richter group...interim report, m12 2011 7 february 2012 richter group. m12 2011 pharmaceuticals ......
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M12 2011
Interim Report, M12 2011 7 February 2012
Richter Group
M12 2011
Pharmaceuticals
Pharmafarm: wholesale (Romania)
Gedeon Richter Farmacia: retail (Romania,
117 pharmacies)
Russia: Gedeon Richter RUSGreenfield investment (1996)
Romania: Gedeon Richter RomaniaAcquisition (1998)
Poland: GR PolskaAcquisition (2002-2008)
India: Richter ThemisJoint venture (2004)
Germany: Richter-Helm BiologicJoint venture (2007)
Parent company: Gedeon RichterFounded: 1901
Wholesale and retail
Other
A number of companies rendering services or
performing commercial and marketing activities
+ more than 30 other commercial and servicing
subsidiaries and associated undertakings
+ further minority interests in wholesale and
pharmacies
Switzerland: PregLemAquisition (2010)
Leading pharmaceutical group in the region
M12 2011
3
Key financial data
HUF Change EUR Change
Sales 309.3 bn + 12.4 % 1,104.8 m + 10.7 %
Operating profit 62.6 bn + 0.0 % 223.7 m - 1.5 %
Net profit 49.3 bn - 23.8 % 175.9 m - 25.0 %
EPS (HUF / EUR) 2,645 -23.6 % 9.45 - 24.8 %
M12 2011
4
Key market developments
CIS
− Russia
predictable economic environment
significant increase in sales
invoicing in Roubles
− Ukraine
political, economic stabilization
sales increase
− Other republics
about flat sales
good performance of wholesale & retail
M12 2011
5
Key market developments
Central and Eastern Europe
− austerity measures in healthcare
− sales growth in key markets
Western Europe
− gynaecological sales network established - (Grünenthal OC portfolio)
− good performance of OC portfolio acquired from Grünenthal
− increasing competition in the generic business
− austerity measures in healthcare
Hungary
− success of recently launched products
− unfavourable regulatory measures
USA
− decline in drospirenone related revenues
M12 2011
11 %
6 %
12%
7 %
5 %
29 %
10%
7%
7%
6
Geographical composition of Group sales
Total:
HUF 275.3 bn
EUR 998.2 m
Total:
HUF 309.3 bn
EUR 1,104.8 m+ 10.7 % (€)
2010
M12
EU15
Hungary
Poland
Romania
EU9
Other
countries
Other CIS
Ukraine
USA
Russia
2011
M12
Hungary
Russia
Poland
Romania
EU9
EU15Other
countries
USA
Other CIS
Ukraine
6%
12%
26%7%
14%
7%
6%5%
11%
5%
7%
M12 2011
7
Composition of pharmaceutical sales
by therapeutic areas
Muscle
relaxants
Gastrointestinal
Other
Gynaecology
Central nervous
system
Cardiovascular
Total: EUR 984.3 m
2011
M124 %
34 %
13 %
7 %
17 %
25 %
M12 2011
8
CIS
Substantial increase in
sales (19% EUR)
Stabil economic
environment
* Turnover of the pharmaceutical segment
Turnover*
EURm
0
100
200
300
400
500
2005 2006 2007 2008 2009 2010 2011
Russia Ukraine Other republics
M12 2011
9
Russia
1 January 2011 –
invoicing in Roubles
Significant increase in
sales (26% EUR)
New product launches,
outstanding marketing
activity
Increase of manufacturing
and warehousing
capacities
Turnover*
EURm
* Turnover of the pharmaceutical segment
0
50
100
150
200
250
300
350
2005 2006 2007 2008 2009 2010 2011
M12 2011
10
Ukraine, Kazakhstan, other republics
Ukraine
− 15 % increase in USD terms
− stabil political and economic climate
− new product launches
Kazakhstan
− new product launches
Other republics
− 2% increase (USD)
Turnover*USDm
* Turnover of the pharmaceutical segment
0
20
40
60
80
100
120
140
160
2005 2006 2007 2008 2009 2010 2011
Ukraine Kazakhstan Other republics
M12 2011
11
EU – composition of sales*
Traditional EU member
states
− strengthening our position
on key Western-European
markets
− own gynaecological sales
and marketing network
Poland, Romania, EU 9
− well established in the region
for decades
− own specialized sales network
41%
59%
* Turnover of the pharmaceutical segment
M12 2011
12
Poland, Romania, EU9
Turnover growth
Unfavourable regulatory
environment
Poland:
– sales growth of 9 % in PLN
– new product launches
Romania:
– turnover growth of 6 % in RON
– proportion of doubtful debts
remained substantial
Turnover*EURm
* Turnover of the pharmaceutical segment
0
50
100
150
200
2005 2006 2007 2008 2009 2010 2011
Poland Romania* EU9
M12 2011
13
USA
Declining sales levels
( - 28% USD)
Significant proportion of
gynaecology – 96 %
Drospirenone related profit
sharing decreased
USDm
Turnover*
* Turnover of the pharmaceutical segment
0
20
40
60
80
100
120
140
160
180
200
2005 2006 2007 2008 2009 2010 2011
M12 2011
14
Hungary
Sales growth: 5 % in HUF
terms
Success of recently launched
products
Unfavourable macroeconomic
and industry related
conditions
Unfavourable amendments
implemented to the price
regulations and
reimbursement system
HUFbnTurnover*
* Turnover of the pharmaceutical segment
0
5
10
15
20
25
30
35
40
45
2005 2006 2007 2008 2009 2010 2011
M12 2011
15
Gynaecology – therapeutic focus
Full range of female healthcare products
Generic and original clinical product development
Product group with higher than the average gross margin
Expansion of our Western-European presence
− acquisition of Grünenthal OC portfolio
− expansion of the sales and marketing network Germany
Spain
Italy
Austria
Portugal
Switzerland
M12 2011
0
20
40
60
80
100
120
140
Non-gynaecological sales (pharma) (HUFbn)
Gynaecological sales (HUFbn)
16
Gynaecological sales by region
5%
26%21%
9%
26%
Total:
HUF 93.2 bn
EUR 332.9 m
2011
M12
Hungary
Central and
Eastern Europe
EU15
Other countries
CIS
USA
13%
Grünenthalportfolio
HUFbn
M12 2011
17
Sales network
staff
0
200
400
600
800
1000
1200
1400
1600
2005 2006 2007 2008 2009 2010 2011
CIS CEE Hungary
M12 2011
18
Key financial data
M12 2011HUFm
M12 2010HUFm HUFm %
Total sales 309,339 275,312 34,027 12.4
Gross profit 194,497 168,175 26,322 15.7
Operating profit 62,623 62,653 -30 0.0
Net financial income -6,492 5,073 -11,565 n.a.
Profit for the period 49,264 64,640 -15,376 -23.8
Total assets 688,208 603,277 84,931 14.1
Shareholders’ equity 488,775 442,115 46,660 10.6
Capital expenditures 32,146 88,704 -56,558 -63.8
Cash 118,606 75,600 43,006 56.9
Change
M12 2011
19
Operating expenses and margins
Sales and marketing expenses
− 25.5% of consolidated turnover
Administration and general expenses
− increased by 10 %
Research and development expenses
− 9.3 % of consolidated turnover
− increased by 6 %
Other income and other expenses
− expense of HUF 37 million
Polpharma action at law – break fee –40 mUSD
Gross margin
61.1%
62.9%
Operating margin
22.8%
20.2%
M12 2011
20
Financial income
M12 2011 M12 2010
Unrealised financial items (12,232) (2,440)
Reassessment of currency related trade receivables and trade payables 2,229 (233)
Reassessment of currency loans 131 137
Reassessment of credit (5,504) -
Reassessment of other currency related items (337) (2,516)
Normal interest expense related to liability in respect of PregLem (4,493) -
Reversal of assessment of forward exchange contracts as of 1 Jan (64) 108
Result of unrealised forward exchange contracts - 64
Impairment losses at investments (4,194) -
Realised financial items 5,740 7,513
Result of realised forward exchange contracts 189 (1,884)
Exchange losses /gains realised on trade receivables and trade payables (2,099) 4,400
Exchange losses /gains on conversion 1,545 600
Dividends 59 11
Net interest income 2,056 4,056
Other (208) 330
Net financial income (6,492) 5,073
HUFm
M12 2011
21
One-off items – incomes and expenses –in the consolidated P&L
M12 2011HUF mn
Genefar / Polpharma break-up fee (40 USDm) Other income +8,394
Genefar / Polpharma interest (3,5 USDm) Other income +766
Normal interest expense related to liability in
respect of PregLem
Financial expenses -4,493
Revaluation of outstanding purchasing price in
respect of PregLem reflecting changes in the
likelihood of payments
Other expenses -5,041
Share proportional stake of impairment loss
due to overdue debts at Hungaropharma
Income from
associates-4,294
Impairment loss at investments – Protek Financial expenses -4,194
Balance -8,862
M12 2011
22
Evolution of currency exchange rates
150,00
170,00
190,00
210,00
230,00
250,00
270,00
290,00
310,00
330,00
31.1
2.2
010
31.0
1.2
011
28.0
2.2
011
31.0
3.2
011
30.0
4.2
011
31.0
5.2
011
30.0
6.2
011
31.0
7.2
011
31.0
8.2
011
30.0
9.2
011
31.1
0.2
011
30.1
1.2
011
31.1
2.2
011
HUF/USD
HUF/EUR
M12 2011
23
2010
Q4
2010 2011
Q1
2011
Q2
2011
Q3
2011
Q4
2011
EUR/HUF
period end 277.7 277.7 265.8 265.6 292.1 311.1 311.1
average 275.7 275.8 272.3 264,7 272.8 303.2 280.0
USD/HUF
period end 208.9 208.9 187.0 183.4 215.6 240.7 240.7
average 201.5 209.9 198.9 182,3 192.9 224.7 201.0
Exchange rates
M12 2011
24
Ownership structure
31 December 2011
Hungarian State
Holding Company
Domestic
investors
International
investors
62.2%
25.2%
12.6%
M12 2011
Thank you for your attention!