Comment by the Board of Directors of Q-Med in relation to the year-end report published today
In relation to the public offer (the "Offer") to the shareholders of Q-Med AB (publ) ("Q-Med") made by Galderma Holding AB, a company wholly-owned by Galderma Pharma S.A., ("Galderma") and the year-end report for 2010 published by Q-Med today, the Board of Directors of Q-Med (the "Board") has deemed it appropriate to comment and update the shareholders on Q-Med's estimated conditions for growth and profitability. The purpose is to provide the shareholders with information that is as up-to-date and relevant as possible prior to the shareholders' decision regarding the Offer. The last day of the acceptance period of the Offer is 7 February 2011.
With reference to the year-end report for 2010 it can be stated that Q-Med shows a fourth quarter with good underlying profitability, mainly due to strong market growth within Esthetics in Asia and Rest of World as well as deliveries to Q-Med's partner in North America. This information was partly known by the Board on 13 December 2010 in connection with the Board's decision to recommend the shareholders to accept the Offer by Galderma.
In connection with the interim report for the third quarter 2010, Q-Med informed that the company sees increased competition for Restylane®, mainly in Europe and Latin America. A recent and very tangible example is that Galderma in January 2011 launched a range of nine different fillers based on hyaluronic acid under the name EMERVEL for the European and Latin American market.
The increasing competition is natural. More players are attracted to this still relatively young and growing market as there are opportunities for profitable growth. The trend towards increasing competition from strong players with broad product portfolios will continue. Q-Med is a leading company on the esthetics market and in the Board's opinion the company needs to make increasingly large market investments in the coming years in order to try to sustain and increase the current market shares for products within the Restylane product family. This will result in higher costs for marketing, sales organization and product development relative to Q-Med's sales. Consequently, these efforts will negatively affect the profitability within product area Esthetics in the next few years. The Board's and the company's assessment is that the operating margin during these years will not be improved but rather be below the 2010 operating margin adjusted for items affecting comparability.
Q-Med AB is a medical device company that develops, manufactures, markets, and sells high quality medical implants for esthetic and medical use. The majority of the products are based on the company's patented technology, NASHA(TM), for the production of stabilized non-animal hyaluronic acid. The product portfolio today contains: Restylane® for filling lines and folds, contouring and creating volume in the face, Macrolane(TM) for body contouring, Durolane(TM) for the treatment of osteoarthritis of the hip and knee joints, Deflux® for the treatment of vesicoureteral reflux, VUR, (a malformation of the urinary bladder) in children, and Solesta® for the treatment of fecal incontinence. Sales are made through the company's own subsidiaries or distributors in over 70 countries. Q-Med today has about 650 coworkers, with almost 400 at the company's head office and production facility in Uppsala, Sweden. Q-Med AB is listed in the Mid Cap segment of the NASDAQ OMX Nordic.
Q-Med AB (publ), Seminariegatan 21, SE-752 28 Uppsala, Sweden. Corporate identity number 556258-6882.
The Board has previously announced its unanimous support for the Offer and recommended the shareholders to accept Galderma's Offer. Based on the above, the Board maintains its assessment that it is in the interest of the shareholders to accept the Offer.
This statement shall in all respects be governed by and construed in accordance with substantive Swedish law. Disputes arising from this statement shall be settled exclusively by Swedish courts.
Uppsala January 31, 2011
Q-Med AB (publ)
The Board of Directors
Queries should be addressed to:
Anders Milton, Chairman of the Bid Committee and Director of the Board
Tel: +46 (0) 70-526 46 02
Q-Med provides the information in this release in accordance with the Swedish Securities Market Act and/or the Financial Instruments Trading Act. The information was submitted for disclosure at 7.30 a.m. on January 31, 2011.
 In view of the undertaking from Lyftet Holding B.V. to Galderma to accept the Offer, Bengt Ågerup has not participated in the Board's dealings with matters relating to the Offer or in this statement.
 The Bid Committee, which has been established by the Board, consists of the directors of the Board Anders Milton, Bertil Hult and Ulf Mattsson.