Investors’ Day at Olainfarm September 14, 2007 Company Presentation

Investors’ Day at Olainfarm

September 14, 2007

Company Presentation

OlainFarm: at a glance

- 35 years since established, 10 years since privatized

- Produces both FDFs and full cycle APIs

- Annual sales have more than doubled over the past 3 years

- Strong and seasoned management team

- ISO 14001 (2001:2007), FDA (USA - APIs only, 2002) and GMP (EU 2004:2007)

Major shareholders:- Olmafarm (sole shareholder is OlainFarm’s Chairman of the Board Valerijs Maligins) - Juris Savickis

Governing Structure

• Shareholders meeting

• Council- Supervisory body, which represents the shareholders' interests between the Shareholders’ meetings- Consists of 5 members, elected by shareholders for 3

years- Elects and dismisses members of the Board

• Board- Executive body, which manages and represents the

company- Responsible for commercial activities of the company- Composed of 5 members (recently reduced down from 7), elected for 3 years

Main Markets

Unconsolidated Sales by Market, H1 2007, % by Value

Great Britain

8%

Ukraine

12%

Kazakhstan

13%

Latvia

21%

Russia

28%

Other

4%

Bulgaria

1%Georgia

1%

Lithuania

2%

Poland

2%Belarus

8%

- Main focus on home market and the CIS

- Central and Western Europe growing mainly through APIs and intermediates

- Diversification of markets

- Over 200 medical representatives in key markets

- Sales to 25 countries, subsidiary in Russia

Main Markets (continued)

- On average the sales growfaster than markets (about 15%)

- Branding has slowed growthin Russia in terms of sales, not profit

- Specific products influenced significant growth in the UK and Kazakhstan

- Very limited exposure to Russian DLO Program (about200 000 LVL)

Sales development in Top 5 Markets ' 000 LVL

2067%

-10%

8%

24%

21%

974%

407%

42%

20%

4%

Ls 0

Ls 500

Ls 1 000

Ls 1 500

Ls 2 000

Ls 2 500

Ls 3 000

Russia Latvia Kazakhstan Ukraine Great Britain

1H 05

1H 06

1H 07

Key Products

Sales by Products 1H 2007 % by value

Fenkarol13%

Furamag/Furagin/Furasol11%

Neiromidin11%

Noofen/Fenibut11% PASA Sodium salt

10%

MAG7%

Remantadin6%

Adaptol5%

Etacizin4%

Other22%

- Antihistamine

- Sold as Bikarfen or Gistafen in selected markets

- Limited clinical tests conducted to strengthen sales

- Sales of antihistamines in our markets: approx 105 M LVL

- Maximum sales: 4.2 M LVL p.a.

Key Products - Fenkarol

Fenkarol/Bikarfen/Gistafen 6 months sales

Ls 0

Ls 200 000

Ls 400 000

Ls 600 000

Ls 800 000

Ls 1 000 000

Ls 1 200 000

1H 2003 1H 2004 1H 2005 1H 2006 1H2007

Noofen/Fenibut 6 months sales

Ls 0

Ls 200 000

Ls 400 000

Ls 600 000

Ls 800 000

Ls 1 000 000

Ls 1 200 000

1H 2003 1H 2004 1H 2005 1H 2006 1H2007

- Nootropic drug

- Sold as Fenibut in Russia and as Noofen elsewhere

- Cost efficient synthesis

- Participation in Russian DLO.Program discontinued in 2007, which caused slight drop in sales

- Total sales of this product group in our markets: 140 M LVL


Key Products - Fenibut

Neiromidin 6 months sales

Ls 0

Ls 200 000

Ls 400 000

Ls 600 000

Ls 800 000

Ls 1 000 000

Ls 1 200 000

1H 2003 1H 2004 1H 2005 1H 2006 1H2007

- Cholinesterase inhibitor

- Cost efficient chemical synthesis - Total sales of this product group in our markets: approx 300 M LVL as this is a multi-purpose drug for CNS related indications

- Maximum sales: 7 M LVL p.a.

Key Products - Neiromidin

Key Products - Furagin

Furamag/Furagin/Furasol 6 months sales

Ls 0

Ls 200 000

Ls 400 000

Ls 600 000

Ls 800 000

Ls 1 000 000

Ls 1 200 000

1H 2003 1H 2004 1H 2005 1H 2006 1H2007

- Nitrofurantoine derivative, anti-infective drug

- In process of replacement of Furagin with Furamag

- In sachets sold as Furasol

- Olainfarm is the only stable API producer in traditional markets

-Total sales of this product group in our markets: 70 M LVL


Key Products – PASA Sodium Salt

PASA Sodium Salt 6 months sales

Ls 0

Ls 100 000

Ls 200 000

Ls 300 000

Ls 400 000

Ls 500 000

Ls 600 000

Ls 700 000

Ls 800 000

Ls 900 000

Ls 1 000 000

1H 2003 1H 2004 1H 2005 1H 2006 1H2007

- Anti tuberculosis drug, helps to treat resistant forms of tuberculosis

- So far sold solely to governmental programs, thus sales are difficult to forecast

- World market approx. 300 M EUR

- Maximum sales: 5 M LVL p.a., limited by current production capacities

- Files are being prepared for WHO registration, allowing for worldwide sales

New Products – Current Status

Meldonium - Generic drug for treatment of cardio vascular diseases,

original among TOP 15 best selling drugs in Russia and TOP 3 best seller in Ukraine

- Current status: Registration files are being finished, bioequivalence tests started in Ukraine

- Expected launch: 2008

Expected sales in 2012 - LVL 4.5 mln

statNew Products – Current Status

Olvazol ®

- Patent protected next generation of Meldonium

- Fast acting drug for prophylaxis and treatment of ischemic heart and brain injury and infarction

- Current status: undergoing stability tests, clinical pilot trials to be started by the end of 2007.




R-Fenibut

- Pure enantiomeric form of known drug, at least 2x more effective than a

parent drug, thus requires ½ of dosage or less- Fewer side effects- Current status: scale-up and fine-tuning of technology under way, clinical

pre-trials to be started before the end of 2007- Expected launch: 2009



R-Fenotropil

- New patented molecule, at least 2x more effective as parent drug, thus requires ½ of dosage or less and has fewer side effects

- Current status: scale-up and fine-tuning of technology under way, pre-clinical trials to be started before the end of 2007




Memantine

- Widely used for treatment of Alzheimer’s disease, running out of patent protection

- Olainfarm developed technology for worldwide sales

- Exclusive co-operation with a multinational company, Olainfarm will sell Memantine in CEE, CIS and Middle East

- Current status: registration by partner started in Germany, Canada; Olainfarm is finishing file to be submitted for registration early 2008

- Expected launch: 2009 (limited markets)

Expected sales in 2012: LVL 7.5 mln (subject to patent protection)


New Generics Program for Baltics

- First stage includes five new first generics for the Baltic states, two for treatment of fungus, two for CNS diseases and one cardiovascular medicine

- Three of the five will be registered through Baltic MRP procedure

- Currens status: registration under way



Estimated Sales, LVL '000

15 156 18 808 22 79627 127

31 99437 013

42 825190

1 6505 200

11 900

18 850

28 300

1 540

2 725

3 600

4 800

6 000

7 200

8 640

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

2006 2007F 2008F 2009F 2010F 2011F 2012F

API & Intermediates

New FDFExisting FDF

- Existing FDF products:- more marketing effort, branding, additional comparative tests; - strengthened network of medical representatives; - new forms and dosages of products;- new markets within FSU countries; - natural market growth; - price increases.

- New FDF products:- higher added value;- patent protected.

- APIs and intermediates - improved recognition of Olainfarm in the global market;- UK already among top markets.

Where will the growth come from?

Historic performance

Sales, Net Profit and EBITDA '000 LVL

5294

7368

10678

12985

16704

9491

16632 778 732

1 6582 508

3 4512 982

-797-3491 0261 148

-2000

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

2002 2003 2004 2005 2006 2007 H1

Sales

Net Profit EBITDA

Seasonality

Quaerterly Seasonality of Sales, EBIT, EBITDA, Net Profit '000 LVL

39543788

3640

5320

4900

4550

160326 280

630420

691 802 770

14001190

910

22238

78

440 485247

840

0

1000

2000

3000

4000

5000

6000

2006Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2

Sales

EBIT

EBITDA

Net profit

Historic performance - Margins

Seasonality of Margins

17,48%

21,17% 21,20%

26,30%

24,30%

20%

4,05%

8,61%7,70%

15,80%

12,90%

9,20%

0,56%

6,28%

2,14%

8,27%

9,90%

5,43%

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

30,00%

2006Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2

EBITDA Margin

EBIT Margin

Net margin

Historic Performance - Assets Asssets, LVL

25%36%

41% 40%37% 37%

16%14%

9%10%

5%

1%

18%

19%15%

16%

23%

22%

18%

31%

31%33%

42%

47%

7%0%

1%0%

2%

4%

0

5000000

10000000

15000000

20000000

25000000

30000000

2002 2003 2004 2005 2006 2007 1H

Other, inc. Cash

Debtors

Inventory &WIP

Intangibleassets

Fixed assets

Historic Performance - Equity and Liabilities

Equity & Liabilities LVL

59%54%

51%48%60%73%

25%

28%

27%30%23%

7%

3%

5%

7%8%9%

11%

13%

13%

15%15%

8%

10%

0

5000000

10000000

15000000

20000000

25000000

30000000

2002 2003 2004 2005 2006 2007 1H

Payables

Tax liabilities

Interest bearing debt

Equity and reserves

Share performance in 2007

-- Olainfarm-- OMX Riga

Share performance in 2007

-- Olainfarm-- OMX Nordic EUR GI

Investment Alternatives in 2007

Since January 1, 2007:

- DAX +12.55%

- Nikkei 225 -7.83%

- S&P 500 +2.36%

- CAC40 -2.11%

- FTSE 100 -0.54%

- SSMI -1.4%

IPO of June 2007

- 876 023 shares subscribed; 2 584 267.85 LVL raised

- Post issue number of shares: 14 085 078

- Raised amounts allowed to proceed with smaller items of CAPEX program, including warehousing and some production units

- Ampouling facility project postponed, not abandoned

Considerations for Further Activities

- Partial issue allowed to attract some leverage;

- Considerable CAPEX needs remain for 2008 and further years, especially as new products get launched into market;

- Limited possibilities for further significant leverage;

- Board and the Council to elaborate proposals by the end of this year.

35

Documents

Investors’ Day at Olainfarm September 14, 2007 Company Presentation