Schweizerhall Expands Its Pharmaceutical Presence With the Acquisition of Novosis AG

• Schweizerhall Holding AG acquires the German specialty pharmaceuticals company Novosis AG
• Purchase price in cash and own shares is subject to the achievement of milestones
• Novosis is a technological leader in the development and manufacturing of transdermal drug delivery system
• Complementary technology platforms and customer segments offer new growth potential
• Agenda item: authorized capital of 300 000 shares proposed
• Acquisition further strengthens corporate strategy by focusing on specialty pharmaceuticals and value added generics

BASEL, March 10, 2006 - Schweizerhall, the Basle-based group specializing in pharmaceuticals and chemicals, announced today the signing of a purchase agreement for the acquisition of Novosis AG, located in Miesbach, Germany. The two companies are engaged in complementary business activities focused on dynamic segments of the pharmaceuticals industry. With Novosis, Schweizerhall gains access to another attractive market segment within specialty pharma and value added generics. This contrasts from the classic generics business by offering better margins and higher barriers to entry.

Luzi A. von Bidder, President of the Board of Directors of Schweizerhall Holding AG states: “The acquisition of Novosis represents an excellent strategic fit and complementary strengthening of our pharmaceutical activities. Hence it broadens our technology base for pharmaceuticals particularly in the area of advanced drug delivery, strengthens our offering for the generics industry and improves our access to research-driven pharmaceutical companies. After this purchase Schweizerhall still has sufficient financial flexibility to fuel the further expansion of the Business Unit Pharma”.

Dr. Wilfried Fischer, founder and chairman of the Board of Novosis AG commented: “Our goal with this transaction is two-fold. We want to secure financial resources to fund our R&D activities and also to achieve a good return for the financial investors who have supported us during the start-up phase of< our company. We are delighted about the successful closing of the negotiations and look forward to joining forces with our industrial partner, Schweizerhall.”

Novosis AG is a technological leader in the area of advanced drug delivery

Novosis AG is a privately owned pharmaceutical company specialized in the development and manufacturing of transdermal and biodegradable, subcutaneous drug delivery systems. The company, founded in 1997 by Dr. Wilfried Fischer and based in Miesbach close to Munich (Germany), currently employs 62 highly skilled and motivated staff. Novosis develops and manufactures products for renowned pharmaceuticals and generics companies including Schering, Sandoz/Novartis and Ratiopharm. Top selling drugs include several highly effective transdermal systems, such as Fentanyl patches for the treatment of chronic pain. The company possesses a full pipeline of new products scheduled to reach the market over the next few years. Experienced pharmacists (Ph.D.), biologists, engineers, formulation chemists, as well as chemical and pharmaceutical technicians deploy their know-how and competence for the development of new technologically complex drug delivery systems. Transdermal systems for contraception, the treatment of central nervous system diseases, novel patches to relieve pain as well as biodegradable implants for the treatment of prostate cancer are some of the more advanced projects in the R&D pipeline. Additionally, research in transdermal delivery focuses on innovative approaches in actively controlled drug release and transdermal application. In this field Novosis developed new, patent-protected technologies which will continue to supply its pipeline with innovative products. At its Miesbach site, Novosis operates state-of-the-art manufacturing facilities with an annual capacity currently in excess of 100 million patches. For the full year 2006 Novosis expects a turnover of EUR 16 million, an EBITDA of EUR 4.8 million and forecasts rapid and profitable mid-term growth based on the market introduction of new products. The size of the therapeutic patch market is estimated at approximately USD 4 billion with an annual growth of around 12%.

Purchase price partially dependent on the achievement of milestones

Schweizerhall reached an agreement with the major shareholders of Novosis AG, founder Dr. Wilfried Fischer and several financial investors, on the acquisition of the entire share capital of Novosis AG. Initially, by the end of May 2006, Schweizerhall will pay EUR 26.6 million in cash and EUR 8.3 million in newly issued Schweizerhall shares. Depending on the achievement of financial earnings and R&D milestones, a second payment of minimum EUR 9.0 million and maximum EUR 47.7 million will be due in the first quarter 2008. Dr. Wilfried Fischer will receive half in cash and half in Schweizerhall shares for 44% of the Novosis share capital and will become a bigger shareholder of Schweizerhall Holding AG. The financial investors will be paid solely in cash. The cash component will be settled with existing liquid funds and borrowings to be raised temporarily and repaid with the proceeds from the future divestment of private equity investments. Consolidation in the financial accounts of the Schweizerhall Group will take place from the date of the acquisition or in 2006 for the approximately three remaining quarters of the year.

Issuance of authorized share capital proposed to the Annual General Meeting of Schweizerhall Holding AG

At the Annual General Meeting on April 28, 2006, Schweizerhall Holding AG will propose to issue an additional authorized capital of 300 000 shares for the future growth of its pharmaceutical business. Part of the shares will be used to reimburse Dr. Wilfried Fischer for the Novosis acquisition.

Complementary technology platforms and customer segments offer new growth potential

Two successful businesses offering pharmaceutical products and services are joining forces. The combined technological know-how in both the development and manufacturing of oral formulations (Business Unit Pharma with Cimex Pharma) and in transdermal and implantable drug delivery systems (Novosis) strengthens the specialty range of the common business. The new alliance emerges as a strong supplier to the fast growing European pharmaceuticals market, based on strong client relationships with generics distributors and on a good cooperation with research-driven pharmaceutical companies. Dr. Wilfried Fischer will continue to serve as CEO of Novosis AG within the Schweizerhall Group. A former head of development of Hexal (now Sandoz/Novartis) he has a successful track record of experience in the research-driven pharmaceutical industry as well as in the generics field. Schweizerhall intends to expand its strategic positioning in generics through Novosis and to strengthen contract development services for research-driven pharmaceutical companies. In the longer term, Schweizerhall plans to push product development and to build a combined broadened product portfolio. In addition, significant synergies exist between Schweizerhall’s Business Unit Pharma (Cimex) and Novosis in the area of sourcing of active ingredients, product development and registration.

Additional information regarding this transaction will be presented at the forthcoming press conference on March 23, 2006. On the same occasion the annual results 2005, approved by the Board of Directors on March 3, 2006, will be published.

Novosis AG

Novosis AG, a privately held pharmaceutical company based in Miesbach (Germany), specializes in the development and manufacturing of transdermal and implantable drug delivery systems. Based on proprietary and patent protected technologies Novosis develops and manufactures its own therapeutic patches for actively controlled drug release. A top-selling drug is the highly effective Fentanyl patch, a pain reliever. Novosis has a full pipeline with projects for the indication areas of contraception, pain and cancer in late stages of development. Large international pharmaceutical customers rely on the partnership with Novosis for the galenical development and GMP-manufacturing. For additional information see: www.novosis.com.

SHS Ltd. for investment management

Founded in 1993, SHS Ltd. is financing and advising young promising companies espcecially in the health care industry. Together with the three investment pools SHS Venture Capital KG, SHS Technology Investment Ltd. and SHS Midcap KG, SHS is managing a capital of about EUR 80 million. B. Schirmers and R. Spatscheck, both former McKinsey advisors as well as H. Leonhardt, a former corporate finance project manager of Arthur Andersen, are the main associates. Among the investors are the Kreditanstalt für Wiederaufbau (KfW), tbg, the Sachsen LB and SHS itself.

Schweizerhall

Schweizerhall is active in the pharmaceutical and chemical industries. The Business Unit Pharma specializes in the development, registration and approval, production and packaging of pharmaceuticals, which are no longer under patent protection. With a focus on solid pharmaceutical forms, the Business Unit Pharma supplies leading generics firms throughout Europe. The Business Unit Chemicals is the leading Swiss supplier of chemical raw materials, intermediates, specialty chemicals and customized mixtures within comprehensive supply chain solutions. Leveraging its in-depth experience and state-of-the-art infrastructures, the business unit offers global sourcing, optimal storage, packaging, quality assurance, just-in-time delivery, disposal and recycling. The Schweizerhall Group is headquartered in Basle, currently employs approximately 380 staff and generates annual sales of about CHF 300 million. Schweizerhall Holding AG, the Group’s parent, is listed on SWX Swiss Exchange (Swiss security number: 2119090; Telekurs/Bloomberg: SWHN; Reuters: SWHN.S).

Downer & Company acted as financial advisor to Novosis AG on this transaction.

Contact

Luzi Andreas von Bidder
President of the Board of Directors
Phone: +41 43 344 7474
info@schweizerhall.com
www.schweizerhall.com