• Sales up by 88.92 % at Rs. 291.58 crore for Q2 on consolidated basis over standalone Q1
• Profit up by 72.74 % at Rs. 43.69 crore for the Q2 on consolidated basis over standalone Q1
• Ramps up Dosage Forms business - Nashik FDF facility commissioned
• MoU signed with a US generic major for development/manufacture of 18 products
• Captures another project from a big pharma company on Contract Manufacturing space
• Total number of US DMFs shot up to 54 as of Sept 2005
• Docpharma - successful open offer wherein cumulative shareholding increased to 95.5% and operational consolidation under progress
• Mr. Leon Van Rompay, the CEO of Docpharma, inducted into the Board of Matrix

Singapore, 27th October 2005.

Matrix Laboratories Limited has recorded a consolidated net profit (profit after tax and minority interests) of Rs 43.69 crore on a net sales turnover of Rs. 291.58 crore on consolidated basis for the second quarter ended 30th September 2005. An amount of Rs. 8.44 crore and Rs. 7.37 crore has been provided for depreciation / amortization and taxation, respectively, during the quarter on consolidated basis.

The annualized earnings per share (EPS) on the consolidated basis for the quarter works out to be Rs. 11.68 on a paid-up equity capital of Rs. 29.94 core with a face value of Rs. 2 per share. The consolidated results include the performance of Docpharma NV to the extent of 95.5 % holding and Explora Laboratories SA to the extent of 43 % holding, but does not include the proposed consolidation of Astirx Laboratories, FCC and Mchem. The growth rates mentioned in the highlights are in comparison with the previous quarter (Q1) of the current year, which are standalone.

To fully leverage the Docpharma initiative, dedicated resources have been allocated to backward integrate the existing products and future pipeline. Matrix is also looking extensively to in-license certain products for Docpharma's markets from other generic players.

On standalone basis, Matrix Laboratories Limited posted a profit after tax (PAT) of Rs. 30.65 crore on a net sales of Rs. 174.37 crore for the quarter ended 30th September 2005, as compared to a PAT of Rs. 41.95 crore on a sales of Rs. 162.47 crore in the corresponding quarter last year. The corresponding quarter of last year has an exceptionally high profit due to supply of launch quantities of Citalopram to the US market.

The company has been successful in de-risking from price erosion of Citalopram. The increase in the sales of Anti-retrovirals, Generic active pharmaceutical ingredients (API) and CRAM business segment has more than compensated the drop in Citalopram sales value.

On sequential basis (as compared with the first quarter of the current financial year), the standalone PAT has gone up by 21.18 per cent from Rs. 25.29 crore to Rs. 30.65 crore, while net sales went up by 12.98 per cent from Rs. 154.33 crore to Rs. 174.37 crore.

During the quarter, the company has stepped up the R&D expenditure significantly. The company has filed four DMFs with the US FDA, taking the total number of US DMFs to 54 as of 30th September 2005. On innovation front, the total number of patents reached to 45 as of 30th September 2005.

For the half-year ended 30th September 2005, Matrix Laboratories Limited reported a PAT of Rs. 55.94 crore on a net sales of Rs. 328.70 crore on standalone basis. During this period, the company had spent Rs. 34.20 crore on R&D (both capital and revenue expenditure), as compared to Rs. 10.20 crore in the corresponding period of last year.

Having completed the upgradation of the Finished Dosage Forms (FDFs) manufacturing facility at Nashik during the quarter as per US FDA standards, the company has initiated manufacture of Exhibit batches meant for US market. The company has signed a Letter of Intent (LoI) with a US generic major for development/manufacturing of 18 products. Last year, the company had entered into similar understanding with another US-based generic player.

Similarly, the company as part of its CRAM (Contract Research and Manufacturing) activity has dispatched the first commercial consignment of a key intermediate used in a blockbuster product of a Big Pharma company. The company has entered into long-term supply agreement for this intermediate and this would be a significant growth driver in the CRAM segment.

"Various strategic steps and consolidation measures initiated by the company in the recent past are taking shape as envisaged. The benefits emanating out of these initiatives are expected to yield good results in the near future", said Mr. N. Prasad, the Executive Chairman of Matrix Laboratories.

Docpharma

Sales of Docpharma for the quarter (July-Sep 05) was EUR 23.8 million (Rs.1270.6 million), representing a growth of 10% compared to corresponding quarter of last year. Sales from Belgium accounted for 77% of the total revenues. Typically, this quarter always contributes lower revenues to the annual turnover and is the weakest quarter in the European pharmaceutical market.

The pharmaceutical business unit accounted for 59% of total revenues and Hospital business unit accounted for the remaining 41% and both the business units grew at similar levels of 10% over the corresponding quarter of the previous year. During this quarter, Docpharma launched two products namely, Mirtazapine and Cefuroxime tablets in Belgium.

EBIDTA for the quarter amounts to EUR 4.1 million (Rs.220.2 million), which is 16.8% to sales. Net income after tax amounts to EUR 2.9 million (Rs.154 million) after considering amortization charge and depreciation of EUR 0.590 million (Rs.31.5 million).

The revenues and EBITDA of Matrix (Indian GAAP), Docpharma (Belgian GAAP) and the combined entity on a pro-forma basis are as follows:

About Matrix

Matrix Laboratories Limited is a public limited company listed on BSE and NSE, and is engaged in the manufacture of Active Pharmaceutical Ingredients (APIs) and Solid Oral Dosage Forms. Matrix is one of the fastest growing API manufacturers in India and focuses on regulated markets such as US and EU.

The company has a wide range of products in CNS, anti-bacterial, anti-AIDS, anti-asthmatic, cardiovascular, gastro intestinal, anti-fungal, pain management and life style related therapeutic segments. Four manufacturing facilities of the company are approved by the US FDA. The combined FDA approved capacity is one of the largest in the country. The company's Finished Dosage Forms (FDF) manufacturing facility has a capacity to manufacture 2 billion tablets, 300 million capsules on two- shift basis.

With about 2300 employees, including over 300 R&D scientists, Matrix focuses on developing APIs with non-infringing processes to associate with generic players in regulated markets for their early formulation entry.

For the financial year ended 31st March 2005, Matrix reported a profit after tax (PAT) of US $ 30 million on sales of US $ 146 million. It has recently acquired controlling stake in Docpharma, Belgium, for a front-end presence in Southern Europe. Newbridge Capital/TPG Ventures, US, and Temasek Holdings, Singapore, are the strategic investors in Matrix with combined holding of about 40%.