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Sales activities in Germany

In Germany, STADA’s largest national market as expected, sales in the first nine months of 2011 decreased by 9% to EUR 359.0 million (1-9/2010: EUR 392.7 million). Whereas the decrease in sales in the German market in the second quarter of 2011 still amounted to 9%, sales in the third quarter of 2011 declined by 5%. In total, STADA activities in Germany had a share of 28.7% in Group sales in the first three quarters of 2011 (1-9/2010: 33.3%).

The anticipated decrease in sales in Germany was still attributable to the difficult local framework conditions for generics. Sales in the German Generics segment in the first nine months of 2011 thus decreased by 11% to EUR 265.1 million (1-9/2010: EUR 298.6 million). The STADA Group’s market share of generics sold in German pharmacies was stable by volume in the first three quarters of 2011 at approx. 12.5% (financial year 2010: approx. 12.5%).¹⁾ Viewed in the third quarter of 2011 alone, the market share, as expected – in view of good results in recent tenders for discount agreements – even rose by volume to approx. 13.2%.¹⁾ This, however, continued to be contrasted by operating profitability in the German Group business as expected only just under Group average.

Total sales achieved by STADA in the German market with generics in the first three quarters of 2011 amounted to 74% (1-9/2010: 76%) of sales achieved in Germany.

The development in the German market was primarily based on the good results achieved by STADA sales companies in the context of the numerous tenders for discount agreements by statutory health insurance organizations. STADA’s German sales companies continue to participate on an ongoing basis in these tenders using various bid strategies characterized by margin and market share aspects and consequently also with a large variation in terms of award results. The Group’s overriding objective in this respect of reaching an appropriate operating profitability in Germany led, in the reporting period, to a decrease in sales and market share for STADA in the Generics segment in Germany, without, however, negatively affecting the position of the STADA Group as the clear number 3¹⁾ in the German generics market.

In the third quarter of 2011, the two STADA sales companies STADApharm GmbH and ALIUD PHARMA GmbH achieved very good results in the fourth round of tenders of the Deutsche Angestellten Krankenkasse (DAK) for discount agreements valid throughout Germany.²⁾ The DAK, which insures approx. 6.5 million individuals, thus concluded respective contracts with these two STADA sales companies, each for ten active ingredients from a total of 33 active ingredients – including some product launches and in-house production. The contracts took effect on October 1, 2011 and have a regular term of two years. In the fourth quarter, of 2011 the two STADA sales companies STADApharm GmbH and ALIUD PHARMA GmbH were also awarded contracts for numerous active ingredients in recent tenders with KKH-Allianz, Vereinigte IKK and the Techniker Krankenkasse. The contracts take effect on January 1, 2012 and February 1, 2012 respectively and have a regular term of two years.³⁾ Furthermore, in recent tender rounds with various public health insurers, the STADA sales company cell pharm was also awarded the respective contracts in the fourth quarter of 2011. In light of partly high-volume discount agreements concluded in 2011, the STADA Executive Board expects that the Group’s market share by volume will grow again in the German market.

The repackaging required as a result of the German Pharmaceutical Market Restructuring Act (AMNOG), which became effective as of January 1, 2011, and the product returns associated with it will lead to costs totaling in the six-digit euro area at maximum in the financial year 2011, which STADA recognizes as a one-time special effect in 2011. In this context, EUR 0.4 million were incurred as of the first nine months of 2011.

Generics sales generated by STADA in Germany were still achieved via various sales companies. Sales of ALIUD PHARMA, the largest of the Group-owned sales companies in the German generics market, decreased in the first three quarters of 2011 by 10% to EUR 145.9 million (1-9/2010: EUR 162.8 million). Sales achieved by the Group-owned German generics sales company STADApharm decreased in the reporting period by 16% to EUR 93.0 million (1-9/2010: EUR 111.3 million).

Sales of STADA’s generics sales company, cell pharm, special supplier for the indication areas oncology and nephrology, decreased in the first nine months of 2011 by 2% to EUR 22.6 million (1-9/2010: EUR 23.1 million). In the third quarter of 2011, cell pharm sold the oncological product Tobra-cell^® (annual sales 2010: EUR 0.4 million, accumulated sales in 2011 up to the date of sale: EUR 0.7 million) and thereby achieved earnings of EUR 1.4 million before taxes, which was reported as a relieving one-time special effect.

In the second quarter of 2011, in the context of competition proceedings based on patent law, an injunction was issued in first instance against the German STADA sales companies ALIUD PHARMA GmbH and STADApharm GmbH to refrain from sale of the product with the pharmaceutical ingredient Leflunomid for treatment of active rheumatoid arthritis and active psoriatic arthritis. Following review of the opinion of the court, STADA had decided to appeal against the injunction.

Sales generated with branded products – primarily under the local sales labels STADA GmbH and Hemopharm – recorded a plus of 1% in the first nine months of 2011 to EUR 92.9 million (1-9/2010: EUR 92.1 million). The total share achieved by STADA in the reporting period with Branded Products in Germany amounted to 26% (1-9/2010: 23%).

In the third quarter of 2011, the British STADA subsidiary Britannia Pharmaceuticals Ltd. dissolved an existing agreement with Cephalon GmbH for the sale of Apo-Go^® in the German market. In addition to the fact that Cephalon GmbH became part of the Israeli Teva Group, and thus part of a direct global competitor of STADA, by way of an acquisition, this therefore also takes the decision⁴⁾ of the Munich district court of July 19, 2011 into account, according to which Cephalon, in the sale of the licensed STADA product, was in violation of the obligation to sell in pharmacies. In connection with dissolving this agreement, a burden on earnings resulted in the amount of EUR 5.4 million before or EUR 3.9 million after taxes, which was reported as one-time special effect.

For financial year 2011, the Executive Board expects, with a sales strategy that continues to be geared toward an appropriate local operating profitability, further sales decreases in the generics area and thus for the German business overall.

1)	Data from IMS Health relating to pharmacy sales to customers (source: IMS/Pharmascope national).
2)	See the Company’s corporate news of August 1, 2011.
3)	See the Company´s corporate news of October 31, 2011.
4)	This decision is not yet legally binding.

1)	Sales below EUR 0.05 million were rounded to EUR 0.0 million.

1)	Sales below EUR 0.05 million were rounded to EUR 0.0 million.