600 Lundbeck Jobs to be cut in Europe

Lundbeck announced yesterday that they are axing roughly 600 employees in Europe from their sales teams as a result of the harsh environment and generic competition to their top antidepressant Cipralex/Lexapro.

The Danish organisation declared that the reorganisation is required because they need to establish “a more flexible commercial infrastructure with respect to detailing to general practitioners ahead of multiple future product launches and partly to maintain cost control.”

The proposal intends to “mitigate increased pressure from healthcare reforms, generic competition and uncertainty regarding pricing and reimbursement in Europe.”

Ulf Wiinberg, chief executive at Lundbeck observed that “the market environment in Europe is changing rapidly at a time when Lundbeck has numerous new products to launch.”  These new products include Selincro (nalmefene) for the management of alcohol dependence and an antidepressant called Lu AA21004.

The job losses come at a time when Cipralex (escitalopram), also known as Lexapro in the USA and Japan, has lost its patent protection.  Quarter one sales dropped 4% to 1.47 billion kroner (currently around $250 million), hit by generic competition in Spain, while Lexapro fell 55% to 336 million kroner.

Lundbeck has advised that the group earnings will stall until 2015, as they go through a shift to get new treatments into the market to substitute Cipralex sales.

The 600 cuts will be lost across all Lundbeck subsidiaries in Europe but the organisation noted that they will be carrying on with the existing plans for investments in markets of growth, notably the USA and international markets.

The company confirmed that “we will do our utmost to manage the process in a respectful way and will now initiate a consultation process regarding the anticipated staff reductions with the works councils in the most affected markets.”

The reorganisation is expected to cost around 500 million kroner ($85 million), but the precise cost will be reliant on the implementation and “negotiations with various local stakeholders.”  Lundbeck added that earnings before interest, tax, deprecation and amortisation are expected to still be in the region of 3.0-3.5 billion kroner this year.


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