Meda AB (publ.) January - June 2007, H1 interim report

Meda AB (publ.) January - June 2007, H1 interim report

•	The Group's net sales reached SEK 3,747.8 million (2,650.0).
•	Earnings before interest, taxes, depreciation and amortisation (EBITDA),
excluding non-recurring impact on profits, increased to SEK 1,273.1 million(1)
(686.6(2)), giving a 34.0% margin (25.9). 

•	Operating profit, excluding non-recurring profit impact, rose to SEK 934.4
million(1) (496.5(2)).

•	Including non-recurring items, operating profit totalled SEK 816.3 million
(820.4). 

•	Profit after tax was SEK 426.0 million (465.2). Excluding non-recurring items,
profit after tax rose to SEK 460.9 million(3) (239.9(3)).

•	Earnings per share (EPS) were SEK 1.87 (2.14). Excluding one-offs, EPS stood
at SEK 2.02(3) (1.10(3)).

Highlights

Meda establishes operations in the US through strategic acquisition of MedPointe
•	Meda acquires MedPointe and creates an international specialty pharma company
with:
- Market coverage in Europe and the US.
- Increased focus in high-priority therapy areas (TAs).
- Strong pipeline of new product opportunities.

•	MedPointe: 
-  Net sales for 2006 totalled USD 252 million, an increase of 23%.
-  TAs: allergy / respiratory, and pain.
-  710 employees, about 500 of whom are in sales and marketing.

•	Purchase price:
-  USD 520 million in cash, and 
-  17,500,000 newly issued shares in Meda.

•	New Meda shareholders:
-  The Carlyle Group.
-  The Cypress Group LLC.
-  Other US investors.

•	The acquisition depends on US competition authority approval; this is expected
in Q3 2007.

Follow-up to the Aldara drug acquired from 3M in the US 
•	Sotirimod is a patented substance in a late clinical development phase. 
•	More potent than Aldara.
•	Purchase price: USD 10 million for the European rights and future milestone
payments of USD 10 million. 

The first combined product including an NSAID (ketoprofen) and a proton pump
inhibitor (omeprazole) acquired from Ethypharm
•	Newly developed combined product with well-known substances.
•	Reduces gastrointestinal side effects in treatment of pain, using ketoprofen.
•	Already submitted for registration.
•	Purchase price: EUR 3 million for most European markets and future milestone
payments of EUR 6 million. 

Acquisition of product portfolio from Wyeth 
•	Acquisition of 10 well-established drugs from Wyeth.
•	The products give Meda extra sales of about SEK 160-170¬ million for the rest
of 2007 (8 mths).
•	Meda's position is fortified in key European markets, e.g., Italy and France.
•	Purchase price: SEK 530 million.

CONSISTENT STRATEGY
Meda continues to build on its operations with the same business concept, but
with new dimensions. In six years, the company developed from a small Swedish
pharma company to a North European operation, to a pan-European enterprise and,
through the US company acquisition, to an international specialty pharma company
with expanded ambitions. Meda applies its strategy consistently, step by step,
by establishing in new markets and acquiring products. Meda now has a pipeline
of new product opportunities - not least for the US market. Meda's steadfast
goal: expansion with profitability and controlled risk.

SALES
The Meda Group's net sales for H1 totalled SEK 3,747.8 million (2,650.0) - a
41.4% increase. Exchange rate changes adversely affected Group sales by SEK 34.1
million - compared to 2006. The main portion of the sales increase was due to
the product portfolio acquired from 3M, in which Tambocor, Minitran, and Aldara
products continued to sell well. Aldara's sales for the period were SEK 184
million. Azelastine sales rose robustly during Q2, achieving 13% sales growth -
compared to Q2 2006. Sales of Novopulmon also displayed strong growth of 18% in
Q2. The product portfolio recently acquired from Wyeth was included in Meda's
sales as from May and contributed SEK 34.6 million during the period.  

PROFIT

Non-recurring items
Some non-recurring items, which have an effect on profit, affect comparability
with the same period in 2006.

As stated in the interim report for January - March 2007, integration of 3M's
pharma division was completed during Q1. Restructuring costs of SEK 118.1
million were recognised during Q1, and the costs affect profits for January -
June 2007. In the same period in 2006, SEK 323.9 million had non-recurring
positive impact on profits due to disposal of a production plant in the
Netherlands and a collaboration agreement with Almirall, a Spanish pharma
company. 

Operating profit
Group operating profit for January - June totalled SEK 816.3 million (820.4).
Operating expenses for the period were SEK 1,466.9 million (1,047.9); SEK 303.4
million (136.8) comprised intangible rights amortisation and SEK 118.1 million
were restructuring costs after integration of 3M's pharma division. Group
operating profit, excluding non-recurring items for January - June thus
increased to SEK 934.4 million(4) (496.5(5)).

EBITDA, excluding non-recurring profit impact for the same period, climbed to
SEK 1,273.1 million(4) (686.6(5)) - a rise of 85%. The EBITDA margin, less
non-recurring items, thus improved dramatically to 34.0% (25.9). Including
non-recurring items, EBITDA for H1 totalled SEK 1,155.0 million (1,010.5).

Financial items
The Group's net financial items for January-June were SEK -165.5 million
(-130.3). A non-recurring effect in the form of an exchange difference of SEK
65.3 million from Q1, regarding financing of the 3M acquisition, had a positive
impact on net financial items. Group profit after net financial items for the
period thus totalled SEK 650.8 million (690.1).

Net profit
Net profit for H1, excluding non-recurring profit impact, rose to SEK 460.9
million(6) (239.9(7)). Net profit for H1, including non-recurring profit impact,
was SEK 426.0 million (465.2). Group tax expense for H1 was SEK 224.8 million
(224.9), equivalent to a tax rate of 34.5% (32.6). Had the future company tax
cut in Germany come into force in early 2007, then Meda's total tax rate for H1
would have been about 3.5 percentage points lower.

Earnings per share before dilution for H1 and excluding non-recurring profit
effects stood at SEK 2.02(6) (1.10(7)).

Earnings per share before dilution for H1 2007 were SEK 1.87 (2.14).

FINANCIAL POSITION
Meda's financial position was reinforced during the period - thanks to positive
cash flow from operating activities and the new share issue implemented in
February.

Cash flow from operating activities (before changes in working capital) for
January - June rose to SEK 893.0 million (465.9). Implemented restructuring
measures had an adverse effect of SEK -61.0 million on cash flow. Change in
working capital for the period totalled SEK -323.0 million (-17.2) and is mainly
attributable to the 3M acquisition, which was a net assets acquisition. Total
cash flow from operating activities thus reached SEK 570.0 million (448.7). 
Cash flow from investing activities was SEK -6,216.8 million (-62.8) for January
- June. In January, Meda acquired 3M's European pharma division for SEK 5,605.3
million, and a product portfolio from Wyeth in the US for SEK 530.0 million.

Cash flow from financing activities was SEK 5,595.8 million (-548.2) for H1.
After issue expenses, the new share issue generated positive cash flow of SEK
1,844.2 million, while bank loans increased (net) by SEK 3,865.4 million.
Dividend of SEK 116.1 million was paid to Meda's shareholders in May.

At the end of June, Group cash and cash equivalents were SEK 71.9 million,
compared to SEK 120.6 million at year-end 2006. Net debt stood at SEK 8,618.8
million on 30 June - compared to SEK 4,512.1 million at the end of 2006. The
equity/assets ratio was 35.9% - compared to 38.0% at year-end 2006.

On 30 June, equity was SEK 6,569.8 million, compared to SEK 4,296.8 million at
year-end 2006, which corresponds to SEK 28.28 (19.75) per share.

PARENT COMPANY
Meda AB markets and sells pharmaceuticals and healthcare products. The company
also has participating interests in subsidiaries that operate in large parts of
Europe.

Net sales for H1 2007 totalled SEK 1,375.0 million (613.0), of which intra-Group
sales represented SEK 918.8 million (239.7). The increase in intra-Group sales
is mainly attributable to the parent company's sales to Group companies of
pharmaceuticals acquired in 2007. Profit before appropriations and tax totalled
SEK 491.9 million (185.5).

Cash and cash equivalents totalled SEK 4.7 million, compared to SEK 20.2 million
at year-end 2006.

Investments in intangible rights amounted to SEK 4,039.1 million in the first
six months of 2007 and were mainly product acquisitions from 3M and Wyeth. Other
investments remained essentially unchanged during H1 in relation to the same
period in 2006.

Financial assets rose to SEK 8,117.5 million - compared to SEK 5,872.4 million
at year-end 2006. The acquisition of 3M's European pharma division entailed a
rise in internal loan receivables. 

Meda AB implemented a new share issue in February 2007, which generated positive
cash flow SEK 1,844.2 million after issue expenses. Bank loans increased SEK
3,873.8 million (net) during the period. 

AGREEMENTS AND KEY EVENTS
•	ACQUISITION OF FOLLOW-UP TO THE ALDARA DRUG ACQUIRED FROM 3M IN THE US
Meda acquired the European rights to the sotirimod substance from 3M, a US
company. Sotirimod is designed to treat actinic keratosis and other conditions
and is a follow-up of Aldara (active substance: imiquimod). Sotirimod and
imiquimod are immunomodulatory drugs that activate the body's immune system to
combat skin changes such as actinic keratosis. Aldara is a market leader in its
segment, and Meda reported sales of SEK 184 million during H1 2007.

Sotirimod is a patented substance in a late clinical development phase. It is
more potent than imiquimod, and in human trials, it proved more effective than
Aldara in treating actinic keratosis. Actinic keratosis is characterised by
reddish-brown, scaly patches on sun-damaged skin and can be precancerous. It is
prevalent in more than 30 million people in Europe. 

Meda paid USD 10 million and might pay a further USD 10 million in milestone
payments at defined development and commercialisation stages. 

“Actinic keratosis is a common skin disease,” said Anders Lönner, Meda's CEO,
during the acquisition. “That's why it's very important to continue developing
new improved drugs in this area. Our goal is to develop sotirimod into a
next-generation Aldara, with even better efficacy and simpler treatment.
Acquisition of sotirimod further reinforces Meda's product portfolio in
dermatology.” 

•	ACQUISITION OF RIGHTS TO FIRST COMBINATION OF AN NSAID (KETOPROFEN) AND A
PROTON PUMP INHIBITOR (OMEPRAZOLE)
Meda and Ethypharm, a French development company, signed a long-term exclusive
agreement (15 years) for a new combined product to treat pain and inflammation.
The product comprises the well-known substances omeprazole (a proton pump
inhibitor) and ketoprofen (non-steroidal anti-inflammatory drugs [NSAID]). Use
of this combination can avoid gastrointestinal side effects from ketoprofen.
Another patient benefit is that the drug only needs to be administered once a
day.

The agreement applies to most European markets. The biggest markets are the UK,
Spain, Germany and Italy. Rheumatic diseases are a growing problem as the
proportion of elderly people in Europe increases. So potential for the new
product is judged to be high.

The product was submitted for registration; Meda has paid EUR 3 million for the
sales rights and might pay a further EUR 6 million in milestone payments after
registration and attainment of certain sales targets. No such payments will be
due after sales reach EUR 55 million.

The product is a capsule containing ketoprofen (sustained release granules) and
omeprazole (enteric-coated granules). Ethypharm's pharmaceutical technology
enabled development of a unique single-dose formulation. Ketoprofen is an NSAID
and is common in rheumatic diseases treatment. Omeprazole is a proton pump
inhibitor with an acid-inhibiting effect that protects the mucous membrane of
the stomach. 

Regarding this acquisition, Lönner said: “This new product will be of great help
to patients who must currently take two drugs to avoid NSAID side effects. The
agreement with Ethypharm strengthens Meda's position in the high-priority area
of pain and inflammation - a therapy area in which Meda already has a robust
position with several products.” 

When the acquisition was made public, Gérard Leduc, president of Ethypharm,
said: “We chose Meda instead of many other competitors due to Meda's
pan-European coverage and strong marketing organisation in the pain therapy
area.”

•	ACQUISITION OF PRODUCTS IN WYETH'S PORTFOLIO 
Meda acquired 10 well-established drugs in Europe from Wyeth, a US company. The
deal marks another step in Meda's strategy to become the leading European
speciality pharma company. 

The acquired products are highly recognised brands with sound profitability.
Meda took over the products on 1 May 2007. No employees switched from Wyeth to
Meda in conjunction with the acquisition, which is expected to inject sales of
about SEK 160-170 million into Meda for full-year 2007 (eight months). The
purchase price was SEK 530 million - fully financed via existing credit
facilities. 

The acquisition strengthened Meda's product portfolio in two of its most
important markets. Italy and France account for about 60% of the acquired
products' sales, and positive marketing synergies are expected. 

Seresta, the largest product, is used within the central nervous system (CNS)
therapy area, and its active substance is oxazepam. Oxazepam is in the
benzodiazepine group of drugs and is an anti-anxiety and tranquilizing agent
used to treat sleep disorders and various substance-withdrawal symptoms. Meda
already had three major CNS products: Imovane (sleep disorders), Thioctacid
(diabetic neuropathies), and Parlodel (Parkinson's disease). The main part of
the acquired sales comprises: (See the full report)

KEY EVENTS AFTER THE REPORTING DATE
•	MEDA ESTABLISHES US PRESENCE THROUGH STRATEGIC ACQUISITION OF MEDPOINTE INC.
Meda signed an agreement to acquire all shares in MedPointe Inc. This
acquisition establishes Meda as an international specialty pharma company, with
full market coverage in the US and Europe and sales close to SEK 9 billion. 

The new company combination will give Meda geographic and product synergies.
MedPointe focuses on two of Meda's high-priority therapy areas: allergy /
respiratory, and pain, and the companies' product portfolios complement each
other well.  Meda has a pipeline that can now be commercialised through a wholly
owned subsidiary on the US market. This retains all of the product value.
Similarly, through its existing European organisation, Meda can use product
opportunities in MedPointe's development programme. 

MedPointe is a rapidly growing, privately owned US specialty pharma company. Net
sales for 2006 were USD 252 million - 23% higher than 2005. The gross margin was
about 90%, but major costs for marketing and clinical development programmes
limited the EBITDA margin to roughly 12%. MedPointe made substantial investments
for several years to build its pipeline. Meda's US operation will initially
account for about 20% of the merged company's net sales. MedPointe is estimated
to not have net debt at the time of the transaction. The acquisition is expected
to have a positive impact on Meda's profit per share by 2009 at the latest.

MedPointe's shareholders will receive USD 520 million in cash payment and
17,500,000 newly issued shares in Meda(8). The Carlyle Group and the Cypress
Group, LLC, two well-known private equity firms, are MedPointe's largest
shareholders and have decided to become Meda shareholders. After the
transaction, their combined shareholding will be about 6%(9). The acquisition
depends on US competition authority approval. 

“We are glad to support a strong and logical industrial solution. Meda has in a
relatively short period of time built a solid pan-European position. Together
with MedPointe we see unique synergy effects, both product and market wise”,
said Dr. Ryan Harris, Principal, The Carlyle Group, when the deal went public. 

Frazier Healthcare Ventures, Ferrer Freeman & Co. and MedPointe's management
(other MedPointe shareholders) also decided to become Meda shareholders. A
lock-up agreement applies to newly issued shares for 12-18 months after the
acquisition. 

MedPointe has 710 employees. The company covers the entire US market with about
500 employees in sales and marketing. Marketing is mainly directed at allergy
and pain treatment specialists plus general practitioners. Its head office is in
Somerset, New Jersey. MedPointe's most important products are made in a modern
production plant in Decatur, Illinois. About 100 employees work in production.

MedPointe's priority TAs are allergy, respiratory, and pain. Its bestsellers are
Astelin and Optivar, containing the active substance azelastine. Astelin is a
steroid-free nasal spray, approved for treatment of allergic and non-allergic
rhinitis. Optivar are eye drops approved for treatment of allergic
conjunctivitis. MedPointe's net sales for Astelin and Optivar totalled USD 167
million and USD 29 million, respectively in 2006 - both with a double-figure
growth rate in local currency compared to 2005. 

“We're now establishing Meda as an international specialty pharma company,” said
Lönner at the time of acquisition. “The merged company will be strong with its
market coverage and pipeline. Our organisation can market product development
opportunities from both companies instead of out-licensing them. MedPointe's
investments in product development constitute robust growth potential in sales
and profitability. I'd like to welcome Meda's new US shareholders, which I see
as a sign of confidence in the company.” 

Meda has collaborated with MedPointe in manufacture of azelastine during the
past five years. Both azelastine's formulations (nasal spray and eye drops) have
utility patents in the US until 2011. MedPointe also developed a significant
programme of imminent and long-term opportunities for azelastine. Meda intends
to commercialise these opportunities in Europe and in other key markets. 

“There is an extraordinarily good fit between the two companies. The management
team at MedPointe is eager to join the Meda team and together create a winning
team. Both companies have interesting product opportunities, which give a strong
potential in both the middle and long-term. We can now increase our efforts to
support these programs with both US and European coverage”, said Paul Edick, CEO
MedPointe Inc, when the deal was announced.

•	EXTENDED COLLABORATION WITH RECORDATI
Meda and Recordati, an Italian pharma company, signed a long-term agreement for
marketing a new combined product in Spain - one of the biggest European markets.
The product comprises the well-known substances lercanidipine (a calcium
antagonist) and enalapril (an ACE inhibitor). The product is indicated for high
blood pressure treatment.

Meda already has marketing rights for this combined product in Germany and
Scandinavia. Product launch is under way in Germany, and an application for
product registration in Spain was submitted.

•	CHANGED TAX RATES IN GERMANY
On 6 July, the Bundesrat in Germany decided to cut the income tax for companies.
For Meda, this means lower company taxes for the Group's operations in Germany
as from 1 January 2008. The lower tax rates have a positive impact of about 3.5
percentage points on the Meda Group's total tax rate (tax in relation to pre-tax
profit), based on profit levels reported in the Group's H1 accounts for 2007.

Revaluation of deferred tax assets and tax liabilities following this decision
to cut tax rates will have a non-recurring positive impact of about SEK 80-90
million on Group net sales. This effect will be recognised in the Q3 accounts
for 2007.
RISKS AND UNCERTAINTIES
The Meda Group's business is exposed to financial risks. Meda's 2006 annual
report describes its risk management (pages 44-45). Several other factors, which
Meda cannot fully control, affect the Group. Factors that are particularly
significant for Meda's future growth are: competitors and pricing, actions by
authorities, partnerships, market valuations, clinical trials, key individuals
and recruitment, product liability plus patents and trademarks. The 2006 annual
report describes these types of risks (pages 90-91). No special changes were
identified for the coming six months. Meda continues implementing its growth
strategy, so acquisitions are assessed as per current risk profiles.

ACCOUNTING POLICIES
Group
Meda complies with the EU-approved IFRS standards and their interpretation
(IFRIC). This interim report was prepared as per International Accounting
Standard (IAS) 34 Interim Financial Reporting. Meda applies (1) the new standard
- IFRS 7, Financial instruments: Disclosures and (2) Supplement to IAS,
Presentation of financial statements. The Group's accounting policies and
calculation methods are otherwise unchanged from the 2006 annual report.

2007 INTERIM REPORTS
January - September		Tuesday, 30 October
The board and CEO affirm that this semi-annual report (1) provides a true, fair
summary of the parent company's and Group's operations, position, and earnings,
and (2) describes significant risks and uncertainties faced by the parent and
Group companies.

Stockholm, 8 August 2007

Peter Sjöstrand			Bert-Åke Eriksson
Board chairman			Board member


Marianne Hamilton			Tuve Johannesson 
Board member			Board member


Anders Lönner			Anders Waldenström
CEO				Board member


REVIEW REPORT
We have reviewed the interim report for the period January 1 - June 30, 2007 for
Meda. The board of directors and the CEO are responsible for the preparation and
presentation of this interim financial information in accordance with IAS 34 and
the Annual Accounts Act. Our responsibility is to express a conclusion on this
interim financial information based on our review.

We conducted our review in accordance with the Standard on Review Engagements
SÖG 2410, Review of Interim Financial Information Performed by the Independent
Auditor of the Entity issued by FAR. A review consists of making inquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less
in scope than an audit conducted in accordance with Standards on Auditing in
Sweden RS and other generally accepted auditing practices. The procedures
performed in a review do not enable us to obtain a level of assurance that would
make us aware of all significant matters that might be identified in an audit.
Therefore, the conclusion expressed based on a review does not give the same
level of assurance as a conclusion expressed based on an audit.

Based on our review, nothing has come to our attention that causes us to believe
that the accompanying interim financial information is not, in all material
respects, in accordance with IAS 34 and the Annual Accounts Act.

Stockholm August 8, 2007

Öhrlings PricewaterhouseCoopers AB

Göran Tidström			Mikael Winkvist
Authorised public accountant	Authorised public accountant
Partner in charge


(1)Excluding restructuring costs of SEK 118.1 million due to the 3M pharma
division acquisition.
(2) Excluding revenue of SEK 76.4 million from disposal of a production plant in
the Netherlands, and SEK 247.5 million in capital gain in connection with a
partnership agreement with Almirall, a Spanish pharma company.
(3) Excluding the above non-recurring effects and excluding non-recurring
revenue of SEK 65.3 million in net financial items from Q1 2007. Calculated
using a standard tax rate of 34.5%.
(4) Excluding restructuring costs of SEK 118.1 million due to the 3M pharma
division acquisition. 
(5) Excluding revenue of SEK 76.4 million from disposal of a production plant in
the Netherlands, and SEK 247.5 million in capital gain in connection with a
partnership agreement with Almirall, a Spanish pharma company.
(6) Excluding restructuring costs of SEK 118.1 million due to the 3M pharma
division acquisition and excluding non-recurring revenue of SEK 65.3 million in
net financial items from Q1 2007. Calculated using a standard tax rate of 34.5%.

(7) Excluding revenue of SEK 76.4 million from disposal of a production plant in
the Netherlands, and SEK 247.5 million in capital gain in conjunction with a
partnership agreement with Almirall, a Spanish pharma company. Calculated using
a standard tax rate of 34.5%. 
(8) In May 2007, Meda's AGM accepted the board's proposal to authorise the board
to decide on a new share issue on one or more occasions before the next AGM to
increase share capital. This authorisation comprises a maximum of 23,223,712
shares that can be used to pay for acquisition of other companies, for example.
(9) If no further warrants are redeemed before the acquisition. On 18 July there
were 232,291,251 outstanding shares in Meda.


For more information, please contact:
Anders Lönner, CEO		         tel. +46 8 630 19 00
Anders Larnholt, Investor Relations	tel. +46 8 630 19 62, +46 709 458 878