Sustainability Report 2014 Lek d.d.

Company Profile Sustainability Report 2014 – Lek d.d. 4 1.1 Letter from the President of the Board of Management 3 3 GRI Disclosure G4-1 Success comes in different forms. At Lek, a Sandoz com- pany, it is based on exceptional knowledge and experi- ence as well as an inclusive attitude towards our stake- holders. In year 2014, a strong spirit of cooperation and tight bonds between the associates at Lek, Sandoz and Novartis pervaded. With the same enthusiasm we were building on mutual cooperation with stakeholders in our external environment, especially with patient groups and local communities. Exceptional knowledge and experi- ence have enabled us to consolidate the role of the largest development center within Sandoz. In many areas we achieved record production volumes and continued investments in expansion and modernization of production capacity. In Ljubljana we completed the Vials 2 project and doubled our annual production of lyophilized units. At Biophar- maceuticals Menge‰ we opened new Quality Control laboratories in which the testing of biological activity for all Sandoz biosimilars will be performed. They will also support the release of products on the market for the entire Sandoz Biopharmaceuticals. In Lendava we started the construction of a high-bay warehouse and in Menge‰ continued the construction of the facility for the manufac- ture of everolimus which is the basic active ingredient for one of the key Novartis products. Multiannual continuous investment enabled us to increase the production volume at all sites. The overall volume was 20% higher compared with the previous year. We realized net sales revenue in the amount of EUR 761.3 million, a 2% increase over the previous year. For the first time in its history, our Ljubljana Solids site exceeded its production total of 7 billion units. Continued growth of production volume is expected also in 2015. Increased production also brings an increased consump- tion of natural resources and energy sources which is reflected in our absolute consumption the growth of which is, however, far behind the production growth. At Lek, a Sandoz company, we are trying to limit the impact on the environment to the lowest possible level by installing the most advanced and environmentally least harmful equipment as well as by a number of environmental projects. We have invested EUR 2.9 million in several environment protection related projects. With implemented projects aimed at energy efficiency improvement we saved 34.2 TJ of energy. At the forefront was the Prevalje site where with one major and several smaller projects we reduced energy consumption for this site for as much as 20.5 TJ per year. By introducing a system for exploiting waste gas from a steam boiler we generated major savings in natural gas consumption. In Menge‰, a new steam boiler with im- proved thermal efficiency was put in operation. At the Lendava site we continued the redirection of the outflow of used cooling water into the Mura river and we invested into technological equipment for the regeneration of waste reagent. In Ljubljana, we renovated and additionally isolated the facade of the tablet production facility. Our efforts to reduce environmental impacts reflected also in the improvement of all Lek’s key performance indicators. In one year, we reduced VOC emissions by 34% per tonne of product and improved energy efficiency by 15%. The water use efficiency is better than in the previous year by 10% and the efficiency of discarded waste also by 10% (t of waste/t of product). Our consistent care for the environment and meeting high quality standards was also confirmed by numerous audits by customers and official government inspec- tions among which the inspection by the American Food and Drug Agency (FDA) was particularly demanding and successful. As I have already pointed out, all these would not have been possible without the exceptional knowledge, talent and experience of our associates. We are pleased to have once again extended the full Family Friendly Certificate that reflects our desire to create a work environment which contributes to a better work-life integration. We continued our targeted and systematic investment in development, education and training of our employees Dear associates, partners and stakeholders!