Good business results at the half-year

31. 8. 1999

Operating profit growth – Successful marketing of Lek’s top product – 30% sales growth in the largest export market

In the first half of the year 1999, the sales revenues of the pharmaceutical company Lek amounted to SIT24.2 billion, which exceeded the plan. By successfully optimizing costs and by increasing sales in other markets, Lek managed to a great extent to neutralize the effects of the Russian financial crisis on sales volume, the effects of the war in the South-Eastern Europe and temporary freezing of finished drug sales to the USA. The fact that Lek’s response to the environmental influences was a successful one, is confirmed by a comparison of sales with comparable pharmaceutical companies in this region, and with the same period last year.

“The Board of Management expects that the goals set for this year in the area of sales will be achieved and that the business volume of last year will be exceeded" says Mr. Dragonja, the President.

In the first half-year of 1999, Lek successfully improved operating profit by achieving a 22% growth in comparison with the same period last year. Net profit therefore amounted to SIT1.38 billion, with 56% of objectives being reached.

In the first half-year of 1999 Lek realized 28% sales in the domestic market, and 72% abroad. The best results were achieved in Poland, Lek’s largest export market, where a 30% growth was attained compared with the same period last year. In the first half-year of 1999 the sales augmented in other markets as well. This results from successful marketing of Lek’s top product Amoksiklav. It is marketed in more than 30 countries. Its share of Lek’s total sales amounts to 19.2%, while in the first half of 1999 it reached a 29% growth compared with last year.

Sales of pharmaceutical products are Lek’s leading programme with 81.6% of total sales realized in the first half of the year. Next comes the OTC programme, Animal Health programme, Cosmetics and Medical Devices; Animal Health and Diagnostics surpassed the yearly sales plan dynamics.

In the second half-year Lek will focus on the implementation of the cost optimization programme. After complications with the FDA, when three finished drugs were recalled from the US market last March, Lek is now endeavouring to re-obtain the marketing authorization for these products. They planned to come back to the US market in 2000. The sales of finished drugs in the USA remains Lek’s strategic challenge. Bearing in mind previous experiences, Lek is adjusting its systems and complementing its strategy of coming on this market. Several strategic and operational development projects are under way, aimed at obtaining products and sales sources for the year 2000 and afterwards.