Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Chemical Works of Gedeon Richter PLC (FRA:RIG2, Financial) reported a 14% increase in revenues for the first half of 2024, aligning with their guidance of low to mid-teens growth.
- The company achieved a 21% increase in clean EBIT, indicating strong operational performance.
- Women's health segment showed strong growth, driven by high-margin products and efficiency improvements.
- The company is expanding its R&D capabilities, particularly in women's health, aiming to fill gaps in the global R&D pipeline.
- CSR efforts are focused on improving access to healthcare for marginalized groups in Africa and Europe, enhancing the company's social impact.
Negative Points
- The company faced supply chain issues with its fertility brand Bemfola, impacting its market performance.
- There were significant inventory impairments, which the company acknowledges were largely within their control.
- The women's health segment's strong performance included one-off impacts from Mexican tenders and Chinese pre-shipments, which may not be sustainable.
- The cash conversion cycle has deteriorated, indicating inefficiencies in working capital management.
- The company anticipates increased R&D spending, which could pressure margins in the short term.
Q & A Highlights
Q: Can you provide more details on the one-off issues affecting women's health care performance, particularly regarding Mexican tenders and China shipments? Also, how do these impact the clean EBIT margins?
A: The Mexican tenders and Chinese pre-shipments, which are high-margin products, contributed significantly to the improved margins. The impact is approximately EUR3-4 million per month, adding up to around EUR10-12 million from April to June. The clean EBIT margins benefited from these one-offs, but also from better quality growth and operational efficiencies.
Q: What is the status of the tocilizumab Phase 3 trial, and do you expect to launch it by the end of next year?
A: Tocilizumab is in Phase 3, with completion expected in about six months. We aim to file early next year, with a potential launch by the end of next year or shortly thereafter.
Q: How do you plan to compete with big pharma in the denosumab market in Europe?
A: Our focus on rheumatology and osteoporosis, particularly in women, gives us a commercial edge in Europe. The US market presents challenges due to biosimilar uptake, but we are preparing for a significant sales effort there.
Q: Can you clarify the impact of recent M&A activities on your guidance and financials?
A: The guidance was given without the impact of M&A. The combined impact of Mithra and Helm transactions will add approximately 1% to sales growth. The negative impact on clean EBIT from these transactions is around EUR10 million for the second half of the year.
Q: What are your plans for addressing the high inventory levels and related impairments?
A: We are working to improve inventory management. The first step is to avoid lost business, followed by reducing impairments. Ultimately, we aim to lower inventory levels, though this will take time. Some impairments are expected in the short term, but we are actively managing the situation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
