Higher revenue, improved margins lift Richter earnings

Pharma

Image by LaMography/Moni Lazar

Fourth-quarter net income of Hungarian pharmaceutical company Gedeon Richter came to HUF 21.6 bln, improving from a HUF 14.6 bln loss in the base period, when "other expenses" weighed, an earnings report released ahead of the opening bell on Friday shows.

Revenue increased 8.4% to HUF 150.4 bln. Direct cost of sales rose at a slower rate, climbing 6% to HUF 68.1 bln and lifting gross profit 10.5% to HUF 82.3 bln.

Sales and marketing costs fell 10.7% to HUF 26.6 bln as pandemic restrictions continued to impact direct contact between sales reps and medical professionals.

Richter booked a HUF 5.4 bln loss on the "other income and other expenses" line, well under the HUF 36.7 bln loss in the base period.

Full-year earnings more than double

Richter's net income for the full year, jumped 122.1% to HUF 104.7 bln, supported by higher sales, wider margins and a decline in "other expenses".

Revenue increased 11.6% to HUF 566.8 bln, outpacing the rise in direct costs of sales which were up 7.8% at HUF 248 bln. Gross profit rose 14.8% to HUF 318.8 bln.

Sales and marketing costs fell 9.2% to HUF 105.6 bln, but R+D costs climbed 10.5% to HUF 54 bln.

Richter booked HUF 17.3 bln of "other expenses", down from HUF 44.8 bln in the base period.

Earnings per share came to HUF 563.

U.S. becomes biggest market for pharma sales

Sales of Richter's antipsychotic cariprazine jumped 57.4% to HUF 90.8 bln in 2020, making it the company's second-biggest seller after oral contraceptives which generated HUF 107.8 bln.

Turnover of cariprazine in the United States, where it is marketed under the Vraylar brand, helped make the country Richter's biggest market for pharmaceutical sales. Pharmaceutical segment revenue in the US increased 52.6% to HUF 108.5 bln, bumping Russia - where sales edged down 1.2% to HUF 85.8 bln - out of the top spot.

Pharmaceutical sales in Hungary increased 3.2% to HUF 41.1 bln. Richter noted that it is the fifth-biggest player on the domestic market with market share of 4.6%, but runner-up in the prescription drugs segment with market share of 7.3%.

2021 revenue could rise 5%

Giving guidance at a press conference after the earnings report was released, Richter CEO Gábor Orbán said 2021 turnover, calculated in euros, could rise 5%.

Last year, Richter's sales, calculated in euros, rose 3.5% to EUR 1.615 bln.

Orbán said the guidance assumes specialty product sales will meet targets, exchange rates remain stable and turnover of wholesale products is level. He added that the third wave of the pandemic adds to uncertainty.

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