Drugs group Lundbeck's shares hit by profit warning

COPENHAGEN (Reuters) - Shares in Danish drugs firm Lundbeck fell to their lowest level in over 12 years on Wednesday after it cut its profits forecast for the next two years as European sales slow and spending on new products rise to combat generic competition.

The company has already warned that earnings would stall until 2015 due to cheap generic competition for its existing drugs, meaning new products will be vital for future earnings.

But Chief Executive Ulf Wiinberg said on Wednesday that the negative impact on revenue from healthcare reforms in Europe had also been bigger than expected in the last two years and that slowing European sales and generic competition were hurting.

As a result the company said operating profits would fall further than previously forecast in 2014 as it increases investments in its late-stage drugs development pipeline and product launches.

Lundbeck is working to find new drugs to replace lost revenue from products coming off patent protection such as its antidepressant Cipralex, which is sold as Lexapro in the United States and Japan, and Alzheimer's drug Ebixa.

Wiinberg said 2014 would be the company's peak investment year for the new products pipeline, offering it a solid foundation for growth starting in 2015.

"You only get one chance to launch a product and we have to do it well," Wiinberg said at a briefing for investors.

He was commenting after the company warned in a statement that it now expects revenue in 2014 of about 14 billion Danish crowns ($2.5 billion) and an operating profit of between just 0.5 billion and 1 billion crowns.

Analysts have on average been forecasting a profit of over 2.5 billion crowns for 2014 on turnover of over 14.7 billion crowns, according to Thomson Reuters I/B/E/S Estimates.

Two years ago Lundbeck predicted its annual revenues over the period 2012-2014 would exceed 14 billion crowns a year while earnings before interest and tax (EBIT) would exceed 2 billion crowns a year.

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Drugs group Lundbeck's shares hit by profit warning