SCHWARZ PHARMA On Track

Monheim, (PresseBox) - SCHWARZ PHARMA achieved net sales of €671.2 million in the first nine months of 2007, marking a year-over-year decrease of -6.8%. The operating result rose to €72.4 million (+27.0%). The net result amounted to €25.0 million, compared to €14.0 million last year. Sales of the rotigotine transdermal patch, Neupro®, for treating Parkinson’s disease reached €32.1 million in the first nine months, against €5.1 million in the previous year.

"The business trend has remained on track in the first 9 months of the year", says Detlef Thielgen, Chairman of the Executive Board of SCHWARZ PHARMA AG."The integration process with the UCB Group is continuously running well."

Trend in Net Sales January to September 2007:
Net sales: €671.2 million, -6.8%

SCHWARZ PHARMA achieved net sales of €671.2 million in the first nine months of 2007. After adjusting for exchange rate effects, these fell by 3.7%.

US sales fell by 10.8% to €281.3 million; in US dollars, sales decreased by 3.9%to US$378.2 million. Generic omeprazole sales fell by 10.0% to €130.5 million in the first nine months of 2007. After adjusting for generic products (totaling€175.4 million), the group’s US business fell by 21.1% to €105.9 million. In the first few weeks of its market launch in the USA, rotigotine transdermal patch, Neupro®, for treating Parkinson's disease achieved sales of €3.9 million (US$5.2).

The European affiliates also showed a sales decline in the first nine months of 2007, down -5.1% to €358.8 million.

German sales fell by 20.6% to €126.7 million. This was due to cancellation of the license agreement for the gastrointestinal drug Rifun® (pantoprazole) by the licenser as per January 31, 2007, sales of which had reached €30.3 million in the first nine months of 2006. Despite the difficult market environment, the antiasthmatic drug Atmadisc® (fluticasone/salmeterol; +7.4% to €36.7 million) and the iron preparation Ferro (iron (II) glycine sulphate complex; +6.5% to €11.9 million) recorded sales increases. Neupro® (rotigotine transdermal patch) for treating Parkinson’s disease has been successfully established in the German market and achieved sales of €11.2 million in the first nine months of 2007, distinctly exceeding expectations.

In the other European markets, SCHWARZ PHARMA’s affiliates showed a slight increase in sales of 6.2% to €232.0 million. The introduction of the Parkinson’s patch Neupro® contributed to a sales increase in the UK, Ireland, and Spain as well as the Eastern European countries with the exception of Poland. All in all Neupro® (rotigotine transdermal patch) achieved sales of €17.0 million in the other European markets.

The sales of SCHWARZ PHARMA’s Asian affiliates increased by 5.2% to€28.4 million; after adjusting for exchange rate effects, sales declined by 9.7%.

Earnings Trend January to September 2007:
Operating result: €72.4 million; net result: €25.0 million

SCHWARZ PHARMA achieved a gross profit of €442.4 million in the first nine months of 2007, marking a year-over-year decline of 8.8%. The gross margin declined from 67.4% to 65.9%, especially due to the essential increase in price pressure from generic drugs.

Selling, general and administrative expenses declined by 11.6% to €292.2 million.In the same period of the previous year, increased expenses were incurred by the introduction of the Parkinson’s patch, Neupro®, by executive stock option programs as a result of the share price trend, and by marketing activities for US products and Rifun® in Germany. In addition, in 2006 consulting costs were incurred in connection with the acquisition of SCHWARZ PHARMA by UCB, the Brussels-based Belgian biopharma group.

Research and development costs declined by 21.8% to €120.0 million since the clinical trials for these projects are largely completed; for example, marketing applications were submitted to the European Authorities for Vimpat® (lacosamide)for treating epilepsy and neuropathic pain.

Other income came to €65.7 million in the first nine months of 2007, compared to €84.7 million in the previous year. This decline mainly results from the fact that in the comparison period, SCHWARZ PHARMA had received an up-front payment of US$100 million (€79.5 million) from Pfizer for exclusive rights to fesoterodine.In 2007, planned milestone payments have hitherto reached €51.2 million.The operating result increased by 27.0% in the first nine months of this year to €72.4 million compared to €57.0 million in the comparison period. Due to the decrease in average liquidity, SCHWARZ PHARMA has a low financial result of€4.3 million compared to €5.5 million in the previous year. The resulting pre-tax profit of €76.7 million compares to €62.6 million in the first nine months of 2006.The group’s income tax expense came to €50.9 million, up from €48.3 million.

SCHWARZ PHARMA thus achieved a net result of €25.0 million in the first nine months of 2007, against a figure of €14.0 million in the comparison period. This corresponds to earnings per share of €0.52 compared to €0.30 per share last year.

Cash flow statement, balance sheet, and employees:
Net Cash Position €43.1 million, Equity Ratio 44.1%

Both tax payments and the change in financial structure of the SCHWARZ PHARMA Group due to the domination and profit transfer agreement led to cash outflows from operations of €98.2 million. In the previous year, the receipt of the milestone payment for fesoterodine from Pfizer was the main factor contributing to a cash inflow of €76.9 million.

Cash outflows for investments came to €133.9 million in the first nine months of 2007, compared to €23.8 million in the previous year. The majority of investments were made in tangible assets (€114.8 million), primarily for expanding the company’s fine chemistry production in Shannon/Ireland.Shareholders’ equity rose 1.9% to €576.1 million. The equity ratio of 44.1% was down against the level on December 31, 2006 (52.5%). The net cash position came to €43.1 million as per September 30, 2007.

On September 30, 2007 the number of employees working in the SCHWARZ PHARMA Group worldwide came to 3.679, marking a decrease of 17.8% over December 31, 2006. Job cuts were made necessary by the expiry of patents on key US products, the termination of Rifun® sales in Germany, and sales force restructuring measures. In addition, job vacancies were not refilled.

Outlook for 2007: unchanged

SCHWARZ PHARMA expects sales of €800 million up to € 850 million in fiscal year 2007. Despite a high level of expenses, especially for restructuring, the company seeks to achieve a positive net result. The integration measures under the domination and profit transfer agreement, in force since July 2007, are running as planned.

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