Budapest, 10 March 2016 – Gedeon Richter Plc. will spend HUF 15 billion on an investment project to expand its biotechnology plant founded in 2012 to develop and manufacture biosimilar products, which has a unique, cutting edge technology in the region. The planned investment will help the Company create another 125 jobs for highly qualified experts. The plant in Debrecen will be manufacturing products with high intellectual added value that make it possible to provide the most advanced treatment while at the same time ensuring significant savings for the national health insurance fund. These products represent a significant value for both the patients and the national economy and also contribute to further expanding Richter’s export potential.

The segment that ensures the most effective therapy for the treatment of oncological and immunological diseases and exhibits the fastest growth in the world’s pharmaceutical markets is the use of biosimilar medicines produced by biotechnological methods. Biosimilar products can ensure the same efficiency in treatment as the original biotechnology products with the advantage of being more cost-effective and thereby reducing the costs of health insurers. As a company with long-term thinking, Gedeon Richter Plc attaches great importance in its business strategy to the development and manufacture of biosimilar products in Hungary. Consequently, the Company established a biotechnology development laboratory in Budapest back in 2005. It then spent HUF 25 billion to build a new biotechnology plant in Debrecen in 2012 that is unique in Central Eastern Europe. The plant has created over 200 jobs for highly qualified experts. Richter’s first self-developed biosimilar products are already under European registration and will probably be on the market in the course of 2017 depending on the result of the licensing procedure.

In line with its biotechnology strategy, the Company made sure in the planning phase that it would be able to expand the biotechnology plant in Debrecen in the long-term by building a workshop, which has not been installed with any equipment yet, and making the free space next to the present building available for future use. Hungary’s Minister of Foreign Affairs and Trade Péter Szijjártó and Gedeon Richter’s CEO Erik Bogsch will sign an agreement on providing subsidy for Richter’s biotechnology plant in Debrecen on the basis of a special Governmental decision. The amount of the state contribution is close to HUF 5 billion. This enables Richter to launch an investment programme that can double its current biotechnology manufacturing capacity, create an analytical capacity that can be used for quality rating the products produced in the plant as well as resolve the special storage tasks for the entire country. Another development is that 125 new jobs can be created, especially for people with higher education degrees. Richter will be working together with the town of Debrecen and the University of Debrecen to train the specially qualified staff. The total cost of the investment programme is expected to be nearly HUF 15 billion.

Hungary’s Government and Richter are making a considerable effort that has great bearing on industrial policy and are working towards making Hungary a biotech development and manufacturing centre that will be competitive in international markets as well. By signing this agreement, the goal is to create a comprehensive and internationally competitive product line that can contribute to providing effective healthcare treatment with high added value products.

Background information

The improvement in living conditions and the quality of health services in developed countries makes it possible to significantly lengthen the average lifespan, which results in an ageing population. Due to the special health condition and complaints of elderly people, there is a rapidly growing demand for oncological and immunological therapies, in which biotechnology drugs have been shown to be more effective or the only effective products.

The expansion of extremely expensive biotechnology products, which are 100 per cent subsidised in developed countries, continues unabated in the global pharmaceutical market: one-third of all the new drugs in the European Union are of biotechnological origin. Experts unanimously agree that the market share of biotechnology products will continue to grow in the future. While the small-molecule drug market is estimated to stay below 5% annually in the second half of this decade, the market for biotechnology products is expected to grow by more than 10% a year. This trend is further bolstered by the fact that approximately one third of the current clinical development topics are of biotechnological origin. According to competent estimates, seven of the world’s TOP 10 drugs will be of biotechnological origin by 2015.

A biosimilar drug is a product that in most cases contains a protein as an active ingredient and is manufactured and developed by biotechnology in order to ensure that it is similar to a biotechnological drug already on the market (the reference drug). There is no difference whatsoever between a biosimilar drug and the reference product in terms of quality, safety or effectiveness. The development of biosimilar drugs entails high risk, where the development costs should be estimated at EUR 50-100 million, which can be as much as a hundred times higher than the development costs of generic drugs. At the same time, since the use of these products in therapy can mean significant savings for the health insurance funds, they are also important for the national economy.