Richter Keeps Guidance for Flat 2012 Revenue, CEO Says

Gedeon Richter Nyrt., Hungary’s largest drugmaker, is maintaining its earlier prediction of sales stagnating in euro terms this year as plummeting domestic sales and falling U.S. exports will outweigh rising revenue from Russia and the European Union.

“What we see is that austerity measures affect health care and drug budgets all over Europe and this gives us no reason to be happy,” Chief Executive Officer Erik Bogsch said at a press conference in Budapest today.

Richter, which also is central and eastern Europe’s largest maker of gynecological products, relies on exports to boost profit as Hungarian tax increases and price competition depress domestic sales. The company is eying individual products and drug portfolios to purchase as it seeks to compensate the “unprecedented” drop in Richter’s domestic market share, according to the CEO.

Sales to Russia and Ukraine will probably increase as much as 5 percent this year, while Hungarian revenue is set to decline as much as 20 percent in forint terms, Bogsch said. Exports to western Europe may increase as much as 5 percent.

Richter today reported a 34 percent annual jump in second-quarter net income to 11.4 billion forint as a result of rising sales and a weaker forint boosting export value.

‘Massive Sales’

“Overall, we are pleased with Richter’s second-quarter results driven by massive sales performance in the Commonwealth of Independent States and a positive foreign exchange impact,” Attila Vago, analyst at Budapest-based brokerage Concorde Zrt. said in a note to customers today. Vago rates Richter equal weight with a target price of 42,000 forint.

Richter shares retreated 1.3 percent to 38,815 forint by 11:16 a.m. in Budapest, heading for the biggest drop in almost a month. The company has gained 13.5 percent this year, compared with a 2.8 percent rise in the benchmark BUX index.

Richter may receive a milestone payment from its U.S. partner Forest Laboratories Inc in the last quarter as Forest will probably submit a registration application for the cariprazine drug developed jointly by the two companies, Bogsch said.

The amortization costs of Richter’s Esmya product, at 616 million forint in the April-June period, will remain at the same level in coming quarters, according to the CEO.

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