The Lundbeck Foundation 2011 Report

2011 ANNUAL REPORT

Hans Lundbeck founded the company H. Lundbeck in 1915. In 1954, his widow, Grete Lundbeck, established the Lundbeck Foundation and transferred her shares in H. Lundbeck to the Foundation as the couple had no heirs.

Today, H. Lundbeck is a world leader in the development and sale of drugs to treat brain disorders. H. Lundbeck was listed on the Copenhagen Stock Exchange in 1999, and the Foundation owns 70% of the company.

In 1989, the Lundbeck Foundation acquired its second subsidiary, and today owns 40% of the capital (67% of the votes) in ALK, the world leader in allergy vaccines. Finally, in 2011, the Foundation bought 57% of the leading international rescue and assistance company, Falck.

In addition to the three subsidiaries, the Foundation owns and manages a portfolio of securities worth approx. DKK 10 billion (€ 1.4 billion) via Lundbeckfond Invest, as well as a portfolio of biotech invest-ments managed by Lundbeckfond Ventures.

Throughout its history, the Lundbeck Foundation has made grants to independent research in bio-medicine and natural sciences with ties to Denmark. The amounts involved have increased significantly in recent years, and in 2011 reached DKK 504 million (€ 68 million) of which € 1 million went to “The Brain Prize” awarded by Grete Lundbeck’s European Brain Research Foundation.

THE LUNDBECK FOUNDATION – AN ACTIVE INDUSTRIALFOUNDATION

Grete Lundbeck

THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT

An eventful year with many initiatives 3

Grants- The year in brief 6- Strategy and governance 8- Prize and fellowship recipients 9- Theme: Genetic research alleviates pain and guilt 10- Theme: Neuroscience Centres 14

Commercial activities- The year in brief 18- Corporate governance 2 1- H. Lundbeck 22- ALK 24- Falck 26- Lundbeckfond Invest 28- Lundbeckfond Ventures 30- Social responsibility, risk management and future expectations 32

Consolidated financial statements 33Parent foundation financial statements the Lundbeck Foundation 95The Lundbeck Foundation Centres 103The Lundbeck Foundation Fellows 104

CONTENT


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Chief Executive Officer Christian Dyvig and Chairman of the Board Mikael Rørth


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2011 – AN EVENTFUL YEAR WITH MANY INITIATIVES

2011 was a landmark year for the Lundbeck Foundation on many fronts, e.g. with the acquisition of the international rescue and assistance company Falck, changes to its grant strategy and management. The acquisition of a third subsidiary has long been on the Foundation’s agenda, and the acquisition of Falck has both strengthened and diversified the Group’s financial foundation. 2011 was also the year when, for the first time, the Foundation made grants of more than DKK 500 million (€ 68 million) to research.

Commercial activities

The Lundbeck Foundation Group’s total revenue grew by 39%, from DKK 16.9 billion (€ 2.3 billion) in 2010 to DKK 23.6 billion (€ 3.2 billion) in 2011, primarily due to the acquisition of Falck. Positive progress was also seen in group operating profit before tax and special items (EBIT). In 2011, EBIT was DKK 4,165 million (€ 560 million) compared to DKK 3,513 million (€ 473 million) in 2010 – an increase of 19%, again primarily driven by the acquisition of Falck.

The Foundation’s share of the profit for the year before special items of DKK 1,815 million (€ 244 million) represented a decline from the previous year (DKK 2,880 million (€ 387 million) in 2010). This was due to negative results totalling DKK 142 million (€ 19 million) in Lundbeckfond Invest and Lundbeckfond Ventures, compared to a profit in 2010 of DKK 1,124 million (€ 151 million), while the subsidiaries improved their financial performance. The result for the Foundation is acceptable given that the decline in portfolio investments was caused by external factors, particularly the development in the global stock markets.

H. LundbeckAfter a record turnover in 2010 of DKK 14,765 million (€ 1,986 million), H. Lundbeck again managed to increase sales in 2011 to DKK 16,007 million (€ 2,153 million), corresponding to 8% growth despite the commencement of patent expiring for the antidepressant Cipralex/Lexapro and the resulting generic competition in a number of markets. In 2011, H. Lundbeck increased the sales of other products by 12% to DKK 7,315 million (€ 984 million). Late in the year, the company launched three new products and filed additionally two applications for the registration of new products. Overall, these initiatives will increase sales of other products significantly in the coming years. The most important new initiative in 2011 was, however, the establishment of a joint venture within psychiatry with the Japanese company Otsuka. The agreement confirms H. Lund-

beck’s position as a leading global player in pharmaceuticals for treatment of brain disorders.

Operating profit (EBIT) showed a slight improvement at DKK 3,393 million (€ 456 million) in 2011 compared to DKK 3,357 million (€ 452 million), driven by increased sales and improved efficiency in production. The full impact of the company’s initiatives is not reflected in the results due to non-recurring costs for the reorganisation of research and development activities, as well as costs associated with the Otsuka agree-ment. Profit for the year at DKK 2,282 million (€ 307 million) compared to DKK 2,466 million (€ 332 million) in 2010 was down as a result of increased tax payments.

ALKDuring 2011, the Foundation increased its stake in ALK. At year-end, it held 67% of the votes in the company and 40% of the capital. ALK’s turnover increased by 9% to DKK 2,348 million (€ 316 million) compared to DKK 2,159 million (€ 290 million) in 2010, partly due to milestone payments from its partners. In early 2011, ALK received a large upfront payment from Torii upon conclusion of an agreement regarding sales in the Japanese market. The collaboration with Merck (USA) regarding the North American market also developed posi-tively in 2011. Merck thus made milestone payments to ALK and has presented impressive results from their studies of ALK’s products against grass and ragweed allergies.

Operating profit (EBIT) rose to DKK 299 million (€ 40 million) compared to DKK 192 million (€ 26 million) in 2010. Profit for the year increased to DKK 200 million (€ 27 million) com-pared to DKK 128 million (€ 17 million) in 2010.

FalckIn 2011, the Foundation acquired 57% of the highly respected international rescue and assistance company, Falck. After the acquisition, Falck has continued its positive development and follows the plans upon which the Foundation based its invest-

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year. The Foundation has continued to award application based regular grants to research within biomedical and natural sciences of approx. DKK 300 million (€ 40 million). In the context of the regular grants, the Foundation has increased its focus on young research talent by raising the number of Lundbeck Foundation Fellowships (worth DKK 10 million/€ 1.3 million each) from five to seven per annum.

Strategic grants have increased to DKK 205 million (€ 28 million) from DKK 104 million (€ 14 million) in 2010. The main area of focus is centred around the theme “Brain Disorders are Biology”, given the unique research opportunities in Denmark for combining clinical research with gene-sequencing data and information from health and social registers. The Founda-tion has awarded the largest-ever single grant for psychiatric research in Denmark to the major national interdisciplinary project, iPSYCH. Furthermore, the Foundation has extended the collaboration with the neuroscience centres that were established in 2005. In this report we follow-up on the research findings from these three centres, as well as the neuroscience centre established in 2008. All four have made extremely gratifying progress.

Finally, the Foundation has expanded its funding preferences to include allergy and immune modulation, as per its objective of supporting the research that forms the basis for the activi-ties of the subsidiary ALK.

Lundbeckfond EmergeIn early 2012, the Foundation launched a new initiative, Lund-beckfond Emerge. The ambition is to create a bridge between university-based research and the commercial world. This will be done both by providing grants to start ups and by support-ing researchers in academic communities with operational and industrial competences as well as with making the decisions necessary to develop research results and product ideas, with a view towards building a company or creating other kinds of commercialisation.

The Foundation’s operations

The Lundbeck Foundation’s day-to-day operations are based on a rigorous governance structure that is embedded in the organisation. The aim is to ensure that the Foundation meets its objective of, on the one hand, being an active, value-adding owner and investor and, on the other hand providing grants to research within biomedical and natural sciences with ties to Denmark.

In order to ensure the quality of the research funded by grants, the research areas and the funding methods are clearly defined and announced. The Foundation mainly uses external experts, in the form of internationally renowned researchers who, through their peer review and assessment of project applications, ensure that the projects supported by the Foun-dation are of a high international standard. The most impor-tant criterion for awarding grants is thus the quality of the research and the difference that it can make to people’s health and well-being.

In relation to the subsidiaries, good governance requires a thorough understanding of the companies’ markets, products and services as well as keeping up to date with their opera-

ment – apart from the Brazilian ambulance activities, which Falck has closed down.

Lundbeckfond InvestIn connection with a change of strategy in 2011, the manage-ment of the Foundation’s portfolio investments was renamed Lundbeckfond Invest. The strategy for Lundbeckfond Invest involves increased active internal management of the port-folio, combined with some specialised external managers for selected assets and index investments of the rest of the port-folio at low cost. The new strategy of active internal manage-ment has been progressively implemented in 2011 and will continue in the coming years.

Lundbeckfond Invest manages approx. DKK 10 billion (€ 1.4 billion). Its financial performance in 2011 was strongly affected by the global financial turmoil. The result for Lundbeckfond Invest in 2011 was a loss of DKK 72 million (€ 10 million) com-pared to a profit of DKK 1,179 million (€ 159 million) in 2010.

Lundbeckfond VenturesSince its inception in early 2010, Lundbeckfond Ventures has established itself as a life science investor both in Europe and America, and has extended a wide network of contacts within the pharmaceutical and biotech industries. Based on the positive initial experience with Lundbeckfond Ventures and in light of the global lack of venture capital for biotech com-panies, the Board of the Foundation decided in 2011 to expand the capital committed to Lundbeckfond Ventures. The Foun-dation considers this an attractive and important area for future investment. The Foundation’s intention over the coming years is to continue to expand Lundbeckfond Ventures’ orga-nisation and create a strong international investor and partner for the biotech industry.

In 2011, Lundbeckfond Ventures invested in three new com-panies that are working to respectively develop transcranial magnetic stimulation for the localisation and stimulation of various brain functions, pharmaceuticals to treat the side effects of cancer treatment, and a new, natural bone sub-stitute.

In line with incentive programmes for the venture industry, an incentive programme was introduced at Lundbeckfond Ventures in order to continue to attract and retain skilled and qualified personnel in this specialist area.

Equity and net wealthThe overall impact of developments in the Group’s activities is that the Foundation’s share of consolidated equity grew from DKK 21.4 billion (€ 2.9 billion) to DKK 22.6 billion (€ 3.0 billion), while the Foundation’s net wealth at market prices rose from DKK 28.5 billion (€ 3.8 billion) to DKK 28.7 billion (€ 3.9 billion). The Foundation receives annual dividends from its subsidiaries, which are used for consolidating the Foun-dation and the financing of grants.

Grants

Grants in 2011 increased by 31% to DKK 504 million (€ 68 mil-lion) from DKK 384 million (€ 52 million) in 2010, which is the highest amount the Foundation has ever awarded in a single

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financial reporting are also noteworthy, as is the success in securing for the Foundation its third subsidiary, in the form of Falck. Steen Hemmingsen will maintain his relations to the Foundation through board representation in Falck and Obel-LFI Ejendomme, and in connection with a project including the history of the Foundation.

We wish to express our gratitude to the retired Directors and the Chief Executive Officer for their long-standing and signifi-cant contributions to the development of the Foundation.

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Chief Physician, Professor Mikael Rørth MD was elected new chair (formerly deputy), and Group CEO, Civil Engineer Jørgen Huno Rasmussen replaced him as deputy. Christian Dyvig LLM MBA was employed as Chief Executive Officer of the Foundation.

Finally, on behalf of the Board of Directors and the Manage-ment, we would like to welcome two new Board members: Professor Povl Krogsgaard-Larsen, Pharm.D. and Professor Gunhild Waldemar, Chief Physician, M.D. We have already benefited greatly from their considerable insight and experience.

On behalf of the Foundation, we thank all participants on assessment committees and our partners at universities and in the ministries for their invaluable co-operation in 2011. We look forward to an equally good and eventful 2012.

tions. By doing so, the Foundation aims to be a good sparring partner for the companies’ management.

In 2011, the Foundation’s governance structure has again proven its worth via this year’s sizeable grants, which include support for the iPSYCH project, and via the subsidiaries’ continued impressive development.

The Foundation continuously seeks to minimise its operating costs, which in 2011 in total amounted to DKK 42 million (€ 6 million). This includes the total cost of operations of Lundbeckfond Invest, Lundbeckfond Ventures, grant-making activities and administration, including the monitoring of subsidiaries.

The cost of Lundbeckfond Invest was DKK 6 million (€ 1 mil-lion), equivalent to 0.06% of assets under management. The cost of Lundbeckfond Ventures was DKK 7 million (€ 1 mil-lion), equivalent to 2.0% of invested capital. Costs associated with grants were DKK 7 million (€ 1 million), equivalent to 1.5% of the awarded amount, while the administrative and monito-ring costs in 2011 amounted to DKK 22 million (€ 3 million). Directors’ fees for the Foundation and its wholly owned subsi-diary amounted to DKK 4 million (€ 0.5 million), and execu-tive remuneration was DKK 3 million (€ 0.4 million). Both members of the Board and the Chief Executive Officer of the Foundation are active on the boards of the Group’s partly owned subsidiaries. Total fees to Board members and Chief Executive Officer amounted to DKK 7 million (€ 1 million) and DKK 4 million (€ 0.5 million), respectively.

The Foundation is jointly taxed with its subsidiaries through the wholly owned subsidiary Lundbeckfond Invest A/S. The Group’s total tax expense for 2011 was DKK 1,100 million (€ 148 million), and DKK 468 million (€ 63 million) was paid in Denmark.

Words of thanks to the retired leadershipAt the annual meeting in 2011, the chair, Mogens Bundgaard-Nielsen, announced his resignation from the Board. Under his chairmanship, the Foundation’s work has increased signifi-cantly, particularly in relation to the acquisition of Falck and the establishment of Lundbeckfond Ventures. Furthermore, the grants to research within biomedical and natural science has increased. Mogens Bundgaard-Nielsen has retained links to the Foundation as a board member of the Grete Lundbeck European Brain Research Foundation, which awards “The Brain Prize” (€ 1 million).

Chief physician Nils Axelsen MD also retired from the Board. Through his very broad research insights, Nils Axelsen has contributed significantly to the Foundation, not least in connection with the expansion of the grant activities. He has been the driving force behind establishing the Grete Lund-beck European Brain Research Foundation, which he currently chairs.

The Chief Executive Officer of the Foundation, Steen Hem-mingsen, also elected to retire after 11 years in office. In that period, the Foundation has undergone a huge development in both its commercial and grant-making activities, with invest-ment funds multiplying eight-fold and grants 17-fold. Fur-thermore, the strengthening of the Foundation’s governance principles regarding the Board, grants and developments in

Mikael RørthChairman of the Board

of Trustees

Christian DyvigChief Executive Officer

GRANTS – THE YEAR IN BRIEF

Key dataFunding is divided into two main categories. Regular grants are allocated to projects, Lundbeck Foundation Fellowships, research prizes, travel grants, visiting professorships and pro-jects that focus on research into science teaching. DKK 299 million was awarded in this category.

The Foundation also focuses on strategic initiatives. Within the parameters of the Foundation's overriding grantmaking-strategy, the Board identifies particular fields of research with the aim of funding major projects in which the expertise of multiple Danish and international research teams converges to define projects with strong potential for ground-breaking scientific discoveries. DKK 205 million was granted in this category.

In 2011, the focus was on psychiatry and a major grant of DKK 121 million was awarded to a partnership, iPSYCH, involving researchers at Aarhus University and the Mental Health Ser-vices, Capital Region of Denmark. Funds were also granted for the continuation of the three neuroscience Centres of Excel-lence established in 2005.

Following the grant-making strategy, which can be read on page 8, the Foundation seeks to reward excellence in research with a connection to Denmark. In 2011, the Board revised the grant-making strategy, and there are now two focus areas within biomedicine: neuroscience/psychiatry and allergology/immune modulation. Following on this decision, the Founda-tion will focus on major projects within both neuroscience/psychiatry and allergology/immune modulation when deter-mining the future strategic priorities.

Internationalisation of Danish research If Danish research is to maintain its current level or improve its position in international rankings, local research environments must build up and maintain strong international partnerships. The Foundation contributes to such network activities within biomedicine by funding Visiting Professorships for up to six months at Danish biomedical research institutions. Seven such grants were provided for basic and clinical research in 2011.

Funding is also provided to facilitate international collabora-tions of individual Danish researchers. The Foundation is parti-

In 2011, the Lundbeck Foundation allocated grants worth DKK 504 million to 350 projects. The Foundation received 1,426 applications for a total of DKK 2.74 billion.

DKK million.Regular grants 299Biomedical projects 182Natural sciences projects 26Fellowships 70Visiting Professorships 3Teaching projects 12Travel grants 2Research prizes 1Other projects 3

Strategic initiatives 205iPSYCH 121Continuation of 2005 Neuroscience Centres 84

Total 504

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Anne-Marie Engel, Director of Research


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cularly keen to fund prolonged research visits abroad by high-ly qualified Danish researchers and research visits to Denmark by scientists from abroad. This year, the Foundation granted DKK 11 million to 12 such researchers who travelled abroad and to three who visited Denmark. DKK 220 million to Lundbeck Foundation FellowsSince 2007, the Foundation has awarded five-year fellowships worth DKK 10 million each to a total of 22 researchers from Denmark and abroad who have reached a point in their career where they are ready to establish their own research teams and focus on projects that they themselves have defined.

In 2011, seven new fellows joined this group of young research leaders, who will undoubtedly help define Danish front-line research in the years ahead. What Lundbeck Foundation Fel-lows have in common is that they have to make the change from being part of a team to leading their own team at very short notice. In 2011, Associate Professor Maja Horst ph.d., Head of the Department of Media, Cognition and Communi-cation at the University of Copenhagen, therefore on behalf of the Lundbeck Foundation ran two workshops for fellow-ship recipients to talk about how to combine work on their research with the challenges of leading a team of researchers. Strategic initiativesA grant of DKK 121 million was made to the first three years of iPSYCH, a major interdisciplinary project focusing on psychia-tric research. It is the largest ever grant to psychiatric research in Denmark. The project is headed by five leading Danish researchers in psychiatry, genetics and data research, who will establish collaborations with Statens Serum Institute, Beijing Genomics Institute, deCode Genetics from Iceland and the Faroese biobank. The research seeks to map the biological mechanisms that lead to the development of mental health problems, and to use this knowledge as a basis for the deve-lopment of improved treatment of serious mental illness, and for preventive measures.

Science teachingIn 2011, the Foundation granted DKK 8 million to two research projects focused on education and training of science teachers in primary and lower-secondary schools. The pro-jects are designed to generate new concepts for the training and in-service training of science teachers. The main feature of the projects is collaboration between the university colle-ges and the universities on the development of teacher-training programmes.

New activities in 2012In 2012, the Foundation's strategic projects will continue to focus on psychiatric research, but strategic projects within the area of allergology/immune modulation will also be identified.

The News Department at the Experimentarium will receive funding to enhance media coverage of Danish biomedical and natural sciences research.

Also, a new function has been added to the Foundation's funding activities: Lundbeckfond Emerge. An innovation scout with expertise in biotechnology will visit Danish universities and provide both funding and advice for the further develop-ment of research projects with high commercialisation poten-tial.

In 2011, the establishment of a Danish satellite to the EMBL (European Molecular Biology Laboratories) was facilitated by a DKK 120 million grant from the Lundbeck Foundation. In 2012, following a call for applications, the Danish Council for Independent Research will be in charge of an international peer review, define evaluation criteria and identify interna-tional evaluators. Based on this, the Foundation will decide which university will host the Danish satellite of this presti-gious European basic-research partnership. Denmark will then join Sweden, Norway and Finland in the Scandinavian collabo-ration with EMBL.

Theme articlesBiology and thereby genetics as a base for mental illness is the theme for the discussion between Royal Actor Henning Jensen and Professor of Psychiatry Thomas Werge in the following article.

Furthermore, the heads of the Foundation's four neuroscience Centres of Excellence discuss what will be considered their most significant contributions to research in years to come.

research projects that it funds. Applications are processed by peer-review panels with a majority of external experts.

As a general aim, grants must make a tangible difference. Therefore, large grants are generally allocated to a small num-ber of projects, rather than smaller amounts to a large number of projects.

Funding scheme The Foundation supports independent research in biomedi-cine and natural sciences. Young researchers are given prece-dence, and - all other things equal – biomedical priorities are neuroscience, psychiatry and allergology/immune modulation.

The Foundation promotes the internationalisation of Danish research by funding partnerships and exchange programmes involving leading research teams from Denmark and abroad.

The Foundation endeavours to motivate, inspire and recog-nise research talent, e.g. by presenting honorary awards and fellowships.

Smaller-scale funding of school projects that encourage an interest in science is another integral part of the Foundation's activities.

Funding categoriesRegular: Grants for research into biomedicine and natural sciences are awarded in open competition (“bottom up”).

Strategic: Innovative research in strategic areas determined by the Board for periods covering several years and implemented by the Foundation through specific programmes.

Research fundingThe overriding criterion for the Foundation’s research funding is that the scientific content of the application, the applicant's qualifications and the academic environment at the host institution are all of top quality. The Foundation systematically evaluates both applications and the results generated by the

Make a significant difference

Support quality research at the

highest level

Focus on young researchers

Preference for neuroscience,

psychiatry & allergology/immune

modulation

Increased internationalization

and interest in science

Ties to Denmark

GRANTS – STRATEGY AND GOVERNANCE

The Lundbeck Foundation is an industrial foundation that strives to make a significant impact on people’s health and well-being by funding research of the highest international quality, conducted both in Denmark and involving Danish scientists abroad, and primarily within bio-medicine and natural sciences


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PRIZE AND FELLOWSHIP RECIPIENTS 2011

THE LUNDBECK FOUNDATION FELLOWS

TALENT PRIZES

Associate Professor, ph.d. Jan Arlt

Assistant Professor, ph.d. Mariola Monika Golas

Guest Professor, ph.d. Rune Linding

Assistant Professor, ph.d. Niels Emil Jannik Bjerrum-Bohr

Post doc., ph.d. Himanshu Khandelia

Associate Professor, ph.d.Albin Sandelin

M.Sc., ph.d. Magnus Kjærgaard

Post doc., ph.d.Thomas Just Sørensen

Assistant Professor, ph.d.Søren Egedal Degn

THE BRAIN PRIZE

Professor, ph.d. Péter Somogyi

Professor, ph.d. Tamás Freund

Professor, ph.d. György Buzsáki

RESEARCH PRIZE FOR YOUNG SCIENTISTS

Professor, D.Sc. Eske Willerslev

Research fellow, ph.d. Martin Snoager Sloth

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GENETIC RESEARCH ALLEVIATES PAIN AND GUILT

Danish researchers have been working closely with colleagues from private and public institutions throughout the world in recent years to find and identify more of the mutations in the human genome that increase the risk of developing severe mental illness.

Their discoveries have paved the way for a new understanding of the interaction between genetics and environment, and expectations are high that this research will have a crucial impact on future understanding and treatment of people with mental disorders.

“The first really credible breakthrough came in 2008, when we first managed to dig into the genome physically and ascer-tained that specific changes make individuals predisposed to disorders such as schizophrenia and autism. Bipolar disorder was added to the list later on. This may still be virgin territory but since 2008, the idea that mental illness has a heredity ele-ment has no longer been a mere theory. Mental illness is just as biological as blood pressure and diabetes,” says Thomas Werge, Professor and Head of Research at the Research Insti-tute of Biological Psychiatry, Mental Health Centre Sct. Hans. In a Copenhagen café, Werge meets Royal Actor Henning Jensen, who has suffered from severe depression and has talked openly about it for the last decade. Their conversation ranges over research, guilt and pain.

It's all about guiltEverybody hopes that research will lead to new forms of treatment but for Thomas Werge that isn't the crux of the matter – guilt is.

“When parents watch their children become mentally ill, the sense of guilt is overwhelming. Admitting to high blood pres-sure is one thing but nobody feels at ease saying 'my husband suffers from schizophrenia' or 'my child has ADHD'. Everybody knows something's badly wrong, but the subject is totally taboo.”

Werge acknowledges that the home environment does have an impact on your psychological and mental development, but it isn't the main driving force.

“For me it's about removing the concept of guilt. Guilt has absolutely no place in the equation. But it weighs so heavily it's impossible to fathom.”

For Werge, some of the most satisfactory experiences in his professional life have been lecturing in relatives' and patients' associations and witnessing the strong reactions from parents of children with severe mental illnesses. Specifically, he remembers a lecture in the spring of 2009, when a group of parents told him that they felt as if they had been 'liberated' from guilt.

“A mother with two daughters, the oldest of whom suffered from schizophrenia, had always thought she was to blame for the girl's illness. Her youngest daughter had been physically ill for a prolonged period, and this mother thought that because she had been caring for her, the older sister had been neglec-ted, and that was why she contracted schizophrenia. Imagine spending your whole life feeling guilty about your children. That's awful. If genetics can help overcome that sort of pain, it will have made a colossal impact.”

Understanding is liberatingHenning Jensen, who has suffered from severe depression, is full of praise for the new research breakthroughs. He agrees with Thomas Werge that they mean so incredibly much to the families and to those who suffer from mental illness.

"When I finally realised, after many years, that it’s partly chemistry that triggers depression, I felt liberated. When I'm out talking to people about it they seem so relieved when I bring it up."

But this sense of liberation only followed after many long and difficult years, during which Jensen battled with his condition, and, not least, with an enormous sense of guilt.

"As a depression builds, you feel as if you've no right to live, that you're not a person like everybody else, and that you’re unworthy of being in the presence of others."

Jensen reached a point where he regretted everything. He distanced himself from his every past action and attitude.

Mental illness has a biological foundation, about which we have learned a great deal in recent years. What role does it play for someone with a mental illness – and what does it mean for the researchers – that there are so many other approaches to mental disorders?

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Eventually, it reached a stage where he had almost wiped out his entire life in a kind of suicide attack on his own past and being.

“And just think, when I was discharged from hospital and was back out among other people, it took three years before I spoke to anybody about it. Three years! It was as if there was this silent agreement –as if mutual silence meant it had never actually happened. After three years, a stage director asked me what had happened back then.”

In 2001, Henning Jensen decided to go public with his story, as part of a national information campaign about depression. Since then, he has held some 150 lectures all over Denmark.

“For me, it means the world to accept myself for who I am, without feeling guilt, without having to hide half of myself from the world. I've applied this knowledge in real-life during a new bout of depression a couple of years back when I found myself pacing up and down the beach in Raageleje and telling myself: You have every right to be here, you're a human being,

you've got just as much right to be here as anybody else. And suddenly the fear melted away.

I have to say that you researchers and your public pronounce-ments make it much easier to be a patient and carry that latent depression, that’s always there and always will be. It's been a relief that you were able to pin some scientific facts onto mental disease,” Jensen says.

”For me it's about removing the concept of guilt. Guilt has absolutely no place

in the equation. ”Thomas Werge, Professor of Psychiatry

Henning Jensen and Thomas Werge

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Depressed miceBut what exactly are these facts?

"Well, we haven't yet reached an understanding of what exactly it is in the brain that triggers mental illness. Genetics opens up interesting new horizons because we've never actually had a lot of ways of getting inside the brain. For a century, we've discussed what schizophrenia is, how it differs from autism, for example. Actually, as it is now, your diagnosis can change if you hop on a plane to America, because they have a slightly different classification system than in Europe," Thomas Werge explains.

"But since we've now managed to put our finger on a few of the genetic changes that may make individuals predisposed to severe mental illness, we can induce those same changes in mice and study how the mutations alter their brains. We think we are onto something fundamental about mental illness. If we are, new medication may be developed based on whole new understandings. And then medical treatment of mental illness will be all about prevention or cure.

This is totally different from the methods previously used to develop drugs for mental illness. "There are multiple models, but one of the most widely used depression models is to give a mouse electro-shock,” Werge explains.

“You give it electro-shock at one corner of the cage, so it moves to the other corner. You repeat the procedure until the mouse is completely apathetic and just stands there staring out into space. Based on its behaviour, you now diagnose this as a depressed mouse. You treat it and if something works, then you claim to have found something that works on depression. The new knowledge we've gained in recent years makes it less important how the animal behaves, because now we're able to measure directly the effect of disease mutations in its brain and try to correct the biological mutations that we find.”

Negotiating in a minefieldThomas Werge has encountered a wide range of reactions to animal testing and is curious to know if it raises Henning Jensen's hackles that biological changes are recreated in animals producing, for example, depressed mice.

“No. Not in the slightest. Quite the contrary. If we weren't able to do that we'd still be living in the trees. I'm happy that you don't have to experiment on me to learn about the genetic causes of depression,” replies Jensen, who is actually more interested in knowing what the time horizon is for new forms of treatment.

“We are looking at a time horizon of five years just to work out the potential in the new animals that we're working on. So we're talking about the next generation of people with mental illness benefiting from new drugs,“ Werge explains.

“Will this mean bona fide genetic engineering?” Jensen wants to know.

"I envisage drugs that attack the genetic causes of disorders and either compensate for them or correct them without actually tampering with the patient's genes. The furthest I envisage us going with actually touching genes would be

prenatal diagnosis, which is already used to check for other genetic conditions," Werge replies.

The potential for prenatal diagnosis means the new research has to negotiate in a minefield of ethical discussions and attitudes, and Thomas Werge has encountered some strong reactions.

"When the research was first made public in 2008, some people talked about eugenics and genetic engineering. I even received letters addressed to me as SS Obersturmführer. It's not up to me to decide whether we should introduce prenatal diagnosis. That's a deeply ethical decision that basically is up to the individual. But an opportunity is emerging to advise mentally ill patients who'd like to have children and healthy parents who have mentally ill kids. We have examples of par-ents whose first child became severely ill at a very young age, and now they're not sure whether they dare have any more. In situations like that we would actually be able to provide meaningful genetic counselling,” Werge says.

Henning Jensen does not belong to the group that is worried by the idea of prenatal diagnosis. Quite the contrary in fact.

“The more the better, I say. Of course, nobody wants a society of robots, where everybody looks the same and we are all completely regimented. But I do know from my own experi-ence that as far as mental illness is concerned, some kind of diagnostics is preferable to just abandoning people to a living hell.”

Conflicting genesAll this talk of genes leaves Henning Jensen mulling over his own genetic make-up.

“We've talked a lot about genes. Actually, I've often thought my own genes were in conflict with each other, if I can put it like that. My parents were about as different as you can get, and since I'm the product of both, it has sometimes been difficult to reconcile the two. But one thing both sets of genes did agree about was me becoming an actor. So any defects there may be in my genes are also the raw material for my life as an actor. When I'm up there on the stage, I'm in balance. I really am. Totally. And it's always been like that,” he explains.

“It's funny that you should say 'defects' in your genes,” Werge interjects.

”When I finally realised, after many years, that

it’s partly chemistry that triggers depression, I felt

liberated.”

Henning Jensen, Royal Actor

13


“There are a lot of common genetic differences between humans. And, in fact, a part of this normal genetic make-up may predispose to mental illness. This helps to provide us with an understanding of the fact that mental illness may well just be the extreme ends of normal behaviour. It's normal to be afraid – we have to be afraid sometimes and run for it. It's probably not a bad idea to have periods where you take things a bit slower, and other periods where you do things a bit faster.”

As far as schizophrenia is concerned, Werge points out that 70-90% of us have the genetic variants that cause the condition but only a very small minority actually develop mental problems. Since these genetic variants are so wide-spread, research has concluded that they must also do something positive.

Too much of a good thing“So one way to think about mental vulnerability is that maybe you've got too much of a good thing. I use this argument with parents who blame themselves for their kids' conditions. It helps take the stigma out of the situation if they know that they've given their offspring too much of certain genetic variants, which are basically good for humanity, but just don't work so well for a tiny minority of us,” Werge explains. He uses the famous Danish physicist Niels Bohr as an example.

“Wouldn't it be great to have Niels Bohr's penchant for abstraction, you might ask. Well yes, if you're also just as down-to-earth as he was. Because if you had Bohr's ability to abstract but weren't as down to earth as he was, you'd soar and fly like a helium balloon. All of the abilities that we are equipped with, must fit together. If they're not in balance, it all goes wrong.

The idea of balance is not new to Henning Jensen.

"In the depths of a depression once, I thought a lot about the fact that so many billions of people seem to get by just fine in a mentally balanced state, despite the fact that the slightest imbalance can throw you over the edge. The human brain really is the most outstanding piece of precision engineering.”

Henning Jensen is often asked if learning so much about him-self as he must have done during his depressions hasn’t been rewarding. But as he puts it –

“The answer is no. I'd rather have lived a totally superficial and happy life without the knowledge I possess now. The pain was unfathomable. I haven't learned anything from my illness. But I've learned to live with it.”

14


A CHANCE DISCOVERY

Professor Claus Munck Petersen's research career took a new turn about 18 years ago, when the results of a laboratory experiment he was conducting revealed the presence of a protein that nobody had ever encountered before. His curiosity piqued, Munck Petersen set about identifying this mysterious protein.

Barely a year later, human brain samples confirmed that he had indeed discovered a brand new protein, a receptor produced in mammals' brains, which turns out to play an important role in the well-being of the human brain. He named this protein sortilin.

Claus Munck Petersen soon established a partnership with Professor Anders Nykjær, and the duo have dedicated their lives to finding out what sortilin and its related molecules (sortilins) actually do. In 2005, they received a financial boost from the Lundbeck Foundation and were able to set up MIND.

“MIND made it possible for us to progress systematically as part of an interdisciplinary team that brings together five smaller groups at Aarhus University. We now know the precise structure of a very central part of this receptor family and we also know how a lack of sortilins in the brain affects behaviour in mice,” Munck Petersen explains.

Their experiments revealed that a lack of sortilins lowers the pain threshold in mice, alters their level of activity and impairs their memory. In other words, sortilin plays a role in key brain functions. The team now suspects that the receptors also play an important role in staving off neurological and psychiatric disorders such as Alzheimer's, ADHD and bipolar disease.

“The evidence suggests that defects in this particular receptor system can trigger the development of a number of neurologi-cal disorders. It cannot be ruled out that our findings could ultimately lead to new medicines to treat those conditions," he explains.

Professor Munck Petersen still has to pinch himself whenever he thinks about all the things that his chance discovery and early partnership with Anders Nykjær have led to.

“What started out with a single ph.d. student and a laboratory technician has paved the way for a whole new field of research. 100 scientists from 20 countries attended the conference that we hosted in summer 2010. The Centre sets the agenda in its field, and we intend to do everything in our power to maintain that leading position,” he concludes.

The world is crying out for a breakthrough in the way neurological conditions like bipolar disorder and ADHD are treated. The chance discovery that served as the catalyst for the establishment of the Lundbeck Foundation Research Centre for Membrane-receptors in Neuronal Disease (MIND) may turn out to hold the key to just such an effective new form of treatment.

MIND, Aarhus UniversityThe Lundbeck Foundation Centre for Membrane-Receptors in Neuronal Disease

Management: Professor Claus Munck Petersen and Professor Anders Nykjær

Granted 2005, DKK 50 million

15


LUCENS, Glostrup Hospital, University of CopenhagenThe Lundbeck Foundation Centre for Neurovascular Signaling

Management: Professor Jes Olesen


FROM RESEARCH CENTRE TO NEUROLOGICAL HOSPITAL

When LUCENS opened under Professor Olesen, Glostrup Hospital already had plans to reorganise and focus more closely on neurological conditions.

The professor is in no doubt that LUCENS helped facilitate the transformation, which has made Glostrup home of the largest neurological department in Denmark and one of the biggest in Europe.

“The grant from the Lundbeck Foundation was the fuel that powered the process and made it possible to turn the big plans into reality. It is one of the reasons why we now have special clinics focusing on neurological conditions like epilepsy, Parkinson's disease, dementia, apoplexy, headaches and eye disorders,” Jes Olesen explains.

He also points out that LUCENS has assumed huge impor-tance for the scientific infrastructure in the hospital and made it possible to conduct world-class translational research.

“LUCENS helped us set up a research park with state-of-the art laboratories. It means that when we just can't tease any more information out of brain scans on patients in the hos-pital, we can go straight to the research park and dig deeper with the help of animal models,” he continues.

“We don't have to wait for other researchers to take the initiative when we make new discoveries in our patients. We can do it ourselves.”

Olesen's own research speciality is headaches, and LUCENS has helped him and his colleagues gain a clearer picture of

why migraines occur and of potential ways of treating them more effectively.

“We have found that two neurotransmitters, CGRP and PACAP, which are produced in the brain and elsewhere in the body, affect migraines. If you give these substances to migraine patients, it provokes attacks because one of their actions is to cause a slight distension of the blood vessels in the brain,” the professor explains.

The researchers at LUCENS now know which specific recep-tors the neurotransmitters affect.

“The challenge now is to use this knowledge to develop medicine that will alleviate pain during migraine attacks,” he says.

Jes Olesen is convinced that Glostrup Hospital will be remem-bered 25 years from now for hosting the world's leading headache centre.

“Because that is what it will still be then!” he promises with a smile.

The fact that the Lundbeck Foundation Centre for Neurovascular Signaling (LUCENS) was established there in 2005 is one of the main reasons why Glostrup Hospital has developed into a specialist neurological hospital, according to the Head of the Center, Professor Jes Olesen.

16


CLOSING IN ON WINTER DEPRESSION

Most people in the Nordic Region are well aware that winter is a season of mood swings. The dark months can provoke anything from a mild dose of the winter “blues” to a full-blown winter depression. In this altered state of mind people need more sleep, they crave carbohydrates and they find it more difficult to get things done at work and at home.

The researchers at CIMBI have made important progress to-wards understanding this seasonal state of mind. Brain scans of healthy individuals have been used to study the impact on the serotonin system of the changing seasons and the amount of light. The serotonin system is known to play a key role in a wide range of psycho-physiological functions, including mood, aggression and pain.

The interesting point about the research is the revelation that the serotonin system is affected by the seasons, i.e. it works differently in summer than in winter.

“Serotonin and its related receptor system are part of the key to our state of mind, which may well explain why we undergo major mood swings – or even suffer full-blown winter depres-sion – during the dark months,” explains the Head of CIMBI, Professor Gitte Moos Knudsen, who is well known in interna-tional scientific circles for her work on the serotonin system.

CIMBI has gone a step further, revealing that seasonal mood swings also depend on our genes.

“We are now looking at whether the gene variant that triggers particularly pronounced seasonal fluctuations in healthy indi-viduals has a similar effect on people who suffer from winter

depression and are unable to regulate their serotonin system as the seasons change,” the professors adds.

The center is closing in on what triggers winter depression, and light and brain chemistry are the main suspects.

“We hope that we will be remembered 25 years from now as the people who got to the bottom of what exactly happens in the chemistry of the brain when someone is hit by winter depression. If we succeed, we will have solved a major social problem. At present, about one in twenty persons in the Nordic Region develops full-blown winter depression, and a much larger number experience pronounced mood changes during the dark months. It is detrimental to their quality of life and reduces their ability to do their best,” she concludes.

CIMBI is also developing brand new radioactive tracers capable of measuring serotonin activity in the human brain. The tracers are used in PET and MRI brain scans to analyse what happens in the brain when, for example, we feel sad, impulsive or ready to take a risk.

The Lundbeck Foundation Centre for Integrated Molecular Brain Imaging (CIMBI) is narrow-ing down the mechanism in the brain that triggers depression during the dark winter months in the cold North. The research revolves around light and the serotonin system.

CIMBI, Copenhagen University HospitalThe Lundbeck Foundation Centre for Integrated Molecular Brain Imaging

Management: Professor Gitte Moos Knudsen


17


INDIVIDUALISED SCHIZOPHRENIA TREATMENT

Schizophrenia has long been thought of as an umbrella term covering multiple disorders that affect different structures and signalling systems in the brain rather than being a single con-dition. However, despite indications that this is the case, the research world has lacked solid scientific evidence to go on.

CINS has changed all that. It conducted the first ever study of a large group of patients before treatment with anti-psychotic medicine, and followed up with new brain scans once treat-ment had commenced.

The results of the scans and of other advanced methods of examining how the brain processes input yielded important new information about the condition, e.g. that medicine, and perhaps substance abuse, are not the only factors that can induce changes in the schizophrenic brain. Actually, the condi-tion itself leads to changes in the part of the brain's reward system that is associated with psychotic symptoms.

“These findings are of huge significance to our understanding of the way in which psychotic symptoms such as hallucinati-ons and delusions develop in schizophrenic patients,” explains Professor Birte Glenthøj, Leader of CINS.

The reward system is pivotal to the onset of schizophrenia, and the neurotransmitter dopamine plays a key role in this. Dopamine is the body's own happiness drug. It is released into the brain when we are expecting to experience something good like money, sex or delicious food.

CINS is also challenging the previously accepted idea that changes to the dopamine system are the only way to provoke

symptoms such as delusions. In some patients, changes in the brain's serotonin system induce similar symptoms.

“This is important. It tells us that different sub-types of schizo-phrenia exist that respond differently to different treatments. For example, it means that some patients would benefit from having their serotonin 2A receptors blocked and others from having their dopamine D2 receptors blocked. It opens the prospect of individualised treatment at some point in the future,” Professor Glenthøj adds.

The research has already led to a revision of treatment guide-lines in hospitals, e.g. accentuating how the individual patient should be treated in order to alleviate symptoms such as delusions and hallucinations.

The professor hopes and expects that CINS will be remem-bered 25 years from now for the part it played in making schizophrenia a less “mysterious” disorder and how this encouraged greater overall understanding of the condition.

Changes to the brain's reward system are not the only mechanism that triggers halluci-nations and delusions in patients suffering from schizophrenia. Other structures and signal-ling systems also play a role, according to new research by the Lundbeck Foundation Centre for Clinical Intervention and Neuropsychiatric Schizophrenia Research (CINS). The goal is that one day the research will lead to individualised treatment.

CINS, Glostrup Hospital, University of CopenhagenThe Lundbeck Foundation Centre for Clinical Intervention and Neuropsychiatric Schizophrenia Research

Management: Professor Birte Glenthøj


18


COMMERCIAL ACTIVITIES – THE YEAR IN BRIEF

Activities and results for the year In terms of earnings, 2011 was not on the same level as 2010 for the Lundbeck Foundation Group because of a loss in Lundbeckfond Invest.

In 2011, the Group acquired the shareholding majority of Falck, and Falck was consolidated as a subsidiary of the Group at 1 July. The combination of the consolidation of Falck and higher revenue in the subsidiaries H. Lundbeck and ALK materially pushed up the Group's total revenue, which rose from DKK 16.9 billion in 2010 to DKK 23.6 billion in 2011, an increase of 39%.

H. Lundbeck recorded an increase in revenue in 2011 but a flat development in profit due to investments in research and

development and the launch of new products. ALK recorded higher revenue and profit in spite of major investments in developing new tablet products. Both H. Lundbeck and ALK made significant investments in 2011 in research and develop-ment and the launch of new products both in the near and the long term. As a result, the Group's combined research and development costs rose by DKK 364 million in 2011 to DKK 3,775 million. The subsidiaries' increased focus on launching new products also had an adverse impact on the Group's operating profit (EBIT) owing to higher marketing expenses. There was an increase of DKK 652 million in the Group's EBIT because both H. Lundbeck and ALK, despite higher costs, managed to increase their EBIT, and also because of the con-solidation of Falck.

The commercial activities of the Lundbeck Foundation Group focus on the three subsidiaries (the strategic investments), which are complemented by portfolio and venture investments managed by the Foundation through Lundbeckfond Invest and Lundbeckfond Ventures.

GRANT ACTIVITIES

70%40%*(67%) 57%

Specialized pharmaceutical company developing

innovative treatments for brain disorders

Global leader in allergy vaccines

International leader in assistance and

emergency services

Portfolio investments of approximately

DKK 10bn

Investments in biotech companies

* The Lundbeckfoundation holds 40% of the capital and 67% of the votes in ALK.

19


The Lundbeck Foundation's share of profit for the year before special items amounted to DKK 1,815 million in 2011 and DKK 2,880 million in 2010. Special items amounted to DKK 362 million in 2011 and related to Falck's amortisation of intangible assets and costs associated with acquisitions.

Lundbeckfond Invest recorded a total loss of DKK 72 million, against a profit of DKK 1,179 million in 2010. The large fluctu-ation from 2010 to 2011 is ascribable to Lundbeckfond Invest's exposure to the equity markets, which plunged in 2011. Lundbeckfond Invest recorded a negative return of 1% in 2011, against a positive return of 9% in 2010.

The loss recorded by Lundbeckfond Ventures in 2011 rose by DKK 15 million to DKK 70 million, and was primarily due to

the adverse price performance of listed shares in which Lund-beckfond Ventures has invested.

Operating expenses in the Foundation rose to DKK 42 million in 2011 from DKK 37 million in 2010 because of an overall increase in the number of employees, higher pension provi-sions and higher costs for administration and monitoring of subsidiaries.

The Lundbeck Foundation Group had tax expenses of DKK 1,100 million in 2011, against DKK 899 million in 2010.

In 2011, the Foundation made grants in the all-time high amount of DKK 504 million, against DKK 384 million in 2010, underlining the Foundation's ambition to make substantial contributions to research.

GROUP KEY FIGURES

Financial highlights (DKK million) 2011 2010 2009 2008 2007

Revenue 23,602 16,927 15,594 13,381 12,823Operating profit (EBIT) 4,165 3,513 2,877 2,448 2,920Net financial items -374 1,083 1,301 -1,783 562Lundbeck Foundation's share of profit for the year before special items 1,815 2,880 2,756 -608 1,888Lundbeck Foundation's share of profit for the year 1,614 2,880 2,756 -608 1,888

Grants awarded during the year 504 384 340 328 281 Equity 26,332 25,967 22,399 19,774 21,056Lundbeck Foundation's share of equity 22,551 21,396 18,574 16,371 17,531Total assets 47,459 34,732 32,109 23,588 25,000 Investments in acquisitions 4,537 178 5,133 129 -Investments in property, plant and equipment and intangible assets 1,563 989 1,471 1,427 918 Net wealth (DKK billion) 28.7 28.5 26.1 27.6 33.3

Key figures 2011 2010 2009 2008 2007

Revenue growth 39.4% 8.5% 16.5% 4.4% 13.0%EBIT margin 17.6% 20.8% 18.4% 18.3% 22.8%Return on equity before special items 8.3% 14.4% 15.8% -3.6% 11.8%Average number of employees 15,875 7,314 7,048 6,671 6,535

DKK MILLION

THE LUNDBECK FOUNDATION'S SHARE OF PROFIT 2010

3,500

3,000

2,500

2,000

1,500

1,000

500

0

H. L

und

bec

k

AL

K

Fal

ck

Sp

ecia

l ite

ms

Inve

st

Ven

ture

s-5

5

Ad

min

istr

atio

n-2

5

Tax

Bef

ore

gra

nts

Gra

nts

-38

3

Tota

l

1,728

50 0 0

1,179

3 2,8

80

2,4

97

DKK MILLION

THE LUNDBECK FOUNDATION'S SHARE OF PROFIT 2011

3,500

3,000

2,500

2,000

1,500

1,000

500

0

H. L

und

bec

k

AL

K

Fal

ck

Sp

ecia

l ite

ms

Inve

st

Ven

ture

s-7

0

Ad

min

istr

atio

n-2

9

Tax

Bef

ore

gra

nts

Gra

nts

-49

8

Tota

l

1,59

4

76

238

-20

1

-72

78 1,614

1,116

20


Value Asset

(DKK million) allocation

H. Lundbeck 14,834 50%

ALK 1,290 4%

Falck 3,277 11%

Invest 9,943 34%

Ventures 267 1%

Payable grants etc. (883) n.a.

Net wealth 28,728

NET WEALTH

RETURN 2011SHARE PRICE DEVELOPMENT 2011

H. Lundbeck 1.9%

ALK -0.2%

MSCI World Pharma (DKK) -0.2%

MSCI All World (DKK) -13.6%

NASDAQOMX C20 -14.8%

Dec/10

150

140

130

120

110

100

90

80

70

DKK

Feb/11 Apr/11 Jun/11 Aug/11 Oct/11 Dec/11

The Lundbeck Foundation's share of net profit is composed of income totalling DKK 1,594 million from H. Lundbeck, DKK 76 million from ALK and DKK 238 million from Falck, a loss in Lundbeckfond Invest of DKK 72 million, a loss in Lundbeck-fond Ventures of DKK 70 million and administrative, monito-ring and grant expenses of DKK 29 million. In addition, the Foundation's grants of DKK 504 million are deducted, less withdrawn grants of DKK 6 million.

Net wealth Based on shareholdings in the listed subsidiaries and associ-ates recognised at market value and other assets and unlisted shares recognised at carrying amount less payable grants etc.,

net wealth as of 31 December 2011 amounted to DKK 28.7 bil-lion, against DKK 28.5 billion at the end of 2010.

Movements in net wealth primarily consist of the performance of H. Lundbeck's share price, dividends from H. Lundbeck and grants. The share prices of both H. Lundbeck and ALK recor-ded a fairly flat trend in 2011 (H. Lundbeck 1.8% and ALK -0.2%) on average, but with major fluctuations over the course of the year. The flat price performance was notably better than the Danish NASDAQ OMX C20 index and the global MSCI All World Index, but compared with the international MSCI World Pharma Index, the performance was weak, although this was primarily due to the appreciation of the US dollar towards the end of the year.

MANAGEMENT AND CORPORATE GOVERNANCE

The Lundbeck Foundation is managed by a board consisting of six elected members and three staff representatives from the two companies H. Lundbeck and ALK. The Board appoints the Chief Executive Officer of the Foundation.

The Board is self-supplementing. Ordinary elections are held at the AGM. Staff representatives are elected by the employ-ees as per the procedures stipulated in Danish legislation.

The six elected members serve for a year at a time and are eligible for re-election for up to a maximum of 12 years and up to a maximum age of 75. If necessary, exceptions may be made to this rule to guarantee the desired overall competence profile of the board.

The Board elects a chair and deputy chair immediately after the AGM.

The Foundation yearly holds a minimum of four meetings plus a two-day seminar at which the Foundation’s strategy is discussed and decided upon. The Board has set up a research committee and an investment committee, which meet when necessary, at which time more detailed analyses and discus-sions are conducted on grant and investment issues. However, all decisions regarding grants and major investments are taken by the full Board.

In the Foundation’s subsidiaries, a minimum of half of the members elected at the AGM, usually including the chair, must be independent of the Foundation. The Foundation closely follows the progress of the subsidiaries and seeks to be a good owner and sparring partner for their management, while exerting influence exclusively through representation on their boards and at general meetings. The Foundation considers it important that the companies have qualified and dynamic management teams that are capable of developing the companies and generating value for all shareholders. The CEO of the Foundation usually sits on the subsidiaries’ boards of directors, typically as deputy chair, while the chair of the Foundation is not a member of the subsidiaries’ boards.

Rules of conduct have been implemented regarding potential conflicts of interest in relation to grants and investments as well as for board members and coworkers in relation to the Foundation’s grants.

The Foundation has joined the UN Global Compact. The Foun-dation has drawn up guidelines for its grants, including the recipient’s obligations to comply with the Foundation’s rules for scientific social responsibility.

The Board is subject to self-evaluation, in the form of dia-logue between the chair and individual members, followed by discussions involving the entire Board. The executive manage-ment is evaluated at separate meetings.

21


22


ment of both manic episodes associated with bipolar disorder and schizophrenia. The launch has been initiated in several markets in Asia, Australia and Canada, and more countries will follow in 2012.

New collaboration agreementsAt the beginning of 2011, Lundbeck signed an agreement with US-based Cephalon, (now Teva Pharmaceutical), regar-ding the commercial rights in Canada and Latin America to six products with indications in brain disorders and cancer, including Treanda® (bendamustine HCI) for the treatment of chronic lymphocytic leukemia (CLL) and indolent non-hodgkin lymphoma (NHL). The registration procedures for several of the products have commenced.

In November 2011, Lundbeck signed a strategic partnership agreement with Otsuka Pharmaceutical. The agreement covers the development and commercialization of pharma-ceuticals for the treatment of psychiatric disorders. Under the terms of the agreement, Lundbeck is granted co-commercial-ization rights in all areas outside Asia, Turkey and Egypt for two of Otsuka’s high-potential compounds; aripiprazole depot and OPC-34712. Aripiprazole depot is developed for the treat-ment of schizophrenia. An NDA has been accepted by the U.S. Food and Drug Administration (FDA). In Europe, the com-pound is in clinical phase III, and the expectation is to submit an Marketing Authorisation Application (MAA) to the Euro-pean Medicines Agency (EMA) in the first half of 2013. OPC-34712 recently entered clinical phase III studies in schizophre-nia and depression. The agreement with Otsuka also involves an option to enter into co-development and co-commercial-

2011 business development2011 was in many ways defined by the development of the partnering and collaboration strategy. Further, 2011 was another year of positive progress in the development port-folio, including the approval of two new products.

Partnerships and collaboration agreements2011 was a defining year for H. Lundbeck’s partnerships and collaboration agreements with entering new ones as well as realising the market potential of existing partner agreements.

Successful partnering strategyIn 2011, Lexapro® was launched in Japan by Mochida Pharma-ceutical in collaboration with Mitsubishi Tanabe Pharma. The launch was the direct result of the partnership agreement Lundbeck signed with Mochida in 2002 concerning the devel-opment of escitalopram for the Japanese market. Over the course of the years, Lundbeck has received milestone pay-ments and will now receive a prearranged royalty payment, which is a substantial percentage of the combined revenue in Japan. The launch is a milestone in the history of H. Lundbeck, given that it is the first H. Lundbeck product to be marketed in Japan.

In 2010, Lundbeck acquired the rights to Saphris®/Sycrest® (asenapine) in all markets outside the US, China and Japan from US-based Merck & Co., Ltd. The launch of Sycrest® for the treatment of manic episodes associated with bipolar disorder was initiated in the European markets in 2011 and will continue in 2012. Outside Europe, Saphris® is indicated for the treat-

Lundbeck is an international pharmaceutical company engaged in the research, development,

production, marketing and sale of pharmaceuticals targeted at disorders in the central nervous system

(brain disorders), including depression and anxiety, psychotic disorders, epilepsy and Huntington’s,

Alzheimer’s and Parkinson’s diseases, mainly based on own research. According to the World Health

Organization, WHO, more than 700 million cases of brain disorders are reported every year. These are

serious and life-threatening diseases that affect the quality of life of the patients as well as of their

relatives. Further, these diseases also involve major socio-economic costs.

23


ization of up to three of Lundbeck’s early stage compounds in certain geographical regions. The economic consequence of the agreement is among other, that H. Lundbeck will pay up to DKK 9.7 billion to Otsuka in sales, development and regulatory dependent milestone payments over the coming years.

Pipeline progressIn October 2011, Onfi™ (clobazam) for the treatment of Lennox-Gastaut syndrome (epilepsy) was approved by the FDA. In January 2012, H. Lundbeck launched Onfi™ in the US.

The clinical phase III programme for nalmefene for the treat-ment of alcohol dependence was completed in 2011, and an MAA to the EMA was submitted in December 2011. Reply from the authorities is expected at the end of 2012. Subject to approval, nalmefene will be marketed under the brand name Selincro™ and will become the first pharmaceutical in the market for the treatment of alcohol dependence that helps to reduce alcohol intake.

2011 resultRevenue for the year rose by 8% to DKK 16,007 million. The improvement was driven by increasing sales of Ebixa® for the treatment of Alzheimer’s disease and Azilect® for the treat-ment of Parkinson’s disease (+14% and +15%) and Xenazine® for the treatment of Huntington’s disease and Sabril® for the treatment of infantile spasms (+40% and +73%). Sales of Cip-ralex® against depression continued to impress in 2011, grow-ing 3% in spite of increased generic competition in several countries and the withdrawal of the product from the public market in Germany. Sales of Lexapro® increased 4%.

Research and development costs for the year amounted to DKK 3,320 million, or 21% of revenue, which was an increase of 9% compared to 2010. Sales and distribution costs for the year amounted to DKK 4,017 million equal to 25% of revenue and an increase of 15% compared to 2010. Administrative expenses amounted to DKK 2,111 million equal to 13% of revenue and an increase of 11% compared to 2010.

Operating profit (EBIT) was DKK 3,393 million, corresponding to an increase of 1% relative to 2010. The EBIT margin was 21.2% compared to 22.7% in 2010.

The profit includes a milestone payment of approximately DKK 200 million from Mochida relating to the launch of Lexapro® in Japan and income of DKK 95 million from the sale of the production facilities in Seal Sands in the UK. The profit also includes a DKK 364 million write-down relating to the restructuring of the research and development organization.

The effective tax rate for 2011 was 30.8%, consistent with the expected tax rate of 30-32%. The effective tax rate rose from 25.0% in 2010 primarily due to valuation of tax assets. Profit for the year decreased 7% to DKK 2,282 million.

The Lundbeck Foundation’s share of profit for the year amounted in 2011 to DKK 1,594 million compared to DKK 1,728 million in 2010 and the Foundation received DKK 479 million in dividends.

DKK million 2011 2010Revenue 16,007 14,765Research and development costs 3,320 3,045EBIT 3,393 3,357Profit for the year 2,282 2,466The Lundbeck Foundation’s share of profit for the year 1,594 1,728Average number of employees 5,690 5,689

24


son, the number of patients was approximately 4,300 in the 17 completed clinical studies with GRAZAX® conducted in the period 2001-2011.

In Europe, ALK is conducting the clinical study called the GRAZAX® Asthma Prevention or GAP study. This study, which is the largest ever of its kind, is designed to investigate the potential of the product to prevent the development of asthma in children and adolescents. Studies of allergic children have shown that they are up to seven times more at risk of developing asthma. The GAP study will run for five years in 11 European countries and will include approximately 800 children aged 5-12 years. The study is progressing as planned and is expected to be completed in 2015.

In 2011, ALK’s partner in North America, Merck, initiated a North American phase III clinical study to evaluate the efficacy of grass AIT (GRAZAX®) versus placebo in the treatment of grass pollen-induced allergic rhinocojunctivitis. The study includes 1,500 patients and is the largest ever conducted for grass AIT. The study is expected to be completed in 2012.

In 2011, ALK decided to accelerate the development of tablet based treatment of house dust mite allergy – MITIZAX® in Europe and initiate an additional phase III clinical study (the MERIT study) to broaden the therapeutic use of the product. The MERIT study is a phase III study, and it is intended to enrol

2011 business developmentFor ALK 2011 was defined by strategic partnerships and initiation of groundbreaking studies.

PartnershipsIn 2011, ALK entered into a partnership agreement with Torii Pharmaceutical to develop, register and commercialise MITIZAX®, among other products, in Japan. The agreement also covers ALK’s existing injection based vaccine and diag-nostic products against house dust mite allergy. Moreover, the agreement includes a research and development col-laboration targeting an allergy immunotherapy tablet (AIT) against Japanese cedar pollen allergy. In Japan, allergy to house dust mites and cedar pollen are the most frequently occuring allergies. It is estimated that 25-35 million people suffer from allergy or asthma caused by house dust mites or cedars. On entering into the agreement with Torii, ALK received a payment of DKK 224 million in 2011. The North American partnership with Merck continued in 2011 with among other Merck announcing positive results of the Ameri-can studies of tablet based treatment of grass and ragweed allergies.

Pipeline progressIn 2012, the development of ALK’s products will reach a histo-rically high level. It is expected that more than 8,000 patients will be participating in the clinical studies in 2012. In compari-

ALK is a research-driven global pharmaceutical company focusing on allergy treatment, prevention

and diagnosis. The treatment is based on immunotherapy. Patients are exposed to the allergen in the

form of an allergy vaccine. This restores the normal tolerance in their immune system and provides a

sustained reduction in the symptoms and potentially halts the development of allergies and asthma.

ALK is an international leader in the development of tablet based allergy vaccines. The first tablet

product, Grazax®, is approved in Europe, while tablets for other allergies are currently in the clinical

development phase.

25


approximately 900 adults across 86 centres in 12 European countries. The study will evaluate the efficacy and safety of the treatment of house dust mite induced allergic rhinitis. ALK is also conducting the MITRA study, which is a phase III study enrolling up to 800 patients across 105 centres in 12 European countries to evaluate the efficacy and safety of the tablet in the treatment of house dust mite induced allergic asthma. This study is expected to be completed in 2013.

2011 resultRevenue in 2011 increased by 10% to DKK 2,348 million (2010 DKK 2,159 million). The growth in vaccine sales was 5%, driven by the performance in France, the Netherlands, Spain, the Nordic countries and the USA. Vaccine sales accounted for 81% of total revenue, with the remainder being contributed by sales of adrenaline and diagnostic products, as well as revenues from partnerships.

Operating profit (EBIT) increased by 56% to DKK 299 million versus DKK 192 million in 2010, which is the highest level in ALK’s history. The profit was extraordinarily high and was positively affected in particular by milestone payments from the partners Torii and Merck, which in 2011 contributed DKK 248 million against DKK 19 million in 2010.

Research and development costs increased by 24% to DKK 455 million against DKK 366 million in 2010. The increase

was related particularly to a high level of clinical and pharma-ceutical activities, including the GAP study and initiations of European clinical studies with MITIZAX® and AVANZ®. Added to this was support for the strategic partnerships in North America and Japan and new regulatory requirements in Europe imposing stricter requirements for the documentation of the company’s non-registered product portfolio, especially in Germany. Sales and marketing expenses amounted to DKK 781 million equal to 33% of revenue. Administration expenses were DKK 204 million equal to 9% of revenue and down by 2% compared to 2010.

Income tax for the year amounted to DKK 121 million, cor-responding to an effective tax rate of 38%. The profit for the year was thus DKK 200 million.

The Lundbeck Foundation’s share of net profit for the year was amounted in 2011 to DKK 76 million compared to DKK 50 million in 2010 and the Foundation received DKK 20 million in dividends in 2012.

The Lundbeck Foundation increased its ownership in ALK during 2011 to 40% of the capital and 67% of the votes.

DKK million 2011 2010Revenue 2,348 2,159Research and development costs 455 366EBIT 299 192Profit for the year 200 128Lundbeck Foundation’s share of profit for the year 76 50Number of employees 1,724 1,612

26


Falck is a leading international supplier of pre-hospital services, healthcare, firefighting, roadside

assistance and other contingency services, with operations on five continents and in 33 countries.

Falck has four divisions: Assistance (roadside, personal and home assistance), Emergency (ambulance

and fire service), Healthcare (medical clinics, healthcare employee assistance programmes for com-

panies and pension funds and healthcare staff supply service) and Training (offshore safety and

emergency training). All of Falck’s activities are aimed at preventing accidents and illness, providing

assistance in case of accidents and emergencies, and helping people to get on with their lives after

illnesses or accidents.

In March, Falck acquired 63% of the leading South American ambulance and medical company Grupo EMI, which is head-quartered in Columbia and has approximately 270 ambulances in Columbia, Uruguay, Venezuela, Ecuador, Panama and El Salvador. Grupo EMI’s activities are based on private sub-scriptions, and the company serves approximately 750,000 customers with ambulance and medical assistance.

Falck also expanded its existing emergency services in Poland, Slovakia, Spain and Sweden. In Poland, Falck won the tender for ambulance-service provision in six regions, where the com-pany now operates 84 ambulances. In Slovakia and Spain operations were expanded by way of new fire-service con-tracts, and in Sweden Falck gained more new ambulance con-tracts, e.g. in Stockholm.

AssistanceFalck’s assistance activities are concentrated in the Nordic countries and were affected by the large amounts of snow and hard frost that hit this region in the first months of the year. In Denmark, cloudbursts and heavy rainfalls in the sum-mer months led to increased assistance activities as custo-mers made use of their subscriptions. In Norway, Finland and partly in Sweden, the severe winter weather resulted in increased revenue, since Falck services in these countries are largely based on pay-per-use. Furthermore, the number of roadside assistances rose in Norway as the result of an

New ownershipIn July 2011, Nordic Capital’s seven-year ownership of Falck ended after the Lundbeck Foundation, Kirkbi and other investors acquired the company. The Lundbeck Foundation bought 57% of the shares in Falck in two stages.

Business development in 2011In 2011, Falck came substantially closer to achieving its goal of becoming a worldwide organisation that works to prevent accidents, illness and emergency situations; that rescues and assists people in an emergency quickly and competently; and that rehabilitates people after illness and injury. Falck has expanded geographically in all of its four business areas, especially Emergency.

EmergencyFalck’s emergency activities in 2011 were characterised by a significant international expansion and growth through a num-ber of new contracts. In March, Falck acquired the American ambulance company Lifestar, which operates approximately 440 ambulances and other emergency vehicles in seven states on the US east coast. This significantly strengthened Falck’s position in the US ambulance market: the combination of Lifestar and Falck’s existing ownership of Care Ambulance made Falck the third-largest ambulance operator in the US.

27


agreement to supply roadside assistance to the customers of Norway’s largest insurance company.

HealthcareIn May, Falck’s healthcare division strengthened its position on the Danish market by acquiring the second-largest private supplier of healthcare solutions in Denmark, Healthcare Dan-mark, which provides interdisciplinary healthcare schemes for 130,000 employees in public and private companies. In addition, the international expansion continued with the acquisition of 75% of the company Starowka, which owns four medical clinics in and around the Polish capital Warsaw.

TrainingFalck’s global training activities, which are focused on safety training of employees in the offshore sector, continued to grow and expand in 2011, with no fewer than 240,000 students being trained. Training in wind-turbine operation was enhanced through the construction of a new training centre in Bremerhaven in Germany. Moreover, a 24-meter-high tower for wind-turbine training was built at Falck’s training centre in Teeside, UK. Falck also strengthened its global market position by acquiring 65% of the company Caspian Safe in Azerbaijan.

2011 results*Falck’s revenue in 2011 was DKK 10,193 million, which corre-sponds to a total growth rate of 22%. The increase is primarily

attributable to the purchase of rescue-service operations in the US and South America, but the organic growth was also positive, totalling 4%.

The operating profit before depreciation and amortisation in relation to acquisitions and special items (EBITA) was DKK 980 million, representing an increase of 17%.

The special items amounted to an income of DKK 82 million, which is attributable to a gain on the sale of securities of DKK 242 million (sale of Rural Metro shareholding), the write down of an investment in a subsidiary in Brazil of DKK 142 million, and expenses in relation to the sale of Falck A/S.

Income taxes amounted to DKK 184 million against DKK 183 million in 2010, corresponding to an effective tax rate of 26.2%. The fall in the tax rate is primarily attributable to non-taxable extraordinary items as well as higher non-deductible costs of acquisitions.

Profit for the year in 2011 amounted to DKK 516 million against DKK 458 million in 2010, representing an increase of 13%. The Lundbeck Foundation’s share of profit for the year before special items amounted to DKK 238 million, of which DKK 101 million relates to the period of 36% ownership and therefore income from associated activities, and DKK 137 million relates to the period of 57% ownership and is included in net profit after minority interests.

DKK million 2011 2010Revenue* 10,193 8,367EBITA* 980 839Profit for the year* 516 458The Lundbeck Foundation’s share of profit for the year 238 n.a.Average number of employees* 25,262 19,174

* Falck A/S' figures disclosed for 2010 and 2011. Falck Holding A/S' figures only comprise 6 months activities in 2011.

EmergencyDKK 6,385m:57%

AssistanceDKK 2,693m:24%

HealthcareDKK 1,112m:10%

TrainingDKK 1,019m:9% Emergency

DKK 435m:45%

AssistanceDKK 335m:34%

HealthcareDKK 82m:8%

TrainingDKK 128m:13%

REVENUE SPLIT EBITA SPLIT

28


2011 investment strategyThe asset allocation in Lundbeckfond Invest changed signifi-cantly in 2011. There was a reduction in the proportion of bonds and cash, while the proportion of corporate bonds and equities increased. The reallocation was partly due to the acquisition of Falck, which was funded by liquid funds, and partly due to an active investment decision to increase the share of corporate bonds and equities during the autumn. At the time, equities and corporate bonds had fallen in price, and

were considered to be attractively valued, despite the macro-economic uncertainty.

In 2011, the Lundbeck Foundation reviewed the investment strategy for Lundbeckfond Invest. One result was a decision to outsource less of the asset management of equities and corporate bonds. This follows several years of successful in-house management of corporate bonds and short-term mortgage bonds. The aim is to generate greater value by

2010

Bonds andcash54%

Credit including distressed debt and mezzanine7%

Credit including distressed debt and mezzanine7%

Listedequity30%

Unlisted equity6%

Real assets3%

2011

Bonds andcash38%

Listedequity36%

Unlisted equity9%

Real assets4%

ASSET ALLOCATION

Lundbeckfond Invest manages the Foundation’s portfolio investments and liquidity. Lundbeckfond

Invest’s primary purpose is to generate an annual profit from the Foundation’s assets and secure the

capital base and sufficient financial reserves, in order to support the development of the subsidiaries

and the Foundation’s grant-making activities. As a result, the Foundation’s strategy for Lundbeckfond

Invest is that its investments must, at all times, be diversified in terms of both sectors and asset classes.

The objective for the weighting of the various asset classes is determined by the Foundation’s Board.

Bertil From, CFO

29


SUMMARY OF ASSETS AND RETURN

Market value Return Weighted return* 12.31 2011 12.31 2010 2011 2010 2011 2010 DKK m DKK m DKK m DKK m % %

Bonds and cash 3,784 7,168 201 293 4.7 4.3Credit incl. distressed debt and mezzanine 1,330 925 -3 154 -0.3 16.7Listed equity 3,621 3,892 -276 618 -7.6 18.4Unlisted equity 835 784 44 88 5.3 13.9Real assets 373 410 -32 32 -7.9 8.8Lundbeckfond Invest total 9,943 13,179 -66 1,185 -0.7 9.4

bringing the investment management more closely into line with the Lundbeck Foundation’s long-term investment hori-zon, by acting swiftly and by taking full advantage of Lund-beckfond Invest’s special skills. It is also expected to result in cost savings.

2011 market trends2011 was characterised by economic and financial uncertainty, with sovereign debt crises in Southern Europe and Ireland adding to the turbulence. Growth fell in Europe in particular, but also in the USA. This, along with a growing fear of reces-sion, led to the stock markets falling in value. The greatest falls were in Europe and emerging markets, while the US stock market fared better, with more or less unchanged prices.

The credit markets reflected the stock markets, with falls in corporate bonds in Europe and, to a lesser extent, in the United States. These falls were particularly pronounced for low-rated loans and bonds issued by banks.

However, interest rates in the countries with the best credit ratings fared really well. The 10-year Danish government bond yield fell below 2%, from 3% at the beginning of the year.

Lundbeckfond Invest achieved a return of -1%, corresponding to DKK -66 million, which is acceptable given the economic uncertainty and market conditions.

Bonds and cash contributed positively, as falling interest rates led to capital gains, but the yield was affected by the Foun-dation already having a short average duration for its bond portfolio at the start of the year. This was because it had been thought that there was a risk of interest rates rising, as long-term rates were already low. Corporate bonds also benefited from the declining government bond rates, but the wider credit spread led to an overall loss. The loss was limited by the fact that further investments were made in the asset class during the autumn, when the debt crisis was at its highest and corporate bond prices were at their lowest.

Listed equity generated a loss in line with the markets. Unlis-ted equity, however, generated a good return. The profit includes substantial returns on buy-out funds, which were helped by some profitable exits, while the portfolio of biotech funds made a negative contribution. Biotech funds were trans-ferred from Lundbeckfond Ventures to Lundbeckfond Invest during the year.

Real assets, including the property company Obel-LFI Ejen-domme A/S, reported negative returns. The negative returns were mainly due to falling share prices on the portfolio of listed property companies.

DANISH INTERST RATES STOCK MARKET INDEX IN DKK

4%

3%

2%

1%

0%JanJan FebFeb MarMar AprApr MayMay JunJun JulJul AugAug SepSep OctOct NovNov DecDec

10 years 3 months US Europe Emerging markets The world

*Return on average holding over the period.

110

100

90

80

70

30


Development 2011With an investment framework of DKK 1.4 billion until the end of 2014, Lundbeckfond Ventures is one of the major inter-national venture funds and one of the largest in European life sciences. During its first couple of years, Ventures has estab-lished a broad network of contacts with other life-science investors and operators in Europe and the USA. As a conse-quence, 2011 was a highly active year, which saw a significant increase in the number of new investment opportunities. In the course of 2011, Lundbeckfond Ventures invested in three companies, in each case as the lead or co-lead investor. These new companies span a broad range of life sciences.

New investmentsIn January 2011, investment was made in Nexstim, Finland. Nexstim develops, manufactures and markets Navigated Brain Stimulation devices for pre-surgical mapping of brain func-tions e.g. prior to removal of brain tumors and for therapy of diseases of the Central Nervous System. The system is based on transcranial magnetic stimulation. The equipment is now well established in leading international neurosurgical centres. Stimulation of specific areas of the brain has in addition a number of potential therapeutic applications, including treatment of severe depression.

Acacia Pharma in the UK was founded by an experienced management team and focuses specifically on developing

medicines to treat the side effects of cancer treatment and the complications to which cancer gives rise. For example, at present the company has a new formulation of a known drug in Phase II clinical trials for the new use of treating nausea and vomiting, a side effect that is often associated with both chemical and radiation therapy. The investment in Acacia was made in March 2011.

In July 2011, an investment was made in Bonesupport in Sweden. Bonesupport has developed and markets Cerament™, a new bonecement material that stimulates and supports the regeneration of bone and itself remodels into bone. The mate-rial can be injected, it is non-toxic to patients and surgical staff, and has a range of future applications, including mixing the material with antibiotics and using it as an alternative to minor bone transplants.

Portfolio 2011As an active investor, Ventures allocates significant resources to its existing portfolio. A number of portfolio companies achieved positive results in 2011, both in development projects and in terms of business goals.

Acacia reported positive data from Phase IIa clinical trials of APD209 for the treatment of cancer cachexia, and began Phase II clinical trials of APD515 for the treatment of dry mouth in patients receiving chemotherapy treatment for advanced cancer.

Lundbeckfond Ventures is an internationally active “evergreen” life-science venture fund. The

evergreen structure allows a flexible investment strategy with a long-term investment perspective.

Ventures’ invests broadly in life science, primarily in the development of new medicines and medical

technology. It is essential that the projects address clear medical needs and are of high scientific and

technical quality. The primary focus is on investment in biotech/pharma companies with early clinical

results, and in medtech companies that have achieved regulatory approval or where such approval is

underway.

Mette Kirstine Agger, Managing Partner

31


Veloxis Pharmaceuticals published positive data from a Phase III trial with LCP-Tacro in stable patients who have previously undergone kidney transplants. The results showed, as desired, the same efficiency as for the current product, Prograf. A more detailed analysis revealed a trend toward fewer acute rejections of transplanted kidneys in the group treated with LCP-Tacro. These results form the basis of an application for regulatory approval in Europe. The company also began the final Phase III trial of LCP-Tacro in patients who have recently undergone kidney transplants, and concluded a commercial agreement regarding the already marketed product, Feno-glide.

The development of a new treatment for peanut allergy went a step further when DBV Technologies completed a Phase Ib trial with their innovative patch technology in US, which showed that the product is well tolerated and without serious side effects. The company was granted fast-track status by the FDA because of the obvious medical need.

Syntaxin’s partner Allergan began Phase II clinical trials with AGN-214868 for pain and overactive bladder, respectively. Another major industry player in botulinum toxin-based drugs,

Ipsen Pharmaceuticals, established a new research collabo-ration with Syntaxin in recognition of its strong technology platform and patent position.

The FDA approved Asante’s insulin pump, Pearl™, and Nexstim published a series of results from the use of its equipment for planning surgical interventions in the brain.

Financial performanceLundbeckfond Ventures made a loss of DKK 70 million in 2011, compared to a loss of DKK 50 million in 2010, mainly due to Veloxis’ share price.

UKwww.acacia.com

USAwww.asantesolutions.com

Swedenwww.bonesupport.com

Francewww.dbv-technologies.com

Denmarkwww.epitherapeutics.dk

Finlandwww.nexstim.com

UKwww.syntaxin.com

Denmarkwww.veloxis.com

New drug candidates all in clinical Phase II for treatment of side effects arising from chemotherapy and other forms of cancer treatment.

A disposable insulin pump, Pearl™, which is both user-friendly and competitively priced.

Markets Cerament™, a bonecement material that stimulates and supports the re-generation of bone tissue and remodels into bone. The material can be injected, is non-toxic and has a range of future potential uses, including the ability to mix it with antibiotics.

New epicutaneous patch primarily for the treatment of food allergies, with a focus on peanut allergy in the most advanced project. The administration via the skin is par-ticularly suitable for the treatment of allergies where other forms of treatment entail the risk of anaphylactic shock.

Development of potential new drugs for the treatment of cancer, based on inter-nationally leading research in epigenetics by Prof. Kristian Helin and his team at the University of Copenhagen.

New technology that, by means of precise and targeted transcranial magnetic stimu-lation – and without surgery – can map the brain’s speech and motor centres, e.g. before neurosurgery. The technology also has a number of other potential applications.

Development of new biological medicines based on botulinum toxin analogues forthe treatment of disease through the targeted inhibition of cellular secretion. The main programme for pain treatment is in Phase II under a license agreement with Allergan.

Development of LCP-Tacro™ for immunosuppression in Phase III, specifically targeting kidney transplants. The first product based on its formulation technology platform MeltDose ® was approved by the FDA in 2008 (LCP, NASDAQOMX).

PORTFOLIO 2011

Targeted Secretion Inhibitors

Targeted Secretion Inhibitors

technologiesdbv


32

Social responsibilityThe Lundbeck Foundation through its annual grants to re-search and its subsidiaries has a significant position in Danish research, education and business. This manifests itself as follows:

•TheLundbeckFoundationownsandsupportsthedevelop- ment of H. Lundbeck, ALK and Falck, whose products and servicescontributetohumanhealth,well-beingandsafety. The Foundation's ownership of these companies secures their ties with Denmark.

•TheLundbeckFoundationgrantslargesumsforscientific research of high international standard with ties to Denmark, such as research within the biomedical and natural sciences, forthebenefitoftheDanishsocietyasawhole.

•Makingrisk-bearingventureinvestmentsbothnationallyand internationallyinthelifesciences.

Policies and codes of conduct for H. Lundbeck, ALK and Falck'ssocialresponsibilityaredeterminedbytherespectivecompanies' boards, on which the Lundbeck Foundation is represented. For further description, please refer to the sub-sidiaries'annualreportsfor2011andtheirrespectivewebsites.In addition, the Lundbeck Foundation has entered UN Global Compact.

Business and financial risksThe Lundbeck Foundation Group seeks to ensure a reason-ablebalancebetweenriskexposureandvaluegeneration.Themain risks are the business and financial risks associated with the operations of the subsidiaries H. Lundbeck, ALK and Falck, LundbeckfondInvestandLundbeckfondVentures.

The Foundation's risk management is focused on its port-folioinvestments.Themarketriskonportfolioinvestmentsismanagedbylimitingmaximumexposuretoindividualassetclassesandunderlyingassets.ThelimitationsaresetbytheFoundation'sinvestmentpolicy,whichisadoptedbytheBoard.Theinvestmentpolicyalsolimitstheinvestmentlevelsthatcanbedecidedbythemanagement,theInvest-mentCommitteeandtheBoard.Weeklyportfolioreportsaresubmitted to the management.

Regarding risk management in H. Lundbeck, ALK and Falck, please refer to their annual reports for 2011, since these com-paniesindividuallysetpoliciesandproceduresregardingriskmanagement. In addition, the Lundbeck Foundation continu-ouslymonitorsthedevelopmentinthesubsidiaries.

Events after the end of the financial yearTherehavebeennosignificanteventssincetheendofthefinancialyear.

Future expectationsThe Lundbeck Foundation Group's results will depend on howthebusinessactivitiesofH.Lundbeck,ALKandFalckdevelopsandonreturnsfromtheportfolioandventureinvest-ments. For a more detailed description of the expected developmentofthesubsidiaries,pleaserefertowww.lundbeck.com, www.alk-abello.com and www.falck.com. In 2012, the Lundbeck Foundation has a target of making regular grants worth DKK 300 million and up to DKK 200 milliontostrategicinitiatives.

SOCIALRESPONSIBILITY,RISKMANAGEMENTAND FUTURE EXPECTATIONS

33


CONTENTS

Incomestatementfortheperiod1January–31December 34Statementofcomprehensiveincomefortheperiod1January–31December 35Balance sheet at 31 December 36 ManagementstatementandIndependentauditor'sreport 38Cashflowstatementfortheperiod1January–31December 40Statementofchangesinequityfortheperiod1January–31December 41

Notes1.Accountingpolicies 412.Revenue 523.Staffcosts 524.Depreciation,amortisationandimpairment 565.Feestoauditorsappointedatthegeneralmeeting 576.Specialitems 57 7.Netfinancialitems 57 8.Taxonprofitfortheyear 58 9.Grantsfortheyear 59 10. Intangible assets 60 11.Property,plantandequipment 61 12.Investmentsinassociates 62 13. Financial assets and financial risks 63 14.Deferredtax 65 15.Inventories 67 16.Tradereceivablesandotherreceivables 67 17.Incometax 68 18.Cashresources 6819. Assets held for sale 6920. Capital base 6921.Otherreserves 7022.Minorityinterests 7023.Pensionsandsimilarobligations 70 24.Liabilitiesrelatingtoacquisitionsandminorityinterests 73 25.Otherprovisions 74 26.Mortgage,bank,leasingandrepodebt 74 27.Adjustments 76 28.Workingcapitalchanges 76 29.Businesscombinations 76 30.Financialrisksandfinancialinstruments 7931.Contractualobligations 85 32.Guaranteesandcontingentliabilities 86 33.Relatedparties 88 34.Eventsafterthebalancesheetdate 88 Groupoverview 89

CONSOLIDATEDFINANCIALSTATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS

34



2011 2010 2009 Note DKKm DKKm DKKm Revenue 2 23,602 16,927 15,594Costofsales 3,4 (7,568) (3,611) (3,242)Gross profit 16,034 13,316 12,352 Researchanddevelopmentcosts 3,4 (3,775) (3,411) (3,545)Distributioncosts 3,4 (5,074) (4,239) (3,846)Administrativeexpenses 3,4,5 (3,020) (2,153) (2,083)Profit from operations before special items (EBIT) 4,165 3,513 2,878 Specialitems 6 (362) - -Profitfromoperations 3,803 3,513 2,878 Incomefrominvestmentsinassociates 12 100 - -Financialincome 7 813 1,643 1,897Financialexpenses 7 (1,187) (560) (596)Profit before tax 3,529 4,596 4,179 Taxonprofitfortheyear 8 (1,100) (899) (735)Profit for the year 2,429 3,697 3,444 Minorityinterests’shareofprofitfortheyear (815) (817) (688)Lundbeck Foundation's share of profit for the year 1,614 2,880 2,756 Grantsfortheyear,net 9 (498) (383) (340) Lundbeck Foundation's profit for the year after grants 1,116 2,497 2,416

LundbeckFoundation'sshareofprofitfortheyear 1,614 2,880 2,756 Special items after tax 302 - - Minorityinterests’shareofspecialitemsaftertax (101) - - Lundbeck Foundation's share of profit for the year before special items 1,815 2,880 2,756

INCOMESTATEMENTFORTHEPERIOD1JANUARY–31DECEMBER

35


2011 2010 2009 Note DKKm DKKm DKKm

Profitfortheyear 2,429 3,697 3,444 Currencytranslation,foreignsubsidiaries 105 328 (36)Currencytranslationconcerningadditionstonetinvestmentsinforeignsubsidiaries 115 240 (444)Realised exchange gains/losses concerning additions tonetinvestmentsinforeignsubsidiaries 20 - -Adjustment,deferredexchangegains/losses,hedging 64 (214) 8Exchangegains/losses,hedging(transferredtothehedgeditems) (127) 163 (1)Exchangegains/losses,trading(transferredfromhedging) - 1 22Valueadjustmentofinteresthedginginstruments (56) - -Repaymentofinteresthedginginstruments 15 - -Accumulatedexchangelossondivestmentofinvestmentsinassociates - 2 -Otherequityentriesconcerningassociates (18) (1) -Fairvalueadjustmentofavailable-for-salefinancialassets 21 (6) (4) 27Taxonothercomprehensiveincome 8 (19) (51) 93Other comprehensive income 93 464 (331) Comprehensiveincome 2,522 4,161 3,113 Minorityinterests’shareofcomprehensiveincomefortheyear 22 (843) (965) (586)Lundbeck Foundation's share of comprehensive income 1,679 3,196 2,527 Currencytranslationofforeignsubsidiariesandcurrencytranslationconcerningadditionstonetinvestmentsinforeignsubsidi-ariesandtaxrelatedtotheseitems,totallingDKK197million(2010:DKK505million),isrecognisedinthecurrencytranslationreserveinequity.Otheritemsandtaxrelatedtosuchitemsarerecognisedinreserveforhedgingtransactionsandreserveforfairvalueadjustmentsofavailable-for-salefinancialassets,respectively,atalossofDKK77million(2010:DKK50million)andDKK6million(2010:DKK4million)andrecognisedunderretainedearningsinequityintheamountofDKK49million(2010:DKK135million).

STATEMENTOFCOMPREHENSIVEINCOMEFORTHEPERIOD1JANUARY–31DECEMBER


36




Goodwill 10 9,733 4,298 3,987Contractualcustomerrelationshipsetc. 10 3,005 - -Productrights 10 4,270 3,591 3,552Patentandlicenserights 10 192 323 252Otherintangibleassets 10 386 379 400Projectsinprogress 10 64 127 81Intangible assets 10 17,650 8,718 8,272 Landandbuildings 11 3,180 2,785 2,709Plantandmachinery 11 581 543 613Otherfixturesandfittings,toolsandequipment 11 1,094 303 351Leaseholdimprovements 11 58 - -Prepaymentsandotherassetsunderconstruction 11 788 637 496Property, plant and equipment 11 5,701 4,268 4,169 Investmentsinassociates 12 15 - -Financialassetsatfairvaluethroughprofitorloss 13 9,784 10,002 10,522Available-for-salefinancialassets 13 89 21 26Otherreceivables 13 87 85 67Deferredtax 14 483 178 181Financial assets 10,458 10,286 10,796 Non-current assets 33,809 23,272 23,237 Inventories 15 1,985 1,801 1,781 Tradereceivables 16 3,995 2,366 2,190Otherreceivables 16 716 469 492Receivablesfromassociates 55 - -Incometax 17 134 261 218Prepayments 367 277 235Receivables 5,267 3,373 3,135 Securities 18 2,315 496 1,109 Cash 18 3,985 5,790 2,847 Assets held for sale 19 98 - - Current assets 13,650 11,460 8,872 Assets 47,459 34,732 32,109

BALANCESHEETAT31DECEMBER,ASSETS

37




Capitalbase 20 2,225 2,050 1,900Otherreserves 21 (180) (294) -Retainedearnings 20,506 19,640 16,674 Lundbeck Foundation's share of equity 22,551 21,396 18,574 Minorityinterests'shareofequity 22 3,781 4,571 3,825 Total equity 26,332 25,967 22,399 Payablegrants 389 308 326Pensionsandsimilarobligations 23 342 316 285Deferredtax 14 1,871 601 785Liabilitiesrelatingtoacquisitionsandminorityinterests 24 512 - -Otherprovisions 25 191 280 277Mortgagedebt 26 2,262 1,885 1,884Bankandleasingdebt 26 6,143 10 763Employeebondsandotherdebt 76 60 65Non-current liabilities 11,786 3,460 4,385 Payablegrants 530 416 297Pensionsandsimilarobligations 23 19 12 15Liabilitiesrelatingtoacquisitionsandminorityinterests 24 43 - -Employeebonds 13 - -Otherprovisions 25 217 216 186Mortgagedebt 26 1 1 1Bankandleasingdebt 26 283 10 808Repodebt 26 97 297 -Tradepayables 2,280 1,377 1,131Incometax 17 244 137 156Otherpayables 3,877 2,322 2,038Prepayments 2,32 1,639 517 693Current liabilities 9,243 5,305 5,325 Liabilities relating to assets held for sale 19 98 - - Liabilities 21,127 8,765 9,710 Equity and liabilities 47,459 34,732 32,109

BALANCESHEETAT31DECEMBER,EQUITYANDLIABILITIES

38


TheBoardofDirectorsandtheExecutiveManagementhavetodaypresentedtheannualreportoftheLundbeckFoun-dationforthefinancialyearended31December2011.

Theconsolidatedfinancialstatementshavebeenpreparedinaccordance with International Financial Reporting Standards asadoptedbytheEUandDanishdisclosurerequirementsforannual reports, and the financial statements of the Foundation havebeenpreparedinaccordancewiththeDanishFinancialStatements Act.

We consider the accounting policies used to be appropriate. Accordingly,theconsolidatedfinancialstatementsandthefinancialstatementoftheparentfoundationgiveatrueand

fairviewoftheGroup’sandtheFoundation’sassets,liabilitiesandfinancialpositionat31December2011,andoftheGroup’sandtheFoundation’sactivitiesandtheGroup’scashflowsforthefinancialyear1January–31December2011.

Webelievethatthemanagement’sreviewincludesafairreviewofdevelopmentsintheGroup’sandtheFoundation’sactivitiesandfinances,resultsfortheyearandtheGroup’sandtheFoundation’sfinancialpositioningeneralaswellasa fair description of the principal risks and uncertainties to which the Group and the Foundation are exposed.

Werecommendthattheannualreportbeapprovedattheannual meeting.

MANAGEMENTSTATEMENT

Copenhagen,2May2012

Executive Management

ChristianDyvig

Board of Directors

MikaelRørthChairman

PovlKrogsgaard-Larsen

Kim KlitgaardElectedbytheemployees

JørgenHunoRasmussenDeputyChairman

Gunhild Waldemar

KenLiljegrenElectedbytheemployees

Thorleif Krarup

Jes Østergaard

Peter Adler WürtzenElectedbytheemployees

39


To the Board of Directors of the Lundbeck Foundation

Report on the consolidated financial statements and the Foundation's financial statementsWehaveauditedtheconsolidatedfinancialstatementsandthe Lundbeck Foundation's financial statements for the financialyear1January–31December2011,whichcomprisethe income statement, balance sheet, statement of changes inequityandnotes,includingtheaccountingpolicies,forthe Group as well as the Foundation, and the statement of comprehensiveincomeandthecashflowstatementfortheGroup. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards asadoptedbytheEUandDanishdisclosurerequirementsforannual reports, and the Foundation's financial statements are prepared in accordance with the Danish Financial Statements Act.

Managements’ responsibility for the consolidated financial statements and the Foundation's financial statementsManagementisresponsibleforthepreparationofconsoli-datedfinancialstatementsthatgiveatrueandfairviewinaccordance with International Financial Reporting Standards asadoptedbytheEUandDanishdisclosurerequirementsforannual reports as well as the preparation of financial state-mentsoftheFoundationthatgiveatrueandfairviewinaccordance with the Danish Financial Statements Act, and for suchinternalcontrolasManagementdeterminesisnecessaryto enable the preparation of consolidated financial statements and financial statements of the Foundation that are free from material misstatement, whether due to fraud or error.

Auditor's responsibilityOurresponsibilityistoexpressanopinionontheconsolidatedfinancial statements and the Foundation's financial state-ments based on our audit. We conducted our audit in accor-dance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that wecomplywithethicalrequirementsandplanandperformthe audit to obtain reasonable assurance about whether the consolidated financial statements and the Foundation's finan-cial statements are free from material misstatement.

Anauditinvolvesperformingprocedurestoobtainauditevi-dence about the amounts and disclosures in the consolidated financial statements and the Foundation's financial state-ments.Theproceduresselecteddependontheauditor’sjudgement,includingtheassessmentoftherisksofmaterialmisstatement of the consolidated financial statements and the Foundation's financial statements, whether due to fraud or er-

ror. In making those risk assessments, the auditor considers internalcontrolrelevanttothepreparationofconsolidatedfinancial statements and the Foundation's financial statements thatgiveatrueandfairviewinordertodesignproceduresthat are appropriate in the circumstances, but not for the purposeofexpressinganopinionontheeffectivenessoftheentity'sinternalcontrol.Anauditalsoincludesevaluatingtheappropriateness of accounting policies used and the reason-ablenessofaccountingestimatesmadebyManagement,aswellastheoverallpresentationoftheconsolidatedfinancialstatements and the Foundation's financial statements.

Webelievethattheauditevidencewehaveobtainedissuffi-cientandappropriatetoprovideabasisforourauditopinion.

Ouraudithasnotresultedinanyqualification.

OpinionIn our opinion, the consolidated financial statements and the Foundation'sfinancialstatementsgiveatrueandfairviewoftheGroup’sassets,liabilitiesandfinancialpositionat31December2011andoftheresultsoftheGroup’soperationsandcashflowsforthefinancialyear1Januaryto31December2011 in accordance with the International Financial Reporting StandardsasadoptedbytheEUandDanishdisclosurerequirements for annual reports.

Further, in our opinion, the Foundation's financial statements giveatrueandfairviewoftheFoundation’sassets,liabilitiesand financial position at 31 December 2011 and of the results oftheFoundation’soperationsforthefinancialyear1January–31December2011inaccordancewiththeDanishFinancialStatements Act.

Statement on the management reviewPursuanttotheDanishFinancialStatementsAct,wehavereadthemanagementreview.Wehavenotperformedanyfurther procedures in addition to the audit of the consolidated financial statements and the Foundation's statements.

Onthisbasis,itisouropinionthattheinformationprovidedinthemanagementreviewisconsistentwiththeconsolidatedfinancial statements and the Foundation's financial state-ments.

Copenhagen,2May2012DeloitteStatsautoriseretRevisionspartnerselskab

INDEPENDENTAUDITOR’SREPORT

Anders DonsState Authorised Public

Accountant

MartinFaarborgState Authorised Public

Accountant

40


2011 2010 2009 Note DKKm DKKm DKKm Profitfromoperationsbeforespecialitems(EBIT) 4,165 3,513 2,878Specialitems (51) - -Adjustments 27 1,489 1,193 929Workingcapitalchanges 28 23 106 323Cash generated from operations 5,626 4,812 4,130

Financialreceipts 258 464 455Dividendreceived 113 91 96Financialpayments (317) (313) (250)Incometaxpaidfortheyear 17 (989) (1,177) (767)Incometaxpaid/receivedregardingpreviousyears 17 80 (51) 24Authorisedgrantspaid (304) (283) (281)Cash flows from operating activities 4,467 3,543 3,407

Acquisitionofcompanies 29 (4,537) (178) (5,133)Investmentsinintangibleassets (1,005) (468) (1,010)Investmentsinproperty,plantandequipment (558) (521) (461)Disposalofproperty,plantandequipment 26 3 4Investmentsinotherfinancialassetsatfairvaluethroughprofitorloss (8,020) (6,042) (6,293)Saleofotherfinancialassetsatfairvaluethroughprofitorloss 6,084 8,067 5,916Changeinotherfinancialassets (11) (5) (18)Cash flows from investing activities (8,021) 856 (6,995)

Loanproceeds 6,305 297 2,507Repaymentofloans (4,222) (1,560) (999)Changeinfinancialliabilities - 2 (10)Buybackofsharesfromminorityinterests (76) (24) (11)Employeebonds (9) - 8Dividendpaidtominorityinterests 22 (252) (211) (166)Cash flows from financing activities 1,746 (1,496) 1,329

Changeincash (1,808) 2,903 (2,259)Cashat1January 5,790 2,847 5,092Unrealisedexchangeadjustmentsfortheyear 3 40 14Cash at 31 December 18 3,985 5,790 2,847

CASHFLOWSTATEMENTFORTHEPERIOD1JANUARY–31DECEMBER


41


Lundbeck Minority

Foundation's interests'

Capital Other Retained share of share of Total

base reserves earnings equity equity equity

DKKm DKKm DKKm DKKm DKKm DKKm

Equity at 1 January 2011 2,050 (294) 19,640 21,396 4,571 25,967

Profitfortheyear 1,614 1,614 815 2,429

Othercomprehensiveincome 114 (49) 65 28 93

Comprehensive income - 114 1,565 1,679 843 2,522

Grantsauthorisedduringtheyear,net (498) (498) (498)

Minorityinterests'shareofdividends - (252) (252)

Buybackofsharesfromminorityinterests (29) (29) (52) (81)

MinorityinterestsinFalckacquisition - (1,329) (1,329)

Increaseinminorityinterests 1 1 2 3

Adjustmentofprovision

foracquisitionofminorityinterests (19) (19) (14) (33)

Incentiveprogrammes 21 21 12 33

Other transactions - - (524) (524) (1,633) (2,157)

Increaseofcapitalbase 175 - (175) - - -

Equity at 31 December 2011 2,225 (180) 20,506 22,551 3,781 26,332

Equity at 1 January 2010 1,900 (745) 17,419 18,574 3,825 22,399

Profitfortheyear 2,880 2,880 817 3,697

Othercomprehensiveincome 451 (135) 316 148 464

Comprehensive income - 451 2,745 3,196 965 4,161

Grantsauthorisedduringtheyear,net (383) (383) (383)

Minorityinterests'shareofdividends - (211) (211)

Buybackofsharesfromminorityinterests (7) (7) (18) (25)

Incentiveprogrammes 16 16 10 26

Other transactions - - (374) (374) (219) (593)

Increaseofcapitalbase 150 - (150) - - -

Equity at 31 December 2010 2,050 (294) 19,640 21,396 4,571 25,967

STATEMENTOFCHANGESINEQUITYFORTHEPERIOD1JANUARY-31DECEMBER-NOTE1


1. ACCOUNTING POLICIES

Theconsolidatedfinancialstatementshavebeenpreparedinaccordance

withInternationalFinancialReportingStandards(IFRS)asadoptedby

theEUandtheDanishStatutoryOrderonAdoptionofIFRSissuedpur-

suant to the Danish Financial Statements Act.

The consolidated financial statements for 2011 are the first consolidated

financial statements prepared for the Lundbeck Foundation. The Lundbeck

Foundationhasnotpreviouslypreparedconsolidatedfinancialstatements,

asthesewerepreparedbythewhollyownedholdingandinvestmentcom-

panyLundbeckfondInvestA/S.

IFRS 1, First-time adoption of IFRS, has been applied for the presentation of

consolidated financial statements according to IFRS. In accordance with this

standard,anIFRSopeningbalancesheethasbeenpreparedasat1January

2010,andliketheaccountingfiguresfor2011andthecomparativefigures

for2010thishasbeenpreparedinaccordancewiththestandards(IFRS/

IAS)andinterpretations(IFRIC/SIC)inforceatthebalancesheetdateofthe

transitionyear,i.e.at31December2011.TheGrouphasappliedtheexemp-

tionclause,underwhichthereisnorequirementfora5-yearoverviewof

changesinpensionobligations.Theinformationhasthereforebeenprovided

prospectivelyfrom1January2010.

TheconsolidatedfinancialstatementsarepresentedinDanishkroner(DKK),

whichalsoisthefunctionalcurrencyoftheLundbeckFoundation.

42


•Salesofescitalopramareinvoicedattheagreedprice,butonlyapropor-

tion(theminimumprice)oftheinvoicedpriceisrecognisedasincomeat

thetimeofdelivery.

•Thedifferencebetweentheinvoicedpriceandtheminimumpriceof

Forest'sinventoriesisrecognisedinthebalancesheetasprepayments.

•Aftertheendofeachquarter,thefinalsettlementpriceiscalculated.The

differencebetweenthefinalcalculatedsettlementpriceandtheinvoiced

price is recognised as income and settled with Forest, and the difference

betweentheinvoicedpriceandtheminimumpricerecognisedintheba-

lancesheetasprepaymentatthetimeofdeliveryisrecognisedasincome.

In connection with a potential launch of generic escitalopram in the USA,

theagreementallowsForesttoconvertescitalopraminventoriesintogeneric

escitalopram.Inconnectionwithaconversionofescitalopraminventories

intogenericescitalopram,theminimumpricewillbeadjustedbyanyrepay-

menttoForestofpartoftherecognisedminimumpayment.Thisadjustment

will be expensed in the financial statements.

License income and income from research collaborations

Licenseincomeandroyaltiesfromoutlicensedproductsandnon-refundable

downpaymentsandmilestonepaymentsrelatingtoresearchcollaborations

totalledDKK1,088millionin2011(DKK657millionin2010,whichisrecog-

nisedintheincomestatementunderrevenuewhenthefollowingcriteria

havebeenmet:

•Thepaymentrelatestoresearchresultsalreadyobtained.

•Themostsignificantrisksandbenefitsassociatedwiththeassetsoldare

transferredtothebuyer.

•TheGroupdoesnotretainmanagementcontroloftheassetsold.

•Revenuefromtheindividualpaymentsinanoverallagreementcanbe

clearlyseparatedandcalculatedreliablyatfairvalue.

•ItisprobablethattheGroupwillreceivepaymentfortheassetsold.

•TherearenofurtherdeliveryobligationsfortheGroupconcerningthe

asset sold.

Research and development costs

ResearchanddevelopmentcoststotalledDKK3,775millionin2011(DKK

3,411millionin2010).Developmentcostsarecapitalisedifthecriteriafor

suchcapitalisationaredeemedtohavebeenmetanditisfoundtobepro-

bablethatfutureearningswillcoverthedevelopmentcosts.Duetoavery

longdevelopmentperiodandsignificantuncertaintyinrelationtothedeve-

lopmentofnewproducts,intheopinionoftheGroup,developmentcosts

shouldnotnormallybecapitalisedinthebalancesheetuntilthedevelop-

mentoftheproducthasbeencompletedandallthenecessarypublicreg-

istrationandmarketingapprovalshavebeenobtained.Developmentcosts

relatingtoindividualminordevelopmentprojectsrunningforshort-term

periodsandsubjecttolimitedriskarecapitalisedunderotherintangible

assets.Otherwise,developmentcostswillberecognisedintheincomestate-

mentastheyareincurred.

Intangible assets

Goodwill and product rights and contractual customer relationships etc.

represent a significant part of the Group's total assets, amounting to DKK

17,008millionin2011(DKK7,889millionin2010).Themajorityofthevalueof

these items arose through the acquisition of companies. In connection with

acquisitions,theindividualassetsandliabilitiesarere-assessedtoensure

thatbothrecognisedandunrecognisedvaluesaremeasuredatfairvalue.

Especiallyforintangibleassetsforwhichthereisoftennoactivemarket,

thecalculationoffairvaluemayinvolveuncertainty.Intangibleassetswith

indefinitelivesandintangibleassetsinprogressaretestedforimpairmentat

Theannualreporthasbeenpreparedunderthehistoricalcostconvention,

exceptthatthefollowingassetsandliabilitiesaremeasuredatfairvalue:

derivativefinancialinstrumentsandfinancialinstrumentsatfairvalue.

The consolidated financial statements are presented in accordance with the

newandrevisedstandards(IFRS/IAS)andinterpretations(IFRIC)which

applyforthefinancialyear.

Future IFRS changes

At the date of the publication of these consolidated financial statements,

anumberofnewandamendedstandardsandinterpretationshavenotyet

enteredintoforceorhavenotyetbeenadoptedbytheEU.Therefore,they

are not included in the consolidated financial statements. None of these

changesareexpectedtohaveamaterialimpactonfutureconsolidated

financial statements.

ThefutureamendmentstoIAS19Employeebenefitsentailthatactuarial

gainsandlossesmustberecognisedinthestatementofcomprehensive

income and that the corridor approach is no longer permitted. The Lund-

beckFoundationcurrentlyrecognisesallcostsassociatedwithdefined

benefit pension plans under staff costs in the income statement and does

notapplythecorridorapproach.Apartfromthefactthatactuarialgainsand

lossesmusthenceforthberecognisedinthestatementofcomprehensive

income,theamendmentsarenotexpectedtomateriallyaffectrecognition

or measurement in future consolidated financial statements.

Accounting policies and estimates critical to financial reporting

In the preparation of the consolidated financial statements in accordance

withIFRSandgenerallyacceptedaccountingprinciples,itisnecessaryfor

Managementtomakecertainestimatesandassumptionsasnotallaccoun-

tingitemsandaccrualscanbecalculatedwithcertainty.

Management’sestimatesarebasedonhistoricaldata,recentinformation

availableatthetimeofpresentationofthefinancialstatementsandother

assumptionsconsideredreasonableunderthegivencircumstances.The

actualoutcomemaydifferfromtheseestimates.

TheestimatesaremadebythemanagementoftheLundbeckFoundation,

theH.LundbeckGroup,theALKGroupandtheFalckGroup,respectively.

Itisbelievedthatthefollowingaccountingpoliciesandaccountingestimates

are critical to the Group's financial reporting for 2011.

Income from Forest

Income from Forest from the sale of citalopram and escitalopram amounted

toDKK2,535millionin2011(DKK2,443millionin2010).Theinvoicedpriceis

agreed between Forest and H. Lundbeck at the beginning of each calendar

year.Thepriceiscalculatedonthebasisofexpectationsforthecoming

year'sdevelopmentinthecomponentsincludedintheroyaltycalculation.

Thesecomponentsare:Forest’snetsellingprices,quantitiesusedinsold

products, quantities used in samples, quantities wasted during processing,

andthevariousdosagelevelsofthefinishedgoods.Incomefromsalesof

escitalopram to Forest is recognised as follows:

NOTE 1


43


Amortisation and depreciation periods and scrap values

Inthedeterminationofthecarryingamountofintangibleassetsand

property,plantandequipment,estimatesarerequiredoftheestimated

economiclivesoftheassetsandofscrapvalues.

Recognition and measurement

Assets are recognised in the balance sheet when it is probable that future

economicbenefitswillflowtotheGroupandthevalueoftheassetcanbe

measuredreliably.Liabilitiesarerecognisedinthebalancesheetiftheyare

probableandcanbemeasuredreliably.

Oninitialrecognition,assetsandliabilitiesaremeasuredatcostorfairvalue.

Subsequently,assetsandliabilitiesaremeasuredasdescribedbelowfor

eachindividualitem.

Certain financial assets and financial liabilities are measured at amortised

cost,implyingtherecognitionofaconstanteffectiverateofinterestto

maturity.Amortisedcostisstatedasoriginalcostlessanyprincipalpay-

mentsandplus/lesstheaccumulatedamortisationofanydifference

between cost and the nominal amount. Recognition and measurement

take into consideration gains, losses and risks that arise before the time of

presentation of the consolidated financial statements and that confirm or

invalidatemattersexistingatthebalancesheetdate.

Incomeisrecognisedintheincomestatementasearnedandincludesvalue

adjustmentsoffinancialassetsandfinancialliabilitiesmeasuredatfairvalue

or amortised cost. In addition, expenses incurred to generate the income for

theyeararerecognised,includingdepreciation,amortisation,impairment

lossesandprovisionsaswellasreversalsofamountspreviouslyrecognised

in the income statement as a result of changed accounting estimates.

Consolidated financial statements

The consolidated financial statements include the Lundbeck Foundation and

subsidiariescontrolledbytheFoundation.Controlisachievedwherethe

Foundationdirectlyorindirectlyholdsmorethan50%ofthevotingrightsor

isotherwiseabletoexerciseoractuallyexercisescontrol.

CompaniesinwhichtheGroupholdsbetween20%and50%ofthevoting

rights and/or exercises significant influence but not control are regarded as

associates. Unrealised gains on transactions with associates are eliminated in

proportiontotheGroup’sshareoftheenterprise.

AssociatesincludedintheGroup'sdocumentedinvestmentstrategyare

recognisedasfinancialassetsmeasuredatfairvaluethroughprofitorloss.

Basis of consolidation

The consolidated financial statements are prepared on the basis of the

financial statements of the Foundation and the subsidiaries, which are all

prepared in accordance with the Group's accounting policies.

Theconsolidatedfinancialstatementsarepreparedbyaddingtogetheruni-

formitemsandeliminatingintra-groupincomeandexpenses,investments,

balancesanddividendsaswellasrealisedandunrealisedgainsandlosses

on transactions between the consolidated companies. Account is taken of

the tax effect of these eliminations.

leastonceayearorifthereisevidenceofimpairment.Contractualcustomer

relationshipsetc.identifiedatacquisitionswereprimarilyacquiredwitha

viewtofurtherdevelopingtheacquiredbusinessareasandmarketsand

establishing positions in new markets. As a result, a large part of the pur-

chasepriceshasbeenallocatedtogoodwill.Thevalueinuseoftheproduct

rightsiscalculatedbydiscountingtheestimatemadebyManagementover

theexpectedcashflowsduringabudgetperiodofatleastfiveyearswith

dueconsiderationtopatentexpiry.Forthecalculationofthevalueinuse

of the assets, the Group uses different discount factors depending on the

individualareasofactivityandManagement'sexpectationsforgrowthand

terminalvalue.Thesefactorsarecrucialfortheassessmentofanyimpair-

mentandthusforthefinalcalculationofthefairvalueofintangibleassets.

ItisapreconditionfortheretentionofthevalueoftheGroup'srightsthat

suchrightsarerespected.ItistheGroup'spolicytodefendtheserights

wherevertheymaybeviolated.

Financial assets

Financialassetsincludeinvestmentsinlistedandunlistedequityinstruments

andsecurities,includinglifescienceinvestmentsrecognisedattheirfair

value.Investmentsinunlistedequityinstrumentsandsecuritiesattheendof

2011amountedtoDKK1,294million(DKK1,136millionin2010).

Theassessmentoffairvalueoftheseinvestmentsissubjecttoconsiderable

risk.Thisappliesespeciallytolifescienceinvestmentsbecausethevalueof

thesebusinessesislinkedtothecompany'softenlong-terminvestmentin

thedevelopmentofnewpharmaceuticalsandtechnologies.

Managementestimatesthefairvalueofunlistedinvestmentsinaccordance

withInternationalPrivateEquityandVentureCapitalValuationGuidelines.

i.e.onthebasisofrelevantvaluationmethodsbasedoncomparabletransac-

tionsonmarketconditions,capitalincreasesandthelike.Ifthefairvalue

cannotbedeterminedwithsufficientreliability,theinvestmentsinquestion

arerecognisedatcostlessanyimpairment.TheGroupassessesateach

balancesheetdatewhetherthereisobjectiveevidencethataninvestment

oragroupofinvestmentsisimpaired.Animpairmentlossisrecordedif

the Group assesses that lack of compliance with business plans affect the

calculationoffairvalueorifsubsequentcapitalinjectionsaremadeatlower

prices.

Purchase price allocation in business combinations

In connection with allocation of purchase price in business combinations,

calculationsaremadeoffairvalueofacquiredassetsandliabilities.Since

such calculations are based on expected future cash flows relating to the

acquiredassetsandliabilities,thereisaninherentuncertaintyinrespectof

whether such cash flows will materialise as expected. In accordance with

IFRS3,thepurchasepriceallocationsinbusinesscombinationsmaybe

adjustedforupto12monthsfromthedateofacquisition.

Provisions for acquisition of minorities

ProvisionsforacquisitionofminoritiesamountedtoDKK555millionat31

December2011.Whencalculatingthefairvalueofissuedputoptionswhich

committheGrouptoacquireminorityinterestsinsubsidiaries,theManage-

ment applies estimates of, e.g. the subsidiaries' future financial performance,

the likelihood of option holders exercising their selling right and the time

ofexercise.Thesefactorsareofmaterialimportancetothefairvaluecalcu-

lation,whichisthereforesubjecttouncertainty.

NOTE 1


44


Minority interests

Oninitialrecognition,minorityinterestsareeitherrecognisedatfairvalue

(includingthefairvalueofgoodwillrelatedtominorityinterestsinthe

acquiredcompany)orattheminorityinterests'shareoftheacquiredcom-

pany'sidentifiableassets,liabilitiesandcontingentliabilitiesmeasuredatfair

value(excludingthefairvalueofgoodwillrelatedtominorityinterestsinthe

acquiredcompany).Themeasurementbasisforminorityinterestsisselected

foreachindividualtransaction.

Acquisition and divestment of minority interests

Increasesandreductionsofminorityinterestsaretreatedforaccounting

purposesastransactionswithowners,intheircapacityasowners.Asa

result,anydifferencesbetweenadjustmenttothecarryingamountofmino-

rityinterestsandthefairvalueoftheconsiderationreceivedorpaidare

recogniseddirectlyinequity.

When put options are issued as part of the consideration for business com-

binations,theminorityinterestsreceivingputoptionsareconsideredtohave

beenredeemedontheacquisitiondate.Theminorityinterestsareeliminated

andadebtobligationisrecognisedatfairvalueoninitialrecognition.Fair

valueiscalculatedasthepresentvalueoftheexercisepriceoftheoption.

Subsequent measurements are made at amortised cost with amortisation

andvaluechangestoequitybeingrecognisedonanongoingbasis.

Issued put options relating to business combinations with an acquisition

datebefore1January2010willstillberecognisedinaccordancewithIFRS3

(2004).Accordingly,thesubsequentmeasurementwillbemadeatamor-

tised cost with ongoing recognition of interest expenses in the income

statementandvaluechangesingoodwill.Anysubsequentdividendpay-

ments to option holders are recognised as a financial expense in the income

statementinthecaseswheretheoptionpriceisindependentofdividend

payments.Dividendpaymentsareincludedinthedeterminationofthecost

oftheputoptionsincaseswheretheoptionpriceisadjustedfordividend

paymentsreceived.

Translation of foreign currency

Afunctionalcurrencyisdeterminedforeachofthereportingenterprisesof

theGroup.Thefunctionalcurrencyisthecurrencyintheprimaryeconomic

environmentinwhichthereportingentityoperates.Transactionsincurren-

ciesotherthanthefunctionalcurrencyaretransactionsinforeigncurrencies.

On initial recognition, transactions denominated in foreign currencies are

translated at standard rates which approximate the actual exchange rates

at the transaction date. Exchange differences arising between the exchange

rateatthetransactiondateandtheexchangerateatthedateofpayment

are recognised in the income statement as net financials except in case of

hedge accounting. In case of hedge accounting, such differences are recog-

nised in the same item as the hedged item.

Receivables,payablesandothermonetaryitemsdenominatedinforeign

currenciesthathavenotbeensettledatthebalancesheetdatearetrans-

lated at the exchange rates at the balance sheet date. The difference

between the exchange rates at the balance sheet date and the rates at the

timethereceivableorpayableiscreatedorrecognisedinthelatestconsoli-

Financialstatementitemsofsubsidiariesarefullyconsolidated.Profitforthe

yearandequityattributabletominorityinterestsinsubsidiariesthatarenot

fullycontrolledareincludedintheconsolidatedprofitandequityandstated

as separate line items.

Business combinations

Newlyacquiredcompaniesarerecognisedintheconsolidatedfinancial

statements from the date of acquisition. Companies sold or discontinued are

recognised in the consolidated income statement up to the time of sale or

discontinuance.Expectedcostsrelatedtodivestmentordiscontinuanceare

included in the calculation of gains or losses.

Acquired businesses are accounted for using the purchase method of

accounting, according to which the identifiable assets, liabilities and contin-

gentliabilitiesoftheacquiredcompaniesaremeasuredatfairvalueatthe

timeofacquisition.Accountistakenofthetaxeffectoftherevaluations

made.Thecostofabusinessisgenerallythefairvalueoftheconsideration

paid. If the final determination of the consideration is contingent on one or

morefutureevents,thevaluethereofwillberecognisedatfairvalueatthe

date of acquisition. Changes to contingent considerations are recognised

in the income statement. Put options issued in connection with acquisitions

andthevalueofwhichiscontingentonfutureeventswillberecognisedas

part of the consideration at the date of acquisition. The put options issued

aresubsequentlymeasuredatfairvalue.Anychangestothefairvalueof

issuedputoptionsafterinitialrecognitionarerecognisedinequity.Costs

directlyattributabletothebusinesscombinationarerecognisedinthe

incomestatementasincurred.Adjustmentsofcommitmentsinconnec-

tionwithconditionalconsiderationorissuedputoptionsthevalueofwhich

iscontingentonfutureeventsconcerningbusinesscombinationswithan

acquisitiondatebefore1January2010willstillberecognisedinaccordance

withIFRS3(2004).Accordingly,theadjustmentsarerecognisedingoodwill

untiltheconditionshavebeenmetortheissuedputoptionsexercised.

Positivedifferences(goodwill)betweenthecostoftheacquiredbusiness

andthefairvalueoftheacquiredidentifiableassets,liabilitiesandcontin-

gentliabilitiesarerecognisedunderintangibleassets.Negativedifferences

(negativegoodwill)betweenthecostoftheacquiredbusinessandthefair

valueoftheacquiredidentifiableassets,liabilitiesandcontingentliabilities

are recognised in the income statement at the time of acquisition. Goodwill

arisingfromacquiredbusinessesisadjustedwithinamaximumperiodof12

monthsfromtheacquisitionifadditionalinformationaboutthefairvalueat

the time of acquisition of assets, liabilities and contingent liabilities acquired

isobtainedaftertheacquisition.However,goodwillwillnotberecognisedby

an amount exceeding the expectations of future income from the acquiree.

Goodwillandfairvalueadjustmentsinconnectionwiththeacquisitionof

independentforeignentities(subsidiariesorassociates)areaccountedfor

as assets and liabilities in the acquiree and translated at the exchange rate at

the balance sheet date.

Gains or losses on disposal or discontinuance of subsidiaries and associates

Gains or losses on the disposal or discontinuance of subsidiaries and associ-

ates are calculated as the difference between the selling price or the discon-

tinuanceamountandthecarryingamountofnetassetsatthetimeofsale

as well as anticipated costs relating to sale or discontinuance. The resulting

gain or loss is recognised in the income statement together with accumula-

tedcurrencytranslationadjustmentspreviouslyrecognisedinothercompre-

hensiveincome.Aproportionalcapitalreductiondoesnotresultinrecycling

ofaccumulatedexchangerateadjustmentsthroughprofitorloss.

NOTE 1


45


financialassetsforwhichthefairvalueismeasuredonthebasisofvaluation

techniqueswhichincludeinputsnotbasedonobservablemarketdata.

Income statement

Revenue: Pharmaceuticals for the treatment of brain disorders and allergy

Revenuecomprisesinvoicedsalesfortheyearlessreturnedgoodsand

revenue-basedtaxesconsistingmainlyofvalueaddedtaxesandforeign

revenue-baseddrugtaxes.

Salessubjecttoapriceadjustmentclauseareincludedinrevenueatthe

timeofdeliveryattheminimumprice.Thebalanceoftheinvoicedpriceis

recognisedinthebalancesheetasaprepaymentandissubsequently

includedinrevenuewhenthepricehasbeenfinallydetermined.Theprice

isfinallydeterminedastheproductisresoldbythecustomer.

Moreover,revenueincludeslicenseincomeandroyaltiesfromoutlicensed

productsaswellasnon-refundabledownpaymentsandmilestonepayments

relatingtoresearchanddevelopmentcollaborations.

Inaddition,incomefromthereductionofinvestmentsinresearchenterprises

consideredtorepresentthesaleofresearchresultsisrecognisedasrevenue.

See Accounting policies and estimates critical to financial reporting for a

description of the accounting treatment of income from Forest and of

license income and income from research collaborations.

Revenue: Emergency, Assistance, Healthcare and Training sectors

Revenuerepresentsthevalueofservicesandgoodsdeliveredandinvoiced

subscriptions attributable to the financial period, and is recognised in the

incomestatementifdeliveryandtransferofrisktothebuyerhavetaken

placebeforeyear-end,andiftheincomecanbereliablymeasuredandis

expectedtobereceived.

Thevalueofservicesrenderedisrecognisedonthebasisofthedelivered

percentageofthetotalservice.

Revenuefromsubscriptionsisallocatedtotheincomestatementona

straight-line basis.

Revenuefromsalesofgoodsisrecognisedwhenthesignificantrisksand

rewardsofownershiphavebeentransferredtothebuyer.

Revenueismeasuredatthefairvalueoftheagreedconsiderationexclud-

ingVATandothertaxescollectedonbehalfofthirdparties.Alldiscounts

grantedarerecognisedinrevenue.

Cost of sales

Costofsalescomprisesthecostofgoodsandservicessold.Costincludes

the cost of raw materials, transport costs, consumables and goods for resale,

direct labour and indirect costs of production, including costs for operating

and maintaining production facilities and equipment, amortisation/deprecia-

tionandimpairmentlossesrelatingtosuchassets.Costofsalesmoreover

includesexpensesinconnectionwithqualityassuranceofproductsandany

writedowntonetrealisablevalueofunsaleableandslow-movingitems.Cost

ofsalesalsoincludesexternalassistancetogeneratetheyear'sincome.

dated financial statements is recognised in the income statement under net

financials in respect of unhedged items and under the same item for hedged

items.

Onrecognitionofforeignsubsidiarieshavingafunctionalcurrencydifferent

fromthatusedbytheFoundation,non-monetaryaswellasmonetaryitems

are translated at the exchange rates at the balance sheet date. Exchange

differences arising from the translation of both the balance sheets and the

income statements of the foreign subsidiaries are recognised in the Group's

statementofcomprehensiveincomeunderothercomprehensiveincome.

Foreignexchangeadjustmentofreceivablesfromordebttosubsidiaries

whichareconsideredpartoftheFoundation'soverallinvestmentinthesub-

sidiaryinquestionisrecognisedintheGroup'sstatementofcomprehensive

incomeunderothercomprehensiveincome.

Onrecognitionofforeignassociateshavingafunctionalcurrencydifferent

fromthatusedbytheFoundation,assetsandliabilitiesaretranslatedatthe

exchange rates at the balance sheet date, while the income statement is

translatedataverageexchangeratesfortheyear.Exchangedifferencesaris-

ing from the translation of foreign associates are recognised in the Group's

statementofcomprehensiveincomeunderothercomprehensiveincome.

Financial instruments

Forwardexchangecontractsandotherderivativesareinitiallyrecognised

inthebalancesheetatfairvalueonthevaluedateandaresubsequently

remeasuredatfairvalueatthebalancesheetdate.Positiveandnegativefair

valuesareincludedinotherreceivablesandotherpayablesrespectively.

Changesinthefairvalueofderivativesclassifiedashedginginstruments

and meeting the criteria for hedging future cash flows are recognised in the

Group'sstatementofcomprehensiveincomeunderothercomprehensive

income. Income and expenses related to such hedging transactions are

transferredfromothercomprehensiveincomeoninvoicingofthehedged

item and included in the same item as the hedged item.

Changesinthefairvalueofderivativesclassifiedashedginginstruments

andmeetingthecriteriaforhedgingthefairvalueofarecognisedassetor

liabilityarerecognisedintheincomestatementtogetherwithchangesinthe

valueofthehedgedassetorliability.

Forderivativeswhichdonotqualifyforhedgeaccounting,changesinfair

valuearerecognisedintheincomestatementundernetfinancialsasthey

arise.

Changesinthefairvalueofderivativesusedtohedgenetinvestmentsin

independent foreign subsidiaries or associates and which otherwise meet

therelevantcriteriaarerecognisedintheGroup'sstatementofcomprehen-

siveincomeunderothercomprehensiveincome.

Securities,available-for-salefinancialassetsandderivativesmeasuredat

fairvalueareclassifiedasbelongingtolevels1-3dependingonthepricing

methodapplied.Level1includesfinancialassetsforwhichthefairvalueis

measuredonthebasisofquotedprices(unadjusted)inactivemarketsfor

identicalassets.Level2includesfinancialassetsandfinancialliabilitiesfor

whichthefairvalueismeasuredonthebasisofdirectlyorindirectlyobserv-

ableinputsotherthanthequotedpricesincludedinlevel1.Level3includes

NOTE 1


46


TheLundbeckFoundationhasoptedtousesection3(4)oftheDanishCor-

poration Tax Act. Under these rules, the taxable income of Lundbeckfond

InvestA/SisconsideredtohavebeenearnedbytheLundbeckFoundationif

thetaxableincomeisdistributedasdividendstotheLundbeckFoundation.

SincetheLundbeckFoundation'staxableincomeisregularlyoffsetagainst

grantsfortheyearandprovisionsforfuturegrants,nocurrentordeferred

tax is recognised.

Taxfortheyear,whichconsistsoftheyear'scurrenttaxandthechangein

deferred tax, is recognised in the income statement as regards the amount

thatcanbeattributedtothenetprofitorlossfortheyearanddirectlyinthe

statementofcomprehensiveincomeunderothercomprehensiveincomeas

regards the amount that can be attributed to items under other compre-

hensiveincomeordirectlyinequity.Exchangerateadjustmentsofdeferred

taxarerecognisedaspartofthemovementsindeferredtaxinthebalance

sheet.

Thecurrenttaxchargefortheyeariscalculatedbasedonthetaxratesand

rules applicable at the balance sheet date.

Special items

Specialitemscomprisemajorone-offamountsnotdirectlyattributableto

theGroup'sordinaryactivities,andtheyconcernmatterssuchasamortisa-

tion on contractual customer relationships identified at acquisitions and

transaction costs associated with acquisitions.

Balance sheet

Intangible assets

Goodwill

On initial recognition, goodwill is measured and recognised as the excess

ofthecostorfairvalueoftheacquiredbusinessoverthefairvalueofthe

acquired assets, liabilities and contingent liabilities. On recognition of good-

will,thegoodwillamountisallocatedtothoseoftheGroup’sactivitiesthat

generateseparatecashflows(cash-generatingunits).

Goodwillisnotamortised,butistestedforimpairmentatleastonceayear

(impairmenttest),orifthereisevidenceofimpairment.

Development projects

Clearlydefinedandidentifiabledevelopmentprojectsarerecognisedas

intangibleassetswherethetechnicalrateofutilisationoftheproject,the

availabilityofadequateresourcesandapotentialfuturemarketordevelop-

mentopportunityinthecompanycanbedemonstratedandwherethe

intentionistomanufacture,marketorusetheprojectifthecostcanbe

measuredreliablyanditisprobablethatthefutureearningscancover

productionandsellingexpenses,administrativeexpensesaswellasthe

developmentcosts.Otherdevelopmentcostsarerecognisedintheincome

statement as the costs are incurred.

Aftercompletionofthedevelopmentwork,developmentcostsareamor-

tisedonastraight-linebasisovertheexpectedusefullife.Fordevelopment

projectsprotectedbyintellectualpropertyrights,themaximumamortisation

periodistheremainingtermoftherightsconcerned.Ongoingdevelopment

projectsaretestedforimpairmentatleastonceayear,orifthereisevidence

of impairment.

Research and development costs

Researchanddevelopmentcostscompriseexpensesincurredduringthe

yearinconnectionwiththeGroup'sresearchanddevelopmentfunctions,

including wages and salaries, amortisation/depreciation and impairment and

otherindirectcostsaswellascostsrelatingtoresearchanddevelopment

collaborations on in-licensed products.

Researchcostsarealwaysrecognisedintheincomestatementastheyare

incurred.

Developmentcostsarecapitalisedifanumberofspecificcriteriaforcapita-

lisingthesecostsaredeemedtohavebeenmet.Otherwise,development

costswillberecognisedintheincomestatementastheyareincurred.


descriptionofconditionsforcapitalisingdevelopmentcosts.

Distribution costs

Distribution costs comprise expenses incurred in connection with the distri-

butionoftheGroup'sproductssoldduringtheyearandinconnectionwith

salescampaigns,etc.launchedduringtheyearunderreview,includingdirect

distribution and marketing costs, salaries etc. for the sales and marketing

functions, as well as amortisation/ depreciation and impairment and other

indirect costs.

Administrative expenses

Administrativeexpensescompriseexpensesincurredduringtheyearforthe

management and administration of the Group, including expenses in con-

nectionwiththeadministrativefunctions,management,officepremisesand

officeexpenses,aswellasamortisation/depreciationandimpairmentand

other indirect costs.

Results of investments in associates

The proportionate share of the results of associates is recognised in the

consolidated income statement after tax and elimination of the proportion-

ateshareofanyintra-groupgainsandlossesandafterdeductionofany

writedownsoftheequityinvestments.

Net financials

Net financials include interest income and expenses, including the interest

componentoffinancialleasepayments,whicharerecognisedintheincome

statementattheamountsrelatingtothefinancialyear.Netfinancialsalso

includevalueadjustmentsoffinancialassetsandrealisedandunrealised

gainsandlossesoninvestments,unhedgeditemsdenominatedinforeign

currenciesaswellasforwardcontractsandotherderivativesnotusedfor

hedge accounting, realised exchange gains and losses concerning addi-

tionstonetinvestmentsinforeignsubsidiariesthatarerecycledfromother

comprehensiveincome.Dividendstocapitalholderswhohavereceivedput

options in connection with business combinations are recognised as a finan-

cialexpenseinthecaseswheretheoptionpriceisindependentofdividend

paymentsandotherfinancialexpenses.

Tax

TheGroup'scontrolledDanishcompaniesarejointlytaxedwithLundbeck-

fondInvestA/Sasadministrationcompany.ThecurrentDanishincometax

liabilityisallocatedamongthecompaniesofthetaxpoolinproportionto

theirtaxableincome(fullallocationsubjecttoreimbursementinrespectof

taxlosses).

NOTE 1


47


years

Buildings 25-50

Installations 10

Plantandmachinery 3-10

Vehiclesbycategory 5-12

Other fixtures and fittings, tools and equipment 3-10

Leaseholdimprovementsmax. 10

Thedepreciationbaseiscostlesstheestimatedresidualvalueattheend

oftheexpectedusefullife.Thecostofatotalassetisdividedintosmaller

componentsthataredepreciatedseparatelyifsuchcomponentshavediffe-

rentusefullives.Depreciationmethods,usefullivesandresidualvaluesare

re-assessedannually.

Depreciation is recognised in the income statement under cost of sales,

distributioncosts,administrativeexpensesandresearchanddevelopment

costs,respectively.

Thecostsofmaintainingproperty,plantandequipmentarerecognisedin

theincomestatementastheyareincurred,eitherdirectlyintheincome

statement or as part of indirect costs of production.

Costsincurredthatincreasetherecoverableamountoftheassetconcerned

areaddedtotheasset'scostasanimprovementandaredepreciatedover

theexpectedusefullifeoftheimprovement.

Gainsorlossesonthesaleorretirementofitemsofproperty,plantand

equipmentarecalculatedasthedifferencebetweenthecarryingamount

andthesellingpricereducedbycostsrelatingtodivestmentordiscontinu-

ance. Gains and losses are recognised in the income statement under the

same item as the associated depreciation.

Impairment

Goodwill is written down through the income statement in those cases

wherethecarryingamountexceedsthefuturenetincomeexpectedfrom

thecash-generatingunit(CGU)towhichthegoodwillrelates(recoverable

amount).Intheimpairmenttest,thediscountedexpectedfuturecashflows

(valueinuse)foreachCGUarecomparedtothecarryingamountsofgood-

will and other net assets.

Thecarryingamountofintangibleassetsandproperty,plantandequipment

isanalysedinconnectionwiththepreparationoftheconsolidatedfinancial

statementsifthereareindicationsthatthecarryingamountofanasset

mayexceedtheexpectationsoffutureincomefromtheasset(recoverable

amount).Ifthisanalysisconcludesthatthefutureexpectednetincomefrom

theassetwillbelowerthanthecarryingamount,thecarryingamountwillbe

reducedtothehigheroffairvaluelesscosttosellandvalueinuse.Impair-

ment losses are recognised in the income statement under the same items

as the associated depreciation or amortisation.

Investments in associates

Investmentsinassociatesarerecognisedandmeasuredintheconsolidated

financialstatementsaccordingtotheequitymethod,whichentailsthatthe

investmentsaremeasuredinthebalancesheetattheproportionateshare

oftheassociate'snetassetvaluecalculatedinaccordancewiththeGroup'

accounting policies less or plus unrealised intra-group gains and losses and

plusthecarryingamountofgoodwill.

Other intangible assets

Acquiredintellectualpropertyrightsintheformofproductrights,contrac-

tual customer relationships, patents, licenses, brand names and software are

measured at cost less accumulated amortisation and impairment. The cost of

softwarecomprisesthecostofplanning,includinglabourandcostsdirectly

attributabletotheproject.

Productrightsareamortisedonastraight-linebasisovertheeconomiclives

oftheunderlyingproducts.Contractualcustomerrelationshipsaremeasured

at cost less accumulated depreciation and impairment. Intangible assets

acquiredonacquisitionareamortisedovertheexpectedeconomiclife,

estimatedtobe3to10years.Patentsareamortisedoveramaximumofthe

remaininglifeofthepatent.Licensesareamortisedovertheperiodofthe

agreement.Softwareisamortisedovertheexpectedeconomiclife,estima-

tedtobe3to5years.Theeconomiclivesoflargeadministrativesystemsare

estimatedtobe8years.Amortisationcommenceswhentheassetisready

to be brought into use, which means at the time of commercialisation.

Depreciation is recognised in the income statement under cost of sales,

distributioncosts,administrativeexpensesandresearchanddevelopment

costs,respectively.

Otherintangibleassetswithindeterminableusefullivesarenotamortised

buttestedforimpairmentatleastonceayear,orifthereisevidenceof

impairment.

Borrowing costs to finance the manufacture of other intangible assets are

recognised in the cost price if such borrowing costs relate to the production

period. Other borrowing costs are expensed.

Gainsandlossesonthedisposalofdevelopmentprojects,patentsand

licenses are measured as the difference between the selling price less cost

tosellandthecarryingamountatthetimeofsale.


descriptionofthecalculationofthefairvalueofintangibleassets.

Property, plant and equipment

Property,plantandequipmentaremeasuredatcostlessaccumulated

depreciation and impairment. Land is not depreciated.

Costincludesthecostsofpurchaseandexpensesdirectlyattributableto

thepurchaseuntiltheassetisreadyforuse.Inthecaseofassetsmanufac-

turedbythecompany,costincludesexpensesdirectlyattributabletothe

manufacture of the asset, including materials, components, subsupplies and

labour.

Assetsheldunderfinanceleasesarerecognisedunderproperty,plantand

equipmentandmeasuredatthelowerofthefairvalueandvalueinuseof

thefutureleasepaymentsattheinceptionofthelease.Assetsheldunder

financeleasesaredepreciatedovertheusefullivesoftheassetsor,ifshorter,

overtheleaseterm.

Borrowingcoststofinancethemanufactureofproperty,plantandequip-

ment are recognised in the cost price if such borrowing costs relate to the

production period. Other borrowing costs are expensed.

Property,plantandequipmentaredepreciatedonastraight-linebasisover

theexpectedusefullivesoftheassets,whichareexpectedtobeasfollows:

NOTE 1


48


Inventories

Raw materials, packaging and goods for resale are measured at the latest

known cost at the balance sheet date, which equals cost computed accord-

ing to the FIFO method. Work in progress and finished goods manufac-

turedbythecompanyaremeasuredatcost,i.e.thecostofrawmaterials,

consumables, direct labour and indirect costs of production. Indirect costs

of production include materials and labour as well as maintenance of and

depreciationonthemachines,factorybuildingsandequipmentusedinthe

manufacturingprocessaswellasthecostoffactoryadministrationand

management. Indirect costs of production are allocated based on the normal

capacityoftheproductionplant.

Inventoriesarewrittendowntonetrealisablevalueifitislowerthanthe

costprice.Thenetrealisablevalueofinventoriesisdeterminedastheselling

pricelesscostsofcompletionandcostsnecessarytomakethesaleandis

determinedtakingintoaccountmarketability,obsolescenceanddevelop-

ments in the expected selling price.

Receivables

Currentreceivablescomprisetradereceivablesandotherreceivablesarising

intheGroup'snormalcourseofbusiness.Otherreceivablesrecognisedun-

derfinancialassetsarefinancialassetswithfixedordeterminablepayments

thatarenotquotedinanactivemarketandarenotderivativefinancial

instruments.

Oninitialrecognition,receivablesaremeasuredatfairvalue,whichusually

correspondstothenominalvaluelesswritedownstocountertheriskofloss

calculatedonthebasisofanindividualevaluation.Aprovisionaccountis

used for this purpose.

Prepayments

Prepaymentsconsistofexpensesrelatingtosubsequentfinancialyears.

Prepaymentsaremeasuredatcost.

Securities

The bond portfolio and other securities, which are included in the Group's

documentedinvestmentstrategyforexcessliquidity,orbondswithaterm

tomaturityoflessthanoneyear,arerecognisedundercurrentassets,are

measuredatthevaluedateandmeasuredatthemarketpriceathebalance

sheet date. Both realised and unrealised gains and losses are recognised in

the income statement under net financials.

Equity

Authorised grants

Grantsareconsideredequitymovementsandarerecognisedasaliabilityat

thetimewhenthegranthasbeenauthorisedbytheBoardofDirectorsand

announcedtotherecipient.Authorisedgrantsnotyetdisbursedarerecog-

nisedinlong-termorshort-termliabilities,respectively.

Hedging reserve

Hedge transactions that meet the criteria for hedging future cash flows and

forwhichthehedgedtransactionhasyettoberealisedarerecognisedin

equityunderthehedgingreserve.Valueadjustmentsconcerninghedging

transactionsusedtohedgetheGroup'snetinvestmentinsuchentitiesare

recognisedinequityunderthehedgingreserve.

The proportionate share of the result of the associate is recognised in the

incomestatementaftertaxandeliminationoftheproportionateshareofany

intra-groupgainsandlossesandafterdeductionofanywritedownsofthe

investments.Theproportionateshareofalltransactionsandeventsrecog-

niseddirectlyintheassociate'sothercomprehensiveincomeisrecognisedin

theGroup'sstatementofcomprehensiveincomeunderothercomprehensive

income.

Investmentsinassociateswithanegativecarryingamountarerecognised

atDKK0.Receivablesandotherlong-termfinancialassetsconsideredto

formpartoftheoverallinvestmentintheassociatearewrittendownbyany

remainingnegativenetassetvalue.Tradereceivablesandotherreceivables

arewrittendownonlytotheextenttheyaredeemedtobeirrecoverable.A

provisiontocovertheremainingnegativenetassetvaluewillonlybemade

iftheGrouphasalegalorconstructiveobligationtocovertheliabilitiesof

therelevantassociate.

Financial assets

SecuritiesthatareincludedintheGroup'sdocumentedinvestmentstrategy

inaccordancewiththefairvalueoptionofIAS39FinancialInstruments:

RecognitionandMeasurementarerecognisedonthebasisofthevaluedate

atfairvalueandaresubsequentlymeasuredatmarketpriceorestimatedfair

valueatthebalancesheetdate.Bondswithatermtomaturityoflessthan

oneyeararerecognisedincurrentassets.Bothrealisedandunrealisedgains

and losses are recognised in the income statement under net financials.

Financialassetsaremeasuredatfairvaluethroughprofitorloss,including

investmentsinassociatesiftheyareincludedintheGroup'sdocumented

investmentstrategy.

Bonds forming part of repo transactions, i.e. the selling of bonds to be

repurchased at a later date, remain in the balance sheet as financial assets,

andtheamountreceivedonrepotransactionsisrecognisedasrepodebt.

Returns on such bonds are recognised in the normal manner under finan-

cials.

Thefairvalueoflistedinvestmentsiscalculatedusingofficialcurrently

quotedprices.Thecalculationoffairvalueofunlistedinvestments,including

lifescienceinvestments,ismadeinaccordancewithInternationalPrivate

EquityandVentureCapitalValuationGuidelines.i.e.onthebasisofrelevant

valuationmethodsbasedoncomparabletransactionsonmarketconditions,

capitalincreasesandthelike.Ifthefairvaluecannotbedeterminedwithsuf-

ficientreliability,theinvestmentsinquestionarerecognisedatcostlessany

impairment. The Group assesses at each balance sheet date whether there is

objectiveevidencethataninvestmentoragroupofinvestmentsisimpaired.

Assessmentsofinvestmentsinunlistedequityinstrumentsandsecurities,

includinglifescienceinvestments,includeanassessmentofwhetherthe

companiesliveuptothedefinedbusinessplansandtheimpactofanynon-

complianceonthecalculationoffairvalue.

Oninitialrecognition,otherinvestmentsclassifiedasavailable-for-saleare

measuredatfairvaluewiththeadditionofcostsdirectlyattributabletothe

acquisition.Otherinvestmentsaresubsequentlymeasuredatfairvalueat

thebalancesheetdate,andchangestothefairvaluearerecognisedinthe

statementofcomprehensiveincomeunderothercomprehensiveincome

withtheexceptionofimpairmentlossesanddividends,whicharetakento

theincomestatement.Whenotherinvestmentsavailable-for-salearesold

orsettled,theaccumulatedfairvalueadjustmentsrecognisedunderother

comprehensiveincomearerecycledtonetfinancials.

NOTE 1


49


Thepresentvalueoftheliabilityaccordingtodefinedbenefitplansismea-

suredlessthefairvalueoftheplanassets,andanynetobligationisrecog-

nisedinthebalancesheetundernon-currentliabilities.Anynetassetis

recognised in the balance sheet as a financial asset.

Theyear'schangesintheprovisionsrelatingtodefinedbenefitplansare

recognised in the income statement.

Income tax and deferred tax

Currenttaxliabilitiesandreceivablesarerecognisedinthebalancesheet,

computedastaxcalculatedonthetaxableincomefortheyear,adjustedfor

provisionaltaxpaid.

Taxonitemsinothercomprehensiveincomeisrecognisedinthestatement

ofcomprehensiveincomeunderothercomprehensiveincome.Taxonequity

entriesisrecognisedinequity.

Deferredtaxisrecognisedonalltemporarydifferencesbetweenthecarry-

ingamountsofassetsandliabilitiesandtheirtaxbase,exceptfortemporary

differences arising either on initial recognition of goodwill or a transaction

thatisnotabusinesscombinationandwiththetemporarydifferenceascer-

tained at the time of the initial recognition affecting neither the financial

resultnorthetaxableincome.Thetaxvalueoftheassetsiscalculatedbased

on the planned use of each asset.

Deferredincometaxisprovidedontemporarydifferencesarisingoninvest-

mentsinsubsidiariesandassociates,unlesstheGrouphasapossibilityof

controllingwhenthedeferredtaxistoberealisedanditislikelythatthe

deferred tax will not materialise as current tax.

Deferred tax is measured on the basis of the tax rates and tax rules in force

intherespectivecountriesonthebalancesheetdate.Changesindeferred

tax as a result of changed tax rates or tax rules are recognised in the income

statement.

Deferredtaxassets,includingthetaxvalueoftaxlosscarry-forwards,are

recognisedinthebalancesheetatthevalueatwhichtheassetisexpected

to be realised, either through a set-off against deferred tax liabilities or as

netassetstobeoffsetagainstfuturepositivetaxableincome.

Changesindeferredtaxconcerningthecostofshare-basedpaymentsare

generallyrecognisedintheincomestatement.

Deferredtaxinrespectofrecapturedlossespreviouslydeductedinforeign

subsidiaries is recognised on the basis of a specific assessment of the inten-

tionwitheachindividualsubsidiary.

Balancescalculatedaccordingtotherulesoninterestdeductibilitylimita-

tions in the Danish Corporate Income Tax Act are allocated between the

jointly-taxedcompaniesaccordingtoajointtaxationagreementandare

allocatedbetweenthecompaniesthataresubjectedtodeductibilitylimita-

tion in proportion to their share of the total limitation. Deferred tax liabilities

in respect of these balances are recognised in the balance sheet, whereas

deferredtaxassetsarerecognisedonlyifthecriteriaforrecognitionof

deferred tax assets are met.

Other provisions

Otherprovisionsconsistofdifferenttypesofprovisions,includingprovisions

forpendinglawsuits.Managementmakesassessmentsofprovisionsand

Currency translation reserve

Foreignexchangeadjustmentsarisingonthetranslationoffinancialstate-

mentsforentitieswhichhaveafunctionalcurrencyotherthanDanishkroner,

foreignexchangeadjustmentsrelatingtofinancialassetsandliabilities

representingapartoftheGroup’snetinvestmentinsuchentitiesarerecog-

nisedinequityunderthecurrencytranslationreserve.Onfullorpartial

realisationofanetinvestment,foreignexchangeadjustmentsarerecognised

in the income statement.

Reserve for fair value adjustment of available-for-sale financial assets

Reserveforfairvalueadjustmentcomprisesaccumulatedchangesinthefair

valuesofavailable-for-salefinancialassets.Thereserve,whichformspartof

theGroup’sfreereserves,isdissolvedandtransferredtotheincomestate-

mentastheinvestmentissoldorwrittendown.

Treasury shares

Costandsellingpricesoftreasurysharesaswellasdividendsarerecognised

directlyinequityunderretainedearnings.

Minority interests

Theproportionatesharesoftheprofitsandequityofsubsidiariesattribut-

abletominorityinterestsarerecognisedasaseparateitemunderequity.On

initialrecognition,minorityinterestsarerecognisedasdescribedunderBusi-

ness combinations. The issuance of put options as part of the consideration

in business combinations is recognised as described under Acquisition and

divestmentofminorityinterests.

Share-based payments

Share-basedincentiveprogrammesinwhichemployeesmayopttobuy

shares in H. Lundbeck A/S, ALK-Abelló A/S and Falck Holding A/S, and in

whichsharesareallocatedtoemployees(equityschemes)aremeasuredat

theequityinstruments'fairvalueatthedateofgrantandrecognisedinthe

incomestatementunderstaffcostswhenorastheemployeeobtainsthe

righttobuy/receivetheshares.Thebalancingitemisrecogniseddirectlyin

equityunderothertransactions.

Shareprice-basedincentiveprogrammesinwhichemployeeshavethe

difference between the agreed price and the actual share price settled in

cash(debtschemes)aremeasuredatfairvalueatthedateofgrantand

recognised in the income statement under staff costs when or as the

employeeobtainstherighttosuchdifferencesettlement.Theincentive

programmesaresubsequentlyremeasuredoneachbalancesheetdateand

uponfinalsettlement,andanychangesinthefairvalueoftheprogrammes

are recognised in the income statement under staff costs. The balancing

itemisrecognisedunderprovisions.

Pension obligations

Periodicalpaymentstodefinedcontributionplansarerecognisedinthe

incomestatementattheduedateandanycontributionspayablearerecog-

nised in the balance sheet under current liabilities.

ThepresentvalueoftheGroup'sliabilitiesrelatingtofuturepensionpay-

ments according to defined benefit plans is measured on an actuarial basis

onceayearonthebasisofthepensionableperiodofemploymentuptothe

timeoftheactuarialvaluation.TheProjectedUnitCreditMethodisapplied

todeterminethepresentvalue.Thepresentvalueiscalculatedbasedonas-

sumptionsofthefuturedevelopmentsofsalary,interest,inflation,mortality

anddisabilityratesandotherfactors.Actuarialgainsandlossesarerecog-

nisedintheincomestatementastheyarecalculated.

NOTE 1


50


forsale.Adisposalgroupisagroupofassetstobedisposedof,bysaleor

otherwise, together as a group in a single transaction. Liabilities regarding

assetsheldforsaleareliabilitiesdirectlyassociatedwiththoseassetsthat

will be transferred in the transaction. Assets are classified as held for sale if

theircarryingamountwillberecoveredprincipallythroughasaletransac-

tion within 12 months in accordance with a formal plan rather than through

continuing use.

Assets or disposal groups held for sale are measured at the lower of the car-

ryingamountatthedatewhentheassetswereclassifiedasheldforsaleand

fairvaluelesscoststosell.Assetsarenotdepreciatedoramortisedasfrom

thedatetheyareclassifiedas“heldforsale”.

Impairment losses from the initial classification of the non-current assets

as held for sale as well as gains and losses from following measurement of

thelowestvalueofthecarryingamountorthefairvaluelesssalescostsare

recognisedintheincomestatementintheitemstowhichtheyrelate.Gains

and losses are disclosed in the notes to the financial statements.

Assetsandrelatedliabilitiesarerecognisedseparatelyinthebalancesheet,

and the main items are specified in the notes to the financial statements.

Comparativefiguresinthebalancesheetarenotrestated.

Leases

Foraccountingpurposes,leaseobligationsaredividedintofinanceand

operatingleases.Leasesareclassifiedasfinanceleaseswhensubstantially

all risks and rewards of ownership of the leased asset are transferred. Other

leases are classified as operating leases.

The accounting treatment of assets held under finance lease and the related

liabilityisdescribedinthesectionsonproperty,plantandequipmentand

financialliabilities,respectively.

Assets held under operating leases are not recognised in the balance sheet.

Lease liabilities under operating leases are disclosed as contingent liabilities.

Leasepaymentsconcerningoperatingleasesarerecognisedintheincome

statementonastraight-linebasisoverthetermofthelease.

Cash flow statement

The consolidated cash flow statement is presented according to the indirect

methodandshowsthecompositionofcashflows,dividedintooperating,

investingandfinancingactivitiesrespectively,andthecashandcashequiva-

lentsatthebeginningandattheendoftheyear.

Cashflowsfromacquisitionsanddivestmentsofcompaniesareshownsepa-

ratelyundercashflowsfrominvestingactivities.Thecashflowstatement

includes cash flows from acquired companies from the date of acquisition

andcashflowsfromdivestedcompaniesuntilthetimeofdivestment.

CashflowsfromoperatingactivitiesarecalculatedastheGroup'sprofitfrom

operationsandspecialitems,adjustedfornon-cashoperatingitems,working

capitalchanges,financialreceiptsandpaymentsandincometaxespaid.

Cashflowsfrominvestingactivitiesincludepaymentsinconnectionwith

purchasesandsalesofintangibleassets,property,plantandequipmentand

financialassets,includingequityinvestmentsincompanies.Alsoincluded

are securities classified as current assets. Entering into a finance lease is

considered a non-cash transaction.

contingent liabilities, including the probable outcome of pending and pos-

siblefuturelawsuits,whichinherentlydependsonuncertainfutureevents.

When management determines the probable outcome of lawsuits and

similarfactors,itreliesonassessmentsmadebyexternaladviserswhoare

familiar with the specific cases and the existing legal practice.

Provisionsforrestructuringarerecognisedwhenadetailed,formalplanfor

the restructuring has been made before or on the balance sheet date and

hasbeenannouncedtothepartiesinvolved.Inconnectionwithacquisi-

tions,provisionsforrestructuringcostsareonlyincludedinthecomputation

ofgoodwillifanobligationexistsfortheentityacquiredasofthedateof

acquisition.

Provisionsaremadeforonerouscontractswhentheanticipatedbenefitsto

theGroupfromacontractareoutweighedbytheunavoidablecostsunder

the contract.

When the Group is under an obligation to dismantle an asset or re-establish

thesitewheretheassethasbeenused,aprovisionismadecorrespondingto

thepresentvalueoftheexpectedfuturecosts.Theprovisionisdetermined

based on current orders and estimated future costs, discounted to their

presentvalue.Thediscountfactorusedreflectsthegenerallevelofinterest

rates.Thepresentvalueofthecostsisrecognisedinthecostoftheitemof

property,plantandequipmentinquestionanddepreciatedwiththeseas-

sets.Theincreaseofthepresentvalueovertimeisrecognisedintheincome

statement under financial expenses.

OtherprovisionsarerecognisedwhentheGrouphasalegalorconstructive

obligationthatarisesfrompasteventsanditisprobablethatanoutflowof

financial resources will be required to settle the obligation.

Otherprovisionsaremeasuredasthebestestimateofthecostsrequiredto

settle the liabilities at the balance sheet date.

Returnobligationsimposedontheindustryarerecognisedinthebalance

sheetunderotherprovisions.

Debt

Mortgagedebtanddebttocreditinstitutionsarerecognisedatthetimeof

theraisingoftheloanatproceedsreceivedlesstransactioncostspaid.In

subsequent periods, the financial liabilities are measured at amortised cost,

equivalenttothecapitalisedvaluewhentheeffectiverateofinterestisused,

sothatthedifferencebetweentheproceedsandthenominalvalueisrecog-

nisedintheincomestatementovertheloanperiod.

Residual lease commitments from finance leases are recognised at amor-

tised cost.

Repo debt relates to bonds included in repo transactions. Debt is recognised

at amortised cost, and accumulated repo interest has been accrued.

Debtincludedintheshort-termfinancialliquidityisalsomeasuredatamor-

tised cost in subsequent periods.

Otherpayables,whichincludetradepayablesanddebttopublicauthorities

etc. are measured at amortised cost.

Assets held for sale

Assets held for sale comprise non-current assets and disposal groups held

NOTE 1


51


Cashflowsfromfinancingactivitiesincludepaymentstoandfromshare-

holdersandrelatedexpensesaswellastheraisingofandrepaymentson

loans,mortgagedebtandotherlong-termdebtandcashflowsfromdivi-

dends and minorities.

Cash comprises cash less current bank debt falling due on demand.

Cash flows denominated in foreign currencies, including cash flows in foreign

subsidiaries,aretranslatedattheaverageexchangeratesduringtheyear

becausetheyapproximatetheactualexchangeratesatthedateofpayment.

Cashatyear-endistranslatedattheexchangeratesatthebalancesheet

date,andtheeffectofexchangerateadjustmentsoncashisshownasa

separate item in the cash flow statement.

Key figures

FinancialkeyfiguresarecalculatedaccordingtoRecommendationsand

FinancialRatios2010issuedbytheDanishSocietyofFinancialAnalysts.

EBIT: defined as the Group's profit before special items, financial items and

tax.

EBITmargin: EBIToperationsx100/Revenue

Returnonequity: LundbeckFoundation'sshareofprofitx100

/LundbeckFoundation'sshareofaverageequity

NOTE 1


52


2.REVENUE

2011 2010

DKKm DKKm

Europe 14,468 9,992

USA 4,708 3,722

Restoftheworld 4,426 3,213

23,602 16,927

CNSpharmaceuticals(H.LundbeckGroup) 16,007 14,765

Allergypharmaceuticals(ALKGroup) 2,348 2,162

Emergency,assistance,healthcareandtraining(FalckGroup) 5,247 -

23,602 16,927

Revenueincludes:

Downpaymentsandmilestonepayments 448 37

Royalty 640 620

RevenueinDenmark 2,878 143

Income from Forest in the USA

IncomefromsalesofcitalopramandescitalopramtoForestamountedtoDKK2,535millionin2011(DKK2,443millionin2010)basedontheminimumpricefor

thisyear’sshipmentsandadjustmentsofprepaymentsconcerningprior-yearshipments.Prepayments,whichisthedifferencebetweentheinvoicedpriceandthe

minimumprice,wereDKK234millionat31December2011(DKK517millionin2010).SeeNote1Accountingpoliciesforamoreelaboratedescriptionhereof.

TheagreementwithForesttakesintoconsiderationtheexpiryoftheescitaloprampatentprotectionintheUSAin2012.Priortoanylaunchofgenericcitalo-

pram,Forestisexpectedtoreduceitsescitalopraminventoriestoalowlevel.

DevelopmentsinForest’sinventoriesandnetsellingpricearemonitoredclosely,andtheriskofthepriceadjustmentclauseandrepaymentoftheprepayment

beingappliedisregularlyassessed.Itisbelievedthatthereispresentlynorepaymentrisk.

Other accrued income

ThereisdeferredincomeconcerningresearchanddevelopmentpartnershipsamountedtoDKK74million.Furthermorethereisaccruedsubscriptionrevenue

intheamountofDKK1,036millionandotheraccruedincomeofDKK295millionregardingtheFalckGroup.

3. STAFF COSTS

2011 2010

DKKm DKKm

Short-termstaffbenefits 6,607 3,743

Share-basedpayment 34 21

Pensionbenefits 414 283

Othersocialsecuritycosts 707 465

7,762 4,512

Theyear'sstaffcostsarespecifiedasfollows:

Costofsales 3,072 684

Researchanddevelopmentcosts 1,309 1,155

Distributioncosts 1,755 1,492

Administrativeexpenses 1,626 1,181

Total 7,762 4,512

TotalremunerationintheGroupfortheExecutiveManagementoftheFoundationamountsto 4 2

TotalremunerationintheGroupfortheBoardofDirectorsoftheFoundationamountsto 7 6

Remuneration of the Executive Management and the Board of Directors is specified as follows:

ExecutiveManagement:

ChristianDyvig,appointedon1June2011 2.6

NOTE 2 - 3


53


2011

DKKm

Board of Directors:

MikaelRørth,ChairmanoftheFoundationandLundbeckfondInvestA/S,chairmanoftheresearchcommittee,

thebiomedicalsciencescommitteeandtheinvestmentcommittee 0.8

JørgenHunoRasmussen,DeputyChairmanoftheFoundation,memberoftheinvestmentcommittee 0.4

KimKlitgaard,employeerepresentative 0.2

KenLiljegren,employeerepresentative 0.2

ThorleifKrarup,deputychairmanofLundbeckfondInvestA/S,memberoftheinvestmentcommittee,

deputychairmanofH.LundbeckA/S,chairmanofALK-AbellóA/SanddeputychairmanofFalckHoldingA/S 2.6

PovlKrogsgaard-Larsen,memberoftheinvestment,researchandthebiomedicalandnaturalsciencescommittees 0.2

Gunhild Waldemar, member of the research committee and the biomedical sciences committee 0.2

PeterAdlerWürtzen,employeerepresentative 0.2

Jes Østergaard, chairman of the natural sciences committee and member of the research and

investmentcommitteesandboardmemberofH.LundbeckA/SandofALK-AbellóA/S 1.7

NilsAxelsen,steppeddownon30May2011 0.2

MogensBundgaard-Nielsen,steppeddownon30May2011 0.4

7.1

2011 2010

Averagenumberoffull-timeemployeesduringtheyear 15,875 7,314

Numberofemployeesatyear-end(FTE) 24,676 7,352

Incentive programmes

TheExecutiveManagementoftheFoundationisnotofferedincentiveprogrammes.AnincentiveprogrammehasbeenlaunchedforemployeesofLund-

beckfondVentureswhichissimilartostandardincentiveprogrammesfortheventureindustry.ThepurposeoftheincentiveprogrammeisforLundbeckfond

Venturestobeabletoattractandretainskilledandqualifiedemployees.

Inordertoattract,retainandmotivatekeyemployeesandaligntheirinterestswiththoseoftheshareholders,theGrouphasestablishedanumberofincen-

tiveprogrammesintheH.Lundbeck,ALKandFalckgroups.TheGrouphasusedequity-basedaswellasdebt-basedschemes,andthetablesbelowshowall

theincentiveprogrammesinplacein2010and2011.

Equity-based schemes

Equity-basedschemesareusedbothinH.LundbeckA/S,ALK-AbellóA/SandFalckHoldingA/S.

FortheschemesinH.LundbeckA/S,eachwarrantentitlestheholdertobuyoneshareofDKK5nominalvalueinthecompany.FurthermoretheExecutive

Managementhasbeengrantedshareschemes.Exerciseofthewarrantsandtheshareschemesissubjecttotherelevantemployeescontinuingemployment

atthedateofexercise.ForwarrantsandshareschemestotheExecutiveManagement,exerciseisalsosubjecttoH.LundbeckA/S'shareholderreturnrelative

to a peer group.

FortheschemesinALK-AbellóA/S,eachwarrantentitlestheholdertobuyoneBshareofDKK10nominalvalueinthecompany.Therighttoexercisethe

warrantsissubjecttotheholderoftheoptionnothavingresignedatthetimeofexercise.Therearenootherconditionsforvesting.Theoptionscanbeex-

ercisedonlyduringaperiodoffourweeksafterthepublicationofannualorinterimfinancialstatements.Shareoptionsareconsideredadequatelysecuredin

own shares.

FortheschemeinFalckHoldingA/S,eachwarrantentitlestheholdertobuyoneshareofDKK1nominalvalueinthecompany.Thewarrantsissuedwere

acquiredatmarketvalue,andnoconditionswereattached.Considerationfortheissuedwarrantshasbeenpaidintheformofanon-cashcontributionofa

correspondingnumberofwarrantsinFalckA/S,whichhavesubsequentlybeencancelled.

Debt-based schemes

H.LundbeckA/ShasgrantedStockAppreciationRights(SARs)andRestrictedCashUnits(RCUs)toafewemployeesofUSsubsidiaries.SARisashare

price-based scheme with conditions and award criteria similar to those of the warrant schemes. RCU is a share price-based scheme with conditions and award

criteriasimilartothoseoftheshareschemes.Neitherofthetwoschemescanbeconvertedintoshares,butthevalueoftheschemeisdistributedasacash

amount.

Thefollowingtablesshowalltheincentiveprogrammesinplacein2010and2011.

NOTE 3

3. STAFF COSTS, CONTINUED


54


Conditions for the various incentive programmes are set out below:

Exercise Exercise Number of Outstanding at

H. Lundbeck A/S Vesting period period warrants/ Exercise 31 December

- equity-based schemes date begins ends shares granted price 2011

2007,warrants Immediately 1/82008 31/32011 844,500 156.00 -

2008,warrants 6/5-2/62011 6/5-2/62011 5/5-1/62016 539,544 115.00 151,870

2009,warrants 16/32012 16/32012 15/32017 534,058 102.00 477,919

2010,warrants 16/32013 16/32013 15/32018 790,950 97.00 711,809

2011,warrants 31/32014 1/42014 31/32019 849,085 121.00 786,103

2008,sharescheme 6/5-2/62011 74,609 434

2009,sharescheme 16/32012 92,627 85,449

2010,sharescheme 16/32013 102,689 96,785

2011,sharescheme 31/3-30/62014 539,962 511,284

H. Lundbeck A/S

- debt-based schemes

2008,SARs 11/82011 11/82011 11/82016 2,258 119.76 2,258

2008,RCUs 11/82011 814 -

2009,SARs 1/72012 1/72012 30/62017 241,137 102.00 2,352

2009,RCUs 1/72012 338,975 845

2010,SARs 16/32013 16/32013 15/32018 36,060 97.00 4,639

2010,RCUs 16/32013 10,346 1,331

2011,SARs 31/32014 16/32014 15/32019 53,832 121.00 53,832

2011,RCUs 31/3-30/62014 66,233 66,233

ALK-Abelló A/S

- equity-based schemes

2005/06,shareoptions 1/12009 1/12009 1/12012 68,000 742.00 53,000

2006,shareoptions 1/112009 1/112009 1/112013 33,375 896.00 28,725

2007,shareoptions 1/112010 1/112010 1/112014 29,000 727.00 26,050

2008,shareoptions 1/112011 1/112011 1/112015 47,600 504.00 41,950

2009,shareoptions 1/112012 1/112012 1/112016 58,300 465.00 51,525

2010,shareoptions 1/112013 1/112013 1/112017 174,000 345.00 167,100

2011,shareoptions 1/112014 1/112014 1/112018 220,000 319.00 220,000

TheexercisepriceforALK-AbellóA/S'schemesequalstheaverageofthemarketpriceduringthelastfivebusinessdayspriortothedateofgrant.Theexer-

cisepriceisincreasedby2.5%p.a.andreducedbydividendspaid.Forthe2005/06scheme,theexercisepriceequalstheaverageofthemarketpriceduring

thelasttenbusinessdayspriortothedateofgrant.Theexercisepriceisincreasedby6%p.a.andreducedbydividendspaid.

Exercise Exercise Number of Outstanding at

Falck Holding A/S Acquisition period period warrants/ Exercise 31 December

- equity-based schemes date begins ends shares granted price 2011

2011, warrants

13/72011 30/122015 30/122015 4,443,120 125.00 4,443,120

NOTE 3



55


Outstanding warrants Outstanding Exercised/ Expired/ Outstanding at

and share schemes 2011 at 1 January Additions settled cancelled 31 December

H.LundbeckA/S,warrants 2,693,412 849,085 (19,284) (1,395,512) 2,127,701

H.LundbeckA/S,sharescheme 264,437 539,962 (69,505) (40,942) 693,952

ALK-AbellóA/S,shareoptions 382,150 220,000 - (13,800) 588,350

FalckHoldingA/S,warrants - 4,443,120 - - 4,443,120

Total 2011 3,339,999 6,052,167 (88,789) (1,450,254) 7,853,123

Outstanding warrants

and share schemes 2010

H.LundbeckA/S,warrants 1,902,462 790,950 - - 2,693,412

H.LundbeckA/S,sharescheme 161,748 102,689 - - 264,437

ALK-AbellóA/S,shareoptions 225,975 174,000 - (17,825) 382,150

Total 2010 2,290,185 1,067,639 - (17,825) 3,339,999

Outstanding debt-based schemes

2011

H.LundbeckA/S,SARs 132,106 53,832 - (122,857) 63,081

H.LundbeckA/S,RCUs 251,917 66,233 (814) (248,927) 68,409

Total 2011 384,023 120,065 (814) (371,784) 131,490

2010

H.LundbeckA/S,SARs 171,036 36,060 - (74,990) 132,106

H.LundbeckA/S,RCUs 297,552 10,346 - (55,981) 251,917

Total 2010 468,588 46,406 - (130,971) 384,023

Recognised expenses

Thewarrantsandsharesgrantedarerecognisedintheincomestatementfor2011atanexpensecorrespondingtothefairvalueatthetimeofgrantcalculated

accordingtotheBlack-Scholesmethodforthevestingperiodtodate.Forthewarrantsandsharesinthe2008,2009,2010and2011programmesthatdepend

ontheLundbeckshare’srankinginthepeergroupofcompanies,therecognisedexpensewascalculatedwithdueconsiderationtofulfilmentofthevesting

conditions.

TheSARsgrantedarerecognisedintheincomestatementfor2011atanexpensecorrespondingtothevalueadjustmentfortheyearbasedontheBlack-

Scholesmethod,andtheRCUsgrantedarerecognisedintheincomestatementfor2011atanexpensecorrespondingtothevalueadjustmentfortheyear

based on the performance of the Lundbeck share.

2011 2010

DKKm DKKm

Recognisedexpensesconcerningequity-basedschemes 33 26

Recognisedexpensesconcerningdebt-basedschemes 1 (5)

Total recognised expenses 34 21

NOTE 3



56


Theassumptionsappliedindeterminingthefairvalueofwarrant,shareoptionanddebt-basedschemesatthegrantdateareasfollows:

Market price at Expected divi- Calculated

time of grant, Expected dend payout Risk-free Expected fair value per

DKK volatility, % ratio, % interest rate, % maturity, mths. option, DKK

H. Lundbeck A/S, warrant and share scheme,

March2009 98.75 44.05 1.50 3.20 79 40.37

H.LundbeckA/S,debt-basedscheme,June2009 96.79 36.34 1.50 3.38 79 36.42

H. Lundbeck A/S, warrant, share

anddebt-basedscheme,March2010 99.55 32.29 1.50 2.60 66 29.86

H. Lundbeck A/S, warrant and share scheme,

October2010 95.70 31.70 1.50 1.73 60 24.30

H. Lundbeck A/S, warrant, share

anddebt-basedscheme,April2011 121.20 31.03 2.50 2.99 66 30.10

ALK-AbellóA/S,2009scheme 465.00 45.00 0.97 3.58 60 173.00



WarrantsforsubscriptionofsharesinFalckHoldingA/Swereacquiredatfairvalue.

4.DEPRECIATION,AMORTISATIONANDIMPAIRMENT

Intangible Property, plant

assets and equipment Total

DKKm DKKm DKKm

Depreciation, amortisation and impairment for 2011 are specified as follows

Costofsales 121 232 353

Researchanddevelopmentcosts 216 399 615

Distributioncosts 406 25 431

Administrativeexpenses 31 99 130

Specialitems 242 - 242

1,016 755 1,771

AnimpairmentlossonotherrightstotallingDKK47millionisincludedincostofsalesintheamountofDKK31million,inresearchanddevelopmentcostsin

theamountofDKK11millionandinadministrativeexpensesintheamountofDKK5million.

AnimpairmentlossonpatentrightstotallingDKK95millionisincludedinresearchanddevelopmentcosts.

Animpairmentlossonproperty,plantandequipmenttotallingDKK283millionmainlyconsistsofimpairmentoflandandbuildingsintheUSA.Theimpair-

mentlossisincludedincostofsalesintheamountofDKK21million,inresearchanddevelopmentcostsintheamountofDKK258millionandinadministra-

tiveexpensesintheamountofDKK4million.

Lossesandgainsonthesaleofintangibleassetsandproperty,plantandequipmentarerecognisedatanetgainofDKK113million.Ofthisamount,thegain

fromthesaleofproductionfacilitiesintheUKamountstoDKK95million.

Intangible Property, plant

assets and equipment Total

DKKm DKKm DKKm

Depreciation, amortisation and impairment for 2010 are specified as follows

Cost of sales 101 192 293

Researchanddevelopmentcosts 115 177 292

Distributioncosts 427 13 440

Specialitems 27 80 107

670 462 1,132

Thedistributioncostsfor2011includeaDKK48millionimpairmentlossonproductrights.

Lossesandgainsonthesaleofintangibleassetsandproperty,plantandequipmentwererecognisedatanetlossofDKK33million.

NOTE3-4



57


5.FEESTOAUDITORSAPPOINTEDATTHEGENERALMEETING

Deloitte KPMG

2011 2010 2011 2010

DKKm DKKm DKKm DKKm

Administrative expenses include fees to the company's

auditors appointed by the general meeting in the amount of:

Statutoryaudit 10 11 6 -

Assurance engagements other than audits 1 - - -

Taxadvice 2 3 - -

Otherservices 6 6 1 -

19 20 7 -

TheFalckGroupisauditedbyKPMG.AfewsmallforeignsubsidiariesarenotauditedbytheFoundation'sauditors,aforeignbusinesspartneroftheauditors,

orbyaninternationallyrecognisedaccountancyfirm.

6.SPECIALITEMS

2011 2010

DKKm DKKm

Amortisationofcontractualcustomerrelationships,FalckGroup 242 -

Amortisation of contractual customer relationships, Falck Group associate 69 -

311 -

Transactioncostsinconnectionwithacquisitions 51 -

Special items 362 -

7.NETFINANCIALSITEMS

2011 2010

DKKm DKKm

Financial income

Interest on financial assets measured at amortised cost 63 26

Gainsonfinancialassetsmeasuredatfairvaluethroughprofitorloss 21 -

Gainsonavailable-for-salefinancialassets,incl.dividends 14 5

Gainsonfinancialinstrumentsmeasuredatfairvaluethroughprofitorloss 521 1,171

Gains on loan to associate that has been written down - 9

Gainsonfinancialinstrumentsincludedinthetradingportfolio 66 127

Exchangegains 124 305

Exchangegainsconcerningadditionstonetinvestmentsinforeignsubsidiaries(transferredfromcomprehensiveincome) 4 -

Total financial income 813 1,643

Financial expenses

Interestonfinancialliabilitiesmeasuredatamortisedcost 253 115

Loanconversionexpenses 15 -

Otherfinancialexpenses 27 19

Lossesonavailable-for-salefinancialassets 3 -

Lossesonfinancialinstrumentsmeasuredatfairvaluethroughprofitorloss 638 158

Losses on financial instruments included in the trading portfolio 131 191

Interest component, discounted liabilities 2 -

Exchangelosses 94 77

Exchangelossesconcerningadditionstonetinvestmentsinforeignsubsidiaries(transferredfromcomprehensiveincome) 24 -

Total financial expenses 1,187 560

Net financials (374) 1,083

At31December2011,theGrouprecordedanetgainonavailable-for-salefinancialassetsofDKK11million(netlossofDKK5millionin2010).

NOTE5-6-7


58


NOTE7-8

7.NETFINANCIALSITEMS,CONTINUED

ThenetlossonfinancialinstrumentsmeasuredatfairvaluethroughprofitorlossamountedtoDKK117millionat31December2011(netgainofDKK1,013mil-

lionin2010).ThenetlossonfinancialinstrumentsincludedinthetradingportfolioamountedtoDKK65million(lossofDKK64millionin2010),andthenet

exchangegain,includingrealisednetexchangelosstransferredfromothercomprehensiveincome,amountedtoDKK10millionin2011(netgainofDKK228

millionin2010).

8.TAXONPROFITFORTHEYEAR

2011 2010

DKKm DKKm

Currenttax 1,056 1,118

Prior-yearadjustment,currenttax 6 49

Prior-yearadjustment,deferredtax 12 (24)

Changeofdeferredtaxfortheyear 45 (193)

Total tax for the year 1,119 950

Tax for the year is composed of:

Taxonprofitfortheyear 1,100 899

Taxonothercomprehensiveincome 19 51

Total tax for the year 1,119 950

Tax on other comprehensive income is specified as follows:

Currencytranslationconcerningadditionstonetinvestmentsinforeignsubsidiaries 41 63

Realisedexchangegains/losses,additionstonetinvestmentsinforeignsubsidiaries

(transferredtoprofitandloss) 5 -

Adjustment,deferredexchangegains/losses,hedging 21 (53)

Exchangegains/losses,hedging(transferredtothehedgeditems) (37) 41

Exchangegains/losses,hedging(transferredfromhedging) - -

Valueadjustmentofinteresthedginginstruments (11) -

Tax on other comprehensive income 19 51

Explanation of the Group's effective tax rate relative to the Danish tax rate 2011 DKKm %

Profitbeforetax 3,529

Calculatedtax,25% 882 25.0

Tax effect of:

DifferencesinthetaxratesofforeignsubsidiariesfromtheDanishtaxrateof25% (53) (1.5)

Non-deductibleexpenses/non-taxableincomeandotherpermanentdifferences 123 3.5

Researchanddevelopmentactivities(taxcredits) (77) (2.2)

Prior-yeartaxadjustmentsetc.,totaleffectonoperations 24 0.7

Non-deductiblelosses/non-taxablegainsonsharesandotherequityinvestments 8 0.2

Unrecognisedtimingdifferencesonsecuritiesrecognisedatfairvaluethroughprofitorloss (2) (0.1)

Changeinvaluationofnettaxassets 228 6.5

Deductionforgrants (48) (1.4)

Othertaxesandotheradjustments 15 0.4

Effective tax for the year 1,100 31.2


59


Explanation of the Group's effective tax rate relative to the Danish tax rate 2010 DKKm %

Profitbeforetax 4,596

Calculatedtax,25% 1,148 25.0

Tax effect of:

DifferencesinthetaxratesofforeignsubsidiariesfromtheDanishtaxrateof25% (25) (0.5)

Non-deductibleexpenses/non-taxableincomeandotherpermanentdifferences 75 1.6

Researchanddevelopmentactivities(taxcredits) (94) (2.0)

Prior-yeartaxadjustmentsetc.,totaleffectonoperations 25 0.5

Non-deductiblelosses/non-taxablegainsonsharesandotherequityinvestments 2 0.0

Unrecognisedtimingdifferencesonsecuritiesrecognisedatfairvaluethroughprofitorloss (77) (1.7)

Changeinvaluationofnettaxassets 46 1.0

Deductionforgrants (198) (4.3)

Othertaxesandotheradjustments (3) (0.1)

Effective tax for the year 899 19.6

9. GRANTS FOR THE YEAR

2011 2010

DKKm DKKm

Grants for the year can be specified as follows:

Biomedicalsciencesprojects 182 192

Naturalsciencesprojects 26 28

Fellowships 70 50

Other 21 10

Regular grants 299 280

GrantsofExcellence - 50

CentresofExcellence 84 24

Grete Lundbeck European Brain Research Foundation - 30

Psychiatricresearch(iPSYCH) 121 -

Strategic initiatives 205 104

Grants for the year, gross 504 384

Descendants - -

Reversedgrants/repayments (6) (1)

Grants for the year, net 498 383

NOTE8-9

8.TAXONPROFITFORTHEYEAR,CONTINUED


60


10. INTANGIBLE ASSETS

Contractual

customer Patent Other Projects

relationships Product and license intangible in

Goodwill etc. rights rights assets progress Total

DKKm DKKm DKKm DKKm DKKm DKKm DKKm

Costat1January2011 4,317 - 4,570 683 1,342 127 11,039

Currencytranslation 179 34 58 - 1 - 272

Reclassification - - 75 - 1 (75) 1

Additionthroughacquisitions 5,256 3,220 - - 100 - 8,576

Adjustmentofputoptions

and contingent consideration 1 - - - - - 1

Additions - - 1,143 4 104 34 1,285

Disposals - - (264) - (3) (22) (289)

Cost at 31 December 2011 9,753 3,254 5,582 687 1,545 64 20,885

Amortisationandimpairmentat1January2011 (19) - (979) (360) (963) - (2,321)

Currencytranslation (1) (7) (31) - - - (39)

Reclassification - - - - (1) - (1)

Amortisation - (242) (435) (40) (151) - (868)

Impairment - - - (95) (47) - (142)

Amortisation and impairment on disposal - - 133 - 3 - 136

Amortisation and impairment at 31 December 2011 (20) (249) (1,312) (495) (1,159) - (3,235)

Carrying amount at 31 December 2011 9,733 3,005 4,270 192 386 64 17,650

Carryingamountat31December2010 4,298 - 3,591 323 379 127 8,718

Goodwill impairment test

ThemanagementofrespectivelyH.LundbeckA/S,ALK-AbellóA/SandFalckHoldingA/Shavetestedintangibleassetsforimpairment.Basedontheimpair-

ment tests performed in 2011, it was concluded that there is no need for writing down the goodwill.

Methodology

Intheimpairmenttest,thediscountedexpectedfuturecashflows(valueinuse)pursuanttothemostrecentmanagement-approvedbudgetsforeachCGU

arecomparedtothecarryingamountsofgoodwillandothernetassets.Thefuturecashflowsarebasedonspecificbusinessplansforthenext3-8yearswith

dueconsiderationtopatentexpiry.

Thekeyparametersinthecalculationofthevalueinusearerevenue,earnings,workingcapital,discountfactorandthepreconditionsfortheterminalperiod.

NegativegrowthisprojectedintheH.LundbeckGroupintheterminalperiodduetopatentexpiry,andgrowthof2-3%and2%isprojectedfortheFalck

GroupandtheALKGroup,respectively.

ThecalculationofthevalueinusefortheH.LundbeckGroup,excl.LundbeckInc.,isbasedonadiscountrateof9.7%(9.5%in2010).ForLundbeckInc.adis-

countrateof11.8%(11.6%in2010)wasused.FortheFalckGroup,adiscountrateof10.7%hasbeenusedforemergency,assistanceandhealthcareactivities,

whileadiscountrateof12%wasusedfortrainingservices.FortheALKGroup,adiscountfactorof12%wasused(11%in2010).Thediscountrateisbeforetax,

andtheresultof[WACC/(1–taxrate)]andtheappliedcashflowsarealsopre-taxfigures.

Impairment of other intangible assets

In2011,LundbeckwrotedownpatentrightsandotherrightsbyatotalofDKK142million.Theimpairmentlossisrecognisedintheincomestatementunder

costofsalesintheamountofDKK31million,underadministrativeexpensesintheamountofDKK5millionandunderresearchanddevelopmentcostsin

theamountofDKK106million.Therecoverableamountwascalculatedonthebasisofmanagement’sre-assessedestimateofthevalueinuseoftheassets.

In2010,impairmentofproductrightsamountedtoDKK48million,whichwasrecognisedintheincomestatementunderdistributioncosts.Therecoverable

amountwascalculatedonthebasisofmanagement’sre-assessedestimateofthevalueinuseoftheassets.

Sale of product rights

In 2011, Lundbeck sold the product rights to Nembutal®, Cogentin® and Diuril®. No gain from the sale of these product rights was recognised in 2011 because

anygainissubjecttodevelopmentsinrevenuefromtheseproductsatthebuyer,whichLundbeckdoesnotcontrol.Thefairvalueofthedeferredgainis

basedonmanagement’sestimate.Recognitionofanygainwillcommenceatthetimewhenrevenuefromthethreeproductsexceedsthecarryingamountof

the product rights at the time of disposal.

NOTE 10


61


Patent Other Projects

Product and license intangible in

Goodwill rights rights assets progress Total


Costat1January2010 4,006 4,059 583 1,236 81 9,965

Currencytranslation 239 243 2 7 (1) 490

Reclassification 37 (37) - 29 2 31

Additionthroughacquisitions 35 - 108 - - 143

Additions - 305 - 114 103 522

Disposals - - (10) (44) (58) (112)

Cost at 31 December 2010 4,317 4,570 683 1,342 127 11,039

Amortisationandimpairmentat1January2010,adjusted (19) (507) (331) (836) - (1,693)

Currencytranslation - (10) - - - (10)

Reclassification - - - (7) - (7)

Amortisation - (414) (39) (155) - (608)

Impairment - (48) - - - (48)

Amortisationandimpairmentondisposals - - 10 35 - 45

Amortisation and impairment at 31 December 2010 (19) (979) (360) (963) - (2,321)

Carrying amount at 31 December 2010 4,298 3,591 323 379 127 8,718

Carryingamountat31December2009 3,987 3,552 252 400 81 8,272

11.PROPERTY,PLANTANDEQUIPMENT

Other fixtures Prepayments

and fittings, and other

Land and Plant and tools and Leasehold assets under

buildings machinery equipment improvements construction Total


Costat1January2011 4,472 2,024 1,211 - 637 8,344

Currencytranslation 17 14 2 1 4 38

Reclassification 16 13 3 - (33) (1)

Additionsthroughacquisitions 712 - 891 60 - 1,663

Additions 167 152 185 8 409 921

Disposals (165) (45) (216) (7) (229) (662)

Cost at 31 December 2011 5,219 2,158 2,076 62 788 10,303

Depreciationandimpairmentat1January2011 (1,687) (1,481) (908) - - (4,076)

Currencytranslation (18) (13) (5) - - (36)

Reclassification - 1 - - - 1

Depreciation (198) (118) (240) (7) - (563)

Impairmentfortheyear (271) (5) (15) - - (291)

Depreciationandimpairmentondisposals 135 39 186 3 - 363

Depreciation and impairment at 31 December 2011 (2,039) (1,577) (982) (4) - (4,602)

Carrying amount at 31 December 2011 3,180 581 1,094 58 788 5,701

Carryingamountat31December2010 2,785 543 303 - 637 4,268

Inthecarryingamountat31December2011,

financialleasingisincludedintheamountof 40 12 156 208

Carryingamountofmortgage-backedlandandbuildings 669 11 680

NOTE 10 - 11

10. INTANGIBLE ASSETS, CONTINUED


62


Other fixtures Prepayments

and fittings, and other

Land and Plant and tools and assets under

buildings machinery equipment construction Total

DKKm DKKm DKKm DKKm DKKm

Costat1January2010 4,213 1,956 1,242 496 7,907

Currencytranslation 39 34 13 8 94

Reclassification 15 8 14 (68) (31)

Additionsthroughacquisitions 13 3 2 - 18

Additions 211 61 54 294 620

Disposals (19) (38) (114) (93) (264)

Cost at 31 December 2010 4,472 2,024 1,211 637 8,344

Depreciationandimpairmentat1January2010 (1,504) (1,343) (891) - (3,738)

Currencytranslation (11) (25) (9) - (45)

Reclassification 1 6 - - 7

Depreciation (184) (146) (113) - (443)

Depreciationandimpairmentondisposals 11 27 105 - 143

Depreciation and impairment at 31 December 2010 (1,687) (1,481) (908) - (4,076)

Carrying amount at 31 December 2010 2,785 543 303 637 4,268

Carryingamountat31December2009 2,709 613 351 496 4,169

Inthecarryingamountat31December2010,

financialleasingisincludedintheamountof 23 107 130

Carryingamountofmortgage-backedlandandbuildings 170 170

12.INVESTMENTSINASSOCIATES

2011

DKKm

Costat1January -

Additions 2,850

Additionsthroughacquisitions 14

Reclassification (2,850)

Adjustmentregardingprior-yearacquisitions 2

Cost at 31 December 16

Valueadjustmentsandimpairmentat1January -

Shareofprofitfortheyearaftertaxbeforespecialitems 100

Shareofspecialitems (69)

Shareofothercomprehensiveincome (18)

Shareofotherchangesinequity (3)

Reversedimpairmentondisposals (11)

Accumulated value adjustments and impairment at 31 December (1)

Carrying amount at 31 December 2011 15

On14January2011,theGroupacquired36%ofthesharecapitalofFalckA/S.InJuly2011,theshareswerecontributedtoFalckHoldingA/S,andatthesame

timeFalckHoldingA/SacquiredadditionalsharesinFalckA/S,totheeffectthatFalckHoldingA/Sowns98.8%ofthesharecapitalofFalckA/S.Atthesame

occasion,theGroupsubscribedforadditionalsharesandreachedanownershipinterestof57.4%ofthesharecapitalofFalckHoldingA/S.FalckHoldingA/S

wasconsolidatedintheGroupasasubsidiaryfrom1July2011.

NOTE 11 - 12

11.PROPERTY,PLANTANDEQUIPMENT,CONTINUED


63


Inconnectionwiththetransitionfromanassociatetoasubsidiary,nogainsorlosseswererealised.Note29:Businesscombinations,providesmore

information.

Pleaseseethegroupoverviewforinformationaboutregisteredofficeandownershipinterestsinassociates.

2011/31

December 2011

DKKm

Summarised financial data for associates

Revenue 23

Profitfortheyear -

Total assets 320

Total liabilities 320

13. FINANCIAL ASSETS AND FINANCIAL RISKS

TheGroup'sfinancialinvestmentsclassifiedasfinancialassetsatfairvaluethroughprofitorlossprimarilyrelatetoLundbeckfondInvestA/S'investments.

TheseinvestmentsaremadeonthebasisofaninvestmentpolicyapprovedbytheBoardofDirectors.Thestrategyaimsforanappropriatediversificationof

investmentsondifferentassetclassesandgeographicalmarketsinordertoachieveanappropriatediversificationofinterestrate,exchangerate,creditand

equityrisksonthefinancialinvestments.Thepurposeistoreducetheriskoflossesbutalsotoretaintheprospectofgainingalong-termreturnontheinvest-

ments.

Credit risks

CreditrisksconcerningtheGroup'sfinancialinvestmentsprimarilyrelatetoinvestmentinbondsandotherunlistedinvestmentsfundsinvestinginloansto

businesses.

Inordertolimitthecreditrisk,alargeproportionofthisassetclasshasbeeninvestedinDanishgovernmentandmortgagebondswithahighcreditrating.

Toachieveahigherreturn,theGroupalsoinvestsincorporatebonds.

Equity risks

EquityrisksconcernstheGroup'sholdingoflistedandunlistedshares,includingprivateequityfundsaspartoftheGroup'sinvestmentoperations.Mostof

theseinvestmentsareplacedinlistedshares.

Tolimittheriskoflossesontheseshares,theyarediversifiedondifferentgeographicalregionsandsectorsinaccordancewiththeapplicableinvestment

policy.Derivativefinancialinstrumentsmaybeusedtomanagetheequityrisk.

Otherthingsbeingequal,a10%dropinequitypriceswouldreduceprofitsbyDKK473million(2010:DKK507million).

ForfurtherinformationonrisksconcerningtheGroup'sfinancialinvestments,seenote18:Cashresourcesandnote30:Financialrisksandfinancialinstru-

ments.

NOTE 12 - 13

12.INVESTMENTSINASSOCIATES,CONTINUED


64


Financial

assets at

fair value Available-

through for-sale

profit or financial Other

loss assets receivables

DKKm DKKm DKKm

Carryingamountat1January2011 10,444 21 85

Reclassificationtosecurities,currentassets,1January2011 (442) - -

Carryingamountat1January2011,adjusted 10,002 21 85

Additions 5,939 81 15

Disposals (6,098) (11) (14)

Valueadjustments,year-end (363) (2) 1

Reclassificationtosecurities,currentassets 304 - -

Carrying amount at 31 December 2011 9,784 89 87

Carryingamountat1January2010 11,572 26 67

Reclassificationtosecurities,currentassets,1January2010 (1,050) - -

Carryingamountat1January2010,adjusted 10,522 26 67

Additions 6,042 - 28

Disposals (7,945) (4) (11)

Valueadjustments,year-end 775 (1) 1

Reclassificationtosecurities,currentassets 608 - -

Carrying amount at 31 December 2010 10,002 21 85

Fair value hierarchy for financial assets and financial liabilities, measured at fair value

Level1includesfinancialassetsforwhichthefairvalueismeasuredonthebasisofquotedprices(unadjusted)inactivemarketsforidenticalassets.Level2

includesfinancialassetsandfinancialliabilitiesforwhichthefairvalueismeasuredonthebasisofdirectlyorindirectlyobservableinputsotherthanthe

quotedpricesincludedinlevel1.Level3includesfinancialassetsforwhichthefairvalueismeasuredonthebasisofvaluationmethodswhichincludeinputs

notbasedonobservablemarketdata.

Financial assets and liabilities measured at fair value Level 1 Level 2 Level 3

31 December 2011 DKKm DKKm DKKm

Financial assets

Financialassetsatfairvaluethroughprofitorloss

Danishmortgageandgovernmentbonds 5,704 - -

Creditbonds 1,029 38 -

Listedequity 3,579 - -

Propertycompanies 286 - 85

LundbeckfondVentures 117 - 150

Privateequityfunds 36 11 788

Otherunlistedfunds 39 141 95

Available-for-salefinancialassets 65 6 18

Derivatives - 16 -

Financial assets at fair value 10,855 212 1,136

Financial liabilities

Derivatives - 212 -

Financial liabilities at fair value - 212 -

NOTE 13

13. FINANCIAL ASSETS AND FINANCIAL RISKS, CONTINUED


65


Financial assets and liabilities measured at fair value Level 1 Level 2 Level 3

31 December 2010 DKKm DKKm DKKm

Financial assets

Financialassetsatfairvaluethroughprofitorloss

Danishmortgageandgovernmentbonds 4,247 - -

Creditbonds 632 37 -

Listedequity 3,849 - -

Propertycompanies 317 - 92

LundbeckfondVentures 184 - 74

Privateequityfunds 65 4 733

Otherunlistedfunds 49 157 57

Available-for-salefinancialassets 2 - 19

Derivatives - 42 -

Financial assets at fair value 9,345 240 975


Derivatives - 77 -

Financial liabilities at fair value - 77 -

2011 2010

DKKm DKKm

Financial assets measured at fair value according to level 3

Carryingamountat1January 975 637

Additions 240 242

Disposals (136) (9)

Reclassification,fromlevel3 1 (1)

Fairvalueadjustment 56 106

Carrying amount at 31 December 1,136 975

14.DEFERREDTAX

Temporary differences between the carrying amount and the tax base

Addition

Adjustment of through Movements

Balance at Currency deferred tax, acquisition during Balance at

1 January translation 1 January of activities the year 31 december


2011

Non-currentassets 3,856 59 89 3,700 (440) 7,264

Currentassets (777) 13 31 - 14 (719)

Other 32 (10) (119) 40 182 125

Provisionsinsubsidiaries (52) 2 (1) - 35 (16)

Taxlosscarry-forwardsetc. (821) (8) 76 (148) 287 (614)

Total 2,238 56 76 3,592 78 6,040

Deferred(taxassets)/taxliabilities 609 (11) 12 898 71 1,579

Researchanddevelopmentactivities(taxcredits) (186) (4) - - (1) (191)

Deferred (tax assets)/tax liabilities 423 (15) 12 898 70 1,388

NOTE13-14

13. FINANCIAL ASSETS AND FINANCIAL RISKS, CONTINUED


66


Addition

Adjustment of through Movements

Balance at Currency deferred tax, acquisition during Balance at

1 January translation 1 January of activities the year 31 December


2010

Non-currentassets 3,794 141 (10) 100 (169) 3,856

Currentassets (911) (16) (7) 16 141 (777)

Other (68) (21) (45) - 166 32

Provisionsinsubsidiaries (31) 3 - - (24) (52)

Taxlosscarry-forwardsetc. (444) (22) (37) - (318) (821)

Total 2,340 85 (99) 116 (204) 2,238

Deferred(taxassets)/taxliabilities 712 32 (39) 29 (125) 609

Researchanddevelopmentactivities(taxcredits) (108) (9) 3 - (72) (186)

Deferred (tax assets)/tax liabilities 604 23 (36) 29 (197) 423

2011 2010

DKKm DKKm

Deferred tax assets concern the following items:

Non-currentassets 189 34

Currentassets 194 151

Provisionsandpayables 79 147

Other 195 165

Provisionsinsubsidiaries 15 15

Taxvalueoftaxlosscarry-forwardsetc. 211 298

Researchanddevelopmentactivities(taxcredits) 191 186

Offsetwithinlegaltaxentitiesandjurisdictions (591) (818)

483 178

Deferred tax liabilities concern the following items:

Non-currentassets 2,175 1,193

Current assets 60 63

Provisionsandpayables 31 -

Other 183 161

Provisionsinsubsidiaries 13 2

Offsetwithinlegaltaxentitiesandjurisdictions (591) (818)

1,871 601

Oftherecogniseddeferredtaxassets,DKK402million(DKK484millionin2010)relatedtotaxlossesetc.andresearchanddevelopmentactivities(tax

credits)tobecarriedforward.Utilisationoftheseisbasedonafuturepositiveincomethatexceedsrealisationofthedeferredtaxliabilities.Therecognition

oftaxlossesisbasedonestimatesoftheexpectedearningsandtaxableincomeintheloss-makingentities,supportedbyreportsbyexternalanalysts,when

available.

2011 2010

DKKm DKKm

Unrecognised deferred tax assets:

Unrecogniseddeferredtaxassetsat1January 94 92

Currencytranslation 1 4

Prior-yearadjustments 1 7

Additions 261 47

Utilised (34) (56)

Unrecognised deferred tax assets at 31 December 323 94

NOTE14

14.DEFERREDTAX,CONTINUED


67


15.INVENTORIES

2011 2010

DKKm DKKm

Rawmaterialsandconsumables 243 260

Workinprogress 480 528

Manufacturedgoodsandgoodsforresale 1,262 1,013

Total 1,985 1,801

Indirectcostsofproduction 346 387

Impairmentlossfortheyear 26 35

Inventoriescalculatedatnetrealisablevalue 2 4

Thetotalcostofgoodssoldisincludedincostofsalesintheamountof 2,377 2,180

16.TRADERECEIVABLESANDOTHERRECEIVABLES

2011 2010

DKKm DKKm

Trade receivables

Receivables 4,100 2,393

Writedowns (105) (27)

Total 3,995 2,366

Due dates of trade receivables

Notdue 2,976 1,916

Overduebymorethan1monthandupto6months 991 375


Overduebymorethan12months 70 52

Total 4,100 2,393

Development in writedowns of trade receivables

Writedownsat1January 27 36

Realisedwritedowns (42) (3)

Reversed,unrealisedwritedowns (1) (1)

Changeinwritedowns 121 (5)

Writedowns at 31 December 105 27

Specification of other receivables by due date

Notdue 697 438

Overduebyupto3months 6 25


Overduebymorethan6monthandupto12months 8 -

Overduebymorethan12months 1 1

Total 716 469

Asnolossesareexpectedonotherreceivables,nowritedownshavebeenmade.

Credit risks

TheGroup'sproductsaresoldprimarilytodistributorsofpharmaceuticalsandhospitalsandservicestopublicauthorities,otherlargecustomersandsmall

subscriptionreceivablesfromindividualcustomers.Historically,thelossessustainedhavebeeninsignificant.Thiswasalsothecasein2011.However,the

changeinwritedownsreflectsapotentiallyhigherlossin2012.

The Group has no particular customer concentration and no significant reliance on specific customers. For the Falck Group, the large customers are to a great

extentrepresentedbypublicauthorities.

TheH.Lundbeck,ALKandFalckgroupshavealldefinedinternalprocedurestobefollowedinconnectionwiththeestablishmentofnewcustomerrelation-

ships and changes to existing relationships. The purpose of these procedures is to ensure that the risk of losses is reduced to the extent possible.

NOTE15-16


68


At31December2011,receivablesfromForestLaboratories,Inc.accountedformorethan5%oftotaltradereceivables.Thiswasalsothecaseat31December

2010.

At31December2011,receivablesfromTevaPharmaceuticalIndustriesLtd.accountedformorethan5%oftotalotherreceivables.Thiswasalsothecaseat31

December2010,whenreceivablesfromTakedaPharmaceuticalCompanyLimitedalsoexceededthatlimit.

Market risk

Thepharmaceuticalmarketischaracterisedbytheaimoftheauthoritiestoreduceorcaphealthcarecosts.Marketchangessuchaspricereductionsmay

haveaconsiderableimpactontheearningspotentialofpharmaceuticals.

In2011,thesubsidiariesexperiencedsignificantpricereductionsinseveralcountriesinEurope,wherehigherdebtsandrisingunemploymenthavecompelled

thegovernmentstoidentifysavingsinthepublicbudgets.Thesesavingshaveresulted,amongotherthings,inanumberofhealthcarereformstriggering

comprehensivepricereductionsinanumberofcountries.TheGroupexpectsthattheuncertaintyaboutpublicdebtsanddevelopmentsinunemployment

and the resulting focus on public budgets will continue into 2012 and 2013.

TheGroupismonitoringdevelopmentsintheEuropeaneconomiesandalsodevelopmentsintradereceivablesinordertoreducetheriskoflossestothebest

possible extent.

17.INCOMETAX

2011 2010

DKKm DKKm

Incometaxpayable/(incometaxreceivable)at1January (124) (62)


Taxpayablethroughacquisition 72 -

Prior-yeartaxadjustments 11 49

Taxpayableonprofitfortheyear 1,084 1,165

Taxonothercomprehensiveincome (32) (51)

Taxpaidfortheyear (989) (1,177)

Taxpaid/receivedinrespectofprioryears 80 (51)

Income tax payable/(income tax receivable) at 31 December 110 (124)

Income tax is specified as follows:

Incometaxreceivable (134) (261)

Incometaxpayable 244 137

Income tax payable/(income tax receivable) 110 (124)

18.CASHRESOURCES

2011 2010

DKKm DKKm

Fixed-termdeposits 1,680 4,491

Othercashresources 2,305 1,299

Cash at 31 December 3,985 5,790

Securitieswithamaturityoflessthan3months 744 133

Securitieswithamaturityofmorethan3months 1,571 363

Securities at 31 December 2,315 496

Cash and securities at 31 December 6,300 6,286

DKK95millionoftheGroup'scashandsecuritiesisheldbyaSwedishsubsidiarycomprisedbySwedishinsurancerulesand,byextension,governedbyrules

onsolvencyrequirements.

Thesecuritiesportfolioisclassifiedasfinancialassetsmeasuredatfairvaluethroughprofitorloss.

NOTE16-17-18

16.TRADERECEIVABLESANDOTHERRECEIVABLES,CONTINUED


69


Liquidity and credit risk and capital structure

Withthepresentcapitalstructure,theGroupiswell-consolidated.TheGroupaimstoretainadequatecashresourcestosupportbusinessdevelopmentand

flexibilityincaseofchangestothemarketsituation,potentialacquisitionactivitiesandproductin-licensingopportunities.Thisisachievedthroughacombi-

nationofliquiditymanagement,ultra-liquidassetsandguaranteedandunguaranteedcreditfacilities.Thecapitalstructureisconsideredappropriaterelative

to the Group's strategic plans.

Thecreditriskofcashandderivatives(forwardexchangecontracts,currencyoptionsandinterest-rateoptions)islimitedbecauseLundbeckdealsonlywith

bankswithahighcreditrating.Tofurtherlimittheriskoflosses,internallimitshavebeendefinedforthecreditexposureacceptedtowardsthebankswith

whichtheGroupcollaborates,andtheGroupaimstomaintaincounterpartydiversificationtoavoidmaterialconcentrationatindividualcounterparties.The

Groupalsousescollateralagreements(e.g.ISDAandGRMA)andexchangeofcollateralwithcounterpartieswithwhichtheGrouphashedgingbusiness.

CertainoftheFalckGroup’sloans,includingthedebtofFalckHoldingA/S,aresubjecttocertainloancovenants,andtheFalckGroupcontinuouslymonitors

whetherthecovenantsareobserved.

19. ASSETS HELD FOR SALE

FalckhasresolvedtodivestthesubsidiarythatprovidesemergencyservicesinBrazilbecausethecompanyhasresolved,goingforward,tofocusonthe

privateandcommercialmarketasafoundationforgrowthinBrazil.Consequently,theinvestmentinthecompanyhasbeenwrittendowntofairvalueless

expected costs to sell.

On17February2012,anagreementwasreachedforasaleofthecompany.Thesalewillnotaffecttheprofitforthe2012financialyear.

2011 2010

DKKm DKKm

Assets and liabilities concerning assets held for sale may be specified in the following main groups:

Receivables 92 -

Other non-current assets 6 -

Total assets held for sale 98 -

Non-current liabilities 23 -

Currentliabilities 75 -

Total liabilities relating to assets held for sale 98 -

20. CAPITAL BASE

TheFoundation'scapitalbaseisDKK2,225,000.ThepresentcharteroftheFoundationwasapprovedbytheBoardofDirectorson30May2011.TheCivil

AffairsAgencyactsassupervisoryauthority.OftheFoundation'sprofitbeforetaxlessnon-distributeddividendsinthesubsidiariesandassociates,atleast

20%mustfirstbeallocatedtothecapitalbase.

2011 2010

DKKm DKKm

Change in capital base during the period

1July2005-31December2011

Thecapitalbaseat1January2005amountedto: 1,420 1,420

2005Capitalbaseincreasedby 80 80





2011Capitalbaseincreasedby 175 -

Capital base at 31 December 2,225 2,050

Grants, net 498 383

NOTE18-19-20

18.CASHRESOURCES,CONTINUED


70


21.OTHERRESERVES

2011 2010

DKKm DKKm

Currency translation reserve

Balanceat1January (291) (796)

Currencytranslationfortheyearconcerningforeignsubsidiaries

andadditionstonetinvestmentsinforeignsubsidiaries 243 564

Taxinrelationhereto (46) (59)

Balance at 31 December (94) (291)

Hedging reserve

Balanceat1January (5) 45

Adjustment,deferredexchangegains/losses,hedging,recognisedinothercomprehensiveincome 64 (214)

Exchangegains/losses,hedging,transferredtorevenue (126) 151

Exchangegains/losses,trading,transferredtonetfinancials(transferredfromhedging) - 1


Repaymentofinteresthedginginstruments 15 -

Tax in relation hereto 26 12

Balance at 31 December (82) (5)

Reserve for fair value adjustment of available-for-sale financial assets

Fairvalueadjustmentat1January 2 6

Fairvalueadjustment (2) (1)

Realisedgainondisposal (7) (3)

Prolonged impairment losses recognised in the income statement. 3 -

Fair value adjustment at 31 December (4) 2

Total other reserves (180) (294)

22.MINORITYINTERESTS

2011 2010

DKKm DKK m

Minorityinterestsat1January 4,571 3,825

Shareofprofit/lossfortheyear 815 817

Shareofothercomprehensiveincomefortheyear 28 148

Shareofothercapitalmovements 12 10

Dividend (252) (211)

AdditiononacquisitionofFalck (1,329) -

Buybackofsharesfromminorityinterests (52) (18)

Increaseinminorityinterests 2 -

Adjustmentofprovisionforacquisitionofminorityinterests (14) -

Minority interests at 31 December 3,781 4,571

23.PENSIONSANDSIMILAROBLIGATIONS

ThemajorityoftheemployeesoftheGrouparecoveredbypensionplanspaidforbythecompaniesoftheGroup.Thetypesofplanvaryaccordingtoregula-

toryrequirements,taxrulesandeconomicconditionsinthecountriesinwhichtheemployeesareemployed.Asummaryofthemostimportantplansisgiven

below.

Defined contribution plans

Fordefinedcontributionplans,theemployerundertakestopayadefinedcontribution(e.g.afixedamountorafixedpercentageofthepay).Underadefined

contributionplan,theemployeeswillusuallybeartheriskrelatedtofuturedevelopmentsininterestandinflationrates,mortalityanddisabilityetc.

NOTE 21 - 22 - 23


71


Thecostofdefinedcontributionplans,representingcontributionstotheplans,totalledDKK373millionin2011(DKK234millionin2010).

Defined benefit plans

Fordefinedbenefitplans,theemployerundertakestopayadefinedbenefit(e.g.aretirementpensionatafixedamountorafixedpercentageofthe

employee’sfinalsalary).Underadefinedbenefitplan,thecompanyusuallybearstheriskrelatingtofuturedevelopmentsininterestandinflationratesetc.

Fordefinedbenefitplans,thepresentvalueoffuturebenefits,whichthecompanyisliabletopayundertheplan,iscomputedusingactuarialprinciples.The

computationofpresentvalueisbasedonassumptionsaboutdiscountrates,changesinpayratesandpensions,investmentyield,staffresignationrates,

mortality,disabilityandotherfactors.Presentvalueiscomputedexclusivelyforthebenefitstowhichtheemployeeshaveearnedentitlementthroughtheir

employmentwiththecompany.Actuarialgainsandlossesarerecognisedintheincomestatementastheyarecalculated.

2011 2010

DKKm DKKm

Pensions and similar obligations

Presentvalueoffundedpensionobligations 345 283

Fairvalueofplanassets (279) (233)

Funded pension obligations, net 66 50

Presentvalueofunfundedpensionobligations 190 186

Provisions for pensions, 31 December 256 236

Otherpension-likeobligations 105 92

Provisions for pensions and pension-like obligations, 31 December 361 328

Pension obligations and similar obligations break down as follows:

Non-currentobligations 342 316

Current obligations 19 12

Pension obligations and similar obligations, 31 December 361 328

Theactuarialassumptionsappliedincalculatingpensionobligationsconcerningthedefinedbenefitplansvaryfromonecountrytothenextandarebasedon

local economic and social conditions. The following assumptions were applied:

2011 2010

Discountrate 2.7%-8.0% 2.7%-8.5%

Payrateincrease 2.0%-5.5% 2.0%-5.5%

Pensionincrease 1.3%-2.9% 1.3%-3.3%

Age-weightedstaffresignationrate 0%-8% 0%-8%

Expectedreturnonplanassets 2.5%-8.0% 2.5%-8.5%

2011 2010

% distribution % distribution

The fair value of the plan assets breaks down as follows:

Shares 9 10

Bonds 33 27

Property 4 3

Insurancecontracts 52 60

Other assets 2 1

Total 100 100

NOTE 23

23.PENSIONSANDSIMILAROBLIGATIONS, CONTINUED


72


2011 2010

DKKm DKKm

Change in present value of funded pension obligations

Presentvalueoffundedpensionobligationsat1January 283 232

Additionthroughacquisitions 24 6


Pensionexpenses 12 8

Interestexpensesrelatingtotheobligations 15 12

Actuarial(gains)/losses 10 7

Disbursements (6) (6)

Employeecontributions 2 -

Settlement (3) -

New plan - 6

Present value of funded pension obligations at 31 December 345 283

Change in fair value of plan assets

Fairvalueofplanassets1January 233 191

Addition through acquisitions 26 6


Expected return on plan assets 12 9

Actuarial(gains)/losses (3) 1

Payments 16 11


Employeecontributions 2 2

Settlement (3) -

Newplan - 4

Fair value of plan assets 31 December 279 233

Realised return on plan assets 6 11

Change in present value of unfunded pension obligations

Presentvalueofunfundedpensionobligationsat1January 186 159

Pensionexpenses 7 7

Interestexpensesrelatingtotheobligations 7 9

Actuarial(gains)/losses (7) 15


Present value of unfunded pension obligations at 31 December 190 186

Change in obligations concerning defined benefit plan

Pensionobligationsat1January 236 200


Additionthroughacquisitions (2) -

Recognisedasexpense(changerecognisedintheincomestatement) 35 50

Payments (16) (11)

Disbursements 1 (4)

Employeecontributions - (2)

Pension obligations at 31 December 256 236

Specification of change recognised in the income statement

Pensionexpenses 19 15

Interest expenses relating to the obligations 22 21

Expectedreturnonplanassets (12) (9)

Actuarial(gains)/losses 6 21

New plan - 2

Total expenses recognised 35 50

NOTE 23



73


Other pension-like obligations

AnobligationofDKK105million(2010:DKK92million)isrecognisedintheGrouptocoverotherpension-likeobligations,includingprimarilytermination

benefitsinanumberofsubsidiaries.Thebenefitpaymentsareconditionaluponspecifiedrequirementsbeingmet.Theamountofpension-likeobligations

increasedbyDKK13millionin2011(declinedbyDKK4millionin2010).

24.LIABILITIESRELATINGTOACQUISITIONSANDMINORITYINTERESTS

2011

DKKm

Liabilitiesconcerningacquisitionofminorities 516

Payableconsiderationsandcontingentconsideration 39

Liabilities 31 December 555

Non-current portion:

Liabilitiesconcerningacquisitionofminorities 493


512

Current portion:

Liabilities concerning acquisition of minorities 23


43

Liabilities concerning acquisition of minorities

Liabilities1January -

Currencytranslation 43

Additionsthroughacquisitions 438

Additiononacquisitionofminorityinterests (1)

Interest component, discounted liabilities 2

Adjustment,recognisedgoodwill 1

Adjustment,recognisedinequity 33

Liabilities concerning acquisition of minorities 31 December 516

Due dates in respect of acquisition of minorities are expected to be:

Within1yearofthebalancesheetdate 23

Between1and5yearsfromthebalancesheetdate 374

Morethan5yearsafterthebalancesheetdate 119

Liabilities concerning acquisition of minorities 31 December 516

Payable considerations and contingent consideration

Liabilities1January -

Additions through acquisitions 39

Payable considerations and contingent consideration 31 December 39

Due dates in respect of acquisition of minorities are expected to be:

Within1yearofthebalancesheetdate 20

Between1and5yearsfromthebalancesheetdate 19

Morethan5yearsafterthebalancesheetdate -

Payable considerations and contingent consideration 31 December 39

NOTE23-24



74


25.OTHERPROVISIONS

2011 2010

DKKm DKKm

Otherprovisionsat1January 496 463


Additions through acquisitions 33 -

Provisionscharged 51 106

Provisionsused (152) (79)

Unusedprovisionsreversed (24) (12)

408 496

Other provisions at 31 December break down as follows:

Non-currentprovisions 191 280

Currentprovisions 217 216

408 496

OtherprovisionsprimarilycoverH.LundbeckA/S'expensesfordefendingthecompany'sintellectualpropertyrightsandreturnsandtheguaranteesand

commitmentstowardsbuyerswhichALK-AbellóA/Shasundertakeninconnectionwiththedivestmentoftheingredientsbusiness,Chr.Hansenin2005.

26.MORTGAGE,BANK,LEASINGANDREPODEBT

2011 2010

DKKm DKKm

Mortgage debt

Mortgagedebtbymaturity:

Within1yearofthebalancesheetdate 1 1

Between1and5yearsfromthebalancesheetdate 7 6

Morethan5yearsafterthebalancesheetdate 2,255 1,879

Mortgage debt at 31 December 2,263 1,886

Specification of mortgage debt:

Non-currentliabilities 2,262 1,885

Current liabilities 1 1

Mortgage debt at 31 December 2,263 1,886

Weighted

average Amortised Nominal

Currency/ Fixed/ effective costs value Fair value

Expiry floating interest rate DKKm DKKm DKKm

Mortgage debt 2011

Bondloan,H.Lundbeck DKK/2035 Floating 2.4% 1,411 1,540 1,581

Bondloan,H.Lundbeck DKK/2037 Floating 1.9% 437 440 420



Bondloan,Falck DKK/2025 Fixeduntil2015 4.5% 377 409 415

Bondloan,ALK DKK/2028 Fixed 4.0% 26 26 26

Total 2,263 2,427 2,454

NOTE25-26


75


Weighted

average Amortised Nominal

Currency/ Fixed/ effective costs value Fair value

Expiry floating interest rate DKKm DKKm DKKm

Mortgage debt 2010

Bondloan,H.Lundbeck DKK/2035 Floating 3.4% 1,410 1,567 1,528




Bondloan,ALK DKK/2025 Fixed 4.3% 28 28 28

Total 1,886 2,047 1,990

2011 2010

DKKm DKKm

Bank and leasing debt

Bankandleasingdebtbymaturity:

Within1yearofthebalancesheetdate 283 10

Between1and5yearsfromthebalancesheetdate 1,772 9

Morethan5yearsafterthebalancesheetdate 4,371 1

Bank debt at 31 December 6,426 20

Specification of bank and leasing debt:

Long-termobligations,loan 6,088 -

Long-termobligations,leasedassets 55 10

Totallong-term 6,143 10

Short-termobligations,loan 257 7

Short-term obligations, leased assets 26 3

Totalshort-term 283 10

Bank debt at 31 December 6,426 20

Weighted

average Nominal

Fixed/ effective value

2011 Currency Expiry floating interest rate DKKm

DKK, EUR, NOK,

Bankdebt,FalckGroup USD,SEK,BRL 2012-2018 Floating 4.2% 6,048

EUR, BLR,

Leasingdebt,FalckGroup COP,NOK,USD 2012-2016 Floating 7,.% 70

Leasingdebt,ALKGroup EUR 2014-2016 Floating 3.5% 11

EUR, USD,

Otherbankandfinanceloans,ALKGroup DKK,NOK 2016 Fixed 3.1% 297

6,426

2010

Leasingdebt EUR 2016 Floating 3.5% 13

EUR, USD,

Otherbankandfinanceloans DKK,NOK 2011-2014 Floating 0%-2.6% 7

20

Repo debt

RepodebtintheLundbeckFoundationofDKK98millionfallsdueon16and19January2012Thedebtcarriesafixedrateofinterestfromthedateof

conclusionat0.67%.

NOTE 26

26.MORTGAGE,BANK,LEASINGANDREPODEBT,CONTINUED


76


27.ADJUSTMENTS

2011 2010

DKKm DKKm

Depreciation,amortisationandimpairment 1,508 1,132

Incentiveprogrammes 33 26

Changeinpensionobligation 25 21

Changeinotherprovisions (102) 40

Otheradjustments 25 (26)

1,489 1,193

28.WORKINGCAPITALCHANGES

2011 2010

DKKm DKKm

Changeininventories (113) 79

Changeinreceivables (344) (171)

Changeinreceivablesfromassociates (22) -

Changeincurrentliabilities 502 198

23 106

29.BUSINESSCOMBINATIONS

2011

InJuly2011,theLundbeckFoundationacquiredcontrollinginfluenceinFalckHoldingA/SthroughthecontributionoftheFoundation'sholdingofFalckA/S

shares and the subscription of new shares in Falck Holding A/S. At the same time, Falck Holding A/S acquired additional shares in Falck A/S and now owns

98.8%ofFalckA/SandtheFalckGroup.TheinvestmentisconsistentwiththeFoundation'sintentiontoexpanditshealthcareactivities.

InAugust2011,theFalckGroupacquiredallthesharesinColombianambulanceserviceproviderSER,whichoperatesinthreelargecitiesinColombiaand

hasalargenetworkofdoctors.Inaddition,inSeptember2011theFalckGroupacquiredallthesharesinGermancompanyKranken-TransportHerzig,which

operatesambulanceservicesintheGermanstateofNorthRhineWestphalia.TheseacquisitionsshouldbeseenaspartoftheFalckGroup'saimtobecomea

globalandleadingplayerwithintheirbusinessareas.

Name Principal activity Date of acquisition Ownership interest acquired Voting share acquired

FalckHoldingA/S Emergency,Assistance, July2011 57.36% 57.36%

Healthcare and

Trainingactivities

ServicioEmergencias Ambulanceservices August2011 100% 100%

Regional(SER)

Kranken-TransportHerzig Ambulanceservices September2011 100% 100%

The transactions were accounted for using the purchase method of accounting.

NOTE27-28-29


77


Calculation of acquired net assets and cash consideration:

Fair value on

Fair value on acquisition

acquisition of other

of Falck enterprises Total 2011

DKKm DKKm DKKm

2011

Intangible assets 100 - 100

Property,plantandequipment 1,643 20 1,663

Cashandcashequivalents 969 11 980

Othercurrentassets 1,887 19 1,906

Interest-bearingdebt (4,478) (9) (4,487)

Currentliabilities,provisionsetc. (3,622) (7) (3,629)

Minorityinterests 1,329 (3) 1,326

Acquired net assets (2,172) 31 (2,141)

Goodwill 5,173 72 5,245

Otherintangibleassets 3,206 25 3,231

Deferredtaxonintangibleassets (812) (6) (818)

Acquisition cost 5,395 122 5,517

Acquiredcashinhandandatbank (969) (11) (980)

Cash consideration 4,426 111 4,537

Expensedtransactioncosts 24 27 51

OntheacquisitionoftheFalckGroup,anassessmentwasmadeofthevalueoftheacquiredcustomeragreements,frameworkagreementsandcustomer

portfolios.Thevaluationthereofwasbasedonthe”MultiPeriodExcessEarningsMethod(MEEM-method)”inwhichthevalueiscalculatedonthebasisofan

expectedfuturecashflow.Theprincipalassumptionsareexpectedlivesoftheexistingagreementsandportfolios,earningsandcontributionforusingassoci-

atedassetsandemployees.

ThevaluationofthebrandisbasedontheRelieffromroyaltymethodinwhichthevalueiscalculatedonthebasisofanexpectedfuturecashflowwiththe

keyassumptionsbeingexpectedlife,royaltyrateandgrowthratesandatheoreticallycalculatedtaxeffect.Sincethebrandisexpectedtobeupheldindefi-

nitely,theusefullifehasbeensetasnon-definable.

2010

TheALKGroupacquiredthesharecapitaloftheDutchcompaniesArtuBiologicals(ArtuBiologicalsEuropeB.V.andArtuBiologicalsOnroerendGoedB.V.)

fromFornixBioscienceswithaviewtocurrentlystrengtheningtheALKGroup'sglobalpresenceandenhanceitsmarketconsolidation.Theacquisitionwas

completedintheALKGroup'sDutchsubsidiaryeffective1July2010,andthetwocompaniesarebeingintegratedinanongoingprocess.

TheALKGroupalsoacquiredtheallergyvaccineactivitiesofUScompanyNelcoLaboratorieswithaviewtocurrentlystrengtheningtheALKGroup'sglobal

presence.TheacquisitionwascompletedintheALKGroup'sUSsubsidiaryeffective1August2010.NelcoLaboratoriesmanufacturesandsellsinjection-based

allergyvaccinesintheUSA.


ArtuBiologicals Productionandsale 1July2010 100% 100%

ofallergyvaccines

NelcoLaboratories Saleofallergyvaccines 1August2010 100% 100%

The transactions were accounted for using the purchase method of accounting.

NOTE 29

29.BUSINESSCOMBINATIONS,CONTINUED


78


Calculation of acquired net assets and cash consideration: 2010

DKKm

Fair value on acquisition

Land and buildings 13

Plantandmachinery 3

Other plant and equipment 2

Otherintangibleassets 108

Inventories 33

Receivables 24

Currentliabilities (40)

Acquired net assets 143

Goodwill 35

Acquisitioncost 178

Acquired cash in hand and at bank -

Cash consideration 178

Thecostpricepaidinconnectionwiththecompanyacquisitionsexceededthefairvalueofacquiredidentifiableassets,liabilitiesandcontingentliabilities.

Accordingtoapreliminarycalculation,thepositivedifferenceamountstoDKK7,658million(2010:DKK35million).

ThedifferencewithrespecttotheacquisitionoftheFalckGrouprepresentsthevalueofacquiredcontractualcustomerrelationships,logoandbrandinthe

amountofDKK2,394millionaftertax.Inaddition,individualsmallassetsandliabilitieswithanetvalueofDKK36millionhavebeenidentifiedandrecog-

nised.TheremainingdifferenceofDKK5,173millionrepresentsgoodwillattributabletothefourdifferentbusinessareasintheFalckGroup,anditismainly

basedontherealisationofthestrategicgoaloftheFoundationofhavingathirdlegwithfuturegrowthopportunitiesandthevalueoftheacquiredstaff.

ThedifferencewithrespecttotheacquisitionofothercompaniesrepresentsthevalueofacquiredcontractualcustomerrelationshipsintheamountofDKK19

millionaftertax.TheremainingdifferenceofDKK72millionrepresentsgoodwill.

AcquiredassetsincludetradereceivablesatafairvalueofDKK1,116million.ThecontractualgrossreceivableamountstoDKK1,234million,ofwhichDKK118

millionwasassessedasbeingirrecoverableattheacquisitiondate.

TheownershipoftheFalckGroupwasacquiredintwosteps,thefirstofwhichwasinJanuary2011,whentheFoundationachievedanownershipinterestof

36%,andthesecondinJuly2011,afterwhichtimetheownershipis57%.Nogainorlosshasbeenrecognisedinconnectionwiththestepacquisitionofthe

shareholdingmajorityofFalckbecausenomaterialchangestothevaluationoftheFalckGroupweremadebetweenthetwoacquisitiondates.

Businesscombinationsmaybeadjustedforupto12monthsafterthedateofacquisition.

ThedifferenceinrespectofArtuBiologicalsandNelcoLaboratoriesrepresentsthevalueofassetswhosefairvaluecannotbereliablymeasured,future

growthopportunitiesandthevalueoftheacquiredstaff.

OftheGroup'scomprehensiveincomein2011ofDKK2,522million(2010:DKK4,161million),DKK28million(2010:DKK2million)isattributabletoresults

generatedbytheacquiredoperationsaftertheacquisitiondate.

RevenueandcomprehensiveincomefortheyearfortheGroupin2011calculatedproformaasiftheacquiredenterpriseshadbeenacquiredon1January2011

amounttoDKK28,731million(2010:DKK16,940million)andDKK2,920million(2010:DKK4,197million),respectively.Theamountsstatedareexclusiveof

the effect of the purchase price allocation, which is incorporated in the pre-acquisition balance sheet.

2012

Atthebeginningof2012,theFalckGroupacquired75%ofVLTransportSanitariS.L.U.andGroupVLServeisSantariesS.L.U.,whichoperateambulanceser-

vicesinCatalonia,Spain,foracashconsiderationofDKK108million.TheFalckGroupwillusetheacquisitionasaplatformforfurtherexpansioninambulance

servicesintheSpanishmarket.


VLTransportSanitariS.L.U Ambulanceservices February2012 75% 75%

GroupVLServeisSanitaris, Ambulanceservices February2012 75% 75%

S.L.U.(VL)

Because of the acquisition date, it has not been possible to complete a purchase price allocation.

NOTE 29

29.BUSINESSCOMBINATIONS,CONTINUED


79


30.FINANCIALRISKSANDFINANCIALINSTRUMENTS

TheGroup'sbusinessactivitiesimplythattheresultsandbalancesheetmaybeaffectedbyvariousfinancialrisks.Themanagementoftheserisksisdecen-

tralisedandhandledrespectivelyintheH.Lundbeck,ALKandFalckgroupsandinLundbeckfondInvestA/Sbasedonpoliciesandguidelinesapprovedby

the Board of Directors.

Seealsonote13:Financialassetsandfinancialrisks,note16:Tradereceivablesandotherreceivables,andnote18:Cashresourcesforadescriptionofrisksand

the management thereof.

30.1 Exchange rate risks

Exchange rate risks arise because the Group's expenses and income in different currencies do not match and because the Group's assets and liabilities

denominatedinforeigncurrencydonotbalance,amongotherthingsduetoLundbeckfondInvestA/S'investmentassets.Themanagementoftheserisksis

focused on risk mitigation.

TheGroupappliesvariousderivativefinancialinstrumentstomanagetheserisks.Someoftheseinstrumentsareclassifiedashedginginstrumentsandmeetthe

accountingcriteriaforhedgingfuturecashflows.Changesinthefairvalueofthesecontractsarerecognisedinthestatementofcomprehensiveincomeunder

othercomprehensiveincomeastheyariseand–oninvoicingofthehedgedcashflow–transferredfromothercomprehensiveincomeforinclusioninthesame

itemasthehedgedcashflow.Hedgingcontractsthatdonotmeetthehedgecriteriaareclassifiedastradingcontracts,andchangesinthefairvaluearerecog-

nisedasfinancialitemsastheyarise.TheneedforhedgingisassessedseparatelyintheH.Lundbeck,ALKandFalckgroupsandinLundbeckfondInvestA/S.

Otherthingsbeingequal,anincreaseof5%intheUSDwouldincreasetheGroup'sprofitbyDKK79million.

2011 2010

Monetary assets and monetary liabilities for the principal currencies at 31 December DKKm DKKm

Monetary assets

CAD 171 113

CHF 279 334

GBP 786 663

JPY 108 236

TRY 103 128

USD 3,061 2,110

Monetary liabilities

CAD 182 68

CHF 19 15

GBP 136 90

JPY 100 -

TRY 21 26

USD 1,517 1,535

Duetothelong-standingfixedexchangeratepolicyinDenmark,theforeigncurrencyriskforEURisconsideredimmaterial,andEURisthereforenotincluded

inthelistabove.

Estimated impact on profit and equity from a 5% increase in year-end exchange rates of the most important currencies

CAD CHF GBP JPY TRY USD


2011

Profit (2) 10 (5) 0 1 79

Equity (28) 3 (6) 0 (2) 394

2010

Profit 1 15 23 12 2 70

Equity (15) 9 23 12 (4) 313

Theprofitimpactisincludedintheimpactonequity.

NOTE 30


80


Currency translation in associates measured using the equity method. 2011 2010

DKKm DKKm

Currencytranslationat1January - (2)

Transferredtotheincomestatementinconnectionwithdivestmentofshareholdinginterest - 2

Currencytranslationat31December - -

30.2 Interest rate risk

InterestrateriskrelatestotheGroup'sinterest-bearingassetsandliabilitiesandprincipallytotheGroup'sbondsclassifiedasfinancialassetsmeasuredat

fairvaluethroughprofitorloss.Seenote13:OtherfinancialassetsandtheFalckGroup'soverallloanfinancing,cf.note26:Mortgage,bank,leasingandrepo

debt.

Interest receivable

Thedurationoftheinvestmentswhenselectingfinancingandinvestmentinstrumentsisusedtomanagetheinterestraterisk.Inaddition,theGroupuses

derivativefinancialinstrumentstomitigatetheinterestrateexposure.Theuseoffinancialinstrumentstomanageinterestrateriskdoesnotqualifyforhedge

accounting,andthechangesinfairvaluearethereforerecognisedasfinancialincomeorexpensesinanongoingprocess.

TheGroup'sportfolioofbondshasadurationof1.0year.Otherthingsbeingequal,anincreaseof1%-pointininterestrateswouldincreasetheGroup'sprofit

byDKK66million.

At31December2011,theGrouphadaninterestrateswapformanaginginterestrateexposureonportfolioinvestments.Otherthanthis,therewerenoderiva-

tivesat31December2011and31December2010tomanageinterestraterisksbecausethedistributionofinvestmentscarryingfloatingandfixedinterestat

thegiventimeswasdeemedtobesatisfactory.

Interest expenses

TheFalckGroup’sinterestrateriskismainlyaffectedbytheFalckGroup’soverallfinancing.Basedonthecurrentmarketsituation,theFalckGroup'sexecu-

tivemanagementandboardofdirectorshaveresolvedtoconvert70%oftheoverallfinancingtoafixedthree-yearinterestrateusinginterestrateswaps.

Theremainderoftheoverallfinancingisbasedonashort-terminterestrate.Forhedginginterestraterisks,interestrateswapsensurethattheinterestrate

forpartofthedebtraisedinDKKcannotexceed1.4%,thatinterestratesondebtraisedinEURcannotexceed1.17%andthatinterestratesondebtraisedin

USDcannotexceed0.55%.Theremainingpartofthesyndicatedfinancingmustbebasedonashort-terminterestrate.TheFalckGroupisthereforesensitive

tofluctuationsinmarketinterestrates,andafluctuationby1%-pointwouldchangetheannualinterestexpensebyDKK20millionasalargepartofthe

interestrateexposureishedgedusinginterestrateswaps.Withoutthishedge,afluctuationby1%-pointwouldchangetheGroup'sinterestexpensebyDKK

62 million.

Thesensitivitystatedhasbeendeterminedbasedontherecognisedfinancialassetsandliabilitiesat31December2011.Noadjustmenthasbeenmadefor

servicingandraisingofdebt,orthelikein2011.Furthermore,itisassumedthatallhedgesoffloating-rateloansaredeemedtobeeffective.

30.3 Maturity dates for financial assets and financial liabilities

31 December 2011 Less than Between More than Effective

Financial assets 1 year 1 and 5 years 5 years Total interest

DKKm DKKm DKKm DKKm rates

Derivativesincludedinthetradingportfolio 4 - - 4 -

Securities1)

Danishmortgageandgovernmentbonds 2,295 1,096 2,351 5,742 0-6%

Creditbonds 1 323 704 1,028 3-35%

Listedequity - - 3,580 3,580 -

Sharesinpropertycompanies - - 371 371 -

LundbeckfondVentures - - 267 267 -

Privateequityfunds - - 853 853 -

Otherunlistedfunds - - 257 257 -

Financial assets at fair value through profit or loss 2,300 1,419 8,383 12,102 -

Derivativestohedgefuturecashflows 12 - - 12 -

Financial assets used as hedging instruments 12 - - 12 -

NOTE 30

30.FINANCIALRISKSANDFINANCIALINSTRUMENTS,CONTINUED


81





Receivables2) 4,883 53 35 4,971 -

Fixed-termdeposits 1,680 - - 1,680 0-8%

Othercashresources 2,305 - - 2,305 0-8%

Loans and receivables 8,868 53 35 8,956 -

Available-for-sale financial assets - 89 - 89 -

Total financial assets 11,180 1,561 8,418 21,159 -



Financial liabilities at fair value through profit or loss 82 - - 82 -

Derivativestohedgefuturecashflows

andnetinvestmentinforeignsubsidiaries 89 41 - 130 -

Financial liabilities used as hedging instruments 89 41 - 130 -

Mortgage,bank,leasingandrepodebt 463 1,711 6,612 8,786 1-8%

Employeebonds/purchaseobligations 56 469 119 644 3-6%

Otherpayablesandnon-disbursedgrants2) 6,714 394 - 7,108 -

Financial liabilities, measured at amortised cost 7,233 2,574 6,731 16,538 -

Total financial liabilities 7,404 2,615 6,731 16,750 -





Securities1)

Danishmortgageandgovernmentbonds 488 1,163 2,632 4,283 0-5%

Creditbonds - 161 472 633 2-19%

Listedequity - - 3,849 3,849 -

Sharesinpropertycompanies - - 409 409 -

LundbeckfondVentures - - 258 258 -

Privateequityfunds - - 802 802 -

Other unlisted funds - - 263 263 -

Financial assets at fair value through profit or loss 489 1,324 8,685 10,498 -

Derivativestohedgefuturecashflows 42 - - 42 -

Financial assets used as hedging instruments 42 - - 42 -

Receivables2) 3,052 60 26 3,138 -

Fixed-termdeposits 4,491 - - 4,491 0-4%

Othercashresources 1,299 - - 1,299 0-6%

Loans and receivables 8,842 60 26 8,928 -

Available-for-sale financial assets - 21 - 21 -

Total financial assets 9,373 1,405 8,711 19,489 -

NOTE 30



82


Less than Between More than Effective

1 year 1 and 5 years 5 years Total interest




Financial liabilities at fair value through profit or loss 15 - - 15 -

Derivativefinancialinstrumentstohedgefuturecashflows 62 - - 62 -

Financial liabilities used as hedging instruments 62 - - 62 -

Mortgage,bank,leasingandrepodebt 308 15 1,880 2,203 1-4%

Employeebonds - 60 - 60 3-6%

Otherpayablesandnon-disbursedgrants2) 4,170 310 3 4,483 -

Financial liabilities, measured at amortised cost 4,478 385 1,883 6,746 -

Total financial liabilities 4,555 385 1,883 6,823 -

Theamountsinthetableaboveareexclusiveofinterest.

1)Thesecuritiesareclassifiedasfinancialassetsmeasuredatfairvaluethroughprofitorloss.

2)Includingreceivablesandpaymentsrecognisedinnon-currentassetsandliabilities

3)Nominalvalueofmortgagedebtfallingdueaftermorethan5yearstotalsDKK2,427millionat31December2011(2010:DKK2,047million)

30.4 Net outstanding forward exchange transactions, currency options and interest rate swaps

Exchange Exchange Average

Contractual gains/losses gains/losses hedge prices

value in recognised recognised of existing

accordance in other in income forward

with hedge comprehensive statement/ exchange

accounting income balance sheet transactions Expiry

Forward contracts DKKm DKKm DKKm DKK period

2011

AUD 5 - - 539.84 May2012

CAD 552 (19) 5 536.25 Dec.2012

CHF 183 1 (12) 610.84 Dec.2012

CZK 22 1 - 30.38 Sep.2012

GBP 577 (15) (1) 859.70 Dec.2012

HUF 4 - - 2.48 Mar.2012

JPY 121 (5) (19) 7.08 Dec.2012

MXN 108 2 3 41.39 Dec.2012

NOK 339 (3) - 94.76 Nov.2012

PLN 118 (1) - 165.25 Oct.2012

RUB 49 - - 17.41 Oct.2012

SEK 338 (10) (1) 80.77 Oct.2012

SGD 4 - (1) 426.56 Aug.2012

TRY 148 (2) 20 290.70 Sep.2012

USD 457 (15) 113 550.15 Dec.2012

ZAR 48 - 1 69.35 Oct.2012

Forward contracts 2011 3,073 (66) 108

NOTE 30



83


Exchange Exchange Average

Contractual gains/losses gains/losses hedge prices

value in recognised recognised of existing

accordance in other in income forward

with hedge comprehensive statement/ exchange

accounting income balance sheet transactions Expiry

Forward contracts DKKm DKKm DKKm DKK period

2010

AUD 15 - (13) 429.11 May2011

CAD 367 (4) (38) 548.19 Dec.2011

CHF 131 (10) (12) 545.31 Dec.2011

CZK 21 - (1) 29.74 Oct.2011

EUR 411 - 5 746.46 Apr.2011

GBP 103 - - 861.61 Nov.2011

HUF 8 - - 2.66 Aug.2011

ILS 3 - (2) 145.87 Feb.2011

JPY 20 - 6 6.72 Aug.2011

MXN 115 (3) 2 44.10 Dec.2011

NOK - - (2) - -

PLN 22 - (2) 182.95 Aug.2011

RUB 40 - 1 18.24 Nov.2011

SEK 36 (1) 1 79.51 Dec.2011

SGD 21 - 6 418.53 May2011

TRY 161 3 (28) 357.30 Sep.2011

USD 1,587 14 (76) 566.72 Dec.2011

ZAR 52 (4) (9) 73.71 Nov.2011

Forward contracts 2010 3,113 (5) (162)

Exchange Exchange

Contractual gains/losses gains/losses

value in recognised recognised

accordance in other in income Average

with hedge comprehensive statement/ exercise

accounting income balance sheet prices 1) Expiry

Currency options (zero cost options) DKKm DKKm DKKm DKK period

2011

JPY/DKK(JPYputbought) - - 19

JPY/DKK(JPYcallsold) - - -

Currency options - 19

2010

JPY/DKK(JPYputbought) 177 - - 6.45 Jan.2011

JPY/DKK(JPYcallsold) 180 - (1) 6.53 Jan.2011

Currency options - (1)

1)Theaverageexercisepriceforthesoldcalloptionhasanaveragekick-inpriceofDKK7.18.

At31December2010,currencyoptionsconcerninghedgingofamilestonepaymentinJPY2011.

At31December2011,theexchangedifferencebetweenthecontractvalueandthemarketvalueoftheconcludedforwardexchangecontractsandcurrency

optionsrepresentedalossofDKK77million(alossofDKK21millionin2010),ofwhichDKK11millionwasrecognisedintheincomestatement(DKK16million

in2010).

NOTE 30



84


Interest rate

gains/losses

recognised

in other

Contractual comprehensive Fixed

value income interest rate Expiry

Interest rate collar/interest rate swap DKKm DKKm % period

2011

DKKinterestrateswap 2,300 (38) 1.40 Aug.2014

USDinterestrateswap 431 - 0.55 Aug.2014

EURinterestrateswap 1,487 (3) 1.17 Aug.2014

Interest rate collar/interest rate swap (41)

Trading part

Average

Exchange hedge prices

gains/losses of existing

recognised forward

Contractual in the income exchange

value statement transactions Expiry

Forward contracts DKKm DKKm DKK period

2011

USD - 8 - -

Forward contracts - 8

2010

GBP - (1) - -

USD 600 (55) 561.92 Jan.2011

Forward contracts 600 (55)

Exchange

gains/losses

recognised Average

Contractual in the income exercise

value statement prices Expiry

Currency options DKKm DKKm DKK period

2011

EUR/DKK(EURputbought) 597 3 746.25 Oct.2011

EUR/DKK(EURcallsold) 1,194 (1) 746.66 Oct.2011

JPY/DKK(JPYcallbought) 100 1 7.00 May2012

JPY/DKK(JPYputsold) 100 (3) 7.55 May2012

Currency options -

2010

EUR/DKK(EURputbought) 448 1 746.25 Oct.2011

EUR/DKK(EURcallsold) 896 (1) 746.66 Oct.2011

Currency options -

NOTE 30



85


Interest rate

gains/losses

recognised

Contractual in the income Fixed

value statement interest rate Expiry

Interest rate swap DKKm DKKm % period

2011

Fixedtofloating 600 (74) 3.47 May2020

Interest rate swap (74)

2010

Fixedtofloating 600 (9) 3.47 May2020

Interest rate swap (9)

Deferred recognition of hedging transactions recognised in other comprehensive income 2011 2010

DKKm DKKm

Deferredgains/lossesonhedgingtransactionsat1January (5) 34

Adjustment,deferredexchangegains/losses,hedging,recognisedinothercomprehensiveincome 49 (162)

Exchangegains/losses,hedging,transferredtorevenue (81) 97

Exchangegains/losses,hedging,transferredtoprepaymentsfromForest(balancesheet) (14) 25

Exchangegains/losses,trading,transferredtonetfinancials(transferredfromhedging) - 1


Repaymentofinteresthedginginstruments 11 -

Deferred gains/losses on hedging transactions at 31 December (82) (5)

31. CONTRACTUAL OBLIGATIONS

2011 2010

DKKm DKKm

The Group has signed operating lease obligations for a total amount of 2,491 587

Payment of the obligations breaks down as follows:

Lessthan1year 474 183

Between1and5years 1,063 349

Morethan5years 954 55

2,491 587

Expensed lease payments amounted to 406 200

TheoperatingleasecommitmentsprimarilyconcerntheFalckGroup'sleasesforvehiclesandbuildings.Theleasetermforvehiclestypicallyrunsfor4-9

years.Theleasetermforbuildingstypicallyrunsfor20years.

The Group has signed finance lease obligations for a total amount of 86 14

Payment of the finance lease obligations breaks down as follows:

Lessthan1year 29 3

Between1and5years 48 10

Morethan5years 9 1

86 14

Present value of finance lease obligations 80 13

NOTE 30 - 31



86


Financialleasearrangementscompriseleasesonbuildings,vehiclesandotherleasearrangements.

Otherthantheabove,theGrouphasmadethefollowingcontractualobligations:

Lundbeck Foundation and Lundbeckfond Invest A/S

TheLundbeckFoundationandLundbeckfondInvestA/ShavecapitalcontributionobligationsamountingtoDKK676million(2010:DKK662million).

H. Lundbeck Group

Other purchase obligations

TheH.LundbeckGrouphasundertakentopurchaseproperty,plantandequipmentintheamountofDKK318million(2010:DKK251million).

Research collaborations

TheH.LundbeckGroupispartofmulti-yearresearchanddevelopmentcollaborationscomprisingminimumresearchandcontractualobligationsintheorder

ofDKK126million(2010:DKK0million).

Thetotalamountoftheobligationsmayincreasesubstantiallyinlinewiththefavourabledevelopmentofthecollaborations.

Other contractual commitments

TheH.LundbeckGrouphasenteredintovariousserviceagreementsamountingtoDKK80million(2010:DKK76million).

ALK Group

TheALKGroup'sfinancialobligationsinrespectofresearchanddevelopmentprojectsamountedtoDKK3million(2010:DKK4million).

Falck Group

FalckHoldingA/Shasapurchaseoptiononpartofthebuildingsatapredeterminedvalue.Attheendoftheyear,FalckHoldingA/Sinformedtheownerthat

itintendstoexercisethepurchaseoptionin2012.ThepropertyhasavalueofDKK68million.

32. GUARANTEES AND CONTINGENT LIABILITIES

TheGrouphasthefollowingwarrantycommitmentsandcontingentliabilities:

Joint taxation

H.LundbeckA/S,ALK-AbellóA/SandFalckHoldingA/SandtheirDanishsubsidiariesarepooledfortaxpurposeswithLundbeckfondInvestA/S.The

companiesunderthisjointtaxationschemeareseparatelyliableforthepaymentofowntaxesuntilthesehavebeensettledwiththeadministrationcompany

(LundbeckfondInvestA/S).Aftersuchtime,LundbeckfondInvestA/Sisliableforthecombinedtaxesunderthejointtaxationscheme.

H. Lundbeck Group

Forest

PrepaymentsfromForesthavebeentranslatedattheexchangerateatthetransactiondateorattheforwardrateandrecognisedinthebalancesheetinthe

amountofDKK234million(2010:DKK517million).Ifthetranslationhadbeenmadeattheexchangerateatthebalancesheetdate,theprepaymentswould

haveamountedtoDKK286million(2010:DKK493million).

Bank guarantees and letters of intent

TheH.LundbeckGroup’sbankershaveissuedbankguaranteestothirdpartiesintheamountofDKK136million(2010:DKK117million).In2010,thegroup

hadissuedaguaranteetoathirdpartyintheamountofDKK9million.TheGrouphasassessedthatthefairvalueofguaranteesisDKK0(2010:DKK0).

Pending legal proceedings

TheH.LundbeckGroupisinvolvedinlegalproceedingsinanumberofcountriesagainstanumberofbusinesses,includingpatentdisputes.Intheopinion

ofH.LundbeckA/S,theoutcomeoftheseproceedingswillnothaveamaterialimpactontheGroup’sfinancialposition,resultsofoperationsorcashflows

NOTE 31 - 32

31. CONTRACTUAL OBLIGATIONS, CONTINUED


87


beyondtheamountprovidedforinthefinancialstatements.Duetouncertaintyabouttheoutcomeofthelegalproceedings,theamountoftheprovisionis

uncertain.

TheH.LundbeckGroupisalsoinvolvedinacasefiledbytheUnitedStatesFederalTradeCommission(FTC)inrespectofthepricingofNeoProfen®,which

ismarketedbyLundbeckInc.intheUSA.InSeptember2010,theU.S.FederalDistrictcourtruledinfavourofLundbeck.FTCandtheStateofMinnesotaap-

pealedtheruling.InAugust2011,Lundbeckalsowontheappeal.InJanuary2012,H.LundbeckreceivedastatementfromthechairmanofFTCthattheydo

notintendtoseekreviewbytheUSSupremeCourtoftheappealcase.However,legalpossibilitiesexistforappealuntil20February2012.H.LundbeckA/S

had not announced a final decision at the date of publication of its financial statements.

In2010,theEuropeanCommissionopenedaformalinvestigationtoexaminewhetherH.Lundbeckbywayofunilateralbehaviourand/oragreementshasvio-

latedEUcompetitionlawandtherebyhinderedalawfulentryofgenericcitalopramintomarketsintheEuropeanEconomicArea(EEA).In2011,H.Lundbeck

compliedwithanumberof‘RequestsforInformation’fromtheCommission.

InDecember2011,theBrazilianantitrustauthorities(SecretariatofEconomicLaw–SDE)initiatedadministrativeproceedingstoinvestigatewhetherH.

Lundbeck’senforcementofdataprotectionrightscouldbeviewedasanticompetitiveconduct.InJanuary2012,H.Lundbecksubmittedaresponsetothe

authorities.

Industry obligations

TheH.LundbeckGrouphasreturnobligationsnormalfortheindustry.H.LundbeckA/S'managementexpectsnomajorlossontheseobligations.

ALK Group

Guarantee and collaterals commitments

GuaranteeandcollateralscommitmentsamountedtoDKK9million(2010:DKK10million).

Collaterals

ThecarryingamountoflandandbuildingsprovidedascollateralforcreditinstitutionsamountedtoDKK162million(2010:DKK170million).

Contingent liabilities and assets

ThemanagementofALK-AbellóA/Sassessesthattheoutcomeofpendingclaimsandotherdisputeswillnothaveamaterialimpactonthegroup’sfinancial

position.

Inconnectionwiththedivestmentoftheingredientsbusiness,Chr.Hansenin2004/05,ALK-AbellóA/Shasundertakentheusualrepresentationsandwarran-

tiestowardsthebuyer.Therepresentationsandwarrantiesexpiresuccessivelyoverthecomingyears.AprovisionofDKK140million(2010:DKK140million)

hasbeenrecognisedtocoverspecificrisks.

ALK-AbellóA/SandChr.HansenA/Sarejointlyandseverallyliableforthecombinedincometaxpayablefortheperioduntil31August2005.At31August

2005,thejointly-taxedcompanieshadnocurrenttaxliability.

Falck Group Guarantee and collaterals commitments

Guarantee and collaterals commitments amounted to DKK 9 million.

The Falck Group has issued performance bonds to a certain extent in connection with a number of contracts, including performance bonds for a total of DKK

249millionprovidedinconnectionwithambulancecontractsinDenmark.

Aspartofthegroup'sactivities,usualsupplieragreementshavebeenenteredintoandcertainlettersofintentsigned.

Inconnectionwiththedivestmentofcompaniesandoperations,usualrepresentationsandwarrantiesaremade.Therearecurrentlynooutstandingclaims

whicharenotsufficientlyrecognisedinthebalancesheet.

Contingent liabilities and assets

TheFalckGroupisapartytocertainlitigationandclaims.Managementbelievesthatrulingsinthisrespectwillnothaveamaterialimpactonthegroup’s

financial position.

NOTE 32

32. GUARANTEES AND CONTINGENT LIABILITIES, CONTINUED


88


Collaterals

ThesharesinthesubsidiaryFalckA/SandFalckDanmarkA/ShavebeenprovidedascollateralfordebtintheFalckGroup.

Thecarryingamountofproperty,plantandequipmentprovidedascollateralfordebttocreditinstitutionsamountedtoDKK518million.Issuedmortgage

deedsamountedtoDKK380million.

Lundbeck Foundation and Lundbeckfond Invest A/S

Collaterals

Bondsinrepotransactionshavebeenprovidedascollateralforrepodebt,andotherbondshavebeenprovidedascollateralforhedgingtransactions.The

valueofbondsprovidedascollateralat31December2011amountedtoDKK180million(2010:DKK341million).

33. RELATED PARTIES

TheLundbeckFoundationisanindustrialfoundationestablishedbyGreteLundbeckin1954.

Related parties exercising a significant influence on the Lundbeck Foundation:

*Thecompany’sExecutiveManagementandBoardofDirectors

*Companiesinwhichthecompany'sExecutiveManagementandBoardofDirectorsexerciseasignificantinfluence

The following transactions were made between related parties and the Lundbeck Foundation, all on an arm's length basis:

•TheBoardofDirectorsandtheExecutiveManagementreceivedremuneration.Seenote3.

•InconnectionwiththeacquisitionofsharesinFalckA/SandFalckHoldingsA/S´acquisitionofsharesinFalckA/S,asmallamountoftheshareswere

acquiredfromboardmembersintheamountofDKK8million.

•Transactionswithassociates:

RelatedpartiesoftheFalckGroupalsocompriseassociatesinwhichthecompanyexercisessignificantinfluence.Referenceismadetonote12andthegroup

overviewforanoverviewofassociates.

2011

DKKm

Transactions with associates:

Disposalofproperty,plantandequipment 28

Acquisitionofservices 10

Saleofservices 1

Rental costs 9

Receivablesfromassociatesappearfromthebalancesheet,andinterestpayablefortheperiodamountedtoDKK0.

•Otherthantheaboveandexceptfortransactionseliminatedintheconsolidatedfinancialstatements,therehaveonlybeenfewtransactionsofimmaterial

importance with related parties.

34.EVENTSAFTERTHEBALANCESHEETDATE

Nomaterialeventshaveoccurredsubsequenttothebalancesheetdate.

NOTE 32 - 33

32. GUARANTEES AND CONTINGENT LIABILITIES, CONTINUED


89


COMPANY NAME COUNTRY OWNERSHIP

Datterselskaber

LundbeckfondInvestA/S Denmark 100%

H.LundbeckA/S Denmark 70%

FalckHoldingA/S Denmark 57%

ALK-AbellóA/S Denmark 40%(67%ofthevotes)

Associates

Obel-LFIEjendommeA/S Denmark 50%

VeloxisPharmaceuticalsA/S Denmark 31%

Direct investments

AcaciaPharma UnitedKingdom 17%

AsanteSolutionsInc. USA 6%

BonesupportHoldingAB Sweden 11%

DBVTechnologies France 18%

EpiTherapeuticsApS Denmark 13%

NexstimOy Finland 8%

SyntaxinLtd UnitedKingdom 10%

H. Lundbeck Group

LundbeckArgentinaS.A. Argentina 100%

LundbeckAustraliaPtyLtd. Australia 100%

-CNSPharmaPtyLtd. Australia 100%

LundbeckS.A. Belgium 100%

LundbeckBrasilLtda. Brazil 100%

LundbeckCanadaInc. Canada 100%

LundbeckChileFarmacéuticaLtda. Chile 100%

LundbeckColombiaS.A.S. Colombia 100%

LundbeckChinaHoldingA/S Denmark 67%

-LundbeckPharmaceuticals(Tianjin)Co.,Ltd. China 100%

-LundbeckPharmaceuticalsConsulting(Shanghai)Co.,Ltd. China 100%

LundbeckCognitiveTherapeuticsA/S Denmark 100%

LundbeckExportA/S Denmark 100%

LundbeckInsuranceA/S Denmark 100%

LundbeckPharmaA/S Denmark 100%

LundbeckGroupLtd.(Holding) UnitedKingdom 100%

-LundbeckLimited UnitedKingdom 100%

-LundbeckPharmaceuticalsLtd. UnitedKingdom 100%

-LifehealthLimited UnitedKingdom 100%

-LundbeckUKLLP UnitedKingdom 100%

LundbeckEestiA/S Estonia 100%

OYH.LundbeckAB Finland 100%

LundbeckSAS France 100%

SofipharmSA France 100%

-LaboratoireElaiapharmSA France 100%

LundbeckHellasS.A. Greece 100%

LundbeckB.V. TheNetherlands 100%

LundbeckIndiaPrivateLimited India 100%

Lundbeck(Ireland)Ltd. Ireland 100%

LundbeckIsraelLtd. Israel 100%

LundbeckItaliaS.p.A. Italy 100%

LundbeckPharmaceuticals,ItaliaS.p.A. Italy 100%

-ArchidS.a. Luxembourg 100%

LundbeckJapanK.K. Japan 100%

Lundbeck(Beijing)PharmaceuticalsConsultingCo.,Ltd. China 100%

LundbeckKoreaCo.,Ltd. Korea 100%

LundbeckCroatiad.o.o. Croatia 100%

GROUPOVERVIEW–LUNDBECKFOUNDATIONGROUP

At 31 December 2011


90



SIALundbeckLatvia Latvia 100%

UABLundbeckLietuva Lithuania 100%

LundbeckMéxico,SAdeCV Mexico 100%

LundbeckNewZealandLimited NewZealand 100%

H.LundbeckAS Norway 100%

-CNSPharmaAS Norway 100%

LundbeckPakistan(Private)Limited Pakistan 100%

LundbeckAmericaCentralS.A. Panama 100%

LundbeckPolandSp.z.o.o. Poland 100%

LundbeckPortugal-ProdutosFarmacêuticosUnipessoalLda. Portugal 100%

LundbeckRUSOOO Russia 100%

Lundbeck(Schweiz)AG Switzerland 100%

LundbeckPharmaceuticalGmbH Switzerland 100%

LundbeckSingaporePTE.LTD. Singapore 100%

LundbeckSlovenskos.r.o. Slovakia 100%

LundbeckPharmad.o.o. Slovenia 100%

AxofarmaLab,S.A. Spain 100%

LundbeckEspañaS.A. Spain 100%

H.LundbeckAB Sweden 100%

-CNSPharmaAB Sweden 100%

LundbeckSouthAfrica(Pty)Limited SouthAfrica 100%

LundbeckCzechRepublics.r.o. CzechRepublic 100%

LundbeckİlaçTicaretLimitedŞirketi Turkey 100%

LundbeckGmbH Germany 100%

LundbeckHungáriaKFT Hungary 100%

LundbeckUSAHolding,Inc.1) USA 100%

-LundbeckInc.2) USA 100%

-LundbeckPharmaceuticalsIrelandLimited Ireland 100%

-LundbeckPharmaceuticalsServices,LLC USA 100%

-LundbeckResearchUSA,Inc. USA 100%

LundbeckdeVenezuela,C.A. Venezuela 100%

LundbeckAustriaGmbH Austria 100%

1)At1January2012,thesubsidiarywasrenamedLundbeckUSALLC

2)At1January2012,thesubsidiarywasrenamedLundbeckLLC.

ALK Group

ALK-AbellóNordicA/S Denmark 100%

ALK-AbellóNordicA/S(filial) Sweden 100%

ALK-AbellóNordicA/S(filial) Norway 100%

ALK-AbellóNordicA/S(filial) Finland 100%

ALK-AbellóLtd. UnitedKingdom 100%

ALK-AbellóS.A. France 100%

ALK-AbellóArzneimittelGmbH Germany 100%

ThemoCAREGmbH Germany 100%

ALK-AbellóAllergie-ServiceGmbH Austria 100%

ALK-AbellóAG Switzerland 100%

ALKAG Switzerland 100%

ALK-AbellóB.V. TheNetherlands 100%

-ArtuBiologicalsEuropeB.V. TheNetherlands 100%

-ArtuBiologicalsOnroerendGoedB.V. TheNetherlands 100%

ALK-AbellóS.A. Spain 100%

ALK-AbellóS.p.A. Italy 100%

ALK-Abellósp.z.o.o. Poland 100%

ALK-Abelló,Inc. USA 100%

-ALK-Abelló,SourceMaterials,Inc. USA 100%

ALK-AbellóPharmaceuticals,Inc. Canada 100%

ALK-AbellóA/S(filial) China 100%


At 31 December 2011


91



Falck Group

FalckA/S Denmark 99%

-FalckDanmarkA/S Denmark 100%

-FalckHealthCareHoldingA/S Denmark 100%

-FalckHealthCareA/S Denmark 100%

-HealthCareDanmarkApS Denmark 100%

-ActivCareA/S Denmark 100%

-ActivCarePrivatA/S Denmark 100%

-UlfabDanmarkA/S Denmark 100%

-VikteamA/S Denmark 80%

-FalckHjælpemidlerA/S Denmark 92%

-FalckJobServiceA/S Denmark 85%

-FalckHjemmeplejeA/S Denmark 100%

-LoneHovmandSundhedsafdelingA/S Denmark 100%

-NorthSecuritiesA/S Denmark 49%

-FalckNorgeHoldingAS Norway 100%

-FalckRedningAS Norway 100%

-StorOsloServiceAS Norway 100%

-FalckEmergencyAS Norway 100%

-FalckAmbulanseAS Norway 100%

-FalckNorgeLeasingAS Norway 100%

-FalckHealthCareNorgeAS Norway 100%

-FalckSevicesAS Norway 100%

-FalckNutecHoldingA/S Denmark 100%

-FalckNutecEsbjergA/S Denmark 100%

-FalckNutecManagementA/S Denmark 100%

-FalckGlobalSafetyB.V. TheNetherlands 100%

-FalckNutecAS Norway 100%

-FalckNutecLtd. UnitedKingdom 100%

-NutecCentreforSafetyLtd.1) UnitedKingdom 100%

-FalckOnsiteLimited UnitedKingdom 100%

-OnsiteTrainingServicesLimited1) UnitedKingdom 100%

-FalckNutecTrinidadandTobagoLimited Trinidad&Tobago 80%

-NutecUKLtd. UnitedKingdom 100%

-NutecBelgiumHoldingBVBA1) Belgium 100%

-NutecBelgiumBVBA1) Belgium 100%

-FalckNutecB.V. TheNetherlands 100%

-MarinesafetyInternationalRotterdamB.V. TheNetherlands 100%

-MSTSAsiaSdn.Bhd. Malaysia 70%

-Risktec(M)Sdn.Bhd. Malaysia 100%

-FalckBestariHealthcareSdnBhd. Malaysia 82%

-MSTSAsia(S'pore)Pte.Ltd. Singapore 100%

-FalckBedrijfshulpverleningB.V. TheNetherlands 100%

-FalckPrimeAtlanticLimited Nigeria 51%

-FalckcaspianSafeLLC Azerbaijan 65%

-FalckNutecBrasilParticipacoesLtda Brazil 100%

-FalckNutecBrasilTreinamentosemSegurançaMarítimaLtda Brazil 100%

-SouthfieldLtd Thailand 50%

-FalckNutec(Thailand)Ltd Thailand 65%

-FalckNutecNigeriaLimited Nigeria 51%

-FalckUSAHoldings,Inc USA 100%

-FalckAlfordHoldings,Inc USA 80%

-AlfordServices,Inc USA 100%

-AlfordSafetyServices,Inc USA 100%

-AlfordSafety&Compliance,L.L.C. USA 100%

-HaztecServices-WestIndies,L.L.C. USA 100%

-HaztecServicesSt.LuciaLtd St.Lucia 100%


At 31 December 2011


92



-HaztecServicesTrinidadLimited Trinidad&Tobago 100%

-FalckAlfordInternationalB.V. TheNetherlands 100%

-FalckAlfordHoldingS.A.deC.V. Mexico 100%

-FalckAlfordTrainingS.A.I.P.deC.V. Mexico 100%

-FalckNutecVietnamLimited Vietnam 80%

-FalckSafetyServicesLLC,DeForenedeArabiskeEmirater UnitedArabEmirates 49%

-FalckInvestmentNorgeAS Norway 100%

-FalckFollowitNorgeAS Norway 100%

-VIFAAB Sweden 100%

-FalckSverigeHoldingAB Sweden 100%

-FalckInvestmentSverigeAB Sweden 100%

-FalckRäddningskärAB Sweden 100%

-FalckForsäkringsAB Sweden 100%

-FalckTravelCareAB Sweden 100%

-FalckAmbulansAB Sweden 100%

-FalckRäddningstjänstAB Sweden 100%

-FalckServicesAB Sweden 100%

-SvenskSjöambulansAB2) Sweden 50%

-UlfabSairaankuljetusOY Finland 100%

-SRegHoldingA/S Denmark 100%

-SRegAB Sweden 100%

-SRegServiceAB Sweden 100%

-SRegA/S Denmark 100%

-SRegOy Finland 100%

-SRegAS Norway 100%

-FalckUSA,Inc. USA 100%

-FCACorp. USA 87%

-CareAmbulanceService,Inc. USA 100%

-FalckEMSCorp. USA 95%

-LifestarResponseCorporation,Inc. USA 100%

-LifestarResponseofAlabama,Inc. USA 100%

-Medibus,Inc. USA 100%

-STATEquipmentCorp. USA 100%

-STATEMS,LLC USA 51%

-Bi-CountyAmbulance&AmbuletteTransportServicesCorp. USA 100%

-LifestarResponseofNewJersey,Inc. USA 100%

-LifestarResponseofMaryland,Inc. USA 100%

-AccessTransportServicesHolding,Inc. USA 100%

-AccessonTimeLanguageServicesLLC USA 100%

-HomeCareEquipment,Inc. USA 100%

-Robinson'sAmbulance&OxygenService,Inc. USA 100%

-FalckSoutheastCorp. USA 100%

-FalckHealthCareSverigeHoldingAB Sweden 100%

-FalckAMHealthCareAB Sweden 100%

-FalckHealthCareAMA/S Denmark 100%

-FalckAktivArbetsmedicinAB Sweden 100%

-FalckHealthcareAB Sweden 100%

-FalckInvestmentsFinlandOyAb Finland 100%

-FalckFinlandOy Finland 100%

-FalckOy Finland 100%

-FalckAutoabiOÜ Estonia 100%

-FalckBeneluxNV Belgium 93%

-AmbuceRescueTeamBVBA Belgium 100%

-AmbuceLimburgBVBA Belgium 100%

-MDVInternationalBVBA Belgium 100%

-FalckInvestmentsNV Belgium 80%

-FalckMedicalServicesLLC UnitedArabEmirates 49%


At 31 December 2011


93



-FalckEurasiaB.V. TheNetherlands 95%

-BeijingFalckRescueConsultingServicesCo.,Ltd China 100%

-FalckKazakhstanLLP Kazakhstan 100%

-FalckFireServicesRusLLC Russia 100%

-FalckFoundationVZW Belgium 100%

-FalckMedycynaSp.zo.o. Poland 100%

-Starowkaspzo.o. Poland 75%

-FalckSKa.s. Slovakia 93%

-FalckEmergencyAS Slovakia 51%

-FalckZáchrannáa.s. Slovakia 100%

-FalckAcademys.r.o. Slovakia 100%

-LaSalus,a.s. Slovakia 100%

-LaSalusPhramas.r.o. Slovakia 100%

-FalckFireServicesa.s. Slovakia 100%

-FalckCZa.s. CzechRepublic 93%

-LainsaServiciosContraIncendios,S.A. Spain 51%

-FalckFranceSAS France 100%

-FalckAVDHoldingB.V. TheNetherlands 100%

-FalckAVDB.V. TheNetherlands 100%

-AdvisebureauvanDijkeB.V. TheNetherlands 100%

-AVD-ICTB.V. TheNetherlands 100%

-SafetyCenterHoldingB.V. TheNetherlands 100%

-SafetyCenterHollandB.V. TheNetherlands 100%

-SafetyCenterZuidHollandB.V. TheNetherlands 100%

-SafetyCenterColleagec.v. TheNetherlands 51%

-SafetyCenterZuidHollandc.v. TheNetherlands 52%

-MITB.V. TheNetherlands 100%

-SafeBuildingB.V. TheNetherlands 100%

-SafetyCenterTeamB.V. TheNetherlands 100%

-AVDConsultancyN.V. Belgium 100%

-FalckBrasilAVDParticipaçõesLtda. Brazil 100%

-FalckBrasilPlanodeSaúdeLtda. Brazil 100%

-FalckBrasil747ParticipaçõesLtda. Brazil 100%

-ToesaServiceS.A. Brazil 60%

-TefeTefeServicosdeSaudeLtda Brazil 100%

-FalckBrasilFFParticipaçõesLtda. Brazil 100%

-FalckFire&SafetydoBrasilS.A. Brazil 100%

-FalckPanamaHoldingS.A. Panama 100%

-EMIHoldingsManagementS.A. Panama 63%

-EMIForeignHoldings1S.A. Panama 100%




-EmpresadeMedicinaPrepagada-ServiciodeAmbulanciaPrepagada–GrupoEMIS.A. Colombia 100%

-EMIElSalvadorS.A.deC.V. ElSalvador 100%

-InversionesEMIWorldwideS.A. Panama 100%

-EMIPanamaS.A. Panama 100%

-EMIEcuadorS.A.-EmergenciaMedicaIntegral Ecuador 100%

-PersesS.A. Uruguay 100%

-PortovenusS.A. Uruguay 16%

-EMIVenezuelaHoldingS.A. Panama 100%

-EmergenciaMedicaIntegralEMICentroS.A. Venezuela 100%

-CentroMedicoIntegralCEMICAS.A. Venezuela 100%

-PanamedicalHealthSystemsS.A. Panama 100%

-SolutionServicesInternationalInc. Panama 100%

-ScandinavianWorldwideCapitalCorp. Panama 100%

-RheadesBusinessInc. Panama 100%


At 31 December 2011


94



-RightConnectionServicesCorp. Panama 100%

-ServicioEmergenciasRegionalSERS.A. Colombia 100%

-FalckRettungsdienstGmbH Germany 100%

-Kranken-TransportHerzigGmbH Germany 100%

-KS-Medi-ServiceGmbH Germany 100%

-FalckÖsterreichGmbH Austria 100%

-FalckYardimHizmetleriLimitedŞirketi Turkey 95%

-FalckUKLimited UnitedKingdom 100%

-FalckEMSUKLimited UnitedKingdom 100%

-ResourceProtectionInternationalLtd. UnitedKingdom 100%

-FalckIndiaLimited UnitedKingdom 93%

-FalckServicesLimited Mauritius 100%

-FalckIndiaPvt.Ltd. India 100%

-FalckServicesPvtLtd. India 100%

-FalckFireServicesS.R.L Romania 93%

-FalckTreasuryA/S Denmark 100%

-Investeringsselskabetaf17.december2007A/S Denmark 100%

-FalckAssetManagement9A/S Denmark 100%

-FalckDRFLuftambulanceA/S Denmark 51%

-ACTrafikA/S Denmark 100%

-ACTrafik2ApS Denmark 100%

-KPCEjendommeaf6.juni2002A/S2) Denmark 25%

-FalckNederlandHoldingB.V. TheNetherlands 100%

1)Dormantcompany

2)Associate


At 31 December 2011


95


FINANCIAL STATEMENTS – LUNDBECK FOUNDATION

CONTENTS

Incomestatementfortheperiod1January–31December 96Balancesheetat31December 97Notes1.Accountingpolicies 982.Financialincomeandexpenses 983. Staff costs 994.Feestoauditorsappointedatthegeneralmeeting 1005.Taxonprofitfortheyear 1006.Grantsfortheyear 1007.InvestmentsinLundbeckfondInvestA/S 1018.Othersecuritiesandinvestments 1019.Statementofchangesinequityandcapitalbase 10210. Pension obligation 10211. Related parties 102

PARENT FOUNDATION FINANCIAL STATEMENTSTHELUNDBECKFOUNDATION

96



INCOMESTATEMENTFORTHEPERIOD1JANUARY–31DECEMBER

2011 2010 Note DKKm DKKm

DividendfromLundbeckfondInvestA/S 7 682 400Financial income 2 239 136Financialexpenses 2 (26) (6)Profit from investing activities before costs 895 530

Staffcosts 3 (14) (9)Otherexternalcosts 4 (7) (8)Profit before tax 874 513 Taxonprofitfortheyear 5 - -Profit for the year 874 513 Proposed distribution of profit: Profitfortheyear 874Amount available for distribution 874 The Board of Directors proposes that the profit be allocated as follows:

Transferredtocapitalbase 175

Totalgrantsfor2011 504Reversedgrants/repayments (6)Netgrantsfortheyear 6 498 Retained earnings 201 Distributed 874

97


Assets 2011 2010 Note DKKm DKKm

Landandbuildings 26 27Property, plant and equipment 26 27 InvestmentsinLundbeckfondInvestA/S 7 4,046 4,046Bondportfolios 8 3,150 2,633Unlistedinvestmentfunds 8 18 18Financial assets 7,214 6,697

Non-current assets 7,240 6,724

Otherreceivables 35 29Cash 281 304

Current assets 316 333 Assets 7,556 7,057

Equity and liabilities Capitalbase 2,225 2,050Retainedearnings 4,290 4,089Equity 9 6,515 6,139

Pension obligations 10 23 20Provisions 23 20

Payablegrants,long-term 389 308Non-current liabilities 389 308

Payablegrants,short-term 530 416Repodebt 8 97 172Otherpayables 2 2Current liabilities 629 590

Liabilities 1,018 898

Equity and liabilities 7,556 7,057 Related parties 11

BALANCESHEETAT31DECEMBER


98


1. ACCOUNTING POLICIES

TheannualreportoftheparentcompanyoftheLundbeckFoundationfor2011hasbeenpreparedinaccordancewiththeprovisionsoftheDanishFinancial

StatementsActformedium-sizedreportingclassCenterprises.TheannualreportispresentedinDanishkroner(DKK),whichalsoisthefunctionalcurrency

oftheparentcompany.

Theaccountingpoliciesarechangedfromlastyear.TheInvestmentinthesubsidiaryLundbeckfondInvestA/Sarenowrecognisedinthebalancesheetat

cost,anddividendsreceivedarerecognisedintheincomestatement.Thesubsidiarywaspreviouslyrecognisedinthebalancesheetandtheincomestate-

mentaccordingtotheequitymethod.Thechangeofaccountingpoliciesisbasedonawishtofollowinternationalfinancialreportingpraticeinthearea.

Thecomparativefiguresfor2010havebeenrestatedtoreflectthenewaccountingpolicies.Thefinancialimpactontheprofit,totalassetsandequityofthe

change in accounting policies is described below.

The effect of the change in accounting policies for 2010 is as follows:

Previous New

accounting accounting

policies Change policies

DKKm DKKm DKKm

Dividend/profitshareLundbeckfondInvestA/S 2,590 (2,190) 400

Profitfortheyear 2,703 (2,190) 513

InvestmentinLundbeckfondInvestA/S 18,859 (14,813) 4,046

Equity 20,952 (14,813) 6,139

Totalassets 21,870 (14,813) 7,057

Changeshavealsobeenmadetothewayinwhichtheincomestatementandbalancesheetarepresented,althoughthishasnoimpactontheprofit,total

assetsandequity.

Consolidated financial statements

ConsolidatedfinancialstatementshavebeenpreparedfortheLundbeckFoundationfor2011.TheLundbeckFoundationhasnotpreviouslypreparedconsoli-

datedfinancialstatementsastheFoundationcomplieswiththeexemptionconditionssetoutinsection111(2)oftheDanishFinancialStatementsAct.

Differences relative to the Group’s accounting policies

Theparentcompany'saccountingpoliciesforrecognitionandmeasurementareinaccordancewiththeGroup'spolicieswiththeexceptionsstatedbelow:

Investments in Lundbeckfond Invest A/S

InvestmentsinLundbeckfondInvestA/SarerecognisedintheFoundation'sbalancesheetatcost.Dividendsarerecognisedintheincomestatement.

2.FINANCIALINCOMEANDEXPENSES

2011 2010

DKKm DKKm

Financial income

Interestincome,etc. 107 85

Gainfromsecuritiesandotherequityinvestments 132 51

239 136

Financial expenses

Interest expenses etc. 2 1

Lossonsecuritiesandotherequityinvestments 24 5

26 6


NOTE 1 - 2

99


3. STAFF COSTS

2011 2010

DKKm DKKm

Wagesandsalaries,incl.holidayallowance 8.8 6.7

Pension contributions 0.1 0.1

Pensionbenefits,includingadjustmentofpensionprovision 4.9 2.6

Othersocialsecuritycosts 0.0 0.0

13.8 9.4

PensionbenefitsincludingadjustmentofpensionprovisionrelatestopensionobligationstakenoverfromH.Lundbeckandpensionobligationstowardsfor-

mer board members.

RemunerationoftheExecutiveManagement 2 1

Remuneration of the Board of Directors, including committee fees 2 2

MembersofExecutiveManagementandtheBoardofDirectorswhoalsoserveasdirectorsinsubsidiariesalsoreceiveboardremunerationdirectlyfromsuch

subsidiaries. For a complete description hereof, please see the consolidated financial statements in the annual report of the Lundbeck Foundation for 2011,

Total remuneration of the Executive Management and Board of Directors, including remuneration 2011 2010

received from the wholly owned subsidiary Lundbeckfond Invest A/S is specified as follows: DKKm DKKm

ExecutiveManagement:

ChristianDyvig,appointedon1June2011 2.2

Board of Directors:

MikaelRørth,ChairmanoftheFoundationandLundbeckfondInvestA/S,chairman

oftheresearchcommittee,thebiomedicalsciencescommitteeandtheinvestmentcommittee 0.8

JørgenHunoRasmussen,DeputyChairmanoftheFoundation,memberoftheinvestmentcommittee 0.4

ThorleifKrarup,deputychairmanofLundbeckfondInvestA/S,memberoftheinvestmentcommittee, 0.5

KimKlitgaard,employeerepresentative 0.2

KenLiljegren,employeerepresentative 0.2

PovlKrogsgaard-Larsen,memberoftheinvestment,researchandthebiomedicalandnaturalsciencescommittees 0.2

Gunhild Waldemar, member of the research committee and the biomedical sciences committee 0.2

PeterAdlerWürtzen,employeerepresentative 0.2

Jes Østergaard, chairman of the natural sciences committee and member of the

researchandinvestmentcommittees 0.6

NilsAxelsen,steppeddownon30May2011 0.2

MogensBundgaard-Nielsen,steppeddownon30May2011 0.4

Rounding (0.1)

3.8

2011 2010

Averagenumberofemployeesduringtheyear 7 6

Numberofemployeesatyear-end 7 7

NOTE 3


100


4.FEESTOAUDITORSAPPOINTEDATTHEGENERALMEETING

2011 2010

DKKm DKKm

Otherexternalcostsincludefeestothecompany'sauditors

appointedbythegeneralmeeting,Deloitte,intheamountof:

Statutoryaudit 0.2 0.2

0.2 0.2

5.TAXONPROFITFORTHEYEAR

2011 2010

DKKm DKKm

Taxonprofitfortheyear,LundbeckFoundation 0 0

0 0

Inthefinancialyear,theLundbeckFoundationpaidincometaxofTDKK260(2010:TDKK166).Whencalculatingtaxableincome,theFoundationhas

deductedgrantsandtaxprovisionsforfuturegrants.Nodeferredtaxisrecognisedforaccountingpurposesconcerningtaxprovisionsforfuturegrants

asthisisnotexpectedtocrystallise.DeferredtaxhereonamountedtoDKK177million(2010:DKK227million).

TheLundbeckFoundationisjointlytaxedwithLundbeckfondInvestA/S,whichmeansthattheLundbeckFoundationistaxableondividendsreceivedfrom

LundbeckfondInvestA/S.

ThetotalincometaxpaymentfortheLundbeckFoundationGroupamountedtoDKK909million(2010:DKK1,228million),ofwhichDanishincometax

accountedforDKK468million(2010:DKK983million).

6. GRANTS FOR THE YEAR

2011 2010

Grants for the period can be specified as follows: DKKm DKKm

Biomedicalsciencesprojects 182 192

Naturalsciencesprojects 26 28

Fellowships 70 50

Other 21 10

Regular grants 299 280

GrantsofExcellence - 50

CentresofExcellence 84 24

Grete Lundbeck European Brain Research Foundation - 30

Psychiatricresearch(iPSYCH) 121 -

Strategic initiatives 205 104

Grants for the year, gross 504 384

Descendants - -

Reversedgrants/repayments (6) (1)

Grants for the year, net 498 383


NOTE4-5-6

101


7.INVESTMENTSINLUNDBECKFONDINVESTA/S

DKKm

Costat1January2011 4,046

Costat31December2011 4,046

Netrevaluationat1January2011 14,813

Changeinaccountingpolicies,1January (14,813)

Netrevaluationat31December2011 -

Carrying amount at 31 December 2011 4,046

Dividend received 2011 682

Carrying amount of equity at 31 December 2011 13,147

LundbeckfondInvestA/ShasitsregisteredofficeinHellerupandiswhollyownedbytheLundbeckFoundation.

8.OTHERSECURITIESANDINVESTMENTS

Unlisted

Bond investment

portfolios funds Total

DKKm DKKm DKKm

Carryingamountat1January2011 2,633 18 2,651

Additions 3,204 - 3,204

Disposals (2,795) (1) (2,796)

Valueadjustmentsfortheyear 108 1 109

Carrying amount at 31 December 2011 3,150 18 3,168

Bondsinrepotransactionshavebeenprovidedascollateralforrepodebt.Thevalueofbondsinrepotransactionsprovidedascollateralat31December2011

amountedtoDKK98million(2010:DKK175million).

UnlistedinvestmentfundsincludeinvestmentsinanunlistedinvestmentfundwitharesidualpaymentobligationofDKK6million(2010:DKK6million).

NOTE7-8


102


9.STATEMENTOFCHANGESINEQUITYANDCAPITALBASE

Reserve

for net

revaluation Retained

Capital base*) of subsidiary earnings Total

DKKm DKKm DKKm DKKm

Equityat1January2011 2,050 14,813 4,089 20,952

Changeinaccountingpolicies,1January - (14,813) - (14,813)

Equityat1January2011undernewaccountingpolicies 2,050 - 4,089 6,139

Grants,net. (498) (498)

Retainedlossfortheyear 175 - 699 874

Equity at 31 December 2011 2,225 - 4,290 6,515

*)Changesincapitalbase2005-2011:

Thecapitalbaseat1January2005amountedto: 1,420

2005Capitalbaseincreasedby 80






Capital base at 31 December 2011 2,225

10. PENSION OBLIGATIONS

2011 2010

DKKm DKKm

Obligationsat1January 20 20

Adjustmentfortheyear 3 -

Obligations at 31 December 23 20

11. RELATED PARTIES

TheLundbeckFoundationdefinesrelatedpartiesastheFoundation'sBoardofDirectorsandExecutiveManagement,itswholly-ownedinvestment

andholdingcompanyLundbeckfondInvestA/Sandthiscompany'ssubsidiariesH.LundbeckA/S,ALK-AbellóA/SandFalckHoldingA/S.

LundbeckfondInvestA/SsharesthesameaddressastheLundbeckFoundation,andthereisdualityofmembershipbetweentheExecutiveManagement,

administration(partly)andBoardofDirectors.TheLundbeckFoundationreceivesdividendsfromLundbeckfondInvestA/S.LundbeckfondInvestA/Spays

renttotheLundbeckFoundationonanarm'slengthbasis.Paymentsarelikewisemadeforadministrativeservices.Forinformationonremunerationpaidto

themembersoftheExecutiveManagementandBoardofDirectors,pleaseseenote3.

Otherthantheabove,theLundbeckFoundationhasonlyhadimmaterialtransactionswiththerelatedparties.

NOTE 9 - 10 - 11


103


THE LUNDBECK FOUNDATION CENTRESOF EXCELLENCE

Neuroscience TheLundbeckFoundationCenterforMembrane- Professor,M.D.ClausMunckPetersen DKK50million receptorsinNeuronalDiseases,MIND Professor,Ph.D.AndersNykjær

The Lundbeck Foundation Center for Integrated Professor,M.D.GitteMoosKnudsen DKK 40million MolecularBrainImaging,CIMBI

The Lundbeck Foundation Center for Professor, M.D. Jes Olesen DKK 30 million NeurovascularSignaling,LUCENS

Quantum TheLundbeckFoundationCenterfor Professor,Dr.h.c.JensKehletNørskov DKK25millionSystems Atomic-scaleMaterialsDesign,CAMD

TheLundbeckFoundationTheoreticalCenter Professor,Ph.D.KlausMølmer DKK 20 million forQuantumSystemResearch,LTC

TheLundbeckFoundationCenterforQuantum Professor,Dr.Phil.PoulJørgensen DKK 20 million MechanicsforLargeMolecularSystems,LCTC

Translational TheLundbeckFoundationCenterforApplied Professor,M.D.OlufBorbyePedersen DKK60millionResearch MedicalGenomicsinPersonalizedDisease Prediction,PreventionandCare,LUCAMP

The Lundbeck Foundation Center for Translational Professor, M.D. Torben Ørntoft DKK 20 million MolecularDiagnosticsandBioinformaticRisk AssignmentinCommonCancerDiseases,CETAME

CopenhagenProspectiveStudyonAsthmain Professor,M.D. Hans Bisgaard DKK 20 million Childhood–ALundbeckFoundation center for translational clinical research, COPSAC

Clinical TheLundbeckFoundationCenterforClinical Professor,M.D.BirteGlenthøj DKK30millionIntervention InterventionandNeuropsychiatricSchizophrenia Research, CINS

TheLundbeckFoundationCenterforInterventional Professor,M.D.JensOvergaard DKK 30 million ResearchinRadiationOncology,CIRRO Professor,M.D.CaiGrau

The Lundbeck Foundation Center for Fast-Track Hip Professor, M.D. Henrik Kehlet DKK 35million andKneeArthroplasty Professor,M.D.KjeldSøballe

Nanoscience TheLundbeckFoundationCenterforBiomembranes Professor,M.D.UlrikGether DKK34million in Nanomedicine, CBN Lektor, Ph.D. Dimitrios Stamou

TheLundbeckFoundationNanomedicineCentrefor Professor,M.D.AllanFlyvbjerg DKK 30 million IndividualizedManagementofTissueDamageand Professor,Ph.D.JørgenKjems Regeneration, LUNA

TheLundbeckFoundationNanomedicineResearch Professor,Ph.D.JanMollenhauer DKK 35million Center for Cancer Stem Cell Targeting Therapeutics, NanoCAN

104


LUNDBECKFOND FELLOWS

Name Project title

Ass.Prof.,ph.d.HenrikB.Pedersen Exploringexcitedmolecularmatterbyultra-intenseFreeElectronLaser(FEL)X-raypulses

Ass. Prof.,ph.d.AnjaGroth HistoneMetabolismand(Epi)GeneticStability

Ass. Prof.,ph.d.SuneToft UnveilingtheNatureofaNewlyDiscoveredPopulationofExtremelyDense,Massive,Old, “Dead”GalaxiesintheEarlyUniverse

Professor,ph.d. Themolecularmachineryforfastcalcium-triggeredexocytosisofsynapticand JakobBalslevSørensen secretoryvesicles

Ass. Prof.,ph.d.JakobNilsson ControllingtheSpindleAssemblyCheckpoint

Professor,ph.d. FunctionalcharacterizationofDepolarisation–dependentsignallingpathwaysMartinRøsselLarsen innerveterminals

Ass. Prof.,ph.d. MolecularMechanismsRegulatingEpithelialPlasmaMembraneTransporterAbundanceLeneNiemannNejsum inNormalandDiseaseStates

Ass. Prof.,ph.d. ExitedStatePhysicsofBareandSolvatedMolecularIonsSteenBrøndstedNielsen

Ass. Prof.,ph.d.TroelsC.Petersen SearchingforDarkMatteratCERN’sLHCAccelerator

Postdoc,ph.d. StructuralandfunctionalStudiesofMonoamineNeurotransmitterGProteinCoupledSørenG.F.Rasmussen ReceptorsandMonoamineTransporters

Ass. Prof.,ph.d.BlagoyBlagoev In-depthInvestigationoftheProcessesUnderlyingHumanEmbryonicStemCells MaintenanceandDifferentiationbyAdvancedQuantitativeProteomics

Professor,BA,dr.phil. PathogenPaleogenomics–LookingThroughaWindowintotheGeneticHistoryofMarcusThomasPiusGilbert PathogenstoBetterourUnderstandingofTheirOrigin,Evolution,SpreadandControl

Ass. Prof., ph.d. The Earliest Phases of Circumstellar DisksJesKristianJørgensen

Ass. Prof.,ph.d. GeneRegulationwithSmallMoleculeEpigeneticModulatorsChristian Adam Olsen

Ass. Prof.,ph.d. DynamicCombinatorialChemistry–SupramolecularChemistryinWaterMichaelPittelkow

Ass. Prof.,ph.d.JanArlt MagnetisminSpinorQuantumGases

Ass. Prof., ph.d. AmplitudeComputationGroup(CAMP)NielsEmilJannikBjerrum-Bohr

Ass. Prof.,ph.d. MolecularCharacterizationofCellularAssembliesInvolvedinNeuronalDevelopmentMariolaMonikaGolas andNeurodegeneration

Postdoc,ph.d. InvestigationoftheMolecularBasisofNeurologicalDiseasesRelatedtoIonPumpsUsingHimanshuKhandelia MolecularSimulations

Guest Prof.,ph.d. MultivariateDynamicsoftheJNKPhosphorylationNetworkanditsImplicationsRuneLinding forComplexRegulatoryDiseases

Ass. Prof., ph.d. Albin Sandelin Experimental and Computational Genomics for Neuroscience and Disease Characterization

Ass. Prof.,Fil.dr. UniverseOrigins:ProbingFundamentalPhysicswithPlanckMartinSnoagerSloth

EveryyearTheLundbeckFoundationawardsfellowshipstoparticularlypromisingyoungresearchersandtheirresearchgroups.ThefellowshipsareawardedforfiveyearsandeachfellowshipamountstoDKK10million.

BOARD OF TRUSTEES

Mikael RørthChairman, Professor, Chief Physician, M.D., Copenhagen University HospitalChairman of the Research Committee, the Bio-medical Science Committee and the Investment Committee

Jørgen Huno RasmussenVice-chairman, Chief Executive Officer, FLSmidth, Civil Engineer Member of the Investment Committee

Gunhild WaldemarProfessor, Chief Physician, M.D., Copenhagen University HospitalMember of the Research Committee and the Biomedical Science Committee

Kim KlitgaardOperator, elected by the employees of H. Lundbeck

Peter Adler WürtzenTeam Leader, Ph.D., elected by the employees of ALK

Ken LiljegrenSenior Project Manager, Civil Engineer, elected by the employees of H. Lundbeck

Jes ØstergaardDirector, Civil EngineerChairman of the Natural Science Committee and member of the Research and Investment Committees

Thorleif KrarupDirector, B.Sc. (Econ.), B. Com. Member of the Investment Committee

Management Christian Dyvig Chief Executive Officer

Kasper Kitaj Pedersen Investment Director Britt Wilder Executive Secretary Nina Kamille Holmgaard Adm. Service Coordinator

Research Anne-Marie Engel Director of Research Sissel Vorstrup Associate Director of Research Nina Espegård Hassel Strategic Advisor Ulla Jakobsen Science Manager Kirsten Ljungdahl Secretary Heidi Stoklund Larsen Student Assistant Invest Bertil From Chief Financial Officer Jakob Munk Nielsen Senior Investment Manager Christoffer Gundelach Student Assistant Accounting Claus Køhler Carlsson Director, Accounting & Tax Vibeke P. Bache Head of Accounts Susanne Bernth Senior Controller Susanne Klint Nygaard Controller

Ventures Mette Kirstine Agger Managing Partner Johan Kördel Senior Partner Mikael Strindlund Senior Partner Casper Breum Partner Nicolai Ekström Falkenham Student Assistant

Emerge Christian Elling PartnerDesign: Klaus Wilhardt

Photo: Pernille Ringsing

ISSN 1901-5933

Povl Krogsgaard-LarsenProfessor, Pharm.D.Member of the Investment Committee, the Research Committee and the Biomedical and Natural Science Committees

www.lundbeckfonden.com

The Lundbeck Foundation is an active industrial foundation that strives to maintain and expand H. Lundbeck and provide grants by:

•being an active value-adding owner of its subsidiaries and other innovative companies that are among the leaders in their respective areas of business •supporting and strengthening research in biomedicine and natural sciences of the highest international quality with ties to Denmark in order to make a significant difference to human health and life

The Lundbeck Foundation Group 2011

Revenue € 3.2 billion

Operating profit before tax and special items € 560 million

The Foundation’s share of profit for the year before grants and special items € 244 million

Grants € 68 million

Number of employees 24,676

Net wealth € 3.9 billion

The Lundbeck Foundation ı Vestagervej 17 ı DK-2900 Hellerup ı Tel +45 39 12 80 00

The Lundbeck Foundation 2011 Report

Documents

Transcript of The Lundbeck Foundation 2011 Report