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Richter Q4 profit falls 40% on domestic income drop

Gedeon Richter Nyrt, eastern Europe's biggest maker of contraceptives, said Q4 profit fell 40% on lower income from its home market, Hungary, missing analyst expectations.

Unconsolidated net income was Ft 8.1 billion (€32 million), or Ft 436 a share, compared with Ft 13.5 billion, or Ft 723, a year earlier, the Budapest-based company said in a stock exchange statement. Gedeon Richter Nyrt was expected to earn Ft 9 billion, according to the median estimate of nine analysts surveyed by Bloomberg. Richter's profit fell because Hungary imposed a new corporate tax and the state-monopoly health insurer forced drugmakers to lower prices, the statement said.

„Price reductions on several products were mandated with effect from 1 July 2006. These were implemented in accordance with measures taken by the National Health Insurance Fund which originated from its legal obligation to establish fixed reimbursement categories,” the statement said. „These resulted in a reduction in domestic sales of more than Ft 1 billion for the H2 of 2006.” In addition, wholesalers in Russia bought fewer new drugs from producers after the government subsidy program ran into budgetary problems, the statement said.

The income statement did not mention any milestone payment of from Forest Laboratories Inc., which bought the US and Canadian rights to an experimental pain drug in 2005. Richter's profit was helped by a Ft 3.6 billion payment from New York-based Forest one year ago. Richter's quarterly revenue rose 10.5% from a year earlier to Ft 40.8 billion, compared with an analyst forecast of Ft 40.2 billion. (Bloomberg)