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        <td width="100%"><font FACE="Arial" size="3"><b><a name="PLIVAS SHARES VALUE MUST RETURN TO 600 KUNA">PLIVAS SHARES VALUE MUST RETURN

        TO 600 KUNA</a></b><p></font><font FACE="Arial" size="2">Vecernji list, Wednesday,

        09/09/1998 </p>

        <p>Our share price has drastically decreased, but not due to incompetent business

        activities, but because of the global market crisis. *Because of the Russian crisis,

        almost all foreign investors have withdrawn from Croatia, and the Zagreb Stock Exchange is

        practically out of business. *Almost all expert analysts estimate that the PLIVAS share

        price must increase from its present 350 kuna to some 600 kuna. *We shall continue

        supplying hospitals, but large scale drug-dealers will be cut off until they pay their

        debts, totalling some 400 million kuna. </p>

        <p>&nbsp;</p>

        <p>Reporter: Diana Glavina, Vecernji list</p>

        <p>The President of the Croatian multinational company PLIVA, Zeljko Covic, M.Sc., is

        extremely pleased. The reasons are, above all, the excellent six-month results, high rates

        of increase, which are the best proof of PLIVAs steady growth. In comparison to the

        same period last year, the PLIVAs total income increased by as much as 31.1%, amounting

        to 1.8 billion kuna. EBIT increased almost 30% (615.4 million kuna, representing 80% of

        1997 totals). Net profit increased 7.7% to 407.7 million kuna. </p>

        <b><p>How do you explain these extremely high sales growth rates?</b></p>

        <p>- PLIVAs goal  the internationalisation of business activities  has from the

        very beginning been marked with our endeavours towards an increase of our profit from the

        international market. And today, for the first time, the international market profit

        share, which amounts to 57.6%, is for the first time larger than the profit share from the

        domestic market. Our short-term goal is 60%, in order to ensure the additional stability

        of the company. Furthermore, PLIVA has an optimal export structure in certain regions, so

        that immediately after Croatia and its 42% share of total income are the countries of

        Central and Eastern Europe with a 25% share, and this amounts to an 147% sales increase in

        comparison with the first six months of last year. This is partially a result of our

        acquisition of Polfa Krakow, but even without that, our profits in the region have been

        constantly increasing. I would like to point out that only three years ago, our profit

        from the above mentioned countries amounted to three or four percent. Then followed

        Western Europe with eight percent of income, which means that sales increased by 69%

        there. America accounts for 18 percent of PLIVAs income, and Russia four percent.</p>

        <p>Income in Croatia has grown around 8.9 percent, which only proves our thesis that the

        possibilities for a more meaningful growth in Croatia are limited by the size of the

        market. </p>

        <b><p>Despite the outstanding financial results, PLIVAs share price has decreased

        considerably. What is your explanation of such a contradictory situation?</b></p>

        <p>- It is a fact that the price of shares has dropped considerably. But this is merely

        the result of international market trends, the result of the crises which have shaken up

        the global economy and finances. At the moment, Russia is at the centre of all the crises,

        but let us not forget that the complete effects of the Asian crisis are not yet known. And

        it is a well-known fact that in such moments of crisis, investors react with panic and

        make irrational decisions. These may be non-selective decisions whose repercussions may be

        felt throughout the whole region, not differentiating between the companies and countries

        which are and which are not in crisis. </p>

        <p>And this is why at the moment Croatia is being connected with the Russian crisis. </p>

        <p><b>What is your position as a successful company in such circumstances  are you

        powerless or are you going to be able to make certain moves?</b></p>

        <b><p>- </b>We have just published our financial results, and as usual, we are going on

        the road show with an aim of explaining to the shareholders and foreign investors

        the difference between the Croatian market and PLIVA and all the latest events in Russia. </p>

        <p>Due to the Russian crisis, all foreign investors have withdrawn from Croatia. The

        Zagreb Stock Exchange is practically out of business, and the situation in the countries

        of Central and Eastern Europe, including Russia of course, is very much alike. As I said,

        our income from Russia is four percent, so even if we calculate all the possible risks

        which PLIVA might take due to the devaluation of the Ruble and the crisis on the whole,

        our losses would be practically non-existent. On the other hand, we hold as our advantage

        the fact that PLIVAs income from the stable parts of the world drastically decreases

        the risk of investments in PLIVA. </p>

        <b><p>Have you got expert estimations regarding the PLIVAs share price in the future?</b></p>

        <p>- All the serious analysts are predicting a speedy recovery of PLIVAs shares, and

        according to their estimations the share price should increase to around 600 kuna. The

        Russian tornado has passed over our country too, but I repeat, we are going to use firm

        arguments to ensure the investors that the risk of investing in PLIVA truly is minimal.

        For example, sales of Azithromycin alone represent 30 percent of our income and is

        virtually risk-free. This allows us to give a strong argument to investors and

        shareholders and ask them not to put us in the same basket with Russian companies, which

        rely exclusively on their domestic market and which are over-burdened with massive debts. </p>

        <b><p>Still, according to some analysts, investment banks are saturated with PLIVAs

        shares and this is why they are selling them now.</b></p>

        <p>- This is only partially true, or insufficiently explained: when investors are

        withdrawing from a certain market, they sell whole packages of shares, and among them

        could be a Russian company, a Latin-American company and PLIVA. This is the so-called

        cleaning of the portfolio for the purpose of fast withdrawal from so-called emerging

        markets, in order to invest elsewhere. Besides, many funds have orders not to invest in

        emerging markets. Therefore, it is very important for us too to see the end of the Russian

        crisis and the beginning of a period of political tranquillity. </p>

        <b><p>Have you got any receivables from Russia?</b></p>

        <p>- Our relatively conservative policy towards Russia has proven itself a very reasonable

        one today, even though at the time there had been some foreign investors who held our

        policy against us. However, luckily we know the Russian market and we know that

        investments in Russia involve a lot of risk. Our receivables from Russia amount only to

        around 50 million kuna, and we received around USD 9 million over the period of the last

        eight months. Receivables are dispersed among more than 40 clients, so even if the worst

        case of their bankruptcy came true  we would not be affected very much. </p>

        <b><p>Are you planning any new acquisitions after those in Poland and Slovakia? </b></p>

        <p>- Today PLIVA is already the absolute leader in the pharmaceutical industry in this

        part of Europe. We intend to increase our market share in this region, and are therefore

        analysing all the possibilities of growth, development and, of course, further investment

        in the countries of Central and Eastern Europe, and we shall even invest in Russia.</font></p>

        <p>&nbsp;</td>

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131			<td width="100%"><font FACE="Arial" size="3"><b><a name="PLIVAS SHARES VALUE MUST RETURN TO 600 KUNA">PLIVAS SHARES VALUE MUST RETURN
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133			TO 600 KUNA</a></b><p></font><font FACE="Arial" size="2">Vecernji list, Wednesday,
134
135			09/09/1998 </p>
136
137			<p>Our share price has drastically decreased, but not due to incompetent business
138
139			activities, but because of the global market crisis. *Because of the Russian crisis,
140
141			almost all foreign investors have withdrawn from Croatia, and the Zagreb Stock Exchange is
142
143			practically out of business. *Almost all expert analysts estimate that the PLIVAS share
144
145			price must increase from its present 350 kuna to some 600 kuna. *We shall continue
146
147			supplying hospitals, but large scale drug-dealers will be cut off until they pay their
148
149			debts, totalling some 400 million kuna. </p>
150
151			<p> </p>
152
153			<p>Reporter: Diana Glavina, Vecernji list</p>
154
155			<p>The President of the Croatian multinational company PLIVA, Zeljko Covic, M.Sc., is
156
157			extremely pleased. The reasons are, above all, the excellent six-month results, high rates
158
159			of increase, which are the best proof of PLIVAs steady growth. In comparison to the
160
161			same period last year, the PLIVAs total income increased by as much as 31.1%, amounting
162
163			to 1.8 billion kuna. EBIT increased almost 30% (615.4 million kuna, representing 80% of
164
165			1997 totals). Net profit increased 7.7% to 407.7 million kuna. </p>
166
167			<b><p>How do you explain these extremely high sales growth rates?</b></p>
168
169			<p>- PLIVAs goal the internationalisation of business activities has from the
170
171			very beginning been marked with our endeavours towards an increase of our profit from the
172
173			international market. And today, for the first time, the international market profit
174
175			share, which amounts to 57.6%, is for the first time larger than the profit share from the
176
177			domestic market. Our short-term goal is 60%, in order to ensure the additional stability
178
179			of the company. Furthermore, PLIVA has an optimal export structure in certain regions, so
180
181			that immediately after Croatia and its 42% share of total income are the countries of
182
183			Central and Eastern Europe with a 25% share, and this amounts to an 147% sales increase in
184
185			comparison with the first six months of last year. This is partially a result of our
186
187			acquisition of Polfa Krakow, but even without that, our profits in the region have been
188
189			constantly increasing. I would like to point out that only three years ago, our profit
190
191			from the above mentioned countries amounted to three or four percent. Then followed
192
193			Western Europe with eight percent of income, which means that sales increased by 69%
194
195			there. America accounts for 18 percent of PLIVAs income, and Russia four percent.</p>
196
197			<p>Income in Croatia has grown around 8.9 percent, which only proves our thesis that the
198
199			possibilities for a more meaningful growth in Croatia are limited by the size of the
200
201			market. </p>
202
203			<b><p>Despite the outstanding financial results, PLIVAs share price has decreased
204
205			considerably. What is your explanation of such a contradictory situation?</b></p>
206
207			<p>- It is a fact that the price of shares has dropped considerably. But this is merely
208
209			the result of international market trends, the result of the crises which have shaken up
210
211			the global economy and finances. At the moment, Russia is at the centre of all the crises,
212
213			but let us not forget that the complete effects of the Asian crisis are not yet known. And
214
215			it is a well-known fact that in such moments of crisis, investors react with panic and
216
217			make irrational decisions. These may be non-selective decisions whose repercussions may be
218
219			felt throughout the whole region, not differentiating between the companies and countries
220
221			which are and which are not in crisis. </p>
222
223			<p>And this is why at the moment Croatia is being connected with the Russian crisis. </p>
224
225			<p><b>What is your position as a successful company in such circumstances are you
226
227			powerless or are you going to be able to make certain moves?</b></p>
228
229			<b><p>- </b>We have just published our financial results, and as usual, we are going on
230
231			the road show with an aim of explaining to the shareholders and foreign investors
232
233			the difference between the Croatian market and PLIVA and all the latest events in Russia. </p>
234
235			<p>Due to the Russian crisis, all foreign investors have withdrawn from Croatia. The
236
237			Zagreb Stock Exchange is practically out of business, and the situation in the countries
238
239			of Central and Eastern Europe, including Russia of course, is very much alike. As I said,
240
241			our income from Russia is four percent, so even if we calculate all the possible risks
242
243			which PLIVA might take due to the devaluation of the Ruble and the crisis on the whole,
244
245			our losses would be practically non-existent. On the other hand, we hold as our advantage
246
247			the fact that PLIVAs income from the stable parts of the world drastically decreases
248
249			the risk of investments in PLIVA. </p>
250
251			<b><p>Have you got expert estimations regarding the PLIVAs share price in the future?</b></p>
252
253			<p>- All the serious analysts are predicting a speedy recovery of PLIVAs shares, and
254
255			according to their estimations the share price should increase to around 600 kuna. The
256
257			Russian tornado has passed over our country too, but I repeat, we are going to use firm
258
259			arguments to ensure the investors that the risk of investing in PLIVA truly is minimal.
260
261			For example, sales of Azithromycin alone represent 30 percent of our income and is
262
263			virtually risk-free. This allows us to give a strong argument to investors and
264
265			shareholders and ask them not to put us in the same basket with Russian companies, which
266
267			rely exclusively on their domestic market and which are over-burdened with massive debts. </p>
268
269			<b><p>Still, according to some analysts, investment banks are saturated with PLIVAs
270
271			shares and this is why they are selling them now.</b></p>
272
273			<p>- This is only partially true, or insufficiently explained: when investors are
274
275			withdrawing from a certain market, they sell whole packages of shares, and among them
276
277			could be a Russian company, a Latin-American company and PLIVA. This is the so-called
278
279			cleaning of the portfolio for the purpose of fast withdrawal from so-called emerging
280
281			markets, in order to invest elsewhere. Besides, many funds have orders not to invest in
282
283			emerging markets. Therefore, it is very important for us too to see the end of the Russian
284
285			crisis and the beginning of a period of political tranquillity. </p>
286
287			<b><p>Have you got any receivables from Russia?</b></p>
288
289			<p>- Our relatively conservative policy towards Russia has proven itself a very reasonable
290
291			one today, even though at the time there had been some foreign investors who held our
292
293			policy against us. However, luckily we know the Russian market and we know that
294
295			investments in Russia involve a lot of risk. Our receivables from Russia amount only to
296
297			around 50 million kuna, and we received around USD 9 million over the period of the last
298
299			eight months. Receivables are dispersed among more than 40 clients, so even if the worst
300
301			case of their bankruptcy came true we would not be affected very much. </p>
302
303			<b><p>Are you planning any new acquisitions after those in Poland and Slovakia? </b></p>
304
305			<p>- Today PLIVA is already the absolute leader in the pharmaceutical industry in this
306
307			part of Europe. We intend to increase our market share in this region, and are therefore
308
309			analysing all the possibilities of growth, development and, of course, further investment
310
311			in the countries of Central and Eastern Europe, and we shall even invest in Russia.</font></p>
312
313			<p> </td>
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