Sustainability Report 2013 Lek d.d.

Company Profile Sustainability Report 2013 – Lek d.d. 14 In order to meet all market needs for APIs, we started the construction of a new production plant in Menge‰, where the production of a new active ingredient is planned for 2015. Today, this site also successfully operates the Sandoz Bio- pharmaceuticals Development and Production Center, one of the most important biopharmaceutical development and production centers within Sandoz, a global leader in bios- imilars. In 2013 Biopharmaceuticals Menge‰ fully realized all production and development objectives. We have demonstra- ted that the process for manufacturing an active ingredient for a biosimilar product, as carried out in Menge‰, is stable and reproducible despite its high technological complexity. In parallel with a continually increasing sales market share, the Biopharmaceuticals Development Center Menge‰ has also increased its number of employees. In development activiti- es it is necessary to highlight that we deal not only with so- -called “early development activities” (e.g. development of cell lines, cell banks, and production processes), but have also achieved major success in the area of “late development”, including characterization of production processes and genetic characterization of cell banks. With this growing ran- ge of knowledge and experience we have been strengthening our role within Sandoz Biopharmaceuticals and within the entire Novartis Group. The Menge‰ site successfully passed all inspections in 2013. 1.3.3.3 Lendava site The Lendava site comprises the anti-infectives production unit and a packaging center. Lendava is the leading site for the manufacturing of potas- sium clavulanate in the Sandoz Group, the key ingredient of a broad-spectrum antibiotic, one of Lek’s and Sandoz’s leading products. At the Lendava site we also manufacture gentamycin sulphate. The manufacture is based on stand- ard biotechnology which is the result of the company’s own know-how. In 2013 we again achieved record production as a result of the modernization of technological equipment and process improvements. All market needs were met by increasing our competitiveness and capacities. Additional investment in production capacities and auxiliary infrastructure and several improvements to manufacturing processes resulted in lower production costs as well as improved energy and environmental efficiency. The site successfully passed all inspections. The Packaging Center Lendava (PCL), which is among the fastest growing Sandoz production plants and where the filling and packaging of pharmaceuticals takes place, supplies markets in more than 60 countries worldwide. In 2013 we signficantly increased our capacity with three new high-capacity packaging lines and nearly two billion tablets and capsules were packaged. The key strategic goal of the plant is to become the best Sandoz packaging plant provid- ing a high level of customer service. Another goal is to ef- fectively manage the complexity of packaging and to supply the generic pharmaceutical portfolio with high responsive- ness to volatile market needs and internal flexibility. The total investment in PCL exceeds EUR 35 million and for 2014 a production capacity of a further 12 packaging lines is planned. Through investments in warehouse and production capacities, we will further expand these capaci- ties in the future. This will consolidate our position as a strategic manufactur- ing site within the Sandoz global production network. The Lendava production plant is strengthening its position as one of the major business entities of the south-eastern region of Slovenia. The number of employees, mostly from surrounding localities, is still growing. 1.3.3.4 Prevalje Site At the Prevalje site, a production plant for penicillin pro- ducts, we manufacture a broad-spectrum antibiotic, one of Lek’s and Sandoz’s leading products. It is manufactured in the form of tablets or powders for oral suspensions, and in the form of mixtures and granules, intermediate products sold for further processing. For the Prevalje site, 2013 was very successful as produc- tion volumes, in comparison with previous years, increased again and achieved a record despite a minor incident at the site which resulted in a 14-day halt in production. We manufactured 416 million tablets (6% more than in 2012) and 13.6 million units of oral suspensions (a 4% increase over the previous year). We successfully passed all inspections and again proved our commitment to quality. We installed a new coating process drum and a device for regenerative thermal waste air oxidation. In 2014 further growth in production is expected, with vol- umes expected to grow by nearly 30% in comparison to 2013.