Meda AB (publ) - Interim report, January-June 2010

· Group sales reached SEK 5,986 million (6,901). Currency effects and
increased competition for the Astelin and Optivar products are the main
reasons for lower sales compared to last year.
· EBITDA amounted to SEK 2,620 million (2,349), corresponding to a
43.8% margin (34.0).

· EBITDA, excluding a non-recurring effect[1] and currency effects,
rose 2% to SEK 2,398 million (2,349), thus yielding a 36.7% margin
(34.0).

· Operating profit amounted to SEK 1,777 million (1,641).

· Profit after tax amounted to SEK 1,039 million (867).

· Earnings per share reached SEK 3.44 (2.87).

· Cash earnings per share reached SEK 4.93 (4.97).

CEO's comments

Sales during H1 2010 reached SEK 5,986 million, a 13% decrease compared
to 2009. Currency effects and generic competition for the Astelin and
Optivar products in the US account for the main part of this decrease.
As expected, the economic climate in some European countries also
affected the pharmaceutical market. Excluding these effects, underlying
growth in H1 totaled about 2-3%. We have a very interesting new-product
portfolio, which will yield long-term growth. Several products are in
the early stages of their launch phase, such as Xerese, Ceplene,
Onsolis, and Axorid.

We continue to reinforce Meda's position in emerging markets such as
Turkey and Russia. Emerging markets already constitute about 15% of
Meda's total sales, and Meda's average sales growth for these markets
was over 15% in H1. Meanwhile, efforts to strengthen Meda's pipeline
even further is progressing. This work includes the company's Q2
acquisition of exclusive rights to a patented project for the treatment
of fibromyalgia—a large area currently lacking good treatment. In
addition we have acquired exclusive rights to product development based
on Aldara that can potentially be used on a significantly larger area of
skin affected by actinic keratosis than the existing product.

Despite greater competition for Astelin and Optivar in the US and the
effects of the economic situation in some European markets, Meda
achieved a somewhat higher EBITDA for the period (excluding currency and
non-recurring effects). The EBITDA margin rose to 37% (34). The higher
profitability was partly due to the efficiency improvement program
implemented at the end of 2009, in which marketing activities were
geared more towards specialists.

Cash flow during the period remained high. Net debt has thus been
substantially reduced, bolstering Meda's freedom to make further
acquisitions.

Anders Lönner

Group President and CEO

SALES

January-June

Net sales for January-June were down 13% to SEK 5,986 million (6,901).
Currency effects regarding like-for-like sales had a negative
SEK 545 million impact on sales compared to last year. Price reductions
affected sales adversely in the European markets by about SEK 110
million. Key product sales in H1 were:

Astepro (allergic and non-allergic rhinitis treatment) had US sales of
SEK 225 million (169) during the period. Sales in local currency were up
48% to USD 31 million (21) compared to last year.

Astelin (allergic and non-allergic rhinitis treatment) sales totaled SEK
528 million (821). In the US, sales in local currency were down 35%,
reaching USD 58 million (89). Sales dipped as a result of rising sales
of Astepro, its follow-up, and due to more competition in the segment.

Sales of Tambocor (treatment of cardiac arrhythmia) amounted to SEK 415
million (484). Calculated at fixed exchange rates, sales declined 5%
after mandatory price cuts in several European markets. Tambocor
continued to show robust volume growth.

Betadine (infection treatment) sales decreased to SEK 423 million (469).
At fixed exchange rates, sales remained unchanged compared to last year.

Minitran (angina prevention) sales reached SEK 244 million (277). At
fixed exchange rates, sales were down 2%.

Sales of Aldara (treatment of actinic keratosis) amounted to SEK 219
million (248). At fixed exchange rates, sales dropped 3%. A continued
good volume increase in most markets was not able to make up for lower
sales in Spain, mandatory price cuts in the European markets, and
reduced inventories at the wholesale level in Germany in conjunction
with switching wholesalers.

Soma (muscle relaxant) sales amounted to SEK 182 million (240). Sales in
local currency were down 16%.

Zamadol (moderate to severe pain treatment) sales decreased 16% to SEK
166 million (197). Sales in local currency dipped 8%, mainly due to
lower prices in several European markets.

Meda's sales of Mestinon (treatment of myasthenia gravis, an autoimmune
disease) amounted to SEK 129 million (137). At fixed exchange rates,
sales increased 3%.

Novopulmon (budesonide Novolizer, asthma treatment) sales reached SEK 97
million (108). At fixed exchange rates, sales decreased 1% after lower
sales to distributors in some export markets during the period.

See page 14 for sales information in Meda's geographic regions.

April-June

Net sales for April-June fell 12% to SEK 3,043 million (3,464). Currency
effects regarding like-for-like sales had a negative SEK 260 million
impact on sales compared to last year. Price cuts in Europe reduced
sales in the quarter by roughly SEK 70 million. Sales of the most
important products during the period were:

Astepro (allergic and non-allergic rhinitis treatment) had US sales of
SEK 128 million (123) during the period. Sales in local currency were up
12% to USD 17 million (15) compared to last year. Astepro's proportion
of total azelastine prescribed was 43% in June.

Astelin (allergic and non-allergic rhinitis treatment) sales totaled SEK
281 million (383). In the US, sales in local currency were down 28%,
reaching USD 31 million (43). A generic competitor to Astelin was
launched at the end of June.

Sales of Tambocor (treatment of cardiac arrhythmia) amounted to SEK 206
million (248). At fixed exchange rates, sales were down 7%.

Betadine (infection treatment) sales decreased to SEK 212 million (240).
At fixed exchange rates, sales decreased 2% during the quarter.

Minitran (angina prevention) sales reached SEK 124 million (138). At
fixed exchange rates, sales remained unchanged compared to the same
period last year.

Sales of Aldara (treatment of actinic keratosis) amounted to SEK 105
million (127). At fixed exchange rates, sales decreased 9%, which is
partly attributable to lower sales in Spain in Q2.

Soma (muscle relaxant) sales amounted to SEK 86 million (120). Sales in
local currency were down 25%. Lowered prescribing and lower wholesale
inventory levels adversely affected sales.

Zamadol (moderate to severe pain treatment) sales decreased 21% to SEK
79 million (100). Sales in local currency were down 13%.

Meda's sales of Mestinon (treatment of myasthenia gravis, an autoimmune
disease) amounted to SEK 64 million (70). At fixed exchange rates, sales
remained unchanged compared to the same period last year.

Novopulmon (budesonide Novolizer, asthma treatment) sales reached SEK 48
million (47). Calculated at fixed exchange rates, sales climbed 14%
after a strong increase in the German market.

See page 14 for sales information in Meda's geographic regions.

PROFIT

Compared to the same period in 2009, Q2's income measure was strongly
affected by exchange rate changes. The following table illustrates these
currency effects and shows a condensed income statement in which 2010's
income statement items are translated to 2009's exchange rates.

FIXED EXCHANGE RATES
January-June April-June
2010 2009 Index 2010 2009 Index
Net sales 6,531 6,901 95 3,303 3,464 95
Gross profit 4,234 4,610 92 2,136 2,341 91
Gross margin, % 65% 67% 65% 68%
Operating expenses -2,707 -2,969 -1,356 -1,457

EBIT 1,527[2] 1,641 93 780[2] 884
88
EBIT margin, % 23%[2] 24% 24%[2] 26%
Depreciation and amortization -871 -708 -456 -355
EBITDA 2,398[2] 2,349 102 1,236[2] 1,239
100
EBITDA margin, % 37%[2] 34% 37%[2] 36%
Net financial items -295 -344 -160 -168
EBT 1,232[2] 1,297 95 620[2] 716
87
Tax -388[3] -430 -189[3] -234
Tax, % 31%[3] 33% 30%[3] 33%
Net income 844[4] 867 97 431[4] 482
89

Operating profit

Operating expenses for Q2 amounted to SEK 1,283 million, which was on a
par with the previous quarter.

Operating profit for January-June reached SEK 1,777 million (1,641),
corresponding to an 8% increase.

EBITDA for the same period was SEK 2,620 million (2,349), yielding a
43.8% margin (34.0). EBITDA, excluding a non-recurring effect[5] and
currency effects was SEK 2,398 million (2,349), thus yielding a 36.7%
margin (34.0).

Operating profit for April-June reached SEK 1,117 million (884),
corresponding to a 26% increase.

EBITDA for the same period was SEK 1,561 million (1,239), yielding a
51.3% margin (35.8). EBITDA, excluding a non-recurring effect[5] and
currency effects was SEK 1,236 million (1,239), thus yielding a 37.4%
margin (35.8).

Financial items

The Group's net financial items for January-June were SEK -285 million
(-344). The improvement from last year is due to a lower average
interest rate and lower average debt. The average interest rate at June
30, 2010 was 3.8% (4.0).

The Group's profit after net financial items for January-June rose 15%
to SEK 1,492 million (1,297).

The Group's net financial items for April-June were SEK -155 million
(-168), compared to SEK -130 for the first quarter. The difference
between the two quarters 2010 was affected by exchange rate differences.

Group profit after net financial items for the same period thereby
totaled SEK 962 million (716).

Net income and earnings per share

Net income for January-June rose 20% to SEK 1,039 million (867).

Group tax expense for H1 amounted to SEK 453 million (430), equivalent
to a tax rate of 30.4% (33.2).

Earnings per share for January-June were SEK 3.44 (2.87).

Net income for April-June rose 41% to SEK 679 million (482).

Group tax expense for April-June amounted to SEK 283 million (234),
equivalent to a tax rate of 29.4% (32.7).

Earnings per share for April-June reached SEK 2.25 (1.60).

CASH FLOW

Cash flow from operating activities, before changes in working capital,
for January-June increased to SEK 1,663 million (1,557). Implemented
restructuring measures had a SEK -89 million (-92) impact on cash flow.
Customary quarterly variations in tied-up capital led to a negative
change in cash flow from changes in working capital that amounted to SEK
-153 million (-6). Accordingly, cash flow from operating activities
amounted to SEK 1,510 million (1,551).

Cash flow from investing activities was SEK -304 million (-147) for
January-June. In January, Meda acquired exclusive rights to Ceplene from
EpiCept Corporation, a US development company, and in February Meda
in-licensed exclusive rights to Xerese, a pharmaceutical from Medivir
AB, a Swedish development company.

______________________________

In May Meda acquired exclusive rights to flupirtine, to treat
fibromyalgia, from Adeona Pharmaceuticals and exclusive European rights
to a new formulation of imiquimod from Graceway Pharmaceuticals.

Cash flow from financing activities was SEK -1,032 million (-1,390) for
January-June. Dividend of SEK 302 million was paid to Meda's
shareholders in May.

Cash earnings per share for H1 were SEK 4.93 (4.97).

Cash earnings per share for Q2 were SEK 2.86 (2.52).

FINANCING

On June 30, equity stood at SEK 14,343 million, compared to
SEK 13,664 million at the year's start, which corresponds to SEK 47.5
(45.4) per share. The equity/assets ratio rose to 44.1% from 41.4% at
the start of the year.

The Group's net debt stood at SEK 12,215 million on 30 June, compared to
SEK 13,467 million at the year's start. The SEK 1,252 million reduction
in net debt is primarily attributable to the Group's cash flow.

PARENT COMPANY

Net sales for January-June totaled SEK 1,808 million (1,824), of which
intra-Group sales represented SEK 1,438 million (1,408).

Profit before appropriations and tax reached SEK 1,225 million (3,044).

Net financial items were SEK 794 million (2,496), which includes
dividend of SEK 2,801 million (2,715) from subsidiaries and related
write-down on shares in subsidiaries amounting to SEK 1,844 million.

Cash and cash equivalents amounted to SEK 186 million, compared to
SEK 10 million at year-end 2009.

Investments in intellectual property rights during January-June were SEK
276 million (204), and investments in property, plant, and equipment
totaled SEK 0 million (0).

Non-current financial assets stood at SEK 19,581 million compared to
SEK 20,432 million at year-end 2009.

Agreements and key events

· Meda acquires rights to new treatment of actinic keratosis

Meda acquired exclusive European rights to a new formulation of
imiquimod from Graceway Pharmaceuticals. The new formulation is 3.75%
imiquimod topical cream indicated for the treatment of actinic keratosis
(AK). This product has recently been approved in the US and Canada.
Today Meda markets a higher strength (5%) of imiquimod in Europe under
the trademark Aldara. In 2009, sales of Aldara were approximately SEK
500 million.
3.75% imiquimod can be used on a significantly larger treatment area, it
is once-daily and more tolerable due to the decreased concentration. The
patent for this novel imiquimod formulation is pending.
Graceway is continuing its development program around 3.75% imiquimod.
Meda has exclusive rights to follow-up products based on the imiquimod
substance.
In consideration for the exclusive rights for 3.75% imiquimod, Meda has
paid Graceway an undisclosed up-front and a single-digit royalty on net
sales. No milestone payments will be due for 3.75% imiquimod.
Imiquimod is an immunomodulating agent that activates the body's own
immune defenses through the skin. Actinic keratosis (AK) often develops
on skin frequently exposed to the sun and it is a common pre-cancerous
lesion. It should be treated as it cannot be predicted which AK will
develop into more serious forms of skin cancer. AK occurs in more than
30 million people in Europe, and only a small percentage of patients
have been properly treated.

· Onsolis approved in Canada

Onsolis (fentanyl) has been approved by Health Canada, the Canadian
pharmaceutical authority. Onsolis is a new patented product indicated
for the treatment of breakthrough pain in cancer patients.
Onsolis is the first available fentanyl product approved in Canada for
this indication and it is expected to be available for patients during
the third quarter of 2010. The product will be commercialized by the
joint venture between Meda and Valeant in Canada (Meda Valeant Pharma
Canada Inc.).
Onsolis uses a unique delivery system designed to give rapid and
reliable delivery of fentanyl, the active ingredient. The product
consists of a thin dissolvable disc for application of fentanyl to the
buccal (inner lining of cheek) membranes.

· MEDA acquires exclusive rights to flupirtine for A NEW INDICATION

Meda acquired exclusive US, Canadian and Japanese rights for the use of
flupirtine to treat fibromyalgia from Adeona Pharmaceuticals. As part of
the agreement, Meda assumes full responsibility for development and
commercialization of the compound. Flupirtine is currently in phase-II
development for the patented use for fibromyalgia.
Fibromyalgia is a chronic and debilitating condition characterized by
widespread pain and stiffness throughout the body, accompanied by severe
fatigue, insomnia, and mood symptoms. Fibromyalgia affects an estimated
2-4% of the population worldwide, including an estimated 4 million
people in the United States.
There are presently three products approved for this indication in the
US: Lyrica, Cymbalta, and Savella. Flupirtine differs from these
products in that it employs a unique mode of action. Meda estimates the
US market for fibromyalgia to be nearly USD 1 billion at launch of
flupirtine.

Meda also believes flupirtine's neuroprotective properties can be
leveraged to treat new indications outside of pain and fibromyalgia,
resulting in robust product lifecycle opportunities.
Under the agreement with Adeona, Meda made an up-front payment of USD
2.5 million. In addition, Meda will make a milestone payment of USD 5
million upon the Food and Drug Administration's (FDA's) acceptance of
the New Drug Application (NDA), and USD 10 million upon NDA Approval by
the FDA. Meda will also pay single-digit royalties to Adeona.

· Meda receives one-time payment of EUR 45 million

Meda reached an agreement with the Spanish pharma company Almirall
regarding a respiratory combination project in the Novolizer device that
Meda had certain rights to. The project is in the research phase, and
Almirall has purchased Meda's rights for EUR 45 million.

RISKS AND UNCERTAINTIES

The Meda Group's business is exposed to financial risks. Meda's 2009
annual report describes the company's management of these risks (pp
67-68). Several other factors, which Meda cannot fully control, affect
the Group's operations. Factors judged particularly significant to
Meda's future growth are: competitors and pricing, actions by
authorities, partnerships, market assessments, clinical trials, key
individuals and recruitment, product liability, patents, and trademarks.
The 2009 annual report describes these types of risks (pp 116-118).

ACCOUNTING POLICIES

Group

Meda complies with the EU-approved IFRS standards and their
interpretations (IFRIC). This interim report was prepared as per IAS 34
Interim Financial Reporting. These new accounting standards apply as of
January 1, 2010:

IFRS 3 (revised) Business Combinations. The change will apply
prospectively to acquisitions occurring after the change's effective
date. Application will alter how future acquisitions are recognized,
e.g., regarding recognition of transaction costs, conditional
(contingent) considerations, and step acquisitions. The revision will
not affect previously completed acquisitions but will affect recognition
of future transactions.

IAS 27 Consolidated and Separate Financial Statements. The impact of
this amendment includes always recognizing results attributable to
minority shareholders, even if the minority interest is negative, and
always recognizing transactions with minority shareholders in equity.
The amendment of the standard may influence how future transactions are
recognized.

In other respects, the Group's accounting policies and calculation
methods remain unchanged from the 2009 annual report.

REPORTS IN 2010

Interim report, January-September Wednesday, November
3, 2010

The board of directors and CEO hereby confirm that this six-month
interim report provides a true and fair view of the parent company's and
Group's operations, position and performance, and describes material
risks and uncertainties faced by the parent company and Group companies.

Stockholm, August 4, 2010

Bert-Åke Eriksson Peter
Claesson Marianne Hamilton
Chairman of the Board Board
member Board member

Tuve Johannesson Carola Lemne
Board member Board member

Anders Lönner Anders Waldenström
CEO Board member

For more information, contact

Anders
Larnholt,
Phone: +46 8-630 19 62
VP Corporate Development and Investor
Relations +46 709-458 878

[1] Excluding non-recurring income of SEK 429 million in Q2
[2] Excluding SEK 429 million in non-recurring income.
[3] Excluding tax on non-recurring income.
[4] Excluding SEK 429 million in non-recurring income and related tax
effect.
[5] Excluding non-recurring income of SEK 429 million.

Meda AB (publ) - Interim report, January-June 2010

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