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Richter earnings rise on financial gains

First-quarter net income of drugmaker Gedeon Richter rose 52% year-on-year to HUF 22 billion, lifted by financial gains, an earnings report released early Friday shows, state news wire MTI reported.

Revenue rose 7% to HUF 121.6 bln. Direct costs of sales climbed at nearly the same rate, reaching HUF 51.7 bln.

Gross profit was up 7% at HUF 69.9 bln, but higher administration and general expenses, as well as "other expenses," caused operating profit to fall 3% to HUF 17.2 bln.

Richterʼs bottom line was lifted by a net financial gain of HUF 5.2 bln, compared to a net loss of HUF 2.4 bln in the base period. Richter noted that HUF 4.2 bln of the first-quarter gain was unrealized.

Earnings per share came to HUF 118 for the period.

Cariprazine milestone lifts revenue 

Sales of oral contraceptives, Richterʼs biggest business, rose 10% to HUF 24.1 bln. Sales of the companyʼs antipsychotic cariprazine, trademarked in the United States as Vraylar, jumped 308% to HUF 15.4 bln, lifted by royalties and a one-off sales-related milestone payment of USD 25.6 million (HUF 7.3 bln). Richter noted that without the boost provided by Vraylar, consolidated revenue would have declined from the similarly adjusted base.

Sales of Esmya, Richterʼs treatment for uterine fibroids, plunged 63% to HUF 1.9 bln because of restrictions placed on the drug after European medicines authorities concluded that it may have contributed to the development of some cases of serious liver injury. Richter earlier booked a sizable impairment on the drug.

Sales of Richterʼs nootropic Cavinton, its third-biggest seller during the period, dropped 37% to HUF 4.7 bln.

Richter said that compliance with a European Union directive requiring a unique identifier (UID) for all drug packaging had reduced its manufacturing capacities and resulted in a "substantial decline" in turnover of its traditional portfolio.

CEO sets guidance

At a press conference after the release of the earnings report, CEO Gábor Orbán put consolidated full-year revenue, calculated in euros, at 3% over last yearʼs turnover. Revenue from drug production is set to stagnate, while Richterʼs wholesale business grows, he added.

Management sees revenue in Hungary, calculated in forints, remaining flat in 2019. Turnover in Central Europe is expected to decline 5% because of the UID rollout, while revenue in Western Europe increases 10%. Richter sees sales up 10% in Ukraine and 0-5% in Latin America.

In Russia, sales are set to fall 5-10%, calculated in rubels, and drop 5% in other CIS countries. Chinese sales are seen dropping 10%.

Sales in the United States, excluding those of Vraylar, are set to stagnate.

Orbán said Esmya sales could reach EUR 25 mln for the full year.