Aceto Corporation Announces a 50% Increase in Second Quarter Operating Income.

Aceto Pharma Corp. Launches First Aceto Branded Generic Drug

LAKE SUCCESS, N.Y. -- Aceto Corporation (NASDAQ:ACET), a global leader in the sourcing, regulatory support, marketing and distribution of chemically derived pharmaceuticals, biopharmaceuticals, specialty chemicals and crop protection products, today announced results of operations for its fiscal second quarter and six months ended December 31, 2006.

Fiscal 2007 second quarter net sales increased 9.0% to $75.7 million compared to $69.5 million in the comparable 2006 quarter as we reported sales increases in all of our business segments. Gross profit increased 9.5% to $12.6 million from $11.5 million in the fiscal 2006 quarter and operating income increased 50.3% to $2.7 million, from $1.8 million in the year ago quarter. Net income increased by 12.7% to $1.7 million, or $0.07 per diluted share, up from $1.5 million or $0.06 per diluted share in the fiscal 2006 quarter. This financial performance reflects the recording in the 2007 fiscal second quarter of a net unrealized loss on foreign exchange of approximately $0.3 million, or $0.01 per common share due to the devaluation of the dollar as compared to the Euro and Chinese Yuan as of December 31, 2006, thereby requiring a quarterly revaluation of the dollar denominated assets being held by our foreign subsidiaries, principally cash and accounts receivable.

Net sales for the six months ended December 31, 2006 were $150.4 million, a 4.1% increase from $144.5 million for the fiscal 2006 comparable period. Gross profit for the first half of fiscal 2007 was $25.5 million, an increase of 6.2% from $24.0 million in fiscal 2006. Net income was $4.2 million, or $0.17 per diluted share for the first half of fiscal 2007, compared to $3.5 million, or $0.14 per diluted share in the first six months of fiscal 2006.

Leonard S. Schwartz, Chairman, CEO, and President of Aceto, stated, "Given the challenging economic conditions in the pharmaceutical industry that continue to affect our business, I am pleased with our Company's performance during the fiscal 2007 second quarter. These results surpassed the $0.06 that we reported in the fiscal 2006 second quarter and, had it not been for the currency devaluation at the end of the quarter, would have met our earnings estimate of $0.08 for the quarter."

"I am extremely pleased to announce that our strategic initiative to provide Aceto branded, finished dosage form generic drugs, has become a reality. Aceto Pharma Corp., a wholly owned subsidiary of Aceto Corporation, established for the express purpose of distributing Aceto branded human and veterinary generic pharmaceuticals in the United States, has made a successful entrance into the market by launching and taking orders for its first product, isoflurane, an inhalable anesthetic for human and veterinary use with a current US market of more than $75 million."

Commenting on the performance of the Company's business segments, Mr. Schwartz continued, "During the second quarter, sales in our Health Sciences segment increased by 6% over the 2006 comparable quarter, largely the result of increases in our foreign business, our pharmaceutical intermediates business and our nutritional business. Our Chemicals & Colorants sales increased 11%, primarily due to an increase in sales from our foreign business. In order to more accurately portray the markets in which we do business, we have changed the name of our Agrochemicals segment to Crop Protection. Sales in Crop Protection grew 23% primarily attributable to the successful launch of Asulam, a herbicide used on sugar cane."

Updating the current status of Aceto's strategic initiatives, Mr. Schwartz commented, "Our initiative to provide vaccines for companion animals continues to move forward. As we have previously discussed, we are currently working on a 4-way vaccine for the canine market. Three of the final four animal tests have been successfully completed and the results have been submitted to the USDA. The fourth test is expected to be completed shortly and those results will be submitted to the USDA in the next several weeks. We expect the results of the fourth test to be successful as well. Although there can be no assurances, we continue to expect to receive USDA approval in calendar 2007 and enter the market with Aceto branded product promptly thereafter."

Mr. Schwartz continued, "In addition to our announcement regarding isoflurane, we continue to make progress towards acquiring additional products to distribute under the Aceto brand. We now have agreements with two suppliers to purchase two products to distribute in the United States, one ANDA approved and the other with ANDA approval expected shortly. In addition, we are in the final stages of negotiating with another supplier with four ANDA approved products and are in various stages of negotiation with several other suppliers for additional ANDA approved products for Aceto to distribute in the United States. It remains the Company's intention to sell directly into multiple distribution channels, entering the market in an orderly basis principally focused on the large retail pharmacies while also selling to direct distributors to hospitals. Aceto's business model provides access to the US generic pharmaceutical market for mid-size foreign companies. With respect to regulatory compliance, the Company is very confident that it has achieved the capability to satisfy all of the regulatory requirements and still maintain its status as a distributor."

Mr. Schwartz concluded, "We ended the second quarter of fiscal 2007 with working capital of $109.5 million, no long-term bank debt and shareholders' equity of $119.7 million. We believe this level of working capital provides us the financial strength to move our strategic initiatives forward. We remain optimistic about the Company's business prospects and the strategic initiatives that will drive Aceto's revenue growth in the future, however, we are more cautious about the short term. In terms of financial guidance, we expect to earn approximately $0.06 per diluted share in the third quarter of fiscal 2007, compared to $0.11 in the third quarter of fiscal 2006. Some of this shortfall to the 2006 third quarter is a result of the life cycle of some of the products that we sell. For example, we sell products that the government stockpiles to combat bioterrorism. Fortunately there has been no need to use them however, they do have a shelf life of two years at which time they need to be replaced. The last deliveries we made were in fiscal 2006 so we are not anticipating any new orders of these products in the current fiscal year. The challenging conditions in the industry are also cause for us to temper guidance for the fiscal third quarter. Previously we have not discussed succeeding quarters however, due to the earnings inconsistency projected for the fiscal third quarter, we feel it is prudent to report that we expect the fiscal fourth quarter to be significantly better than the third quarter."

CONFERENCE CALL

Leonard S. Schwartz, Chairman, CEO, and President, and Douglas Roth, CFO, will conduct a conference call at 10:00 a.m. ET on Thursday, February 8, 2007. Interested parties may participate in the call by dialing 888-787-0577 (706-679-3204 for international callers) - please call in 10 minutes before the call is scheduled to begin, and ask for the Aceto call (conference ID # 6916038). The conference call will also be webcast live via the Company's website, www.aceto.com. To listen to the live call please go to the website at least 15 minutes early to register, download and install any necessary audio software. The conference call will be archived on the Company's website, and a recorded phone replay will also be available from 1:00 p.m. ET on Thursday, February 8, 2007 until 5:00 p.m. ET on Monday, February 12, 2007. Dial 800-642-1687 (706-645-9291 for international callers) and enter the code 6916038 for the phone replay. Today we have updated our Corporate Presentation which provides additional details on our strategic initiatives. To view this presentation please go to the Aceto website.

ABOUT ACETO

Aceto Corporation, incorporated in 1947, is a global leader in the sourcing, regulatory support, marketing and distribution of chemically derived pharmaceuticals, biopharmaceuticals, specialty chemicals and crop protection products. With a physical presence in ten countries, Aceto distributes over 1000 chemicals and pharmaceuticals used principally as raw materials in the pharmaceutical, crop protection, surface coating/ink and general chemical consuming industries. Aceto's global operations, including a staff of 26 in Shanghai and 12 in India are unique in the industry and enable its worldwide sourcing and regulatory capabilities. (ACET-F)

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on current expectations, estimates and projections of management. Aceto intends for these forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," or variations of such words are intended to identify such forward-looking statements. The forward-looking statements contained in this press release include, but are not limited to, statements regarding approval of applications for, and sales of, veterinary vaccines, entering the markets for finished dosage forms, results for the third and fourth quarters of fiscal year 2007, and prospects for long-term growth. All forward-looking statements in this press release are made as of the date of this press release, and Aceto assumes no obligation to update these forward-looking statements whether as a result of new information, future events or otherwise, other than as required by law. The forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth or implied by any forward-looking statements. These uncertainties include, but are not limited to, the mix of products sold and the profit margins thereon, order cancellation or a reduction in orders from customers, competitive product offerings and pricing actions, the availability and pricing of key raw materials, dependence on key members of management, risk of entering into new European markets, continued successful integration of acquisitions, economic and political conditions in the United States and abroad, as well as other risks detailed in the Company's SEC reports, including the Company's Form 10-K and other filings. Copies of these filings are available at www.sec.gov.

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