Milan, 28 September 2001

1
Business on track Pipeline fills up
Milan, 28 September 2001
0
2
KEY EVENTS IN 2000

• Strong improvement in business
• Expansion in France completed successfully
• Zanidip license for the USA
• Pharmacia agreement a strong basis for further
  growth

3
KEY RECENT EVENTS

• Zanidip ready for filing in the USA
• Pipeline fills up
• Lercadip in Italy

4
KEY TRENDS IN H1 2001

• International pharmaceutical sales up 141.7
• Successful roll-out of lercanidipine
• Double digit organic growth continues
• Further increase in profitability
• EBITDA 68.2
• EBIT 64.8
• Debt/equity ratio reduced to 0.35

5
RESULTS H1 2001
(million euro)
H1 2000
H1 2001
Change
Net Sales
156.6
213.7
36.4
90.4 57.7
126.3 59.1
Gross Profit as of sales
39.7
RD Expenses as of sales
17.5 11.2
15.1 7.1
(13.8)
EBITDA as of sales
47.1 22.0
28.0 17.9
68.2
EBIT as of sales
18.8 12.0
31.0 14.5
64.8
Pretax Income as of sales
19.6 12.5
27.7 12.9
41.1
Net Income as of sales
12.2 7.8
17.6 8.2
44.3
6
NET INCOME
Change
H1 2001
H1 2000
(million euro)
Net Income from operations
68.9
10.4
17.6
Gain from sale of a business
1.8
Net Income
44.3
17.6
12.2
7
COMPOSITION OF SALES
(million euro)
H1 2001
H1 2000
Change
112.1 71.6
168.5 78.9
PHARMACEUTICALS
50.3
PHARMACEUTICAL CHEMICALS
44.5 28.4
45.2 21.1
1.5
156.6 100.0
213.7 100.0
TOTAL
36.4
80.3 51.3
86.8 40.6
ITALY
8.1
126.9 59.4
76.3 48.7
INTERNATIONAL
66.2
8
COMPOSITION OF PHARMACEUTICAL SALES
(million euro)
H1 2001
H1 2000
Change
81.3 48.3
76.0 67.8
7.0
Pharmaceuticals Italy
12.1 10.8
44.5 26.4
268.3
Pharmaceuticals France
10.2 6.0
8.6 7.7
Pharmaceuticals Spain
18.3
32.5 19.3
15.4 13.7
International licensees
111.4
36.1 32.2
87.2 51.7
International pharmaceuticals
141.7
112.1 100.0
168.5 100.0
50.3
TOTAL PHARMACEUTICALS
9
MAIN PRODUCTS
Breakdown of 1H 2001 pharmaceutical sales
Zanidip 17 (lercanidipine)
Tora-Dol 7
Other 33
Elopram 7
Main Products
Isocef 5
Hexa line 5 (biclotimol)
Exomuc 5
Neo Codion 4
Ulcotenal 4
Diezime 3
Urispas 3 (flavoxate)
Acequin/quide 3
Lomexin 2 (fenticonazole)
Amodex 2
10
SOURCES OF GROWTH
Price / Exchange
Volume
Total
( change, H1 2001 over H1 2000)
Pharmaceuticals
14.9
13.9
1.0
Pharmaceutical Chemicals
1.5
2.1
-0.6
11.1
Organic Growth, total
10.6
0.5
Acquisitions
25.3
25.3
Total Growth
36.4
35.9
0.5
11
EBITDA BY BUSINESS AREA
(million euro)
Change
H1 2001
H1 2000
Pharmaceuticals as of sales
17.2 15.3
35.9 21.3
108.9
Pharmaceutical Chemicals as of sales
10.8 22.4
11.2 22.5
3.7
Total as of sales
28.0 17.9
47.1 22.0
68.2
Operating depreciation
19.2
7.9
9.4
Goodwill amortization
6.7
1.3
416.8
EBIT as of sales
18.8 12.0
31.0 14.5
64.8
Including inter-company sales
12
CAPITAL EMPLOYED
2000 31 DEC
2001 30 JUN
(million euro)
Net Working Capital for Operations
94.1
96.6
194.4
192.9
Net Non-current Assets
Reserves for Long - term Liabilities
(22.2)
(28.6)
260.9
266.3
CAPITAL EMPLOYED
129.2
68.3
Net Debt
137.1
Shareholders Equity
192.6
FINANCING OF CAPITAL EMPLOYED
266.3
260.9
0.94

• 0.35

NET DEBT / EQUITY RATIO
13
ZANIDIP (LERCANIDIPINE)A COMPARATIVE PRODUCT
PROFILE

• Latest generation calcium-channel blocker
• Natural once a day
• Efficacy comparable to best competitors
• Excellent / superior tolerability and safety
  profile

14
ZANIDIP (LERCANIDIPINE)THE REFERENCE MARKET

• Hypertension is the largest indication worldwide
  - over 30 billion
• Addressed by several classes of drugs
• CCBs are one of the largest, about 10 billion
• The leading brand is Norvasc (amlodipine), sold
  by Pfizer, about 3.4 billion

15
ROLL OUT HISTORY
EXPECTED 2001
1998
1999
2000
AUSTRIA GREECE ISRAEL ITALY LUXEMBOURG NETHERLANDS
SPAIN UK
BELGIUM BRAZIL LEBANON
CHILE CYPRUS DENMARK FINLAND GERMANY KOREA KUWAI
T NORWAY PAKISTAN PHILIPPINES SWEDEN
ARGENTINA FRANCE HONG KONG VENEZUELA ECUADOR HUNGA
RY AUSTRALIA CHINA LITHUANIA RUMANIA
Dec. 1997
16
LERCANIDIPINE SALES
(million euro)
28.6
20.3
15.7
14.4
12.9
5.9
Total sales
Direct sales
Sales to licensees
17
LERCANIDIPINE IN ITALY - Market share as a of
all CCBs
18
LERCANIDIPINE AS A OF ALL CALCIUM CHANNEL
BLOCKERS
IMS data - 2Q 2001 - bubble size represents
market value of CCBs
19
LERCANIDIPINE - QUARTERLY IMS DATA IN 11 KEY
MARKETS
share of CCBs
million
20
ROLL OUT PLAN
Status Today
LAUNCHED 28 countries, representing approx.
30 of world market (of which 15 in last
12 months)APPROVED 6 additional
countriesFILED FORAPPROVAL 44 additional
countriesLICENSED gt30 additional countries
21
ROLL OUT PLAN
Key countries where regulatory development is
ongoing
AUSTRALIA (approved, launch late 2001 - early
2002)CHINA (approval expected 4Q
2001) USA (to be filed 4Q 2001)CANADA
(filing expected 4Q 2001)JAPAN (local phase
III studies)
22
THE HYPERTENSION MARKET IN THE USA

• Hypertension affects over 50 million people in
  the U.S.
• Market size exceeds 12 bn US in annual sales
• Calcium Channel Blockers account for well over
  one third of the anti-hypertensive market
• Norvasc sales exceed 1.5 billion

Source Recordati / Forest Laboratories
23
FOREST LABORATORIES THE RIGHT PARTNER

• Annual sales exceeding 1.1 billion US
• Sales force of over 1400 Reps
• Established presence in the cardiovascular market
• Tiazac sales well in excess of 150 ml US (gt5
  market share)
• Strong track record in European partnerships
  collaborations in FDA filings

Source Forest Laboratories
24
TIAZAC SALES DEVELOPMENT
(million USD)
177
158
gt5 market share
130
85
25
Fiscal year ending March
Source Forest Laboratories
25
DRIVERS FOR GROWTHLICENSED-IN PRODUCTS

• Focus, determination, speed and willingness
• to invest
• Multi-territorial presence
• Growing interest in the cardiovascular
• therapeutic area
• A pipeline with the right balance between
• potential and risks as well as time to market

26
FILLING THE PIPELINELICENSING-IN RESULTS YTD
2001

• An advantageous nitroglycerin patch from Mylan.
• Launch in Italy, filing in France and
  Portugal via MRP, in 2002
• An antiviral from Roche in semi-exclusivity for
  Italy (under registration)
• Advanced negotiations for
• A superstatin in semi-exclusivity for Italy
  (phase III)
• An anti-ulcer drug (PPI) for Italy (already
  marketed)
• Escitalopram for Italy

27
FILLING THE PIPELINEONGOING RD

• Lercanidipine
• - Advantageous clinical profile consolidates
• - Patent life in extension

28
FILLING THE PIPELINEONGOING RD

• Lercanidipine-ACEI fixed combination
• - New aggressive targets for blood pressure
• control
• - Combination of drugs needed for most patients
• - Patient compliance
• - Fixed combinations will play a significant
  role
• in the future hypertension market
• - Currently in phase III

29
FILLING THE PIPELINEONGOING RD

• Urology
• - Collaboration agreement with Pharmacia
• - Lead optimization in the area of overactive
• bladder is at an advanced stage
• - Formulation activities are underway on a lead
• compound for female sexual dysfunction
• - Satisfactory progress
  
  

30
Basis for 2001 - 2004 targets

• Current business
• Current products/late stage projects
• Current geography
• Zanidip in U.S., Japan not included

31
2001-2004 TARGETS
CAGR 2000-2004
(million euro)
2000
2001
2004
542
355.9
426
11.1
Net Sales
206.3 58.0
249 58.5
326 60.1
Gross Profit as of sales
12.1
36.9 10.4
36 8.5
54 10.0
RD as of sales
10.1
70.6 19.8
EBITDA as of sales
89 21.0
120 22.2
14.3
46.6 13.1
57 13.5
88 16.3
EBIT as of sales
17.3
32
EVOLUTION OF NET SALES EBIT
(million euro)
16.3
15.2
14.1
13.5
13.1
13.0
12.1
11.0
10.4
Net Sales
EBIT
EBIT prior targets
33
RECORDATI IN 2004
(million euro)
2000
2004
CAGR


Net Sales
356
542
11.1
Pharmaceuticals
433
269
12.6
87
6.0
109
Pharmaceutical Chemicals
8.5
212
153
Italy
12.9
330
203
Other Countries