Recordati: positive first quarter 2008 results, sales and income increase

• Consolidated revenue € 171.9 million, + 5.2%.
• Pharmaceutical revenue € 163.4 million, + 6.3%.
• International sales € 116.7 million, + 9.3%.
• Operating income € 38.1 million, + 2.9%.
• Net income € 25.3 million, + 7.4%.
• Net financial position*:  net debt of € 74.1 million.
• Acquisition of FIC and FIC Médical.
• MRP for approval of lercanidipine+enalapril fixed combination in Europe completed.

Milan, 6 May 2008 - The Board of Directors of Recordati S.p.A. approved the Group’s consolidated results for the first quarter 2008 prepared in accordance with International Accounting Standards and International Financial Reporting Standards (IAS/IFRS) and in particular as per IAS 34 requirements for interim reporting.

First nine months financial highlights

• In the first quarter 2008 consolidated revenue is € 171.9 million, an increase of 5.2% over the same period of the preceding year.  Pharmaceutical sales are € 163.4 million, an increase of 6.3% and include the Orphan Europe group of companies acquired at the end of 2007. The growth is to be attributed to international sales which are up 12.3% while sales in Italy are down by 4.1% mainly due to a negative price effect. Pharmaceutical chemicals sales are € 8.5 million, down by 12.9%. 

• Operating income, at 22.2% of sales, is € 38.1 million, an increase of 2.9% over the first quarter of the preceding year.  Gross margin continues to improve and now stands at 67.6% of sales due to a favourable product mix.

• Net income is € 25.3 million, an increase of 7.4% more than the increase in operating income due to an improved tax rate.

• The net financial position* at 31 March 2008 is a net debt of € 74.1 million, a reduction of € 23.0 million as compared to the net debt position at 31 December 2007 due to cash flow generated by operations which more than offset the investments made in the period.  Shareholders’ equity further improved and is € 412.8 million.   

* Cash and short-term financial investments net of bank overdrafts and medium/long-term loans which include the measurement at fair value of hedging derivatives (fair value hedge).

Business development news

• During January an exclusive license agreement was signed with a subsidiary of Watson Pharmaceuticals, Inc. a U.S. pharmaceutical company, for the marketing and sale in 29 European countries of Kentera®, a bi-weekly oxybutynin transdermal patch indicated for the symptomatic treatment of urge incontinence and/or increased urinary frequency and urgency as may occur in patients.  Kentera® is on the market in a number of countries with current annual sales of over € 7 million. The acquisition of Kentera® reinforces Recordati’s focus in the urology area where it is developing silodosin, indicated for the treatment of benign prostate hypertrophy, due for filing in Europe in the second half of 2008.

• In February a semi-exclusive licensing agreement was entered into with Menarini, the leading Italian pharmaceutical group, for the marketing and sales of frovatriptan, a medicine belonging to the triptan group of drugs indicated for the acute treatment of migraine attacks with or without aura, in France and Greece. Frovatriptan is a selective 5HT1B/1D receptor agonist. Frovatriptan is distinguished from other triptans by its long half-life (26 hours) which ensures long-lasting clinical efficacy and reduces the recurrence rate of migraine attacks. The product is already approved in the licensed markets and is sold there by Menarini under a different brand. Recordati intends to launch its own brand in these countries in the next few months.

• Also in February the approval of Zan-Extra®, a fixed combination of lercanidipine and enalapril indicated for the treatment of hypertension, was obtained in Australia. The Therapeutic Goods Administration (TGA) notified licensee Solvay Biosciences of its decision to approve the registration of Zan-Extra® in its two dosage forms containing lercanidipine 10mg/enalapril 10mg and lercanidipine 10mg/enalapril 20mg.  The launch in Australia of this new product originated by Recordati is planned to take place in May.

• In March the French companies FIC and FIC Médical which are dedicated to the registration and the promotion of pharmaceutical products on behalf of third party companies in Russia and other Commonwealth of Independent States (C.I.S.) countries were acquired.  FIC Médical, headquartered in Paris, is present in Russia, Ukraine, Belarus, Kazakhstan and Georgia, and is planning to enter Armenia and Azerbaijan.  The company’s business is carried out by around 200 people, of which 150 are medical representatives.  The price of the acquisition is € 12 million, of which € 9 million were paid upon signing the agreement while € 3 million are due over a period of three years contingent upon certain conditions.  FIC Médical’s organization will be the base upon which Recordati will develop its own presence in Russia and in the C.I.S. markets, driven, among others, by the enhancement of the product portfolio through the launch of its new original products.

• Also in March the mutual recognition process for the approval throughout the European Union, in Norway and in Iceland, of its new antihypertensive specialty based on a fixed combination of lercanidipine and enalapril was completed.  Germany acted as Reference Member State and the 28 Concerned Member States decided to recognize the approval granted in 2006 by the German medicines agency (BfArM) of this new product in its two dosage forms containing lercanidipine 10mg/enalapril 10mg and lercanidipine 10mg/enalapril 20mg.  The product is already on the market in Germany as from 2007 and sales are growing. Launches in all these countries, in which lercanidipine has already obtained the physicians’ appreciation,  will initiate gradually as from the second half of the year.

Subsequent events

• In April Orphan Europe (a Recordati group company) submitted an Original New Drug Application (NDA) for Carbaglu® (carglumic acid) to the U.S. FDA.  The NDA provides for the safe and effective use of Carbaglu® in the treatment of hyperammonaemia due to an autosomal genetic disorder resulting in the deficiency of the liver enzyme N-acetylglutamate synthase (NAGS deficiency).

• Also in April two financing agreements were finalized with Italian and international banks of high standing.  The two contracts provide for two revolving lines of credit for a period of two years and for an amount of € 50 million each. The interest rate agreed is the Euribor for the draw down period plus 40 basis points.  These lines of credit include covenants which are in line with those already included in our current loan agreements.

Conference call

Recordati will be hosting a conference call today 6 May 2008 at 4.00 pm Italian time (3.00 pm London time, 10.00 am New York time).  Dial-in numbers are:

Italy   +39 02 802 09 11
UK   +44 208 7929 750
USA   +1 866 2396 425
France   +33 170 700 532
Germany  +49 69 2222 2225

A set of slides which will be referred to during the call will be available on our website www.recordati.com under Investors/Company Presentations.

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 (Real Audio file) 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 0003828271), dedicated to the research, development, manufacturing and marketing of pharmaceuticals, with headquarters in Milan, Italy, operations in the main European countries, and a total staff of over 2,400. A European field force of over 1,300 medical representatives promotes a wide range of innovative pharmaceuticals, both proprietary and under license, in a number of therapeutic areas including a specialized business dedicated to treatments for rare diseases. Recordati’s current and growing coverage of the European pharmaceutical market makes it a partner of choice for new product licenses from companies which do not have European marketing organizations.  Recordati is committed to the research of new drug entities within the cardiovascular and urogenital therapeutic areas in which its research team has proven scientific competence and a track record of discovery and development of original drugs, the most recent of which, lercanidipine, a latest generation calcium channel blocker for the treatment of hypertension, is the company’s leading product.  Consolidated revenue for 2007 was € 628.4 million, operating income was € 131.5 million and net income was € 84.9 million.

For further information:

Recordati website:  www.recordati.com

Statements contained in this release, other than historical facts, are "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements are based on currently available information, on current best estimates, and on assumptions believed to be reasonable. This information, these estimates and assumptions may prove to be incomplete or erroneous, and involve numerous risks and uncertainties, beyond the Company’s control. Hence, actual results may differ materially from those expressed or implied by such forward-looking statements. All mentions and descriptions of Recordati products are intended solely as information on the general nature of the company’s activities and are not intended to indicate the advisability of administering any product in any particular instance.

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