Equity
Hungary Egis expects domestic exposure to decrease
“Beginning from 1 April, the price cut on Egis portfolio will amount to almost 6%, after a 6.9% cut from 1 October. This is mainly caused by the blind bidding tenders, which forces producers like Egis to cut prices in order to keep the government subsidies. Cheap Indian imports are to blame for the price erosion," Pálffy said in a research note on Thursday.
In certain cases the price cuts were so high, that Egis decided to take out three drugs from circulation (these drugs were generated HUF 1.5 bn per annum), he added. This was revealed already at a press conference by the company’s CFO on Wednesday.
Hungarian exposure of Egis may fall to 20% or lower in coming years, Pálffy mentioned another takeaway from the analyst meeting.
While R&d expenses for the 1H was down 7% y/y, Egis expects a slight increase for the year, thus total R&D could reach almost HUF 12 bn for the year (last year figure: HUF 11.6 bn), which is in line with KBC’s expectation (its model includes HUF 12.2 bn). Admin expenses are also expected to rise for the year (1H figures is in line with last year’s figure of HUF 4.9 bn), in line with KBC’s previous expectation for a 3% yr/yr rise.
“Nevertheless, it implies that the record operating margin of recent quarter will unlikely to be repeated."
Pálffy also noted that the EMA (European Medicines Agency) has granted approval for the registration of Celltrion’s first biosimilar drug (either the biosimilar version of Herceptin of Roche or Remicade of J&J) in the spring, which will be distributed by Egis in CEE and CIS region by late 2013, and allow Egis to be the 1st company to sell biosimilars in the region.
“Egis will probably make some payments to Celltrion, but no details were revealed by management."
Egis plans to introduce 8-10 new product in this FY and keep that figure for the next two years as well, Pálffy reiterated another official note from yesterday. The split of own and licensed drugs will be roughly 75%-25%, he added.
In certain cases the price cuts were so high, that Egis decided to take out three drugs from circulation (these drugs were generated HUF 1.5 bn per annum), he added. This was revealed already at a press conference by the company’s CFO on Wednesday.
Hungarian exposure of Egis may fall to 20% or lower in coming years, Pálffy mentioned another takeaway from the analyst meeting.
While R&d expenses for the 1H was down 7% y/y, Egis expects a slight increase for the year, thus total R&D could reach almost HUF 12 bn for the year (last year figure: HUF 11.6 bn), which is in line with KBC’s expectation (its model includes HUF 12.2 bn). Admin expenses are also expected to rise for the year (1H figures is in line with last year’s figure of HUF 4.9 bn), in line with KBC’s previous expectation for a 3% yr/yr rise.
“Nevertheless, it implies that the record operating margin of recent quarter will unlikely to be repeated."
Pálffy also noted that the EMA (European Medicines Agency) has granted approval for the registration of Celltrion’s first biosimilar drug (either the biosimilar version of Herceptin of Roche or Remicade of J&J) in the spring, which will be distributed by Egis in CEE and CIS region by late 2013, and allow Egis to be the 1st company to sell biosimilars in the region.
“Egis will probably make some payments to Celltrion, but no details were revealed by management."
Egis plans to introduce 8-10 new product in this FY and keep that figure for the next two years as well, Pálffy reiterated another official note from yesterday. The split of own and licensed drugs will be roughly 75%-25%, he added.
