Gedeon Richter Ltd S/Gdr

So, good morning again and a very warm welcome to Gedeon Richter's first quarter 2026 conference call. My name is Robert Reti, Head of Investor Relations in ESG, the company, and it's my pleasure to welcome two members of the senior leadership team with me today for this call. László Kovács, Chief Financial Officer, and Tomáš Sojak, our Chief Commercial Officer. And the reason why Gabor is not with us, Gabor Orban, our CEO, is that he's on a business trip to Japan meeting our partners in this important country. Before we start the meeting, let me just quickly walk you through the usual technical details. We will be using presentation slides. This presentation is downloadable from our website, getonrichter.com. This is what we published this morning along with our results. The formal presentation will be followed by usual Q&A where you will have an opportunity to ask questions either through the raise your hand functionality of Microsoft Teams or in the chat box. And finally, just to remind you, this poll is recorded and I also want to draw your attention to the usual cautionary statement regarding potential forward-looking statements this presentation may include. And with that, let me hand it over to László, who will present the details of the last three months.

Thank you. Thank you. Thank you, Robi. The first quarter of 2026 was eventful and broadly in line with our expectations. The strong momentum continued across our innovative businesses, more notably CNS supported by the sustained outstanding performance of Raylar and by solid revenue contribution from biotech segment. This was partially offset by a softer than planned start of the year in case of women's healthcare, which was largely driven by delivery timing effects and in case of general medicines by multiple internal and external headwinds that affected our business. Despite the top-line pressures, clean ebit growth exceeded our initial expectations, supported by milestone income and the continuing benefits of our long-term cost management efforts. We once again reduced our operating cost base, with the sole exception of cost of goods sold, and delivered second highest free cash flow generation. Currency movements continue to weigh on our reported results, primarily impacting ROE and EPS figures, while at the same time a visible improvement in Hungary's country's premium and bond yields started to emerge during the quarter. Okay, but what does it mean for the rest of the year and further ahead? Following this very eventful first quarter, we remain confident that we are on the right track to deliver our high single-digit revenue and clean a bit growth target calculated on constant exchange rates for the full year 2026 and therefore reiterate our guidance. You can see a clear gap between the reported figures and the constant exchange rate figure. That gap will be there. It's significant if you're talking about the clean a bit figures. If the same ethics rates would be fixed for the rest of the year, a difference of 7-8% each point between the reported figures and the CER figures could persist. Looking ahead, we are particularly excited about a number of important value drivers. These include the upcoming launch of FiRevit. This is the first formal innovation in menopause for decades. The increasing contribution of our biosimilar portfolio, which may further narrow the gap to profitability in biotech, and our continued progress in joint R&D projects together with AbbVie. These elements reinforce our confidence in the sustainability of our growth and profitability trajectory beyond 2026. Supported by our exceptional free cash flow generation, 77 billion Hungarian Forints in this quarter, we will begin distributing the dividends June, while we remain fully committed to identify and execute the most compelling acquisition opportunities in line with our long-term value creation strategy. Now, in this quarter, let me share a few thoughts about everything that is beyond our financial performance, because expanding the access to health remains a core part of our mission. In women's healthcare, we continue to strengthen our original research pipeline. We targeted acquisitions and partnerships while significantly expanding our early-stage research capabilities. A major milestone ahead is the launch of FiRevi, which I just mentioned, which will be supported by patient awareness and, very importantly, educational initiatives across multiple countries. Since the launch of RiEco, RiEco has reached approximately 100,000 patients in the treatment of endometriosis. This was helping many women avoid invasive surgery. This also reduces medical risk and these women could remain active in the workforce and I think they can achieve a meaningful improvement in the quality of life. In CNS, our numbers are even more remarkable. Since only in 2025 alone, over 745,000 patients were treated in Europe and in the US and since launch this number goes beyond 2 million patients. This is extraordinary numbers. At the same time, our biotech and genmed portfolio play a critical role in improving access to affordable therapies. Recent biosimilar approvals in Europe and in the US and the advancement of multiple clinical programs can further support the broader patient reach. And last but not least, let me also mention that beyond our normal commercial activities, we also continue to contribute to access in underserved regions, including the distribution of more than 5 million units of emergency contraception through NGO partnerships.

I'd like to give an overview about the performance, business unit by business unit. Our quota of ungrowth was broadly in line with our expectation, though overall performance remained a few percentage points below target. Our plans have already incorporated the impact of shipment rescheduling related to the transition to new warehouse, and certainly to ensure uninterrupted patient supply, part of the shipment was brought forward into Q4 2025, which had a negative carryover effected on Q1 2026 with this quarter. This timing effect impacted mostly two business units, women health care and largely the general medicine business unit. Keeping general medicine business unit in the focus, additional external factors weighed on performance. First of all, the termination of an in-license product in 2025 with Rinaldim created an approximately 2% revenue gap that had to be absorbed in Q1. Furthermore, several key assumptions did not materialize. The flu season proved weaker than anticipated and identified risk that unfortunately materialized as risk, resulting in an approximately 3.5 percentage point negative variance versus the prior year and significantly affecting our GMAT growth opportunity. In addition, a product which went on the go on the event patient safety evaluation ultimately led to withdrawal of marketing authorisation across all markets basically, despite the ever strong scientific rationale to maintain restricted use in some major countries. In Uzbekistan, the introduction in this year, a new system, it is a reference pricing system combined with INM prescription, had a more pronounced market impact than expected, anticipated by us, resulting in up to a further 2 percentage point headwinds. Overall, These combined pressures outweighed the positive contribution from the therapeutic areas, where our performance was good, blood and metabolic, and the other therapeutic area, pain and neurology, and altogether we had an 8% decline in the GEMMET portfolio. Despite this decline, I'd like to highlight the performance in blood and metabolic therapeutic area. This continues to strengthen. Dovigatran, it maintains its leadership position across multiple markets. Adoxaban, after Roche, it reached the number one position in Hungary. In pain and neurology, we are regaining the market share through focused promotional efforts and a sustained supply right now. Women healthcare. Core product performance remained strong. Key brands including Rieco, including Evro, Drovelis and Lanzetto continue to deliver solid momentum, reinforcing our commitment to improve women's quality of life. One important element was in the APEC region that we had a delay of emergency contraception delivery from Q2. Altogether, we are absolutely confident that the Women Healthcare Business Unit will deliver double-digit growth by year-end. Underlying effects. 60 plus percent growth in the Q1. Very important that we are treating continuously new patients. The patient pick-up is very, very high for this product. Drovalis, 20 plus percent growth, gaining significant market share, a largely fat market. Preparations for a field-ready launch are progressing very well. We have phased market entries starting in Q2. So the underlying effect tells us that we will have a very strong performance again in the women healthcare portfolio this year. CNS has delivered a strong performance. Vrylar achieving 90% year-on-year growth, driven by robust prescription demand in both bipolar disorder and adjunctive MDD. Our own market, when we are looking to those markets where we are present, sales grew by 33%. It was supported in somewhat of a part reintegration of selected markets, which we took back from our partners. In the meantime, the partner sales unfortunately declined, but this is purely due to the shipment timing and it will recover by the end of the year. BBU growth had two major elements. One is the growth of the TerraParatide franchise. The second one is the new product launches. TerraParatide achieved a 10% growth on the markets where we are managing the product all together. And in the meantime, the partners had very, very strong performance as well. What we assume that this momentum persists in the near term for the partners. However, shipment volumes may moderate later in the year. Getting back to the new launches, it's important to see that they contributed nearly the same absolute growth as the Terry Poratide franchise. We have to very closely monitor the different market archetypes to maximize the potential, because we do see that in some EU archetypes, market archetypes, the price challenge is very, very significant. Looking ahead, we expect a strong performance and a double-digit growth from our innovation pillar, and we anticipate that the biotech launches through the year and the teriparatide performance will offset the negative Q1 impact in GMAT, and we are expecting to deliver a solid single-digit growth. Here we would focus mostly the reported revenues which declined basically one percentage point. This was mainly driven by a very strong foreign exchange rate headwind. The gap between the reported and the constant exchange rate performance was around 7 percentage points, and we accept that this level will broadly persist throughout the whole year, just reinforcing the message of, let's see, we might see some changes in it, but basically this is our expectations for this year. What we have seen that the US dollar has been winking since the second quarter of last year, while the stronger Hungarian foreign continues to impair or reported figures across all other currencies. If you're looking to performance in a geographical setup, we can see that Central and Eastern Europe performance had been mostly affected by the general match in business unit what we detailed. In North America, we had a 4.4% growth altogether. This is almost entirely driven by the weakening US dollar. APEC, we mentioned as well, the Q1 important impact. What I would like to add to the expectations of this geographical area is that we rationalize our investment into this geographical area. We are focusing on lowering the investment and getting much better return, which will probably impact the expectation till year-end in revenue too. Overall, the currency movements weighed heavily on the reported revenues. What we have seen from the geographical trend that they remained very much consistent with our strategic focus. We do see that innovation is a key driver of our sales and growth across all regions and I would like to add that our recent launches and the further market entries within the affordable pillar, the affordable portfolio, will boost our growth rate in the strategic horizon. Thank you very much.

Thank you. On the operating cost side, we are increasingly seeing the tangible benefits of the efficiency measures and the structural improvements implemented over the recent years. In addition, foreign exchange trends provided support to operating expenses, partially offsetting the ethics pressure we experienced on the gross margin level. Cost of sales as of the percentage of revenues increased in Q1 2026, driven by a combination of delivery timing, product mix effects and the impact of the strong Hungarian foreign, which resulted in a gross margin of 67.6% for the period These effects are largely mechanical in nature and they do not indicate any structural change in the underlying profitability of the business and some may partly reverse in the coming quarters. That is what we expect. Operating expenses were managed well overall and they benefited from the long-term optimization efforts as well as FX movements as I already mentioned. Total operating expenses declined by 7%, out of this 9% decline was at sales and marketing cost, which was supported by streamlined activity levels in Asia and Pacific region, China namely, while G&E expenses declined by 5%, which is a mix of FXFX and some of the efficiency measures that are in place for over a year now. R&D expenses also decreased by 5% year-on-year compared to the first quarter of 2025 and stood at around 10% of our overall revenues. This was mainly driven by a lower R&D span following key portfolio milestones. This was more than offsetting the higher investment levels in women's healthcare. Looking ahead, R&D expenses may vary between quarters, reflecting the simultaneous programs and progression of multiple projects that we are advancing in the field of women's healthcare and CNS. As previously communicated during our last call at the end of February, restructuring costs are now reported outside of operating expenses. In Q1, these costs were just above 1 billion Hungarian Forints and as I mentioned, they were excluded from all the operating expenses. While the current impact is limited, Restructuring costs may increase during the year, potentially reaching up to 10 billion Hungarian Forins or approximately 30 million Euros, as we roll out several cloud-based IT solutions during the year. If we focus on Cleanabit, overall we delivered a very strong Cleanabit growth on constant exchange rate in Q1, which was up to 15%. At the same time, in the headwind, the reported figures are only 1.5% and the reported figure is 69.7 billion Hungarian Forints in the first quarter. The profitability was further supported by milestone income in an amount of 3.6 billion Hungarian Forints, mainly in biotech and in CNS, compared to virtually no such income a year ago. CNS and Biotech both delivered a significant year-on-year improvement in a clean EBIT, with CNS remaining our largest earnings contributor for the period driven by the outstanding performance of Raylard. Let me also mention that we are very, very happy and proud that this is the second consecutive quarter when we report positive clean EBIT for Biotech. However, it's still not a steady state. We expect that to be reached by the end of next year, so positive might turn into negative for the for the rest of the year but this is something that that we expect at the same time clean a bit in women's health care and in general medicines came in below last year primary reflecting top line shortfalls in women's health care clean a bit of 9.4 billion Hungarian for instance below the recent run with due to shipment and timing effects that was just described by Tomas a higher planned R&D and some adverse currency movements, while GenMed was impacted by weaker revenues and a lower gross profit contribution. If we move forward below the line, the good news is there's not much to be seen here. So the difference between the clean EBIT and the reported EBIT is not significant. The difference is only 2.4 billion Hungarian Forints and this includes the restructuring cost I just mentioned before and we do not see any unusual items impacting our results. Maybe our cash flow generation is more interesting. Free cash flow amounted to 77 billion Hungarian Forints. This is the second largest amount in a single quarter recorded in the history of Richter and represents 29% year-on-year increase. This strong performance was driven by higher operating cash flows and the absence of any material net working capital funding this quarter. because networking capital was practically unchanged in Q1. This is a sharp contrast to what we had a year before that was 18 billion additional investments in 2025. As a result, cash conversion days remained broadly stable compared to the previous quarter and improved somewhat year on year. Capital Investor Activity was limited and there is no material M&A transactions so far. The majority of free cash flow generated strengthened our net cash positions and it further enhancing our financial flexibility and supporting our readiness to pursue value-accurative M&A opportunities going forward. The last slide I wanted to share some information is about R&D, where you may see a few new indicators. R&D remains a central pillar of our long-term strategy. We continue to advance our own proprietary CNS program, including Compound 202, by making further progress in our collaboration with AbbVie on programs 932 and 691. And also we have some preclinical activities. At the same time, our recent women's healthcare acquisitions added five new preclinical programs, further strengthening our internal innovation pipeline. Together, these efforts reflect our commitment to building a balanced R&D portfolio that combines disciplined internal development with high-quality external partnerships. So that would be the summary from our side, and I'm handing back to you, Robi.

Thank you very much, Laci and Tomáš. This concludes the formal part of the presentation and now we are happy to take your questions. As I mentioned, either raise your hands through the Teams platform or put it in the chat box and we already have a few questions in the chat box from Lukasz, actually two in CNS, two in bio. What was the milestone and the second question is when we expect Phase 2 results from the GED? Can we name the entire project with CNS?

Okay, anyway, so we had a project before which we sold a few years ago and in the agreement, so it's not with AbbVie, right? This CNS milestone has nothing to do with AbbVie. We sold the project years ago and there was a milestone that was triggered when the first dosage was injected into the first UN in the phase three trials that happened at the very beginning of the year, so recorded A milestone and in terms of biotech or biosimilars, it's with regards to our US market entry. You know, if you just check it, it cannot be anything else but denazumab. So that are the two milestones that appear here. And is the bio R&D sustainable? I think it is. So it's a deliberate decision. We were building a portfolio. Now that portfolio is out on the market or will be out in the market very soon, we are ready to bring it to the market. If we find other partners, then we might increase our R&D spending, but for the moment it seems to be a normal run rate. May I add one thought?

Which is very important that the expectations towards the biosimilar development are rather changing from the authoritative perspective, which is in itself decreasing the cost. So it's very important we need to invest less for clinical trials and probably somewhat more for how we are building up the project itself more focused on quality. It in itself decreases the price and the cost pressure on the biotech developments and certainly we already have the plans which are the candidates for the future as well.

And answering the question on phase two results from the second indication of 932 that the GAD study is still running and we expect the top line data first half of 2027, so next year. Bram, next question comes from Bram Bering.

Yes, hi. Hey. A couple of smaller things, please. First of all, in general medicine, Could you repeat for me, please, how much the switchovers to the new warehouse, how much they impacted those sales in this quarter? That's the first question. The second question is, are there any generic launches in recent trajectory of sales in that segment. And thirdly, you have now milestone data coming from various different areas. Could you perhaps sum up what you think you might in total record on milestone earnings or milestone payments? for the full year second question and then the last question is to do with the accounting treatment of the of the amortization of the new CRM system can you tell me exactly you said it wasn't impacting the operating results but could you show me or explain to me where exactly i should be seeing it that's all

I'll come with the GMAT. The first impact, when we looked at this impact together, the women in healthcare and the GMAT portfolio, it was 3-5% on the different portfolios. Actually, this is what we've seen that we would have been able to overcome if we would not have the other impacts that I've detailed. Without the other impacts we actually would have seen a bit differently, however it was absolutely necessary to do in order to ensure a continuous supply in the big markets.

Any expected launches for GemMed?

We have quite many especially in the blood and metabolic arena where we are focusing right now. We have altogether 41 launches in different countries. We are following up the Apixaban opportunity, Adoxaban opportunity, Fingolimab, Dimethylfumarate and so on. So there's a lot going on. The number of launches around the same as what we had in the last year. Different markets certainly all together.

Thank you. Okay, maybe I will continue with a technical question. I could talk hours about this because by education I'm still an auditor. So the accounting treatment brand is in the past, all these programs before there was this huge cloud-based approach of the IT providers, it was all capitalized costs. So it was on your balance sheet and there was an amortization. Now it's different. Since we have some tricky IFRS standards on licensing, IFRS 16 to be more exact, you need to record these costs in your P&L. So it is just in contrast to what used to be in the past. And whenever we pay those costs, they appear in our P&L. So instead of recording to the balance sheet and accounting for amortization, we directly put them to the P&L. And what we do here is just following all the IFRS benchmarks and also the pharma benchmarks. So whoever has a big IT-based program, they just make an adjustment to the claims figures. That is all happening. For example, the warehouse situation that was also driven by a cloud-based IT solution that was implemented and this is actually happening. That's why you can see around 1 billion Hungarian Forints that are now between the reported EBIT figure and the clean EBIT figure. I hope I was able to explain the technical details. And milestone earnings for the year, Robi, I think we do not expect anything significant for the rest of the year.

We are not aware of anything major coming in our way, but if something will, we will let you know. Next question again from Lukasz. Are you looking at potential entry in GLP-1 analog generics?

Yes, we are. We have different ongoing discussions and corporations and all the scientists as well. We are preparing Gorshav very well for this opportunity, looking on different geographical entry options as well with these new entries.

Yes, but we publicly announced that was last year that there was the VEGO regenerate specifically for Europe. That was a broader cooperation, co-development agreement with Adavo and there are other similar development or co-development agreements we are working on. Yes. I don't see any other questions, so... Okay, Dariusz.

Hi, thank you for taking my question. Can you hear me? yes yes yes yeah I wanted to ask on the comment on the FX for the year when you rated rated rated guidance now for the year you mentioned you mentioned that if the FX would be the same for the rest of the year we should expect a similar impact of 7% for the full year but I've noticed that the presentation was saying 5% similar to what you've announced the FYE results so I wanted to ask a comment on that given that Q1 had the largest USD impact.

Thank you. That was a quarter ago. At the then prevailing exchange rate, we anticipated approximately 5% point FX headwind. This is now revised to 7-8% full year impact in terms of reported financials. So we reiterated our constant exchange rate guidance, high single digit growth in both revenues and clean EBIT. And now what we anticipate again, the now currently prevailing exchange rates, assuming they hold for the rest of the year, which is clearly not going to be the case, But based on these exchange rates, now the full year FX had revenues at around 7-8% each point.

Okay, thank you.

We have a question. I don't know how you're going to proceed. Darush, anything else? No? Thank you. Great. Thank you. Next question from Gabor. Go ahead, Gabor. We can't hear you Gabor, probably you are muted.

Yeah, I'm sorry. Thanks for the presentation. So my question is, if I understand correctly, restructuring costs could exceed €10 million this year. Does it mean that costs of €7-8 million will arise per quarter? What is the run rate going forward?

I think it's a bit of a hockey stick, so the second part of the year could be higher. So it's not a normally distributed, not a linear distribution, of course, rather in the last part of the year. As we roll out all these projects, it takes time.

Okay, thanks.

Thank you, and there are a couple of more questions in the chat box. The first one is, what chance we see 932 moving to phase 3 in bipolar depression? We never given and we don't want to give probabilities for any clinical developments. But what we can say that the top line data what we what we commented on didn't naturally change our assessment of the success, potential success of the projects and currently we are together with them evaluating the data and deciding on the next steps. And the breakdown of new product revenues in biosimilars, we don't want to break it down to individual products at this stage we may do so at a later stage but clearly it's driven by by demo zoom up but also some total zoom up sales already recorded because we saw to our Japanese partner Mochida some products ahead of their their launch in their own market demo zoom up will still produce this indication mainly if you're going to more details Yes, I don't see any other questions in the chat box, so just perhaps as a final call, if anyone wants to ask yes. Dariusz?

Thank you. On women's health care, the impact from the warehouse transition in Q4, I want to ask if you can provide some color on the customer inventory build-out in the Q4. Was that in line with like a quarter impact this year or should we expect more impacts from higher inventory build-out in Q4 for the customers last year?

We do not expect a higher change regarding this year. This was, on a quarterly basis, not more than 3%. Altogether, the women healthcare business unit had the lower impact, the general medicine had the somewhat higher impact. This was around the range. We do not see that this will have any further impact on the business unit. We need to note as well that the APEC delivery of emergency contraceptive had a significantly higher impact on the numbers due to the size and the rare shipment schedule to this region.

Okay, thank you.

Thank you very much. Next question should come from Akos Civera.

Hi, first of all, thank you for the presentation. My question is regarding the women's healthcare R&D spending. So I would like to know if the R&D spending will stabilize at these higher levels that we currently see in the first quarter. And also another question regarding the FIRA-EU marketing authorization, that what is the expected timeline for commercial launch and when should we see the first meaningful revenue contribution from it?

With the R&D spendings, we estimated a run rate at around 20-25 million euros per quarter. We are just at that rate, so it was the same rate for Q4 and Q1. This is the normal run rate, it might change, so we were successfully securing two deals in the first quarter, Cermatix and Fimside, and you could have seen that now we have five new pre-clinical programs, so if we Put some more efforts that it may increase, but as for now, this is the normal run rate. With fear of it, I think I hand over to Tom, actually we start in the summer.

You too, with one country first, it depends on certainly the country specificities, reimbursement system and so on. and step-by-step we first launch in Central European countries due to the fact that it's an easier market access option and then we will move into the bigger market so relevant sales I would say that Q4 hopefully we can speak about it already what are the first impressions but this will be mostly the next year where we will see the significant uptake from the markets thank you

Thank you very much. Next follow-up question from Gabor.

Yeah, absolutely a follow-up. So, what would you be satisfied with the sales of Fiorabbi next year? Is there any early prediction?

We have predictions longer term, actually. What we assessed is more the peak sales. With the peak sales expectations, we have quite significant close to vehicle opportunities, what we see all together. I would not give, if you don't mind, guesses for the next year because we need to see that our market strategy, what we are putting together right now, how we resonate on the market. However, looking on the market potential in menopause, the changing acceptation of hormonal therapy by the physicians, the prescribers, as well by the society, provide us a very bright opportunity with this product.

is still planning to have a specific human health care related event at some point later Q2 or Q3 where we want to provide a bit more black trenurity behind this opportunity and and our key products so please bear with us I mean at some point later this year you're gonna have more more details on this Alright, so let's move back to Bram. Another question or a follow-up?

Yeah, just another follow-up. I caught something at the beginning of the presentation regarding withdrawal of a marketing authorization, and I didn't catch what drug, what segment, and if it's material or not.

It's not a major product for us. It's Levomizole. It's a parasite infection treatment. Still, if you look to the quarter, it had a significant impact because we suddenly lose the total sales as well. In some markets, the patient level recall had been induced, so that's why we mentioned it. From the year, it will be diminished as impact. So it was generics. It's generics.

Okay.

Thank you, Bram. Another one in the chat box, yes.

Yes, a question around partnering Outlast and CU AstraZeneca. We are working on it. We are working on it. It's a priority and we will come back to you with results and information to be shared whenever we are ready. So it's a priority and we will come back to you as soon as we are there.

Yes, I think we again run out of questions, so unless anyone else has anything to ask, then I would like to thank you very much for being with us today, also for the many questions and the very interactive Q&A session. If there's anything else left unanswered, then just reach out to Invesco Relations as in the past. Otherwise, we will see you in three months time. Thank you very much. Have a great day. Thank you. Thank you. Bye bye.