Richter Gedeon Nyrt. Updates Market Outlook and Strategic Plans
MBH Investment Bank Issues Updated Performance Analysis and Strategic Goals for 2035
MBH Investment Bank has been actively tracking the performance of Richter Gedeon Nyrt.
since September 2024, with analysts updating their price expectations based on the company's fourth-quarter results.
Richter Gedeon has reported a 9% year-on-year increase in total revenue, reaching HUF 221.1 billion for the fourth quarter, although this slightly falls short of analyst projections.
The company's gross margin has grown by 16.2%, amounting to HUF 151.1 billion, yet it does not meet the consensus forecast of HUF 156.9 billion.
The adjusted EBIT was HUF 70.9 billion, also lower than the anticipated HUF 77.9 billion.
However, the net income demonstrated strong performance, exceeding expectations with HUF 64 billion, which is over HUF 3 billion higher than predicted.
Richter has introduced its strategic framework extending to 2035, outlining tasks and goals aimed at mitigating a potential rapid and substantial profit loss due to the expiration of the cariprazine patent by the decade's end.
The MBH has reiterated its buy recommendation, maintaining a target price of HUF 13,105.
The refreshed strategy emphasizes revenue and R&D investments in the gynecology business unit, aiming to double these figures by 2035. New therapeutic areas targeting urinary health, polycystic ovary syndrome (PCOS), and female oncology are planned alongside the expansion of existing segments such as contraception and endometriosis treatment.
Additionally, Richter aspires to bolster its presence in the US and strengthen its position in Western Europe.
The neuropsychiatry segment will focus on maximizing the value of cariprazine during its patent period.
Following this, the company aims to keep the Central Nervous System (CNS) division as a value-generating segment in the 2030s and 2040s, with the development of a new molecule with blockbuster potential, currently in phase two clinical trials as RGH-932.
Richter anticipates a doubling of its General Medicines revenues by 2035, aiming for an adjusted EBIT margin exceeding 20%.
The company plans to increase the freshness index of its portfolio significantly and raise R&D spending as a percentage of revenue to 7%.
The therapeutic areas of interest, including cardiovascular, traditional CNS, hematology, and diabetes/obesity treatments, are projected to yield attractive growth opportunities despite existing price erosion.
In biotechnology, Richter expects to see it become its fastest-growing unit, targeting strong double-digit growth through the introduction of numerous new products and expanded contract development and manufacturing organization (CDMO) capacity.
The goal remains to achieve profitability by 2027 through various product launches.
Looking ahead, Richter forecasts revenues from non-CNS segments to grow at an average rate of 7-8% annually, reaching approximately €3.2-3.5 billion by 2035. Furthermore, it aims to enhance the EBIT margin from non-CNS operations to over 20% by 2030-31.
Based on financial outlooks through 2025-35, Richter believes that an annual base dividend of €200 million will remain sustainable beyond the expiration of cariprazine patents, with substantial dividend growth expected in the first half of the projected period, followed by moderate growth until 2035.
Effective management of upcoming challenges associated with the cariprazine patent expiration is currently a key concern for investors, and Richter presents strategic plans segmented by business units in its recent disclosures.
The company is prioritizing solid growth across its four divisions, aiming for robust performance independent of cariprazine by 2030, with a targeted adjusted EBIT exceeding 20% by the decade's end, which implies necessary profitability within the biotechnology unit and ongoing dynamic growth in the WHC and GenMed sectors.
For 2025, management expects a 10% revenue growth target, with similar growth anticipated for adjusted operating profit.
Additionally, the company has noted that American tariffs on European pharmaceuticals will not impact management's plans.
Richter has experienced a significant increase in R&D expenditures, which rose by 50%, now accounting for 13% of fourth-quarter revenue.
Noteworthy results include the RGH-932/ABBV-932 program, developed in partnership with AbbVie, which has entered phase two clinical trials.
Furthermore, new phase two trials for generalized anxiety disorder are expected to commence in 2025.
Among the business units, the gynecology (WHC) unit reported a 12% revenue increase in 2024, driven by strong performances from key brands and successful portfolio management.
The neuropsychiatry (CNS) division also saw revenue growth by 12% year-on-year in the fourth quarter, reflecting continued prescription demand and significant milestone revenues.
The general medicines (GenMed) unit reported growth of 10.5%, while the biotechnology unit also posted a 17% revenue boost, attributed to robust sales of teriparatide biosimilars.
MBH reaffirmed its price target at HUF 13,105 and maintained a buying recommendation, citing a favorable operating environment amidst strong fundamentals.
since September 2024, with analysts updating their price expectations based on the company's fourth-quarter results.
Richter Gedeon has reported a 9% year-on-year increase in total revenue, reaching HUF 221.1 billion for the fourth quarter, although this slightly falls short of analyst projections.
The company's gross margin has grown by 16.2%, amounting to HUF 151.1 billion, yet it does not meet the consensus forecast of HUF 156.9 billion.
The adjusted EBIT was HUF 70.9 billion, also lower than the anticipated HUF 77.9 billion.
However, the net income demonstrated strong performance, exceeding expectations with HUF 64 billion, which is over HUF 3 billion higher than predicted.
Richter has introduced its strategic framework extending to 2035, outlining tasks and goals aimed at mitigating a potential rapid and substantial profit loss due to the expiration of the cariprazine patent by the decade's end.
The MBH has reiterated its buy recommendation, maintaining a target price of HUF 13,105.
The refreshed strategy emphasizes revenue and R&D investments in the gynecology business unit, aiming to double these figures by 2035. New therapeutic areas targeting urinary health, polycystic ovary syndrome (PCOS), and female oncology are planned alongside the expansion of existing segments such as contraception and endometriosis treatment.
Additionally, Richter aspires to bolster its presence in the US and strengthen its position in Western Europe.
The neuropsychiatry segment will focus on maximizing the value of cariprazine during its patent period.
Following this, the company aims to keep the Central Nervous System (CNS) division as a value-generating segment in the 2030s and 2040s, with the development of a new molecule with blockbuster potential, currently in phase two clinical trials as RGH-932.
Richter anticipates a doubling of its General Medicines revenues by 2035, aiming for an adjusted EBIT margin exceeding 20%.
The company plans to increase the freshness index of its portfolio significantly and raise R&D spending as a percentage of revenue to 7%.
The therapeutic areas of interest, including cardiovascular, traditional CNS, hematology, and diabetes/obesity treatments, are projected to yield attractive growth opportunities despite existing price erosion.
In biotechnology, Richter expects to see it become its fastest-growing unit, targeting strong double-digit growth through the introduction of numerous new products and expanded contract development and manufacturing organization (CDMO) capacity.
The goal remains to achieve profitability by 2027 through various product launches.
Looking ahead, Richter forecasts revenues from non-CNS segments to grow at an average rate of 7-8% annually, reaching approximately €3.2-3.5 billion by 2035. Furthermore, it aims to enhance the EBIT margin from non-CNS operations to over 20% by 2030-31.
Based on financial outlooks through 2025-35, Richter believes that an annual base dividend of €200 million will remain sustainable beyond the expiration of cariprazine patents, with substantial dividend growth expected in the first half of the projected period, followed by moderate growth until 2035.
Effective management of upcoming challenges associated with the cariprazine patent expiration is currently a key concern for investors, and Richter presents strategic plans segmented by business units in its recent disclosures.
The company is prioritizing solid growth across its four divisions, aiming for robust performance independent of cariprazine by 2030, with a targeted adjusted EBIT exceeding 20% by the decade's end, which implies necessary profitability within the biotechnology unit and ongoing dynamic growth in the WHC and GenMed sectors.
For 2025, management expects a 10% revenue growth target, with similar growth anticipated for adjusted operating profit.
Additionally, the company has noted that American tariffs on European pharmaceuticals will not impact management's plans.
Richter has experienced a significant increase in R&D expenditures, which rose by 50%, now accounting for 13% of fourth-quarter revenue.
Noteworthy results include the RGH-932/ABBV-932 program, developed in partnership with AbbVie, which has entered phase two clinical trials.
Furthermore, new phase two trials for generalized anxiety disorder are expected to commence in 2025.
Among the business units, the gynecology (WHC) unit reported a 12% revenue increase in 2024, driven by strong performances from key brands and successful portfolio management.
The neuropsychiatry (CNS) division also saw revenue growth by 12% year-on-year in the fourth quarter, reflecting continued prescription demand and significant milestone revenues.
The general medicines (GenMed) unit reported growth of 10.5%, while the biotechnology unit also posted a 17% revenue boost, attributed to robust sales of teriparatide biosimilars.
MBH reaffirmed its price target at HUF 13,105 and maintained a buying recommendation, citing a favorable operating environment amidst strong fundamentals.
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