The third-quarter net income of Hungarian pharmaceutical company Gedeon Richter jumped 151% year-on-year to HUF 22.2 billion, boosted by higher revenue and a big financial gain, an earnings report released late Thursday shows, according to state news wire MTI.
Net income was just over the HUF 20.9 billion estimate by analysts polled by Portfolio.hu.
Revenue increased 28% to HUF 127.5 bln. Cost of sales climbed at a faster clip, rising 42% to HUF 57.7 bln. Gross profit was up 19% at HUF 69.8 bln.
Richter booked an HUF 8.5 bln net financial gain for the quarter, compared to a net loss of HUF 4.2 bln in the base period. Earnings per share came to HUF 119 in Q3.
For the period Q1-Q3, Richterʼs net income rose 30% year-on-year to HUF 61.8 bln, also supported by higher turnover and a sizable net financial gain.
Revenue increased by 14% to HUF 369.1 bln. Cost of sales climbed 20% to HUF 161.7 bln. Gross profit rose 10% to HUF 207.3 bln.
Operating profit edged up 1% to HUF 52.1 bln as R&D spending rose 19% to HUF 36.5 bln and administration and general expenses increased 10% to HUF 20.3 bln.
"A decline in the turnover of our traditional portfolio occurred in the reporting period linked primarily to reduced manufacturing capacities as a result of the serialization project," Richter tells the Budapest Business Journal.
"The above factor impacted primarily the first three months as with turnover and related manufacturing volumes increasing to near-normal levels in the subsequent quarters. "
The company explains that currency fluctuations had a positive impact on sales levels reported in HUF in the first nine months of the year 2019, caused mostly by a year-on-year appreciation of the average USD/HUF and EUR/HUF exchange rates of 8.3% and 1.8%, respectively.
Richterʼs domestic sales were up 3% at HUF 29.5 bln in Q1-Q3, and sales in other EU countries increased 16% to HUF 153.2 bln. In Romania, sales rose 34% to HUF 68.6 bln, albeit from a low base caused by an involuntary shutdown of Richterʼs wholesale business there for about one-and-a-half months in 2018.
Sales in the CIS were up 5% at HUF 99.7 bln, as higher sales in Ukraine and other CIS countries offset a 4% decline in Russian sales caused mainly by regulatory-related preshipments in the base period.
Sales in the United States jumped 94% to HUF 49.1 bln, boosted by turnover of and a milestone payment for Richterʼs antipsychotic cariprazine, sold there under the Vraylar brand.
Sales in China fell 28% to HUF 15.6 bln.
Richter noted that it booked a HUF 5.9 bln complete impairment loss for its intangible asset Esmya USA and said a Marketing Authorisation Application filing for the drug, used to treat uterine fibroids, "is no longer considered active".
The U.S. Food and Drug Administration (FDA) earlier expressed concerns over reports of a possible link between Esmya and liver injury in some patients in Europe.
Restrictions were placed on the drug after European medicine authorities concluded that it "may have contributed to the development of some cases of serious liver injury", causing Esmya sales to plunge.
At a press conference after the earnings report was released, CEO Gábor Orbán said Richterʼs consolidated revenue, calculated in euros, could rise 8-9% this year. Sales are set to stay flat in Eastern Europe, climb by 15% in Ukraine, but fall 30% in China. Russian sales, calculated in rubles, are expected to decline more than 5% because of a fall in wholesale inventories and reductions in regulated prices, he added.
Orbán said compliance with a European Union directive requiring a unique identifier for all drug packaging had reduced turnover by EUR 9 million.