaborations, and income fromcollaborations on commercialization of products.
Sales-based licensing income and royalties from out-licensed products are recognized in profit or loss underrevenue, when the Group provides access to its product rights as they exist throughout the license period.

Revenue from sales-based licensing income is recognized when the performance obligation is satisfied, i.e.,
when transferred to the customer. For royalties, revenue is recognized when the subsequent sale occurs.
As the performance obligations are satisfied over time, revenue is also recognized over time.
When the Group provides a customer the right to use the product rights as they exist at the point in time atwhich the license is granted, revenue is recognized at a point in time when control is transferred to the licensee
and the license period begins when the customer's right to the intellectual property is transferred.
Non-refundable down payments and milestone payments received relating to research collaborations arerecognized in profit or loss under revenue as other revenue.
Cost of sales
Cost of sales comprises cost of goods sold, which includes the cost of raw materials, transportation costs,
consumables and goods for resale, direct labor and indirect costs of production, including operating costs, andamortization/depreciation and impairment losses relating to product rights and manufacturing facilities.
Sales and distribution costs
Sales and distribution costs comprise costs incurred for the sale and distribution of the Group’s products soldduring the year. This includes costs incurred for sales campaigns, training and administration of the sales force
and for direct distribution, marketing and promotion. Sales and distribution also include salaries and other costs
for the sales, distribution and marketing functions, amortization/depreciation and impairment losses and otherindirect costs.
Administrative expenses
Administrative expenses comprise expenses incurred for the management and the administration of the Group,i.e., salaries and other expenses relating to, for example, management, HR, IT and finance functions as wellas amortization/depreciation and impairment losses and other indirect costs.
Research and development costs
Research and development costs comprise costs incurred for the Group’s research and development
functions, i.e., employee costs, amortization/depreciation and impairment losses and other indirect costs aswell as costs relating to research and development collaborations.
Research costs are always recognized in profit or loss as they incur.
Due to a very long development period and the significant uncertainties inherent in the development of new
products, development costs are expensed as incurred in line with industry practice. Consequently, the87

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 25
25 MATERIAL ACCOUNTING POLICY INFORMATION – CONTINUED
development costs do not qualify for capitalization as intangible assets until marketing approval by a regulatory
authority is obtained or considered highly probable.
Other operating expenses
Other operating expenses comprise other income and expenses relating to operating activities of a secondary
nature to the Group. Other operating expenses include integration and transaction costs relating to material
acquisitions, income and expenses relating to legal settlements and material gains and losses on the sale orretirement of items of property, plant and equipment.
Financial income and financial expenses
Financial income and financial expenses include interest income and expenses, net gain or loss on securities
and other financial assets, including dividends, fair value adjustment of contingent consideration, fair value
adjustment of other financial liabilities, foreign currency gains or losses and other financial income andexpenses. Interest income or expenses are recognized using the effective interest method.
Income tax
The Parent Company and Danish subsidiaries are jointly taxed with the principal shareholder, Lundbeckfonden(Lundbeckfond Invest A/S), and its Danish subsidiaries. The current Danish corporate income tax liability isallocated among the companies of the tax pool in proportion to their taxable income (full allocation subject toreimbursement in respect of tax losses). At the time of the preparation of the financial statements, the allocationof the reimbursement from jointly taxed companies not controlled by the Parent Company is not finalized.
Consequently, adjustments to the initial estimates made, if any, will be included as adjustments to prior years
in the following financial year.
Tax for the year, which consists of the year’s current tax and the change in deferred tax, is recognized in thestatement of profit or loss as regards the amount that can be attributed to the net profit or loss for the year, inother comprehensive income as regards the amount that can be attributed to items in other comprehensive
income, and in equity as regards the amount that can be attributed to items in equity. The effect of foreignexchange differences on deferred tax is recognized in the statement of financial position as part of the
movements in deferred tax.
The Group has determined that the global minimum top-up tax, which it is required to pay under Pillar Two
legislation, is an income tax in the scope of IAS 12. The Group has applied a temporary mandatory relief fromdeferred tax accounting for the impacts of the top-up tax and will account for it as a current tax when it incur.

The current income tax charge is calculated based on the tax laws enacted or substantively enacted at the endof the reporting period in the countries where the Group operates and generates taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation and considers whether it is probable that a tax authority will accept an uncertain tax
treatment. The Group measures its tax balances based on either the most likely amount or the expected value,depending on which method provides a better prediction of the resolution of the uncertainty.
Current tax for the year is calculated based on the income tax rates and rules applicable at the reporting date.
Current tax payables and receivables, including contributions payable and receivable under the Danish joint
taxation scheme, are recognized in the balance sheet, computed as tax calculated on the taxable income forthe year adjusted for provisional tax paid.
On initial recognition, the amendments to IAS 12 require companies to recognize deferred tax on transactions
that give rise to equal amounts of taxable and deductible temporary differences.
Deferred tax is recognized on all temporary differences between the carrying amounts of assets and liabilities
and their tax bases. However, deferred tax is not recognized on temporary differences arising either on initialrecognition of goodwill or from a transaction that is not a business combination, if the temporary difference
ascertained at the time of the initial recognition affects neither the financial result nor the taxable income. The
tax value of the assets is calculated based on the planned use of the individual assets.
Deferred tax is measured based on the income tax rates and tax rules in force in the respective countries atthe balance sheet date. Changes in deferred tax resulting from changed income tax rates or tax rules arerecognized in profit or loss.
Deferred tax assets, including the tax value of tax loss carryforwards, are recognized in the balance sheet atthe value at which the assets are expected to be realized, either through an offset against deferred tax liabilities
or as net tax assets to be offset against future positive taxable income.
Changes in deferred tax concerning expenses for share-based payments are generally recognized in profit orloss. However, if the amount of the tax deduction exceeds the related cumulative expense, it indicates that the
tax deduction relates not only to an operating expense, but also to an equity item. In such a case, the excessof the associated current or deferred tax is recognized directly in equity.
Deferred tax in respect of recaptured losses previously deducted in foreign subsidiaries is recognized basedon a specific assessment of each individual subsidiary.

88

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 25
25 MATERIAL ACCOUNTING POLICY INFORMATION – CONTINUED
Balances on interest deductibility limitations calculated according to the provisions of the Danish Corporation
Tax Act are allocated between the jointly taxed companies according to a joint taxation agreement and areallocated between the companies that are subject to limitation of deductibility in proportion to their share of thetotal limitation. Deferred tax liabilities in respect of these balances are recognized in the balance sheet, whereas
deferred tax assets are recognized only if the criteria for recognition of deferred tax assets are met.
Statement of financial position
Intangible assets
Goodwill
On initial recognition, goodwill is measured and recognized as the excess of the cost over the fair value of theacquired assets, liabilities and contingent liabilities.
Development projects
Development costs are recognized in profit or loss as they incur unless the conditions for capitalization havebeen met. Development costs are capitalized only if the development projects are clearly defined andidentifiable and where the technical rate of utilization of the project, the availability of adequate resources anda potential future market or development opportunity can be demonstrated. Furthermore, such costs arecapitalized only where the intention is to manufacture, market or use the project, when the cost can bemeasured reliably and when it is probable that future earnings can cover production, sales and distribution
costs, administrative expenses and development costs.
After completion of the development work, development costs are amortized over the estimated useful life. The
maximum amortization period for development projects protected by intellectual property rights is consistent
with the remaining patent protection period of the rights concerned. Ongoing development projects are tested
for impairment at least annually or when there is indication of impairment.
Product rights and other intangible assets
Acquired intellectual property rights in the form of product rights, patents, licenses, customer relationships andsoftware are measured at cost less accumulated amortization and impairment losses. The cost of software
comprises the cost of planning, labor and costs directly attributable to the project.
Product rights are amortized over the economic lives of the underlying products, which in all material aspects
follow the patent terms, which are currently between five and fifteen years. Other rights are amortized over theperiod of agreement. Amortization commences when the asset is ready to be brought into use.

Amortization is recognized in profit or loss under cost of sales and research and development costs,
respectively.
Borrowing costs to finance the manufacture of intangible assets are recognized in the cost price, if suchborrowing costs relate to the production period. Other borrowing costs are expensed.
Gains and losses on the disposal of development projects, patents and licenses are measured as the difference
between the selling price less cost to sell and the carrying amount at the time of sale. Gains and losses arerecognized in profit or loss; normally in a separate line item or, if considered immaterial to the understandingof the consolidated financial statements, in the same line item as the associated amortization. In general,
amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment
losses. Land is not depreciated.
Cost includes the costs of acquisition and expenses directly attributable to the acquisition until the asset isready for use. The cost of self-constructed assets includes costs directly attributable to the construction of theasset.
Borrowing costs to finance the construction of property, plant and equipment are recognized in the cost price,
if such borrowing costs relate to the production period. Other borrowing costs are expensed.
Items of property, plant and equipment are depreciated on a straight-line basis over the estimated useful livesof the assets:• Buildings
30 years• Installations
10 years• Plant and machinery
3-10 years• Other fixtures and fittings, tools and equipment
3-10 years• Leasehold improvements, max.
10 years
Depreciation methods, useful lives and residual values are reassessed annually and adjusted if appropriate.
Costs incurred that increase the recoverable amount of an asset are added to the value of the asset as an
improvement and are depreciated over the estimated useful life of the improvement.
Gains or losses on the sale or retirement of items of property, plant and equipment are calculated as thedifference between the carrying amount and the selling price less cost to sell or discontinuance costs. Gains

89

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 25
25 MATERIAL ACCOUNTING POLICY INFORMATION – CONTINUED
and losses are recognized in profit or loss; normally in a separate line item or, if considered immaterial to theunderstanding of the consolidated financial statements, in the same line item as the associated depreciation.
Right-of-use assets are initially measured at cost, which comprises the initial amount of the liability adjusted
for any lease payments made at or before the commencement date, plus any initial direct costs incurred andan estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the siteon which it is located, less any lease incentives.
Subsequently, the right-of-use asset is depreciated using the straight-line method from the commencement
date to the end of the lease term. Depreciation is recognized in profit or loss. Right-of-use assets are presented
as part of property, plant and equipment.
Impairment
Intangible assets with indefinite useful lives and intangible assets not yet commercialized are not subject toamortization and are tested annually for impairment, or more frequently if events or changes in circumstancesindicate that they may be impaired. The annual impairment test is performed irrespective of whether there is
any indication of impairment.
Intangible assets and property, plant and equipment in use with finite useful lives are tested for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets(cash-generating unit). Non-financial assets other than goodwill that suffered an impairment are reviewed forpossible reversal of the impairment at the end of each reporting period.
Impairment losses are reversed only if the assumptions and estimates underlying the impairment calculation
have changed. Indications of impairment or reversal of impairment include the following:• Research and development results for a product• Changes in expected cash flows due to lower sales expectations• Changes in technology• Changes in assumptions about future use• Changes in market and legal risks• Changes in cost structure

Other financial assets
Equity investments that are not investments in associates are classified as other financial assets.
On initial recognition, equity investments are measured at fair value. Subsequently, they are measured at fairvalue at the balance sheet date, and changes to the fair value are recognized under financial income or
financial expenses or in other comprehensive income according to an individual decision for each equity
investment.
Inventories
Raw materials, packaging and goods for resale are measured at the latest known cost at the balance sheet
date, which is equivalent to cost computed according to the FIFO method. Work in progress and finished goods
manufactured by Lundbeck are measured at cost, i.e., the cost of raw materials, consumables, direct labor andindirect costs of production. Indirect costs of production include materials, labor, maintenance of anddepreciation on machines, factory buildings and equipment used in the manufacturing process as well as thecost of factory administration and management. Indirect costs of production are allocated based on the normal
capacity of the production plant.
Inventories are written down to net realizable value if it is lower than the cost price. The net realizable value of
inventories is calculated as the selling price less costs of completion and costs incurred to execute the sale.
The net realizable value is determined having regard to marketability, obsolescence and expected selling pricedevelopments.
Receivables
Current receivables comprise trade receivables and other receivables arising in the Group’s normal course ofbusiness.
Other receivables recognized in financial assets are financial assets with fixed or determinable cash flows thatare not quoted in an active market and are not derivative financial instruments.
On initial recognition, receivables are measured at fair value and subsequently at amortized cost, which usuallycorresponds to the nominal value less write-downs to counter the risk of losses. Write-downs are calculatedusing the ‘full lifetime-expected credit losses’ method, whereby the likelihood of non-fulfilment throughout the
lifetime of the financial instrument is taken into consideration. A provision account is used for this purpose.
Securities
On initial recognition, securities (including the bond portfolio), which are included in the Group’s documented
investment strategy for excess liquidity and recognized under current assets, are measured at fair value.
Subsequently, the securities are measured at fair value at the balance sheet date. The fair value is based on

90

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Note 25
25 MATERIAL ACCOUNTING POLICY INFORMATION – CONTINUED
publicly quoted prices of the invested assets. Both realized and unrealized gains and losses are recognized in
profit or loss under financial income or financial expenses.

EquityDividends
Proposed dividends are recognized as a liability at the time of adoption of the dividend resolution at the Annual
General Meeting (the time of declaration). Dividends expected to be paid in respect of the year are included in
the line item Profit for the year in the statement of changes in equity.
Treasury shares
Acquisition and sale of treasury shares as well as dividends are recognized directly in equity under retained
earnings.
Share-based payments
Share-based incentive programs in which shares are granted to employees and in which employees may opt
to buy shares in the Parent Company (equity-settled programs) are measured at the equity instruments’ fairvalue at the date of grant and recognized under employee costs as and when the employees obtain the rightto receive/buy the shares. The offsetting item is recognized directly in equity under retained earnings.
Share price-based incentive programs in which employees have the difference between the agreed price andthe actual share price settled in cash (cash-settled programs) are measured at fair value at the date of grant
and recognized under employee costs as and when the employees obtain the right to such difference
settlement. The cash-settled programs are subsequently remeasured on each balance sheet date and upon
final settlement, and any changes in the fair value of the programs are recognized under employee costs. The
offsetting item is recognized under liabilities until the time of the final settlement.
Retirement benefit obligations and similar obligations
Defined contribution plans
Payments to defined contribution plans are recognized in profit or loss at the due date, and any contributions
payable are recognized in the balance sheet under current liabilities.
Defined benefit plans
The present value of the Group’s liabilities relating to future pension payments under defined benefit plans ismeasured on an actuarial basis once a year based on the pensionable period of employment up to the time of
the actuarial valuation. The calculation of present value is based on assumptions of future developments ofsalary, interest, inflation, mortality and disability rates and other factors. Present value is computed exclusively

for the benefits to which the employees have earned entitlement through their employment with Lundbeck.
Pension expenses, finance costs and administration fees are recognized in profit or loss under employee costs.
Actuarial gains and losses are recognized in other comprehensive income as they are calculated and cannot
subsequently be recycled through profit or loss.
The present value of the defined benefit plan liability is recognized less the fair value of the plan assets, andany net obligation is recognized in the balance sheet under non-current liabilities. Any net asset is recognizedin the balance sheet as a financial asset, considering, where relevant, the provisions of IFRIC 14 The Limit on
a Defined Benefit Asset, Minimum Funding Requirements and their Interaction.
Provisions
Provisions mainly consist of provisions for discounts and rebates, product returns, pending lawsuits andrestructuring. A provision is a liability of uncertain timing or amount.
Unsettled discounts and rebates are recognized as provisions, when the timing or amount is uncertain. Where
absolute amounts are known, the discounts and rebates are recognized as trade payables.
Return obligations imposed on the Group are recognized as provisions in the balance sheet.
Amounts relating to pending lawsuits are recognized when the outflow is probable and the amount is measured
as the best estimate of the costs required to settle the liabilities at the balance sheet date.
In connection with restructurings in the Group, provisions are made only for liabilities set out in a specificrestructuring plan based on which the parties affected can reasonably expect that the Group will carry out the
restructuring, either by starting to implement the plan or announcing its main components.
Debt
Bank debt and bond debt are recognized at the time of the raising of a loan/issuing of bonds at the fair valueof the proceeds received less transaction costs paid. In subsequent periods, the financial liabilities aremeasured at amortized cost, which is equivalent to the capitalized value when the effective rate of interest isused. The difference between the proceeds and the nominal value is recognized in profit or loss under financial
income or financial expenses over the loan period.
Other payables
Other payables include employee costs payables, contingent consideration, derivative financial instruments,
debt to public authorities, payables to shareholders, etc.
Contingent consideration is recognized as part of the business combination and is recognized at fair value
considering the passage of time and changes in the applied probability of success. The fair value is assessed

91

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Note 25
25 MATERIAL ACCOUNTING POLICY INFORMATION – CONTINUED
at each reporting date and the effect of any adjustments relating to the timing of payment and the probabilityof success is recognized under financial income or financial expenses.
Payables to shareholders and other payables are measured at amortized cost.
Lease liabilities
Lease liabilities are recognized at the present value of future payments in accordance with the leaseagreements and include the present value of future payments relating to reasonably certain extensions. Intereston the lease liabilities is calculated using Lundbeck’s incremental borrowing rate and recognized underfinancial income or financial expenses. The lease liabilities are reduced by any instalments paid to the lessor.
Lundbeck uses the same incremental borrowing rate for lease agreements with similar characteristics.
Changes to lease agreements after initial recognition are accounted for either as a modification to an existing
agreement, a separate agreement or a partial disposal depending on the nature of the change. Changes will
result in changes to both the lease liability and the right-of-use asset.

Financial Statements of the Parent Company

92

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Financial Statementsof the Parent
Company
CONTENTSStatement of profit or loss
Statement of financial position
Statement of changes in equity
Financial Statements of the Parent Company

NOTES

93
94
95

1 Revenue

96

2 Employee costs

96

3 Investments in subsidiaries

96

4 Financial income and expenses

97

5 Income taxes

97

6 Distribution of profit97

7 Intangible assets

98

8 Property, plant and equipment

98

9 Right-of-use assets and lease liabilities

99

10 Inventories

99

11 Provisions

99

12 Contingent assets and contingent liabilities

99

13 Bank debt and bond debt

100

14 Payables to subsidiaries

100

15 Financial instruments

100

16 Audit fees100

17 Contractual obligations

100

18 Related parties

101

19 Subsequent events

101

20 Material accounting policy information

101

93

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Statement of profit or loss
1 January – 31 December

2023

2022

Notes

DKKm

DKKm

Revenue

1

14,117

12,722

Cost of sales

2

3,633

3,005

10,484

9,717

4,313

3,598

Gross profit
Sales and distribution costs

2

Administrative expenses

2

941

789

Research and development costs

2

3,066

3,428

2,164

1,902
345

Profit from operations (EBIT)
Income from investments in subsidiaries

3

2,155

Financial income

4

564

415

Financial expenses

4

736

461

4,147

2,201

Profit before tax
Tax on profit for the year

5

456

345

Profit for the year

6

3,691

1,856

Statement of profit or loss

Financial Statements of the Parent Company

94

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Statement of financial position –assetsStatement of financial position –equity and liabilities

At 31 December

At 31 December
2023

2022

Notes

DKKm

DKKm

Intangible assets

7

8,493

9,233

Property, plant and equipment

8

1,720

1,724

Right-of-use assets

9

157

174

Investments in subsidiaries

3

Financial Statements of the Parent Company

2023

2022

DKKm

DKKm

Share capital

996

996

Proposed dividends

697

578

Hedging reserve

144

237

Retained earnings

16,744

13,826Equity18,581

15,637923

Notes

10,46810,508

5,918

6,028

Other financial assets

98

172

Other receivables

4

3

Financial assets

16,488

16,711

Non-current assets

26,85827,842

3,226

2,671

776

787

3,810

4,647

349

531

Trade payables
Lease liabilities

Receivables from subsidiaries

Inventories
Trade receivables
Receivables from subsidiaries
Other receivables

10

Prepayments

120

24

Receivables

5,055

5,989

Cash and bank balances

4,341

2,626

Current assets

12,622

11,286

Assets

39,48039,128

Statement of financial position - assets

Deferred tax liabilities

5

1,182

Provisions

11

219

70

Bank debt and bond debt

13

3,714

5,096

Lease liabilities

9

147

161

Payables to subsidiaries

14

8,827

9,402

Other payables
Non-current liabilities
Provisions

Payables to subsidiaries

11
9

12

20

14,101

15,672

77

20

1,796

1,790

12

14

4,112

4,860

Income tax payables

74

6

Other payables

727

1,129

Current liabilities

6,798

7,819

Liabilities

20,89923,491Equity and liabilities

39,48039,128

Statement of financial position – equity and liabilities

95

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Statement of changes in equity
At 31 December

Notes

Equity at 1 January
Profit for the year

Share
capitalProposed
dividends

Hedging
reserve

Retainedearnings

DKKm

DKKm

DKKm

DKKm

DKKm

996

578

237

13,826

15,637

6

Equity

-

697

-

2,994

3,691

Distributed dividends, gross

-

(578)

-

-

(578)

Dividends received, treasury shares

-

-

-

2

2

Deferred gains/losses on cash flow
hedge, exchange rate

-

-

117

-

117

Deferred gains/losses on cash flow
hedge, interest rate

-

-

(21)

-

(21)

Deferred gains/losses on cash flow
hedge, price

-

-

(137)

-

(137)

Exchange gains/losses, hedging(transferred to revenue)

-

-

(78)

-

(78)

Buyback of treasury shares

-

-

-

(43)

(43)

Incentive programs

-

-

-

33

33

-

-

26

1

27

-

-

-

(69)

(69)

996

697

144

16,744

18,581

Tax on transactions in equity

5

Other transactions on equity
Equity at 31 December

See note 12 Equity in the consolidated financial statements.

Statement of changes in equity

Financial Statements of the Parent Company

96

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Notes 1-3
1 REVENUE

Information on employees
2023

2022

Revenue by region

DKKm

DKKm

Europe

4,759

4,423

United States

7,028

6,454

International markets

2,090

2,347

Total

13,877

13,224

103

86

Other revenue
Effects from hedging
Total revenue

137

(588)

14,117

12,722

Breakdown of employee costs

2023

2022

DKKm

DKKm

Short-term employee benefits

1,594

1,447

Retirement benefits

133

129

Social security costs

18

17

Equity- and cash-settled incentive programs

33

24

Severance and other costs from restructuring activities

59

-

1,837

1,617

Employee costs for the year are included in the following functions in the statement of profit or loss:
Employee costs

2023

2022

DKKm

DKKm

Cost of sales

512

448

Sales and distribution costs

126

99

Administrative expenses

450

318

Research and development costs

749

752

1,837

1,617

Total

2022
NumberAverage number of full-time employees in the financial year

1,822

1,751

Number of full-time employees at 31 December

1,875

1,769

Remuneration of the Registered Executive Management
See notes 3 Employee costs and 14 Incentive programs in the consolidated financial statements.
Remuneration of the Board of Directors
See note 3 Employee costs in the consolidated financial statements.
Incentive programs
See note 14 Incentive programs in the consolidated financial statements.

2 EMPLOYEE COSTS

Total

2023
Number3 INVESTMENTS IN SUBSIDIARIES
2023
DKKm

Cost at 1 January

10,772

Capital reduction in subsidiaries(40)

Cost at 31 December

10,732

Impairment at 1 January

264

Impairment at 31 December

264

Carrying amount at 31 December

10,468In 2023, income from investments in subsidiaries relates to dividends of DKK 2,155 million. In 2022, income
from investments in subsidiaries related to dividends received, and impairment losses amounted to DKK 345
million.
See note 23 List of subsidiaries in the consolidated financial statements for an overview of subsidiaries.

97

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Notes 4-6
4 FINANCIAL INCOME AND EXPENSES

Deferred tax balances
2023

2022

DKKm

DKKm

Financial income

564

415

Financial expenses

736

461

Net financials, expenses/(income)

172

46

Temporary differences between assets and liabilities asstated in the financial statements and in the tax base

Balance at
1 January

Adjustment ofdeferredtax atbeginningof yearMovements
duringthe year

Balance at
31 December

DKKm

DKKm

DKKm

DKKm

5,836

-

569

6,405

Property, plant and equipment

429

-

9

438

In 2023, out of total financial income and financial expenses, DKK 483 million (DKK 369 million in 2022) and
DKK 616 million (DKK 173 million in 2022) relate to intra-group interest income and expenses, respectively.

Inventories

412

-

69

481

Other items

(166)

(70)

(290)

(526)

Tax loss carryforwards etc.

(2,314)53

836(1,425)

In 2023, financial income and financial expenses are impacted by a net exchange loss of DKK 4 million (gainof DKK 20 million in 2022) relating to translation of receivables from and payables to subsidiaries that areconsidered part of the overall investment in subsidiaries.

Total temporary differences

4,197

(17)

1,193

5,373

923

(4)

263

1,182

Further, in 2023, financial income and financial expenses are impacted by a gain of DKK 17 million (loss of
DKK 163 million in 2022) relating to the translation of external loans used for hedging net investments in foreign
operations in the U.S.

The major assumptions relating to the recognition and measurement of tax assets are described innote 5 Income taxes in the consolidated financial statements.

Intangible assets

Deferred (tax assets)/tax liabilities

2023

2022

DKKm

DKKm

Balance at 1 January

923

239

Movements related to transactions recognized in profit or loss

276

656

Movements related to transactions recognized in equity

(17)

28

1,182

923

Movements in deferred tax

5 INCOME TAXESTax on profit for the year
2023

2022

DKKm

DKKm

Balance at 31 December

Current tax, joint taxation contribution

164

27

Prior-year adjustments, current tax¹⁾

6

(276)

Prior-year adjustments, deferred tax¹⁾

(4)

266

Change in deferred tax for the year

263

418

Total tax for the year

429

435

697

578

456

345

Transferred to/from distributable reserves

2,994

1,278

Total profit for the year

3,691

1,856

Proposed dividend per share (DKK)

0.70

0.58

Proposed distribution of profit for the year
Proposed dividends for the year

Tax for the year is composed of:
Tax on profit for the year

6 DISTRIBUTION OF PROFITTax on transactions in equity

(27)

90

Total tax for the year

429

435

1) For 2022, movements from prior-year adjustments, deferred tax to prior-year adjustments, current tax, primarily relate to the utilization of tax
losses from prior years by jointly taxed companies not controlled by the Parent Company.

See note 12 Equity in the consolidated financial statements for details on treasury shares.

2023

2022

DKKm

DKKm

98

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Notes 7-8
7 INTANGIBLE ASSETS

Intangible assets
Cost at 1 January
Transfers
Additions

8 PROPERTY, PLANT AND EQUIPMENT
Productrights¹⁾

Other
rights²⁾

Projects inprogress²⁾

Total
intangible
assets

DKKm

DKKm

DKKm

DKKm

16,813

1,753

103

18,669

-

20

(20)

-

111

4

90

205

Cost at 31 December

16,924

1,777

173

18,874

Amortization and impairment losses at 1 January

7,785

1,651

-

9,436

Amortization

891

54

-

945

Amortization and impairment losses at 31 December

8,676

1,705

-

10,381

Carrying amount at 31 December

8,248

72

173

8,493

1) In 2023, product rights not yet commercialized amounted to DKK 2,322 million (DKK 2,322 million in 2022).
2) Other rights and projects in progress primarily include items such as the IT system SAP.

For details on material product rights and impairment testing, see note 6 Intangible assets in the consolidated
financial statements.

Property, plant and equipment

Land andbuildings

Plant andmachineryOtherfixturesand fittings,
tools andequipment

Prepayments
and assets
underconstruction

Total
property,plant andequipment

DKKm

DKKm

DKKm

DKKm

DKKm

3,338

1,055

504

445

5,342

Transfers

88

30

57

(175)

-

Additions

6

8

3

146

163

Cost at 1 January

Disposals

-

(26)

-

-

(26)

416

5,479

463

-

3,618

24

-

167

-

(26)

Cost at 31 December

3,432

1,067

564

Depreciation and impairment losses at
1 January

2,278

877

103

40

Depreciation
Disposals

-

(26)

-

Depreciation and impairment losses at
31 December

2,381

891

487

-

3,759

Carrying amount at 31 December

1,051

176

77

416

1,720

Pledged assets
No land and buildings were mortgaged at 31 December 2023. No other assets have been pledged.

99

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Notes 9-12
9 RIGHT-OF-USE ASSETS AND LEASE LIABILITIESLand and buildings
Cost at 1 January

10 INVENTORIES
2023

2022

DKKm

DKKm

227

227

Additions2-

Disposals during the year

(1)-

Adjustment to right-of-use assets during the year¹⁾(6)-

Cost at 31 December

222

227

Depreciation and impairment losses at 1 January

53

39

Depreciation

13

14

Depreciation and impairment on disposals(1)-

Depreciation and impairment losses at 31 December

65

53

Carrying amount at 31 December

157

174

1) Comprises reassessment of lease term and renewal of lease agreements.

Amounts recognized in profit or loss

2023

2022

DKKm

DKKm

Expense relating to short-term leases, not capitalized1

1

Depreciation of right-of-use assets, land and buildings

13

14Interest expense relating to lease liabilities

3-

Total recognized in profit or loss

17

15

2023

2022

DKKm

DKKm

Within one year

1214

Between one year and five years

50

54

After five years

97

107

Lease liabilities at 31 December

159

175

Maturity analysis of lease liabilities

Raw materials and consumables
Work in progress
Finished goods and goods for resale
Total

2023

2022

DKKm

DKKm

192

185

2,540

2,066

494

420

3,226

2,671

11 PROVISIONS
2023
DKKm

Provisions at 1 January

90

Additional provisions recognized

216

Provisions used during the year

(10)

Provisions at 31 December

296

The Parent Company has entered into agreements with individual subsidiaries, under which it will cover
expected losses and obligations concerning restructuring programs. The provisions in the Parent Company
therefore cover such losses and obligations.
At 31 December 2023, the total restructuring provision amounted to DKK 59 million (DKK 20 million at 31
December 2022). In 2023, DKK 10 million of the restructuring provision was used and DKK 49 million wasrecognized.
In addition, provisions comprise liabilities relating to items such as legal disputes and environmental provisions.

12 CONTINGENT ASSETS AND CONTINGENT LIABILITIES
Pending legal proceedings
See note 16 Contingent assets and contingent liabilities in the consolidated financial statements for details on
pending legal proceedings.

100

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Notes 12-17
12 CONTINGENT ASSETS AND CONTINGENT LIABILITIES - CONTINUED
Joint taxation
The Parent Company is part of a Danish joint taxation scheme with Lundbeckfonden (Lundbeckfond Invest
A/S including subsidiaries), according to which the Parent Company partly has a joint and several liability andpartly a secondary liability with respect to corporate income taxes, etc. for the jointly taxed companies. In
addition, the Parent Company partly has a joint and several liability and partly a secondary liability with respect
to any obligations to withhold tax on interest, royalties and dividends for these companies. However, in bothcases the secondary liability is capped at an amount equal to the share of the capital of the company directly
or indirectly owned by the ultimate parent company. The total tax obligation under the joint taxation scheme isshown in the financial statements of Lundbeckfond Invest A/S.
Letters of intent
The Parent Company has entered into agreements to cover operating losses in certain subsidiaries.
As collateral for bank guarantees, the Parent Company has issued letters of intent to the banks in the amountof DKK 4 million (DKK 7 million in 2022) on behalf of subsidiaries.

13 BANK DEBT AND BOND DEBT
There is no bank debt or bond debt falling due after more than five years from the balance sheet date at 31
December 2023 and 2022, respectively.

14 PAYABLES TO SUBSIDIARIES
Payables to subsidiaries falling due after more than five years from the balance sheet date amounted to DKK
8,827 million at 31 December 2023 (DKK 9,402 million at 31 December 2022).

15 FINANCIAL INSTRUMENTS
Foreign currency management is handled by the Parent Company. See note 19 Financial instruments in the
consolidated financial statements.
The fair value of derivatives at year-end is disclosed in note 19 Financial instruments in the consolidated
financial statements. The fair value adjustment recognized in equity is disclosed in the statement of changes

in equity in the financial statements of the Parent Company. All fair value adjustments are initially recognizedin equity.

16 AUDIT FEES
2023

2022

DKKm

DKKm

Statutory audit

4

4Assurance engagements other than audit

1

1

Other services

1

4

Fee to PricewaterhouseCoopers

6

9

The fee for non-audit services provided to the Parent Company by PricewaterhouseCoopers Statsautoriseret
Revisionspartnerselskab, Denmark, amounted to DKK 1 million (DKK 5 million in 2022) and consisted of otherassurance services and other accounting and tax advisory services.

17 CONTRACTUAL OBLIGATIONS
Research and development milestones and collaborations
The Parent Company has entered into a number of agreements relating to research and development of new
products and intellectual property rights from acquisitions, as well as other collaborations. According to theagreements, Lundbeck is committed to paying certain milestones.
At 31 December 2023, potential future milestone payments totaled DKK 1,106 million (DKK 1,095 million at 31
December 2022).
Sales milestones
The Parent Company is committed to paying certain commercial sales milestones, royalties or other payments
based on a percentage of sales generated from the sale of goods following marketing approval. These amounts
are excluded from the contractual obligations because of their contingent nature, being dependent on future
sales.
Other purchase obligations
The Parent Company has undertaken purchase obligations relating to property, plant and equipment in theamount of DKK 688 million (DKK 24 million in 2022).

101

Lundbeck Annual Report 2023

Management Review

Consolidated Financial Statements

Financial Statements of the Parent Company

Notes 18-20
18 RELATED PARTIES
For information on related parties exercising controlling influence on the Parent Company, see note 22 Relatedparties in the consolidated financial statements.
The Parent Company is included in the consolidated financial statements of Lundbeckfonden.
The Parent Company had transactions with subsidiaries during 2023. The Parent Company’s share ofownership of all subsidiaries is 100%. The Parent Company did not enter into any transactions with otherrelated parties that were not on an arm’s length basis.

19 SUBSEQUENT EVENTS
No subsequent events have occurred after the balance sheet date that required adjustment to or disclosure in
the financial statements of the Parent Company.

20 MATERIAL ACCOUNTING POLICY INFORMATION
The financial statements of the Parent Company H. Lundbeck A/S have been prepared in accordance with theDanish Financial Statements Act applying to enterprises in reporting class D. The financial statements arepresented in Danish kroner (DKK). All amounts have been rounded to the nearest DKK million, unlessotherwise indicated.
Assets and liabilities are presented in the balance sheet according to a current/non-current classification.
The accounting policies for the financial statements of the Parent Company remain unchanged from theprevious financial year.
Differences relative to the accounting policies for the consolidated financial statements
The Parent Company’s accounting policies for recognition and measurement are consistent with theaccounting policies for the consolidated financial statements with the exceptions stated below. For a descriptionof the accounting policies of the Group, please refer to the consolidated financial statements.
Statement of profit or loss
Income from investments in subsidiaries
Income from investments in subsidiaries includes dividends from subsidiaries, which are recognized in the
Parent Company’s statement of profit or loss when the Parent Company’s right to receive such dividends has

been approved. Further, income from investments in subsidiaries includes proceeds from liquidation ofsubsidiaries and any impairment losses or reversals of impairment losses on investments in subsidiaries.
Exchange gains/losses
Exchange gains/losses on translation of receivables from and payables to subsidiaries that are considered partof the overall investment in subsidiaries are recognized in profit or loss under financial income or financial
expenses.
Exchange gains/losses on that part of the bank debt in foreign currency which is used for hedging of the net
investments in subsidiaries and which provides an effective hedging of the exchange gains/losses of the net
investments are recognized in profit or loss under financial income or financial expenses.
Statement of financial position
Investments in subsidiaries
Investments in subsidiaries are measured at cost in the Parent Company’s financial statements. Where therecoverable amount of the investments is lower than cost, the investments are written down to this lower value.
In addition, cost is written down to the extent that dividends distributed exceed the accumulated earnings in
the subsidiary since the acquisition date.
Other financial assets
On initial recognition, investments are measured at cost, corresponding to fair value plus directly attributable
costs. Subsequently, they are measured at fair value at the balance sheet date. Any fair value adjustments onequity investments recognized in other comprehensive income in the consolidated financial statements arerecognized under financial income or financial expenses in the Parent Company’s statement of profit or loss.
Statement of changes in equity
Pursuant to the Danish Financial Statements Act, entries recognized in the statement of comprehensive
income in the consolidated financial statements are recognized directly in the statement of changes in equity
in the Parent Company’s financial statements, except for entries concerning exchange gains/losses ontranslation of receivables from and payables to subsidiaries, entries providing an effective hedge against
foreign exchange gains/losses on the net investment and entries concerning other financial assets.
Statement of cash flows
In accordance with the exemption clause in section 86(4) of the Danish Financial Statements Act, no separate
statement of cash flows has been prepared for the Parent Company as it is included in the consolidated
statement of cash flows.

102

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Management Statement
The Board of Directors and the Registered Executive
Management have today considered and adopted theAnnual Report of H. Lundbeck A/S for the financial
year 1 January to 31 December 2023.

Financial Statements Act. The Management Review
has been prepared in accordance with the Danish
Financial Statements Act and Article 8 of Regulation(EU) 2020/852 (EU Taxonomy Regulation).

The Consolidated Financial Statements have been
prepared in accordance with IFRS AccountingStandards as adopted by the EU and further
requirements in the Danish Financial Statements Act,and the Parent Company Financial Statements havebeen prepared in accordance with the Danish

In our opinion, the Consolidated Financial Statements
and the Parent Company Financial Statements give atrue and fair view of the financial position at 31
December 2023 of the Group and the Parent
Company and of the results of the Group and Parent

Company operations and consolidated cash flows forthe financial year 1 January to 31 December 2023.
In our opinion, the Management Review includes atrue and fair account of the development in theoperations and financial circumstances of the Groupand the Parent Company, of the results for the year
and of the financial position of the Group and the
Parent Company as well as a description of the mostsignificant risks and elements of uncertainty facing theGroup and the Parent Company.

In our opinion, the Annual Report of H. Lundbeck A/S
for the financial year 1 January to 31 December 2023
with the file name HLUNDBECK-2023-12-31-en.zip
has been prepared, in all material respects, incompliance with the ESEF Regulation.
We recommend that the Annual Report be adopted at
the Annual General Meeting.

Management Statement

Copenhagen, 7 February 2024
REGISTERED EXECUTIVE MANAGEMENTCharl Gerhard Van Zyl
President and CEO

Lars Bang
Executive Vice President,
Product, Development & Supply

Joerg Hornstein
Executive Vice President,
CFO

Per Johan Luthman
Executive Vice President,
Research & Development

Jacob Tolstrup
Executive Vice President,
Commercial Operations

Lars Søren Rasmussen
Chair of the Board

Lene Skole-Sørensen
Deputy Chair

Santiago Arroyo

Jeffrey Berkowitz

Lars Erik Holmqvist

Jeremy Max Levin

Jakob Riis

Ilse Dorothea Wenzel

Hossein Armandi
Employee representative

Lasse Skibsbye
Employee representative

Dorte Clausen
Employee representative

Camilla Gram Andersson
Employee representative

BOARD OF DIRECTORS

103

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Independent Auditor’s Reports
Independent Auditor’s Reports
TO THE SHAREHOLDERS
OF H. LUNDBECK A/S

Report on the audit of
the financial statements
Our opinion
In our opinion, the Consolidated Financial Statements(pages 50-91) give a true and fair view of the Group’s
financial position at 31 December 2023 and of theresults of the Group’s operations and cash flows forthe financial year 1 January to 31 December 2023 inaccordance with IFRS Accounting Standards as
adopted by the EU and further requirements in theDanish Financial Statements Act.
Moreover, in our opinion, the Parent Company
Financial Statements (pages 92-101) give a true andfair view of the Parent Company’s financial position at
31 December 2023 and of the results of the Parent
Company’s operations for the financial year 1 January
to 31 December 2023 in accordance with the Danish
Financial Statements Act.
Our opinion is consistent with our Auditor’s Long-form
Report to the Audit Committee and the Board of
Directors.

What we have audited
The Consolidated Financial Statements of H.
Lundbeck A/S for the financial year 1 January to 31
December 2023 comprise the consolidated statementof profit or loss and statement of comprehensive
income, the consolidated statement of financial
position, the consolidated statement of changes inequity, the consolidated statement of cash flows andthe notes, including summary of material accounting
policy information.
The Parent Company Financial Statements of H.
Lundbeck A/S for the financial year 1 January to 31
December 2023 comprise the statement of profit orloss, the statement of financial position, the statementof changes in equity, and the notes, includingsummary of material accounting policy information.
Collectively referred to as the “Financial Statements”.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (ISAs) and the
additional requirements applicable in Denmark. Our
responsibilities under those standards andrequirements are further described in the Auditor’s
responsibilities for the audit of the Financial
Statements section of our report.

We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the Group in accordance with
the International Ethics Standards Board for
Accountants’ International Code of Ethics forProfessional Accountants (IESBA Code) and the
additional ethical requirements applicable in
Denmark. We have also fulfilled our other ethicalresponsibilities
inaccordance
with
these
requirements and the IESBA Code.
To the best of our knowledge and belief, prohibited
non-audit services referred to in Article 5(1) ofRegulation (EU) No 537/2014 were not provided.
Appointment
We were first appointed auditors of H. Lundbeck A/S
on 24 March 2020 for the financial year 2020. We
have been reappointed annually by shareholder
resolution for a total period of uninterrupted
engagement of 4 years including the financial year2023.

Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the Financial Statements for 2023. These
matters were addressed in the context of our audit of
the Financial Statements as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.

104

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Independent Auditor’s Reports
Continued
Key audit matter
Sales deductions in the U.S.
The Group provides rebates and discounts to customers in the U.S. that fall under certain
government mandated reimbursement arrangements, of which the most significant is Medicaid.
These arrangements result in deductions to gross sales in arriving at net revenue. The period
passing between the sales to distributors and payment of the related rebates under the U.S.
Federal and State Government Healthcare programs may be several months and requires theunsettled amounts to be recognized as a provision. The provision for rebates and discounts isbased on several significant assumptions, including estimated rebate percentages and estimationof time from sale of the individual products to receipt of invoice under the U.S. Federal and State
Government Healthcare programs.
We focused on these arrangements because they are complex and require significant estimationby Management in establishing an appropriate provision for the unsettled amounts. This included
estimation of sales volumes subject to the rebates, estimation of applicable rebate rates, andestimation of the lag time described above.
We refer to note 1.5, 15 and 25 in the Consolidated Financial Statements.
Impairment of product rights
Product rights are tested when there is an indication of impairment, and product rights not yet
commercialized are tested annually for impairment.
The recoverability of the carrying value of product rights is contingent on future cash flows and/or
the outcome of research and development activities. The determination of the recoverable
amounts includes significant estimates, which are highly sensitive and depend upon key
assumptions and judgments, including the probability of technical and regulatory success, amountand timing of projected future cash flows, patent expiry, and discount rate assumptions. Changes
in these assumptions could have an impact on the recoverable amount of product rights.
We focused on this area as the amounts involved are material and there is a risk that the productrights will be impaired if the key assumptions deviate negatively from the expectations.
We refer to note 1.5, 6 and 25 in the Consolidated Financial Statements.

How our audit addressed the key audit matter
We performed risk assessment procedures to obtain an understanding of the IT systems, business processes and relevant
controls for rebates and discounts in the U.S. We assessed whether the controls were designed and implemented toeffectively address the risk of material misstatements. For selected controls, which we planned to rely on, we tested whether
these were performed on a consistent basis.
We obtained Management’s calculations under the reimbursement arrangements and evaluated the accuracy of thecalculations made. Further, we assessed, tested and challenged key data inputs and the significant assumptions applied
by management, including the estimate of the period from sale to receipt of invoice.
We considered the Group’s historical provisions by comparing the actual rebate with the rebate percentage estimate usedby Management to recognize the provision, including performing a retrospective review of the prior period provisions
compared to subsequent payments to evaluate the accuracy of Management’s estimate and to identify any potential
management bias.
We evaluated the presentation and disclosures of sales deductions in the U.S. in the Consolidated Financial Statements.

We performed risk assessment procedures to obtain an understanding of the business processes and relevant controls for
impairment indicators and the determination of the recoverability amount of product rights. We assessed whether thecontrols were designed and implemented to effectively address the risk of material misstatements. For selected controls,
which we planned to rely on, we tested whether these were performed on a consistent basis.
For product rights with impairment indicators and product rights not yet commercialized, we among others:• Tested Management’s process for determining the recoverable amount;• Evaluated the appropriateness of the methodology used in the impairment tests;• Evaluated Management’s key assumptions and judgments used in the impairment tests, including probability oftechnical and regulatory success, amount and timing of projected future cash flows, and expected impact of lossof exclusivity;• Tested the underlying data used in the impairment tests; and• Included our in-house valuation experts to assess the valuation techniques used and to assist with the evaluation ofcertain key assumptions, including the discount rates applied.
We evaluated the disclosures of impairment testing in the Financial Statements.

105

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Independent Auditor’s Reports
Continued

Statement on Management review
Management is responsible for Management Review(pages 3-48 and page 107, respectively).
Our opinion on the Financial Statements does notcover Management Review, and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the Financial
Statements, our responsibility is to read Management
Review and, in doing so, consider whether
Management Review is materially inconsistent with
the Financial Statements or our knowledge obtainedin the audit, or otherwise appears to be materially
misstated.
Moreover, we considered whether Management
Review includes the disclosures required by theDanish Financial Statements Act and Article 8 ofRegulation (EU) 2020/852 (EU Taxonomy
Regulation).
Based on the work we have performed, in our view,
Management Review is in accordance with theConsolidated Financial Statements and the Parent
Company Financial Statements and has been
prepared in accordance with the requirements of theDanish Financial Statements Act and the disclosure
requirements of Article 8 of Regulation (EU) 2020/852(EU Taxonomy Regulation). We did not identify any
material misstatement in Management Review.

Management’s responsibilities for the financial
statements
Management is responsible for the preparation of
consolidated financial statements that give a true andfair view in accordance with IFRS AccountingStandards as adopted by the EU and further
requirements in the Danish Financial Statements Act
and for the preparation of parent company financial
statements that give a true and fair view inaccordance with the Danish Financial Statements
Act, and for such internal control as Management
determines is necessary to enable the preparation offinancial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the Financial Statements, Management
is responsible for assessing the Group’s and the
Parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related togoing concern and using the going concern basis ofaccounting unless Management either intends toliquidate the Group or the Parent Company or tocease operations, or has no realistic alternative but todo so.
Auditor’s responsibilities for the audit of thefinancial statements
Our objectives are to obtain reasonable assurance
about whether the Financial Statements as a whole
are free from material misstatement, whether due tofraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a highlevel of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs and the additional

requirements applicable in Denmark will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate,
they could reasonably be expected to influence theeconomic decisions of users taken on the basis ofthese Financial Statements.
As part of an audit in accordance with ISAs and the
additional requirements applicable in Denmark, we
exercise professional judgment and maintainprofessional skepticism throughout the audit. We
also:• Identify and assess the risks of material
misstatement of the Financial Statements, whether
due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of notdetecting a material misstatement resulting fromfraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override ofinternal control.
• Obtain an understanding of internal control relevantto the audit in order to design audit procedures thatare appropriate in the circumstances, but not for the
purpose of expressing an opinion on theeffectiveness of the Group’s and the Parent
Company’s internal control.
• Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting

estimates and related disclosures made byManagement.
• Conclude on the appropriateness of Management’s
use of the going concern basis of accounting andbased on the audit evidence obtained, whether amaterial uncertainty exists related to events orconditions that may cast significant doubt on theGroup’s and the Parent Company’s ability tocontinue as a going concern. If we conclude that amaterial uncertainty exists, we are required to draw
attention in our auditor’s report to the related
disclosures in the Financial Statements or, if suchdisclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report.
However, future events or conditions may cause theGroup or the Parent Company to cease to continue
as a going concern.
• Evaluate the overall presentation, structure andcontent of the Financial Statements, including thedisclosures, and whether the Financial Statements
represent the underlying transactions and events ina manner that gives a true and fair view.
• Obtain sufficient appropriate audit evidence
regarding the financial information of the entities orbusiness activities within the Group to express an
opinion on the Consolidated Financial Statements.
We are responsible for the direction, supervisionand performance of the group audit. We remainsolely responsible for our audit opinion.

106

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Independent Auditor’s Reports
Continued

We communicate with those charged withgovernance regarding, among other matters, theplanned scope and timing of the audit and significant
audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide those charged with governance witha statement that we have complied with relevant
ethical requirements regarding independence, and tocommunicate with them all relationships and othermatters that may reasonably be thought to bear on
our independence and, where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with those charged
with governance, we determine those matters thatwere of most significance in the audit of the Financial
Statements of the current period and are therefore the
key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes
public disclosure about the matter.

Report on compliance with the
ESEF Regulation

As part of our audit of the Financial Statements weperformed procedures to express an opinion onwhether the annual report of H. Lundbeck A/S for thefinancial year 1 January to 31 December 2023 withthe filename HLUNDBECK-2023-12-31-en.zip is
prepared, in all material respects, in compliance with
the Commission Delegated Regulation (EU)2019/815 on the European Single Electronic Format(ESEF Regulation) which includes requirements
related to the preparation of the annual report in
XHTML format and iXBRL tagging of theConsolidated Financial Statements including notes.
Management is responsible for preparing an annual
report that complies with the ESEF Regulation. This
responsibility includes:• The preparing of the annual report in XHTML format;• The selection and application of appropriate iXBRL
tags, including extensions to the ESEF taxonomy

Hellerup, 7 February 2024
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
CVR no. 33 77 12 31

Lars Baungaard
State Authorized Public Accountant
mne23331

Torben Jensen
State Authorized Public Accountant
mne18651

and the anchoring thereof to elements in thetaxonomy, for all financial information required to betagged using judgment where necessary;• Ensuring consistency between iXBRL tagged data
and the Consolidated Financial Statements
presented in human-readable format; and• For such internal control as Management
determines necessary to enable the preparation ofan annual report that is compliant with the ESEF
Regulation.
Our responsibility is to obtain reasonable assurance
on whether the annual report is prepared, in allmaterial respects, in compliance with the ESEF
Regulation based on the evidence we have obtained,
and to issue a report that includes our opinion. The
nature, timing and extent of procedures selected
depend on the auditor’s judgment, including theassessment of the risks of material departures fromthe requirements set out in the ESEF Regulation,
whether due to fraud or error. The procedures include:• Testing whether the annual report is prepared in
XHTML format;• Obtaining an understanding of the company’s
iXBRL tagging process and of internal control over
the tagging process;• Evaluating the completeness of the iXBRL tagging
of the Consolidated Financial Statements including
notes;• Evaluating the appropriateness of the company’s
use of iXBRL elements selected from the ESEF
taxonomy and the creation of extension elements
where no suitable element in the ESEF taxonomy
has been identified;• Evaluating the use of anchoring of extension
elements to elements in the ESEF taxonomy; and• Reconciling the iXBRL tagged data with the audited
Consolidated Financial Statements, including notes.
In our opinion, the annual report of H. Lundbeck A/S
for the financial year 1 January to 31 December 2023
with the file name HLUNDBECK-2023-12-31-en.zip is
prepared, in all material respects, in compliance with
the ESEF Regulation.

107

Lundbeck Annual Report 2023

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements

Adjusted EBITDA Reconciliation(part of Management Review – not audited)
Adjusted EBITDA Reconciliation

2023

Adjusted EBITDA reconciliation

For financial guidance for 2023, Lundbeck focuses onrevenue performance and adjusted EBITDA.
Lundbeck’s previous performance measure (Core EBIT)
adjusted for amortization of product rights and for each
non-recurring item that Management deemed exceptional
and/or which accumulates or was expected toaccumulate to DKK 100 million.
Adjusted EBITDA provides an improved and moreconsistent indicator, measuring the underlying
operational profitability. Adjusted EBITDA enables abetter understanding of the underlying operational
performance, as the operating result is adjusted to
exclude depreciation and amortization, impairment losses
and reversals of impairment losses, as well as
adjustments restricted to the following categories:

Revenue

Reported
resultAdjusted

2022
Reported
resultAdjusted

DKKm

DKKm

DKKm

DKKm

19,912

19,912

18,246

18,246

Cost of sales

4,485

2,332

3,951

2,113

Gross profit

15,427

17,58014,295

16,133

Sales and distribution costs

7,482

7,341

6,610

6,637

Administrative expenses

1,293

1,202

1,079

1,000

Research and development costs

3,457

3,385

3,754

3,673

Profit from operations (EBIT)

3,195

-

2,852

-

Depreciation/amortization

2,012

-

1,811

-

EBITDA

5,207

5,652

4,663

4,823

EBITDA margin

26.2%

28.4%

25.6%

26.4%

Adjustments to EBITDA
Integration costs

-

-

-

-

64

-

(138)

-

Gains/losses on divestment of businesses

-

-

-

-

Acquisition expenses

-

-

-

-

Restructuring expenses

Integration expenses

Other adjustments

381

-

298

-

Adjusted EBITDA

5,652

5,652

4,823

4,823

Restructuring costs

Adjusted EBITDA margin

28.4%

28.4%

26.4%

26.4%

Gains/losses on divestment of businesses
Acquisition expenses
Other adjustments
Adjusted EBITDA is a non-IFRS performance measure.

108

Lundbeck Annual Report 2023

Lundbeck Annual Report 2023

H. Lundbeck A/SOttiliavej 92500 Valby
DenmarkGlobal Communication & Public Affairs
Tel. +45 36 30 13 11
information@lundbeck.com
www.lundbeck.com
CVR number 56759913

Management Review

2023 in Brief

Our BusinessGovernance

Financial Statements