Moscow, April 29, 2010 – JSC Pharmstandard (LSE: PHST IL, RTS: PHST RU),  published the audited financial results for the year 2009 and non-audited results of sales for the 1^st quarter of year 2010.

Net profit of the Company for the full year 2009 increased by 96% and accounted to RUR 6,852 million.

Revenues for the 1^st quarter of year 2010 increased by 25,8% in comparison with the same period of the year 2009 and amounted to RUR 5, 727 million.

Key figures of year 2009:

· Revenue growth +68%, total revenue RUR 24,095.4 million

· Gross margin + 34% , gross profit RUR 11,727.5 million or 49% of total sales

· EBITDA growth +59%,  EBITDA  RUR 9,636 million or 40% of total sales

· Net profit growth + 96%, net profit RUR 6,852.4 million or 28,4% of total sales

Major events of year  2009 and beginning of year 2010:

· Pharmstandard became the leader of the Russian pharmaceutical market as result of higher sales of medicines, and increasing its share in the market from 4,0% to 4,4%.

· Pharmstandard keeps the leadership in the commercial segment of the market, increasing its share from  5,2% to 5,5% as result of higher sales during 2009.

· Pharmstandard remains the uncontested leader among the domestic producers as result of higher sales of medicines increasing its share from 18,9% to 20%.

· Within the tenth anniversary of «Platinum Ounce 2009», the open competition among professionals of pharma business, Pharmstandard has been awarded in nominations «The Company of the Year - the Russian pharmaceutical products manufacturer» and «The Company of the Decade - the Russian pharmaceutical products manufacturer».

· Antiviral product  «Arbidol» became the leader of Russian pharmaceutical market as result of significantly increased sales for year the 2009. The efficacy of “Arbidol” as preventive measures and treatment of “swine flu”  À/H1N1 was confirmed by the leading Russian virology science centers. The sales of Arbidol in year 2009 reached RUR 5,503 millions

· «Arbidol» was elected the winner and was awarded the «Platinum ounce 2009» in the nominations «Over-the-counter preparation of the year» and «Over-the-counter preparation of the decade». The preparation Pentalgin® became the winner of the award «HOUSEHOLD BRAND/BRAND ¹1 in Russia» in the category «Analgesic drug». The preparation Complivit® became the winner of the award «Brand of Trust» in the category «Vitamins».

· Within year 2009 Pharmstandard was found the winner in five Federal opened auctions for the purchase of preparations for the cure of patients with pygmean nanizm disease in the frames of program 7 nosologies, which resulted in signing of State contracts for supply of the preparationà Rastan® (International non-patent name Somatropin) for the total amount of 483,7 millions of rubles ( including VAT).

· In December 2009 Pharmstandard won in Federal opened auction under the program 7 nosologies for the supply in year 2010 of the preparation Coagil VII for the amount of 1 176 millions of Rubles (including VAT). The preparation Coagil VII is manufactured in the frames of joint biotechnological project “Generium”.

· Pharmstandard won in Federal opened auction under the program of 7 nosologies in the category of anti-tumor preparations for the supply of the preparation «Velcade» (International non-patent name Bortezomib) of Janssen-Cilag production and fulfilled the State contract for the amount of 4 028,1 millions of rubles ( including VAT).

· Pharmstandard registered successfully the prices of 86 pharmaceuticals products, which enter in the list of vital and essential drugs (VED) due to the adoption of the Decree of the Government of Russian Federation dated 08.08.2009 N 654 "On improvement of State regulation of prices of vitally necessary and most important drugs".

· On April 2010 the Pharmstandard acquired 11,3% of shares of Joint-Stock Company “Grindeks”, one of the biggest producers of medicines in Latvia, continuing the strategic partnership in the distribution and promotion of the preparation “Mildronate” in Russia.

· On April 2010 LLC «NauchÒåkhStroy Plus» signed an agreement with Affitech A/S (Denmark) for the joined development of innovative monoclonal antibody for treatment of oncological and other deseases. The amount of investments from the part of «NauchÒåkhStroy Plus» will total 23 millions of Euro. The commercialization of pharmaceutical preparations in Russia and CIS countries will be managed by Pharmstandard

2009 Audited Financial Results

Revenue

The Company’s revenue for the full year 2009 increased by 68.1% and achieved to RUR 24,095 million compared to RUR 14,335 million reported in the same period of 2008. Pharmaceutical products and medical equipment sales contributed  97.1% and 2.9% of the total sales respectively.

Pharmaceutical products

Sales of pharmaceutical products increased by RUR 10,147 million or by 77% from RUR 13,260 million reported in full year 2008 to RUR 23,407 million in the same period of 2009.

Company decided to segregate 3^rd parties products separately in the reporting due to significant increase of its portion the total pharmaceutical sales of the Company. The contribution from the 3^rd parties sales in 2009 achieved to 26.6% from the total pharmaceutical sales.

The Company organic sales of the pharmaceutical products in 2009 grew by RUR 5,437 million or by 46% and amounted to RUR 17,250 million.

The organic sales of OTC products and prescription (Rx) products contributed 86.4% and 13.6% of the total own pharmaceutical products sales respectively.

the sales of OTC products increased by RUR 4,460 million or by 43.0% and amounted to RUR 14,841 million in the full year 2009 generally contributed by the market-leading brands such as Arbidol®, Pentalgin®, Complivit®, Afobazol®, Amixin®.

The Company’s revenue from prescription (Rx) products increased by RUR 976 million or by 71.7% and amounted to RUR 2,338 million primarily contributed by the market-leading brands such as Phosphogliv®, Combilipen®, Rastan®, Picamilon®, Biosulin®.

The sales of the third parties products increased by RUR 4,710 million or by 325.6% and amounted to RUR 6,156 million. The main contribution was attributed to the following brands: Velcade® (Janssen Cilag), Mildronate® (Grindeks), IRS-19® and Imudon® (Solvay).

Medical equipment and disposables

Sales of medical equipment and disposables declined in 2009 by RUR 386.9 million or by 36% to RUR 688.7 million from RUR 1.075.7 million in 2008.  Such decline was caused by cuts in budget financing of state medical institutions for procurement of sterilizing machines due to recession.

The Company does not view the declined sales as critical because in the beginning of 2009 the management approved an efficiency program at this business segment, including cost optimization in order to maintain the financial result at break-even level.

Gross profit

In 2009, the Company’s gross profit increased by RUR 2,969.1 million or by 33.9% and amounted to RUR 11,727.5 million. In relation to sales total gross profit margin decreased from 61.1% in 2008 to 48.7% in 2009. The decrease is primarily caused by two factors: (i) the higher share of third parties products in the sales structure (from 10.1% in 2008 to 25.6% in 2009) and their lower margin as compared to the Company’s own products; (ii) the price increase for the materials and components.

Operating expenses

In relation to sales the operating expenses decreased from 21.8% in 2008 to 13.2% in 2009. In 2009, the Company’s operating expenses slightly increased by RUR 51.3 million or by 1.6% and amounted to RUR 3,174.4 million. This indicator suggests high efficiency of operating expense management in the context of recession.

Selling and distribution costs (S&D)

In relation to sales selling and distribution costs decreased from 17.2% in 2008 to 10.2% in 2009. Organic S&D (excluding third parties products costs) in relation to sales decreased from 18.3% in 2008 to 13.0% in 2009. Total S&D decreased by RUR 3.7 million or by 0.15% from RUR 2,466.8 million in 2008 to RUR 2,463.1 million in 2009. There were no significant fluctuations in the structure of S&D during 2009 in comparison with the same period of 2008

General and administrative expenses (G&A)

In relation to sales general and administrative expenses decreased from 4.6% in 2008 to 3.0% in 2009. Organic G&A (excluding third parties products expenses) in relation to sales decreased from 4.8% in 2008 to 3.5% in 2009. Total G&A increased by RUR 55.0 million or by 8.4% from RUR 656.2 million in 2008 to RUR 711.2 million in 2009.

Other income (expenses)

In 2009, other income amounted RUR 105.3 million compared to other expenses amounted to RUR 715.2 million in 2008. This change is primarily contributed by (i) the RUR 448 million reversal of the provision recorded in 2008 against Genesis, distributor (in 2008, RUR 476 million provision was recorded against trade receivables from Genesis and were recognized in S&D) and (ii) the reduction in exchange loss by RUR 299 million due to stabilization of the Ruble to US$ exchange rate.  

EBITDA

In 2009, EBITDA amounted to RUR 9,636 million or 40% of total sales. EBITDA grew by 59% in 2009 in comparison to 2008. This fact indicates the effective level of company management.

Financial expenses and financial income

Financial expense decreased by RUR 109.2 million or by 42.8% from RUR 255.2 million in 2008 to RUR 146.0 million in 2009. This decrease results primarily from decrease in the balance of the Citibank loan in accordance with its repayment schedule.

Financial income growth in 2009 by RUR 110.3 million and amounted to RUR 132.9 million. This increase was due to the increase in interest income from cash deposits placed in banks and also due to 2009 gain from change in fair value of interest rate swap.

Profit for the year and non-controlling interest

The Company’s net profit for the year grew by RUR 3,349.3 million or by 95.6% from RUR 3,503.1 million in 2008 to RUR 6,852.4 million in 2009. In relation to total sales these figures were 24.4% and 28.4% for the respective years. In 2009, profit for the year attributable to the equity holders of the Parent of the Company was RUR 6,836.4 million. It should be noted, in relation to the Company’s sales of own produced products the net profit excluding the share of third parties products sales and their lower margin as compared to the Company’s own produced products accounted for 33.9% in 2009 in comparison to 27% in 2008. Profit for the year in the amount of RUR 16.0 million attributable to non-controlling interests primarily represented the amount attributable to the minority shareholders of Pharmstandard-Tomskhimfarm OJSC (holders who own 9% voting shares).

Earnings per share attributable to equity holders of the parent increased from 92.72 Rubles in 2008 to 180.89 Rubles in 2009.

                     Consolidated statement of financial position as at 31 December 2009
                                            (in thousands of Russian Roubles)

                                Consolidated income statement for the year ended 31 December 2009
                                (in thousands of Russian Roubles)

1^st  Quarter 2010 unaudited sales results

Pharmstandard unaudited revenue increased by RUR 1,174 million or by 25.8% from RUR 4,553 million in the 1^st Quarter 2010 to RUR 5,727 million in the same period of 2009.

Sales of pharmaceutical products and medical equipment contributed  98.4% and 1.6% of the total Company sales respectively.

Pharmaceutical products

Sales of pharmaceutical products increased by RUR 1,191 million or by 26.8% from RUR 4,445 million in 2008 to RUR 5,636 million in 2009.

The Company’s organic pharmaceutical products sales and third parties products contributed 80.3% and 19.7% of the total pharmaceutical sales, respectively.

The Company’s organic pharmaceutical products sales grew by RUR 655 million or by 17% and amounted to RUR 4,523 million.

Sales of OTC products and prescription (Rx) products accounted for 81.9% and 18.1% of the total own pharmaceutical products sales respectively.

In the 1^st quarter 2010 OTC products sales increased by RUR 293 million or by 8.6% and amounted to RUR 3,705 million. The contribution mainly attributed to the market-leading brands Arbidol®, Pentalgin®, Complivit®, Afobazol®, Amixin®.

Sales of prescription (Rx) products increased by RUR 362 million or by 79.5% and amounted to RUR 817 million and generally attributed by the market-leading brands Phosphogliv®, Combilipen®, Rastan®, Picamilon®, Biosulin®.

Sales of third parties products increased by RUR 541 million or by 96.6% and amounted to RUR 1,100 million mainly contributed by Mildronate® (Grindeks), IRS-19® and Imudon® (Solvay), Coagil (Lekko), Pulmozim®.

Medical equipment and disposables

Sales of medical equipment and disposables declined in the 1^st Quarter 2010 by RUR 16.4 million or by 15.2% from RUR 107.7 to RUR 91.3 million.  Such decline in sales was caused by cuts in budget financing of state medical institutions for procurement of sterilizing machines due to recession.

Sales structure in the 1^st Quarter 2010

Sales structure in the 1^st Quarter 2010, excluding third parties products

Conference call

Pharmstandard is pleased invite the investment community to a results conference call with the management of the company followed by a Q&A session.

Thursday, April 29, 2010

07:00 New York
12:00 London
15:00 Moscow

International Call-in Number:  +44 (0) 207 162 0077

US Call-in Number: +1 877 491 0064

We recommend that participants start dialing in 5-10 minutes prior to ensure a timely start to the conference call.

Conference call participants can register in advance using the link below:

https://eventreg1.conferencing.com/webportal3/reg.html?Acc=097741&Conf=172691

Pharmstandard will be represented by:

Igor Krylov, CEO

Elena Arkhangelskaya, CFO

Conference call presentation will be available on Thursday,29 April 2010 on Company’s web-site: https://www.pharmstd.ru/investors_en/investor/p2/

The conference call replay will be available through May 6, 2010.
International Replay Number: +44 (0) 20 7031 4064
Replay Access Code: 864483