Faulding: Half Year Announcement.

Business & Medical Editors

ADELAIDE, South Australia--(BUSINESS WIRE)--Mar. 6, 2001

Half Year Ended 31 December 2000

Key Consolidated Group Financial Results

-- A 16% increase in sales revenue to $1.35 billion.

-- An increase of 8% in earnings before interest and tax (EBIT) to $70.4
million. After excluding the impact of the debtors securitisation program, EBIT
increased by 14%.

-- An increase of 8% in net profit after tax (NPAT) to $39.5 million.

-- A 7% increase in earnings per share from 22.8(cent)to 24.4(cent)per share.

-- An 8% increase in research and development expenditure to $37.4 million.

-- A partially franked interim dividend of 12(cent)has been declared (December
1999 - 11(cent)).

Key Divisional Highlights

-- From 1 July 2000, the Group's pharmaceutical business and

assets have been integrated to form a global pharmaceutical

division, Faulding Pharmaceuticals, with an increased focus on

markets in North America and Europe.

-- Faulding Pharmaceuticals has recorded a 15% increase in EBIT,

reflecting strong performances in the Americas and Asia

Pacific regions. All costs associated with the Faulding

Pharmaceuticals integration process to date have been absorbed

within this result.

-- Healthcare recorded an 11% increase in EBIT to $38.4 million.

Healthcare Services recorded double digit growth in sales and

EBIT, together with some improvement in margins. While sales

growth was flat in Faulding Consumer, reflecting difficult

trading conditions for nutriceutical products following the

introduction of the GST, the business recorded double digit

EBIT growth as a result of savings generated from the

continuing integration of the nutriceuticals business

operations and other efficiency improvements.

                       Results by Business Unit

                         Sales Revenue             EBIT
                      Dec 00   Dec 99   %      Dec 00   Dec 99   %
                    $Million $Million Change $Million $Million Change

Faulding
 Pharmaceuticals       331.2    229.0 +44.6      46.4     40.2  +15.2
Faulding Healthcare  1,020.6    937.1  +8.9      38.4     34.7  +10.7
Other                      -        -     -     (14.4(a) (10.0) +44.0

Total                1,351.8  1,166.1 +15.9      70.4     64.9   +8.3

(a) includes impact of debtors securitisation of $3.7 million (1999 -
    nil).

Chief Executive Officer's Review

The Company has recorded good organic growth in sales and EBIT in both operating divisions. Established positions in major markets and the strong demand for our pharmaceutical and healthcare products provides a sound basis for continuing growth.

Integration of the Company's pharmaceutical assets and the establishment of the new organisational structure for the Faulding Pharmaceuticals division has progressed well. The division recorded a solid 15% increase in EBIT for the December 2000 half year, while at the same time absorbing costs and the disruption associated with the integration process. The divisional head office team is now in place and its focus on the opportunities available in the large Northern Hemisphere markets is already evident from the recruitment, capital allocation and business development activity undertaken since July 2000.

Existing and forecast demand, as well as the division's continually expanding product range, have required new investment and improved coordination of development and manufacturing facilities. Capacity usage reached record levels in Faulding Pharmaceuticals' manufacturing sites during the reporting period. In December 2000, the Company announced the purchase of an additional facility at Piscataway, New Jersey, and additional capital expenditure of approximately US$81 million over the next five years to fund the upgrade of both this site and the existing site at Elizabeth, New Jersey. This activity will allow us to double solid oral dosage pharmaceutical production over that period and to undertake development and manufacturing activities more efficiently. In relation to injectable products, our development and manufacturing facility in Puerto Rico has widened its focus from the US market to encompass markets worldwide and provide greater support to the primary facility in Mulgrave, Victoria. We have already submitted product applications developed in Puerto Rico for Brazilian and Canadian markets and we expect further submissions in the United Kingdom during the next reporting period.

We are beginning to see the benefits of the integration in developing synergies at a customer level, particularly in the United States. The marketing of oral and injectable dose forms of famotidine for example, upon launch in April 2001, will demonstrate our ability to extract far greater value from these products by marketing a full range of presentations. In addition, the increased coordination of business development activities and their focus in the Northern Hemisphere have facilitated our ability to deal with and secure opportunities. These improvements and those to other common functions, in particular raw material sourcing and product development, are expected to add value in the future.

EBIT grew by 57% in the Americas region as a result of strong performances from the Purepac oral generic business in the USA, and from the Brazilian and Canadian operations. The Purepac result was based on new product approvals and the sustained performance of controlled release diltiazem. The Faulding Laboratories branded business increased sales and profit, with continued strong increases in dispensed prescriptions of Kadian(R), the sustained-release morphine product. A further product, the FUDR(TM) brand of floxuridine, was acquired in February 2001 as we continue to build our branded portfolio and our oncology franchise. FUDR(TM) is a freeze-dried injectable oncology drug indicated for palliative use in the management of gastrointestinal cancer. It will be marketed by our existing branded sales team.

While sales in the Europe, Middle East and Africa (EMEA) region increased, growth from the previous year was offset by the effects of stockpiling in response to Y2K in December 1999. Demand was particularly strong in the Middle East and Ireland. EBIT declined slightly in comparison with last year as a result of costs incurred in increasing the region's investment in product development and from improvement of its systems supporting distribution, marketing and sales. Important steps are now being taken to ensure that Faulding's involvement in key markets in this region is appropriately structured and suitably resourced to allow for maximised returns from the Company's product portfolio. For the longer term, the recent announcement of the extended arrangements with NaPro Biotherapeutics, Inc enabling Faulding to promote and sell paclitaxel, the world's largest selling oncology agent, in Europe is a significant development. It represents a central plank in the enhancement of Faulding Pharmaceuticals' oncology franchise and of its market position in this region.

In the Asia Pacific region, EBIT increased by 58% reflecting solid sales growth in most areas. The Australian DBL(R) injectable business recorded a particularly good result, assisted by the launch of pamidronate, its most successful to date. Pamidronate is a technically challenging product with significant barriers to entry and at this stage has no competition in this market. An improved and profitable result was also delivered by the division's operations in China. This is expected to continue, aided by the recent GMP accreditation of the Foshan manufacturing site.

Our underlying strategies for the Faulding Pharmaceuticals division remain unchanged. We aim to exploit growing demand for generics in our existing markets and to target further geographic expansion. We also remain committed to expanding our branded business by identifying niche opportunities in defined markets. A focus on building our franchises in oncology and pain management, and in providing solutions to patients and care-providers in these key areas, guides our expansion in both generics and brands.

The Group's total investment in research and development has increased by 8% to $37.4 million, primarily a result of the continued strengthening and widening of our generic product pipeline.

The Faulding Healthcare division, comprising the Healthcare Services and Faulding Consumer businesses, recorded EBIT growth of 11% for the half year ended 31 December 2000. Healthcare Services recorded sales and EBIT growth in excess of 10%, while margins for its distribution activities improved in comparison with the prior period. Five years ago we made a conscious decision to build a broadly based pharmacy services business to which business information systems and data access are integral. The December 2000 acquisition of the Amfac(TM) point-of-sale and dispense pharmacy systems and the Healthlinks internet-based information portal complement our existing investments in pharmacy information services and enhance Faulding's position as the conduit for products and information between manufacturers and pharmacists. The established focus on brands, sophisticated logistics and IT solutions remains the platform for future growth in this business.

Faulding Consumer delivered double digit EBIT growth while experiencing flat sales for the period. Trading conditions have been difficult in the vitamin, mineral and supplement (VMS) business since the introduction of the GST in July. This has been partially offset by gains made in the sunscreen market where our innovative marketing and product development initiatives are producing increased returns. Important progress was made in integrating the VMS businesses, including in particular the Bullivant's and Golden Glow(R) operations acquired last year. Further substantial cost efficiencies will be extracted when appropriate externally conducted manufacturing is consolidated in-house during the 2001 calendar year. The increased financial strength of Faulding Consumer is delivering tangible benefits in the form of group purchasing power, and the gains in both cost control and overhead recovery are being seen in improved EBIT. The Campbell's soap assets, which were acquired in early December 2000, have been integrated into the Shepparton soap facility on schedule and without increasing labour.

The December 2000 half year has been a positive one for the Company. Important progress has been made in integrating the Faulding Pharmaceuticals operations and Faulding Healthcare continues to deliver on its established strategies in its services and consumer products businesses. Clear, well established strategies are in place which allow us to take best advantage of the external market conditions in which we operate to achieve good levels of organic growth.

Faulding is a worldwide health and personal care company which is publicly listed on the Australian Stock Exchange. Faulding's principal businesses are oral and injectable generic and branded pharmaceuticals, consumer health products, the provision of distribution and retail management services to retail pharmacies, and logistics management services to hospitals. Faulding markets its products and is represented in more than 70 countries.

The following trade marks are owned by F H Faulding & Co Limited ACN 007 870 984 and its controlled entities: KADIAN, DBL, AMFAC and GOLDEN GLOW.

(ENDS 6 March 2001)

                 CONSOLIDATED GROUP FINANCIAL SUMMARY
                   Half Year Ended 31 December 2000


                                        Dec 00      Dec 99        %
                                         $000        $000      Change

Sales revenue                        1,351,801   1,166,141       15.9
Earnings before interest and tax        70,356      64,886        8.4
Operating profit before tax             57,644      52,803        9.1
Group net profit after tax              39,460      36,383        8.4
Return on funds (Group net profit
 after tax/average equity)                 5.7%        5.8%      (1.7)
Earnings per share after tax              24.4(cent)  22.8(cent)  7.0
Dividends per share                       12.0(cent)  11.0(cent)  9.1


                 CONSOLIDATED GROUP FINANCIAL SUMMARY
                   Half Year Ended 31 December 2000


                      Cash Flow

                                        Dec 00      Dec 99       %
                                         $000        $000      Change

Operating cash flow                     49,665(b)    1,248    3,979.6
Investing cash flow                    (86,943)    (74,471)     (16.7)
Financing cash flow                     31,945      60,322      (47.0)
Net cash flow                           (5,333)    (12,901)      58.7


                      Balance Sheet

Net current assets                     203,292(a)  317,529      (36.0)
Fixed assets                           368,783     324,102       13.8
Other net assets                        29,240      10,967      166.7
Intangibles                            222,430     205,226        8.4
Goodwill                               168,430     153,272        9.9

Financed by:

Net debt                               288,407(a)  364,709      (20.9)
Shareholders funds                     703,768     646,387        8.9

Gearing                                     41%(a)      56%     (26.8)

(a) Impacted by cumulative impact of debtors securitisation of $118
    million.

(b) Impacted by current period impact of debtors securitisation of $25
    million.