Lek d.d. Business Results in the first nine months of 2005

Lek, a Sandoz company, recorded USD 498 m sales in the first nine months of this year resulting in 4.1-percent growth in comparison with the same period in the previous year. The share of Lek’s sales in Sandoz sales is 15.4%.

Western Europe, the USA and overseas countries accounted for 37.5% of total sales, Central and Eastern Europe and the CIS accounted for 51%, and the Slovene market 11.5%. 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. The USA remains Lek’s leading market.

If we focus on regional market structure, the share of sales in the countries of the expanded European Union amounted to 35.4% of total sales.

Lek records the majority of its sales in pharmaceutical products (prescription drugs and over the counter products), namely 91.7%. Other programs within Lek make up 8.3% of Lek’s total sales. However, since beginning of the year 2005 they no longer include animal health products, as they were transferred to Novartis.

The markets of Central and Eastern Europe, Southeast Europe and the Commonwealth of Independent States recorded in the first nine months of 2005 sales of USD 306.9 m, a growth rate of 10 percent in comparison with the same period in the previous year.

On its traditional markets, Poland, the Russian Federation and Slovenia, Lek is one of the leading generic pharmaceutical companies. The highest growth was recorded in the Russian Federation.

Lek d.d.‘s investments into research and development activities has a growth rate of 8.10 percent in comparison with the same period in the previous year and has amounted to 10% of turnover in first nine months of this year.

In the first nine months of 2005, Lek invested SIT 9.396 bn, enhancing of production facilities for demanding pharmaceutical products. On Friday, October 21, Lek will thus open a new plant for the manufacture of hypolipemic drugs in Mengeš. This new facility will be an important link in the chain of Sandoz’s manufacturing capacities for global manufacture of active ingredients. With this new plant, Lek is implementing the strategy of the Mengeš site, as the plant will constitute an important manufacturing centre for selected global active ingredients within the framework of Sandoz.

***

Lek, a Sandoz company, is one of the pillars of leading world generics company Sandoz. It operates as a global development center for products and technologies, as a global manufacturing center for active pharmaceutical ingredients and medicines, as a competence center for the development of vertically integrated products, as a Sandoz competence center in the field of development and manufacturing of biopharmaceutical products and as a supply center for the markets of CEE, SEE and CIS, sales Slovenia and sales services for Sandoz’s global markets. Lek d.d. employs about 3,037 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 Division of the Novartis group, is a world leader in generic pharmaceuticals. Sandoz develops and markets a wide variety of active ingredients and finished products, including biopharmaceuticals and anti-infectives. Since June 2005 Hexal AG, Germany, and since July 2005, EonLabs Inc. U.S., are part of Sandoz. In 2004, Sandoz employed around 13,400 people worldwide and posted sales of USD 3.0 billion. The combined businesses had pro forma 2004 sales of USD 5.1 billion and more than 20,000 employees.

Novartis AG (NYSE: NVS) is a world leader in pharmaceuticals and consumer health. In 2004, the Group’s businesses achieved net sales of USD 28.2 billion and pro forma net income of USD 5.6 billion. The Group invested approximately USD 4.1 billion in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ about 91,700 people and operate in over 140 countries around the world. For further information please consult http://www.novartis.com.

This press release contains statements and conclusions based on projections of Lek’s future business operations. These estimates are derived from the best information currently available. In case these forecasts prove unreliable, the actual results could prove different from those projected.