Lek Exceeded Projected Goals in 2001

Considering the exceptionally challenging and active macro-economic environment, as well as the global economic recession, Lek concluded the year 2001 successfully. The Lek Group sales reached SIT 80 billion in 2001, exceeding projected goals by 9 percent. Sales grew by 34.6 percent compared to the year 2000. A significant factor in the increase of sales of the Lek Group were the acquisitions of Argon, and especially that of PharmaTech, whose sales together totaled SIT 5.4 billion in 2001. The parent company Lek sales grew by 24.2 percent and outpaced the growth of the global pharmaceutical market.

Key factors in the company’s growth are its successful cooperative ventures: in the Slovenian market with Sanofi-Synthelabo; and in Croatia with Pliva, where antibiotic Klavocin, a mixture of amoxycillin and clavulanic acid, tops the list of products in this market. The acquisitions of Polish and the Romanian pharmaceutical companies strengthened our position in these markets, and with the internationalization of our product portfolio in the Russian Federation we exceed our planned sales objectives

Lek d.d. sales reached SIT 68 billion in 2001. Pharmaceutical products and active ingredients for use in human medicine contributed the largest share of total sales, 90.8 percent (of this, 70.9 percent for prescription drug sales and 11.8 percent for active ingredients sales) and OTC sales followed with 8 percent. Other programs totaled 9.2 percent (animal health 4.4 percent, cosmetics 3.3 percent and medical devices 1.5 percent respectively).

Lek d.d. sold SIT 14.7 billion on the home market, which was 21.5 percent of Lek’s total sales, representing a growth rate of 7.5 percent . Lek’s ten leading markets accounted for 70 percent of total sales. Lek grew rapidly in these markets. In Central and Eastern Europe Lek sales reached SIT 15.6 billion (or 22.9 percent of Lek’s total sales), in Southeastern Europe SIT 12.8 billion (18.8 percent of total sales) and in the Commonwealth of Independent States SIT 11.2 billion (16.4 percent of total sales).

In 2001, Lek internationalized its most important brand names in antibiotics and its drugs for the treatment of cardiovascular, alimentary tract and muscular-skeletal system diseases. Once again Lek’s best selling drug last year was Amoksiklav, whose growth was even faster than the company’s, achieving 30.9 percent increase.

Last year, Lek extensively internationalized its business operations and continues to do so while taking into consideration new developments and business conditions. Sales on the home market are losing their leading position in terms of Lek’s total sales. In accord with company strategy, Poland is becoming Lek’s leading market. The acquisition of Argon further strengthened this position. The Romanian company Lek PharmaTech is among the leading companies for sales of antibiotics in the region, and placed second in sales of antibiotics on the Romanian market. With the opening of a representative office in Beijing, we consolidated our position in China. Aside from the major activities of our representatives in China- the sale and purchase of active ingredients- Lek has the right product for the Chinese pharmaceutical market. These excellent sales results make it possible for Lek to invest in new research and development projects.

In 2002 we plan to maintain this dynamic growth and continue to expand our business internationally. By purchasing pharmaceutical companies, Lek wishes to ensure the synergistic effects of its acquisitions. Once we receive new approvals for the sale of finished products, drug sales on the U.S. market will again contribute to a significant share of Lek’s sales growth.