Hikma Pharmaceuticals Plc · LSE:HIK
Hikma Pharmaceuticals — H1 2020 Earnings Presentation
37 slides from Hikma Pharmaceuticals's earnings presentation, 2020
Slide 1: 2020 Interim Results
Better health. Within reach. Every day. Hikma Pharmaceuticals PLC 2020 Interim Results
Slide 2: Disclaimer
Disclaimer Save to the extent required by law, neither Hikma Pharmaceuticals PLC nor any of its affiliates (Hikma), nor any other party, is under any duty to update or inform you of any changes to such information. In particular, it should be noted that the financial information relating to Hikma co
Slide 3: Strong Group core revenue and profit growth
Strong Group core revenue and profit growth Core1 Core Core operating Core basic Operating revenue operating profit profit margin earnings per share cash flow $1,132m $284m 25.1% 85.3¢ $292m 1 Core results are presented to show the underlying performance of the Group, excluding exceptional items and
Slide 4: Our response to COVID-19
Our response to COVID-19 Impact of COVID-19 on the US Market1 Our response Our employees • Continuing to support our local and communities communities through funding, medicine +3.6% retail +3.3% % Change in total Change in NBRx vs. prescriptions vs. prior week prior week donations, food and other e
Slide 5: Injectables
Injectables
Slide 6: Benefiting from our broad portfolio and flexible, high-quality operations
Benefiting from our broad portfolio and flexible, high-quality operations US Injectables revenue by category ($ millions) • Base business remained relatively stable $200 • Saw an increase in Q1, reflecting a pull forward in demand, followed by softness in Q2 due to low levels of Total product sales
Slide 7: Expanding our US Injectables portfolio and leading in new launches
Expanding our US Injectables portfolio and leading in new launches Number of injectable launches in the US for our key competitors 2019 – 1H201,2 Hikma Fresenius Dr Reddy’s Amneal Auromedics Mylan Sagent Sandoz Baxter Pfizer 1 Generic launches Hikma Pharmaceuticals PLC 7 2 IQVIA US and Hikma interna
Slide 8: Growing a pipeline with a focus on differentiated product opportunities
Growing a pipeline with a focus on differentiated product opportunities US Injectables pipeline of 135 products1 Complex products Other • ~10% are complex products; 7% are NTEs2 Filed 43 • Potential launch dates are from 2020 products 4 39 • Increasing number of complex Development 67 products – 22%
Slide 9: Partnering with Gilead to supply remdesivir
Partnering with Gilead to supply remdesivir Improving supply to COVID-19 treatment Agreement with Gilead to manufacture remdesivir for injection Remdesivir has been granted conditional marketing authorisation in the EU and emergency use authorisation in the US as a COVID-19 treatment This agreement
Slide 10: Strong revenue growth in MENA and Europe
Strong revenue growth in MENA and Europe Europe highlights MENA highlights • Broad product portfolio supporting COVID-19 patients • Leveraging our broad product portfolio to meet patients’ demand • Launching new products across market • Continue to drive demand for our biosimilar products • Strong l
Slide 11: Generics
Generics
Slide 12: Leveraging strengthened foundations to overcome competitive market dynamics
Leveraging strengthened foundations to overcome competitive market dynamics Generics business 1H20 performance Leveraging operational Maintaining our strong foundation: and commercial enhancements: 400 25% 350 • Flexible manufacturing enabled us to maintain 20% supply continuity 300 250 15% • Increa
Slide 13: Benefitting from diversified portfolio and commercial improvements
Benefitting from diversified portfolio and commercial improvements Hikma’s Generic portfolio by competition and revenue contribution1 Hikma is the market leader for 14% 53% 66% of these products 2% 19% Sole player 2 players 3 – 5 players > 6 players 1 Does not include contract manufacturing Hikma Ph
Slide 14: Optimising our well-diversified portfolio and driving growth through new products
Optimising our well-diversified portfolio and driving growth through new products Expanding our Generics portfolio through launches Generics revenue by product Generic • Paragraph IV opportunity Zortress® • First generic to enter the market and 7% 48% currently sole generic player 2015 1H20 Generic
Slide 15: Developing a pipeline of complex products to drive growth
Developing a pipeline of complex products to drive growth US Generics pipeline of 73 products1 Complex products Other • Includes naloxone nasal spray and Filed 19 generic Advair Diskus® • Potential launch dates are from 2020 10 9 products • Includes complex products with limited Development 24 compe
Slide 16: Branded
Branded
Slide 17: Fifth largest pharmaceutical company in MENA
Fifth largest pharmaceutical company in MENA MENA top 10 pharmaceutical companies by sales1 ($ millions) $13.7 6% Top 10 billion growth manufacturers make up Total in the market between 37.4% market size 2019 - 2020 of the total market Hikma’s growth strategy • Prioritise tier 1 markets and drive de
Slide 18: Delivering growth in tier one markets
Delivering growth in tier one markets • Good demand for in-market products • Launched 3 new products – Bufomix, Divinus and Celect • Reduction in demand for pharmacy products like anti-infectives Algeria Egypt Saudi Arabia • Good demand for in-market products • Strong recovery following challenges •
Slide 19: Leveraging our strong commercial capabilities to increase engagement with stakeholders
Leveraging our strong commercial capabilities to increase engagement with stakeholders Developing a tailored approach to reach stakeholders Being proactive in response to COVID-19 Conducting COVID-19 awareness campaigns to assist patients, doctors and pharmacists Advisory Patient boards awareness Ho
Slide 20: Focusing on key therapeutic areas for top markets
Focusing on key therapeutic areas for top markets Branded pipeline by top 5 markets1 Pipeline by market Pipeline by key therapeutic area 12% 13% 19% 26% 3% 3% 6% 12% 6% 17% 2% 18% 15% 20% 20% 8% Anti-infectives Autoimmune Cardiovascular Algeria KSA Morocco Jordan Egypt CNS Diabetes Oncology Pain Man
Slide 21: Finance
Finance Khalid Nabilsi, Chief Financial Officer
Slide 22: Group financial highlights
Group financial highlights 1H19 1H20 % change Core1 revenue $1,043 million $1,132 million +9% Core gross profit $544 million $602 million +11% Core operating profit $246 million $284 million +15% Core EBITDA2 $288 million $328 million +14% Core net income $176 million $205 million +16% Basic earning
Slide 23: Injectables
Injectables Core revenue Core operating profit Core revenue (million) (million) Strong demand for in-market products in US and EU $600 driven by COVID-19 22% Good growth in MENA, reflecting good demand for our $485 $200 $204 $500 portfolio and biosimilars 13% $428 $63 $167 Launched new products acro
Slide 24: Generics
Generics Core revenue Core operating profit Core revenue (million) (million) $400 $100 Good demand for differentiated products 0% $90 Recent product launches $368 $369 $80 1% $70 71 Increased competition $300 $60 72 $50 $40 $30 Core operating profit $200 $20 $10 Improved product mix $0 1H19 1H20 Hig
Slide 25: Branded
Branded Core revenue Core operating profit Core revenue (million) (million) ● Constant currency ● Constant currency Good growth in Saudi Arabia and Egypt and strong $300 $60 recovery in Algeria 6% 14% $275 New product launches across all markets $49 $51 $250 $40 4% $242 13% Lower sales in Sudan $200
Slide 26: Core R&D and capital expenditure
Core R&D and capital expenditure Core R&D Cash capital expenditure (million) (million) $66 $70 $60 $60 $62 $48 $58 $50 $38 US $12 $40 $40 $30 $23 MENA $22 $20 $20 $10 $13 Europe $6 $0 $0 1H19 1H20 1H19 1H20 ● Invested 5% of Group core revenue in core R&D ● Upgrading capabilities and adding new techn
Slide 27: Cash flow and balance sheet
Cash flow and balance sheet Operating cash flow Net debt position (million) (million) Dec-19 Jun-20 $292 $300 Short-term financial debts1 $578 $138 Long-term financial debts2 $107 $789 $250 Cash and cash equivalents $443 $416 $187 Net debt $242 $511 $200 Net debt/core EBITDA 0.41x 0.81x \\\\\\\\\\\\
Slide 28: Raising 2020 guidance
Raising 2020 guidance Injectables Generics Branded ● Revenue: ● Revenue: ● Revenue growth in constant $950 million to $980 million $720 million to $760 million, currency: ● Core operating margin: including $20 million to $40 million for generic Advair mid-single digits 38% to 40% Diskus® (GxA) ● Cor
Slide 29: Appendix
Appendix
Slide 30: 1H20 exceptional items and other adjustments
1H20 exceptional items and other adjustments Bridge between 1H20 core and reported operating profit Bridge between 1H20 core and reported net income (million) (million) $13 million $7 million $297 $284 $4 212 $1 $1 $34 $205 $13 $2 $21 Core MENA Intangible Jordan Impairment Reported Core net Amortisa
Slide 31: 2020 expected exceptional items and other adjustments
2020 expected exceptional items and other adjustments Bridge between 2020 core and reported operating profit Bridge between 2020 core and reported net income (million) (million) $(16) million $(23) million $3 $16 $14 $48 $1 $34 $7 Core MENA Intangible Jordan Impairment Reported Core net Amortisation
Slide 32: Group core revenue by segment and region
Group core revenue by segment and region 1H20 Group core revenue by segment 1H20 Group core revenue by region US Injectables 63% Generics 43% 33% Other MENA EU & ROW Branded 0% 31% 6% 24% Hikma Pharmaceuticals PLC 32 Sensitivity: General
Slide 33: Core finance expense
Core finance expense 1H20 core finance expense (million) $30 $24 $25 6 Other bank charges, including $20 commissions and factoring $15 Effective interest rate: 3.97% 12 Interest on loans $10 Effective interest rate: $5 Interest and fees on 4.53% 6 (including commitment and amortised upfront fees) Eu
Slide 34: Consolidated P&L
Consolidated P&L % constant $ million 1H19 1H20 % change currency change Revenue 1,047 1,132 +8% +8% Core revenue 1,043 1,132 +9% +9% Gross profit 548 602 +10% +10% Core gross profit 544 602 +11% +10% Core gross margin 52.2% 53.2% +1.0pp +0.8pp Operating profit 238 297 +25% +26% Core operating profi
Slide 35: Consolidated cash flow statement
Consolidated cash flow statement $ million 1H19 1H20 Cash generated from operating activities 211 311 Income taxes paid (41) (19) Income tax received 17 - Net cash inflow from operating activities 187 292 Purchases of property, plant and equipment (48) (66) Proceeds from disposal of property, plant
Slide 36: Consolidated balance sheet
Consolidated balance sheet $ million Dec-19 Jun-20 $ change % change Goodwill 282 280 (2) (1)% Other intangible assets 552 570 18 3% Property, plant and equipment 912 924 12 1% Right-of-use assets 50 46 (4) (8)% Investment in associates and joint ventures 11 11 - - Deferred tax assets 243 234 (9) (4
Slide 37: Better health. Within Reach. Everyday.
Better health. Within Reach. Everyday. Hikma Pharmaceuticals PLC Sensitivity: General
Hikma Pharmaceuticals — H1 2020 Earnings Presentation on 6ix