Lek Enters the U.S. Market with Co-Amoxiclav

6. 1. 2003

Ljubljana, January 6, 2003 – Lek d.d, a Slovene pharmaceutical company, has entered the world’s largest pharmaceuticals market with its leading product, co-amoxiclav. By entering the U.S. market, Lek has, to date, achieved its most far-reaching business goal. On its first workday, January 2, 2003, Lek’s affiliated company, Lek Pharmaceuticals, Inc., sold $27 million worth of co-amoxiclav.

The originator, GlaxoSmithKline, markets its product under the trademark Augmentin. The annual sales of Augmentin in the U.S. amount to $1.3 billion. Co-amoxiclav is available on the market in only limited amounts because of its complex production process, both concerning the technology and intellectual property rights. In addition to the originator, there are two other generic manufacturers present on the market since July of last year: the American company, Geneva, with its generic co-amoxiclav, and an Israeli company, Teva, which began to market its co-amoxiclav tablets less than a month ago. A marketing authorization for co-amoxiclav tablets has also been received by an Indian company, Ranbaxy, but their product is not yet available on the U.S. market.

The product is protected by a large number of patents which limit generic competition. The originator, GlaxoSmithKline, has filed lawsuits against all generic manufacturers of co-amoxiclav who have obtained U.S. marketing authorizations for the product. In the lawsuits, GlaxoSmithKline alleges that the generic companies illegally obtained the strain for the production of clavulanic acid.

The Slovene pharmaceutical company, Lek d.d., has, however, developed an independent strain for the production of clavulanic acid in its research laboratories in cooperation with external associates who are internationally recognized experts. In a court dispute, Lek is now proving its own, independent development of the product claiming that the lawsuit is entirely unfounded. The business risks are managed with a sufficient critical mass of resources within the Novartis Group.

Lek d.d. began its co-amoxiclav project in 1989 with its own research and development efforts, developing its own technology for the production of clavulanic acid and its own finished forms of co-amoxiclav which are in compliance with international regulatory requirements. Lek d.d. is producing the active ingredient, clavulanic acid, in its plant in Lendava and the finished product in Prevalje.

Co-amoxiclav is Lek’s most internationally distributed product which, to date, has become established in the markets of Poland, Croatia, Romania, the Russian Federation, the EU nations, as well as in Asian, African and Latin American countries. Lek is marketing its product in over 60 countries.

The consolidated sales of co-amoxiclav in the U.S. market are expected to exceed $100 million in 2003 making the U.S. Lek’s biggest market.


This document and the content of it does not constitute an offer of securities or an offer to purchase securities, nor a solicitation for an offer of securities or an offer to purchase securities, nor marketing or sales activity for such securities. This document must not be used for such an offer or such marketing activities. This document shall also not be construed to record that an offer of securities or an offer to purchase securities, or a solicitation for an offer of securities or an offer to purchase securities, or marketing or sales activity for such securities have been or will be made. If a public offer to acquire securities is made, a prospectus will be filed with the Securities Market Agency and a bid document will be published in advance in accordance with the Slovenian Takeover Act.

This release contains certain “forward-looking statements”, relating to both the Novartis Group’s and Lek’s businesses, which can be identified by the use of forward-looking terminology or by discussions of strategy, plans or intentions. Such statements include a description of the intention of Novartis to make a tender offer for the shares of Lek. Such statements reflect the current views of Novartis and Lek with respect to future events and are subject to certain risks, uncertainties and assumptions. It is possible that the tender offer may not be made if the conditions proposed by Novartis are not met in a manner that Novartis deems satisfactory. Other factors that could impact the success of a potential acquisition include uncertainties relating to clinical trials and product development, unexpected regulatory delays or government regulation generally, and obtaining and protecting intellectual property, as well as factors discussed in the Form 20-F filed by Novartis with the US Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected.

The information contained herein is not for publication or distribution to persons in the United States of America or any jurisdiction where such sale would be unlawful. The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended, and may not be offered or sold in or from the United States without registration thereunder or pursuant to an available exemption therefrom.