NRF January2005

State of Global Retailing: 

State of Global Retailing A Closer Look at Russia Artem Bektemirov, CEO Pharmacy Chain 36.6 NRF Annual Meeting 16 January 2005

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Soviet-Style Retailing

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Retailing Today

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Shopping at Apteka 36.6

RUSSIA: #1 EMERGING RETAIL GROWTH MARKET: 

RUSSIA: #1 EMERGING RETAIL GROWTH MARKET A.T. Kearney’s 2004 Global Retail Development Index

WHY RUSSIA IS #1 RETAIL GROWTH MARKET: 

Market Growth: 10% annual growth in the next 5 years. Already one of the 10 largest retail markets in the world. Strong Economy: Driven by strong trade balance, growth in productivity and investment, and fiscal responsibility. Market Opportunities: With rising incomes, consumers seek greater quality and choice offered by modern formats. Government Support: Relatively liberal policies in consumer economy balance traditional hurdles. Strong Local Players Emerging: Russia retailers now emerging with operating efficiencies comparable to international benchmarks. WHY RUSSIA IS #1 RETAIL GROWTH MARKET

RUSSIA’S TWO ECONOMIES: 

RUSSIA’S TWO ECONOMIES

RUSSIA’S RETAIL MARKET:$170 BILLION AND GROWING: 

Real growth of consumer income and retail turnover % y-o-y Source: State statistic committee, IRG estimations 6-Year Annual Average: Retail: 9.1% Income: 10.3% RUSSIA’S RETAIL MARKET: $170 BILLION AND GROWING

RETAIL MARKET SEGMENTS: 

Source: GKS, UFG, Euromonitor RETAIL MARKET SEGMENTS Annual Forecast Growth 2004-2010* Electronics 15% DIY 14% Food 12% Cosmetics 11% Pharmaceuticals 9% *nominal USD, CAGR Pharmaceuticals

RUSSIAN RETAIL MARKETREMAINS FRAGMENTED: 

5% Food 36% Electronics 9% DIY 6% Pharmaceuticals Source: UFG Research Top-5 Players’ Marketshare RUSSIAN RETAIL MARKET REMAINS FRAGMENTED Food: Metro Electronics: Eldorado Pharmaceuticals: 36.6 DIY: Starik Hottabych Top Russian Retailers

FOOD RETAIL: RUSSIA vs. INTERNATIONAL: 

Sales per Square Meter (2002) USD FOOD RETAIL: RUSSIA vs. INTERNATIONAL

PHARMACY RETAIL CHAINS: RUSSIA vs. INTERNATIONAL: 

Sales per Square Meter (2003) USD PHARMACY RETAIL CHAINS: RUSSIA vs. INTERNATIONAL

RUSSIAN RETAIL: FUTURE TRENDS: 

RUSSIAN RETAIL: FUTURE TRENDS New Formats: New and different formats (DIY, convenience stores). Consolidation: Small chains bought by larger retailers. Regional Expansion: Cities with population +1 million. Foreign Retailers: Continued expansion over next 2 - 3 years. Large Format Retail: Trade centers and hypermarkets.

RUSSIAN RETAIL: MAIN BARRIERS: 

RUSSIAN RETAIL: MAIN BARRIERS Capital: Lack of investments for domestic retail chain development. Consumer Income: Low income of Russian population outside Moscow. Real Estate Shortage/Prices: Lack of space and high rental and purchase prices. Competition: Particularly with unorganized trade and open markets. Bureaucracy & Red Tape.

PHARMACEUTICAL MARKET FORECAST: 

Source: Pharmexpert, RMBC, DSM, 36.6 Moscow Regions Russia 3,671 4,038 4,442 4,886 5,375 5,805 6,269 2003-2009 CAGR* Russia 9.3% Regions 10% Moscow 5.8% *Compound Annual Growth Rate USD Millions PHARMACEUTICAL MARKET FORECAST

PARA-PHARMACEUTICAL MARKET FORECAST: 

* Includes medical devices (blood pressure meters, thermometers, glucometers, etc.), first aid (adhesive bandages, wound care materials, etc.), patient care products, specialty hosiery and support products. Source: Euromonitor, Pharmexpert, Supplier data, Internal estimates Dietary supplements Other* Total PPh 343 399 477 566 667 783 911 2003-2009 CAGR Total PPh 18% Other 20% Supplements 15.8% USD Millions PARA-PHARMACEUTICAL MARKET FORECAST

COSMETICS AND TOILETRIES MARKET FORECAST: 

Sources: AIPM/RMBC, UFG, GKS, Euromonitor GROWTH Y-o-Y, % MARKET USD billions COSMETICS AND TOILETRIES MARKET FORECAST Diapers 16.1% Sanitary Protection 15.5% Skin Care 14.6% Fastest Growing % CAGR (2003-2008)

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Pharmacy Chain 36.6 Russia’s Leading Health and Beauty Retailer

36.6 AT A GLANCE: 

sales in 2003. EBITDA was 9.3% in 2003. market capitalization. 20% of shares placed in 2003 IPO. topline annual growth: 30% in retail, 20% in manufacturing. in 7 Russian regions. purchases in 4th quarter 2004. in the generic portfolio of Veropharm. skilled personnel and experienced management team. 250 pharmacies 145 million 25% 290 products 6000 employees 147.8 million 7.3 million 36.6 AT A GLANCE

36.6 EXPANSION: 

250 pharmacies 7 regions 30 million customers 36.6 EXPANSION

36.6 IS RUSSIA’S MOST RECOGNIZABLE BRAND: 

Source: Gallup Media Survey, 2003 Also leads in: attendance 49% purchases 40% 36.6 IS RUSSIA’S MOST RECOGNIZABLE BRAND

CUSTOMER VALUE PROPOSITION: 

We strive to increase the value of the company by providing our customers with a reason to come back. CUSTOMER VALUE PROPOSITION Convenient locations. Reliable quality products. Excellent shopping experience. Wide assortment. Competitive prices.

36.6 TODAY & TOMORROW: 

By 2008: $800 million in sales 10% of market 60 million customers 36.6 TODAY & TOMORROW 0 5 0 1 0 0 1 5 0 2 0 0 2 5 0 3 0 0 $55 $76 $45 $45 $39 STORES 2003 SALES 2003 USD millions 36.6 o3 rigla first aid natur produkt

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Address: 105082 Moscow, 36 Bolshaya Pochtovaya str. Tel.: +7 (095) 792-5207 Fax: +7 (095) 792-5206 E-mail: info@oao366.ru www.pharmacychain366.com