Recordati Industria Chimica e Farmaceutica

Earnings Release • Oct 26, 2017

2017 First nine months results

CONFERENCE CALL – 26 OCTOBER 2017

First nine months 2017 highlights

• Revenue € 963.8 million, up 11.8%
• EBITDA € 342.0 million or 35.5% of sales, up 22.1%
• Operating income (EBIT) € 307.5 million or 31.9% of sales, up 21.8%
• Net income € 219.8 million or 22.8% of sales, up 20.6%
• Net debt € 321.7 million, an increase of € 123.0 million as compared to year-end 2016, after dividend distribution and product acquisition for an overall disbursement of € 339.0 million.
• Approval of Cystadrops® for the ocular manifestations of cystinosis
• Agreement with the Meyer Hospital in Florence for the development of a treatment for ROP
• Acquisition of the European rights to Seloken®/Seloken® ZOK (metoprolol) and Logimax® (metoprolol+felodipine) from AstraZeneca
• Private placement of notes for a total of € 125.0 million
• Agreement with MimeTech for the development of a new compound for neurotrophic keratitis
• Approval of Reagila® (cariprazine) for the treatment of schizophrenia

Main product sales

Corporate products including drugs for rare diseases account for 65.9% of revenue

(million Euro)	Jan-Sept 2017	Jan-Sept 2016	Change %
Zanidip® (lercanidipine)	96.1	90.0	6.8
Zanipress® (lercanidipine+enalapril)	53.7	50.8	5.8
Urorec® (silodosin)	69.5	63.3	9.9
Livazo® (pitavastatin)	29.2	27.0	8.2
Seloken®/Seloken® ZOK/Logimax® (metoprolol/metoprolol+felodipine)	22.7	-	n.s.
Other corporate products*	202.6	175.2	15.6
Drugs for rare diseases	161.3	140.6	14.7

3 * Include the OTC corporate products for an amount of € 76.3 million in 2017 and € 60.4 million in 2016 (up 26.3%).

A diversified product portfolio

Data: First nine months 2017 Total revenue € 963.8 m

Composition of revenue by geography

Continued growth

(million Euro)	Jan-Sep 2017	Jan-Sep 2016	Change %
Italy	192.7	171.2	12.6
France	91.7	84.7	8.2
Germany	87.1	72.7	19.7
U.S.A.	83.4	77.4	7.7
Russia, other CIS countries and Ukraine	79.3	56.1	41.3
Turkey	65.4	65.8	(0.6)
Spain	59.6	55.8	6.7
North Africa	31.2	34.3	(9.0)
Portugal	30.1	29.5	2.2
Other W. Europe countries	38.7	27.5	40.8
Other CEE countries	31.7	24.6	28.8
Other international sales	141.9	132.8	6.9
TOTAL PHARMACEUTICALS	932.8	832.5	12.0
PHARMACEUTICAL CHEMICALS	31.0	29.9	3.8

(In local currency, millions)	Jan-Sep 2017	Jan-Sep 2016	Change %
Russia (RUB)	4,375.5	3,586.4	22.0
Turkey (TRY)	244.4	200.6	21.9
U.S.A. (USD)	95.7	88.4	8.3

Geographical breakdown of pharmaceutical revenue

Data: First nine months 2017 Pharmaceutical revenue € 932.8 m

First nine months 2017 results

Further margin growth

(million Euro)	Jan-Sep 2017	Jan-Sep 2016	Change %
Revenue	963.8	862.4	11.8
Gross Profit	676.2	595.1	13.6
as % of revenue	70.2	69.0
SG&A Expenses	295.2	273.5	7.9
as % of revenue	30.6	31.8
R&D Expenses	72.1	60.2	19.8
as % of revenue	7.5	7.0
Other Income (Expense), net	(1.4)	(9.0)	(84.7)
as % of revenue	(0.1)	(1.0)
Operating Income	307.5	252.4	21.8
as % of revenue	31.9	29.3
Net Income	219.8	182.3	20.6
as % of revenue	22.8	21.1

First nine months 2017 results

Operating segments Revenue EBIT Treatments for rare diseases 16.7% Primary & specialty care 83.3% Treatments for rare diseases 24.0% Primary & specialty care 76.0% EBIT margin on sales: Treatments for rare diseases, 45.8% Primary & Specialty care, 29.1%

Net financial position

(million Euro)	30 Sep 2017	31 Dec 2016	Change
Cash and short-term financial investments	297.9	138.5	159.4
Bank overdrafts and short-term loans	(33.0)	(15.7)	(17.3)
Loans – due within one year	(51.7)	(40.4)	(11.3)
Loans – due after one year	(534.9)	(281.1)	(253.8)
NET FINANCIAL POSITION	(321.7)	(198.8)	(123.0)

Financial projections

2017 targets

(million Euro)	2016 Actual	2017 Targets
Revenue	1,154	1,290 - 1,300
EBITDA	371	450 - 460
Operating income (EBIT)	327	400 - 410
Net Income	237	290 - 295

Company declarations, disclaimers and profile

DECLARATION BY THE MANAGER RESPONSIBLE FOR PREPARING THE COMPANY'S FINANCIAL REPORTS

The manager responsible for preparing the company's financial reports Fritz Squindo declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this presentation corresponds to the documental results, books and accounting records.

Statements contained in this presentation, other than historical facts, are "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements are based on currently available information, on current best estimates, and on assumptions believed to be reasonable. This information, these estimates and assumptions may prove to be incomplete or erroneous, and involve numerous risks and uncertainties, beyond the Company's control. Hence, actual results may differ materially from those expressed or implied by such forward-looking statements.

All mentions and descriptions of Recordati products are intended solely as information on the general nature of the company's activities and are not intended to indicate the advisability of administering any product in any particular instance.

Recordati, established in 1926, is an international pharmaceutical group, listed on the Italian Stock Exchange (Reuters RECI.MI, Bloomberg REC IM, ISIN IT 0003828271) with a total staff of more than 4,100, dedicated to the research, development, manufacturing and marketing of pharmaceuticals. Headquartered in Milan, Italy, Recordati has operations in the main European countries, in Russia, in other Central and Eastern European countries, in Turkey, in the United States of America and in North Africa. An efficient field force of medical representatives promotes a wide range of innovative pharmaceuticals, both proprietary and under license, in a number of therapeutic areas including a specialized business dedicated to treatments for rare diseases. Recordati is a partner of choice for new product licenses for its territories. Recordati is committed to the research and development of new specialties with a focus on treatments for rare diseases. Consolidated revenue for 2016 is € 1,153.9 million, operating income is € 327.4 million and net income is € 237.4 million.

Contact Information Via M. Civitali 1 +39 02 48787393

Offices: Investor Relations: Website: Recordati S.p.A. Marianne Tatschke www.recordati.com 20148 Milano, Italy tatschke.m@recordati.it