Hikma Pharmaceuticals Plc · LSE:HIK
Hikma Pharmaceuticals — FY2015 Earnings Presentation
37 slides from Hikma Pharmaceuticals's earnings presentation, Mar 16, 2016
Slide 1: 2015 preliminary results
Hikma Pharmaceuticals PLC 2015 preliminary results 16 March 2016
Slide 2: Disclaimer
► 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 person or publis
Slide 3: Strong performance with excellent strategic momentum for future growth
Strong performance with excellent strategic momentum for future growth ► Successful execution of Group’s growth strategy Group revenues in 2015 across all three business segments Generics Branded ► Swift integration of Bedford, delivering new high value products for US Injectables ► Strategic acquis
Slide 4: Financial performance
Financial performance
Slide 5: Group financial highlights
Group financial highlights Solid Group performance in 2015 ($ millions) 151.0 140.4 143.7 126.6 (Cents) 1,600 1,515 1,400 1,489 1,440 10 32 1,200 22 Basic EPS Core basic EPS Dividend per share 1,000 863 2014 2015 Special Dividend 800 851 818 600 491 444 400 474 454 319 427 409 200 299 286 0 Revenue
Slide 6: Branded: Delivering strong underlying growth in revenue and profitability
Branded Delivering strong underlying growth in revenue and profitability Revenue($ million) Core1 operating profit ($ million) Constant currency Constant currency 160 149 650 620 149 140 +13% +34% 600 120 550 570 118 551 +3% 100 111 +6% 500 80 450 60 400 40 350 20 300 0 250 2014 2015 200 Operati
Slide 7: Injectables: Stable revenue and excellent profitability
Injectables Stable revenue and excellent profitability Revenue ($ million) Core1 operating profit ($ million) 316 +3% 735 +19% 713 300 312 700 75 0% 72 250 265 +18% 600 90 92 200 548 546 500 150 400 100 50 300 0 2014 2015 200 100 Operating margin 2015 - 2014 2015 Change Constant Change 2014 2015 Cur
Slide 8: Generics: Continued decline of specific market opportunities, as expected
Generics Continued decline of specific market opportunities, as expected Revenue ($ million) Core1 operating profit ($ million) 120 113 216 100 200 -30% 80 - 59% 150 60 151 40 46 100 20 0 2014 2015 50 Operating margin 2014 2015 Change Reported 52.3% 29.1% -23.2pp 0 2014 2015 Core1 52.3% 30.5% -21.9p
Slide 9: Cash flow
Cash flow Lower contribution from specific market opportunities Operating cash flow ($ million) ► Operating cash flow was $366 million compared with $425 million in 2014, reflecting the lower contribution from 425 specific market opportunities in the Generics business 400 - 14% ► The primary uses of
Slide 10: Capital expenditure
Capital expenditure Continued investment in quality and capacity for future growth Capital expenditure ($ million) ► Maintaining and expanding our facilities across the 100 91 MENA including Jordan, Egypt and Sudan 90 82 ► Integrating Bedford and expanding capacity in Europe 80 21 including a new in
Slide 11: Product related investments
Product related investments Expanding and enhancing our product portfolio Product related investments1 ($ million) 202 Bedford ► Group R&D expenditure including product-related Acquisition 200 investments and acquisitions of $71 million 123 Intangibles R&D (P&L 180 expense) ► Expecting R&D expenditu
Slide 12: Balance sheet
Balance sheet Strong financing position remains Net debt position at 31 December 2015 ($ million) ► Net debt of $135 million decreased significantly 800 compared with Dec 2014 593 - Strong cash generation in 2015 600 - Reduction in short term borrowing following repayment of $225 million bridge loan
Slide 13: Bridge between core and reported operating profit and net income in 2016
Bridge between core and reported operating profit and net income in 2016 *** These figures are based on estimates and are subject to change *** $60 million $50 million $25 million $20 million Core operating profit Amortisation other than Inventory step up Acquisition & integration Gain on sale from
Slide 14: Outlook for 2016
Outlook for 2016 Group revenue • In the range of $2.0 to $ 2.1 billion • Revenue and core operating profit in line with historical trends, on a constant Branded currency basis • Revenue growth in the mid to high-single digits Injectables • Core operating margin of around 36% • Revenue in the range o
Slide 15: Branded
Branded
Slide 16: Building on our leading position in MENA
Building on our leading position in MENA 2015 achievements 2016 objectives ► Delivered excellent growth through continued ► Leverage our MENA R&D centres to further focus on strategic, higher value products and enhance our pipeline increasing efficiencies ► Continue to focus on higher value product
Slide 17: Focus on higher value product launches
Focus on higher value product launches 2015 product launches 25 54 Total launches ► CNS ► Diabetes ► Oncology 20 ► Respiratory ► Immuno-suppressant ► Anti-inflammatory ► Anti-infective 15 15 ► Sexual health 14 10 9 6 5 3 3 2 2 0 Saudi & GCC Egypt Tunisia Morocco Lebanon Algeria Sudan Jordan 16
Slide 18: Injectables
QUALITY Injectables
Slide 19: Strengthening our global injectables platform
Strengthening our global injectables platform 2015 achievements 2016 objectives ► Delivered strong performance across our three ► Launch more differentiated products from the geographies Bedford and Hikma R&D pipelines, offsetting ► Returned Portugal facility to full FDA compliance expected declines
Slide 20: Growing our US market share by value
Growing our US market share by value US generic Injectables market share (million eaches) US generic injectables market share ($ million) 40.0% 30.0% 36.7% 36.2% 30.0% 19.1% 20.0% 18.2% 15.4% 14.2% 20.0% 13.3% 16.1% 14.8% 13.5% 12.3% 10.0% 8.7% 7.4% 10.0% 6.8% 5.3% 5.3% 4.8% 5.6% 4.2% 4.0%3.9% 4.1%
Slide 21: Successfully launching Bedford products in the US market
Successfully launching Bedford products in the US market Launch plan for the first 20 Bedford products, 2015 to 2017 12 Azathioprine approved in 2016 10 9 8 8 Caffeine citrate, thiotepa and 2 phentolamine approved and 5 6 launched in 2015 4 3 5 1 3 2 1 1 1 1 - 2015 2016 2017 Cherry Hill Portugal Ger
Slide 22: Generics
Generics
Slide 23: Transforming our non-injectables business in the US
Transforming our non-injectables business in the US 2015 achievements 2016 objectives ► Strong performance from our legacy portfolio ► Successful Implementation of integration plan helped to offset the decline in specific market Combining Hikma and Roxane teams opportunities Optimising pipeline
Slide 24: Organisational chart
Organisational chart Hikma team US President and Chief Executive Roxane team VP Legal CFO Affairs SR VP Sales VP HR & IT & Marketing President, President Columbus VP Supply Exec. Dir. VP Quality Chain & ET General Regulatory & Affairs General Manager Medical Affairs Manager VP Product Development VP
Slide 25: Established R&D team with strong track record ensures development and launch of more differentiated products
Established R&D team with strong track record ensures development and launch of more differentiated products R&D organisational structure (Number of employees) 80 75 70 ► Large team of 182 full-time employees focused on the 60 development of more differentiated products 50 42 40 ► Expertise in condu
Slide 26: Over 30 launches expected in the next three years
Over 30 launches expected in the next three years Roxane expected launches, 2016 to 2018 (Number of products) 14 13 12 1 12 1 2 1 10 1 8 2 1 8 1 1 6 2 4 8 8 2 4 0 2016 2017 2018 Controlled substances & specialised Extended release Oncology Transdermals, patches & derms Respiratory 25
Slide 27: Synergy targets identified across the Roxane business
Synergy targets identified across the Roxane business Area Description R&D ► Improving cost control through enhanced pipeline management Legal costs ► Strengthening in-house legal team Sales and ► Enhancing sales and marketing activities and optimising customer relationships marketing Supply chain ►
Slide 28: On track to deliver 2017 revenue between $700 - $750 million
On track to deliver 2017 revenue between $700 - $750 million, with medium-term EBITDA margins of around 35% Roxane revenue ($ million) Revenue of around $650 Revenue less than $650 million Revenue in range of $700 - million Core operating margin in low double- $750 million digits 676 • Launch of clo
Slide 29: Combined Generics pipeline creates significant growth potential
Combined Generics pipeline creates significant growth potential Roxane and legacy business expected launches, 2016 to 2018 (Number of products) ► Combined pipeline of 74 products expected to launch in 2016-2018: – Signed agreements for 18 more differentiated products in 2015 35 31 29 1 30 1 2 5 25 7
Slide 30: Summary
AIKMK. QUALITY
Slide 31: Building a leading global provider of generic pharmaceuticals
Building a leading global provider of generic pharmaceuticals Delivering high quality, affordable medicines to patients • Leading global injectables manufacturer • Leading pharmaceutical manufacturer in MENA and emerging markets • High quality provider of non-injectable generics in the US Commercial
Slide 32: Appendix
QUALITY Appendix
Slide 33: Revenue by segment and region
Revenue by segment and region 2015 revenue by segment 2015 revenue by region 40% 46% 48% 49% 1% 10% 6% Branded Injectables Generics Other MENA US Europe & ROW 32
Slide 34: Consolidated P&L
Consolidated P&L Solid Group performance in 2015 Constant currency $ million 2015 2014 Change change Revenue 1440 1489 -3% +2 Gross profit 818 851 -4% +1 Gross margin 56.8% 57.2% -0.3pp -0.2pp Operating profit 381 402 -5% +3% Core operating profit1 409 427 -4% +4% Core operating margin 28.4% 28.7% -
Slide 35: Cash flow statement
Cash flow statement $ million 2015 2014 Profit before tax and minority interest 318 362 Adjustments for non-cash items 89 91 Change in working capital (44) 17 Income tax paid (51) (79) Other 54 34 Net cash generated from operating activities 366 425 Investment in property, plant and equipment (82) (
Slide 36: Balance sheet
Balance sheet $ million Dec-15 Dec-14 Growth $ Cash 593 288 305 Trade and other receivables 488 439 49 Other current assets 28 13 15 Inventories 251 273 (22) Total current assets 1,360 1,013 347 Intangible assets 607 602 5 Tangible fixed assets 507 514 (7) Investment in associated companies and join
Slide 37: Exchange rate movements impacting 2015 revenue and profit
Exchange rate movements impacting 2015 revenue and profit Currency 2015 2014 Change% Average Average USD/Algerian Dinar 100.4033 80.6145 (20)% USD/Egyptian Pound 7.7160 7.0972 (8)% USD/Moroccan Dirham 9.8008 9.0155 (8)% USD/Tunisian Dinar 1.9623 1.7001 (13)% USD/Sudanese Pound 9.6600 6.0277 (38)% 36