Said Darwazah, Executive Chairman and Chief Executive Officer of Hikma, said: 

“Hikma’s resilient first half performance is a testament to the strength of our core underlying business, supported by the breadth and depth of our portfolio and capabilities. Double digit profit growth in our Injectables and Branded businesses has helped to offset a decline in Generics caused by industry-wide competitive pressures. Our increasingly differentiated portfolio, market leading positions, unique manufacturing footprint and the strength of our customer relationships form a strong foundation for further progress and we are confident in our outlook for the future.  We expect to maintain good momentum in Branded and Injectables and for Generics to return to growth in 2023.”

Group H1 highlights:

Resilient first half performance

• Group revenue flat – strong performance in Injectables and Branded offseting impact of weaker pricing in Generics
• Stable reported gross margin of 50.4%, reflecting positive product mix
• Core operating profit down 4% to $296 million reflecting lower profit in Generics. Reported operating profit down 27%, primarily reflecting a high comparative in H1 2021 due to an impairment reversal
• Good cashflow from operating activities of $169 million while maintaining healthy inventory to ensure continuity of supply
• Maintained comfortable leverage with net debt^[5] to EBITDA^[6] of 1.7x at 30 June 2022 (31 December 2021 0.6x), having completed the acquisitions of Custopharm and the Canadian assets of Teligent and a buyback of $300 million shares during the period
• Interim dividend of 19 cents per share

Strong performance in Injectables and Branded partially offsets decline in Generics

• Global Injectables revenue grew strongly, up 9%, driven by the US base business, the Custopharm and Teligent acquisitions, and a good performance in Europe. Injectables core operating profit increased by 12% and core operating margin expanded to 38.8%
• Branded achieved good growth in several key markets, with revenue up 6%. An improved product mix drove growth in core operating profit of 16% and core operating margin of 21.8%
• Generics was impacted by the highly competitive environment in the US and slower than expected ramp up of recent launches, resulting in an 18% fall in revenue and core operating margin of 17.6%

Strategic progress positions business for future growth

• Successfullly completed the acquisitions of Custopharm and Teligent’s Canadian assets
• Expanded our European footprint through entry into the French injectables market
• Investing in local injectables manufacturing in MENA to support growing product portfolio
• Benefited from strong demand for our oncology products in Algeria supported by our continued investment in local manufacturing
• Strong contribution from chronic medications - driving 80% of Branded revenue growth in H1
• Continued investment in commercial capabilities to support development of growing speciality portfolio and more resilient growth opportunities in Generics

Outlook for full year 2022

• Injectables – we continue to expect revenue growth to be in the mid to high-single digits and core operating margin to be between 36% to 37%
• Branded – we now expect revenue to grow in the low-single digits on a reported basis. On a constant currency basis, we expect Branded revenue to grow in the mid-single digits. We expect core operating profit to be more evenly split across the year
• Generics – we now expect revenue to be in the range of $650 million to $675 million and core operating margin to be between 15% to 16%

[1] Throughout this document, H1 2022 refers to the six months ended 30 June 2022 and H1 2021 refers to the six months ended 30 June 2021

[2] Constant currency numbers in H1 2022 represent reported H1 2022 numbers translated using H1 2021 exchange rates, excluding price increases in the business resulting from the devaluation of currencies and excluding the impact from hyperinflation accounting. Lebanon and Sudan are considered hyperinflationary economies, therefore the spot exchange rates as at 30 June 2022 were used to translate the results of these operations into US dollars

[3] During the first half, Hikma bought back 12.5 million shares as a result of the $300 million share buyback announced on 24 February 2022, 11 April 2022 and 11 May 2022

^[4] Core results throughout the document are presented to show the underlying performance of the Group, excluding other adjustments set out in Note 5. Core results are a non-IFRS measure and a reconciliation to reported IFRS measures is provided on page 16

[5] Group net debt is calculated as Group total debt less Group total cash.  Group net debt is a non-IFRS measure.  See page 17 for a reconciliation of Group net debt to reported IFRS figures

[6] EBITDA is earnings before interest, tax, depreciation, amortisation, impairment and other items. EBITDA is a non-IFRS measure, see page 16 for a reconciliation to reported IFRS results. For the purposes of the leverage calculation, EBITDA is calculated for trailing twelve months ended 30 June 2022