Sustainability Report 2010 Lek d.d.

Letter from fhe President of the Board of Management 6 Letter from fhe President of the Board of Management Dear Reader, The present Report is an upgrade, in both scope and substance, to all the previous reports compiled by Lek Pharmaceuticals to provide its key stakeholders an overview of environ- mental, economical and societal impacts of its operations. When compiling the report, we followed the Novartis' common strategy of the four corporate citizenship pillars, which are comprehensive sets of our sustainable development concept: patients, business manage- ment, people and community as well as concern for natural environment. At Lek, a Sandoz company, these are viewed as the pillars supporting all of the company’s plans and their implementation. Reporting of measurable results first requires strategic planning and day-to-day implemen- tation of the set objectives. In addition to comprehensive and strictly controlled internal re- porting in accordance with the Responsible Care requirements, Lek has decided to publicly disclose the basic performance indicators in compliance with the EMAS Eco-Management Scheme and the GRI Guidelines. The company thereby enhances comparability between the impact of its operations and its corporate performance, while meeting Novartis’ and Sandoz’ firm commitment to sustainable development. In many aspects, Lek’s economic sustainability is a result of development capabilities, verti- cal organizational structure, and competencies. Despite the economic crisis, Lek has not recorded any significant drop in its sales revenues in the past two years. In 2010, sales revenues lagged by 2% behind the figure posted the year before. In 2009, developments in the global market caused the volume of orders to decline. However a gradual economic recovery and rebound could be seen in 2010. A number of production lines operated to their full capacity. The production of potassium clavulanate at the Lendava site posted record results, the high growth in API production continued, while growth was recorded in the manufacture of sterile products. According to selected key indicators, our production facili- ties are among the highest-ranking at Sandoz, while the Prevalje site ranks at the very top. We introduced a number of new products and formulations, mainly for the highly developed markets of EU, Canada, USA, Japan, Brazil and others. In Slovenia, our domestic market, we increased our market share and consolidated our position in some of the major thera- peutic groups. We manifest our responsibility towards patients by providing novel, high quality and innova- tive generic and biosimilar medicinal products. In Lek’s two development centers, Ljubljana and Menge‰, approximately one quarter of all Sandoz’ global development activities in the field of standard generics and biopharmaceuticals take place. In terms of development, the year 2010 was a highly intensive one: we produced the first API of our own develop- ment for a biosimilar, launched 36 new products on some of the most demanding markets, while the number of development projects under way in our development centers exceeded 200. In addition to the research and development activities, we actively worked at raising awareness of certain patient groups, in particular the young population. To mention just one: on 5th May, World Asthma Day, in cooperation with contracting experts, we organized a training program on the significance of asthma management and held several breathing workshops. Business Ethics Principles, defined in the Novartis Code of Conduct, are integrated in our organizational culture. Knowledge of the Code of Conduct is consolidated through refresher courses. We are proud to recognize that the e-courses organized in 2010 were successfully completed by a great majority of Lek employees. In many aspects, employee satisfaction depends on work-life balance, which should be based on long-term solutions and a flexible system. Our endeavors to create an optimum working environment for our employees were strongly supported by the permanent Family Friendly Enterprise certificate we were among the first Slovenian companies to receive.