Hikma Pharmaceuticals PLC · LSE:HIK
Hikma Pharmaceuticals — H1 2008 Earnings Presentation
46 slides from Hikma Pharmaceuticals's earnings presentation, Aug 28, 2008
Slide 1: Hikma Pharmaceuticals PLC 2008 Interim Results
HIKMA PHARMACEUTICALS PLC 2008 Interim Results 28 August 2008
Slide 2: ■ This document, which has been issued by Hikma Pharmaceuticals PLC (the “Company”), comprises
■ 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: Said Darwazah, Chief Executive
Said Darwazah Chief Executive
Slide 4: H1 2008 Highlights
H1 2008 Highlights ■ Group revenues up 33.4% to $299.9 million ■ Strong performances in both the Branded and Injectables businesses ■ Better than expected performance from acquisitions in Jordan and Egypt ■ Lower revenues and significant margin erosion in our US Generics business ■ Oversubscribed pl
Slide 5: Bassam Kanaan, Chief Financial Officer
Bassam Kanaan Chief Financial Officer
Slide 6: Consolidated income statement
Consolidated income statement All figures in $ million H1 2008 H1 2007 Change Net sales 299.9 224.9 +33.4% Gross profit 135.0 113.9 +18.5% Gross profit margin 45.0% 50.7% -5.6 Adjusted operating profit(1) 56.7 52.9 7.2% Adjusted operating profit margin 18.9% 23.5% -4.6 Operating profit 47.1 51.8 -9.
Slide 7: Analysis of adjusted consolidated income statement
Analysis of adjusted consolidated income statement1 H1 2008 H1 2007 Exceptional H1 08 vs H1 07 items & Intangible Adjusted All figures in $ million Adjusted intangible As Reported Adjusted amortisation As Reported amortisation (2) (2,3) Net sales 304.7 (4.8) 299.9 224.9 224.9 +35.5% Operating profit
Slide 8: Branded and Injectables continue to generate an increasing percentage of Group sales
Branded and Injectables continue to generate an increasing percentage of Group sales H1 2008 revenue by segment H1 2007 revenue by segment 58.0% 46.1% 26.7% Branded Branded 26.9% Injectables Injectables 0.7% Generics 1.1% Generics 14.4% Other Other 26.1% Page 7
Slide 9: MENA represents an increasing percentage of Group sales
MENA represents an increasing percentage of Group sales H1 2008 revenue by region H1 2007 revenue by region 14.2% 16.0% 18.6% 67.2% 54.2% 29.8% MENA MENA US US Europe & ROW Europe & ROW Page 8
Slide 10: Branded: Excellent performance driven by organic growth and acquisitions
Branded Excellent performance driven by organic growth and acquisitions Net sales ($ million) ■ 22.3% organic growth 175.0 ■ Strong trading across all MENA markets, + 68.0% particularly in the GCC, Algeria and Jordan 150.0 47.3 125.0 ■ Better than expected performance at APM and + 22.3% 126.7 Hikma
Slide 11: Branded: Strong margins
Branded Strong margins Gross profit ($ million) Operating profit ($ million) 60.0 120.0 52.1 * 3.3 50.0 100.0 + 56.5% 50.4 94.0 + 67.2% 40.0 +47.0% 80.0 34.3 30.0 60.0 56.2 20.0 40.0 20.0 10.0 0.0 0.0 H1 2007 H1 2008 H1 2007 H1 2008 Gross margin Operating margin Change vs. Change vs. H1 05 H1 06 H1
Slide 12: Injectables: Expanding our global presence
Injectables Expanding our global presence Net revenue ($ million) ■ 17.9% organic growth excluding the acquisitions of Thymoorgan and APM 90.0 80.0 ■ Excellent revenue growth in MENA + 34.3% 9.8 -Quality salesforce 70.0 + 17.9% 70.8 -Broad product portfolio 60.0 -Strong market presence 60.0 50.0 40.
Slide 13: Injectables: Expanding operating margins in the underlying business
Injectables Expanding operating margins in the underlying business Gross profit ($ million) Operating profit ($ million) 35.0 16.0 14.8 * 34.0 14.0 13.3 * + 11.8 % 1.4 33.8 0.9 13.5 33.0 +9.1% 12.0 + 14.3 % 12.3 32.0 10.0 31.0 8.0 1 30.0 6.0 29.6 29.0 4.0 28.0 2.0 27.0 0.0 H1 2007 H1 2008 H1 2007 H1
Slide 14: Generics: Declining sales in a difficult trading environment
Generics Declining sales in a difficult trading environment Net sales ($ million) ■ Lower prices and lower than expected volumes for Lisinopril following the expiry of the VA contract 70.0 60.0 ■ Lower than expected demand for new products 58.7 - 18.1 % 50.0 48.0 * ■ Continued price erosion across o
Slide 15: Generics: Greater than expected margin erosion
Generics Greater than expected margin erosion Gross profit ($ million) Operating profit ($ million) 30.0 20.0 28.2 25.0 15.0 15.7 20.0 10.0 - 58.5 % 15.0 5.0 -107.6% 11.7 * 10.0 0.0 4.8 -1.2* - 75.8 % H1 2007 H1 2008 -138.2% -4.8 5.0 6.8 -5.0 -6.0 0.0 -10.0 H1 2007 H1 2008 Gross margin Operating mar
Slide 16: Group operating expenses
Group operating expenses Operating expenses as a % of Group revenue ■ Increase in adjusted sales and marketing Change spend due primarily to increased spend H1 07 H1 08 vs. H1 07 on product promotion Sales & Marketing 13.4% 15.7% + 2.3 Research & Development 4.1% 3.6% - 0.5 ■ Adjusted G&A expens
Slide 17: Cash flow
Cash flow All figures US$m H1 2008 H1 2007 Profit before tax and minority interest 39.3 49.5 Adjustments for non-cash items 27.9 13.5 Change in working capital (57.7) (49.3) Income tax paid (4.0) (9.8) Net cash generated from operating activities 5.4 3.9 Investment in property, plant and equipment (
Slide 18: Expanding production facilities for growth
Expanding production facilities for growth Capital expenditure ($ million) 35 ■ Investment in a new lyophilisation plant in Portugal 29.2 0.9 30 5.8 ■ Upgrading machinery, buildings and equipment at 25 21.1 0.4 APM, Hikma Egypt and JPI 5.2 20 2.5 6.8 ■ Ongoing investment in Jordanian manufacturing 1
Slide 19: Improved leverage to support growth
Improved leverage to support growth Net debt position at 30 June 2008 ($ million) ■ Placed 9.9% of issued share capital in Jan 2008 95 raising gross proceeds of $160.3 million -307.0 -197.6 45 34.5 22.5 -5 -63.5 -55 -99.9 -105 -155 -120.2 -205 -278.0 Short-Term borrowing Long-Term borrowing -255
Slide 20: Outlook for 2008
Outlook for 2008 ■ Group revenue growth between 30% and 35% ■ Gross margin of approximately 44% ■ Slight operating loss in the Generics business in H2 2008 ■ Revenue growth of approximately 60% in the Branded business ■ Continued strong revenue growth in the Injectables business Page 19
Slide 21: Said Darwazah, Chief Executive
Said Darwazah Chief Executive
Slide 22: Hikma's strong track record of delivering growth
Hikma’s strong track record of delivering growth Group revenues ($ million) 500 448.8 450 400 350 317 299.9 300 262 250 214 200 188 150 138 99 105 90 100 50 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 H1 2008 Page 21
Slide 23: Generics: Stabilising our Generics business
Generics Stabilising our Generics business ■ Changes to the management team -Appointed General Manager and VP, Sales & Marketing -Overhauling the Sales and Marketing team ■ Thorough review of current operations ■ Actions to date -Cancelling low margin products -Implementing price increases -Renegoti
Slide 24: Injectables: Our competitive injectables platform and unique market presence
Injectables Our competitive injectables platform and unique market presence Our competitive injectables platform H1 2008 Injectables sales by region ■ A “one-stop-shop” for injectables (development, manufacturing, sales & marketing 41.1% ■ A reputation for operational excellence and compliance ■ Hig
Slide 25: Injectables: Capitalising on opportunities in the MENA region
Injectables Capitalising on opportunities in the MENA region Page 24
Slide 26: Injectables: Developing our market position across Europe
Injectables Developing our market position across Europe Page 25
Slide 27: Injectables: Building our market presence in the US
Injectables Building our market presence and targeting new opportunities in the US •Development Continued various hormones submission of 6-8 and steroids to be new products per submitted 2009- year (including 2010 oncology products) Seek partners for in licensing or private label supply opportunit
Slide 28: Injectables: Strengthening our global portfolio through new product launches
Injectables Strengthening our global portfolio through new product launches MENA Jordan Saudi Arabia Kuwait Libya Sudan Yemen Europe Germany Austria Portugal Ireland Holland US 0 5 10 15 20 25 30 Launched in H1 08 Lauch expected H2 2008 / 2009 Page 27
Slide 29: Injectables: Focusing our pipeline on key therapeutic areas
Injectables Focusing our pipeline on key therapeutic areas Products to be submitted in next 12 months Pending approvals by therapeutic area` by therapeutic area Anti-infective Oncology 11% 19% Anti-infective 38% CNS 10% Others 2% Supportive Care Anti- 3% inflammatory 4% Cardiovascular 5% Cardiovascu
Slide 30: Strategic priorities for the Injectables business
Injectables Strategic priorities for the Injectables business ■ Growing the overall product portfolio ■ Expanding in key therapeutic areas ■ Building our geographic presence ■ Developing our manufacturing capabilities Page 29
Slide 31: Branded: The MENA markets are performing as strong as ever
Branded The MENA markets are performing as strong as ever Rank Company Market Growth Market value (%) share ($ m) (%) ■ Growing populations TOTAL MENA 6,864 21.2 100.0 ■ Increasing affluence 1 SANOFI- 768.4 22.1 11.2 ■ Developing health insurance industry AVENTIS 2 GSK 525.8 17.4 7.7 ■ Increasing go
Slide 32: Branded: Our strong position in our core markets
Branded Our strong position in our core markets JORDAN ALGERIA SAUDI ARABIA COMPANY Market Growth Market COMPANY Market Growth Market COMPANY Market Growth Market value (%) share value (%) share value (%) share ($m) (%) ($m) (%) ($m) (%) Rank JORDAN 178.6 12.4 100% ALGERIA 2,230.4 28.3 100% SAUDI 1,
Slide 33: Branded: Our expanding product portfolio will ensure continued growth
Branded Our expanding product portfolio will ensure continued growth 40 35 30 25 20 15 10 5 0 Jordan Saudi Arabia Algeria Egypt Sudan Tunisia Lebanon Products launched Products approved Products pending Page 32
Slide 34: Branded: Strengthening our position as MENA's preferred licensing partner
Branded Strengthening our position as MENA’s preferred licensing partner ■ 35.5% or $64 million of Branded sales from in-licensed products ■ 25% growth in sales of existing in-licensed products ■ 78% growth in sales of new in-licensed products from Takeda, including Actos® and Blopress® ■ Strong pro
Slide 35: Branded: Investing in sales and marketing to support growth
Branded Investing in sales and marketing to support growth Sales and Country marketing staff Algeria 173 Tunisia Lebanon Tunisia 32 Jordan Libya 20 Algeria Egypt 298 Libya Gulf States Egypt Sudan 51 Saudi Arabia Jordan 233 Lebanon 46 Chad Saudi Arabia 229 Sudan Yemen Gulf States 104 Yemen 30 With al
Slide 36: Strategic priorities for the Branded business
Branded Strategic priorities for the Branded business ■ Organic growth -Expanding product portfolio -Enhanced sales and marketing structure ■ Synergies from recent acquisitions -Product launches in new markets -Streamlining distribution channels -Roll-out of Hikma payment terms ■ Acquisitions -Entry
Slide 37: Strategy for future growth
Strategy for future growth ■ Replicating our Branded business model in new emerging markets ■ Building our leading position in our core MENA markets ■ Integrating acquisitions and pursuing further acquisitions ■ Developing our global specialty Injectables business ■ Restoring profitability in our US
Slide 38: Q&A
Q&A
Slide 39: Appendix
Appendix
Slide 40: Branded: Launching new products and developing new markets
Branded Launching new products and developing new markets Product approvals in H1 2008 Product launches in H1 2008 50 40 36 45 46 35 40 30 35 25 20 30 25 36 20 20 15 15 10 10 10 16 6 4 5 5 8 2 4 0 2 0 MENA Europe and ROW MENA-NEW MENA-Other Europe and ROW New products New products Line extensions an
Slide 41: Branded: Pipeline for future growth
Branded Pipeline for future growth Branded submissions in H1 2008 Branded pending approvals at 30 Jun 2008 80 320 305 70 67 280 60 240 50 200 40 160 305 67 30 120 20 80 13 13 10 5 40 25 35 8 8 8 21 14 5 17 0 0 MENA-NEW Other MENA Europe and RoW MENA-NEW Other MENA Europe and RoW New products Line ex
Slide 42: Injectables: Launching new products and developing new markets
Injectables Launching new products and developing new markets Product approvals in H1 2008 Product launches in H1 2008 35 35 30 30 30 25 25 20 20 27 15 15 13 11 12 10 10 6 6 12 10 5 1 5 3 5 2 5 3 2 0 1 0 1 US MENA Europe & ROW US MENA Europe New products Line extensions Page 41
Slide 43: Injectables: Pipeline for future growth
Injectables Pipeline for future growth Injectable submissions in H1 2008 Injectable pending approvals at 30 June 2008 12 140 126 10 120 10 8 100 8 1 80 6 60 126 10 4 4 7 1 40 26 2 20 10 13 1 3 10 3 2 1 16 10 8 0 0 US Europe MENA-NEW Other MENA US Europe MENA - New Other MENA New products Line extens
Slide 44: Generics: Expanding our product portfolio
Generics Expanding our product portfolio Product approvals and launches in H1 2008 6 5 4 3 3 2 1 1 2 1 0 Approvals Product launches New products Line extensions Page 43
Slide 45: Generics: Pipeline for future growth
Generics Pipeline for future growth Submissions and pending approvals in H1 2008 35 32 30 6 25 20 15 26 10 5 2 2 0 Submissions Pending approvals New products Line extensions Page 44
Slide 46: Net working capital
Net working capital 220 170 Terms of payment (days) 120 US: 60-90 MENA: 120-360 70 Europe: 60-120 20 (30) H1 2006 H1 2007 H1 2008 Debtor days Stock days Creditor days Debtor days(1)* 107 122 120 Stock Days(2)* 163 176 191 Creditor Days(3)* 66 70 72 (1) Debtor Days, annualized revenue x 365. (2) Stoc
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