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Higher sales, lower marketing costs boost Richter earnings

Hungarian pharmaceutical company Gedeon Richterʼs second-quarter net income climbed 80% year-on-year to HUF 31.5 billion, lifted by higher revenue, improved margins and lower marketing costs, state news wire MTI says, citing an earnings report published early Monday.

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Revenue rose almost 15% to HUF 137.3 bln. The direct cost of sales increased at a slower pace, rising 8% to HUF 56.5 bln, lifting gross profit 20% to HUF 80.8 bln.

Sales and marketing costs fell 18% to HUF 26 bln.

Earnings per share came to HUF 170 for the period.

H1 net income up 53%

For the first half, Richterʼs net income increased 53% year-on-year to HUF 60.5 bln, supported by some of the same factors that boosted earnings in Q2.

Revenue rose 15% to HUF 278.7 bln. The direct cost of sales climbed at a more moderate 12% to HUF 116.2 bln. And gross profit increased 18% to HUF 162.5 bln.

Sales and marketing costs were down 8% at HUF 58.2 bln.

Richter noted that promotional activities, particularly in the EU-15 region and in Russia, had been "severely limited" by measures to prevent the spread of the novel coronavirus during the period. Spending on promotional activities and sales staff headcount were also reduced in China "as a response to the adverse market environment", Richter added. The ratio of sales and marketing expenses to overall revenue dropped to 20.9% in H1 from 26.2% in the base period, impacted as well by robust sales growth.

Vraylar sales make U.S. Richterʼs biggest market

The United States was Richterʼs biggest market in H1, bumping Russia out of the top spot. US sales increased 64% to HUF 52.9 bln, boosted by turnover of Richterʼs anti-psychotic cariprazine, marketed there under the brand name Vraylar. Sales in Russia stagnated at HUF 41.4 bln.

Domestic sales edged up a little more than 1% to HUF 20.4 bln. Richter was the fourth-biggest player locally, with a market share of 5%. However, in the prescription drugs segment, Richter was runner-up with market share of 7.4%.

Sales in Poland climbed 8% to HUF 13.7 bln, and sales in China were up 4% at HUF 9.4 bln.

Oral contraceptives remained Richterʼs biggest seller, increasing 20% to HUF 56.6 bln. Cariprazine cemented its position in the number-two spot as sales jumped 79% to HUF 45.1 bln. The third-biggest seller was the nootropic Cavinton. Cavinton sales fell 28% to HUF 8.5 bln.

Richter noted that Chinese authorities had delisted Cavinton injectable from the start of 2020, resulting in a "significant loss of sales" of the product. But that drop was offset by higher sales in China of Richterʼs emergency contraceptive Escapelle.