RNS Number:0541G
Goldshield Group PLC
10 January 2003


For Immediate Release                                            10 January 2003


                              Goldshield Group plc

                        ("Goldshield" or "the Company")

                  Claim from The Secretary of State for Health

On 21 December 2002, Goldshield Group plc announced that it had received a claim
for damages from The Secretary of State for Health and certain other claimants
arising from the sale and supply of the anticoagulant drug Warfarin between 1996
and 2000.  The claim alleges that Goldshield and certain other parties had been
involved in anti-competitive behaviour resulting in the National Health Service
("NHS") paying an excess aggregate reimbursement cost for Warfarin during this
period.

Goldshield has now had an opportunity to consider the court papers received from
The Secretary of State for Health and the Board of Directors wish to place the
following information on record:

*    Between 1996 and 2000, the period during which the alleged anti-competitive 
     behaviour took place, Goldshield Pharmaceuticals Limited (a wholly owned 
     subsidiary of the Company) sold its product Marevan, the "branded" 
     formulation of Warfarin which the Goldshield Group originally acquired  in 
     1992.

*    The pricing of branded pharmaceutical products, such as Marevan, was at the 
     relevant time carried out under the Department of Health's Prescription 
     Pricing Regulation Scheme (PPRS).  The effect of the PPRS was to control a 
     supplying company's profits made on products sold directly to the NHS 
     rather than controlling the price of an individual product.  Profit was
     measured by reference to the return on the capital employed and if certain
     thresholds were exceeded, then the difference was refunded to the 
     Department of Health by cash payment or by appropriate price reductions.

*    The Goldshield Group increased its price for Marevan in 1997 with the 
     knowledge of the Department of Health PPRS branch and the Directors
     believe this increase was within the allowable margins under the PPRS. So 
     far as the Directors are aware, this price increase has never previously 
     been questioned or challenged by the Department of Health. There has been 
     no increase in the price at which the Goldshield Group supplied Marevan 
     between 1997 and 2000 other than to take account of the introduction of  
     patient "blister" packs in 1999, the prices of which were set within the 
     PPRS and notified to the Department of Health.

*    The Goldshield Group first introduced a non-branded or "generic" 
     formulation of Warfarin in April 2000.  The Goldshield Group applied to 
     obtain product licences for the sale of generic Warfarin during the course 
     of 1997.  These licences were granted in the latter part of 1998 but 
     because of changes required to the licences before a product could be 
     appropriately marketed, the Goldshield Group made an application to the 
     Medicines Control Agency ("MCA")  for these licences to be modified.  Final 
     approvals to enable the Goldshield Group to market and sell a generic 
     Warfarin product were issued during the last quarter of 1999.  As a 
     consequence, Goldshield was unable to launch its own generic Warfarin 
     product until April 2000.

*    The re-imbursement cost to the NHS is based on a "Drug Tariff" which, for 
     generic products, is calculated by reference to a weighted average of list 
     prices from three manufacturing companies and two mainline wholesalers of 
     the product. Goldshield Group prices for Marevan have not been used for the 
     calculation of the drug tariff for generic Warfarin products nor have the 
     Goldshield Group's  prices for its own generic Warfarin product launched in 
     April 2000 been used for the calculation of the drug tariff for generic 
     Warfarin. These re-imbursement costs are not the same as the "ex factory" 
     prices charged to the wholesaler or a pharmacy which dispenses the products 
     on behalf of the NHS. For example during the last six months of 2002, 
     according to Goldshield's internal records, the average price charged by 
     the Goldshield Group for generic Warfarin 1mg was approximately 1.5 pence 
     per tablet compared to a NHS Drug Tariff price of approximately 5.0 pence 
     per tablet.

*    The Drug Tariff prices of many generics, including that of Warfarin 
     increased during the course of 1999 and remained high until mid 2000. The 
     Directors believe that this increase can be explained by a combination of
     factors including:

     -    the withdrawal by the MCA of the manufacturing licence held by
          Regent GM Laboratories Limited ("Regent") causing Regent to leave the 
          generic pharmaceuticals market in December 1998 and with a resulting 
          shortage of supply;

     -    Norton Healthcare Limited ("Norton") and APS/Berk, both manufacturers 
          of Warfarin, transferring their facilities outside of the UK which had 
          a  temporary effect on supply; and

     -    the requirement in January 1999 for generic manufacturers to supply
          patient "blister" packs of Warfarin as opposed to the previous bulk 
          supply of tablets in containers with an associated impact on the cost 
          of implementation.

     These factors, were identified in July 2001 in a report by OXERA Consulting
     Limited for the Department of Health, which indicated that it was the 
     Department of Health's own view that the initial problems in the generics 
     industry arose from these "supply shocks".  OXERA was commissioned by the 
     Department of Health to undertake a fundamental review of the supply and 
     distribution of generic medicines.

*    During 1997, Goldshield initiated the development of a number of new 
     formulations of Warfarin as part of its business development programme.
     Towards the end of that year Goldshield contacted all of the then product
     licence-holders of generic Warfarin with a proposal to licence its know-how
     relating to its current and future formulations of Warfarin.  This approach 
     led to the conclusion of separate commercial agreements in the first half 
     of 1998 with Regent and Norton for the licensing of Goldshield's Warfarin 
     formulations. Regent terminated its agreement in January 1999 following the 
     withdrawal of its licences by the MCA and its departure from the generic 
     pharmaceutical market and Norton terminated its agreement in November 1999.

*    The Directors do not believe that the Goldshield Group has at any time 
     sought to improperly or artificially reduce or constrain the supply of its 
     Warfarin-based products to the UK market.

*    During the period 1st January 1996 and 31st December 2000
     Goldshield's Pharmaceutical Division made total sales to the National 
     Health Service of approximately #6.9 million of Warfarin-based 
     pharmaceuticals (based on the Company's internal financial records) 
     comprising both sales of Marevan and, from April 2000, generic Warfarin.  
     Sales of Marevan accounted for #4.8 million of this total.

The Company takes the allegations made by the Secretary of State for Health
extremely seriously and intends to defend the Court proceedings vigorously on
the basis that it does not believe that it has acted improperly.  The Directors
believe that the claim by the Department of Health does not take the above
matters into account. The Goldshield Group has never been asked by the
Department of Health to give any explanation in relation to the allegations or
to provide any of the above information prior to the launch of the Court
proceedings, which the Directors find extraordinary.

The Company does not intend to comment further on the Court proceedings which,
it has been advised, may take many months to reach a conclusion.

ENDS

For further information, please call :

Buchanan Communications
Louise Bolton                                                 Tel: 07771 788 116


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