Moscow, 14 April, 2008 – OJSC Pharmstandard (“Pharmstandard” or the “Company”), the leading domestic pharmaceutical company in Russia and the third largest pharmaceutical company operating in Russia overall (LSE: PHST LI, RTS: PHST RU), announces audited financial and operating results for the year ended 31 December 2007.

Key Highlights

-          Revenue growth of 33%, to RUR11,371 million (US$445[1] million)

-          Profit for the period (Net Income) increased 60%, to of RUR3,263 million (US$128 million) - 29% as percentage of revenue

-          EBIDTA[2] up 50% to RUR4,882 million (US$191 million) and EBIDTA margin achieved 43% from revenue

-          Core therapeutic segments driving growth: Arbidol® best selling product in Russian pharmaceutical market; 6 brands among top-20 best selling domestic brands in Russia, 3 leading brands among top-20 on the total commercial market

-          Pharmstandard strengthens market position: becomes #3 pharma company overall in Russia by sales value and the leader of the commercial segment

-          Pharmstandard launched 10 new products which generated revenue of RUR350 millions (US$13.7 million) or 3% of pharmaceutical products sales

-          Medical equipment and disposables business up 34% to RUR1,609 million (US$63 million)

-          In May 2007 the Company successfully completed its IPO, selling 43% of its share capital to the international and domestic institutional investors

Commenting on today’s announcement, Igor Krylov, CEO of Pharmstandard said:

“The results prove our strategy and quality of its execution. Pharmstandard has met all engagements which we undertook to our investors during the IPO process and demonstrated perfect operational and financial results. We see our goal now in providing stable company development in future.”

The Company reported revenue of RUR11,371 million (US$445 million) for the year ended December 31, 2007. Revenue growth achieved 33% (21% on pro forma[3]) and attributed to growing sales of branded pharmaceutical products both in OTC and Rx category. Top10 brand represented approximately 75% on the Company pharmaceutical sales. Leading Masterlek brands accelerated its sales under Pharmstandard management in 2007: Arbidol® sales growth achieved 56%, Flukostat® – 16% and  Amixin® – 14%. 10 new products launched in 2007 generated revenue of RUR350 millions (US$13.7 million) or 3% of pharmaceutical products sales. 34% growth demonstrated medical equipment business. The increase was due largely to sales of sterilizers in federal tender.

Gross profit in 2007, as a percentage of revenue, achieved 60% comparing to 58% in 2006 (56% on pro forma). Gross profits in 2007 increased by RUR1,910 million (US$75 million) or 39% (31% on pro forma) to RUR6,852 million (US$268 million). The decrease of cost of sales and relevant increase of gross profit reflected synergy effect after Masterlek integration. One of key factors was decrease of Masterlek brands cost of sales after production transfer on own facility.

As a percentage of revenue selling and distribution costs in 2007 remained almost constant at 14.3% comparing to 14.9% in 2006. Pharmstandard’s selling and distribution costs were RUR1,626 million (US$64 million) in 2007, an increase of 28% (19% on pro forma). The increase was due largely to increased marketing and advertising costs, as well as increased labor costs due to growing sales force.

As a percentage of revenue, general and administrative expenses decreased by 1%, from 6% to 5%. General and administrative expenses were RUR571 million (US$22 million) in 2007, an increase of 14% (4% on pro forma). The increase was due largely to growing labor costs. Masterlek integration was one of the key factors of G&A expenses decrease.

Company’s strong growth in revenue and continued cost effective management of expenses led to profit for the period attributable to the shareholders of the Company increase of RUR1,333 million (US$52 million) or 70% (73% on pro forma) to RUR3,228 million (US$126 million) in 2007.

EBITDA increased RUR1,627 million (US$64 million) or 50% (47% on pro forma) to RUR4,882 million (US$191 million) in 2007. As a percentage of revenue, EBITDA increased to 43% in 2007 from 38% in 2006.

In 2007 the Company invested RUR687 million (US$27 million) in acquisition of intangible assets, equipment and building.

Market Position

According to Pharmexpert data Pharmstandard became #3 pharma company overall in Russia by sales value and the leader of the commercial segment in 2007 with market share of 4.6% (4.2% in 2006) and 27% growth for the period. Pharmstandard has 6 brands among top-20 best selling domestic brands in Russia: Arbidol®, Pentalgin®, Complivit®, Terpincod®, Codelac®, Flucostat®. Arbidol® was the largest selling pharmaceutical product, by sales, in the Russian pharmaceutical market with growth rate of 36%, according to Pharmexpert.

The Company’s summary condensed consolidated statement of operations and balance sheet are presented below:

Summary Condensed Consolidated Statement of Operations

Summary Condensed Consolidated Balance Sheet

Enquiries:

OJSC Pharmstandard
+7 495 970 0030
Email pr@pharmstd.ru
www.pharmstd.ru

A conference call for analysts and investors will be held at 14.00 BST (17.00 Moscow time) on Monday, 14 April 2008.

Notes to Editors:
Overview of Pharmstandard

Pharmstandard is the leading domestic pharmaceutical company in Russia and the third largest pharmaceutical company operating in Russia overall, by sales value. Pharmstandard is a leader of the biggest commercial segment of the Russian pharmaceutical segment. The Company develops, manufactures, markets and sells generic and, to a lesser extent, original pharmaceutical products in various formulations, primarily in Russia.  Pharmstandard’s product portfolio includes market-leading brands (6 brands among top-20 best selling domestic brands in Russia), such as Arbidol® (antiviral for systemic use), Pentalgin® (analgesics), Terpincod® (cough and cold), Complivit® (vitamins), Codelac® (cough and cold) and Flucostat® (antifungal). In 2007, Arbidol® was the largest selling pharmaceutical product, by sales, at the Russian pharmaceutical market, according to data by Pharmexpert. Pharmstandard has limited exposure to the Russian Government’s Federal Reimbursement Programme, through which 4% of its pharmaceutical product sales were made in 2007.

In August 2006, the Company acquired Masterlek, a Russian pharmaceutical company focused on the antiviral for systemic use and antifungal therapeutic segments. This acquisition was in line with Pharmstandard’s corporate strategy to expand its market position in Russia through acquisitions that complement the Company’s product portfolio. Masterlek contributed approx imately 30 products to the Company’s product portfolio, including the market-leading brands Arbidol® and Flucostat®.

Pharmstandard operates five manufacturing facilities in Russia and, with a production capacity of 1,104 million packs as of December 31, 2007, has one of the largest production capacities among domestic pharmaceutical companies in Russia. The Company has invested approximately RUR2.7 billion in capital investments in its manufacturing facilities since the start of 2004. Pharmstandard’s flexible production capacity distinguishes it from its competitors by allowing it to quickly and efficiently adjust production based on input from its distributors and sales force.

In addition to its pharmaceutical business, the Company also develops, manufactures, markets and sells medical equipment, such as sterilizing and distilling machines, and disposable medical products, such as syringes.

www.pharmstd.ru

OJSC “Pharmstandard”

Condensed Consolidated Balance Sheet at 31 December 2007

(in thousands of Russian Roubles)

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9,602,693

Consolidated Statement of Operations

For the Year Ended 31 December 2007

(in thousands of Russian Roubles)

[1] All USD figures based on average exchange rates for the relevant periods.  These were USD / RUR 27.20 for 2006 and 25.57 in 2007.

[2] EBITDA doesn’t include foreign exchange gain.

[3] Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006.