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Richter Sees 2012 Sales Stagnating in Euros, Bogsch Says

Gedeon Richter Nyrt., Hungary’s largest drugmaker, sees 2012 sales stagnating in euro terms as a decline in domestic sales and exports to the United States will outweigh increasing revenue in Russia and Ukraine.

“We have an outstandingly successful year behind us with record sales in Russia, therefore we’re a bit more cautious with regards to this year,” Chief Executive Officer Erik Bogsch said at a press conference in Budapest today.

Net income rose 26 percent to 8.9 billion forint ($40 million) in the last quarter of 2011 as revenue jumped 53 percent to 91.1 billion forint, fueled by strong exports to former Soviet states and the European Union, the company said earlier today.

Richter, central and eastern Europe’s largest maker of gynecological products, faces higher marketing and sales costs as a result of recent acquisitions and the development of a sales network in western Europe. Spending on research and development is also set to increase in 2012 as the company will probably have to pay a “very significant” milestone payment for the licensing of its Esmya product, Bogsch said.

“We may receive a much smaller milestone payment toward the end of the year, however the difference between what we have to pay and what we may receive is very significant,” Bogsch said.


Exports to Russia, which account for 29 percent of the company’s revenue, are seen rising by as much as 5 percent in dollar terms after a 28 percent jump in 2011. Ukrainian and western European exports may grow by 5 percent, respectively.

Domestic sales calculated in forint are set to drop between 15 percent and 20 percent while sales in the U.S. will probably plummet by 40 percent in dollar terms, Bogsch said.

The company’s tax payment in Hungary will increase by 2.5 billion forint, compared to last year, as a result of new taxes and the expiration of a corporate tax break.

The licensing of Esmya, developed for the treatment of myomas, may take place by March, allowing the start of sales in Germany and the United Kingdom in April, Bogsch said. The company is awaiting the results of Phase III clinical trials for cariprazine, used for treating schizophrenia and bipolar disorder. Positive results may mean the sale of the drug will start in the U.S. in early 2014, Bogsch said.

The company’s operating profit may be 15 percent to 16 percent of sales in 2012, according to Bogsch.

Richter shares declined 1.2 percent to 38,890 forint at 11:16 a.m. in Budapest, falling for the first time in four days.

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