Jo Langmoen President & CEO

This financial year we experienced the effects of the actions to cut pharmaceutical spending in full. Patent expiries, generic substitution schemes and intensified generic competition impacted sales volumes heavily in all the Nordic countries, especially in Sweden. In this area, we witnessed an average growth of roughly 5% this calendar year. During the last quarter, average growth rates plunged below 4%. The gap to the 8-10 % growth levels from the beginning of this millenium is significant. Delayed introductions of new innovative medicines have contributed to this limited growth rate.

Despite the slow markets, Tamro was again able to improve its result from the previous year. Tamro Group’s pre-tax profit in 2004/2005 rose to EUR 89 million. This financial year was extended to thirteen months (1.1.2004 – 31.1.2005) to match the accounting year of Tamro’s parent company PHOENIX Pharmahandel AG&Co KG.

Tamro as a subsidiary of PHOENIX Group

The changes in Tamro’s ownership in 2003 led to the delisting of Tamro’s share from Helsinki Stock Exchange 10 May 2004. The redemption process of all shares and warrants was completed, when PHOENIX International Beteiligungs GmbH paid the redemption price to the minority shareholders according to the the arbitral award dated 7 July.

Tamro’s new position as a subsidiary of the PHOENIX Group has been welcomed amongst our stakeholders. Tamro’s operational structure and position in its own business in the Nordic countries and the Baltic States remains unchanged, but Tamro is now more free to use this access to the expertise and resources of Europe’s second largest pharmaceutical distributor, and vice versa.

The continuous benchmarking of the performance indicators and the transfer of best practice across countries supports the positive development of local business units, which translates into concrete benefits for our customers.

Our market share since the change in ownership has continued to develop favourably, our average market of the Nordic wholesale markets has increased to 51%, up 3.5 percentage points from the previous year.

Search for continuous improvement

Tamro is working continuously to improve its market position and enhance profitability in all its business units. The logistics chain of products and services from industry to pharmacies and consumers is becoming increasingly demanding, and any wholesaler has to constantly adjust to the changing market situation to stay competitive. Sometimes, unfortunately, streamlining of operations involves cuts in workforce, as we saw March 2004 in Sweden and October 2004 in Finland.

We are very committed to provide our customers with the best service in our industry. This is why we listen to our customer’s needs and develop solutions to meet them. The Demand Chain Replenishment (DCR) -project in Norway is a fresh example, where we aim to free pharmacy staff’s time from logistical routines to customer service. As a result, Apokjeden’s supply chain becomes more efficient, while the customer enjoys better service. Our information systems are being developed to provide further insight into pharmaceutical sales in each of our operating country. Many of our business partners are international companies, which value a single point of access to sales and logistical data that encompass regions as well as single countries and pharmacies.

Thanks to our employees and business partners

I would like to thank both our employees and our business partners for their contribution to the successful year that Tamro had in 2004/2005, as reported in this Annual Web Report. The Group result reflects the performance of our individual business units, which in 2004 again showed improving performance compared to previous years. The most significant financial improvement was achieved in Norway and Finland.

Outlook for the future

Tamro starts the year 2005/2006 with modest expectations for market growth. Cost containment plans in Norway, Sweden and Finland are likely to impact our sales. Maintaining and developing our competitiveness and profitability in the future will mainly come from cost reduction. While many challenges lay ahead, we will continue to work hard to develop customer satisfaction and maintain cost leadership.