M9 2016

Richter Group

Interim Report, M9 2016 3 November 2016

M9 2016

2

Summary – M9 2016

Consolidated sales: +1.6% (EUR), +2.7% (HUF)+ sales growth in EU15 region+ good growth in Romania and in China− significant sales decline in other CIS region and in the USA

Profit for the period*: -2.0% (EUR), -1.0% (HUF)+ Acquisition of Rxmidas – one-off reassessment at fair value+ Recordati milestone payment+ decrease in R&D expenses− impact of RUB EUR exchange rate – 18.2% depreciation− increase in S&M expenses− expenses of product withdrawal of Lisvy®

2

*Net income attributable to owners linked to the parent

M9 2016

3

Key events I. – cariprazine

Recordati license agreement – 2 August 2016− exclusive license agreement to commercialize cariprazine,− in Western Europe, in Algeria, in Tunisia and in Turkey,− March 2016: EMA started the evaluation of Richter’s marketing

authorisation application for cariprazine for the treatment of schizophrenia.

MD-72 flexible doses trial – 5 August 2016− topline results: it did not show significant difference compared to placebo

used in adjunctive treatment to antidepressant therapy in adults with major depressive disorder (MDD) treatment.

M9 2016

4

Key events II.

DM Bio* license agreement – 19 October 2016− technology transfer and license-in agreement in respect of the

development and commercialization of DM Bio’s biosimilar monoclonal antibody, Trastuzumab,

− exclusive distribution rights for Europe, the CIS region and Latin American countries,

− pilot technology for further development.

*Joint venture company formed by Dong-A Socio Holdings of Korea and Meiji Seika Pharma of Japan.

M9 2016

5

Consolidated financial highlights

*Net income attributable to owners of the parent

HUF Change % EUR Change %

Total revenues 284.0bn 2.7 909.6m 1.6

Profit from operations 45.4bn (13.4) 145.3m (14.3)

Profit for the period* 43.9bn (1.0) 140.7m (2.0)

EPS (diluted) 237 (1.3) 0.76 (2.6)

M9 2016

9%

6%

13%

9%

2%

23%

14%

7%2%

5% 4%

6%

6

Geographical composition of Group sales

6

M9 2015 M9 2016

Hungary

RussiaPoland

Romania

EU10

EU15USA

Other CIS

Ukraine

RoW

China

HungaryRussia

Poland

Romania

EU10

EU15USA

Other CIS

Ukraine

RoW

LatAm

Total: HUF 276.6bnEUR 895.5m

Total: HUF 284.0bnEUR 909.6m

+ 2.7% (HUF) + 1.6% (EUR)

China

LatAm

10%

6%

15%

4%

8%

21%

14%

6%7%

3%

4%

2%

M9 2016

7

P&L

HUFmM9 2016

Change %

EURmM9 2016

Change %

as % of total revenues

Total revenues 284,021 2.7 909.6 1.6

Gross profit 168,052 (0.9) 538.2 (2.0) 59.2

S&M expenses (80,305) 6.1 (257.2) 4.9 28.3

A&G expenses (13,958) 1.1 (44.7) 0.0 4.9

R&D expenses (26,546) (8.4) (85.0) (9.4) 9.3

Other income and other expenses (1,869) n.a. (6.0) n.a. 0.7

Profit from operations 45,374 (13.4) 145.3 (14.3) 16.0

Net financial income 2,789 n.a. 8.9 n.a. 1.0

Profit for the period* 43,924 (1.0) 140.7 (2.0) 15.5

*Profit attributable to owners of the parent

M9 2016

0%

10%

20%

30%

40%

50%

60%

0

50 000

100 000

150 000

200 000

250 000

Gross profit Gross margin

8

Decreasing gross profit, gross margin

+ Increase of turnover in EU15 and in China

+ Increase of turnover in Russiain RUB

− Sales decline in other CIS and in the USA

− Weakening RUB exchange rateagainst EUR and HUF (YoY) EUR RUB → 18.2%

− Increase of share in turnover of W&R

HUFm59.2%61.3%

M9 2016

0%

5%

10%

15%

20%

25%

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

Profit from operation Operating margin

9

Decreasing operating margin

HUFm

16.0%18.9%

+ Acquisition of Rxmidas – one-off reassessment at fair value

+ Recordati milestone payment+ Decreasing R&D expenditures

− Decreasing gross margin− Impact of RUB EUR exchange

rate – 18.2% depreciation− Increase in sales and

marketing expenses− Expenses linked to product

withdrawal of Lisvy®

M9 2016

10

Sales in the Pharmaceutical segment*

* 89% of turnover originates from outside of Hungary

10

Sales development – contradictory impacts+ growth: China, EU15, Poland, Romania, Hungary, Russia

(in RUB), Rest of the World

+ increasing ESMYA® sales

− decreasing overall OC sales

− decline: EU10, other CIS, USA

Successful product launches

M9 2016

Hungary

Stable pharmaceutical market

Sales increase: 2.3% in HUF

Success of products launched in recent years

HUFbn

*Turnover of the pharmaceutical segment

11

0

10

20

30

40

Turnover *

M9 2016

EU – composition of sales*

EU15− strengthening our position

in key Western-European markets

− own Women’s Healthcaresales and marketing network

Poland, Romania, EU10− well established in the region for

decades− own specialized sales network*Turnover of the pharmaceutical segment

12

49%

51%

M9 2016

EU15

*Turnover of the pharmaceutical segment

7.9% sales increase in EUR

Own S&M network

Women’s Healthcare products: ESMYA®, Bemfola®, Richter OC portfolio, acquired OCs

Declining oral contraceptivemarket

EURm

13

020406080

100120140160180

Turnover*

M9 2016

Poland, Romania, EU10

Increasing generic competitionPrice erosion

Poland: – 7.4% increase in PLN– strong flu epidemic –

Groprinosin sales increase

Romania:– increasing sales levels

(8.0% in RON)– base period: low level of

wholesale stock

EURm

*Turnover of the pharmaceutical segment

14

0

50

100

150

200

Turnover*

Poland Romania EU10

M9 2016

CIS

Sales decline (7.9% in EUR)

Russia− RUB devaluation (YoY)− slowdown of Russian economy

Ukraine− political uncertainty− UAH devaluation− decreasing purchasing power

EURm

*Turnover of the pharmaceutical segment

15

0

100

200

300

400

500

Turnover*

Russia Ukraine Other CIS

M9 2016

0

100

200

300

400

Turnover*

Russia

Sales increase in RUB(9.4% in RUB; -7.4% in EUR)

February 2016 – An average 4% price increase when projected across the entire range of products

Weakening of EUR RUB exchange rate in M9 2016: 18.2% (YoY)

EURm

*Turnover of the pharmaceutical segment16

RUBm

10000

11000

12000

13000

14000

15000

Turnover*

M9 2016

Ukraine, Other republics

Ukraine− sales increase (USD 7.6%)− low sales level in the base

period− political and economic

turmoil− UAH devaluation

USD UAH: 18.6% (YoY)

Other republics− 14.2% decrease (EUR)

(-13.9% in USD)− devaluation of Kazakh Tenge

EUR KZT: 72.6% (YoY)− uncertain economic and

FOREX environment

USDm

*Turnover of the pharmaceutical segment

17

0

50

100

150

200

Turnover*

Ukraine Other CIS

M9 2016

USA

Sales decline (12.4% in USD)

Cariprazine (VraylarTM) royaltyincome achieved duringH1 2016: USD 3.4m

Increasing sales level of emergency contraceptives Substantial decrease of revenues resulting from profit sharing agreementsSignificant proportion of Women’s Healthcare – 79%

USDm

*Turnover of the pharmaceutical segment

18

0

40

80

120

160

Turnover*

M9 2016

China

19

Sales in M9 2016: EUR 60.8m

Dynamically expanding pharmaceutical market

From 2016 GR Rxmidas 100% Richter owned

Sales network personnel: 233

Higher sales level of Cavinton and Escapelle

M9 2016

Latin America

20

Sales* in M9 2016: USD 16.0mRegional presence:− Brazil− Mexico− Colombia− Ecuador− Bolivia− Peru− Chile

Women’s Healthcare products in focusGradual launch of ESMYA®

*Turnover of the pharmaceutical segment

Mediplus N.V.

M9 2016

15%

21%

38%

3%

6%

17%

Pharmaceutical sales by therapeutic areas

Muscle relaxants

Gastrointestinal

Other

Women’s Healthcare

Central nervous system

Cardiovascular

Total: EUR 759.9m

M9 2016

21

M9 2016

23%

4% 10%

37%

6%10%

4%

6%

22

Women’s Healthcare sales by region

CEEHungary

CIS

USA

RoW

EU15

Ex-Grünenthalportfolio

Total: HUF 90.4bnEUR 289.5m

EURm

22

China

LatAm

0

50

100

150

200

250

300

Gynaecological sales Non‐gynaecological sales

M9 2016

23

Sales impact of Ex-Grünenthal portfolio and ESMYA®

Ex-Grünenthal portfolio sales: EUR 35.0m

ESMYA® sales: EUR 48.1m

Subtotal: EUR 83.1m

Women’s Healthcare sales

Ex-Grünenthalportfolio

ESMYA®

WH Total: EUR 289.5m

12%

17%

M9 2016

24

Fertility – Bemfola®

innovative biosimilar product addressing female fertilitydeveloped as a biosimilar to Gonal-f®

recombinant-human Follicle Stimulating Hormone (r-hFSH) launch: Q2 2014currently commercialized in the EU, in Israel, in the Middle East and in AustraliaRichter acquired global marketing rights for the product (excluding the USA)

Sales in M9 2016: EUR 7.3m – not included in consolidated turnover

M9 2016

25

Lisvy® - product withdrawal

Lisvy® is a gestodene and ethynil estradiol containing transdermal contraceptive patch licensed-in from Bayer HealthCare

Richter received a notification from Bayer HealthCare, according to which certain stability tests carried out under specific conditions resulted in out-of specification results

Bayer investigates the causes of non-specific responses

Richter consulted with the responsible national authorities

On 10 October 2016 Richter initiated the withdrawal of Lisvy® with immediate effect on all markets involved

M9 2016

staff

26

Sales network

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2010 2011 2012 2013 2014 2015 M9 2015 M9 2016

CIS CEE Hungary EU15 China

M9 2016

27

Wholesale and retail

W&R sales contribution is 19% of total sales

76% of the W&R turnover originates in Romania

20.4% sales increase in EUR in Romania

27

M9 2016

25.25%

67.61%

7.14%

28

Ownership structure

30 September 2016

Hungarian State Holding Company

Domestic investors International

investors

28

M9 2016

Thank you for your attention!

29

M9 2016

Appendix

Exchange rates

30

M9 2016

31

Evolution of currency exchange rates

HUF

260

280

300

320

340

EUR HUFUSD HUF

M9 2016

32

Evolution of currency exchange rates

EUR

65

70

75

80

85

90

95

EUR RUB

M9 2016

33

Evolution of currency exchange rates

HUF

3,25

3,50

3,75

4,00

4,25

4,50

4,75

HUF RUB

M9 2016

M9 2016 H1 2016 Q1 2016 M12 2015 M9 2015

EURHUF 312.23 312.67 311.98 309.67 308.82

USDHUF 279.64 279.95 283.12 279.16 277.39

RUBHUF 4.09 4.00 3.77 4.70 4.78

EURRUB 76.34 78.17 82.75 65.89 64.61

EURUSD 1.12 1.12 1.10 1.11 1.11

34

Exchange rates At period end

Average

30.09.2016 30.06.2016 31.03.2016 31.12.2015 30.09.2015

EURHUF 309.15 316.16 314.16 313.12 313.32

USDHUF 276.35 284.29 276.62 286.63 279.05

RUBHUF 4.36 4.43 4.09 3.88 4.26

EURRUB 70.91 71.73 76.81 80.70 73.55

EURUSD 1.12 1.11 1.14 1.09 1.12