RESPONSES TO LETTERS - QUESTIONS OF ASE/OF CMC
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Tuesday, August 9, 2011 |
Pursuant to yesterday's article at «Euro2day.gr» under the heading "Lavrentiadis: Hot money and paper-companies" and pursuant to the Hellenic Capital Market Commission’s letter dated 08/08/2011, under protocol number 3774 and as well as Athens Exchange letter dated 08/08/2011, under protocol number 18797, ALAPIS SA (hereinafter “ALAPIS” or the "Company") informs of the following referring to the Company:
1. ALAPIS commenced its activity in the Research and Development in 2008 (hereinafter «R&D») of innovative generic pharmaceutical products (generic plus), which enabled it to differentiate from its competitors and offer its customers, patients, healthcare professionals and third party companies, high value added pharmaceutical products:
Specifically, ALAPIS, during 2010, administered the development of a total of 20 medicines, while it successfully developed 10 generic plus dossiers and proceeded to submitting 5 of them to the pertinent local and European authorities. These products consist of various pharmaceutical formulations of the central nervous system, the cardiovascular system and ophthalmology, where the Company has accumulated high specialization and expertise. ALAPIS, by virtue of its constant presence in the field, reinforces the development of its business activity in the licensing-out (i.e. management/exploitation of rights) of proprietary products and provides third party services and in general, seeks strategic partners for the joint development of products, maximizing in this way the cost / benefit ratio. At the same time, the Company is implementing a significant number of licensing agreements, granting the rights of use to well established Greek and/or multinational companies (MNCs) for the placement of products in the local and European market.
2. In order to contain the cost of its development activities, as well as the cost of the continuous monitoring of all existing dossiers of the products under the Company's name, in December 2010, ALAPIS signed an agreement with the company AKOLAB SA (hereinafter "AKOLAB"), which, to the best of ALAPIS knowledge, is under the controlling interest of the entrepreneur Mr. Konstantinos Christodoulou, according to which (agreement) AKOLAB undertook for a fee (i) the provision of research and development services for specific pharmaceutical products (generics) on behalf of ALAPIS, and (ii) the completion of the development phase of the Company's 32 existing generic products dossiers. Under no circumstances shall this Agreement impede the ongoing activity of ALAPIS as it regards the research and development on new generic products either for its own use or for its commercial use and the sale of these generics to other customers of the Company via licencing or similar type of contracts.
3. In September 2010, ALAPIS agreed to sell to the company MAC PHARMACEUTICALS SA (hereinafter "MAC"), which to the best of ALAPIS knowledge, is under the controlling interest of the entrepreneur Mr. Elias Makris, part of its business activity which concerns the production and marketing of pharmaceutical formulations primarily for hospital use, including the division’s obligations. The said transaction, although it has been running for several months, has been delayed to complete mainly due to bureaucratic issues (delay in the change of beneficiary registration by the National Organization for Medicines). Until the completion of this process, ALAPIS continues to sell these medicines to Public hospitals, while it continues to use for these purposes MAC services for a fee. Since the agreement with MAC, which is expected to be completed within the next two months, ALAPIS will continue to have significant economic benefits as:
a) it will produce on MAC’s behalf the latter’s generic products, in the same way it produces medicines for another 27 companies, and
b) along with MAC’s traded products, ALAPIS will provide MAC with logistics and administration services, as well as services concerning taking orders, warehousing, distribution, collection and credit control for the sale of MAC’s products to wholesalers (pre-wholesaling) in the same way it does for another 29 companies.
It is noted that since June 2010, ALAPIS has announced that it intends to constrain its sales to the broader public sector and the same exact policy applies to the service provided by MAC as far as it concerns the Company’s same division, which does not imply the cease of ALAPIS activities, since the sale of medicines is not discontinued, but, in contrast, focuses on selling its own generic drugs in all therapeutic categories to the hospitals as well as to the private sector. Also, it is noted that there are no categories of medicines that are distributed exclusively to Public hospitals, but certain drugs that are mainly distributed to Public hospitals, without precluding their availability at the private sector as well.
4. In November 2010, ALAPIS agreed to sell to the company EXELIXIS S.A.(hereinafter "EXELIXIS"), which to the best of ALAPIS knowledge, is allegedly controlled by the company ESCADO INVESTMENTS LTD, part of its business activities which concerns the production and marketing of various products (excluding medicines) sold in pharmacies, including the division’s obligations. Already several suppliers of the said activity have consented to this transaction, while discussions are still underway with the remaining ones. Upon completion of this transaction, ALAPIS intends to focus on products that have significant sales growth potential in future and in particular on medicines whose demand is inelastic. The generic products market is expected to reach the levels of other European countries, namely to have a 40-50% overall market share as compared to less than 10% that it holds today. In any case, as in the MAC agreement, likewise with EXELIXIS, the Company expects to reap significant economic benefits from the cooperation with EXELIXIS, since the intention of both companies is to joint their efforts so much in the production EXELIXIS’s products for third party companies, as well as in the provision of logistics and distribution services that ALAPIS Group can provide via its network of 7 pharmaceutical warehouses for EXELIXIS’s products, as a result of which, the Company is expected to contain to a great extent operating, sales, distribution and warehousing costs.
5. The aforementioned transactions and individual agreements with MAC, AKOLAB and EXELIXIS reflect the Board of Directors expressed policy as regards ALAPIS Group operating model, and in no way do they relate to the termination or withdrawal from an existing business activity of the Company.
It is pointed out that the sale of the aforementioned products, is in line with the regular flow of operation of a pharmaceutical company, which includes the acquisition, sale and/or the development of pharmaceutical products, pursuant to its marketing strategy and its product mix for the individual therapeutic categories, all of which are determined by the constantly changing conditions of the domestic and international pharmaceutical market (expire of patents, new technologies, new clinical studies, etc.)
On this basis and in line with the Company’s statutory purposes , the sale of dossiers-brands of pharmaceutical products is common practice for the Company and in no way does the sale of dossiers, brands, and the concession of contracts to MAC, EXELIXIS and AKOLAB, establish a discontinued activity.
Consequently, the aforementioned three transactions do not constitute an extraordinary or unusual substantial event, outside the normal flow of the ALAPIS group operation in order to trigger any disclosure/communication obligation.
With the exception of the alleged involvement of the company ESCADO INVESTMENTS LTD in EXELIXIS, ALAPIS states that it did not have in the past and still does not have until today any kind of relationship or agreement with this company.
Finally, ALAPIS outstanding bank debt with Proton Bank during the year of 2010 was nil, while the Company has received a loan from this bank at the beginning of the current fiscal year, which is included in ALAPIS’ published interim financial statements for the period 01.01-31.03.2011 and it was used exclusively for working capital requirements of the Company.
For any further clarifications, please contact our Investor Relations department
Tel: +30 213 0175056
E-mail: ir@alapis.eu