19th Aug 2015 08:22
LONDON (Alliance News) - Hikma Pharmaceuticals PLC is the second best performer in the FTSE 100 Wednesday morning after it reiterated its revenue guidance for 2015, although it reported a fall in pretax profit for its first half as revenue was hit by the strength of the dollar and a good performance in Hikma's Branded and Injectibles segments was offset by a decline in its Generics segment.
Shares in Hikma were up 1.9% at 2,446.00 pence Wednesday morning.
Additionally, the company said Wednesday it has inked a licensing and distribution deal with UK nutraceutical and vitamin company Vitabiotics Ltd, giving it the exclusive rights to register, market, distribute and sell five of Vitabiotics' products in 15 of its Middle East and North Africa markets. It also has the rights to market, distribute and sell the full Vitabiotics product range in five of these markets.
Hikma continues to expect to report full-year revenue growth of around 6% at constant currency, or around 2% at actual exchange rates, assuming the high end of its guidance range for its Generics business.
For the half year to end-June, the company reported a pretax profit of USD170 million, down from USD219 million a year before, as revenue fell to USD709 million from USD738 million.
Revenue in its Generics segment fell to USD79 million from USD128 million a year before. Hikma said that in the previous year it had delivered an exceptionally strong performance and that there was greater competition in the market in the first half of 2015.
In this segment, Hikma's gross margin fell to 60.8% from 74.2%. Depending on how quickly sales of gout treatment colchicine ramp up in its second half, Hikma said it expects this business to deliver revenue of between USD175 million to USD200 million for the full year. It had previously guided for around USD200 million for this segment.
In July, the company agreed to acquire Roxane Laboratories Inc and Boehringer Ingelheim Roxane Inc from Boehringer Ingelheim, the German pharmaceutical company. The company said Wednesday that this acquisition will "transform" its Generics business in the US, and also will allow it to expand its product portfolio in other markets, particularly the Middle East and North Africa region. It expects the acquisition to add to adjusted earnings per share in 2016, and and add very strongly to adjusted EPS thereafter.
In its Branded segment revenue grew 9%, although growth was held back by the strength of the dollar, and on a constant currency basis revenue in this segment rose 16%. Growth was driven by new product launches and a focus on higher-value products and more than offset lower sales in Iraq and Libya, which continue to be hit by political disruptions. During the first half the Branded business launched 23 products across all of its markets, and got 70 regulatory approvals in the Middle East and North Africa region.
For the full year, Hikma expects the Branded business to report revenue growth in the high single digits for the full year and a slight improvement in adjusted operating margin. On a constant currency basis it continues to expected Branded revenue growth in the low-teens, and adjusted operating margin to improve by around 200 basis points.
In its Injectibles business revenue for the first half was in line with the first half of 2014 and with Hikma's expectations after an "extremely strong performance" in the previous year. The company said its Bedford site, which it acquired from Ben Venue Laboratories Inc, a member of the Boehringer Ingelheim group, last July, is now well integrated and it is ahead of schedule in transferring the Bedford products to its manufacturing sites.
In October last year, Hikma received a warning letter from the US Food and Drug Administration in relation to its Portuguese facility, and noted that this has not hit the manufacture or distribution of products from the facility. The facility was re-inspected by the FDA in June and it is awaiting further communication regarding its status.
Hikma expects the Injectibles business to report revenue for 2015 in line with 2014.
Hikma proposed an interim dividend of 11.0 cents per share, in line with the level it paid in the previous year.
"We have taken important strategic steps this year and we are very excited about the opportunities these bring to the group. Across our geographies, we have strong market positions, we are executing well and we are very confident in the outlook for 2015 and beyond," said Chief Executive Officer Said Darwazah in a statement.
Panmure and Shore both kept their Hold ratings for the stock following the results, with Shore saying that whilst the company's top line was weaker than it had expected, earnings were ahead of its estimates.
"With no surprises on trading, our view for the year remains unchanged. Meanwhile, Roxane ? the acquisition yet to complete - has the potential to transform Hikma into a leading player in the US generics market, and we will be updating our view on the business accordingly in due course," Panmure said.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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