Customer to transfer Swedish penicillin manufacturing

Meda, one of Recipharm’s customers has today advised that they will transfer
supply of their mainly Swedish penicillin products and manufacture offshore with
other suppliers. The manufacturing contract with Recipharm Strängnäs will
therefore be terminated at December 31, 2015. This business accounts for
approximately 2% of Recipharm’s current sales. Recipharm currently employs 60
employees in Strängnäs and unfortunately the termination will likely lead to a
reduction in that number. Financially, the termination will have a positive
impact on Recipharm’s profitability from 2016.
Impact on operations, employment and finance

  · The termination will likely lead to reductions in personnel at the Strängnäs
site and potentially even site closure. The total number of employees in
Strängnäs were 60 at September 30, 2014 and the total book value of fixed assets
at the site was SEK 9.8 million.

  · The manufacturing contract in Strängnäs remains in force until 31st of
December 2015, and there will be no change in the business until then. The Meda
business in Strängnäs generated sales YTD September of SEK 52.9 m with a
negative EBITDA of SEK -1.0 m and negative EBIT of SEK -1.7 m. It is estimated
that Meda’s decision to offshore their production will increase Recipharm’s
profit and EPS from 2016.

  · All options for the site for 2016 and beyond are undergoing review, and more
information will be given no later than February 17, 2015, when the 2014 Full
Year report is issued.

Other Meda business with Recipharm

  · Meda is one of Recipharm largest customers with manufacturing contracts at
six Recipharm sites. Meda is a customer as a result of the the sale of the
mainly Swedish Recip product business (former part of Recipharm) to Meda in
December 2007.

  · Of the other five site contracts, Meda has served notice of termination for
the Höganäs contract. If this contract is eventually terminated it will affect
group sales by approximately 1.6% in 2016 and a further 1.5% in 2017. All other
contracts remain with the customary notice period of 1-2 years.

Thomas Eldered, CEO of Recipharm:
“I am disappointed that a long relationship will be terminated and in particular
how it will affect a number of our Swedish employees, who have demonstrated
their commitment and hard work to provide a high quality product and service to
Meda. We have worked hard to explore opportunities to improve the business for
both companies. Unfortunately our offers have been rejected and they have now
decided to transfer this range of products to other manufacturers abroad.
 Whilst this is regrettable especially for the persons affected by this
decision, the financial impact of this termination is expected to be positive
from 2016 and the short term business impact will be minimal, if any. We will
now continue to pursue our mission to develop and manufacture pharmaceuticals
for demanding customers for global use. Our financial objectives remain
unchanged.”

For further information please visit www.recipharm.com or contact:
Thomas Eldered, CEO, thomas.eldered@recipharm.com, telephone: +46 8 602 52 10
Björn Westberg, CFO, bjorn.westberg@recipharm.com, telephone: +46 8 602 46 20

This information is published in accordance with the Swedish Securities Market
Act, the Swedish Financial Instruments Trading Act and/or the regulations of
NASDAQ Stockholm. This information was submitted for publication on 4 December,
2014, at 15:00 hrs CET.

About Recipharm
Recipharm is a leading CDMO (Contract Development and Manufacturing
Organisation) in the pharmaceutical industry based in Sweden employing some
2,200 employees. Recipharm offers manufacturing services of pharmaceuticals in
various dosage forms, production of clinical trial material including API and
pharmaceutical product development. Recipharm manufactures more than 400
different products to customers ranging from Big Pharma through to smaller
research- and development companies. Recipharm’s turnover is approximately SEK
3.3 billion and the Company operates development and manufacturing facilities in
Sweden, France, the UK, Germany, Spain, Italy and Portugal and is headquartered
in Jordbro, Sweden. The Recipharm B-share (RECI B) is listed on NASDAQ
Stockholm.

For more information on Recipharm and our services, please visit
www.recipharm.com (http://file///C:/Users/Thomas/AppData/Local/Microsoft/Windows
/ 
Temporary%20Internet%20Files/Content.Outlook/FZHEQOEB/visit%20www.recipharm.com)
.