Hikma reiterates guidance despite generics hiccups

published 17 May 2012

Things appear to be proceeding to plan at Hikma Pharmaceuticals as it has reiterated its revenue growth guidance for 2012, despite a few setbacks in its generic drugs business.

"We are making good progress towards delivering our targets for this year and surpassing the important milestone of $1bn in revenue," said Said Darwazah, Chief Executive Officer of Hikma.

The group announced 28% growth in its branded business during the first four months of the year, along with 12%organic revenue growth.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

"Excellent" growth has been seen in two of the company's largest markets, Algeria and Egypt, which have benefited from increased local production and greater manufacturing capacity, respectively.

A slower-than-expected start in Sudan and the effect of reorganisation in Iraq has been partially offset by a good performance from its businesses in Saudi Arabia, Tunisia and Libya, as well as higher tender sales.

In a statement the company said: "We reiterate our guidance of around 20% Branded revenue growth for the full year and expect around 45% of revenue to be delivered in the first half.

"We continue to expect gross margin and adjusted operating margin in 2012 to be broadly in line with 2011, reflecting the increases that we anticipated in wages and research and development expense and the impact of consolidating Promopharm, our recent acquisition in Morocco. The benefit of operating leverage will mean margins are stronger in the second half of the year."

Divisionally, the firm's injectables business has performed "extremely well" this year, driving strong demand for its products in the US. Overall, the group expects that the global business will achieve revenue growth of more than 35% in 2012, with an adjusted operating margin in the high teens.

The Generics business, however, continues to see pricing pressures and revenue has been further affected by actions the company is taking in response to the US Food and Drug Administration (FDA) warning letter it received in February for its Eatontown facility, which is causing a slow-down in sales, but a stronger second half is expected. The full year adjusted earnings before interest and tax margin is set to be in the mid single-digits.

The share price fell 1.5p to 612.00p by 10:00.