Lek ready for new challenges

21. 5. 1999

At the press conference on Friday 21. May 1999, the new Board of Management of Lek d.d., appointed on 21 April 1999, made an assessment of the macro-environment the company is operating in, as well as of the realistic business opportunities of Lek in the present and next year. The Board members pointed out that Lek is a future-oriented company responding to the changes in the extremely demanding and dynamic international environment; its organization and processes will therefore need to be adjusted according to evolving circumstances.

Adjustments of organization and processes for a successful response to the changes in the international environment

According to the Board’s assessment, the first quarter of this year was good despite certain negative effects from the macro-environment that will affect business operations in the present and next year.

The major problems are the continuing Russian crisis, the war in South-Eastern Europe, increasing problems with receivables in some key markets, and the recall of pharmaceutical products from the US market.

Due to the new circumstances, the Board of Management will update the economic plan for the year 1999, prepared at the time when some above mentioned factors still did not exist.

According to the Board’s estimate, the objectives set for 1999 cannot be attained. An estimated 7% lag in the planned objectives and sales volume is expected, which is 0.1% lower than last year. For the year 2000 Lek is planning sales by 14.3% higher than this year, which will help the company retain the sales growth rate of the past years.

The Board of Management adopted the guidelines for its future operations which will enable the company to respond to the new situation effectively, and mostly to achieve the objectives set for the year 2000.

In key markets Lek will consolidate its position through new approaches. Know-how in the fields of marketing, regulations and development will form a basis for its operations. With AmoksiklavŽ as its leading product Lek is starting to penetrate the EU market, thereby implementing the strategy according to which the European Union will be one of the five strategic markets in 2003.

Despite the difficulties connected with placing finished formulations in the US market Lek will intensify sales of active substances and repeat clinical studies and registration procedures for some of those products. This means that Lek does not intend to give up on the American market, which will remain one of Lek’s strategic markets.

Lek will increase its business performance through a systemic selection of the markets and products which will secure required profitability. The investments will be mainly used for development of new products and markets. We will endeavour to create a business culture and values which will inspire and motivate the employees to work and achieve more.

For the implementation of these measures the Board of Management considered it necessary to propose to the Annual General Meeting that no dividends are paid this year. This was summaried by Mr. Metod Dragonja, President of the Board of Management. “We believe that Lek must actively tackle factors present in a wider economic environment and that the employees as well as the owners should be involved in this. Only such participation will prepare the ground for the fulfilment of business plans we set for the year 2000 which should provide added value for both the employees and owners. The proposed measures represent, namely, a possibility for the consolidation of the company in the year 1999 and an investment in achieving better business results in the future".