Egis’ CFO, Mr László Marossfy said, the company’s DLO payment terms were prolonged to 12-24months from previous 6 months – according to Reuters. He also added payment terms got worse for the Russian private market sales as well. The CFO said, the company does not see its 25% y/y Russian sales growth to be feasible on the back of this changes.
Our view: We believe, the news could have a negative share price impact across the pharmaceutical companies selling drugs to the Russian drug subsidy system. We see the companies DLO system sales could decline on the worsened payment terms, and the companies’ working capital need is also expected to increase on the trend that payment terms are getting longer on both the Russian private and DLO market.
Russian sales exposure of CEE generic pharmas.
Based on 9M06 figures
in US$ Russian private market sales Russian DLO sales DLO as of Russian sales Total Russian sales
Egis (consolidated) 62.3 9.9 14% 72.2
Richter (unconsolidated) 133.4 36 21% 169.4
Zentiva (consolidated) 24.3 14.3 37% 38.5
Krka (consolidated) na na na 134.7
Source: Company data