Richter GroupM12 2015

Richter Group

Full Year Report, M12 2015 9 January 2016

Summary – M12 2015M12 2015

Summary M12 2015

Consolidated sales: +2.9% (EUR), +3.3% (HUF)+ good growth in EU15 countries in China and in Romania (W&R)+ good growth in EU15 countries, in China and in Romania (W&R)+ sales growth in Russia in RUB− significant sales decline in Ukraine

Profit for the period*: +116.1% (EUR), +116.7% (HUF)+ substantial one-off milestone payment from Allerganp y g+ significant decrease in operating expenses+ net financial loss

22

*Net income attributable to owners of the parent

Key events 2015M12 2015

Key events 2015

FDA approval of cariprazine 17 S t b 2015FDA approval of cariprazine – 17 September 2015

European Commission approval of Esmya® 5 mg for intermittent treatment in the long term management of Uterine Fibroids (myomas)– 28 May 2015

Marketing authorisation application for biosimilar products – EMApegfilgrastim – 8 December 2015

d bi i il t A ’ N l t− proposed biosimilar to Amgen’s Neulastateriparatide – 4 January 2016− proposed biosimilar to Eli Lilly’s Forteop p y

3

Consolidated financial highlightsM12 2015

Consolidated financial highlights

HUF Change % EUR Change % g g

Total revenues 365.2bn 3.3 1,179.4m 2.9

Profit from operations 67.4bn 78.5 217.6m 77.9

Profit for the period* 54 1bn 116 7 174 6m 116 1Profit for the period 54.1bn 116.7 174.6m 116.1

EPS (diluted) 291 115.6 0.94 113.6

*Net income attributable to owners of the parent

4

Geographical composition of Group salesM12 2015

Geographical composition of Group sales

Hungary HungaryRussia Poland Russia

Poland9%

6%24%10%

6%22%

FY2014 FY2015

Romania

Ukraine

Romania

Other CIS

Ukraine12%

5%

7%

14%

9%

2%

EU10

EU15

Other CISChina

EU10

LatAm

10%

13%

7%

5%4%

2%

3%

LatAm

4 %14%

7%

5%5%

2%

EU15USA RoW

EU15USARoW

T t l T t l

China5% 3% %

Total: HUF 353.7bn

EUR 1,145.7m

Total: HUF 365.2bn

EUR 1,179.4m

+ 3.3% (HUF) + 2.9% (EUR)

55

P&LM12 2015

P&L

HUFmM12 2015

Change %

EURmM12 2015

Change %

as % of total revenues

Total revenues 365,220 3.3 1,179.4 2.9

Gross profit 221,433 3.4 715.1 3.1 60.6

S&M expenses (97,216) -4.4 (313.9) -4.7 26.6

A&G expenses (20,387) 3.7 (65.8) 3.5 5.6

R&D expenses (34,824) -20.2 (112.5) -20.4 9.5

Other income and other expenses (1,634) -85.5 (5.3) -85.5 0.5

Profit from operations 67,372 78.5 217.6 77.9 18.4

Net financial income (8,315) -34.9 (26.9) -35.0 2.3

Profit for the period* 54,062 116.7 174.6 116.1 14.8

*Profit attributable to owners of the parent

6

Flat gross profit, gross marginM12 2015

Flat gross profit, gross margin

+ Increase of turnover in EU15+ Increase of turnover in EU15 countries and in China

+ Increase of turnover in RussiaHUFm

40%

50%

60%

200 000

250 000in RUB+ Improvement of the product

mix

HUFm60.6%60.5%

10%

20%

30%

40%

50 000

100 000

150 000mix + Appreciation of USD and CNY

against HUF and EUR

0%

10%

0

Gross profit Gross margin- Significant sales decline in

Ukraine Gross profit Gross marginUkraine- Weakening RUB exchange rate

against EUR and HUF (YoY)

7

EUR RUB → 31.5%

Increasing operating marginM12 2015

Increasing operating margin

Substantial one-off milestone

20%

25%

60 000

70 000

80 000

HUFm

18.4%

Substantial one off milestone payment from Allergan

Decreasing marketing costs

10%

15%

20 000

30 000

40 000

50 000

60 000

10.7%

Decreasing marketing costs

Significantly decreasing R&D di

0%

5%

0

10 000

20 000expenditures

Profit from operation Operating margin

8

Pharmaceutical sales*M12 2015

Pharmaceutical sales

Key drivers of growth:

Women’s Healthcare

China and EU15 countries

Successful product launches

*89% of turnover originates from outside of Hungary

9

g g y

9

HungaryM12 2015

Hungary

Turnover *

Stable pharmaceutical marketHUFbn

30

40Sales increase: 6.5% in HUF

10

20Success of products launched in recent years

0

*Turnover of the pharmaceutical segment

10

EU – composition of sales*M12 2015

EU composition of sales

EU15− strengthening our position

49%g g p

in key Western-European markets

− own Women’s Healthcaresales and marketing network

51%

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

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

11

EU15M12 2015

EU15

Turnover*

14.6% sales increase in EUR EURm

120140160180

Recently established S&M network

20406080

100

Women’s Healthcare products: Esmya®, Lisvy®, Richter OC

020y , y ,

portfolio, acquired OCs

*Turnover of the pharmaceutical segment

12

Poland, Romania, EU10M12 2015

Poland, Romania, EU10

I i i titi

Turnover*

Increasing generic competition

Price erosionEURm

150

200

Poland: 8 7% increase in PLN

EURm

0

50

100– 8.7% increase in PLN– strong flu epidemic –

Groprinosin sales increasel l l l i th b

Poland Romania EU10

– low sales levels in the base period

Romania:– flat sales levels

(-0.5% in RON)*Turnover of the pharmaceutical segment

( 0.5% in RON)

13

CISM12 2015

CIS

Turnover*Sales decline (-11.2% in EUR)

EURm

300

400

500

Russia− RUB devaluation (YoY)

l d f R i

0

100

200− slowdown of Russian economy

Ukraine

Russia Ukraine Other CIS

Ukraine− political uncertainty− UAH devaluation− strongly decreasing purchasing

power *Turnover of the pharmaceutical segment

14

RussiaM12 2015

Russia

Turnover*

Sales increase in RUB(23.7% in RUB; -5.9% in EUR)

EURm

300

400

Turnover

Price increase: 1 January 2015

Significant weakening of

EURm

100

200Significant weakening of EURRUB exchange rate in M12 2015: 31.5% (YoY)

0Decreasing purchasing power

*Turnover of the pharmaceutical segment

15

Ukraine, Other republicsM12 2015

Ukraine, Other republics

Turnover*

Ukraine− 59.8% decline (USD 29.5m)− political and economic

USD

150

200

Turnoverpturmoil

− UAH devaluationUSD UAH: 45 1% (YoY)

USDm

0

50

100USD UAH: 45.1% (YoY)

− significantly decreasing purchasing power

0

Ukraine Other CIS

Other republics− 1.5% increase (EUR)

(-17.8% in USD)− devaluation of Kazakh

Tenge*Turnover of the pharmaceutical segment

16

USAM12 2015

USA

Turnover*

Sales decline (-6.5% in USD)

USDm

160

200

Turnover

Significant proportion of Women’s Healthcare – 82%

USDm

40

80

120

Emergency contraceptive –significant contributor to

0

gachieved performance

*Turnover of the pharmaceutical segment

17

ChinaM12 2015

China

Sales in M12 2015: EUR 54.4m

Dynamically expanding pharmaceutical market

From 2016 GR Rxmidas 100% Richter ownedFrom 2016 GR Rxmidas 100% Richter owned

Sales network: 224 medical representatives

One-off preshipment

Appreciation of CNY* against EUR

18

* FOREX gains originating from the appreciation of CNY shown under Other income and other expenses.

Latin AmericaM12 2015

Latin America

S l * i M12 2015 USD 21 5Sales* in M12 2015: USD 21.5m

Regional presence:Regional presence:− Brazil− Mexico− Colombia− Ecuador− Bolivia 22 October 2015 – Richter completed− Peru− Chile

22 October 2015 Richter completed the acquisition of Mediplus N.V.

Women’s Healthcare products in focus

19

*Turnover of the pharmaceutical segment

Pharmaceutical sales by therapeutic areasM12 2015

Pharmaceutical sales by therapeutic areas

13%17%

Other Central nervous system

22%4%

6%Muscle relaxants

Gastrointestinal Cardiovascular2015 22%4%Gastrointestinal 2015

38%

Women’s Healthcare

Total: EUR 997.5m

20

Women’s Healthcare sales by regionM12 2015

Women s Healthcare sales by region

4004%

11%CEE

Hungary

CIS EURm

200

250

300

35023%

3%

Ex-Grünenthalportfolio

Chi

50

100

150

200

37%

13%

4%3%

EU15

China

LatAm

0

Gynaecological sales Non‐gynaecological sales

5%USA

RoW

y g gy g

Total: HUF 118.4bnEUR 382.3m

2121

Sales of Ex-Grünenthal portfolio and ESMYA®

M12 2015

Sales of Ex Grünenthal portfolio and ESMYA

Ex-Grünenthal sales: EUR 49.7m

ESMYA® sales: EUR 49.8m

Women’s Healthcare sales

13%Subtotal: EUR 99.5m

13%GrünenthalWH Total: EUR 382.3m

22ESMYA®

Sales networkM12 2015

Sales network

staff

1 600

1 800

1 200

1 400

1 600

800

1 000

200

400

600

0

200

2008 2009 2010 2011 2012 2013 2014 2015

CIS CEE Hungary EU15 China

23

Wholesale and retailM12 2015

Wholesale and retail

W&R sales contribution is 17% of total sales

73% of the W&R turnover originates in Romania

18.2% sales increase in EUR in Romania

2424

Ownership structureM12 2015

Ownership structure

31 December 2015

Domestic

68.00%

6.75%investors International investors

25.25%

Hungarian State Holding g gCompany

2525

M12 2015

Thank you for your attention!y y

26

AppendixM12 2015

Appendix

Exchange rates

27

Evolution of currency exchange ratesM12 2015

Evolution of currency exchange rates

HUFHUF

320

340

300

320

280EUR HUFUSD HUF

260

240

28

Evolution of currency exchange ratesM12 2015

Evolution of currency exchange rates

EUR

85

90

70

75

80

60

65

70

EUR RUB

50

55

45

29

Exchange ratesM12 2015

Exchange rates At period end

31.12.2015 30.09.2015 30.06.2015 31.03.2015 31.12.201431.12.2015 30.09.2015 30.06.2015 31.03.2015 31.12.2014

EURHUF 313.12 313.32 315.04 299.14 314.89

USDHUF 286.63 279.05 282.75 278.94 259.13

RUBHUF 3.88 4.26 5.07 4.83 4.45

EURRUB 80.70 73.55 62.14 61.93 70.76

AverageEURUSD 1.09 1.12 1.11 1.07 1.22

M12 2015 M9 2015 H1 2015 Q1 2015 M12 2014

EURHUF 309.67 308.82 307.03 308.58 308. 74

279 16 277 39USDHUF 279.16 277.39 275.73 274.37 231.98

RUBHUF 4.70 4.78 4.91 4.39 6.16

EURRUB 65.89 64.61 62.53 70.29 50.12

EURUSD 1.11 1.11 1.11 1.12 1.3330