Egis has announced that changes in the Russian drug subsidy (DLO) list could result in roughly USD 4m lower revenues for their 2007/06 business year started in October. This is a result of 11 products were taken –off from the subsidy list effective from 1 November 2006. Egis will have 27 drugs to remain on the DLO list.
Our view: We see the news as neutral, as we believe; the market has already priced in the news about the DLO list changes yesterday. We have estimated that Egis’ revenues could be USD4.5m lower as one of their major drugs Suprastin was off the list, which is more or less in-line with the company’s current announcement.