Zentiva continues to deliver growth

Zentiva, the Czech-based generic pharmaceuticals company, has seen net sales grow by 11.2% in 2004 to CZK10,673.8m (€360m). Total sales growth was 9.2% excluding the one-off impact of CZK 187.6m (€6.4m), which was due to the sale of know-how following an antimonopoly ruling post the acquisition of Slovakofarma.

The key factor behind Zentiva's growth in 2004 was the success of its branded prescription pharmaceuticals business with sales increasing by 10.4% due to the significant growth of its modern branded product portfolio. During the third quarter the company recorded significantly higher sales of the products, for which the know-how will be disposed of due to the ruling of the anti-monopoly authorities. This was the result of higher demand from wholesalers in order to secure the stocks needed to cover the period of the transfer of marketing approvals. As a consequence of this additional wholesaler demand in Q3, sales of these products were significantly lower in Q4.

In 2004, Zentiva's business in the Czech and Slovak Republics developed in line with the retail market in both countries. In these two markets, Zentiva's strategy is continuing to prove very successful with the strong momentum behind the company's key promoted brands being offset by declining sales of older non-promoted products, as well as the products covered by the antimonopoly ruling.

Sales grew by 126.8% in Poland and 43.8% in Russia in 2004, relative to 2003 on a pro forma basis. This rapid growth is a result of our strategy of strengthening our position in these attractive new markets by focusing on certain of our key promoted brands.

The strategic focus on promoted branded pharmaceutical products meant that this key product group continued to increase its contribution to Zentiva's overall sales. These products are characterised by fast growth and relatively higher margins. The sales of its top fifteen products represented 37.2% of total sales in 2004 (2003: 29.0%) highlighting the success in driving sales growth through a portfolio of promoted brands. In Poland and Russia, business is largely based on promoted branded products, while in Slovakia Zentiva continues to modernise the portfolio with new promoted brands in response to significant changes in the overall market environment.

Ji?i Michal, chairman and ceo said: 'I am pleased with the excellent results that Zentiva has reported for 2004. These figures clearly highlight how we have leveraged the acquisition and integration of Slovakofarma to drive the successful expansion of our business in central and eastern Europe. The growth that we have achieved in both Poland and Russia has been particularly gratifying, as has our performance in Slovakia against a background of difficult market conditions.

'Our on-going success is based on our focus on the primary care segment of each of the markets in which we operate and our ability to manage our product portfolio and development pipeline so that we can provide as many patients as possible with modern cost-effective healthcare. During the course of 2004 we have organised our production capacity so that we now have an efficient platform to support our ambitious growth targets.

'Looking ahead I am confident that by extending our primary care focussed strategy to more markets in Central and Eastern Europe, Zentiva can continue to generate attractive returns for its shareholders.'