GLOBAL - Denmark's Unipension has sold its entire holding in pharmaceuticals stock Lundbeck amid concerns that one of its drugs is becoming used in the US to carry out executions.
Although the Danish company has not breached Unipension's ethical guidelines, the pension fund said it decided from an overall risk/return perspective to sell the holding of around DKK40m (€5.4m).
The stake represents less than 1% of Lundbeck's market capitalisation.
Unipension said it began a dialogue with Lundbeck in March on two current issues - the use of the sedative pentobarbital (trade name Nembutal) in executions in the US, against the wishes of Lundbeck, and the illegal marketing of antidepressants to children in the US.
Head of investment Niels Erik Petersen said: "Against the background of the statements we received, our immediate opinion is that Lundbeck is not breaching our guidelines. But their handling of the case has been inappropriate."
He said the fund was critical both of Lundbeck's lack of openness to the public and its unwillingness to communicate with investors.
He said Unipension had been unable to get extensive and detailed statements regarding Lundbeck's efforts to make sure their products were not used in an undesired way.
Human rights pressure group Reprieve says US states are increasingly turning to pentobarbital to carry out executions by lethal injection after supplies of another drug, which has been widely used, have been in short supply in the US.
Lundbeck has defended itself by saying it does not control the application of pentobarbital.
On its website, it said: "Based on our evaluation and the advice of external experts, we have concluded there are no viable steps Lundbeck can take to prevent end-users from obtaining the product for unapproved use, short of withdrawing the product from the market."
But Reprieve is not satisfied with the efforts made by the drugs company.
Reprieve investigator Maya Foa said: "That Lundbeck has refused to adopt any of the strategies available to them to prevent the use of their drugs in executions is baffling.
"As more evidence comes out about how easy it would be for the company to restrict the distribution of the product, serious questions about the company's integrity need to be asked."
Unipension is the joint pensions administration company for three professional schemes - the Architects' Pension Fund (AP), the Pension Fund for Danish academics (MP) and the Pension Fund for Agricultural Academics and Veterinary Surgeons (PJD). In all, Unipension manages DKK80bn of assets.
Other Danish pension funds also have holdings in Lundbeck, including ATP and LD. At the end of 2010, ATP held shares worth DKK69.4m.
ATP portfolio manager Claus Berner Møller said: "We are in close dialogue with the company about several issues."