Comment to information given to mass media


Olainfarm                                             12.02.2007

Comment to information given to mass media

Today Dienas bizness has published information on JSC „Olainfarm” 
which may contain some information significant for investors and 
shareholders as well.
“Olainfarm” in cooperation with international pharmaceutical company 
to start production and supply of a new product to the world market. 
JSC „Olainfarm“ has signed an agreement with an international pharmaceutical 
company about the production and supply of a new medicine to the world market.
The agreement provides that JSC „Olainfarm“ will produce the medicine 
worldwide sale of which will be promoted by both, „Olainfarm“ and its partner. 
The said agreement may potentially mean the biggest export deal ever of 
finished form medicines produced in Latvia to the western markets. 

JSC „Olainfarm“ has reached an agreement with an international pharmaceutical 
company about the production of memantine, medicine, active pharmaceutical 
ingredient of which has been in focus of Olainfarm for a number of years. 
After assessing the quality of active pharmaceutical ingredient produced 
by Olainfarm, its production capacity and the reputation of a reliable 
supplier, an international pharmaceutical company proposed to sign a contract 
not only on a supply of an active pharmaceutical ingredient, but of finished 
form medicines for the world market as well.  JSC „Olainfarm“ plans that 
during the next year sales volume of this product alone will reach 1.5 million 
Lats (more than 2 million Euro) but in the years to come the figure may rise 
to some 10 million Lats ( around 14 million Euro) per annum.

According to the conditions of the contract, the medicines will be 
produced in Olainfarm and Olainfarm and its partner will organize 
the supply of memantine to different markets.  International pharmaceutical 
company will ensure the availability of the product in the USA, Canada, 
the UK, Australia, New Zealand, South Africa, Israel and Japan, while 
Olainfarm will distribute it to the Baltics, CIS, Russia, Central and 
Eastern Europe, Middle East and rest of Asia.  Olainfarm’s distribution 
list currently includes the countries where the company has not worked 
before, but plans to enter these markets in the nearest future 
(e.g. Czech Republic). 

Memantine is the new generation neuroprotector, which has been particularly 
widely and successfully applied in treatment of Alzheimer’s disease.  
In the related research works Olainfarm has so far invested more than 
300 000 lats (420 000 Euros).  It is estimated that the total investments 
of Olainfarm in this project before the production is started will reach 
1 000 000 lats (1 423 000 Euros).  Investments of the partner company 
are some ten times this amount and are made relying on long term cooperation 
in production. 

2006 has been a successful year for Olainfarm as the company’s actual 
profits seem to exceed the forecast ones and the preliminary calculations 
show some 15.6 million lats (22.2 million Euros) in mother company’s sales.  
Finished form medication make up some 90% of company’s sales.  The last year 
has also showed some significant increase in share of company’s promotable 
(marketable) products in its total sales.  In 2006 69% of finished form 
sales were those of the promotable products and in 2007 the company plans 
this figure to be increased to 72% 
In 2006 the most popular products of Olainfarm in all of its markets were 
psychometabolic stimulator „Noofen“, anti-allergic medicine „Fenkarol“and 
neuromuscular transmission stimulator „Neiromidine“.  In Latvian market 
the best sellers were anti ulcer medicine „Omeprazols“, antiviral medication 
„Ribaverin“as well as pro-biotic „Jogurt“.
In early January Olainfarm informed that in cooperation with Swedish partners 
„Jucker Pharma‘ it has approved an order worth 1.166 million euro to supply 
chemical product to the British branch „Novartis Grimsby Limited“ of Swiss 
based pharmaceutical giant „Novartis“.  Very recently Olainfarm and Novartis 
have agreed on 50% increase in the order for this year and the negotiations 
have started on the volumes for the next year.

Olaine, February 12th, 2007

Prepared by
Salvis Lapinsh 
Deputy CFO
JSC Olainfarm
Mobile. +37126448873
E-mail: slapinsh@olainfarm.lv