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Corporate strategy

Corporate strategy. Niche market player – therapeutic niche - women’s healthcare – geographic niche - C EE, CIS L ong-term supply agreement s in EU / USA – sophisticated chemistry knowledge Sound research and development activity – original research - focused exclusively on the CNS

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Corporate strategy

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  1. Corporate strategy • Niche market player • –therapeutic niche - women’s healthcare • –geographic niche - CEE, CIS • Long-term supply agreements in EU / USA • –sophisticated chemistry knowledge • Sound research and development activity • – original research - focused exclusively on the CNS • – developments - successful innovations • Licensing activity • – broadening of the existing product portfolio • –beneficial partner Regional multinational company

  2. Good growth driven by gynaecology and cardiovascular H1 2006 1996 Central Nervous System Gastro-intestinal Muscle relaxants Gastro-intestinal Muscle relaxants Central Nervous System 7% 3% 17 % 9% 4% Other 26 % 21 % 24 % 33 % Other 16 % 12% Cardio-vascular 28 % Cardio-vascular Gynaecology Gynaecology Sales US$ 410mUS$ 247 m

  3. Expanding gynaecological business • Niche player • Core expertise in steroid chemistry • Wide range of women’s healthcare products • Continuous expansion on traditional markets • FDA / EMEA compliant facilities • Long-term supply agreements – EU / USA US$ mn 185 + 28 % 115 90 H1 H1

  4. One of the broadest gynaecological portfolio • Oral contraceptives • third- and second-generation • Emergency pills • Hormone Replacement Therapy • tablets, patches • Antifungals • tablets, cream • Other gynaecological products • APIs

  5. Sales by product type Reproduction / Generic 71 % Generic development • focusing on niches • preparing for patent expiries Original research • focusing on CNS Licensing activity • beneficial partner Own developed compounds 18 % Licensed-in 11 % Source: Richter’s sales H1 2006

  6. Hungary - 8 % EU + 14 % 85 88 39 41 USA + 13 % 157 Other countries + 16 % CIS + 32 % Sales (US$ m) H1 2005 H1 2006 Hungary EU 78 93 34 USA 36 118 Other countries CIS US$ 410mUS$ 359 m 14 % increase IFRS unauditedfigures.

  7. US$ m CIS –continuous dynamic growth • Favourable market conditions • - stable political and economic environment • - high crude oil and natural gas prices • Increasing proportion of new • products: 38 % • Russia: DLO programme continues 216 + 32 % 157 118 H1 H1

  8. Russia – the Company’s largest market • Subsidy programme (DLO) – new reimbursement list from 1 January 2006 • – about US$ 1.0 bn allocated for 2006 – at retail price level • – H1 2006 – appr. US$ 20 m • Protek – changes to invoicing procedures • – Q1 2006 – about US$ 10 m

  9. Russia – sales breakdown US$ million 119 10 93 20 30 56 89 63 56 H1 H1 H1

  10. Expansion of sales network in the CIS region Number of sales stuff Total:700 Total: 140 H1

  11. US$ m USA • Sales increase from a low base • Steroids – supply agreements • Barr Labs. • J&J – several APIs • Generic business • lisinopril, famotidine, spironolactone • increasing competition, decreasing prices 70 + 13 % 39 34 H1 H1

  12. Balanced business model - two major export markets

  13. EU 25 Focused marketing strategies • Former EU 15 • Sales via partners • Finished and API shipments • Continual preparation for patent expiries • appr. 1/3 of EU 25 sales • New members from Central and Eastern Europe(PL, CZ, SK, Baltic S.) • Own sales network • Finished product supplies • New product launches • appr. 2/3 of EU 25 sales • Main drivers of growth in both areas • Gynaecology • Portfolio renewal

  14. Richter in Hungary HUF m • Unfavourable economic environment • Flat sales • Success of new products – renewal of product portfolio – 70 % of domestic sales 40 800 18 000 17 900 H1 H1

  15. Gross and operating margins

  16. Profit after taxation HUF m US$ m 43 600 + 56 % 218 30 000 + 42 % 142 19 200 99 H1 H1 H1 H1

  17. Capital expenditure HUF m US$ m 129 25 800 7 500 39 6 400 30 H1 H1 H1 H1

  18. Ownership structure on 30 June 2006 ÁPV Ltd. (Hungarian Privatisation and State Holding Company) 25.0 % International investors 66.0 % Domestic investors 9.0 % The only independent Hungarian pharmaceutical company

  19. THE RICHTER GROUP

  20. Gedeon Richter-RUS • Greenfield investment established – 1996 • Location – 100 km southeast from Moscow • Strategic goal – added local value • Ongoing investments – connected to the DLO programme – expansion of the packaging facility – upgrading of some production lines, equipments and laboratories – enhancement of storage capacity

  21. GZF Polfa • Acquisition in Poland – November 2002 • Strengthening of market presence in Central and Eastern Europe–a key element of Richter’s strategy – Poland – 3rd largest export market after Russia and USA • Transaction rationale– complementary product portfolio • –GMP-compliant facilities • – favourable location: 35 km southwest from Warsaw • Ownership ratio – since 2006 June: 70 %

  22. Gedeon Richter Romania • Acquisition – May 1998 • Major therapeutic areas– central nervous system, cardiovascular • Capital expenditure programmes – manufacturing facility to comply with GMP standards– regional development centre • Main areas of focus in 2006 – first deliveries to Western European markets – further expansion of sales and marketing teams

  23. Richter-Themis Ltd. • Joint venture established – Richter-Themis Medicare Private Ltd. – 51 % stake – August 2004 • Manufacturing – APIs and intermediates • Strategic goal – to increase synthetic capacity in a highly competitive environment • Building upon new facilities – operation started gradually from early 2006

  24. Unconsolidated sales of key subsidiaries

  25. Comparative figures – H1 2006 Consolidated Parent Consolidated / Parent HUF m HUF m % Total sales 104 621 86 765 120.6 Gross profit 62 215 54 567 114.0 Operating profit 23 239 21 260 109.3 Net profit 31 449 29 959 105.0 IFRS unaudited figures.

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