London, 2 November 2012 – Hikma Pharmaceuticals PLC ("Hikma") (LSE: HIK) (NASDAQ Dubai: HIK), the fast growing multinational pharmaceutical group, is today updating the market on its current trading and financial position. This constitutes its Interim Management Statement relating to the period from 1 July 2012 to date, as required by the UK Listing Authority's Disclosure and Transparency Rules.
2 November 2012
We are pleased to maintain our guidance for 2012 of around 20% Group revenue growth.
Our Branded business has been performing well, with particularly strong performances in Algeria, Egypt and Libya driven by strong demand for our products, new product launches and more focused sales efforts. We continue to work on restructuring our business in Iraq, where we changed our distributor in the beginning of the year. In Sudan, where the business is being impacted by adverse currency movements, we are seeing a gradual improvement in sales. We continue to expect around 20% Branded revenue growth for the full year. Excluding adverse currency movements, which are likely to have a small negative impact on margins, we expect Branded gross margin and adjusted operating margin to be broadly in line with 2011.
Our global Injectables business has been performing ahead of our expectations. This performance has been driven by new product launches, increased tender sales, better portfolio management and increased demand owing to continuing product shortages in the US market. Based on this strong performance and a continued focus on operating efficiencies, we now expect to exceed our previous guidance, with revenue of around $460 million and adjusted EBIT margin above 22%.
As anticipated, we saw an initial pick up in our Generics business in the beginning of the second half, as we progressed with our compliance work at our Eatontown facility. Following further observations by the FDA, additional compliance work is required. To complete this work most efficiently and expeditiously, we have taken the decision to halt commercial production until mid-January and will also be taking further actions to restructure the business. We will continue to supply our customers to the best of our ability through existing inventory and from our FDA-approved manufacturing facilities in the MENA region. For the full year, we now expect this business to deliver revenue of around $105 million and a loss of around $15 million, compared to our previous guidance of break-even. This includes approximately $5 million of non-recurring costs related to remediation and restructuring. We are reviewing this business and are considering all strategic options.
Our financing position remains strong and will allow us to make further strategic investments going forward.
Said Darwazah, Chief Executive Officer of Hikma said:
"Maintaining the highest quality standards across our global business is essential for Hikma and the decision that we have taken in our oral generics business in the US reflects this. We are committed to bringing our Eatontown facility back into full compliance as quickly as possible. More broadly, we are continuing to benefit from the strength of our diversified business model – our Branded business is performing well and our Injectables business is exceeding our expectations."