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STADA intends to acquire Russian pharmaceutical company Nizhpharm

STADA Arzneimittel AG has entered into exclusive negotiations to acquire approx. 97% of the shares in the Russian pharmaceutical company Nizhpharm OJSC, Nizhny Novgorod. The provisional agreement (“Heads of Agreement”) was signed today and specifies that STADA will acquire these Nizhpharm shares for an anticipated total price of approx. EUR 80 to 85 million. The final transaction is subject to certain provisions, including the positive results of a due diligence investigation into Nizhpharm by STADA, approval by the STADA Supervisory Board and agreement and execution of a purchase contract. STADA has exclusivity until 31 January 2005.

Founded in 1919, Nizhpharm is now the fourth-largest local pharmaceutical company in Russia in terms of sales value and is one of the fastest-growing suppliers in the Russian pharmaceutical market. In 2003, Nizhpharm increased sales in local currency by +28% to RUB 1,415.3 million and in Euros by +9% to EUR 40.8 million, respectively. These sales were mainly achieved with branded products. According to Nizhpharm, the company also achieved significant sales growth in the first nine months of 2004 of approx. +20% in Russian Rubles and +17% in Euros in comparison to the same period of the previous year. From today’s perspective, Nizhpharm expects that net income after taxes, which amounted to RUB 172.6 million and EUR 5.0 million in 2003, could be almost doubled in 2004. Nizhpharm also anticipates that the strong earnings growth will continue in 2005.

Nizhpharm is currently owned by the European Bank for Reconstruction and Development (EBRD) (25%), the Nizhpharm management (36%) and other institutional and private investors (39%). The shareholders are currently in exclusive negotiations with STADA about the sale of a total of approx. 97% of Nizhpharm’s shares. Both sides are optimistic that the ongoing negotiations will rapidly lead to the successful conclusion of a final agreement.

Nizhpharm employs around 1,250 people in total. Its own production facilities are designed to western standards. Nizhpharm was one of the first companies to be awarded Russian GMP certification (Good Manufacturing Practice, international production standard in the pharmaceutical industry) and anticipates attaining GMP certification to EU standards in the near future.

Nizhpharm's portfolio consists of more than 40 brand-name products with off-patent active ingredients for various strategically selected indication areas. Approx. 74% of Nizhpharm's sales in 2003 were in non-prescription drugs. The Russian market accounts for the major share (84%) of Nizhpharm's sales. Substantial export sales by Nizhpharm's own local subsidiaries are being achieved in Ukraine and Kazakhstan.

From STADA’s perspective, the acquisition of Nizhpharm is an important strategic step and is part of the expansion of Group activities in the CIS states within STADA’s framework of ongoing internationalization.

For more information, please contact:

STADA Arzneimittel AG
Corporate Communications
D-61118 Bad Vilbel
Tel.: +49 6101 603-113
Fax: +49 6101 603-506
e-mail: communications@stada.de

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