Good morning again, and a very warm welcome to Gedeon Richter's first quarter 2026 conference call. My name is Róbert Réthy, Head of Investor Relations and ESG in 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 Tamás Szolyák, our Chief Commercial Officer. The reason why Gábor is not with us, Gábor Orbán, 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, gedeonrichter.com. This is what we published this morning along with our results.
The formal presentation will be followed by the 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. Finally, just to remind you, this call is recorded, and I also want to draw your attention to the usual cautionary statement regarding potential forward-looking statements this presentation may include. 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, Róbert. 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 Vraylar and by a 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 continued to weigh on our reported results, primarily impacting ROE and EPS figures, while at the same time a visible improvement in Hungary's country risk 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 EBIT 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 EBIT figures.
If the same FX rates would be fixed for the rest of the year, a difference of 7- 8 percentage points between the reported figures and the CER figures could persist. Looking ahead, we are particularly excited about the number of important value drivers. These include the upcoming launch of Fylrevy. This is the first hormonal 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, HUF 77 billion 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 Fylrevy, which I just mentioned, which will be supported by patient awareness and, very importantly, educational initiatives across multiple countries. Since the launch of Ryeqo, Ryeqo has reached approximately 100,000 patients in the treatment of endometriosis. This was helping many women avoid invasive surgery. This also reduced 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 U.S., 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 U.S., and the advancement of multiple clinical programs can further support the broader patient reach. 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 contraceptions through NGO partnerships. I'm handing over to you, Tamás.
Okay, thank you very much, László. I like to give an overview about the performance business unit by business unit. Our Q1 growth 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 a new warehouse, and certainly to ensure uninterrupted patient supply, part of a shipment was brought forward into Q4 2025, which had a negative carryover effected on Q1 2026 for this quarter. This timing effect impacted mostly two business units, Women's Healthcare 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-licensed product in 2025, it's Renaldim, created an approximately 2 percentage revenue gap that had to be absorbed in Q1.
Furthermore, several key assumptions did not materialize. The flu season proved weaker than anticipated, an 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 GenMed growth opportunity. In addition, a product which underwent an event, patient safety evaluation, ultimately led to withdrawal of marketing authorization across all markets, basically, despite the 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 INN 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 GenMed portfolio. Despite this decline, I would like to highlight the performance in Blood and Metabolic therapeutic area. This continues to strengthen. Dabigatran, it maintains its leadership position across multiple markets. Edoxaban, after launch, 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's Healthcare, core product performance remained strong. Key brands, including Ryeqo, including EVRA, Drovelis, and Lenzetto, continue to deliver solid momentum, reinforcing our commitment to improve women's quality of life. One important element was in the APAC region that we had a delay of emergency contraception delivery from Q2.
Altogether, we are absolutely confident that the Women's Healthcare business unit will deliver double-digit growth by year-end. Underlying effects. Ryeqo, 60%+ growth in the Q1. Very important that we are treating continuously new patients. The patient pickup is very, very high for this product. Drovelis, 20%+ growth. Gaining significant market share, a largely fat market. Preparations for Fylrevy 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's Healthcare portfolio this year. CNS has delivered a strong performance. Vraylar 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 part in somewhat of a re-integration 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. BioTech growth had two major elements. One is the growth of the teriparatide franchise. The second one is the new product launches. Teriparatide achieved a 20% growth on the markets where we are managing the product altogether. 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 is important to see that they contributed nearly the same absolute growth as the teriparatide 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 GenMed, and we are expecting to deliver a solid single-digit growth. Here we would focus mostly the reported revenues, which declined basically 1 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 seven percentage points, and we accept that this level will broadly persist throughout the whole year, just reinforcing the message of Laci.
We might see some changes in it, but basically this is our expectations for this year. What we have seen that the U.S. dollar has been weakening since the second quarter of last year, while the stronger Hungarian forint continues to impair our 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 Medicine business unit, what we detailed. In North America, we had a 4.4% growth altogether. This is almost entirely driven by the weakening U.S. dollar. APAC, 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. 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. Back.
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 FX pressure we experience 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 forint, 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&A expenses declined by 5%, which is a mix of FX effects 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 spend 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 HUF 1 billion , 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 HUF 10 billion or approximately EUR 30 million as we roll out several cloud-based IT solutions during the year. If we focus on Clean EBIT, overall, we delivered a very strong Clean EBIT 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 HUF 69.7 billion in the first quarter.
The profitability was further supported by milestone income in an amount of HUF 3.6 billion. 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 Clean EBIT, with CNS remaining our largest earnings contributor for the period, driven by the outstanding performance of Vraylar. 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 the steady state. We expect that to be reached by the end of next year. So positive might turn into negative for the rest of the year, but this is something that we expect. At the same time, Clean EBIT in Women's Healthcare and in General Medicines came in below last year, primarily reflecting top-line shortfalls.
In Women's Healthcare, Clean EBIT of HUF 9.4 billion was below the recent run rate due to shipment and timing effects that was just described by Tamás, 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 only HUF 2.4 billion , 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 HUF 77 billion . 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 net working capital was practically unchanged in Q1. This is a sharp contrast to what we had a year before. That was HUF 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 expenditure 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-accretive 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 the central pillar of our long-term strategy.
We continue to advance our own proprietary CNS program, including compound RGH-202, while making further progress in our collaboration with AbbVie on programs ABBV-932 and RGH-691. We also 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. That would be the summary from our side, and I am handing back to you, Róbert.
Thank you very much, Laci and Tamás. 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. We already have a few questions in the chat box from [Lucas]. Actually two in CNS, two in BioTech. I do not know who. What is your-
Yeah.
You want to start?
The milestones? Yeah.
In CNS--
Yeah.
--what was the milestone and the second question is, when we expect the phase II results from the GAD indication.
Can we name the actual project with CNS?
I think we need to.
Okay. Anyway, we had a project before which we sold a few years ago, and in the agreement. It is not with AbbVie, right? This CNS milestone is 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 human in the phase III trials. That happened at the very beginning of the year, so recorded a milestone. In terms of biotech or biosimilars, it is with regards to our U.S. market entry. If you just check it cannot be anything else but denosumab. So that are the two milestones that appear here. Is the Bio R&D sustainable? I think it is. It is 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-
Please.
One thought is, which is very important, that the expectations towards the biosimilar development are rather changing from the authorities' perspective, which is in itself decreasing the cost. It is 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. Certainly, we already have the plans, which are the candidates for the future as well.
Answering the question on phase II results from the second indication of ABBV-932, that GAD study is still running, and we expect top-line data first half 2027, so next year.
Bram, next question comes from [Bram Buring]. Go ahead, sir.
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 is the first question. The second question is, are there any generic launches in 2026 that should significantly change the recent trajectory of sales in that segment? 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 amortization of the new CRM system. You said it was not impacting the operating results, but could you show me or explain to me where exactly I should be seeing it? That is all.
Okay. Maybe I'll start with the--
I'll come with the GenMed.
Okay.
The first impact, when we look to this impact together, the Women's Healthcare and the GenMed portfolio, it was 3%-5% on the different portfolios. Actually, this is what we've seen, that we would've been able to overcome if we would not have the other impacts, what I've detailed. Without the other impacts, we actually would've seen a bit differently. However, it was absolutely necessary to do in order to ensure a continuous supply in the big markets. The second, I lost.
The launches. Any expected launches for GenMed? I think it's--
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, edoxaban opportunity, fingolimod, dimethyl fumarate, and so on. There's a lot going on. The number of launches around the same as what we had in the last year. Different markets, certainly, altogether.
Thank you.
Okay, maybe I will continue with the technical question. I could talk hours about this because by education, I'm still an auditor, so the accounting treatment, [Bram], is in the past, all these programs, before there was this huge cloud-based approach of the IT providers, it was all capitalized cost. 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. It is just in contrast what used to be in the past. 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. What we do here is just following all the IFRS benchmarks and also the pharma benchmarks.
Whoever has a big IT-based program, they just make an adjustment to the clean 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 HUF 1 billion that are now between the reported EBIT figure and the Clean EBIT figure. I hope I was able to explain the technical details. Milestone earnings for the year. Probably, I think we do not expect anything significant for the rest of the year.
We are not aware anything major coming in our way, but if something will-
We will let you know.
Yes.
Next question, again, from Lukas. "Are you looking at potential entry in GLP-1 analog generics?
Yes. We have different ongoing discussions and cooperations and already signed deals as well. We are preparing ourselves very well for this opportunity, looking on different geographical entry options as well with these new entries.
Yes, what we publicly announced, that was last year, that was the Wegovy generic specifically--
Right
--for Europe. That was a broader cooperation co-development agreement with Adalvo, and there are other similar development or co-development agreements we are working on.
Yes.
I don't see any other questions, so let's Okay, [Darius], one more. Go ahead, [Darius].
Hi. Thank you for taking my question. Can you hear me?
Yes.
Yes.
Yeah. I wanted to ask on the comment on the FX for the year. When you reiterated guidance now for the year, 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. I've noticed that the presentation was saying 5%, similar to what you've announced at the FY results. I wanted to ask a comment on that, given that the Q1 had the largest USD impact. Thank you.
Please.
That was a quarter ago. At the then prevailing exchange rate, we anticipated approximately five percentage point FX headwind. This is now revised to 7%-8% full-year impact in terms of reported financials. We reiterated our constant exchange rate guidance, high single-digit growth in both revenues and Clean EBIT. Now what we anticipate, again, the 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 headwind at revenue is at around seven to 8 percentage point.
Okay. Thank you.
We have a question. I don't know how you want to proceed and whether-
[Dariusz], anything else? No? Or then we-
No. Thank you.
All right. Thank you. Next question from [Gábor Bukta]. Go ahead, [Gábor]. We cannot hear you, [Gábor].
Probably you are muted, like we were.
Yeah. I'm sorry. Yeah, hi. Thanks for the presentation. My question is, if I understand correctly, restructuring costs could exceed HUF 10 million this year. Does it mean that costs of EUR 7 million-EUR 8 million will rise per quarter? Or 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. It's not normally distributed, not a linear distribution of cost, rather in the last part of the year. As we roll out all these projects, it takes time.
Okay, thanks.
Thank you. There are a couple of more questions in the chat box. The first one is-
Can I take that?
Please. Yeah, you can. What chance we see ABBV-932 moving into phase III in bipolar depression? We never give and we don't want to give probabilities for any clinical developments. What we can say that the top-line data, what we commented on, didn't materially change our assessment of the potential success of the projects. Currently, we are together with AbbVie evaluating the data and deciding on the next steps. 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 denosumab, but also some tocilizumab sales already recorded, because we sold to our Japanese partner, Mochida, some products ahead of their launch in their own market.
Denosumab was osteoporosis indication mainly, if you're going to more details.
Yes. I don't see any other questions in the chat box. Just perhaps as a final call, if anyone wants to ask. Yes, [Darius]?
Yeah. Thank you. On Women's Healthcare, the impact from the warehouse transition in Q4, I wanted to ask if you can provide some color on the customer inventory build-out into Q4. Was that in line with a quarterly impact this year, or should we expect more impact from higher inventory build-out in Q4 with 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's 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 APAC 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 [Ákos Tiffer]. [Ákos]?
Hi. First of all, thank you for the presentation. My question is regarding the Women's Healthcare R&D spending. I would like to know if the R&D spending will stabilize at these higher levels that we currently see in the first quarter. Also another question regarding the Fylrevy EU marketing authorization, 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 EUR 20 million-EUR 25 million per quarter. We are just at that rate. It was the same rate for Q4 and Q1. This is the normal run rate. It might change. We were successfully securing two deals in the first quarter, Celmatix and FimmCyte . You could have seen that now we have five new preclinical programs. If we put some more efforts, it may increase. But as for now, this is the normal run rate. With Fylrevy, I think I hand over to Tamás. We will start in the [inaudible]
Q2 with one country first. It depends on certainly the country's specificities, reimbursement system, and so on. Step by step, we first launch in central European countries due to the fact that it is 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, a follow-up question from [Gábor].
Yeah, absolutely, a follow-up. So what would you be satisfied with the sales of Fylrevy 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 Ryeqo opportunities, what we see altogether. 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.
We are still planning to have a specific women's healthcare-related event at some point later, Q2 or Q3, where we want to provide a bit more granularity behind this opportunity and our key products. So please bear with us. At some point later this year, you are going to have more details on this. All right, 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 did not catch what drug, what segment, and if it is material or not.
It is not a major product for us. It is levamisole. It is 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 is why we mentioned it. For the year, that will be diminished as impact. It was generics. Generics.
Generics.
Yeah. And-
Thank you.
Thank you, Bram.
Another one in the chat box. Yes.
Yes. A question around partnering out- licensed [use transfer] Fylrevy. 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. 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 investor relations as in the past. Otherwise, we will see you in three months' time. Thank you very much. Have a great day. Bye-bye.
Thank you.
Thank you. Bye-bye.