Hikma Pharmaceuticals profit slides 2% amid challenging market

Company plans to buy back shares this year to boost investments

Manufacturing pharmaceutical products at the Hikma laboratory in Amman, Jordan. Salah Malkawi / The National

Hikma Pharmaceuticals posted a 2 per cent decline in its 2021 profit amid a "challenging environment" and said it will buy back shares of up to $300 million in 2022 to continue pursuing investments.

Reported profit attributable to shareholders, including one-off or non-cash items, slipped to $421m last year, Hikma said in a bourse filing to the London Stock Exchange on Thursday. The drop in profit was due to a one-off adjustment last year, according to the statement. No further details were disclosed.

Revenue climbed 9 per cent year on year to $2.55 billion driven by higher sales across its three business units of generic, branded and injectable drugs.

Hikma marked "another successful year of solid growth and continued strategic momentum" in 2021, said Siggi Olafsson, chief executive of Hikma.

"As we look to 2022 and beyond, I am most excited about how we are continuing to build and evolve our portfolio with important investments and new partnerships."

The London-listed company, which was founded in Jordan four decades ago, supplies various generic drugs including anaesthetics, pain medications, sedatives, neuromuscular blocking agents and anti-infectives. Hikma operates in the US, Middle East, North Africa and Europe, and employs 8,700 people globally.

In September, it acquired generic sterile injectables company Custopharm to boost its needle-based treatments business in the US in a deal worth up to $425m.

Hikma's board agreed to a share buyback of up to $300m, which will ensure the "maintenance of an efficient balance sheet whilst retaining substantial flexibility for continued investment and M&A [mergers and acquisitions]", the company said.

All three of Hikma's business units recorded growth in 2021.

Injectables revenue grew 8 per cent in 2021 on the back of a broad portfolio, geographic spread, flexible manufacturing capabilities and new launches across regions.

Revenue growth in the generics business, up 10 per cent, was primarily driven by "a strong performance from recently launched products, which more than offset increased price erosion", Hikma said. Branded drugs revenue grew 9 per cent.

The board also recommended a full-year dividend of 54 cents per share, up from 50 cents per share in 2020.

The company's cashflow from operating activities rose 38 per cent to $638m during the year while operating expenses rose 15.5 per cent to $719m. Capital expenditure declined 15.6 per cent to $145m.

In the Mena region, $66m was spent on expanding manufacturing capabilities, while $56m was invested in the US to upgrade equipment and add new technologies to the generics and injectables businesses, including a new compounding facility in Dayton, New Jersey.

The group's total debt decreased 9.2 per cent to $846m, mainly reflecting strong cashflow generation, which enabled a reduction in short-term borrowing, while maintaining the repayment schedule of long-term loans, Hikma said.

Net debt, excluding co-development agreements and contingent liabilities, fell to $420m, compared with $605m in 2020.

Assets rose 14.9 per cent to $2.46bn at the end of 2021 and cash balance increased 30.2 per cent to $426m.

"Looking at 2022, the business is well positioned to continue to grow, benefiting from our broad portfolio and pipeline, as well as our high-quality operations," Mr Olafsson said.

This year, the company expects injectables revenue to grow in the low to mid-single digits. It also expects generics revenue to grow in the range of 8 per cent to 10 per cent. Branded revenue is expected to be in line with 2021, growing in the mid-single digits, excluding the impact of hyperinflation.

Hikma also announced a new target to reduce its greenhouse gas emissions by 25 per cent by 2030.