Half-Year Sales Results exceeded the Plan

In Slovenia, Lek’s largest market, a 3% sales growth was noted. The sales of pharmaceutical products increased by 10%, which was influenced by the successful onset of operations of Sanofi-Synthelabo-Lek joint venture. A negative influence on the sales growth in the domestic market was exerted by divesting the dental programme in the last year. The largest trend of sales growth in the first half-year is accounted for by the CIS market with a 47% increase. This reflects the improved economic situation in this market and a relative stability of the rouble. In the Central and Eastern Europe, the results prove a foreseen 13% growth. Our business operations in the markets of Asia and South America were extremely successful. The sales increased by 39%, mainly due to Amoksiklav. Above-the-plan sales growth was achieved also in the territory of the South-Eastern Europe. In the USA the sales were lower than in the same period last year, yet we expect an increase through re-launching of finished pharmaceutical products in the second half-year. The result was partly compensated by the launch of Amoksiklav in individual markets of the European Union and other new markets.

Lek’s top product Amoksiklav continued to be successfully marketed this year, and consequently, the sales increased by 24%, which currently accounts for 20.9% of Lek’s entire sales. The sales growth was achieved by penetrating new markets and by presenting new forms of the product in existing markets.

The share of sales of pharmaceutical products, our leading programme, amounted to 82.1% in the first half-year, surpassing the plan by 2%. The highest sales growth was achieved with the OTC programme which exceeded the previous year’s level by 39%, and the major share of the sales growth was realized in the CIS markets. The sales plans were also exceeded by the Animal Health and Medical Devices, with the Cosmetics slightly lagging behind.

Leks’ major markets continue to be Slovenia with a 25.2% sales share, followed by Poland with a 15.8% share, the Russian Federation with 7.9%, Croatia with 7.8% and the Czech Republic with 4.2%.

The net profit in the first half-year of 2000 amounts to SIT2.7 billion, which is a 96% increase compared to the same period last year.

Profit growth continues to be the basic orientation of Lek management till the end of the year. Introducing products with higher added value, higher productivity and cost efficiency, and providing organic growth by balancing the ratio between productive investment project and infrastructure investments represent only part of the activities under way in this direction. In the second half-year a vast programme of restructuring will be implemented, aimed at providing higher business efficiency, and mainly at improving the quality of management.

Lek is pleased to announce its shareholders that its ambitious plans for the first half-year were fully implemented. Based on good sales forecasts for the second half-year we are optimistic in our expectations that the business objectives for the year 2000 will be achieved. We wish to notify our shareholders that the dividend pay-out for the year 1999 will start on 1 September 2000.