Sostenibilidad. En serio.
Case study

Global Emerging Markets positive impact case study

Richter Gedeon Nyrt

10 May 2021 |
Active ESG
In this case study, we demonstrate how current holding Richter Gedeon Nyrt is creating positive impact aligned to the Sustainable Development Goals (SDGs).

Founded in 1901, Richter Gedeon Nyrt (Richter) is one of top pharmaceutical companies in Central and Eastern Europe Middle East Africa (CEMEA).  Headquartered in Budapest, it has a presence in 50 countries.

Theory of Change

Richter covers a number of important therapeutic areas aligned with Sustainable Development Goals (SDGs). Its product portfolio is renowned for oral contraceptive (relevant for SDG 5.6 and 3.7), generic and biosimilar drugs (relevant for SDG 3.8), as well as mental health drugs (SDG 3.1), among others.

Alignment with UN SDGs

The company’s research focus, products, campaigning, and culture align closely with UN SDGs not only for health and wellbeing but also for gender equality and women’s empowerment.

SDG 3: Good health and well-being

  • Target 3.1 Mental health: By 2030, reduce by one third premature mortality from non-communicable diseases through prevention and treatment and promote mental health and well-being.
  • Target 3.7 Sexual and reproductive health-care information and education: By 2030, ensure universal access to sexual and reproductive health-care services, including for family planning, information and education, and the integration of reproductive health into national strategies and programmes.
  • Target 3.8 Affordable drugs: Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all.

SDG 5 Gender equality and women’s empowerment:

  • Target 5.6 Birth control, family planning and reproductive rights: Ensure universal access to sexual and reproductive health and reproductive rights as agreed in accordance with the Programme of Action of the International Conference on Population and Development and the Beijing Platform for Action and the outcome documents of their review conferences.

Mental health awareness and treatment to help millions of people and their families

Drugs to treat mental health issues are a growing source of Richter’s revenue: the company derived €320 million, or 20%, of its overall 2020 sales, from drugs treating mental health issues. Growth is due to maturing conditions for its drug, cariprazine (sold under the brand name Vraylar in the US and as Reagila in Europe) as well as increasing awareness of mental health in general. According to the company, at the end of 2020 around 130,000 patients were estimated to be on cariprazine in the US, where it is approved to treat bipolar I disorder.1 A further 30,000 patients were being prescribed the drug in Europe, where it is approved to treat schizophrenia in adults. In addition to these approved indications, cariprazine has potential to be used for the treatment of major depressive disorder (MDD). Use for this purpose is in Phase III trials; approval would add substantial upside to the stock.

As well as selling medicines, Richter runs social research studies and mental health awareness campaigns. In 2020 approximately 25,000 physicians and other health care practitioners engaged in disease awareness campaigns organised by Richter in CEMEA.2 Most of its awareness campaigns are focused on unmet needs in schizophrenia treatment. Schizophrenia is a chronic psychiatric disorder that affects about 1% of the population, or an estimated 5 million people in the EU alone. The physical, social and mental burden is felt not only by sufferers but also by their families: research conducted by Richter in four eastern European countries found that family members struggle with a lack of information. They also often face major disruption to their own lives since caring for the patient requires significant time and dedication.3

Reproductive health as a tool for women’s empowerment

With 23% of its 2020 revenues coming from the sale of oral contraceptives, birth control and family planning are very important for Richter too. According to data from health information company IQVIA, approximately 2.2 million women use Richter’s oral contraceptive, with around another 135,000 using its intrauterine contraceptive delivery system Levosert. Some of the firm’s products are used in national family planning programmes such as those recently sponsored by the ministries of health in Moldova and Uzbekistan. Family planning is linked to positive outcomes including a decrease in the ratio of teenage mothers, lower abortion rates (including unsafe abortions), higher female education rates and overall women’s empowerment.

Data shows that educational programmes focused on sexuality, body change during puberty and availability of contraception significantly decrease the number of abortions.4  Richter is involved in sexual and reproductive health information and education programmes: from 2015, Richter, in cooperation with ÄGGF, supports the School of Contraception and Lady’s Talk programs in the CIS region5, with the aim of decreasing unwanted pregnancies and abortion among adolescents.

On the other side of the coin, Richter helps women with fertility issues to increase their chances of getting pregnant with its fertility drug Bemfola. Used by over 500,000 women6 since its launch in 2014, Bemfola now accounts for 4% of Richter’s total sales. Declining birth rates have led to ageing populations in most developed countries, which is a demographic problem. Thanks to IVF and other treatments, fertility is increasing in the over 40s age category, helping women who have postponed motherhood due to financial constraints or the need to advance and consolidate their careers to fulfil their dream of parenthood.

To strengthen Richter’s contribution to SDG 5 further, we believe the group could go beyond offering the above solutions and address women’s empowerment from an operational standpoint further.7 This could be achieved by improving the ratio of female representation on its board and in top management.

Cheaper medicines to reach more people in need

One third of Richter’s revenues are linked to the sale of traditional generic or biosimilar8 drugs. These products are offered at a discount to the original drug they copy, making them more affordable for patients or the hospitals and healthcare centres using them, and thereby widening the reach of healthcare coverage. The price saving ultimately depends on factors including therapeutical area treated, number of competitors, local regulation and reimbursed status — Richter offers some generic drugs with discounts as high as 75% on launch, making the company’s contribution to Target 3.8 of the UN SDGs particularly meaningful.

The market should value the positive impact

Investors in Richter should consider returns in terms of potential share appreciation as well as positive SDG-related impact. The group is delivering on its strategic transformation: this de-emphasises riskier CIS countries in favour of the US and the European Union, while also expanding the portfolio to include more profitable drugs and serving important SDGs. In our view the company’s shares are currently priced attractively in relation to cash-adjusted price-to-earnings levels. There are also catalysts that could lead to a rerating of the stock: multiples could expand in the event authorities approve the use of cariprazine for MDD indications, while the return on equity could also expand thanks to more efficient capital allocation9 and better profitability margins. 


Risk profile

  • This document does not constitute a solicitation or offer to any person to buy or sell any related securities or financial instruments.
  • The value of investments and income from them may go down as well as up, and you may not get back the original amount invested.
  • Past performance is not a reliable indicator of future results and targets are not guaranteed.
  • Investments in emerging markets tend to be more volatile than those in mature markets and the value of an investment can move sharply down or up.

1Vraylar is approved in the US to treat adults suffering from schizophrenia and manic, mixed or depressive episodes associated with bipolar I disorder. An estimated 400,000 patients have been treated with Vraylar since its launch in March 2016 and it has been prescribed more than 3 million times in the US. Cariprazine was discovered by Gedeon Richter Plc. and is licensed to Allergan (AbbVie) in America and to Recordati SpA in Western European countries.

2See for instance details of a campaign organised in Russia on the latest Sustainability report (page 85):  Gedeon Richter Sustainability Report 2018-2019

3Family members play a key role in providing emotional support for patients and more than half also provide financial resources. According to the research, caring takes up more than 20 hours weekly, with about 20% forced to quit their jobs or work part-time as a result. At least half of caregivers find the financial burden difficult, unsurprisingly given 60% have serious difficulties in keeping their jobs.
4See for instance the Mädchen-Sprechstunde educational programme provided by the Medical Society for Health Promotion ÄGGF in Germany in cooperation with Richter.
5The Commonwealth of Independent States (CIS) includes various Eastern European countries, most notably Russia and Ukraine
62200 UIs / 1 ART
7We use the term ‘solutions’ to refer to ‘what’ a company does in terms of the products or services it sells that enable a positive impact aligned with an SDG. We use the term ‘operations’ to refer to ‘how’ a company operates in terms of the positive impact it generates through its own production process or rendering of services.
8A ‘generic’ drug is a medicine that contains the same chemical substance as a drug that was originally protected by chemical patents. Generic drugs are allowed for sale after the patents on the original drugs expire. Given that the active chemical substance is the same, the medical profile of generics is believed to be equivalent in performance. A generic drug has the same active pharmaceutical ingredient (API) as the original, but it may differ in some characteristics such as the manufacturing process. ‘Biosimilar’ medicines are biological drugs that are highly similar to another biological medicine already licensed for use. In essence, both generic and biosimilar drugs copy existing medicines (whose patent has expired) and hence can be sold at cheaper prices than new drugs protected by patents.
9The company has just quadrupled its dividend per share to use some of its net cash.

Related insights

Lightbulb icon

Get the latest insights straight to your inbox