Recordati: Positive first nine months results: EBITDA +48.6%, net income +39.7%.

Milan, 13 November 2001

The Board of Directors of Recordati S.p.A. examined the Group's consolidated results for the first nine months of 2001.

Financial highlights for the first nine months

• Consolidated sales were € 308.9 million, up 25.5% over the same period of the preceding year (€ 246.0 million). The increase was due to organic growth (+7.0%) and to the consolidation of the companies acquired in 2000. Pharmaceutical sales grew significantly (+35.9%) while pharmaceutical chemical sales were down by 4.0%. Also consolidated as of the third quarter were the results of Sophartex, subsidiary of Bouchara-Recordati. International sales were € 186.3 million and represent 60.3% of total sales.
• Gross profit increased by 26.3% improving as a percentage of sales due to the higher proportion of pharmaceuticals on total business.
• EBITDA at 22.7% of sales grew from € 47.1 million to € 70.0 million (+48.6%) thanks to the increased profitability of the pharmaceuticals segment.
• Operating income at 14.6% of sales was € 45.0 million, growing by 48.9% over the same period of the preceding year. R&D expenses were below those recorded in the first nine months of 2000 due to the reduced clinical and regulatory expenditure related to the filing of lercanidipine in the U.S.A. and Canada. These expenses are now mostly borne by our licensees.
• Net income, at 7.6% of sales, went from € 16.9 million to € 23.6 million, an increase of 39.7%, less than that recorded for operating income due to reduced non-recurring gains.
• The group's financial structure improved significantly relative to 31 December 2000 thanks to operational cash flow generated during the period and to funds obtained from the conversion of savings shares into ordinary shares. Net equity reached € 198.8 million and net indebtedness as of 30 September 2001 was reduced to € 67.5 million.

In the third quarter

• Sales increased by 6.4%, EBITDA achieved a margin of 24.1% of sales (21.4% in 2000), net income at 6.3% of sales was € 6.0 million, up 27.9% over the same period of the preceding year.
• During July an agreement was reached with AstraZeneca for the transfer to Recordati of the registration and marketing rights in Italy to Lercadip® (lercanidipine). The product, which is currently sold by AstraZeneca, will become part of Recordati's product portfolio in December 2001.
• The documentation necessary for lercanidipine's U.S. New Drug Application (NDA) was completed in collaboration with our partner Forest Laboratories. The NDA was filed with the FDA on October 1, 2001. The FDA usually takes around one year to evaluate drug approval requests.

Comment on operations

"In the first nine months of 2001 the results obtained by our Group were very positive and activities aimed at sustaining growth and development continued" declared Giovanni Recordati, Chairman and CEO. "In particular Zanidip® (lercanidipine), our proprietary antihypertensive calcium channel blocker, continued to perform well internationally and is now sold in 31 countries, around 30% of the world market. In the third quarter the Group's profitability was satisfactory notwithstanding the seasonality of our product portfolio. For the whole year 2001, thanks also to the increased international profile of our business, we believe that the sales targets previously announced will be substantially met while we expect improved income from operations."

Stock Options, plans, awards, and relative capital increase

The Board of Directors approved both a new three-year stock option plan aimed at motivating group management, excluding top managers, as well as the modification of the current top management's plan, and, as per these plans, resolved to award options for the subscription or the purchase of a total of 448,000 ordinary shares with a nominal value of € 0.50 each. In order to service these options the Board approved a capital increase for a maximum nominal value of € 224,000. The options awarded under both plans can be exercised in tranches, which may be accumulated, at pre-established times but at the latest in May 2005.

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.