English - Siegfried

Chairman’s LetterDear Shareholders,In 2006 the Siegfried Group managed to continue on its“course for growth”. This success applies not only to theGroup, but to both Divisions and all our business segmentsas well. The Siegfried Division, which comprises our pharmaceuticalactivities, opened a new production facility in Maltaand completely modernized the crystallization operation(a key end stage in chemical production) in Zofingen. During2006, the Sidroga Division founded a daughter companyin Austria to begin marketing its products in that countrydirectly.Overall, the Board of Directors and the Executive Managementare pleased with the results for the past business year.The ambitious growth goals were clearly met and surpassed,gross profits increased, and operating income barely missedour set goal of 12%. These results are all the more remarkableas the Siegfried Group made substantial investments inthe development and upgrading of our product portfolio,and in the development of future markets. In addition,generic projects lacking market potential were consistentlydepreciated.Growth was particularly strong in those business segmentsthat count as our core competencies: development, scalingup, and production of active pharmaceutical ingredients andthe corresponding intermediate products, as well as in thedevelopment and production of generics. The Siegfried Groupwill focus on these market segments for future success.In the development, scale-up, and production of activepharmaceutical ingredients we offer both custom synthesis(chemical synthesis of an ingredient for a single clientwith the corresponding patents) and the production of ourown pharmaceutical ingredients as multi-client products.Our custom synthesis activities grew in 2006, despite an industrystill struggling with overcapacity in Europe and NorthAmerica, thanks in part to our long-term relationships withnumerous large pharmaceutical companies. This resulted inSiegfried’s participation in the production of Tamilflu, the flumedication from Roche. Often, we were able to show ourflexibility and willingness to meet specific customer requirements,as with Tamilflu, where we were able to producethe necessary amount of the medication for Roche in a veryshort timeframe. For the up-and-coming U.S. company,Celgene, Siegfried developed an innovative collaborationmodel that will benefit both companies in the coming years.Close cooperation between our specialists and the customers’experts is crucial for us to leverage our strengths in4Chairman’s Letter