Richter Gedeon Vegyeszeti Gyár Nyilvánosan Muködo Rt : Gedeon Richter Plc. - Interim management statement 3 months to March 2024

Gedeon Richter

Q1 2024

Earnings Report

14 May 2024

Q1 2024 highlights - 2024 guidance fully reiterated

2024 guidance	Pharma Revenues (CER*)	EUR 2.15-2.25bn
to grow "low-to-mid-teens"%
Clean EBIT (CER*)	EUR 725-750mn

Q1 2024 CER revenue growth +15.5% (nearly 3ppt FX headwind in Q1), at the high end of the FY guidance range

Q1 2024 CER Clean EBIT at EUR 178mn (+17%), in line

with guidance range, if considering some seasonality/phasing

				HUF 200.1bn			HUF 65.0bn
	Q1
			(EUR 0.52bn)			(EUR 167mn)
	H1			Pharma sales			Clean EBIT2
				+12.6%			+10.5%
	Q1-Q3
	FY			HUF 52.7bn			HUF 373
				Free Cash-flow3			EPS
				+13.6 HUFbn		+77.6%

HUF 63.6bn

(EUR 164mn)

EBIT1 +17.5%

15.9%

Return on Equity4

+0.4ppt

1. EBIT: Profit/loss from operations
2. Clean EBIT (cEBIT): Gross profit less op. expenses (S&M, G&A, R&D) less clawback plus milestone income. cEBIT reflects the profitability of the core business, excl. one-offs
3. Free Cash Flow: Operating Cash flow after changes in Net Working Capital plus interest received less Capex (PP&E)
4. Return on Equity: Cumulative net profit for the last 4 quarters divided by the actual quarter's equity

* CER (constant exchange rate) calculation is based on 2023 actual FX rate (HUFEUR = 382)

2

Financial and operational highlights

Financial highlights

• Pharma revenues were at HUF 200bn (EUR 515mn) in Q1 2024, up 13% YoY
• CER (ex-FX) revenue growth was 16%, at the high end of the FY 2024 guidance range; the nearly 3ppt FX headwind in the period was due to the 19% weaker RUB YoY, only partly offset by the weaker HUF
• Ex-FXsales growth was driven by continued very strong (20%+) growth of both cariprazine (CNS) and the WHC segment. BIO revenues also jumped from a low base.
• Gross profit (pharma) grew by 13% to HUF 141bn and gross margin marginally improved (by 0.2ppt) to 70.2% in Q1 2024 despite the adverse FX
• Clean EBIT (pharma) reached HUF 64bn (EUR 166mn), up 9% YoY, while CER (ex-FX) Clean EBIT reached EUR 178mn, up 17%, in line with the full-year guidance range
• Free cash flow (before M&A) amounted to HUF 53bn in Q1 2024, a significant, 35% increase YoY, helped by the strong operating cash flow and the realized FX gains (vs. large FX losses a year ago)
• M&A (Formycon) and a small buyback used up bulk of the FCF, leading to a small net cash accumulation
• The AGM approved the payment of HUF 78.8bn dividend (approx. 423 DPS) from 2023 net profit. This payment is expected to take place during Q2 2024.

Business drivers and key events

• Acquisition of a 9.08% stake in leading biosimilar developer Formycon (FYB) for EUR 82.8mn (Jan 2024)
• Acquisition of HELM's interest in the German biological assets, assuming 100% ownership of RHB (Richter- Helm BioLogics) and RHT (Richter-Helm BioTec) for a cash payment of EUR 112.4mn (not yet closed)
• Offer submitted to acquire certain assets from Mithra Pharmaceuticals; negotiations ongoing

3

Steroids in wastewater - well below the safety threshold

Pharmaceuticals in the environment - steroids

• Following the working out and acceptance of a risk assessment system and methodology, we rolled out a voluntary steroid active substance monitoring and measurement system at our major steroid production sites in the last three years
• We are monitoring wastewater steroid content based on an annual measurement plan. We plan to further roll out this monitoring system to non-steroid APIs as well
• For all APIs tested, the amount released into the environment was at least one order of magnitude smaller than the value with a potentially harmful effect on the environment

API	Site	Roll-out	PEC/PNEC*
(acceptable value <1)
desogestrel	Budapest	2023	0.11
drospirenone	Dorog	2022	0.00015
estetrol	Dorog	2022	0.000042
estradiol-17ß-acetate	Dorog	2023	0.000000357577
estradiol methylether	Budapest	2023	0.064196071
acetate
17β-estradiol	Dorog	2023	0.002145461
norelgestromin	Dorog	2021	0.0011
norethisterone	Dorog	2023	0.0016

• PEC = Predictive Environmental Concentration PNEC = Predictive non-effective Concentration

Sustainability reporting: 2023 report published + prep for CSRD

• Richter published its 2023 Sustainability Report on 26 April 2024 along with its Annual Report
• Preparation has already begun for the 2024 reporting, first time application of EU's CSRD and the
  European Sustainability Reporting Standards (ESRS)
• A Double Materiality Assessment
  - according to ESRS - is in progress to reassess and define the relevant and material topics and data points for the sustainability reporting

4

Financial

Highlights

5

Pharmaceutical revenues (ex-FX) rose by 16% in Q1 2024

Pharmaceutical Revenues, cumulative (HUF bn, EUR mn)		Pharmaceutical Revenues by region (HUF bn)

+12.6%+15.5%

200.1	205.3

177.8

	Western Europe
515
Pharma other	Central Europe
GM	Eastern Europe
BIO	North America
WHC

30.9	36.5
	39.643.4
	38.5	43.5
		46.7
		57.4

CNS	Asia & Pacific

9.1

5.6

15.2

Q1 2023

Q1 2023 Q1 2024Q1 2024 FX-adjusted

	Latin America
Q1 2024	Rest of the World
(EURmn)

7.3

2.3

1.8

Q1 2024

Pharmaceutical Revenues (HUF bn)		RUBHUF exchange rate

+12.6%

200.0200.1

177.8184.4185.3

Q1 2023

Q2 2023

Q3 2023

Q4 2023

Q1 2024

All data in HUFbn

	8.0
	7.0
	6.0
Pharma Other	5.0			-19.3%
BIO
WHC	4.0
GM	3.0
CNS
0.0
	01/01/2022	07/01/2022	01/01/2023	07/01/2023	01/01/2024
					Source: MNB
					6

Outstanding WHC, normalizing BIO and strong Reagila® drove internal performance in Q1

WHC Revenues

+17.2% +21.7%

74.2	77.0

63.3

Q1 2023 Q1 2024Q1 2024 FX-adjusted

BIO Revenues

+45.6% +43.5%

11.4

11.3

7.9

Q1 2023 Q1 2024Q1 2024 FX-adjusted

GM Revenues

-1.7%+4.0%

59.5	58.5	61.9

Q1 2023 Q1 2024Q1 2024 FX-adjusted

CNS ex-Vraylar Revenues

+35.2%	+35.8%
3.5	3.6

2.6

Q1 2023 Q1 2024Q1 2024 FX-adjusted

Key messages

• WHC revenue growth accelerated in Q1 2024 on the back of very strong performance in China, LatAm and North America, to some extent driven by the timing of product delivery. The traditional portfolio also generated material growth, and the ramping sales of new, innovative products (like Drovelis® and Ryeqo®) remained impressive.
• GenMed sales were held back by continued FX headwind (weak RUB), while ex-FX growth was affected by shipment schedules in Q1; new product launches continued
• BIO revenues jumped YoY, as CDMO revenues improved from a low base and Terrosa® sales kept on growing
• CNS (ex-Vraylar) performance remained robust, as Reagila® sales continued to rise dynamically (+35%) both in our own network and at partners

All data in HUFbn	7

Opex increased by 17% YoY, driven by R&D (clinical programs)

Operating costs as a % of Pharma revenues (%)

Operating costs (pharma) (HUFbn)

40			34					34				36
	33		33
35	32	31	32			31
		29		30			30
30									28		Cost of Sales
24
25				23			23						S&M
	20	20	20	21		20	20			19
20			19		19	18	R&D
15	14	13	13	9	13	13	10	11	10	12	11	10	11	G&A
10
							7		6
6	5	5	4	5	5	4	5	6	6	6
5
0
Q1 21	Q2 21 Q3 21	Q4 21 Q1 22	Q2 22	Q3 22 Q4 22	Q1 23 Q2 23	Q3 23 Q4 23 Q1 24

63.0

11.1

17.2

34.7

71.2

12.1

22.2

37.0

+17.1%

65.9

11.5

20.0

34.4

66.5

12.1

19.0

35.4

73.8

12.5

22.7

38.5

S&M

R&D G&A

Operating costs as a % of Pharma revenues (%)

35		33	32	31
30									Cost of Sales
25		21	21	19
		S&M
20
								R&D
15		12	11	10
		G&A
10
	5	5		6
5
0
FY 2021	FY 2022	FY 2023

Q1 2023

Q2 2023

Q3 2023

Q4 2023

Q1 2024

Key messages

• Cost of Sales as a % of sales was almost unchanged YoY, implying close to flat gross margin
• Operating expenses rose by 17% YoY in Q1 2024, outpacing the growth of revenues, primarily due to materially higher R&D expenses
• R&D expenses increased by 33% YoY, driven by the CNS and BIO businesses, where a strong pipeline of clinical programs continued to progress
• Sales & Marketing expenses rose by 11%, the largest increase observed in China related to the intensified sales efforts
• G&A expenses rose by 13%, partly reflecting general cost inflation in Hungary and also costs incurred on efficiency projects

All data in HUFbn	8

Clean EBIT (ex-FX) increased by 17% in Q1 2024

Pharmaceutical Clean EBIT, cumulative (HUF bn, EUR mn)

+8.9%+16.7%

59.1

64.4

69.0

165.7

0.111.0

14.2	16.8							Pharma other
14.7							GM
									BIO
36.5	42.7							WHC
								CNS
-6.4		-5.4	-0.7			Q1 2024
Q1 2023	Q1 2024	Q1 2024		(EURmn)
				FX-adjusted

Pharmaceutical Clean EBIT (HUF bn)

Key messages

•	Clean EBIT (pharma) rose by 9% YoY in Q1 2024 to HUF
	64.4bn, as the RUB weakness remained a headwind in Q1
	vs. the base period
•	FX-adjusted Clean EBIT increased by 17% YoY to HUF
	69bn, reflecting the underlying strength of the business;
	this is in line with the full-year guidance considering some
	seasonality/phasing effect
•	Small milestone revenue (HUF 1.2bn) supported Clean EBIT
	in Q1 2024 vs almost none a year ago; this was more than
	offset by higher clawback YoY (in the WHC segment)
•	CNS and WHC were the key drivers for the earnings growth
	in Q1 on the back of continued strength in Vraylar® and
	across the bulk of the WHC portfolio
•	BIO losses narrowed slightly YoY, as CDMO revenues rose

59.1

0.1

14.7

14.2

36.5

-6.4

Q1 2023

			+8.9%
			64.8
53.0			7.9
	0.0	14.8
10.2

8.5

38.047.1

	-3.7			-5.3
Q2 2023	Q3 2023

59.4		64.4					WHC
					GM
			6.6	16.8
							CNS
5.8
					11.0					Pharma Other
											BIO
53.3		42.7
	-5.3	-1.0		-5.4		-0.7
Q4 2023	Q1 2024

from a low base and Terrosa® kept on growing, more than

offsetting higher R&D expenses

• GenMed Clean EBIT (and profit margins) was hit by adverse

FX movements (19% weaker RUB YoY)

All data in HUFbn	9

Below-the-line: large FX gains boost net profit; normalized taxes

Net Profit in Q1 2024, below-Clean EBIT items (HUF bn)

Includes all taxes in line with

				1.7	1.2	3.0		Global Minimum Tax and some
						deferred tax
No material
						13.7
adjustment
items in Q1			15.2
								68.2
					Including HUF 2.2bn
65.0						0.3
1.4	63.6			income from Richter-Helm
			(incl. Q4 23 adjustment)
			o/w HUF 2.1bn realized;
			HUF 13.1bn unrealized
Clean EBIT	Other rev/exp,	EBIT	FX gain/losses	Net interest	Other Fin inc/exp	Associates	Taxes	Minority int.	Net Profit*
	one-offs

Key messages

• • Significant FX gains - predominantly unrealized - boosted the net income in Q1 2024 (vs. large FX losses a year ago) on the back of the weaker HUF at the end of the period. FX gains are primarily related to working capital items.
  • Taxes are accounted for in accordance with the Global Minimum Tax (15%); some higher-tax countries bring effective tax rate slightly higher, while utilizing deferred tax assets reduces the cash tax payment somewhat
  • Net profit came in at HUF 68.2bn, a very significant 74% increase YoY, due to higher operating profits and the FX losses turning into FX gains this year
• Profit for the period attributable to owners of the parent

All data in HUFbn

10