Hikma Pharmaceuticals PLC · LSE:HIK
Hikma Pharmaceuticals — H1 2006 Earnings Presentation
39 slides from Hikma Pharmaceuticals's earnings presentation, 2006
Slide 1: 2006 Interim Results
A AlKMA. QUALITY HIKMA PHARMACEUTICALS PLC 2006 INTERIM RESULTS
Slide 2: Samih Darwazah, Chairman and Chief Executive
Samih Darwazah Chairman and Chief Executive
Slide 3: Important notice
Important notice This document, which has been issued by Hikma Pharmaceuticals PLC (the “Company”), comprises the written materials/slides for a presentation. This document and its contents are confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other
Slide 4: Agenda
Agenda • H1 2006 highlights • Financial performance • Operational performance and strategy • Outlook 3
Slide 5: H1 2006 highlights
H1 2006 highlights • Revenue increased by 17.6% to $154.9 million • Profit attributable to shareholders up by 19.9% to $30.1 million • Record year of regulatory approvals • Substantially increased capacity across the Group • Completed the acquisition of JPI • Positive outlook maintained for the year
Slide 6: Bassam Kanaan, Chief Financial Officer
Bassam Kanaan Chief Financial Officer
Slide 7: Financial summary
Financial summary ($ million) H1 2006 H1 2005* Change Revenue 154.9 131.8 +17.6% Gross profit 80.0 72.8 +9.9% R&D costs 9.0 7.2 +25.8% Operating profit 42.2 40.8 +3.3% Profit before tax 42.4 38.7 +9.5% Profit attributable to shareholders 30.1 25.1 +19.9% Diluted earnings per share (cents) 17.2 16.7
Slide 8: Consolidated Group revenue
Consolidated Group revenue (US$ million) 280 2-yr CAGR: +18.6% 262.2 240 200 212.4 H1 06 vs H1 05: +17.6% 186.3 160 154.9 120 131.8 80 40 0 2003 2004 2005 0 H1 2005 H1 2006 7
Slide 9: Branded revenues
Branded revenues (US$ million) 100 2-yr CAGR: +32.3% 93.0 80 H1 06 vs H1 05: +25.1% 74.0 60 64.0 53.1 51.1 40 20 0 2003 2004 2005 51.1 H1 2005 H1 2006 8
Slide 10: Generic revenues
Generic revenues (US$ million) 2-yr CAGR: +2.6% 120 115.2 109.4 100 106.2 80 H1 06 vs H1 05: -4.2% 60 56.2 53.8 40 20 0 2003 2004 2005 0 H1 2005 H1 2006 9
Slide 11: Injectable revenues
Injectable revenues (US$ million) 2-yr CAGR: +49.0% 50 49.3 40 H1 06 vs H1 05: +52.9% 34.0 30 28.9 20 22.2 22.2 10 0 2003 2004 2005 0 H1 2005 H1 2006 10
Slide 12: Gross profit
Gross profit (US$ million) 140 135.8 120 H1 06 vs H1 05: +9.9% 100 108.4 94.2 80 80.0 60 72.8 40 20 0 2003 2004 2005 0 H1 2005 H1 2006 Gross Margins Change vs. 2003 2004 2005 H1 2005 H1 2006 H1 2005 Branded 48.6% 53.6% 57.8% 59.9% 55.3% -4.6% Generic 53.7% 54.1% 54.1% 58.5% 53.8% -4.7% Injectables 3
Slide 13: Operating profit
Operating profit 70 (US$ million) 69.2 60 62.7 H1 06 vs H1 05: +3.3% 50 55.6 40 40.8 42.2 30 20 10 0 2003 2004 2005 H1 2005 H1 2006 Operating Margins Change vs. 2003 2004 2005 H1 2005 H1 2006 H1 2005 Generic 40.0% 38.6% 33.6% 38.9% 32.6% -6.3% Branded 21.2% 30.3% 30.9% 34.8% 34.4% -0.4% Injectables
Slide 14: Operating expenses
Operating expenses Change (US$million) 40.1 +18.7% 40 35 33.8 30 13.2 +14.9% 11.5 25 20 9.0 +25.8% 7.2 15 10 13.8 15.8 +14.5% 5 0 H1 2005 H1 2006 Operating expenses as a percentage of Group revenue H1 2005 H1 2006 Change vs. H1 2005 G&A 8.7% 8.5% -0.2% Research & Development 5.4% 5.8% +0.4% Sales &
Slide 15: Taxation
Taxation (US$ million) 14.0 12.0 12.9 11.4 10.0 8.0 6.0 33.4% 27.0% 4.0 2.0 0.0 H1 2005 H1 2006 14
Slide 16: Cash flow
Cash flow All figures US$m 2003 2004 2005 H1 2005 H1 2006 NET CASH FLOW FROM OPERATING ACTIVITIES Profit before tax and minority interest 53.0 59.0 64.4 38.7 42.4 Adjustments for non-cash items 7.9 10.9 15.4 6.8 7.5 Change in working capital (2.8) (13.9) (24.1) (32.1) (29.4) Income tax paid (18.9) (
Slide 17: Dividends
Dividends • Proposed interim dividend of $5.0 million (3.0 cents per share) • 20% payout ratio targeted for full year 2006, as indicated at IPO • Expected to be paid to shareholders on 27 October 2006 16
Slide 18: JPI Contribution
JPI Contribution z Consolidated from 12 September 2006 z Top line contribution of $10-$12 million z Operating margins will improve as integration achieved 17
Slide 19: Samih Darwazah, Chairman and Chief Executive
Samih Darwazah Chairman and Chief Executive
Slide 20: Hikma's strategic objectives
Hikma’s strategic objectives • Reinforce our strong market position in the MENA Region and grow market share • Continue to grow the Injectable Pharmaceuticals business by successfully launching new products and strengthening our sales and marketing network • Pursue profitable growth in the United St
Slide 21: Regulatory approvals and product launches
Regulatory approvals and product launches 98 regulatory approvals in 2005 82 regulatory approvals in H1 2006 60 57 60 50 50 48 40 37 40 51 30 30 27 39 20 33 13 20 10 10 7 4 14 4 9 2 6 4 2 3 0 0 Generic Branded Injectable Generic Branded Injectable New products Line extensions and new regions New pro
Slide 22: Regulatory applications submitted
Regulatory applications submitted 73 regulatory applications submitted in 2005 37 regulatory applications submitted in H1 2006 40 39 40 35 10 35 30 30 25 25 20 20 20 4 16 15 14 15 29 10 11 10 10 10 10 16 9 5 5 10 6 4 0 2 0 Generic Branded Injectable Generic Branded Injectable Pharmaceutical Pharmace
Slide 23: Product pipeline for future growth
Product pipeline for future growth Pending approvals (1) New products under development(1) 40 60 35 34 50 44 30 40 25 21 28 20 19 30 30 24 12 15 20 20 10 10 16 14 5 4 0 0 Generic Branded Injectable Generic Branded Injectable (2) (3) (2) Pharmaceutical Pharmaceutical Pharmaceutical Pharmaceutical Pha
Slide 24: Branded Pharmaceuticals
Branded Pharmaceuticals z Increasing market share z Jordan – 7.1%*, up from 6.4%** z Saudi Arabia – 3.8%*, up from 3.5%** z Algeria – 3.4%*, up from 3.2%** z Market leading position in Sudan z Sales and marketing presence reinforced across the region z 293 sales reps across the region z Developing s
Slide 25: Generic Pharmaceuticals
Generic Pharmaceuticals Strong product portfolio z 36 products in 79 dosage strengths Generic ANDA Approvals – 1995 through H1 2006 and forms 7 Building momentum in product approvals 6 z 7 ANDA approvals in H1 2006* z 3 ANDA approvals so far in H2 5 2006* 4 Maintaining strong pipeline 3 z Submitted
Slide 26: Generic Pharmaceuticals - Pipeline
Generic Pharmaceuticals - Pipeline Submissions in H1 10 '06 4 submitted in 2004 10 submitted in 2005 10 submitted in 2006 20 Pending approvals 4 $13.2 billion market 39 Under development Line extensions New products 25
Slide 27: Injectable Pharmaceuticals
Injectable Pharmaceuticals Expanding product portfolio Market authorisations across Europe z 50 products in 110 dosage strengths and forms 14 z USA – 7 ANDAs approved 12 and marketed 10 z Europe – 53 marketing 8 authorisations 6 z MENA – 49 products approved and marketed 4 z Added 11 products in 29
Slide 28: Hikma and JPI - A strong combination
Hikma and JPI - A strong combination z Significant scope for synergies through integration of R&D, registration, sales and marketing z Increases capacity through better utilisation of JPIs manufacturing facilities and the subsequent redirection of capacity in Jordan z Faster product delivery to the
Slide 29: Outlook
Outlook • Solid set of interim results • Future growth drivers • Unique position in the fast growing MENA region • Development into market leader in injectables • Strong R&D pipeline across all three core businesses • On track to deliver solid financial results for the full year 28
Slide 30: Appendix
A AlKMA. QUALITY HIKMA PHARMACEUTICALS PLC APPENDIX
Slide 31: Revenue by business segment
Revenue by business segment H1 2005 revenue by segment H1 2006 revenue by segment 38.8% 41.3% 16.9% 21.9% 42.6% 34.8% 1.6% 2.0% Generic Branded Injectable Other Generic Branded Injectable Other 30
Slide 32: Revenue by geographic region
Revenue by geographic region H1 2005 revenue by region H1 2006 revenue by region 46.2% 50.5% 6.7% 8.8% 47.0% 40.7% US MENA Europe US MENA Europe 31
Slide 33: Net working capital
Net working capital 200 Stock Days 160 120 Debtor Days 80 Creditor Days 40 0 2003 2004 H1 2005 2005 H1 2006 2003 2004 2005 H1 2005 H1 2006 Debtor days(1) 93 103 101 114 105 Stock Days(2) 193 156 168 160 160 Creditor Days(3) 51 56 77 69 64 (1) Accounts receivables, net as % of revenue multiplied by 3
Slide 34: Expanding production facilities to meet growth plans
Expanding production facilities to meet growth plans 7,500 m2 cephalosporin plant in Portugal nearing completion Capital expenditure, as of 30 June 2006 Expected to be operational early 2007 (US$ million) Estimated cost of $20 million 30 All cephalosporin lines plus dedicated laboratory, packi
Slide 35: Net cash
Net cash 69.1 (US$ million) 100 60 (32.3) 117.1 20 51.2 (26.8) (20) (47.7) (21.2) (60) (35.8) (100) H1 2005 H1 2006 Long-Term Borrowing Short-Term Borrowing Investments in Cash Deposits, Cash and Cash Equivalents, and Collateralized cash H1 2005 H1 2006 Debt / Equity 52.4% 15.2% Net Debt / Equity 20
Slide 36: Branded Pharmaceuticals – Market share
Branded Pharmaceuticals – Market share JORDAN SAUDI ARABIA Market share (Rx Market share (Rx Market plus OTC) by Market plus OTC) by Company position sales (%) Company position sales (%) HIKMA 1 7.1 GLAXOSMITHKLINE 1 10.3 DAR AL DAWA 2 5.5 SPIMACO 2 7.4 APM 3 5.5 PFIZER 3 6.7 PFIZER 4 4.7 NOVARTIS P
Slide 37: Generic Pharmaceuticals – 2006 approvals
Generic Pharmaceuticals – 2006 approvals ANDA approvals in H1 2006 IMS 2005 Sales Product name Therapeutic category ($ million) Cephalexin capsules 250 & 500mg Cephalosporin (Oral) 79.5 Cefadroxil capsules 500mg Cephalosporin (Oral) 17.5 Amoxicillin tablets 875mg Penicillin (Oral) 56.3 Cefadroxil ta
Slide 38: Injectable Pharmaceuticals - 2006 approvals
Injectable Pharmaceuticals - 2006 approvals Tentative ANDA approvals in H1 2006 IMS 2005 Sales Product name Therapeutic category ($ million) Ondansetron 2ML Oncology/Anitemetic 566.4 Ondansetron 20ML Oncology/Anitemetic As above Total market value : 566.4 37
Slide 39: Al-Jazeera Pharmaceutical Industries (JPI)
Al-Jazeera Pharmaceutical Industries (JPI) JPI z Founded in 1994 and commenced commercial operations in 1999 z 390 employees, including 83 in sales and marketing z 2005 sales of $16 million Transaction z Acquisition of remaining 52.5% stake in JPI z Cash consideration of $21.0 million Contribution t
Hikma Pharmaceuticals — H1 2006 Earnings Presentation on 6ix