OREANDA-NEWS. Pharmstandard OJSC (the “Company”) announces that it is considering a spin-off of the Company's branded over-the-counter business (“Branded OTC”) into a separate legal entity (“NewCo”).

As a result of the proposed spin-off NewCo would operate the Branded OTC business and thereby would:

• control 27 actively developed OTC brands;

• be present in the key therapeutic categories of the Russian market; and

• be supported by a fully-fledged sales and marketing team.

In the course of the last several years the Company has significantly diversified its business within the Russian pharmaceutical market and has moved away from being solely focused on the OTC market. For the year ended December 31, 2012, approximately 71% of the total revenues of the Company were derived from sales of third-party pharmaceutical products, prescription pharmaceuticals and medical equipment and from other activities.

The Company's management sees a potential strategic benefit in the spin-off because operating the Branded OTC business separately may be more efficient and a separate listing of NewCo may attract additional investor interest so that the combined value of Pharmstandard and NewCo may increase. The Branded OTC business will have a separate experienced management team led by Olga Mednikova, presently Head of Marketing at Pharmstandard.

Revenues for the Branded OTC business reached approximately RUR12.7 billion in the year ended December 31, 2012, comprising approximately 25% of the Company's total revenues for the same period.

An EGM to approve the spin-off is scheduled to take place on September 27, 2013.

The Company's management expects that The Bank of New York Mellon, as depositary (“BNYM”), will shortly be seeking instructions from GDR holders as to how to vote the shares underlying their GDRs at the EGM.

If the spin-off is approved at the EGM, the shares of NewCo will, on the date of the registration of the new shares of NewCo, be proportionally distributed to all shareholders, subject to compliance with applicable securities laws.

Furthermore, if the spin-off is approved at the EGM, shareholders who voted against the spin-off will have the option to sell their shares in the Company to the Company. GDR holders who instructed BNYM to vote the shares underlying their GDRs against the spin-off will have the option of selling such shares to the Company via BNYM. The Company expects the price to be set at RUR2,180 per ordinary share of the Company. In accordance with Russian law, the Company's obligation to buy shares from shareholders and GDR holders via BNYM is limited to the value of 10% of the net assets of the Company as at the date of the reoganisation (such value is currently expected to be approximately RUR 5 billion). Requests to purchase the Company's shares will be pro-rated in the event that the value of all purchase requests exceeds the 10% figure. Pharmstandard wishes to preserve the rights of GDR holders to the highest extent possible, so that GDR holders would have an opportunity to sell the shares underlying their GDRs to JSC Pharmstandard following a “no” vote by them, subject to payment of applicable fees, taxes and expenses. Therefore, Pharmstandard is prepared to instruct BNYM accordingly.

If the spin-off is approved and once NewCo has been formed, NewCo is expected to consider establishing a separate Newco GDR program in which new GDRs would be issued representing the shares of NewCo distributed to BNYM on behalf of the Company's existing GDR holders. The establishment of a Newco GDR program is subject to certain commercial considerations and the necessary corporate and regulatory approvals in Russia. In addition, GDRs representing NewCo shares would be distributed only to GDR holders that provided certifications to establish that the distribution could be made to them in accordance with applicable securities laws and would be subject to the payment of applicable fees, expenses and taxes. In the event that a NewCo GDR program is not established, or to the extent that GDR holders did not establish their eligibility to receive GDRs representing NewCo shares, it is likely that BNYM would sell the relevant NewCo shares and distribute the net proceeds, after deduction of applicable fees, expenses and taxes, to the GDR holders entitled to those proceeds. Whether or not a Newco GDR facility is established, the Company may give GDR holders an opportunity to elect to receive NewCo ordinary shares instead of the net proceeds from their sale, subject to the payment of applicable fees, expenses and taxes. However, NewCo ordinary shares would be distributed only to GDR holders that had provided certifications to establish that the distribution could be made to them in accordance with applicable securities laws and that had established Russian securities accounts to which those NewCo shares could be delivered.

NewCo plans to list its shares on MICEX/RTS. If NewCo establishes a GDR program, the GDRs will be unlisted.

The Company expects any spin-off of the Branded OTC business to be completed by the end of 2013.