UPDATE - Richter raises guidance after Q3 earnings


Hungarian drugmaker Gedeon Richter is standing by guidance for annual revenue growth of 0-5% in 2011, calculated in euro, and it is raising its projection for the increase in operating profit to 18% from 15-16% in August, CEO Erik Bogsch said at a press conference on Tuesday, after the company published its Q3 report.

Richter expects 5-10% revenue growth in Poland, calculated in zloty but stagnation in Romania, Bogsch said. It sees the portfolio of recently acquired Grunenthal adding €45m to revenue in the EU-15, where turnover would otherwise stagnate, he added. Sales in Russia are expected to climb 10-15%, calculated in euro, and dollar-term sales in Ukraine are seen increasing 5-10%. Richter expects sales in other CIS countries to fall about 5%, calculated in dollars. Sales in the US are set to drop 35%.

Richter had revenue of €998.2m in 2010.

Speaking about profit expectations, Bogsch said Q1-Q3 turned out well, apart from one-off factors.

Bogsch said peer Genefar paid Richter $40m in compensation, plus $3.5m in interest and legal costs, for breach of contract in the failed acquisition of Polpharma in October, but the amount - HUF 6.83bn - was booked on the "other revenue" line in Q3.

Richter has kept the number of its sales representatives in Hungary unchanged at 180, even though the tax on the reps was raised from HUF 5m to HUF 10m, he said.

Changes to the drug subsidy system next year are expected to reduce Richter’s revenue by HUF 3bn in 2012, Bogsch said. The increase in the tax on subsidized medicines from 12% to 20% will cost Richter a further HUF 4.1bn next year, he added.

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