• Net sales stands at Rs. 3,953 million
• Net loss at Rs. 9 million
• R&D spend stands at Rs. 263 million
• 11 FDF filings including 4 for US
• 11 DMFs filed

Financial and operational review

“We are extremely excited about the progress we are making to realign and adjust our company’s focus as we prepare to be a global source of API, Finished Dosage Forms and other product opportunities. During the past quarter we have begun this process and, now with the closing of the transaction with Mylan, we are in a position to accelerate this realignment further. We continue to look forward to the future where all of our shareholders will realize the benefits of a fully integrated company,” said Mr. Rajiv Malik, CEO of Matrix Laboratories Limited.

Matrix Laboratories has posted consolidated net sales of Rs. 3,953 million for the quarter ended 31st December 2006 which represents a sequential growth of 6% (Previous Quarter: Rs 3,732 Million) and a YoY growth of 18% (Previous Year: Rs.3,338 Million). The consolidated net loss for the quarter ended 31st December 2006 was Rs.9 million as against Rs. 159 million (net profit) for the preceding quarter. Because of acquisitions at different points of time during the last year, the results for the Q3FY06 quarter are not comparable with the results of the current quarter. The comparison of the current quarter performance with the immediate preceding quarter is as below:

                                                                                              Rs Million

Particulars	Q3FY07	Q2FY07
Sales	3,953	3,732
EBIRDTA	679	698
% to sales	17.2	18.7
R & D	263	226
% to sales	6.7	6.1
EBITDA	416	471
% to sales	10.5	12.6
Depreciation	148	128
Interest	204	195
Net Income	(9)	159

In conjunction with the company’s decision to realign its business, the lower EBITDA in the current quarter is primarily the result of lower than expected earnings by Docpharma N.V., a 100% subsidiary of the company, as well as increased R&D spend

Docpharma’s results were impacted by initial costs incurred as the company looks to expand its operations into France and Italy. Revenues from sales in these countries are expected to contribute to earnings in future quarters. Additionally, unfavorable variances resulted from the deferment of certain outlicensing contracts, a price decrease for a key product in the Netherlands, a one-time inventory provision and a restructuring charge taken with respect to the hospital business

R&D spending increased in the current quarter, as well as for the fiscal year in total, as Matrix continues to invest in its pipeline. During the quarter, Matrix filed 4 (four) Drug Master Files (DMFs) in US and 7 (seven) European DMFs have been filed during the quarter. The total number of DMFs filed till date during the current fiscal year is 24 (twenty four) as against 16 (sixteen) filings effected in the corresponding period of the prior year

In the first year of Finished Dosage Form development, the company till date has made 14 (fourteen) regulatory filings for finished dosages including 7 (seven) for US. Matrix has also filed 3 (three) patents during the quarter taking the total tally to 65 (cumulative)

Also contributing to the net loss in the current quarter is an unfavorable impact from income taxes, primarily at Docpharma, due to operating losses at certain Docpharma-related entities for which no tax benefit was able to be recognized and certain one-time provisions,. In the prior quarter, the tax rate was favorably impacted by the recognition of certain tax benefits in Belgium.

Product Segment Analysis

Product group segment wise revenues for the quarter in review compared with the preceding quarter are as under:

                                                                                              % to total sales

Particulars	Q3FY07	Q2FY07
Generic APIs	36	34
Anti-retro Virals (ARVs)	23	19
Finished Dosage Forms	22	25
Hospital business	15	14
CRAM	4	8

Generic API business

The Generic API business contributed Rs. 1421 million to the consolidated net sales in Q3FY07 which represents a sequential growth of 13% (Rs. 1254 million in preceding quarter). The growth in generic API business is attributable to supply of certain generic APIs which are scheduled for launch in the US market during the coming quarters.

Anti-retro Virals (ARVs)

The consolidated net sales in the ARV portfolio stands at Rs. 919 million which represents a growth of 30% on sequential basis (Rs. 705 million in preceding quarter). The robust sales in the ARV product group is attributable to supply of key ARV APIs to the domestic and the international customers who have won certain tenders.

Finished Dosage Forms (FDF)

Docpharma N.V., a 100% subsidiary of the company recorded revenues of Rs.862 million for Q3FY07 as against Rs.922 million recorded in the preceding quarter. As discussed above, several unfavorable items impacted the financial results of Docpharma in the current quarter.

CRAM business

Revenues in the CRAM business stand at Rs. 153 million for the quarter under review (Preceding quarter – Rs.308 million). The shortfall in the sales is primarily attributable to deferment in shipment of certain key intermediates as the intended manufacturing facilities were utilized for strategic filings in FDF space.