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1 dpavlin 1.1 <p align="center"><b>PLIVA acquires a 66.67% stake of LACHEMA, Czech pharmaceutical
2     company</b></p>
3     <p>PLIVA has announced that it has signed agreements for the purchase of a 66.67%
4     stake in Lachema, the Czech pharmaceutical company, for a cash consideration
5     of USD 26.5 million from the company’s institutional investors. The transaction
6     was made via its subsidiary, PLIVA Krakow. The closing of the transaction is
7     expected to take place within 30 days. In accordance with Czech law, PLIVA Krakow
8     will also make a public offer to the remainder of Lachema’s shareholders. It
9     is estimated that the total cash consideration for the acquisition of a 100%
10     stake will be between USD 32 and 33.5 million.</p>
11     <p>PLIVA CEO, Zeljko Covic, commented: “PLIVA’s strategy to consolidate its position
12     in Central and Eastern Europe is confirmed by the acquisition of Lachema, one
13     of the leading companies in the stable, attractive and growing Czech market.
14     This acquisition will bring new synergies between PLIVA Zagreb and PLIVA Krakow.
15     Lachema’s portfolio and its position on the Czech market will additionally strengthen
16     PLIVA’s presence in the region. Furthermore, as one of the first CEE candidates
17     for admission into the European Union, the Czech Republic offers additional
18     opportunities for expansion into Western European markets and the greater internationalisation
19     of PLIVA’s activities.”</p>
20     <p>Lachema, which is based in Brno, is one of the leading pharmaceutical companies
21     in the Czech Republic. It develops, manufactures and markets pharmaceuticals,
22     as well as diagnostic preparations and fine chemicals. For the year ending 31
23     December 1999, the company’s revenues are expected to be approximately USD 28
24     million, and net assets are expected to be USD 32.3 million.</p>
25     <p>Lachema’s strength lies in the development, manufacturing and marketing of
26     cytostatics. Cardiovascular drugs and antivirotics complete the company’s current
27     portfolio. Lachema’s range of generic cytostatic products and a brand new facility
28     for injectable cytostatics, which recently passed German BGA - Bundesgesellschaft
29     für Arzneimittel (Federal Drug Institute) inspection, will enable PLIVA to continue
30     its further expansion in this attractive “niche” market. In addition, Lachema’s
31     generic product, Enalapril, one of the most commonly prescribed ACE inhibitors
32     in the CEE region, will add to PLIVA’s important cardiovascular franchise. Lachema
33     is also the producer of Enalapril as an active ingredient.</p>
34     <p>With this acquisition, PLIVA is expected to become one of the major players
35     in the stable, attractive and sizeable Czech pharmaceutical market (assessed
36     at USD 712 million in 1998). In 1998, 34% of Lachema’s total sales were exports,
37     mainly to Slovakia, Germany and Poland. PLIVA believes that the registration
38     of Lachema’s products in PLIVA’s other markets, and their active promotion in
39     14 countries, will lead to further, long-term growth and will increase the proportion
40     of PLIVA’s revenue gained internationally. The quality of Lachema’s cytostatic
41     portfolio and of its new facility also offers a solid basis for expansion into
42     other Western markets. In addition, Lachema’s role as the producer of a range
43     of active pharmaceutical ingredients used in the production of finished cytostatic
44     forms, further strengthens the strategy behind the transaction.</p>
45     <p>PLIVA will work quickly to maximise the synergies between PLIVA and Lachema
46     in the areas of marketing, distribution, product registration and production.
47     Lachema is not expecting profits this year, however an aggressive restructuring
48     process and significant cost reduction program is intended to improve the company’s
49     growth prospects, both in sales and net income. Lachema is expected to become
50     a positive contributor to PLIVA’s long-term earnings.</p>
51     <p>PLIVA is the largest pharmaceutical company in Central and Eastern Europe.
52     PLIVA’s strategy is to focus on research, development, manufacturing and marketing
53     of prescription drugs and over-the-counter products. Among the most prominent
54     of PLIVA’s discoveries is azithromycin, a new generation antibiotic that has
55     been licensed to Pfizer. International revenue represents 60% of PLIVA’s total
56     revenue. In October 1997, PLIVA acquired Polfa Krakow, one of the leading pharmaceutical
57     companies in Poland, the most attractive CEE market. </p>

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