Richter GroupH1 2014
Richter Group
Interim Report, H1 2014 31 July 2014
Summary – H1 2014H1 2014
Summary H1 2014
Consolidated sales: -5.3% (EUR), -1.7% (HUF)− significant sales decline in Russia in Ukraine and in Polandsignificant sales decline in Russia, in Ukraine and in Poland− currency devaluation+ good growth in EU15 countries, in other CIS region and in the USA
Profit for the period*: -21.9% (EUR), -18.9% (HUF)p ( ), ( )− negative balance of Other income and expenses − weakening EURRUB exchange rate+ net financial income – significant profit+ net financial income significant profit
22
*Net income attributable to owners of the parent
Consolidated financial highlightsH1 2014
Consolidated financial highlights
HUF Change EUR Changeg g
Total revenues 174.9bn -1.7% 569.4m -5.3%
P fit fProfit from operations 19.1bn -36.4% 62.0m -38.8%
Profit for the period* 23 2bn -18 9% 75 4m -21 9%Profit for the period 23.2bn -18.9% 75.4m -21.9%
EPS (diluted) 124 -18.9% 0.40 -21.9%
*Net income attributable to owners of the parent
3
Geographical composition of Group salesH1 2014
Geographical composition of Group sales
Hungary Hungary
Russia PolandRussia
Poland10%
6%29%
11%
5%23%
H1 2013 H1 2014Romania Romania
Ukraine12% 13%
5%
EU10*
EU15Other CIS
Ukraine
R W**
EU10*Other CIS
RoW**
8 %
6%
10%
7%
4% 3%2%3% 3 %
10%
13%
7%
4% 4%2%
EU15USA
RoW**China EU15
USALatin America
T t l T t l
China
%2%Latin America
4%
*Including Croatia
Total: HUF 177.9bnEUR 601.1m
Total: HUF 174.9bnEUR 569.4m
- 1.7% (HUF) - 5.3% (EUR)
44
Including Croatia
**Restated in respect to exclude Latin America.
P&LH1 2014
P&L
HUFmH1 2014
Change %
EURmH1 2014
Change %
as % of total revenues
Total revenues 174,907 -1.7 569.4 -5.3
Gross profit 107,032 -5.9 348.4 -9.3 61.2
S&M expenses (52,728) -4.9 (171.7) -8.4 30.2
A&G expenses (9,501) -1.2 (30.9) -4.9 5.4
R&D expenses (22,717) 9.4 (73.9) 5.3 13.0
Other income and other expenses (3,035) n.a. (9.9) n.a. 1.7
Profit from operations 19,051 -36.4 62.0 -38.8 10.9
Net financial income 3,870 758.1 12.6 740.0 2.2
Profit for the period* 23,158 -18.9 75.4 -21.9 13.2
*Profit attributable to owners of the parent
5
Decreasing gross profit, gross marginH1 2014
Decreasing gross profit, gross margin
60%250 000
- Significant sales decline in Russia and in UkraineWeakening EURRUB
HUFm61.2%
63.9%
40%
50%
60%
150 000
200 000
- Weakening EURRUB exchange rate
- Increasing proportion of
10%
20%
30%
50 000
100 000wholesale and retail segment
+ Devaluation of HUF0%0
2007 2008 2009 2010 2011 2012 2013 13H1 14H1
Gross profit Gross margin
Devaluation of HUFcompared to EUR
+ Increase of turnover in EU15 countries in other CIS regioncountries, in other CIS regionand in the USA
6
Decreasing operating marginH1 2014
Decreasing operating margin
25%70000
HUFm
Decreasing gross margin
Negative balance of Other
15%
20%
40000
50000
60000
10.9%
16.8%
gincome and expenses incurred − claw back related liabilities− lack of milestone incomes
5%
10%
10000
20000
30000
lack of milestone incomes
Increasing R&D expenditures
0%02007 2008 2009 2010 2011 2012 2013 13H1 14H1
Profit from operation Operating margin
Decreasing sales and marketing expenses
7
Pharmaceutical sales*H1 2014
Pharmaceutical sales
Key drivers of growth:
EU15 countries, other CIS and USA
Female healthcare
Successful product launches
*88% of turnover originates from outside of Hungary
8
g g y
8
HungaryH1 2014
Hungary
Turnover *
Stable pharmaceutical marketHUFbn
30
40Sales increase: 5.4% in HUFHUFbn
10
20Success of products launched in recent years
02008 2009 2010 2011 2012 2013 13H1 14H1
*Turnover of the pharmaceutical segment
9
EU – composition of sales*H1 2014
EU composition of sales
Traditional EU member states
46%
− strengthening our position in key Western-European markets
− own gynaecological sales and marketing network
54%
Poland, Romania, EU10**
− well established in the region for decades
− own specialized sales network*Turnover of the pharmaceutical segment p** Including Croatia
10
EU15H1 2014
EU15
Turnover*
26.7% sales increase in EUR EURm
100
120
140
Turnover
Recently established S&M network
EURm
40
60
80
Female healthcare products: Richter OC portfolio, acquired
0
20
2008 2009 2010 2011 2012 2013 13H1 14H1
p , qOCs, Esmya®
*Turnover of the pharmaceutical segment
11
Poland, Romania, EU10H1 2014
Poland, Romania, EU10
Increasing generic competition
Turnover*
Increasing generic competition
Price erosionEUR
150
200
Turnover
Poland: – 25.0% decline in PLN
EURm
50
100– lack of flu epidemic –Groprinosin sales decrease
– parallel import (OCs, EC, 0
2008 2009 2010 2011 2012 2013 13H1 14H1
Poland Romania EU10**
p p ( , ,other products)
Romania:Romania:– decreasing sales levels
(-0.8% in RON) *Turnover of the pharmaceutical segment**Data of 2012 adjusted with Croatia
– significant delays in payment12
CISH1 2014
CIS
Turnover*
Sales decline (-18.9% in EUR) EURm
300
400
500
Turnover( )
Russia
EURm
100
200
300− RUB devaluation− slowdown of Russian economy
02008 2009 2010 2011 2012 2013 13H1 14H1
Russia Ukraine Other CIS
Ukraine− political uncertainty− UAH devaluation
*Turnover of the pharmaceutical segment
13
RussiaH1 2014
Russia
Sales decline
Turnover*
Sales decline(-11.5% in RUB; -25.3% in EUR)
EURm
300
400
Turnover*
Significant weakening of EURRUB exchange rate in H1 2014: 18 4%
EURm
100
200
H1 2014: 18.4%
Decreasing purchasing power
0
100
2008 2009 2010 2011 2012 2013 13H1 14H1
Destocking at both wholesale and pharmacy levels
Increase of manufacturing and warehousing capacities
*Turnover of the pharmaceutical segment
14
Ukraine, Other republicsH1 2014
Ukraine, Other republics
Turnover*
Ukraine− 19.5% decline (USD)
USD
150
200
Turnover− political and economic
turmoil− UAH devaluation
USDm
50
100− decreasing purchasing power
02008 2009 2010 2011 2012 2013 13H1 14H1
Ukraine Other CIS
Other republics− 22.2% increase (USD)
*Turnover of the pharmaceutical segment
15
USAH1 2014
USA
Turnover*
Sales increase (USD 4.0m)
USDm
160
200Significant proportion of gynaecology – 80%
USDm
40
80
120
Sales increase – Plan B One-Step
0
40
2008 2009 2010 2011 2012 2013 13H1 14H1
p
*Turnover of the pharmaceutical segment
16
ChinaH1 2014
China
Dynamically expanding pharmaceutical market
From 2013 JV operates with Richter majority stake
Sales network: 224 medical representatives
Sales in H1 2014: EUR 21 8mSales in H1 2014: EUR 21.8m
Stock piling in H1 2013: EUR 9.5mp g
17
Latin AmericaH1 2014
Latin America
R i l iRegional expansion:− Brazil− Mexico− Colombia− Ecuador
Bolivia− Bolivia− Peru− Chile
Female healthcare products in focus
Sales in H1 2014: USD 11.3m
18
Pharmaceutical sales by therapeutic areasH1 2014
Pharmaceutical sales by therapeutic areas
13%
OtherCentral nervous system
13%
24%7%
18%
Muscle relaxants
C di lH1 2014 24%4%GastrointestinalCardiovascularH1 2014
34%
Gynaecology
Total: EUR 409.6m
19
Female healthcare sales by regionH1 2014
Female healthcare sales by region
12024%
5%13%
CEE
Hungary
CISEURm
60
80
10024%
5%Ex-Grünenthal
portfolioChina
0
20
4034%
6%9%
4%
USAEU15
Latin America
Gynaecological sales Non‐gynaecological sales
RoW
Total: HUF 52.0bnEUR 169.2m
2020
Female Healthcare: Esmya® - phased launches IH1 2014
Female Healthcare: Esmya phased launches I.
Reimbursement grantedReimbursement granted
Country Launch Reimbursed Country Launch ReimbursedGermany Q1 12 Q1 12
United Kingdom Q2 12 Q2 12
Austria Q2 12 Q4 12
Belgium Q3 13 Q3 13
France Q3 13 Q3 13
Spain Q4 13 Q3 13
Denmark Q4 12 Q4 12
Norway Q4 12 Q4 12
Hungary Q2 12 Q1 13
Canada Q3 13 Q3 13
Finland Q4 13 Q4 13
Luxemburg Q3 13 Q4 13Hungary Q2 12 Q1 13
Sweden Q1 13 Q1 13
Slovakia Q3 12 Q1 13
Luxemburg Q3 13 Q4 13
Switzerland Q4 13 Q4 13
Ireland Q1 14 Q1 14
Slovenia Q4 12 Q2 13
Netherlands Q3 12 Q2 13
Czech Republic Q2 12 Q3 13
Bulgaria Q4 12 Q1 14
Portugal Q3 12 Q1 14
Estonia Q3 12 Q2 14
21
Female Healthcare: Esmya® - phased launches IIH1 2014
Launch without reimbursement
Female Healthcare: Esmya phased launches II.
Country LaunchUkraine Q4 13
Country LaunchPoland Q2 12
Croatia Q1 14
Armenia Q1 14
Uzbekistan Q1 14
Latvia Q3 12
Lithuania Q3 12
Romania Q3 12 Uzbekistan Q1 14
Serbia Q1 14
Tajikistan Q1 14
Romania Q3 12
Russia Q2 13
Belorussia Q4 13
Moldova Q1 14
Kyrgyzstan Q2 14
Georgia Q4 13
Kazahstan Q4 13
Turkmenistan Q4 13Turkmenistan Q4 13
22
Sales networkH1 2014
Sales network
1800staff
1200
1400
1600
600
800
1000
0
200
400
2006 2007 2008 2009 2010 2011 2012 2013 13H1 14H1
CIS CEE Hungary EU15 China
23
Wholesale and retailH1 2014
Wholesale and retail
W&R sales contribution is 16% of total sales
72% of the W&R turnover originates in Romania
2424
Ownership structureH1 2014
Ownership structure
30 June 2014
Domestic investors
6.48%International
investors68.27%
Hungarian State Holding Company
25.25%
2525
H1 2014
Thank you for your attention!y y
26
AppendixH1 2014
Appendix
Exchange rates
27
Evolution of currency exchange ratesH1 2014
Evolution of currency exchange rates
320
340HUF
280
300
240
260EURHUF
USDHUF
180
200
220
180
28
Evolution of currency exchange ratesH1 2014
Evolution of currency exchange rates
EUR
50
52
EUR
46
48
42
44 RUBEUR
40
42
38
29
Exchange ratesH1 2014
Exchange rates
At i d dAt period end30.06.2014 31.03.2014 31.12.2013 30.09.2013 30.06.2013
EURHUF 310.19 307.06 296.91 298.48 295.16
USDHUF 227.13 223.38 215.67 221.06 226.18
RUBHUF 6 69 6 27 6 55 6 80 6 91
Average
RUBHUF 6.69 6.27 6.55 6.80 6.91
H1 2014 Q1 2014 M12 2013 M9 2013 H1 2013
EURHUF 307.2 308.4 296.8 296.5 295.9
USDHUF 224.1 225.0 223.4 225.1 225.1
RUBHUF 6.4 6.4 7.0 7.1 7.3
30