Sustainability Report 2013 Lek d.d.

Company Profile Sustainability Report 2013 – Lek d.d. 8 Dear readers, dear shareholders of Lek, a Sandoz company, A strategy should not only inspire, it should also be rea- listic. This report demonstrates that the strategy of our corporate responsibility for 2014 has solid foundations. It focuses on increasing access to affordable, high-qua- lity health care for patients in developing and developed countries. The focus of our corporate responsibility is fully aligned with our mission in which accessibility is core. Translated into the language of different business func- tions and in the language of our culture, the new strategy primarily means the following: environmental integration; innovation; knowledge; flexible, lean and technologically advanced production; efficient and improved products; rational consumption of energy and materials; and a safe, encouraging and healthy work environment. In order to achieve all of the above, one year is not enough. The foundations for these accomplishments should be built earlier and for Lek, a Sandoz company, this is clearly true. But despite good intentions, it is particularly challenging to contribute to greater acces- sibility in the economic situation in which Slovenia has found itself. However, even in these circumstances our targets were highly development-oriented. Return on inputs. The efforts made throughout the extremely tough year of 2013 have paid off. We increased our production output by 2% and with hard work achieved more than EUR 745 million net sales revenues, a 13% increase over the previous year. The revenue and volume growth resulted in positive de- velopments in many areas at all production sites. I would particularly like to mention that we remained a stable and safe employer and created new jobs. We employed 285 new associates, the majority in biopharmaceuticals and production, thereby increasing our workforce by 7%. We became the most desired employer in Slovenia, con- tinued to hold the Family Friendly Company certificate and for the eleventh year in a row received an award for outstanding investment in employee education. By exten- ding the Be Healthy initiative and a range of preventative programs, we strived to maintain and improve the health and wellbeing of our associates. Yes, we are well aware that high-quality and satisfied hu- man resources are of key importance to our competiti- veness in the pharmaceutical industry. A clear indication of how valuable their contribution is, among a number of Sandoz and Novartis team and individual recognitions, are two high awards for outstanding research achie- vement in biotechnology and comparative genomics for targeted industrial strain improvements and in organic chemistry for a major, more sustainable improvement by introducing ß -borylation of a wide range of organic mole- cules in a water medium. Strategic element at Sandoz and Novartis. In 2013, Lek, a Sandoz company, strengthened its position as a leading development center and one of the leading production cen- ters within Sandoz. By acquiring the position of the leading company in introducing new products into production, we finally proved our openness to innovation and the ability to transfer research results into production. The Menge‰ site became Sandoz’s competence center for the development of biopharmaceutical products, which is of special signifi- cance due to the complexity of this area and its prospects for development. In the domestic market we were, along with products from other Novartis divisions, the leading sup- plier of medicines and number one in the OTC products segment. We were the first to offer patients a generic nasal spray with the active ingredient mometasone, developed in Ljubljana. Here we built our second Quality Control Cen- ter, and the site also houses the Regulatory Competence Center SND for Southeast Europe and the most productive Sandoz packaging center for solid dosage forms in the re- gion. The Lendava Packaging Center, a strategic packaging production site for Sandoz, was also the fastest growing Sandoz production facility in 2013. The Prevalje site is among the most modern Novartis plants and manufac- tures one of the best-selling Sandoz products. On the occa- sion of its 35 th anniversary, we organized an Open Door Day for the local population, our partners and development partners. Long-term performance of the company. At Lek, a Sandoz company, we conceive of long-term performance as economic growth, supported by a positive social im- pact and further steps towards an even greater reduction in environmental impacts. Development and production require not only knowledge, but also raw materials and energy resources;they produce waste and emissions to the water and air. 1.2 Letter from the President of the Board of Management 7 7 GRI Disclosure G4-1