Gedeon Richter Nyrt., Hungary’s largest drugmaker, said third-quarter profit rose 6.4 percent, boosted by a compensation payment for a failed takeover.
Net income increased to 20.6 billion forint ($92.5 million), or 1,107 forint a share, from 19.4 billion forint, or 1,041 forint a share, a year earlier, the company said in a filing to the Budapest Stock Exchange today. That compares with a mean projection for 13.5 billion forint of eight analysts in a Bloomberg poll.
Richter, central and eastern Europe’s largest maker of gynecological products, faces higher marketing costs as a result of acquisitions last year and the development of a sales network in former Soviet states and western Europe. Higher costs will lower Richter’s profit compared with an “outstanding” 2010 result, Chief Executive Officer Erik Bogsch said at a press conference today. Results this year should be “normal,” barring unexpected events in the last two months, he said.
The Budapest-based company had a one-off income of $43.5 million in compensation payment for its failed takeover of Polish company Polpharma SA. The compensation was awarded by an international arbitration court.
Sales dropped 7.8 percent to 72.4 billion forint as the “situation is deteriorating” on all the company’s markets, Bogsch said. Bogsch maintained an earlier guidance for sales rise of as much as 5 percent in 2011.
Richter, which makes the Plan B morning-after contraceptive pill, purchased Swiss pharmaceutical company PregLem Holding SA and the contraceptive portfolio of Germany’s Gruenenthal GmbH in 2010 to expand in western Europe. The company, based in Budapest, is also cooperating with Forest Laboratories Inc. (FRX) to develop a drug to treat schizophrenia and bipolar disorders.
Clinical results for the treatment of schizophrenia are due by the end of February and Richter may receive a milestone payment from Forest if the results are positive, Bogsch said.
Marketing and sales costs jumped 26.1 percent to 19.1 billion forint as Richter is building out and operating 100 person-strong sales network in seven western European countries, Bogsch said.
Shares fell 0.5 percent to 34,810 forint by 09:55 a.m. in Budapest, pushing the stock’s decline to 18.2 percent this year.
Richter’s financial loss in the third quarter dropped 39 percent to 1.9 billion forint while corporate and local tax payments fell 59 percent and 57 percent, respectively, according to the release. As a result of regulatory changes in Hungary, Richter can reclaim 1.9 billion forint from a special industry tax, cutting tax payment obligations in the last two quarters of the year.
From 2012, the company sees an annual revenue loss of 7.1 billion forint stemming from “unfavorable” changes in Hungarian regulations, Bogsch said.
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