Lek Business Results in Q1 2005

Western Europe, the USA and overseas countries accounted for 38.2% of total sales, Central and Eastern Europe and the CIS accounted for 49.7%, and the Slovene market 11.9%. With this Lek achieved a very balanced sales markets structure, which allows us to attain optimal utilization of the potentials of products which are intended for global sales. Lek leading market remains USA.

If we focus on regional market structure, the share of sales in the countries of the expanded European Union amounted to 38% of total sales.

Lek records majority of its sales in pharmaceutical products (prescription drugs and over the counter products), namely 92%, and 8% in other programs.

In Q1 2005 Lek invested 3.085 bn SIT, mainly in enhancing of the production facilities for the demandning pharmaceutical products.

The Business Center for Central and Eastern Europe, Southeast Europe and the Commonwealth of Independent States, Lek’s competency within Sandoz, recorded sales of USD 128.3 m, a growth rate of 16.2 percent in comparison with the same period previous year.

Lek’s leading markets in the Business Center are Poland, the Russian Federation and Slovenia – on its key markets Lek represents one of the leading generic pharmaceutical company. The highest growth was recorded in the Russian Federation and in Poland.

In Poland Lek consolidated its position among the leading suppliers of generic pharmaceuticals, in second place behind domestic firm Polpharma.

Future aspirations

The role, competencies and responsibilities of newly appointed Lek Board of Management – Janja Bratoš, Lek CEO, Marjan Novak, member and workers’ director, and Gottfried Rieser, member – remain unchanged. As part of the global organization, Lek supports Sandoz efforts towards becoming the world’s leading generic company. Lek Supervisory Board has given the Board of Management a mandate to expand the Board of Management with one or possibly two additional members.

Lek’s vision and strategy will be revised and aligned with the vision and strategy of Sandoz – to become the world’s generic leader. Lek key orientations include:

- developing Lek as a center of excellence
- strengthening Lek development of pharmaceutical products with our own pharmaceutical ingredients
- developing Lek as a competence manufacturing center
- consolidating our position in the markets of CEE/CIS/SEE

“Lek employees and management have proved with our knowledge and experience that we are capable of being a part of a leading global generic supplier. The management of both Novartis and Sandoz have shown us respect and appreciation for the results we have achieved, and more importantly for our ability to preserve a sound basis for future operations. At the same time we have to be aware that Lek has to stay competitive in the future, as well. Partly we have to insure this internally by achieving efficacy and successfulness. Partly this has to be insured by the environment in which we operate. Only in this way we can stay globally competitive in the long run,” said Lek CEO Janja Bratoš.

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  Lek, a new Sandoz company, is an international pharmaceutical company which operates as a business center on the markets of Central and Eastern Europe, Southeastern Europe and the CIS region, and also markets its products successfully on the US market, in the EU and elsewhere around the world. Lek creates value through the development, manufacturing and sales of pharmaceutical products, active pharmaceutical ingredients and biopharmaceutical products. Lek employs about 4,186 people in various regions and achieved total sales of USD 746.5 million in 2004. For further information please consult http://www.lek.si

Sandoz, a Novartis company, is a leading global supplier of high-quality generic pharmaceuticals. Headquartered in Vienna, Austria, Sandoz is a Retail Generics company operating also two Business Units with specific strategic focus – Industrial Products and Biopharmaceuticals. In 2004, Sandoz achieved sales of USD 3.045 billion, employs about 13,400 people and operate in over 120 countries around the world.

Novartis AG (NYSE: NVS) is a world leader in pharmaceuticals and consumer health. In 2004, the Group’s business achieved sales of USD 28.2 billion and a net income of USD 5.8 billion. The Group invested approximately USD 4.2 billion in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ about 81,400 people and operate in over 140 countries around the world. For further information, please consult http://www.novartis.com