BERLIN-CHEMIE Aktiengesellschaft

Berlin

Befreiender Konzernabschluss zum Geschäftsjahr vom 01.01.2020 bis zum 31.12.2020

A. MENARINI INDUSTRIE FARMACEUTICHE RIUNITE S.R.L.

Florenz/Italien

Office in Florence - Via Sette Santi, 3

Share capital € 150.000.000 fully paid in C.F., VAT number and entry in the Florence Register of Companies Nr. 00395270481

Entry in the Economic and Administrative Register Nr. 7874

CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL YEAR 2020

ADMINISTRATION AND CONTROL BODIES

Board of Directors

(In office until approval of the financial statements for the year ending 31 December 2020)

	Eric Cornut (Chairman)
	Elcin Barker Ergun (CEO)
	Lucia Aleotti
	Alberto Giovanni Aleotti
	Jürg Witmer
	Carlo Colombini

Supervisory Board

(In office until approval of the financial statements for the year ending 31 December 2020)

	Carlo Sarra (Vorsitzender)
	Stefano Andorlini
	Francesco Stringini

Auditor of the Accounts

(In office until the approval of the financial statements for the year ending 31 December 2021)

PricewaterhouseCoopers S.p.A.

REPORT ON OPERATIONS FOR THE FINANCIAL YEAR 2020

1. Letter from the Chairman

Dear Shareholders,

The year 2020 will go down in history for the planetary dimensions of the health crisis originated by Covid-19. The crisis is continuing to have a strong global impact, particularly on citizens and society, economic and social structures and has exposed the fragility of health systems in many countries around the world, including those in EU Member States.

The Menarini Group responded with great promptness to the global crisis that was unfolding, put-ting the safety of its employees first, implementing a number of measures that would later prove to be an absolute best practice in the business context. The immediate suspension of business travels, the institution of smart working with the provision of the necessary laptops, the closure of canteens and their replacement with individual lunch boxes, the extensive provision of personal safety devices and disinfectants are just a few of the measures adopted during the period from January to February 2020. The Menarini Group has also immediately supported institutions, hospitals, doctors and non-profit associations with timely initiatives to meet urgent and sometimes dramatic needs. We redeployed part of our facility in Florence to produce sanitizing gel, which was not available, donating over 300 tons of it to the Italian Civil Defense, to associations that assist the homeless and to African missions; we donated respirators and hundreds of thousands of masks to doctors. Every branch has worked to support healthcare units and citizens for emergencies. Equally prompt was the response of our diagnostics subsidiary, which met the global demand for Covid-19 tests by sourcing some of the most advanced and diverse solutions for various needs world-wide and making them available to health care institutions.

On a different level, this global emergency is demonstrating, once again, how fundamental scientific and technological innovation is to ensure a prosperous future for humanity. It will shape the future not only of our health systems, but also of our economy and society. The ability of companies to adapt to the constant evolution of this crisis has been and will be decisive in obtaining and sustainably maintaining their competitive advantage.

A first remarkable move, in response to market challenges, was the agreement that the Menarini Group entered into in June 2020, to acquire Stemline Therapeutics Inc, an American biopharmaceutical company focused on the development and commercialization of innovative cancer therapies, featuring a proprietary drug for a rare onco-hematological disease.

We expect this newly acquired company to provide a solid foundation for future growth in the U.S. and worldwide, thanks to its significant oncology pipeline.

After obtaining a positive CHMP opinion in November 2020, and EMA approval in January 2021, the first sale of Elzonris® in Europe was recorded in the 1st half 2021 as scheduled. We have thus marked another milestone in the history of our company, now present in both the US and EU with its own oncology product.

Also in the oncology field, in July 2020 we signed a worldwide license with Radius Health for the development and commercialization of Elacestrant, a selective estrogen receptor degrader (SERD) with the potential to become a new therapy for breast cancer.

In addition to oncology, our objective is to strengthen our position in primary and secondary care, where we have an important leadership position at the international level. To this end, we have decided to invest 150 million euro for a new state-of-the-art manufacturing facility in Florence, which will significantly increase our oral blister production capacity and support our future growth in primary and secondary care. Also in response to the need for Covid-19 treatment, the company joined, as manufacturing partner, a research project led by the TLS (Toscana Life Science) aimed at developing the production process of a monoclonal antibody against the virus. In December, our Menarini Biotech production site in Pomezia produced the first batch of the Covid antibody for clinical trials. The first results are expected in the coming months, followed by a rapid Phase 2 after which an antibody "made in Italy" could give rise to a therapeutic solution for Covid 19.

From a financial perspective, the pandemic negatively impacted the Group's sales (-1.1%), while the operating result and the net result were affected by the amortization related to the acquisition of Stemline and the exchange rate losses. EBITDA showed year-on-year improvement. In closing on behalf of the entire Board of Directors, I would like to thank all of our employees and partners globally who during this challenging year have worked tirelessly to ensure that patients have uninterrupted access to our medicines, and to provide physicians with a continuous flow of scientific information along with the support needed in this serious pandemic.

Menarini Group achieved the following net sales results.

NET REVENUES

(Million euro)

	2020	%	2019	%	Changes
NET REVENUES	3.750,0	100,0	3.793,5	100,0	-1,1
Pharmaceuticals	3.471,9	92,6	3.574,6	94,2	-2,9
Pharmaceuticals Italy	791,3	21,1	796,1	21,0	-0,6
International Pharmaceuticals	2.680,6	71,5	2.778,5	73,2	-3,5
Diagnostics	275,6	7,3	202,4	5,3	36,2
Diagnostics Italy	100,8	2,7	74,7	2,0	34,9
International Diagnostics	174,8	4,7	127,7	3,4	36,9
Other sales	2,5	0,1	16,5	0,4	-84,8
Other sales Italy	0,1	0,0	3,5	0,1	-97,4
Other international sales	2,4	0,1	13,0	0,3	-81,5

Net international sales amounted to 2.857,8 million Euro (-2.1%) in 2020 and accounted for 76.2% of the total.

Globally, 92% of revenues were derived from the sale of pharmaceuticals, while 7% came from the sale of diagnostic products and 1% from other products (internal data). International pharmaceutical sales include, for the first time in 2020, revenues earned by Stemline US after the acquisition date.

2. RESEARCH AND DEVELOPMENT ACTIVITIES

2.1 GENERAL COMMENTS

Research and Development activities are strategic for the future growth of the Menarini Group.

In recent years, Menarini decided to move decisively into the oncology field, characterized by high levels of unmet medical needs since the increasing knowledge around the mechanisms of growth and mutation of tumors opens up new possibilities in the development of more effective and targeted drugs.

Menarini has therefore chosen to increase its investments in pharmaceutical R&D, for the development of new personalized medicines (both biologic products and chemical entities), as well as in new technologies for life sciences, aimed at the early non-invasive diagnosis and characterization of tumours, enabling doctors to identify the best therapeutic option for each individual patient.

2.2 ONCOLOGY PRODUCTS UNDER DEVELOPMENT

In 2020, the group's oncology pipeline was enhanced primarily through acquisitions. At the current date, the pipeline consists of the following products.

Elzonris®

- With the acquisition of Stemline in the first half of 2020, Elzonris® (tagraxofusp) entered the Menarini Group's oncology pipeline. The product, already commercialized in the US for the treatment of adult and paediatric patients, aged two years or older, suffering from blastic plasmacytoid dendritic cell neoplasm (BPD-CN), received a positive opinion by the CHMP in November 2020. The product has subsequently been approved by EMA in Jan 2021. Elzonris® is also being evaluated in clinical trials for additional indications including chronic myelomonocytic leukaemia (CMML) and myelofibrosis (MF).

Elacestrant

- In July 2020, the Menarini Group and Radius Health, Inc. entered into an exclusive global license agreement for the development and commercialization of elacestrant.Elacestrant is an oral selective estrogen receptor degrader (SERD), currently being evaluated in the EMERALD Phase 3 study as hormonal treatment for postmenopausal women and men with advanced ER+/HER2- breast cancer.

Felezonexor

- This is a novel, oral, small-molecule reversible inhibitor of exportin-1 (XPO1), a key nuclear transport protein. XPO1 is overexpressed by many cancers, leading to mislocalization of key tumor suppressors and growth-regulatory proteins in the cytoplasm. Felezonexor is currently being tested as a potential treatment for patients with solid tumors (clinical development phase I-b).

SL-701

- This is an immunotherapy treatment directing the immune system to attack targets present on certain malignancies. SL-701 is composed of three short peptides (IL-13Rα2, EphA2, and Survivin), targeting glioma-associated antigens and designed to generate an antigen specific CD8+ T cell response. SL-701 is currently being investigated for the treatment of recurrent glioblastoma multiforme.

SL-901

- This is a small molecule PI3K and DNA-PK inhibitor that has demonstrated activity against PI3K α/δ and PIK3C2 β. SL-901 has shown preclinical activity against a variety of tumor types. A Phase 1 trial in patients with solid tumors is ongoing.

SL-1001

- This is a selective, small molecule RET inhibitor that has demonstrated preclinical activity in a variety of RET-driven tumor models. SL-1001 is currently in IND-enabling studies.

Significant progress was made in 2020 as part of the development programs already ongoing at the end of 2019. The main ones are as follows.

MEN1611

- The tolerability profile of MEN1611 in association with trastuzumab +/- fulvestrant was confirmed during the Phase-I study B-PRECISE-01 in patients with HER2-positive, PIK3CA mutated, advanced or metastatic breast cancer.

Promising results in heavily pre-treated patients, together with prolonged disease control, provided the rationale for continuing with the cohort expansion phase of the B-PRECISE-01 study.

In addition, in July 2020 an open-Label, multi-center, phase Ib/II study of MEN1611 in combination with cetuximab in patients with PIK3CA mutated/N-K-RAS and BRAF wild-type colorectal cancer failing irinotecan, oxaliplatin, 5-FU and anti-EGFR containing regimens has been activated. This will give us the opportunity to study the potential of MEN1611 in a disease with high need for therapies and in which the PIK3CA mutation represents a promising therapeutic target.

MEN1703

- The dose escalation phase of the DIA-MOND-01 trial in patients with Acute Myeloid Leukemia showed that MEN1703 has a manageable safety profile and resulted in a meaningful target engagement in peripheral blood and bone marrow blast cells from patients treated with MEN1703. Based on that, the DIAMOND-01 study has been progressed into the cohort expansion.

MEN1112

- A new administration regimen is being assessed to enhance the clinical properties of this antibody directed against the CD157 antigen and become the paradigm for further clinical trials. In 2020, a new administration regimen was under assessment to enhance the clinical properties of this antibody directed against the CD157. In April 2021, after the occurrence of an adverse event limiting the drug dosage, Menarini asked for the advice of the independent Data Safety Monitoring Board (iDSMB), which expressed a negative opinion on the risk/benefit ratio of the treatment, recommending to stop the clinical development. In agreement with this recommendation, Menarini started the procedure to stop the ARMY-01 study and all the other development activities.

MEN1309

- A set of preclinical studies have been conducted to identify further clinical options for this monoclonal antibody directed against the CD205 antigen and conjugated to an antitumor toxin (ADC-Antibody Drug Conjugate). Confirmatory studies in pre-clinical in vivo models are ongoing.

Pracinostat

- The clinical development of this drug for acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS) indications is conducted by our partner Helsinn SA. In July 2020, Helsinn publicly announced that it had decided to discontinue patient recruitment and terminate the phase 3 study of pracinostat in AML based on an analysis by an independent data monitoring committee that it was unlikely to achieve the primary endpoint of overall survival compared with the control group.

2.3 ANTIBIOTICS PRODUCTS UNDER DEVELOPMENT

Every year around 700,000 people die in the world due to hospital infections multiresistant to current antibiotics (data aggregated by the US CDC, ECDC and GARDP agencies). In this field Menarini is committed, in partnership with the US company Melinta Therapeutics, to provide patients with new antibiotics effective against these types of bacteria and is working on five active ingredients, three in monotherapy and two in association, for co-development and marketing in Europe, CIS countries and Asia Pacific including China, South Korea and Australia, for a total of 68 countries.

Quofenix®

(delafloxacin) is a new fluoroquinolonic antibiotic already approved by the US FDA for the treatment of acute bacterial skin and skin structure infections (ABSSSI) and community acquired bacterial pneumonia (CABP). Based on the favourable efficacy and safety profile, it received EMA approval for the first of the two indications in December 2019. In March 2020, the dossier for the second indication was submitted to EMA and the approval took place as expected by mid-2021.

Vaborem®

(meropenem + vaborbactam) is a new systemic carbapenemic antibiotic approved at European level by centralised procedure in November 2018. It is a medicinal product with various indications ranging from complicated urinary tract infections (cUTI) in adults, including acute pyelonephritis, to complicated intra-abdominal infections (CIAIs) and hospital acquired pneumonia (HAP), including assisted ventilation pneumonia. It represents the first combination antibiotic therapy containing a carbapenemic antibiotic and a new β-lactamase inhibitor, the first of its class of new cycloboronic species. In 2020, both registration and post-registration activities have been carried out. Development of pediatric Vaborem® is underway, to provide access to patients under 17 years of age.

Orbactiv®

(oritavancin) is a semi-synthetic glycopeptide antibiotic for intravenous use. It was approved in 2015 in Europe with a centralized procedure for the treatment of acute bacterial infections of the skin and skin structures caused by Gram-positive bacteria (ABSSSI). In 2020, both registration activities in new countries and post-registration activities were carried out. Menarini and Melinta are advancing the development of pediatric Vaborem® to provide access to patients under 17 years of age.

2.4 OTHER DRUGS UNDER DEVELOPMENT

Dexketoprofen (analgesic)

Tramadol - dexketoprofen 75mg/25mg in the formulation of coated tablets for the treatment of medium/severe pain, such as post-surgical pain, is now approved in 47 countries.

A new pharmaceutical form of dexketoprofen in oral granules administered without water was approved in December 2020 in 17 European countries via decentralised procedure.

This is a new step in the development of dexketoprofen, a drug characterized by high tolerability and safety, such as to make it usable as OTC in many countries of the world, but also of great effectiveness, such as to have been able to approve it, in fixed association with a low dose of tramadol, in 47 countries of the world, in the indication moderate-severe pain.

2.5 NEW TECHNOLOGIES FOR LIFE SCIENCES

2.5.1 DEParray™ - Ampli1™ - Cellsearch®

As part of its strong focus on the oncology area, Menarini has expanded its attention to other technological areas that will support the world of oncology in the future:

•	early and minimally invasive diagnosis;
•	continuous monitoring of the evolution of the patient's tumor;
•	real-time adjustment of therapies.

In this direction Menarini Silicon Biosystems is positioned, which has patented and realized:

•	DEPArrayTM, an instrumentation capable of detecting rare cells (such as cancer cells, but not limited to) present in a blood sample or a small biopsy;
•	Ampli1TM, also a proprietary technology for balanced and complete amplification of the entire genome of a single cell;
•	CellSearch, which includes the only FDA-approved instrumentation for the enumeration of circulating cancer cells (CTCs) and which, combined with DepArray, is now the golden standard in CTC analysis.

In addition to oncology, Menarini is exploring further applications of these technologies, for example in prenatal medicine. For more details on current and future applications, please refer to section 5.2 dedicated to "Precision Diagnostics".

3. GROUP PERFORMANCE IN THE ONCOLOGY MARKETS

3.1 GENERAL COMMENTS

The acquisition of Stemline Therapeutics Inc. with an investment of USD 677 million (EUR 522 million) has enabled the Group to finally realize its strategic goal of entering the US biopharmaceutical sector. The company, which is headquartered in New York City, has a highly entrepreneurial culture focused on research excellence. With this acquisition, in addition to enriching the oncology pipeline with Elzonris®, a promising drug for a rare onco-hematologic disease, already available to U.S. patients, as commented in Section 2.2 "Oncology Products in Development", as well as a number of other promising drugs, we are adding to our team of researchers a group of high-profile professionals and scientists working with the goal of improving the quality of life of oncology patients through the use of innovative therapies.

3.2 REVENUE TREND

Between the acquisition date (June 10, 2020) and the closing date, Elzonris developed revenues of 30 million euro. On an annual basis, 2020 revenues related to Elzonris amounted to 41 million euro.

On March 29, Menarini/Stemline reached an agreement with Nippon Shinyaku Co. to grant the latter an exclusive license for the development and marketing of Elzonris® in the territory of Japan. With this agreement, which marks the historic milestone of its presence in Japan, Menarini continues the global roll-out of Elzonris® and reaffirms its commitment to providing innovative medicines worldwide.

Also thanks to its new presence in the U.S., on July 23, 2020, the company signed an agreement with Radius Health for the exclusive, worldwide license to develop and commercialize Elacestrant, an oral selective estrogen receptor degrader (SERD) that has the potential to introduce new therapeutic paradigms in breast cancer.

4. GROUP PERFORMANCE IN PRIMARY AND SECONDARY CARE PHARMACEUTICAL MARKETS

4.1 GENERAL COMMENTS

The health crisis due to the spread of the coronavirus throughout 2020 brought with it negative social and economic consequences. Governments and health systems in all countries suddenly found themselves facing a new situation that, due to the high transmissibility of the virus and its mortality, required urgent action to limit the damage. Most companies and businesses across all sectors have been severely impacted by the restrictions imposed, resulting in plummeting revenues, downsizing, and in some cases, business closure. The impacts of macroeconomic scenarios on countries' ability to maintain current levels of welfare and assistance will only be measurable in the coming years.

The Menarini Group, both because of the composition of its portfolio and because of its important presence in Italy, one of the most affected countries in 2020, has been affected by the situation. Some therapeutic areas, such as antibiotics, have dropped dramatically, as cold-related drugs. The use of masks and social distancing have drastically reduced the transmission of seasonal diseases. There has also been an estrangement of patients from medical offices, with a dangerous decline in prevention and treatment activities, even for cardiovascular diseases. The result of this situation has been and still is extremely harmful to patients. Data emerging from a European Registry on Acute Heart Attack (ISACS-STEMI COVID-19) show that during the pandemic there was a significant reduction in primary PCI procedures, a later hospital admission of patients with acute heart attack, and a higher mortality observed in patients treated in 2020 with a relative increase of 41% compared with 2019.

4.2 ETHICAL PRODUCTS BUSINESS UNIT

4.2.1 Cardiovascular area

Despite the difficulties of access to doctors' offices, both for patients and for medical representatives, in 2020 the Menarini Group managed to increase its sales to 1,124.2 million euro (+1.3%) and confirmed the cardiovascular area as one of its main strengths, accounting for 39.7% of ethical sales.

In fact, the turnover recorded for products based on olmesartan simple and associated was 334.8 million euro (-0.8%), 247.4 million euro (+8.1%) for Ranexa® (ranolazine), 237.6 million euro (-1.2%) for products based on nebivolol (simple and associated) and 72.6 million euro (-2.4%) for those based on zofenopril (simple and associated). (Source: IQVIA WRMP Dec 2020).

4.2.2 Metabolic area

In 2020, the metabolic area achieved sales of 468.5 million euro, equal to 16.5% of the Menarini Group's ethical turnover (-13.9%) (Source: IQVIA WRMP Dec 2020).

This strong decrease is due to the loss of exclusivity of Adenuric® (April 2019), a febuxostat-based drug indicated in the treatment of gout and hyperuricemia, whose sales amounted to 64.2 million euro (-55.1%). Of note is the increase in the area of diabetology, in which the Menarini Group has a historical presence, with sales of 334.3 million euro (+2.8%).

4.2.3 Respiratory area

The respiratory area in 2020 increased its turnover to 352.7 million euro, (+7.3%) (IQVIA Dec 2020 data). In this area, the most important position, both for the Menarini Group and for the market in general, is held by the therapeutic classes aimed at the treatment of obstructive airways diseases, such as asthma and chronic obstructive pulmonary disease (COPD).

The most prominent families in the area are:

•	aclidinium simple and associated with formoterol (Bretaris Genuair®, Brimica Genuair®);
•	fluticasone alone and combined with salmeterol (Fluspiral® and Aliflus Diskus®);
•	umeclidinium simple and associated with vilanterol (Rolufta Ellipta® and Laventair Ellipta®);
•	fluticasone + vilanterol (Revinty Ellipta®);
•	budesonide + formoterol (Gibiter Easyhaler®).

These were joined in 2018 by the triple agent fluticasone + umeclidinium + vilanterol (Elebrato Ellipta®), launched initially in Germany and France and the following year in the rest of Europe, with sales of approximately 31.8 million euro in 2020. (Source: IQVIA WRMP Dec 2020)

4.2.4 Anti-Rheumatics / Analgesics

Another important therapeutic area for the Menarini Group, which represents 11.9% of the Group's ethical turnover, is Anti-Rheumatics and Analgesics, where sales of 337.1 million euro were recorded, a decrease compared to the previous year (-6.8%) (Source: IQVIA WRMP Dec 2020).

It is worth pointing out that, in general, this market seems to have been particularly impacted by the pandemic: many NSAIDs (i.e., nonsteroidal anti-inflammatory drugs including diclofenac, ibuprofen, ketorolac, nimesulide and piroxicam) have been subjected to studies for hypothesized - but never proven - adverse events on Covid patients. Although the EMA has confirmed the safety of these drugs following study outcomes by both patients and healthcare providers, it has at the same time recommended the lowest effective dose to be used for the shortest possible period.

The combination of this statement and analyses of possible negative correlations resulted in a shift in demand in the analgesic market, which declined sharply for NSAIDs and turned almost entirely toward paracetamol-based products.

4.2.5 Gastroenterology area

In 2020, the gastroenterology area had a turnover of 139 million euro, (Source: IQVIA WRMP Dec 2020), corresponding to 4.9% of the Group's ethical turnover (-2.6%).

Within the gastroenterological area, the most important sector is certainly made up of proton pump inhibitors or PPIs, which have seen the arrival of generics for several years now.

4.2.6 Systemic anti-bacterials

In 2020, the systemic antibacterial area, which accounts for 3% of the Group's ethical sales, had sales of €82.2 million (Source: IQVIA WRMP Dec 2020 (-26.4%).

Products in this category, which were already subject to generic competition, suffered a major loss caused by the pandemic, as masks and spacing dramatically reduced bacterial infections.

The only product in this area with growth was Tazeracin® (based on piperacillin and tazobactam), used for the treatment of infections in patients admitted to intensive care units. Its advantage over other similar drugs lies in the possibility of being administered intravenously in a continuous and prolonged manner, achieving a faster improvement in the clinical picture and significantly reducing the mortality rate of patients. Its sales, which constituted 8.2% of the turnover of this area, amounted to 6.6 million euro (+15.8%). (Source: IQVIA WRMP Dec 2020)

4.2.7 Anti-allergics

The anti-allergic area closes 2020 with sales of 119 million euro (Source: IQVIA WRMP Dec 2020), equal to 4.2% of the Group's ethical turnover, up on the previous year (+5.4%). The group's growth in this area is mainly due to drugs based on bilastine, a new generation antihistamine effective in the treatment of allergic rhinoconjunctivitis, both seasonal and perennial, and urticaria, which in 2020 recorded sales of 89.9 million euro (+8%).

4.2.8. Genito-urinary area

Within this area, the two most important products are Spedra® (avanafil) and Priligy® (dapoxetine). Spedra® is used for the treatment of erectile dysfunction and exhibits a higher absorption rate and therefore faster action than competitors, coupled with a favorable safety profile.

As far as Priligy® is concerned, China once again confirmed its position as the leading country in 2020, thanks also to a particularly sensitive context with regard to the disease, with sales of 42.8 million euro (+38.5%) (internal data, MAT Dec 2020).

4.2.9 Antivirals

In 2020, the area of antivirals, accounting for 1.3% of the Group's ethical turnover, recorded sales of 35 million euro (-13.7%) (Source: IQVIA WRMP Dec 2020). This area has also been impacted by the pandemic, due to reduced circulation of the shingles virus against which our Brivudin is targeted.

4.3 CONSUMER HEALTHCARE BUSINESS UNIT

The Menarini Group is present in the following segments of the Consumer Healthcare market:

•	Over-the-counter Drugs (OTC)
•	Medical devices
•	Food supplements
•	Baby milk.

(Million euro)

GEOGRAPHICAL AREA	2020	2019	+/-
Central Europe, Russia and CIS countries	276,7	293,5	-5,7%
Western Europe	150,5	155,5	-3,2%
Asia-Pacific	71,1	85,5	-16,9%
Latam, CA, Middle East & Africa	17,8	7,1	n.s.
TOTAL	516,1	541,7	-4,7%

Source: Internal data

The 2020 Consumer Health market has been heavily affected by COVID at several levels:

―	Drastic reduction of visits in pharmacies across the globe;
―	Important reduction of transmissible pathologies like Flu;
―	Delay or cancellation of launches due to inadequate context.

On the other hand, 2020 has also been a great booster of our digital transformation, showing our ability to adapt and reinvent our business model. In terms of results, the consumer business unit's 2020 sales amounted to 516.1 million euro, 5% below 2019 sales with different trends across regions:

―	Central Europe, Russia and CIS countries closed around 2% below previous year, mainly due to unfavourable exchange rates.
―	Western Europe has closed 5% below previous period due to low sales in cough & cold, tonic and probiotic categories.
―	Asia was heavily impacted with a -15% year-over-year decline, especially in Southeast Asia.

In spite of difficult market conditions, we achieved interesting results with Lasea/Seremind, a drug for anxiety and sleep disorders, which met with consumer approval at a time of increasing anxiety in the population.

4.4 BUSINESS UNIT RELIFE - AESTHETIC MEDICAL DERMATOLOGY

With a view to providing patients with a high standard of quality from product development to product manufacturing and related scientific information, the Group has created the Relife project to innovatively approach both the dermatology and aesthetic medicine markets.

The product portfolio can aid physicians and patients in managing major dermatological needs such as eczema, nappy rash, acne, hyperpigmentation / melasma, xerosis to psoriasis, and major aesthetic medicine needs through injectable hyaluronic acid (HA) soft tissue filler, injectable HA based mesotherapy, absorbable barbed threads, and chemical peel to promote healthy skin renewal.

The value of sales in 2020 amounted to 16.3 million euro (+2.6%), of which 11.3 million in Asia-Pacific (-10.5%) and 4.4 million in Italy (+38.6%) (internal data).

In 2020, the Menarini Group completed two strategic acquisitions to ensure sustainable growth and a pipeline of innovative products. The first acquisition is the global rights of a complete range of aesthetic threads including biorevitalization threads, and the second is the first-in-class bioactive peptide.

4.5 SALES TRENDS IN THE MAIN GEOGRAPHICAL AREAS

4.5.1 Western Europe Region

The Covid-19 virus pandemic caused significant changes in Western Europe that can be summarized in three different aspects:

1)	Difficulty and concern among patients in accessing physician offices, resulting in a significant decline in prescription sales;
2)	Reduction in the economic availability of individual citizens with a consequent significant drop in the consumption of consumer health care and dermo-aesthetic products;
3)	Significant fluctuation within therapeutic classes in the ethics segment. Strong increase in prescriptions for Covid's treatment drugs and drastic decline in some classes of acute care drugs and antibiotics (approximately -30%).

Recent data have also shown, mainly in Italy but in general in all European countries, a contraction of other parameters certainly impacting on the use of drugs.

Below are the top five countries.

•	Italy
•	Germany
•	Spain
•	France
•	Turkey

Italy. The year 2020 closes with an internal figure of 806.1 million (-2.2%), despite the very strong drop in antibiotics (-23.8%). Compared to the reference market, Menarini nevertheless presents an evolution index slightly above 100, confirming its continued competitiveness within the Italian pharmaceutical market.

Germany.

Berlin-Chemie Menarini in terms of net sales (internal data) closed 2020 with 425 million, down about 8% compared to 2019. Sales of Adenuric® (febuxostat) after patent loss fell by more than 65% and Brimica® (aclidinium combined with formoterol) also saw sales fall by more than 20% due to the import of the product from other countries.

France.

The sharp decline in sales for the French subsidiary continued in 2020, with 127.8 million euro showing a 20% drop on 2019 (internal data). The decline is due to both the patent expiration of Adenuric® and the impact on prescriptions of our off-patent products as a result of the new local legislation, aimed essentially at discouraging the use by the medical class of branded products. It should be noted that Menarini France is promoting some GSK products in the respiratory area.

Turkey.

The subsidiary's 2020 turnover in local currency grew by 16.2%, while turnover in euro amounted to 131.9 million (internal data). Arveles® and Latixa®, the first two products in terms of turnover, continue to grow at double-digit rates, guaranteeing the subsidiary excellent competitiveness in its target market.

Spain.

Spain is one of the European countries where the impact of Covid has been felt most strongly, negatively affecting prescriptions for acute medicines, such as those for the treatment of pain. Enantyum®, the subsidiary's leading product in terms of sales, was affected by this downturn, recording a drop of around 9% to 166.4 million. The evolution index calculated on the reference market remains above 100 (IQVIA data).

4.5.2 Central Europe, Russia, Central Asia and Caucasus Region

The international division of Berlin Chemie Menarini achieved in this year a total turnover of 874.0 million euro, down by 2.6% compared to the previous year. Russia again confirmed its position as the most important country in the region in 2020 with a turnover of 253.4 million euro, followed by Poland with a turnover of 134.0 million euro and Ukraine with a turnover of 75.9 million euro (+13.2%). In the Baltic countries, growth stood at 3.3%, which allowed our subsidiary to climb one position in the ranking of pharmaceutical companies to take 2nd place. Finally, in Uzbekistan we are firmly in 1st place.

4.5.3 Asia Pacific Region (APAC)

The A. Menarini Asia-Pacific Group's headquarters is in Singapore and it operates in 13 countries (Singapore, Indonesia, Australia, China, Hong Kong, India, Malaysia, Philippines, South Korea, New Zealand, Taiwan, Thailand and Vietnam). The region contributed 475.9 million euro to 2020 consolidated sales, a decline of -5.2% (internal data).

The impact of COVID-19 was negative on revenue, which declined year-on-year for the only time in the last 10 years. Despite the difficulties on the top-line, the region continued to grow on the bottom-line.

Due to COVID-19 limiting in-person contacts, digitization has become essential to inform physicians about our broad product portfolio. Menarini Asia Pacific invested in multichannel marketing and external partnerships. For 2020, there were several new product launches across countries, such as SpedraTM (avanafil), Calecim® (stem cell-based), Dermatix® Ultra Kids (decamethylcyclo-pentasiloxane) and others.

Sales of prescription drugs totaled 394.0 million euro, down 2.6% (internal data). The decline mainly affected certain therapeutic areas such as respiratory, pain and dermo-aesthetics.

Consumer Healthcare sales were 73.1 million euro, down -17.9% compared to 2019 (internal data). The retail sector was one of the most affected channels across the region due to the restrictive measures. Most markets in the region were affected, particularly Thailand, the Philippines, Indonesia and Hong Kong. China is confirmed as the fastest growing country in the Asia-Pacific region. Sales in China stood at 99.4 million euro (internal data), an increase of +28.5%. The continued growth in prescription drug sales is due to Priligy® (dapoxetine) thanks to multi-channel expansion, Letrox® (levothyroxine sodium), Kestine® (ebastine).

4.5.4 Latin America Region and Middle East and Africa Region

Consolidated sales in the Latin America region totaled 163.7 million euro (internal data). Menarini is present in several Latin American countries, either directly or through other local partners.

Menarini Central America

was founded over 40 years ago in Guatemala, where it is still headquartered for the Central America and the Caribbean region. Consolidated net sales in 2020 reached euro 119.3 million (internal data), with 1% growth despite the economic crisis due to the pandemic. In 2020, Menarini consolidated its first position in the Central American pharmaceutical market with a market share of 5.7%. Of note, two Central American countries, Nicaragua and El Salvador had double-digit growth of 22.5% and 11.4%, respectively. In addition, Central America strengthens its portfolio with important launches such as Lixiana® (edoxaban).

Menarini Mexico

also continued to strengthen its presence in the territory, closing 2020 with net sales of 25.5 million euro, +2% (+15.7% in local currency) (internal data).

Menarini is also present in other Latin American countries with its own subsidiaries in Peru and Colombia; and in other countries through local distributors, the most important of which are in Brazil and Argentina.

Middle East and Africa

In the Middle East-Africa area, turnover for 2020 amounted to 48.8 million euro (internal figures). The best results in terms of revenue growth were achieved in French-speaking Africa (+66.9%), Saudi Arabia (+50.6%), the United Arab Emirates (+33.9%), Egypt (+33.2%) and Iraq (+30.9%) (internal data).

5. GROUP PERFORMANCE IN DIAGNOSTICS MARKETS

5.1 MENARINI DIAGNOSTICS

During 2020, Menarini Diagnostics in the face of the health emergency was able to respond with solutions for the screening and diagnosis of Covid-19 infections structured on three levels:

1)	Central Laboratory, with real-time PCR molecular diagnostics tests;
2)	Triage/pre-triage, to allow decentralization of Covid-19 screening routines and rapid management of patients in hospital admissions, with rapid tests with results within 20 minutes in molecular diagnostics - VitaPCR Point of Care system - and in immunofluorescence, with the Afias platform for antigenic and antibody tests;
3)	Communities, schools, offices, with rapid tests with results in 10 minutes, in lateral-flow technology, for both antibodies and Covid-19 antigen.

The timely response has allowed us to successfully enter the high added value and high growth rate segments of Molecular Diagnostics and Point of Care (diagnostic routines close to the patient), with applications for infectious diseases, a strategic objective of the long-term plan. At the same time, the process of renewing the product portfolio of the more traditional lines, such as urine and glycated hemoglobin tests, continued.

Despite the suboptimal situation due to the prolonged quarantine period, the launch of the continuous glucose monitoring system (CGM), called GlucoMen Day, took place in 2020, placing Menarini among the very few companies worldwide that have this innovative technology available, which is particularly appreciated by patients.

5.2 MENARINI SILICON BIOSYSTEMS

Menarini Silicon Biosystems' mission is to provide solutions for rare cell analysis with precision at the single cell level.

During 2020, the company continued to work on the major projects included in the long-term plan:

1.	Non Invasive Pre-Natal Diagnostic (NIPD) project: the project has successfully completed the Proof Of Concept phase, demonstrating the possibility of capturing fetal trophoblasts from a single blood sample and thus allowing the subsequent verification of genetic mutations.
2.	Project for the development of the new AutoPrep Plus system, for rare cell enrichment using ferrofluid technology.
3.	DepArray Plus development project with increased robustness and level of automation of the system through also adding Artificial Intelligence for automatic cell recognition.
4.	Project for the development of the new test for the count of circulating tumor cells for Multiple Myeloma, the only test that starting from the blood sample will be able to monitor the therapy by replacing the bone marrow sample.
5.	Project to develop a semi-automated system for rare cell enrichment using ferrofluid, Cel-lMag, which will allow research laboratories to use CellSearch technology, which is the Gold Standard for enrichment of circulating cancer cells even on small routines (completed and launched in February 2021).

5.3 OUTLOOK FOR OPERATIONS

The continuation of the pandemic and delays in vaccination plans in the first part of 2021 have affected the performance of the diagnostics market. However, during the first quarter of2021 a number of new products were launched as planned for both Menarini Diagnostics and Menarini Silicon Biosystems.

The first launch was Leasy Kit, an innovative reagent from Menarini research, to isolate viral RNA after molecular swabbing. The advantages are considerable savings in time, work and resources while maintaining a high level of performance. A new laboratory of about 200 square metres was built at the Group's plant in Pisa for the pro-duction and quality control of about 300,000 tests per month.

Menarini Silicon Biosystems has also developed and launched the new test for the non-invasive monitoring of multiple myeloma (CMMC) and the DepArrayTM PLUS.

6. PRODUCTION

6.1 GENERAL COMMENTS

The active ingredients, semi-finished and finished pharmaceutical products marketed by the companies of the Menarini Group come mainly from internal production facilities and to a lesser extent from third-party manufacturers. Our Corporate Manufacturing department, through its various functions, coordinates and supports all the production and logistic activities that are the basis of the Menarini Group Supply Chain.

6.2 PLANTS AND PRODUCTION

Menarini has 11 pharmaceutical production plants worldwide, located in Florence (2 centers +1 under construction), L'Aquila, Berlin (2 centers), Dresden, Barcelona, Kaluga (Russia), Istanbul, Jakarta and Guatemala. The total number of plants rises to 18 if we also consider the plants for the production of active pharmaceutical ingredients and intermediates in Pisa, Lomagna (Lecco) and Casaletto Lodigiano (Lodi), the biotechnology plants in Pomezia and those for diagnostic products located in Pisa, Shannon (Ireland) and Huntingdon Valley-Philadelphia (USA).

An investment decision of the amount of 150 million euro was made in 2020 for a new state-of-the-art manufacturing facility in Florence that will significantly increase our oral blister production capacity and support our future growth in both primary and secondary care. The estimated annual production capacity is 240 million blisters, 1000 tons of bulk and 3 billion tablets.

These plants in 2020 produced 572 million drug packages, which include various pharmaceutical formulations and over one billion blister packs (1,062 million).

Importantly, despite the serious implications of the Covid-19 pandemic on supply chains and manufacturing activities, with rigorous risk mitigation procedures implemented in all Group production facilities, Menarini's manufacturing network has been highly effective, efficient, flexible and resilient, securing supplies and therapies to patients world-wide and ensuring excellent business continuity in an extremely complex scenario.

6.3 PRODUCT QUALITY

In 2020 the Covid-19 pandemic has led to substantial implications on the Quality Systems of pharmaceutical and chemical production sites in general, which naturally also affected Menarini plants, given the need to integrate standard operating procedures with specific procedures related to risk mitigation actions linked to the Covid-19 pandemic. In addition, constraints related to national and international business travel required the implementation of remote audits to suppliers, in line with what has been implemented also by Regulatory Agencies for their audits at pharmaceutical and chemical production sites around the world.

Despite this unprecedented situation, the Menarini Quality System has proven to be effective and compliant. Here are just a few of the many important results achieved:

1.	The excellent result of the nitrosamine risk assessment and confirmatory tests, required by the European Medicines Agency (EMA) from all pharmaceutical companies selling products in Europe, carried out by our Group on all Menarini products, which were found to be nitrosamine-free and compliant with high quality standards.
2.	The rapid and successful completion of the project for a new laboratory, as a center of excellence for the analysis of nitrosamines and other genotoxic impurities, to verify and monitor that our pharmaceutical and chemical products are free from these potential impurities. This is a competitive advantage that allows the Menarini Group to manage this very important matter with advanced analytical techniques, knowledge and skills, in line with the objective of achieving the highest quality standards. The project was completed in a few months during the "lock-down period" and authorized by AIFA in August 2020.
3.	The continuous recognition of the high standards of our Quality Management Systems, confirmed once again by numerous audits carried out by International Authorities. A Quality Management System (QMS), managed by Quality Assurance, is defined in each plant and consists of guidelines, procedures, operating instructions, protocols and other documents, aimed at regulating all activities in an unambiguous way, to ensure that each pharmaceutical specialty is always produced identically to itself in order to meet the defined quality standards. In addition to the positive recognition of the high standards of its Quality Management Systems, Menarini has established a structured program of continuous improvement, in line with ever-increasing regulatory and compliance requirements, to adhere to its mission of always providing high quality products to its patients worldwide.
4.	The successful implementation of serialization for drugs to be dispatched to Russia, according to the law that came into effect on July 1, 2020, in order to track and trace products and avoid the risk of counterfeit products in Russia. This implementation followed that of serialization for EU products, which came into effect as of February 2019. The Menarini Group implemented plans and related procedures plans, to successfully and timely comply with the new law.

7. SOCIAL RESPONSIBILITY, ENVIRONMENT AND ETHICS

7.1 SOCIAL RESPONSIBILITY

7.1.1. Our people

Menarini operates with a direct presence in 66 countries, where 17,673 employees work, an increase of 1.3% compared to 2019. Of these, 48% are women. Since its founding in 1886, people have been at the heart of Menarini's values. Together we created our identity and together we continue to create our future.

7.1.2 Social initiatives

In addition to maintaining a high level of responsibility towards its own people, Menarini is sensitive to the different realities that surround us and is committed to initiatives that are useful to the various communities that host us.

The world is not the same everywhere, so we do not have standardized initiatives that are the same in every country. But there is a common thread between the various regions and countries, which is the solidarity towards the less fortunate that translates into concrete aid, such as the distribution of meals, medicines, (in times of pandemic) sanitising gel, tampons, school kits, the promotion of sport as a means of integration for young people with motor difficulties, help for pregnant women and children who are victims of violence.

7.2 ENVIRONMENT, HEALTH AND SAFETY

7.2.1. Our approach to integrated EHS management

Menarini has adopted a rigorous company policy on health, safety and environmental protection. This policy is implemented on a daily basis through the application of voluntary management systems that comply with the most widespread and recognized international standards. Since 2002, a program has been in place involving all the factories and implemented with the following timetable:

•	since 2004, all Italian production sites, including central warehouses and research and development laboratories, have been aligned with international standards OHSAS 18001 and ISO 14001;
•	since 2004, Menarini's Barcelona office has achieved a further recognition: EMAS certification, within the European Eco-Management and Audit Scheme. In the pharmaceutical sector, the Spanish subsidiary has become the first company in the Catalonia region and the second national company to receive EMAS;
•	since 2008, Berlin-Chemie has certified its environmental management system in accordance with the international ISO 14001 standard and subsequently, in 2012, obtained occupational health and safety certification in accordance with the OHSAS 18001 standard;
•	in 2015, the project to obtain energy certification in accordance with the ISO 50001 standard was activated, ending in 2016 with the certification of the Florence, Pisa, Pomezia and Lomagna sites, as well as the German sites of Berlin-Chemie and Menarini von Heyden;
•	in 2017, OHSAS 18001 certification was extended to another eight companies which, added to the others already certified, led to an almost total spread of this certification throughout Italy;
•	since 2018, the Berlin plant has certified its health and safety management system according to the new international standard ISO 45001;
•	in 2020, the Italian companies, Laboratorios Menarini SA in Barcelona and Menarini von Heyden obtained the international ISO 45001 certification.

The results achieved represent another success story within the Group, thanks also to the contribution of every single worker, who actively participates in the application of health, safety and environmental policies.

7.2.2. Energy consumption and waste recovery

In recent years, the Group has implemented measures to reduce energy consumption at all production and research facilities. Thanks to this commitment, the Group has made its contribution to the fight against climate change. The percentage of waste sent for recovery, with respect to the waste produced, has undergone a significant increase over the last two years and stands at over 75% for solid pharmaceutical waste, placing it in the highest bracket of companies in the pharmaceutical sector that publish EMAS-registered Environmental Statements. This result derives from the policies established at Group level, which give preference to the most virtuous suppliers capable of carrying out energy recovery.

7.2.3 Occupational health and safety

The protection of health and safety in the workplace is recognized as a fundamental human right and the Menarini Group has established a rigorous company policy in this regard. Safety training plays a fundamental role. The road to continuous improvement and the reduction of accidents to a minimum also passes through the professional competence transferred to all the people in the company both through classroom training and during daily activities by the most expert personnel (training on the job). A specific disclosure has been prepared, aligned with international reporting and accident management guidelines, having as its object the comparative analysis with industry benchmarks of the main performance indicators (KPIs), namely the frequency I(f) and severity I(g) indices relating to workplace accidents occurring to company personnel in the four-year period 2017-2018-2019-2020.

Overall, the situation can be considered very positive: both the severity index I(g) and the frequency index I(f) for the Group have remained firmly and clearly below the reference values for the chemical-pharmaceutical sector. In particular, the overall frequency index stands at just over half the average value for the sector.

7.2.4 COVID-19's emergency management

In relation to the state of emergency due to the spread of the COVID-19 epidemic, the Menarini Group has from the outset and constantly monitored the situation, acting promptly, depending on the evolution of the scenario, to allow the highest possible level of protection of health, safety and hygiene in the workplace.

Specific risk containment measures were defined and implemented according to the characteristics of the corporate context and the nature of the activities carried out, in full compliance with the directives, indications, limitations and recommendations issued by the relevant bodies.

Among the various measures that have been put in place and are still in place, it is worth briefly mentioning the main ones:

•	establishment of the "TASK FORCE COVID-19" at Menarini Group level, represented by the entire Top Management, to monitor the international scenario and define the corporate policies to be adopted;
•	definition and application of the company's agile work plan ("smart-work"), aimed at substantially limiting the physical presence of administrative staff at the offices, also in relation to the evolution of local epidemic scenarios;
•	continuation of the activities of the pharmaceutical production/formulation departments throughout the emergency period, in compliance with national and regional regulations;
•	definition of specific criteria for the identification of fragile subjects at greater risk (e.g. age, previous pathologies, pregnant women, etc.), with consequent precautionary limitation of access to company premises;
•	systematic use of individual respiratory protection devices (FFP2 valve-free mask) for all persons present, for whatever reason, in company areas;
•	implementation of a strict travel restriction policy, which has included the application of major restrictions in line with the evolving scenario.

All the activities carried out by the Menarini Group were subject to a specific third-party audit, carried out in June 2020. This audit was entirely dedicated to verifying the correct application of the anti-counterfeiting measures at all Italian sites. The audit was carried out by a specific accredited certification body, which carried out thorough documentary checks and the necessary operational control activities at each site. The outcome of this activity showed, on the one hand, the concrete and effective implementation of the anti-tampering protocol and, on the other, compliance with the regional and national regulatory requirements in force.

7.3 ETHICS

Menarini adopts the highest ethical standards in all its business processes and works hard to foster ethical behavior.

Throughout the world, we strive to build and preserve integrity, our most important business asset and the core value underlying our business. Conducting our business with integrity is essential to maintaining our status as a market leader. We owe it to patients, customers, our people and other stakeholders.

For Menarini, integrity means not only complying with current legislation, but also operating in accordance with the highest ethical standards, as set out in the following documents approved by the Board of Menarini:

•	the "Menarini Group Code of Conduct", which specifically establishes and formalizes the common principles that must inspire the conduct and policies of each company of the Group;
•	the "Menarini Global Anti-corruption Compliance Program", which aims to strengthen and harmonize, on a global level, ethical standards and common standards in the fight against corruption, outlining the key elements that must characterize the anti-corruption compliance programs of each company in the Group.

In addition to adopting the highest ethical standards, Menarini has long worked to ensure that the same standards are adopted and effectively implemented at the industry level.

Important progress has been made in this regard by EFPIA (European Federation of Pharmaceutical Industries and Associations) and the trade associations that comprise it, which have led to the adoption of codes and guidelines aimed at ensuring that member companies respect the highest standards of integrity and transparency in their interactions with their interlocutors (physicians, healthcare professionals, public bodies).

All companies that carry out scientific information activities for drugs on the market prepare and adopt appropriate procedures to demonstrate and ensure strict compliance with the principles and regulations of proper scientific information.

The verification process requires that an independent Certification and Inspection body accredited at European level ascertain each year the compliance with the procedures and the correct execution of the scientific information processes, issuing a certificate of conformity to the company.

8. MAIN RISKS AND UNCERTAINTIES TO WHICH THE GROUP IS EXPOSED

8.1 THE RISK MANAGEMENT MODEL

The Menarini Group adopts a risk management model in line with the ISO 31000 international best practices (so-called Enterprise Risk Management "framework"). This model foresees the systematic identification and evaluation of risks according to homogeneous metrics and nomenclatures, which allows:

•	to verify the correct understanding and control of the effects of uncertainty on the achievement of corporate objectives;
•	to highlight potential synergies between the players involved in risk management (so-called "process owners") in order to identify and implement appropriate risk mitigation strategies.

8.2. CLASSIFICATION OF RISKS

8.2.1. Strategic Risks

The strategic risks facing the Group are primarily linked to the products/services it markets. Some of them could significantly affect the achievement of corporate objectives such as:

A.	Risks associated with "corporate brand" management and reputation;
B.	Risks associated with the competitive landscape;
C.	Risks associated with developing new products and entering new areas of business;
D.	Risks associated with identifying and implementing new sales channels.

A. Brand and Reputation Risks

Notoriety, reputation, positioning and brand recognition are intangible assets with a non-quantifiable value and therefore not recorded in the financial statements, but which can influence the company's ability to achieve its strategic objectives. The Group supports in all institutional forums (national and international trade associations) the importance of consolidating the reputation of the pharmaceutical sector. In the current phase of uncertainty due to the pandemic, the sector has demonstrated its responsibility and ability to respond promptly to the needs of the community, ensuring the continuity of production, access to treatment and support for the health system. As a pharmaceutical industry and as a company, we will continue to do our part to ensure that this pandemic becomes just a bad memory.

Finally, we should mention the commitment of our medical-scientific informants, who allow us to promptly grasp changes in the context, maintaining a constant commitment to doctors, health workers and patients.

B. Risks related to the competitive scenario

The Menarini Group is present in over one hundred countries and operates in a dynamic, highly competitive and highly regulated environment. In this context, aggressive behavior by competitors or major regulatory changes, if not handled correctly and in a timely manner, could lead to the loss of opportunities in terms of market prices, demand and future cash-flow projections.

The market for reimbursable pharmaceutical products is influenced by the spending budgets of various countries, which makes the Group exposed to public finance decisions such as:

a)	public price reductions;
b)	elimination or limitation on reimbursability and/ or prescription;
c)	introduction of patient cost-sharing;
d)	payback (quotas to be paid by the companies in the presence of breaches of the pharmaceutical expenditure ceiling);
e)	fast-track lanes to facilitate the market introduction of generic drugs.

On the other hand, the market for non-refundable products is influenced by macroeconomic factors, such as consumers' willingness to spend and inflation, which can direct consumers' choices towards lower-priced products. In general, the pandemic event has caused significant fluctuations in market demand with very different impacts depending on the business areas affected.

C. Risks associated with the development of new products and entry into new business areas

A company's ability to identify market trends in advance and seize opportunities early has a significant impact on its ability to achieve its strategic goals. In this regard, it should be emphasized that the current context makes the activities of "scouting" and "business development" increasingly crucial.

The objective is to give value to each individual product acquired. The expiry of certain patents and the entry of generic drugs into the market usually entail significant changes in competitive scenarios and profitability margins. It should also be stressed that our sector is characterised by a strong dynamism, marked by the continuous introduction of new drugs both to treat new pathologies and to introduce new improved therapies for existing pathologies. It follows that the revenues from the exploitation of a given investment could be significantly lower than initially hoped for.

In recent years, the Menarini Group has implemented a shared process involving different functions and professional skills, in order to encourage the sharing of ideas and the formation of interdisciplinary teams capable of carrying out complex evaluations in a limited timeframe. It also carries out targeted simulations in relation to possible future scenarios (business case). With regard to research and development, competition in the pharmaceutical sector is high and characterized by intense and costly research and rapid technological progress. Competitors, especially when they have significant resources allocated to R&D, could develop new technologies and bring more effective products to market, making the company's products less competitive or in some cases obsolete.

For a specific analysis of the main therapeutic focuses of our pipeline, and the main risks involved, please refer to the Section on "Research and Development Activities".

D. Risks associated with the identification and implementation of new sales channels

The ability to manage current sales channels and identify new ones can have a major impact on the profitability and development of our business, particularly Consumer Healthcare, which is among the most dynamic. The last few years have been characterized by a rapid digitization process, which is still ongoing and strongly accelerated by Covid-19 with important impacts:

•	on the supply side, allowing new competitors to enter the market, even outside the pharmaceutical sector;
•	from the demand side, influencing the needs of physicians, healthcare providers, and patients.

The new challenges required a periodic review of our organizational models in order to understand industry trends, their implications on our business model and support our strategy.

8.2.2. Operational Risks

The Group is exposed to a wide range of operational risks. Only those that could have a significant impact on the achievement of the Group's objectives are listed below.

a)	a production process and supply chain risks;
b)	b risks related to information systems;
c)	c risks related to product registration and patient health;
d)	d risks associated with the performance of con-tracts.
e)	e risks associated with accounting and budge-ting processes.

Risks of disruption to production processes and the supply chain

The production of active ingredients, semi-finished and finished pharmaceutical products is carried out in production facilities of the Menarini Group and of third parties, which are duly registered and operate in compliance with international "GMP-Good Manufacturing Practices". By their very nature, production processes are exposed to the risk of interruption, for example due to natural disasters, epidemics, socio-political events, changes in manufacturing permits, exceptional interruptions in supplies of strategic raw materials or energy, and any prolonged downtime could have a significant impact on revenues and margins. The risks of interruption of production processes that are considered significant are linked to the entire supply chain, in which the Group's plants are integrated not only with each other but also with third-party companies.

The Menarini Group has adopted specific procedures in order to guarantee the necessary production capacity on an ongoing basis in full compliance with the quality standards required both in its own production facilities and in those of third parties.

The main quality standards to which drug manufacturers must continually adjust are the current Good Manufacturing Practices (cGMP) standards, which are required by regulatory authorities that oversee the production and marketing of drugs. In some cases, adjustments can have a significant impact on manufacturing processes. Recall in particular the regulation that came into force in 2019, implementing the Anti-Counterfeiting Directive 2011/62/EU, which required European drug manufacturers to update their manufacturing processes to equip packaging with:

•	a unique identifier (on a bar code) in which the product code, serial number, batch number and expiry date are recorded;
•	an anti-tampering device, which guarantees the integrity of the package so that once it has been opened it can no longer be re-closed as it was originally.

The new regulation also requires the AIC holder to enter all unique identifiers into a European hub called EMVS (European Medicines Verification System).

With this information, pharmacies can more quickly manage the operations of expired, revoked, withdrawn or stolen medications.

Risks associated with the use of information systems

The extraordinary technological advances we are witnessing represent a fundamental change in the society in which we live. These advances, which qualify as the fourth industrial revolution, are merging the physical, digital, and biological worlds, creating enormous prospects for companies. In the context of life sciences, the fourth industrial revolution is presenting new technologies such as artificial intelligence (AI), robotics, nanotechnology, 3-D printing and the Internet of Things. All of this, coupled with systems capable of managing, storing and analysing the huge stream of data collected from patients, studies, and other sources, will lead to enormous scientific benefits but also a widening of the perimeter of risk. Indeed, the trend of digitisation of processes, both on the "productive" side (Industry 4.0 and Serialisation) and on the "non-productive" side (digital conversion of activities), together with the same pandemic event (which has favoured Remote Working) have increased the central role of information systems as tools to support business continuity and at the same time widened the perimeter of vulnerability to cyber risk.

According to recent studies, the pharmaceutical sector is one of the sectors most affected by cyber-attacks. Any breach of the security perimeter may result in the loss, theft or manipulation of sensitive data for the Group or third parties, with potential consequences in terms of restoration costs to recover lost or damaged data, contractual or extra-contractual liabilities, and reputational damage. A cyber incident can go so far as to halt vital organizational processes with severe impacts on business continuity. To prevent this, the Group has equipped itself with a series of defence mechanisms and invests in continuously improving the resilience of the entire process.

Product registration and patient health risks

As far as product safety is concerned, it is important to remember that the Marketing Authorization of a medicinal product (MA) is granted by the Health Authorities on the basis of the registration dossier. Efficacy and safety are demonstrated in clinical studies conducted on a statistically significant but inevitably limited number of patients. When a pharmaceutical product is marketed and is therefore administered to a much larger population and sometimes in conjunction with other drugs, it is possible to know in a much more thorough way the risks and benefits of its use and therefore research on a pharmaceutical product must continue even after obtaining the MA. Furthermore, international regulations for the protection of public health require companies with marketing authorizations to communicate to the Health Authorities all information relating to the safety of drugs on the market, in particular information on adverse reactions. Each pharmaceutical company of the Menarini Group performs this function through its own Pharmacovigilance Manager who works in liaison with the national Health Authority and with the Corporate Structure for Drug Safety set up at the Parent Company which receives, manages and archives data from all the countries where a company of the Menarini Group is present, elaborates Periodical Reports and Risk Management Plans and transmits them to the competent European Health Authorities. In this way both the Health Authorities and the Group obtain an efficient monitoring of all adverse events, including possible dangerous interactions with other drugs, which may occur even after years of marketing and ensure that all new information on the drug on the market is made readily available to doctors and health operators. If the new information on the drug on the market is so important that the risks of adverse reactions outweigh the therapeutic benefits, the competent Health Authorities may suspend or even revoke the MA. However, since the risks of adverse reactions are intrinsic to the pharmaceutical business and expose companies to potential claims for compensation of even significant amounts, the Group considers it prudent to purchase adequate insurance cover. Naturally, this coverage is affected by the inefficiencies of the insurance markets, which for the pharmaceutical sector consist of a few specialized operators with limited capacity. Therefore, it cannot be excluded that, in the future, it might not be convenient or even impossible for the Company to purchase appropriate insurance cover for all the pharmaceutical forms marketed at acceptable conditions.

Risks associated with the proper drafting and fulfilment of contracts

The Group enters into numerous commercial agreements, including those for the acquisition of marketing rights for products developed by third parties, which may have significant economic and financial repercussions. These agreements sometimes provide for obligations (e.g. minimum orders or sales) that may depend on external factors not entirely under the Group's control and that may entail penalties in favour of the counterparty or even the termination of said agreements with the consequent loss of the investment. Therefore, the efficient, correct and timely drafting of contracts is essential to balance the risk of incurring defaults and the risk of losing profitable business opportunities. The Menarini Group, in order to better govern this risk component, has intensified the exchange between the legal department and the functions involved in the individual cases and has developed guidelines and procedures to support the drafting of the various contracts.

Risks associated with planning and management control processes

An effective planning and management control system that is in line with corporate strategies is a fundamental safeguard against the risk of sub-optimal resource allocation. In this sense, it is of fundamental importance to verify and constantly monitor the quality of the "inputs" which, in turn, depends on the timely and correct exchange of in-formation between the various players involved in the budgeting process (the Business Units and the central and local "Finance" functions).

8.2.3. Financial Risks

Financial risks are one of the main areas of expo-sure for an international Group such as Menarini and can have a profound effect on its results. The main financial risks identified and assessed are summarized below:

1.	Credit Risk;
2.	Liquidity risks;
3.	Exchange risk;
4.	Risks associated with changes in interest rates and financial market volatility.

Credit risk

Credit risk is represented by the Group's exposure to potential losses that may arise from failure by customers to meet their obligations. Some specific conditions that heighten this risk are the con-centration of credit on a limited number of customers or the development of a strong and intense exchange with parties located in particular countries ("Country Risk"). Credit risk deriving from the Group's normal operations with customers is monitored and mitigated by means of:

―	customer evaluation procedures;
―	appropriate payment terms, such as advance payments and letters of credit;
―	transfer to third parties (e.g. non-recourse factoring or insurance cover).

Liquidity risk

Liquidity risk may be manifested in the inability to raise, under pre-determined economic conditions and terms, the financial resources required to meet commercial and financial obligations. The ability to effectively manage cash flows can affect the company's ability to finance growth, meet its obligations and maintain long-term financial stability.

The Group has taken the following measures to optimize cash flow management:

―	centralized management of collection and payment flows;
―	maintaining an adequate level of available liquidity;
―	obtaining adequate lines of credit;
―	monitoring of prospective liquidity conditions, in relation to the business planning process.

Exchange rate risk

Given its presence in international markets, the Group is naturally exposed to the risk deriving from the impact of exchange rate fluctuations on commitments and transactions denominated in currencies other than euro.

Given the current structure, exposure to exchange rate risk is primarily attributable to:

―	foreign currency purchases of raw materials, semi-finished and finished products, services and royalties;
―	cash flows from financial assets and liabilities denominated in foreign currencies, particularly cash investments in securities denominated in U.S. dollars;
―	the effects of exchange rate fluctuations on the consolidated income statement and shareholders' equity following conversion into euro of amounts reported in the financial statements of companies whose reporting currency is not the euro (translation risk).

Exchange rate risk management is carried out centrally by the Parent Company and at the main regional hubs. Currency exposure deriving from invoices payable and orders in foreign currency is monitored on an ongoing basis, with a time horizon of 2-3 months, and, for those currencies most exposed to price volatility, suitable hedges are put in place with a view to minimizing the impact. In addition to the above, the Group adopts a matrix risk assessment mechanism, based on three distinct factors: degree of volatility, expected potential loss and estimated inflows which, on the basis of their correlations, enable identification of suitable hedging strategies.

Risks linked to changes in interest rates and financial market volatility

Cash investment strategies in international financial markets favor prudence over yield. The investment portfolio is mainly made up of low-risk classes, such as government bonds and higher rated corporate bonds. Despite prudence and diversification, we cannot exclude that the situation of certain issuers or the intrinsic volatility of interest rates may lead to losses in value in the securities present within the portfolio.

8.2.4. Compliance Risks

Premise

Compliance risks are managed outside of the Menarini Risk Framework, as they are handled by dedicated corporate functions, again using a risk-based approach.

With regard to the required compliance with work-place health and safety and environmental protection regulations and policies, we have already discussed the voluntary EHS (Environmental Health and Safety) integrated management system in section 7.2 ENVIRONMENT, HEALTH AND SAFETY. We have also seen in section 7.3 ETHICS the system of procedures that Menarini has imposed on itself to ensure compliance with the highest ethical standards in all its business processes. Menarini's Compliance Program also includes:

―	compliance with the requirements deriving from the introduction into the Italian legal system of Legislative Decree no. 231/2001, concerning the administrative liability of legal persons;
―	compliance with competition and data protection regulations

Compliance with Italian regulations on the administrative liability of entities (Legislative Decree 231/2001)

Legislative Decree no. 231 of June 8, 2001, which established the administrative liability of entities in connection with the commission of certain offences in the interest of or to the advantage of the entity itself (in addition to the criminal liability of the individual who materially committed the offence). In order to prevent the risk of conduct that might expose the Group's Italian companies to a breach of this decree, the following joint actions were implemented:

―	adoption of a Code of Ethics and release to all employees and all those who work directly or indirectly for the company (e.g., agents, participants in any capacity, consultants, suppliers, business partners), in order to ensure that their behavior is always inspired by the principles of honesty, loyalty, integrity, fairness and good faith;
―	adoption and implementation of the Organization, Management and Control Model, as provided for by Legislative Decree no. 231/2001 (the Model) as an essential prerequisite for benefiting from the exemption provided for by law for administrative liability for offences. In order to guarantee the effective implementation of the Model, the Group carries out regular staff training activities;
―	appointment of an autonomous and independent Supervisory Body ('OdV') with the task of supervising the functioning and observance of the Model; the OdV carries out this activity also through specific audits on sensitive company processes from the point of view of D. Lgs. Lgs. 231/2001.

Compliance with Italian and EU regulations on competition and personal data protection.

In order to guarantee that all the companies of the Menarini Group comply with the regulations in question, the Corporate Antitrust and Privacy Compliance Department operates at the Parent Company. This department maps out and updates the compliance risks of processes and from the planning stages of new business initiatives, carries out supervisory and training activities for personnel and issues guidelines for the correct conduct of all functions potentially exposed to such risks.

The same Department, in collaboration with the other corporate functions involved (in particular Information & Communication Technology and Organization) provides for the management of any phenomena of data breach, loss or theft of personal data (hacking, piracy, actions of unfaithful employees and so on).

The current EU Regulation 2016/679 on the protection of personal data (Global Data Protection Regulation or "GDPR") requires the company to notify and communicate to the Supervisory Authority, in the presence of personal data breaches that may compromise the freedoms and rights of data subjects.

The GDPR requires the appointment of a Data Protection Officer (DPO), who is responsible for all the functions and fulfilments required by the Law and by the Global Data Protection Governance Model adopted by the Parent Company and by the main companies operating in Europe.

9. ECONOMIC-FINANCIAL ANALYSIS

9.1 PREMISE

The following reclassified statements although not mandatory under Italian GAAP shown as they are considered representative of the Group's financial performance:

a)	Net financial position
b)	Reclassified balance sheet
c)	Reclassified income statement
d)	Reclassified cash flow statement

9.2 NET FINANCIAL POSITION

"Short-term financial investments" refers to cash invested in securities. Securities on the balance sheet at the end of the fiscal year are contained in:

•	Asset management for a total of 451 million euro, primarily consisting of both government and corporate bonds with limited duration and low counterparty risk;

(millions EUR)

	31/12/2020	31/12/2019	31/12/2018	CHANGES 20/19	CHANGES 19/18
Cash and cash equivalents	619,2	1.194,9	1.109,2	-575,7	85,7
Short-term financial investments	536,5	355,4	373,0	181,1	-17,6
Short term Debts to Banks	-35,6	-48,3	-90,6	12,7	42,3
NET FINANCIAL POSITION	1.120,1	1.502,0	1.391,6	-381,9	110,4

•	Investments in financial instruments consisting of U.S. Treasury Notes, T-Bills and money market funds with very short-term maturities, all within one year, for a counter value of 48 million euro;
•	Personalized asset management of 37 million euro, consisting primarily of both government and low-risk corporate bonds and, up to a maximum of 15%, in equity instruments.

Short-term payables to banks are extremely limited and mainly derive from the financial needs of the subsidiary in Turkey.

9.3 RECLASSIFIED BALANCE SHEET

Below is the reclassified balance sheet with financial criteria:

•	Non-current assets include fixed assets net of accumulated depreciation, receivables due after one year and deferred tax assets;
•	Current assets include inventories, deferred cash and cash equivalents (trade and other receivables due within the year), accruals and deferrals;
•	Net financial position includes the items described in the previous paragraph;
•	Shareholders' equity includes equity, both attributable to the Group and minority interests;
•	Non-current liabilities include severance indemnities, payables due after one year and the provision for deferred taxes;
•	Current liabilities include trade payables, other payables due within one year (excluding those to banks), other provisions for risks and charges, accruals and deferrals.

(TEUR)

	31.12.2020	31.12.2019	31.12.2018
Non-current assets
Intangible assets	855.936	429.646	339.013
Property, Plant and Equipment	453.497	425.144	421.234
Financial assets	15.127	16.188	16.724
Receivables due beyond one year	17.060	18.894	19.093
Deferred tax assets	147.985	135.322	118.647
Total	1.489.605	1.025.194	914.711
Current assets
Inventories	930.370	796.746	710.716
Trade and other receivables	1.074.875	1.069.225	1.033.694
Accruals and deferrals	36.039	36.565	30.318
Total	2.041.284	1.902.536	1.774.728
Net financial position	1.120.172	1.501.917	1.391.582
ASSETS	4.651.061	4.429.647	4.081.021
Net equity and non-current liabilities
Net Equity	3.420.871	3.296.976	3.021.410
Employee Severance payment	35.055	37.489	40.611
Payables due beyond one year	6.177	6.198	6.196
Provision for deferred taxes	54.513	3.860	3.535
Total	3.516.616	3.344.523	3.072.752
Current Liabilities
Trade and other payables	767.837	761.363	748.243
Provisions for risks and charges	285.848	257.312	202.506
Accruals and deferrals	80.760	66.449	57.520
Total	1.134.445	1.085.124	1.008.269
LIABILITIES AND EQUITY	4.651.061	4.429.647	4.081.021

Law no. 126 of October 13, 2020, converting with amendments Decree Law no. 104 of August 14, 2020, granted the Italian companies of the Group A. Menarini Industrie Farmaceutiche including the Parent Company itself the option to revalue their tangible and intangible assets even if fully depreciated.

The following items were affected by the revaluation pursuant to Law no. 126 of October 13, 2020, converting with amendments Decree Law no. 104 of August 14, 2020, as described in the Notes to these consolidated financial statements.

Intangible fixed assets (trademarks)	53.684
Tangible fixed assets (buildings)	40.612
Shareholder's equity	-91.467
Trade and other payables (tax payables)	-2.829

For further details on the assets subject to revaluation and the methods used, reference should be made to the specific paragraph in the Explanatory Notes.

For the purposes of the economic and financial analysis that follows, the revaluation has a negligible impact on the balance sheet indicators and no impact on the income statement indicators.

9.4 RECLASSIFIED INCOME STATEMENT AND MAIN INCOME STATEMENT FIGURES

Below is the income statement reclassified ac-cording to the criterion of managerial relevance, using the classification of the National Council of Certified Public Accountants and Bookkeepers (CNDEC) in order to highlight more immediately some intermediate margins, such as

•	Value Added, the margin that remains with the company to remunerate "internal" production factors (personnel, depreciation and amortization, financial charges, taxes, profits);
•	Gross Operating Margin or "EBITDA", the margin on ordinary operations stripped of "non-monetary" income components and therefore often used as a surrogate for cash flow from operations;
•	the Operating Result or "EBIT", expresses the income that the company is able to generate before the return on equity and third party capital.

Million EUR

	2020	2019	2018	CHANGES 20/19	CHANGES 19/18
Revenues from sales	3.750	3.793	3.674	-43	119
Internal production	105	-35	1	140	-36
Value of Operational Production	3.855	3.758	3.675	97	83
External operating costs	2.348	2.304	2.298	44	6
Added Value	1.507	1.454	1.377	53	77
Personnel costs	976	962	920	14	42
GROSS OPERATING MARGIN (EBITDA)	531	492	457	39	35
Amortization, depreciation and provisions	258	143	141	115	2
OPERATING RESULT (EBIT)	273	349	316	-76	33
Result of the financial area	-92	26	-24	-118	50
RESULT BEFORE TAX	181	375	292	-194	83
Income taxes	39	118	100	-79	18
NET RESULT	142	257	192	65	65
- of which, Group	126	241	176	-115	65
- of which, third parties	16	16	16	0	0
Profits distributed by the Parent company	0	0	0	0	0

9.5 INCOME INDICATORS

	2020	2019	2018	CHANGES 20/19	CHANGES 19/18
R.O.E (Net Profit / Average Net Equity)	4,2%	8,1%	6,5%	-3,9	1,6
R.O.I. (EBIT / Average Invested Operating Capital)	8,4%	12,4%	12,2%	-4,0	0,2
R.O.S (EBIT/Net Revenues)	7,3%	9,2%	8,6%	-1,3	0,6

9.6 RECLASSIFIED CASH FLOW STATEMENT

Below is the reclassified Cash Flow Statement, which shows the main components that determined the change in the net financial position, defined as above.

Million EUR

	2020	2019	2018
EBITDA	531	492	457
Decrease (Increase) in trade receivables	38	-31	-17
Decrease (Increase) in trade payables	-17	32	65
Decrease (Increase) in inventories	-134	-86	-63
Income tax paid	-112	-140	-166
Other changes	91	37	-20
Unlevered free cash flow	397	304	256
Fixed assets (Investments/Disinvestments)	-687	-220	-221
Result of the financial area	-92	26	-24
Change in Net Financial Position	-382	110	11
Initial Net Financial Position	1.502	1.392	1.381
Final Net Financial Position	1.120	1.502	1.392

The change in the Net Financial Position derives mainly from net cash flows from current operations and fixed assets.

9.7 BALANCE SHEET AND FINANCIAL INDICATORS

	2020	2019	2018	CHANGES 20/19	CHANGES 19/18
Liquidity Index (net financial position + deferred liquidity/current liabilities)	1,93	2,37	2,41	-0,44	-0,04
Financial Independence Index (Shareholders' Equity/Total Liabilities)	0,74	0,74	0,74	0,00	0,00
Coverage ratio of fixed assets (Shareholders' equity / Non-current assets)	2,30	3,22	3,30	-0,92	-0,08
Coverage ratio of fixed assets and net working capital: Shareholders' equity / (Non-current assets + Current assets - Current liabilities)	1,43	1,79	1,80	-0,36	-0,01

10 THE BUSINESS OUTLOOK

As regards the business outlook, please refer to the comments in the previous chapters.

Florence, 20th October 2021

The Chairman of the Board of Directors

Dr. Eric Cornut

Consolidated financial statements as at 31 December 2020

BALANCE SHEET AS AT 31 DECEMBER 2020

(TEUR)

ASSETS	31.12.2020	31.12.2019
A) Due from shareholders	0	0
B) Non-current assets
I INTANGIBLE ASSETS
1 Start-up and business expansion costs		0
2 Development costs		0
3 Industrial patents and intllectual property usage rights	330.622	32.459
4 Concessions, licenses, trademarks and similar rights	418.432	309.424
5 Goodwill	76.337	1.140
6 Assets under construction and advances	29.930	79.216
7 Others	6.705	7.407
TOTAL B.1	855.936	429.646
II PROPERTY, PLANT AND EQUIPMENT
1 Land and buildings	233.213	193.505
2 Plant and machinery	129.748	134.053
3 Industrial and commercial equipment	11.270	13.494
4 Other assets	60.680	66.798
5 Assets under construction and advances	18.586	17.294
TOTAL B.II	453.497	425.144
III NON-CURRENT FINANCIAL ASSETS
1 Investments in
a) subsidiaries	1	1
b) associates	5	5
c) other companies	531	531
Total	537	537
2 Receivables
a) subsidiaries	0	0
b) associates	0	0
c) holding	296	266
d) other companies	11.271	13.025
Total	11.567	13.291
3 Other securities	3.023	2.360
TOTAL B.III	15.127	16.188
TOTAL NON-CURRENT ASSETS (B)	1.324.560	870.978
C) CURRENT ASSETS
I INVENTORIES
1 Raw materials and consumables	299.497	250.574
2 Work-in-progress and semi-finished goods	54.699	54.320
3 Contract work-in-progress	0	0
4 Finished goods and merchandise	568.991	481.781
5 Advances	3.087	5.975
TOTAL C.I	926.274	792.650
I a Assets held for sale
Assets held for sale	4.096	4.096
Total	4.096	4.096
II RECEIVABLES
1 Trade receivables	819.757	858.033
Total	819.757	858.033
5 a Tax receivables
Due within the next financial year	221.837	176.568
Due beyond one year	5.206	5.231
Total	227.043	181.799
5 b Deferred tax assets
Due beyond one year	147.985	135.322
5 c Others
Due within the next financial year	33.280	34.623
Due beyond one year	11.855	13.663
Total	45.135	48.287
TOTAL C.II	1.239.920	1.223.441
III CURRENT FINANCIAL ASSETS
6 Other securities	536.517	355.406
TOTAL C.III	536.517	355.406
IV CASH AND CASH EQUIVALENTS
1 Bank and postal accounts	619.048	1.194.638
2 Checks	0	0
3 Cash on hand	193	217
TOTAL C.IV	619.240	1.194.855
Total current assets (C)	3.326.047	3.570.448
D) Prepayments and deferrals	36.039	36.565
TOTAL ASSETS (A+B+C+D)	4.686.646	4.477.991

LIABILITIES	31.12.2020	31.12.2019
A) EQUITY
EQUITY ATTRIBUTABLE TO GROUP SHAREHOLDERS
I Share capital	150.000	150.000
II Share premium-reserve	134.278	134.278
III Revaluation reserves	97.076	49.123
IV Legal reserve	30.000	30.000
V Treasury stock reserve	0	0
VI Other reserves distinctly stated	0	0
VI a Government grant reserve	2.872	2.872
VI b Research reserve	1.291	1.291
VI c Foreign investment reserve	24.790	24.790
VI d Extraordinary reserve	913.345	840.046
VI e Merger negative goodwill reserve	25.644	25.644
VI f Other reserves	5.746	5.737
VI g Translation reserve	4.785	4.924
VII Retained earnings (losses) carried forward	1.761.797	1.659.710
IX Net income (loss) for the period	125.901	241.073
TOTAL GROUP NET EQUITY	3.227.520	3.169.488
MINORITY INTERESTS
Minority interests in capital and reserves	127.194	111.329
Minority interests in net income (loss)	16.157	16.159
TOTAL MINORITY INTERESTS	143.351	127.488
Total equity (A)	3.420.871	3.296.976
B) Provisions for risks and charges
1 For pensions and similar obligations	67.314	61.586
2 For taxes, including deferred
a) for tax risks	32.854	30.995
b) for deferred taxes	54.513	3.860
Total	87.367	34.855
4 Other	185.680	164.731
Total provisions for risks and charges (B)	340.361	261.172
C) Employees severance payment	35.055	37.489
D) Payables
3 Payables to shareholders for financing	0	0
4 Due to banks	35.585	48.344
5 Due to other lenders
Due within the next financial year	5	14
Due beyond one year	63	43
Total	68	57
6 Advance	200	32
7 Accounts payable	500.728	547.534
8 Notes payable	285	258
12 Taxes payable
Due within the next financial year	78.891	59.017
Due beyond one year	0	0
Total	79.891	59.017
13 Payables to social security institutions	25.807	25.576
14 Other payables
Due within the next financial year	131.858	128.890
Due beyond one year	6.177	6.198
Total	138.035	135.087
Total payables (D)	809.599	815.905
E) Prepayments and deferrals	80.760	66.449
TOTAL LIABILITIES (A + B + C + D + E)	4.686.646	4.477.991

Income Statement as at 31 December 2020

(TEUR)

	2020	2019
A) Value of production
1 Revenues from sales and services	3.750.037	3.793.475
2 Changes in inventories of work in progress, semi-finished and finished goods	101.805	-28.476
3 Changes in contract work in progress	0	0
4 Increases in capitalized costs for internally produces non-current assets	8.968	18.566
5 Other revenues
a) Government grants related to income	4.375	9.895
b) Cost recoveries and other revenues	37.730	40.822
Total value of production (A)	3.902.915	3.834.282
B) Production costs
6 Raw materials, supplies, materials for consumption and merchandise	1.381.718	1.323.960
7 Services	863.694	961.194
8 Leases and rentals	129.118	144.423
9 Personnel expenses
a) wages and salaries	689.669	682.454
b) social security costs	147.204	153.034
c) termination indemnities	14.022	13.696
d) pensions and similar obligations	8.554	9.627
e) other costs	116.142	104.207
Total (a+b+c+d+e)	975.591	963.018
10 Amortization, depreciation and write-downs
a) amortization of intangible assets	166.575	51.154
b) depreciation of property, plant and equipment	69.775	72.273
c) other adjustments to non-current assets	48.611	116
d) write-down of current assets	654	18
Total (a+b+c+d)	285.615	123.561
11 Changes in inventories of raw materials, supplies, consumables and merchandise	-84.240	-125.805
12 Provisions for risks	30.750	19.352
14 Other operating expenses	47.881	75.444
Total cost of production (B)	3.630.127	3.485.147
Operating income (A-B)	272.788	349.135
C) Financial income and expenses
15 Income from investments
a) in subsidiaries	0	0
d) in other companies	0	0
	0	0
16 Other financial income
b) on non-current securities	4	5
c) on current securities	7.903	7.962
d) others	5.623	8.773
Total (b+c+d)	13.530	16.740
17 Interests and other financial charges	-6.729	-12.767
17 b Foreign exchange gains and losses	-96.303	17.060
Total financial income and expenses (C)	-89.502	21.033
D) Adjustments to financial assets and liabilities
18 Revaluations
b) of non-current assets	0	0
c) of current trading securities	0	4.760
Total (b+c)	0	4.760
19 Writedowns	0	0
b) of non-current assets	0	0
c) of current trading securities	-2.508	0
Total (b+c)	-2.508	0
Total adjustments to financial assets (D)	-2.508	4.760
Profit before taxes (A-B+C+D)	180.778	374.927
20 Income taxes, current and deferred	-38.720	-117.696
21 NET INCOME (LOSS)	142.058	257.232
Minority Interest in net income (loss)	16.157	16.159
NET INCOME (LOSS) ATTRIBUTABLE TO GROUP SHAREHOLDERS	125.901	241.073

Cash flow statement as at 31 december 2020

(TEUR)

	2020	2019
A) Cash flow operational management (indirect method)
Net income (including minority)	142.058	257.232
Income taxes	38.720	117.696
Interest charges (income)	-9.013	-6.703
Dividends	0	0
Gains (Losses)	-2.509	1.828
1. Profit (loss) for the period before income taxes, interests, dividends and gains/losses	169.256	370.053
Adjustments for non-monetary items that do not have any impact on NWC
Provisions	174.952	173.873
Amortization and depreciation of non-current assets	236.350	123.427
Impairment due to permanent losses	48.611	116
Value adjustments to financial assets and liabilities of derivative financial instruments that do not involve monetary movements	0	0
Other adjustments non-monetary items	-9.320	-4.633
2. Cash flow before changes in the NWC	619.848	662.835
Change NWC
Decrease (increase) in inventories	-132.315	-86.030
Decrease (increase) in receivables	49.433	-31.389
Decrease (increase) in payables	-53.262	32.261
Decrease (increase) in accrued income and prepaid expenses	4.987	-6.246
Increase (decrease) in accrued expenses and deferred income	14.311	8.929
Other NWC changes	-84.330	-509
3. Cash flow after changes in the NWC	418.672	579.850
Other adjustments
Collected interest (paid)	9.013	6.703
(Income taxes paid)	-111.978	-139.272
Collected dividends	0	0
(Use of provisions)	-139.529	-117.556
Other collection / payments	0	0
Total other adjustment	-242.494	-250.125
Cash flow from operating activities (A)	176.178	329.725
B. Cash flows from investments
Non-current tangible assets
(Investments)	-50.211	-84.213
Disinvestments	-4.663	6.163
Non-current intangible assets
(Investments)	-43.718	-145.062
Disinvestments	0	3.198
Non-current financial assets
(Investments)	0	0
Disinvestments	1.061	536
Current financial assets
(increases)	-110.765	0
Decreases	0	17.555
Acquisition of businesses net of cash and cash equivalents	-530.749	0
Sale of a business net of cash and cash equivalents	0	0
Cash flow from investment (B)	-739.045	-201.823
C. Cash flows from financing
Third parties funds
Increase (decrease) bank loans	-12.759	-42.230
Financing	0	0
(Reimbursement of loans)	11	-13
Own funds	0	0
Paid capital increases	0	0
(Reimbursements of capital)	0	0
Sale (purchase) of own shares	0	0
(Dividends and interim dividends paid)	0	0
Cash flow from financing (C)	-12.748	-42.243
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (A+/-B+/-C)	-575.615	85.659
Opening balance cash and cash equivalents	1.194.855	1.109.196
bank and postal accounts	1.194.638	1.108.639
checks	0	0
Cash on hand	217	558
Closing balance cash and cash equivalents	619.240	1.194.855
bank and postal accounts	619.048	1.194.638
checks	0	0
Cash on hand	192	217
Change in cash and cash equivalents (A+/-B+/-C)	-575.615	85.659

Notes to Financial Statements

1. FORM AND CONTENT OF THE CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements for the year ended 31 December 2020 comprise the Balance Sheet, Income Statement, Cash Flow Statement and Notes to the Financial Statements.

The purpose of these Notes to the Financial Statements is to provide illustration, analysis and, in some cases, integration of the data contained in the financial statements and contains the information required by Article 2427 of the Italian Civil Code.

The Consolidated Financial Statements have been prepared in accordance with the current provisions of the Italian Civil Code as well as the regulations contained in Legislative Decree no. 127 of 9 April 1991 and subsequent amendments and additions.

The consolidated financial statements include the financial statements of Parent Company A. Menarini Industrie Farmaceutiche Riunite Srl. and the companies in which the Parent Company directly or indirectly holds a controlling interest or exercises de facto operational control.

The financial statements used for consolidation purposes are the financial statements of the individual companies, already approved by the Shareholders' Meetings or prepared by the Board of Directors for approval, reclassified and adjusted to comply with the accounting principles and presentation criteria described below.

For those companies that have a financial year-end date other than 31 December, interim annual financial statements have been prepared as at 31 December.

Pursuant to Article 28, paragraph 2 of Legislative Decree 127/91, the companies analytically indicated in Attachment 2 were excluded from the consolidation area using the line-by-line method because they are irrelevant for the Group as a whole. These investments have been valued at cost, reduced if necessary to take account of any lasting losses in economic value.

1.1 CONSOLIDATION METHODS

The consolidation method used is the line-by-line method, which provides for the inclusion in the consolidated financial statements of all assets and liabilities as well as all costs and revenues of subsidiaries, regardless of the percentage interest held by the Parent Company.

The book value of investments in consolidated companies is eliminated against the related share of shareholders' equity. The positive differences resulting from the elimination are attributed where possible to specific assets or liabilities of the companies included in the consolidation, within the limits of their current values. Any residual value is allocated to an asset item called "Goodwill" (OIC 17) and amortised according to the criteria provided for this item. When it is negative, due to the un-distributed profits of the consolidated company or to any "good business" achieved during the acquisition, this difference is entered in an item of share-holders' equity called "Consolidation reserve".

Minority interests in shareholders' equity are re-corded under a specific item in the Balance Sheet. Minority interests in net income are shown separately in the Income Statement. The balance sheet and income statement transactions between the companies included in the scope of consolidation are eliminated in full. Exchange differences relating to the elimination of income statement items are attributed to unrealized exchange gains (losses), while exchange differences relating to the elimination of balance sheet items are attributed to the items to which they refer.

Profits and losses arising from transactions be-tween consolidated companies, not yet realised with third parties are eliminated. An exception is made for margins on the sale of capital goods sold within the Group at prices in line with market conditions, since such elimination would have irrelevant effects and would entail disproportionate costs.

The financial statements of companies expressed in currencies other than the euro are converted into euro as follows:

•	balance sheet items are converted at period-end exchange rates, recording the difference be-tween the value of opening shareholders' equity at the exchange rate at the end of the period and the value at the exchange rate at the beginning of the period in a special consolidation reserve;
•	Income Statement items are translated at the average exchange rate for the period, recording the difference between the profit or loss expressed at closing exchange rates and the average exchange rate in a specific consolidation reserve.

The main exchange rates used in the conversion are shown below:

Euro exchange rates	Exchange rate at 31.12.2020	Exchange rate at 31.12.2019	Average exchange rate 2020	Average exchange rate 2019
US Dollar	1,2271	1,1234	1,1422	1,1195
British Pound Sterling	0,8990	0,8508	0,8897	0,8778
Swiss Franc	1,0802	1,0854	1,0705	1,1124
Turkish Lira	9,1131	6,6843	8,0547	6,3578
Russian Ruble	91,4671	69,9563	82,7248	72,4553
Polish Zloty	4,5597	4,2568	4,4430	4,2976

1.2 ACCOUNTING PRINCIPLES AND VALUATION CRITERIA

The accounting principles used are in line with those prepared by the National Councils of Chartered Accountants and the Italian Accounting Organization (O.I.C.) (Consigli Nazionali dei Dottori Commercialisti e dei Ragionieri e dall'Organismo Italiano di Contabilità (O.I.C.) Bookkeepers. In order to draw up the financial statements clearly and provide a true and fair view, the Italian Civil Code defines the following postulates of the financial statements, referred to in OIC principle no. 11.

a)	Prudence: profits are included only if realised by the end of the financial year, while account is taken of risks and losses pertaining to the financial year even if they are known later;
b)	Going concern perspective: the valuation of balance sheet items is made on a going concern basis and therefore taking into account the fact that the company constitutes a functioning economic complex intended to generate income;
c)	Substantial representation: the recognition and presentation of items shall be made taking into account the substance of the transaction or contract;
d)	Accrual basis: account is taken of income and charges for the financial year, regardless of the date of collection or payment.
e)	Consistency in valuation criteria: the valuation criteria are not changed from one financial year to the next. Derogations from this principle are permitted in exceptional cases, in which the Notes to the Financial Statements must justify the derogation and indicate its influence on the representation of the financial position and results of operations.
f)	Materiality: recognition, measurement, presentation and disclosure requirements do not need to be met when compliance with them is immaterial in order to give a true and fair view. Information is considered material when its omission or misstatement could reasonably influence the decisions made by the primary recipients of financial information based on the financial statements. Pursuant to Article 2423-ter of the Italian Civil Code, items preceded by Arabic numerals and lowercase letters that do not involve the display of any amount have been omitted;
g)	Comparability: for each item in the Balance Sheet, Income Statement and Cash Flow Statement, the amount of the corresponding item for the previous year is shown. If the items are not comparable, those for the previous year are adjusted. Derogations from the assumption of comparability are permitted in exceptional cases provided that the Explanatory Notes indicate the reason for and influence on the representation of the financial position and results of operations (Article 2423-bis, paragraph 2, of the Italian Civil Code).

The accounting principles and valuation criteria are applied uniformly to all consolidated companies.

Items preceded by Arabic numerals and lower-case letters which have a zero amount both in the current and previous year have been omitted.

The accounting principles and valuation criteria used in the preparation of these financial statements are described below.

Revaluation of business assets law 126/2020

The law no. 126 of October 13, 2020, converting with amendments Decree Law No. 104 of August 14, 2020, granted the Italian companies of the A. Menarini Industrie Farmaceutiche including the Parent Company the option to revalue their tangible and intangible assets even if fully depreciated. The following items were affected by the revaluation pursuant to Law No. 126 of October 13, 2020, converting with amendments Decree Law No. 104 of August 14, 2020, as described in the Notes to the Financial Statements.

(TEUR)

Intangible fixed assets (trademarks)	53.684
Tangible fixed assets (buildings)	40.612
Total assets	94.296
Revaluation reserves (Parent company)	47.953
Retained earnings (losses) carried forward (revaluation reserve consolidated companies)	42.828
Minority interests in capital and reserves	686
Accounts payable and other payables (tax payable)	2.829
Total liabilities	94.296

The revaluation of the trademarks is supported by special appraisals of the value of the trademarks drawn up by the independent business consulting firm Manfriani Melani Cecchi e associati of Florence. The value of the trademarks was determined based on the income flows expected from them, according to prudential estimates, as per the business plans. These flows were discounted over the residual useful life of the brand based on a discount rate estimated based on the specific characteristics and risks of the asset being valued. For the trademarks relating to the products of the Consumer Health Care business unit, the so-called "Relief from Royalty" method was adopted, which estimates the value of the trademark based on the present value of the theoretical savings deriving from ownership, which makes it possible not to pay royalties for the use of the intangible assets in question.

For trademarks relating to the products of the Ethics Business Unit, the so-called "Residual Profit Split" criterion was deemed preferable, since these trademarks are included in the recent Patent Box agreement that saw the sharing of this method with the Inland Revenue Service. This method, in line with the recommendation in the circular of the Revenue Agency No. 11/E of 2016 and the OECD Guidelines, determines the income of the intangible by subtracting from the net profit of the product the remuneration attributable to the so-called routine functions and to the other assets and factors that contribute to the formation of such profit. Applying this logic to the net income flows expected from marketing the product, we proceeded to isolate the income flows attributable to the brand itself.

The value of the revaluation carried out with reference to the brands owned by the Group is detailed below.

(TEUR)

	STARTING VALUE	REVALUATION	REVALUED AMOUNT
Sustenium®	0	9.700	9.700
VivinC®	4.547	9.453	14.000
Fastum®	0	6.500	6.500
Laila®	0	5.700	5.700
Enantyum®	0	2.100	2.100
Metforal®	0	13.243	13.243
Spasmomen®	0	2.676	2.676
Quinazide®	0	1.573	1.573
Acediur®	0	1.213	1.213
Zecovir®	0	942	942
Glibomet®	0	584	581
Total trademarks	4.547	53.684	58.231

With reference to the revaluation operations of the various industrial buildings located in the municipalities of Florence, Pisa and Pomezia (RM), it should be noted that the value was determined based on the market price criterion, resulting from appraisals drawn up by independent professionals.

Intangible fixed assets

Intangible assets and costs with long-term utility are recorded, the latter with the prior consent of the Board of Statutory Auditors at purchase or production cost, including ancillary charges. This cost is adjusted by the corresponding accumulated amortization and any further write-downs required in the presence of permanent losses as described later in the relevant paragraph.

The cost of production includes all costs directly attributable to the product and other costs, to the extent reasonably attributable, relating to the period of manufacture and until such time as the fixed asset can be used.

Intangible assets, consisting of industrial patents, intellectual property rights or concessions, licenses and trademarks, are recognized as assets only if they are individually identifiable and their cost can be estimated with sufficient reliability. Intangible fixed assets are amortized on a straight-line basis and the amortization charged to each financial year refers to the allocation of the cost incurred over their entire useful life. Amortization begins when the asset is available and ready for use.

The following amortisation rates are determined in such a way as to allocate the cost among the years in which the usefulness manifests itself, on a constant basis for each year in which the asset is in operation.

―	Start-up and business expansion costs: 20 %
―	Industrial patents and intellectual property rights: 20 %
―	Concessions, licenses and similar rights: according to the duration of the relevant contracts or, failing that, 20 %
―	Brands: 10 %
―	Internally developed software: 20 %
―	Start-up: 20%.

Development costs are charged in full to the In-come Statement for the year in which they are incurred.

Start-up and expansion costs relating to capital increases carried out within consolidated companies are recorded in the Income Statement. Goodwill is recorded in the financial statements only if acquired for a consideration, and after verification of the existence of the relative recoverability conditions; and can be amortized over five years, although potentially with indefinite useful life. Except goodwill, there are no intangible assets with an indefinite useful life.

Tangible fixed assets

Tangible fixed assets are recorded at purchase or production cost, including ancillary charges. This cost is increased as a result of revaluations carried out in application of special laws and adjusted by the corresponding accumulated depreciation and any further write-downs required in the presence of permanent losses as described later in the relevant paragraph.

The cost of production includes all directly attributable costs and general production costs, for the portion reasonably attributable to the asset, relating to the period of manufacture and until such time as the asset can be used.

Assets acquired by the Group through finance leases are recorded at the current value at the date of acquisition or, if lower, at the present value of the payments due under the contract (financial method).

Depreciation rates are calculated systematically and on a straight-line basis, based on rates considered representative of the estimated useful economic-technical life of the assets. These rates are reduced by half in the first year in which the asset is available for use, thus approximating the shorter period of use of the asset. The depreciation rates applied, and not changed compared to the previous year, are as follows:

―	Industrial buildings: 5,5 %
―	General installations: 10 %
―	Light constructions: 10 %
―	Plant and machinery for low-corrosive processing: 12 %
―	Plant and machinery for highly corrosive processing: 17,5 %
―	Water treatment plants: 15 %
―	Equipment: 40 %
―	Furniture, fittings and office equipment: 12 %
―	Electronic office equipment: 20 %
―	Heavy transport: 20 %
―	Vehicles, motorcycles and similar: 25 %
―	Scientific library: 20 %

Purchases of small amounts of goods, as they are similar to consumables, are expensed in the year in which they are incurred.

Impairment losses on fixed assets

The Group assesses at each balance sheet date whether there is an indicator that an asset may be impaired. In the presence of those indicators, the recoverable value is estimated, understood as the greater of value in use and fair value net of selling costs.

If the recoverable value is lower than the corresponding net book value, the asset is written down to its full value.

The write-down is not maintained in subsequent years if the reasons for the adjustment no longer apply. The write-back is made within the limits of the value that the asset would have had if the value adjustment had not taken place taking into account the depreciation that would have been made in the absence of the write-down.

Diagnostic instruments on free loan

Diagnostic instruments placed with customers on free loan are classified as Tangible Fixed Assets under "Other assets" and are depreciated at a rate of 20%, reduced by half for the year in which the instrument is made available to the customer. Diagnostic tools purchased but not yet placed at the customers' premises on sale or on sale are recorded among the inventories.

At the signing of the free loan agreement, the instrument is transferred from the inventories to the assets, with a balancing entry in the Income Statement under "Increases in fixed assets for internal work".

Costs for improvements and maintenance of an incremental nature

Costs incurred to expand, modernize or improve the structural elements of a tangible fixed asset, including modifications made to increase its compliance with the purposes for which it was acquired, are capitalized if they produce a significant and measurable increase in the production capacity, safety or useful life of the asset at whose cost they are attributed. If these costs do not produce these effects, they are treated as ordinary maintenance and charged to the income statement.

If the asset has been acquired under an operating lease, the related costs for improvements and maintenance of an incremental nature are recorded under intangible assets and amortised over the useful life or, if shorter, over the residual duration of the contract granting use of the asset.

Financial investments

Investments in associated companies (between 20% and 50% of the share capital), if significant, are valued using the equity method, after deducting dividends and making the adjustments required by the consolidation principles.

Other equity investments are valued at cost, adjusted if necessary to take account of impairment losses. The value adjusted in previous years is only maintained if the reasons for the adjustment are still valid. Otherwise, the adjustment is reversed completely or in part.

Securities other than equity investments

Securities that do not constitute fixed assets are recorded at purchase cost, i.e. at the realizable value inferable from market trends, whichever is lower. For securities traded on regulated markets, the market value is considered equal to the market price of the security at 31 December.

The amortised cost criterion does not apply to those securities whose flows cannot be determined. In addition, the amortised cost criterion may not be applied to debt securities if the effects are immaterial, as in the case of debt securities held in the portfolio for a period presumably shorter than 12 months. The general method for the valuation of securities is that of specific cost, alternatively the weighted average cost criterion is used. Value adjustments made in previous years to take account of the market value are reversed in whole or in part if the reasons for this no longer apply.

Inventories

Inventories are initially recorded at purchase or production cost. Inventories are subject to impairment if their realizable value is lower than their book value. The purchase cost is the actual purchase price plus ancillary charges. The value of any slow-moving or obsolete stocks is reduced so as not to exceed the estimated realizable value. The cost of production includes all costs directly attributable to the product, in addition to a share of common costs incurred during the manufacturing period and reasonably attributable to the hours of direct labour absorbed.

The cost method adopted is the weighted average cost. Job orders and experiments in progress are valued based on the contractual fees accrued with reasonable certainty, net of advances received.

Advances to suppliers of raw, ancillary and consumable materials and goods are recorded under inventories at nominal value.

Receivables

Receivables recorded in the financial statements represent rights to collect fixed or determinable amounts of cash from customers or other third parties.

Receivables originating from revenues from the sale of goods are recognised on an accrual basis when both of the following conditions are met: the production process of the goods has been completed and the substantial and non-formal transfer of property has taken place, assuming the transfer of risks and benefits as a benchmark. Receivables are recognised in the financial statements using the amortised cost method, taking into account the time factor; the amortised cost method may not be applied to receivables if the effects are immaterial. If receivables recognized at amortized cost exceed their estimated realizable value, their value is reduced by a specific provision for doubtful accounts.

The estimate of the allowance for doubtful accounts is made by analysing individual receivables, determining the presumed losses for each situation of anomaly already evident or reasonably foreseeable, and assessing, based on experience and any other useful elements, the further losses that are presumed to be incurred on receivables outstanding at the balance sheet date.

The allocation to the provision for doubtful debts secured by guarantees takes into account the effects of the enforcement of such guarantees.

Cash and cash equivalents

Cash and cash equivalents consist of the positive balances of bank and post office deposits, cheques and cash on hand at year-end.

Bank and post office deposits and cheques are valued at their estimated realizable value, money and cash on hand at nominal value. Amounts held in foreign currency are valued at the exchange rate in force on the closing date of the financial year.

Accruals and deferrals

Accrued income and accrued expenses represent, respectively, portions of income and costs pertaining to the year that will have financial manifestations in subsequent years.

Prepaid expenses and deferred income represent, respectively, portions of costs and income that have had a financial impact during the year or in previous years but which are attributable to one or more subsequent years.

Provisions for risks and charges

Provisions for risks and charges represent certain or probable liabilities of a specific nature with an uncertain date of occurrence or amount. In particular, the provisions for risks and charges represent liabilities of a determined nature and probable existence, the values of which are estimated; while the provisions for charges represent liabilities of a determined nature and certain existence, estimated in terms of amount or date of occurrence, connected with obligations already assumed at the date of the financial statements, but which will be expressed in cash in subsequent financial years. Allocations to provisions for risks and charges are recorded in the Income Statement among the items of operation, to which the transaction refers, with the prevailing criterion of classification of costs by kind.

The subsequent use of the provisions is made directly and only for those expenses and liabilities for which the provisions were originally set up. Any negative differences with respect to the charges actually incurred are recorded in the Income Statement in line with the original provision, while if the surplus arises as a result of positive developments in a company's business, the elimination or reduction of the surplus provision is recorded among the positive components of the income of the class having the same nature.

The provision for pensions is calculated using the Projected Unit Credit Method, which discounts individual liabilities based on appropriate estimates of demographic and actuarial trends (e.g., company turnover rates) and economic and financial trends (e.g., future inflation levels and expected nominal wage trends).

Severance payment

The severance indemnity (TFR) represents the benefit to which the employee of any Italian company is entitled in any case of termination of employment, pursuant to Article 2120 of the Italian Civil Code. It corresponds to the total amount of indemnities accrued net of advances paid and is equal to what would have been payable to employees if the employment relationship had terminated at the balance sheet date.

Payables

Payables are liabilities of a given nature and certain existence, representing obligations to pay fixed or determinable amounts of cash or cash equivalents, or goods/services of equivalent value, usually at a given date.

Payables are recognised in the financial statements according to the amortised cost method, taking into account the time factor. The amount shown on the financial statements states the real liability for principal, interests and any additional charges accrued at the financial statement's date. The amortised cost criterion may not be applied to payables if the effects are immaterial. In case of payables with a maturity of less than 12 months, the effects of the above method are generally considered insignificant, therefore, the initial recognition of the debt is made at nominal value net of premiums, discounts, allowances provided for in the contract or otherwise granted. Payables originating from costs for the purchase of goods are recognised on an accrual basis when both of the following conditions are met: the production process of the goods has been completed and the substantial and non-formal transfer of title has taken place, assuming the transfer of risks and benefits as a benchmark.

Current, deferred and prepaid income taxes for the year

Income taxes for the period are classified into 3 items (as per OIC 25, §27):

a) current taxes

This item includes taxes due on taxable income for the period, including any fines and interest accrued relating to events during the period (for example, late payment of advances and other irregularities).

Current taxes are calculated according to the rates and regulations in force in the various countries in which Group companies operate, based on a realistic forecast of taxable income. The recognition of current taxes has a balancing entry in the balance sheet under tax payables, which are recorded under Liabilities net of advances, withholding taxes and tax credits that can be legally offset, unless a refund has been requested. In the latter case, the amounts are shown under receivables under item C.II.5-bis.

b) taxes relating to previous years

Taxes relating to previous years, including the related ancillary charges (interest and penalties) may derive, for example, from tax assessments, settlement notices, payment notices, assessment and adjustment notices and other disputes with the tax authorities. Their counterpart in the balance sheet may be item B2 "Provisions for taxes, including deferred" or item D12 "Taxes payables", depending on the characteristics of the liability (see OIC 19 "Payables"). The item also includes the positive (or negative) difference between the amount due following the settlement of a dispute or an assessment and the value of the provision set aside in previous years.

c) deferred income taxes

Temporary differences between the result determined in accordance with the rules and principles governing the preparation of financial statements (accounting result) and the result determined in accordance with the rules governing the determination of direct taxes (taxable income) give rise to the recognition of deferred and prepaid taxes. The latter are calculated even in the presence of tax losses that can be carried forward, and are recorded to the extent that there is reasonable certainty that taxable income will be realized in future years such as to fully absorb the temporary differences and the losses themselves. Deferred tax assets and liabilities are calculated on the basis of the tax rates that are expected to apply in the year in which the temporary differences will reverse, as provided for by the tax regulations in force at the balance sheet date of the consolidated companies.

This item includes: i) with a positive sign, the allocation to the provision for deferred taxes and the use of deferred tax assets; and ii) with a negative sign, deferred tax assets and the use of the provision for deferred taxation: they contribute with this sign to identify the total amount of income taxes for the year. The item includes both deferred and prepaid taxes for the year and those from previous years. More generally, all changes in deferred tax assets posted to Item C.II.5-ter of Assets and in deferred tax liabilities posted to Item B.2 of Liabilities are entered in the Income Statement under "Income taxes for the period, current, deferred and prepaid". Deferred and prepaid taxes are not offset.

Recognition of costs and revenues

Revenues and income, costs and expenses are recorded on an accrual basis, net of returns, discounts, rebates and premiums. Revenues are shown net of taxes and other charges (e.g., charges to be offset or pay-back adjustments) directly related to the sale of goods and/or services.

Public grants are recorded as revenues on an accrual basis and recorded under item A5 "Other revenues and income" of the Income Statement when it is certain that the conditions for payment will be met and the grants will be paid. Grants commensurate with the cost of property, plant and equipment are instead gradually recognised in the Income Statement on a systematic basis based on the useful life of the assets to which they refer. This is done by recording the grant under "Other revenues and income" and at the same time deferring the relevant portion to subsequent years through the recording of deferred income.

Commitments, guarantees given and contingent liabilities not shown on the balance sheet

Commitments and guarantees not shown in the Balance Sheet are indicated in the Notes to the Financial Statements at their contractual value. Contingent liabilities that are not set aside in the provisions for risks as they are not considered probable are described in the Notes to the Financial Statements. A more complete understanding of the main risks to which the Group is exposed is provided in a separate section of the Report on Operations.

Subsequent events

Events occurring after the end of the financial year that change conditions already existing at the financial statements date and that require changes in the values of assets and liabilities, in accordance with the relevant accounting standard, are recognized in the financial statements in accordance with the accrual basis of accounting to reflect the effect that such events have on the financial position and results of operations at the end of the financial year.

Events occurring after the end of the financial year that change situations existing at the date of the financial statements, but that do not require a change in the carrying amount, as they relate to the following financial year, are not recognized in the financial statements but are illustrated in the Notes to the Financial Statements, as well as in the Report on Operations when necessary, for a more complete understanding of the company's situation.

2. DETAILS ON SPECIFIC ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS

All amounts are expressed in thousand euro, unless otherwise indicated.

2.1 BALANCE SHEET

ASSETS

B.I NON-CURRENT ASSETS

Details and movements are shown in the following table:

	Start-up and expansion costs	Industrial patents and intellectual property	Concessions, licenses trademarks and similar
Balance at 31.12.19
Cost	0	86.146	831.584
Amortization	0	-53.687	-522.160
Total	0	32.459	309.424
Change in cost:
Increases	0	28.543	101.862
Decreases	0	-112	-552
Translation differences	0	334.969	96.551
Changes in consolidation area	0	-23.398	-7.063
Account transfers	0	-344	27.271
Total	0	339.658	218.069
Changes in accumulated amortization
Uses	0	-10.770	-4.968
Increases	0	-32.336	-106.532
Translation differences	0	0	0
Changes in consolidation area	0	1.643	3.461
Account transfers	0	-32	-1.112
Total	0	-41.495	-109.151
Balance as at 31.12.20
Cost	0	425.804	1.049.653
Amortization	0	-95.182	-631.311
Total	0	330.622	418.342

	Goodwill	Assets under construction and advances	Others	Total
Balance at 31.12.19
Cost	255.404	79.216	44.482	1.296.832
Amortization	-254.264	0	-37.075	-867.186
Total	1.140	79.216	7.407	429.646
Change in cost:
Increases	7.746	7.924	1.779	147.854
Decreases	0	-36.126	-228	-37.018
Translation differences	91.869	0	0	523.389
Changes in consolidation area	-5.343	-139	-265	-36.208
Account transfers	0	-27.690	-4.558	-5.321
Total	94.272	-56.031	-3.272	592.696
Changes in accumulated amortization
Uses	-370	0	211	-15.897
Increases	-21.054	0	-2.106	-162.028
Translation differences	0	0	0	0
Changes in consolidation area	1.074	745	167	7.090
Account transfers	1.275	0	4.298	4.429
Total	-19.075	745	2.570	-166.406
Balance as at 31.12.20
Cost	349.676	23.185	41.210	1.889.528
Amortization	-273.339	745	-34.505	-1.033.592
Total	76.337	23.930	6.705	855.936

B.I.3 Industrial patents and intellectual property usage rights

The amount of 330,622 TEUR is mainly made up as follows:

•	the development and marketing rights for Elzonris® (tagraxofusp) further to the acquisition of Stemline in the first half of 2020;
•	the marketing rights acquired in 2020 from the US Radius Health Inc. of Elacestrant amounting to 27,800 Euro;
•	the experimental development right for new indications (e.g. community-acquired pneumonia) for the antibiotic delafloxacin. This item, amounting to 7,500 TEUR gross of the amortisation fund, includes 50% of the fees paid to the licensor Melinta Therapeutics Inc up to now;
•	Patents related to CellSearch® technology amounting to 4,113 TEUR acquired in 2017 from Janssen Diagnostics;
•	new patent registrations at the international level.

B.I.4 Concessions, licenses, trademarks and similar rights

The amount of 418,342 TEUR at 31 December 2020 is made up as follows:

•	concessions, licenses and industrial trademarks for 401,742 TEUR;
•	software licenses for 16,600 TEUR.

The increase in the year (101,862 TEUR) is due to concessions, licences and trademarks for 94,518 TEUR and software licences for 7,344 TEUR.

The main components of the increase of 94,518 TEUR are as follows:

a)	53,684 TEUR further to the revaluation pursuant to Law No. 126 of 13 October 2020 converting with amendments Decree-Law No. 104 of 14 August 2020;
b)	20,176 TEUR relating to the acquisition of the Crestor® brand for the treatment of Cholesterol;
c)	17,700 TEUR relating to the milestone for the product Ranexa®;
d)	3,900 TEUR for the extension to the Chinese territory of the marketing rights for a line of nasal sprays.

B.I.5 Goodwill

The amount of goodwill is equal to 76,337 TEUR and essentially refers to the American company Stemline Therapeutics Inc.

B.I.6 Assets under construction and advances

The amount of assets under construction and advances is equal to 23,930 TEUR. The fixed assets in progress mainly include:

•	the marketing rights for 11,538 TEUR in Europe, the CIS (including Russia) and Asia-Pacific territories (including China) for three antibiotic products obtained under license from Melinta Therapeutics Inc.;
•	the signing of a Licence & Supply Agreement with the Swiss company Glenmark Specialty through the payment of an upfront amount of 2,000 TEUR;
•	software licences for 2,800 TEUR, as part of the development of IT projects of corporate importance.

B.I.7 Other intangible fixed assets

As at 31 December 2020, this item amounted to 6,705 TEUR.

B.II TANGIBLE FIXED ASSETS

Details and movements are shown in the following table:

	Land and buildings	Plant and machinery	Industrial and commercial equipment
Balance as at 31.12.19
Cost	340.181	429.688	60.086
Depreciations	-146.676	-295.635	-46.592
Total	193.505	134.053	13.494
Change in cost
Increases	8.791	19.785	3.477
Decreases	-566	-5.615	-108
Changes in consolidation area	-127	248	1
Translation differences	-5.303	-8.832	-753
Account transfers	11.131	6.122	1.354
Total	13.926	11.708	3.971
Changes in accumulated depreciations
Uses	-458	5.304	-649
Increases	28.799	-25.913	-6.104
Changes in consolidation area	114	-137	-126
Translation differences	2.371	4.722	557
Account transfers	-5.044	11	126
Total	25.782	-16.013	-6.196
Balance as at 31.12.20
Cost	354.107	441.396	64.058
Depreciations	-120.894	-311.648	-52.788
Total	233.213	129.748	11.270

	Other assets	Assets under construction and advances	Total
Balance as at 31.12.19
Cost	310.397	17.294	1.157.647
Depreciations	-243.599	0	-732.502
Total	66.798	17.294	425.145
Change in cost
Increases	26.892	15.445	74.389
Decreases	-15.547	-323	-22.158
Changes in consolidation area	388	-157	353
Translation differences	-5.954	-438	-21.281
Account transfers	163	-13.235	5.536
Total	5.942	1.292	36.839
Changes in accumulated depreciations
Uses	11.959	0	16.156
Increases	-27.856	0	-31.074
Changes in consolidation area	-15	0	-164
Translation differences	3.975	0	11.626
Account transfers	-123	0	-5.031
Total	-12.060	0	-8.487
Balance as at 31.12.20
Cost	316.339	18.586	1.194.487
Depreciations	-255.659	0	-740.990
Total	60.680	18.586	453.497

B.II.1 Land and buildings

The increases in the item land and buildings during the year, amounting to 8,791 TEUR, are mainly due to:

•

the renovation works for 1,915 TEUR of the property located in Athens (Greece);

•

the revaluation pursuant to Law no. 126 of October 13, 2020 for 1,911 TEUR of Laboratori Guidotti spa;

•

extraordinary improvements and modernization carried out on the complex of industrial properties

•	of the Florence site Via Sette Santi 3 for 972 TEUR; of the Lodichem site for 930 TEUR; of the Dresden site for 794 TEUR.

The reclassifications of the variation in the cost of land and buildings, amounting to 11,131 TEUR, are mainly attributable to the completion of the works related to the modernisation of the properties located in Florence (3,049 TEUR) and in Rapolano (1,461 TEUR).

The decrease in the accumulated depreciations by 28,799 TEUR takes into account the revaluation of buildings for a total of 40,612 TEUR, following the revaluation carried out pursuant to Law No. 126 of 13.10.2020 for some of the Group's Italian companies such as the Parent Company itself, Laboratori Guidotti SpA, Menarini Ricerche SpA, Immobiliare Firenze '971 srl, Luso-chimica SpA, F.I.R.M.A SpA, Pomezia Engineering & Finance Services SpA, Rismondo srl and Unomarchetti srl. Therefore, the whole amount of the buildings' revaluation is 40,612 TEUR. In the absence of this revaluation, the building depreciation fund would have increased by 9,902 TEUR.

B.II.2 Plant and machinery

The investments in plant and machinery made during the 2020 financial year amounting to 19,785 TEUR were mainly made for the following Group production sites:

•	in Italy for 4,017 TEUR;
•	in Berlin (Germany) for 3,979 TEUR;
•	in Spain for 1,512 TEUR;
•	in other production sites, mainly Dresden (Germany), Istanbul (Turkey) and the chemical plants in Pisa, Lomagna and Casaletto Lodigiano (Italy), where plant modernisation works were carried out for a total of 7,114 TEUR.

The reclassifications relating to the change in the cost of this category, amounting to 6,122 TEUR, represent the investments made in previous financial years, capitalised in 2020 as they have been completed and can be used:

•	Kaluga (Russia) for 1,704 TEUR;
•	Berlin (Germany) for 1,152 TEUR;
•	Lodichem (Italy) for 1,485 TEUR;
•	Dresden (Germany) for 1,358 TEUR.

B.II.3 Industrial and commercial equipment

The amount of 11,270 TEUR consists of various equipment used in the Group's laboratories and located mainly in Italy (Bologna, Rapolano and L'Aquila), Germany (Berlin), Spain and the USA (Huntingdon Valley).

B.II.4 Other assets

The net balance of other assets amounted to 60,680 TUER at 31.12.2020 and consisted of the following:

•	diagnostic instruments on loan from third parties for 22,578 TEUR;
•	motor vehicles for 15,418 TEUR;
•	furniture, office machines and other assets for 22,684 TEUR.

The increases for the year, amounting to 26,892 TEUR, are mainly attributable to the purchase of diagnostic instruments installed at the hospitals for 11,537 TEUR, motor vehicles for the periodic renewal of the vehicle fleet for 5,303 TEUR and furniture, office machines and sundry assets for 10,053 TEUR.

B.II.5 Assets under construction

These amount to 18,586 TEUR and refer to investments in progress for improvements to various Group plants, mainly at the Kaluga (Russia), Berlin (Germany), Lomagna (Italy), and La Vettola (Italy) sites.

Finally, there are investments in progress on buildings located in Florence amounting to 2,505 TEUR.

Revaluations of fixed assets

Below is a list of the tangible fixed assets recorded in the consolidated financial statements as at 31.12.2020 on which revaluations have been carried out over the years. They all relate to assets owned by Italian companies and have been revalued in accordance with special laws.

Thousand EUR

	Revaluation L.576/75	Revaluation L.72/83	Revaluation L.413/91
Concessions, licenses, trademarks and similar rights	0	0	0
Patents	0	7	0
Land and buildings	290	1.229	2.305
Plant and machinery	30	286	0
Industrial and commercial equipment	6	38	0
Other goods	33	146	0
Total	359	1.706	2.305

	Revaluation L.185/08	Revaluation L.126/20	Total
Concessions, licenses, trademarks and similar rights	0	53.684	53.684
Patents	0	0	7
Land and buildings	51.266	40.612	95.702
Plant and machinery	0	0	316
Industrial and commercial equipment	0	0	44
Other goods	0	0	179
Total	51.266	94.296	149.932

B.III. Financial fixed assets

B.III.1.a Financial investments in not consolidated subsidiaries due to immaterial impact

	at 31.12.20	at 31.12.19	% owned
Menarini SA (Pty) Ltd	1	1	51,00
Total	1	1

B.III.1.b Financial investments in affiliated companies

	at 31.12.20	at 31.12.19	% owned	Valuation
Consorzio Depurazione Acque Reflue scrl	5	5	50,00	Cost
Totalt	5	5

B.III.1.d-a Other companies

The other companies in which the Group holds an investment are valued as follows:

	at 31.12.20	at 31.12.19	% owned	Valuation
Theravectys	521	521	0,81
Fondazione ITS VITA	10	10	11,98	Cost
Insgesamt	531	531	0

B.III.2.d-a Other tangible fixed assets

This item amounts to 11,271 TEUR and refers for the amount of 10,317 TEUR to the receivable of the Parent Company from Fondazione Internazionale Menarini.

B.III.3 Other securities

Other securities amount to 3,023 TEUR and mainly include the subscribed and recalled units of the Panakes venture capital fund, focused on investments in start-ups in the medtech sector. The valuation of these units at NAV (Shareholders' Equity) amounted to 2,434 TEUR (81%) at 31 December 2020.

The shares subscribed and not yet paid in, amounting to 1,995 TEUR, are included in "Commitments, guarantees given, and potential liabilities not shown in the balance sheet".

C) CURRENT ASSETS

C.I Inventories

They are composed as follows:

(TEUR)	31.12.20	31.12.19	Changes
Raw materials	299.497	250.574	48.923
Semi-finished products	54.699	54.320	379
Finished products	179.288	137.250	42.038
Goods	389.703	344.532	45.171
Advances	3.087	5.974	-2.887
TOTAL	926.274	792.650	133.624

The increase in inventories is mainly due to the Irish company Phardiag and the Eastern European region of Berlin-Chemie.

C.I.a Other assets held for sale

This item, amounting to 4,096 TEUR, refers to a real estate property belonging to one of the Group companies, the negotiations for the sale of which are already at an advanced stage.

C.II RECEIVABLES

C.II.1 Trade receivables

They are composed as follows:

(TEUR)	31.12.20	31.12.19	Changes
Receivables due within one year	843.114	884.700	-41.586
Allowance for doubtful accounts	-23.357	-26.667	3.310
TOTAL	819.757	858.033	-38.276

Below is a breakdown of receivables by geographical area:

(TEUR)	31.12.20	31.12.19	Changes
Italy	160.851	166.610	-5.759
Other EU countries	271.350	275.099	-3.749
Non-EU Europe	204.699	233.031	-28.331
Far East	118.902	138.301	-19.399
Latin America	31.159	34.896	-3.738
North America	22.533	5.129	17.404
Middle East - Africa	33.620	31.634	1.986
Allowance for doubtful accounts	-23.357	-26.667	3.310
TOTAL	819.757	858.033	-38.276

C.II.5-a Tax receivables

a) Tax receivables due within the next financial year

The tax receivables increased from 176,568 TEUR to 221,837 TEUR and mainly consist of:

> Receivables from the Italian tax authorities broken down as follows:

(TEUR)	31.12.20	31.12.19	Changes
Tax receivables included Patent Box 2015-2019	61.280	1.266	60.014
VAT credits	32.512	25.067	7.445
VAT credits requested for refund	3.670	6.955	-3.285
IRES and IRAP credits	4.840	14.832	-9.992
R&D tax receivables	2.096	8.167	-6.071
Other receivables from the tax authorities	43.379	36.723	6.656
TOTAL	147.777	93.010	54.767

> Tax receivables of foreign Group companies (74,060 TEUR)

From a temporal point of view, the collectability of tax receivables is as follows:

(TEUR)	31.12.20	31.12.19	Changes
Within the next financial year	221.837	176.568	45.269
Beyond the next financial year	5.206	5.231	-25
TOTAL	227.043	181.799	45.244

There are no receivables due beyond the fifth subsequent year.

C.II.5-b Deferred tax assets

(TEUR)	31.12.20	31.12.19	Changes
Beyond the next financial year	147.985	135.322	12.663
TOTAL	147.985	135.322	12.663

C.II.5-c Other receivables due within one year

They are composed as follows:

(TEUR)	31.12.20	31.12.19	Changes
Receivables from employees	1.865	2.114	-249
Security deposits	3.022	2.923	99
Advances	7.021	8.545	-1.524
Sundry receivables	21.372	21.041	331
TOTAL	33.280	34.623	-1.343

C.II.5-d Other receivables due beyond one year

They are composed as follows:

(TEUR)	31.12.20	31.12.19	Changes
Receivable from employees	52	52	0
Security deposits	672	680	-8
Sundry receivables	11.131	12.931	-1.800
TOTAL	11.855	13.663	-1.808

There are no receivables due beyond the fifth subsequent year.

C.III.6 Financial assets not constituting fixed assets

The assets included in this item represent liquidity invested in securities and as at 31 December 2020 amounted to 536,517 TEUR.

(TEUR)	31.12.20	31.12.19	Changes
Other securities	536.517	355.406	181.111
Total	536.517	355.406	181.111

C.IV Cash and cash equivalents

(TEUR)	31.12.20	31.12.19	Changes
Bank and postal deposits	619.048	1.194.638	-575.590
Cash on hand	192	217	-25
Total	619.240	1.194.855	-575.615

D. PREPAYMENTS AND DEFERRALS

(TEUR)	31.12.20	31.12.19	Changes
Accrued income	10.508	12.708	-2.200
Prepaid expenses	25.531	23.857	1.674
Total	36.039	36.565	-526

Prepaid expenses (25,531 TEUR) consist of the portions pertaining to future years of expenses incurred in advance, the main ones being:

•	insurance premiums of 5,629 TEUR
•	royalties, for 3,488 TEUR
•	maintenance fees of 1,202 TEUR
•	convention and conference expenses of 546 TEUR
•	advertising and promotional expenses for 374 TEUR
•	lease payments of 144 TEUR.

EQUITY AND LIABILITIES

SHAREHOLDERS' EQUITY - GROUP SHARE

Changes in the Parent Company's equity accounts during the year are shown in the following table:

(TEUR)	as at 31.12.19	Allocation of 2019 result	Other changes	2020 result	as at 31.12.20
Capital	150.000	0	0	0	150.000
Share premium reserve	134.278	0	0	0	134.278
Revaluation reserve	49.123	0	47.953	0	97.076
Legal reserve	30.000	0	0	0	30.000
Government grants reserve	2.872	0	0	0	2.872
Research reserve	1.291	0	0	0	1.291
Foreign investments reserve	24.790	0	0	0	24.790
Extraordinary reserve	840.046	73.299	0	0	913.345
Merger negative goodwill reserve	25.644	0	0	0	25.644
Other reserves	5.737	9	0	0	5.746
Translation reserve	4.924	0	-139	0	4.785
Retained earnings carried forward	1.659.710	167.765	-65.683	0	1.761.792
Profit (loss) for the year	241.073	-241.073	0	125.901	125.901
Total group equity	3.169.488	0	-17.869	125.901	3.277.520

The profits made in 2019 were allocated entirely to reserves.

The movements in the column "other changes" are attributable to

•	47,953 TEUR to the Parent Company's revaluations as the contra-entry to the higher value attributed to the proprietary trademarks and to the buildings, also owned, net of the relative substitute tax and originating from the effect of the revaluation of the assets referred to above (referred to in the paragraph "Revaluations of company assets" and to the item Intangible fixed assets);
•	27,662 TEUR to the revaluations of the remaining Italian companies as a balancing entry for the higher value attributed to owned property, net of the related substitute tax due to the revaluation of assets (referred to in the section on "Revaluations of Company Assets") on the line Retained Earnings;
•	15,165 TEUR to the revaluations of the remaining Italian companies as a balancing entry for the higher value attributed to owned trademarks, net of the relative substitute tax due to the revaluation of assets (referred to in the section on "Revaluations of Company Assets") on the line Retained Earnings;
•	-109,336 TEUR mainly due to currency fluctuations of the consolidated companies and in particular attributable to the companies Stemline Therapeutics Inc (US Dollar), OOO Berlin-Chemie/ A.Menarini (Russian Ruble), ZAO Berlin-Pharma (Russian Ruble), Menarini İlaç Sanayi ve Ticaret A.Ş. (Turkish Lira), İ.E. Ulagay İlaç Sanayii Türk A.Ş. (Turkish Lira) referred to in the line Retained Earnings Reserve.

SHAREHOLDERS' EQUITY - MINORITY INTERESTS

Changes during the year in the shareholders' equity accounts of minority interests (minority shareholders of consolidated companies) are illustrated in the following table:

(TEUR)	as at 31.12.19	Allocation of 2019 result	Other changes	2020 result	as at 31.12.20
Capital and reserves	111.329	16.159	-294	0	127.194
Result	16.159	-16.159	0	16.157	16.157
Total third-party equity	127.488	0	-294	16.157	143.351

The changes shown in the "other changes" column are attributable

•	for 107 TEUR to the portion attributable to third parties of the revaluation of the building located in Pomezia;
•	686 TEUR to the portion attributable to third parties of the revaluation of the Quinazide® trademark;
•	-1,092 TEUR mainly due to the negative effect of the fluctuation of the currencies of the consolidated companies.

B) PROVISIONS FOR RISKS AND CHARGES

Details and movements are shown in the following table:

(TEUR)	Balance as at 31.12.19	Increases	Direct uses
B.1 For pensions and similar obligations	61.586	8.579	-2.192
B.2 For taxes, including deferred
for tax risks	30.995	15.985	-13.926
for deferred taxes	3.860	-34	-58.860
Total	34.855	15.951	-72.786
B.3 Other
for ongoing disputes	3.802	2.279	-2.970
for settlement charges	21.914	13.378	-10.938
for payback (diagnostics)	11.568	0	0
for returns	17.391	5.508	-4.263
for environmental charges	578	14	0
for agent supplementary indemnity	4.425	456	-398
for discount ex art.11 c.6 dl 78/2010	9.616	8.833	-8.549
for employee incentives	71.065	87.785	-74.004
for other risks and charges	24.372	18.113	-5.834
Total other	164.731	136.366	-106.956
TOTAL PROVISIONS FOR RISKS AND CHARGES	261.172	160.896	-181.934

(TEUR)	Reversal of excess	Other changes	Balance as at 31.12.20
B.1 For pensions and similar obligations	-24	-635	67.314
B.2 For taxes, including deferred
for tax risks	-173	-27	32.854
for deferred taxes	0	109.547	54.513
Total	-173	109.520	87.367
B.3 Other
for ongoing disputes	-714	-76	2.321
for settlement charges	-1.098	738	23.994
for payback (diagnostics)	0	0	11.568
for returns	-714	-644	17.278
for environmental charges	0	0	592
for agent supplementary indemnity	0	0	4.483
for discount ex art.11 c.6 dl 78/2010	-720	0	9.180
for employee incentives	-1.572	-1.574	81.700
for other risks and charges	-574	-1.513	34.564
Total other	-5.392	-3.069	185.680
TOTAL PROVISIONS FOR RISKS AND CHARGES	-5.589	105.816	340.361

The pension fund mainly refers to supplementary pension benefits for employees of various foreign countries such as Germany (32,320 TEUR), France (9,773 TEUR), Greece (7,123 TEUR), South Korea (3,434 TEUR), Belgium (2,753 TEUR), Thailand (2,621 TEUR), Turkey (2,841 TEUR) and Philippines (2.068 TEUR).

The provision for tax risks is necessary in view of the current complexity of tax regulations in the various countries in which the Group operates and the resulting unambiguous interpretation of these regulations, which makes the risk of unforeseen tax charges in the years to come not improbable. To this end, a provision of 15,985 TEUR was prudently set aside in 2020.

The provision for ongoing disputes (3,231 TEUR) relates to disputes with the personnel of some branches, mainly foreign branches.

The settlement charges provision (23,994 TEUR) consists of the best estimate for exceeding expenditure ceiling for the years 2018, 2019 and 2020. The increase in 2020, amounting to 13,378 TEUR, essentially refers to the Parent Company (13,078 TEUR) and refers to the breakthrough of the hospital expenditure ceiling planned by the Government for 2020, for 11,722 TEUR, and for a supplement for 2018 amounting to 1,356 TEUR.

The item "Discount provision pursuant to art. 11 c.6 Decree 78/2010" ( 9,180 TEUR) refers to the estimated percentage discount for the second half of 2020, applied on the price to the public net of VAT, on the value of medicines supplied under the National Health Service, which pharmaceutical companies will have to pay to the Regions for the above period in compliance with the provisions of paragraph 6 of art. 11 of Decree Law no. 78 of 31 May 2010 converted with amendments by Law no. 122 of 30 July 2010.

The provision for payback (diagnostics) represents the amount of 11,568 TEUR that the Group has prudently set aside in order to meet the State's request for a contribution from diagnostic companies to cover the breach of the expenditure ceiling established for medical devices from 2015. During 2020, the Group did not deem it necessary to make further provisions, considering that the amount set aside so far to meet any requests was adequate.

The provision for returns (17,278 TEUR) was calculated, for the Group's Italian companies, on the basis of the average incidence of return costs on revenues. This incidence has been deter-mined using the statistical method for each Group company and takes into account the average time that elapses between the attainment of revenues and the final balance of returns. Costs for returns take into account all charges relating to product recalls (compensation, disposal costs and general expenses).

The provision for environmental charges (592 TEUR) consists of provisions made by the German subsidiary Berlin-Chemie on the basis of Article 8 of the German Reunification Treaty, which provides for a programme of measures to safeguard and reclaim the land on which the company's plants for the disposal of chemical materials are located.

The Agents' Supplementary Indemnity Fund (4,483 TEUR) covers the probable liability linked to the future termination of agency relationships currently in place. The provision in the income statement was determined with reference to the commissions paid for the current year.

The provision for employee incentives (81,700 TEUR) includes the charges for individual bonuses that are estimated to be payable to employees, mainly from Italian and German companies, in relation to the achievement of personal and corporate objectives in 2020. The provision for the year has a balancing entry under item "B.9.e - Other personnel costs".

C. EMPLOYEE SEVERANCE PAYMENT

The following table shows the changes during the year:

Balance as at 31.12.19	Decrease for uses	Amount set aside during the year	Other changes	Translation diff.	Balance as at 31.12.20
37.489	-12.851	14.022	-3.605	0	35.055

The decrease in utilizations is due to settlements paid, advances on severance indemnities and the allocation of the same severance indemnity to supplementary pension funds.

The amount set aside amounts to 14,022 TEUR and corresponds to item B 9 c) of the Income Statement.

D. LIABILITIES

4) Towards banks

Payables to banks as at 31.12.2020 amounted to 35,585 TEUR, compared to 48,344 TEUR in the previous year, all due within the next financial year. Below is a breakdown by individual group company.

(in TEUR)		31.12.20	31.12.20	31.12.20
		in foreign currency	in euro	in euro
			31.12.2019	31.12.2018
İ.E. Ulagay İlaç Sanayii Türk A.Ş.	TRY	177.421	19.562	15.723
İ.E. Ulagay İlaç Sanayii Türk A.Ş	EUR		15.000	32.370
Others	EUR		1.023	251
Total			35.585	48.344

5a) from other lenders due within the next financial year

(in TEUR)	31.12.20	31.12.19	Changes
Other financing	5	14	-9
Total	5	14	-9

5b) from other lenders due beyond one year

(in TEUR)	31.12.20	31.12.19	Changes
Other financing	63	43	20
Total	63	43	20

7) Accounts payable

(in TEUR)	31.12.20	31.12.19	Changes
Liabilities to suppliers	530.728	547.534	-16.806
Total	530.728	547.534	-16.806

Below is a breakdown of liabilities by geographical area:

(TEUR)	31.12.20	31.12.19	Changes
Italy	126.318	123.429	2.889
Other EU-Countries	223.132	265.345	-42.213
Europe, not EU	41.904	49.536	-7.632
Far East	49.775	51.803	-2.028
Latin America	3.089	4.429	-1.340
North America	82.900	43.561	39.339
Middle East - Africa	3.610	9.431	-5.821
Total	530.728	547.534	-16.806

12) Tax liabilities

(TEUR)	31.12.20	31.12.19	Changes
Tax liabilities due within one year	78.891	59.017	19.874
Total	78.891	59.017	19.874

13) Liabilities towards social security institutions

(TEUR)	31.12.20	31.12.19	Changes
Payables to social security institutions	25.807	25.576	231
Total	25.807	25.576	231

14) Other liabilities

(TEUR)	31.12.20	31.12.19	Changes
Liabilities to employees	61.369	60.667	702
Liabilities to agents and consignees	405	436	-31
Sundry liabilities	76.261	73.984	2.277
Total	138.035	135.087	2.948

Amounts due to employees mainly include liabilities for holidays and other accrued and untaken remuneration. The item "Sundry liabilities" consists of liabilities from Italian companies for TEUR 11,231 and from foreign companies for TEUR 65,029.

Specifically with regard to the Italian companies, the existence of payables by materiality is indicated below:

•

payables to the Italian Medicines Agency / Ministry of Health for a total of TEUR 6,574. The amount mainly includes the contribution that art. 48 of Law 326 of 25/11/2003 requires pharmaceutical companies to pay to the AIFA in order to finance various forms of information on drugs, pharmacovigilance, research, training and updating and for the similar contribution that art. 1, paragraph 409, letter C, Law 266/2005 requires pharmaceutical companies to pay to the Ministry of Health in order to finance various forms of information on medical devices. In addition to this, there is a debt due for the 5% price reduction of certain products. The amount of TEUR 6,574 is attributable to the Parent Company for the amount of 2,437 TEUR and to Laboratori Guidotti for the remainder;

•

the amount of TEUR 4,137 that the subsidiary Laboratori Guidotti will have to return to CIPE and the Presidency of the Council of Ministers by virtue of the judgment (which has become final) with which the Court ofAppeal of Rome, in 2015, quantified the reduction in the compensation due to Laboratori Guidotti for failure to publish the correct selling price of the medicinal product Glibomet®.

As far as abroad is concerned, the main contribution is as follows:

•	TEUR 16,694 is attributable to the region of Berlin-Chemie (including Central and Eastern European countries);
•	TEUR 14,297 is attributable to the region Asia Pacific;
•	TEUR 15,120 is attributable to Spain-Central America.

E) ACCRUALS AND DEFERRALS

The item as at 31.12.2020 is detailed as follows:

(TEUR)	31.12.20	31.12.19	Changes
Accrued expenses	67.929	54.632	13.297
Deferred income	12.831	11.817	1.014
Total	80.760	66.449	14.311

The item "Deferred income" includes the amount of TEUR 353 relating to the 2021-2030 portions of the grant for plants deriving from the purchase of capital goods pursuant to Article 1, paragraphs 184 to 197, of Law no. 160/2019 (Finance Act 2020) and Article 1, paragraphs 1051 to 1063 and 1065, of Law no. 178/2020 (Finance Act 2021).

Commitments, guarantees given and contingent liabilities not shown on the Balance Sheet

These amount to TEUR 1,995 and refer to the commitment to pay the subscribed and not yet called-up units of the Panakes venture capital fund, as already commented under "Other securities".

There are no other agreements not shown in the Balance Sheet that could significantly affect the Group's financial position and results of operations, pursuant to Article 2427, point 22-ter of the Italian Civil Code.

2.2 INCOME STATEMENT

Below we give more explanations and details of the items in the Income Statement that require it.

A. VALUE OF PRODUCTION

A.1 Revenues from sales and services

They varied from TEUR 3,793,475 to TEUR 3,750,037, a decrease by -1.1%.

The amount of revenues mainly consists of sales of goods and is detailed as follows:

(TEUR)	2020	2019	Changes
Revenues for goods	3.693.109	3.739.210	-46.101
Evenues for co-promotion services	56.928	54.265	2.663
Total	3.750.037	3.793.475	-43.438

Breaking down the consolidated turnover by business area, the detail is as follows:

(Million euro)	2020	%
Pharmaceuticals	3.474,4	92,7
Diagnostics	275,6	7,3
Total	3.750,0	100

(Million euro)	2019	%	2018	%
Pharmaceuticals	3.591,1	94,7	3.467,3	94,4
Diagnostics	202,4	5,3	207,3	5,6
Total	3.793,5	100	3.674,6	100

(Million euro)	2017	%	2016	%
Pharmaceuticals	3.395,6	94,2	3.309,4	93,8
Diagnostics	207,2	5,8	217,5	6,2
Total	3.602,8	100	3.526,9	100

Breaking down the consolidated turnover by geographical area, the breakdown is as follows:

(Million euro)	2020	%
Italy	892,2	23,8
Other EU-Countries	1.564,6	41,7
Europe, not EU	574,5	15,3
Far East	471,2	12,6
Latin America	141,7	3,8
North America	56,4	1,5
Middle East - Africa	49,4	1,3
Total	3.750,0	100

(Million euro)	2019	%	2018	%
Italy	874,3	23,0	886,0	24,2
Other EU-Countries	1.578,2	41,6	1.592,2	43,3
Europe, not EU	661,8	17,4	617,7	16,8
Far East	490,8	12,9	405,9	11,1
Latin America	144,7	3,8	121,6	3,3
North America	6,7	0,2	6,0	0,2
Middle East - Africa	37,0	1,0	45,2	1,2
Total	3.793,5	100	3.674,6	100

(Million euro)	2017	%	2016	%
Italy	903,4	25,1	958,0	27,2
Other EU-Countries	1.542,4	42,8	1.542,8	43,7
Europe, not EU	645,2	17,9	564,6	16,0
Far East	355,2	9,9	313,4	8,9
Latin America	115,7	3,2	105,7	3,0
North America	4,6	0,1	2,9	0,1
Middle East - Africa	36,3	1,0	39,5	1,1
Total	3.602,8	100	3.526,9	100

A.4 Increases in capitalised costs for internally produced non-current assets

They originate mainly from capitalisation of diagnostic instruments given on loan to customers.

A5.a Government grants related to income

They are composed as follows:

(TEUR)	2020	2019	Changes
Sundry grants	3.182	8.739	-5.557
Capital grants	1.193	1.156	37
Total	4.375	9.895	-5.520

The item Sundry contributions for TEUR 3,182 refers to:

―	for TEUR 2,096 (TEUR 8,167 in 2019) to the tax relief obtained by Italian companies in relation to the "Research and Development Tax Credit" recognised pursuant to Article 1, paragraph 35 of Law 190/14 (2015 Stability Law), as an incentive measure for the investments in research and development made by them;
―	for TEUR 324 to the contribution for the sanitisation and purchase of protective equipment pursuant to Article 125 of Decree-Law No. 34 of 19 May 2020;
―	for TEUR 34 TEUR to the 2020 portion of the grant obtained by the Italian companies, on account of plant following the purchase of capital goods pursuant to Article 1, paragraphs 184 to 197, of Law No. 160/2019 (Finance Act 2020) and Article 1, paragraphs 1051 to 1063 and 1065, of Law No. 178/2020 (Finance Act 2021).

A.5.b Costs recoveries and other revenues

(TEUR)	2020	2019	Changes
Prior-period income	2.410	5.140	-2.730
Prior-period expense	-1.578	93	-1.671
Expense recoveries	16.851	16.031	820
Royalties	1.106	939	167
Insurance indemnities	668	1.040	-372
Various services	1.436	2.167	-731
Other income	16.837	15.412	1.425
Total	37.730	40.822	-3.092

B. PRODUCTION COSTS

B.6 Costs for raw materials, supplies, materials for consumption and merchandise

(TEUR)	2020	2019	Changes
Purchase of raw materials, semi-finished and finished products	1.349.941	1.287.135	62.806
Purchase of various materials	31.991	38.368	-6.377
Prior-year income	-268	-1.569	1.301
Prior-year losses	54	26	28
Total	1.381.718	1.323.960	57.758

B.7 Costs for services

(TEUR)	2020	2019	Changes
Scientific advice	68.610	39.111	29.499
Commissions for agents and representatives	38.083	37.178	905
Maintenance and repairs	46.932	46.641	291
Various consultancies	91.952	77.844	14.108
Transport and shipping costs	45.731	44.584	1.147
Distribution services	19.829	18.436	1.393
Processing	55.737	46.824	8.913
Postage and telephone charges	6.830	7.235	-405
Utilities	16.795	17.984	-1.189
Staff training expenses	7.461	12.797	-5.336
Insurance premiums	15.731	14.750	981
Cleaning and environmental hygiene costs	7.508	6.619	889
Patent and trademark registration expenses	13.528	21.103	-7.575
Travel expenses	29.298	62.965	-33.667
Medical-scientific information	299.485	399.704	-100.219
IMS publications and statistics	18.383	17.412	971
Other service costs	82.764	89.983	-7.219
Prior-period income	-2.558	-1.872	-686
Prior-period losses	1.595	1.896	-301
Total	863.694	961.194	-97.500

The item "Various consultancies" mainly includes administrative, technical and ICT consulting (TEUR 13,723), legal consulting (TEUR 15,942), personnel search expenses (TEUR 6,297) and miscellaneous consulting (TEUR 49,641).

B.8 Use of third-party assets

(TEUR)	2020	2019	Changes
Royalties	80.909	94.100	-13.191
Rents and leases	26.314	27.167	-853
Leasing fees	21.893	23.166	-1.273
Prior-period income	-3	-25	22
Prior-period losses	5	15	-10
Insgesamt	129.118	144.423	-15.305

B.9 Personnel expenses

(TEUR)	2020	2019	Changes
Personnel
a) Wages and salaries	689.669	682.454	7.215
b) Social security charges	147.204	153.034	-5.830
c) Staff leaving indemnities	14.022	13.696	326
d) Pensions and similar	8.554	9.627	-1.073
e) Other costs	116.142	104.207	11.935
Total	975.591	963.018	12.573

B.10 Amortisations, depreciations and write-downs

(TEUR)	2020	2019	Changes
Depreciation and write-downs
a) Amortisation of intangible assets	166.575	51.154	115.421
b) Depreciation of property, plant and equipment	69.775	72.273	-2.498
c) Other write-downs of non-current assets	48.611	116	48.495
d) Impairment of receivables included in current assets and cash and cash equivalents	654	18	636
Total	285.615	123.561	162.054

The increase in the item "Amortisation of intangible fixed assets" is primarily attributable to rights acquired as a result of the acquisition of Stemline, including goodwill, as per the comment on the item "Industrial patents and intellectual property rights" in the balance sheet. The item "Other write-downs of non-current assets" consists of write-downs of marketing rights on an oncology product and of rights on a biopharmaceutical production- technology platform.

B.12 Provisions for risks

(TEUR)	2020	2019	Changes
Provisions for risks	30.750	19.352	11.398
Total	30.750	19.352	11.398

Provisions for 2020 risks amount to TEUR 30,750 and relate to risks such as returns, disputes with personnel and agents' termination indemnity. Of these, the amount of TEUR 19,564 relates to the Italian companies, including the provision for returns, while the amount of 11,186 TEUR refers to foreign companies. The increase is mainly due to a provision of 11.7 million euro for the charge arising from the decision to terminate a license agreement relating to rights on a biopharmaceutical production-technology platform.

B.14 Other operating expenses

They are composed as follows:

(TEUR)	2020	2019	Changes
Taxes other than income tax	14.135	13.946	189
Others	31.627	60.411	-28.784
Prior-period income	-742	-214	-528
Prior-period losses	2.861	1.301	1.560
Total	47.881	75.444	-27.563

C. FINANCIAL INCOME AND EXPENSES

C. 16 Other financial income

This is composed as follows:

(TEUR)	2020	2019	Changes
Non-current securities	4	5	-1
Trading securities	7.903	7.962	-59
Other financial income	5.608	8.373	-2.765
Prior-period income	14	500	-486
Prior-period losses	1	-100	101
Total	13.530	16.740	-3.210

The amount of TEUR 7,903 refers mainly to coupons accrued on bonds in which the Group invests liquidity. Income other than the above mainly refers to bank interest income of TEUR 3,938 and default interest income of TEUR 82.

C.17 Interest and other financial expenses

They are composed as follows:

(TEUR)	2020	2019	Changes
Bank interest expenses	2.333	6.908	-4.575
Sundry interest expenses	1.376	1.199	177
Bank charges and other financial expenses	3.016	6.130	-3.114
Prior-period income	0	-1.475	1.475
Prior-period losses	4	5	-1
Total	6.729	12.767	-6.038

C.17a Foreign exchange gains and losses

They are composed as follows:

(TEUR)	2020	2019	Changes
Realised exchange gains (losses)	-68.489	2.775	-71.264
Unrealized exchange gains (losses)	-27.814	14.285	-42.099
Total	-96.303	17.060	-113.363

The total change is largely attributable to the currency effect, in particular to the evolution of the Russian Rouble and USD exchange rates, the latter emphasized by the acquisition of the American biopharmaceutical company Stemline Therapeutics Inc.

D. ADJUSTMENTS TO FINANCIAL ASSETS AND LIABILITIES

D.19.c Write-downs of current trading securities

The amount of TEUR 2,508 refers to the adjustment to the market value at the end of the financial year of the price of bonds entered under current assets.

E 22. Income taxes, current and deferred

(TEUR)	2020	2019	Changes
Current income taxes	-118.061	-143.436	25.375
Deferred tax liabilities	6.499	799	5.700
Deferred tax assets	16.281	15.897	384
Taxes relating to the previous year	56.561	9.044	47.517
Total	-38.720	-117.696	78.976

The Group's tax rate (the ratio between the income taxes recognised in line 20 and the item "Profit Before Tax") improved from 31% in 2019 to 21% in 2020, mainly due to the improvement of the Italian companies benefiting from the Patent Box Tax Credit for the years 2015-2019, refunds for higher IRES paid in previous years, and due to the interpellation submitted by the Parent Company concerning the ACE (Aid for Economic Growth) relief for 2019.

3. OTHER INFORMATION

3.1 Changes in the scope of consolidation

In June 2020, the acquisition of the US biopharmaceutical company Stemline Therapeutics Inc. and its controlled companies Stemline Therapeutics BV (The Netherlands) and Stemline Therapeutics Switzerland GmbH (Switzerland) was completed. In September 2020, the acquisition of the Italian company Promo Threads (Milan) was completed and merged into Relife Srl effective as of January 1, 2021. Additionally, the following new companies were incorporated during the year 2020:

―	A.Menarini Manufacturing & Logistics Luxembourg S.A. (Luxembourg);
―	Relife France SASU (France);
―	Relife Menarini LLC (Russia);
―	Berlin chemie menarini mongolia LLC (Mongolia).

The liquidation of the following companies was completed in 2020:

―	Berlin-Chemie/A.Menarini Danmark ApS;
―	Berlin-Chemie/A.Menarini China Co.Ltd.

3.2 Remuneration of directors and statutory auditors

Below are the total fees - to the directors and members of the Board of Statutory Auditors of the Parent Company.

(TEUR)	2020	2019	Changes
Directors' fees	2.730	2.160	570
Remuneration of the Board of Statutory Auditors	17	23	-6
Total	2.747	2.183	564

It should be noted that the remuneration due to the directors refers to the amounts contractually envisaged for the work performed.

3.3 Transactions with related parties

Pursuant to Article 2427, paragraph 22-bis of the Italian Civil Code, it is hereby notified that there were no transactions with related parties that were not concluded at normal market conditions.

3.4 Reconciliation between the financial statements of the parent company and the consolidated financial statements

	31.12.2020		31.12.2019
	Equity	Net income	Equity	Net income
Net equity and result for the year as reported in the financial statements of the Parent Company	1.409.368	53.290	1.308.124	73.308
Elimination of the book value of consolidated investments:
- difference between book value and pro-quota value of net equity	1.942.526	-	1.875.575	-
- pro-rata results achieved by consolidated companies and value adjustments	260.441	260.441	318.257	318.257
- consolidation difference	(3.678)	(2.209)	(1.468)	325
- know-how	-	-	-	-
- third parties	(143.351)	(16.157)	(127.488)	(16.159)
Elimination of the effects of transactions between consolidated companies:	-	-	-	-
- adjustments to inventory profits	(138.405)	15.752	(153.319)	(40.215)
- value adjustments to consolidated equity investments	3.787	44.574	2.190	70.650
- intra-group dividend adjustments	-	(128.922)	-	(140.177)
- other consolidation adjustments	(53.168)	(100.868)	(52.383)	(24.916)
Group interest in net equity and net income	3.277.520	125.901	3.169.488	241.073
Net equity and result for the year attributable to minority interests	143.351	16.157	127.488	16.159
Net equity and result for the year as reported in the consolidated financial statements	3.420.871	142.058	3.296.976	257.232

4. SIGNIFICANT EVENTS OCCURRING AFTER THE END OF THE FINANCIAL YEAR

Significant events occurring after the end of the financial year include the first sale of Elzonris® in Europe in the first half of 2021 further to the approval by the EMA in January 2021, which is described in the Management Report of these Consolidated Financial Statements.

There were no significant events after the end of the financial year that would affect the financial position, results of operations and notes to these Consolidated Financial Statements.

5. DISCLOSURE OF PUBLIC DISBURSEMENTS PURSUANT TO LAW NO. 124/2017 (MARKET AND COMPETITION LAW)

The transparency regulations on public disbursements ex. art.1 paragraphs 125 et seq. of Law no. 124/2017 as reformulated by Decree Law no. 34 of April 30, 2019 provides in paragraph 125-bis that companies state "in the notes to the financial statements and any consolidated financial statements the amounts and information relating to grants, subsidies, benefits, contributions or aid, in cash or in kind, not of a generic kind and without fee, remuneration or compensation, actually granted by public administrations". This obligation to make disclosure does not apply where the monetary amount of such benefits is less than 10,000 euro in the period under consideration.

(TEUR)

BENEFICIARY	FACILITATED PROJECT	ISSUING ENTITY	AMOUNT
Menarini Ricerche	Progetto Pista	Regione Lazio	398.157
Menarini Silicon Biosystems	M4M - More For Medical	Regione Emilia Romagna	253.315
Menarini Biotech	MenHub	Regione Lazio	95.772
Total			747.244

For further details on the projects being facilitated, please refer to the 2020 statutory financial statements of the companies involved.

6. CONCLUSION

These financial statements have been prepared in accordance with the provisions of the law and provide a true and fair view of the Group's financial position and results of operations.

Florence, 20h October 2021

The Chairman of the Board of Directors

Dott. Eric Cornut

ANNEXES TO THE NOTES

THE MENARINI GROUP COMPANIES

COMPANY NAME	HEAD OFFICE	PAID-UP CAPITAL
A. Menarini Industrie Farmaceutiche Riunite srl	Florence	EUR 150.000.000
A. Menarini Diagnostics srl	Florence	EUR 30.000.000
Laboratori Guidotti spa	Pisa	EUR 4.200.000
Malesci Istituto Farmacobiologico spa	Florence	EUR 255.000
Istituto Luso Farmaco d'Italia spa	Milan	EUR 130.000
F.I.R.M.A. spa	Florence	EUR 120.000
Lusochimica spa	Lomagna (LC)	EUR 228.000
Menarini Ricerche spa	Pomezia (RM)	EUR 7.800.000
POMEZIA ENGINEERING & FINANCE SERVICES SPA	Pomezia (RM)	EUR 8.000.000
Menarini Biotech srl	Pomezia (RM)	EUR 1.550.000
A. Menarini Farmaceutica Internazionale srl	Florence	EUR 40.000.000
CODIFI srl	Florence	EUR 1.000.000
A. Menarini Manufacturing, Logistics and Services srl	Florence	EUR 42.650.000
Menarini Silicon Biosystems SpA	Bologna	EUR 1.938.554
Relife Italia srl	Florence	EUR 10.300
Relife srl	Florence	EUR 10.575
VaxYnethic srl	Milan	EUR 10.000
A.Menarini Newtech srl	Florence	EUR 20.000.000
Lodichem Srl	Florence	EUR 3.000.000
Promo Threads srl	Milan	EUR 11.050.000
Berlin-Chemie AG	Berlin (Germany)	EUR 20.452.187
ZAO Berlin-Pharma	Kaluga (Russia)	RUB 900.100.000
OOO Berlin-Chemie/ A.Menarini	Moscow (Russia)	RUB 200.000.000
Berlin-Chemie/Menarini Pharma GmbH	Berlin (Germany)	EUR 25.565
STG Service-Touristik-Grundstücksverwaltung GmbH	Berlin (Germany)	EUR 25.565
Berlin-Chemie Vertriebs GmbH	Berlin (Germany)	EUR 25.000
Berlin-Chemie Distributions GmbH	Berlin (Germany)	EUR 25.000
Berlin-Chemie Pharmaceuticals GmbH	Berlin (Germany)	EUR 25.000
Berlin-Chemie Arzneimittel GmbH	Berlin (Germany)	EUR 25.000
UAB Berlin Chemie/Menarini Baltic	Vilnius (Lithuania)	EUR 725.000
SIA Berlin Chemie/Menarini Baltic	Riga (Latvia)	EUR 2.845
Berlin-Chemie/Menarini Polska Sp.z.o.o.	Warsaw (Poland)	PLN 1.000.000
OU Berlin-Chemie Menarini Eesti	Tallinn (Estonia)	EUR 22.369
Berlin Chemie/ Menarini Hrvatska d.o.o.	Zagreb (Croatia)	HRK 20.000
Berlin Chemie/ A.Menarini Suomi Oy	Helsinki (Finland)	EUR 8.000
Berlin-Chemie/ A. Menarini Ceska Republica s.r.o.	Prague (Czech Republic)	CZK 200.000
Berlin-Chemie/ A. Menarini Magyarorszaàg Kft	Budaörs (Hungary)	HUF 3.000.000
Berlin-Chemie/ Menarini BH d.o.o. Bosnien	Sarajevo (Bosnia and Hercegovina)	BAM 2.000
Berlin-Chemie Montenegro d.o.o.	Podgorica (Montenegro)	EUR 1
Berlin-Chemie / A. Menarini Ukraine GmbH	Berlin (Germany)	EUR 25.000
SC Berlin-Chemie/ A.Menarini SRL	Bucharest (Romania)	RON 16.007.440
A. Menarini Pharma GmbH	Vienna (Austria)	EUR 36.336
A. Menarini Research & Business Service GmbH	Berlin (Germany)	EUR 40.001
Berlin-Chemie/A. Menarini Kosovo L.L.C.	Pristina (Kosovo)	EUR 1.000
Berlin-Chemie/A. Menarini Macedonia DOOEL	Skopje (Macedonia)	MKD 307.407
Berlin-Chemie / A. Menarini Bulgaria EOOD	Sofia (Bulgaria)	BGN 5.000
Berlin-Chemie / A. Menarini Distribution Georgia LLC	Tbilisi (Georgia)	GEL 72.445
Berlin-Chemie/A. Menarini Distribution Romania S.R.L.	Bucharest (Romania)	RON 113.000
Berlin-Chemie/ A.Menarini Distribution Kazakhstan LLP	Almaty (Kazakhstan)	KZT 10.000.000
Berlin-Chemie A. Menarini Distribution d.o.o. Beograd	New Belgrade (Serbia)	RSD 3.000.000
Berlin-Chemie/A.Menarini Distribution Slovakia s.r.o.	Bratislava (Slovakia)	EUR 25.000
Berlin-Chemie/ A.Menarini Distribution Ljubljana LLC	Ljubljana (Slovenia)	EUR 25.000
Berlin chemie menarini mongolia LLC	Ulaanbaatar (Mongolia)	USD 100.000
Relife Menarini LLC	Moscow (Russia)	RUB 20.000.000
A. Menarini Asia Pacific Pte Ltd	Singapore	EUR 540.000.001
A. Menarini Asia Pacific Holdings Pte Ltd	Singapore	EUR 787.739.039
A. Menarini Australia Pty Ltd	Chatswood	AUD 224.000.000
Invida International Trading (Shanghai) Co, Ltd	Pechino (China)	CNY 97.583.446
A.Menarini Hong Kong Limited	Hong Kong (HK)	HKD 380.000.000
A. Menarini India Private Limited Ltd	Ahmedabad (India)	INR 2.292.921.844
PT. Transfarma Medica Indah	Jakarta (Indonesia)	IDR 198.760.570.000
PT Menarini Indria Laboratories	Bekasi (Indonesia)	IDR 34.000.000.000
A. Menarini Korea Co.Ltd.	Korea (Seoul)	KRW 67.983.980.733
A. Menarini Singapore Pte Ltd	Singapore	SGD 150.000.000
A. Menarini Philippines Pte Ltd	City of Taguig (Philippines)	PHP 2.766.823.101
Transfarma Philippines, Inc	City of Taguig (Philippines)	PHP 13.457.211
A. Menarini (Thailand) Limited	Bangkok (Thailand)	THB 231.250.000
Inovail Heathcare (Philippines) Inc	City of Taguig (Philippines)	PHP 47.936.864
A. Menarini China Holding co., Ltd	Wuhan (China)	CNY 184.745.880
A. Menarini Biomarkers Singapore Pte Ltd	Singapore	EUR 25.020.984
A. Menarini New Zealand PTY Limited	Auckland (New Zealand)	NZD 5.435.594
A.Menarini International Trading (Wuhan) Co, Ltd	China	CNY 1.200.000
Menarini İlaç Sanayi ve Ticaret A.Ş.	Istanbul (Turkey)	TRY 64.057.182
Ulagaylar İlaç Sanayi ve Ticaret A.Ş.	Istanbul (Turkey)	TRY 1.690.515
Oğuzlar İlaç Sanayi ve Ticaret A.Ş.	Istanbul (Turkey)	TRY 1.492.201
İ.E. Ulagay İlaç Sanayii Türk A.Ş.	Istanbul (Turkey)	TRY 18.209.504
I.C.P. Cyprus Limited	Lefkosia, Cyprus	TRY 4.561.571
Ulagay I.C.P. Limited	Lefkosia, Cyprus	TRY 24.558
Laboratorios Menarini SA	Badalona (Spain)	EUR 1.202.000
Retrain S.A.U.	Badalona (Spain)	EUR 60.200
Menarini Consumer Healthcare S.A.U. (former Tecefarma)	Badalona (Spain)	EUR 60.110
Guidotti Farma S.L.U.	Badalona (Spain)	EUR 300.000
Laboratorios Fermon S.L.U.	Badalona (Spain)	EUR 18.030
Farmen SA Guatemala	Guatemala	QTZ 1.553.321
Menafar, S.A. Panama	Panama	USD 10.000
Menfar, S.A. de C.V.Honduras	Honduras	HNL 108.000
Menfar, SA de CV El salvador	El Salvador	USD 29.900
Menafar, SA Costa Rica	Costa Rica	CRC 2.000.000
Distribuidora Nicafar, SA	Nicaragua	NIO 250.000
Latin Farma, SA	Guatemala	GTQ 200.000
A. Menarini Latin America SLU	Badalona (Spain)	EUR 29.040.000
A .Menarini Mexico SA	Mexico	MXNUR 50.000
A .Menarini Mexico Servicios, SA	Mexico	MXN 50.000
Penrand Corporation, SdRL	Santo Domingo	DOP 206.171.400
A. Menarini Real Estate Luxembourg SA	Luxemburg	EUR 2.500.000
Menarini International Operations Luxembourg SA	Luxemburg	EUR 84.700.000
A.Menarini Manufacturing & Operations Luxembourg SA (former A. Menarini Participations Dresden SA)	Luxemburg	EUR 22.500.000
Menarini International Investments SA Luxembourg	Luxemburg	EUR 61.200.000
A. Menarini Participations Internationales SA	Luxemburg	EUR 900.000.000
Phardiag Limited	Shannon (Ireland)	EUR 126.974
Comercial Vallvidrera, SAU	Barcelona (Spain)	EUR 300.500
Con.Fi.Farm. Finanziaria Farmaceutica srl	Florence	EUR 10.000
Immobiliare Firenze '971 srl	Florence	EUR 46.500
Unomarchetti srl	Florence	EUR 10.000
Rismondo srl	Florence	EUR 46.000
Fiesole Auditorium srl	Florence	EUR 10.000
Immobiliare Monte Serra srl	Florence	EUR 10.000
Duemarchetti srl	Florence	EUR 100.000
A. Menarini Pharma Brazil srl	Florence	EUR 10.000
Immobiliare Montebianco Sas	Florence	EUR 516
Tremarchetti Srl	Florence	EUR 100.000
Quattromarchetti Srl	Florence	EUR 100.000
Sesto Real Estate srl	Florence	EUR 10.000
Immobiliare Sette Santi 1 srl	Florence	EUR 10.000
A. Menarini Manufacturing & Logistics Luxembourg S.A.	Luxemburg	EUR 30.000
Menarini Diagnosticos SA	Badalona (Spain)	EUR 6.010.000
N.H.S. SASU	Paris (France)	EUR 3.380.000
Menarini France SA	Paris (France)	EUR 8.000.000
A. Menarini Diagnostics France SASU	Paris (France)	EUR 2.340.590
A. Menarini Portugal - Farmaceutica SA	Lisbon (Portugal)	EUR 550.000
Malesci - Farmaceutica Lda	Lisbon (Portugal)	EUR 5.000
Lubefar Produtos Farmaceuticos Lda	Lisbon (Portugal)	EUR 49.880
Guidotti - Farmaceutica Lda	Lisbon (Portugal)	EUR 5.000
Menarini Diagnosticos, Mat. de Laboratorio Lda	Lisbon (Portugal)	EUR 5.000
Menarini Hellas SA	Athens (Greece)	EUR 6.972.762
Guidotti Hellas SA	Athens (Greece)	EUR 880.200
Menarini Diagnostics SA	Athens (Greece)	EUR 13.980.000
Menarini Benelux SA/NV	Machelen (Belgium)	EUR 8.680.000
A. Menarini Diagnostics Ltd	Wokingham (Great Britain)	GBP 33.500.000
A. Menarini Pharmaceuticals Ireland Limited	Dublin (Ireland)	EUR 250.000
A. Menarini GmbH	Vienna (Austria)	EUR 7.630.648
A. Menarini AG	Zürich (Schweiz)	CHF 11.700.000
A. Menarini Pharmaceuticals Ireland Limited	Dublin (Irland)	EUR 250.000
A. Menarini AG	Zürich (Switzerland)	CHF 11.700.000
Menarini Von Heyden GmbH	Dresden (Germany)	EUR 25.000
A. Menarini Pharmaceuticals UK Ltd	High Wycombe (Great Britain)	GBP 49.999.600
Menarini Silicon Biosystems INC	San Diego (CA)	USD 100
Relife France SASU	Rungis (France)	EUR 3.000.000
Stemline Therapeutics Inc., NY	New York (NY)	USD 1
Stemline Therapeutics BV	Amsterdam (Netherlands)	EUR 1
Stemline Therapeutics Switzerland GmbH	Zug (Switzerland)	CHF 20.000

COMPANY NAME	Tätigkeit	HELD THROUGH	OTHER SHARE HOLDERS INCLUDED	%
A. Menarini Industrie Farmaceutiche Riunite srl	Pharmaceuticals	Pharmafin SpA (99.95%)		100,00
A. Menarini Diagnostics srl	Diagnostics	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Laboratori Guidotti spa	Pharmaceuticals	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Malesci Istituto Farmacobiologico spa	Pharmaceuticals	Con.Fi.Farm. Finanziaria Farmaceutica srl (51 %)	A. Menarini Industrie Farmaceutiche Riunite srl (30 %)	55,00
Istituto Luso Farmaco d'Italia spa	Pharmaceuticals	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
F.I.R.M.A. spa	Pharmaceuticals	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Lusochimica spa	Chemicals	A. Menarini Industrie Farmaceutiche Riunite srl (52.632 %)	Laboratori Guidotti spa (47.368%)	100,00
Menarini Ricerche spa	Research and development pharmaceutical products	A. Menarini Industrie Farmaceutiche Riunite srl (92 %)	Istituto Luso Farmaco d'Italia spa (2 %); Laboratori Guidotti spa (2 %); Malesci Istituto Farmacobiologico spa (2 %); F.I.R.M.A. spa (2 %)	99,10
POMEZIA ENGINEERING & FINANCE SERVICES SPA	Research and toxicology	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Menarini Biotech srl	Research and development biotech products	Menarini Ricerche spa (99.5 %)	A. Menarini Industrie Farmaceutiche Riunite srl (0,5 %)	99,10
A. Menarini Farmaceutica Internazionale srl	Pharmaceuticals	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
CODIFI srl	Distribution	A. Menarini Industrie Farmaceutiche Riunite srl (44%)	Laboratori Guidotti spa (19.5%); Malesci Istituto Farmacobiologico spa (15%); Istituto Luso Farmaco d'Italia spa (10%); F.I.R.M.A. spa (5%); A. Menarini Diagnostics srl (5%); Relife Italia srl (former Relivia sr) (1%); Lusochimica spa (0.5%)	93,25
A. Menarini Manufacturing, Logistics and Services srl	Pharmaceuticals	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Menarini Silicon Biosystems SpA	New technologies applied to Life Sciences	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Relife Italia srl	Pharmaceuticals	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Relife srl	Pharmaceuticals	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
VaxYnethic srl	Research, development and production of vaccines	A.Menarini Newtech srl (51 %)		51,00
A.Menarini Newtech srl	New technologies applied to Life Sciences	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Lodichem Srl	Real estate	Lusochimica spa (100%)		100,00
Promo Threads srl	Pharmaceuticals	Relife srl (100%)		100,00
Berlin-Chemie AG	Pharmaceuticals and Diagnostics	A. Menarini Participations Internationales SA (95.000125 %)	A. Menarini Industrie Farmaceutiche Riunite srl (4.999875 %)	100,00
ZAO Berlin-Pharma	Pharmaceuticals	Berlin-Chemie AG (60 %)	Berlin-Chemie/Menarini Pharma GmbH 40 %)	100,00
OOO Berlin-Chemie/ A.Menarini	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100 %)		100,00
Berlin-Chemie/Menarini Pharma GmbH	Pharmaceuticals	Berlin-Chemie AG (95 %)	STG Service-Touristik-Grundstücksverwaltung GmbH (5 %)	100,00
STG Service-Touristik-Grundstücksverwaltung GmbH	Financing	Berlin-Chemie AG (100 %)		100,00
Berlin-Chemie Vertriebs GmbH	Pharmaceuticals	Berlin-Chemie AG (100 %)		100,00
Berlin-Chemie Distributions GmbH	Pharmaceuticals	Berlin-Chemie AG (95 %)	STG Service-Touristik-Grundstücksverwaltung GmbH (5 %)	100,00
Berlin-Chemie Pharmaceuticals GmbH	Pharmaceuticals	Berlin-Chemie AG (100 %)		100,00
Berlin-Chemie Arzneimittel GmbH	Pharmaceuticals	Berlin-Chemie AG (100 %)		100,00
UAB Berlin Chemie/Menarini Baltic	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100 %)		100,00
SIA Berlin Chemie/Menarini Baltic	Pharmaceuticals	UAB Berlin Chemie/Menarini Baltic (100 %)		100,00
Berlin-Chemie/Menarini Polska Sp.z.o.o.	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100 %)		100,00
OU Berlin-Chemie Menarini Eesti	Pharmaceuticals	UAB Berlin Chemie/Menarini Baltic (100 %)		100,00
Berlin Chemie/ Menarini Hrvatska d.o.o.	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100%)		100,00
Berlin Chemie/ A.Menarini Suomi Oy	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100%)		100,00
Berlin-Chemie/ A. Menarini Ceska Republica s.r.o.	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100%)		100,00
Berlin-Chemie/ A. Menarini Magyarorszaàg Kft	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100%)		100,00
Berlin-Chemie/ Menarini BH d.o.o. Bosnien	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100%)		100,00
Berlin-Chemie Montenegro d.o.o.	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100%)		100,00
Berlin-Chemie / A. Menarini Ukraine GmbH	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100%)		100,00
SC Berlin-Chemie/ A.Menarini SRL	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100%)		100,00
A. Menarini Pharma GmbH	Pharmaceuticals	A. Menarini Participations Internationales SA (100%)		100,00
A. Menarini Research & Business Service GmbH	Research	A. Menarini Participations Internationales SA (95 %)	A. Menarini Industrie Farmaceutiche Riunite srl (5%)	100,00
Berlin-Chemie/A. Menarini Kosovo L.L.C.	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100%)		100,00
Berlin-Chemie/A. Menarini Macedonia DOOEL	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100%)		100,00
Berlin-Chemie / A. Menarini Bulgaria EOOD	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100%)		100,00
Berlin-Chemie / A. Menarini Distribution Georgia LLC	Pharmaceuticals	Berlin-Chemie Distributions GmbH (100 %)		100,00
Berlin-Chemie/A. Menarini Distribution Romania S.R.L.	Pharmaceuticals	Berlin-Chemie Distributions GmbH (100 %)		100,00
Berlin-Chemie/ A.Menarini Distribution Kazakhstan LLP	Pharmaceuticals	Berlin-Chemie Distributions GmbH (100%)		100,00
Berlin-Chemie A. Menarini Distribution d.o.o. Beograd	Pharmaceuticals	Berlin-Chemie Distributions GmbH (100%)		100,00
Berlin-Chemie/A.Menarini Distribution Slovakia s.r.o.	Pharmaceuticals	Berlin-Chemie Distributions GmbH (100 %)		100,00
Berlin-Chemie/ A.Menarini Distribution Ljubljana LLC	Pharmaceuticals	Berlin-Chemie Distributions GmbH (100 %)		100,00
Berlin chemie menarini mongolia LLC	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100%)		100,00
Relife Menarini LLC	Pharmaceuticals	Berlin-Chemie/Menarini Pharma GmbH (100%)		100,00
A. Menarini Asia Pacific Pte Ltd	Pharmaceuticals	A. Menarini Asia Pacific Holdings Pte Ltd (100%)		100,00
A. Menarini Asia Pacific Holdings Pte Ltd	Pharmaceuticals	A. Menarini Participations Internationales SA (100 %)		100,00
A. Menarini Australia Pty Ltd	Pharmaceuticals	A. Menarini Asia Pacific Pte Ltd (100 %)		100,00
Invida International Trading (Shanghai) Co, Ltd	Pharmaceuticals	A.Menarini Hong Kong Limited (100%)		100,00
A.Menarini Hong Kong Limited	Pharmaceuticals	A. Menarini Asia Pacific Pte Ltd (100 %)		100,00
A. Menarini India Private Limited Ltd	Pharmaceuticals	A. Menarini Asia Pacific Pte Ltd (100 %)		100,00
PT. Transfarma Medica Indah	Pharmaceuticals	A. Menarini Asia Pacific Pte Ltd (100 %)		100,00
PT Menarini Indria Laboratories	Pharmaceuticals	A. Menarini Asia Pacific Holdings Pte Ltd (70 %)		70,00
A. Menarini Korea Co.Ltd.	Pharmaceuticals	A. Menarini Asia Pacific Pte Ltd (100 %)		100,00
A. Menarini Singapore Pte Ltd	Pharmaceuticals	A. Menarini Asia Pacific Pte Ltd (100 %)		100,00
A. Menarini Philippines Pte Ltd	Pharmaceuticals	A. Menarini Asia Pacific Pte Ltd (100 %)		100,00
Transfarma Philippines, Inc	Pharmaceuticals	A. Menarini Asia Pacific Pte Ltd (100 %)		100,00
A. Menarini (Thailand) Limited	Pharmaceuticals	A. Menarini Asia Pacific Pte Ltd (100 %)		100,00
Inovail Heathcare (Philippines) Inc	Pharmaceuticals	A. Menarini Asia Pacific Holdings Pte Ltd (100%)		100,00
A. Menarini China Holding co., Ltd	Financing	A. Menarini Asia Pacific Pte Ltd (100 %)		100,00
A. Menarini Biomarkers Singapore Pte Ltd	New technologies applied to Life Sciences	A. Menarini Asia Pacific Holdings Pte Ltd (100 %)		100,00
A. Menarini New Zealand PTY Limited	Pharmaceuticals	A. Menarini Asia Pacific Pte Ltd (100 %)		100,00
A.Menarini International Trading (Wuhan) Co, Ltd	Pharmaceuticals	A. Menarini China Holding co., Ltd (100 %)		100,00
Menarini İlaç Sanayi ve Ticaret A.Ş.	Pharmaceuticals	Menarini International Investments SA Luxembourg (100 %)		100,00
Ulagaylar İlaç Sanayi ve Ticaret A.Ş.	Pharmaceuticals	Menarini İlaç Sanayi ve Ticaret A.Ş. (99.99 %)		99,99
Oğuzlar İlaç Sanayi ve Ticaret A.Ş.	Holding	Menarini İlaç Sanayi ve Ticaret A.Ş. (100 %)		100,00
İ.E. Ulagay İlaç Sanayii Türk A.Ş.	Holding	Ulagaylar İlaç Sanayi ve Ticaret A.Ş. (50 %)	Menarini İlaç Sanayi ve Ticaret A.Ş. (23%) Oğuzlar İlaç Sanayi ve Ticaret A.Ş. (15%)	87,99
I.C.P. Cyprus Limited	Pharmaceuticals	İ.E. Ulagay İlaç Sanayii Türk A.Ş. (79.81 %)	Menarini İlaç Sanayi ve Ticaret A.Ş. (20.19%)	90,42
Ulagay I.C.P. Limited	Pharmaceuticals	İ.E. Ulagay İlaç Sanayii Türk A.Ş. (78%)	Menarini İlaç Sanayi ve Ticaret A.Ş. (20%); I.C.P. Cyprus Limited (2%)	90,44
Laboratorios Menarini SA	Pharmaceuticals	A. Menarini Industrie Farmaceutiche Riunite srl (95 %)	Comercial Vallvidrera, SAU (5 %)	100,00
Retrain S.A.U.	Pharmaceuticals	Laboratorios Menarini SA (100%)		100,00
Menarini Consumer Healthcare S.A.U. (former Tecefarma)	Pharmaceuticals	Laboratorios Menarini SA (100 %)		100,00
Guidotti Farma S.L.U.	Pharmaceuticals	Laboratorios Menarini SA (100 %)		100,00
Laboratorios Fermon S.L.U.	Pharmaceuticals	Laboratorios Menarini SA (100 %)		100,00
Farmen SA Guatemala	Pharmaceuticals	A. Menarini Latin America SLU (98 %)	Menfar, SA de CV El Salvador (2 %)	100,00
Menafar, S.A. Panama	Pharmaceuticals	A. Menarini Latin America SLU (99%)	Farmen SA Guatemala (1 %)	100,00
Menfar, S.A. de C.V.Honduras	Pharmaceuticals	A. Menarini Latin America SLU (96.3%)	Menafar, S.A. Panama (0,925 %); Menfar, SA de CV El salvador (0,925 %); Farmen SA Guatemala (0,925 %); Distribuidora Nicafar, SA (0,925 %)	100,00
Menfar, SA de CV El salvador	Pharmaceuticals	A. Menarini Latin America SLU (99.615%)	Farmen SA Guatemala (0.385%)	100,00
Menafar, SA Costa Rica	Pharmaceuticals	A. Menarini Latin America SLU (99.99995%)	Farmen SA Guatemala (0.00005%)	100,00
Distribuidora Nicafar, SA	Pharmaceuticals	A. Menarini Latin America SLU (98 %)	Farmen SA Guatemala (2%)	100,00
Latin Farma, SA	Pharmaceuticals	A. Menarini Latin America SLU (99.5%)	Menafar, S.A. Panama (0.5 %)	100,00
A. Menarini Latin America SLU	Pharmaceuticals	Laboratorios Menarini SA (100 %)		100,00
A .Menarini Mexico SA	Pharmaceuticals	A. Menarini Latin America SLU (99.998%)	Laboratorios Menarini SA (0.002 %)	100,00
A .Menarini Mexico Servicios, SA	Pharmaceuticals	A. Menarini Latin America SLU (99.998%)	Laboratorios Menarini SA (0.002 %)	100,00
Penrand Corporation, SdRL	Pharmaceuticals	A. Menarini Latin America SLU (99.99995%)	Farmen SA Guatemala (0.00005%)	100,00
A. Menarini Real Estate Luxembourg SA	Real Estate	A. Menarini Industrie Farmaceutiche Riunite srl (51 %)	Comercial Vallvidrera, SAU (49%)	100,00
Menarini International Operations Luxembourg SA	Pharmaceuticals	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
A.Menarini Manufacturing & Operations Luxembourg SA (former A. Menarini Participations Dresden SA)	Holding	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Menarini International Investments SA Luxembourg	Holding	A. Menarini Participations Internationales SA (99,99995 %)	Menarini International Operations Luxembourg SA (0,00005 %)	100,00
A. Menarini Participations Internationales SA	Holding	A. Menarini Industrie Farmaceutiche Riunite srl (99,9999 %)	Menarini Benelux SA/NV (0,00001 %)	100,00
Phardiag Limited	Pharmaceuticals and Diagnostics	A. Menarini Participations Internationales SA (100%)		100,00
Comercial Vallvidrera, SAU	Real Estate	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Con.Fi.Farm. Finanziaria Farmaceutica srl	Holding	A. Menarini Industrie Farmaceutiche Riunite srl (49.02%)		49,02
Immobiliare Firenze '971 srl	Real Estate	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		49,02
Unomarchetti srl	Real Estate	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Rismondo srl	Real Estate	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Fiesole Auditorium srl	Real Estate	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Immobiliare Monte Serra srl	Real Estate	Laboratori Guidotti spa (100 %)		100,00
Duemarchetti srl	Real Estate	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
A. Menarini Pharma Brazil srl	Pharmaceuticals	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Immobiliare Montebianco Sas	Real Estate	A. Menarini Industrie Farmaceutiche Riunite srl (99.95%)		99,95
Tremarchetti Srl	Real Estate	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Quattromarchetti Srl	Real Estate	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Sesto Real Estate srl	Real Estate	A. Menarini Industrie Farmaceutiche Riunite srl (100 %)		100,00
Immobiliare Sette Santi 1 srl	Real Estate	A. Menarini Industrie Farmaceutiche Riunite srl (100%)		100,00
A. Menarini Manufacturing & Logistics Luxembourg S.A.	Pharmaceuticals	A. Menarini Participations Internationales SA (100%)		100,00
Menarini Diagnosticos SA	Diagnostics	A. Menarini Participations Internationales SA (99,95 %)	Comercial Vallvidrera, SAU (0,025 %); A. Menarini Industrie Farmaceutiche Riunite srl (0,025 %)	100,00
N.H.S. SASU	Pharmaceuticals	Menarini France SA (100 %)		98,91
Menarini France SA	Pharmaceuticals	A. Menarini Industrie Farmaceutiche Riunite srl (46,5 %)	A. Menarini Farmaceutica Internazionale srl (40%); Istituto Luso Farmaco d'Italia spa (11.07325%); Malesci Istituto Farmacobiologico spa (2.42375%); POMEZIA ENGINEERING & FINANCE SERVICES SPA (0.0025%); A. Menarini Participations Internationales SA (0.00025%)	98,91
A. Menarini Diagnostics France SASU	Diagnostics	Menarini France SA (100 %)		98,91
A. Menarini Portugal - Farmaceutica SA	Pharmaceuticals	Lubefar Produtos Farmaceuticos Lda (99,9964 %)	A. Menarini Participations Internationales SA (0,0036 %)	100,00
Malesci - Farmaceutica Lda	Pharmaceuticals	A. Menarini Participations Internationales SA (98%)	Malesci Istituto Farmacobiologico spa (2 %)	99,10
Lubefar Produtos Farmaceuticos Lda	Pharmaceuticals	A. Menarini Participations Internationales SA (99.8%)	Menarini Benelux SA/NV (0.2 %)	100,00
Guidotti - Farmaceutica Lda	Pharmaceuticals	A. Menarini Participations Internationales SA (97.9%)	Menarini Benelux SA/NV (2.1%)	100,00
Menarini Diagnosticos, Mat. de Laboratorio Lda	Diagnostics	A. Menarini Participations Internationales SA (95 %)	Comercial Vallvidrera, SAU (5 %)	100,00
Menarini Hellas SA	Pharmaceuticals	A. Menarini Industrie Farmaceutiche Riunite srl (70%)	A. Menarini Participations Internationales SA (30 %)	100,00
Guidotti Hellas SA	Pharmaceuticals	A. Menarini Industrie Farmaceutiche Riunite srl (70%)	A. Menarini Participations Internationales SA (30 %)	100,00
Menarini Diagnostics SA	Diagnostics	A. Menarini Industrie Farmaceutiche Riunite srl (99 %)	Menarini Diagnosticos SA (1 %)	100,00
Menarini Benelux SA/NV	Pharmaceuticals and Diagnostics	A. Menarini Industrie Farmaceutiche Riunite srl (99.998%)	A. Menarini Participations Internationales SA (0.002%)	100,00
A. Menarini Diagnostics Ltd	Diagnostics	A. Menarini Participations Internationales SA (99.999 %)	A. Menarini Industrie Farmaceutiche Riunite srl (0.001%)	100,00
A. Menarini Pharmaceuticals Ireland Limited	Pharmaceuticals	A. Menarini Participations Internationales SA (100%)		100,00
A. Menarini GmbH	Diagnostics	A. Menarini Participations Internationales SA (100%)		100,00
A. Menarini AG	Pharmaceuticals	A. Menarini Participations Internationales SA (100%)	A. Menarini Industrie Farmaceutiche Riunite srl (0.001%)	100,00
A. Menarini Pharmaceuticals Ireland Limited	Pharmaceuticals	A. Menarini Participations Internationales SA (100%)		100,00
A. Menarini AG	Pharmaceuticals	A. Menarini Participations Internationales SA (100%)		100,00
Menarini Von Heyden GmbH	Pharmaceuticals	A.Menarini Manufacturing & Operations Luxembourg SA (former A. Menarini Participations Dresden SA) (100%)		100,00
A. Menarini Pharmaceuticals UK Ltd	Pharmaceuticals	A. Menarini Participations Internationales SA (100%)		100,00
Menarini Silicon Biosystems INC	Diagnostics	Menarini Silicon Biosystems SpA (100 %)		100,00
Relife France SASU	Pharmaceuticals	Menarini France SA (100%)		98,91
Stemline Therapeutics Inc., NY	Pharmaceuticals	Berlin-Chemie AG (100%)		100,00
Stemline Therapeutics BV	Pharmaceuticals	Stemline Inc., NY (100%)		100,00
Stemline Therapeutics Switzerland GmbH	Pharmaceuticals	Stemline Therapeutics BV (100%)		100,00

a) Other equity investments in subsidiaries and associated companies (Article 38, paragraph 2 lett. D)

COMPANY NAME	HEAD OFFICE	PAID-UP CAPITAL
1 Consorzio Depurazione Acque Reflue scrl	L'Aquila (AQ)	EUR 10.000
2 Capitank	L'Aquila	EUR 114.000
3 Menarini SA (Pty) Ltd	Bryanston (RSA)	ZAR 10.000
4 Turkiye Eczacilari Deposu A.S ,	Istanbul	TRY 50.000

COMPANY NAME	INDUSTRY	HELD THROUGH	OTHER SHAREHOLDERS INCLUDED	%
1 Consorzio Depurazione Acque Reflue scrl	Pharmaceuticals	A. Menarini Manufacturing, Logistics and Services srl (50 %)		50,00
2 Capitank	Pharmaceuticals	A. Menarini Manufacturing, Logistics and Services srl (26,88%)		26,88
3 Menarini SA (Pty) Ltd	Pharmaceuticals	A. Menarini Participations Internationales SA (51 %)		51,00
4 Turkiye Eczacilari Deposu A.S ,	Real Estate	Ulagaylar İlaç Sanayi ve Ticaret A.Ş. (15,81 %)		15,81

AUDITORS' REPORT

Independent auditor's report

In accordance with article 14 of Legislative Decree No. 39 of 27 January 2010

To the quotaholders of

A. Menarini Industrie Farmaceutiche Riunite Srl

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of A. Menarini Industrie Farmaceutiche Riunite (the Group), which comprise the balance sheet as of 31 December 2020, the income statement and statement of cash flows for the year then ended and related notes.

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as of 31 December 2020, and of the result of its operations and cash flows for the year then ended in accordance with the Italian laws governing the criteria for their preparation.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of this report. We are independent of A. Menarini Industrie Farmaceutiche Riunite Srl (the Company) pursuant to the regulations and standards on ethics and independence applicable to audits of financial statements under Italian law. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of the Directors and the Board of Statutory Auditors for the Consolidated Financial Statements

The directors are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with the Italian laws governing the criteria for their preparation and, in the terms prescribed by law, for such internal control as they determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

The directors are responsible for assessing the Group's ability to continue as a going concern and, in preparing the consolidated financial statements, for the appropriate application of the going concern basis of accounting, and for disclosing matters related to going concern. In preparing the consolidated financial statements, the directors use the going concern basis of accounting unless they either intend to liquidate A. Menarini Industrie Farmaceutiche Riunite Srl or to cease operations, or have no realistic alternative but to do so.

The board of statutory auditors is responsible for overseeing, in the terms prescribed by law, the Group's financial reporting process.

Auditor's responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (ISA Italia) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

As part of our audit conducted in accordance with International Standards on Auditing (ISA Italia), we exercised professional judgment and maintained professional scepticism throughout the audit. Furthermore:

•	We identified and assessed the risks of material misstatement of the consolidated financial statements, whether due to fraud or error; we designed and performed audit procedures responsive to those risks; we obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
•	We obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control;
•	We evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors;
•	We concluded on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern;
•	We evaluated the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
•	We obtained sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion on the consolidated financial statements.

We communicated with those charged with governance, identified at an appropriate level as required by ISA Italia regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identified during our audit.

Report on Compliance with other Laws and Regulations

Opinion in accordance with Article 14, paragraph 2, letter e), of Legislative Decree no. 39/2010

The directors of A. Menarini Industrie Farmaceutiche Riunite Srl are responsible for preparing a report on operations of the A. Menarini Industrie Farmaceutiche Riunite Group as of 31 December 2020, including its consistency with the relevant consolidated financial statements and its compliance with the law.

We have performed the procedures required under auditing standard (SA Italia) no. 720B in order to express an opinion on the consistency of the report on operations with the consolidated financial statements of the A. Menarini Industrie Farmaceutiche Riunite Group as of 31 December 2020 and on its compliance with the law, as well as to issue a statement on material misstatements, if any.

In our opinion, the report on operations is consistent with the consolidated financial statements of A. Menarini Industrie Farmaceutiche Riunite Group as of 31 December 2020 and is prepared in compliance with the law.

With reference to the statement referred to in article 14, paragraph 2, letter e), of Legislative Decree no. 39/2010, issued on the basis of our knowledge and understanding of the Company and its environment obtained in the course of the audit, we have nothing to report.

Florence, 28 October 2021

PricewaterhouseCoopers SpA

Rodrigue G. Schübelin, Partner

This report has been translated into English from the Italian original solely for the convenience of international readers

BERLIN-CHEMIE Aktiengesellschaft

Eigentümerstruktur