Pharmstandard company presentation Business & Financial results, 2007.

59
Pharmstandard company presentation Business & Financial results, 2007

Transcript of Pharmstandard company presentation Business & Financial results, 2007.

Page 1: Pharmstandard company presentation Business & Financial results, 2007.

Pharmstandard company presentation

Business & Financial results, 2007

Page 2: Pharmstandard company presentation Business & Financial results, 2007.

Disclaimer and Confidentiality Requirements

This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of OJSC Pharmstandard (the “Company”) or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever.

This presentation is only for persons having professional experience in matters relating to investments and must not be acted or relied on by persons who are not Relevant Persons (as defined below). Solicitations resulting from this presentation will only be responded to if the person concerned is a Relevant Person.

This presentation is made to and directed only at (i) persons outside the United Kingdom, (ii) qualified investors or investment professionals falling within Article 19(5) and Article 49(2) (a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (iii) high net worth individuals, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (such persons collectively being referred to as "Relevant Persons").

This presentation and its contents are confidential and must not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person, whether or not such person is a Relevant Person. Failure to comply with this restriction may constitute a violation of applicable securities laws. If you have received this presentation and you are not a Relevant Person you must return it immediately to the Company. This presentation does not constitute a recommendation regarding the securities of the Company.

This presentation includes 'forward-looking statements'. These statements contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the Company’s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Company's projects and services) are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to be materially different from results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this presentation. Each of the Company and the Selling Shareholder and their respective agents, employees and advisers, expressly disclaims any obligation or undertaking to update any forward-looking statements contained herein.

The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice.All information not separately sourced is from Company data.

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Page 3: Pharmstandard company presentation Business & Financial results, 2007.

Today’s Presenting Team

Dr. Igor Krylov

CEO,

Chairman

of the Management Board

and Member

of the Board of Directors

Elena Arkhangelskaya

Chief Financial Officer

Dr. Olga Mednikova

Chief Sales

and Marketing Officer

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Page 4: Pharmstandard company presentation Business & Financial results, 2007.

Company Overview

Dr. Igor Krylov, CEO

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Page 5: Pharmstandard company presentation Business & Financial results, 2007.

Pharmstandard at a Glance

Leading domestic pharmaceutical company in Russia (measured by sales)

• #3 pharma company overall in Russia by sales value in 20071

• #1 pharma company in the Consumer spending (Commercial retail) pharma market by sales value in

20071

Modern and efficient manufacturing facilities

• 4 pharmaceutical production sites and 1 medical equipment and disposables plant

• Russian GMP compliant facilities, some of which are EU GMP compliant

• 200 branded and non-branded pharmaceutical products

• Capacity – more then 1.3 billion packs

Experienced sales and marketing people

• More then 340 sales people and 25 actively promoted brands

• 6 brands among top-20 best selling domestic brands in Russia1

Arbidol®, Pentalgin®, Complivit®, Terpincod®, Codelac®, Flucostat®

Since IPO (May’2007) Pharmstandard is listed on LSE, RTS

• Industry leading growth EBIDTA margin and profitability

• Market capitalization more then $3.5 billion (60% growth from IPO)

Source1 Pharmexpert, preliminary data, in retail prices. Subject to change. . 2 Company As at 31 December 2007

Market

Production

Sales & Marketing

Financials

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Page 6: Pharmstandard company presentation Business & Financial results, 2007.

Russia pharmaceutical market development

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.

1.1 1.3

1.4 1.5 1.6 1.7 1.8 1.9 2.1 2.3

4.4 5.1 5.6 6.79.4 11.0 12.9 15.1 17.5

1.4

2.52.0

2.5

2.5

2.5

2.5

2.5

0.0

5.0

10.0

15.0

20.0

25.0

2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E

US

D m

ln

Hospitals

Commercial

FRP

CAGR 07-12 Total market-15%CAGR 07-12 Commercial segment-17%

7.8

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Page 7: Pharmstandard company presentation Business & Financial results, 2007.

Retail market by countries, value and growth (%)

USA$250 000 mln

+5%

Europe$130 000 mln

+5%

Russia$8 000 mln

+17%

Japan$63 000 mln

+2%

Source: Pharmexpert presentation on Аnnual Conference, St. Petersburg, March, 2008, manufacture prices

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Page 8: Pharmstandard company presentation Business & Financial results, 2007.

Russian Pharma Market Set to Expand

• Drug consumption per capita

expected to double in 2011

due to strong

macroeconomic driving

consumer boom

• Growing access to medicines

in retail market by active

development of distribution

companies and pharmacy

chains

• Increased consumer focus on

health and well being in line

with demographic trends

Pharmaceutical Consumption Per Capita in Russia($)*

Pharmaceutical Consumption Per Capita by Country($)**

Co

ns

um

pti

on

pe

r c

ap

ita

($

)C

on

su

mp

tio

n p

er

ca

pit

a (

$)

3844

59

75 79

96109

124

141

160

0

20

40

60

80

100

120

140

160

180

2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E

* in retail prices

** in producers' prices

Source1: Pharmexpert, preliminary data, subject to change

Source2: Renaissance, EU Market Indicators

20062007

303

230 238

149 144 135

49

330

251 258

160 160145

63

0

50

100

150

200

250

300

350

Greece Hungary CzechRepublic

World East-CentralEurope

Poland Russia

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Page 9: Pharmstandard company presentation Business & Financial results, 2007.

Russian Pharmaceutical market structure 2007

Market structure by sales channelsbased on 2007

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.

IMPORT; 34% DOMESTIC; 66%

IMPORT; 78% DOMESTIC; 22%

0% 20% 40% 60% 80% 100%

Value(USD)

Volume(Packs)

IMPORT

DOMESTIC

3,8 bn units

11,4 bn USD

Market split between domestic and international competitors 2007

Hospitals10%

FRP17%

Commercial73%

Commercial

FRP

Hospitals

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Page 10: Pharmstandard company presentation Business & Financial results, 2007.

FRP – Update

• 2007 budget was set at RUR 40bn (RUR 51.2bn spent)1

• 2006 budget was set at RUR 34bn (RUR 67.9bn spent)

• 2005 budget was set at RUR 50.8bn (RUR 39.6bn spent)

• Resulted in a number of products being removed from the FRP list both voluntarily and involuntarily by pharma companies as FRP officials ask for even longer payment terms and simultaneously cut prices

• 16.9 million participants eligible – 5.5 million currently enrolled

Key facts

• 2006 debts fully paid

• 2008 FRP budget is set at RUR 58bn plus RUR 10bn reserved

• FRP was divided in two parts on federal and regional level

• Going forward Government focused on including generic domestic products on FRP list rather than expensive foreign products

• Currently only 7% of the total FRP market is serviced by Russian pharma companies

Current status

FRP is recovering, domestic pharmacompanies appear to be future beneficiaries

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change

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Page 11: Pharmstandard company presentation Business & Financial results, 2007.

Low Exposure to FRP

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.

Pharmstandard has a lower exposure to the FRP compared to its peers

Composition of Leading Companies’ Sales in Russia by Market Segment in 2007

50

72

95

68

8782

27 31

8287

4612

3

25

8

4

61

65

63

4

16

27 5

14 124

12 11

0

50

100

NO

VA

RTIS

SA

NO

FI-

AV

EN

TIS

PH

AR

MS

TA

ND

AR

D

BA

YER

SC

HER

ING

PH

AR

MA

BER

LIN

-CH

/MEN

AR

INI

SA

ND

OZ

RO

CH

E

JAN

SS

EN

-CIL

AG

GED

EO

N R

ICH

TER

PFIZ

ER

%

HospitalFRP

Commercial

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Page 12: Pharmstandard company presentation Business & Financial results, 2007.

Pharmstandard position in the ATC1 categories of Consumer spending (commercial retail) pharma market by value, 2007

Top 5 ATC1 categories occupies 67% of total Commercial retail market

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.

A - ALIMENTARY TRACT AND METABOLISM

R - RESPIRATORY SYSTEM

C - CARDIOVASCULAR SYSTEM

N - CENTRAL NERVOUS SYSTEM

J - GENERAL ANTI-INFECTIVES SYSTEMIC

G - GENITO-URINARY SYSTEM AND SEX HORMONES

M - MUSCULO-SKELETAL SYSTEM

D - DERMATOLOGICALS

L - ANTINEOPLASTIC AND IMMUNOMODULATING AGENTS

V - VARIOUS

S - SENSORY ORGANS

B - BLOOD AND BLOOD FORMING ORGANS

H - SYSTEMIC HORMONAL PREPARATIONS (EXCLUDING SEX HORMONES)

K - HOSPITAL SOLUTIONS

P - PARASITOLOGY

T - DIAGNOSTIC AGENTS

PHS #5

PHS #2

PHS #1

PHS #1 PHS #25*

*PHS growth +19%

Segm growth +12%

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Page 13: Pharmstandard company presentation Business & Financial results, 2007.

Growth Analysis Across Market Segments1

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.

Dom

esti

c c

om

pan

ies

Inte

rnati

on

al com

pan

ies

Pharmstandard demonstrated leading absolute growth in 2007 among its domestic and international pears

CorporationCommerci

alFRP Hospital

Commercial

FRP HospitalTotal sales

2006Total sales

2007Total

Growth Commercial Growth

Total Growth (% )

Commercial Growth (% )

Pharmstandard 280,7 22,5 7,0 357,2 11,6 6,3 310,3 375,1 64,8 76,4 21% 27%Nizhparm (Stada) 88,2 47,5 2,5 105,1 40,4 3,1 138,2 148,6 10,4 16,9 8% 19%Otechestvennye lekarstva 52,0 25,2 13,0 76,4 18,6 19,6 90,2 114,6 24,4 24,4 27% 47%Pharm-Center 33,4 11,4 25,1 45,5 9,3 36,0 69,9 90,8 20,9 12,1 30% 36%Materia Medika 71,5 0,1 79,7 0,1 71,6 79,8 8,2 8,2 11% 11%Mikrogen NPO 50,8 16,8 61,1 17,0 67,6 78,1 10,5 10,4 16% 20%Veropharm ZAO 41,8 8,4 11,5 50,7 7,3 14,6 61,6 72,6 10,9 8,8 18% 21%Biotek 32,2 4,6 11,5 51,5 3,2 12,4 48,3 67,1 18,8 19,3 39% 60%Akrichin (Polpharma) 41,8 17,0 3,2 44,1 12,4 3,1 61,9 59,6 (2,3) 2,3 (4%) 6%Moshimpharmpreparaty 39,2 1,4 5,9 42,4 1,1 7,2 46,5 50,6 4,1 3,1 9% 8%

Novartis 189,2 183,3 17,7 234,4 212,8 17,3 390,3 464,6 74,3 45,2 19% 24%Sanofi-Aventis 295,0 131,2 76,3 325,4 53,9 71,4 502,5 450,7 (51,9) 30,3 (10%) 10%Pharmstandard 280,7 22,5 7,0 357,2 11,6 6,3 310,3 375,1 64,8 76,4 21% 27%Bayer Shering Pharma 180,6 86,8 21,0 222,4 80,8 24,4 288,4 327,6 39,2 41,8 14% 23%Berlin-Chemie/Menarini 226,4 57,3 14,3 261,4 24,7 15,0 298,1 301,2 3,1 35,0 1% 15%Sandoz 173,5 19,1 29,5 235,1 11,0 40,5 222,1 286,6 64,5 61,5 29% 35%Roche 64,0 188,7 32,9 74,7 170,7 34,9 285,6 280,3 (5,4) 10,7 (2%) 17%Janssen-Cilag 80,3 241,3 7,3 86,9 181,0 10,8 328,9 278,7 (50,2) 6,6 (15%) 8%Gedeon Richter 183,1 45,9 29,3 221,5 15,5 33,4 258,3 270,4 12,1 38,4 5% 21%Pfizer 196,5 27,6 30,1 222,1 6,5 27,0 254,1 255,6 1,5 25,6 1% 13%

2006 2007

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Page 14: Pharmstandard company presentation Business & Financial results, 2007.

Market Share of Top-10 Companies in theRussian Pharma Market (% 2007 in value)1

Market Share of Domestic Pharmaceutical Producers (% 2007 in value)1

#3 pharmaceutical company on Russian market

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.

#3 pharma company in Russia overall

#1 domestic pharma company

Nizpharm (Stada)

Otechestvennye lekarstva5,0%

10,1%

Pharmstandard16,3%

2006 – 15,0% (1st)

Pharm-Center4,0%

3,5%

3,4%

Materia Medika

Mikrogen NPO

Veropharm ZAO

2,9%Biotek

46,9%Other

2,6%

Akrichin(Polpharma)2,2%

Moshimpharmpreparaty

3,2%Veropharm ZAO

Novartis

Bayer Shering Pharma

Berlin-Chemie/Menarini

4,4%

4,2%Sanofi-Aventis

Pharmstandard3,5%

2006 – 3,1% (4th)

3,1%

2,8%

2,7%Sandoz

2,6%Roche

2,6%Janssen-Cilag

2,5%Gedeon Richter

2,4%Pfizer69,0%

Other

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Page 15: Pharmstandard company presentation Business & Financial results, 2007.

A Leader in the Consumer spending (Commercial retail pharma market) of Russian Pharma market

Market Share — Top 10 Companies1 Market Share—Top 10 Domestic Companies1

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.

PHS is #1 in Consumer spending (Commercial retail pharma market)

is 73% of the total market

Nizpharm (Stada)9,4%

Pharmstandard18,7%

2006 – 17,0% (1st)

Otechestvennye lekarstva

4,0%

Materia Medika4,2%

Biotek2,7%

Mikrogen NPO3,2%

Veropharm ZAO2,6%

Pharm-Center2,4%

Krasnogorskleksredstva2,4%

Akrichin (Polpharma)

2,3%

50,2%Other

Sanofi-Aventis4,2%

Berlin Chemie/Menarini3,4%

Pharmstandard4,6%

2006 – 4,2% (2nd)

Sandoz3,0%

Novartis3,0%

Bayer Shering Pharma2,9%Pfizer

2,9%

Gedeon Richter2,8%

Nycomed2,8%Servier

2,7%67,8%Other

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Page 16: Pharmstandard company presentation Business & Financial results, 2007.

2003

4Q03:

Acquisition of ICN’s business in Russia (five factories, distribution centres and pharmacy chain)

Q104:

New management team brought in with experience in international and domestic pharma companies2Q04:Close Polypharm (pharma production facility)

2H05:

Sale of Marbiopharm (pharma production facility)

Creation of holding company/ legal restructuring finalised

1H05:

Acquisition of TZMOI (Tyumen)—manufacturer of medical equipment

Open centralised warehouse for pharmaceutical products in Moscow

1Q08:

Acquisition of 19,88% shares of «DIPAKA TRAIDING LIMITED», which owns Mirpharm

Signing agreement with Grindeks on exclusive distribution and promotion of Mildronate®

Pharmstandard Key Development Milestones

4Q06:

New production of spray, tablets and capsules; central manufacture laboratory and renovation of production facilities

Total investment since 2004: approximately RUR 600m

Leksredstva plant (Kursk)

2007:Solvay and Pharmstandard has signed the agreement on manufacturing two pharmaceutical products Imudon® and IRS 19® in Russia

Start production of Arbidol and Flucostat on Leksredstva ( Kursk)

1H06:

New production of solutions, production of vitamins and insulin at Ufavita plant (Ufa). Total investment since 2004: approximately RUR 730m

May 2006:Legal name changed from Biovit LLC to OJSC Pharmstandard

2H06:Termination of production in Oktyabr plant in St Petersburg, production transferred to other existing sitesAcquisition of Masterlek (3.5% share of domestic Russian Pharma market by sales value)

May 2007:

Pharmstandard successfully completed its IPO, selling 43% of its share capital to the international and domestic institutional investors

Pre 2003:

Group consisted of two manu-facturing facilities (Ufa and Phytopharm) operating under Biovit LLC

2004

2005

2006

2008

Source: Company

Note: OJSC – Open Joint Stock Company, LLC – Limited Liability Company

2007

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Page 17: Pharmstandard company presentation Business & Financial results, 2007.

Modern Production Facilities

Source: Company

Note: Capacity in packs. Figures shown are as of 31 December 2007

Tomsk

Tyumen

Moscow

Ufa

Kursk

TomskhimpharmCapacity: 332 m

TZMOIUfavitaCapacity: 230 m

LeksredstvaCapacity: 719 m

Nizhny Novgorod

PhytopharmCapacity: 56m

Pharmstandard HQ

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Page 18: Pharmstandard company presentation Business & Financial results, 2007.

Production Facilities – Summary Overview

Source: Company. Note: Total capacity calculations assume 8-hour shifts and 5 day working week

Factory Approximate size (sq. m.) Formulation

Capacity 000’s packs Dec 2005

Capacity 000’s packs Dec 2006

Capacity 000’s packs Dec 2007

14'900 (own) Syrops & liquid forms 52,644 52,644 46,456 Tablets 361,077 564,406 638,705 Sprays 10,368 12,288 Powders 1,260 2,241

LEKSREDSTVA (KURSK)

Capsules 16,200 18,870

5'850 (lease) Ampules 7,624 8,595 10,346 Frozen-dried preparation 2,640 2,640 3,360 Syrops & liquid forms 6,360 6,360 9,053 Tablets 63,012 109,973 159,711 Vitamin bars (ferrohematogen) 14,000 22,680 33,660 Insulin 14,400 14,400

UFAVITA (UFA)

Saline infusin 4,500 0

1'200 (lease) Ointments 11,100 1,200 13,600 Powders 10,280 10,280 10,000 Syrops & liquid forms 29,187 24,000 23,699

PHYTOFARM (N.NOVGOROD)

Tablets 12,850 12,850 8,265

29'000 (own) Syrops & liquid forms 1,200 1,200 5,400 TOMSKHIMPHARM (TOMSK) Tablets 206,856 206,856 326,949

Closed in 2006 Capsules 1,384 Sprays 4,582 Tablets 72,797

OKTYABR (S.PETERSBURG)

857,593 1,070,412 1,357,852

Syringes 295 295 552 Needles 624 624 1,200 Sterilizing machines < 100 dm³ 24,250 24,250 8,400 Sterilizing machines > 100 dm³ 319 319 318

Aquadistilling machines 7,320 7,320 6,200

TZMOI (Tyumen)

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Page 19: Pharmstandard company presentation Business & Financial results, 2007.

Diversified Product Portfolio in 2007

Pharmaceuticals86% of 2007 sales

Medical Devices14% of 2007 sales

OTC85% of 2007 sales

Rx1

15% of 2007 sales

• Therapeutic focus:AnalgesicsCough & cold Vitamins Anti-viral Anti-fungal

• Product portfolio includes:Acid pump inhibitorsNitrites & nitratesACE inhibitorsAlimentary tract

metabolism

Source: Company

Note: 1 Includes Other sales

2 Pro forma 2006

33% (21%)2 revenue growth in 2007

37% growth (23%)2 23% (12%)2 growth 33% growth

• Product portfolio includes:Sterilisers (72% of

sales) Distillers (5% of

sales)Medical disposables

(23% of sales)

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Page 20: Pharmstandard company presentation Business & Financial results, 2007.

Pharmstandard achievements 2007

Source: Company1 Pharmexpert,preliminary data, in retail prices. Subject to change.2 As at 31 December 2007

Leading domestic pharmaceutical company in Russia (measured by sales)1:

– #3 pharma company overall in Russia

– #1 pharma company in the commercial segment

Significant growth in sales and profitability2:

– Revenue growth +33% and achieved $445 mln

– Gross profit growth +39% and achieved $268 mln or 60% of sales

– EBITDA growth +50% and achieved $191 mln or 43% of sales

– Net profit growth + 60% and achieved $ 128 mln or 29% of sales

Market leading brands and new launches:

– Arbidol® is a leader of Russian Consumer spending pharma market (measured by sales)1

– 6 brands among top-20 best selling domestic brands in Russia1

– Launched 10 new products – $ 13.7 mln or 3% of total sales.

New long-term projects and acquisitions:

– Co - рroduction contract with Solvay Pharma (IRS-19, Immudon)

– Acquisition 20% of Mir-Farm company (R&D base for future development)

– Exclusive sales contract with Grindex ( Mildronat® ) in Russia

– Successful completion of Masterlek integration

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Page 21: Pharmstandard company presentation Business & Financial results, 2007.

Core Comparables Benchmarking

Net profit margin (2007)

Gross margin (2007)

EBITDA margin (2007)

Sales growth (2007)

Source: Renaissance estimations. Company reports. Source: Renaissance

33,4%

3,9%

39,4%

27,5%

41,6%

22,4%

37,6%

0%

10%

20%

30%

40%

50%

Phar

mst

anda

rd

Aspe

n

Vero

phar

m

KRKA

Hikm

a

Ged

eon

Rich

ter

Stad

a

60,3%48,3%

59,1% 63,8%49,4% 52,9% 48,1%

0%

20%

40%

60%

80%

Phar

mst

anda

rd

Aspe

n

Vero

phar

m

KRKA

Hikm

a

Ged

eon

Rich

ter

Stad

a

42,9%

32,2% 32,2% 30,0%25,4% 25,4%

20,2%

0%

10%

20%

30%

40%

50%

Phar

mst

anda

rd

Aspe

n

Vero

phar

m

KRKA

Hikm

a

Ged

eon

Rich

ter

Stad

a28,7%

17,9% 18,4% 17,0%14,0% 14,9%

6,7%

0%

5%

10%

15%

20%

25%

30%

35%

Phar

mst

anda

rd

Aspe

n

Vero

phar

m

KRKA

Hikm

a

Ged

eon

Rich

ter

Stad

a

PHS has industry leading growth EBIDTA margin and profitability

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Page 22: Pharmstandard company presentation Business & Financial results, 2007.

Pharmstadard’s investment case since IPORussian consumer stocks performance in 2007 vs RTS Index (%)Pharmstandard IPO placement structure

Offer structure:•43.3% of total shares•Date of placement – May 4, 2007•Price

•$58.2 for share •$14.55 for GDR

Stock Exchange (PHST):•LSE - 25% in GDRs•RTS, MICEX - 18.3%

Underwriters: •UBS and Citigroup

Depositary for GDR: •Bank of New York

Source: Bloomberg, Renaissance

60

80

100

120

140

160

180

04.0

5.20

07

04.0

6.20

07

04.0

7.20

07

04.0

8.20

07

04.0

9.20

07

04.1

0.20

07

04.1

1.20

07

04.1

2.20

07

04.0

1.20

08

04.0

2.20

08

04.0

3.20

08

Pharmstandard FTSEurofirst 300 - PharmaceuticalsFTSE Global Pharmaceuticals MSCI Pharmaceuticals Index

50%

70%

90%

110%

130%

150%

16.0

5.20

07

14.0

6.20

07

12.0

7.20

07

09.0

8.20

07

06.0

9.20

07

04.1

0.20

07

01.1

1.20

07

30.1

1.20

07

28.1

2.20

07

05.0

2.20

08

PHST APTK VRPH RTSI

Pharmaceutical stock performance (rebased %) GDRs Pharmaceutical stock performance (rebased %) Local shares

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Page 23: Pharmstandard company presentation Business & Financial results, 2007.

Our Strategy

•Promote our market-leading brands to drive sales growth and profitability

•Launch new products on a regular basis

•Expand sales and marketing effort

•Continue to actively control costs

•Grow through acquisitions

•Exploit opportunities from Federal Reimbursement Programme (FRP)

Building a top-3 pharmaceutical company in Russia

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Page 24: Pharmstandard company presentation Business & Financial results, 2007.

Sales & Marketing Overview

Dr. Olga Mednikova, Chief Sales and Marketing Officer

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Page 25: Pharmstandard company presentation Business & Financial results, 2007.

Promote our market-leading brandsto drive sales growth and profitability

• Arbidol is #1 on Consumer spending pharma market

• 6 leading brands

• “Top of mind” position with consumers

• Significant brand loyalty

• 5 leading brands improve their positions

• 3 leading brands among top-20 on the total Consumer spending pharma market

Exclusively produced by Pharmstandard

Produced by Pharmstandard

Leading domestic pharma trademarks by sales value in 2007

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.Note: 1 Masterlek Brands

Trademark Ranking in 2007 Ranking in 2006ARBIDOL1

1 1

PENTALGIN 2 3

MEXIDOL 3 2

SODIUM CHLORIDE 4 5

TREPINCOD 5 6

VIFERON 6 7

COMPLIVIT 7 10HOWTHORN 8 4

FLUKOSTAT1 9 12

FENOTROPIL 10 8

CEFAZOLIN 11 13

CORTEXIN 12 19

CYCLOFERON 13 17

CAPSICI ANNUI TINCTURE 14 18

CODELAC 15 20

ESSLIVER 16 11

GLUCOSE 17 16

CHONDROLON 18 38

CORVALOL 19 15

BIPHIDUMBAKTERIN 20 14

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Page 26: Pharmstandard company presentation Business & Financial results, 2007.

OTC Products – Top-Selling Products

Source: Company and MasterLek reportsNotes:1 Acquired as part of MasterLek acquisition on 2 August

2006, sales 2006 on pro forma basis, Pro Forma assumes

inclusion of MasterLek as part of Pharmstandard as of 1 January

2006. Sales in 2005 – Masterlek sales.

Product

ATC-2Therapeuticsegments

Arbidol1 Anit-viral 56%Terpincod Cough And Cold 14%Pentalgin Analgesics 9%Complivit Vitamins -6%Flukostat1 Anti-fungal 16%Codelak Cough And Cold 10%Askophen-P Analgesics 7%Ingalipt Cough And Cold 72%Codelak-Phyto Cough And Cold 145%Rinostop Nasal preparationis 79%Other

840

975

899

471

296

222

82

34

29

17

1 190

2 316

1 322

1 314

623

502

412

85

85

56

56

1 465 21%

TOTAL OTC products sales 5 055

1 485

1 163

1 206

663

435

375

80

49

23

31

1 212

6 722 8 235

831

159

108

-40

68

36

5

36

33

25

253

1 513 23%

2006SalesRURm

Sales growthin 2007RURm

% Growthin 2007

2005SalesRURm

2007SalesRURm

26

Page 27: Pharmstandard company presentation Business & Financial results, 2007.

Leading Products in Anti-infective Systemic Use Segment (2007)

Arbidol®—#1 Pharma Brand in Russia

Arbidol®

• Captured #1 brand position, in part, through active promotion by Pharmstandard sales force

• Acquired as part of Masterlek transaction

• Original product developed in 1987, active marketing launched in 2000

• Segment growth 2006-2007 + 31,0% (2001-2007 CAGR+42%)

• Arbidol sales growth 2006-2007 +38,3% (CAGR +127%)

Source: PharmexpertNote: Remodelled to reflect current categories

Source: CompanySource: Pharmexpert preliminary data, retail prices 2007. Subject to change.

2

Annual Segment Sales Dynamics1,2

GRIPPFERON(FIRNM ZAO)

3%

AMIXIN (PHARMSTANDARD)

5%

AFLUBIN (RICHARD BITTNER GMBH)

4%

IMMUNAL (SANDOZ)

6%

OTHER3%

ARBIDOL (PHARMSTANDARD)

35%

ANAFERON (MATERIA MEDIKA)

15%

VIFERON(FERON OOO)

12%

CYCLOFERON (POLYSAN)

7%

OSCILLOCOCCINUM(LABORATOIRE

BOIRON)10%

30,4 41,163,0 74,7

97,2129,1

164,7

3,15,5

12,216,4

44,9

82,9

113,0

1,24

3,03

3,89

4,70

5,64

1,49

1,90

0

50

100

150

200

250

300

2001 2002 2003 2004 2005 2006 2007

Sale

s (

US

$m

)

0,0

1,0

2,0

3,0

4,0

5,0

6,0

Avera

ge p

rice (U

S$

)

OTHER

PHARMSTANDARD

Average Price (US$)

2001-2007 CAGR: 42%

27

Page 28: Pharmstandard company presentation Business & Financial results, 2007.

Arbidol – Marketing Strategy

Marketing strategy

Arbidol is a key driver of the business

Cough & Cold consumer based development and potential for Arbidol

Source: ComConNote: Growth rate based on hy-o-hy growth, represents increase in the number of consumers

• Arbidol is expected to become the key driver for OTC category/entire Company:

Significant market opportunitySuperior efficacy will drive market development and sales growth

• Marketing objective is

to further increase Arbidol's brand awareness as a unique, anti-flu agent with clinically-proven efficacy

to establish strong consumption habit of flu treatment with symptomatic agent plus Arbidol

New DTC campaign has been launched in Jan 2008 “To stop and deactivate virus”

Product(millions of consumers)

1H05

2H05

1H06

2H06

1H07

%growth

Cough & Cold 34,1 33,1 34,3 33,3 34,8 +4,5%Coldrex 7,8 7,5 7,8 8,2 7,9 -3,7%Teraflu 4,1 4,9 5,2 5,0 7,9 +59,3%Arbidol 1,4 1,6 2,4 2,2 3,3 +49,6%

28

Page 29: Pharmstandard company presentation Business & Financial results, 2007.

Pentalgin—#1 Pain Reliever (Non-Narcotic)

Pentalgin

• Franchise includes Pentalgin-N® andPentalgin-ICN®

• First launched Pentalgin-ICN® in 1999 and followed with launch of Pentalgin-N® in 2002

• Steadily gained market share since 2001

• Market segment growth 2006-2007 +16% (2001-2007 CAGR +17%)

• Pentalgin sales growth 2006-2007+13% (2001-2007 CAGR +28%)

Source: Pharmexpert

Top-10 Products in Analgesics Segment (2007)

Annual Segment Sales Dynamics1,2

ALKA-ZELTCER (BAYER SCHERING PHARMA)

3%

OTHER39%

SEDAL-O (SOPHARMA)3%

EFFERALGAN (BMS)3%NUROFEN

(BOOTS HEALTHCAREINTERNATIONAL)

3%

ASPIRIN (BAYER SCHERING

PHARMA)

3%

PENTALGIN (PHARMSTANDARD)

24%

TEMPALGIN(SOPHARMA)

7%

BARALGIN(SANOFI-AVENTIS)

7%

SEDALGIN (ACTAVIS)6%

SOLPADEINE (GSK)3%

75,7102,7 105,9 104,0

131,3152,6

176,917,5

24,5 24,9

30,9

50,658,4

64,5

0,20

0,31

0,39

0,46

0,58

0,24 0,25

0

50

100

150

200

250

300

2001 2002 2003 2004 2005 2006 2007

Sale

s (

US

$m

)

0,0

0,1

0,2

0,3

0,4

0,5

0,6

Avera

ge p

rice (U

S$

)

OTHER

PHARMSTANDARD

Average Price (US$)

2001-2007 CAGR: 17%

Source: CompanySource: Pharmexpert preliminary data, retail prices 2007. Subject to change.

229

Page 30: Pharmstandard company presentation Business & Financial results, 2007.

Pentalgin – Marketing strategy

Source: Comcon

Note: Growth rate based on hy-o-hy growth, represents increase in the number of consumers

• Pentalgin has been keeping leading position since 2001 and demonstrating stable growth

• Pentalgin is expected to be further driver of OTC category

• Marketing objective is to

– keep conversion consumers from old traditional analgesics to Pentalgin through communication of Pentalgin's USP/Best-In-Class efficacy

– to capitalise on Pentalgin’s brand recognition by launching Pentalgin plus® in new (improved) formulation (launched Mar 2008)

– introduce additional new formulations of this leading product to consumers by taking advantage of current brand loyalty

Marketing strategyNon-narcotic analgesics consumer based development and potential for Pentalgin

Product(millions of consumers)

1H05

2H05

1H06

2H06

1H07

%growth

Solpadein 1,5 1,6 1,5 1,3 1,1 -10,7%All other 28,0 27,9 26,4 25,6 24,9 -2,7%Pentalgin 7,9 7,4 6,1 5,9 6,2 +4,6%

30

Page 31: Pharmstandard company presentation Business & Financial results, 2007.

Complivit - #1 Vitamin (Vitamins + Minerals)

Annual Segment Sales Dynamics1

Multivitamins with Minerals Market Share Breakdown (2007)

• Complivit has been leading brand since 2001

• Pharmstandard had 19.7% market share in 2007

• Market segment growth 2006 - 2007 + 8%

(2001-2007 CAGR +15% )

• Complivit sales growth 2006–2007 + 32%

(2001-2007 CAGR +19%)

COMPLIVIT

(PHARMSTANDARD)15%

VITRUM (UNIPHARM INC.) 8%

SUPRADYN(BAYER SCHERING PHARMA)

6%

ELEVIT PRONATAL (BAYER SCHERING PHARMA)

4%

MERZ SPEZIAL DRAGEES (MERZ GMBH)

4%

BIOVITAL GEL FOR CHILDREN

Other48%

MULTI-TABS JUNIOR

(FERROSAN)2%

VITRUM PRENATAL FORTE(UNIPHARM INC.)

VITRUM BEAUTY (UNIPHARM INC.)

3%

MULTI-TABS KID

(FERROSAN)2%

4%(BAYER SCHERING PHARMA)

4%

63,1

81,291,0

102,4

135,9143,9 142,814,7

16,7

18,5

19,3

26,8

27,635,1

3,40

4,97

5,38

5,82

6,23

4,03

4,42

0

20

40

60

80

100

120

140

160

180

200

2001

2002 2003 2004

2005

2006

2007

Sale

s (

US

$m

)

0,0

1,0

2,0

3,0

4,0

5,0

6,0

Avera

ge p

rice (U

S$)

OTHERPHARMSTANDARDAverage Price (US$)

2001-2007 CAGR:15%

Source: CompanySource: Pharmexpert preliminary data, retail prices 2007. Subject to change.

231

Page 32: Pharmstandard company presentation Business & Financial results, 2007.

Complivit – Marketing strategy

• Complivit demonstrates above-market sales growth and expected to continue to be the most popular “Russian vitamin”

• Marketing objectives is to

– increase Complivit consumption through launching of new specialised sub-brands under umbrella (recently launched new brands Complivit Ca D3, Complivit sugar free, Complivit 365)

– Increase brand consumptionamong current users through increasing of period of usage (communication of Comlivit as “annual vitamin” )

Marketing strategyVitamins consumer based development and potential for Complivit

Source: Comcon

Note: Growth rate based on hy-o-hy growth, represents increase in the number of consumers

Product(millions of consumers)

1H05

2H05

1H06

2H06

1H07

%growth

Complivit 3,0 2,7 3,7 3,5 3,9 +11,5%Vitrum 2,4 2,0 2,3 2,0 2,4 +16,3%Centrum 1,6 1,7 1,7 1,6 2,0 +26,4%All other 13,0 11,5 10,6 9,9 10,0 +0,8%

32

Page 33: Pharmstandard company presentation Business & Financial results, 2007.

Product

ATC-2Therapeuticsegments

2006SalesRURm

Sales growthin 2007RURm

% Growthin 2007

2005SalesRURm

2007SalesRURm

Prescription Products—Top Selling Products

Source: Company and MasterLek reports

Note: Shading denotes actively promoted products

1 Acquired as part of MasterLek acquisition on 2 August 2006,

sales on pro forma basis, Pro Forma assumes inclusion

of MasterLek as part of Pharmstandard as of 1 January 2006.

Sales in 2005 – Masterlek sales.

Phosphogliv Hepatic protector 6 253 356 103 41%

Amixin Anti-viral 151 217 247 29 14%

Biosulin Diabet care 26 50 120 70 140%

Rastan Growth hormone 0 0 53 53 16920%

Pikamilon Psychoanaleptics 25 34 45 11 33%

Renipril Cardiovascular 28 36 41 5 14%

Azitrox Systemic Antibacterial 28 34 37 3 10%

Piracetam Psychoanaleptics 13 24 37 13 54%

Termikon Anti-fungal 14 35 37 2 5%

Ciklodol Anti-parkinson products 10 1 29 28 2083%

Other 638 646 489 -157 -24%

TOTAL Rx products sales 939 1 331 1 491 160 12%

33

Page 34: Pharmstandard company presentation Business & Financial results, 2007.

1 Source: Pharmexpert2 Based on consumer prices

Top products in Hepatic Protectors segment (2007)

Phosphogliv® – Successful Rx Product Launch

• Launched in 2005• Novel product in-licensed from the Institute of Biomedical Chemistry • Premium priced product based on superior efficacy • Patent protected until 2018• Clinically validated

– 2nd generation combination therapy with anti-viral, anti-inflammatory andimmunomodulating properties

Market segment growth 2006-2007 + 4% (2001-2007 CAGR +25%)Phosphogliv sales growth 2006-2007+42% (2001-2007 CAGR +149%)

• Expected to be a significant growth driver going forward

Phosphogliv®

Annual segment sales dynamics1

TYCVEOL (EUROPA-

CARSIL (SOPHARMA)9%

LIV-52 (HIMALAYA DRUG COMPANY LTD.)

3%

HEPA-MERZ (MERZ GMBH) 3%

THIOCTACID (PLIVA)4%

BIOPHARM ZAO)3%

OTHER9%

PHOSPHOGLIV (PHARMSTANDARD)

4%

BERLITION (BERLIN-CH/MENARINI)

6%

ESSLIVER (STADA ARZNEIMITTEL AG)

9%

HEPTRAL (ABBOTT LABORATORIES)

22%

ESSENTIALE (SANOFI-AVENTIS)28%

52,2 69,5 80,1 90,9

130,3

194,2 196,3

0,6

0,91,2

1,5

1,8

4,1 8,0

3,864,55

5,12

5,90

6,85

8,74

10,05

0

50

100

150

200

250

2001 2002 2003 2004 2005 2006 2007

Sale

s (

US

$m

)

0,0

2,0

4,0

6,0

8,0

10,0

Avera

ge p

rice (U

S$

)

OTHER

PHARMSTANDARD

Average Price (US$)

2001-2007 CAGR: 25%

Source: CompanySource: Pharmexpert preliminary data, retail prices 2007. Subject to change.

2 Based on consumer prices34

Page 35: Pharmstandard company presentation Business & Financial results, 2007.

New product launches in 2007O

TC

Rx

New products sales achieved $13.7 mln or 3% from total pharmaceutical sales in 2007

Product ATC

Sales value

2007

USD mln

Market

value 2007

USD mln Key Market brands

Recent product launches

175,6 Coldrex, Fervex, Teraflu

68,3 Novo-Passit, Persen

107,9 Immunal, Immunorm

45,0 Calcium D3, Calcium

Maxicold®

Passifit®

Immunex®

Complivit® Ca D3

Complivit® 365

R05A0-Cold Preparations Without Anti-Infectives

N05B5-Herbal Hypnotics/Sedatives

L03A0-Immunostimulating Agents Excluding Interferons

A12A-calcium products

A11A - Multivitamins, combinations

2,0

1,0

0,4

1,2

0,2 231,8 Vitrum, Complivit, Multi-Tabs

239,5 Humulin, Protaphan, Actrapid

21,0 Genotropin, Saizen, Humatrope

241,1 Movalis, Voltaren, Diclofenac

93,2 Mexidol

Biosulin®

Rastan®

Artrozan®

Mexiprim®

Benfolipen®

A10C2-Human Insulins And Analogues

H04C0-Growth Hormones

M01A1-Anti-Rheumatics, Non-Steroidal Plain

C01X0 - All Other Cardiac Preparations

A11D (tablets) - vitamin B1 and combinations

4,9

2,2

0,6

1,1

0,1 15,0 Milgamma, Neuromultivit

Source: CompanySource: Pharmexpert preliminary data, retail prices 2007. Subject to change.

235

Page 36: Pharmstandard company presentation Business & Financial results, 2007.

multivitamins with minerals

232 Vitrum, Multi

Complivit Fe Sep-08 A11A – multivitamins with minerals

232 Vitrum, Multi

Complivit Mg Sep-08 A11A – multivitamins with minerals

232 Vitrum, Multi

Neurocomplit Mar-08 A11D – vitamin B1 and combinations

43 Milgamma, Multi-Tabs B complex, Neuromultivit

Lactazar Sep-08 A15A – appetite stimulants Lactasa Neosmectine Jan-08 A07B – intestinal absorbent

antidiarrhoeals 45 Smecta, Carbone

Activated

Combilipen

Product Approvals and Launches 2008O

TC

Rx

Product

Date of expected launch ATC

ATC value, US$m

(2007) 1 Key market brands

New product launches in 2008

Influnorm May-08 R05A – cold preparations without anti-infectives

175 Coldrex, Fervex, Teraflu

Pentalgine plus Mar-08 N02B – non-narcotics analgesics and antipyretics

248 Tempalgine, Baralgine, Nurofen, Solpadeine

Complivit ophtalmo Sep-08 A11A – multivitamins with minerals

232 Vitrum, Multi-Tabs, Supradine

Complivit Se Sep-08 A11A –

Mar-08 A11D3 (injections) – vitamin B1 and combinations

34 Milgamma, Multi-Tabs B complex

Octolipen Nov-08 A05B0 – hepatic protectors 209 Tioctacid, Berlition Neupomax Sep-08 L03A1 – colony-stimulating

factors 13 Neupogen, Granocyte

Formetin Jun-08 A10B2 – biguanide antidiabetics 21 Glucofazh, Siofor Bloctran Apr-08 C09C0 – antgiotensine-2

antagonists plain 21 Losap, Diovan, Kozaar

Source: CompanySource: Pharmexpert preliminary data, retail prices 2007. Subject to change.

236

Page 37: Pharmstandard company presentation Business & Financial results, 2007.

Expand sales and marketing effort

• Covers 75% of the Russian pharma market

• All sales reps have medical education/work experience

• Appropriately incentivised with cash bonus up to 33% of salary

• In 2008 looking to:

– Increase “feet on the street” to over 470 sales people

– Further specialise sales force by therapeutic area

– Increased product expertise

Experienced sales force up to 340 sales persons1

Source: Company

Note: As at 31 December 2007

Real ti

me d

ata

-

ETM

S

HQ Sales and marketing

Real tim

e d

ata

- ETM

S

National manager

1 manager

Regional manager

23 managers

OTC sales force(134)

Rx sales force(157)

National manager

2 managers

Regional manager

29 managers

OTC Rx(incl. ENDO-

Team)

37

Page 38: Pharmstandard company presentation Business & Financial results, 2007.

Effective Sales Force management system

• Pharmbase software system allowing regular sales in/sales out analysis

– Product distribution and stock on each territory

– Sales performance by each territory and medical rep

• ETMS system allowing effective sales people, marketing activities and clients performance management

– Real time data on sales force activities allowing regional managers to more effectively manage sales force

– Clients data base and prescription dynamic by each doctor

– Effective clients detailing

– Segmentation and targeting of clients

– Daily activities and commitments

– Sales Force recourses allocation analysis by each product

– Data on 101 880 clients: doctors, specialists, pharmacists

are already included

Effective and competitive Sales Force team

38

Page 39: Pharmstandard company presentation Business & Financial results, 2007.

Rapidly Growing Revenue Profile

Source:Company

Note:

1 2005 results include results of Tyumen acquisition (as of 1 January 2005)

2 2006 results include results of MasterLek acquisition (as of 2 August 2006)

3 Pro Forma assumes inclusion of MasterLek as part of Pharmstandard as of 1 January 2006

Achieved 21% growth in 2007 (OTC 23%, Rx 11%, Medical equip 34%)

(pro-forma)

Medical equipment and disposables

PHARMA

Growth

3 946

5 685

8 5239 374

11 371

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

11 000

12 000

2004 IFRS 2005 IFRS 2006 IFRS 2006 pro-forma 2007 IFRS

RU

R,

mln

44%

50%

33%

21%

Growth

14%

13%

14%

18%

100%82%

86%

87%

86%

39

Page 40: Pharmstandard company presentation Business & Financial results, 2007.

Financial Overview

Elena Arkhangelskaya, Chief Financial Officer

40

Page 41: Pharmstandard company presentation Business & Financial results, 2007.

Divisional Sales Breakdown 2004-2007

Source: Company reports, 2004, 2005, 2006, 2007 results audited by E&Y (IFRS)

Note: 1 Pro Forma assumes inclusion of MasterLek as part of Pharmstandard as of 1 January 2006.

Pro-Forma basis 1

IFRS basis2007 2006 2005 2004

Growth 07/06

Growth 07/06, %

Pharmaceutical products 9 763 7 326 4 674 3 946 2 436 33%OTC products 8 235 6 032 3 902 3 347 2 204 37%Branded generics 7 548 5 341 3 275 2 766 2 207 41%Non-branded generics 688 691 627 581 -3 0%Prescription products 1 473 1 199 733 555 274 23%Branded generics 1 207 899 440 294 308 34%Non-branded generics 266 299 293 261 -33 -11%Other sales 55 96 39 44 -42 -43%Medical equipment and disposables 1 609 1 196 1 011 0 412 34%

Sale of goods 11 371 8 523 5 685 3 946 2 849 33%

2007 2006 2005 2004Growth 07/06

Growth 07/06, %

Pharmaceutical products 9 763 8 178 4 674 3 946 1 585 19%OTC products 8 235 6 722 3 902 3 347 1 513 23%Branded generics 7 548 6 031 3 275 2 766 1 516 25%Non-branded generics 688 691 627 581 -3 0%Prescription products 1 473 1 331 733 555 142 11%Branded generics 1 207 1 025 440 294 182 18%Non-branded generics 266 306 293 261 -40 -13%Other sales 55 125 39 44 -70 -56%Medical equipment and disposables 1 609 1 196 1 011 0 412 34%

Sale of goods 11 371 9 374 5 685 3 946 1 997 21%

41

Page 42: Pharmstandard company presentation Business & Financial results, 2007.

Revenue Growth Drivers

Source: Company reports

Note:

1 Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006

2 Excluding Other Pharma Sales

3% 2% 16%

11 371 9 374

0

2 000

4 000

6 000

8 000

10 000

12 000

Sales 2006 PF OTC product sales Rx product sales Med. Equipment Sales 2007 IFRS

RU

R,

mln

Total growth 21% (pro-forma)1

42

Page 43: Pharmstandard company presentation Business & Financial results, 2007.

Margin Expansion 2007

EBITDAGross Profit

Source: Company reports

Note:

1 Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006

1 726

3 178

4 942 5 233

6 852

56%

60%58%

56%

44%

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

2004 IFRS 2005 IFRS 2006 IFRS 2006Pro-forma

2007 IFRS

RU

R m

ln

Gross profit

As % of sales

583

1 720

3 255 3 496

4 882

43%

37%38%

30%

15%

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

2004 IFRS 2005 IFRS 2006 IFRS 2006Pro-forma

2007 IFRS

RU

R m

lnEBITDA

As % of sales

50% EBITDA growth 2006-2007 (IFRS)39% Gross Profit growth 2006-2007 (IFRS)

43

Page 44: Pharmstandard company presentation Business & Financial results, 2007.

Competitive Cost Structure 2007

General and Administration CostsSelling and Distribution Costs

Source: Company reports

Note:

1 Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006

13%

8%

6% 6%

5%

499522443

549 571

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

2 200

2 400

2004 IFRS 2005 IFRS 2006 IFRS 2006Pro-forma

2007 IFRS

RU

R m

lnLabour costs

Other expenses

As % of sales

74% 64%42% 42%

38%

26% 36%58% 58% 62%

14%15%15%

19%

13%

1 626

1 372

1 069

532

1 268

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

2 200

2 400

2004 IFRS 2005 IFRS 2006 IFRS 2006Pro-forma

2007 IFRS

RU

R m

ln

Marketing

Labour costs

Other expenses

As % of sales

30%

59% 52% 52%46%

17%

10%17% 17%

24%

53%

31%

31%30%

29%

44

Page 45: Pharmstandard company presentation Business & Financial results, 2007.

Attractive Profitability Growth

Source: Company reports

Note:

1 Pro Forma assumes inclusion of Masterlek as part of Phamstandard as of 1 January 2006

60% Net Profit growth in 2007 (IFRS)

320

1 019

2 036 2 006

3 263

21%

29%

8%

18%

24%

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

2004 IFRS 2005 IFRS 2006 IFRS 2006pro-forma

2007 IFRS

RU

R m

ln

Net Profit

As % os sales

Net Profit 2004–2007

45

Page 46: Pharmstandard company presentation Business & Financial results, 2007.

Consolidated Balance Sheet and Capex

Capital ExpenditureIFRS basis

Debt summary

• Facility A: US$80.9m (maturity Dec-2009/L+150)

• Facility B: US$51.7m (maturity Dec-2011/L+190)

• Net debt: US$125.1m

CAPEX structure in 2007:

1. Purchase of property, plant and equipment 521.6 mln RUR (76%) 

2. Purchase of intangible assets 165.2 mln RUR (24%)

Source: Company reports

Note:

1 Conversion rate 25,57 RUR/USD

189

889 890

687

0

200

400

600

800

1 000

2004 2005 2006 2007

RU

R,

mln

CAPEX

(in millions of RUR) 2004 2005 2006 2007

Cash and Equivalents 66 244 193 193

Other Current Assets 2 980 4 263 5 300 6 696

Long-term Assets 2 292 3 806 8 277 8 405

Total Assets 5 337 8 313 13 770 15 294

Total Debt 1 496 584 3 875 3 265

Current Liabilities (excl. short-term debt) 931 3 303 2 425 1 129

Non-current Liabilities (excl. long-term debt) 378 502 1 129 1 297

Total Equity 2 533 3 925 6 340 9 603Total Liabilities & Equity 5 337 8 313 13 770 15 294

46

Page 47: Pharmstandard company presentation Business & Financial results, 2007.

Masterlek Integration

• Leading Masterlek brands accelerated its sales growth under Pharmstandard management in 2007 (pro-forma):

– Arbidol +56%; + 831 m RUR

– Flucostat + 16%; + 68 m RUR

– Amixin + 14%; + 29 m RUR

• Improvement of Gross Margin due to decrease of API prices, transferring of production to own facility (Kursk):

– Arbidol to 62% in 2007 vs 46% in 2006

– Flukostat to 86% in 2007 vs 58% in 2006

– Amixin to 75% in 2007 vs 45% in 2006

• Amixin production transfer on own facility (Tomsk) will be fully accomplished in 2008

• Integration of commercial and administrative operations decreased S&D and G&A costs by 4% of sales

Realised estimated synergy effect

Source: Company

47

Page 48: Pharmstandard company presentation Business & Financial results, 2007.

2007 Underlying Financials

RUR Mln FY 2007 FY 2006 Change

Sales 11 371 8 522 33,4%

Gross Profit 6 852 4 942 38,6%

S&D Expenses 1 626 1 268 28,2%

S&D Expenses, % of Sales 14% 15% -1%

G&A Expenses 571 499 14,4%

G&A Expenses, % of Sales 5% 6% -1%

Operating Income 4 614 2 967 55,5%

Net Income 3 263 2 036 60,3%

EBITDA* 4 882 3 255 50,0%

48

Page 49: Pharmstandard company presentation Business & Financial results, 2007.

Appendix

49

Page 50: Pharmstandard company presentation Business & Financial results, 2007.

Russian pharma market – generic market

Commercial

8%

92%

Generics Original

Hospital

83%

17%

Generics Original

FRP

25%

75%

Generics Original

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.

50

Page 51: Pharmstandard company presentation Business & Financial results, 2007.

Structure of the Commercial segment of Russianpharma market by OTC, Rx in volume

26.2

73.8

24.1

75.9

24.9

75.1

25.9

74.1

0%10%20%30%40%50%60%70%80%90%

100%

2004 2005 2006 2007

OTC

Rx

50.3

49.7

48.3

51.5

50.6

49.4

51.4

48.6

0%

20%

40%

60%

80%

100%

2004 2005 2006 2007

OTC

Rx

Structure of the Commercial segment ofRussian pharma market by OTC, Rx in value

Structure of the Russian market by product group (OTC, Rx) 2004-2007

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.

51

Page 52: Pharmstandard company presentation Business & Financial results, 2007.

Ratio of imported and local pharma products in Comercial segment of Russian market is stable since 2004

In value

76.3

23.7

76.5

23.5

76.6

23.4

76.3

23.7

0%

20%

40%

60%

80%

100%

2004 2005 2006 2007

Local

Imported

In volume

32.4

67.6

32.8

67.2

32.8

67.2

32.8

67.2

0%

20%

40%

60%

80%

100%

2004 2005 2006 2007

Local

Imported

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.

52

Page 53: Pharmstandard company presentation Business & Financial results, 2007.

Maxicold®

• Launched in 2007

• Achieved about $2 mln sales during the first year

Maxicold® – Successful OTC Product Launch

Top products in Cold preparations segment (2007)

Annual segment sales dynamics1

Source: Company1 Source: Pharmexpert preliminary data, retail prices. Subject to change2 Based on consumer prices

Annual segment sales dynamics1

37,462,8

89,0 82,2

116,9142,0

173,3

0,0

0,0

0,00,0

0,0

0,1

1,9

1,77 1,76 1,701,93

2,23

3,03

3,73

0

20

40

60

80

100

120

140

160

180

200

2001 2002 2003 2004 2005 2006 2007

Sale

s (

US

$m

)

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

Avera

ge p

rice (U

S$)

OTHERPHARMSTANDARDAverage Price (US$)

2001-2007 CAGR: 29%

ANTIFLU (SAGMEL INC.)3%RINZASIP (UNIQUE

PHARMACEUTICAL LABORATORIES)

3%RINZA (UNIQUE

PHARMACEUTICAL LABORATORIES)

5%

RINIKOLD (SHREYA LIFE SCIENCES)

2%OTHER

4%

COLDACT (RANBAXY LABORATORIES

LTD.)5%

ANTIGRIPPIN (NATUR PRODUCT)

6%

ANTIGRIPPIN (ANTIVIRAL NPO

ZAO)8%

FERVEX (BMS)14%

COLDREX (GSK)20%

TERAFLU (NOVARTIS)

30%

53

Page 54: Pharmstandard company presentation Business & Financial results, 2007.

Flukostat

Flukostat

• Market leader since 2006

• Launched in 2000, actively marketed

since 2002

• Market segment growth 2006-2007 +2% (CAGR 2001-2007 +24%)

• Flucostat sales growth 2006–2007 +21% (CAGR 2001-2007 +102%)

Top 10 Products - Anti Fungal Infections 2007

Annual Segment Sales Dynamics1

NIZORAL(JANSSEN-CILAG)

3%

LAMISIL(NOVARTIS)

6%

IRUNINE(VEROPHARM ZAO)

5%

RUMICOZ(OTECHESTVENNIE

LEKARSTVA)3%

OTHER26%

FLUKOSTAT(PHARMSTANDARD)

18%

DIFLUCAN (PFIZER)17%

MYCOSYST (GEDEON RICHTER)10%

ORUNGAL(JANSSEN-CILAG)

7%

MYCOMAX(ZENTIVA A.S.)

5%

35,0 58,9 59,6 64,7 82,3 107,3 106,1

0,3

2,27,6

10,7

14,8

21,4 24,9

2,63

5,36

6,67

8,517,70

4,164,44

0

20

40

60

80

100

120

140

2001 2002 2003 2004 2005 2006 2007

Sale

s (

US

$m

)

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

Avera

ge p

rice (U

S$)

OTHERPHARMSTANDARDAverage Price (US$)

2001-2007 CAGR: 24%

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.

54

Page 55: Pharmstandard company presentation Business & Financial results, 2007.

GRIPPFERON(FIRN-M ZAO)

3%OTHER

3%

CYCLOFERON(POLYSAN)

7%

IMMUNAL(SANDOZ)

6%

AFLUBIN(RICHARD BITTNER GMBH)

4%

ECHINACEA(SAINT-PETERSBURG PHARMACEUTICAL

FACTORY/GALENOPHARM)

0%

ARBIDOL(PHARMSTANDARD)

35%

ANAFERON (MATERIA MEDIKA)

15%

VIFERON(FERON OOO)

12%

OSCILLOCOCCINUM (LABORATOIRE

BOIRON) 10%

AMIXIN(PHARMSTANDARD)

5%

Amixin

Top 10 products - Anti-virals, excluding anti-HIV 2007

• Mode of action - induces production of all types of interferon (α, β, γ); has antiviral and immunomodulating activity; stimulates production of human antibodies

• Currently 90%1 of prescriptions come from GPs and pediatricians for the treatment of prophylaxis and treatment of URTI

• Other potential indications include acute and chronic pelvic infections and STD

• Market segment growth 2006-2007 +31% (CAGR 2001-2007 +42%)

• Amixin sales growth 2006-2007 +16,7% (CAGR 2001-2007 +37%)

Amixin

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.

55

Page 56: Pharmstandard company presentation Business & Financial results, 2007.

Terpincod/Codelac

Top-10 Products – Antitussive & Expectorants 2007

Annual Segment Sales Dynamics1

64,087,9

114,0 121,2156,9

177,1

220,1

8,4

13,7

26,235,2

40,1

46,3

55,2

0,460,83 1,02 1,22

1,57

0,52 0,67

0

50

100

150

200

250

300

2001 2002 2003 2004 2005 2006 2007

Sale

s (

US

$m

)

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

Avera

ge p

rice (U

S$)

OTHERPHARMSTANDARDAverage Price (US$)

2001-2007 CAGR: 25%

Terpincod

First launched Terpincod in 1996

Terpincod sales growth 2006-2007 + 16%

(CAGR 2001-2007 +43%)

Codelac

Includes Codelac tablets and Codelac Phyto syrup

First launched Codelac tablets in 1996 and followed with Codelac Phyto syrup in 2004

Codelac sales growth 2006-2007 +35% (CAGR 2001-2007 +33%

Market segment growth 2006-2007 +23% (CAGR 2001-2007 +25%) 4%

OTHER32%

AMBROBENE(RATIOPHARM

INTERNATIONAL)

6%

PULMOZYME (ROCHE)

5%

HEDELIX(KREWEL

MEUSELBACHGMBH)

4%

3%

TERPINCOD(PHARMSTANDARD)

13%

LASOLVAN(BOEHRINGERINGELHEIM)

12%

ACC (SANDOZ)10%

CODELAC(PHARMSTANDARD)

6%

DOKTOR MOM (UNIQUE

PHARMACEUTICALLABORATORIES)

5%

Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.

56

Page 57: Pharmstandard company presentation Business & Financial results, 2007.

Top Pharmaceutical Product Drivers

Source: Company and MasterLek reports

Note:

1 Acquired as part of MasterLek acquisition on 2 August 2006,

sales 2006 on pro forma basis, Pro Forma assumes inclusion

of MasterLek as part of Pharmstandard as of 1 January 2006.

Arbidol1

Terpincod

Pentalgin

Phosphogliv

Biosulin

Flukostat1

Rastan

Maxicold

Codelak

Ingalipt

Product

Anti-viral

Cough and Cold

Analgesics

Hepatic protector

Diabet care

Anti-fungal

Growth hormone

Cough and Cold

Cough and Cold

Cough and Cold

ATC-2Therapeuticsegments

TOTAL Pharmaceutical sales

2006SalesRURm

1 485

1 163

1 206

253

50

435

0

7

375

49

8 053

2007SalesRURm

2 316

1 322

1 314

356

120

502

53

50

412

85

9 726

Sales growthin 2007RURm

831

159

108

103

70

68

53

43

36

36

1 673

% Growthin 2007

56%

14%

9%

41%

140%

16%

16920%

618%

10%

72%

21%

57

Page 58: Pharmstandard company presentation Business & Financial results, 2007.

Breakdown of Sales for 2007 by Distributor

• Top 5 distributors accounted for 58% of pharmaceutical product sales in 2007

• Typical payment terms for distributors:

– Regional wholesalers: 45-75 days

– Export distributors: 30-90 days

– National distributors: 60–90 days

– FRP program: 60-90 days

Source: Company

Note: Manufacturers’ prices

Top 5 Distributors – 2007

Distributor % of sales

Genesis 19

Katren 14

Protek 10

SIA International 9

Rosta 6

Total 58

58

Page 59: Pharmstandard company presentation Business & Financial results, 2007.

Thank you!

59