Lek Business Results in 2006*

Lek d.d. (“Lek”) once again posted its highest sales figures in its pharmaceutical franchise (prescription medicines) at USD 719 m (EUR 573 m), in OTC medicines at USD 100 m (EUR 80 m), in active pharmaceutical ingredients at USD 57 m (EUR 46 m) and in others at USD 28 m (EUR 22 m).

Among sales regions, sales in Slovenia accounted for 9%, Central and Eastern Europe for 48%, Western Europe, and the USA and Overseas Countries accounted for 43% of total sales. Except on the domestic Slovenian market, where we faced a further decrease in prices, sales growth in all other regions was high. In the Russian Federation we recorded sales growth rates of 33.4 percent. The highest sales growth, 62%, was recorded in the markets of Western Europe, the USA and Overseas Countries. This growth was driven by new product launches from the Lek and Sandoz global product portfolio.

The leading product in 2006 was once again the antibiotic Amoxiclav, followed by Omeprazole, Ondansetron, Ketonal and Linex.

In 2006 Lek recorded strong profit growth, which is a result of sales growth, as well as a result of process improvement and optimization in the administration.

Investments in development

Lek’s investments in research and development activities are growing and reached USD 85.7 m (EUR 68.3 m) in 2006, which amounts to 9.5% of turnover.

At the Development Center Slovenia we develop products for the European Union, the USA and Canada, and in 2006 we added a number of development projects for Japan and Australia, thus achieving a high level of globalization.

The importance of Lek researchers to Novartis was acknowledged with a VIVA award – a Novartis award for outstanding scientific achievements – which was in 2006 given to Lek employees Dr. Anton Čopar and Rok Grahek, together with only two other scientists from Sandoz and 10 from other Novartis business units.

On September 28, 2006 we began construction of a Biopharmaceuticals Development Center, which will consolidate Lek and Sandoz’s leading position in the field of biopharmaceuticals. According to the plans, the construction of the building, with a total surface area of approximately 2,800 m2, is expected to be completed by the end of 2007. The value of the investment is USD 8.4 m (EUR 6.7 m). At the new development center, which will employ 100 experts from the fields of microbiology, biology, biochemistry, chemistry and pharmacy, Lek will develop and manufacture biopharmaceuticals for Sandoz’s global markets.

Capital Expenditures

In addition to the investments in production capacities which Lek concluded in 2006, it began an investment in the enlargement of production capacity at the Ljubljana site. The value of the project, which will increase production to 5 bn tablets per year, amounts to USD 14.7 m (EUR 11.7 m).

We have begun the construction of a quality center at the Ljubljana site; the value of the investment amounts to USD 6.6 m (EUR 5.3 m).

In 2006 investments were approved at USD 77 m (EUR 61.4 m).

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*All data published in this press release are preliminary, unaudited and according to Slovenian Accounting Standards.

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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 2,820 people and achieved total sales of USD 904 million in 2006. For further information please consult http://www.lek.si

Sandoz, a Division of the Novartis group, is a global leader in the field of generic pharmaceuticals, offering a wide array of high-quality, affordable products that are no longer protected by patents. Sandoz has a portfolio of more than 840 active substances in over 5 000 forms worldwide. Key product groups include antibiotics, treatments for central nervous system disorders, gastrointestinal medicines, cardiovascular treatments and hormone therapies. Sandoz develops, produces and markets these drugs along with pharmaceutical and biotechnological active substances and anti-infectives. In addition to the strong organic growth in recent years, Sandoz has made a series of acquisitions including Lek (Slovenia), Sabex (Canada), Hexal (Germany) and EonLabs (U.S.) and sells its products in more than 110 countries. In 2006, Sandoz employed around 21,000 people worldwide and posted sales of USD 6 billion.

Novartis AG (NYSE: NVS) is a world leader in offering medicines to protect health, cure disease and improve well-being. Our goal is to discover, develop and successfully market innovative products to treat patients, ease suffering and enhance the quality of life. Novartis is the only company with leadership positions in both patented and generic pharmaceuticals. We are strengthening our medicine-based portfolio, which is focused on strategic growth platforms in innovation-driven pharmaceuticals, high-quality and low-cost generics and leading self-medication OTC brands. In 2006, the Group’s businesses achieved net sales of USD 37.0 billion and net income of USD 7.2 billion. Approximately USD 5.4 billion was invested in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 101,000 people and operate in over 140 countries around the world. For more information, please visit http://www.novartis.com.

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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.