Sustainability Report 2014 Lek d.d.

17 1.3.3.4 Prevalje site At the Prevalje site, we manufacture a broad-spectrum anti- biotic, one of Lek’s and Sandoz’s leading products. It is ma- nufactured in the form of tablets or powders for oral suspen- sions, and in the form of mixtures and granules, sold in more than 60 countries. In 2014, the growth of production volumes continued. The tablet production grew by nearly 35%, in comparison with the previous year, and for the first time ever we exceeded the annual production of half a billion tablets. The production of finished products grew by 20%. The difference between the growth in the production of intermediates and finished pro- ducts is primarily a result of contracts through public tenders for which we packaged a large part of the tablets manufac- tured in the form of the so called "hospital packs" that are typically five-times our normal packaging sizes. There was also a high growth in the production of mixtures and finished granulates while the production of powders for oral suspen- sions was slightly behind the results from the previous year. Energy consumption increased by 2.2%. For 2015, we expect again high growth in production volumes. Meeting high standards of quality and the awareness of the importance of safety at work and environmental protection was also confirmed by numerous audits by customers and official government inspections among which the inspection by the American Food and Drug Agency (FDA) was particu- larly successful. 1.3.3.5 Lek sites are also utilized by tenants of business premises. Their environmental management is defined in tenancy agreements. A separate article requires them to comply with Lek’s officially published and adopted internal regulations related to appropriate and safe use of business premises, including issues such as health, safety and the environment. For tenants, uniform HSE standards apply, according to the principle guest - host, for which the HSE unit provides consulting services and periodical monitoring (see also item Organization, human resources and education in the field of health, safety and the environment). Tenants are responsi- ble for the legality of their environmental management. A year of exceeding achievements "For the Prevalje site, year 2014 was a record year in all aspects. Good results were achieved with the awareness of the importance of quality, occupational safety and good customer service. The basis for our achievements are, however, excellent cooperation between organizational units at the site, support of other Lek sites, Kundl and Les Franqueses sites and Lek’s central functions." Zlatko Ajd, site Head Prevalje 1.3.4 Highlights and milestones of Lek’s operations in 2014 For Lek, a Sandoz company, the year 2014 has been assessed as successful despite challenging business cir- cumstances in the markets where we operate. • We are consolidating our position as the leading Sandoz Development Center . We developed 27 novel products for the most demanding global markets, in total 80 new products over the last three years. The majority of the newly developed products were launched to markets in Europe, Canada, Australia, USA and Japan. At the end of the year, more than 280 development projects were under way in the Sandoz Development Center Slovenia. Their com- plexity is increasing in line with the company’s strategy. • We are a key Sandoz location for introducing new products . Nearly 700 new launches to global markets were executed from Slovenia, accounting for 33% of all Sandoz new launches. • The production volume has been increasing at all of our sites across Slovenia (in Ljubljana, Menge‰, Lendava, Prevalje). Products manufactured in Slovenia, are marketed via the Sandoz global sales network in 160 countries across the world. • Despite increasingly harsh economic conditions, Novartis also continued its investments in Slovenia and has invested nearly EUR 1.6 billion in Slovenia over twelve years . More than half of these funds were dedicated to development. We also invested in mod- ernization and expansion of production capacity. • In May, our Ljubljana Steriles unit achieved an important milestone. Commencement of regular production of lyophilized vials in the state-of-the-art facility Vials 2 enabled a doubling of the annual production of lyophilized vials. • Also in May, we opened two new packaging li- nes at the Lendava packaging center and thereby considerably increased the capacity and responsive- ness to market needs. In September we started to build a high-bay warehouse. • In June we opened new laboratories for quality control of products with bioanalytical methods at Biopharmaceuticals Menge‰ where biological activity of all Sandoz biosimilars will be tested. The new laboratories are a positive enhancement and recogni- tion for the site as they will support the entire Sandoz Biopharmaceuticals in releasing products on the market. Company Profile