Recordati: Positive first nine months 2003 results. Good performance of the pharmaceutical business both in Italy and abroad.

Milan, 29 October 2003

Excluding non-recurring 2002 sales, pharmaceutical sales were up 4.6% and lercanidipine sales up 20.1%

The Board of Directors of Recordati S.p.A. examined the Group's consolidated results for the first nine months of 2003.

First nine months financial highlights

• Consolidated net sales were € 356.6 million compared to € 364.8 million during the same period of last year. The decrease is to be attributed entirely to the pharmaceutical chemicals business which has been earmarked for disposal. Pharmaceutical sales were € 308.0 million, a slight increase of 0.4% over the preceding year. An increase in volumes more than compensated for the negative price effect worth over € 13 million, and the 2002 income from lercanidipine sales to Forest Laboratories which did not recur this year. Excluding this income which totaled € 12.5 million (inclusive of a $ 3 million down payment), pharmaceutical sales increased by 4.6% and lercanidipine sales by 20.1%.
• Pharmaceutical chemicals sales went from € 57.9 million to € 48.6 million due to a negative volume effect, following the decision to reduce our presence in the market for certain intermediates for antibiotics, as well as to a negative price/currency effect. Sales volumes of active pharmaceutical ingredients for the generics market increased considerably.
• EBITDA, at 21.5% of sales, went from € 87.9 million in the first nine months of 2002 to € 76.8 million, a decrease of 12.7%. The pharmaceutical business generated EBITDA of € 72.2 million, or a 23.4% margin on sales, an improvement over the first two quarters of this year. The comparison with the 2002 first nine months result (-6.1%) is affected by the € 10 million margin realized on non-recurring lercanidipine revenue from Forest Laboratories in that period. Excluding this effect pharmaceutical EBITDA grew by 8%. This was possible thanks to the considerable increase in sales volumes and the favorable product mix which also contributed to absorb the negative price effect. EBITDA generated by pharmaceutical chemicals decreased significantly mainly as a result of the negative currency effect due to the strength of the euro versus the dollar.
• EBIT, at 15.7% of sales, was € 56.0 million and net income at 8.4% of sales was € 30.0 million, both in line with this year's preceding quarters. The decrease, when compared to the same period of last year, was due to the lower profitability of the pharmaceutical chemicals business.
• The Group's financial structure improved over year-end 2002 due to cash flow generated during the period in excess of capital investments and the dividends paid. Net financial indebtedness at September 30 2003 decreased to € 33.6 million and shareholders' equity was € 234.3 million.

During the first nine months

• The Mutual Recognition Procedure for the approval of the new 20mg dosage form of lercanidipine in European Union countries was successfully completed. This new formulation provides therapeutic convenience in a single once daily administration to those patients who, on account of the severity of their hypertensive condition, require a higher daily dose, thus increasing compliance. The approval was granted by all 12 countries where it was requested, including Germany, Italy and Spain. In France approval was already obtained through a national application procedure. In Ireland an equivalent national procedure applies. The approval of the 20mg form was also obtained in Australia.
• During the period this new 20mg formulation of lercanidipine was launched in Germany and in France and it is expected to be on the market in other European countries and in Australia within the first quarter of 2004.
• As regards the status of lercanidipine in the U.S., we are actively working with Forest Laboratories, our licensee for the U.S. market, to identify the best modified release formulation possible to meet the FDA's further requirements which were stated after the receipt of an approvable letter in August 2002 and to develop a competitive product for the U.S. market.
• In September a license agreement was signed with the Spanish pharmaceutical company Grupo Uriach for the marketing and sale in Spain of Alergoliber® (rupatadine), a latest generation systemic antihistamine indicated for the treatment of allergies.
• Regarding our research in the area of urology, we are proceeding with the development of the 5HT1A receptor antagonists program for the treatment of unstable bladder, which was being carried out by us in collaboration with Pharmacia, and have started the preparation of the proof-of-concept clinical program. During the two years we have been working together with Pharmacia the programs progressed and positive results were obtained, including the identification of a first candidate. After its acquisition of Pharmacia, Pfizer decided, for reasons connected with its own research activities, not to continue the co-development of this program. Recordati therefore regained full possession of all of its rights as well as all documentation and data produced under the collaboration agreement.
• Also in this area, encouraging results were obtained in the pursuit of two new discovery lines for novel compounds with potential for the treatment of urination disorders.
• 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 first quarter 2004. The investment bank Merrill Lynch is assisting Recordati in this process.

Comment on operations

"Our performance in the first nine months of 2003, which is in line with our expectations, is an example of how our pharmaceutical business is able to react to external difficulties such as the price cuts in Italy and also compensate for the absence of lercanidipine supplies to the U.S." declared Giovanni Recordati, Chairman and CEO. "The group is currently further focusing its activity and in the future it will concentrate all its resources on the pharmaceutical business in order that it may grow and become progressively more competitive. We confirm our year-end targets as already disclosed".

Today 29 October, at 4:30 pm Italian time (3:30 pm London time and 10:30 am New York time), Recordati will be hosting a conference call to discuss the first nine months 2003 results included herewith. Dial-in numbers are:

Italy +39 02 802 09 11
U.K. +44 208 7929 750
U.S.A. +1 866 2396 425
France +33 170 700 532
Germany +49 69 2222 2225

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.