STADA Arzneimittel AG — Earnings Release 2007

May 15, 2007

News Details

Corporate | 15 May 2007 07:25

STADA: Successful start in 2007 – Q1: sales +20%, EBIT +28%, net income +22%

STADA Arzneimittel AG / Quarter Results

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Important items at a glance

• Group sales Q1/2007: EUR 360.1 million (+20%)
• Operating profit and EBIT Q1/2007: both at EUR 49.0 million (+28%)
• Net income Q1/2007: EUR 26.9 million (+22%)
• Integration of the Serbian Hemofarm Group develops as planned
• Unchanged optimistic outlook for further business development

The financial figures for the first quarter of 2007 published by STADA
Arzneimittel AG today, on May 15, 2007, show that the strong growth of the
Group continued in the first three months of the current fiscal year. 'The
clear double-digit increases in sales and net income confirm the expected
successful start to fiscal year 2007', says STADA’s Chairman of the
Executive Board Hartmut Retzlaff.

Development of sales
In Group sales, STADA recorded growth of 20% to EUR 360.1 million in the
first three months of 2007 (first quarter of 2006: EUR 299.6 million).

By adjusting this growth rate for acquisitions made by the Group in the
previous 12 months as well as for sales contributions, which in the first
quarter of the previous year, stemmed from disposals made within the
previous 12 months and product sales given up, this results in a
corresponding adjusted organic growth in Group sales of 6% for the first
quarter of 2007.

The STADA Group’s two core segments, Generics and Branded Products, thereby
achieved a total of 94.8% of Group sales (first quarter of 2006: 91.9%).
The significantly larger of the two core segments, Generics, recorded sales
growth of 29% to EUR 267.1 million in the reporting period (first quarter
of 2006: EUR 207.2 million). The share of Generics in Group sales thus
amounted to 74.2% in the first three months of 2007 (first quarter of 2006:
69.2%). In the core segment Branded Products, sales increased by 9% to EUR
74.1 million in the first quarter of the current fiscal year (first quarter
of 2006: EUR 68.0 million). The share of Branded Products in Group sales
thus amounted to 20.6% in the first quarter of 2007 (first quarter of 2006:
22.7%).

As expected, with an increase of 25%, STADA’s international sales grew
again at a stronger rate in the first three months of 2007 as compared to
overall sales of the Group. Thus, sales outside of Germany had a share of
59.8% in the reporting period (first quarter of 2006: 57.5%). International
business has once again proven to be an important growth factor for the
STADA Group and has confirmed STADA’s long-term strategy of
internationalization.

Regional development
In Germany, which continues to be STADA's biggest national market, Group
sales rose by 14% to EUR 144.7 million in the first quarter of 2007 (first
quarter of 2006: EUR 127.3 million). Due to STADA’s ongoing
internationalization, the share of German business in Group sales, however,
decreased as expected from 42.5% in the first quarter of 2006 to 40.2% in
the first quarter of 2007.

In the currently declining German generics market, the STADA Group’s
Generics sales, which, in particular, are based on the two generics sales
lines STADApharm and ALIUD PHARMA, increased by a total of 20% to EUR 114.8
million. As a result, STADA was therefore able to raise the Group’s market
share in the German generics market to 10.6% in the first three months of
2007 (first quarter of 2006: 8.9%).

As of April 1, 2007, with the Act for strengthening competition in public
health insurance (GKV-WSG), an additional law to regulate the German health
care system took effect which, due to comprehensive regulations, will
probably lead to significant structural changes of the German health care
system and the market structures which depend on it.

Within the STADA Group’s sales structures in Germany, ALIUD PHARMA in
particular, which operates without a sales force, but also STADApharm make
use of discount contracts promoted by the GKV-WSG as an additional sales
instrument. Thus, ALIUD PHARMA has already signed 19 discount agreements
with health insurance organizations with a total of approx. 39 million
persons insured.

Overall, not only the consequences of such discount contracts, but also the
complex effects of the GKV-WSG as a whole in the German generics market
will depend on the medium and long-term competitive reactions of all market
participants; they can therefore not be accurately assessed at this point
in time.

From today’s perspective, STADA continues to expect that, notwithstanding
the GKV-WSG, the Group’s sustainable growth course can be continued. In the
current fiscal year 2007, STADA will also react to a possible permanent
burden of earnings due to structural market changes by means of appropriate
measures to secure earnings, if required, which can particularly also
include reductions in personnel in the German sales companies. Currently,
in this connection, positions in the Generics sales force remain unoccupied
to a larger extent.

The Group’s Branded Products business in Germany remains mostly unaffected
by the GKV-WSG. Here, with EUR 28.9 million in the first quarter of 2007,
the high sales level of the corresponding period in the previous year
(first quarter of 2006: EUR 29.4 million) was nearly achieved.

In Serbia, STADA’s now – after the successful takeover of the Serbian
Hemofarm Group in the third quarter of 2006 – second largest national
market, the Group achieved sales in the amount of RSD 2,512.1 million or
EUR 31.7 million in the first three months of 2007. Thereby, the structural
integration of the Hemofarm Group into the STADA Group continues to develop
as planned. Overall, STADA continues to expect from the operating
integration of the Hemofarm Group into the STADA Group an additional
positive profit contribution in the amount of clear double-digit euro
millions within the first three full fiscal years after the acquisition.

In Belgium, sales achieved by STADA with the local STADA sales companies,
grew by a total of 10% to EUR 26.1 million (first quarter of 2006: EUR 23.7
million) in the reporting period. The position as the clear market leader
in the Belgian generics market was thereby further strengthened.

In Russia, due to the inclusion of the Russian Hemofarm sales line, local
sales achieved there in the first quarter of 2007 by STADA as a Group were
increased by 3% to EUR 21.4 million as compared to the same period in the
previous year (first quarter of 2006: EUR 20.8 million). As compared to the
corresponding quarter of the previous year, it must be taken into account
that the biggest local product Chondroxide has, as is known, not been part
of the Russian reimbursement program since June 1, 2006, and sales
therefore clearly declined as compared to the first quarter of 2006; the
inclusion of Chondroxide into this program had indeed stimulated demand,
but was no longer attractive in terms of earnings due to required
significant price reductions.

In Italy, STADA achieved, with a minimal reduction in sales of 1% to EUR
25.0 million (first quarter of 2006: EUR 25.1 million), almost the same
sales level in the reporting period as in the corresponding quarter of the
previous year. The Italian generics market continues to lack regulative
structures, which stimulate the demand for generics on a sustainable basis.

In Spain, sales in the first quarter of 2007 grew despite significant price
reductions due to regulatory measures in the local generics market as of
March 1, 2007, by 6% to EUR 16.8 million (first quarter of 2006: EUR 15.8
million).

In France, STADA’s local sales went down by 4% to EUR 15.6 million in the
first quarter of 2007 (first quarter of 2006: EUR 16.3 million). Here, the
known comprehensive stockpiling activities on the part of the pharmacy and
wholesaler distribution channels in the fourth quarter of 2006 in advance
of the regulatory restrictions for the granting of discounts by
manufacturers to the distribution channels as of January 1, 2007 were
noticeable as a diminishing effect.

STADA recorded strong sales growth in the United Kingdom in the first
quarter of 2007; there, sales went up by 29% to EUR 11.8 million (first
quarter of 2006: EUR 9.2 million). In most other European countries too,
the local sales companies achieved sales growth; by comparing the first
quarter of 2007 and the first quarter of 2006, double-digit growth rates
were reported in the Netherlands (+13%), in Ireland (+13%), in Austria
(+65%) and in Portugal (+48%).

In the Asian markets, sales achieved by STADA declined by 52% to EUR 9.1
million in the first quarter of 2007 (first quarter of 2006: EUR 18.9
million). It must be taken into account here that STADA had shown in
Vietnam, in 2006, due to a tender business, focused on the first quarter of
2006 with a sales volume of EUR 12.6 million, exceptionally high one-time
sales in the first three months of 2006.

Development of earnings
Net income rose by 22% to EUR 26.9 million in the reporting period (first
quarter of 2006: EUR 22.1 million) and thereby went up again at a stronger
rate as compared to sales growth. Earnings per share in the first quarter
of 2007 amounted to EUR 0.46 (first quarter of 2006: EUR 0.41), taking into
consideration that the average number of STADA shares increased by 9% as
compared to the first quarter of 2006 due to the exercise of options since
then. This is also noticeable for the diluted earnings per share, which
amounted to EUR 0.44 in the first quarter of 2007 (first quarter of 2006:
EUR 0.38).

The other key earnings figures also showed clear growth in the first three
months of 2007. Operating profit showed an increase of 28% to EUR 49.0
million in the first quarter of 2007 (first quarter of 2006: EUR 38.2
million). Earnings before taxes (EBT) rose by 14% to EUR 40.6 million in
the reporting period (first quarter of 2006: EUR 35.6 million). Earnings
before interest and taxes (EBIT) grew by 28% to EUR 49.0 million in the
first quarter of 2007 (first quarter of 2006: EUR 38.3 million). Earnings
before interest, taxes, depreciation and amortization (EBITDA) increased in
the first three months of the current fiscal year by 25% to EUR 64.8
million (first quarter of 2006: EUR 51.7 million).

A sales-related operating profit margin of 13.6% resulted for the first
quarter of the current fiscal year (first quarter of 2006: 12.8%); thus, in
the first three months of 2007 STADA achieved a higher operating
profitability than in the corresponding period of the previous year.

Thereby, no one-time special effects influencing the aforementioned key
earnings figures occurred in the first quarter of 2007; the first quarter
of 2006, by contrast, was still burdened by one-time special effects in the
total amount of EUR 5.8 million.

Product development
Due to the Group’s comprehensive development and approval activities, STADA
was able to launch 116 new products into the market in the first quarter of
2007 (first quarter of 2006: 103 product launches). From the Executive
Board’s point of view, STADA’s product pipeline continues to be
well-filled, so that the Group can provide the STADA subsidiaries with
numerous products for launches in the future, too. This applies in
particular with regard to generics in the countries of the EU. Research and
development costs amounted to EUR 8.8 million in the first quarter of 2007
(first quarter of 2006: EUR 7.9 million).

In addition, via BIOCEUTICALS Arzneimittel AG, a company initiated by STADA
and predominantly financed via venture capital, STADA continues to pursue
the development of two biosimilar products.

For Erythropoietin-zeta (Epo-zeta), for which, as is known, extensive
international distribution rights were transferred to the clinic specialist
Hospira in November 2006, STADA and BIOCEUTICALS continue to assume that
there is a chance to obtain an approval for the indication 'dialysis' by
the end of the current fiscal year 2007.

For the second biosimilar project Figrastim, first clinical studies were
begun in the current second quarter of 2007.

Financial position and cash flow
In the Executive Board’s view, the STADA Group’s financial position
continues to be healthy and stable.

As of March 31, 2007, the equity-to-assets ratio was 40.1% (December 31,
2006: 40.1%). Net debt amounted to EUR 756.2 million on this date (December
31, 2006: EUR 773.0 million).

With EUR 30.6 million in the first quarter of 2007, the operating cash flow
was clearly above the value of the first quarter of 2006 (EUR -31.5 million
or EUR 7.4 million adjusted for the burdening one-time special effect at
that time for the partial payment of existing liabilities from the purchase
of the SANKYO branded product package in the fourth quarter of 2005).

Active acquisition policy to be pursued
STADA continues to pursue an active acquisition policy to accelerate Group
growth and thereby also constantly examines its own positioning in the
scope of international consolidation processes within the pharmaceutical
and especially the generics market.

In doing so, essential acquisition goals for STADA remain the further
extension of its international sales presence as well as the generation of
economies of scale effects in the areas of procurement, production, product
development and/or sales. 'Should we find appropriate acquisition targets,
we continue to imagine adequate capital measures in order to create a
sufficient financial framework' comments STADA’s Chief Financial Officer
Wolfgang Jeblonski.

Unchanged optimistic outlook
The Executive Board’s outlook on the STADA Group’s further development of
business is optimistic – despite significant regulatory measures and
intensive competition, in particular also price wars, which must always be
expected in individual national markets. However, due to the strategic
positioning and operative alignment, the Executive Board continues to
assume that STADA, also in the future, will be able to benefit from
structural growth potentials of the markets and to continue the Group’s
sustained growth course; thereby, the continued goal of an ongoing
improvement in the operating profit margin is being pursued. 'We expect
that 2007 will become the twelfth record year in a row in sales and
earnings', concludes Retzlaff.

Further information:
STADA Arzneimittel AG / Corporate Communications / Stadastraße 2–18 /
61118 Bad Vilbel, Germany
Phone: +49(0) 6101 603-113 / Fax: +49(0) 6101 603-506 /
E-mail: communications@stada.de
Or visit our website at www.stada.com

DGAP 15.05.2007

Language: English
Issuer: STADA Arzneimittel AG
Stadastraße 2-18
61118 Bad Vilbel Deutschland
Phone: +49 (0)6101 603- 113
Fax: +49 (0)6101 603- 506
E-mail: communications@stada.de
www: www.stada.de
ISIN: DE0007251803, DE0007251845,
WKN: 725180, 725184,
Indices: MDAX
Listed: Amtlicher Markt in Frankfurt (Prime Standard), Düsseldorf;
Freiverkehr in Berlin-Bremen, Hannover, Hamburg, München,
Stuttgart

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