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Richter, Egis shares drop on spending cuts in Hungary, Russia

Shares of Richter Gedeon Nyrt, eastern Europe's biggest drugmaker by market value, dropped Ft 2,650, or 5.8%, to 43,000 at 10:17 a.m. in Budapest. Egis Nyrt, which ranks No. 5 in the region, fell Ft 1,370, or 4.9%, to 26,455. Hungary yesterday unveiled a draft law that would force drugmakers to give a rebate to the state health insurer, just as Russia announced it was removing medicines such as Richter's hypertension treatment Normodipine from its reimbursement list. Richter said profit may drop as much as 7% next year if the Hungarian plan becomes law. “Historically, both Egis and Richter have been able to adjust to difficult circumstances,” said Vladimira Urbankova, an analyst at Erste Bank in Prague. “I do not see this is something they can't live with. This is just the initial reaction.” Richter also warned yesterday that revenue from Russia would decline by $25 million this year because Normodipine and some versions of Cavinton, a medicine that helps blood flow to the brain, were taken off the country's reimbursement list. Egis CFO László Marosffy declined to say yesterday how much his company might lose from the government's reform plans. Profit at the company, which gets almost 40% of its revenue from Hungary, may drop 20%, according to Péter Tordai, an analyst at KBC Groep NV. (Bloomberg)