Recordati: First half 2001 results show futher growth. EBITDA +68.2%. International pharmaceutical the driving force.

Milan, 1 August 2001

The Board of Directors of Recordati S.p.A. approved the Group's consolidated results for the first half and second quarter of 2001.

First half financial highlights

• Consolidated net sales were 413.7 billion lire, up 36.4% over the same period of 2000, 11.1% of which due to organic growth and 25.3% to the Bouchara companies' results, consolidated as from 1 July 2000. Pharmaceutical sales at 326.3 billion lire, were up 50.3%. International pharmaceutical sales grew significantly, up 141.7% and represent more than half this segment's sales. Sales of pharmaceutical chemicals at 87.5 billion lire grew by 1.5%. Total international sales increased by 66.2% and represent 59.4% of total sales.
• Gross profit at 244.5 billion lire increased by 39.7% and improved its percentage on sales from 57.7% to 59.1%.
• EBITDA was 22.0% of sales, increasing by 68.2% to 91.1 billion lire thanks to the improved profitability of the pharmaceuticals segment. Pharmaceuticals EBITDA grew by 108.9% and now stands at 21.3% of sales (15.3% in the first half of 2000). The pharmaceutical chemicals segment maintains its good level of profitability.
• Operating income at 14.5% of sales amounts to 60.0 billion lire, an increase of 64.8% over the first half of last year.
• Net income increased by 44.3% to 34.0 billion lire (8.2% of sales). Excluding non-recurring gains realized during the first half of 2000 the increase was of 68.9%.

The group's financial structure improved significantly thanks to operational cash flow generated during the period and to funds obtained from the conversion of savings shares into ordinary shares in the amount of 43.7 million euros. Net indebtedness as of 30 June 2001 was reduced from 250.2 billion lire to 132.3 billion lire, while net equity reached 373.0 billion lire and currently finances 73.8% of capital employed.

Main operational events

• Zanidip®, Recordati's proprietary calcium channel blocker, was launched in France, Argentina and Hong Kong. Marketing approval was obtained in Australia where a licensing agreement was signed with Solvay who plan to launch the product within the end of 2001. An important agreement was entered into with Fournier Pharma for its registration and sale in Canada. Fournier expects to file for approval by the end of this year. Zanidip® was also licensed out for the Mexican market to Laboratorios Sanfer. Regulatory activity, in collaboration with our licensee Forest Laboratories, continued with the objective of filing the registration with the FDA in the second half 2001. As of 30 June lercanidipine has been approved in 33 countries and is under approval in a further 40. Licensing agreements currently in place cover almost the entire world pharmaceutical market. In Italy Zanedip® is the third calcium channel blocker on the market; in Spain the product maintains its strong growth, while in France initial sales are very encouraging. In Germany, where the product was launched eight months ago, lercanidipine has already reached a market share of over 2%.
• An important clinical study involving over 800 elderly hypertensive patients was completed. Results showed that lipophilic calcium channel blockers, and so lercanidipine, while just as efficacious, cause less leg edema, less leg swelling and less drop-outs due to any adverse event or to leg edema than the leading non-lipophilic calcium channel blocker amlodipine.
• Regarding the research and development alliance with Pharmacia, a number of new molecules have been synthesized and tested in order to identify candidates for potential drugs for the treatment of overactive bladder and urinary incontinence.
• The reorganization of the companies acquired in France is being finalized. The marketing organization was reinforced and a leaner central operation was implemented to create synergies and cost savings.

Comment on operations
"During the first half of 2001 - declared Giovanni Recordati, Chairman and CEO - we were able to confirm further growth of profitability and further expansion of our international pharmaceutical operations. Sales of lercanidipine in Germany and France, two key markets where the product was recently launched, confirm its market potential and further success possibility. Thanks to the good operational results, the improving performance of Zanidip® on international markets and the strong performance of our main products, we expect to be able to confirm the positive results obtained during the first half for the full year 2001."

Recordati, established in 1926, is a European pharmaceutical group, listed on the Italian Stock Exchange (Reuters RECI.MI, Bloomberg REC IM, ISIN IT 0003074447), dedicated to the research, development, manufacturing and marketing of pharmaceuticals and pharmaceutical chemicals, with headquarters in Milan, Italy and operating subsidiaries in France, Portugal, Spain, Switzerland and the United States.