Pharmstandard company presentation

UBS Russian One-on-One Conference , Pharmstandard presentation, 18-19 March 2008, NY

Pharmstandard company presentationUBS Russian One-on-One Conference 18-19 March 2008

UBS Russian One-on-One Conference , Pharmstandard presentation, 18-19 March 2008, NY2

Disclaimer and Confidentiality RequirementsThis 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 has been prepared solely for use in connection with the possible offering of ordinary shares (the “Shares”) and global depositary receipts representing shares (“GDRs” and, together with the Shares, the “Securities”) in the Company (the “Offering”). This document is an advertisement and not a prospectus and any purchase of Securities in the Offering should be made solely on the basis of information contained in the prospectus and any supplemental prospectus to be published in respect of the Offering. The information contained in this presentation has not been independently verified. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of Augment Investments Limited (the “Selling Shareholder”) or the Company or any of their respective affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation.

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 not for distribution in, nor does it constitute an offer of securities in the United States, Canada, Australia or Japan. Neither the presentation nor any copy of it may be transmitted into the United States, its territories or possessions, or distributed, directly or indirectly, in the United States, its territories or possessions. Any failure to comply with this restriction may constitute a violation of US securities laws. The presentation is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. The Company has not registered and does not intend to register any portion of the Offering in the United States or to conduct a public offering of any securities in the United States.

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 is not a public offer or advertisement of Securities in the Russian Federation and is not an invitation to make offers to purchase any Securities in the Russian Federation, and must not be passed on to third parties or otherwise be made publicly available in Russia. The GDRs have not been and will not be registered in Russia and are not intended for “placement” or “circulation” in Russia.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.


Company Overview

Dr. Igor Krylov, CEOElena Arkhangelskaya, CFO


Russia pharmaceutical market development

Source: Pharmexpert, Renaissance

1,1 1,3 1,4 1,5 1,6 1,7 1,8 1,9 2,1 2,34,4 5,1 5,6 6,7 7,9 9,4 11,0 12,9

15,117,5

0,0 0,01,4

2,5 1,72,5

2,52,5

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

USD

mill

ion

0%

5%

10%

15%

20%

25%

30%

35%

Hospitals Commercial DLO YoY grow th %

CAGR 07-12 Total market - 14,8%CAGR 07-12 Commercial segm - 17,2


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($)**

Con

sum

ptio

n pe

r cap

ita ($

)C

onsu

mpt

ion

per c

apita

($)

38 4459

75 7996

109124

141160

0

20

40

60

80

100

120

140

160

180

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

38 4459

75 7996

109124

141160

0

20

40

60

80

100

120

140

160

180

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

Con

sum

ptio

n pe

r cap

ita ($

)

38 4459

75 7996

109124

141160

0

20

40

60

80

100

120

140

160

180

2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E*in retail prices

303

230 238

149 144 135

49

330

251 258

160 160 145

63

050

100150200250300350

Greece Hungary CzechRepublic

World East-CentralEurope

Poland Russia

2006 2007** in producers' prices

Source1: PharmexpertSource2: Renaissance, EU Market Indicators


Russian Pharmaceutical market structure 2007

Market split between domestic and international competitors 2007

Market structure by sales channelsbased on 2007

Hospitals10%

DLO17%

Commercial73%

Commercial DLO Hospitals

IMPORT; 34% DOMESTIC; 66%

IMPORT; 78% DOMESTIC; 22%

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

Value(USD)

Volume(Packs)

IMPORT DOMESTIC

Source: Pharmexpert, retail prices 2007


Pharmstandard achievements 2007 Leading domestic pharmaceutical company in Russia (measured by sales)

– #3 pharma company overall in Russia and #1 pharma company in the commercial segment – Industry leading growth and profitability– Revenue growth +34% and achieved $446 mln in 2007 – EBITDA growth +67% and achieved $65 mln in 1H 2007 or 38% as % from sales

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

New long-term projects and acquisitions– Production contract with Solvay Pharma (IRS-19, Immudon)– Acquisition 20% of Mir-Farm company (R&D base for future development)– Exclusive contract with Grindex to promote and sale Mildronat® product in Russia– Masterlek integration and production transfer to own factories of its products (Arbidol, Flukostat))

Launch 10 new products– 5 OTC (Maxicold, Passifit , Immunex, Complivit Ca D3 and Complivit 365)– 5 Rx (Biosulin, Rastan, Artrozan, Mexiprim, Benfolipen)

Experienced sales force– More than 340 sales reps2 and implemented ETMS system

Source: Company1 Pharmexpert, in retail prices2 As at 31 December 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 equipmentOpen centralised warehouse for pharmaceutical products in Moscow

1Q08:Acquisition of 19,88% shares of «DIPAKA TRAIDING LIMITED», which owns MirpharmSigning 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 facilitiesTotal 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: CompanyNote: OJSC – Open Joint Stock Company, LLC – Limited Liability Company

2007


Modern Production Facilities

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

Tomsk

Tyumen

Moscow

Ufa

Kursk

TomskhimpharmCapacity: 220m

TZMOIUfavitaCapacity: 146m

LeksredstvaCapacity: 671m

Nizhny Novgorod

PhytopharmCapacity: 56m

Pharmstandard HQ


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: PharmexpertNotes: Based on sales in retail prices for 2007

#3 pharma company in Russia overall# 1 domestic pharma company

Sandoz2,7%

Berlin-Chemie/Menarini

2,8%

Bayer Shering Pharma3,1%

Roche2,6%

J anssen-Cilag2,6%

Gedeon Richter2,5%

Pfizer2,4%

Novartis4,4%

Sanofi-Aventis4,2%

Other69,0%

Pharmstandard3,5%

2006 - 3,1% (4th)

Otechestvennye lekarstva

5,2%

Other48,8%

Nizhparm (Stada)6,7%

Pharmstandard16,9%

Moshimpharmpreparaty

2,3%Akrichin

(Polpharma)2,7%

Pharm-Center4,1%

Biotek3,0%

Materia Medika3,6%

Veropharm ZAO3,3%

Mikrogen NPO3,5%

2006 - 15,3% (1st)


A Leader in the Commercial Segment of Russian Pharma market

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

Source: PharmexpertNotes: Commercial segment 2007, based on sales in retail prices for 2007

PHS is #1 in commercial segment (commercial segment is 73% of the total

market)

2

Sandoz3,0%

Novartis3,0%

Bayer Shering Pharma2,9%Pfizer2,9%

Gedeon Richter2,8%

Nycomed2,8%

Servier2,7%

Pharmstandard4,6%

Sanofi-Aventis4,2%

Other67,8%

Berlin-Chemie/Menarini

3,4%

2006 - 4,2% (2nd)

Biotek2,8%

Veropharm ZAO2,8%

Mikrogen NPO3,3%

Pharm-Center2,5%

Otechestvennye lekarstva

4,1%

Krasnogorskleksredstva

2,4%

Akrichin (Polpharma)

2,4%

Pharmstandard19,4%

Nizhparm (Stada)5,7%

Other50,2% Materia Medika

4,3%

2006 - 17,7% (1st)


Growth Analysis Across Market Segments1

Source: Pharmexpert, Note:1 Based on sales in retail prices 2007

Dom

esti

c co

mpa

nies

Inte

rnat

iona

l com

pani

es

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

Corporation Commercial FRP Hospital Commerci

al FRP Hospital Total sales 2006

Total sales 2007

Total 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


Diversified Product Portfolio in 2007

Pharmaceuticals86% of 2007 sales

Medical Devices

14% of 2007 sales

OTC72% of 2007 sales

Rx1

14% of 2007 sales

Therapeutic focus: Analgesics Cough & cold Vitamins Anti-viral Anti-fungal

Product portfolio includes: Acid pump inhibitors Nitrites & nitrates ACE inhibitors Alimentary tract

metabolism

Product portfolio includes: Sterilisers Distillers Medical disposables

Source: CompanyNote: 1 Includes Other sales

2 Pro forma 200634% (22%)2 revenue growth in 2007

37% growth (23%)2 24% (12%)2 growth 33% growth


3 902

6 0326 722

8 235733

1 1991 331

1 491

39

96

125

36

1 011

1 196

1 196

1 609

0

2 000

4 000

6 000

8 000

10 000

12 000

2005 2006 IFRS 2006 pro-forma 2007

OTC Rx Other Medical equipment

Historical Net Sales

Source: CompanyNote: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 12%, Medical equip 34%)

1% Other

14% Rx

72% OTC

13% Medical Equip.

1% Other13% Rx

69% OTC

18% Medical Equip.

1% Other

14% Rx

71% OTC

14% Medical Equip.

1% Other

13% Rx

72% OTC

14% Medical Equip.

5 685

8 523

9 374

11 371


(in millions RUR) Sales % of Sales Sales % of Sales Sales % of Sales% Growth

in 2007

SALES:

Pharmaceutical products 4 674 82% 8 178 87% 9 763 86% 19%

OTC products 3 902 69% 6 722 72% 8 235 72% 23%

Branded generics 3 275 58% 6 031 64% 7 548 66% 25%

Non-branded generics 627 11% 691 7% 688 6% 0%

Prescription products 733 13% 1 331 14% 1 491 13% 12%

Branded generics 440 8% 1 025 11% 1 225 11% 20%

Non-branded generics 293 5% 306 3% 266 2% -13%

Other sales 39 1% 125 1% 36 0% -71%

Medical equipment and disposables 1 011 18% 1 196 13% 1 609 14% 34%

Sale of goods 5 685 100% 9 374 100% 11 371 100% 21%

2005 2006 pro-forma 2007

Divisional Sales Breakdown–IFRS

Source: Company reports, 2005, 2006 results audited by E&Y (IFRS)Note:1 Pro Forma assumes inclusion of MasterLek as part of Pharmstandard as of 1 January 2006.


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

Export expansion

Continue to actively control costs

Grow through acquisitions

Exploit opportunities from Federal Reimbursement Programme (FRP) as they arise

Building a top-3 pharmaceutical company in Russia


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

Arbidol is #1 on total 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 commercial market

Exclusively produced by PharmstandardProduced by Pharmstandard

Leading domestic pharma trademarks by sales value in 2007

Source: Pharmexpert. Based on consumer prices, Rx and OTC productsNote:1 Masterlek Brands

1Trademark Ranking in 2007 Ranking in 2006

ARBIDOL1 1 1PENTALGIN 2 3MEXIDOL 3 2SODIUM CHLORIDE 4 5TREPINCOD 5 6VIFERON 6 7COMPLIVIT 7 10HOWTHORN 8 4FLUKOSTAT1 9 12FENOTROPIL 10 8CEFAZOLIN 11 13CORTEXIN 12 19CYCLOFERON 13 17CAPSICI ANNUI TINCTURE 14 18CODELAC 15 20ESSLIVER 16 11GLUCOSE 17 16CHONDROLON 18 38CORVALOL 19 15BIPHIDUMBAKTERIN 20 14


Product ATC-2 therapeutic segments

2006SalesRURm

2007SalesRURm

Salesgrowth in 2007

RURm% Growth

in 2007Arbidol Anit-viral 1 485 2 316 831 56%

Terpincod Cough And Cold 1 163 1 322 159 14%Pentalgin Analgesics 1 206 1 314 108 9%

Phosphogliv Hepatic protector 253 356 103 41%

Biosulin Diabet care 50 120 70 140%

Flukostat Anti-fungal 435 502 68 16%Rastan Growth hormone 0 53 53 16920%

Maxicold Cough And Cold 7 50 43 618%Codelak Cough And Cold 375 412 36 10%

Ingalipt Cough And Cold 49 85 36 72%

TOTAL Pharmaceutical sales 8 053 9 726 1 673 21%

Top Pharmaceutical Product Drivers

Source: Company and MasterLek reportsNote:1 Acquired as part of MasterLek acquisition on 2 August 2006

1

1



2005SalesRURm

2006SalesRURm

2007SalesRURm

Salesgrowth in 2007

RURm% Growth

in 2007Arbidol Anit-viral 840 1 485 2 316 831 56%Terpincod Cough And Cold 975 1 163 1 322 159 14%Pentalgin Analgesics 899 1 206 1 314 108 9%Complivit Vitamins 471 663 623 -40 -6%Flukostat Anti-fungal 296 435 502 68 16%Codelak Cough And Cold 222 375 412 36 10%Askophen-P Analgesics 82 80 85 5 7%Ingalipt Cough And Cold 34 49 85 36 72%Codelak-Phyto Cough And Cold 29 23 56 33 145%Rinostop Nasal preparationis 17 31 56 25 79%Other 1 190 1 212 1 465 253 21%

TOTAL OTC products sales 5 055 6 722 8 235 1 513 23%

OTC Products – Top-Selling Products

Source: Company and MasterLek reportsNotes:1 Acquired as part of MasterLek acquisition on 2 August 20062 Terpincod is not actively promoted

1

1


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 Sales growth 2006-2007 – 36,3%

Source: PharmexpertNote: Remodelled to reflect current categories

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

1 Source: Pharmexpert2 Based on consumer prices

Source: Company

Annual Segment Sales Dynamics1,2

GRIPPFERON (FIRN-M ZAO)

3%AMIXIN

(PHARMSTANDARD)5%

AFLUBIN (RICHARD

BITTNER GMBH)4%

IMMUNAL (SANDOZ)

6%

OTHER3%

ARBIDOL (PHARMSTAN

DARD)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

Sales

(US$

m)

0,0

1,0

2,0

3,0

4,0

5,0

6,0

Average price (US$)

OTHER PHARMSTANDARD Average Price (US$)

2001-2007 CAGR: 42%


Pentalgin—#1 Pain Reliever (Non-Narcotic)

Source: Company

Pentalgin Pentalgin plus® in new (improved)

formulation was launched in 2007 to capitalise on Pentalgin’s brand recognition

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

Source: Pharmexpert

Top-10 Products in Analgesics Segment (2007)

Annual Segment Sales Dynamics1,2


75,7102,7 105,9 104,0

131,3152,6

176,917,5

24,5 24,9 30,9

50,6

58,4

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

Sales

(US$

m)

0,0

0,1

0,2

0,3

0,4

0,5

0,6

Average price (US$)


2001-2007 CAGR: 17%

PENTALGIN (PHARMSTANDA

RD)24%

TEMPALGIN (SOPHARMA)

7%

BARALGIN (SANOFI-AVENTIS)

7%SEDALGIN (ACTAVIS)

6%CARDIOMAGNIL

(NYCOMED)4%SEDAL-O

(SOPHARMA)3%

OTHER37%

ALKA-ZELTCER (BAYER

SCHERING PHARMA)

3%

PIRALGIN (BELMEDPREPAR

ATY)3%

EFFERALGAN (BMS)3%

SOLPADEINE (GSK)3%


Complivit - #1 Vitamin (Vitamins + Minerals)

Annual Segment Sales Dynamics1

Source: PharmexpertNote:1 Based on consumer prices

Vitamins and minerals segment includes products for adults, children, and pregnant women (A11A)

Segment demonstrates stable volumes, but strong value growth (CAGR of 15%) from 2001 to 2007 due to:– Price rises and dollar depreciation – Active promotion of branded products

Pharmstandard had 19.7% market share in 2007

Complivit 2007/2006 growth – 32%

63,181,2

91,0102,4

135,9 143,9 142,814,7

16,718,5

19,3

26,827,6 35,1

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

Sales

(US$

m)

0,0

1,0

2,0

3,0

4,0

5,0

6,0

Average price (US$)


2001-2007 CAGR: 15%

Multivitamins with Minerals Market Share Breakdown (2007)

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 (BAYER

SCHERING PHARMA)4%

Other48%

MULTI-TABS J UNIOR (FERROSAN)

2%

VITRUM PRENATAL FORTE (UNIPHARM

INC.)4%

VITRUM BEAUTY (UNIPHARM INC.)

3%MULTI-TABS KID (FERROSAN)

2%



2005SalesRURm

2006SalesRURm

2007SalesRURm

Salesgrowth in 2007

RURm% Growth

in 2007Phosphogliv 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%

Prescription Products—Top Selling Products

Source: Company and MasterLek reportsNote: Shading denotes actively promoted products1 Acquired as part of MasterLek acquisition on 2 August 2006

1



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

Phosphogliv®

Annual segment sales dynamics1

Source: Company

Source: Pharmexpert

LIV-52 (HIMALAYA DRUG COMPANY

LTD.)3%

HEPA-MERZ (MERZ GMBH)

3%

THIOCTACID (PLIVA)4%

TYCVEOL (EUROPA-BIOPHARM ZAO)

3%OTHER

9%

PHOSPHOGLIV (PHARMSTANDARD)

4%

BERLITION (BERLIN-CH/MENARINI)

6% ESSLIVER (STADA ARZNEIMITTEL AG)

9%

CARSIL (SOPHARMA)9%

HEPTRAL (ABBOTT LABORATORIES)

22%

ESSENTIALE (SANOFI-AVENTIS)

28%

52,069,5 80,1 90,9

130,3

194,2 196,3

0,6

0,91,2

1,5

1,8

4,1 8,0

3,86

4,555,12

5,90

6,85

8,74

10,05

0

50

100

150

200

250

2001 2002 2003 2004 2005 2006 2007

Sales

(US$

m)

0,0

2,0

4,0

6,0

8,0

10,0

Average price (US$)


2001-2007 CAGR: 25%


AmixinAnnual Anti-viral segment dynamics2

Acquired as part of MasterLek acquisition (2006)

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

Sales growth 2006-2007 – 16,7%

Key facts

Source: Pharmexpert, 2007 Note:2 Based on consumer prices

Note:1 Source: ComCon,

PrIndex

24,436,2

48,859,3

76,2

98,0

125,5

2,1

2,6

3,5

5,6

8,8

12,0

14,0

6,53

10,31

11,6712,31

13,19

7,70

8,56

0

20

40

60

80

100

120

140

160

2001 2002 2003 2004 2005 2006 2007Sa

les (U

S$m)

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

Average price (US$)


2001-2007 CAGR: 32%


New product launches in 2007

Source: Company data, Pharmexpert,

OTC

Rx

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

Product ATC

Sales value 2007USD mln

Market value 2007USD mln Key Market brands

Recent product launches

Maxicold ® R05A0-Cold Preparations Without Anti-Infectives 2,0 175,6 Coldrex, Fervex, Teraflu

Passifit ® N05B5-Herbal Hypnotics/Sedatives 1,0 68,3 Novo-Passit, Persen

Immunex ® L03A0-Immunostimulating Agents Excluding Interferons 0,4 107,9 Immunal, Immunorm

Complivit Ca D3® A12A – calcium products 1,2 45,0 Calcium D3, Calcium

Complivit 365® A11A - Multivitamins, combinations 0,2 231,8 Vitrum, Complivit, Multi-Tabs

Biosulin ® A10C2-Human Insulins And Analogues 4,9 239,5 Humulin, Protaphan, Actrapid

Rastan ® H04C0-Growth Hormones 2,2 21,0 Genotropin, Saizen, Humatrope

Artrozan ® M01A1-Anti-Rheumatics, Non-Steroidal Plain 0,6 241,1 Movalis, Voltaren, Diclofenac

Mexiprim® C01X0 – All Other Cardiac Preparations 1,1 93,2 Mexidol

Benfolipen® A11D (tablets) – vitamin B1 and combinations 0,1 15,0 Milgamma, Neuromultivit


Maxicold® – Successfull OTC Product Launch

Maxicold® Launched in 2007 Achieved about $2 mln sales during the

first year

Top products in Cold preparations segment (2007)

Annual segment sales dynamics1

Source: Company1 Source: Pharmexpert2 Based on consumer prices

37,4

62,8

89,0 82,2

116,9

142,0

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

Sales

(US$

m)

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

Average 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%


Product Approvals and Launches 2008

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 – 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 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: Pharmexpert

Note:1 Segment size – retail audit2 Excludes regional tenders

OTC

Rx


Expand sales and marketing effort

All sales reps have medical education/work experience

Covers 75% of the Russian pharma market Incentivised sales force—up to 33% bonus of annual

salary In 2008 looking to:

– Increase “feet on the street” to over 430 sales people

– Further specialise sales force by therapeutic area

Experienced sales force up to 340 sales persons1

Note: As at 31 December 2007

Real

tim

e da

ta -

ETM

S

HQ Sales and marketing

National manager1 manager

Regional manager23 managers

OTC sales force(134)

Rx sales force(157)

National manager2 managers

Regional manager29 managers

OTC Rx(incl. ENDO-Team)

Real time data - ETM

S

Source: Company


Masterlek Integration

Leading Masterlek brands accelerated its sales growth under Pharmstandard management in 2007

– Arbidol +56%; + 831 m RUR

– Flucostat + 16%; + 68 m RUR

– Amixin + 14%; + 29 m RUR

Production transfer on own facility (Kursk) improves Gross Margin– Arbidol to 60% in 2007 vs 46% in 2006– Flukostat to 90% in 2007 vs 58% in 2006

Amixin production transfer on own facility (Tomsk) will be fully accomplished in 2008 Masterlek integration decreased of administration costs

Realised synergy effect


Medical Equipment (TZMOI)

Sterilizers(72% of 2007 sales)1

Medical Equipment(2007 sales RUR 1,609m),

14% of group sales in 2007

Aqua distillers(5% of 2007 sales)1

Disposables/Other(23% of 2007 sales)1

- Total sales growth is 35% in 2007 - Growth driven by sterilizers (Federal tender 450 mln RUR)

- Improved GM

Source: Company estimatesNote:1 Based on divisional sales


Pharmstadard’s investment case since IPO

Russian consumer stocks performance in 2007 vs RTS Index (%)

Pharmaceutical stock performance (rebased %)

Pharmstandard IPO placement structureOffer structure:

•43.3% of total shares•Date of placement – May 4, 2007•Price - $58.2 for share and $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

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 Veropharm 36,6 RTS Index


Appendix


Production Facilities – Summary Overview

Source: Company. Note: Total capacity for pharmaceutical production in 2006 excludes capacity from Oktyabr (St. Petersburg) factory which closed in Q3’2006.

Total capacity calculations assume 8-hour shifts and 7 day working week

Factory Approximate size (sq. m.) Formulation Shifts

Capacity 000’s packs Dec 2005



14'900 (lease) Syrops & liquid forms 3 52,644 52,644 52,650 Tablets 3 361,077 564,406 585,405 Sprays 2 10,368 11,643 Powders 2 1,260 1,819

LEKSREDSTVA (KURSK)

Capsules 3 16,200 19,440

5'850 (lease) Ampules 2 7,624 8,595 8,595 Frozen-dried preparation 3 2,640 2,640 2,640 Syrops & liquid forms 1 6,360 6,360 6,035 Tablets 2 63,012 109,973 107,373 Vitamin bars (ferrohematogen) 2 14,000 22,680 22,680 Insulin 2 14,400 14,400

UFAVITA (UFA)

Saline infusin 2 4,500 4,500

1'200 (lease) Ointments 2 11,100 1,200 13,600 Powders 1 10,280 10,280 10,000 Syrops & liquid forms 2 29,187 24,000 23,699

PHYTOFARM (N.NOVGOROD)

Tablets 2 12,850 12,850 8,265

29'000 (own) Syrops & liquid forms 1 1,200 1,200 3,600 TOMSKHIMPHARM (TOMSK) Tablets 3 206,856 206,856 216,281

Closed in 2006 Capsules 2 1,384 Sprays 1 4,582 Tablets 2 72,797

OKTYABR (S.PETERSBURG)

857,593 1,070,412 1,103,808

Syringes 2 295 295 295 Needles 2 624 624 29 Sterilizing machines < 100 dm³ 2 24,250 24,250 12,470 Sterilizing machines > 100 dm³ 2 319 319 247 Aquadistilling machines 2 7,320 7,320 4,705

TZMOI (Tyumen)


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 and export distributors:

30–60 days – National distributors: 60–90 days– FRP program: 180 days

Source: CompanyNote: Manufacturers’ prices

Top 5 Distributors – 2007

Distributor % of sales

Genesis 19

Katren 14

Protek 10

SIA International 9

Rosta 6

Total 58


Low Exposure to FRP

Source: PharmexpertNote: Based on retail prices in US$

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

87 82

27 31

82 87

4612

3

25

8

4

6165

63

416

27 5

14 124

12 11

0

50

100NO

VART

IS

SANO

FI-A

VENT

IS

PHAR

MSTA

NDAR

D

BAYE

R SC

HERI

NGPH

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BERL

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H/ME

NARI

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HospitalReimbursementCommercial


Financial Overview


Our Portfolio growth in 1H 2007

Sales 2007 H1 2006 H1 Growth Growth %Pharmaceutical products 3,777 2,368 1,410 60%

OTC products 3,067 1,879 1,188 63%

Branded generics 2,768 1,596 1,172 73%

Non-branded generics 299 283 15 5%

Prescription products 670 436 234 54%

Branded generics 545 302 244 81%

Non-branded generics 124 134 -10 (7%)

Other sales 41 53 -12 (23%)Medical equipment and disposables 649 549 100 18% Sale of goods 4,426 2,917 1,510 52%

Sales 2007 H1 2006 H1 Growth Growth %Pharmaceutical products 3,777 3,070 708 23%

OTC products 3,067 2,474 593 24%

Branded generics 2,768 2,190 578 26%

Non-branded generics 299 283 15 5%

Prescription products 670 542 128 24%

Branded generics 545 402 144 36%

Non-branded generics 124 140 -16 (11%)

Other sales 41 54 -14 (25%)Medical equipment and disposables 649 549 100 18% Sale of goods 4,426 3,619 808 22%

Pro-Forma basis

IFRS basis


1,220

1,017

1,694

38%

35%

34%

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1H 2006 PF 1H 2006 1H 2007

RU

R m

ln .

31%

32%

33%

34%

35%

36%

37%

38%

39%

EBIDTA As % of Sales

1,9251,684

2,535

53%

58%

57%

0

500

1,000

1,500

2,000

2,500

3,000

1H 2006 PF 1H 2006 1H 2007

RU

R m

ln .

50%

51%

52%

53%

54%

55%

56%

57%

58%

59%

Gross Profit As % of Sales

Margin Expansion 1H 2007EBITDAGross Profit

Source: Company reportsNote:1 Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006


7%

6%

7%

238249

193

0

50

100

150

200

250

300

1H 2006 PF 1H 2006 1H 2007

RU

R m

ln .

5%

5%

5%

6%

6%

6%

6%

6%

7%

7%

Labour costs Other expenses As % of Sales

16%

17%

17%752

587

492

0

100

200

300

400

500

600

700

800

1H 2006 PF 1H 2006 1H 2007

RU

R m

ln .

16%

16%

16%

16%

17%

17%

17%

17%

Marketing Labour costs Other expensesAs % of Sales

Competitive Cost Structure 1H 2007General and Administration CostsSelling and Distribution Costs

Source: Company reportsNote: 1 Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006


617 647

962

22%22%17%

0

200

400

600

800

1,000

1,200

1H 2006 PF 1H 2006 1H 2007

RU

R m

ln .

0%

5%

10%

15%

20%

25%

Net Profit As % of Sales

Attractive Profitability Growth

HY Net Profit 2006–2007

Source: Company reportsNote:1 Pro Forma assumes inclusion of Masterlek as part of Phamstandard as of 1 January 2006

21.4%

50% Net Profit growth in 1H 2007 (pro-forma)


Consolidated Balance Sheet and Capex

Capital ExpenditureIFRS basis

Debt summary Facility A: US$91m (maturity Dec-2009/L+150) Facility B: US$55m (maturity Dec-2011/L+190) Net debt: US$128m

189

889 890

193

0

100

200

300

400

500

600

700

800

900

1,000

2004 2005 2006 1H 2007

RU

R m

ln .

CAPEX

(in millions of RUR) 30 Jun 2007 31 Dec 2006

Cash and Equivalents 483 193

Other Current Assets 5,183 5,300

Long-term Assets 8,137 8,277Total Assets 13,804 13,770

Total Debt 3,778 3,875Current Liabilities (excl. short-term debt) 1,558 2,425Non-current Liabilities (excl. long-term debt) 1,165 1,129

Total Equity 7,303 6,340Total Liabilities & Equity 13,804 13,770


0%5%

10%15%20%25%30%35%40%45%

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Core Comparables Benchmarking Sales growth (1H 2007)

Net profit margin (1H 2007)EBITDA margin (1H 2007)

Gross margin (1H 2007)

PHS has industry leading growth and profitability

0%

10%

20%

30%

40%

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Phar

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Pharmstandard company presentation

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Transcript of Pharmstandard company presentation