2013 Annual Report

2013 ANNUAL REPORT

LUNDBECK FOUNDATION | LUNDBECK | ALK | FALCK | LUNDBECKFOND GRANTS | THE BRAIN PRIZE | LUNDBECKFOND EMERGE | LUNDBECKFOND VENTURES | LUND FOND INVEST | LUNDBECK FOUNDATION | LUNDBECK | ALK | FALCK | LUNDBECKF GRANTS | THE BRAIN PRIZE | LUNDBECKFOND EMERGE | LUNDBECKFOND VENTUR LUNDBECKFOND INVEST | LUNDBECK FOUNDATION | LUNDBECK | ALK | FALCK | L BECKFOND GRANTS | THE BRAIN PRIZE | LUNDBECKFOND EMERGE | LUNDBECKFO TURES | LUNDBECKFOND INVEST | LUNDBECK FOUNDATION | LUNDBECK | ALK | F LUNDBECKFOND GRANTS | THE BRAIN PRIZE | LUNDBECKFOND EMERGE | LUNDBE VENTURES | LUNDBECKFOND INVEST | LUNDBECK FOUNDATION | LUNDBECK | AL FALCK | LUNDBECKGRANTS | THE BRAIN PRIZE | LUNDBECKFOND EMERGE | LUND VENTURES | LUNDBECKFOND INVEST | LUNDBECK FOUNDATION | LUNDBECK | AL LUNDBECKFOND GRANTS | THE BRAIN PRIZE | LUNDBECKFOND EMERGE | LUNDBE VENTURES | LUNDBECKFOND INVEST | LUNDBECK FOUNDATION | LUNDBECK | AL FALCK | LUNDBECKFOND GRANTS | THE BRAIN PRIZE | LUNDBECKFOND EMERGE | LUNDBECKFOND VENTURES | LUNDBECKFOND INVEST | LUNDBECK FOUNDATION LUNDBECK | ALK | FALCK | LUNDBECKGRANTS | THE BRAIN PRIZE | LUNDBECKFON LUNDBECKFOND VENTURES | LUNDBECKFOND INVEST | LUNDBECK FOUNDATION BECK | ALK | FALCK | LUNDBECKFOND GRANTS | THE BRAIN PRIZE | LUNDBECKFO EMERGE | LUNDBECKFOND VENTURES | LUNDBECKFOND INVEST | LUNDBECK FOU LUNDBECK | ALK | FALCK | LUNDBECKFOND GRANTS | THE BRAIN PRIZE | LUNDBE EMERGE | LUNDBECKFOND VENTURES | LUNDBECKFOND INVEST | LUNDBECK FOU ALK | FALCK | LUNDBECKFOND GRANTS | THE BRAIN PRIZE | LUNDBECKFOND EME

CONTENTS

Lundbeck Foundation – an active industrial foundation

1

2013 – A year of value creation

2

Overview of the Lundbeck Foundation

4

Lundbeck Foundation Grants - Regular grants - Personal grants - Strategic grants - Teaching and communicating science and research - Lundbeck Foundation Lectures

6 8 10 16 18 20

Lundbeckfond Emerge

22

Lundbeckfond Ventures

24

Lundbeckfond Invest

27

Lundbeck 30 ALK 32 Falck 33 Governance, CSR and Risks Financial statements Lundbeck Foundation Group Financial statements Parent Foundation Board and employees

34 37 99 108

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

LUNDBECK FOUNDATION – AN ACTIVE INDUSTRIAL FOUNDATION

In November 2013, the Lundbeck Foundation moved into its new domicile at Scherfigsvej 7, Copenhagen

Hans Lundbeck founded the company Lundbeck in 1915. In 1954, his widow, Grete Lundbeck, established the Lundbeck Foundation and transferred her shares in Lundbeck to the Foundation as the couple had no heirs. The objective of the Foundation is to (i) secure and develop the activities of the Lundbeck Group and (ii) make grants for the purpose of making a significant difference to human health and life.

The Lundbeck company focused early on the development and sale of pharmaceuticals, in particular antipsychotics. Today, Lundbeck is a world leader in the development and sale of drugs for the treatment of a broad array of brain disorders. Lundbeck was listed on the Copenhagen Stock Exchange in 1999, and today the Foundation owns 70% of the company.

In 1989, the Lundbeck Foundation acquired its second subsidiary, and today owns 42% of ALK, a global leader in allergy vaccines. In 2011, the Lundbeck Foundation acquired 57% of its third subsidiary, Falck, a leading international rescue and assistance company.

In addition to the three subsidiaries, the Foundation owns and manages a portfolio of securities worth approx. DKK 12 billion via Lundbeckfond Invest, as well as a portfolio of 14 biotech investments managed by Lundbeckfond Ventures. Finally, Lundbeckfond Emerge works to accelerate the commercialization of early stage scientific projects by way of investment and active project participation.

The Foundation makes annual grants of DKK 400-500 million to support medical research of the highest international quality in order to make a significant difference to human health and life.

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

2013 – A YEAR OF VALUE CREATION 2013 was a year of significant value creation in all areas of the Lundbeck Foundation. Lundbeck introduced three new products and continued the successful development of its pipeline, ALK obtained approval of its tablet vaccine in the US and Falck continued its international expansion. Lundbeckfond Invest's in-house managed portfolio substantially outperformed the market and Lundbeckfond Ventures invested in three new companies. In total, wealth of more than DKK 11 billion was created. Finally, the Foundation maintained its ambition to annually grant DKK 400-500 million to scientific research of the highest international quality in order to make a significant difference to human health and life.

Commercial activities Lundbeck 2013 was a significant year for Lundbeck. Three new products were approved: Brintellix® against depression became available in the US and was approved in Europe, Abilify Maintena® against schizophrenia was launched in the US and approved in Europe and finally Selincro® against alcohol addiction was launched in Europe.

Also the development of the pipeline was successful with positive data on Lu AE58054 for the treatment of Alzheimer’s disease and the related decision to initiate clinical phase III studies. Furthermore, the development of Brexpiprazole for the treatment of schizophrenia and depression and Desmoteplase for the treatment of acute ischaemic stroke continued according to plan.

Lundbeck is also continuing the restructuring and optimization of its operations to improve performance and to support innovation. An efficiency program is being implemented and will help free up further resources for investments, in the product pipeline and in geographical expansion.

Lundbeck continued to deliver strong results and acceptable profits in 2013 despite it being the first full year without revenue from Lexapro in the US, the patent expiry of Ebixa® and an unexpected fine from the European Commission.

ALK 2013 was characterised by challenging European markets, and a significant step forward for ALK in the US. Although several European countries saw low or negative market growth, ALK succeeded in increasing its overall market share and grew overall European product sales as a consequence of increased tablet sales and the recently launched adrenaline autoinjector Jext®. Due to production issues, affected Jext® batches was recalled in early November and production, marketing and sales was suspended.

In North America, ALK saw significant progress towards the approval of the first two SLIT-tablets. ALK has partnered with Merck in North America, who is responsible for sales and marketing. Besides North America, ALK also increased sales in China and in a number of emerging markets.

2

ALK continued to streamline its organization, production and portfolio in order to optimize the company and release resources to capture market shares in existing markets, while also expanding into new markets.

Falck Falck continued its positive growth in 2013. The improvement was based primarily on strong results in Emergency, but Falck also reported growth in Healthcare and Safety Services. Falck continued to strengthen its international profile moving into eight new countries and one new continent.

Falck’s growth comes both via acquisitions in countries such as the US, Germany, Australia, Mexico and Angola and via a strong focus on organic growth initiatives.

Falck has confirmed its ambitious growth targets, and in 2013 the company continued the work on strategic initiatives to ensure that it will reach its goal of lifting revenue to DKK 20 billion over the course of the next five to eight years.

Lundbeckfond Invest and Lundbeckfond Ventures In 2013, Lundbeckfond Invest continued to execute on its strategy from 2011 of establishing active in-house management of the portfolio combined with cost-efficient index mandates. The efforts again produced encouraging results with positive returns in all asset classes, both absolute and relative to benchmark.

The return was driven both by growing global markets and strong results in in-house managed equity and credit, which again significantly outperformed benchmark. In-house managed equities generated a return of 31% (by comparison the global equity benchmark rose by 17%) and in-house managed credit generated a return of 13% (by comparison the global credit benchmark rose by 5%).

Lundbeckfond Invest’s return for the year amounted to DKK 1,206 million, against DKK 1,286 million in 2012. This translates into a total time-weighted return of 11.3%, which is highly satisfactory. At the end of the year, Lundbeckfond Invest had a portfolio of approximately DKK 12 billion under management.

In 2013, Lundbeckfond Ventures invested in three new companies with activities in (i) programs targeting the treatment of rare diseases with clear unmet medical needs, (ii) the mapping

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

of cancerous and pre-cancerous lesions in women undergoing examination to identify and diagnose cervical cancer and (iii) the design and development of novel domain antibodies for oral treatment of gastro intestinal immune mediated diseases with none or limited systemic side effects. Lundbeckfond Ventures also made its first two exits with satisfactory returns.

At the end of 2013, the portfolio included a total of 14 companies, and Lundbeckfond Ventures continues to support and work actively with these to secure a positive return.

Grants The Lundbeck Foundation each year makes grants of DKK 400-500 million to medical research of the highest international quality. In 2013 the Foundation decided to expand its focus areas to include the support of research and projects aiming at enhancing the quality of teaching and the communication of science and research. Projects within this area must be evaluated according to equally stringent criteria as other research projects. Therefore, a new peer review committee, focusing on the support for projects aimed at raising the interest in and awareness of science and biomedicine through research, teaching and communication was established.

Young researchers continue to be a particular priority for the Foundation. The Lundbeck Foundation aims to motivate, inspire and acknowledge research talents, for example by awarding personal grants and honorary prizes in the form of Lundbeck Foundation Fellowships, The Research Prize for a Young Scientist and Talent Prizes.

One of the Foundation’s strategic grants focuses on increasing our understanding of the blood-brain barrier (BBB). It will be lead by five researchers from four different universities all working within different areas and brought together by the Foundation. By establishing a cross-functional collaborative effort combining different areas of research it is the hope that it will become possible to engineer molecules that can be safely transported across the BBB into specific brain regions.

Finally, as part of the Foundation’s strategy to support and acknowledge excellent researchers, The Grete Lundbeck European Brain Research Foundation again awarded The Brain Prize and Professor Eske Willerslev of Copenhagen University’s Centre for GeoGenetics was appointed the first new Lundbeck Foundation Professor. Eske Willerslev is an interna-tionally recognised researcher in the fields of ancient DNA, ancient genomics, DNA degradation and evolutionary biology. His research often receives significant public attention and he frequently publishes in the most quoted magazines, such as Science and Nature.

for activities related to the improvement of people’s lives and well being, especially as it relates to brain diseases.

In accordance with the statutes of the Foundation, Professor Mikael Rørth will step down at the AGM in 2014 after having served on the Board for 12 years. Mr. Rørth has made particularly valuable contributions as chairman of the Foundation from 2011-2012 and as chairman of the Research and the Biomedical Science Comittees for many years. Mr. Rørth has been a great driving force in the Foundation's development, focusing especially on transparency in the decision-making process, the establishment of international peer review and evaluation committees as well as the personal evaluation of grants. Mr. Rørth is highly respected and very well-liked due to his professional and unique interpersonal skills. Professor, MD., DM Sc. Susanne Krüger Kjær will be recommended as a new board member of the Lundbeck Foundation.

Professors Anders Björklund, Lund University, Ole Petter Ottersen, University of Oslo, and Ole William Petersen, University of Copenhagen stepped down as members of the Biomedical Science Committee at the end of 2013. For a number of years, the three professors have made a significant contribution to the Foundation. At the turn of the year, professors Alastair Compston, University of Cambridge, Hans Erik Bøttker, Aarhus University, and Jan G. Bjaalie, University of Oslo, were elected as members of the Biomedical Sciences Committee.

We would like to express a warm thank you to the retiring board and committee members for their long-standing and important contribution to the Foundation. On behalf of the Foundation, we also thank all participants on assessment committees and our partners at universities and at the ministries for the successful co-operation in 2013. We look forward to an equally good and eventful 2014.

Jørgen Huno Rasmussen Chairman of the Board

Christian Dyvig Chief Executive Officer

The foundation’s operations During the past years The Foundation has been expanding its’ activities with increased grants and new initiatives like Lundbeckfond Ventures and Lundbeckfond Emerge. Consequently, more office space was needed and the Foundation bought and renovated a building just outside the centre of Copenhagen. The Lundbeck Institute is a tenant in the building and it is the Foundation’s hope that the building will become a place

Christian Dyvig and Jørgen Huno Rasmussen

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

OVERVIEW OF THE LUNDBECK FOUNDATION

70%

Annual grants of DKK 400-500 million for research of the highest international standard

Global leader in brain disorders Revenue DKK 15,258 million

From invention to commercialisation 2 portfolio companies Global leader in allergy vaccines

42% (69%)

Revenue DKK 2,244 million Investment in life science companies 14 portfolio companies

International leader in assistance and emergency

57%

Portfolio investments in shares, bonds, etc.

Value: DKK 11,922 million

Revenue DKK 12,534 million

Note: Lundbeck Foundation owns 42% of the share capital and 69% of the votes in ALK after the deduction of treasury shares.

Group key figures Financial highlights (DKK million) Revenue Operating profit before special items Lundbeck Foundation's share of profit before special items Lundbeck Foundation's share of profit

2013 2012 2011 2010 2009 30,092 3,465 2,807 2,074

28,675 2,842 2,292 2,115

23,602 4,172 1,819 1,618

16,927 3,513 2,880 2,880

15,594 2,877 2,756 2,756

Grants awarded 376 482 504 384 340 Dividends from subsidiaries 295 499 537 441 355

Investments in acquisitions 593 437 4,537 178 5,133 Investments in property, plant, equipment and intangible assets 2,454 2,426 1,563 989 1,471

Equity 29,357 27,928 26,332 25,967 22,399 Lundbeck Foundation's share of equity 25,437 24,033 22,551 21,396 18,574 Total assets 54,121 50,232 47,459 34,732 32,109

Net wealth 37,642 26,893 28,736 28,519 26,138

Key figures Revenue growth Operating profit margin Return on equity before special items Average number of employees

4

5.0% 21.5% 39.4% 8.5% 16.5% 11.5% 9.9% 17.7% 20.8% 18.4% 11.3% 9.8% 8.3% 14.4% 15.8% 29,798 28,049 15,875 7,314 7,048

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

All the commercial activities of the Lundbeck Foundation Group have performed very well in 2013. The three subsidiaries as well as investments by Lundbeckfond Invest and Lundbeckfond Ventures have generated positive results and increases in net wealth.

Activities and results for the year The Lundbeck Foundation Group’s revenue rose by 5% (21%) to DKK 30,092 million (28,675) in 2013. Lundbeck and ALK continued to make significant investments in R&D as well as new product launches. In spite of that the Group's R&D costs fell marginally to DKK 3,344 million. Sales and distributions cost fell by DKK 599 million to DKK 5,694 million, as a direct consequence of recent year’s efficiency programs. As a result the Group's operating profit grew by 22% to DKK 3,465 million.

Lundbeckfond Invest realized a return that outperformed benchmark. The return amounted to DKK 1,206 million (1,286).

This translates into a total time weighted return of 11.3% (13.1%), which is highly satisfactory. Lundbeckfond Ventures recorded a profit of DKK 181 million in 2013 (-78). The improved financial performance was principally due to the increased share price of Veloxis. In 2013, Lundbeckfond Ventures invested in three new companies and sold two.

The Lundbeck Foundation Group had tax expenses of DKK 707 million (627), equal to an effective tax rate of 22% (19%).

The Lundbeck Foundation's share of net profit after tax and before special items rose by 22% to DKK 2,807 million in 2013.

Special items amounted to DKK 733 million (177) after tax in 2013 and relates to the fine from European Commission of approximately DKK 699 million, which has been appealed, and Falck's amortisation of intangible assets and costs associated with acquisitions.

The Foundation's operating expenses totalled DKK 59 million (54) excluding the gain on sale of the Foundation’s former domicile. The increase was due to a generally higher level of activity in the Foundation, including greater involvement in the strategic grants, active in-house asset management and a small increase in the employee headcount.

DKK 376 million (482) was awarded in grants in 2013 equal to 18% (23%) of the Foundation’s profit for the year.

Equity and net wealth As a combined effect of the development in the Group’s operations, the Foundation’s share of consolidated equity rose to DKK 25,437 million (24,033) after grants. The Foundation’s net wealth calculated at fair value increased to DKK 37,642 million (26,893) in 2013, primarily because of the increase in Lundbeck’s share price, but all areas contributed and added value with ALK contributing most in percentage terms.

Outlook The financial performance of the Lundbeck Foundation Group is correlated with developments in the commercial activities of Lundbeck, ALK and Falck and the return of Lundbeckfond Invest and Lundbeckfond Ventures which, in turn, depend on trends in the financial markets. For a detailed description of the outlook for the subsidiaries, go to www.lundbeck.com, www.alk-abello.com and www.falck.com.

Distribution of net wealth

Net wealth

Value (DKK million)

Ventures and Emerge 2%

Change in net wealth 1/1-31/12 2013

Lundbeck 49% Invest 31%

Lundbeck 18,817

7,706

ALK

2,505

938

Falck

4,533

1,119

Invest 11,922 1,195 Ventures and Emerge Grants, Admin, etc.

Falck 12%

Net wealth

742

168

-877

-377

37,642

10,749

ALK 6%

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Anne-Marie Engel, Director of Research

The Lundbeck Foundation annually grants DKK 400-500 million to make a significant difference to people’s health and lives. In 2013, the Foundation has supported outstanding researchers in the biomedical and natural sciences to strengthen Danish related research of the highest international quality. Furthermore, the Foundation supports research and projects aiming at enhancing the quality of teaching and communicating science and research.

Grants by category since 2008

DKK million

Regular

Personal

Strategic

Lundbeckfond Emerge

600 500

204

120

74 300 200 100

The Foundation also supports activities designed to promote the interest in and awareness of research into biomedicine and natural sciences, both within the educational system and among the general population.

16

400

95

100

30

50

203

190

2008

2009

80

8 82

72

123 126

230

228

223 160

0 2010

2011

2012

Young researchers are a particular priority, but the Foundation still seeks to support particularly outstanding researchers throughout their careers. The Lundbeck Foundation aims to motivate, inspire and acknowledge research talents, for example by awarding personal grants and honorary prizes.

2013

Focus areas

Finally, Lundbeckfond Emerge supports early commercialisation of new research from Danish universities and Brain Prize Awardees.

Grants 2013 The total sum awarded in 2013 was DKK 376 million, and only lower than DKK 400 million for timing reasons.

A very large proportion of the funds that the Lundbeck Foundation grants for research covers the salaries of researchers at different stages of their careers. The grants awarded in 2013 covered wages equivalent to 621 researchers at all stages of their careers, from scholarships to senior researchers, as well as technical staff.

The Foundation supports high-quality Danish related research projects within all biomedical research fields, but if of similar quality the Foundation prioritizes high-quality projects in neuroscience, psychiatry, and allergology/immune modulation as well as pre-hospital treatment.

Regular grants Regular grants included biomedical and natural science projects, as well as projects focusing on education and science communication.

The internationalization of Danish research is promoted via the funding of partnerships and exchange programmes involving leading Danish and international research teams.

Regular grants accounted for DKK 160 million, of which DKK 128 million went to biomedical research projects: 80 % in basic research and 20 % in clinical research. DKK 20 million

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Strategic grants Strategic grants are awarded on the basis of suggestions from research communities, discussions with universities and research councils as well as internal deliberations. Such grants often go to groups of researchers who set up large projects that shed light on relevant issues from a multi-disciplinary perspective. These projects are defined in close co-operation with the Foundation’s management and undergo peer review by international ad hoc expert panels.

Research Full-time Equivalents in 2013

Number

400

Total 621

350 300 250 200 150

249 197

100 50

39

0 Postdoc.

Ph.d.

Other academic staff

72

64

Scholarships

Technical staff

was granted for natural science research projects and DKK 12 million for projects that focus on teaching and communicating science.

Teaching and communicating science and research The first celebration of Denmark’s best teachers took place in May 2013. The project is a collaboration between the newspaper Politiken and the Foundation. Readers were invited to nominate the best school teacher in Denmark. More than a thousand nominations were submitted, and the six winning teachers or teacher-teams were identified by expert panels.

The Ph.d. Cup was transmitted on TV for the first time in collaboration between the newspaper Information, the Foundation and Danish Broadcasting Corporation. Eight finalists had been chosen based on written abstracts. They gave oral presentations of their ph.d. projects televised on stage, and the winner was chosen by a panel consisting of two scientists and a TV-host representing the non-scientific audience.

Personal grants and prizes In this category, the Foundation has awarded Lundbeck Foundation Fellowships, Lundbeck Foundation’s Research Prize for Young Scientists and Talent Prizes as well as the Brain Prize. It also comprises international under- and postgraduate Research Fellowships, Visiting Professorships, as well as pregraduate Scholarships, travel- and study grants.

The Grete Lundbeck European Brain Research Foundation awarded the Brain Prize for the third time. Six outstanding researchers collectively received the award for their pioneering work to develop the method of optogenetics.

Lundbeck Foundation Fellowships have been awarded since 2007. These personal grants of DKK 10 million each are given to outstanding young researchers who are ready to establish or expand their own research group at a Danish university or university hospital. In 2013, seven such fellowships were awarded to promising young researchers from the biomedical and natural sciences.

In 2013, three strategic projects were funded; one was an extension of one of the Foundation’s centres of excellence focused on the diagnosis and treatment of subtypes of schizophrenia, founded in 2008 by Professor Birte Glenthøj.

The second was a collaboration between psychiatrist professor Per Fink and epidemiologist professor Torben Jørgensen on functional disorders. The third was a new collaboration between five Danish researchers from different fields, headed

by Professor Martin Lauritzen, who will work with the functions of the blood-brain-barrier, and the challenges it poses to the administration of medication to the brain, and how to overcome these challenges using nanotechnology.

Revised grant strategy Regular and personal grants In 2013, it was decided to rethink the application process for the Foundation’s regular and personal grants. Starting from December 2013, applications must be submitted to dedicated rounds for either ph.d. stipends, national or international postdoc stipends, or running costs. Grants for ph.d. or postdoc stipends include a sum for running costs.

As part of the Foundation’s strategy to support and acknowledge excellent researchers, Professor Eske Willerslev of Copenhagen University’s Centre for GeoGenetics was appointed the first new Lundbeck Foundation Professor.

Starting in 2014, the Foundation will also award clinical professorships and positions as clinical research associate professors.

Research areas eligible for support The committee for natural sciences project support was closed after the 2013 grants were decided. In the near future, support for natural sciences projects will be limited to projects with a clear biomedical component, and such applications will be evaluated by the Biomedical Science Committee.

Teaching and communicating science and research must be evaluated according to equally stringent criteria as research projects. Therefore, a new committee, focusing on grants to projects aimed at raising interest and awareness of science and biomedicine through research, teaching and communication, was established and had its first meeting in 2013.

In the following you will find descriptions of some of the projects and people who have received regular, personal and strategic grants, as well projects that focus on teaching and communicating science.

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Regular grants In 2013, the Biomedical and Natural Science Committees assessed a total of 1051 applications, and grants were awarded to 117 projects. The projects vary greatly in terms of subject, scope and duration, and their results will have an impact on future research and other processes in many different ways.

Common to all projects supported by the Foundation, in addition to being of the highest international quality, is that they involve fascinating narratives, one or more questions that meticulous researchers are eager to answer, and hypotheses that must be confirmed or rejected. Below are three examples of research projects that the Foundation fully or partially funded via regular project grants in 2013.

Applications submitted to evaluation committees

Number of applications

Number of grants

Success rate

Biomedical sciences

961

100

10%

Natural sciences

90

17

19%

Total

1,051

117 11%

ADHD in Mouse and Man – a Role for Sortilin-Receptors?

Untreated

Amphetaminetreated

Normal mouse

Sortilin receptor deficient mouse

Normal mice and sortilin-receptor deficient mice treated with amphetamine.

The pattern of lines in each square are direct recordings of the movementpatterns of the two types of mice after treatment with either saline (placebo) or amphetamine. While amphetamine induces a marked hyperactivity in normal mice, it has a paradoxical calming effect on receptor deficient mice, reminiscent of how humans with ADHD respond to treatment.

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Simon Glerup, Associate Professor, Institute of Biomedicine, Aarhus University ADHD (Attention Deficit Hyperactivity Disorder) is a psychiatric condition which affects approximately 5% of all children, and which can cause substantial problems for both the children and their families. Characteristics of ADHD are hyperactivity, impulsive behavior and difficulties in concentrating and keeping focus. Another characteristic is the paradoxical effect of amphetamine-like drugs, which relieve the symptoms in patients rather than cause the arousal and hyperactivity seen in non-ADHD-individuals when they use amphetamine.

The biological background for ADHD is still not clear, but increasing amounts of research results indicate a substantial hereditary component. In spite of this, attempts to identify the genes responsible for the heritability of the disorder have so far been disappointing. In this project, Simon Glerup and his research team will work further on a discovery they have made during their work on Sortilins – a family of membrane receptors found mainly in nerve cells, where they are particularly important for the regulation of neuronal function and viability. Simon Glerup and his research team have found that when mice lack a certain Sortilin-receptor-coding gene, their behavior becomes ADHD-like. When they are treated with amphetamine-like drugs, their behavior normalizes. Based on this, the group will work on the hypothesis that dysfunctional Sortilin-related receptors are involved in the development of ADHD, and thus try to shed new light on the genetic background for the disorder.

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

How Does Bacteria Become Resistant To Antibiotics?

Morten Sommer, Professor, Institute for Systems Biology, Technical University of Denmark Bacterial resistance to antibiotics is a problem of increasing proportions. Millions of people die every year as a result of infections with treatment-resistant bacteria. This development is expected to continue, as only few new antibiotics are being introduced to the market. At the Technical University of Denmark, Professor Morten Sommer and his research team are focusing on the mechanisms that make bacteria resistant to treatment with the antibiotics we already have. They have discovered that bacteria become resistant by taking up resistance-genes, not from other multi-resistant strains of bacteria, but rather from non-pathogenic bacteria. The team therefore believes that there must be reservoirs of such bacteria, functioning as donors of resistance-genes to pathogenic bacteria, in our surroundings. Morten Sommer and his research team will use DNA-sequencing to identify such populations of resistant bacteria, and they will further work on how the horizontal exchange of genes between pathogenic and non-pathogenic bacteria takes place. Finally, the project focuses on how the use of antibiotics influences the risk of transfer of resistance from normal bacteria, e.g. in our gut, to pathogenic bacteria.

An increase in our knowledge of how resistance spreads to pathogenic bacteria should enable us to use antibiotics in a more appropriate way and thereby to delay the development of even more multi-resistant strains of pathogenic bacteria.

Nonpathogenic bacteria can be resistant to antibiotics (round and blue). This is not a problem in itself, but the resistance may be transferred to otherwise non-resistant pathogenic bacteria (oblong and blue), resulting in infections that cannot be cured with the antibiotics we have today. This transfer of resistance between non-pathogenic and pathogenic bacteria may take place in different environments, one of them the human gut.

Seaweed as Food for Humans Professor, Ole G. Mouritsen, Department of Physics, University of Southern Denmark

One of the world's largest macroalgae bull kelp (Nereocystis leutkeana) that is also one of the most delicious. Its biology reflects on some very special physico-chemical properties of its cellular structure and composition which determine its flavour, among other things. (Photo: S. R. Claubuesch).

The Sea is one of the last resorts for mankind to exploit for obtaining more food to feed the world. The marine macroalgae or so-called seaweeds are an almost unexploited resource for primary foodstuffs in the Western world, whereas it is an essential part of the daily diet in the East. Seaweeds are in many ways optimal for human nutrition because they contain a bounty of important minerals, trace elements, vitamins, proteins, iodine, and healthy poly-unsaturated fatty acids.

Moreover, seaweeds have plenty of dietary fibres and hence contain few calories. Their contents of poly-unsaturated fatty acids and the perfect balance between omega-3 and omega-6 fatty acids are particularly beneficial for our health. Seaweeds will thus probably become a larger part of our daily diet in the future. However, in the West and in Europe in particular, we mostly exploit seaweeds as extracts for additives and stabilizers in processed food. In this project, professor Ole Mouritsen and his team will assess the physical and chemical properties of Nordic seaweeds, both harvested in the wild and farmed.

As seaweed materials are virtually unexplored scientifically by physical experimentation and methodologies, there is an urgent need for fundamental research in the physical and chemical properties of seaweeds in order to optimize their use as whole foodstuffs, functional food, as well as novel additives to food.

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Personal grants The Foundation awards personal grants and prizes to support and encourage outstanding researchers at different stages of their careers.

The Brain Prize A personal prize of EUR 1 million, awarded by the Grete Lundbeck European Research Foundation to one or more scientists who have achieved distinction through outstanding contributions to European brain research.

On 2 May 2013, The Brain Prize was awarded for the third year running at a ceremony in the Danish Royal Library’s Black Diamond building. The prize was presented by His Royal Highness Crown Prince Frederik.

The prize was shared equally between professors Ernst Bamberg, Germany, Edward Boyden, USA, Karl Deisseroth, USA, Peter Hegemann, Germany, Gero Miesenböck, England and Georg Nagel, Germany.

Together, these six scientists laid the foundation for and developed the 'optogenetic method', which is regarded as one of the greatest neuroscientific breakthroughs of the past 50 years. Put simply, optogenetics allows researchers to switch the function of certain brain-neurons on and off, greatly improving the ability to investigate conditions such as Parkinson's disease, Alzheimer's disease, epilepsy, pain, schizophrenia, ADHD and addiction.

The largest single activity of the Foundation's outreach programme - The 2013 Brain Prize Meeting - took place in October. All six prize winners as well as a number of invited speakers attended the meeting together with a great many participants from both Denmark and the rest of Europe.

During the year, the Foundation entered into an agreement to arrange the 'Brain Conferences' in partnership with the Federation of European Neuroscience Societies. These are international, specialist conferences that will be held in Denmark twice a year for the next five years, beginning in the spring of 2014.

This partnership is expected to further strengthen the Foundation's international network and to highlight Denmark as a country that focuses on brain research. It is also expected to help develop and consolidate the Foundation's successful cooperation with the three large Danish universities and the Danish Society for Neuroscience.

Presentation of The Brain Prize 2013.

From left: Professors Ernst Bamberg, Ed Boyden, Karl Deisseroth, Peter Hegemann, Gero Miesenböck, Georg Nagel, HRH Crown Prince Frederik and Chairman of the Board Nils Axelsen

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Lundbeck Foundation Professor – Eske Willerslev The forty-two year old Professor, Eske Willerslev, from the University of Copenhagen has been awarded the first new Lundbeck Foundation Professorship as an acknowledgment of his groundbreaking research in genetics and evolution – particularly human evolution and demography, and of his dedicated work with sharing the results of his research, not only with his peers, but also with students and the general public.

Eske Willerslev is internationally recognised for his groundbreaking science. He has published 166 scientific papers in high profile international journals of which 29 are in Nature and Science - 20 as first or last author.

The Lundbeck Foundation has granted Eske Willerslev DKK 25 million for the next five years of research. The money provides a crucial economical foundation for the continuation of his revolutionary work on human evolution and dispersals across the globe.

Following a life as explorer and fur trapper in northeastern Siberia, Eske Willerslev returned to Denmark in 1994 dedicated to pursue a scientific career. Shortly after having defended his ph.d.-thesis, at the age of 33, he became the youngest professor in Denmark at the time.

Eske Willerslev has spent 1½ years as Independent Welcome Trust Fellow at University of Oxford where he later became visiting professor. He was recently awarded the title of honorary doctor at University of Oslo and the prestigious Miller Visiting Professorship at UC Berkeley. He has received a large number of prizes and awards for his research including the Lundbeck Foundation Young Researcher Award and the Rosenkjær Award - the latter for his ability to communicate his research to the public. Twice, his research has been nominated among the journal Science breakthroughs of the year.

Lundbeck Foundation Professor Eske Willerslev.

Photo: Mikael Schlosser

In 2009 Eske Willerslev established Centre of Excellence in GeoGenetics at University of Copenhagen with a grant from the Danish National Research Foundation. Today the centre hosts 70 scientists and is among the world’s leading institutions in ancient DNA and evolutionary research.

The collaboration between the Foundation and Eske Willerslev dates back to 2010, where the first grant was given to support his research. Over the years, this has resulted in a number of scientific breakthroughs. In 2010, a tuft of hair was used for the first full-genome sequencing of a 4,000-year-old individual from an extinct Greenlandic culture. In 2011, the sequencing of a tuft of hair from an aborigine from Australia helped document that present day aborigines in Australia are direct descendents of the first humans to populate the continent 50,000 years ago. In 2013, a 24,000 year-old siberian skeleton showed that North American Indians share their evolutionary history with present day Europeans.

On several occasions, Eske Willerslev has shared his research results and exciting stories of how he obtained them with audiences attending Lundbeck Foundation Lectures.

The Lundbeck Foundation Professorship grant will be used to continue and develop his research on human origins and dispersal.

Lundbeck Foundation Professor Eske Willerslev takes out sediment samples to be used for DNA-analysis, Peary Land, 2006.

Photo: Svend Funder, SNM

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Lundbeck Foundation Fellowships Lundbeck Foundation Fellowships are personal grants of DKK 10 million for five years of research.

They are awarded to young researchers who are ready to start or expand their own research groups in strong Danish research environments.

Lundbeck Foundation Fellow Jacob Sherson Associate Professor, ph.d.

Department of Physics and Astronomy Aarhus University

Lundbeck Foundation Fellow Pontus Gourdon Postdoc, ph.d.

Department of Molecular Biology and Genetics Aarhus University

Photo: Lars Kruse, AU Kommunikation

The world’s coldest crystal At the University of Aarhus, Jacob Friis Sherson and his team are working on clouds of atoms at temperatures very close to absolute zero (equivalent to −273.15 °C). At this temperature, everything stops. By overlapping several laser beams under these extreme conditions, the researchers have created the world’s coldest crystal. In time and after many more experiments this crystal can form the basis of a quantum computer.

To simulate the best way of moving the cold atoms and exploiting the shifts in their energy that form the basis of the quantum computer, a lot of different combinations have to be tried out. Jacob Friis Sherson and his colleagues, therefore, created an on-line computer game, where players at the same time as they are challenging themselves – also contribute to a mass experiment in the basic science of quantum computing.

Lundbeck Foundation Fellow Jacob Pontoppidan Thyssen MD, ph.d.

Department of Dermatology and Allergology Gentofte University Hospital University of Copenhagen Can dry and cracked skin be the start of allergic disease?

Filaggrin is the name of a protein that keeps the cells in the upper layer of our skin hydrated, thereby ensuring that physical elements from our environment do not penetrate the skin barrier. Jacob P. Thyssen is working to test his hypothesis that mutations in the gene coding for filaggrin, leading to dry and cracked skin, is associated with an increased risk for eczema, asthma and hay fever. He believes that the lack of normally functioning filaggrin literally leads to cracks in the surface of patients, allowing for the passage of chemicals and allergens from e.g. plants or animals across the skin barrier. Over time, these allergens will be processed by the body’s immune system, and may – after having entered the body through a completely different route, end up causing allergic reactions such as asthma and hay fever in the mucosa lining patient's airways following secondary airway exposure.

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3-D models of transporters in cell membranes A cell is an amazing and complex machinery in itself. Each of our approximately 70,000 billion cells only function normally if its internal machinery is in order, and the same goes for its communication with cells around it. Proteins in the cell membrane are responsible for the transportation in and out of cells of communication signals, nutrients and waste products.

Pontus Gourdon and his research group will focus on three well known, but not thoroughly characterised families of transport-proteins specialised in moving substances from one side of cells’ membranes to the other. He believes that detailed knowledge of the 3-dimensional structure of these proteins, obtained by X-ray crystallography, may well hold the key to a better understanding of diseases caused by dysfunctions in such proteins, because the structures provide insight into the function of the proteins.

Lundbeck Foundation Fellow Petrine Wellendorph Associate professor, ph.d.

Department of Drug Design and Pharmacology University of Copenhagen

Tracking the biological effects of Fantasy GHB (gamma Hydroxybutyric acid) has powerful effects on the central nervous system. As a drug, it has been used for different medical purposes. As a party drug, GHB is known under a variety of names, among them Fantasy and date-rape drug.

If taken in high doses, GHB can be lethal. Petrine Wellendorph’s research has already resulted in the identification of the molecule in the brain that binds GHB. It turned out to be a family member of a large class of GABA-receptors, known for many years as the target for GABA – an important neurotransmitter in the brain. Now she focuses her research to learn even more about the interaction between GHB and its target with the aim of eventually designing novel GHB-like therapeutic drugs or even an antidote for treatment of people who have had an overdose of the drug. Another branch of Petrine Wellendorph’s research focuses on mapping the natural effects of GHB, and whether it works through other receptors apart from the GABA-receptor.

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Lundbeck Foundation Fellow Thorsten Hansen Associate Professor, ph.d.

Department of Cheminstry University of Copenhagen

Unravelling the secrets of photosynthesis Thorsten Hansen is hoping that with a background in both theoretical chemistry and physics, he is well suited to reveal what happens when green plants absorb the light of the sun during photosynthesis. Nature actually exploits the energy from the sun much more efficiently than the best man-made solar cells. Certain mega-proteins that are active during photosynthesis are instrumental in producing oxygen. The energy-transfer that takes place during this process should be studied in more detail according to Thorsten Hansen. He will use quantum mechanical equations to create cartoonlike descriptions of the behaviour of electrons during oxygen production in photosynthesis. The theoretical models from Thorsten Hansen’s equations will subsequently be tested in laser experiments.

Lundbeck Foundation Fellow Tania Rinaldi Barkat Assistant Professor, ph.d.

Department of Neuroscience and Pharmacology University of Copenhagen

Sound interpretation in the brain Tania Barkat’s research is focused on the development and function of the parts of the brain that process and interpret sound. The identity and development of the neuronal circuits that are responsible for the brain’s interpretation of sound are largely unknown. Tania Barkat’s research at Harvard University has shed some light on this. She was able to identify certain circuits in the brains of young mice, crucial to the development of normal sound-interpretation. She also detected that the brains of the mice had to meet the sounds from their environment during a particular period (age 12-15 days) for their sense of sound to develop normally. Tania Barkat’s research will shed new light on how the brain processes different sound features during development, and may have practical implications, for instance by defining when it is best – from the point of the developing brain – to expose a person to a second language in order to acquire it most easily.

Lundbeck Foundation Fellow Stephan Pless Associate Professor, ph.d.

Department of Drug Design and Pharmacology University of Copenhagen

Hopes for better ways to relieve pain Stephan Pless' area of expertise is membrane receptors. There is one receptor in particular, which Stephan Pless wants to work with. It is called P2X receptor, and it has been identified to play a role in the generation of pain. The receptor consists of three proteins that change configuration depending on how they are stimulated. This change makes the receptor open or close a so-called ion channel in the cell membrane, and research has demonstrated an association between the channel being constantly open and a state of chronic pain. Stephan Pless and his team insert artificial fluorescent amino acids into the receptor proteins. The light intensity of the amino acids changes in accordance with the conformation of the receptor and thus the channel. The more is known about the properties of the receptor, the more precisely researchers will be able to design drugs in the future, which can block the receptor and thus hopefully relieve the suffering of many patients with diseases that cause chronic pain.

Lundbeck Foundation Fellows 2013

Six Lundbeck Foundation Fellows at the award ceremony. From left Jacob Sherson, Thorsten Hansen, Petrine Wellendorph, Stephan Pless, Pontus Gourdon and Tania Rinaldi Barkat. Unfortunately Jacob Thyssen was not able to attend the ceremony.

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Lundbeck Foundation’s Research Prize for Young Scientists and Talent Prizes Lundbeck Foundation’s Research Prize for Young Scientists is awarded to one researcher under the age of 40, and the Foundation’s five Talent Prizes to researchers under the age of 30.

Darach Watson Associate Professor, ph.d.

Dark Cosmology Center Niels Bohr Institute University of Copenhagen

New Groundbreaking methods for measuring cosmic distances Originally from Ireland, Darach Watson joined the Niels Bohr Institute in 2003 and played a pivotal role in the establishment and development of the Dark Cosmology Centre there. He is a leading expert in X-ray astronomy and is notable in that field for the discovery and characterisation of the most distant X-ray sources, including the detection of the most distant objects known in the universe. He is highly prolific and his scientific work is frequently cited. With an inventive and original research style, he brings together an eclectic mix of techniques and ideas to create new insights. He and his colleagues describe a new method for measuring cosmic distances. Instead of using measurements based on supernova explosions, which can only be observed for a few weeks, they base their new method on the observation of active super-massive black holes at the centres of galaxies, known as quasars. Quasars are persistent and far brighter sources of light for astronomers to work with. Being able to measure and calculate cosmic distances is of the utmost importance for research in astronomy and cosmology, particularly for calculating the amount of dark energy in the Universe. Dark energy is responsible for accelerating the speed of the expansion of the universe and accounts for 70% of the universe's energy density; yet it remains almost entirely undescribed and is regarded as the biggest question confronting modern physics. By introducing the new measuring technique, Darach Watson and his colleagues have added the ability to measure distances much further than ever before, thereby allowing astronomers to measure dark energy in the early history of the universe.

Morten Würtz MD, ph.d.-student Institute of Clinical Medicine, Aarhus University and Department of Cardiology Aarhus University Hospital

Inconsistent effect of aspirin in the prevention of heart attacks Morten Würtz began his research career while he was still a medical student in Aarhus. After having obtained the medical degree, he now continues his research as a ph.d.-student with a very ambitious project, which has already resulted in publications in high-ranking journals and has earned him a number of national and international awards. His research focuses on the prevention of heart attacks and other clinical consequences of thrombosis. The main focus is aspirin, which is an antithrombotic agent that prevents the formation of blood clots by hindering the aggregation of blood platelets.

Morten Würtz’ studies have shown that aspirin treatment is not equally effective in all patients at risk, and patients with a reduced effect of aspirin seem to have a particularly high risk of future heart attacks.

Morten Mattrup Smedskjær Associate Professor, ph.d.

Dept. of Biotechnology, Chemistry and Environmental Engineering Aalborg University Photo: Klaus Holsting

Every galaxy has a supermassive black hole at its heart, millions to billions of times the mass of the Sun. When these dark hearts of galaxies actively accrete matter they become incredibly bright. These are quasars, and they outshine almost everything else in the universe. Shown here is the galaxy NGC4051 with an active black hole at its centre, one of the objects used to estimate cosmological distances.

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The physical chemistry of glass Morten Mattrup Smedskjær has already published 57 articles in peer-reviewed journals, and submitted seven patent applications. He recently returned to Aalborg University after having spent time in a research based US-company working with high-tech glass materials. Morten Mattrup Smedskjær has chosen to continue his research career in the academic world, where his research will be focusing on the physical chemistry of glass. He has already established a large international network of collaborators, and is now building a research group at Aalborg University, where he will continue to work on some of his earlier discoveries, among them a way of ‘quantum-cutting’ glass – a procedure that can help increase the efficiency of energy transfer in solar cells.

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Both awards are given to exceptionally talented scientists for outstanding research based on recommendation from their peers and colleagues.

Jeremy David Silver B.A./B.Sc.(Hons.), ph.d.

Department of Environmental Science - Atmospheric Modeling Aarhus University

Improving mathematical models for air pollution Jeremy Silver came to Denmark from Australia in 2008 with an educational background in mathematics and philosophy of science. He first worked with biostatistics in Copenhagen, and later joined the University of Aarhus to work with mathematical/physical modelling. He has published scientific articles within biostatistics, atmospheric modelling and health effects of air pollution, and his cross-disciplinary approach has already set new standards within the area of calculating and modelling air pollution, as well as winning prizes for his university studies and for his research in Denmark. He is particularly interested in improving computer models for air particulate pollution. Jeremy Silver focuses his research on identifying weaknesses in currently used models as well as improving the calculations that underlie the predictive models, and thereby the accuracy of future models for air pollution.

Casper Foldager Assistant Professor, MD, ph.d.

Dept. of Clinical Medicine Aarhus University

The healing of damaged cartilage Casper Foldager has always had a particular interest in sport, and how the body copes with physical challenges. Injuries to joints very often include injuries to the cartilage that caps the ends of our bones, and normally sees to it that a joint can move smoothly. As opposed to many other tissues in the body, the regeneration power of cartilage is very weak, and this means that even very young athletes who have suffered injuries to their joints can experience the onset of arthrosis.

This is both a painful condition and something that may put an early end to an otherwise promising sports-career. In his research, Casper Foldager, who also works as an orthopaedic surgeon, focuses on understanding the molecular processes and intercellular signals that underlie the healing of damaged cartilage in humans, and particularly at how the limited regeneration potential of human cartilage can be improved. He is seeking inspiration for future therapies in the study of salamanders, which have remarkable regenerative capacities, and he hopes that in the future, new knowledge from these studies will help provide healing therapies for damaged cartilage, e.g. by the use of dedicated stem cells or gene therapy.

Tor Biering Sørensen MD., ph.d.

Department of Cardiology Gentofte University Hospital University of Copenhagen

The use of ultrasound to detect early signs of cardiac disease Tor Biering-Sørensen got his medical degree just two years ago, but he has already obtained remarkable results in his research in the use of ultrasound of the heart to prevent cardiac disease. Tor uses echocardiography to identify patients with a particular kind of asymptomatic cardiac arrhythmia – atrial fibrillation. This condition can go unnoticed for a long time, and by the time it is diagnosed, the patient’s heart may already have begun to build up a blood clot which can later be transported with the bloodstream to the brain and cause a stroke. Tor Biering-Sørensen’s research has showed that examinations with advanced ultrasound technology can identify high-risk patients by revealing early asymptomatic cases of atrial fibrillation. This makes it possible for doctors to start stroke-preventive treatment early.

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Strategic grants For a number of years, the Foundation has supported innovative research in strategic areas. In 2013, DKK 82 million was granted to strategic initiatives. The three major strategic grants represent a continuation of the Foundation’s focus on psychiatric research and an extension of the aim of contributing further to the internationalization of Danish research.

Drug delivery to the brain and brain transport mechanisms The Research Initiative on the Blood-Brain Barrier (BBB) and Drug Delivery to the brain is a large cross-functional project to which the Lundbeck Foundation donated DKK 40 million in 2013. The grant is for three years, with an option for extension of financing for further two years.

Martin Lauritzen, Professor of Clinical Neurophysiology and Translational Neurobiology at University of Copenhagen will lead the project. He will work in close collaboration with Thomas Andresen, Professor and Head of the Center for Nanomedicine and Theranostics, Technical University of Denmark, Torben Moos, Professor and Head of the Neurobiology Research Group at Aalborg University, Morten S. Nielsen, Associate Professor and Head of the Receptor Trafficking group at Aarhus University, and Birger Brodin Larsen, Associate Professor and Head of the Drug Transporters Research Group at University of Copenhagen.

The current research project has its primary focus on drug delivery to the central nervous system, with the overarching aim to develop a drug delivery system that releases carried drugs by enzymatic activation in the brain. Steps on the way will be systematized characterization of the transport and fate of different sized nano-carriers in vitro BBB models and in animal models. The interplay in the neuro-vascular unit will be assessed by identification of communication pathways between the cellular constituents, to better understand their influence on the BBB permeability.

The research will be done in collaboration with international experts from UK, US and Hungary, and will also aim at exchanging young scientists between the collaborating groups.

The BBB is a physical barrier formed by tight junctions between the cells lining the vessels of the brain. It regulates the entry of molecules into the brain, effectively separating the central nervous system from the blood circulation and protecting the brain tissue from damaging molecules. The BBB has a very low permeability to most molecules and in addition there are active transporters in the BBB that rapidly expel the molecules, should they come across.

The need for treatments of brain diseases such as brain cancer and neurodegenerative diseases is increasing with the expansion of the aging population, and drug transport across the BBB and into the brain itself is still a major challenge.

Hence, a strong focus on this area is needed. By establishing a cross-functional collaborative effort combining different areas of research, it is the hope that engineered molecules can be identified that can be safely transported across the BBB into specific brain regions.

The understanding of the BBB and its regulation has increased during the last decade as has the ability to design and engineer drug delivery systems for transport of drugs across tissue barriers. Research in nano-biomaterials has allowed for the development of nano-carriers that can target specific receptors in the tissues and at the same time carry encapsulated drugs designed to be released under certain conditions, e.g. in cancer tissue or during inflammatory processes.

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Five Investigators around a ladder: On top, Professor Thomas Andresen, DTU. Below him Professor Martin Lauritzen, KU, and in front, Associate Professor Birger Brodin, KU. To the left in the picture, Associate Professor Morten Nielsen, AU and to the right, Professor Torben Moos, AAU.

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

DanFunD – an epidemiologic study of Functional Somatic Syndromes

Clinical Intervention and Neuropsychiatric Schizophrenia Research

Professor Per Fink and Professor Torben Jørgensen

Professor Birte Yding Glenthøj

The Lundbeck Foundation has donated DKK 11.5 million for a 5-year continuation of the project Danish Functional Disorders (DanFunD). Professor Torben Jørgensen from the Research Centre for Prevention and Health, Glostrup University Hospital leads the project together with Professor Per Fink from the Research Clinic for Functional and Psychosomatic Disorders, Aarhus University Hospital.

Clinical Intervention and Neuropsychiatric Schizophrenia Research (CINS) is a major clinical research project aiming at characterizing brain structure and function in patients with first episode schizophrenia, and was established as a Lundbeck Foundation Center in 2009. The proposed plan for new clinical studies was found to be of significant scientific merit after external peer review, so the Lundbeck Foundation awarded CINS II DKK 30 million for the centre’s next 5-year period in 2013. Birte Yding Glenthøj, Professor at Glostrup University Hospital will continue to lead the CINS research.

This project has its main focus on Functional Somatic Syndromes (FSS), and will, by use of a large population cohort of 10,000 men and women aged 18-69 years drawn from the general population in the western part of the Greater Copenhagen area, establish new knowledge on the prevalence and characteristics of the symptoms and syndromes in the general population.

FSS is a major health issue. It covers a spectrum of syndromes, and each medical area has at least one syndrome, where appropriate medical assessment cannot explain patients’ symptoms and disabilities by a biomedical mechanism. These include irritable bowel syndrome (gastroenterology), chronic pelvic pain (gynaecology), fibromyalgia (rheumatology), non-cardiac chest pain (cardiology), tension headache (neurology), and chronic fatigue syndrome (infectious disease).

FSS range from vague symptoms to severe, disabling conditions. About 5 % of the Danish population suffers from FSS accounting for 10-20 % of the health care expenses. However, these numbers are uncertain, and the DanFunD epidemiologic project will perform a standardized symptom collection of all participants enrolled. They will go through detailed physical and metabolic examinations, tests of both pain perception and autonomic nervous system function. Information is collected about chronic infections, immunological factors, genes, biomarkers, personality, life style and psychosocial factors. The purpose is to evaluate the course of the syndromes and their relatedness to other diseases, as well as their socio-economic consequences by linking to the Danish health registries.

Overall, it is expected that the project will lead to more transparent and evidence based definitions of FSS, and give a better understanding of occurrence, risk factors and implications for treatment and prevention.

The overall aim of the CINS II project is to predict short-term outcome and treatment response for patients with newly diagnosed schizophrenia.

All newly diagnosed patients with schizophrenia will be thoroughly examined using complex clinical tests. Furthermore, three signaling systems and their receptors will be assessed in the brain. The patients will be treated medically and followed both in the short and long term.

The very large datasets from tests and examinations will be combined with data from the first five years of CINS research.

In collaboration with Professor Lars Kai Hansen of Department of Applied Mathematics and Computer Science, Technical University of Denmark, the data will be used for machine learning.

Here, patterns in data indicating for instance good outcome of patient’s disease episodes will be identified. These studies are expected to allow for the identification of objective biological measures that can be used as predictors of disease outcome and be useful in the selection of therapy.

The research team also enrolls individuals at ultra-high risk for developing psychosis, applying the same multimodal approach and machine learning analyses as described above.

Patients will have brain scans, and their genetic profile will be examined. This research may allow the identification of biomarkers that can identify the individuals at the highest risk for developing psychosis. This group of patients is also enrolled in a randomized trial testing the effects of cognitive remediation.

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Teaching and communicating science and research Over the last decade, the Foundation has increased its support to projects focusing on research into and development of science teaching, as well as science communication to a broader audience.

Furthermore, the Foundation wishes to promote the dissemination of research results to the general public including through Lundbeck Foundation Lectures.

In order to strengthen our work to i.e. increase the educational level of science pupils in Denmark, the Foundation has established an evaluation Committee for Science Teaching and Communication, which started its work in 2013. In the future, there will be two annual deadlines for applicants who wish to apply for grants within this area, and the committee will work to ensure that the best projects with the broadest outreach will receive support from the Foundation.

Throughout 2013 the Foundation has supported several activities and initiatives on teaching and communicating science e.g. the first national Danish conference for science teachers ‘Big Bang’, a science-marathon with the participation of 33,000 pupils, and the Danish participation in the International Biology Olympiad for highschool students under the age of 20.

Young Scientists “Young Scientists” is a Danish national talent-competition for pupils in elementary and secondary school with an interest in science and technology, organised by Danish Science Factory.

The Foundation has been one of the main sponsors of the event for a number of years, supporting its aim of nurturing scientific talent and strengthening a feeling of a common ‘science-identity’ among the contestants. With the increasing

focus on the importance of communicating science, it was decided in 2013 for the first time to grant a new communication price for the best projects from junior and senior contestants respectively. Apart from the main prizes, the winners of different categories get to participate in international science shows and competitions, and to visit international research based companies working within science and technology.

Euroscience Open Forum (ESOF) ESOF is Europe’s largest, general science meeting, held biannually in a leading European city. June 21-26 2014, the meeting will be held in Copenhagen. The Foundation is one of the key sponsors for ESOF 2014 with its sponsorship of conference-track “Learning in the 21st Century”, focusing on the future skills and knowledge to keep the European citizens well-educated and knowledgeable. The Foundation will also award a communication prize to the best presenter at this conference-track.

HRH Prince Joachim discusses with Johan Henrik Reeh his prize winning project on insulation and heat loss.

Photo: Carsten Andersen

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

From left: The Finalists Ditte Marie From, Tea Torbenfeldt Bengtsson, Stine Lindahl Jacobsen, Maja Rosenstock (winner), Nina Overgaard Therkildsen, Camilla Stampe Jensen, Henrik Skov Midtiby, Minister of Science, Innovation and Higher Education Morten Østergaard, and host MD Peter Lund Madsen.

From left Sofie Dich Hermann, Rudi Lauridsen and Iben Sass Büchert.

Photo: Simon Fals, Politiken

Photo: DR

Ph.d.

Cup Graphics: iBureauet

In 2013 the Foundation partnered with the daily newspaper Information, Universities of Denmark and the Danish Broadcasting Corporation, DR, to scale up the Information’s Ph.d.

Cup, develop its activities and bring the research and results from ph.d. students to a larger audience.

The Danish universities selected ph.d.-candidates to submit a short well-written abstract of their ph.d.-thesis for evaluation by a committee of top-researchers, who themselves were all winners of the Danish prize for Research Communication.

Eight winners were chosen and they participated in a special newspaper on research and in the battle for knowledge that was distributed to universities and libraries. The winners were also invited to the TV-version of the Ph.d. Cup, where they had to battle each other in presenting their ph.d. project in front of a live audience. The minister of Science, Innovation and Higher Education, Morten Østergaard, celebrated the winner – and all the participants – on stage.

The show had more than 100,000 viewers.

Starting in 2013, the Foundation has sponsored a new initiative within the framework of the Ph.d. Cup - a Media School for young scientists. At the Media School editors, journalists, social media specialists, television professionals, actors and others train the participants to better understand and master their role when they participate in the public debate.

The best teacher Graphics: Claus Nørregaard

In 2013 the Foundation initiated a collaboration with the daily newspaper Politiken on a prize for teachers whose work had stood out and made a special impression. Candidates could be nominated by pupils, colleagues, headmasters or parents.

The aim of the award is to contribute to the development of teaching practices in Danish primary and upper secondary schools as well as vocational schools, and help restore respect for the profession.

The teaching award received much attention and Politiken received an impressive 1084 nominations for the award.

Altogether six prizes were given out: Three for teachers from primary schools, and three prizes for teachers from upper secondary schools and vocational schools.

A panel of expert judges reviewed the nominations – and the winners were announced at an event focusing on inspirational teaching and good teachers.

The award for best teacher in the primary school went to the two teachers Sofie Dirch Hermann and Iben Sass Büchert from Herstedlund School in Albertslund, who received the prize for their work in a second grade class in the subjects Danish, gymnastics, mathematics, science and technology. The award for best teacher in secondary school went to Rudi Laursen who is a history and gymnastics teacher at Sct. Knuds Gymnasium in Odense.

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Lundbeck Foundation Lectures In 2012 the Lundbeck Foundation, the science museum Experimentarium and the daily newspaper Information initiated a series of public lectures to provide an opportunity for anyone interested to meet scientists and learn about their front line research. The lectures are held by scientists and celebrities who provide interesting perspectives on new findings and discuss the opportunities they provide and the consequences.

JANUARY DNA and man's great migrations

JANUARY The 100-year anniversary of Niels Bohr’s revolutionary atomic model

FEBRUARY Stem cells – now and in the future

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MARCH ADHD – fashion diagnosis or harsh reality

APRIL Irregular heartbeat – infatuation or illness?

APRIL Asthma and allergies – the mysterious pandemics

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

The interest in these lectures proved to be overwhelming. Consequently, the Foundation in cooperation with Aarhus University and Folkeuniversitetet initiated a series of Lundbeck Foundation Lectures in Aarhus in early 2014.

JUNI When alcohol takes over

OCTOBER The mystery of the Vikings

AUGUST The wild world of atoms

NOVEMBER Among bears and astronauts

OCTOBER Struggling with health anxiety

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Partner Christian E. Elling

LUNDBECKFOND EMERGE invests in translation of life science innovation into new businesses. It is our objective to act as a catalyst for the commercialization of breakthrough research and innovation.

Accordingly, Lundbeckfond Emerge invests in new research data, which we consider have substantial commercial potential and where our experience and competences can add value to new companies or projects.

Background Societies acknowledge that healthcare is vital for economic growth. However, the cost of healthcare is growing and new innovative medical products are increasingly measured against cost efficiency and overall impact on public health care. This has raised the requirements to the innovation in healthcare that needs to be delivered. At the same time, commercialization of innovative research data can be a challenging proposition. For the individual scientist or the small biotech company, the process may seem insurmountable, especially if he or she lacks experience and a network in the commercial field. It may often be difficult to source the venture capital required to convert exciting research results into a focused research project with a commercial perspective.

Funding sources are very restricted because such projects typically involve a high risk given the early development stage. In addition to funding, scientists also need commercial experience and sound-boarding partners, which can be difficult to find. These circumstances make conditions difficult for scientists and their projects, to the disadvantage of themselves and society, which are unable to capitalize on the value of such innovation if the commercial applications are not investigated.

the growth and successful commercialization of new breakthrough research and innovation. The objective is achieved by investing in projects on commercial terms and by providing relevant support to businesses to help them build professional operations. We wish to identify high-quality research offering strong commercial potential and where the framework conditions allow a clear plan of execution to be developed.

The research projects build on constructive collaboration, between Lundbeckfond Emerge and the individual scientists, leveraging each party’s strengths. Lundbeckfond Emerge thus aims to be a proactive partner and to contribute to building new businesses and innovation, not only by investing but also through intellectual contributions and by making our experience and network connections available to other investors and the industry. Each new business will benefit substantially from this approach, allowing it to pursue an optimized plan and gain access to the relevant industry players from the beginning.

Lundbeckfond Emerge The activity of Lundbeckfond Emerge complements the neighboring activities of the Foundation with the academic grant activity on the one side and the venture investments in mature life science companies on the other. With these elements, the Foundation has the instruments to support and invest in the development of original breakthrough scientific hypotheses from the academic setting to commercialization.

The objective of Lundbeckfond Emerge is to contribute to

Building on the financing of Insusense Therapeutics with DKK 15 million, the company had the financial strength to begin the commercial development and make the necessary investments, in developing its key technology and lead candidates.

In 2013 the company made substantial progress in forming the basis for uncovering the full potential of its therapeutics in the treatment of diabetes, which afflicts hundreds of millions of people worldwide. Through investments the company solved some of the challenges of the project that would have

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Developments in 2013 2013 was a very active year for Lundbeckfond Emerge assessing potential new projects and actively pursuing the strategy of Lundbeckfond Emerge in the portfolio companies.

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Portfolio 2013

Denmark

Development of new pharmaceuticals for the treatment of diabetes based on internationally leading research in the role of the sortilin protein family.

Denmark

Development of new pharmaceuticals for the treatment of cancer based on interna-

www.epitherapeutics.dk

tionally leading research in epigenetics.

Studies in primary myocytes (“muscle cells”) shows that the insulin receptor, which is key for controlling blood sugar, is expressed in clusters (left picture – clear green dots, blue color cell nucleus).

However, when the gene for SorCS1 is removed, the insulin receptor is found in a dispersed distribution (right picture – dispersed green) resulting in a 50% reduction of insulin receptor at the cell surface, illustrating the substantial impact SorCS1 deficiency may have on the insulin receptor.

Crystal structure of the active catalytic site of the enzyme KDM2A histone demethylase. In total, there are 32 histone demethylases enzymes of which 30 belong to the group of Jumonji domain demethylases all sharing similar catalytic domains. Many of these are thought to be involved in the development of various types of cancers.

precluded further progress of the technology, in an academic setting. This now allows the company to move the technology and lead candidates forward towards preclinical development, forming the basis for bringing the important new treatment principle towards the physicians and their patients.

EpiTherapeutics, is a biopharmaceutical company making innovative pharmaceutical agents based on a leading scientific position in the field of epigenetics. Lundbeckfond Emerge participated in the financing raising EUR 5 million in a first closing of a Series A round, bringing the total financing raised to EUR 14,6 million, since the inception of Epitherapeutics in October 2008. The financing supports the further advancement of the company’s anti-cancer drug candidates toward clinical development. Epitherapeutics is building a pipeline of novel small-molecule inhibitors against selected epigenetic oncology targets. Epigenetic enzymes are considered to play a key role in numerous human diseases, including oncology.

23

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Mette Kirstine Agger, Managing Partner

Lundbeckfond Ventures is an international evergreen life science venture fund. The evergreen structure allows for 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 programs address clear medical needs and are of high scientific quality.

Development in 2013 2013 was a very productive year with both new investments, substantial progress in the existing portfolio as well as exits.

Lundbeckfond Ventures continues to expand its activities in the US and is well positioned to do so with an annual investment frame of approximately DKK 300-400 million per year.

Three new investments were completed in 2013 together with a number of follow on investments in the existing portfolio. At the end of the year the portfolio included 14 active investments. All medtech companies have products in commercial launch phase while the pharmaceutical product portfolio spans from preclinical development over pivotal Phase III studies to products in regulatory approval process.

New Investments Cydan is an orphan drug accelerator with a small and highly experienced operational team focused on identifying and de-risking drug candidates and building a program portfolio of drug candidates with therapeutic potential for treatment of orphan diseases. Orphan drugs is a category of drugs targeting patient groups below 200,000 and 250,000 patients in the US and Europe, respectively. Drug candidates that get orphan drug status are granted commitment from the FDA and EMA of more rapid review and approval processes as well as advisory help in light of the serious unmet need and the wish to promote new medicines particularly focused on these patients.

DySIS Medical develops and markets the DySIS colposcope, which substantially improves the accuracy of detecting early stages of cervical cancer. The product is being marketed in the EU and the US. Cervical cancer is highly preventable if detected in the early stages of development. However, around 250,000 women die every year from the disease, demonstrating the difficulty of diagnosing the disease in its early stages using current methods. Extensive multi-centre clinical trials

24

have been conducted and have demonstrated that DySIS is substantially more effective than the traditional methods in use today. The most recent clinical publication showed that DySIS detected 97% of all cases of cervical cancer caused by the most prevalent form of the human papillomavirus. According to the same clinical trial, traditional methods detect only 55% of early stage cancer.

Today, antibody therapeutics is provided as systemic treatments with effective reach of target organs but also systemic side effects. In certain diseases such as inflammatory intestinal disorders, restricted administration of a therapeutic antibody to the intestine would allow focused and long term treatment without the systemic side effects. UK based VHSquared has designed novel domain antibodies for oral treatment engineered to be stable in the gastrointestinal tract. Orally administered domain antibody products will provide localised treatment of gastro intestinal immune mediated diseases with none or limited systemic side effects.

Key portfolio developments Lundbeckfond Ventures is a very active investor, supporting management in its portfolio companies. It has been a privilege for the team to work with so dedicated and experienced management teams and co-investors and see the continuous progress.

2013 was a very busy year for Acacia where a small and very effective team has progressed three clinical candidates. The company achieved positive results from its phase IIa proofof-concept study investigating APD403 for the prevention of acute nausea & vomiting in cancer patients receiving chemotherapy. Although a number of anti-emetics are available on the market, these are generally much better at controlling vomiting than nausea. Therefore, nausea remains the major unmet medical need for cancer patients receiving chemo-

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Portfolio 2013 UK www.acacia.com

Supportive care programs for post-surgical and cancer patients by using known molecules in a new way. Currently the company has two ongoing Phase III studies in Post-Operative Nausea and Vomiting and a Phase IIb study in Chemotherapy Induced Nausea and vomiting.

USA www.allocure.com

Develops AC607, an off-the-shelf biologic, based on mesenchymal stem cell therapy for kidney repair. AC607 targets the site of injury via a chemokine receptor mediated process and acts via secretion of multiple paracrine factors. Phase II study ongoing in the US and Canada.

USA www.asantesolutions.com

Easy-to-use insulin pump with a disposable pre-filled cartridge that enables up to seven day use. The product has CE mark, 510(k) clearance and is launched with a ‘pay as you go’-model in the US.

Sweden www.bonesupport.com

Injectable bone replacement material CERAMENT™ that remodels to bone within months and can be eluted with antibiotics. Marketed in the EU and the US for use in particular trauma and in the EU also with Gentamicin for treatment of osteomylitis.

Other antibiotic products are under development.

USA www.celladon.net

Gene based therapy for treatment of heart failure that upregulates the SERCA2a enzyme in cardiomyocytes, to support heart beating without increasing the oxygen consumption. Ongoing comprehensive Phase II/III study in EU/US.

USA www.cydanco.com

Incubator vehicle focused on building a portfolio of programs targeting the treatment of rare diseases with clear unmet medical needs.

France www.dbv-technologies.com

Desensitisation of food allergy with transdermal delivery using a proprietary patch carrying the relevant allergen. Peanut program is in Phase IIb in the US.

UK www.dysismedical.com

Combines standard colposcopy with Dynamic Spectral Imaging for enhanced precision of mapping cancerous and pre-cancerous lesions in women undergoing examination to identify and diagnose cervical cancer. The product is being marketed in the EU and the US.

France www.enterome.com

Diagnostic tests based on novel biomarkers showing abnormalities of bacterial composition of the microbiome in the human intestine. First tests are being developed focusing on inflammatory diseases in the intestine.

Finland www.nexstim.com

Equipment that enables precise and targeted transcranial magnetic stimulation and mapping of the brain’s functional areas, currently being marketed for pre-surgical mapping of the brain with therapeutic potential, including stroke rehabilitation therapy.

UK www.psioxus.com

Oncolytic virus to treat cancer with potential for systemic delivery thereby reaching both primary tumor and metastases. Phase I/II clinical trial ongoing.

USA

Biologic for treatment of the orphan eye disorder Graves Orbitopathy. The therapeutic approach has the potential to reduce both the inflammation and fibrosis causing the acute and long term irreversible changes around the eyes of these patients. Phase IIa placebo controlled study ongoing in US/EU.

dbv

technologies

River Vision LLC

25

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Portfolio 2013 (Continued)

UK www.syntaxin.com

The company was sold to Ipsen in July.

DK www.veloxis.com

Envarsus, a once daily tacrolimus formulation has successfully completed development for use in immunosuppression following kidney transplantation and is currently in regulatory approval process as both in the US and the EU. Envarsus has been granted orphan drug status by the FDA.

USA www.vhsquared.com

Designs and develops novel domain antibodies for oral treatment engineered to be stable in the gastrointestinal tract. Orally administered domain antibody products will provide localised treatment of gastro intestinal immune mediated diseases with none or limited systemic side effects.

Targeted Secretion Inhibitors

Targeted Secretion Inhibitors

therapy. The company has rapidly progressed with APD403 and initiated a full Phase IIb study in chemotherapy induced nausea and vomiting.

In 2012, the company obtained very positive results with APD421 showing in a Phase II study that APD 421 reduced the incidence of nausea and vomiting compared to placebo in adult surgical patients at moderate-to-high risk of suffering Post Operative Nausea and Vomiting. Vomiting and especially nausea remain a major problem for patients after surgical operations, despite the availability of a number of approved anti-emetics. Based on these results, the company has in 2013 initiated two pivotal Phase III studies in post-operative nausea and vomiting.

Based on its 510(k) approval and with very positive patient user tests, Asante Solutions successfully launched SNAP, an easy-to-use insulin pump with a disposable pre-filled cartridge that enables up to seven day use.

BoneSupport that has developed and now markets CERAMENT™, a resorbable, ceramic, biphasic bone graft substitute which remodels into healthy native bone within six to twelve months has progressed with the next generation product of the CERAMENT™ family. The first, CERAMENT™|G, received CE-mark during the year. CERAMENT|G is the first injectable antibiotic eluting, osteoconductive, ceramic bone substitute to receive CE-mark and is now being launched in Europe.

DBV Technologies developing new treatments for food allergies with lead program targeting peanut allergy in phase IIb was listed on EuroNext Paris in March 2012. Lundbeckfond Ventures sold part of its equity holding during 2013 in a joint transaction with the company and brought its ownership position below 5%.

While progressing ColoAd1, and oncolytic virus for treatment of cancer with the potential for systemic delivery through Phase I/II clinical trial, PsiOxus has completed a Phase II trial of MT102 in wasting disease (cachexia) and demonstrated a significant greater weight gain when compared to placebo

26

in very progressed lung and colorectal cancer patients. The clinical study demonstrated MT-102’s ability to halt the vicious cycle of weight loss, weakness and fatigue of cachectic late stage cancer patients.

River Vision initiated a Phase IIa placebo controlled study of a novel biologic for treatment of the moderate to severe form of the orphan eye disorder Graves Orbitopathy, a very debilitating condition that ultimatively can lead to blindness. The therapeutic approach has the potential to reduce both the inflammation and fibrosis causing the acute and long term irreversible changes around the eyes of these patients.

Syntaxin, with expertise in the field of botulinum toxins, was during the year sold to Ipsen, with which Syntaxin had two major strategic alliances. Ipsen paid DKK 210 million upfront with further contingent payments that could reach DKK 1,000 million or more depending on the achievement of development and commercial milestones.

Veloxis Pharmaceuticals has met all of its announced goals for 2013 and finished the year by filing the New Drug Application for its product, Envarsus®, with the FDA. Earlier in the year, Veloxis also submitted a European Marketing Authorisation Application to the EMA. Veloxis is seeking approval to market Envarsus® for the prevention of organ rejection in kidney transplant patients based on two positive phase III trials in de novo kidney transplanted patients and stable kidney transplanted patients both meeting their primary efficacy and safety end points. Envarsus® is a once-daily formulation of tacrolimus, the standard of care therapeutic for prevention of organ rejection after kidney transplantation. The company also demonstrated the potential for Envarsus® to improve tacrolimus-induced tremors in stable kidney transplant patients.

Results Since its start, Lundbeckfond Ventures has invested a total of DKK 840 million primarily in private companies and today has a portfolio of 14 companies. The book value of the portfolio and returns from exits year end was DKK 789 million primarily as a result of the changes in share price in Veloxis A/S.

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Bertil From, CFO

Lundbeckfond Invest manages the Foundation’s portfolio investments, which consist of cash and financial investments. Invest’s primary purpose is to generate a return and secure sufficient reserves to support the grant-making activities and the subsidiaries. The Foundation’s strategy is that Invest’s portfolio shall be diversified in terms of both asset classes and sectors.

A good year 2013 was a good year for Invest, both from a business development and financial performance perspective. The return total was DKK 1,206 million (1,286) equaling 11.3% (13.1%), which is considered satisfactory given the market conditions with weak economic growth and rising interest rates.

developed markets due to the very low yields on low risk assets e.g. government bonds.

In 2013, Invest continued to expand the investment strategy implemented in August 2011. The investment strategy included a revised asset allocation, which entailed increasing exposure to credit and equities at the expense of government bonds, mortgage bonds and cash, as well as a shift towards managing investments internally instead of using external managers.

Equity investments contributed strongly to the result as listed equities generated the highest return in 2013, equal to 22% (18%) before the equity hedge. Real estate had the second highest return with 19% (17%) followed by credit with 12% (20%). Unlisted equities (private equity) could not match listed equities and returned 10% (9%). A number of legacy biotech funds contributed negatively to the result.

The allocation to listed equities was increased from 44% to 49% during 2013. This increase was partly due to shifting more capital into the asset class and partly due to an increase in the value of the existing investments. Credit, which includes both corporate bonds and loans, was reduced from 24% at the end of 2012 to 22%. The reduction was due to profit taking on investments, in which the potential had been realized. The remaining asset classes experienced declining allocation.

The global economy and Europe in particular was during 2013 still affected by the repercussions of the economic and financial crisis that began in 2008. Europe was thus characterized by zero economic growth whilst growth globally was moderate. Despite this, financial markets developed positively and risk assets in particular delivered solid returns with rising share prices and falling credit spreads between corporate and government bonds. The developed markets, U.S. and Europe, delivered the best performance whilst Emerging Markets generally experienced negative returns. Long term interest rates rose and resulted in negative returns for bonds with longer maturities. The development reflects the fact that investors, in their search for returns, shifted towards riskier assets in the

Invest's investment strategy was well positioned to this market environment, with large equity and credit positions and no long interest rate exposure.

Asset allocation 31.12.2013 Unlisted equities and real estate 9%

Bonds and cash 20%

Listed equities – managed externally 25%

Credit – managed in-house 20%

Listed equities – managed in-house 24%

Credit – managed externally 2%

27

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Companies in which Lundbeckfond Invest had large investments

The low, but rising interest rates led to a moderate return on the holdings of government and mortgage bonds. An interest rate swap that served to reduce the Foundation’s longer interest rate exposure experienced a gain in value, leaving the total return of the bonds and cash portfolio at 2% (3%).

The investments in equities and credit managed internally by Invest, delivered very satisfactory returns again in 2013. The combination of the investment selection and a strong sales discipline contributed to generate high returns. The sales discipline materialises through selling equities and credits which have experienced significant value increases and in turn are assessed as overvalued. Proceeds from divestments are reinvested in other opportunities. This was especially prominent in the credit portfolio, where a number of corporate bonds were sold.

In order to protect Invest against large losses the equity portfolio has been partially hedged during the year. The motivation for this was a belief that the increasing share prices were driven by declining risk premiums and higher valuations due to the central banks’ expansive monetary policy rather than underlying earnings growth and that the transition in valuations post crisis could be volatile. The costs associated with this cautious strategy have reduced Invests return by three percentage points.

All new investments in 2013 were made by Invest through internal management as no funds was allocated to external managers, and the number of external managers of listed equities and bonds was reduced from seven to four. The ambition is to continue this development in 2014.

Management During 2013, the Foundation continued the expansion of internal management at the expense of external managers. The purpose of increasing the internal management is to create greater value by being able to better match the investments with the Foundation’s longer investment horizon, react faster and utilize the special competences within the investment team.

The investment philosophy of the Foundation is to have a detailed understanding of, and knowledge about, the companies in which investments are made. Upon identifying a company for investment the attention turns to the capital structure and how and where an investment shall be done. Hence, should the investment be in equity or debt (bonds or loans) and should the investment be further enhanced through financial

Summary of assets and return

Bonds and cash

Market value 31.12 2013

Return

31.12 2012

2013

Time-weighted return 2012

2013

2012

DKKm DKKm DKKm DKKm % % 2,339

2,278 42 74

2.0

3.1

Credit incl. distressed debt and mezzanine

2,656

2,605 279 411

11.7

20.3

Listed equities

5,829

4,776 723 669

15.2

17.1

Unlisted equities

735

847 81 63

9.9

7.8

Real estate

363

483 81 69

18.7

16.8

11.3

13.1

Lundbeckfond Invest total

28

11,922

10,989

1,206

1,286

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

instruments e.g. options. As a result, the asset allocation derives from the individual investment choices. The asset allocation is monitored as a part of the general portfolio and risk management, and it is ensured that the allocations are within the limits established by the Board.

Return on in-house managed assets 40% 35%

The experience thus far has been that the internal management contributes to a more dynamic asset allocation, where the allocation adapts more quickly to changing market conditions compared to previously, where funds had to be moved between external managers.

30%

The focal point of selecting companies to invest in is that the companies must be solid, well-run and global market leaders or leaders in their relevant market. Invest searches for companies that through their technology, production efficiency or brand have established leadership and exposure to growth markets. Furthermore, the companies must have the ability to defend their leadership in the future and create value for investors. In addition, the companies must not act unethically or be in conflict with UN Global Compact. In each case the expectation to the company’s future earnings and cash flow are compared to the company’s current valuation, and only in the event that the company seems attractively valued is an investment made.

10%

Invest’s investment process includes ongoing contact with the companies' Investor Relations department, and where possible, the companies' management, in order to maximize the understanding of the companies. To maintain a lean investment organization, Invest follows at any time a relatively small number of companies, resulting in a more concentrated portfolio. The increasing share prices resulted in a situation where a number of companies, in which investments had been made, reached unattractive valuations, which led to positions being sold. This included, among others, Google and Daimler.

On the other hand, investments were made in other quality companies, which were viewed as attractively valued, e.g. Pandora and Samsung.

The valuation of Emerging Markets, and in particular China, was viewed as becoming increasingly attractive during 2013

31%

25% 20% 15%

17% 13% 5%

5% 0%

Credit

Equities

In-house managed Benchmark

due to decreasing share prices and increasing earnings. On the back of an analysis of investment opportunities in China, Invest initiated investments in Chinese companies during mid2013. Specific companies within the consumer goods, healthcare and internet industries with exposure to the growing Chinese middle-class were chosen. Thus far Invest has had good experiences from investing in China, with regard to obtaining further market insight and generating returns. To date the returns have been positive even though the Chinese market has been flat. Investments in Emerging Markets are expected to be expanded gradually to other countries and regions during 2014.

The credit markets were very strong in 2013 with many new issues and tightening credit spreads. The portfolio has been somewhat reorganized and shifted towards newly issued bonds and bonds with longer maturities. The combination of a weak dollar and higher interest rates in the U.S. has led to increased investments in US bonds instead of European bonds.

Furthermore, Invest has with interest noted and played an active part in the development of a Danish market for corporate bonds and hopes that the market will further develop in the coming years.

Organisation During 2013, the investment team was increased from two to three investment professionals supplying additional competencies and resources in order to manage the increased investment activity. Adjustments of the remaining Lundbeckfond Invest organisation were also finalised.

The expense ratio for Invest including management fees was 0.15% (0.14%) of invested capital in 2013. This increase is partly due to the additional staff needed to implement the new investment strategy, where the investment team manages the assets internally, and partly due to increased performancebased compensation. The Foundation considers this an attractive and low level.

Lundbeckfond Invest has through Obel-LFI Ejendomme rebuilt the properties on Guldbergsgade hosting Copenhagen School of Design and Technology.

29

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Lundbeck is a specialised pharmaceutical company engaged in developing new and innovative treatments for brain diseases on the basis of in-house research and external partnerships. Lundbeck has activities relating to a number of brain diseases such as depression, alcohol dependence, epilepsy and schizophrenia as well as Alzheimer’s, Huntington’s and Parkinson’s diseases.

Business development 2013 was a good year for Lundbeck. The company delivered strong results that met their financial guidance, the product pipeline showed a number of positive developments and several new products were successfully launched.

Lundbeck is in the process of renewing its product portfolio and expanding its geographical reach. Some products are maturing, but the company is well on its way to replace them.

Among the highlights of the year were the approvals and launches of Brintellix®, Abilify Maintena® and Selincro® in different markets. Further, Lundbeck saw strong performance in most existing products, and is specifically seeing rapid growth in sales in the US and International Markets as the company’s new products start to take off around the world. Revenue from recently launched products increased 45% in 2013. New products now contribute to 20% of total revenue – and this trend is expected to grow and accelerate in years to come as revenues from recently approved products come on-stream.

New products In 2013, Lundbeck reached a number of important milestones as part of its R&D efforts: Abilify Maintena (aripiprazole) for the treatment of schizophrenia and Brintellix (vortioxetine) for the treatment of MDD were approved by both the FDA in the US and the EMA in Europe. Lundbeck also received formal approval of Selincro (nalmefene) for the treatment of alcohol dependence from the EMA. All three products will in the years to come play an important role in the successful transition of Lundbeck’s product portfolio and the growing geographic diversification of the company’s revenue streams.

30

Pipeline progress As well as launching new products, Lundbeck is continuously working to develop new innovative treatments to meet existing unmet needs. The company’s late-stage pipeline shows great promise, and Lundbeck has a special focus on three new compounds: brexpiprazole, desmoteplase and Lu AE58054. It is our hope that these compounds will become effective future treatments for patients suffering from depression, schizophrenia, stroke and Alzheimer’s disease.

Partner strategy Lundbeck has a sophisticated partner strategy and is highly committed to seeing it succeed. The company has a strong alliance with Otsuka Pharmaceutical on a number of projects, such as the development and commercialization of Abilify Maintena, as well as brexpiprazole, Lu AE58054, Selincro in Japan and Lu AF20513.

Lundbeck is continuing to capture benefits from the partnership with Takeda Pharmaceutical on the development and commercialization of Brintellix, as well as the partnership with Mochida Pharmaceutical and Mitsubishi Tanabe Pharma Corporation on the commercialization of Lexapro in Japan.

Internal efficiency In recent years, Lundbeck has made substantial efforts to reorganize the company to make it more flexible and effective.

This enables the company to manage the successful transition of the European product portfolio, to mitigate the pressure from healthcare reforms, and to overcome challenges such as increased competition from generics, and uncertainty sur-

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

DKK MILLION Revenue

2013 2012 2011 15,258 14,802 16,007

Research and development costs

2,872 2,919 3,319

Operating profit before special items

1,599

1,726

3,395

Profit for the year before special items

855

1,165

2,283

The Lundbeck Foundation's share of profit for the year before special items

599

816

1,598

Average number of employees

5,530

5,639

5,690

Net cash

3,718 1,912 2,036

Dividends for the year

543

392

685

The Lundbeck Foundation's share of dividends for the year

380

275

480

The figures are calculated using Lundbeck’s own accounting policies that do not acknowledge the fine from the EU Commission as a special item.

rounding pricing and reimbursement in Europe. The restructuring of the European commercial infrastructure started in 2012 and Lundbeck is already capturing benefits of this process. In 2013, Lundbeck began the optimization of their administrative processes through the Fit-for-the-Future programme, which is expected to benefit the company for years to come.

Results achieved in 2013 Lundbeck’s financial performance in 2013, excluding the unexpected fine from the European Commission, was better both in terms of revenue and for operating profit than in 2012 and forecasted in the guidance published in February 2013. The company continued to deliver strong results and good profits despite 2013 being the first full year without revenue from Lexapro in the US, and with the patent expiry of Ebixa® in Europe.

Total revenue for the year was DKK 15,258 million, an increase of 3% compared to 2012. The primary driver was the increased sales from new products and the growth in the US and International Markets. Lundbeck reported growing sales of Cipralex® against depression (+2%), while the sales of Ebixa® for the treatment of Alzheimer's disease fell because of substantial generic competition (down 25%). Azilect® for Parkinson's disease (+14%), Xenazine® for Huntington's disease (+19%), Sabril® for infantile spasms (+41%) and Onfi® for Lennox-Gastaut Syndrome (+125%) were the primary growth drivers for Lundbeck in 2013. Treanda® for chronic lymphocytic leukemia, which was launched in Canada in 2012, grew beyond expectations throughout the year. Revenue was also lifted by a milestone

payment of DKK 166 million from Takeda related to the filing of Brintellix® and by a gain of DKK 567 million from the divestment of a mature product portfolio in the US to Recordati S.p.A. Research and development costs amounted to DKK 2,872 million, corresponding to 19% of revenue, which is a decrease of one percentage point compared to 2012. Sales and distribution costs amounted to DKK 4,200 million, corresponding to 28% of revenue and a decrease of 13% relative to 2012. Administrative expenses amounted to DKK 2,549 million including the unexpected fine from the European Commission. Excluding the fine administrative expenses amounted to DKK 1,850 mio. corresponding to 12% of revenue and an increase compared to 2012 primarily due to one-off restructuring costs related to the Fit-for-the-Future programme.

Profit from operations before special items was DKK 1,599 million, which was 7% lower than in 2012. The EBIT margin was 11%, against 12% in 2012.

The effective tax rate in 2013 was 42% compared to 30% in 2012. The increased tax rate relates to the unexpected fine from the European Commission, which is not tax-deductible.

The Lundbeck Foundation's share of profit for the year was DKK 599 million in 2013, against DKK 816 million in 2012, and in 2014 the Foundation will receive DKK 380 million in dividends from H. Lundbeck related to the profit for 2013.

31

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

DKK MILLION

2013 2012 2011

Revenue

2,244 2,345 2,348

Research and development costs

463

511

455

Operating (EBIT) profit before special items

131

182

299

Profit for the year, continuing operations

61

54

200

The Lundbeck Foundation's share of profit for the year before special items

26

23

76

1,804

1,828

1,724

Average no. of employees Net cash

-15 145 420

Dividends for the year

51

51

51

The Lundbeck Foundation's share of dividends for the year

20

20

19

The figures are calculated using ALK’s own accounting policies that acknowledge restructuring costs as a special item.

ALK is a global research-driven pharmaceutical company focusing on allergy prevention, diagnosis and treatment. ALK is the global leader in allergy vaccination (immunotherapy) where patients are exposed to allergens in the form of allergy immunotherapy products. The unique treatment induces a protective immune response which reduces and potentially halts the development of allergy, asthma and allergic reactions. ALK offers allergy immunotherapy products as injections, sublingual drops and tablets, the most recent, best documented and most convenient treatment. The product portfolio includes an adrenaline auto-injector for the treatment of severe allergic reactions and diagnostic products.

Business development 2013 was characterised by challenging European markets, but ALK succeeded in increasing its market shares and growing its European revenue. Product sales outside Europe also continued to grow. Significant progress was made towards the approval of the first two SLIT-tablets in the US (GRASTEK™ and RAGWITEK™), and the new SLIT-tablet – targeting house dust mite-induced allergic rhinitis and allergic asthma – is on course for a European filing in 2014.

Merck. The first of these, for GRASTEK™, was reviewed by the Allergenic Products Advisory Committee of the US Food and Drug Administration (FDA) in December. The committee voted unanimously that the available data support the product’s efficacy and safety in patients aged five to 65 years.

Development in the base business European revenue accounted for 81% of ALK’s total revenue in 2013. Although several countries saw low or negative market growth, ALK succeeded in increasing its overall market share and grew overall European product sales as a consequence of increased AIT products sales in selected markets and the recently launched adrenaline autoinjector Jext®.

The US allergy immunotherapy market is currently dominated by injection-based SCIT treatments which are prepared by specialists for individual patients. If approved, the new tablet products would be the first in their class, representing an important advance for allergy immunotherapy treatment in the US.

Throughout Europe, newer products such as SLIToneULTRA®, AVANZ®, Jext® and GRAZAX® increased their proportion of overall sales, an important factor in ALK’s move to simplify its portfolio by phasing out lower-volume products.

Partner progress in North America 2013 saw important progress towards ALK’s goal of globalising its SLIT-tablet portfolio, with two Biologic License Applications (BLAs) submitted by ALK’s partner in North America,

32

The Allergenic Products Advisory Committee recommended approval of ALK’s ragweed sublingual allergy immunotherapy tablet (RAGWITEK™) on a meeting held in January 2014.

Strategic development ALK’s strategy plan, Focus 2016, was launched in 2012.

Tangible results include progress in developing and commercialising the SLIT-tablet portfolio, early realisation of savings following the streamlining of ALK’s business structure and simplification of ALK’s product supply network. These are part of ALK’s strategy to simplify its business. In all, Simplify initiatives are expected to yield annual net savings of DKK 100 million in 2016.

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

DKK MILLION Revenue Operating profit before special items Profit for the year before special items The Lundbeck Foundation's share of profit for the year before special items Number of employees Net interest-bearing debt Dividends for the year The Lundbeck Foundation's share of dividends for the year

2013

2012

2011*

12,534 11,504 10,193 1,112

1,083

980

562

532

519

357

311

236

32,009 28,005 25,262 6,215

5,755

5,437

0

0

0

n.a.

n.a.

n.a.

*Proforma figures for 2011.

The figures are calculated using Falck’s own accounting policies.

Falck is a leading international supplier of pre-hospital services, healthcare, firefighting, roadside assistance, safety and other contingency services, with operations on six continents and in 43 countries. Falck has four divisions: Emergency (ambulance and fire fighting service), Assistance (roadside, personal and home assistance), Healthcare (medical clinics, healthcare employee assistance programmes for companies and pension funds and healthcare staff supply service) and Safety Services (offshore safety and emergency training). Falck’s activities are directed towards preventing accidents and disease; providing assistance in situations of emergency, accidents and need; and helping people move on with their lives after illness or accidents.

Business development Falck continued to expand its global presence in 2013 and is well on track to becoming a worldwide organisation that works to prevent accidents, diseases and emergency situations; that rescues and assists people in an emergency quickly and competently; and that rehabilitates people after illness and injury. Organic growth for the year was 7.7%.

Development in the four business areas Falck Emergency continued its organic and acquisitive growth path in 2013. In Germany and the US, Falck expanded its existing network through acquisitions and also in Australia workers will now be assisted by Falck acquired HES that provides medical emergency response and related services to the mining and oil & gas industries in remote areas of Australia.

Furthermore, new projects were started around the world with fire fighting in Belgium, medical clinics in Russia and ambulance services in Finland.

Falck's Assistance activities are concentrated to the Nordic Region: Denmark, Norway, Sweden, Finland and Estonia. In all these countries, Falck continues to provide assistance to its subscribers with their vehicles and homes. For example, Falck helps people get their car started again if it has broken down, and assists homeowners with everything from water in the basement to snow on the roof. Moreover, both individuals and businesses can make use of Falck's assistance and service offering for buildings, healthcare and travel activities.

In the Healthcare division, the acquisition of Swedish-based Skandinavisk Hälsovård, which provides doctors and nurses on a temporary basis throughout the Nordic region, expanded Falcks network of doctors, nurses and social and healthcare assistants and strengthens Falck Healthcare’s position as an integral player in the healthcare system in the Nordic countries. The acquisition ties in with Falck Healthcare’s strategy of expanding in the healthcare sector in all of Scandinavia and enhances the company’s position, also in terms of physicians, on the Swedish market, the largest market in the Nordic region.

The global safety services activities, which traditionally involve safety training of employees in the offshore sector, continued to grow in 2013. Falck entered the Canadian market via its acquisition of the Survival Systems Integrated Services, which is located in one of Canada’s major oil hubs Halifax, Nova Scotia.

Falck grew organically through the opening of a new center in Mexico and the establishment of a company in Angola which will spearhead the introduction of Falck products and services into the country.

33

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

GOVERNANCE, CSR AND RISKS The Lundbeck Foundation's daily operations are based on a governance structure ensuring that the Foundation, in a transparent manner, meets its dual objective (i) of being an active, value-creating owner and investor and (ii) to support research of the highest international standard with the aim of making a difference to human health and live.

Corporate Governance The Lundbeck Foundation is managed by a board comprising of six members elected according to its statutes and three employee-elected representatives of the subsidiaries. The Board defines the Foundation's strategy and makes decisions of major significance or of an unusual nature in addition to final decisions on the provision of grants. Furthermore, the Board supervises the organization and makes sure that the Foundation is managed appropriately and in accordance with applicable law and its statutes. The Board does not participate in the daily management of the Foundation, but it appoints the CEO, who is in charge of the daily operations.

There are a minimum of four board meetings each year and in addition a two-day seminar is held at which the Foundation's strategy is reviewed, discussed and refined. The Board has set up a research and an investment committee, which meets when required to conduct more detailed analyses and discuss issues relating to grants and investments, respectively. Major investment decisions are made by the Board, and all grants are approved by the Board.

The six members of the Board, all of whom are independent, are elected for terms of one year. The intention of one-year terms is to ensure that the members are regularly held accountable for their decisions. No member who has been a member of the Board for more than 12 years or who has turned 75 years of age can be elected or re-elected. The Board may deviate from this rule if necessary for the purpose of retaining a board member due to his or her particular competencies.

The Board is self-perpetuating and elects new members in accordance with the Foundation's statutes. The chairman and the vice-chairman nominates new members to the Foundation's Board, and there is therefore no nomination committee.

Ordinary election of members takes place at the AGM. Board members elected by the employees are elected according to statutory procedures. The principle governing the composition of the Board is that the Board should be made up of members whose combined knowledge and expertise will enable the Board to fulfil the Foundation's objectives as set out in the statutes.

Members of the Board are remunerated by a fixed fee which does not depend on the financial results of neither the subsidiaries nor the portfolio or venture investments. Members of the research and investment committee receive a special fixed fee. The remuneration of each member is specified in the annual report.

A written code of conduct regarding investments and grants has been laid down, and rules have also been laid down governing the access of board members, employees and third par34

ties to grants from the Foundation. The applicable code of conduct is available on the Foundation’s website.

At least half of the shareholder-elected board members of the subsidiaries, usually including the chairman, are independent of the Foundation. The Foundation monitors the performance of the subsidiaries closely and seeks to act as a value-creating owner and partner for the boards and managements of the subsidiaries, and exerts its influence through board selection and representation on the company boards and at general meetings. The CEO of the Foundation normally sits on the boards of directors of the subsidiaries, typically as the vicechairman, whereas the chairman of the Foundation is never a member of the board of directors of the subsidiaries.

The Board performs regular self-assessments facilitated by a third party. The self-assessments include a review of the strengths and weaknesses of the board work, of whether statutory requirements are met and of the collaboration between the Executive Management and the Board.

In 2013, a whistleblowing scheme was established providing the Foundation’s employees, employees in the Foundation's subsidiaries and people related to The Lundbeck Foundation with the option of confidentially reporting wrongdoing. The whistleblowing reporting function can be accessed on the Foundations website.

The Foundation wants to ensure transparency in respect of all its activities, which is done through a high level of information on the Foundation’s website and a detailed description of the activities of the year in the annual review and report.

Grant Governance The Lundbeck Foundation’s general criteria for granting research funds are that the scientific content of the application, the qualifications of the applicant and the academic environment of the host institution are of a high international standard, and that the research can make a difference to human health and live. The Foundation seeks to ensure uniform assessment of applications. Fundamentally, the Foundation would like for all applications to be subjected to peer review and for such review to be undertaken by a majority of experts independent of the Foundation. For assessing regular project applications, the Foundation has set up two permanent eva-luation committees with a majority of external and foreign experts. For assessing larger personal and strategic applications, ad hoc evaluation panels of international experts are set up. All assessments lead to a recommendation to the Board, which makes the final allocation of grants in accordance with statutory requirements.

Assessment procedures for applications and recommendations are adjusted on an ongoing basis concurrently with developments and implementation of new initiatives.

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

Evaluation committees The Lundbeck Foundation has set up two permanent peer review evaluation committees for assessing biomedical science project applications as well as teaching and communication initiatives. The Biomedical Science Committee has nine members six of whom are external experts who may be affiliated with the committee for a maximum of six years. The remaining three members are members of the Board with research expertise. The Science Teaching and Communication Commitee has three members of whom two are external experts and one is a member of the Board.

External ad hoc reviews External review of applications by ad hoc expert panels is used for example in connection with the assessment of the Lundbeck Foundation Fellowships and strategic initiatives. To support the assessment of such applications, the Foundation also makes bibliometric analyses of applicants' publications and quotations.

Through the years, the Foundation has built a database of external reviewers. Some of the ways in which the Foundation selects its reviewers are via expert panels around the world set up by the European Research Council (ERC), among experts known within the European Science Foundation (ESF), via its own assessment committees and via recommendations from partners in private European research foundations.

CSR The Lundbeck Foundation Group is a global group with significant societal influence. The Lundbeck Foundation would like to live up to this responsibility and to be recognised by external as well as internal stakeholders as a trustworthy and responsible group characterised by professionalism, commitment, honesty and integrity.

The Foundation is committed to the UN Global Compact, which consists of ten principles concerning corporate social responsibility. These are the cornerstones of the policies, strategies and guidelines of the Lundbeck Foundation, including its grant-making activities, ownership of Lundbeck, ALK and Falck as well as portfolio investments and other investments. One of the consequences is that the Foundation opposes all forms of corruption, including extortion and bribery, and that the Foundation follows the UN guidelines related to labour standards, environment and human rights as well as sustainable development.

The Lundbeck Foundation’s values and policies are reflected within the entire Lundbeck Foundation Group. The specific CSR policies and codes of the subsidiaries are laid down by the boards of directors of the subsidiaries in which the Lundbeck Foundation is represented and make sure that policies for CSR, including human rights and impacts on climate are in force. Values and policies may thereby be adapted to the special circumstances of the subsidiaries. See the annual reports and websites of the subsidiaries for further information about their respective CSR policies.

The CSR policies, strategies and guidelines of the Lundbeck Foundation are for example reflected through: Support to independent research. The Foundation allocates substantial funds to research for the benefit of society and people's health and lives.

Portfolio investments. The investment policy in force states that the Foundation is not allowed to make investments in enterprises presumed to be acting unethically or not respecting the ten principles of the UN Global Compact. The investment portfolios are periodically reviewed to make sure that major investments comply with the investment policy. The reviews conducted in 2013 did not reveal any significant noncompliance investments.

Lundbeckfond Ventures and Emerge. The Foundation makes investments within life science to enable the development of new pharmaceuticals and new methods of treatment and diagnostic testing for diseases for the purpose of improving people's quality of life.

Gender equality and diversity. The Lundbeck Foundation supports gender equality and diversity and aims to have both genders represented on the boards of the Lundbeck Foundation and its subsidiaries within the next four years and, in the long term, to have at least two members of both genders represented on the boards. Currently, one out of six members elected to the Board of the Foundation is a woman and after the AGM in 2014 it will be two. At management level, the Foundation aims to have a mix of genders reflecting the distribution of genders of the recruitment base. Two out of six of the Foundation’s senior managers are women.

Risks The Lundbeck Foundation seeks to ensure a reasonable balance between risk exposure and value creation. The goal is to achieve a long-term, stable return subject to moderate risk.

The risk management of the Lundbeck Foundation is performed across Lundbeckfond Invest and Lundbeckfond Ventures. Portfolio investments' market risk is managed by limiting maximum exposure to individual asset classes and underlying assets. In addition, limits have been set for the duration of bond investments to manage interest rate risk. The Board lays down the investment policy. Derivative financial instruments such as swaps, options and forward contracts are used for risk management purposes. The investment policy governs the use of such instruments with regard to maturity, quantity and counter-party requirements. Weekly portfolio performance reports are prepared for the CEO, and there is monthly detailed reporting to the Board.

Risks also involve the business risks and financial risks associated with the operations of the subsidiaries: Lundbeck, ALK, and Falck as well as Lundbeckfond Invest and Lundbeckfond Ventures. Risk management policies and procedures of the subsidiaries are defined individually by the managements of the subsidiaries in which the Foundation is represented on the boards of directors. The Foundation monitors the performance of the subsidiaries on an ongoing basis, which is part of the regular monthly reporting to the Board. See the annual reports of the subsidiaries for information on their risk management policies and procedures.

Further information For further information on the Lundbeck Foundation’s corporate and grant governance, CSR and risks please go to the Foundation’s webpage: www.lundbeckfonden.com

35

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

FINANCIAL STATEMENTS LUNDBECK FOUNDATION GROUP

CONTENTS

Income statement for the period 1 January – 31 December 38 Statement of comprehensive income for the period 1 January – 31 December 39 Balance sheet at 31 December 40 Management statement and Independent auditors’ report 42 Cash flow statement for the period 1 January – 31 December 44 Statement of changes in equity for the period 1 January – 31 December 45

Notes 1. Accounting policies 45 2. Revenue 56 3. Staff costs 56 4. Depreciation, amortisation and impairment 59 5. Fees to auditors appointed at general meeting 60 6. Special items 60 7. Net financial items 61 8. Tax on profit for the year 62 9. Grants for the year 63 10. Intangible assets 64 11. Property, plant and equipment 65 12. Financial assets and financial risks 66 13. Investments in associates 69 14. Deferred tax 70 15. Inventories 7 1 16. Trade receivables and other receivables 7 1 17. Cash resources 73 18. Capital base 73 19. Other reserves 74 20. Minority interests 74 21. Provisions 75 22. Mortgage, bank, leasing and repo debt 79 23. Other payables 8 1 24. Adjustment for non-cash operating items 8 1 25. Working capital changes 8 1 26. Acquisition of companies 8 1 27. Financial risks and financial instruments 83 28. Contractual obligations 89 29. Guarantees, contingent assets and liabilities 90 30. Related parties 92 31. Events after the balance sheet date 92

Group overview 93

CONSOLIDATED FINANCIAL STATEMENTS

37

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

INCOME STATEMENT FOR THE PERIOD 1 JANUARY – 31 DECEMBER

2013 2012

Note DKKm DKKm

Revenue 2 30,092 28,675 Cost of sales 3, 4 -14,232 -12,959 Gross profit 15,860 15,716

Research and development costs 3, 4 -3,344 -3,436 Sales and distribution costs 3, 4 -5,694 -6,293 Administrative expenses 3, 4, 5 -3,357 -3,145 Operating profit before special items 3,465 2,842

Special items 6 -1,249 -396 Operating profit 2,216 2,446

Financial items, Lundbeckfond Invest, net 7 1,206 1,286 Financial items, Lundbeckfond Ventures, net 7 181 -78 Financial items, subsidiaries, net 7 -441 -381 Income from investments in associates 13 - Profit before tax 3,162 3,273

Tax on profit for the year 8 -707 -627 Profit for the year 2,455 2,646

Minority interests’ share of profit for the year 20 -381 -531 Lundbeck Foundation’s share of profit for the year 2,074 2,115

Lundbeck Foundation’s share of profit for the year 2,074 2,115 Special items after tax 1,123 267 Minority interests’ share of special items -390 -90 Lundbeck Foundation’s share of profit for the year before special items 2,807 2,292

Grants authorised during the year, including Emerge activities, gross

38

CONSOLIDATED FINANCIAL STATEMENTS

9

376

482

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD 1 JANUARY - 31 DECEMBER

2013 2012

Note DKKm DKKm

Profit for the year 2,455 2,646

Actuarial gains/losses 21 19 -113 Tax -4 34 Items that will not subsequently be reclassified to the income statement 15 -79

Currency translation, foreign subsidiaries -354 -17 Currency translation concerning additions to net investments in foreign subsidiaries -145 -27 Realised exchange gains/losses concerning additions to net investments in foreign subsidiaries -8 -40 Adjustment, deferred exchange gains/losses, hedging 142 -67 Exchange gains/losses, hedging (transferred to the hedged items) -126 130 Exchange gains/losses, trading (transferred from hedging) - 1 Value adjustment of interest hedging instruments 9 -32 Repayment of interest hedging instruments 51 Fair value adjustment of available-for-sale financial assets 19 -35 8 Adjustment for hyperinflation -2 1 Tax on other comprehensive income 8 71 1 Items that may subsequently be reclassified to the income statement -397 -42

Other comprehensive income -382 -121

Comprehensive income 2,073 2,525

Minority interests’ share of comprehensive income for the year 20 -242 -490 Lundbeck Foundation’s share of comprehensive income 1,831 2,035

Currency translation of foreign subsidiaries and currency translation concerning additions to net investments in foreign subsidiaries and tax related to these items, net loss of DKK 427 million (net loss of DKK 72 million in 2012), is recognised in the currency translation reserve in equity. Other items and tax related to such items are recognised in reserve for hedging transactions and reserve for fair value adjustments of available-for-sale financial assets, respectively, at net gain DKK 57 million (DKK 23 million in 2012) and net loss DKK 35 million (net gain DKK 8 million in 2012) and recognised under retained earnings in equity in the amount of DKK 152 million (DKK 10 million in 2012).

CONSOLIDATED FINANCIAL STATEMENTS

39

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

BALANCE SHEET AT 31 DECEMBER, ASSETS

2013 2012

Note DKKm DKKm

Goodwill 10,435 10,158 Contractual customer relationships etc.

2,261 2,634 Other intangible assets 5,880 5,612 Intangible assets 10 18,576 18,404

Property, plant and equipment 11 6,153 5,912

Financial assets – Lundbeckfond Invest 12 11,814 10,924 Financial assets – Lundbeckfond Ventures and Emerge 12 728 519 Investments in associates 13 86 17 Deferred tax 14 550 576 Other financial assets 12 232 194 Financial assets 13,410 12,230

Non-current assets 38,139 36,546

Inventories 15 2,312 2,101

Trade receivables and other receivables 16 5,809 5,401 Income tax 275 538 Receivables 6,084 5,939

Securities – Lundbeckfond Invest 188 72 Securities – subsidiaries 1,300 1,597 Securities 17 1,488 1,669

Cash – Lundbeckfond Invest 208 214 Cash – subsidiaries 5,890 3,763 Cash 17 6,098 3,977

Current assets 15,982 13,686

Assets 54,121 50,232

40

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

BALANCE SHEET AT 31 DECEMBER, EQUITY AND LIABILITIES

2013 2012

Note DKKm DKKm

Capital base 18 2,523 2,270 Other reserves 19 -626 -221 Retained earnings 23,540 21,984

Lundbeck Foundation’s share of equity 25,437 24,033

Minority interests’ share of equity 20 3,920 3,895

Total equity 29,357 27,928

Payable grants 298 400 Provisions 21 1,490 1,245 Deferred tax 14 1,881 2,018 Payables to financial institutions – subsidiaries 22 9,037 8,356 Other payables 31 54 Non-current liabilities 12,737 12,073

Payable grants 674 591 Provisions 21 544 446 Income tax 106 68 Payables to financial institutions – subsidiaries 22 643 672 Repo debt – Lundbeckfond Invest 22 196 126 Other payables 2, 23 9,864 8,328 Current liabilities 12,027 10,231

Liabilities 24,764 22,304 Equity and liabilities

CONSOLIDATED FINANCIAL STATEMENTS

54,121

50,232

41

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

MANAGEMENT STATEMENT

The Board of Directors and the Executive Management have today considered and approved the annual report of the Lundbeck Foundation for the financial year ended 31 December 2013.

cial statements of the Foundation give a true and fair view of the Group’s and the Foundation’s assets, liabilities and financial position at 31 December 2013, and of the Group’s and the Foundation’s activities and the Group’s cash flows for the financial year 1 January – 31 December 2013.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and the financial statements of the Foundation have been prepared in accordance with the Danish Financial Statements Act. In addition, the annual report has been prepared in accordance with the Danish disclosure requirements for annual reports.

We believe that the management’s review includes a fair review of developments in the Group’s and the Foundation’s activities and finances, results for the year and the Group’s and the Foundation’s financial position in general as well as a fair description of the principal risks and uncertainties to which the Group and the Foundation are exposed.

We consider the accounting policies used to be appropriate.

Accordingly, the consolidated financial statements and finan-

We recommend that the annual report be approved at the annual meeting.

Copenhagen, 7 April 2014

Executive Management Christian Dyvig

Board of Directors

42

Jørgen Huno Rasmussen Chairman

Mikael Rørth Vice-chairman

Steffen Kragh

Thorleif Krarup

Povl Krogsgaard-Larsen

Gunhild Waldemar

Kim Klitgaard Elected by the employees

Ken Liljegren Elected by the employees

Peter Adler Würtzen Elected by the employees

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors of the Lundbeck Foundation Report on the consolidated financial statements and the Foundation’s financial statements We have audited the consolidated financial statements and the Lundbeck Foundation’s financial statements for the financial year 1 January – 31 December 2013, which comprise the income statement, balance sheet, statement of changes in equity and notes, including the accounting policies, for the Group as well as the Foundation, and the statement of comprehensive income and the cash flow statement of the Group. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for annual reports, and the Foundation’s financial statements are prepared in accordance with the Danish Financial Statements Act. Management’s responsibility for the consolidated financial statements and the Foundation’s financial statements Management is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for annual reports as well as the preparation of financial statements of the Foundation that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of consolidated financial statements and financial statements of the Foundation that are free from material mis-statement, whether due to fraud or error.

internal control relevant to the preparation of consolidated financial statements and the Foundation’s financial statements that give a true and fair view in order to design procedures that are appropriate in the circumstances, but not to express an opinion on the effectiveness of the entity’s internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the consolidated financial statements and the Foundation’s financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Our audit has not resulted in any qualification.

Opinion In our opinion, the consolidated financial statements give a true and fair view of the Group’s assets, liabilities and financial position at 31 December 2013 and of the results of the Group’s operations and cash flows for the financial year 1 January to 31 December 2013 in accordance with the International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for annual reports.

Further, in our opinion, the Foundation’s financial statements give a true and fair view of the Foundation’s assets, liabilities and financial position at 31 December 2013 and of the results of the Foundation’s operations for the financial year 1 January – 31 December 2013 in accordance with the Danish Financial Statements Act.

Auditor’s responsibility Our responsibility is to express an opinion on the consolidated financial statements and the Foundation’s financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements and the Foundation’s financial statements are free from material misstatement.

Statement on the management review Pursuant to the Danish Financial Statements Act, we have read the management review. We have not performed any further procedures in addition to the audit of the consolidated financial statements and the Foundation’s financial statements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements and the Foundation’s financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements and the Foundation’s financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers

Copenhagen, 7 April 2014

On this basis, it is our opinion that the information provided in the management review is consistent with the consolidated financial statements and Foundation’s financial statements.

Deloitte Statsautoriseret Revisionspartnerselskab

Anders Dons State Authorised Public Accountant

Martin Faarborg State Authorised Public Accountant

43

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

CASH FLOW STATEMENT FOR THE PERIOD 1 JANUARY – 31 DECEMBER

2013 2012

Note DKKm DKKm

Operating profit before special items 3,465 2,842 Special items -744 -14 Adjustment for non-cash operating items etc.

24 1,899 1,543 Working capital changes 25 1,005 108 Cash flows from operating activities 5,625 4,479

Financial receipts 499 241 Dividend received 118 153 Financial payments -779 -507 Income tax paid -593 -1,135 Authorised grants paid -370 -388 Cash flows from operating activities 4,500 2,843

Acquisition of companies 26 -593 -437 Divestment of subsidiaries, non-controlling interests and operations -22 12 Investments in intangible assets -1,377 -1,488 Investments in property, plant and equipment -984 -938 Disposal of intangible assets and property, plant and equipment 42 106 Investments in other financial assets at fair value through profit or loss -5,759 -8,272 Sale of other financial assets at fair value through profit or loss 6,057 8,357 Change in other financial assets -46 -2 Cash flows from investing activities -2,682 -2,662

Loan proceeds 1,309 555 Repayment of loans -664 -252 Change in other financial liabilities -5 -5 Buyback of shares from minority interests -20 -238 Capital injections from minority interests 17 39 Settlement of exercised share options -14 Employee bonds -19 -13 Dividend paid to minority interests 20 -193 -269 Cash flows from financing activities 411 -183

Change in cash 2,229 -2 Cash at 1 January 3,977 3,985 Unrealised exchange adjustments for the year -108 -6 Cash at 31 December 17 6,098 3,977

44

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD 1 JANUARY – 31 DECEMBER

Lundbeck Minority

Foundation’s interests’

Other Retained share of share of

Capital base reserves earnings equity equity Total equity

DKKm DKKm DKKm DKKm DKKm DKKm

Equity at 1 January 2013 2,270 -221 21,984 24,033 3,895 27,928

Profit for the year 2,074 2,074 381 2,455 Other comprehensive income

-405 162 -243 -139 -382 Comprehensive income - -405 2,236 1,831 242 2,073

Grants authorised during the year, net -351 -351 - -351 Minority interests’ share of dividends - - -166 -166 Buyback of shares from minority interests -13 -13 -8 -21 Change in minority interests 8 8 20 28 Adjustment of provision for acquisition of minority interests -108 -108 -80 -188 Incentive programmes 40 40 22 62 Settlement of share options -6 -6 -8 -14 Tax related to items recognised directly on equity

3 3 3 6 Other transactions - - -427 -427 -217 -644

Increase of capital base 253 - -253 - -

Equity at 31 December 2013 2,523 -626 23,540 25,437 3,920 29,357

Equity at 1 January 2012 2,225 -180 20,506 22,551 3,781 26,332

Profit for the year 2,115 2,115 531 2,646 Other comprehensive income

-41 -39 -80 -41 -121 Comprehensive income - -41 2,076 2,035 490 2,525

Grants authorised during the year, net -460 -460 - -460 Minority interests’ share of dividends - - -245 -245 Buyback of shares from minority interests -37 -37 -115 -152 Decrease in minority interests -49 -49 - -49 Adjustment of provision for acquisition of minority interests -51 -51 -37 -88 Incentive programmes

44 44 21 65 Other transactions - - -553 -553 -376 -929

Increase of capital base 45 - -45 - -

Equity at 31 December 2012 2,270 -221 21,984 24,033 3,895 27,928

1. ACCOUNTING POLICIES

The consolidated financial statements have been prepared in accordance

The annual report has been prepared under the historical cost convention,

with International Financial Reporting Standards (IFRS) as adopted by the

except that the following assets and liabilities are measured at fair value:

EU and the Danish Statutory Order on Adoption of IFRS issued pursuant to

derivative financial instruments and financial instruments at fair value.

the Danish Financial Statements Act. The consolidated financial statements are presented in accordance with the The consolidated financial statements are presented in Danish kroner (DKK),

new and revised standards (IFRS/IAS) and interpretations (IFRIC) which

which also is the functional currency of the Lundbeck Foundation.

apply for the financial year. This has not resulted in any changes in accounting policies that have affected recognition and measurement in the current or previous years other than the changes described below.

CONSOLIDATED FINANCIAL STATEMENTS

45

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 1

Changes in accounting policies

The changes have been made with retrospective effect, and comparative

Two changes have been made to the accounting policies which relate to the

figures have been restated. The changes in accounting policies with regard

consolidated financial statements for 2013.

to IAS 19 Employee Benefits have improved the profit for 2012 by DKK 79 million to DKK 2,646 million. The change in accounting policies with regard

The Lundbeck Foundation has implemented the changes to IAS 19 Employee

to reallocation of amortization on product rights has no effect on the profit

Benefits effective from 1 January 2013, according to which actuarial gains

for 2012. The changes in accounting policies have no impact on the balance

and losses must be recognized in the statement of comprehensive income

sheet and no net impact on the statement of comprehensive income, state-

instead of the income statement and not subsequently be recycled through

ment of changes in equity and the cash flow statement.

profit or loss. The implementation has resulted in additional disclosures.

If the change in accounting policies regarding IAS 19 Employee Benefits had In addition, as from 1 January 2013, the Lundbeck Foundation has reallo-

not been effected, profit for 2013 would have been DKK 15 million higher, i.e.

cated to cost of sales amortization on product rights, which was previously

profit for the year would have been DKK 2,470 million. If the change in

recognized as sales and distribution costs. The reallocation has been made

accounting policies regarding the reallocation of amortization on product

to align cost of sales on all products regardless of whether they are pro-

rights had not been effected, sales and distribution costs would have been

duced by Lundbeck or Lundbeck has purchased the right to the products

DKK 800 million higher, and costs of sales would have been correspondingly

and subsequently amortizes the rights.

lower.

Restatement of comparative figures due to changes in accounting policies:

2013 2012 New Previous New Previous policies Changes policies policies Changes policies DKKm DKKm DKKm DKKm DKKm DKKm

Income statement Cost of sales -14,232 -801 -13,431 Research and development costs -3,344 - -3,344 Sales and distribution costs -5,694 789 -6,483 Administrative expenses -3,357 -7 -3,350 Operating profit before tax 3,162 -19 3,181 Tax on profit for the year -707 4 -711 Profit for the year 2,455 -15 2,470

Statement of comprehensive income Actuarial gains/losses 19 19 - Tax -4 -4 - Items that will not subsequently be reclassified to the income statement 15 15 - Other comprehensive income -382 15 -397

Cash flow statement Operating profit before special items 3,465 -19 3,484 Adjustment for non-cash operating items etc.

1,899 19 1,880 Cash flow from operating activities 5,625 - 5,625

46

CONSOLIDATED FINANCIAL STATEMENTS

-12,959 -3,436 -6,293 -3,145 3,273 -627 2,646

-396 -4 473 40 113 -34 79

-12,563 -3,432 -6,766 -3,185 3,160 -593 2,567

-113 34

-113 34

-

-79 -121

-79 -79

-42

2,842 1,543 4,479

113 -113 -

2,729 1,656 4,479

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 1

Future IFRS changes

• The most significant risks and benefits associated with the asset sold are transferred to the buyer.

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

• The Group does not retain management control of the asset sold.

a number of new and amended standards and interpretations have not yet

• Revenue from the individual payments in an overall agreement can be

entered into force or have not yet been adopted by the EU. Therefore, they

clearly separated and calculated reliably at fair value.

are not included in the consolidated financial statements.

• It is probable that the Group will receive payment for the asset sold.

• There are no further delivery obligations for the Group concerning

None of the new standards or amendments of existing standards are expec-

the asset sold.

ted to have any material impact on future consolidated financial statements.

Research and development costs Research and development costs totalled DKK 3,344 million in 2013 (DKK

Accounting policies and estimates critical to financial reporting

3,436 million in 2012). Research and development costs are recognised in the income statement as they are incurred unless the criteria for capitalisation of the development costs are deemed to have been met and it is found

In the preparation of the consolidated financial statements in accordance

to be probable that future earnings will cover the development costs. Due

with IFRS and generally accepted accounting principles, it is necessary for

to a very long development period and significant uncertainty in relation

Management to make certain estimates and assumptions as not all accoun-

to the development of new products, in the opinion of the Group, develop-

ting items and accruals can be calculated with certainty.

ment costs should not normally be capitalised in the balance sheet until the development of the product has been completed and all the necessary

Management’s estimates are based on historical data, recent information

public registration and marketing approvals have been obtained. Develop-

available at the time of presentation of the financial statements and other

ment costs relating to individual minor development projects running for

assumptions considered reasonable under the given circumstances. The

short-term periods and subject to limited risk are capitalised under other

actual outcome may differ from these estimates.

intangible assets.

The estimates are made by the management of the Lundbeck Foundation,

Intangible assets

the H. Lundbeck Group, the Falck Group and the ALK Group, respectively.

Goodwill, product rights and contractual customer relationships etc. represent a significant part of the Group's total assets, amounting to DKK 17,884

It is believed that the following accounting policies and accounting estimates

million in 2013 (DKK 17,754 million in 2012). The majority of the value of

are critical to the Group's financial reporting for 2013.

these items arose through the acquisition of companies or the acquisition of rights. In connection with acquisitions, the individual assets and liabilities

Application of materiality and relevance

are re-assessed to ensure that both recognised and unrecognised values

In the preparation of the consolidated financial statements, the Lundbeck

are measured at fair value. Especially for intangible assets for which there is

Foundation aims to focus on information which is considered to be material

often no active market, the calculation of fair value may involve uncertainty.

and thus relevant to the users of the consolidated financial statements. This

Intangible assets with indefinite lives and intangible assets in progress are

applies both to the accounting policies and to the information given in the

tested for impairment at least once a year or if there is evidence of impair-

notes in general.

ment. Contractual customer relationships etc. identified at acquisitions were primarily acquired with a view to further developing the acquired business

Based upon events which have taken place during the year and the financial

areas and markets and establishing positions in new markets. As a result, a

position at year-end, Management has assessed which information is mate-

large part of the purchase prices has been allocated to goodwill. The value

rial for the users. For this purpose, The Lundbeck Foundation operates with

in use of the product rights is calculated by discounting the estimate made

internal guidelines for the application of materiality and relevance which

by Management over the expected cash flows during a budget period of at

have been agreed with the external auditors.

least five years with due consideration to patent expiry. For the calculation of the value in use of the assets, the Group uses different discount factors

When assessing materiality and relevance, due consideration is given to

depending on the individual areas of activity and Management's expecta-

ensure adherence to the International Financial Reporting Standards as

tions for growth and terminal value in the period over and above five years.

adopted by the EU and the Danish Statutory Order on Adoption of IFRS

These factors are crucial for the assessment of any impairment and thus for

issued pursuant to the Danish Financial Statements Act and to ensure that

the final calculation of the fair value of intangible assets.

the consolidated financial statements give a true and fair view of the Group’s financial position at the balance sheet date and the operations and cash

It is a precondition for the retention of the value of the Group's rights that

flows for the financial year.

such rights are respected. It is the Group's policy to defend these rights wherever they may be violated.

License income and income from research collaborations License income and royalties from outlicensed products and non-refundable

Impairment

downpayments and milestone payments including service income from such

Goodwill is written down through the income statement in those cases

agreements relating to research collaborations totalled DKK 1,304 million in

where the carrying amount exceeds the future net income expected from

2013 (DKK 869 million in 2012), which is recognised in the income statement

the cash-generating unit (CGU) to which the goodwill relates (recoverable

under revenue when the following criteria have been met:

amount). In the impairment test, the discounted expected future cash flows

• The payment relates to research results already obtained.

(value in use) for the CGU are compared to the carrying amounts of goodwill

• The buyer has gained access to and possession of the research results.

and other net assets.

CONSOLIDATED FINANCIAL STATEMENTS

47

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 1

The carrying amount of intangible assets and property, plant and equipment

Consolidated financial statements

is analysed in connection with the preparation of the consolidated financial statements or if there are indications that the carrying amount of an asset

The consolidated financial statements include the Lundbeck Foundation and

may exceed the expectations of future income from the asset (recoverable

subsidiaries controlled by the Foundation. Control is achieved where the

amount). If this analysis concludes that the future expected net income from

Foundation directly or indirectly holds more than 50% of the voting rights or

the asset will be lower than the carrying amount, the carrying amount will be

is otherwise able to exercise or actually exercises control.

reduced to the higher of fair value less cost to sell and value in use.

Companies in which the Group holds between 20% and 50% of the voting Impairment losses are recognised in the income statement under the same

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

items as the associated depreciation or amortization.

associates. Unrealised gains on transactions with associates are eliminated in proportion to the Group’s share of the enterprise.

Financial assets Financial assets include investments in listed and unlisted equity instruments

Investments in associates included in the Group’s documented investment

and securities, including life science investments recognised at their fair

strategy are recognised as financial assets measured at fair value through

value. Investments in unlisted equity instruments and securities at the end of

profit or loss.

2013 amounted to DKK 1,389 million (DKK 1,550 million in 2012).

Basis of consolidation The assessment of fair value of these investments is subject to considerable

The consolidated financial statements are prepared on the basis of the

uncertainty. This applies especially to life science investments because the

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

value of these businesses is linked to the company's often long-term invest-

prepared in accordance with the Group’s accounting policies.

ment in the development of new pharmaceuticals and technologies.

The consolidated financial statements are prepared by adding together uniManagement estimates the fair value of unlisted investments in accordance

form items and eliminating intra-group income and expenses, investments,

with International Private Equity and Venture Capital Valuation Guidelines.

balances and dividends as well as realised and unrealised gains and losses

i.e. on the basis of relevant valuation methods based on comparable transac-

on transactions between the consolidated companies. Account is taken of

tions on market conditions, capital increases and the like. If the fair value

the tax effect of these eliminations.

cannot be determined with sufficient reliability, the investments in question are recognised at cost less any impairment. The Group assesses at each

Financial statement items of subsidiaries are fully consolidated. Profit for the

balance sheet date whether there is objective evidence that an investment

year and equity attributable to minority interests in subsidiaries that are not

or a group of investments is impaired. An impairment loss is recorded if

fully controlled are included in the consolidated profit and equity and stated

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

as separate line items.

calculation of fair value or if subsequent capital injections are made at lower Business combinations

prices.

Newly acquired companies are recognised in the consolidated financial Purchase price allocation in business combinations

statements from the date of acquisition. The date of acquisition is the date

In connection with allocation of purchase price in business combinations,

when control actually passes to the Group. Businesses sold or discontinued

calculations are made of fair value of acquired assets and liabilities. Since

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

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

or discontinuance. The date of disposal is the date when control of the busi-

acquired assets and liabilities, there is an inherent uncertainty in respect of

ness actually passes to a third party. Expected costs related to divestment or

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

discontinuance are included in the calculation of gains or losses.

IFRS 3, the purchase price allocations in business combinations may be Acquired businesses are accounted for using the purchase method of ac-

adjusted for up to 12 months from the date of acquisition.

counting, according to which the identifiable assets, liabilities and continProvisions for acquisition of minorities

gent liabilities of the acquired businesses are measured at fair value at the

Provisions for acquisition of minorities amounted to DKK 1,021 million at 31

time of acquisition. Account is taken of the tax effect of the revaluations

December 2013 (DKK 711 million in 2012). When calculating the fair value of

made. The cost of a business is generally the fair value of the consideration

issued put options which commit the Group to acquire minority interests

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

in subsidiaries, the Management applies estimates of, e.g. the subsidiaries’

more future events, the value thereof will be recognised at fair value at the

future financial performance, the likelihood of option holders exercising their

date of acquisition. Changes to contingent considerations are recognised

selling right and the time of exercise. These factors are of material impor-

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

tance to the fair value calculation, which is therefore subject to uncertainty.

and the value of which is contingent on future events will be recognised as part of the consideration at the date of acquisition. The put options issued

Amortisation and depreciation periods and scrap values

are subsequently measured at fair value. Any changes to the fair value of

In the determination of the carrying amount of intangible assets and proper-

issued put options after initial recognition are recognised in equity. Costs di-

ty, plant and equipment, estimates are required of the estimated economic

rectly attributable to the business combination are recognised in the income

lives of the assets and of scrap values.

statement as incurred. Adjustments of commitments in connection with conditional consideration or issued put options the value of which is contingent on future events concerning business combinations with an acquisition date before 1 January 2010 will still be recognised in accordance with IFRS

48

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 1

3 (2004). Accordingly, the adjustments are recognised in goodwill until the

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

conditions have been met or the issued put options exercised.

binations, the minority interests receiving put options are considered to have been redeemed on the acquisition date. The minority interests are eliminated

Any positive difference (goodwill) between the consideration and the value

and a debt obligation is recognised at fair value on initial recognition. Fair

of non-controlling interests in the acquiree and the fair value of the previous-

value is calculated as the present value of the exercise price of the option.

ly held interests in the acquiree, on the one hand, and the fair value of the

Subsequent measurements are made at fair value and fair value changes are

acquired identifiable assets, liabilities and contingent liabilities, on the other

recognised in equity on an ongoing basis.

hand, is recognised in intangible assets. On acquisition, goodwill is allocated to the cash-generating units which will subsequently form the basis for fu-

Issued put options relating to business combinations with an acquisition

ture impairment tests. Negative differences (negative goodwill) between the

date before 1 January 2010 will still be recognised in accordance with

cost of the acquired business and the fair value of the acquired identifiable

IFRS 3 (2004). Accordingly, the subsequent measurement will be made at

assets, liabilities and contingent liabilities are recognised in the income state-

amortised cost with ongoing recognition of interest expenses in the income

ment at the time of acquisition. Goodwill arising from acquired businesses is

statement and value changes in goodwill. Any subsequent dividend pay-

adjusted within a maximum period of 12 months from the acquisition if ad-

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

ditional information about the fair value at the time of acquisition of assets,

statement in the cases where the option price is independent of dividend

liabilities and contingent liabilities acquired is obtained after the acquisition

payments. Dividend payments are included in the determination of the cost

and it is found that the fair values originally calculated were incorrect or the

of the put options in cases where the option price is adjusted for dividend

consideration for the business combination is different from that originally

payments received.

fixed. The effect of the adjustments will be recognised in the opening equity, and the comparative figures will be restated accordingly. Subsequently, goodwill is not adjusted. However, goodwill will not be recognised by an

Translation of foreign currency

amount exceeding the expectations of future income from the acquiree.

A functional currency is determined for each of the reporting enterprises of Goodwill and fair value adjustments in connection with the acquisition of

the Group. The functional currency is the currency in the primary economic

independent foreign entities (subsidiaries or associates) are accounted for

environment in which the reporting entity operates. Transactions in curren-

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

cies other than the functional currency are transactions in foreign currencies.

the balance sheet date.

On initial recognition, transactions denominated in foreign currencies are Gains or losses on disposal or discontinuance of subsidiaries and associates

translated at standard rates which approximate the actual exchange rates

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

at the transaction date. Exchange differences arising between the exchange

ciates are calculated as the difference between the selling price or the

rate at the transaction date and the exchange rate at the date of payment

discontinuance amount and the carrying amount of net assets at the time of

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

sale as well as anticipated costs relating to sale or discontinuance. The re-

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

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

nised in the same item as the hedged item.

cumulated currency translation adjustments previously recognised in other comprehensive income. A proportional capital reduction does not result in

Receivables, payables and other monetary items denominated in foreign cur-

recycling of accumulated exchange rate adjustments through profit or loss.

rencies that have not been settled at the balance sheet date are translated 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 time the re-

Minority interests

ceivable or payable is created or recognised in the latest consolidated financial statements is recognised in the income statement under net financials in

On initial recognition, minority interests are either recognised at fair value

respect of unhedged items and under the same items for hedged items.

(including the fair value of goodwill related to minority interests in the acquired company) or at the minority interests' share of the acquired com-

On recognition of foreign subsidiaries having a functional currency different

pany's identifiable assets, liabilities and contingent liabilities measured at fair

from that used by the Foundation, non-monetary as well as monetary items

value (excluding the fair value of goodwill related to minority interests in the

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

acquired company). The measurement basis for minority interests is selected

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

for each individual transaction.

income statements of the foreign subsidiaries are recognised in the Group's statement of comprehensive income under other comprehensive income.

Acquisition and divestment of minority interests

However, for foreign subsidiaries and associates operating in hyperinflationary economies, revenue and costs are translated at the exchange rate ruling

Increases and reductions of minority interests are treated for accounting

at the balance sheet date. Prior to the translation, the income statement

purposes as transactions with owners, in their capacity as owners. As a

and the non-monetary items of the balance sheet are restated taking into

result, any differences between adjustment to the carrying amount of

account the buying power of the functional currency based on inflation

minority interests and the fair value of the consideration received or paid

until the balance sheet date (inflation correction). The effect of the infla-

are recognised directly in equity.

tion correction is recognised in the currency translation reserve in equity.

In the income statement, it is recognised in financials as a loss/gain on the monetary net position in the relevant entities. The assessment of when an

CONSOLIDATED FINANCIAL STATEMENTS

49

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 1

economy is hyperinflationary is based on qualitative as well as quantitative

Changes in the fair value of derivatives used to hedge net investments in in-

factors, including whether the accumulated inflation over a three-year period

dependent foreign subsidiaries or associates and which otherwise meet the

is in the order of 100%.

relevant criteria are recognised in the Group's statement of comprehensive income under other comprehensive income.

Foreign exchange adjustment of receivables from or debt to subsidiaries which are considered part of the Foundation's overall investment in the sub-

Securities, available-for-sale financial assets and derivatives measured at

sidiary in question is recognised in the Group's statement of comprehensive

fair value are classified as belonging to levels 1-3 depending on the pricing

income under other comprehensive income.

method applied. Level 1 includes financial assets for which the fair value is measured on the basis of quoted prices (unadjusted) in active markets for

On recognition of foreign associates having a functional currency different

identical assets. Level 2 includes financial assets and financial liabilities for

from that used by the Foundation, assets and liabilities are translated at the

which the fair value is measured on the basis of directly or indirectly obser-

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

vable inputs other than the quoted prices included in level 1. Level 3 includes

translated at average exchange rates for the year. Exchange differences ari-

financial assets for which the fair value is measured on the basis of valuation

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

techniques which include inputs not based on observable market data.

statement of comprehensive income under other comprehensive income.

On the divestment of wholly-owned foreign entities, foreign exchange ad-

Income statement

justments accumulated in equity via other comprehensive income and which can be attributed to entities are reclassified from the “Currency translation

Revenue: Pharmaceuticals for the treatment of brain disorders and allergy

reserve” to the income statement together with any gain or loss on the di-

Revenue comprises invoiced sales for the year less returned goods and

vestment. On the divestment of partially owned foreign subsidiaries, the part

revenue-based taxes consisting mainly of value added taxes and foreign

of the currency translation reserve that relates to non-controlling interests

revenue-based drug taxes.

is not recognised in the income statement. On partial divestment of foreign subsidiaries without giving up control, a proportionate share of the currency

Moreover, revenue includes license income and royalties from outlicensed

translation reserve is transferred from the parent company shareholders’ to

products as well as non-refundable downpayments and milestone payments

the non-controlling shareholders’ share of equity. On partial divestment of

relating to research and development collaborations and collaboration on

associates and joint ventures, the proportionate share of the accumulated

commercialization of products.

currency translation reserve recognised in other comprehensive income is transferred to profit for the year together with the gain or loss on the

In addition, income from the reduction of investments in research enterprises

divestment. Any repayment of intercompany balances that are considered

considered to represent sale of research results is recognised as revenue.

part of the net investment is not considered, in itself, a partial divestment of See Accounting policies and estimates critical to financial reporting for a

subsidiaries.

description of the accounting treatment of license income and income from research collaborations.

Financial instruments Revenue: Emergency, Assistance, Healthcare and Training sectors Forward exchange contracts, interest rate swaps, share options and other

Revenue represents the value of services and goods delivered and invoiced

derivatives are initially recognised in the balance sheet at fair value on the

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

value date and are subsequently remeasured at fair value at the balance

come statement if delivery and transfer of risk to the buyer have taken place

sheet date. Positive and negative fair values are included in other receivables

before year-end, and if the income can be reliably measured and is expected

and other payables respectively.

to be received.

Changes in the fair value of derivatives classified as hedging instruments

The value of services rendered is recognised on the basis of the delivered

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

percentage of the total service.

Group's statement of comprehensive income under other comprehensive income. Income and expenses related to such hedging transactions are

Revenue from subscriptions is allocated to the income statement on a

transferred from other comprehensive income on invoicing of the hedged

straight-line basis.

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

Revenue from sales of goods is recognised when the significant risks and Changes in the fair value of derivatives classified as hedging instruments

rewards of ownership have been transferred to the buyer.

and meeting the criteria for hedging the fair value of a recognised asset or liability are recognised in the income statement together with changes in the

Revenue is measured at the fair value of the agreed consideration excluding

value of the hedged asset or liability.

VAT and other taxes collected on behalf of third parties. All discounts granted are recognised in revenue.

For derivatives which do not qualify for hedge accounting, changes in fair value are recognised in the income statement under net financials as they

Cost of sales

arise.

Cost of sales comprises the cost of goods and services sold. Cost includes the cost of raw materials, transport costs, consumables and goods for resale, direct labour and indirect costs of production, including costs for operating

50

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 1

and maintaining production facilities and equipment, amortisation/deprecia-

as a financial expense in the cases where the option price is independent of

tion and impairment losses relating to such assets. Cost of sales moreover

dividend payments and other financial expenses.

includes royalty payments concerning inlicensed products, expenses in connection with quality assurance of products and any writedown to net realis-

Tax

able value of unsaleable and slow-moving items. Cost of sales also includes

The Group's controlled Danish companies are jointly taxed with Lundbeck-

external assistance to generate the year's income.

fond Invest A/S as administration company. The current Danish income tax liability is allocated among the companies of the tax pool in proportion to

Research and development costs

their taxable income (full allocation subject to reimbursement in respect of

Research and development costs comprise expenses incurred during the

tax losses).

year in connection with the Group's research and development functions, including wages and salaries, amortisation/depreciation and impairment and

The Lundbeck Foundation has opted to use section 3(4) of the Danish

other indirect costs as well as costs relating to research and development

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

collaborations on in-licensed products.

Invest A/S is considered to have been earned by the Lundbeck Foundation if the taxable income is distributed as dividends to the Lundbeck Foundation.

Research costs are always recognised in the income statement as they are

Since the Lundbeck Foundation's taxable income is regularly offset against

incurred.

grants for the year and provisions for future grants, no current or deferred tax is recognised.

Development costs are recognised in the income statement as they are incurred. Development costs are capitalised only if a number of specific

Tax for the year, which consists of the year's current tax and the change in

criteria are deemed to have been met.

deferred tax, is recognised in the income statement as regards the amount that can be attributed to the net profit or loss for the year and directly in the

See Accounting policies and estimates critical to financial reporting for a

statement of comprehensive income under other comprehensive income as

description of conditions for capitalising development costs.

regards the amount that can be attributed to items under other comprehensive income or directly in equity. Exchange adjustments of deferred tax are recognised as part of the movements in deferred tax in the balance sheet.

Sales and distribution costs Sales and distribution costs comprise expenses incurred in connection with the sale and distribution of the Group's products sold during the year. This

The current tax charge for the year is calculated based on the tax rates and

includes expenses for sales campaigns launched, training and administration

rules applicable at the balance sheet date.

of the sales force and direct distribution and marketing costs. Also recognised are wages and other expenses for the sales and marketing functions,

Special items

amortisation/depreciation and impairment of product rights, for example,

Special items comprise major one-off amounts not directly attributable to

and other indirect costs.

the Group's ordinary activities, and they concern matters such as amortisation on contractual customer relationships identified at acquisitions and transaction costs associated with acquisitions.

Administrative expenses Administrative expenses comprise expenses incurred in the year for the management and administration of the Group. This includes wages and other costs relating to the Group's management, HR, IT and finance func-

Balance sheet

tions. Also recognised are amortisation/depreciation and impairment and Intangible assets

other indirect costs.

Goodwill Results of investments in associates

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

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

of the cost or fair value of the acquired business over the fair value of the

consolidated income statement after tax and elimination of the proportio-

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

nate share of any intra-group gains and losses and after deduction of any

will, the goodwill amount is allocated to those of the Group’s activities that

writedowns of the equity investments.

generate separate cash flows (cash generating units).

Net financials

Goodwill is not amortised, but is tested for impairment at least once a year

Net financials include interest income and expenses, including the interest

(impairment test), or if there is evidence of impairment.

component of financial lease payments, which are recognised in the income statement at the amounts relating to the financial year. Net financials also

Development projects

include value adjustments of financial assets and realised and unrealised

Clearly defined and identifiable development projects are recognised as

gains and losses on securities, unhedged items denominated in foreign

intangible assets where the technical rate of utilisation of the project,

currencies as well as forward contracts and other derivatives not used for

the availability of adequate resources and a potential future market or

hedge accounting, realised exchange gains and losses concerning additions

development opportunity in the company can be demonstrated and where

to net investments in foreign subsidiaries that are recycled from other com-

the intention is to manufacture, market or use the project if the cost can

prehensive income, realised fair value adjustments and prolonged losses on

be measured reliably and it is probable that the future earnings can cover

available-for-sale financial assets. Dividends to capital holders who have re-

production and selling expenses, administrative expenses as well as the

ceived put options in connection with business combinations are recognised

development costs. Other development costs are recognised in the income statement as the costs are incurred.

CONSOLIDATED FINANCIAL STATEMENTS

51

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 1

After completion of the development work, development costs are amor-

finance leases are depreciated over the useful lives of the assets or, if shorter,

tised on a straight-line basis over the expected useful life. For development

over the lease term.

projects protected by intellectual property rights, the maximum amortisation period is the remaining term of the rights concerned. Ongoing development

Borrowing costs to finance the manufacture of property, plant and equip-

projects are tested for impairment at least once a year, or if there is evidence

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

of impairment.

production period. Other borrowing costs are expensed.

Product rights and other intangible assets

Property, plant and equipment are depreciated on a straight-line basis over

Acquired intellectual property rights in the form of product rights, contrac-

the expected useful lives of the assets, which are expected to be as follows:

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

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

Years

software comprises the cost of planning, including labour and costs directly

Buildings 25-50

attributable to the project.

Installations 10 Plant and machinery

3-10

Product rights are amortised on a straight-line basis over the economic

Vehicles according to category

5-12

lives of the underlying products which in all material aspects are currently

Fixtures and fittings, tools and equipment

3-10

between 8-12 years. Contractual customer relationships are measured at cost

Leasehold improvements max.

less accumulated depreciation and impairment. Intangible assets acquired

on acquisition are amortised over the expected economic life, estimated to

The depreciation base is cost less the estimated residual value at the end

be 3 to 10 years. Patents are amortised over a maximum of the remaining

of the expected useful life. The cost of a total asset is divided into smaller

life of the patent, which in all material aspects is currently between 10-13

components that are depreciated separately if such components have dif-

years. Licenses are amortised over the period of the agreement. Software is

ferent useful lives. Depreciation methods, useful lives and residual values are

amortised over the expected economic life, estimated to be 3 to 5 years. The

re-assessed annually.

10

economic lives of large administrative systems are estimated to be 8 years.

Amortisation commences when the asset is ready to be brought into use,

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

which means at the time of commercialisation.

and distribution costs, administrative expenses and research and development costs, respectively.

Depreciation is recognised in the income statement under cost of sales, sales and distribution costs, administrative expenses and research and develop-

Gains or losses on the sale or retirement of items of property, plant and

ment costs, respectively.

equipment are calculated as the difference between the carrying amount and the selling price reduced by costs relating to divestment or discontinu-

Other intangible assets with indeterminable useful lives are not amortised

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

but tested for impairment at least once a year, or if there is evidence of

same items as the associated depreciation.

impairment.

Investments in associates Borrowing costs to finance the manufacture of other intangible assets are

Investments in associates, except for investments in associates, that are

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

included in the Group’s documented investment strategy, are recognised and

period. Other borrowing costs are expensed.

measured in the consolidated financial statements according to the equity method, which entails that the investments are measured in the balance

Gains and losses on the disposal of development projects, patents and

sheet at the proportionate share of the associate's net asset value calculated

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

in accordance with the Group' accounting policies less or plus unrealised

sell and the carrying amount at the time of sale.

intra-group gains and losses and plus the carrying amount of goodwill.

See Accounting policies and estimates critical to financial reporting for a

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

description of the calculation of the fair value of intangible assets.

income statement after tax and elimination of the proportionate share of any intra-group gains and losses and after deduction of any writedowns of the

Property, plant and equipment

investments. The proportionate share of all transactions and events recog-

Property, plant and equipment are measured at cost less accumulated de-

nised directly in the associate's other comprehensive income is recognised in

preciation and impairment. Land is not depreciated.

the Group's statement of comprehensive income under other comprehensive income.

Cost includes the costs of purchase and expenses directly attributable to the purchase until the asset is ready for use. In the case of assets manufac-

Investments in associates with a negative carrying amount are recognised

tured by the company, cost includes expenses directly attributable to the

at DKK 0. Receivables and other long-term financial assets considered to

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

form part of the overall investment in the associate are written down by any

labour.

remaining negative net asset value. Trade receivables and other receivables are written down only to the extent they are deemed to be irrecoverable. A

Assets held under finance leases are recognised under property, plant and

provision to cover the remaining negative net asset value will only be made

equipment and measured at the lower of the fair value and value in use of

if the Group has a legal or constructive obligation to cover the liabilities of

the future lease payments at the inception of the lease. Assets held under

the relevant associate.

52

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 1

Financial assets

is determined having regard to marketability, obsolescence and expected

Securities that are included in the Group's documented investment strategy

selling price developments.

in accordance with the fair value option of IAS 39 Financial Instruments: Recognition and Measurement are recognised on the basis of the settle-

Receivables

ment date at fair value and are subsequently measured at market price or

Current receivables comprise trade receivables and other receivables arising

estimated fair value at the balance sheet date. Bonds with a term to maturity

in the Group's normal course of business. Other receivables recognised un-

of less than one year are recognised in current assets. Both realised and

der financial assets are financial assets with fixed or determinable payments

unrealised gains and losses are recognised in the income statement under

that are not quoted on an active market and are not derivative financial

net financials.

instruments.

Financial assets are measured at fair value through profit or loss, including

On initial recognition, receivables are measured at fair value and subse-

investments in associates if they are included in the Group's documented

quently to amortised costs, which usually corresponds to the nominal value

investment strategy.

less writedowns to counter the risk of loss calculated on the basis of an individual evaluation. A provision account is used for this purpose.

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,

Prepayments

and the amount received on repo transactions is recognised as repo debt.

Prepayments consist of expenses relating to subsequent financial years.

Returns on such bonds are recognised under financials.

Prepayments are measured at cost.

On initial recognition, other investments classified as available-for-sale are

Securities

measured at fair value with the addition of costs directly attributable to the

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

acquisition. Other investments are subsequently measured at fair value at

documented investment strategy for excess liquidity, or bonds with a term to

the balance sheet date, and changes to the fair value are recognised in the

maturity of less than one year, are recognised under current assets. Securi-

statement of comprehensive income under other comprehensive income

ties are initially recognised at fair value on the value date and are subse-

with the exception of impairment losses and dividends, which are taken to

quently remeasured at market value at the balance sheet date. Both realised

the income statement. When other available-for-sale investments are sold

and unrealised gains and losses are recognised in the income statement

or settled, the accumulated fair value adjustments recognised under other

under net financials.

comprehensive income are recycled to the income statement.

Equity The fair value of listed investments is calculated using closing prices

Authorised grants

according to exchange markets. The calculation of fair value of unlisted

Grants are considered equity movements and are recognised as a liability at

investments, including life science investments, is made in accordance with

the time when the grant has been authorised by the Board of Directors and

International Private Equity and Venture Capital Valuation Guidelines. i.e. on

announced to the recipient. Authorised grants not yet disbursed are recog-

the basis of relevant valuation methods based on comparable transactions

nised in long-term or short-term liabilities, respectively.

on market conditions, capital increases and the like. If the fair value cannot be determined with sufficient reliability, the investments in question are re-

Hedging reserve

cognised at cost less any impairment. The Group assesses at each balance

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

sheet date whether there is objective evidence that an investment or a

for which the hedged transaction has yet to be realised are recognised in

group of investments is impaired. Assessments of investments in unlisted

equity under the hedging reserve.

equity instruments and securities, including life science investments, include an assessment of whether the companies live up to the defined business

Value adjustments concerning hedging transactions used to hedge the

plans and the impact of any non-compliance on the calculation of fair value.

Group's net investment in such entities are recognised in equity under the hedging reserve.

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

Currency translation reserve

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

Foreign exchange adjustments arising on the translation of financial state-

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

ments for entities which have a functional currency other than Danish kroner,

tured by the company are measured at cost, i.e. the cost of raw materials,

foreign exchange adjustments relating to financial assets and liabilities

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

representing a part of the Group’s net investment in such entities are recog-

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

nised in equity under the currency translation reserve.

depreciation on the machines, factory buildings and equipment used in the manufacturing process as well as the cost of factory administration and

On full or partial realisation of a net investment, foreign exchange adjust-

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

ments are recognised in the income statement.

capacity of the production plant.

Reserve for fair value adjustment of available-for-sale financial assets Inventories are written down to net realisable value if it is lower than the

Reserve for fair value adjustment comprises accumulated changes in the fair

cost price. The net realisable value of inventories is determined as the selling

values of available-for-sale financial assets. The reserve, which forms part of

price less costs of completion and costs incurred to execute the sale, and it

the Group’s free reserves, is dissolved and transferred to the income statement as the investment is sold or written down.

CONSOLIDATED FINANCIAL STATEMENTS

53

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 1

Treasury shares

Tax on items in other comprehensive income is recognised in the statement

Cost and selling prices of treasury shares as well as dividends are recognised

of comprehensive income under other comprehensive income. Tax on equity

directly in equity under retained earnings.

entries is recognised in equity.

Minority interests

Deferred tax is recognised on all temporary differences between the carry-

The proportionate shares of the profits and equity of subsidiaries attribut-

ing amounts of assets and liabilities and their tax base, except for temporary

able to minority interests are recognised as a separate item under equity.

differences arising either on initial recognition of goodwill or a transaction

On initial recognition, minority interests are recognised as described under

that is not a business combination and with the temporary difference as-

“Business combinations”. The issuance of put options as part of the consi-

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

deration in business combinations is recognised as described under “Acquisi-

result nor the taxable income. The tax value of the assets is calculated based

tion and divestment of minority interests”.

on the planned use of each asset.

Share-based payments

Deferred income tax is provided on temporary differences arising on invest-

Share-based incentive programmes in which employees may opt to buy

ments in subsidiaries and associates, unless the Group has a possibility of

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

controlling when the deferred tax is to be realised and it is likely that the

shares are allocated to employees (equity schemes) are measured at the eq-

deferred tax will not materialise as current tax.

uity instruments' fair value at the date of grant and recognised in the income statement under staff costs under the respective functions when or as the

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

employee obtains the right to buy/receive the shares. The balancing item is

in the respective countries on the balance sheet date. Changes in deferred

recognised directly in equity under other transactions.

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

Share price-based incentive programmes in which employees have the difference between the agreed price and the actual share price settled in cash

Deferred tax assets, including the tax value of tax loss carry-forwards, are

(debt schemes) are measured at fair value at the date of grant and recog-

recognised in the balance sheet at the value at which the asset is expected

nised in the income statement under staff costs when or as the employee

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

obtains the right to such difference settlement. The incentive programmes

net assets to be offset against future positive taxable income.

are subsequently remeasured on each balance sheet date and upon final settlement, and any changes in the fair value of the programmes are recog-

Changes in deferred tax concerning the cost of share-based payments are

nised in the income statement under staff costs under the respective func-

generally recognised in the income statement.

tions. The balancing item is recognised under provisions until the time of the Deferred tax in respect of recaptured losses previously deducted in foreign

final settlement.

subsidiaries is recognised on the basis of a specific assessment of the intention with each individual subsidiary.

Pension obligations Periodical payments to defined contribution plans are recognised in the income statement at the due date and any contributions payable are recog-

Balances calculated according to the rules on interest deductibility limita-

nised in the balance sheet under current liabilities.

tions in the Danish Corporate Income Tax Act are allocated between the jointly-taxed companies according to a joint taxation agreement and are

The present value of the Group's liabilities relating to future pension pay-

allocated between the companies that are subjected to deductibility limita-

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

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

once a year on the basis of the pensionable period of employment up to the

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

time of the actuarial valuation. The present value is calculated based on as-

deferred tax assets are recognised only if the criteria for recognition of

sumptions of the future developments of salary, interest, inflation, mortality

deferred tax assets are met.

and disability rates and other factors. Present value is computed exclusively for the benefits to which the employees have earned entitlement through

Other provisions

their employment with the Group. Pension expenses, finance costs and ad-

Other provisions consist of different types of provisions, including provisions

ministration fees are recognized in the income statement under staff costs.

for pending lawsuits. Management makes assessments of provisions and

Actuarial gains and losses are recognized in the statement of comprehensive

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

income as they are calculated and cannot subsequently be recycled through

sible future lawsuits, which inherently depends on uncertain future events.

profit or loss.

When management determines the probable outcome of lawsuits and similar factors, it relies on assessments made by external advisers who are

The present value of the liability according to defined benefit plans is

familiar with the specific cases and the existing legal practice in the area.

measured less the fair value of the plan assets, and any net obligation is recognised in the balance sheet under non-current liabilities. Any net asset is

Provisions for restructuring are recognised when a detailed, formal plan for

recognised in the balance sheet as a financial asset.

the restructuring has been made before or on the balance sheet date and has been announced to the parties involved. In connection with acquisi-

Income tax and deferred tax

tions, provisions for restructuring costs are only included in the computation

Current tax liabilities and receivables are recognised in the balance sheet,

of goodwill if an obligation exists for the entity acquired as of the date of

computed as tax calculated on the taxable income for the year, adjusted for

acquisition.

provisional tax paid.

54

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 1

Provisions are made for onerous contracts when the anticipated benefits to

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

the Group from a contract are outweighed by the unavoidable costs under

Lease liabilities under operating leases are disclosed as contingent liabilities.

the contract.

Lease payments concerning operating leases are recognised in the income statement on a straight-line basis over the term of the lease.

When the Group is under an obligation to dismantle an asset or re-establish the site where the asset has been used, a provision is made corresponding to

Cash flow statement

the present value of the expected future costs. The provision is determined based on current orders and estimated future costs, discounted to their

The consolidated cash flow statement is presented according to the indirect

present value. The discount factor used reflects the general level of interest

method and shows the composition of cash flows, divided into operating,

rates. The present value of the costs is recognised in the cost of the item of

investing and financing activities respectively, and cash and cash equivalents

property, plant and equipment in question and depreciated with these as-

at the beginning and at the end of the year.

sets. The increase of the present value over time is recognised in the income Cash flows from acquisitions and divestments of companies are shown sepa-

statement under financial expenses.

rately under cash flows from investing activities. The cash flow statement Other provisions are recognised when the Group has a legal or constructive

includes cash flows from acquired companies from the date of acquisition

obligation that arises from past events and it is probable that an outflow of

and cash flows from divested companies until the time of divestment.

financial resources will be required to settle the obligation.

Cash flows from operating activities are calculated as the Group's profit from Other provisions are measured as the best estimate of the costs required to

operations and special items, adjusted for non-cash operating items, working

settle the liabilities at the balance sheet date.

capital changes, financial receipts and payments and income taxes paid.

Return obligations imposed on the industry are recognised in the balance

Cash flows from investing activities include payments in connection with

sheet under other provisions.

purchases and sales of intangible assets, property, plant and equipment and financial assets, including equity investments in companies. Also included

Debt

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

Mortgage debt and debt to credit institutions are recognised at the time of

considered a non-cash transaction.

the raising of the loan at proceeds received less transaction costs paid. In subsequent periods, the financial liabilities are measured at amortised cost,

Cash flows from financing activities include payments to and from share-

equivalent to the capitalised value when the effective rate of interest is used,

holders and related expenses as well as the raising of and repayments on

so that the difference between the proceeds and the nominal value is recog-

loans, mortgage debt and other long-term debt and cash flows from divi-

nised in the income statement over the loan period.

dends and minorities.

Residual lease commitments from finance leases are recognised at amor-

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

tised cost.

Cash flows denominated in foreign currencies, including cash flows in foreign Repo debt relates to bonds included in repo transactions. Debt is recognised

subsidiaries, are translated at the average exchange rates during the year

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

because they approximate the actual exchange rates at the date of payment.

Cash at year-end is translated at the exchange rates at the balance sheet

Potential rights to offsetting financial assets and financial liabilities for repo

date, and the effect of exchange rate adjustments on cash is shown as a

transactions does not qualify for offsetting for accounting purposes and

separate item in the cash flow statement.

therefore repo transactions is recognised and presented gross.

Debt included in the short-term financial liquidity is also measured at amor-

Key figures

tised cost in subsequent periods.

Key figures are calculated according to Recommendations and Financial Other payables, which include trade payables and debt to public authorities

Ratios 2010 issued by the Danish Society of Financial Analysts.

etc. are measured at amortised cost.

Leases

Operating profit:

Defined as the Group's profit before

special items, financial items and tax

For accounting purposes, lease obligations are divided into finance and operating leases. Leases are classified as finance leases when substantially

Operating profit margin: Operating profit x 100 / Revenue

all risks and rewards of ownership of the leased asset are transferred. Other leases are classified as operating leases.

Return on equity:

Lundbeck Foundation's share of profit x 100 /

Lundbeck Foundation's share of average equity

The accounting treatment of assets held under finance lease and the related liability is described in the sections on property, plant and equipment and financial liabilities, respectively.

CONSOLIDATED FINANCIAL STATEMENTS

55

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 2 - 3

2. REVENUE

2013 2012

DKKm DKKm

Europe 19,993 19,369 USA 4,863 4,328 Rest of the world 5,236 4,978 Total 30,092 28,675

Brain diseases (H. Lundbeck Group) 15,258 14,802 Allergy treatment (ALK Group) 2,246 2,345 Emergency, assistance, healthcare and training (Falck Group) 12,588 11,528 Total 30,092 28,675

Revenue includes: Downpayments and milestone payments 1,148 435 Service income research collaborations 60 87 Royalty 96 347 Income from sale of ownership interest in Proximagen Group plc.

- 115 Revenue Denmark 5,914 5,655

Other accrued income There is accrued subscription revenue in the amount of DKK 1,191 million in 2013 (DKK 1,121 million in 2012) and other accrued income in 2013 of DKK 345 million (DKK 326 million in 2012).

3. STAFF COSTS

2013 2012

DKKm DKKm

Short-term staff benefits 10,410 10,289 Share-based payment 69 73 Pension benefits 598 594 Other social security costs 1,087 1,107 Total 12,164 12,063

The year's staff costs are specified as follows: Cost of sales 6,504 6,050 Research and development costs 1,235 1,256 Sales and distribution costs 2,328 2,869 Administrative expenses 2,097 1,888 Total 12,164 12,063

Total remuneration in the Group for the Executive Management of the Foundation amounts to 8 5 Total remuneration in the Group for the Board of Directors of the Foundation amounts to 7 7

56

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 3 3. STAFF COSTS, CONTINUED

2013 2012

DKKm DKKm Remuneration of the Executive Management and the Board of Directors is specified as follows: Executive Management: Christian Dyvig 8.0 4.5

Board of Directors: Jørgen Huno Rasmussen, Chairman of the Foundation and Lundbeckfond Invest A/S from 2 May 2012, Chairman of the Investment Committee 0.8 0.7 Mikael Rørth, Vice-chairman of the Foundation and Lundbeckfond Invest A/S, Chairman of the Biomedical Sciences Committee and member of the Investment Committee 0.8 0.9 Steffen Kragh, member of the Investment Committee, from 23 May 2013 0.2 Thorleif Krarup, member of the Investment Committee, Chairman of the Science Teaching and Communication Committee, Vice-chairman of Falck A/S, board member of H. Lundbeck A/S and ALK-Abelló A/S 2.0 2.1 Povl Krogsgaard-Larsen, member of the Investment, Biomedical Sciences and Natural Sciences Committees 0.5 0.5 Gunhild Waldemar, member of the Biomedical Sciences Committee 0.4 0.4 Kim Klitgaard, employee representative from H. Lundbeck A/S 0.2 0.2 Ken Liljegren, employee representative from H. Lundbeck A/S 0.2 0.2 Peter Adler Würtzen, employee representative from ALK-Abelló A/S 0.2 0.2 Jes Østergaard, Chairman of the Natural Sciences Committee and member of the Investment Committee, board member of H. Lundbeck A/S and ALK-Abelló A/S, stepped down on 23 May 2013 1.4 1.8 Total 6.7 7.0

Average number of full-time employees during the year 29,798 28,053 Number of employees at year-end 39,314 35,421

Incentive programmes The Executive Management of the Foundation is not offered incentive programmes. An incentive programme has been launched for employees of Lundbeckfond Invest and Lundbeckfond Ventures which is similar to standard incentive programmes for investment management and venture industry. The purpose of the incentive programme is for Lundbeckfond Invest and Lundbeckfond Ventures to be able to attract and retain skilled and qualified labour.

In order to attract, retain and motivate key employees and align their interests with those of the shareholders, the Group has established a number of incentive programmes in the H. Lundbeck, ALK and Falck groups. The Group uses short-term incentive programmes that provide an annual bonus for the achievement of pre-determined targets of the financial year as well as long term equity-based and debt-based schemes.

Equity-based schemes Equity-based schemes are used both in H. Lundbeck A/S, ALK-Abelló A/S and Falck Holding A/S.

For the schemes in H. Lundbeck A/S, each warrant entitles the holder to buy one share of DKK 5 nominal value in the company. The Executive Management has been granted share schemes. Exercise of the warrants and the share schemes is subject to the relevant employees continuing employment at the date of exercise. Exercise of warrants and share schemes granted to the Executive Management is also subject H. Lundbeck achieving its financial targets.

For the schemes in ALK-Abelló A/S, each warrant entitles the holder to buy one B share of DKK 10 nominal value in the company. The right to exercise the warrants is subject to the holder of the option not having resigned at the time of exercise. No other vesting conditions apply. The options can be exercised only during a period of four weeks after the publication of annual or interim financial statements. Share options are considered sufficiently covered by treasury shares. The ALK Group has established conditional shares plans for the Board of Management and a number of key employees as a part of a retention programme. Conditional shares will be available three years after the date of grant, provided that ALK achieves the targets for vesting.

For the scheme in Falck Holding A/S, each warrant entitles the holder to buy one share of DKK 1 nominal value in the company. The warrants issued were acquired at market value, and no conditions were attached. Consideration for the issued warrants has been paid in the form of a non-cash contribution of a corresponding number of warrants in Falck A/S, which have subsequently been cancelled.

Debt-based schemes H. Lundbeck A/S has granted Stock Appreciation Rights (SARs) and Restricted Cash Units (RCUs) to a few employees of US subsidiaries. SAR is a share 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 criteria similar to those of the share schemes. Neither of the two schemes can be converted into shares, but the value of the scheme is distributed as a cash amount.

CONSOLIDATED FINANCIAL STATEMENTS

57

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 3 3. STAFF COSTS – CONTINUED

The tables below shows the conditions for the active equity-based scheme in 2013 and 2012 financial year:

Number of

warrants/

Exercise Exercise shares Vesting date period begins period ends granted Exercise price H. Lundbeck A/S - equity-based schemes 2008, warrants 6/5 2011 6/5 2011 5/5 2016 405,234 115.00 2009, warrants 16/3 2012 16/3 2012 15/3 2017 534,058 102.00 2010, warrants 16/3 2013 16/3 2013 15/3 2018 790,950 97.00 2011, warrants 31/3 2014 1/4 2014 31/3 2019 849,085 121.00 31/3 2015 1/4 2015 31/12 2018 155,750 113.00 2012, warrants (3 years) 1) 31/3 2016 1/4 2016 31/12 2018 233,629 113.00 2012, warrants (4 years) 1) 31/3 2017 1/4 2017 31/12 2018 389,380 113.00 2012, warrants (5 years) 1) 2012, warrants 31/3 2015 1/4 2015 31/3 2020 692,003 113.00 2009, share scheme 16/3 2012 92,627 2010, share scheme 16/3 2013 102,689 2011, share scheme 31/3-30/6 2014 539,962 2012, share scheme 31/3 2015 245,681 2013, share scheme 31/5 2016 540,562

1) As from 2012, the exercise price of DKK 113.00 is revalued by 4.00% per year adjusted for the dividend payout ratio.

The fair value at the time of grants of 2013 share scheme was DKK 110.70 pr. share.

ALK-Abelló A/S - equity-based schemes 2007, share options 1/11 2010 1/11 2010 1/11 2014 29,000 799.00 2008, share options 1/11 2011 1/11 2011 1/11 2015 47,600 544.00 2009, share options 1/11 2012 1/11 2012 1/11 2016 58,300 492.00 2010, share options 1/11 2013 1/11 2013 1/11 2017 174,000 356.00 2011, share options 1/11 2014 1/11 2014 1/11 2018 220,000 342.00 2012, share options 1/5 2015 1/5 2015 1/5 2019 101,000 435.00 2013, share options 1/3 2016 1/3 2016 1/3 2020 87,975 464.00 2012, share scheme 1/5 2015 15,300 2013, share scheme 1/3 2016 14,600

The exercise price for ALK-Abelló A/S’ schemes equals the average of the market price during the last five business days prior to the date of grant.

The exercise price is increased by 2.5% p.a. and reduced by dividends paid.

Conditional share under the share scheme have been granted at DKK 420 pr. share (DKK 399 in 2012). Fair value at the time of grants in 2013 was DKK 69 pr. share.

ALK’s share options exercised in 2013 were to be settled by cash settlement. A total of 77,000 share options were exercised and a total payment amounted to DKK 14 millions (DKK 0 in 2012).

Number of

warrants/

Acquisition Exercise Exercise shares

date period begins period ends granted Exercise price Falck Holding A/S - equity-based schemes 2011, warrants 13/7 2011 30/12 2015 30/12 2015 4,443,120 125.00

Outstanding at

1 January Additions

Exercised/ settled

Expired/ Outstanding at cancelled 31 December

Outstanding warrants and share schemes 2013 H. Lundbeck A/S, warrants 2,365,476 - -60,525 -61,043 2,243,908 ALK-Abelló A/S, share options 588,475 89,000 -77,700 -35,300 564,475 Falck Holding A/S, warrants 4,443,120 - - - 4,443,120 Total 2013 7,397,071 89,000 -138,225 -96,343 7,251,503

Average exercise price for options, DKK 145.88 464.00 273.82 749.49 142.12 58

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 3 - 4 3. STAFF COSTS – CONTINUED

Outstanding at

1 January Additions

Exercised/ settled

Expired/ Outstanding at cancelled 31 December

Outstanding warrants and share schemes 2012 H. Lundbeck A/S, warrants 2,127,701 1,470,762 -593 -1,232,394 2,365,476 ALK-Abelló A/S, share options 588,350 101,000 - -100,875 588,475 Falck Holding A/S, warrants 4,443,120 - - - 4,443,120 Total 2012 7,159,171 1,571,762 -593 -1,333,269 7,397,071

Average exercise price for options/warrants DKK 149.45 134.01 102.00 147.73 145.88

Debt-based schemes The debt-based schemes consist of Stock Appreciation Rights and Restricted Cash Units awarded during the years 2008-2013.

In June 2013, a few employees of US subsidiaries were granted Restricted Cash Units (RCUs), a share price-based scheme with conditions and award criteria similar to those of the share scheme granted in June 2013 to a number of key employees of the parent company and its non-US subsidiaries. The allocated RCUs, a total of 19,003, will vest on 31 May 2016 subject to continuing employment with Lundbeck and Lundbeck achieving its financial targets, after which time they are settled. The size of the amount depends on the value of the Lundbeck share at the vesting date. The fair value per RCU at the time of grant was calculated at DKK 110.70.

The share price-based scheme for employees of the Lundbeck Group’s US subsidiaries cannot be converted into shares because the value of the scheme is distributed as a cash amount.

The SARs allocated in 2010 vested in 2013. The RCUs allocated in 2010 vested in 2013, after which time the scheme was settled.

Liability and expense recognised in the income statement The warrants and shares granted are recognised in the income statement for 2013 at an expense corresponding to the fair value at the time of grant calculated according to the Black-Scholes method for the vesting period that concerns 2013.

The SARs granted are recognised in the income statement for 2013 at an expense corresponding to the value adjustment for the year based on the BlackScholes method, and the RCUs granted are recognised in the income statement for 2013 at an expense corresponding to the value adjustment for the year based on the performance of the Lundbeck share.

2013 2012

DKKm DKKm

Recognised expenses concerning equity-based schemes 62 71 Recognised expenses concerning debt-based schemes 8 2 Total recognised expenses 70 73

At 31 December 2013, the total liability in respect of debt-based schemes amounted to DKK 11 million (DKK 3 million in 2012). The liability covers all debt-based schemes in force at 31 December 2013.

4. DEPRECIATION, AMORTISATION AND IMPAIRMENT

2013 2012

DKKm DKKm Depreciation, amortisation and impairment are specified as follows: Cost of sales 1,370 940 Research and development costs 204 225 Sales and distribution costs 63 61 Administrative expenses 145 136 Special items 505 515 Total 2,287 1,877

CONSOLIDATED FINANCIAL STATEMENTS

59

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 4 - 5 - 6 4. DEPRECIATION, AMORTISATION AND IMPAIRMENT – CONTINUED

An impairment loss on the Sycrests ® product rights totalling DKK 210 million was recognised in cost of sales. Furthermore an impairment loss on patent rights totalling DKK 38 million is recognised in research and development costs. The recoverable amounts were calculated on the basis of management’s re-assessed estimate of the value in use of the assets.

In 2012 an impairment loss on other product rights totalling DKK 15 million is recognised in research and development costs. An impairment loss on patent rights totalling DKK 8 million is recognised in research and development costs. The recoverable amounts were calculated on the basis of management’s re-assessed estimate of the value in use of the assets.

Losses and gains on the sale of intangible assets and property, plant and equipment were recognised at a net gain of DKK 14 million (DKK 142 million in 2012).

5. FEES TO AUDITORS APPOINTED AT THE GENERAL MEETING

Deloitte KPMG 2013 2012 2013 2012 DKKm DKKm DKKm DKKm Administrative expenses include fees to the company’s auditors appointed by the general meeting in the amount of: Statutory audit 18 17 - Other assurance engagements - - - Tax advisory services 3 3 - 2 Other services 29 8 - 1 Total 50 28 - 3

Other services in 2013 include one-off advisory services provided by Deloitte which have been evaluated as not impairing the independence of the external audit services provided.

A few small foreign subsidiaries are not audited by the parent company’s auditors, a foreign business partner of the auditors, or by a recognised, international auditing firm.

The Falck Group was audited by KPMG in 2011 and fees covers the period up to the annual general meeting of 26 April 2012.

6. SPECIAL ITEMS

2013 2012

DKKm DKKm

Fine from European Commission -699 Reversal of provision concerning divestment of Chr. Hansen in 2005. In connection with the divestment, the Group assumed the usual representations and warranties towards the buyer in the amount of DKK 140 million and other recognised specific debt obligations of DKK 15 million. On expiry of the warranty period at the end of July 2012, the obligations were no longer considered to be in force - 155 Amortisation of contractual customer relationships, Falck Group -505 -515 Transaction costs associated with acquisitions, Falck Group -45 -36 Special items -1,249 -396

60

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 7

7. NET FINANCIAL ITEMS

2013 2012

DKKm DKKm Financial items, Lundbeckfond Invest, net, are specified as follows:

Financial income Interest on financial assets measured at amortised cost 4 10 Gains on financial instruments at fair value through profit or loss 1,997 1,467 Gains on financial instruments included in the trading portfolio 46 13 Exchange gains 6 26 Total financial income 2,053 1,516

Financial expenses Other financial expenses 2 2 Losses on financial instruments at fair value through profit or loss 609 92 Losses on financial instruments included in the trading portfolio 205 131 Exchange losses 31 5 Total financial expenses 847 230

Net financials 1,206 1,286

Financial items, Lundbeckfond Ventures, net, are specified as follows:

Financial income Gains on financial instruments at fair value through profit or loss 201 22 Total financial income 201 22

Financial expenses Losses on financial instruments at fair value through profit or loss 20 100 Total financial expenses 20 100

Net financials 181 -78

Financial items, subsidiaries, net, are specified as follows:

Financial income Interest on financial assets measured at amortised cost 23 31 Gains on financial assets at fair value through profit or loss 3 16 Gains on available-for-sale financial assets, incl. dividends 20 Gains on financial instruments included in the trading portfolio - 4 Exchange gains 133 94 Realised exchange gains concerning additions to net investments in foreign subsidiaries (transferred from comprehensive income) 8 40 Other financial income 8 6 Total financial income 195 191

Financial expenses Interest on financial liabilities measured at amortised cost 362 375 Other financial expenses 33 41 Losses on financial instruments at fair value through profit or loss 1 7 Losses on financial instruments included in the trading portfolio - 4 Interest component, discounted liabilities 5 4 Exchange losses 235 141 Total financial expenses 636 572

Net financials -441 -381

CONSOLIDATED FINANCIAL STATEMENTS

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 7 - 8 7. NET FINANCIAL ITEMS - CONTINUED

At 31 December 2013, the Group recorded a net result on available-for-sale financial assets of DKK 20 million (net of DKK 0 million in 2012).

The net gain on financial instruments measured at fair value through profit or loss amounted to DKK 1,568 million at 31 December 2013 (net gain of DKK 1,290 million in 2012). The net loss on financial instruments included in the trading portfolio amounted to DKK 159 million (net loss of DKK 118 million in 2012), and the net exchange gain, including realised net exchange loss transferred from other comprehensive income, amounted to net loss of DKK 119 million in 2013 (net gain of DKK 14 million in 2012).

8. TAX ON PROFIT FOR THE YEAR

2013 2012

DKKm DKKm

Current tax 921 598 Prior-year adjustment, current tax -93 -15 Prior-year adjustment, deferred tax 12 56 Change of deferred tax for the year -23 -47 Change of deferred tax as a result of changed income tax rates -177 Total tax for the year 640 592

Tax for the year is composed of: Tax on profit for the year 707 627 Tax on other comprehensive income -67 -35 Total tax for the year 640 592

Tax on other comprehensive income is specified as follows: Currency translation concerning additions to net investments in foreign subsidiaries -84 2 Realised exchange gains/losses, additions to net investments in foreign subsidiaries (transferred to profit and loss) -2 -10 Adjustment, deferred exchange gains/losses, hedging 36 -19 Exchange gains/losses, hedging (transferred to the hedged items) - income statement -29 36 Exchange gains/losses, hedging (transferred to the hedged items) - balance sheet -1 Value adjustment of interest hedging instruments 13 -8 Fair value adjustment of available-for-sale financial assets -4 -2 Tax on actuarial adjustments relating to pension obligations 4 -34 Tax on other comprehensive income -67 -35

Explanation of the Group’s effective tax rate relative to the Danish tax rate 2013 DKKm %

Profit before tax 3,162 Calculated tax, 25% 790 25.0

Tax effect of: Differences in the tax rates of foreign subsidiaries from the Danish tax rate of 25% 104 3.3 Non-deductible expenses/non-taxable income and other permanent differences 154 4.9 Fine from the European Commission 175 5.5 Research and development activities (tax credits) 22 0.7 Prior-year tax adjustments etc., total effect on operations -44 -1.4 Non-deductible losses/non-taxable gains on shares and other equity investments -84 -2.7 Unrecognised timing differences on securities recognised at fair value through profit or loss -9 -0.3 Deduction for grants -233 -7.4 Other taxes and other adjustments 9 0.3 Change of deferred tax as a result of changed income tax rates -177 -5.5 Effective tax for the year 707 22.4

62

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 8 - 9 8. TAX ON PROFIT FOR THE YEAR - CONTINUED

Explanation of the Group’s effective tax rate relative to the Danish tax rate 2012 DKKm %

Profit before tax 3,273 Calculated tax, 25% 818 25.0

Tax effect of: Differences in the tax rates of foreign subsidiaries from the Danish tax rate of 25% -15 -0.5 Non-deductible expenses/non-taxable income and other permanent differences 97 3.0 Research and development activities (tax credits) -30 -0.9 Prior-year tax adjustments etc., total effect on operations 38 1.2 Non-deductible losses/non-taxable gains on shares and other equity investments 19 0.6 Unrecognised timing differences on securities recognised at fair value through profit or loss 1 0.0 Deduction for grants -307 -9.4 Other taxes and other adjustments 6 0.2 Effective tax for the year 627 19.2

9. GRANTS FOR THE YEAR

2013 2012

DKKm DKKm

Biomedical science projects 128 175 Natural science projects 20 25 Teaching and communicating science 12 23 Regular grants 160 223

Lundbeck Foundation Professor 25 Lundbeck Foundation Fellowships 70 80 Grete Lundbeck European Brain Research Foundation 15 15 Talent teaching prizes 1 1 Travel grants for conferences and similar activities 2 4 Research abroad 9 18 Visiting professorships 2 3 Other 2 2 Personal grants 126 123

DanFunD 12 CINS II 30 BBB-Project 40 EMBL - 60 RESCueH - 44 MEPRICA - 16 Strategic grants 82 120

Grants for the year, gross 368 466

Descendants - Reversed grants/repayments -17 -6 Grants for the year, net 351 460

Emerge activities 8 16 Grants authorised during the year, including Emerge activities, gross 376 482

CONSOLIDATED FINANCIAL STATEMENTS

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 10

10. INTANGIBLE ASSETS

Contractual

customer Patent and Other relations Product and intangible Ongoing

Goodwill etc. rights license rights assets projects Total

DKKm DKKm DKKm DKKm DKKm DKKm DKKm Cost at 1 January 2013 10,178 3,400 6,860 703 1,714 48 22,903 Currency translation -328 -64 -125 -3 -18 - -538 Reclassification / transfers - - - 13 16 -28 1 Addition on acquisitions 579 171 - 10 - - 760 Adjustment of put options and contingent consideration 17 - - - - - 17 Additions - - 1,121 11 181 65 1,378 Disposals - - - - -36 -1 -37 Adjustment, acquisitions in 2012 9 - - - - - 9 Cost at 31 December 2013 10,455 3,507 7,856 734 1,857 84 24,493

Amortisation and impairment at 1 January 2013 -20 -766 -1,898 -531 -1,284 - -4,499 Currency translation - 25 60 - 5 - 90 Amortisation - -505 -620 -23 -144 - -1,292 Impairment - - -210 -38 - - -248 Amortisation and impairment on disposals - - - - 32 - 32 Amortisation and impairment at 31 December 2013 -20 -1,246 -2,668 -592 -1,391 - -5,917

Carrying amount at 31 December 2013 10,435 2,261 5,188 142 466 84 18,576 Carrying amount at 31 December 2012 10,158 2,634 4,962 172 430 48 18,404

Goodwill impairment test The management of H. Lundbeck A/S, Falck Holding A/S and ALK-AbellĂł A/S have tested intangible assets for impairment. Based on the impairment tests performed in 2013, it was concluded that there is no need for writing down the goodwill.

Methodology In the impairment test, the discounted expected future cash flows (value in use) pursuant to the most recent management-approved budgets for each CGU are compared to the carrying amounts of goodwill and other net assets. The future cash flows are based on specific business plans for the next 1-7 years with due consideration to patent expiry.

The key parameters in the calculation of the value in use are revenue, earnings, working capital, discount factor and the preconditions for the terminal period. Negative growth is projected in the H. Lundbeck Group in the terminal period due to patent expiry, and positive growth of 2.5-3.5% (2.5-3.5% in 2012) is projected for the Falck Group and 2% (2% in 2012) for the ALK Group.

The calculation of the value in use for the H. Lundbeck Group is based on a discount rate of 11.8% (11.6% in 2012). Lundbeck Inc. is now considered fully integrated from a CGU viewpoint. In 2012 a discount rate of 13.6% was used for Lundbeck Inc. For the Falck Group, a discount rate of 10% (10% in 2012) has been used for emergency, assistance and healthcare activities, while a discount rate of 11% (11% in 2012) was used for training services. For the ALK Group, a discount factor of 12% was used (12% in 2012). The discount rate is before tax, and the result of [WACC/(1 – tax rate)] and the applied cash flows are also pre-tax figures.

Product rights Of product rights, DKK 2,632 million (DKK 2,539 million in 2012) are products not yet commercialised.

64

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 10 - 11 10. INTANGIBLE ASSETS – CONTINUED

Contractual

customer Patent and Other relations Product and intangible Ongoing

Goodwill etc. rights license rights assets projects Total

DKKm DKKm DKKm DKKm DKKm DKKm DKKm

Cost at 1 January 2012 9,753 3,254 5,582 687 1,545 64 20,885 Currency translation -3 16 -17 1 8 - 5 Reclassification / transfers - - - - 54 -55 -1 Addition on acquisitions 391 114 - - - - 505 Adjustment of put options and contingent consideration 33 - - - - - 33 Additions - - 1,295 15 135 39 1,484 Disposals - - - - -28 - -28 Adjustment, acquisitions in 2011 4 16 - - - - 20 Cost at 31 December 2012 10,178 3,400 6,860 703 1,714 48 22,903

Amortisation and impairment at 1 January 2012 -20 -249 -1,312 -495 -1,159 - -3,235 Currency translation - -2 8 - -2 - 4 Reclassification - - - - 1 - 1 Amortisation - -515 -579 -28 -146 - -1,268 Impairment - - -15 -8 - - -23 Amortisation and impairment on disposals - - - - 22 - 22 Amortisation and impairment at 31 December 2012 -20 -766 -1,898 -531 -1,284 - -4,499

Carrying amount at 31 December 2012 10,158 2,634 4,962 172 430 48 18,404 Carrying amount at 31 December 2011 9,733 3,005 4,270 192 386 64 17,650

11. PROPERTY, PLANT AND EQUIPMENT

Other fixtures Prepayments and fittings, and assets

Land and Plant and tools and Leasehold under

buildings machinery equipment improvements construction Total

DKKm DKKm DKKm DKKm DKKm DKKm

Cost at 1 January 2013 5,511 1,937 2,329 75 664 10,516 Currency translation -45 -6 -127 -5 -6 -189 Reclassification / transfers 63 105 132 - -301 -1 Addition on acquisitions - - 119 2 - 121 Additions 177 75 361 16 376 1,005 Disposals -35 -31 -318 - -1 -385 Cost at 31 December 2013 5,671 2,080 2,496 88 732 11,067

Depreciation and impairment at 1 January 2013 -2,229 -1,242 -1,116 -17 - -4,604 Currency translation 22 5 90 3 - 120 Reclassification / transfers 18 - -18 - - Depreciation -205 -134 -389 -13 - -741 Depreciation and impairment on disposals 23 28 260 - - 311 Depreciation and impairment at 31 December 2013 -2,371 -1,343 -1,173 -27 - -4,914

Carrying amount at 31 December 2013 3,300 737 1,323 61 732 6,153 Carrying amount at 31 December 2012 3,282 695 1,213 58 664 5,912

In the carrying amount at 31 December 2013, financial leasing is included in the amount of 140 55 195

Carrying amount of property, plant and equipment provided as loan collateral 2,330 31 2,361 CONSOLIDATED FINANCIAL STATEMENTS

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 11 - 12 11. PROPERTY, PLANT AND EQUIPMENT – CONTINUED

Other fixtures Prepayments and fittings, and assets

Land and Plant and tools and Leasehold under

buildings machinery equipment improvements construction Total

DKKm DKKm DKKm DKKm DKKm DKKm

Cost at 1 January 2012 5,219 2,158 2,076 62 788 10,303 Currency translation -9 - 14 4 -1 8 Reclassification / transfers 274 192 62 - -531 -3 Addition on acquisitions 14 - 46 - - 60 Additions 61 59 405 9 408 942 Disposals -48 -472 -274 - - -794 Cost at 31 December 2012 5,511 1,937 2,329 75 664 10,516

Depreciation and impairment at 1 January 2012 -2,039 -1,577 -982 -4 - -4,602 Currency translation 5 - -3 - - 2 Reclassification - - -1 - - -1 Depreciation -211 -127 -356 -13 - -707 Impairment for the year -4 -1 - - - -5 Depreciation and impairment on disposals 20 463 226 - - 709 Depreciation and impairment at 31 December 2012 -2,229 -1,242 -1,116 -17 - -4,604

Carrying amount at 31 December 2012 3,282 695 1,213 58 664 5,912 Carrying amount at 31 December 2011 3,180 581 1,094 58 788 5,701

In the carrying amount at 31 December 2012, financial leasing is included in the amount of 148 24 172

Carrying amount of property, plant and equipment provided as loan collateral 2,312 44 2,356

12. FINANCIAL ASSETS AND FINANCIAL RISKS

The Group’s financial investments classified as financial assets at fair value through profit or loss primarily relate to Lundbeckfond Invest’s investments.

These investments are made on the basis of an investment policy approved by the Board of Directors. The strategy aims for an appropriate diversification of investments on different asset classes and geographical markets in order to achieve an appropriate diversification of interest rate, exchange rate, credit and equity risks on the financial investments. The purpose is to reduce the risk of losses but also to retain the prospect of gaining a long-term return on the investments.

Credit risks Credit risks concerning the Group’s financial investments primarily relate to investment in bonds and other unlisted funds investing in loans to businesses.

In order to limit the credit risk, a large proportion of this asset class has been invested in Danish government and mortgage bonds with a high credit rating.

To achieve a higher return, the Group also invests in corporate bonds.

Equity risks Equity risks concerns the Group’s holding of listed and unlisted shares, including private equity funds as part of the Group’s investment operations. Most of these investments are placed in listed shares.

To limit the risk of losses on these shares, they are diversified on different geographical regions and sectors in accordance with the applicable investment policy. Derivative financial instruments are used to manage the equity risk.

66

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 12 12. FINANCIAL ASSETS AND FINANCIAL RISKS – CONTINUED

Other things being equal, a 10% decrease/increase in equity prices would reduce/increase profits by DKK 582 million and DKK 384 million respectively (reduce by DKK 541 million and increase by DKK 477 million in 2012).

For further information on risks concerning the Group’s financial investments, see note 17: Cash resources and note 27: Financial risks and financial instruments.

Financial

Financial assets

assets at fair value Financial

at fair value through profit assets Other financial assets

through profit or loss, at fair value Other

or loss, Lundbeckfond through profit Available-for- Receivables financial

Lundbeckfond Ventures and or loss, sale financial Other from assets,

Invest Emerge total assets receivables associates total

DKKm DKKm DKKm DKKm DKKm DKKm DKKm Carrying amount at 1 January 2013 10,852 519 11,371 138 56 - Reclassification to securities, current assets, 1 January 2013 72 - 72 - - - Carrying amount at 1 January 2013, adjusted 10,924 519 11,443 138 56 - Reclassification - -15 -15 - - - Additions 5,651 109 5,760 11 39 52 Disposals -5,599 -67 -5,666 -42 -4 - Value adjustments, year-end 954 182 1,136 -15 -3 - Reclassification to securities, current assets -116 - -116 - - - Carrying amount at 31 December 2013 11,814 728 12,542 92 88 52

Carrying amount at 1 January 2012 9,655 267 9,922 119 57 - Reclassification to securities, current assets, 1 January 2012 -138 - -138 - - - Carrying amount at 1 January 2012, adjusted 9,517 267 9,784 119 57 - Additions 7,883 330 8,213 68 17 - Disposals -7,412 - -7,412 -172 -17 - Value adjustments, year-end 870 -78 792 123 -1 - Reclassification to securities, current assets 66 - 66 - - - Carrying amount at 31 December 2012 10,924 519 11,443 138 56 -

194 194 102 -46 -18 232

176 176 85 -189 122 194

Fair value hierarchy for financial assets and financial liabilities, measured at fair value Level 1 includes financial assets for which the fair value is measured on the basis of quoted prices (unadjusted) in active markets for identical assets. Level 2 includes financial assets and financial liabilities for which the fair value is measured on the basis of directly or indirectly observable inputs other than the quoted prices included in level 1. Level 3 includes financial assets for which the fair value is measured on the basis of valuation methods which include inputs not based on observable market data.

The requirement for reclassifications between the levels are evaluated continually during the year. For the individual financial assets and liabilities it is evaluated whether the most critical input variable in connection with determination of fair value have changed from unobservable to observable or the other way around. If this is the case the asset or liability is reclassified from the recent relevant level to new level from the time where the change in input variable occur.

CONSOLIDATED FINANCIAL STATEMENTS

67

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 12 12. FINANCIAL ASSETS AND FINANCIAL RISKS – CONTINUED

Financial assets and liabilities measured at fair value Level 1 Level 2 Level 3 31 December 2013 DKKm DKKm DKKm Financial assets Financial assets at fair value through profit or loss Danish mortgage and government bonds 3,634 - Credit bonds 2,234 61 25 Listed equities 5,979 - Property companies 190 - 173 Lundbeckfond Ventures and Emerge 377 - 352 Private equity funds 152 - 579 Other unlisted funds 23 68 183 Available-for-sale financial assets 58 - 34 Derivative financial instruments - 150 Financial assets at fair value 12,647 279 1,346

Financial liabilities Derivative financial instruments - 225 Financial liabilities at fair value - 225

Applied valuation methods for the determination of fair value of the majority of the separate categories above are as follows:

Sensitivity in fair value in case of

Valuation method used Used unobservable inputs changes in unobservable inputs Danish mortgage and Closing prices according N/A N/A government bonds to exchange markets Credit bonds Closing prices according N/A N/A

to exchange markets Listed equities Closing prices according N/A N/A

to exchange markets Property companies Closing prices according Required rates on return 5.25% If required rate of return is reduced by

to exchange markets 0.25pp the fair value will be reduced

by DKK 21 million.

Lundbeckfond Ventures Closing prices according Capital injections made at N/A og Emerge to exchange markets and price different prices

of recent transactions

less write downs for level 3 Private equity funds Closing prices according Multiples If closing prices accordning to

to exchange markets and market exchange markets for a peer group

multiples for a peer group, reduced increase by 1% the fair value will be

by an estimated factor for trading increased by DKK 6 million

in an unlisted market Other unlisted funds At cost less write-downs N/A N/A Derivative financial instruments Fair value of interest rate swaps is N/A N/A

calculated as the present value of

estimated future cash flows based on

observable yield curves, fair value of

foreign exchange contracts is

determined using forward exchange

rate at the balance sheet date and

fair value of share options is based

on closing prices accordning to exchange markets

68

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 12 - 13 12. FINANCIAL ASSETS AND FINANCIAL RISKS – CONTINUED

Financial assets and liabilities measured at fair value Level 1 Level 2 Level 3 31 December 2012 DKKm DKKm DKKm Financial assets Financial assets at fair value through profit or loss Danish mortgage and government bonds 3,880 - Credit bonds 2,198 74 Listed equities 4,813 - Property companies 320 - 162 Lundbeckfond Ventures and Emerge 222 - 297 Private equity funds 63 27 757 Other unlisted funds 22 108 169 Available-for-sale financial assets 108 - 30 Derivative financial instruments - 37 Financial assets at fair value 11,626 246 1,415

Financial liabilities Derivative financial instruments - 274 Financial liabilities at fair value - 274

2013 2012

DKKm DKKm Financial assets measured at fair value according to level 3 Carrying amount at 1 January 1,415 1,172 Additions 242 457 Disposals -284 -173 Reclassification, from level 3 -104 -71 Fair value adjustment 77 30 Carrying amount at 31 December 1,346 1,415

13. INVESTMENTS IN ASSOCIATES

2013 2012

DKKm DKKm

Cost at 1 January 18 16 Exchange rate adjustments 3 Additions through acquisitions 68 2 Disposal and reclassification -2 Cost at 31 December 87 18

Value adjustments and impairment at 1 January -1 -1 Share of profit for the year after tax - Accumulated value adjustments and impairment at 31 December -1 -1

Carrying amount at 31 December 86 17

Please see the Group overview for information about registered office and ownership interests in associates.

CONSOLIDATED FINANCIAL STATEMENTS

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LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 13 - 14 13. INVESTMENTS IN ASSOCIATES – CONTINUED

2013 / 31 2012 / 31 December 2013 December 2012

DKKm DKKm Summarised financial data for associates Revenue 215 57 Profit for the year 2 3 Total assets 527 350 Total provisions 439 349

14. DEFERRED TAX

Temporary differences between the carrying amount and the tax base

Adjustment of Addition on Movements

Balance at Currency deferred tax acqusition of during Balance at

1 January translation at 1 January activities the year 31 December

DKKm DKKm DKKm DKKm DKKm DKKm

2013 Non-current assets 7,912 -55 -35 220 337 8,379 Current assets -400 41 6 - -35 -388 Other -421 65 -78 - -603 -1,037 Provisions in subsidiaries 300 -1 5 - -411 -107 Tax loss carry-forwards etc.

-1,022 20 266 - -135 -871 Total 6,369 70 164 220 -847 5,976

Deferred (tax assets)/tax liabilities 1,619 77 17 55 -338 1,430 Research and development activities (tax credits) -177 9 -5 - 74 -99 Deferred (tax assets)/tax liabilities 1,442 86 12 55 -264 1,331

2012 Non-current assets 7,264 -19 72 116 479 7,912 Current assets -429 8 18 - 3 -400 Other -165 18 -43 - -231 -421 Provisions in subsidiaries -16 - - - 316 300 Tax loss carry-forwards etc.

-614 1 30 - -439 -1,022 Total 6,040 8 77 116 128 6,369

Deferred (tax assets)/tax liabilities 1,579 12 39 29 -40 1,619 Research and development activities (tax credits) -191 3 17 - -6 -177 Deferred (tax assets)/tax liabilities 1,388 15 56 29 -46 1,442

2013 2012

DKKm DKKm

Deferred tax assets concern the following items: Non-current assets 113 137 Current assets 179 186 Provisions and payables 29 38 Other 490 41 Provisions in subsidiaries 28 222 Tax value of tax loss carry-forwards etc.

302 363 Research and development activities (tax credits) 99 177 Offset within legal tax entities and jurisdictions -690 -588 Total 550 576

70

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 14 - 15 - 16 14. DEFERRED TAX – CONTINUED

2013 2012

DKKm DKKm

Deferred tax liabilities concern the following items: Non-current assets 2,189 2,280 Current assets 54 58 Provisions and payables 6 45 Other 322 223 Offset within legal tax entities and jurisdictions -690 -588 Total 1,881 2,018

Net 1,331 1,442

Of the recognised deferred tax assets, DKK 401 million (DKK 541 million in 2012) related to tax losses etc. and research and development activities (tax credits) to be carried forward. Utilisation of these is based on a future positive income that exceeds realisation of the deferred tax liabilities. The recognition of tax losses is based on estimates of the expected earnings and taxable income in the loss-making entities, supported by reports by external analysts, when available.

2013 2012

DKKm DKKm Unrecognised deferred tax assets: Unrecognised deferred tax assets at 1 January 303 323 Currency translation - -1 Prior-year adjustments -22 Additions 32 11 Utilised -11 -30 Unrecognised deferred tax assets at 31 December 302 303

15. INVENTORIES

2013 2012

DKKm DKKm

Raw materials and consumables 280 248 Work in progress 606 503 Manufactured goods and goods for resale 1,426 1,350 Total 2,312 2,101

Indirect costs of production 377 350 Impairment loss for the year 93 40 Inventories calculated at net realisable value 5 4 The total cost of goods sold is included in cost of sales in the amount of 2,705 2,445

16. TRADE RECEIVABLES AND OTHER RECEIVABLES

2013 2012

DKKm DKKm Trade receivables and other receivables can be specified as follows: Trade receivables 4,444 Other receivables 753 Derivative financial instruments 150 Receivables from associates 50 Prepayments 412 Total 5,809

CONSOLIDATED FINANCIAL STATEMENTS

4,075 741 37 67 481 5,401

71

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 16 16. TRADE RECEIVABLES AND OTHER RECEIVABLES – CONTINUED

2013 2012

DKKm DKKm

Trade receivables Receivables 4,772 4,322 Impairment -328 -247 Total 4,444 4,075

Due dates of trade receivables Not due 3,268 3,024 Overdue by more than 1 month and up to 6 months 1,111 943 Overdue by more than 6 month and up to 12 months 26 72 Overdue by more than 12 months 39 36 Total 4,444 4,075

Development in writedowns of trade receivables Writedowns at 1 January 247 105 Actual writedowns -180 -35 Reversed, unrealised writedowns - -8 Change in writedowns 261 185 Writedowns at 31 December 328 247

Specification of other receivables by due date Not due 743 729 Overdue by up to 3 months 8 8 Overdue by more than 12 months 2 4 Total 753 741

As no losses are expected on other receivables, no writedowns have been made.

Credit risks The Group’s products are sold primarily to distributors of pharmaceuticals and hospitals and services to public authorities, other large customers and small subscription receivables from individual customers. Historically, the losses sustained on debtors have been insignificant. This was also the case in 2013, when there was an increase in losses incurred. However, the change in writedowns reflects a potentially higher loss.

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 extent represented by public authorities.

The H. Lundbeck, ALK and Falck groups have all defined internal procedures to be followed in connection with the establishment of new customer relationships and changes to existing relationships. The purpose of these procedures is to ensure that the risk of losses is reduced to the extent possible.

Market risks The pharmaceutical market is characterised by the aim of the authorities to reduce or cap healthcare costs. Market changes such as price reductions may have a considerable impact on the earnings potential of pharmaceuticals.

In recent years, the subsidiaries have experienced significant price reductions in several countries in Europe, where higher debts and rising unemployment have compelled the governments to identify savings in the public budgets. Furthermore, the earlier market access for generic pharmaceuticals has eroded earnings from the H. Lundbeck Group’s products in certain markets, where H. Lundbeck had expected exclusivity to protect the value of the large investments it had made some years back. The Group expects that the uncertainty about public debt and development in unemployment and the resulting focus on public budgets will continue into 2014 and 2015.

The Group is monitoring development in the European economies and also development in trade receivables in order to reduce the risk of losses to the best possible extent.

72

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 17 - 18

17. CASH RESOURCES

2013 2012

DKKm DKKm

Fixed-term deposits 3,821 1,708 Other cash resources 2,277 2,269 Cash at 31 December 6,098 3,977 Securities with a maturity of less than 3 months 345 444 Securities with a maturity of more than 3 months 1,143 1,225 Securities at 31 December 1,488 1,669 Cash and securities at 31 December 7,586 5,646

DKK 101 million (DKK 107 million in 2012) of the Group’s cash and securities is held by a Swedish subsidiary comprised by Swedish insurance rules and, by extension, governed by rules on solvency requirements.

Furthermore DKK 14 million of the Group’s cash resources has been provided as collateral for hedging instruments.

The securities portfolio is classified as financial assets measured at fair value through profit or loss.

Liquidity and credit risk and capital structure With the present capital structure, the Group is well-consolidated. The Group aims to retain adequate cash resources to support business development and flexibility in chase of changes to the market situation, potential acquisition activities and product inlicensing opportunities. This is achieved through a combination of liquidity management, ultra-liquid assets and guaranteed and unguaranteed credit facilities. The capital structure is considered appropriate relative to the Group’s strategic plans.

The credit risk of cash and derivatives (forward exchange contracts, currency options, interest-rate options and equity options) is limited because the Group deals only with banks with a high credit rating. To further limit the risk of losses, internal limits have been defined for the credit exposure accepted towards the banks with which the Group collaborates, and the Group aims to maintain counterparty diversification to avoid material concentration at individual counterparties. The Group also uses collateral agreements (e.g. ISDA and GRMA) and exchange of collateral with counterparties with which the Group has hedging transactions.

Certain of the Falck Group’s loans, including the debt of Falck Holding A/S, are subject to certain loan covenants, and the Falck Group continuously monitors whether the covenants are observed. All loan covenants were observed in 2013.

18. CAPITAL BASE

The Foundation’s capital base is DKK 2,523 million. The present charter of the Foundation was approved by the Board of Directors on 23 May 2013. The Civil Affairs Agency acts as supervisory authority.

Of the Foundation’s profit before tax less non-distributed dividends in the subsidiaries and associates, at least 20% must first be allocated to the capital base.

2013 2012

Note DKKm DKKm

Change in the Foundation’s capital base during the period 1 January 2009 - 31 December 2013 The capital base at 1 January 2009 amounted to: 1,750 1,750 2009 Capital base increased by 150 150 2010 Capital base increased by 150 150 2011 Capital base increased by 175 175 2012 Capital base increased by 45 45 2013 Capital base increased by 253 Capital base at 31 December 2013 2,523 2,270

Grants for the year, net

9

351

460

CONSOLIDATED FINANCIAL STATEMENTS

73

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 19 - 20

19. OTHER RESERVES

2013 2012

DKKm DKKm Currency translation reserve Balance at 1 January -166 -94 Currency translation for the year concerning foreign subsidiaries and additions to net investments in foreign subsidiaries -508 -85 Tax in relation hereto 81 13 Balance at 31 December -593 -166

Hedging reserve Balance at 1 January -59 -82 Adjustment, deferred exchange gains/losses, hedging, recognised in other comprehensive income 151 -67 Exchange gains/losses, hedging, transferred to revenue -123 130 Exchange gains/losses, hedging, transferred to the balance sheet -3 Exchange gains/losses, trading, transferred to net financials (transferred from hedging) - 1 Value adjustment of interest hedging instruments 51 -32 Tax in relation hereto -19 -9 Balance at 31 December -2 -59

Reserve for fair value adjustment of available-for-sale financial assets Fair value adjustment at 1 January 4 -4 Fair value adjustment -15 123 Realised gain on disposal -20 -115 Fair value adjustment at 31 December -31 4

Total other reserves -626 -221

20. MINORITY INTERESTS

2013 2012

DKKm DKKm Minority interests at 1 January 3,895 3,781 Share of profit/loss for the year 381 531 Share of other comprehensive income for the year -139 -41 Share of other capital movements 19 21 Dividend -166 -245 Addition on acquisition of Insusense 10 Buyback of shares from minority interests -8 -115 Change in minority interests 8 Adjustment of provision for acquisition of minority interests -80 -37 Minority interests at 31 December 3,920 3,895

Of dividend paid to minority interests, DKK 26 million (DKK 24 million in 2012) was recognised in provisions for acquisition of minority interests in 2013.

74

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 21

21. PROVISIONS

2013 2012

Note DKKm DKKm

Provisions can be specified as follows: Pensions and similar obligations 21.1

448 473 Liabilities relating to acquisitions and minority interests 21.2

1,021 711 Other provisions 21.3

565 507 Total 2,034 1,691

Provisions break down as follows: Long-term 1,490 1,245 Short-term 544 446 Total 2,034 1,691

21.1 PENSIONS AND SIMILAR OBLIGATIONS

The majority of the employees of the Group are covered by pension plans paid for by the companies of the Group. The nature of the plans varies according to regulatory requirements, tax rules and economic conditions in the countries in which the employees are employed. A summary of the most important plans is given below.

Defined contribution plans For defined contribution plans, the employer undertakes to pay a defined contribution (e.g. a fixed amount or a fixed percentage of the pay). Under a defined contribution plan, the employees will usually bear the risk related to future developments in interest and inflation rates, mortality and disability etc.

The cost of defined contribution plans, representing contributions to the plans, totalled DKK 560 million in 2013 (DKK 551 million in 2012).

Defined benefit plans For defined benefit plans, the employer undertakes to pay a defined benefit (e.g. a retirement pension at a fixed amount or a fixed percentage of the employee’s final salary). Under a defined benefit plan, the company usually bears the risk relating to future developments in interest and inflation rates etc.

For defined benefit plans, the present value of future benefits, which the company is liable to pay under the plan, is computed using actuarial principles.

The computation of present value is based on assumptions about discount rates, changes in pay rates and pensions, investment yield, staff resignation rates, mortality, disability and other factors. Present value is computed exclusively for the benefits to which the employees have earned entitlement through their employment with the company. Actuarial gains and losses are recognised in the income statement as they are calculated.

2013 2012

DKKm DKKm Pensions and similar obligations Present value of funded pension obligations 407 423 Fair value of plan assets -314 -311 Funded pension obligations net 93 112 Present value of unfunded pension obligations 265 260 Provisions for pensions at 31 December 358 372 Other pension-like obligations 89 100 Provisions for pensions and pension-like obligations at 31 December 447 472

Pension assets/liabilities and similar obligations break down as follows: Non-current liabilities 438 466 Current liabilities 10 7 Pension obligations 448 473 Plan assets, recognised in other receivables -1 -1 Pension assets/liabilities and similar obligations at 31 December, net 447 472

CONSOLIDATED FINANCIAL STATEMENTS

75

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 21 21.1 PENSIONS AND SIMILAR OBLIGATIONS – CONTINUED

The actuarial assumptions applied in calculating pension obligations concerning the defined benefit plans vary from one country to the next and are based on local economic and social conditions. The following assumptions were applied:

2013 2012 Discount rate 3.4%-4.2% 3.3%-4.3% Inflation rate 2.2%-2.4% 2.0%-2.2% Pay rate increase 2.4%-4.4% 2.4%-3.7% Pension increase 2.4%-3.4% 2.2%-2.7% Age-weighted staff resignation rate 0%-8.0% 0%-8.0% Expected return on plan assets 2.9%-4.2% 2.9%-4.3%

2013 2012

% distribution % distribution

The fair value of the plan assets breaks down as follows: Shares 7 6 Bonds 18 18 Property 4 4 Insurance contracts 69 70 Other assets 2 2 Total 100 100

Shares and bonds are measured at fair value based on closing prices in an active market. Property, insurance contracts and other assets are not based on quoted prices in an active market.

2013 2012

DKKm DKKm Change in present value of funded pension obligations Present value of funded pension obligations at 1 January 423 345 Currency translation -11 8 Pension expenses 13 12 Interest expenses relating to the obligations 13 15 Actuarial (gains)/losses -18 49 Disbursements -15 -8 Employee contributions 2 2 Present value of funded pension obligations at 31 December 407 423

Change in fair value of plan assets Fair value of plan assets at 1 January 311 279 Currency translation -10 8 Expected return on plan assets 9 12 Actuarial (gains)/losses -5 1 Payments 24 18 Disbursements -15 -8 Employee contributions 2 2 Administration fee -2 -1 Fair value of plan assets at 31 December 314 311

Realised return on plan assets 7 5

76

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 21 21.1 PENSIONS AND SIMILAR OBLIGATIONS – CONTINUED

2013 2012

DKKm DKKm Change in present value of unfunded pension obligations Present value of unfunded pension obligations at 1 January 260 190 Currency translation - 1 Pension expenses 7 7 Interest expenses relating to the obligations 8 9 Actuarial (gains)/losses -6 65 Disbursements -4 -3 Plan changes - -9 Present value of unfunded pension obligations at 31 December 265 260

Specification of expenses recognised in the income statement Pension expenses 20 19 Interest expenses relating to the obligations 21 24 Expected return on plan assets -9 -11 Actuarial (gains)/losses 2 1 Total expenses recognised 34 33

Specification of amount recognised in the statement of comprehensive income Actuarial (gains)/losses 19 -113 Total expenses recognised 19 -113

The expected contribution for 2014 for the defined benefit plans is DKK 37 million (DKK 28 million in 2013).

Sensitivity analysis The most significant assumptions used in the calculation of the obligation for defined benefit plans are discount rate and inflation rate. An increase in the discount rate of 0.25% results in a decrease in the obligation of approximately DKK 26 mio. and vice versa. An increase in the inflation rate of 0.25% results in a increase in the obligation of approximately DKK 7 mio. and vice versa.

Other pension-like obligations An obligation of DKK 89 million (DKK 100 million in 2012) is recognised in the Group to cover other pension-like obligations, including primarily termination benefits in a number of subsidiaries. The benefit payments are conditional upon specified requirements being met. The amount of pension-like obligations fell by DKK 11 million (fell by DKK 5 million in 2012).

21.2 LIABILITIES RELATING TO ACQUISITIONS AND MINORITY INTERESTS

2013 2012

DKKm DKKm Liabilities: Liabilities concerning acquisition of minorities 898 655 Payable considerations and contingent consideration 123 56 Liabilities at 31 December 1,021 711

Non-current portion: Liabilities concerning acquisition of minorities 817 653 Payable considerations and contingent consideration 74 49 Non-current portion at 31 December 891 702

Current portion: Liabilities concerning acquisition of minorities 81 2 Payable considerations and contingent consideration 49 7 Current portion at 31 December 130 9

CONSOLIDATED FINANCIAL STATEMENTS

77

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 21 21.2 LIABILITIES RELATING TO ACQUISITIONS AND MINORITY INTERESTS – CONTINUED

2013 2012

DKKm DKKm Liabilities concerning acquisition of minorities Liabilities at 1 January 655 516 Currency translation -35 -4 Additions through acquisitions 101 42 Disposals on acquisition of minority interests -7 -9 Interest component, discounted liabilities 5 4 Dividends paid and other adjustments -26 -15 Adjustments recognised in goodwill relating to business combinations before 1 January 2010 17 33 Adjustments and interest recognised in equity relating to business combinations after 1 January 2010 188 88 Liabilities concerning acquisition of minorities at 31 December 898 655

Due dates in respect of acquisition of minorities are expected to be: Within 1 year of the balance sheet date 81 2 Between 1 and 5 years from the balance sheet date 785 508 More than 5 year after the balance sheet date 32 145 Liabilities concerning acquisition of minorities at 31 December 898 655

Payable considerations and contingent consideration Liabilities at 1 January 56 39 Additions through acquisitions 71 39 Reassessment of previously recognised earn-outs 2 -5 Payments during the year -6 -17 Payable considerations and contingent consideration at 31 December 123 56

Due dates in respect of payable considerations and contingent considerations are expected to be: Within 1 year of the balance sheet date 49 7 Between 1 and 5 years from the balance sheet date 74 49 Liabilities concerning acquisition of minorities at 31 December 123 56

In connection with Falck assuming an obligation to acquire non-controlling interests, a concurrent right was obtained for Falck to acquire the same noncontrolling interests in the agreed period.

The consideration for obligations and rights to acquire non-controlling interests is determined on the basis of profit before exercise multiplied by an already agreed multiple, typically less net debt in the relevant companies. On recognition in the balance sheet, this value is made up at fair value on the basis of earnings and net debt at the time when the non-controlling interests are expected to exercise their right to sell their shares to Falck. The calculated fair value assumes an increase in earnings and a decrease in net debt in the relevant companies as compared with the value recognised in the financial statements.

21.3 OTHER PROVISIONS

2013 2012

DKKm DKKm

Other provisions at 1 January 507 408 Currency translation -6 Addition on acquisitions 6 3 Provisions charged 386 629 Provisions used -300 -228 Unused provisions reversed -28 -305 Total 565 507

Other provisions at 31 December break down as follows: Non-current provisions 161 77 Current provisions 404 430 Total 565 507

Other provisions primarily cover H. Lundbeck A/S’ expenses for e.g. disputes, returns and the restructuring of the H. Lundbeck Group’s administrative processes in Europe, initiated in 2013 and of the commercial organisation in Europe, initiated in 2012, the ALK Group’s organisational restructuring costs and the Falck Group’s pending litigation, actuarially estimated liabilities relating to worker injuries in the United States and the Group’s obligation to clean up and demolish facilities on leased land.

78

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 22

22. MORTGAGE, BANK, LEASING AND REPO DEBT

2013 2012

Note DKKm DKKm Mortgage, bank, leasing and repo debt can be specified as follows: Mortgage debt 22.1 2,509 2,245 Bank and leasing debt 22.2 7,171 6,783 Repo debt 22.3 196 126 Total 9,876 9,154

Can be specified as follow: Long-term debt to financial institutions – subsidiaries 9,037 8,356 Short-term debt to financial institutions – subsidiaries 643 672 Repo debt – Lundbeckfond Invest 196 126 Total 9,876 9,154

22.1 MORTGAGE DEBT

2013 2012 DKKm DKKm Mortgage debt by maturity: Within 1 year of the balance sheet date 3 1 Between 1 and 5 years from the balance sheet date 221 132 More than 5 year after the balance sheet date 2,285 2,112 Mortgage debt at 31 December 2,509 2,245

Specification of mortgage debt: Non-current liabilities 2,506 2,244 Current liabilities 3 1 Mortgage debt at 31 December 2,509 2,245

Weighted

average Amortised

Currency effective cost

Expiry Fixed/floating interest rate DKKm 2013 Bond loan, H. Lundbeck DKK/2035 Floating 2.5% 1,414 Bond loan, H. Lundbeck DKK/2037 Floating 1.2% 438 Bond loan, H. Lundbeck DKK/2037 Floating 1.2% 268 Bond loan, H. Lundbeck DKK/2034 Floating 0.9% 10 Bond loan, H. Lundbeck DKK/2034 Floating 0.9% 2 Bond loan, Falck DKK/2025 Fixed until 2015 4.5% 353 Bond loan, ALK DKK/2026 Floating 2.0% 24 Total 2,509

2012 Bond loan, H. Lundbeck DKK/2035 Floating 2.1% 1,413 Bond loan, H. Lundbeck DKK/2037 Floating 1.2% 437 Bond loan, H. Lundbeck DKK/2034 Floating 0.9% 10 Bond loan, H. Lundbeck DKK/2034 Floating 0.9% 2 Bond loan, Falck DKK/2025 Fixed until 2015 4.5% 358 Bond loan, ALK DKK/2028 Fixed 4.0% 25 Total

2,245

Nominal value DKKm

Fair value DKKm

1,481 440 283 10 2 369 24 2,609

1,526 426 274 10 2 380 24 2,642

1,511 440 10 2 382 25 2,370

1,571 423 10 2 396 25 2,427

Bond loans are classified as level 1 under the fair value hierarchy. Fair value has been determined based on closing prices according to exchange markets.

CONSOLIDATED FINANCIAL STATEMENTS

79

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 22

2013 2012 DKKm DKKm Bank and leasing debt by maturity: Within 1 year of the balance sheet date 640 671 Between 1 and 5 years from the balance sheet date 6,519 2,527 More than 5 year after the balance sheet date 12 3,585 Bank debt at 31 December 7,171 6,783

Specification of bank and leasing debt: Long-term obligations, loan 6,453 6,071 Long-term obligations, leased assets 78 41 Total long-term 6,531 6,112 Short-term obligations, loan 613 648 Short-term obligations, leased assets 27 23 Total short-term 640 671 Bank debt at 31 December 7,171 6,783

22.2 BANK AND LEASING DEBT

Weighted

average Carrying

effective amount 2013 Currency Expiry Fixed/floating effective rate DKKm

Bank debt, Falck Group DKK, EUR, USD, other 2014-2018 Floating 4.0% 6,769 Leasing debt, Falck Group AUD, BLR, CAD, COP, EUR, NOK, USD 2014-2025 Fixed/floating 7.0% 99 Leasing debt, ALK Group EUR, USD 2014-2016 Floating 3.5% 5 Other bank and finance loans, ALK Group EUR 2016 Fixed 3.1% 298 Total 7,171

2012 Bank debt, Falck Group DKK, EUR, NOK, USD, SEK, BLR, other 2013-2018 Floating 4.3% 6,420 Leasing debt, Falck Group EUR, BLR, COP, NOK, USD 2013-2020 Floating 6.1% 56 Leasing debt, ALK Group EUR, USD 2014-2016 Floating 3.5% 9 Other bank and finance loans, ALK Group EUR 2016 Fixed 3.1% 298 Total 6,783

22.3 REPO DEBT

Repo debt in Lundbeckfond Invest amounts to DKK 196 million (DKK 126 million in 2012) falls due 9 January 2014. The debt carries a fixed rate of interest from the date of conclusion at 0.15% (0.08% in 2012).

80

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 23 - 24 -25 - 26

23. OTHER PAYABLES

2013 2012

Note DKKm DKKm Employee bonds 18 19 Trade payables 2,763 2,388 Other payables 5,322 4,121 Derivative financial instruments 225 274 Prepayments 29

1,536 1,526 Total 9,864 8,328

24. ADJUSTMENT OF NON-CASH OPERATING ITEMS

2013 2012 DKKm DKKm

Depreciation, amortisation and impairment 1,761 1,346 Gain on reduction of ownership interest - -115 Incentive programmes 62 65 Change in pension obligation -7 -45 Change in other provisions 59 246 Other adjustments 24 46 Total 1,899 1,543

25. WORKING CAPITAL CHANGES

2013 2012 DKKm DKKm

Change in inventories -252 -113 Change in receivables -434 -220 Change in receivables from associates -35 -6 Change in current liabilities 1,726 447 Total 1,005 108

26. ACQUISITION OF COMPANIES

Total 2013 Total 2012

DKKm DKKm Calculation of acquired net assets and cash consideration: Intangible assets 10 Property, plant and equipment 121 60 Financial assets 3 Cash and cash equivalents 32 25 Other current assets 122 82 Interest-bearing debt -105 -46 Current liabilities, provisions etc.

-71 -58 Minority interests -10 Net assets acquired 102 63 Goodwill 579 391 Other intangible assets 171 114 Deferred tax on intangible assets -56 -42 Acquisition cost 796 526

CONSOLIDATED FINANCIAL STATEMENTS

81

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 26 26. ACQUISITION OF COMPANIES – CONTINUED

Total 2013

DKKm

Total 2012 DKKm

Acquisition cost 796 526 Provisions for acquisition of minorities -101 -42 Acquisition cost exclusive of obligations to buy minority interests 695 484 Acquired cash in hand and at bank -32 -25 Outstanding consideration -79 -39 Consideration relating to prior-year acquisitions 9 17 Cash consideration 593 437

Expensed transaction costs 45 36

Acquisitions 2013 Name

Principal activity

Country

Date of acquisition

Purchase price

Voting share acquired

Verihealth Emergency USA Apr. 2013 81 100% Skandinavisk Hälsovärd Group Healthcare Sweden Aug. 2013 43 100% GARD Emergency Germany Sep. 2013 462 100% Hostile Environment Services Emergency Australia Oct. 2013 79 55% Other 30 Total 695

Acquisitions 2012

Name Principal activity Country Date of acquisition Purchase price Voting share acquired Grupo VL Emergency Spain Feb. 2012 American Ambulance Emergency USA Sep. 2012 Occupational Safety Training Training USA Dec. 2012 Other Total

113 243

75% 96%

61 67 484

100%

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

Verihealth is an American ambulance company whose primary activity is patient transportation. The acquisition strengthened Falck’s position as the thirdlargest ambulance company in the United States. The market in California is characterized by strong growth, driven by population growth as well as demographic developments towards a greater proportion of elderly people. Part of the consideration has been allocated to existing customer contracts, while the rest has been allocated to goodwill, relating to the potential of continuing growth in the US market through expansion of the strategic platform, efficiency improvements by integrating operations with other activities in California and by exploiting the competencies, knowledge and relations of key persons.

Skandinavisk Hälsovård Group is one of the leading Swedish providers of physician and nurse temps. The company has customers in the public as well as the private healthcare sector. The acquisition of Skandinavisk Hälsovård has given Falck a position as the largest group of providers of healthcare staffing in Scandinavia. Part of the purchase price has been allocated to existing customer contracts, while the rest has been allocated to goodwill. Goodwill relates to the expansion of the strategic platform for Falck’s healthcare activities and exploitation of synergies and the future growth potential.

GARD is the largest private ambulance services provider in Germany. The company has activities in patient transportation, primarily in and around Hamburg, and activities in other parts of northern and eastern Germany. The acquisition complements Falck’s existing activities in Germany and is considered to be strategically important for generating additional growth in Germany, the largest market in Europe. Part of the purchase price has been allocated to existing customer relations, while the rest has been allocated to goodwill, reflecting the establishment of a strong strategic platform with growth potential in terms of both revenue and earnings and the contribution of key persons with knowledge of the German market.

82

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 26 - 27 26. ACQUISITION OF COMPANIES – CONTINUED

Hostile Environment Services is an Australian provider of ambulance services, fire fighting, medical clinics and safety training for the mining, oil and gas industries in remote areas of Australia and Papua New Guinea. Part of the consideration has been allocated to existing customer relations and the rest to goodwill, which relates to the strategic access to the Australian market and the growth potential that exists in the mining industry in relevant geographies and in the market for emergency services in Australia.

The cost price paid in connection with the company acquisitions exceeded the fair value of acquired identifiable assets, liabilities and contingent liabilities.

According to a preliminary calculation, the positive difference amounts to DKK 694 million (DKK 463 million in 2012).

The difference with respect to acquisition of companies represents the value of acquired contractual customer relationships in the amount of DKK 115 million (DKK 72 million in 2012) after tax. The remaining difference of DKK 579 million (DKK 391 million in 2012) represents goodwill.

In connection with acquisitions, an assessment is made of the value of the acquired customer agreements, framework agreements and customer portfolios. The valuation thereof was based on the ”Multi Period Excess Earnings Method (MEEM-method)” in which the value is calculated on the basis of an expected future cash flow. The principal assumptions are expected lives of the existing agreements and portfolios, earnings and contribution for using associated assets and employees.

Acquired assets include trade receivables at a fair value of DKK 99 million (DKK 46 million in 2012). The contractual gross receivable is DKK 126 million (DKK 50 million in 2012), of which DKK 27 million (DKK 4 million in 2012) was deemed to be unrecoverable as of the date of takeover.

Minority interests in acquisitions in 2013 are recognised at fair value, including the fair value of goodwill related to the minority interest. In 2011, goodwill in relation to acquisition of the Falck Group was recognised exclusive of goodwill relating to minority interests.

Business combinations may be adjusted for up to 12 months after the date of acquisition.

Of the Group’s comprehensive income in 2013 of DKK 2,073 million (DKK 2,525 million in 2012), DKK 13 million (DKK 13 million in 2012) is attributable to results generated by the acquired operations after the acquisition date.

Revenue and comprehensive income for the Group for 2013 calculated pro forma as if the acquired enterprises had been acquired on 1 January 2013 amount to DKK 30,638 million (DKK 28,996 million in 2012) and DKK 2,095 million (DKK 2,533 million in 2012), respectively. The amounts stated are exclusive of the effect of the purchase price allocation, which is incorporated in the pre-acquisition balance sheet.

27. FINANCIAL RISKS AND FINANCIAL INSTRUMENTS

The Group’s business activities imply that the results and balance sheet may be affected by various financial risks. The management of these risks is decentralised and handled in the H. Lundbeck, ALK and Falck groups and in Lundbeckfond Invest based on policies and guidelines approved by the Board of Directors.

See also note 12: Financial assets and financial risks, note 16: Trade receivables and other receivables, and note 17: Cash resources for a description of risks and the management thereof.

27.1 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 denominated in foreign currency do not balance, among other things due to Lundbeckfond Invest’s investment assets. The management of these risks is focused on risk mitigation.

The Group applies various derivative financial instruments to manage these risks. Some of these instruments are classified as hedging instruments and meet the accounting criteria for hedging future cash flows. Changes in the fair value of these contracts are recognised in the statement of comprehensive income under other comprehensive income as they arise and – on invoicing of the hedged cash flow – transferred from other comprehensive income for inclusion in the same item as the hedged cash flow. Hedging contracts that do not meet the hedge criteria are classified as trading contracts, and changes in the fair value are recognised as financial items as they arise. The need for hedging is assessed separately in the H. Lundbeck, ALK and Falck groups and in Lundbeckfond Invest.

Other things being equal, an increase of 5% in the DKK/USD exchange rate would increase the Group’s profit by DKK 182 million (DKK 120 million in 2012).

CONSOLIDATED FINANCIAL STATEMENTS

83

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 27 27.1 EXCHANGE RATE RISKS – CONTINUED

2013 2012

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

Monetary assets CAD 233 213 CHF 139 165 GBP 779 1,042 JPY 56 29 USD 5,227 3,720

Monetary liabilities CAD 239 227 GBP 252 124 JPY 100 100 USD 1,773 1,380

Due to the long-standing fixed exchange rate policy in Denmark, the foreign currency risk for EUR is considered immaterial, and EUR is therefore not included in the list above.

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

CAD CHF GBP JPY USD DKKm DKKm DKKm DKKm DKKm 2013 Profit -1 7 11 -2 182 Equity -39 7 12 -2 401

2012 Profit -2 8 6 -4 120 Equity -38 8 24 -4 472

The profit impact is included in the impact on equity.

27.2 INTEREST RATE RISKS

Interest rate risk relates to the Group’s interest-bearing assets and liabilities and principally to the Group’s bonds classified as financial assets measured at fair value through profit or loss. See note 12: Financial assets and financial risks and the Falck Group’s overall loan financing, cf. note 22: Mortgage, bank, leasing and repo debt.

Interest receivable The duration of the investments when selecting financing and investment instruments is used to manage the interest rate risk. In addition, the Group uses derivative financial instruments to mitigate the interest rate exposure. The use of financial instruments to manage interest rate risk does not qualify for hedge accounting, and the changes in fair value are therefore recognised as financial income or expenses in an ongoing process.

The Group’s portfolio of bonds has a duration of 1.9 year (1.6 year in 2012). Other things being equal, an increase of 1 %-point in interest rates would increase the Group’s profit by DKK 88 million (DKK 74 million in 2012).

At 31 December 2013, the Group had an interest rate swap for managing interest rate exposure on portfolio investments. Other than this, there were no derivatives at 31 December 2013 and 31 December 2012 to manage interest rate risks because the distribution of investments carrying floating and fixed interest at the given times was deemed to be satisfactory.

84

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 27 27.2 INTEREST RATE RISKS – CONTINUED

Interest expenses The Falck Group’s interest rate risk is mainly affected by the Falck Group’s overall financing. Based on the current market situation, the Falck Group’s executive management and board of directors have resolved to prolong the interest rate swaps that expire in 2014 to 2016 and 2017 so 70%-80% of the overall financing is converted to a fixed rate of interest. The remainder of the overall financing is based on a short-term interest rate. The interest rate exposure is hedged by interest rate swaps during the hedging period to the effect that interest rates on the part of the debt that is denominated in DKK cannot exceed 1.18% exclusiv the current interest rate margin, for debt denominated in EUR interest rates cannot exceed 1.03% excluding the current interest rate margin, and for debt denominated in USD, interest rates cannot exceed 1.14% excluding the current interest rate margin. The remaining part of the syndicated financing is to be based on short-term interest rates. The Falck Group is therefore only to a minor extent sensitive to fluctuations in market interest rates, and a fluctuation by 1% would change the interest expense for the year by DKK 26 million (DKK 23 million in 2012), as a large part of the interest rate risk is hedged by interest rate swaps. Without this hedge, a fluctuation by 1%-point would change the Group’s interest expense by DKK 68 million (DKK 61 million in 2012) based on the current level of debt per year-end 2013.

The sensitivity stated has been determined based on the recognised financial assets and liabilities at 31 December 2013. No adjustment has been made for servicing and raising of debt, or the like in 2013. Furthermore, it is assumed that all hedges of floating-rate loans are deemed to be effective.

27.3 MATURITY DATES FOR FINANCIAL ASSETS AND FINANCIAL LIABILITIES

More than Less than 1 year 1-5 years 5 years Total Effective 31 December 2013 DKKm DKKm DKKm DKKm interest rates Financial assets Derivatives included in the trading portfolio 9 - - 9 Securities 1) Danish mortgage and government bonds 1,444 404 1,786 3,634 0-6% Credit bonds 16 968 1,336 2,320 1-18% Listed equities - - 5,979 5,979 Shares in property companies - - 363 363 Lundbeckfond Ventures and Emerge 7 - 722 729 Private equity funds - - 748 748 Other unlisted funds - - 257 257 Financial assets at fair value through profit or loss 1,476 1,372 11,191 14,039

Derivatives to hedge future cash flows and net investment in foreign subsidiaries 134 7 - 141 Financial assets used as hedging instruments 134 7 - 141

5,574 88 - 5,662 Receivables 2) Fixed-term deposits 3,821 - - 3,821 0-7% Other cash resources 2,277 - - 2,277 0-7% Loans and receivables 11,672 88 - 11,760

Available-for-sale financial assets - 65 23 88 Total financial assets 13,282 1,532 11,214 26,028

Financial liabilities Derivatives included in the trading portfolio 165 - - 165 Financial liabilities at fair value through profit or loss 165 - - 165 Derivatives to hedge future cash flows and net investment in foreign subsidiaries 31 29 - 60 Financial liabilities used as hedging instruments 31 29 - 60

840 6,834 2,202 9,876 0-5% Mortgage, bank, leasing and repo debt 3) Employee bonds/purchase obligations 148 867 32 1,047 3-6% 8,863 300 - 9,163 Other payables and non-disbursed grants 2) Financial liabilities, measured at amortised cost 9,851 8,001 2,234 20,086 Total financial liabilities 10,047 8,030 2,234 20,311 -

CONSOLIDATED FINANCIAL STATEMENTS

85

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 27 27.3 MATURITY DATES FOR FINANCIAL ASSETS AND FINANCIAL LIABILITIES – CONTINUED

Less than More than

1 year 1-5 years 5 years Total Effective 31 December 2012 DKKm DKKm DKKm DKKm interest rates Financial assets Derivatives included in the trading portfolio 1 - - 1 Securities 1) Danish mortgage and government bonds 1,609 530 1,741 3,880 0-5% Credit bonds 46 548 1,678 2,272 1-25% Listed equities - - 4,813 4,813 Shares in property companies - - 482 482 Lundbeckfond Ventures and Emerge - - 519 519 Private equity funds - - 866 866 Other unlisted funds - - 280 280 Financial assets at fair value through profit or loss 1,656 1,078 10,379 13,113

Derivatives to hedge future cash flows 36 - - 36 Financial assets used as hedging instruments 36 - - 36

5,421 51 5 5,477 Receivables 2) Fixed-term deposits 1,708 - - 1,708 0-4% Other cash resources 2,269 - - 2,269 0-5% Loans and receivables 9,398 51 5 9,454

Available-for-sale financial assets - 86 52 138 Total financial assets 11,090 1,215 10,436 22,741

Financial liabilities Derivatives included in the trading portfolio 160 - - 160 Financial liabilities at fair value through profit or loss 160 - - 160 Derivatives to hedge future cash flows and net investment in foreign subsidiaries 41 73 - 114 Financial liabilities used as hedging instruments 41 73 - 114

798 2,427 5,929 9,154 0-6% Mortgage, bank, leasing and repo debt 3) Employee bonds/purchase obligations 28 611 145 784 3-6% 7,166 402 - 7,568 Other payables and non-disbursed grants 2) Financial liabilities, measured at amortised cost 7,992 3,440 6,074 17,506 Total financial liabilities 8,193 3,513 6,074 17,780

The amounts in the table above are exclusive of interest.

1) The securities are classified as financial assets measured at fair value through profit or loss.

2) Including receivables and payments recognised in non-current assets and liabilities.

3) Nominal value of mortgage debt falling due after more than 5 years totals DKK 2,609 million at 31 December 2013 (DKK 2,370 million in 2012).

86

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 27

27.4 NET OUTSTANDING FORWARD EXCHANGE RATE TRANSACTIONS, CURRENCY OPTIONS, INTEREST RATE SWAPS AND EQUITY OPTIONS

27.4 Hedging part

Exchange Exchange Average hedge Contractual gains/losses gains/losses prices of

value recognised in recognised in existing according to other income forward

hedge comprehensive statement/ exchange

accounting income balance sheet contracts Expiry Forward contracts DKKm DKKm DKKm DKK period 2013 CAD 851 38 39 535.33 Oct. 2014 GBP 532 -11 11 873.52 Dec. 2014 USD 1,968 -47 10 536.31 Nov. 2014 Other currencies 1,530 43 66 Forward contracts 2013 4,881 23 126

2012 CAD 775 -2 -42 561.84 Dec. 2013 GBP 618 - -29 907.86 Nov. 2013 USD 547 -6 -20 569.85 Dec. 2013 Other currencies 1,822 5 -39 Dec. 2013 Forward contracts 2012 3,762 -3 -130

At 31 December 2013, the exchange rate difference between the contract value and the market value of the concluded forward exchange contracts and currency options represented a gain of DKK 55 million (a loss of DKK 69 million in 2012), of which DKK 32 million was recognised in the income statement (DKK 2 million in 2012).

Interest rate

gains/losses

recognised in

other

Contractual comprehensive Fixed interest value income rate Expiry Interest rate collar/interest rate swap DKKm DKKm % period 2013 DKK interest rate swap 2,300 -19 1.40 Aug. 2014 DKK interest rate swap 425 - 0.56 Jun. 2016 DKK interest rate swap 300 - 0.56 Jun. 2016 DKK interest rate swap 815 1 0.89 Sep. 2017 DKK interest rate swap 900 2 0.88 Sep. 2017 DKK interest rate swap 300 - 0.88 Sep. 2017 USD interest rate swap 406 -1 0.55 Aug. 2014 USD interest rate swap 390 2 1.14 Sep. 2017 EUR interest rate swap 1,492 -9 1.17 Aug. 2014 EUR interest rate swap 1,201 2 0.67 Sep. 2017 Interest rate collar/interest rate swap -22

CONSOLIDATED FINANCIAL STATEMENTS

87

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 27 27.4 NET OUTSTANDING FORWARD EXCHANGE RATE TRANSACTIONS, CURRENCY OPTIONS, INTEREST RATE SWAPS AND EQUITY OPTIONS – CONTINUED

Interest rate

gains/losses

recognised in

other

Contractual comprehensive Fixed interest value income rate Expiry Interest rate collar/interest rate swap DKKm DKKm % period 2012 DKK interest rate swap 2,300 -47 1.40 Aug. 2014 USD interest rate swap 424 -2 0.55 Aug. 2014 EUR interest rate swap 1,492 -24 1.17 Aug. 2014 Interest rate collar/interest rate swap -73

27.4 Trading part Average hedge

Exchange prices of

gains/losses existing

recognised in forward

Contractual the income exchange

value statement transactions Expiry Forward contracts DKKm DKKm DKKm period 2013 GBP 100 1 886.3 Feb. 2014 Forward contracts 1

2012 GBP 100 1 916.5 Mar. 2013 Forward contracts 1

Share option

gains/losses

recognised in

Contractual the income Market value

value statement 31 December Expiry Equity contracts DKKm DKKm DKKm period 2013 Options on indices - -53 -162 Jan.-Mar. 2014 Options on equities - 40 - Equity contracts - -13 -162

2012 Options on indices 11,371 -53 -46 June 2013 Options on equities 245 11 -9 Jan.-Mar. 2013 Equity contracts 11,616 -42 -55

Exchange

gains/losses

recognised in

Contractual the income Average

value statement exercise prices Expiry Currency options DKKm DKKm DKK period 2012 EUR/DKK (EUR put bought) - -1 - EUR/DKK (EUR call sold) - 2 - JPY/DKK (JPY put sold) - -2 - Currency options -1

88

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 27 - 28 27.4 NET OUTSTANDING FORWARD EXCHANGE RATE TRANSACTIONS, CURRENCY OPTIONS, INTEREST RATE SWAPS AND EQUITY OPTIONS – CONTINUED

Interest rate

gains/losses

recognised in

Contractual the income Fixed interest

value statement rate Expiry Interest rate swap DKKm DKKm % period 2013 Fixed to floating 600 19 2.24 Nov. 2023 Interest rate swap 19

2012 Fixed to floating 600 -41 3.47 May 2020 Interest rate swap -41

28. CONTRACTUAL OBLIGATIONS

2013 2012

DKKm DKKm

The Group has signed operating lease obligations for a total amount of 2,378 2,548

Payment of the obligations breaks down as follows: Less than 1 year 489 502 Between 1 and 5 years 982 1,076 More than 5 years 907 970

2,378 2,548

Expensed lease payments amounted to 561 520

The operating lease commitments primarily concern the Falck Group’s leases for vehicles and buildings. The lease term for vehicles typically runs for 4-9 years. The lease term for buildings typically runs for 20 years.

The Group has signed finance lease obligations for a total amount of 119 75

Payment of the finance lease obligations breaks down as follows: Less than 1 year 31 25 Between 1 and 5 years 72 37 More than 5 years 16 13

119 75

Present value of finance lease obligations 104 63

Financial lease arrangements comprise leases on buildings, vehicles and other lease arrangements.

Besides this, the Group has made the following contractual obligations:

Lundbeck Foundation and Lundbeckfond Invest A/S

The Lundbeck Foundation and Lundbeckfond Invest A/S have capital contribution obligations amounting to DKK 485 million (DKK 505 million in 2012).

H. Lundbeck Group

Other purchase obligations The H. Lundbeck Group has undertaken purchase obligations in the amount of DKK 274 million (DKK 305 million in 2012).

CONSOLIDATED FINANCIAL STATEMENTS

89

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 28 - 29 28. CONTRACTUAL OBLIGATIONS – CONTINUED

Research collaborations The H. Lundbeck Group is part of multi-year research and development collaboration projects comprising minimum research and contractual obligations in the order of DKK 52 million (DKK 141 million in 2012).

The total amount of the obligations may increase substantially in line with the favourable development of the collaborations.

Other contractual commitments The H. Lundbeck Group has entered into various service agreements amounting to DKK 124 million (DKK 102 million in 2012).

Furthermore H. Lundbeck had at 31 December 2013 capital contribution obligations amounting to DKK 8 million (DKK 3 million in 2012).

ALK Group

The ALK Group’s financial obligations in respect of research and development projects amounted to DKK 28 million (DKK 3 million in 2012).

Falck Group

Falck Holding A/S has a right of first refusal to buy a number of buildings at a preset value. At the end of the year, Falck Holding A/S had not notified any owners that it wanted to exercise such a right of first refusal in 2014 (DKK 0 million in 2012).

The Group has the following warranty commitments and contingent liabilities:

Joint taxation H. Lundbeck A/S, ALK-Abelló A/S and Falck Holding A/S and their Danish subsidiaries are pooled for tax purposes with Lundbeckfond Invest A/S. As from the 2013 financial year, the companies have partly a joint and several liability and partly a secondary liability with respect to income taxes etc. for the jointly-taxed companies. As from 1 July 2012, the companies in the tax pool have partly a joint and several liability and partly a secondary liability with respect to any obligations to withhold tax on interest, royalties and dividends for the jointly-taxed companies. However, in both cases the secondary liability is capped at an amount equal to the share of the capital of the companies directly or indirectly owned by Lundbeckfond Invest A/S.

29. GUARANTEES, CONTINGENT ASSETS AND LIABILITIES

H. Lundbeck Group

Bank guarantees and letters of intent The H. Lundbeck Group’s bankers have issued bank guarantees to third parties in the amount of DKK 85 million (DKK 105 million in 2012). The Group has assessed that the fair value of guarantees is DKK 0 (DKK 0 in 2012).

Pending legal proceedings The H. Lundbeck Group is involved in legal proceedings in a number of countries against a number of businesses, including patent disputes. In the opinion of the management of H. Lundbeck A/S, the outcome of these proceedings will not have a material impact on the Group’s financial position, results of operations or cash flows beyond the amount provided for in the financial statements. Due to uncertainty about the outcome of the legal proceedings, the amount of the provision is uncertain.

In June 2013, the European Commission issued a decision in which it found that H. Lundbeck by entering into a few selected patent settlement agreements in 2002 had violated EU competition law and thereby hindered a lawful entry of generic citalopram into markets in the European Economic Area (EEA). The European Commission issued a fine of EUR 93.8 million. In September 2013, this decision was appealed by Lundbeck to the General Court.

It may take up to six years before this matter is finally decided by the courts. Lundbeck does not expect that the fine will increase as a result of the appeal.

Lundbeck paid the fine in the third quarter of 2013. Consequently, Lundbeck has a contingent asset corresponding to a maximum of the amount of the fine.

In December 2011, the Brazilian antitrust authorities (Secretariat of Economic Law – SDE) initiated administrative proceedings to investigate whether H. Lundbeck’s enforcement of data protection rights could be viewed as anticompetitive conduct. In January 2012, H. Lundbeck submitted a response to the authorities. Due to a change in the Brazilian Antitrust Law, handling of the case has shifted from SDE to CADE (the Administrative Council for Economic Defense) and remains pending.

90

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTE 29 29. GUARANTEES, CONTINGENT ASSETS AND LIABILITIES – CONTINUED

Industry obligations The H. Lundbeck Group has return obligations normal for the industry. H. Lundbeck A/S’ management expects no major loss on these obligations.

ALK Group

Warranty and guarantee commitments Warranty and guarantee commitments amounted to DKK 13 million (DKK 13 million in 2012).

Collaterals The carrying amount of land and buildings provided as collateral for credit institutions amounted to DKK 153 million (DKK 152 million in 2012).

Contingent liabilities and assets The management of ALK-Abelló A/S assesses that the outcome of pending claims and other disputes will not have a material impact on the Group’s financial position.

In connection with the divestment of the ingredients business, Chr. Hansen in 2005, ALK-Abelló A/S undertook usual representations and warranties towards the buyer. On expiry of the warranty period at the end of July 2012, the management assessed the company’s liabilities towards the buyer, which resulted in a reversal of the provision to cover specific risks of DKK 140 million. See note 6 regarding 2012.

Falck Group

Warranty and guarantee commitments Warranty and guarantee commitments amounted to DKK 7 million (DKK 7 million in 2012).

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 317 million provided in connection with ambulance contracts in Denmark (DKK 297 million in 2012).

As part of the Group’s activities, usual supplier agreements have been entered into.

In connection with the divestment of companies and operations, usual representations and warranties are made. There are currently no outstanding claims which are not sufficiently recognised in the balance sheet.

Contingent liabilities and assets The Falck Group is a party to certain litigation and claims. Management believes that rulings in this respect will not have a material impact on the Group’s financial position.

Collaterals The shares in the subsidiary Falck A/S and Falck Danmark A/S have been provided as collateral for debt in the Falck Group.

The carrying amount of property, plant and equipment provided as collateral for debt to credit institutions amounted to DKK 520 million (DKK 534 million in 2012). Issued mortgage deeds amounted to DKK 354 million (DKK 359 million in 2012).

Lundbeck Foundation and Lundbeckfond Invest A/S

Collaterals Bonds in repo transactions have been provided as collateral for repo debt, and other bonds have been provided as collateral for hedging transactions.

The value of bonds provided as collateral at 31 December 2013 amounted to DKK 227 million (DKK 263 million in 2012).

CONSOLIDATED FINANCIAL STATEMENTS

91

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 30 - 31

30. RELATED PARTIES

The Lundbeck Foundation is a commercial foundation established by Grete Lundbeck in 1954.

Related parties exercising a significant influence on the Lundbeck Foundation: • The company’s Executive Management and Board of Directors

• Companies in which the company's Executive Management and Board of Directors exercise a significant influence

The following transactions were made between related parties and the Lundbeck Foundation, all on an arm’s length basis: • The Board of Directors and the Executive Management received remuneration. See note 3.

• Transactions with associates:

Related parties of the Falck Group also comprise associates in which the company exercises significant influence. Reference is made to note 13 and the Group overview for an overview of associates.

2013 2012

DKKm DKKm

Transactions with associates:

Sale of property, plant and equipment - 5

Acquisition of services -10 -10

Sale of services -

Royalty income 1

Rental costs -25 -20

Receivables from associates appear from the balance sheet, and interest payable for the period amounted to DKK 1 million.

Transactions with associated companies have been eliminated in the consolidated financial statements.

Transactions and balances with other related parties • In 2013, H. Lundbeck paid a consultancy fee of DKK 3 million (DKK 4 million in 2012) to Lundbeck International Neuroscience Foundation, an independent commercial foundation established by H. Lundbeck A/S in 1997.

Other than the above and except for transactions eliminated in the consolidated financial statements, there have only been few transactions of immaterial importance with related parties.

31. EVENTS AFTER THE BALANCE SHEET DATE

No events have occurred in the period from the balance sheet date until the presentation of the financial statements which may change the evaluation of the annual report.

92

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

GROUP OVERVIEW – LUNDBECK FOUNDATION GROUP AT 31 DECEMBER 2013

COMPANY NAME

COUNTRY

OWNERSHIP

Subsidiaries Lundbeckfond Invest A/S

Denmark

100%

- H. Lundbeck A/S

Denmark

70%

- Falck Holding A/S

Denmark

57%

- ALK-Abelló A/S

Denmark

42% (69% of the votes)

Insusense ApS

Denmark

60%

Lundbeckfond Invest A/S - associates Obel-LFI Ejendomme A/S

Denmark

50%

Veloxis Pharmaceuticals A/S

Denmark

43%

Lundbeckfond Invest A/S - direct investments Acacia Pharma Ltd.

United Kingdom

Allocure Inc.

USA

Asante Solutions Inc. Bonesupport Holding AB

25% 20%

USA

6%

Sweden

17%

Celladon

USA

12%

Cydan Inc.

USA

19%

DBV Technologies

France

DySIS Medical Ltd.

United Kingdom

Enterome

France

EpiTherapeutics ApS

Denmark

1% 21% 24% 16%

Nexstim Oy

Finland

8%

PsiOxus Ltd.

United Kingdom

13%

River Vision Corp.

USA

27%

Syntaxin Ltd.

United Kingdom

7%

VHsquared Ltd.

United Kingdom

21%

H. Lundbeck Group Lundbeck Argentina S.A.

Argentina

100%

Lundbeck Australia Pty Ltd.

Australia

100%

- CNS Pharma Pty Ltd.

Australia

100%

Lundbeck Austria GmbH

Austria

100%

- Innenwelt Gemeinnützige GmbH

Austria

100%

Belgium

100%

Lundbeck Brasil Ltda.

Brazil

100%

Lundbeck Canada Inc.

Canada

100%

Chile

100%

Lundbeck S.A.

Lundbeck Chile Farmacéutica Ltda.

Lundbeck (Beijing) Pharmaceuticals Consulting Co., Ltd. Lundbeck Colombia S.A.S. Lundbeck Croatia d.o.o.

Lundbeck Czech Republic s.r.o.

Lundbeck China Holding A/S 1)

China

100%

Colombia

100%

Croatia

100%

Czech Republic

100%

Denmark 67%

- Lundbeck Pharmaceuticals (Tianjin) Co., Ltd.

China

100%

- Lundbeck Pharmaceuticals Consulting (Shanghai) Co., Ltd.

China

100%

Lundbeck Export A/S

Denmark

100%

Lundbeck Insurance A/S

Denmark

100%

Lundbeck Pharma A/S

Denmark

100%

Lundbeck Eesti A/S

Estonia

100%

OY H. Lundbeck AB

Finland

100%

Lundbeck SAS

France

100%

Sofipharm SA

France

100%

- Laboratoire Elaiapharm SA

France

100%

Germany

100%

Lundbeck Hellas S.A.

Lundbeck GmbH

Greece

100%

Lundbeck Hungária KFT

Hungary

100%

India

100%

Lundbeck (Ireland) Ltd.

Ireland

100%

Lundbeck Israel Ltd.

Israel

100%

Lundbeck Italia S.p.A.

Italy

100%

Lundbeck India Private Limited

CONSOLIDATED FINANCIAL STATEMENTS

93

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

GROUP OVERVIEW – LUNDBECK FOUNDATION GROUP AT 31 DECEMBER 2013

COMPANY NAME

COUNTRY

Lundbeck Pharmaceuticals, Italy S.p.A.

OWNERSHIP

Italy

- Archid S.a.

Luxembourg

100% 100%

Lundbeck Japan K. K.

Japan

Lundbeck Korea Co., Ltd.

Korea

100%

SIA Lundbeck Latvia

Latvia

100%

UAB Lundbeck Lietuva

Lithuania

100%

Malaysia

100%

Mexico

100%

Lundbeck Malaysia SDN. BHD. Lundbeck México, SA de CV Lundbeck B.V.

The Netherlands

Lundbeck New Zealand Limited

New Zealand

H. Lundbeck AS

100%

100% 100%

Norway

100%

Lundbeck Pakistan (Private) Limited

Pakistan

100%

Lundbeck America Central S.A.

Panama

100%

Peru

100%

Lundbeck Peru S.A.C. Lundbeck Poland Sp.z.o.o.

Lundbeck Portugal - Produtos Farmacêuticos Unipessoal Lda. Lundbeck RUS OOO Lundbeck Singapore PTE. LTD.

Poland

100%

Portugal

100%

Russia

100%

Singapore

100%

Lundbeck Slovensko s.r.o.

Slovakia

100%

Lundbeck Pharma d.o.o.

Slovenia

100%

South Africa

100%

Lundbeck South Africa (Pty) Limited Lundbeck España S.A.

Spain

100%

H. Lundbeck AB

Sweden

100%

- CNS Pharma AB

Sweden

100%

Lundbeck (Schweiz) AG

Switzerland

100%

Lundbeck Pharmaceutical GmbH

Switzerland

100%

Lundbeck İlaç Ticaret Limited Şirketi

Turkey 100%

Lundbeck Group Ltd. (Holding)

United Kingdom

100%

- Lundbeck Limited

United Kingdom

100%

- Lundbeck Pharmaceuticals Ltd.

United Kingdom

100%

- Lifehealth Limited

United Kingdom

100%

- Lundbeck UK LLP

United Kingdom

100%

Lundbeck USA LLC

USA

100%

- Lundbeck LLC

USA

- Lundbeck Pharmaceuticals Ireland Limited

Ireland

100% 100%

- Lundbeck Pharmaceuticals Services, LLC

USA

100%

- Lundbeck Research USA, Inc.

USA

100%

Venezuela

100%

Lundbeck de Venezuela, C.A.

1) In subsidiaries in which Lundbeck does not hold 100% of the share capital but has a put option to buy the remaining capital at a fixed price after a pre-arranged number of years, a debt obligation is recognised instead of recognition of minority interests.

ALK Group ALK-Abelló Nordic A/S

Denmark

100%

ALK-Abelló Nordic A/S (branch)

Sweden

100%

ALK-Abelló Nordic A/S (branch)

Norway

100%

ALK-Abelló Nordic A/S (branch)

Finland

100%

United Kingdom

100%

ALK-Abelló Ltd. ALK-Abelló S.A.

France

ALK-Abelló Arzneimittel GmbH ALK-Abelló Allergie-Service GmbH

100%

Germany

100%

Austria

100%

ALK-Abelló AG

Switzerland

100%

ALK AG

Switzerland

100%

ALK-Abelló B.V.

The Netherlands

100%

- Artu Biologicals Europe B.V.

The Netherlands

100%

- Artu Biologicals Onroerend Goed B.V.

The Netherlands

100%

ALK-Abelló S.A.

Spain

100%

- ALK-Abelló S.p.A.

Italy

100%

ALK-Abelló sp. z.o.o.

Poland

100%

ALK-Abelló, Inc.

USA

100%

ALK-Abelló, Source Materials, Inc.

USA

100%

94

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

GROUP OVERVIEW – LUNDBECK FOUNDATION GROUP AT 31 DECEMBER 2013

COMPANY NAME

COUNTRY

ALK-Abelló Pharmaceuticals, Inc. ALK-Abelló A/S (branch)

OWNERSHIP

Canada

100%

China

100%

Falck Group Falck A/S

Denmark

100%

- Falck Danmark A/S

Denmark

100%

- Falck Hjælpemidler A/S

Denmark

100%

- Falck Treasury A/S

Denmark

100%

- Falck Health Care Holding A/S

Denmark

100%

Denmark

100%

Denmark

100%

Denmark

100%

- Falck Health Care A/S

- Falck Dental Care ApS

- Falck Luftambulance A/S

- Falck Air AB

Sweden

100%

- ActivCare A/S

Denmark

100%

Denmark

100%

- ActivCare Privat A/S

- Vikteam A/S

Denmark

- Falck JobService A/S

Denmark

80% 85%

- Falck Assistance A/S

Denmark

100%

- Falck Air Ambulance A/S 2)

Denmark 50%

- North Securities A/S 2)

Denmark 49%

- Falck Fire Services A/S

Denmark

100%

Germany

100%

- Falck Fire Services CH AG

Schwitzerland

100%

- Falck Fire Services BE NV

Belgium

100%

Norway

100%

- Falck Fire Services DE GmbH

- Falck Norge Holding AS

- Falck Redning AS

Norway

100%

- Falck Emergency AS

Norway

100%

- Falck Ambulanse AS

Norway

100%

- Falck Norge Leasing AS

Norway

100%

- Falck Health Care Norge AS

Norway

100%

- Falck Services AS

Norway

100%

- Falck Safety Services Holding A/S

Denmark

100% 100%

- Falck Safety Services A/S

Denmark

- Falck Nutec Management A/S

Denmark

100%

- Falck Global Safety B.V.

The Netherlands

100%

- Falck Nutec AS

Norway

100%

- Falck Nutec Ltd.

United Kingdom

100%

- Nutec Centre for Safety Ltd. 1)

United Kingdom

100%

- Falck Onsite Limited

United Kingdom

100%

- Onsite Training Services Limited. 1)

United Kingdom

100%

- Falck Nutec Trinidad and Tobago Limited

Trinidad & Tobago

- Nutec UK Ltd.

United Kingdom

80% 100%

- Nutec Belgium Holding BVBA 1)

Belgium 100%

- Nutec Belgium BVBA 1)

Belgium 100%

- Falck Nutec B.V.

The Netherlands

100%

- Marinesafety International Rotterdam B.V.

The Netherlands

100%

- MSTS Asia Sdn. Bhd.

Malaysia

- Risktec (M) Sdn. Bhd.

Malaysia

- Falck Bestari Healthcare Sdn Bhd - MSTS Asia (S'pore) Pte. Ltd.

- Falck Nutec Malaysia Sdn. Bhd.

- Falck BHV Operations B.V.

- Falck Safety Services Nigeria Limited

- Falck Prime Atlantic Limited - Falck Caspian Safe LLC

- Falck Safety Services Canada Ltd.

- Falck Safety Services Belgium BVBA

- Falck Nutec Brasil Participacoes Ltda

- Falck Nutec Brasil Treinamentos em Segurança Marítima Ltda

- Southfield Ltd

CONSOLIDATED FINANCIAL STATEMENTS

70% 100%

Malaysia

82%

Singapore

100%

Malaysia

70%

The Netherlands

100%

Nigeria

51%

Nigeria

51%

Azerbaijan

65%

Canada

55%

Belgium

100%

Brazil

100%

Brazil

100%

Thailand

50%

95

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

GROUP OVERVIEW – LUNDBECK FOUNDATION GROUP AT 31 DECEMBER 2013

COMPANY NAME

COUNTRY

- Falck Nutec (Thailand) Ltd

Thailand

- Falck USA Holdings, Inc

USA

OWNERSHIP

65% 100%

- Falck Alford Holdings, Inc

USA

80%

- Alford Services, Inc

USA

100%

- Alford Safety Services, Inc

USA

100%

- Haztec Services - West Indies, LLC

USA

100%

St. Lucia

100%

Trinidad & Tobago

100%

- Haztec Services St. Lucia Ltd - Haztec Services Trinidad Limited - Occupational Safety Training, Inc.

- Falck Alford International BV

- Falck Holding de México, S.A. de C.V.

- Falck Safety Services de México, S.A.P.I. de C.V.

- Falck Nutec Vietnam Limited

- Falck Safety Services LLC

- Falck Global Assistance Norway AS

USA

- Falck Followit Norge AS

- Falck Sverige Holding AB

- Falck Investment Sverige AB

- Falck Räddningskär AB

100%

The Netherlands

100%

Mexico

100%

Mexico

55%

Vietnam

88%

UAE

49%

Norway

100%

Norway

100%

Sweden

100%

Sweden

100%

Sweden

100%

- Falck Security AB

Sweden

100%

- Falck Forsäkring AB

Sweden

100% 100%

- Falck TravelCare AB

Sweden

- Falck Ambulans AB

Sweden

95%

- Falck Räddningstjänst AB

Sweden

100%

- Falck Services AB

Sweden

100%

- Svensk Sjöambulans AB 2)

Sweden 50%

- Falck Ensihoito Oy

Finland

- S Reg Holding A/S

Denmark

- S Reg AB - Falck Secure AB

100% 100%

Sweden

100%

Sweden

100%

Denmark

100%

- S Reg Oy

Finland

100%

- S Reg AS

Norway

100%

Sweden

100%

Sweden

100% 100%

- S Reg A/S

- Falck Health Care Sverige Holding AB

- Falck AM Health Care AB

- Falck Aktiv Arbetsmedicin AB

Sweden

- Falck Healthcare AB

Sweden

100%

- Skandinavisk Hälsovård AB

Sweden

100%

- Svensk Närsjukvård AB

Sweden

100%

- Doc Care AB

Sweden

100%

- Ofelia Vård AB

Sweden

100%

- Ofelia Vård AS

Norway

100%

- Falck USA, Inc.

USA

- FCA Corp.

USA

USA

- Care Ambulance Service, Inc.

98% 87% 100%

- Falck EMS Corp.

USA

97%

- Lifestar Response Corporation, Inc.

USA

100%

- Lifestar Response of Alabama, Inc.

USA

100%

- Medibus, Inc.

USA

100%

- STAT Equipment Corp.

USA

100%

- STAT EMS, LLC

USA

USA

100%

- Bi-County Ambulance & Ambulette Transport Services Corp.

- Lifestar Response of New Jersey, Inc.

51%

USA

100%

- Lifestar Response of Maryland, Inc.

USA

100%

- Access Transport Services Holding, Inc.

USA

100%

- Access on Time Language Services LLC

USA

100%

- Home Care Equipment, Inc.

USA

100%

- Robinson's Ambulance & Oxygen Service, Inc.

USA

100%

- Falck Southeast Corp.

USA

USA

96

- Cape Cod Medica Enterprises, Inc

CONSOLIDATED FINANCIAL STATEMENTS

96% 100%

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

GROUP OVERVIEW – LUNDBECK FOUNDATION GROUP AT 31 DECEMBER 2013

COMPANY NAME

COUNTRY

OWNERSHIP

- American Ambulance, Inc.

USA

100%

USA

- Falck Southeast II Corp.

- Transitional Health Solutions LLC

USA

- Falck Northern California Corp.

- Falck Northwest Corp.

- Falck Investments Finland Oy Ab

96% 100%

USA

100%

USA

100%

Finland

100%

- Falck Oy

Finland

100%

- Falck Autoabi OÜ

Estonia

100%

- Falck Benelux NV

Belgium

93%

- Falck Investments NV

Belgium

88%

- Falck Medical Services LLC

- Falck Eurasia B.V.

- Falck Russia Holding B.V. 2)

- Falck Medical Vladivostok LLC

- Beijing Falck Rescue Consulting Services Co., Ltd

- Falck Kazakhstan LLP

- Open Clinic LLP

- Falck Foundation VZW

- Falck Medycyna Sp. z o.o.

The Netherlands

49%

Russia

100%

China

100%

Kazakhstan

100%

Russia

- Starowka Sp. z o.o.

- Falck SK a.s.

49% 100%

Kazakhstan

- Falck Fire Services Rus LLC

UAE The Netherlands

- Falck Emergency AS

Belgium

100%

Poland

100%

Poland

76%

Slovakia

93%

Slovakia

- Falck Záchranná a.s.

80% 100%

Slovakia

51% 100%

- Falck Academy s.r.o.

Slovakia

100%

- Falck Healthcare a.s.

Slovakia

100%

- Falck Pharma s.r.o.

Slovakia

100%

Slovakia

100%

- Falck Fire Services a.s.

- Falck CZ a.s.

Czech Republic

93%

- Falck SCI, S.A.

Spain

65%

- Falck Emergency Spain, S.L.

Spain

65%

- Falck VL Servicios Sanitarios, S.L.

- Falck Servizi Industriali di Emergenza S.r.l.

Spain

75%

Italy

65%

- Falck France SAS

France

100%

- Falck Holding B.V.

The Netherlands

100%

- Falck B.V.

The Netherlands

100%

- Falck Fire Services NL B.V.

The Netherlands

100%

- Falck AVD B.V.

- AVD-ICT B.V.

- Safety Center Zuid Holland B.V.

100% 100%

The Netherlands

100%

The Netherlands

52%

- Safe Building B.V.

The Netherlands

100%

- Falck BHV B.V.

The Netherlands

100%

- AVD Consultancy N.V.

Belgium

100%

- Safety Center Zuid Holland c.v.

The Netherlands The Netherlands

- Falck Brasil AVD Participações Ltda.

- Falck Brasil Plano de Saúde Ltda.

- Falck Brasil 747 Participações Ltda.

- Falck Brasil FF Participações Ltda.

- Falck Panama Holding S.A.

- EMI Holdings Management S.A.

Brazil

100%

Brazil

100%

Brazil

100%

Brazil

100%

Panama

100%

Panama

63%

- EMI Foreign Holdings 1 S.A.

Panama

100%

- EMI Foreign Holdings 2 S.A.

Panama

100%

- EMI Foreign Holdings 3 S.A.

Panama

100%

- EMI Foreign Holdings 4 S.A.

Panama

100%

- Servicio Emergencias Regional SER S.A.

Panama

100%

- Falck Fire & Safety do Brasil S.A.

- Empresa de Medicina Integral EMI S.A. Servicio de Ambulancia Prepagada - Grupo EMI S.A.

- EMI El Salvador S.A. de C.V.

Brazil

65%

Colombia

100%

El Salvador

100%

- Inversiones EMI Worldwide S.A.

Panama

100%

- EMI Panama S.A.

Panama

100%

CONSOLIDATED FINANCIAL STATEMENTS

97

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

GROUP OVERVIEW – LUNDBECK FOUNDATION GROUP AT 31 DECEMBER 2013

COMPANY NAME

COUNTRY

OWNERSHIP

- EMI Ecuador S.A.- Emergencia Medica Integral

Ecuador

100%

- Perses S.A.

Uruguay

100%

- Portovenus S.A.

Uruguay

16%

- EMI Venezuela Holding S.A.

Panama

100%

- Emergencia Medica Integral EMI Centro S.A.

Venezuela

100%

- Centro Medico Integral CEMICA S.A.

Venezuela

100%

- Falck Chile Holding S.A.

Chile

100%

- Falck Chile S.A.

Chile

80%

- Falck Safety Services Limitada

Chile

100%

Chile

100%

- Falck Capacitacion Limitada

- Falck Rettungsdienst GmbH

- G.A.R.D. Verwaltungsgesellschaft für Ambulanz und Rettungsdienst mbH

Germany

90%

Germany

100%

- G.A.R.D. Gesellschaft für Ambulanz und Rettungsdienst Cuxhaven GmbH

Germany

100%

- G.A.R.D. Gesellschaft für Ambulanz und Rettungsdienst Hamburg West mbH

Germany

100%

- GUARD Hospital Service GmbH

Germany

100%

- G.A.R.D. Gesellschaft für Ambulanz und Rettungsdienst Bremen mbH

Germany

100%

- ASN-Ambulanz-Service-Nord GmbH

Germany

100%

Germany

100%

Germany

100%

- G.A.R.D. Gesellschaft für Ambulanz und Rettungsdienst Hamburg-Ost GmbH

- G.A.R.D. Arbeitsgemeinschaft Rettungsdienst Dresden GmbH

- G.A.R.D. ArGe Dresden GbR

Germany

100%

Germany

100%

- G.A.R.D. Gemeinnützige Ambulanz und Rettungsdienst GmbH

- GUARD Gesellschaft für unabhängige ambulante Rettungsdienstleistungen GmbH

Germany

100%

- G.A.R.D. Gesellschaft für Ambulanz und Rettungsdienst NRW mbH

Germany

100%

- K&G Taxi-Krankentransporte und Dienstleitungs GmbH

- G.A.R.D. Beteiligungsgesellschaft für Ambulanz und Rettungsdienst mbH

Germany

80%

Germany

100%

- promedica Rettungsdienst GmbH

Germany

90%

- RTD Consulting GmbH

Germany

100%

- ASG Ambulanz Leipzig GmbH

Germany

100%

- promedica Rettungsdienst Bremehaven/Bremen GmbH

Germany

100% 70%

- promedica Rettungsdienst Walbeck-Frankenberg GmbH & Co. KG

Germany

- Euro-Med Einkaufsgemeinschaft GmbH

Germany

- promedica Services GmbH

Germany

Germany

- G.A.R.D. Ambulanzflugdienst GmbH

- Brava Holding GmbH 2)

63% 100% 50%

Germany 25%

- Kranken-Transport Herzig GmbH

- KS-Medi-Service GmbH

Germany

100%

Germany

100% 100%

- Falck Österreich GmbH

Austria

- Falck Yardim Hizmetleri Limited Şirketi

Turkey 100%

- Falck Pty Ltd

Australia

55%

Australia

100%

United Kingdom

100%

United Kingdom

100%

- Medical Services Limited 2)

United Kingdom

45%

United Kingdom

93%

United Kingdom

100%

- Falck Ambulance Services Australia Pty Ltd

- Falck UK Limited

- Falck EMS UK Limited - Falck Emergency Services UK Ltd.

- Frontline Fire International Limited

- Falck Fire Services UK Limited

- Falck Emergency Asia Pte. Ltd.

- Falck India Limited

- Falck Services Limited

United Kingdom

100%

Singapore

100%

United Kingdom

93%

Mauritius

100%

- Falck India Pvt. Ltd. (India)

India

100%

- Falck Services Pvt Ltd. (India)

India

100%

- Falck Fire Services S.R.L

Romania

- Falck South Africa Holding (PTY) LTD

93%

South Africa

100%

- Med1 (Private) Limited 2)

Sri Lanka

50%

- A C Trafik A/S

Denmark

100%

- KPC Ejendomme af 6. juni 2002 A/S 2)

Denmark 25%

1) Dormant company 2) Associate

98

CONSOLIDATED FINANCIAL STATEMENTS

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

FINANCIAL STATEMENTS PARENT FOUNDATION CONTENTS

Income statement for the period 1 January – 31 December Balance sheet at 31 December

Notes 1.

Accounting policies 2. Financial income and expenses 3. Staff costs and other operating costs 4. Fees to auditors appointed at the general meeting 5. Tax on profit for the year 6. Grants for the year 7. Investments in subsidiaries 8. Other securities and investments 9. Statement of changes in equity and capital base 10. Pension obligations 11. Related parties 12. Events after the balance sheet date

FINANCIAL STATEMENTS – LUNDBECK FOUNDATION

100 101

102 102 102 103 104 104 105 105 106 106 106 106

99

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

INCOME STATEMENT FOR THE PERIOD 1 JANUARY – 31 DECEMBER

2013 2012

Note DKKm DKKm

Dividend from Lundbeckfond Invest A/S 7 1,064 Financial income 2 341 279 Financial expenses 2 -116 -25 Profit from investing activities before costs 1,289 254

Other operating income 12 Staff costs 3 -18 -21 Other external costs 4 -11 -12 Depreciations and amortisations -3 -7 Profit before tax 1,269 214

Tax on profit for the year 5 -5 -1 Profit for the year 1,264 213

Proposed distribution of profit: Profit for the year 1,264 Amount available for distribution 1,264

The Board of Directors proposes that the profit be allocated as follows:

Transferred to capital base 253

Total amount for grants in 2013 368 Reversed grants/repayments -17 Net grants for the year 6 351

Retained earnings 660 Distributed 1,264

100

FINANCIAL STATEMENTS – LUNDBECK FOUNDATION

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

BALANCE SHEET AT 31 DECEMBER

Assets 2013 2012

Note DKKm DKKm

Other intangible assets 2 2 Intangible assets 2 2

Land and buildings 82 12 Property, plant and equipment 82 12

Investments in subsidiaries 7 4,059 4,061 Other securities and investments 8 3,987 3,239 Financial assets 8,046 7,300

Non-current assets 8,130 7,314

Other receivables 39 21 Receivable from subsidiary 1 1 Income tax receivable 1 2 Cash 97 71

Current assets 138 95

Assets 8,268 7,409

Equity and liabilities

Capital base 2,523 2,270 Retained earnings 4,658 3,998 Equity 9 7,181 6,268

Pension liabilities 10 20 29 Provisions 20 29

Payable grants, long-term 298 400 Non-current liabilities 298 400

Payable grants, short-term 674 591 Repo debt 8 89 95 Other payables 6 26 Current liabilities 769 712

Liabilities 1,067 1,112

Equity and liabilities 8,268 7,409

Related parties 11 Events after the balance sheet date 12

FINANCIAL STATEMENTS – LUNDBECK FOUNDATION

101

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 1 - 2 - 3

1. ACCOUNTING POLICIES

The financial statements of the parent company of the Lundbeck Foundation for 2013 has been prepared in accordance with the provisions of the Danish Financial Statements Act for medium-sized reporting class C enterprises. The annual report is presented in Danish kroner (DKK), which also is the functional currency of the Foundation.

The accounting policies are unchanged from last year.

Differences relative to the Group’s accounting policies The Fondation’s accounting policies for recognition and measurement are in accordance with the Group’s policies with the exceptions stated below:

Other operating income Other income consist of rental and other service income as well as gain on sale of tangible fixed assets.

Investments in subisidiaries Investments in Lundbeckfond Invest A/S are recognised in the Foundation’s balance sheet at cost. Dividends are recognised in the income statement.

Investments in other subsidiaries follow the same principles as for Lundbeckfond Invest A/S. The other current subsidiary is classified as a Lundbeckfond Emerge activity. In practice this means that the fair value of the investment is written down yearly based on costs incurred by the subsidiary.

2. FINANCIAL INCOME AND EXPENSES

2013 2012

DKKm DKKm

Financial income Interest income, etc.

183 117 Gain from securities and other equity investments 158 162

341 279 Financial expenses Interest expenses etc.

- Loss on securities and other equity investments 116 25

116 25

3. STAFF COSTS AND OTHER OPERATING COSTS

2013 2012

DKKm DKKm

Wages and salaries, incl. holiday allowance 15.8 12.2 Pension contributions - 0.1 Pension benefits, including adjustment of pension provision 1.8 8.4 Other social security costs 0.1 0.1

17.7 20.8

Pension benefits including adjustment of pension provision relates to pension obligations taken over from H. Lundbeck and pension obligations towards existing and former board members. The decrease is due to the fact that it was decided in 2012 to terminate the scheme going forward, and the conditions for this termination were specified in this connection resulting in an increase in the provision in 2012.

Remuneration of the Executive Management

4 2 Remuneration of the Board of Directors, including committee fees 4 4

102

FINANCIAL STATEMENTS – LUNDBECK FOUNDATION

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 3 - 4 3. STAFF COSTS AND OTHER OPERATING COSTS – CONTINUED

Members of Executive Management and the Board of Directors who also serve as directors in subsidiaries also receive board remuneration directly from such subsidiaries. For a complete description hereof, please see the consolidated financial statements in the annual report of the Lundbeck Foundation for 2013, note 3.

Total remuneration of the Executive Management and Board of Directors (including remuneration 2013 received from the wholly owned subsidiary Lundbeckfond Invest A/S) is specified as follows: DKKm

Executive Management: Christian Dyvig

6.5

Board of Directors: Jørgen Huno Rasmussen, Chairman of the Foundation and Lundbeckfond Invest A/S from 2 May 2012, Chairman of the Investment Committee

0.8 Mikael Rørth, Vice-chairman of the Foundation and Lundbeckfond Invest A/S, Chairman of the Biomedical Sciences Committee and member of the Investment Committee

0.8 Steffen Kragh, member of the Investment Commitee, from 23 May 2013

0.2 Thorleif Krarup, member of the Investment Committee, Chairman of the Science Teaching and Communication Committee

0.3 Povl Krogsgaard-Larsen, member of the Investment, Biomedical Sciences and Natural Sciences Committees 0.5 Gunhild Waldemar, member of the Biomedical Sciences Committee

0.4 Kim Klitgaard, employee representative from H. Lundbeck A/S

0.2 Ken Liljegren, employee representative from H. Lundbeck A/S

0.2 Peter Adler Würtzen, employee representative from ALK-Abelló A/S

0.2 Jes Østergaard, Chairman of the Natural Sciences Committee and member of the Investment Committee, stepped down on 23 May 2013

0.3 Rounding -

3.9

Average number of employees during the year 9 Number of employees at year-end

9

Total operating costs of the Lundbeck Foundation and Lundbeckfond Invest A/S Lundbeck Foundation - Staff costs, other external costs and depreciations

32 Lundbeckfond Invest A/S - Staff costs and other external costs

27

59 Can be allocated to the Foundations activities as follows: Strategic investment, monitoring and administration

26 Lundbeckfond Invest 11 Lundbeckfond Ventures 10 Grant and Emerge activities

12

59

2012 DKKm

3.4

0.7 0.9 0.3 0.5 0.4 0.2 0.2 0.2 0.6 -0.1 3.9 8 9

34 20 54 28 6 9 11 54

4. FEES TO AUDITORS APPOINTED AT THE GENERAL MEETING

2013 2012

DKKm DKKm Administrative expenses include fees to the company's auditors appointed by the general meeting, Deloitte, in the amount of: Statutory audit

Other services

0.3 0.3 0.6

0.3 0.2 0.5

FINANCIAL STATEMENTS – LUNDBECK FOUNDATION

103

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 5 - 6

5. TAX ON PROFIT FOR THE YEAR

2013 2012

DKKm DKKm

Tax on profit for the year, Lundbeck Foundation

5 5

1 1

In the financial year, the Lundbeck Foundation paid income tax of TDKK 1,222 (TDKK 677 in 2012). When calculating taxable income, the Foundation has deducted grants and tax provisions for future grants. No deferred tax is recognised for accounting purposes concerning tax provisions for future grants as this is not expected to crystallise. Deferred tax hereon amounted to DKK 450 million (DKK 333 million in 2012).

The Lundbeck Foundation is jointly taxed with Lundbeckfond Invest A/S, which means that the Lundbeck Foundation is taxable on dividends received from Lundbeckfond Invest A/S.

The total income tax payment for the Lundbeck Foundation Group amounted to DKK 593 million (DKK 1,136 million in 2012), of which Danish income tax accounted for DKK (70) million (DKK 475 million in 2012). The negative tax payment in Denmark was due to excess payment of Danish taxes in 2012.

6. GRANTS FOR THE YEAR

2013 2012

DKKm DKKm

Biomedical science projects 128 175 Natural science projects

20 25 Teaching and communicating science

12 23 Regular grants 160 223

Lundbeck Foundation Professor

25 Lundbeck Foundation Fellowships

70 80 Grete Lundbeck European Brain Research Foundation

15 15 Talent and teaching prizes 1 1 Travel grants for conferences and similar activities

2 4 Research abroad

9 18 Visiting professorships

2 3 Other

2 2 Personal grants

126 123

DanFunD 12 CINS II

30 BBB-Projekt

40 EMBL - 60 RESCueH - 44 MEPRICA - 16 Strategic grants

82 120

Grants for the year, gross

368 466

Descendants

- Reversed grants/repayments

-17 -6 Grants for the year, net

351 460

Emerge activities

8 16 Grants for the year, including Emerge activities, gross

376 482 104

FINANCIAL STATEMENTS – LUNDBECK FOUNDATION

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 7 - 8

7. INVESTMENTS IN SUBSIDIARIES

Lundbeckfond Other

Invest A/S subsidiaries Total DKKm DKKm DKKm Cost at 1 January 2013

4,046 15 Additions - - Cost at 31 December 2013

4,046 15

Net revaluation at 1 January 2013 - - Value adjustments for the year - -2 Net revaluation at 31 December 2013 - -2

Carrying amount at 31 December 2013

4,046 13 Carrying amount at 31 December 2012

4,046 15

Carrying amount of equity as per the most recently published annual report 14,586 -

Dividend received 2013 1,064 - Dividend received 2012

- -

Lundbeckfond Invest A/S has its registered office in Copenhagen and is wholly owned by the Lundbeck Foundation.

At the end of 2012, the Foundation acquired 60% of the share capital of Insusense ApS, registered in Risskov, Denmark.

4,061 4,061 -2 -2 4,059 4,061 14,586

1,064 -

8. OTHER SECURITIES AND INVESTMENTS

Bond and

corporate Unlisted

loans investment portfolios Equities funds Total DKKm DKKm DKKm DKKm Carrying amount at 1 January 2013 Additions Disposals Value adjustments for the year Carrying amount at 31 December 2013

2,435 2,855 -2,079 -25 3,186

785 187 -247 59 784

19 1 -3 - 17

3,239 3,043 -2,329 34 3,987

Bonds in repo transactions have been provided as collateral for repo debt. The value of bonds in repo transactions provided as collateral at 31 December 2013 amounted to DKK 89 million (DKK 95 million in 2012).

Unlisted investment funds include investments in an unlisted investment fund with a residual payment obligation of DKK 5 million (DKK 5 million in 2012).

FINANCIAL STATEMENTS – LUNDBECK FOUNDATION

105

LUNDBECK FOUNDATION 2013 ANNUAL REPORT

NOTES 9 - 10 - 11 - 12

9. STATEMENT OF CHANGES IN EQUITY AND CAPITAL BASE

Retained

Capital base*) earnings Total DKKm DKKm DKKm

Equity at 1 January 2013 2,270 3,998 6,268 Grants, net.

-351 -351 Retained profit for the year 253 1,011 1,264 Equity at 31 December 2013 2,523 4,658 7,181

*) Changes in capital base 2009-2013: The capital base at 1 January 2009 amounted to: 1,750 2009 Capital base increased by 150 2010 Capital base increased by 150 2011 Capital base increased by 175 2012 Capital base increased by 45 2013 Capital base increased by 253 Capital base at 31 December 2013 2,523

10. PENSION OBLIGATIONS

2013 2012

DKKm DKKm

Obligations at 1 January 29 23 Adjustment for the year -9 6 Obligations at 31 December 20 29

11. RELATED PARTIES

The Lundbeck Foundation defines related parties as the Foundation’s Board of Directors and Executive Management, its wholly-owned investment and holding company Lundbeckfond Invest A/S and this company’s subsidiaries H. Lundbeck A/S, ALK-Abelló A/S and Falck Holding A/S, and Insusense ApS.

Lundbeckfond Invest A/S shares the same address as the Lundbeck Foundation, and there is duality of membership between the Executive Management, administration (partly) and Board of Directors. The Lundbeck Foundation receives dividends from Lundbeckfond Invest A/S. Lundbeckfond Invest A/S pays rent to the Lundbeck Foundation on an arm's length basis. Payments are likewise made/received for administrative services. The Foundation also receive service fee for administrative services provided to Insusense ApS. For information on remuneration paid to the members of the Executive Management and Board of Directors, please see note 3.

Other than the above, the Lundbeck Foundation has only had immaterial transactions with the related parties.

12. EVENTS AFTER THE BALANCE SHEET DATE

No events after the balance sheet date with effect on the financial statements have occured.

106

FINANCIAL STATEMENTS – LUNDBECK FOUNDATION

BOARD

108

Jørgen Huno Rasmussen, Chairman Born 1952, elected to the Board in 2008.

MSc engineering (civil), B. Com. and Lich.tech.

Chairman of the Investment Committee.

Chairman of the board of Tryghedsgruppen and board of Tryg A/S, member of the boards of Bladt Industries A/S, Haldor Topsoe A/S, Terma A/S and Vestas Wind Systems A/S.

Special qualifications In-depth knowledge of managing an international, listed group and skills in new markets, strategy, branding, acquisitions and divestments, business development, procurement, finance, risk management and optimising production processes.

Mikael Rørth, Vice-chairman Born 1943, elected to the Board in 2002.

Professor, Chief Physician, M.D., Copenhagen University Hospital.

Chairman of the Research Committee and member of the Investment Committee.

Special qualifications Experienced clinician with substantial scientific production in clinical oncology and basic research. Chief physician at the Copenhagen University Hospital since 1980 and professor at Copenhagen University since 1993. Long-standing contribution to research policy, including chairmanship of a number of scientific committees.

Steffen Kragh Born 1964, elected to the Board in 2013.

M.Sc. and MBA, Member of the Investment Committee, President & CEO of Egmont Foundation and Egmont International Holding. Non-executive board member Nykredit Holding A/S (VC), Nykredit Realkredit A/S (VC), Foreningen Nykredit, CapplenDamm Holding (C) and chairman of numerous companies in the Egmont group.

Special qualifications Expertise within strategy, economics, finance and accounting, capital markets, securities and funding, legal and regulatory matters of importance to financial business, corporate management and financial business management, including IT.

Thorleif Krarup Born 1952, elected to the Board in 2003.

B.Sc. (Economics) and B. Com., Director.

Member of the Investment Committee, Chairman of the Science Teaching and Communication Committee.

Chairman of the board of Exiqon A/S, vice-chairman of Falck A/S, member of the boards of ALK A/S, H. Lundbeck A/S, Bisca A/S and the Denmark-America Foundation.

Special qualifications Management experience from large international organisations.

Expertise in finance and economics. In-depth experience with board work in listed companies in the Nordic, UK and US

Povl Krogsgaard-Larsen Born 1941, elected to the Board in 2011.

Professor, Pharm. D., Copenhagen University.

Member of the Research Committee and the Investment Committee.

Chairman of the board of Bioneer A/S, vice-chairman of the Alfred Benzon Foundation and member of the board of the Carlsberg Laboratory.

Special qualifications Experience with board work in large international company and management of knowledge-intensive organisations. Skills in research, development and innovation and experience with research evaluation.

Introduction of the concept of scientific social responsibility and contribution to principles of academic leadership.

Gunhild Waldemar Born 1957, elected to the Board in 2011.

Professor, Chief Physician, M.D., D. M. Sc. Dept. of Neurology, Copenhagen University Hospital, Rigshospitalet. Member of the Research Committee. Director of Danish Dementia Research Centre, Chairman of the research committee under the Danish Alzheimers Association, Liaison with the European Federation of Neurological Societies EFNS and vice-chairman of the Dementia Council, Capital Region of Denmark.

Special qualifications Skills in research, development, research evaluation and innovation.

Long-standing experience with international research management and board work in international scientific companies.

Kim Klitgaard Born 1963, elected to the Board in 2010.

Operator.

Elected by the employees of H. Lundbeck A/S.

Ken Liljegren Born 1963, elected to the Board in 2010.

Civil engineer, Principal Scientist.

Elected by the employees of H. Lundbeck A/S.

Peter Adler Würtzen Born 1968, elected to the Board in 2008.

Ph.d., Team Leader.

Elected by the employees of ALK A/S.

EMPLOYEES

Management

Christian Dyvig

Chief Executive Officer

Theis Martin Malmborg Britt Wilder Nina Kamille Holmgaard

Executive Assistant Executive Secretary Adm. Service Coordinator

Invest Klaus Ørtoft Madsen Kasper Kitaj Pedersen Christoffer Gundelach

Bertil From Chief Investment Director Investment Director Student Assistant

Chief Financial Officer

Grants Sissel Vorstrup Nina Espegård Hassel Ulla Jakobsen Kirsten Ljungdahl Heidi Stoklund Larsen

Anne-Marie Engel Associate Director of Research Strategic Advisor Science Manager Secretary Student Assistant

Director of Research

The Brain Prize Janne Axelsen

Kim Krogsgaard International Relations Manager

Director

Emerge

Christian E. Elling

Partner

Ventures Johan Kördel Casper Breum Jon Kaznelson Berit Mikkelsen

Mette Kirstine Agger Senior Partner Partner Analyst Associate

Managing Partner

Accounting/Controlling Susanne Bernth Lotte Halse Dorthe Mathiasen Steen Rosendal

Claus Køhler Carlsson Senior Investment Controller Investment Controller Book-keeper Controller

Director of Accounting & Tax

SCIENTIFIC COMMITIEES

Biomedical Science Committee Mikael Rørth, chairman, Professor, Chief Physician, M.D. Gunhild Waldemar, Professor, Chief Physician, M.D. Povl Krogsgaard-Larsen, Professor, Pharm D. Anders Björklund, Professor, M.D. Peter Friberg, Professor, MD Ulf Hedin, Professor, MD Ole Petter Ottersen, Professor, M.D. Ole William Petersen, Professor, M.D. Edvard Smith, Professor, MD

Natural Science Committee Jes Østergaard, chairman, M.Sc. Chemical Engineering Povl Krogsgaard-Larsen, Professor, Pharm D. Knut Conradsen, Professor, dr. phil.

Björn Lindman, Professor, ph.d.

Science Teaching and Communication Committee Thorleif Krarup, chairman, B.Sc. Economics and B. Com. Nils O. Andersen, Professor, dr. scient.

Doris Jorde, Professor, ph.d.

Design: Klaus Wilhardt Photo: Pernille Ringsing ISSN 1901-5933

Lundbeck Foundation is an active industrial foundation that strives to maintain and expand Lundbeck by:

• being a value-adding owner of Lundbeck, ALK and Falck and other innovative companies through Lundbeckfond Ventures and Lundbeckfond Emerge • being an active manager of its portfolio investments through Lundbeckfond Invest • supporting and strengthening research in biomedical sciences of the highest international standards in order to make a significant difference to human health and life

Lundbeck Foundation Group 2013 Revenue

DKK 30,092 million

Operating profit

DKK 3,465 million

Lundbeck Foundation’s share of profit

DKK 2,807 million

Grants

DKK

Net wealth

DKK 37,642 million

Number of employees

376 million

29,798 million

Lundbeck Foundation ı Scherfigsvej 7 ı DK-2100 Copenhagen ı Tel +45 39 12 80 00 ı www.lundbeckfonden.com CVR no 11814913