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