Richter GroupH1 2014

Richter Group

Interim Report, H1 2014 31 July 2014

Summary – H1 2014H1 2014

Summary H1 2014

Consolidated sales: -5.3% (EUR), -1.7% (HUF)− significant sales decline in Russia in Ukraine and in Polandsignificant sales decline in Russia, in Ukraine and in Poland− currency devaluation+ good growth in EU15 countries, in other CIS region and in the USA

Profit for the period*: -21.9% (EUR), -18.9% (HUF)p ( ), ( )− negative balance of Other income and expenses − weakening EURRUB exchange rate+ net financial income – significant profit+ net financial income significant profit

22

*Net income attributable to owners of the parent

Consolidated financial highlightsH1 2014

Consolidated financial highlights

HUF Change EUR Changeg g

Total revenues 174.9bn -1.7% 569.4m -5.3%

P fit fProfit from operations 19.1bn -36.4% 62.0m -38.8%

Profit for the period* 23 2bn -18 9% 75 4m -21 9%Profit for the period 23.2bn -18.9% 75.4m -21.9%

EPS (diluted) 124 -18.9% 0.40 -21.9%

*Net income attributable to owners of the parent

3

Geographical composition of Group salesH1 2014

Geographical composition of Group sales

Hungary Hungary

Russia PolandRussia

Poland10%

6%29%

11%

5%23%

H1 2013 H1 2014Romania Romania

Ukraine12% 13%

5%

EU10*

EU15Other CIS

Ukraine

R W**

EU10*Other CIS

RoW**

8 %

6%

10%

7%

4% 3%2%3% 3 %

10%

13%

7%

4% 4%2%

EU15USA

RoW**China EU15

USALatin America

T t l T t l

China

%2%Latin America

4%

*Including Croatia

Total: HUF 177.9bnEUR 601.1m

Total: HUF 174.9bnEUR 569.4m

- 1.7% (HUF) - 5.3% (EUR)

44

Including Croatia

**Restated in respect to exclude Latin America.

P&LH1 2014

P&L

HUFmH1 2014

Change %

EURmH1 2014

Change %

as % of total revenues

Total revenues 174,907 -1.7 569.4 -5.3

Gross profit 107,032 -5.9 348.4 -9.3 61.2

S&M expenses (52,728) -4.9 (171.7) -8.4 30.2

A&G expenses (9,501) -1.2 (30.9) -4.9 5.4

R&D expenses (22,717) 9.4 (73.9) 5.3 13.0

Other income and other expenses (3,035) n.a. (9.9) n.a. 1.7

Profit from operations 19,051 -36.4 62.0 -38.8 10.9

Net financial income 3,870 758.1 12.6 740.0 2.2

Profit for the period* 23,158 -18.9 75.4 -21.9 13.2

*Profit attributable to owners of the parent

5

Decreasing gross profit, gross marginH1 2014

Decreasing gross profit, gross margin

60%250 000

- Significant sales decline in Russia and in UkraineWeakening EURRUB

HUFm61.2%

63.9%

40%

50%

60%

150 000

200 000

- Weakening EURRUB exchange rate

- Increasing proportion of

10%

20%

30%

50 000

100 000wholesale and retail segment

+ Devaluation of HUF0%0

2007 2008 2009 2010 2011 2012 2013 13H1 14H1

Gross profit Gross margin

Devaluation of HUFcompared to EUR

+ Increase of turnover in EU15 countries in other CIS regioncountries, in other CIS regionand in the USA

6

Decreasing operating marginH1 2014

Decreasing operating margin

25%70000

HUFm

Decreasing gross margin

Negative balance of Other

15%

20%

40000

50000

60000

10.9%

16.8%

gincome and expenses incurred − claw back related liabilities− lack of milestone incomes

5%

10%

10000

20000

30000

lack of milestone incomes

Increasing R&D expenditures

0%02007 2008 2009 2010 2011 2012 2013 13H1 14H1

Profit from operation Operating margin

Decreasing sales and marketing expenses

7

Pharmaceutical sales*H1 2014

Pharmaceutical sales

Key drivers of growth:

EU15 countries, other CIS and USA

Female healthcare

Successful product launches

*88% of turnover originates from outside of Hungary

8

g g y

8

HungaryH1 2014

Hungary

Turnover *

Stable pharmaceutical marketHUFbn

30

40Sales increase: 5.4% in HUFHUFbn

10

20Success of products launched in recent years

02008 2009 2010 2011 2012 2013 13H1 14H1

*Turnover of the pharmaceutical segment

9

EU – composition of sales*H1 2014

EU composition of sales

Traditional EU member states

46%

− strengthening our position in key Western-European markets

− own gynaecological sales and marketing network

54%

Poland, Romania, EU10**

− well established in the region for decades

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

10

EU15H1 2014

EU15

Turnover*

26.7% sales increase in EUR EURm

100

120

140

Turnover

Recently established S&M network

EURm

40

60

80

Female healthcare products: Richter OC portfolio, acquired

0

20

2008 2009 2010 2011 2012 2013 13H1 14H1

p , qOCs, Esmya®

*Turnover of the pharmaceutical segment

11

Poland, Romania, EU10H1 2014

Poland, Romania, EU10

Increasing generic competition

Turnover*

Increasing generic competition

Price erosionEUR

150

200

Turnover

Poland: – 25.0% decline in PLN

EURm

50

100– lack of flu epidemic –Groprinosin sales decrease

– parallel import (OCs, EC, 0

2008 2009 2010 2011 2012 2013 13H1 14H1

Poland Romania EU10**

p p ( , ,other products)

Romania:Romania:– decreasing sales levels

(-0.8% in RON) *Turnover of the pharmaceutical segment**Data of 2012 adjusted with Croatia

– significant delays in payment12

CISH1 2014

CIS

Turnover*

Sales decline (-18.9% in EUR) EURm

300

400

500

Turnover( )

Russia

EURm

100

200

300− RUB devaluation− slowdown of Russian economy

02008 2009 2010 2011 2012 2013 13H1 14H1

Russia Ukraine Other CIS

Ukraine− political uncertainty− UAH devaluation

*Turnover of the pharmaceutical segment

13

RussiaH1 2014

Russia

Sales decline

Turnover*

Sales decline(-11.5% in RUB; -25.3% in EUR)

EURm

300

400

Turnover*

Significant weakening of EURRUB exchange rate in H1 2014: 18 4%

EURm

100

200

H1 2014: 18.4%

Decreasing purchasing power

0

100

2008 2009 2010 2011 2012 2013 13H1 14H1

Destocking at both wholesale and pharmacy levels

Increase of manufacturing and warehousing capacities

*Turnover of the pharmaceutical segment

14

Ukraine, Other republicsH1 2014

Ukraine, Other republics

Turnover*

Ukraine− 19.5% decline (USD)

USD

150

200

Turnover− political and economic

turmoil− UAH devaluation

USDm

50

100− decreasing purchasing power

02008  2009 2010 2011 2012 2013 13H1 14H1

Ukraine Other CIS

Other republics− 22.2% increase (USD)

*Turnover of the pharmaceutical segment

15

USAH1 2014

USA

Turnover*

Sales increase (USD 4.0m)

USDm

160

200Significant proportion of gynaecology – 80%

USDm

40

80

120

Sales increase – Plan B One-Step

0

40

2008  2009 2010 2011 2012 2013 13H1 14H1

p

*Turnover of the pharmaceutical segment

16

ChinaH1 2014

China

Dynamically expanding pharmaceutical market

From 2013 JV operates with Richter majority stake

Sales network: 224 medical representatives

Sales in H1 2014: EUR 21 8mSales in H1 2014: EUR 21.8m

Stock piling in H1 2013: EUR 9.5mp g

17

Latin AmericaH1 2014

Latin America

R i l iRegional expansion:− Brazil− Mexico− Colombia− Ecuador

Bolivia− Bolivia− Peru− Chile

Female healthcare products in focus

Sales in H1 2014: USD 11.3m

18

Pharmaceutical sales by therapeutic areasH1 2014

Pharmaceutical sales by therapeutic areas

13%

OtherCentral nervous system

13%

24%7%

18%

Muscle relaxants

C di lH1 2014 24%4%GastrointestinalCardiovascularH1 2014

34%

Gynaecology

Total: EUR 409.6m

19

Female healthcare sales by regionH1 2014

Female healthcare sales by region

12024%

5%13%

CEE

Hungary

CISEURm

60

80

10024%

5%Ex-Grünenthal

portfolioChina

0

20

4034%

6%9%

4%

USAEU15

Latin America

Gynaecological sales Non‐gynaecological sales

RoW

Total: HUF 52.0bnEUR 169.2m

2020

Female Healthcare: Esmya® - phased launches IH1 2014

Female Healthcare: Esmya phased launches I.

Reimbursement grantedReimbursement granted

Country Launch Reimbursed Country Launch ReimbursedGermany Q1 12 Q1 12

United Kingdom Q2 12 Q2 12

Austria Q2 12 Q4 12

Belgium Q3 13 Q3 13

France Q3 13 Q3 13

Spain Q4 13 Q3 13

Denmark Q4 12 Q4 12

Norway Q4 12 Q4 12

Hungary Q2 12 Q1 13

Canada Q3 13 Q3 13

Finland Q4 13 Q4 13

Luxemburg Q3 13 Q4 13Hungary Q2 12 Q1 13

Sweden Q1 13 Q1 13

Slovakia Q3 12 Q1 13

Luxemburg Q3 13 Q4 13

Switzerland Q4 13 Q4 13

Ireland Q1 14 Q1 14

Slovenia Q4 12 Q2 13

Netherlands Q3 12 Q2 13

Czech Republic Q2 12 Q3 13

Bulgaria Q4 12 Q1 14

Portugal Q3 12 Q1 14

Estonia Q3 12 Q2 14

21

Female Healthcare: Esmya® - phased launches IIH1 2014

Launch without reimbursement

Female Healthcare: Esmya phased launches II.

Country LaunchUkraine Q4 13

Country LaunchPoland Q2 12

Croatia Q1 14

Armenia Q1 14

Uzbekistan Q1 14

Latvia Q3 12

Lithuania Q3 12

Romania Q3 12 Uzbekistan Q1 14

Serbia Q1 14

Tajikistan Q1 14

Romania Q3 12

Russia Q2 13

Belorussia Q4 13

Moldova Q1 14

Kyrgyzstan Q2 14

Georgia Q4 13

Kazahstan Q4 13

Turkmenistan Q4 13Turkmenistan Q4 13

22

Sales networkH1 2014

Sales network

1800staff

1200

1400

1600

600

800

1000

0

200

400

2006 2007 2008 2009 2010 2011 2012 2013 13H1 14H1

CIS CEE Hungary EU15 China

23

Wholesale and retailH1 2014

Wholesale and retail

W&R sales contribution is 16% of total sales

72% of the W&R turnover originates in Romania

2424

Ownership structureH1 2014

Ownership structure

30 June 2014

Domestic investors

6.48%International

investors68.27%

Hungarian State Holding Company

25.25%

2525

H1 2014

Thank you for your attention!y y

26

AppendixH1 2014

Appendix

Exchange rates

27

Evolution of currency exchange ratesH1 2014

Evolution of currency exchange rates

320

340HUF

280

300

240

260EURHUF

USDHUF

180

200

220

180

28

Evolution of currency exchange ratesH1 2014

Evolution of currency exchange rates

EUR

50

52

EUR

46

48

42

44 RUBEUR

40

42

38

29

Exchange ratesH1 2014

Exchange rates

At i d dAt period end30.06.2014 31.03.2014 31.12.2013 30.09.2013 30.06.2013

EURHUF 310.19 307.06 296.91 298.48 295.16

USDHUF 227.13 223.38 215.67 221.06 226.18

RUBHUF 6 69 6 27 6 55 6 80 6 91

Average

RUBHUF 6.69 6.27 6.55 6.80 6.91

H1 2014 Q1 2014 M12 2013 M9 2013 H1 2013

EURHUF 307.2 308.4 296.8 296.5 295.9

USDHUF 224.1 225.0 223.4 225.1 225.1

RUBHUF 6.4 6.4 7.0 7.1 7.3

30