Turkey to become key base for Egis

Bloomberg

Laszlo Marosffy sees domestic sales rising 8 percent in the coming fiscal year and even faster growth in key export markets.

"I believe there’ll be a significant sales growth in Egis’ strategic markets in 2010," Marosffy said in an interview with Bloomberg Tuesday. The company expects 8 percent revenue growth in Hungary and even more in the former Soviet and east European markets, he added.

Exports have become the main driver of growth for Budapest-based Egis as sales in Hungary were hampered by collapsing consumer spending, government budget cuts and price pressures from competitors. The company has turned to markets such as Russia and Turkey to keep revenue growing. Russia is the company’s largest export market and sales growth in quarter ended March 30 was 15 percent in dollar terms. The firm agreed with wholesalers in the two countries to compensate them for losses caused by the dropping currencies. The stabilization of the ruble and hryvnia since March means that the compensation Egis pays to wholesalers in these countries "is no longer significant," he said.

Still, the Hungarian currency’s gains may wipe out much of the benefits in Russia and Ukraine, cutting the value of export sales when converted to forint. The forint Wednesday reached the highest versus the euro since Jan. 7, a sign of rising investor confidence in the country’s fiscal performance.

Egis, which last year bought a Polish generic-drug portfolio from its majority owner Laboratoires Servier, started selling its products in Turkey a year ago. With a "very concentrated and strong portfolio," the company has built a sales network of 50 people, Marosffy said. "Our strategic aim is to turn Turkey into our third-largest export market after Russia and Poland, in terms of revenue in three years," he said.