Hikma Pharmaceuticals PLC · LSE:HIK
Hikma Pharmaceuticals — FY2005 Earnings Presentation
35 slides from Hikma Pharmaceuticals's earnings presentation, 2006
Slide 1: 2005 Preliminary Results
A AIKMA QUALITY HIKMA PHARMACEUTICALS PLC 2005 PRELIMINARY 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 • 2005 highlights • Financial performance • Operational performance and strategy • Outlook 3
Slide 5: Hikma Pharmaceuticals PLC
Hikma Pharmaceuticals PLC • Generics – focus on US • Branded – focus on MENA and Europe • Injectables – focus on US, Europe and MENA Manufacturing Plants (including JPI, 47.5% owned associate) R&D Centres 4
Slide 6: 2005 highlights
2005 highlights • Achieved revenue growth for the Group of 23.5% • Delivered 17.1% growth in profit attributable to shareholders • Increased investment in R&D by 70.7% • Expanded into the lyophilized segment of the injectables market • Increased capacity across three businesses • Strengthened MENA m
Slide 7: Bassam Kanaan, Chief Financial Officer
Bassam Kanaan Chief Financial Officer
Slide 8: Financial summary
Financial summary year ended 31 December ($ million) 2005 2004* Change Revenue 262.2 212.4 +23.5% Gross profit 135.8 108.4 +25.2% R&D costs 16.5 9.7 +70.7% Operating profit 69.2 62.7 +10.3% Profit before tax 64.4 59.0 +9.1% Profit attributable to shareholders 43.9 37.5 +17.1% Diluted earnings per sh
Slide 9: Revenue by business segment
Revenue by business segment year ended 31 December Change (US$ million) 280.0 262.2 +23.5% 240.0 49.3 +70.8% 212.4 200.0 28.9 160.0 93.0 +25.7% 74.0 120.0 80.0 106.2 115.2 +8.5% 40.0 0.0 2004 2005 Generic Branded Injectable Other 8
Slide 10: Revenue by business segment
Revenue by business segment year ended 31 December 2004 revenue by segment 2005 revenue by segment 34.8% 35.5% 13.6% 18.8% 50.0% 43.9% Generic Branded Injectable Other Generic Branded Injectable Other 9
Slide 11: Gross profit
Gross profit year ended 31 December Change (US$ million) 140.0 135.8 +25.2% 18.4 +89.5% 120.0 108.4 100.0 9.7 53.7 +35.3% 80.0 39.7 Gross Margins 60.0 2004 2005 Generics 54.1% 54.1% +0.0% 40.0 62.3 Branded 53.6% 57.8% +4.2% 57.5 +8.5% 20.0 Injectables 33.7% 37.4% +3.7% Group 51.1% 51.8% +0.7% 0.0 20
Slide 12: Operating expenses
Operating expenses year ended 31 December Change (US$million) 80.0 70.0 +48.9% 70.0 60.0 22.6 +49.8% 50.0 47.1 40.0 15.1 16.5 +70.7% 30.0 9.7 20.0 19.5% 27.4 +38.7% 10.0 19.7 0.0 2004 2005 As a percentage of Group revenue (%) S&M 9.3% 10.4% +1.1% R&D 4.6% 6.3% +1.7% G&A 7.1% 8.6% +1.5% Other 1.2% 1.
Slide 13: Operating profit
Operating profit year ended 31 December (US$ million) Change 80.0 76.0* +10.9% 68.5* 8.5 +109.2% 2004 2005 4.1 60.0 Unallocated corporate (6.5) (8.2) +25.9% expenses ($m) 22.4 28.8 +28.2% Share of results from 0.7 1.4 +98.0% associates ($m) 40.0 Group Operating Profit ($m) 62.7 69.2 +10.3% Operating
Slide 14: Taxation
Taxation year ended 31 December (US$ million) 25.0 20.8 19.5 20.0 15.0 10.0 35.3% 30.2% 5.0 0.0 2004 2005 13
Slide 15: Net Working Capital
Net Working Capital (US$ million) 110 Terms of Payment (Days) 90 US: 60-90 70 MENA: 120-360 50 30 10 (10) (30) (50) 2002 2003 2004 2005 Accounts Receivables, Net Inventories Trade Accounts Payable Net Working Capital (4) Debtor days(1) 117 93 103 108 Stock Days(2) 197 193 156 168 Creditor Days(3) 44
Slide 16: Capital expenditure
Capital expenditure year ended 31 December (US$ million) 30.0 26.2 7.8 20.0 18.0 2.1 8.3 12.4 10.0 6.1 4.4 0.0 2004 2005 Generic Branded Injectable Other Total 15
Slide 17: Net cash
Net cash at 31 December (US$ million) 86.9 140 100 (13.9) 141.1 60 20 49.1 (20) (26.7) (32.2) (36.3) (21.9) (60) 2004 2005 Long-Term Borrowing Short-Term Borrowing Investments in Cash Deposits, Cash and Cash Equivalents, and Collateralized cash Hikma’s strong balance sheet gives it financial flexibi
Slide 18: Dividends
Dividends year ended 31 December • Proposed pro-rata dividend of $1.5 million (0.89 cents per share) • For 2 months since IPO dividend at 20% payout ratio • Expected to be paid to shareholders on 30 May 2006 • Record date: 28 April 2006 • Subject to approval at the Annual General Meeting 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 • Consolidate our strong market position in the MENA Region and grow market share • Grow the Injectable Pharmaceuticals business by successfully launching new products and strengthening our sales and marketing network • Pursue profitable growth in the United States by fo
Slide 21: Regulatory approvals and product launches
Regulatory approvals and product launches 98 regulatory approvals in 2005 10 product launches in 2005 60 57 5 50 4 40 37 3 51 30 5 2 20 33 3 1 2 10 4 2 6 4 2 0 0 Generic Branded Injectable Generic Branded Injectable New products Line extensions and new regions New products 20
Slide 22: Regulatory applications submitted in 2005
Regulatory applications submitted in 2005 40 39 35 10 20 30 25 15 20 20 5 10 20 15 14 29 17 13 10 10 16 5 9 8 5 4 3 2 0 0 1 ct es e y cs lar S od Generic Branded Injectable tiv l og Tra CN on sti cu Blo f ec ato pl a rm as y Pharmaceutical Pharmaceutical Pharmaceutical n tar rm Ho ov ti-i eo n r di
Slide 23: Product pipeline for future growth
Product pipeline for future growth Pending approvals (1) New products under development(1) 45 60 39 40 50 50 35 30 28 40 29 25 23 30 20 21 20 17 15 13 3 10 10 21 14 5 8 0 0 Generic Branded Injectable Generic Branded Injectable (2) (3) (2) Pharmaceutical Pharmaceutical Pharmaceutical Pharmaceutical P
Slide 24: 2005 Highlights: Branded Pharmaceuticals
2005 Highlights: Branded Pharmaceuticals • Created separate sales teams for Branded and Injectable products • Launched 5 new products and 3 new products pending approval • Continue to develop relationships with originator pharmaceutical manufacturers • At year end 65 products in portfolio in 142 dos
Slide 25: MENA market share and position
MENA market share and position • Strong market position in the key MENA countries • Broad geographic reach across 13 countries • Benefit from local sales and marketing teams Region Market Share Position Jordan 6.4% 1st Saudi Arabia 3.5% 6th Algeria 3.2% 7th Note: Saudi Arabia market share and positi
Slide 26: 2005 Highlights: Injectable Pharmaceuticals
2005 Highlights: Injectable Pharmaceuticals • Launched 3 new products • Launched 9 injectable products into two new regions • Strong performance across US, MENA and Europe • Established dedicated sales force in MENA • Newly established sales force in Germany • Expanded into lyophilized segment of In
Slide 27: 2005 Highlights: Generic Pharmaceuticals
2005 Highlights: Generic Pharmaceuticals • Solid revenue growth • Maintained gross margins • Launched 2 new products and 13 new products pending approval • JPI plant approved to manufacture for US market • At year end 36 products in portfolio in 79 dosage strengths and forms 26
Slide 28: Capacity
Capacity Expected completion date JPI – cephalosporin plant H1 2006 Algeria H1 2006 Portugal - cephalosporin plant H2 2006 Jordan - penicillin plant 2007 Italian expansion – lyophilised 2007 plant 27
Slide 29: Acquisition strategy
Acquisition strategy • Acquisitions are a key part of our growth strategy • We continue to look for opportunities to consolidate our position in the MENA Region and particularly in the fast growing GCC • Attractive candidates will have significant distribution capabilities, complementary product por
Slide 30: Outlook
Outlook • Well-positioned to continue our track record of strong growth • Strength and diversity of our business will enable us to deliver strong organic growth at the Group level • Potential for acquisitions 29
Slide 31: Appendix
A AIKMA QUALITY HIKMA PHARMACEUTICALS PLC APPENDIX
Slide 32: Restatement of prior year income statement comparatives
Restatement of prior year income statement comparatives 2004 restated 2004 Difference Revenue 212,377 214,148 1,771 Sales and marketing 19,728 21,062 (1,334) General and administrative 15,098 15,961 (863) expenses Other operating expenses, 1,949 2,282 (333) net Other income 224 557 333 Flotation cos
Slide 33: Branded Pharmaceuticals – Jordan Competitive Landscape
Branded Pharmaceuticals – Jordan Competitive Landscape Market Share (Rx plus OTC) Company by Sales (%) Hikma 6.4 Dar Al Dawa 5.8 Arab Pharmaceutical Manufacturing 5.8 Pfizer 4.8 Sanofi-Aventis 4.5 GlaxoSmithKline 4.0 Novartis Pharma 3.1 Ram Pharmaceutical 2.9 Wyeth 2.5 AstraZeneca 2.4 32 Source: IMS
Slide 34: Branded Pharmaceuticals – Saudi Arabia Competitive Landscape
Branded Pharmaceuticals – Saudi Arabia Competitive Landscape Market Share (Rx and OTC) Company by Sales (%) GlaxoSmithKline 10.1 Spimaco 7.3 Pfizer 6.5 Novartis Pharma 4.0 Tabuk 3.5 Hikma + JPI (associate) 3.5 Janssen Cilag 3.3 Astrazeneca 3.3 Julphar 3.1 Merck Sharp Dohme 3.0 Abbott 2.7 Aventis 2.3
Slide 35: Branded Pharmaceuticals – Algeria Competitive Landscape
Branded Pharmaceuticals – Algeria Competitive Landscape Market Share (Rx plus OTC) Company by Sales (%) Sanofi-Aventis 19 Pfizer 7.4 Saidal 6.9 Novartis 5.6 GlaxoSmithKline 5.1 BMS-UPSA 3.9 Hikma 3.2 MSD Chibret 2.2 Solvay 2.2 Schering Plough 2.1 34 Source: IMS data, Year 2005