Benzonatate

Business Editors & Health/Medical Writers

ZAGREB, Croatia--(BW HealthWire)--June 11, 2002

PLIVA

PLIVA d.d. ("PLIVA") announced today a definitive agreement with Sobel N.V. ("Sobel") to acquire all of the shares (100%) of Sobel Holdings Inc. ("Sobel Holdings"), a US company which owns the pharmaceutical company Sidmak Laboratories, Inc. ("Sidmak"), and its wholly-owned subsidiary, Odyssey Pharmaceuticals, Inc. ("Odyssey"), for a cash consideration of USD 152.9 million and assumption of bank debt of USD 59 million.

Sidmak and Odyssey (together, the "Sidmak companies"), based in East Hanover, New Jersey are a fully integrated specialty pharmaceutical enterprise offering a balanced portfolio of branded and generic products. Sidmak carries a broad line of more than 40 generic products in over 90 strengths and dosages. Odyssey, established in April 2000, is devoted solely to the acquisition, development and marketing of exclusive branded pharmaceutical products and is currently marketing six branded products.

The acquisition of the Sidmak companies is expected to provide PLIVA with a number of significant strategic and financial benefits, including:

For the year ended 31 December 2001, the Sidmak companies' net sales increased by 34.4% to USD 100.4 million, and EBIT improved from a loss of USD 9.8 million to earnings of USD 4.3 million, with total assets of USD 117.3 million and net assets of USD 7.5 million. PLIVA expects that the Sidmak companies should achieve significant sales growth in 2002, with further improvement in EBIT and EBIT margin. PLIVA intends to consolidate the Sidmak companies from the date of closing, which is scheduled for this summer.

The principal assets of the Sidmak companies are product rights, ANDAs (Abbreviated New Drug Applications), NDAs (New Drug Applications), contracts and trademarks relating to a portfolio of branded and generic pharmaceuticals, a sales distribution network covering the US market, a pharmaceutical production facility and a new product development facility in East Hanover, New Jersey.

Sidmak's established product portfolio includes products covering a broad range of therapeutic areas, such as benzonatate (respiratory), cyclosporine MODIFIED (immunosuppressant), hydralazine HCl (anti-hypertensive), hydroxyzine HCl (anti-anxiety), trazodone (anti-depressant) and metoclopramide HCl (gastrointestinal). These products are sold in numerous forms, including traditional tablets and capsules, both sustained- and extended-release, aerosols and soft gelatins. In terms of market share, eight of Sidmak generic products are ranked number one and seven others hold the second position (according to IMS data, 2001).

Odyssey's portfolio contains exclusive branded products acquired from several global pharmaceutical companies. Its products currently consist of Urecholine (bethanechol chloride) the unique pharmaceutical option for treatment of non-obstructive urinary retention; Vivactil (protriptylline HCl) and Surmontil (trimipramine maleate) for the treatment of symptoms of mental depression; Antabuse (disulfiram) used in treatment of alcohol abuse as an aid to supportive and psychotherapeutic treatment; Nystatin Vaginal tablets for the treatment of vaginal candidiasis and Custodiol HTK solution, a new product in the US market used for the perfusion and preservation of donor organs.

PLIVA's Hungarian affiliate, PAM Property Management Limited Liability Company ("PAM"), through PAM's U.S. subsidiary, Property Asset Management USA, Incorporated ("PAM Inc."), is to acquire the Sidmak companies and will fund the acquisition through an azithromycin royalty secured financing facility (USD 165 million) arranged by Citibank N.A. and a club of five banks. PAM has been established to serve as a key finance subsidiary of PLIVA, providing funding to its international operations as well as holding and managing various assets relating to PLIVA's international businesses, including the Sidmak acquisition vehicle PAM Inc. PLIVA believes that, by organising a portion of its existing and future international holdings in this fashion, it has been and will be able to borrow and finance its international operations more effectively.

As a result of the acquisition, PLIVA is raising forecasted revenue growth for year 2002 to "mid 20s". Due to goodwill amortization and certain costs related to the acquisition and related financing, we expect the transaction to have a neutral effect at the EBIT level in 2002, with a consequent decline in the EBIT margin compared to 2001. However, because of certain tax efficiencies related to the transaction, PLIVA expects that its effective world-wide tax rate will decline in 2002 and later years. Taking the transaction into account, PLIVA is raising its EPS growth expectations for the year 2002 to around 25%.

Zeljko Covic, Chief Executive Officer of PLIVA, said: "I am very pleased to announce the acquisition of Sidmak, which is a continuation of our strategy to expand into new markets. This acquisition will enable PLIVA to capitalize on the opportunities afforded by the world's largest pharmaceutical market and to better exploit our R&D potential. Sidmak provides a strong platform for PLIVA's future and for the creation of additional shareholder value."

The acquisition is subject to clearance under the Hart-Scott-Rodino Antitrust Improvement Act, and the Exxon-Florio Act in the US and other customary conditions.

Lazard Freres & Co. LLC is acting as financial adviser to PLIVA and Banc of America Securities LLC. is acting as financial adviser to Sobel on the acquisition.

A presentation will be held for analysts on Tuesday 11 June 2002 beginning at 3:00 p.m. BST, at the offices of Financial Dynamics, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB. The presentation will be available on the "Investor's Page" of PLIVA's web site at www.pliva.hr.

A conference call will be held for analysts and investors on Tuesday 11 June 2002 beginning at 5:00 p.m. BST (6:00 p.m. CET, 12:00 noon EST). Please dial +44 20 8781 0576 and enter access code 418909. A recording of the conference call will be available for 7 days following the call. Please dial +44 20 8288 4459 and enter access code 658512 to listen to the recording.

Notes for editors:

1. PLIVA is based in Zagreb, Croatia, and is the largest

pharmaceutical company based in Central and Eastern Europe. PLIVA

is focusing on research, development, manufacturing and marketing

of specialty pharmaceuticals. It is expanding its sales into the

Western European and US markets and leveraging its leading

regional position by consolidating its presence in CEE markets.

PLIVA's largest product is Azithromycin, a macrolide antibiotic,

which PLIVA discovered. Azithromycin has been licensed to Pfizer,

and Pfizer sells the product in its designated markets under the

name Zithromax, while PLIVA markets the drug under the Sumamed

brand. International revenues represent over 75% of PLIVA's total

revenues. PLIVA has been listed on the London and Zagreb stock

exchanges since 1996.

2. The Sidmak companies are a New Jersey-based specialty

pharmaceutical enterprise focused principally on development,

production, marketing and distribution of branded and generic

products in the USA. Sidmak's established product portfolio

mainly focuses on the therapeutic areas of Central Nervous System

and Cardiovascular Health. Sidmak has a sales network covering

the US and a production facility and a new development facility

in East Hanover, NJ. Sidmak's wholly owned subsidiary, Odyssey,

is devoted to the acquisition, development and marketing of

branded pharmaceutical products.www.sidmaklab.com

3. The USA is the world's largest pharmaceutical market, with a

market size of US$150 billion in 2000, which comprises 42% of the

total world pharmaceutical market. It is expected to grow by 12%

per annum to US$263 billion by 2005. Between 2003 and 2010, 121

patent protected products with sales of US$74 billion in 2001

will potentially become generics (Source: IMS Health, PLIVA

estimate).

This press release contains certain forward-looking statements. Such statements include those regarding the PLIVA Group and the Sidmak companies, the potential benefits and synergies of the transaction, and the pharmaceutical markets. Such statements are based on current beliefs and expectations and are subject to a number of risks, assumptions and uncertainties that could cause actual future results and performance to differ materially from any expected future results or performance, expressed or implied, by the forward-looking statements. These risks, assumptions and uncertainties include, but are not limited to, factors such as the operating results, the effectiveness of cost reduction measures, the effects of business consolidation and restructuring, the regulatory environment, fluctuations in currency, exchange, interest and tax rates, and the impact of any other factors not known to PLIVA or not currently considered material by PLIVA. PLIVA d.d. disclaims any intention, and assumes no responsibility, to update or revise any of the forward-looking statements contained herein to reflect subsequent information, events or circumstances or otherwise.

www.pliva.hr

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