London, 16 May 2013 – Hikma Pharmaceuticals PLC (LSE: HIK) (NASDAQ Dubai: HIK), the fast growing multinational pharmaceutical group, will hold its Annual General Meeting today where the following statement will be made regarding its current trading and financial position. This constitutes its Interim Management Statement relating to the period from 1 January 2013 to date, as required by the UK Listing Authority’s Disclosure and Transparency Rules.
16 May 2013
The Group has made a strong start to the year. The Branded and Injectables businesses are performing well and are on track to meet our current full year guidance for 2013. Our Generics business is continuing to benefit from a specific market opportunity for doxycycline that is delivering revenue ahead of our original expectations. As a result, we now expect Group revenue to grow by around 13% in 2013, up from our previous guidance of around 10%.
Our Branded business is performing well. Across the region, we continue to focus on launching new products, enhancing our sales and marketing activities and driving operational efficiencies. This is supporting good growth across our markets, particularly in Algeria, Egypt and Saudi Arabia. We are also benefitting from the salesforce and distribution restructuring that we undertook last year in Jordan and Iraq, respectively.
In January 2013, we completed the acquisition of the Egyptian Company for Pharmaceuticals and Chemical Industries ("EPCI"). We have now fully integrated the EPCI sales and marketing team into our Egyptian business and we have initiated plans to upgrade their manufacturing facility.
On a constant currency basis, we continue to expect Branded revenue growth to be around 11% in 2013, with a slight improvement in adjusted operating margin. Given the prevailing weakness of some of the North African currencies, and of the Egyptian Pound in particular, we reiterate our guidance for reported Branded revenue growth of around 9% for the full year with adjusted operating margin in line with 2012.
In April, we announced that the Board had completed a strategic review of the global Injectables business and had determined that the business should remain within the Hikma Group. The Board believes that Hikma is uniquely positioned to create significant further value from this business, by leveraging its high-quality manufacturing facilities, broad product portfolio, attractive R&D pipeline and global distribution platform.
The Injectables business has made an excellent start to the year. In particular, we are performing extremely well in the US, driven by new product launches, price improvements and our continued focus on operational efficiencies. Since the beginning of the year we have also continued to actively develop our product pipeline. We continue to expect our global Injectables business to achieve low double-digit revenue growth for the full year.
Since the beginning of the year we have remained focused on completing the remediation of our Eatontown facility. This work is ongoing and has slowed the reintroduction of our products to the market. As a result, we are expecting this business to incur one-off remediation costs and inventory write-downs of around $25 million to $30 million, for the full year.
We expect the impact of the remediation and the associated costs to be more than offset by a market opportunity for one of our products, doxycycline, which has performed extremely well in the year to date. With the expectation of exceptionally strong doxycycline sales, primarily in the first half, we are raising our full year guidance for this business to revenue of around $150 million and a reported operating margin in the low teens. We expect to complete the remediation work in the second half of the year and will, in parallel, continue to evaluate the strategic options for this business.
Our financing position remains strong and will allow us to make further strategic investments during 2013, as these opportunities arise.
Said Darwazah, Chief Executive Officer of Hikma said:
"We have made a very good start to 2013 across all of our businesses and I am pleased to be able to raise our Group guidance for the full year. In the MENA region, we are continuing to deliver strong growth and our global Injectables business is performing very well, benefitting from the investment we have made in the quality of our manufacturing facilities and our product portfolio. The significant contribution from doxycycline in the first half of 2013 is enabling us to cover the increased cost of remediation in our Generics business, and we continue to focus on completing this work and reintroducing products to the market. Overall, our diversified business model is positioning the Group to deliver another strong year in 2013."
We will announce our interim results for the six months to 30 June 2013 on 21 August 2013.