Lundbeck: The Brain Company – A Century of Betting on the Mind

Introduction

In August 1915, while Europe tore itself apart in the trenches of World War I, a 30-year-old Danish entrepreneur named Hans Lundbeck sat in his modest Copenhagen office surrounded by catalogs for biscuits, vacuum cleaners, aluminum foil, and photographic equipment. If someone had told him his trading company would one day become the world's only fully integrated pharmaceutical company focused solely on diseases of the brain—generating DKK 22 billion in annual revenue and employing 5,700 people across 50 countries—he would have laughed and returned to his typewriter.

The company was founded by Hans Lundbeck in 1915, and was initially a trading company supplying a variety of goods to the Danish market, including machinery for manufacturing, aluminium foil, artificial sweeteners, and photographic equipment. Yet that improbable transformation—from general trader to global neuroscience powerhouse—represents one of the most remarkable strategic pivots in pharmaceutical history.

In 2024, Lundbeck achieved total revenue of DKK 22,004 million, generating the highest revenue ever recorded in its history. The company's strategic brands—Rexulti, Vyepti, Trintellix/Brintellix, and Abilify Maintena—showed double-digit growth rates and now represent 75% of total revenue.

But beneath this apparent prosperity lurks an existential challenge. Jefferies analysts note that the company's looming 2029+ patent cliff puts approximately 60% of its sales at risk. The story of Lundbeck is ultimately the story of managing these patent cliffs—a saga of strategic pivots, bold acquisitions, controversial legal battles, and the relentless pursuit of innovation in one of medicine's most challenging frontiers: the human brain.

The themes that emerge from Lundbeck's 110-year journey offer timeless lessons for understanding the pharmaceutical industry: the power of extreme strategic focus, the unique advantages of foundation ownership, the mechanics of patent lifecycle management, and the courage required to bet big on neuroscience when many competitors have fled the space entirely.

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Origins: From Biscuits to Brain Drugs (1915–1950s)

The Unlikely Founder

On 14 August 1915, Hans Lundbeck founded a company in Copenhagen, Denmark. Denmark's neutrality during World War I had positioned it perfectly to build a flourishing trade with the warring nations across Europe. With government encouragement, many Danes set up their own import-export businesses. Among them was Hans Lundbeck, who had been trading in butter since the early years of that decade.

The company dealt in everything from machinery, biscuits, confectionery, sweeteners, cinema equipment and cameras to photographic paper and aluminium foil, besides renting out vacuum cleaners. It was a quintessential trading business of its era—acting primarily as a broker, with no warehouse or manufacturing facilities needed.

Then came a hiring decision that would shape the company's destiny for a century. The first employee that he hired, a young lady who was a multiannual Danish champion in typewriting, later became his wife and founder of the Lundbeck Foundation. This woman, Grete Lundbeck, would prove instrumental not only in the company's daily operations but in establishing the ownership structure that distinguishes Lundbeck to this day.

The Pivot to Pharmaceuticals

The revaluation of the Danish currency following the war lowered the price on imports and Lundbeck's business flourished. In 1924, Lundbeck hired Edouard Goldschmidt, who became a partner in the company. Goldschmidt was a game-changer. He brought experience from the chemical and pharmaceutical industries, introducing to the company new agency contracts for pharmaceuticals, such as suppositories and painkillers. Cologne and creams were also added to the portfolio and the company acquired its first tablet compression machine.

By 1933, the direction was becoming clear: Lundbeck sold chemical products at the amount of DKK 42,000, while other products in the portfolio became more and more insignificant.

The company's first truly original pharmaceutical moment came in 1937. Together with the biological institute at the Carlsberg Foundation, Lundbeck developed the first original Lundbeck product called Epicutan® for wound healing. The success with Epicutan® gave Lundbeck international ambitions and the confidence to continuously seek out new research opportunities – driving forces which still characterize the company today.

To ensure sufficient manufacturing capacity, the company moved to the Copenhagen suburb of Valby in 1939, where Lundbeck headquarters is still situated today. Led by Oluf Hübner, Lundbeck established its first chemical research facilities.

The Foundation of Future Focus

The postwar period brought structural changes that would prove crucial. In 1950, Lundbeck turned into a stock company with a share capital of DKK 1 million. This provided a foundation for increased investment in research and formalized the company's growing ambitions.

But the most consequential development came four years later. In 1954, the Lundbeck Foundation was established to maintain and expand the activities of Lundbeck Group and also to provide funding for scientific research of the highest quality. Grete Lundbeck, the widow of Lundbeck's founder Hans Lundbeck, established the Lundbeck Foundation by donating a large amount of her shares and willing the rest to the Foundation.

Today, the Foundation holds 69% of the share capital and 76% of the votes in H. Lundbeck A/S. This ownership structure—a publicly traded company with a research-focused foundation as its majority shareholder—would prove to be a defining competitive advantage.

For investors, the early history reveals an important pattern: Lundbeck's success wasn't inevitable but emerged from a series of calculated pivots toward higher-value activities, catalyzed by strategic hires and an ownership model designed for long-term thinking rather than quarterly pressures.

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The CNS Pivot: Entering Brain Diseases (1950s–1980s)

The Truxal Moment

In 1954, the same year the Foundation was established, Lundbeck started its first steps into the world of psychiatric treatments with a license to sell Lacumin® developed by the German pharmaceutical company, Chemishe Fabrik Promonta.

But the real inflection point came in 1957-1959. After the war, Lundbeck continued to grow and in 1957 the company introduced Truxal (chlorprothixene) for the treatment of schizophrenia, entering the market for brain disorders.

Truxal represented a crucial technical innovation. Chlorpromazine, the first antipsychotic, had revolutionized psychiatric medicine but came with significant side effects. Lundbeck's scientists developed a chlorpromazine-based medication that successfully reduced these unwanted effects. Through the 1960s and 1970s, Truxal became Lundbeck's most-sold product.

This wasn't merely a successful product launch—it was a strategic declaration. Lundbeck had identified its future in the central nervous system.

Going International & Going Deep

Lundbeck's products had long been marketed on a wider international scale. The company's international sales had, since the end of World War II, been handled through agreements with locally based sales agents. By the mid-1960s, the company's international sales represented 75 percent of its revenues, and the company moved to take its foreign operations into its own hands, setting up subsidiaries and sales offices in most of its foreign market countries.

The ownership consolidation continued as well. Grete Lundbeck died in 1965, transferring her shares to the Lundbeck Foundation. In 1967, the Lundbeck Foundation moved to purchase the Goldschmidt family's 49.5 percent of the company, giving it full ownership.

The decisive strategic pivot came in the late 1970s and 1980s. From the late 1970s, and up through the 1980s, Lundbeck diverted its old agency business and thus became a dedicated pharmaceutical company focusing on the production of drugs used to treat disorders and diseases of the central nervous system.

A significant step towards specialization was the sale of its antibiotics production facility in 1991, reinforcing its commitment to Central Nervous System (CNS) drugs.

This was a bold bet. By focusing exclusively on the brain, Lundbeck was limiting its addressable market while simultaneously entering one of the most scientifically challenging areas of medicine. The brain remains poorly understood even today; in the 1970s, it was essentially a black box. Drug development in neuroscience has historically suffered from higher failure rates and longer development timelines than other therapeutic areas.

But Lundbeck's leadership recognized something important: specialization creates expertise, expertise creates competitive advantage, and competitive advantage creates sustainable profitability. Lundbeck became the only fully-integrated pharmaceutical company in the world solely devoted to the treatment of these disorders.

The strategic decision to go "all-in" on brain diseases would define the company's identity and competitive positioning for decades to come. While larger pharmaceutical companies would eventually retreat from neuroscience—citing the difficulty and expense of CNS drug development—Lundbeck doubled down.

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The Citalopram Era: Building a Blockbuster (1989–2002)

INFLECTION POINT #1: Cipramil/Celexa Launch

Citalopram was first synthesized in 1972 by chemist Klaus Bøgesø and his research group at the pharmaceutical company Lundbeck and was first marketed in 1989 in Denmark.

The journey from synthesis to market took 17 years—typical for pharmaceutical development, especially in the complex realm of CNS drugs. The clinical trials and development demonstrated that citalopram was effective in combating anxiety-based depression. Importantly, while having a broad side-effect profile, citalopram proved to be the best drug of its class at inhibiting serotonin re-uptake channels.

The drug was first released in Denmark in 1989 under the trade name Cipramil. The drug's strong reputation spread and by 1998 the drug could be prescribed to anyone in the USA, under the trade name Celexa.

Lundbeck expanded rapidly in the 1990s, due to the success of Cipramil®. Cipramil® was registered in more than 70 countries for the treatment of depression and anxiety.

The success was transformational, but it came with a dangerous dependency. Cipramil grew to become Lundbeck's dominant product, representing over 78% of the company's total turnover in 1999. By then, Cipramil/Celexa accounted for nearly 82 percent of Lundbeck's sales, a troubling situation, particularly as the company faced the loss of its patents by 2001.

The IPO and Strategic Shift

Facing both an impending patent cliff and the need for capital to navigate it, Lundbeck made a landmark decision. In 1999, Lundbeck's shares were listed on Nasdaq Copenhagen.

This effort was helped in part by the company's public listing in 1999, when the Lundbeck Foundation placed nearly 25 percent of the company's shares on the Copenhagen stock exchange. The share listing gave the company increased potential for making acquisitions.

The listing created a unique hybrid structure: majority foundation ownership providing long-term stability, combined with public market accountability and access to capital. The combination of being majority-owned by a foundation and at the same time being listed on the stock exchange means a lot to Lundbeck. In times of prosperity, the foundation gives us flexibility. In times of recession, the foundation gives us stability.

Hans Lundbeck's company finally came of age when its shares were listed on the Copenhagen Stock Exchange in June 1999. The listing gave Lundbeck access to new capital in case it wanted to buy up more subsidiaries. The company became more visible, placing more responsibility on management but providing a new method of rewarding employees with shares.

The citalopram era established Lundbeck as a serious global pharmaceutical player, but it also created a strategic imperative: the company needed to navigate the coming patent cliff without destroying shareholder value. The solution would prove controversial.

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The Evergreening Strategy: Escitalopram & Patent Battles (2002–2010)

INFLECTION POINT #2: The Cipralex/Lexapro Gambit

With citalopram patents expiring in key markets in the early 2000s, Lundbeck executed one of the most studied—and criticized—lifecycle management strategies in pharmaceutical history.

Citalopram has one stereocenter, creating enantiomeric forms. They are termed S-(+)-citalopram and R-(–)-citalopram. Citalopram is sold as a racemic mixture, consisting of 50% (R)-(−)-citalopram and 50% (S)-(+)-citalopram. Only the (S)-(+) enantiomer has the desired antidepressant effect. Lundbeck now markets the (S)-(+) enantiomer, the generic name of which is escitalopram.

The new drug was launched by Lundbeck in 1989 under the brand name Cipramil® and was very successful. Citalopram is a racemate, namely a mixture of two types of molecules known as enantiomers.

The technical challenge was separating these enantiomers. In this way, the enantiomers of citalopram (including escitalopram, which is mainly responsible for the drug's therapeutic effects) became available for the first time. In 2002, Lundbeck launched Cipralex®, an antidepressant containing the active substance escitalopram.

Escitalopram was developed in cooperation between Lundbeck and Forest Laboratories. Its development was initiated in 1997, and the resulting new drug application was submitted to the US FDA in March 2001.

Lundbeck and Forest have developed and launched escitalopram, the therapeutically active (S)-enantiomer of citalopram, as an improved follow-up compound for the potential treatment of depression. In December 2001, Lundbeck received Swedish approval for the treatment of depression and panic disorder, and in January 2002, the product was approved in Switzerland for the treatment of depression. By May 2002 it had been approved in Belgium, Denmark, the UK, France, Iceland, Luxembourg, Norway and Austria.

Cipralex®/Lexapro® was launched in 2002 and made available in about 100 countries worldwide, growing to account for the major share of Lundbeck's business.

The Patent Wars Across Continents

The evergreening strategy immediately attracted legal challenges from generic manufacturers who argued that escitalopram was essentially the same drug with a new patent designed to extend Lundbeck's monopoly.

It did not take long before the first generic drug manufacturers attacked these rights in order to clear a path to the European market. In first instance proceedings, Alfred E. Tiefenbacher GmbH and several other generic drug companies were able to successfully invalidate Lundbeck's patent and SPC in a number of European countries, including Germany, the UK, the Netherlands and Belgium.

Lundbeck fought back aggressively. Lundbeck appealed to the Supreme Court of the Netherlands which eventually reversed the court of appeal's decision with respect to the validity of the product claims. The Supreme Court confirmed – in line with the principle of absolute substance protection and the EPO's case law – that a known substance can be inventive if the patentee was the first to make it available to the public through a new and inventive method.

The commercial success was significant. In 2023, escitalopram was the second most prescribed antidepressant and fourteenth most commonly prescribed medication in the United States, with more than 37 million prescriptions.

The EU Antitrust Fine: Pay-for-Delay

While battling to defend its patents in court, Lundbeck simultaneously pursued a different strategy with some generic manufacturers: paying them to stay out of the market.

In June 2013 the Commission fined Lundbeck €93.8 million and several producers of generic medicines a total of €52.2 million for delaying the market entry of citalopram, Lundbeck's blockbuster antidepressant medicine.

In 2013, the Commission fined Lundbeck (€92.3 million) and four generic companies (€52.2 million) for having concluded several anticompetitive agreements aimed at delaying market entry of the generic version of Citalopram®. At the time of the agreements, Lundbeck's patent on the molecule and the initial processes had already expired.

According to the EC, Lundbeck agreed with each of the generic manufacturers to delay the market entry of cheaper generic versions of Lundbeck's branded citalopram. According to the EC decision, Lundbeck paid generic manufacturers to delay the launch of their version of the drug once the basic patent had expired. At the time of the agreements, Lundbeck still held related process patents.

The legal battle continued for years. The EU competition enforcer had imposed a combined fine of €146 million on Lundbeck and five generic drugmakers for such deals, prompting the companies to challenge the ruling at the General Court which upheld the EU decision in 2016. The drugmakers subsequently appealed to the Luxembourg-based Court of Justice of the European Union (CJEU) which on Thursday dismissed all six motions and agreed with the lower tribunal that such deals were aimed at blocking rivals.

The escitalopram saga illustrates both the creativity and the ethical boundaries of pharmaceutical lifecycle management. While Lundbeck successfully extended its franchise, the methods employed generated significant regulatory and reputational consequences.

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The U.S. Gamble: Ovation Acquisition & Market Entry (2009)

INFLECTION POINT #3: Building a U.S. Platform

By 2008, Lundbeck faced a strategic imperative. Despite its global success with citalopram and escitalopram, the company lacked the most important capability for pharmaceutical growth: a proprietary commercial platform in the United States, the world's largest pharmaceutical market.

In 2009, Lundbeck acquired Ovation Pharmaceuticals, Inc., establishing Lundbeck's own commercial platform in the US, the world's largest market for pharmaceuticals.

The acquisition of Ovation realises Lundbeck's strategic goal of building a US commercial platform and will contribute to Lundbeck's mid and long-term growth prospects.

Under the terms of the transaction, Lundbeck will make an upfront payment of USD 600 million immediately upon closing of the transaction. Additional payments of up to USD 300 million within one year of closing are contingent upon the achievement of certain product regulatory milestones relating to the approvals of Sabril® by the FDA.

In March 2009, Lundbeck purchased Ovation for $600 million in cash, with further payments of up to $300 million based on regulatory approvals for vigabatrin (Sabril), which was under development at the time.

The Strategic Logic

Ovation is an excellent match for Lundbeck and will help us realise our strategic goals. Ovation will provide a commercial platform in the US with a highly experienced management team and specialty sales force, a late-stage development pipeline and a proven scientific and regulatory expertise in areas of high unmet medical needs.

The product pipeline at Ovation is predominantly focused on CNS disorders and includes Sabril® for adults with refractory complex partial seizures and children with infantile spasms, two indications that have recently been unanimously recommended for approval by the Peripheral and Central Nervous System Drugs Advisory Committee appointed by the US FDA.

Ovation Pharmaceuticals is an American manufacturer and distributor of pharmaceuticals products. It was founded in 2000 by Jeffrey Aronin and is headquartered in Deerfield, Illinois. Ovation is a privately held corporation based on a business model of acquiring mature but under-promoted pharmaceuticals, as well as pharmaceutical candidates which are far along the development and FDA certification processes. Since 2009, the company has been wholly owned by the Danish pharmaceutical company Lundbeck.

The Ovation acquisition transformed Lundbeck from a primarily European company to a truly global player. The $900 million investment provided not just U.S. sales infrastructure but also regulatory expertise and a pipeline of complementary CNS products. This platform would prove essential for commercializing future products including Rexulti and Vyepti.

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The Otsuka Partnership: A Game-Changing Alliance (2011–Present)

INFLECTION POINT #4: The Otsuka Strategic Partnership

In 2011, Lundbeck entered into what would become one of the most successful pharmaceutical partnerships of the decade. Lundbeck and Otsuka established a global alliance in November 2011 to bring to bear their considerable experience and resources in the CNS area to introduce next-generation treatments for conditions such as schizophrenia, depression, Alzheimer's disease and alcohol dependency.

The partnership model was strategic genius for a mid-sized player like Lundbeck. By partnering with Otsuka—a Japanese pharmaceutical giant with deep expertise in psychiatry—Lundbeck gained access to pipeline assets and commercial reach that would have been impossible to develop independently.

Abilify Maintena: The Long-Acting Injectable Play

Otsuka and Lundbeck won U.S. approval for the once-monthly schizophrenia treatment back in 2013.

Aripiprazole once-monthly is marketed as ABILIFY MAINTENA® for extended-release injectable suspension is an atypical antipsychotic for intramuscular use. It was created by Otsuka in Japan and has been co-developed and co-commercialized by the alliance between Otsuka and Lundbeck.

ABILIFY MAINTENA was approved in the U.S. in 2013 for the treatment of adults with schizophrenia and in 2017 for the maintenance monotherapy treatment of adults with bipolar I disorder.

The partnership continued to innovate. Otsuka America Pharmaceutical, Inc. and Lundbeck announced the U.S. Food and Drug Administration has approved the New Drug Application for ABILIFY ASIMTUFII® (aripiprazole) extended-release injectable suspension for intramuscular use, a once-every-two-months injection for the treatment of schizophrenia in adults or for maintenance monotherapy treatment of bipolar I disorder in adults.

This novel formulation is Otsuka's Abilify Asimtufii, which it developed in partnership with Lundbeck and won the FDA's approval in April 2023. Compared with Abilify Maintena, Abilify Asimtufii is a longer-acting injectable and only needs to be administered once every two months.

Rexulti: The Follow-On Blockbuster

REXULTI was discovered by Otsuka and is being co-developed by Otsuka and Lundbeck.

Otsuka and its partner Lundbeck snagged an FDA approval for Rexulti (brexpiprazole) to treat schizophrenia and as an add-on therapy for major depression, leaving the two companies prepping for an August launch into an increasingly crowded field.

Rexulti has become Lundbeck's top-selling product. Lundbeck is pleased with commercial performance through the first three quarters of 2025, which is headlined by strong growth of Vyepti and accelerating growth of Rexulti.

The partnership extended Rexulti's indications further. The drug gained approval for treating agitation associated with Alzheimer's dementia—a significant market expansion. The Copenhagen-based company's top-selling product is Rexulti, a schizophrenia and depression drug that last year expanded its approved uses to include agitation caused by Alzheimer's disease. The product accounted for 4.5 billion Danish krone (about $661 million) in revenue last year.

The Otsuka partnership demonstrates how smaller pharmaceutical companies can punch above their weight through strategic alliances. Rather than trying to compete head-to-head with Big Pharma in internal R&D, Lundbeck leveraged partnerships to access blockbuster potential while contributing its specialized neuroscience expertise and commercial capabilities.

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The Migraine Expansion: Alder & Vyepti (2019–Present)

INFLECTION POINT #5: Entering Migraine

In 2019, under CEO Deborah Dunsire, Lundbeck made a transformative acquisition that expanded its therapeutic focus beyond psychiatry into neurology.

Lundbeck has struck a deal to buy migraine drug developer Alder BioPharmaceuticals for almost $2 billion (€1.8 billion). The takeover centers on a near-approval anti-CGRP antibody that could address Lundbeck's need for near-term revenue drivers.

Under the terms of the agreement, Lundbeck will commence a tender offer for all outstanding shares of Alder, whereby Alder stockholders will be offered an upfront payment for USD 18.00 per share in cash, along with one non-tradeable Contingent Value Right that entitles them to an additional USD 2.00 per share upon approval of eptinezumab by the European Medicines Agency. The transaction is valued at up to USD 1.95 billion net of cash.

The acquisition closed successfully, and the FDA delivered. Danish pharma company Lundbeck has received approval from FDA for Vyepti (eptinezumab-jjmr) as a preventive migraine treatment for adults.

Vyepti Performance

Vyepti has emerged as one of Lundbeck's most important growth drivers. Vyepti delivered strong results during the first nine months of 2025. This performance has been powered by continued strong growth in the US and supported by robust adoption of Vyepti in prioritized ex-US markets, including Canada, Italy, France, Spain, and Germany. Vyepti's global net revenue for the third quarter year-to-date 2025 was DKK 3.254 billion, and this represents 57% growth over the same period last year. Net revenue for Vyepti in the US was DKK 2.834 billion, growing 56% over prior year.

Vyepti's unique positioning—as an IV-administered CGRP therapy requiring only quarterly infusions—differentiates it from subcutaneous competitors. While the infusion requirement limits accessibility, it also creates a more controlled treatment experience that appeals to certain patients and physicians.

The Alder acquisition exemplified Lundbeck's strategic approach under Dunsire: identifying late-stage assets that complement existing capabilities and accelerate diversification. Migraine, while a different therapeutic area than psychiatry, leverages similar commercial channels (neurologists and primary care) and aligns with Lundbeck's core expertise in brain diseases.

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The Longboard Acquisition: Betting on Rare Epilepsies (2024)

INFLECTION POINT #6: The Biggest Bet Yet

In October 2024, Lundbeck announced the largest acquisition in its 110-year history.

The acquisition will enhance and complement Lundbeck's capabilities and presence within neuro-rare conditions. The lead asset, bexicaserin, holds blockbuster potential and is in development for the treatment of DEEs in a program enrolling patients diagnosed with Dravet syndrome, Lennox-Gastaut syndrome, and other DEE syndromes.

Under the terms of the agreement, Lundbeck will commence a tender offer for all outstanding shares of Longboard common stock, whereby Longboard shareholders will be offered a payment for USD 60 per share in cash. The cash consideration represents a 77% premium to the 30-day volume-weighted average price of shares of Longboard common stock as of September 30, 2024.

The transaction, worth approximately $2.6bn in equity value and $2.5bn net of cash, was finalised following the closure of a tender offer for all outstanding Longboard shares at $60 each.

The Bexicaserin Opportunity

The bexicaserin asset complements Lundbeck's mid- to late-stage pipeline and diversifies revenue growth following the expected launch in the fourth quarter of 2028 and with a global peak sales potential estimated by Lundbeck between USD 1.5 - 2 billion.

Longboard had been making the case that bexicaserin can stand apart from other approaches to treat epilepsies. In January, the biotech reported Phase 1b/2a data showing a median 53.3% reduction in seizure frequency in patients with DEEs during the 75-day treatment period, results that had the company making claims of best-in-class potential. Shares of the biotech soared more than 300% after that data report.

Bexicaserin has received Breakthrough Therapy Designation from the U.S. FDA and is set to become a cornerstone of Lundbeck's new neuro-rare disease franchise.

The Focused Innovator Strategy

Longboard is now Lundbeck's wholly owned subsidiary, following the closure of the acquisition process initially announced in October 2024. The tender offer for Longboard's outstanding common stock expired shortly after midnight on 27 November 2024 with 88.6% of Longboard's shares validly tendered.

Lundbeck President and CEO Charl van Zyl stated: "This transformative transaction will become a cornerstone in Lundbeck's neuro-rare franchise, with a potential to drive growth into the next decade."

The timing is strategically crucial. The company's long-time largest product, Trintellix/Brintellix, is slated to lose patent protection at the end of 2026. Rexulti loses exclusivity in 2029, allowing Lundbeck a longer runway to grow the brand.

Bexicaserin's expected 2028 launch timing positions it to help offset the impact of Rexulti's patent expiration in 2029—though the timing remains tight and execution risk is significant.

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Current State & The Patent Cliff Challenge (2025)

Today's Business

H. Lundbeck A/S reported its financial results for the third quarter of 2025, highlighting significant growth in revenue and net profit. The company experienced a 14% increase in revenue at constant exchange rates, reaching DKK 18.5 billion for the first nine months of 2025.

The revenue of Lundbeck's strategic brands increased by +21% CER, reaching DKK 9,436 million, representing 77% of total revenue. Adjusted EBITDA reached DKK 4,221 million, growing +24% CER, driven by continuous strong momentum across strategic brands fueled by the strong performance of Vyepti® and Rexulti®.

Full Year Revenue Growth Guidance has been upgraded to 13% to 14%. Full Year Adjusted EBITDA Growth Guidance has been upgraded to 22% to 25%.

The Looming Patent Cliff

Despite the strong operational performance, Jefferies downgraded H Lundbeck A/S from Hold to Underperform and lowered its price target to DKK39.00 from DKK50.00, citing concerns about the pharmaceutical company's upcoming patent expirations. The downgrade focuses on H Lundbeck's looming 2029+ patent cliff, which puts approximately 60% of the company's sales at risk.

The '884 Patent covering Trintellix expires on 17 June 2026, with an expected six-month pediatric exclusivity period extending to 17 December 2026.

For Rexulti, the compound patent, including patent term extensions, will expire in the U.S. on 23 June 2029.

Jefferies adds Lundbeck's pipeline has potential, but most new drugs are unlikely to reach the market before 2028, too late to offset the impact of the 2029 patent losses. Jefferies warns rival treatments Caplyta, Auvelity could erode market share for schizophrenia drug Rexulti.

The Avadel Bidding War

Adding a new dimension to Lundbeck's M&A strategy, the company entered an unexpected bidding war in November 2025.

Lundbeck is cutting in on Alkermes' proposed purchase of its Irish biopharma compatriot Avadel Pharmaceuticals, revealing Friday that it has tendered an offer valuing the target company at up to $23 per share.

Lundbeck's proposal would comprise $21 per ordinary Avadel share at the time of the acquisition's close, plus a contingent value right that could trigger two additional $1-per-share payments tied to future sales milestones for Avadel's narcolepsy drug Lumryz and its recently acquired sleep asset valiloxybate.

Avadel announced today that its Board of Directors has determined in good faith that the unsolicited proposal from Lundbeck constitutes a "Company Superior Proposal" as defined in Avadel's existing transaction agreement with Alkermes. The Lundbeck Proposal values Avadel at up to $23.00 per ordinary share, implying a total equity value of approximately $2.4 billion.

However, Alkermes upped its bid to $21 per share plus a one-time $1.50 contingent value right. Avadel's board ultimately decided that while the overall purchase prices offered by Alkermes and Lundbeck were similar, the CVR offered by Lundbeck was determined to be unlikely to be achieved.

The Avadel situation illustrates both Lundbeck's strategic aggression in pursuing growth through M&A and the competitive intensity in neuroscience assets.

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Playbook: Business & Strategic Lessons

Lesson 1: The Power of Extreme Focus

Lundbeck's research and development teams are dedicated to creating the most innovative and effective treatments for patients with psychiatric and neurological disorders. Lundbeck is the only fully-integrated pharmaceutical company in the world solely devoted to the treatment of these disorders.

While this extreme focus limits Lundbeck's addressable market, it creates several powerful advantages: deep scientific expertise, strong relationships with neurologists and psychiatrists, regulatory knowledge specific to CNS trials, and a brand identity synonymous with brain health.

The strategic lesson: specialization creates competitive moats that generalists cannot easily breach.

Lesson 2: The Foundation Ownership Model

Lundbeck's largest shareholder is the Lundbeck Foundation, which owns roughly 70% of the shares in Lundbeck, while the remaining 30% are traded on the stock exchange.

The Foundation states: "We are an industrial foundation, which means we are a combination of a business and a charity. We do not have owners, and income from our commercial activities – usually dividends from the companies we own – is channelled back into society through donations for various purposes."

The Lundbeck Foundation annually distributes around DKK 500 million for various research grants.

This structure provides patient capital for long-term drug development, insulation from hostile takeovers, and alignment between the company's commercial activities and its research mission.

Lesson 3: Strategic Partnerships as Force Multipliers

The Otsuka partnership demonstrates how mid-sized pharmaceutical companies can access blockbuster potential without the capital requirements of independent development. The partnership contributed Abilify Maintena, Abilify Asimtufii, and Rexulti—products that now represent a significant portion of Lundbeck's revenue.

Lesson 4: Managing Patent Cliffs Through Pipeline Building

The citalopram → escitalopram → Lexapro transition showed both the opportunities and pitfalls of lifecycle management. While the evergreening strategy extended the franchise's commercial life, it also generated significant legal and regulatory costs, including a €93.8 million EU fine.

Today's challenges with Trintellix (LOE 2026) and Rexulti (LOE 2029) require a more diversified approach: the Alder acquisition brought Vyepti, the Longboard acquisition brought bexicaserin, and ongoing M&A activity like the Avadel bid demonstrates management's commitment to building pipeline depth.

Lesson 5: Ethical Controversies & Brand Management

Lundbeck formerly held the only license to manufacture pentobarbital (Nembutal) in the United States. The drug is commonly used for execution by lethal injection in the United States. After coming under criticism for not adding an 'end user' agreement to prevent importers from selling Nembutal to American prisons for use in executions, Lundbeck announced that it would not sell Nembutal to prisons in U.S. states that carry out executions. By introducing a new distribution system, Nembutal will be supplied exclusively through a specialty pharmacy drop ship program that will deny distribution of the product to prisons.

In December 2011, Lundbeck divested a portfolio of products including Nembutal to US pharmaceutical company Akorn Inc.

The Nembutal controversy and the EU antitrust fine illustrate the reputational risks that pharmaceutical companies face beyond their core commercial activities. Lundbeck's response—restricting distribution and ultimately divesting the product—demonstrated a willingness to accept commercial costs to protect brand reputation.

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Porter's 5 Forces & Hamilton's 7 Powers Analysis

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Porter's 5 Forces

1. Threat of New Entrants: MODERATE

CNS drug development presents significant barriers: long development timelines (often 10+ years), high failure rates, complex regulatory pathways, and the need for specialized commercial infrastructure (psychiatrist and neurologist relationships). However, biotech companies can develop individual assets and partner or sell to larger players, as demonstrated by Lundbeck's own acquisitions of Alder and Longboard.

2. Supplier Power: LOW

Active pharmaceutical ingredients and manufacturing are largely commoditized. Lundbeck operates production facilities in Denmark, France, and Italy, providing supply chain control.

3. Buyer Power: HIGH

Payers (insurance companies, PBMs, government healthcare systems) exercise significant influence over drug pricing and formulary positioning. The shift toward value-based healthcare increases buyer sophistication. Generic erosion post-patent expiry dramatically demonstrates buyer power through price competition.

4. Threat of Substitutes: HIGH

Within psychiatry and neurology, multiple treatment modalities exist: competing branded drugs, generics, psychotherapy, and increasingly, digital therapeutics. The concerns about increasing competition for Rexulti in the treatment of major depressive disorder, given the launch of Caplyta in the fourth quarter of 2025, and agitation associated with Alzheimer's disease, following a potential approval of Axsome's Auvelity in 2026 illustrate the intensity of therapeutic competition.

5. Competitive Rivalry: HIGH

Despite Lundbeck's claim to being the only fully integrated CNS-focused pharmaceutical company, it competes against larger players' neuroscience divisions (Otsuka, Takeda, UCB, AbbVie) and specialized biotechs. Competition intensifies as multiple companies race to address large unmet needs in depression, schizophrenia, and neurodegeneration.

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Hamilton's 7 Powers Analysis

1. Scale Economies: LIMITED

While Lundbeck benefits from scale in its commercial operations (5,700 employees across 50+ countries), it lacks the manufacturing and R&D scale of Big Pharma. The ~20% R&D reinvestment rate relative to revenue provides adequate investment but not overwhelming resources.

2. Network Effects: NONE

Pharmaceutical products do not typically benefit from network effects.

3. Counter-Positioning: MODERATE

Lundbeck's exclusive focus on brain diseases represents a counter-position against Big Pharma companies that have reduced neuroscience investment due to development challenges. This specialization would be costly for diversified competitors to replicate.

4. Switching Costs: LOW-MODERATE

While psychiatric patients may resist medication changes due to personalized response profiles, the presence of generics and therapeutic alternatives limits switching costs at the system level.

5. Branding: MODERATE

Lundbeck has built strong recognition among neurologists and psychiatrists. The company's long heritage and exclusive focus on brain health create trust, but this brand power diminishes post-patent when generics compete on price.

6. Cornered Resource: LIMITED

The Otsuka partnership provides access to unique assets (Rexulti, Abilify franchise), but these are shared resources. Bexicaserin, acquired through Longboard, represents a potentially cornered resource if Phase 3 trials succeed.

7. Process Power: MODERATE

Lundbeck has more than 70 years of experience in neuroscience and specialized expertise in CNS drug development and commercialization. This institutional knowledge represents meaningful process power.

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Competitive Landscape

Lundbeck operates in a challenging competitive environment. Key competitors include:

• Otsuka: Partner but also independent CNS player
• Biogen: Neurodegeneration focus with Alzheimer's assets
• UCB: Neurology (epilepsy) and immunology
• AbbVie: Migraine portfolio (Ubrelvy, Qulipta) competing with Vyepti
• Eli Lilly: Migraine (Emgality) and growing neuroscience pipeline
• Specialized biotechs: Numerous companies developing CNS assets

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Bull Case vs. Bear Case

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Bull Case

1. Strategic Brand Momentum: Rexulti and Vyepti are delivering strong double-digit growth that is accelerating, not decelerating. The AAD (Alzheimer's agitation) indication for Rexulti opens a significant new market.

2. Bexicaserin Potential: If Phase 3 trials succeed, bexicaserin could become a $1.5-2 billion product in rare epilepsies with limited competition and favorable orphan drug economics.

3. Foundation Ownership Advantage: The Lundbeck Foundation provides stability, long-term thinking, and insulation from activist pressure during patent transitions.

4. M&A Capability: Management has demonstrated acquisition discipline (Alder, Longboard) and the balance sheet has capacity for additional deals. CEO van Zyl's track record at UCB includes successful integration of major acquisitions.

5. Focused Innovator Strategy: The capital reallocation program is delivering margin expansion, with adjusted EBITDA margin reaching 34%+ in 2025.

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Bear Case

1. Patent Cliff Severity: With 60% of revenue at risk by 2029, the pipeline must deliver significant new products on a tight timeline—and most pipeline assets won't reach market until 2028 or later.

2. Rexulti Competition: New treatments like Caplyta and potentially Auvelity threaten Rexulti's market share in depression and Alzheimer's agitation before the patent expires.

3. Bexicaserin Execution Risk: Phase 3 trials carry inherent failure risk. If bexicaserin fails, Lundbeck faces the patent cliff with limited replacement options.

4. Trintellix Erosion: The 2026 loss of exclusivity for Trintellix will immediately pressure revenues, with limited time to grow replacement products.

5. Acquisition Dependence: The reliance on M&A to fill the pipeline creates competition risk—as demonstrated by the Avadel bidding war—and integration risk.

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Myth vs. Reality

Myth	Reality
Lundbeck is immune to generic competition due to its specialty focus	Generic erosion has historically been significant, as seen with Cipramil, Lexapro, and Onfi
The Otsuka partnership is permanent	Partnership agreements have specific terms; Lundbeck must manage relationships while building independent capabilities
Foundation ownership prevents all short-term pressure	Lundbeck is still publicly traded; minority shareholders expect returns, and the company must balance long-term investment with quarterly performance
CNS is too hard—competitors won't enter	Multiple biotechs and Big Pharma divisions continue pursuing CNS assets, attracted by large unmet needs and premium pricing

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Key KPIs to Track

For investors monitoring Lundbeck, three metrics deserve particular attention:

1. Strategic Brand Revenue Growth (%): This measures the performance of Rexulti, Vyepti, Trintellix/Brintellix, and Abilify Maintena—the core of Lundbeck's current business. Consistent 15%+ growth indicates successful commercial execution and competitive positioning. Deceleration signals trouble.

2. R&D Productivity (Pipeline Advancement Rate): Track the progression of pipeline assets through clinical phases, particularly bexicaserin's Phase 3 progress. The company needs multiple late-stage successes to offset patent losses. Key milestones include bexicaserin Phase 3 readouts (expected 2027-2028) and potential new indication approvals for existing products.

3. Adjusted EBITDA Margin: Currently at 34%+, this indicates operational efficiency. As generic erosion impacts Trintellix (starting late 2026) and eventually Rexulti (2029), maintaining margin will require either successful new product launches or continued cost discipline. Margin compression signals the patent cliff is overwhelming replacement strategies.

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Conclusion

Lundbeck's 110-year journey from a Copenhagen trading company selling biscuits and vacuum cleaners to the world's only fully integrated pharmaceutical company focused solely on brain diseases represents one of the most remarkable strategic transformations in corporate history.

The company's story illuminates enduring truths about pharmaceutical economics: the temporary nature of patent-protected profits, the strategic value of extreme specialization, the advantages of patient capital through foundation ownership, and the relentless imperative to innovate or decline.

Today, Lundbeck faces its most significant strategic challenge since the citalopram patent cliff of the early 2000s. The 2029+ patent expiration threatens 60% of current revenues. Success requires flawless execution across multiple dimensions: commercial momentum for growth drivers Rexulti and Vyepti, clinical success for pipeline assets like bexicaserin, and disciplined M&A to supplement internal capabilities.

The pieces are in place: a world-class neuroscience franchise, stable foundation ownership, an experienced management team with M&A expertise, and a late-stage pipeline with blockbuster potential. Whether those pieces combine to navigate the patent cliff successfully will determine whether Lundbeck remains an independent force in brain health for another century—or becomes a cautionary tale about the unforgiving economics of pharmaceutical innovation.

Hans Lundbeck's company has reinvented itself before. The next five years will reveal whether it can do so again.