Eon Labs Reports Sales and Net Income for the First Quarter of 2005.

LAKE SUCCESS, N.Y. -- Eon Labs, Inc. (Nasdaq: ELAB) today reported net income of $26.1 million and diluted earnings per share of $0.29 for the first quarter ended March 31, 2005. The quarter ended March 31, 2005 included merger related expenses incurred in connection with the pending acquisition of the Company by Novartis AG, which decreased net income by $1.8 million, or $0.02 per share. For the quarter ended March 31, 2004, the Company reported net income of $32.3 million and diluted earnings per share of $0.36 which included income from a payment to settle all Nabumetone patent litigation that increased net income by $6.1 million, or $0.07 per share. Excluding the above items, adjusted diluted earnings per share for the first quarter ended March 31, 2005 would be $0.31 and $0.29 per share in the comparable quarter in 2004.

Net sales were $101.0 million for the first quarter ended March 31, 2005, compared to $104.2 million in the comparable quarter in 2004. The decrease is primarily the result of the launches of 100mg and 150mg Bupropion during the first quarter of 2004, and a decline in prices and volumes in selected other products. The sales decrease was largely offset by the launch of Itraconazole during the first quarter of 2005, as well as, the sales of products that were introduced subsequent to the first quarter of 2004, including Fosinopril Sodium, Citalopram and Cilostazol.

Currently, the Company has 27 ANDAs pending with the FDA, including one tentative approval. Additionally, the Company has a final approval for Omeprazole 10mg and 20mg capsules that is still the subject of pending litigation. Total annual brand sales exceed $13.6 billion for all of these ANDAs.

FINANCIAL REVIEW

Gross profit as a percentage of net sales was 58.8% for the quarters ended March 31, 2005 and 2004. The gross margin percentage for each quarter benefited from the introduction of new products, primarily Itraconazole which was launched in the first quarter 2005 and Bupropion which was launched in the first quarter of 2004.

Selling, general and administrative expenses decreased by $2.0 million to $11.0 million for the first quarter ended March 31, 2005 from $13.0 million in the comparable quarter in 2004. The decrease is attributed to lower legal expenses, insurance premiums for product liability, personnel related expenses and lower outside sales commissions. The reduction in legal expenses is attributable to a decrease in patent litigation costs that were higher in 2004 due to litigation involving the launch of Bupropion and lower expenses related to phentermine litigation.

Research and development expenses decreased by $0.6 million to $5.0 million for the first quarter ended March 31, 2005, compared to $5.6 million in the comparable quarter in 2004. The decrease was principally due to the timing of certain expenditures principally related to bio-studies.

For the first quarter ended March 31, 2005, merger related expenses, primarily legal and investment banking fees, of $3.0 million were incurred in connection with the pending acquisition of the Company by Novartis AG. These expenses are being reported separately in the Consolidated Statements of Income.

Other income decreased by $9.5 million to $1.0 million for the first quarter ended March 31, 2005 from $10.5 million in the comparable quarter of 2004. The decrease is primarily due to the receipt of a $10.0 million payment to settle all patent litigation involving Nabumetone in 2004 offset by an increase of $0.5 million in interest income.

The effective tax rate for the first quarter ended March 31, 2005 decreased to 37.1% from 39.3% in the comparable quarter in 2004. The decrease is primarily attributable to the tax benefit from The American Jobs Creation Act of 2004 and an increase in tax-exempt interest on investments.

Eon will conduct a live audio webcast today at 10:00 a.m., Eastern Time to discuss the financial results for the first quarter of 2005. To access the live audio webcast, visit the Investor Relations section of our website at www.eonlabs.com and follow the link. Interested persons may listen to the live conference by calling toll free [phone] (U.S. only), or [phone] (international). The password for the conference call is ELAB. A replay of the conference call will be available until 5:00 p.m., Eastern Time on May 4, 2005 by calling toll free [phone] (U.S. only), or [phone] (international). The passcode for the replay is 4661713. The replay will also be available on the Investor Relations section of the Eon Labs, Inc. website, www.eonlabs.com.

Eon Labs is a generic pharmaceutical company specializing in developing, licensing, manufacturing, selling and distributing a broad range of prescription pharmaceutical products. For press releases and other company information, visit the Eon Labs, Inc. website at www.eonlabs.com.

Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: This release contains statements that are forward-looking in nature which express the beliefs and expectations of management. Such statements are based on current plans, estimates and expectations and involve a number of known and unknown risks, uncertainties and other factors that could cause the Company's future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. These factors and additional information are discussed in the Company's filings with the Securities and Exchange Commission and statements in this release should be evaluated in light of these important factors. Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

Eon Labs, Inc. and Subsidiaries
                   Consolidated Statements of Income
           (Dollars in thousands, except per share amounts)
                              (unaudited)

                                           For the Three Months Ended
                                                      March 31,
                                                  2005        2004
Net sales                                    $  101,048  $  104,229
Cost of sales                                    41,652      42,921
        Gross profit                             59,396      61,308

Operating expenses:
    Selling, general and administrative          10,953      12,983
    Research and development                      4,954       5,570
    Merger related costs                          2,976           -
        Total operating expenses                 18,883      18,553

        Operating income                         40,513      42,755

Other income and (expense):
    Interest income                                 954         448
    Other (expense) income, net                      (4)     10,022
        Total other income, net                     950      10,470

Income before provision for income taxes         41,463      53,225
Provision for income taxes                      (15,384)    (20,908)
       Net income                            $   26,079  $   32,317

Net income per share data:
    Basic                                    $     0.29  $     0.36
    Diluted                                  $     0.29  $     0.36

Weighted average common shares outstanding:
    Basic                                    88,841,105  88,710,774
    Diluted                                  90,608,434  90,778,406

The earnings per share and common share data for the three months
ended March 31, 2004 reflect a 2-for-1 stock split effected in the
form of a 100% stock dividend distributed in June 2004 to
stockholders of record at the close of business on May 17, 2004.

Amortization of other intangibles of $940 for the three months
ended March 31, 2004 previously included in selling, general and
administrative expenses has been reclassified to cost of sales.


                    Eon Labs, Inc. and Subsidiaries
                 Condensed Consolidated Balance Sheets
                 March 31, 2005 and December 31, 2004
                        (Dollars in thousands)
                              (unaudited)

                                               March 31,  December 31,
ASSETS                                           2005          2004
Current assets
    Cash and cash equivalents                 $  63,290    $  59,500
    Short-term investments                      165,696      136,252
    Other current assets                        207,809      224,218
      Total current assets                      436,795      419,970

Property, plant and equipment, net               53,248       52,481
Goodwill and other intangible assets, net        64,041       64,981
Other assets                                      9,155        7,742
      Total assets                            $ 563,239    $ 545,174
                                             ===========   ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities                           $  84,069    $  93,252
Long-term liabilities                             8,682        8,398
     Total liabilities                           92,751      101,650
Total stockholders' equity                      470,488      443,524
      Total liabilities and
       stockholders' equity                   $ 563,239    $ 545,174
                                             ===========  ===========