Lundbeck plans major restructuring as 1st-half profits plunge

In order to regain profitability, Danish CNS specialist drugmaker Lundbeck (LUN: CO) this morning announced a major restructuring program which will reduce the total cost base by around 3 billion Danish kroner ($448 million) with full effect in 2017. The news sent Lundbeck’s shares rocketing 16.2% to 196.20 kroner by 11.45 CEST.

Lundbeck will restructure headquarter functions and commercial operations in Europe and other markets which are expected to lead to a reduction of around 1,000 employees, around 17% of the total workforce. In connection with the restructuring program provisions and write-downs at the level of 1.7 billion kroner will be made in the third quarter 2015.

As part of the restructuring program a reclassification of 4.8 billion kroner is included as R&D costs in the second quarter, leading to an operating loss of 4.87 billion kroner. .The reclassification is a change in accounting estimate based on management's reassessment of certain previously capitalized product rights.