Recordati: First half 2003 results were positive and substantially in line with last year.

Milan, 31 July 2003

The Board of Directors of Recordati S.p.A. approved the Group's consolidated results for the first half of 2003.

First half financial highlights

• Consolidated net sales were € 247.2 million compared to € 254.0 million during the same period of last year. The decrease is to be attributed entirely to the pharmaceutical chemicals business. Pharmaceutical sales grew from € 211.2 million to € 213.9 million thanks to the increase in volumes which more than compensated for the negative price effect. Lercanidipine, Recordati's proprietary antihypertensive drug, contributed to this result with a growth of 8.8%, a growth rate which is even more significant (+16.9%) if the sales to our U.S. licensee Forest Laboratories are excluded from the 2002 comparison base. Pharmaceutical chemicals sales went from € 42.8 million to € 33.3 million mainly due to lower volumes, following the decision to progressively reduce our presence in the market for certain intermediates for antibiotics, and a negative currency effect.
• EBITDA, at 20.7% of sales, went from € 56.0 million to € 51.1 million. The pharmaceutical business maintained its profitability and generated EBITDA of € 47.6 million, a 22.3% margin on sales. This was possible thanks to the considerable increase in sales volumes and the favorable product mix which offset the negative price effect. EBITDA generated by pharmaceutical chemicals decreased significantly mainly as a result of the negative currency effect.
• EBIT, at 15.0% of sales, was € 37.1 million, in line with that of the same period of the preceding year.
• Net income at 8.0% of sales was € 19.9 million, a slight decrease as compared to the first half 2002.
• During the first half 210,786 own shares were purchased and at 30 June 2003 treasury stock stood at 1,199,666 shares.

Main operational events

• The development of lercanidipine, our proprietary antihypertensive drug, continued. The approval of the new 20mg presentation in European Union countries was obtained and the first launch took place in Germany during June.
• As regards the status of lercanidipine in the U.S., it was decided not to conduct the clinical trials required by the FDA (Food and Drug Administration) using the existing formulation of lercanidipine, but rather to develop a new modified release formulation which might better meet the FDA's requirements and may also provide additional patent protection and increased therapeutic advantages. We are actively working together with Forest to identify the best modified release formulation to satisfy these objectives and develop a competitive product for the U.S. market.
• Regarding our research in the area of urology, Pfizer, for reasons connected with its own research activities, decided not to continue the development of the 5HT1A receptor antagonists program for the treatment of unstable bladder which was being carried out in collaboration with Pharmacia (recently taken over by Pfizer). Recordati therefore regains full possession of all of its rights as well as all documentation and data produced under the collaboration agreement. During the two years we have been working together with Pharmacia the programs progressed and positive results were obtained, such as the identification of a candidate for proof-of-concept trials in humans, and it is our intention to go ahead with the next phases of development.
• In order to focus management and financial resources on the pharmaceutical business, the decision has been taken to dispose of the pharmaceutical chemicals business. This decision is likely to result in the partial or total sale of the pharmaceutical chemicals activities within the next six to nine months. The investment bank Merrill Lynch International is advising Recordati in this process.

Management comments

"During the first half of 2003 our pharmaceutical business performed well confirming its vitality" declared Giovanni Recordati, Chairman and CEO. "This business segment, on which we have decided to focus our resources, maintained the profitability levels achieved in 2002 and obtained increased sales volumes for all its main products, lercanidipine in particular. The pharmaceutical chemicals business, which is being disposed of, was penalized by the weak dollar and the low profitability of its biochemical plant. We expect these factors to continue during the second half of the year and this would have a negative overall impact of around € 7 to € 8 million on our estimated 2003 EBIT. On the other hand, we confirm our objectives for the pharmaceutical business. We expect that full year 2003 EBIT for the group" concluded Giovanni Recordati, "will be of around € 80 million."

Conference call

Recordati will be hosting a conference call today 31 July 2003 at 4:30 pm, Italian time. Dial-in numbers are:
Italy +39 02 802 09 11
UK +44 208 792 9750
USA +1 866 2396 425
Callers are invited to dial-in 10 minutes before conference time and ask for the Recordati conference call. If conference operator assistance is required during the connection please digit * followed by 0. A recording of the conference call will be placed on the website www.recordati.com .

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, Ireland, Portugal, Spain, Switzerland and the United States.

* Reclassified for comparison purposes
Pending completion of independent and statutory audits.