Hikma Pharmaceuticals reports 17% increase in half-year profit

Company sees improved outlook for 2021 driven by revenue from generic drug sales

Hikma Pharmaceuticals said profit attributable to shareholders rose to $248 million in the first six months to the end of June. Salah Malkawi/ The National

Hikma Pharmaceuticals posted a 17 per cent increase in profit for the first half of 2021 as revenue grew driven by higher sales across its three business units of generic, branded and injectable drugs, despite a "challenging" environment.

The company, which was founded in Jordan four decades ago, said profit attributable to shareholders rose to $248 million in the first six months to the end of June, up from $212m in the same period last year.

Hikma Pharmaceuticals - which supplies various generic drugs including anaesthetics, pain medications, sedatives, neuromuscular blocking agents and anti-infectives - recorded an annual 7 per cent rise in revenue to $1.2 billion, it said in a filing to the London Stock Exchange (LSE), where its shares are traded.

"We have benefited from the resilience of our portfolio and our flexible manufacturing footprint," Siggi Olafsson, chief executive of Hikma Pharmaceuticals, said. "Our strong performance included solid year-over-year increases in revenue and operating profit, underscoring our ability to generate positive results in challenging market conditions. We are continuing to benefit from investments we have made to build our pipeline of new medicines."

Hikma operates in the US, Middle East, North Africa, Europe and employs 8,400 people globally. In March, the drugmaker abandoned plans to buy GlaxoSmithKline’s businesses in Tunisia and Egypt.

Hikma's board is recommending an interim dividend of 18 cents per share for the first half of 2021, which will be paid on September 20 to eligible shareholders on the register at the close of business on August 20.

The group generated operating cash flow of $224m, down from $292m, because of an increase in income tax paid, due in part to its growing US business, as well as the timing of tax payments, it said. The group's total debt remained at $932m in the first half.

Its branded drugs unit recorded an annual 16 per cent increase in revenue to $319m during the first half of 2021, driven by higher sales across Tier 1 markets of Algeria, Saudi Arabia and Egypt.

The company said it saw "good demand" across a range of products and benefited from flexible commercial and manufacturing operations in Saudi Arabia.

In Egypt, demand for some Covid-19 related products has continued, along with a "good performance" from the broader portfolio, it said. In Sudan, volumes grew significantly, compared to the first half of 2020, when this market faced "severe disruptions".

During the period, Hikma launched 39 branded products across its markets and is seeing a return to normal conditions following disruptions to its product launches in 2020 due to the Covid-19 pandemic.

"We continue to expect branded revenue to grow in the mid-single digits in constant currency," the company said.

Revenue from Hikma's generic drugs business grew an annual 8 per cent to $400m during the first half of 2021, reflecting good demand for new and recently launched products, a more favourable product mix and lower operating expenses, Hikma said.

The company expects generics revenue to be in the range of $810m to $830m for the full year, it said.

Hikma's global injectables business revenue grew an annual 1 per cent to $492m. Injectables operating profit declined in line with expectations, primarily due to a shift in product mix, the company said.

Hikma's injectables portfolio in the US of 119 products and an incremental contribution from new launches, partially offset lower demand for products used in the treatment of Covid-19, when compared with the first half of 2020.

The company's operations in Europe and Mena recorded "good demand" for its portfolio of products and manufacturing capabilities. Hikma's injectables business introduced a total of 44 products globally, including 9 in the US.

"We continue to expect injectables revenue growth in the mid-single digits," the company said.

Overall, Hikma expects the group capital expenditure to be around $140m to $160m for the year.

The diversified portfolio and flexible manufacturing capabilities is expected to drive further growth in the second half of the year, according to the company.

"Our progress in the first half underpins our improved outlook for the full year," Mr Olafsson said. "Looking ahead, our clear strategy, strong pipeline and agility give us the confidence to drive continued growth and deliver increased value to all our stakeholders."