Richter has reaffirmed its revenue expectations this year, not counting any further severe restrictive measures


The main points of the press conference:

  • Great steps have been taken with regard to the high value-added portfolio – CEO Gábor Orbán started the press conference. “This will improve results, stay on track” he added.
  • The first semester revenue exceeded both the average and maximum of analysts ’expectations. EPS went down, but that wasn’t a big surprise, you could expect that.
  • Commitments have been made in both gynecology and the central nervous system, with Drovelis a combined contraceptive licensed by the European Commission and Ryeqo in July. Ensuring the success of cariprazine on the central nervous system line has been a priority, with the entry of AbbVie that the product will also be able to be introduced in Japan and Taiwan.
  • Another important event of the quarter was the sale of its business interest in its wholesale and retail operations in Moldova. It is not a particularly interesting event in terms of profit and sales, but a step to sharpen the pharmaceutical manufacturing focus.
  • A HUF 70 billion bond issue took place on the second of June, and Richter tried to take advantage of the current favorable funding costs, which cannot be considered permanent in the light of the central bank’s austerity measures, said Gábor Orbán.
  • The increase in HUF was mainly due to the wholesale-retail segment, and to a lesser extent to pharmaceutical production: the pharmaceutical segment grew by less than 5 percent, while the wholesale-retail segment showed double-digit dynamics in the first half of the year.
  • It continued the rise of specialized products within the portfolio.
  • Among the products, Richter ‘s first self – manufactured biosimilar product, Terrosa showed great growth, now a big difficulty has arisen, competitors are starting to show up. Because of this, there is no need to rewrite the vision, this was to be expected. Gábor Orbán is still optimistic about Bemfola.
  • Richter experienced adverse effects on the Russian market due to the weakening of the ruble, and the revision of official prices also hit Russian market opportunities.
  • Richter had a negative impact on medical activities and did not return to normal in any region., so it was not possible to bring about the growth that could have been achieved in a covid-free period in the broad-portfolio market.
  • The aim was to increase R&D activity, and this happened, mainly in the three priority areas.
  • Regarding the annual expectation, Gábor Orbán said that expectations for the featured products have remained broadly unchanged, an increasing share of Evra’s turnover will go into Richter’s revenue as it enters herd books, and could be complete next year. Reagila’s sales this year may be slightly lower than previously forecast based on the first half of the year, with numbers remaining for other products. Gábor Orbán confirmed the consolidated sales growth target of 5% in euros. Gross margin may come down a little further, to 55.5 percent and 19 percent operating profit is likely for the full year after management’s 20.5 percent in the first half. Sales and marketing activity were subdued, which the company would raise, which is expected to increase costs, which will worsen the profit rate. Nevertheless, nIt is not possible for the company to bring last year’s operating profit value in HUF terms – said Gábor Orbán.
  • Gábor Orbán, in connection with the fact that inflation affects the company, said that Richter has a big role to play in whether the weakening of the forint can compensate for inflation. This year he didn’t know inflation is bad for Richter. Drug prices have been stable or declining since 2007, in addition, government measures also have costs, taking into account erosion over 50 percent in real terms over the past 14 years, taking into account inflation. This is felt strongly in gross margin, and the company does not get good prices for new products either, said Erik Bogsch, president of Richter. Innovation takes place entirely in the US, only in the European market there is no return on R&D costs. There was an 8-10 percent price increase in the U.S. on an annual basis, he added.
  • Regarding supplier capacities, Gábor Orbán said that the vertical business model helped, but Richter did not have everything. The bottles ran out, for example, when demand changed due to vaccine production. There were also difficulties in the price and availability of construction raw materials, in the field of transportation, although a lot had to be developed in our own processes so that the costs did not break with the realities.
  • The company has passed the epidemic management so far, Richter does not envisage further restrictive measures – said Gábor Orbán. A downside risk from the forecasts is a possible severe fourth coronavirus wave, which is not currently included in the business plans, added Zsuzsa Beke, head of government relations and public relations at Richter.

Richter’s share price rose 0.8 percent in trading this morning after the quick report, outperforming the Hungarian market, while the BUX index is currently up 0.4 percent.

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Source: Portfolio.hu – Üzlet by www.portfolio.hu.

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