Hikma Pharmaceuticals Plc · LSE:HIK
Hikma Pharmaceuticals — FY2014 Earnings Presentation
36 slides from Hikma Pharmaceuticals's earnings presentation, March 2015
Slide 1: Hikma Pharmaceuticals PLC 2014 Preliminary Results
Hikma Pharmaceuticals PLC 2014 Preliminary Results
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: Financials
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Slide 4: Consolidated income statement: Strong Group performance in 2014
Consolidated income statement Strong Group performance in 2014 Revenue Adjusted operating Net income EPS – adjusted, diluted* ($m) profit1 ($m) (cents) ($m) + 9% 1,489 1,365 + 3% 427 413 + 8% + 31% 149.5 278 138.4 212 2013 2014 2013 2014 2013 2014 2013 2014 3 1 Before the amortisation of intangible
Slide 5: Branded: Strong performance in most markets offset by restructuring in Algeria
Branded Strong performance in most markets offset by restructuring in Algeria Revenue ($ million) Adjusted operating profit1 ($ million) 140 - 18% + 1% 561 135 120 550 111 554 551 100 500 - 1% 80 450 60 400 40 350 300 20 250 0 2013 2014 200 Operating margin 150 100 2013 2014 Change 50 Reported 22.4%
Slide 6: Injectables: Excellent revenue growth and profitability
Injectables Excellent revenue growth and profitability Revenue ($ million) Adjusted operating profit1 ($ million) 713 260 700 265 + 33% 75 240 + 60% 650 220 600 90 200 536 180 550 548 160 500 81 166 140 450 120 92 100 400 80 350 363 60 300 40 250 20 0 200 2013 2014 150 Operating margin 100 50 2013 2
Slide 7: Generics: Strong underlying growth from legacy products
Generics Strong underlying growth from legacy products, with expected decline of specific opportunities Revenue ($ million) Adjusted operating profit1 ($ million) 160 166 - 32% 268 - 19% 140 250 120 216 113 200 100 80 150 60 40 100 20 - 2013 2014 50 Operating margin 2013 2014 Change 0 Reported 47.4%
Slide 8: Cash flow: Strong cash flow driven by our US businesses
Cash flow Strong cash flow driven by our US businesses Operating cash flow ($ million) ► Operating cash flow increased by $88 million to $425 million, reflecting the very strong performance of the US Injectables and Generics businesses + 26% 425 400 ► Cash primarily used to fund capex and product re
Slide 9: Capital expenditure: Investing in facilities and capacity for future growth
Capital expenditure Investing in facilities and capacity for future growth Capital expenditure ($ million) ► Capex of $91 million reflects continued investment in 100 our facilities across the Group 91 90 22 + 54% ► Maintenance and equipment additions across our 80 MENA facilities, including Algeria
Slide 10: Product-related investments: Expanding our product portfolio
Product-related investments Expanding our product portfolio to drive future growth Product-related investments1 ($ million) ► In addition to the $55 million of R&D spend in 2014, 147 the Group invested a further $24 million in products Bedford acquisition 140 123 - intangibles that were capitalised
Slide 11: Balance sheet: Strong financing position
Balance sheet Strong financing position Net debt position at 31 December 2014 ($ million) ► Net debt of $274 million, reflecting very strong cash 288 generation in 2014 290 190 175 ► Full year net financing expense of $34 million 90 Short-term Long-term borrowing1 borrowing -10 Cash & cash Dec 2013
Slide 12: Summary: Outlook for 2015
Summary Outlook for 2015 ► Group revenue growth of around 6% in constant currency, or around 3% reported if current exchange rates prevail ► Branded revenue growth in the low-teens in constant currency, or high single digit at current exchange rates, and an improvement in adjusted operating margin ►
Slide 13: Our diversified business model continues to deliver strong growth
Our diversified business model continues to deliver strong growth Group revenue ($ million) Acquired Bedford and Ben Acquired Baxter’s Multi Source Injectables (US) Venue (US) Acquired 94.1% of Promopharm (Morocco) Acquired Elie Pharmaceuticals (Sudan) Acquired EPCI (Egypt) Acquired minority stake i
Slide 14: Branded
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Slide 15: Developing our Branded pipeline to meet growing demand
Developing our Branded pipeline to meet growing demand in specific therapeutic areas Branded launches by therapeutic area 6% 10% 12% 14% 1% 15% 23% 19% 22% 38% 12% 23% 18% 8% 13% 11% 5% 30% 48% 2% 8% 39% 6% 16% 3% 2013 2014 2015E 2016E 69 launches 59 launches Expecting to launch around 200 products
Slide 16: Successfully leveraging our corporate and local R&D centres
Successfully leveraging our corporate and local R&D centres Launches and submissions in Algeria, Egypt, Jordan, Saudi Arabia and Tunisia, 2009 to 2014 Tunisia 7 R&D employees Jordan 121 R&D employees Therapeutic areas: Therapeutic areas: 29 launches - Central nervous system 37 launches - Central ner
Slide 17: Investments across our markets are driving strong growth
Investments across our markets are driving strong growth ► Increasing focus on strategic products through Saudi/GCC 5-yr revenue CAGR: 5% restructuring of sales force ► Strengthening customer and distribution channels Saudi & GCC through use of third party distributor ► Improving promotional efforts
Slide 18: Our strong track record of growth across the MENA markets
Our strong track record of growth across the MENA markets Branded revenue, 2009 to 2014 ► Expecting to return to low-teens growth Hikma 5-year CAGR (reported): 9% in 2015 (constant currency) Hikma 5-year CAGR (constant): 12%* MENA market 5-year CAGR: 9%** ► MENA pharmaceutical market continues Expec
Slide 19: Improving profitability is a key priority
Improving profitability is a key priority Branded adjusted operating margin, 2009 to 2014 ► Expecting to see improvement in adjusted operating margin in 2015 Targeting 24% EBIT margins over the medium term ► Improving sales in Algeria will support 27% Around 200bp margin improvement improvement 24%
Slide 20: Injectables
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Slide 21: Building strong market positions in the US, MENA and Europe
Building strong market positions in the US, MENA and Europe EUROPE CAPABILITIES Vials, ampoules, bags, cytotoxics, pre- A broad portfolio across a filled syringes range of product types and MANUFACTURING: US FDA, EU and MENA approved therapeutic areas manufacturing facilities in Portugal, Italy and
Slide 22: Successfully growing our US market share by value
Successfully growing our US market share by value US generic Injectables market share (million eaches) US generic injectables market share ($ million) 45.0% 20.0% 39.9% 40.0% 17.5% 18.0% 35.0% 16.0% 30.0% 14.0% 12.0% 11.0% 25.0% 9.6% 10.0% 20.0% 8.0% 15.0% 13.0% 13.0% 6.1% 6.1% 6.0% 5.4% 5.3% 5.1% 1
Slide 23: Building a leading global manufacturer of generic injectable products
Building a leading global manufacturer of high quality, affordable generic injectable products Injectables revenue, 2009 to 2014 ► Launch of Bedford products will be a key driver of growth Hikma 5-year revenue CAGR: 38% Strong medium-term ► Leveraging Bedford’s R&D growth potential driven by capabil
Slide 24: Launch of Bedford products will be a key driver of growth
Launch of Bedford products will be a key driver of growth Launch plan for the first 20 Bedford products, 2015 to 2017 Launch plan 20 18 16 14 12 10 10 8 8 6 2 6 4 5 2 3 2 2 1 1 - 2015 2016 2017 Cherry Hill Portugal Germany 23
Slide 25: Generics
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Slide 26: Developing our generics portfolio by re-launching legacy products
Developing our generics portfolio by continuing to re-launch our legacy products ► Re-introduced a total of 33 products since 2012 and expecting to bring back a further 5 in 2015 ► Currently marketing a portfolio of 24 molecules in 66 different dosage forms and strengths ► Continuing to leverage our
Slide 27: Investing in R&D and business development to build a strong pipeline
Investing in R&D and business development to build a strong pipeline ► Developing related growth strategies that build on and reinforce our strong legacy business ► Diversifying into new areas with attractive market dynamics – such as dermatologics, opthalmics and oncology ► Focusing on niche market
Slide 28: Summary
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Slide 29: Our diversified business model: A strong platform for growth
Our diversified business model A strong platform for growth Group revenue ($ million) Acquired Bedford and Ben Acquired Baxter’s Multi Source Injectables (US) Venue (US) Acquired 94.1% of Promopharm (Morocco) Acquired Elie Pharmaceuticals (Sudan) Acquired EPCI (Egypt) Acquired minority stake in Unim
Slide 30: Appendix
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Slide 31: Consolidated income statement
Consolidated income statement $ million 2014 2013 Change Revenue 1,489 1,365 +9% Gross profit 851 764 +11% Gross margin 57.2% 56.0% +1.2 Operating profit 402 352 +14% Adjusted operating profit1 427 413 +3% Adjusted operating margin 28.7% 30.3% -1.6 EBITDA2 474 427 +11% Adjusted EBITDA1,2 485 463 +5%
Slide 32: Consolidated cash flow statement
Consolidated cash flow statement $ million 2014 2013 Profit before tax and minority interest 362 298 Adjustments for non-cash items 91 110 Change in working capital 17 (22) Income tax paid (79) (84) Other 34 35 Net cash generated from operating activities 425 337 Investment in property, plant and eq
Slide 33: Consolidated balance sheet
Consolidated balance sheet $ million 2014 2013 Growth $ Growth % Cash 288 175 113 65% Trade and other receivables 439 439 - 0% Other current assets 13 7 6 86% Inventories 273 276 (3) (1)% Total current assets 1,013 897 116 13% Intangible assets 602 447 155 35% Tangible fixed assets 514 443 71 16% In
Slide 34: Revenue by segment and region
Revenue by segment and region 2014 revenue by segment 2014 revenue by region 37% 43% 48% 51% 15% 6% Branded Injectables Generics MENA US Europe & ROW 33
Slide 35: Injectables sales by region
Injectables sales by region 2014 Injectables revenue by region 77% 13% 10% MENA US Europe & ROW 34
Slide 36: Exchange rate movements
Exchange rate movements Currency 2015 2014 Change% Spot 28th February Average USD/Algerian Dinar 94.8583 80.6145 (15)% USD/Egyptian Pound 7.6278 7.0972 (7)% USD/Moroccan Dirham 9.6714 9.0155 (7)% USD/Tunisian Dinar 1.9501 1.7001 (13)% USD/Sudanese Pound 6.3171 6.0277 (5)% 35