N a t i ona l H ea l th & Secu r i ty S t a te s tr a t egy Pha rma - 2020

1. NationalHealth& Security Statestrategy Pharma- 2020 Imports substitution Productionof High-Quality PharmaceuticalGlass Packaging InvestmentProject v 2.5 February2014

2. SummaryofInvestmentProposal DearSirs, wearebringingtoyourattentionanopportunitytoinvestinequityofaprojectcompanyVoronezhmedsteklo,whichwillbesetuptoorganizefirstinRussia andCISfull-cycleproductionofhigh-qualitypharmaceuticalglasspackaging,i.e.productionofborosilicate1st hydrolyticclass(hereafter1HC)tubularglass andsubsequentmanufacturingofmedicalglassproducts(ampoules,vials,cartridges)outofit. Thisinvestmentprojectisaimedatsubstitutionofexpensiveimportedproducts,thepriceofwhichbesideshigherproductioncostsincludeslossesdueto breakage during transportation(25%)and customsduty(15%).Itis expectedthatRussia’s consumption ofhigh-quality1 HCtubularglass products will increaseseveraltimesinthenext3-5yearsduetointroductionofmandatorycompliancewithGMPstandardsforpharmaceuticalproducersstartingfrom 2014aswellasdueto strategicstateprogramsupportingdomesticpharmaceuticalproducers“Pharma-2020”. Estimated required project financing is 3.3 billion rubles. The project assumes installation of two furnaces to produce borosilicate tubular glass with aggregatedcapacityof17,500tonsp.a.Itisplannedtocompletetheprojectin2stages:1st stage–constructionofplantbuildingsandthe1st furnacewith respectiveequipment(capexof2.0billionrubles),2nd stage–installationofthe2nd furnacewithrespectiveequipment(capexof1.0billionrubles),operating costsduringinvestmentperiodareestimatedat0.3billionrubles. Theprojectinitiatorsintendtotake2.3billionrublesbankloanandattract1.0billionrublesequityinvestmentinordertofinancebothprojectstages. This document shortly presents key project information. A more detailed Investment Memorandum with description of Russian medical tubular glass market,projectdetailsandfinancialforecasts(includingfinancialmodelinExcel) willbeprovidedonrequest. IfYouareinterestedinthisopportunity,please,contactthefinancialadvisoroftheprojectinitiatorsbythecontactslistedbelow.Wesuggesttoorganizean introductionmeetingwith theprojectinitiatorstopresenttheprojectanddiscussfurtherquestions. Sklyarov Sergey CEO JSCo “VRN-glass” Tel:+7(910)740-66-39; Email:sklyar24@yandex.ru InvestmentProject:ProductionofTubularGlassforPharmaceuticalPurposes

3. KeyInvestmentConsiderations • Currentlytherearenoproducersofhigh-quality1st hydrolyticclass(1st HC)medicalglasspackagingwithfullproductioncycle,i.e.producing both tubularglass andrespective productsoutofit,inRussiaandCIS • Demandfor1st HCmedicalglassiscurrentlysatisfiedbyimportedproducts,thepriceofwhichbesideshigherproductioncostsincludeslosses due to breakageduringtransportation(25%),customsduty(15%)andlogisticsexpenses • Demandforhigh-qualitymedicalglasspackagingwillincreaseseveraltimesduringthenext3-5yearsduetoplannedmandatoryadoptionof GMPstandardsbypharmaceuticalproducersstartingfrom2014andduetostateprogramofdomesticpharmaceuticalindustrydevelopment “Pharma- 2020” Attractivemarketniche (importsubstitution) withhighgrowth potential • On the federal level: this project is aimed at substitution of import, is in the framework of state strategy to develop highly technological domesticproductionandis essentialto fulfillmentofthestateprogramto supportdomesticpharmaceuticalmanufacturers (Pharma– 2020) • Ontheregionallevel:GovernmentoftheVoronezhregionisinterestedinlocationofthefutureproductioninindustrialpark“Maslovskiy”and isreadytoprovidealandplotforrent,freeconnectiontoelectricityandgasnetworksaswellastaxbenefits.Totalcostofresourcesprovided by governmentis estimatedat0.5 billion rubles. Strongsupportof the projectbythestateand regionalgovernment • Furnaces for production of glass will be constructed by Horn Glass Industries AG, which is amain industrial supplier of the leading global borosilicateglass producerSchott AG.Similarlevelproductionfacilitiesare non-existentin RussiaandCIS • The furnaces structure will be based on high-quality refractory blocks made of zirconium dioxide; glass melting process will be controlled automaticallybyelectronic systems • LocationattheselectedsiteinVoronezhregionwillprovideaccesstoenergyresourcesaswellasconvenientlogisticswithmajorconsumers (producersof medicinespackagedin ampoules andvials)andsuppliers(mainraw materialisquartzsand) Uniquemodern productionfacilities • Managementanddevelopmentofbusinessintheareaofpharmaceuticalcardboardpackagingformorethan10years,obvioussynergieswith production of medicalglass packaging • Establishedpersonalrelationshipswithmanagementofpharmaceuticalproducers,whoarepotentialbuyersofthemedicalglasspackaging (ampoules,vials) Motivatedand experiencedproject initiators • Itisexpectedthatalreadyinthe4th yearfromtheprojectstartrevenuewillreach2.5billionrubleswith64%marketshareinthesegmentof1st HCmedicalglass (in volume terms) • Expectedaveragegross marginduring10-yearforecast periodis 59%,EBITDAmargin– 56%,netprofitmargin–36% • PotentialEnterprise Valueisestimatedat9 billion rublesas ofendofthe 4th year Largeindustry player,high expected profitability • SaletoPEfund:anumberofRussianandforeignPrivateEquityfundsmightbeinterested inbuy-outof alargeindustryplayerwithhigh profitability indicators and unique for Russia modern production facilities. Potential candidates include 3i, Apax Partners, New Enterprise Associates,CapitalInternational,etc. • Sale to strategic investor:leading European producers (SchottAG, Gerresheimer AG)willbeinterested inacquisition of alarge Russian competitormanufacturing productsofcomparable quality Excellentexitprospects (3-5yearshorizon) InvestmentProject:ProductionofTubularGlassforPharmaceuticalPurposes

4. RussianPharmaceutical Market Russianpharmaceuticalmarket dynamics2004-2020F,billionrubles,in consumerprices includingVAT • Consumption of medical glass packaging is directly related to development of the pharmaceutical market, which will be strongly influencedbytherealizationofthestateStrategyondevelopmentof Russian pharmaceutical industry for the period till 2020 (Pharma- 2020)intheshortandmediumterm • According toPharma-2020, the pharmaceutical market should reach 400-500billionrublesby2011andin2020it shouldreach1-1.5trillion rubles,i.e.morethantriple • MajorgrowthdriversforthepharmaceuticalmarketbesidesPharma- 2020inthenext 10 yearswillbethefollowing: • Development of the additional pharmaceutical support program • Introduction ofvoluntarypharmaceuticalinsurance • Modernizationofthe hospitals’ pharmaceuticalsupply system • Increaseofpharmaceuticalconsumptionpercapita 1600 1400 1200 1000 800 600 400 200 0 1500 Forecast 1332,5 1185 1052,5 937,5 832,5 707 552 602 484 427 350 387 270 310 (DLO) 187,5 137,5 Source:StatestrategyondevelopmentoftheRussianpharmaceuticalindustryforthe periodtill 2020,asofOctober2009 Retail salesofdomestically producedmedicines, inbillionunits(packs) Structureofthe Russianpharmaceuticalmarketin2009,inUSDmillion 2,80 +8,3% 2,59 +5,4% Hospitalsegment LLO* 2,45 11800;75% 2008 2009 2010 Source:Pharmexpert * LLO–medicinesprovisiononbenefitbasis Source:Pharmexpert InvestmentProject:ProductionofTubularGlassforPharmaceuticalPurposes

5. Pharma-2020 • Thepurposeofthestatepolicy,describedinStrategyondevelopment of Russian pharmaceutical industry for the period till 2020, is to increasetheshareofdomesticpharmaceuticalproducersto25%by 2015andto50%by2020 • Governmentapprovedalistof57strategicallyimportantmedicines(to cure oncologic and cardiovascular diseases, hepatitis B and C,Gaucher’sdisease,multiplesclerosis),productionofwhichshould belaunchedontheterritoryofRussianFederationby2015.31outof thismedicines(54%)arepackagedinmedicalglass. • The program assumes financing in the amount of 177 620 million rubles(inpricesofFebruary2009)fortheperiodof2009-2020,part of which will be provided by the state as well as by Russian venture company,Rusnano,andVEB. • Among others, 36 billion rubles will be spent on support of GMP standards adoption, which will lead to tougher requirement toward medicalglasspackaging. • The Russian pharmaceutical industry will drastically toughen its requirementsto glasspackaginginthenearest future.New medicines moreoftenrequirepackagingoutofthe1st hydrolyticclass,whichis currentlynotproducedinRussia. • Thus,developmentofthepharmaceuticalindustryintheframeworkof theapprovedstatestrategywillleadto: • Overall increase of the potentially available market of medical glass packaging dueto increase ofdomesticpharmaceutical production; • Significantincreaseoftheshareof1st hydrolyticclasspackagingdue to enforcement of mandatory compliance of the Russian pharmaceuticalindustry with GMP standardsstartingfrom 2014. Marketsharesofdomestic andforeignproducers in2007andasplannedby theStrategy in2020 2007 2020 Foreign80% Domestic20% Original Foreign50% Domestic50% Original Generics Brandedgenerics Generics Brandedgenerics Source:StatestrategyondevelopmentoftheRussianpharmaceuticalindustryfortheperiod till2020,asofOctober2009 StructureofPharma-2020financingfundsby use 177 620 millionrubles Personnel educationand infrastructure 20% R&D 60% Adoptionof GMP 20% Source:StatestrategyondevelopmentoftheRussianpharmaceuticalindustryfortheperiod till2020,asofOctober2009 InvestmentProject:ProductionofTubularGlassforPharmaceuticalPurposes

6. MarketofMedical1st and2ndHCGlassPackaging • There isnoreliablestatisticsonthe marketofmedical tubularglass andampoules(becauseofthemistakesintheFederalStateStatistics Service’s data on medical tubular glass and because of the lack of statisticsdataonampoules) • Experts of the pharmaceutical market estimate total annual consumption of imported and domestically produced medicines packaged inampoules and vials at 6 billion units with the share of localproducersabout80% • This estimate in units is equivalent to 34.2 thousand tons assuming averageweightofanampouleat4gramsanda vial–at 14grams • Currentlyabout25%oftheampoulesandvialsmarket(8-9thousand tons)belongstothedomesticproducerTuimazysteklo.Thequalityof glass produced by Tuimazysteklo correspond to 2nd hydrolytic class andthusit is1,5-2lessexpensive comparedto1stHCglass. • Currently,theshareof1st HCmedicalglassaccountsfor15%ofthe ampoulesandvialsmarket. The market valuegiventhe current market structureintermsofvolumeisestimatedat4.0billionrubles(~$140 million) • It is expected that share of 1HC glass will increase to at least 70% afterenforcementofmandatoryGMPcompliancein2014,whichwill resultinincreaseofthetotalmarketvalueto5.6billionrubles(~$200 million) • Itisworthnotingthatcurrently1st HCmedicalglassisnotproducedin Russia. The project of Voronezhmedsteklo is aimed mainly at substitution of imported products due to offering of high quality medicalglasspackaging atthepricelowerthanimportand convenient logistics • Market share of Voronezhmedsteklo in the 4th year from the project start isexpected tobe64%of the1st HC segment and45%of thetotal vialsandampoulesmarket(1st and2nd HC) EstimatedRussianpotentialavailablemarketof 1stand2ndhydrolytic classin volumeterms 34.2 thousand tons 4,800 millionunits ampoules; 13,2 vials; 21 vials; 1500 ampoules; 3300 Source:expertestimatesofSagedimandRMG Projectedvolumeofthe Russian1st and2nd HC medicalglassmarekt(inmillion tons)andmarket shareofVoronezhmedsteklo (VMS),2011-2021 43,3 42,9 42,5 41,6 42,0 12,5 12,6 41,2 37,4 39,2 36,3 34,2 35,2 13,0 12,9 12,7 12,4 11,8 11,2 30,8 29,9 29,1 30,3 30,0 29,7 29,4 29,1 28,8 27,5 26,2 5,4 5,3 5,1 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 below1HC 1HC Source:expertestimatesofSagedimandRMG InvestmentProject:ProductionofTubularGlassforPharmaceuticalPurposes

7. ProjectTimeline • Theprojectassumesinstallationof2furnacestoproduceborosilicate tubularglasswith aggregatedcapacityof17,500tonsp.a. • It isplanned tocomplete theproject in2 stages: 1stage –construction of plant buildingsandthe1st furnacewithrespectiveequipment(capex of2.0billionrubles),2-ndstage–installationofthe2nd furnacewith respectiveequipment(capexof1.0billionrubles),currentinvestment costsareestimatedat0.3billionrubles. • According to HORN Glass Industries AG, it will take 24 months to manufacture and install a furnace starting from the receipt of contracted30%advancepayment • Thus, launch of production at the first furnace will take place in 24 monthsfromstartoffinancing,of thesecondfurnace-in36months • Itisplannedtomaximallysaveonconstructionofbuildingsbyusing modern fast-building technologies. Temporary roads, paved at first,willbelaterreconstructedintofundamental. • Theprojectcostswillbeadjustedatleast7timesintheperiodofits realizationinordertodecreasetotalcosts. Glass productionat 1st furnace 12 months Glass production at2nd furnaces Design 6months Constructionof buildings 12 months Installationoffirst furnace 12 months Installationofsecondfurnace 12 months 0 6 12 18 24 30 36 6months 6months 6months 6months 6months 6months Completion of construction Beginningof construction Launchof1stfurnace Launchof 2nd furnace Project start InvestmentProject:ProductionofTubularGlassforPharmaceuticalPurposes

8. Projected ProfitandLossStatement Voronezhmedsteklo ProjectedProfit andLossStatement In‘000rubles 1year 2year 3year 4year 5year 6year 7year 8year 9year 10 year Revenue Growth,% Administrativeexpenses %ofrevenue EBITDA EBITDAmargin,% Depreciation -- -- (121 867) (178 582) (178 582) (178 582) (178 582) (178 582) (178 582) (178 582) EBIT EBITmargin,% Net profitmargin,% - - 18% 30% 36% 42% 39% 40% 41% 41% InvestmentProject:ProductionofTubularGlassforPharmaceuticalPurposes

9. Brief summary 1. Implementation of this project will allow to solve the problem of supply of the Russian pharmaceutical market glass of the first hydrolytic class due to the appearance of Russian producers. 2. The project is supported by Ministry of industry and trade of Russia, Ministry of health of the Republic of Belarus , Association of Russian pharmaceutical Manufacturers 3. Project crediting is ready to undertake the Sberbank of Russia. 4. The plant will be picked and delivered «turn key» under a single contract with the direct participation of Hornglass ind. Ag as a General supplier. 5. Compliance of the quality of the glass of the first hydrolytic class ISO 3585 type 3.3 - will be the main result of the project.