Interim Management Statement

RNS Number : 4869R

Hikma Pharmaceuticals Plc

04 November 2011

 



Hikma remains on track to deliver full year Group revenue and net income in line with guidance

London, 4 November 2011 - Hikma Pharmaceuticals PLC (LSE: HIK) (NASDAQ Dubai: HIK), the fast growing multinational pharmaceutical group, is today updating the market with its Interim Management Statement relating to the period from 1 July 2011 to date, as required by the UK Listing Authority's Disclosure and Transparency Rules.

We are pleased to reiterate our guidance for 2011 of over 20% Group revenue growth and organic Group revenue growth of around 7%.  We remain on track to deliver reported net income in the range of $85 million to $90 million, excluding the consolidation of the recent acquisition of Promopharm. 

We have seen stronger Branded sales growth in the second half as trading conditions in previously disrupted MENA markets continue to improve.  Whilst sales in our Generics business are being impacted by ongoing pricing pressure, this is being offset by an excellent performance in our global Injectables business which is continuing to deliver very strong growth in the second half.  We now expect organic Group gross margin to be around 46%.

In a challenging year, we are also making excellent progress in delivering our long-term strategic plans.  We have established a significant local manufacturing presence in Morocco through our recent acquisition and we have expanded our facilities in Egypt and Tunisia.  In Algeria, we inaugurated our new penicillin plant and will begin local production of anti-infectives for the Algerian market in 2012.  We have also expanded our global Injectables operations through the acquisition of the Multi Source Injectables ("MSI") business in the US and through the inauguration of our new injectables facility in Portugal.  We have made strategic investments in India and China, enabling us to expand our API sourcing and R&D capabilities.

Branded

Our Branded business in MENA is performing well, with revenues to the end of September up around 9%.  As expected, sales in Tunisia and Egypt are continuing to improve.  In Libya, we have recently re-entered the market on a commercial basis and across our other MENA markets we are performing in line with our expectations.  Given the overall performance we have achieved through September and the strong demand we are seeing for our products in the market, we reiterate our guidance of around 7% revenue growth and around 23% operating margin for the Branded business for the full year, excluding the consolidation of the recent acquisition.

On 3 October 2011, we announced the acquisition of a 63.9% stake in Promopharm.  Through this strategic transaction we have entered the Moroccan market and see strong growth potential for Promopharm's existing business and significant opportunities to launch Hikma's leading products in Morocco.  As previously announced, we are making a mandatory tender offer for the remaining 36.1% of Promopharm's shares and we anticipate completing this process by the end of the year.

Generics

Our Generics business continues to deliver double-digit revenue growth, excluding the exceptional colchicine sales in 2010.  According to IMS Health, demand for our products is up 13% in terms of prescriptions written and our market share has increased from 1.7% to 1.9%¹.  For the full year, we now expect sales to be around $155 million and operating margin in the low double-digits mainly due to industry-wide pricing pressure, which we do not expect to be fully offset by higher volumes. 

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¹ IMS Health, YTD Aug 2011.

Injectables

Our global Injectables business is performing extremely well across all regions.  This reflects strong demand for our existing products, new product launches and growth in our contract manufacturing services.  For the full year, we expect the organic Injectables business to deliver strong double-digit sales growth, with a significant improvement in operating margin. 

In Portugal, we inaugurated our new Injectables facility, which has begun producing lyophilised products for the European and MENA markets and which has expanded our liquids capacity for the US market.  Our R&D team is currently working on bringing several new lyophilised products to all of our markets.  In addition, we have identified a number of opportunities to develop our overall Injectables product portfolio and now plan to increase our investment in Injectables R&D over the coming two years.

We are making good progress with the integration of the MSI business, implementing restructuring plans and achieving cost savings.  As part of the MSI integration and restructuring plan, we have completed the first phase of facility upgrades and capacity enhancements at our Cherry Hill facility.  We are well on track to deliver our full year revenue guidance for MSI of $100-$105 million and continue to expect the business to break even in the second half.  For 2012, we continue to expect MSI to contribute revenues of at least $180 million and EBITDA margin of at least 10%.

Financing position

In September 2011, we obtained new debt facilities of $180 million, allowing us to fund the acquisition of Promopharm and other capital expenditure requirements.  Overall, the Group remains in a good financing position.

Said Darwazah, Chief Executive Officer of Hikma said:

"The excellent performance of our global Injectables business, our rapid progress in integrating the MSI business in the US and the resilience of our operations in MENA demonstrate the strength of our diversified business model.  We are pleased to reiterate our full year guidance for revenue and net income in 2011 and we remain confident that our strategy of organic growth supplemented by acquisitions and strategic alliances will continue to deliver excellent results for the Group." 

We plan to announce our preliminary results for the twelve months to 31 December 2011 on 14 March 2012.

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Enquiries:

Hikma Pharmaceuticals PLC
Susan Ringdal Investor Relations Director	[phone]

FTI Consulting

Ben Atwell/Julia Phillips/Jonathan Birt/Matthew Cole	[phone]

About Hikma

Hikma Pharmaceuticals PLC is a fast growing multinational group focused on developing, manufacturing and marketing a broad range of both branded and non-branded generic and in-licensed products.  Hikma operates through three businesses: "Branded", "Injectables" and "Generics", based principally in the Middle East and North Africa ("MENA"), where it is a market leader, the United States and Europe.  In 2010, Hikma achieved revenues of $730.9 million and profit attributable to shareholders of $98.8 million. 

 

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