Richter GroupM12 2013

Richter Group

Interim Report, M12 2013 5 February 2014

Summary – M12 2013M12 2013

Summary M12 2013

Consolidated sales: + 4.8% (EUR), + 7.6% (HUF)+ good growth in China in EU15 countries and in other CIS region+ good growth in China, in EU15 countries and in other CIS region− price erosion

Profit for the period*: -11,7% (EUR), -9,4% (HUF)+ sales increase+ increasing gross profitg g p− higher level of S&M expenses− other expenses – one-off items

*Net income attributable to owners of the parent

22

Key events in Q4 2013M12 2013

Key events in Q4 2013

6-29 November – Exchangeable bond issued by MNV Zrt.

21 November – Cariprazine – FDA „Complete ResponseLetter”

26 November – Esmya® two courses – CHMP – positiveopinionopinion

16-19 December – Establishment of joint venture in Brasil andMexico

33

Consolidated financial highlightsM12 2013

Consolidated financial highlights

HUF Change EUR Changeg g

Total revenues 351.4 bn 7.6% 1,184.0 m 4.8%

P fit fProfit from operations 48.6 bn -0.2% 163.9 m -2.7%

Profit for the period* 44 6 bn -9 4% 150 4 m -11 7%Profit for the period 44.6 bn -9.4% 150.4 m -11.7%

EPS (diluted) 240 -9.4% 0.81 -11.7%

*Net income attributable to owners of the parent

4

Geographical composition of Group salesM12 2013

Geographical composition of Group sales

9%

7%

9%6%

Hungary

Russia Poland

Hungary

Russia Poland7%

12%

30%

M12 2012

M12 2013

6%28%

13%RomaniaRomania

8 %

6%

10%

7%

2012 2013

6% 7%

3%9% 10%1%

EU10Ukraine EU10

Oth CIS

Ukraine

5% 5% 3% 5%4%1%

EU15USA

Other CIS

RoWChina EU15

USA

Other CIS

RoWChina

Total: HUF 326.7 bn

EUR 1,130.1 m

Total: HUF 351.4 bn

EUR 1,184.0 m7.6% in HUF4.8% in EUR+

55

P&LM12 2013

P&L

HUFmM12 2013

Change %

EURmM12 2013

Change %

as % of total revenues

Total revenues 351,424 7.6 1,184.0 4.8

Gross profit 220,713 9.4 743.6 6.6 62.8

S&M expenses (106,842) 15.1 (360.0) 12.1 30.4

A&G expenses (19,330) -4.2 (65.1) -6.7 5.5

R&D expenses (41,570) 7.0 (140.0) 4.2 11.8

Other income and other expenses (4,333) 272.9 (14.6) 265.0 1.2

Profit from operations 48,638 -0.2 163.9 -2.7 13.8

Net financial income (1,466) n.a. (4.9) n.a. 0.4

Profit for the period* 44,646 -9.4 150.4 -11.7 12.7

*Profit attributable to owners of the parent

6

Increasing gross profit and gross marginM12 2013

Increasing gross profit and gross margin

+ Higher than average increase of turnover in China, in EU15 countries and in other CIS HUFm 62 8%

50%

60%

200 000

250 000countries and in other CIS region

+ Increasing share of

HUFm 62.8%61.7%

20%

30%

40%

50 000

100 000

150 000own-developed products

- Weakening RUB/EUR0%

10%

0

50 000

2006 2007 2008 2009 2010 2011 2012 2013

Gross profit Gross margin

- Weakening RUB/EUR exchange rate in H2 2013

- Decline in the high margin US b i Gross profit Gross marginUS business

- Increasing proportion of wholesale and retail segment

7

g

Decreasing operating marginM12 2013

Decreasing operating margin

Sales and marketing expenses

25 0%70000

Sales and marketing expenses− expanding sales network in

Western EuropeEsmya® launches

HUFm

15,0%

20,0%

25,0%

40000

50000

60000

70000− Esmya® launches− S&M activities in China

R h d d l t

13.8%14.9%

5,0%

10,0%

15,0%

10000

20000

30000

40000Research and development expenses− Forest, PregLem, biosimilar

h0,0%0

10000

2006 2007 2008 2009 2010 2011 2012 2013

Profit from operation Operating margin

research

Other expenses – one-off items

Amortisation− Esmya® + Grünenthal OCs

8

Esmya Grünenthal OCs

Other expenses – one-off itemsM12 2013

Other expenses one off items

Other expenes – HUF 4.3 bn

Significantly less milestone income in 2013Significantly less milestone income in 2013− More than USD 10 m− Impact: approx. -0.6 percentage pointp pp p g p

Increase of claw-back related liabilities: HUF 1.2 bn(Hungary, Romania, Germany)

Impairment losses on intangible assets and licenses: HUF 1.7 bn− termination of PregLem PGL2 research project carried out for

endometriosis indication in Q4 2013endometriosis indication in Q4 2013

Overall impact: approx. HUF 5 bn

99

Pharmaceutical sales*M12 2013

Pharmaceutical sales

Key drivers of growth:

China, EU15 countries and Ukraine

Female healthcare

Successful product launches

*90% of turnover originates from outside of Hungary

10

g g y

10

HungaryM12 2013

Hungary

Turnover *Stabilising pharmaceutical market HUFbn

40

Sales increase: 2.3% in HUF30

Successful product launches

202007 2008 2009 2010 2011 2012 2013

*Turnover of the pharmaceutical segment

11

EU – composition of sales*M12 2013

EU composition of sales

Traditional EU member states 40%

− strengthening our position in key Western-European markets

− own gynaecological sales and marketing network

60%

Poland, Romania, EU10**

− well established in the region for decades

− own specialized sales network*Turnover of the pharmaceutical segment p** Including Croatia

12

EU15M12 2013

EU15

140

Turnover*8.5% sales increase in EUR

EURm

80

100

120

140

Recently established S&M network

20

40

60

80

Female healthcare products: Richter OC portfolio, acquired

0

20

2007 2008 2009 2010 2011 2012 2013

p , qOCs, Esmya®

*Turnover of the pharmaceutical segment

13

Poland, Romania, EU10M12 2013

Poland, Romania, EU10

Increasing generic competition

Turnover*

Increasing generic competition

Price erosionEURm

100

150

200

Poland: – 5.1% decrease in PLN

0

50

100− expiry of Avonex licensing

agreement− adjusted sales with Avonex: 0

2007 2008 2009 2010 2011 2012 2013

Poland Romania EU10**

j+5.7% in PLN

Romania:Romania:– increasing sales levels

(+2.6% in RON) *Turnover of the pharmaceutical segment**Data of 2012 adjusted with Croatia

– significant delays in payment14

CISM12 2013

CIS

Turnover*

Slight sales increase (+1.6% in EUR) EURm

300

400

500( )

Ukraine: healthy sales growth

100

200

Russia: expiry of Supraxlicencing agreement in 2012 0

2007 2008 2009 2010 2011 2012 2013

Russia Ukraine Other CIS

licencing agreement in 2012

*Turnover of the pharmaceutical segment

15

RussiaM12 2013

Russia

Sales increase (+5.5% in RUB;

Turnover*

Sales increase ( 5.5% in RUB; -0.1% in EUR)

Expiry of Suprax licensing EURm

300

400p y p g

agreement(revenue loss: RUB 0.5 bn/ EUR 11 7 m)

100

200EUR 11.7 m)

Adjusted sales with Suprax(+9 3% in RUB; +3 5% in EUR)

02007 2008 2009 2010 2011 2012 2013

(+9.3% in RUB; +3.5% in EUR)

Significant weakening of RUB/EUR exchange rate in H2RUB/EUR exchange rate in H2 2013

Increase of manufacturing and

*Turnover of the pharmaceutical segment

Increase of manufacturing and warehousing capacities

16

Ukraine, Other republicsM12 2013

Ukraine, Other republics

Turnover*

Ukraine− 10.1% increase (USD) USDm

150

200− efficient marketing activity

Other republics

0

50

100p

− 8.9% increase (USD)

02007 2008  2009 2010 2011 2012 2013

Ukraine Other CIS

*Turnover of the pharmaceutical segment

17

USAM12 2013

USA

Turnover*

Slow down of sales decline(-10.7% in USD) USDm

160

200

( )

Significant proportion of l 92%

40

80

120gynaecology – 92%

Plan B increase0

40

2007 2008  2009 2010 2011 2012 2013

Plan B increase

Finasteride shipments

*Turnover of the pharmaceutical segment

18

ChinaM12 2013

China

Dynamically expanding pharmaceutical market

From 2013 JV operates with Richter majority stake

Sales network: 204 medical representatives

Sales in 2013: EUR 34 9 mSales in 2013: EUR 34.9 m

Preshipments (in H1 2013): EUR 9.5 mp ( )

19

Pharmaceutical sales by therapeutic areasM12 2013

Pharmaceutical sales by therapeutic areas

13%17%

OtherCentral nervous system

13%

6%

17%

Muscle relaxants

M1226%4%Gastrointestinal CardiovascularM12

2013

34%

Gynaecology

Total: EUR 1,026.4 m

20

Female healthcare sales by regionM12 2013

Female healthcare sales by region

CEE

Hungary

CISEURm

5%14%

30%

300

400

500CIS

27%

8%12%

4%

0

100

200

EU15

Ex-Grünenthalportfolio

China

8%

Gynaecologicalsales Non gynaecologicalsales

USARoW

Gynaecological sales Non‐gynaecological salesTotal:

HUF 104.2 bnEUR 351.0 m

2121

Female Healthcare: Esmya® - gradual launches IM12 2013

Female Healthcare: Esmya gradual launches I.

Reimbursement grantedReimbursement granted

Country Launch Reimbursed Country Launch ReimbursedGermany 12Q1 12Q1

United Kingdom 12Q2 12Q2

Austria 12Q2 12Q4

Netherland 12Q3 13Q2

Czech Republic 12Q2 13Q3

Belgium 13Q3 13Q3

Denmark 12Q4 12Q4

Norway 12Q4 12Q4

Hungary 12Q2 13Q1

France 13Q3 13Q3

Spain 13Q4 13Q3

Canada 13Q3 13Q3Hungary 12Q2 13Q1

Sweden 13Q1 13Q1

Slovakia 12Q3 13Q1

Canada 13Q3 13Q3

Finland 13Q4 13Q4

Luxemburg 13Q3 13Q4

Slovenia 12Q4 13Q2 Switzerland 13Q4 13Q4

22

Female Healthcare: Esmya® - gradual launches IIM12 2013

Launch without reimbursement

Female Healthcare: Esmya gradual launches II.

Launch without reimbursement

Country LaunchPoland 12Q2

Baltic States 12Q3

Romania 12Q3

Portugal 12Q3

Bulgaria 12Q4

Russia 13Q2Russia 13Q2

Belorussia 13Q4

Georgia 13Q4

Kazahstan 13Q4

Turkmenistan 13Q4

Ukraine 13Q4Ukraine 13Q4

23

Sales networkM12 2013

Sales network

1800staff

1200

1400

1600

1800

600

800

1000

1200

0

200

400

600

02005 2006 2007 2008 2009 2010 2011 2012 2013

CIS CEE Hungary EU15 China

24

Wholesale and retailM12 2013

Wholesale and retail

W&R sales contributions is 15% of total sales

72% of the W&R turnover originates in Romania

2525

Exchangeable bonds: 2014-2019M12 2013

Exchangeable bonds: 2014 2019

6 Nov 2013 MNV Zrt. Announcement on Public offering:b d ti t EUR 900 ith i th f 3 375% 3 875%− new bonds amounting to EUR 900 m, with a coupon in the range of 3.375%-3.875% p.a.

− proceeds from offering intended to be used to finance the repurchase of exchangeablebonds amounting to EUR 833 m with a 4.4% coupon, due in 2014

26 Nov 2013 MNV Zrt Announcement – Final metrics of the New bonds:26 Nov 2013 MNV Zrt. Announcement Final metrics of the New bonds:− coupon: 3,375% − due date: 2 April 2019− issue size: EUR 903,8 missue size: EUR 903,8 m− exchange premium: 35% compared to the share price as of the bond issue date− Richter:

− tendered EUR 52 m principal aggregate amount Existing bonds for repurchase,p p gg g g p ,− subscribed for EUR 52 m principal aggregate amount New bonds

29 Nov 2013 MNV Zrt. Announecement – Exchange metrics of the Existing bonds− bonds validly tendered: 94,86%− rate of repurchase: 103,5%− accrued interest: 0,86795%

6 Dec 2013 MNV Zrt. Announcement – Settlement of the transaction

26

− Ownership ratio of MNV Zrt.: 25.25%

Ownership structureM12 2013

Ownership structure

31 December 2013

Domestic investors

5.98%International

investors68.77%

Hungarian State Holding Company

25.25%

2727

M12 2013

Thank you for your attention!y y

28

AppendixM12 2013

Appendix

Exchange rates

29

Evolution of currency exchange ratesM12 2013

Evolution of currency exchange rates

320

340

HUF

280

300

240

260EUR/HUF

USD/HUF

180

200

220

180

30

Evolution of currency exchange ratesM12 2013

Evolution of currency exchange rates

45

46

EUR

43

44

41

42

RUB/EUR

39

40

38

31

Exchange ratesM12 2013

Exchange rates

At i d dAt period end31.12.2013 30.09.2013 30.06.2013 31.03.2013 31.12.2012

EUR/HUF 296.91 298.48 295.16 304.30 291.29

USD/HUF 215.67 221.06 226.18 237.36 220.93

RUB/HUF 6 55 6 80 6 91 7 65 7 26

Average

RUB/HUF 6.55 6.80 6.91 7.65 7.26

2013 M12 2013 M9 2013 H1 2013 Q1 2012 M12

EUR/HUF 296.8 296.5 295.9 296.1 289.1

USD/HUF 223.4 225.1 225.1 224.0 225.0

RUB/HUF 7.0 7.1 7.3 7.4 7.2

32