Proprietary research activities are focused exclusively on compounds for the diseases of the central nervous system (CNS), primarily on schizophrenia, mania, depression, anxiety and chronic pain. The Company has a portfolio of 18 ongoing projects, of which two are in clinical phase II trials and three are in clinical phase I. The remainder are in the preclinical phase. At the end of 2008 the clinical portfolio was the following:

Positive results of Phase II clinical trials of RGH-188 in the indication of bipolar mania were published during 2008. The ongoing Phase II/b trials of the same compound for shcizophrenia are expected to be completed in the second half of 2009.

Following the gradual restructuring between 1998 and 2004 of our research activities targeting NCEs and a comprehensive modernisation of our technical infrastructure and laboratories, it can be confidently stated that the Company has established the most up to date research centre in the region. Based on our long term almost 50 year experience in the area of classical fermentation, combined with molecular biological knowledge, a strategic decision was made by the management in 2006 to start recombinant biotechnological activities at the Company. In order to make a great step forward Gedeon Richter Plc. jointly with Helm AG acquired the Hamburg based Strathmann Biotec GmbH, a highly experienced company in the field of development and manufacturing microbial proteins. The acquired company with 80 employees possesses an R&D laboratory, a pilot plant and a manufacturing unit, all of which meet the highest quality standards. In addition, construction of a biotechnology pilot plant in Budapest also started during 2007 and is expected to be operational in 2009. Meanwhile a greenfield investment has commenced in Debrecen which incorporates the building of a manufacturing unit for mammalian cell product development. According to construction plans this unit is expected to start its operations during 2012.

The Company considers it essential to establish partnerships to facilitate the development and marketing of new molecules. We join forces with academic and university institutions in the early phase of our research activities, while we make efforts to establish cooperation with other pharmaceutical companies when it comes to development of molecules in clinical phases. In this regard partnerships with the US-based Forest Laboratories and with the Japanese Mitsubishi-Tanabe Pharmaceuticals have contributed substantially to the Company’s research activity. In particular Richter’s experience in preclinical trials has complemented well with Forest’s experience in clinical trials.

Development work in several therapeutic areas continued in 2008 at the Parent company and at its two subsidiaries in Poland and Romania, all of which is coordinated by the Director of Development of Richter. The Group’s target is to launch 5-7 new generic and branded generic products per year on its traditional markets, i.e. Hungary, CEE and CIS. Licensing-in activity increasingly contributes to the continuous development of the Group’s product portfolio. Process development activities and bioequivalence studies on several active pharmaceutical ingredients and finished products continued so as to create opportunities for further product introductions in the USA and EU markets.

As a result of the Group’s development activity we successfully enhanced during 2008 our female healthcare product portfolio. In addition, the Company launched a number of licensed-in products on its various markets during the year.

The Group reported in 2008 a slight 1.9 percent increase in its spending on research and development which totalled HUF 18,402 million (EUR 73.2 million), representing 7.8 percent of consolidated sales.