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Richter GroupInterim Report, H1 2017
Budapest, 28 July 2017
* EURRUB FX impact: EUR 33 m
Total sales – growth factors
Reported Base Growth
EURm EURm EURm %
Consolidated 733 599 134 22
Russia 38*
EU15 28
USA 22
W&R (RO) 29
117
* Profit attributable to owners of the parent
Financial results – highlights
Reported Base Growth
EURm EURm EURm %
Gross profit 416 352 64 18
Profit fromoperations
104 85 19 23
Net financial (loss) / income
-13 15 -28 -
Profit for theperiod*
91 93 -2 -2
Specialty Projects –Current developments
• 19 May 2017: CHMP positive opinion onReagila®
• 19 July 2017: marketing authorization to Reagila® (cariprazine) granted by European Commission (EC)
3%
12%
7%3%
29%
45%
Sales of key specialty portfolio
• VraylarTM royalty: US$ 21.7m (EUR 20.0m)• CNS sales: EUR 92.0m, 15%
• ESMYA® sales: EUR 44.1 m• BEMFOLA® sales: EUR 17.6 m• WH sales: EUR 240.5m, 40%
ESMYA®
BEMFOLA®
VRAYLARTM
CNS – other
WH – other
Other
9%
18%7%
Sales of acquired portfolio
• Ex-Grünenthal portfolio sales: EUR 22.5 m• ESMYA® sales: EUR 44.1 m• BEMFOLA® sales: EUR 17.6 m
Subtotal: EUR 84.2 m
WH Total: EUR 240.5 m
Women’s Healthcare sales Ex-Grünenthal
portfolio
ESMYA®
BEMFOLA®
13%
18%
16%5%4%
7%2%
7%
3%
25%
Pharmaceutical sales by geographies
*Including Poland and Romania.
11%
16%
18%
4%7%6%
2%6%
3%
27%
HungaryRussia
EU12*
EU15
USA
Other CIS
Ukraine
RoW
LatAm
China
H1 2016 H1 2017
Hungary
Russia
EU15
USA
Other CIS
Ukraine
RoW
LatAmChina
Total: HUF 157.3 bnEUR 503.0 m
Total: HUF 188.0 bnEUR 607.5 m
+ 19.5% (HUF) + 20.8% (EUR)
EU12*
02000400060008000
100001200014000160001800020000
0
100
200
300
400
Russia• Sales
RUB 10,440.0m (+4.1%)EUR 166.7m (+29.9%)
• Increase in volume
• Improving product mix (highershare of WH products)
• Limited price increases implemented at the end of 2016
EURm
RUBm
Turnover of pharmaceutical segment.
Richter’s sales performance
+9.1%
020406080
100120140160180200
EU15
Turnover of pharmaceutical segment.
EURm
• SalesEUR 108.5m (+34.0%)
• Richter’s growth markets– UK– Spain– France
• Products with increasing sales dynamics– Esmya®
– Bemfola®
Richter’s sales performance
+13.5%
0
20
40
60
80
USA
USDm
Turnover of pharmaceutical segment.
• SalesUS$ 48.5m (+94.0%)
• VraylarTM royalty: US$ 21.7m• High level of Plan B / Plan B One-
Step sales• Increasing API sales
Richter’s sales performance
-1.1%
Pharmaceutical sales by therapeutic areas
Muscle relaxants
Gastrointestinal
Other
Women’s Healthcare
Central Nervous System
Cardiovascular
Total: EUR 607.5 m
15%
20%
40%
3%
6%
16%
24%
4%9%
38%
7%9%
3%
6%
Women’s Healthcare sales by region
EURm
Total: HUF 74.4 bnEUR 240.5 m
EU12*Hungary
CIS
USA
RoW
EU15
Grünenthalportfolio
China
LatAm
*Including Poland and Romania.
0
50
100
150
200
250
Gynaecological sales Non‐gynaecological sales
Sales networkstaff
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2012 2013 2014 2015 2016 H1 2016 H1 2017CIS CEE Hungary EU15 China LatAm
Wholesale and retail
• W&R contributes 19% to total sales
• 79% of the W&R turnover originates in Romania
• Sales increase in Romania– 35.7% in EUR terms
HUFm
0%10%20%30%40%50%60%70%80%90%
100%
W&R HUF Overall pharma sales HUF
REPORTING PERIODConsolidated Financials
Consolidated Financials –Highlights
*Net income attributable to owners of the parent.
HUF Change % EUR Change %
Total revenue 226.8 bn 21.1 732.9 m 22.4
Gross profit 128.8 bn 16.9 416.2 m 18.1
Profit from operations 32.3 bn 21.9 104.4 m 23.1
Profit for the period* 28.2 bn (2.9) 91.1 m (1.8)
EPS (diluted) 151 (3.2) 0.49 (2.0)
54%55%56%57%58%59%60%61%62%63%
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
COGS Gross profit Gross margin
Consolidated Financials –Decreasing gross margin
+ VraylarTM royalty+ Substantial sales growth in all
regions+ Appreciation of RUB exchange
rate against EUR and HUF (YoY) EUR RUB → 19.9%
– Price erosion on the traditionalmarkets
– Increasing costs related to tightening regulatory measures
– Increasing share of W&R– Esmya and Bemfola
amortization
HUFm
58.8%56.8%
S&M costsHUFm
0%
10%
20%
30%
40%
50%
60%
0
20 000
40 000
60 000
80 000
100 000
120 000
S&M costs S&M percentage of sales
R&D costsHUFm
0%
10%
20%
30%
40%
50%
60%
0
10 000
20 000
30 000
40 000
50 000
R&D costs R&D percentage of sales
0%2%4%6%8%10%12%14%16%18%20%
010 00020 00030 00040 00050 00060 00070 00080 000
Profit from operation Operating margin
Consolidated Financials –flat operating margin
– Decline of gross margin– Moderate increase of
operating expenses – One-off income in base
period related to theacquisition of Rxmidas
HUFm
14.1%14.2%
REPORTING PERIODCorporate Matters
Ownership structure
30 June 2017
Hungarian State Holding Company
Domestic investors
International investors
68.53%
25.25%
6.22%
Appendix I.
Individual Market Performances
CIS – sales performance and composition
EURm
Turnover of pharmaceutical segment.
0
100
200
300
400
500
Russia Ukraine Other CIS
• Ukraine– increasing sales levels
(+2.5 m in US$)– low sales levels in base period– market has stabilised to certain
extent– UAH depreciation
US$UAH: 5.2% (YoY)• Other republics
– sales increase(+2.0 m in EUR)
– improving economic and FOREX environment
Ukraine, Other republics
USDm
Turnover of pharmaceutical segment.
Richter’s sales performance
0
50
100
150
200
Ukraine Other CIS
Hungary
Turnover of pharmaceutical segment.
HUFbn• Sales
HUF 19,906 m (+0.9%)
• Stable pharmaceutical market
• Success of products launchedin recent years
Richter’s sales performance
0
10
20
30
40
53%
47%
EU* – composition of sales
• EU15– strengthening our position in
key Western-European markets
– own Women’s Healthcare sales and marketing network
• EU12**– well established in the region
for decades– own specialised sales network
*Turnover of pharmaceutical segment.**Including Poland and Romania.
EU15
EU12**
EU12*
EURm
Turnover of pharmaceutical segment.
*Including Poland and Romania.
• SalesEUR 96.4m (+6.5%)
• Increasing generic competition• Price erosion
• Poland:– 5.5% sales increase (PLN)– sales increase of Groprinosin
• Romania:– 14.5% sales increase (RON)– substantial price decreases
implemented by the Government
Richter’s sales performance
020406080
100120140160180200
China• Sales in H1 2017:
EUR 35.1 m (-0.6%)
• GR Rxmidas is 100% Richter owned since 2016
• Sales network personnel: 261
• Timing of shipments
EURm
Richter’s sales performance
0
10
20
30
40
50
60
70
80
Latin America• Sales* in H1 2017:
USD 11.6 m (+11.5%)
• Regional presence:
– Mexico, Colombia, Brazil
– Mediplus N.V. → Ecuador, Bolivia, Peru, Chile
• Women’s Healthcare products in focus
• Increase of ESMYA® sales
*Turnover of pharmaceutical segment.
USDm
Richter’s sales performance
0
5
10
15
20
25
Appendix II.
Exchange Rate Movements
Evolution of currency exchange rates I.
HUF
260
280
300
320
340
EURHUFUS$HUF
Evolution of currency exchange rates II.
EUR
55
60
65
70
75
80
EURRUB
Evolution of currency exchange rates III.
HUF
3,75
4,00
4,25
4,50
4,75
5,00
5,25
5,50
RUBHUF
Appendix –Exchange rates
At period end
Average
30.06.2017 31.03.2017 31.12.2016 30.09.2016 30.06.2016
EURHUF 308.87 308.70 311.02 309.15 316.16
USDHUF 270.87 288.64 293.69 276.35 284.29
RUBHUF 4.56 5.15 4.78 4.36 4.43
EURRUB 67.73 59.94 65.07 70.91 71.37
EURUSD 1.14 1.07 1.06 1.12 1.11
H1 2017 Q1 2017 M12 2016 M9 2016 H1 2016
EURHUF 309.42 309.10 311.46 312.23 312.67
USDHUF 285.26 290.24 281.24 279.64 279.95
RUBHUF 4.94 4.94 4.19 4.09 4.00
EURRUB 62.64 62.57 74.33 76.34 78.17
EURUSD 1.08 1.06 1.11 1.12 1.12