Hikma Pharmaceuticals Plc · LSE:HIK
Hikma Pharmaceuticals — FY2016 Earnings Presentation
40 slides from Hikma Pharmaceuticals's earnings presentation, Mar 15, 2017
Slide 1: Hikma Pharmaceuticals PLC 2016 preliminary results
The image part with relationship ID rId2 was not found in the file. Hikma Pharmaceuticals PLC 2016 preliminary results 15 March 2017
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: A solid financial performance in 2016 and excellent strategic progress
A solid financial performance in 2016 and excellent strategic progress INJECTABLES Selling specialised generic and branded injectable products globally $781 m 40% of Group revenue1 GENERICS BRANDED Selling non-injectable generic products across Selling branded generics and the US in-licensed product
Slide 4: 2016 financial performance
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Slide 5: Group financial highlights
Group financial highlights Solid performance in 2016 ($ millions) 136.5 143.7 126.6 2,001 118.5 2,000 84.5 (Cents) 1,950 66.5 1,500 32 33 1,440 Basic EPS Core basic EPS Dividend per share 1,054 2015 2016 Constant currency 1,000 1,018 818 521 500 465 454 473 318 409 419 286 276 0 Revenue Core gross p
Slide 6: Amortisation and exceptional items impacted Group operating profit and net income in 2016
Amortisation and exceptional items impacted Group operating profit and net income in 2016 419 37 $117 million 27 34 41 18 302 4 Core operating profit Intangible Inventory-related Impairment and Acquisition, Release of Gain from sale of Reported operating amortisation adjustments write-down of assets
Slide 7: Injectables: Strong growth and excellent profitability
Injectables Strong growth and excellent profitability Revenue ($ million) Core1 operating profit ($ million) Constant currency Constant currency +11% 788 346 800 +11% 350 710 83 340 700 300 +10% 312 +9% 72 91 250 600 92 607 200 500 546 150 400 100 781 50 300 0 2015 2016 200 100 Operating margin
Slide 8: Generics
Generics Consolidation of West-Ward Columbus and anticipated decline in certain products Revenue ($ million) Core1 operating profit ($ million) 50 604 600 45 474 46 550 40 500 35 - 24% 450 30 +300% 25 400 350 20 35 300 15 250 10 200 5 150 0 151 2015 2016 100 130 Operating margin 50 2015 2016 Change
Slide 9: Branded
Branded A strong improvement in profitability in constant currency Revenue($ million) Core1 operating profit ($ million) Constant currency Constant currency 160 154 600 600 +5% 149 140 +31% 550 570 120 -2% 556 118 500 100 -5% 112 450 80 400 60 350 40 20 300 0 250 2015 2016 200 Operating margin 1
Slide 10: Cash flow
Cash flow Cash flow reflects impact of acquisition and integration costs Operating cash flow ($ million) Roxane ► Operating cash flow was $293 million, down from acquisition and $366 million in 2015 reflecting: integration costs -10% • West-Ward Columbus acquisition and 350 366 329 integration costs
Slide 11: Capital expenditure
Capital expenditure Continued investment in capacity and capabilities to support future growth Capital expenditure ($ million) 140 ► Expanding Injectables capacity and capabilities in the US 122 120 ► Investing in the West-Ward Columbus facility 100 82 ► Continued expansion of Injectables 76 manufac
Slide 12: Product-related investments
Product-related investments Expanding and enhancing our product pipeline Product-related investments1 ($ million) Core R&D (P&L expense) Product-related investments ► Significant increase in R&D investment: (balance sheet) 180 • Consolidation of West-Ward Columbus – investing in the development of t
Slide 13: Balance sheet
Balance sheet Financing position remains strong following West-Ward Columbus acquisition Net debt position at 31 December 2016 ($ million) ► Net debt of $697 million, up from $135 million 800 ► Reflects completion of West-Ward Columbus 593 acquisition in February 2016 600 ► Financing position remain
Slide 14: Outlook for 2017
Outlook for 2017 Group revenue • Group revenue of around $2.2 billion in constant currency • Revenue in the range of $800 million to $825 million Injectables • Core operating margin in the high 30s • Revenue of around $800 million, with 15% contribution from certain new launches Generics • Significa
Slide 15: Bridge between core and reported operating profit and net income in 2017
Bridge between core and reported operating profit and net income in 2017 *** These figures are based on estimates and are subject to change *** $50 million 53 3 Core operating profit Intangables amortisation other than Inventory related adjustments Reported operating profit software $58 million ` 50
Slide 16: Delivering our strategy
The image part with relationship ID rId2 was not found in the file. Delivering our strategy
Slide 17: Focusing on five key priorities to achieve our strategic objectives
Focusing on five key priorities to achieve our strategic objectives Maximise portfolio potential across our markets Optimise operations and drive efficiencies Develop a differentiated product portfolio by building best- in-class R&D capabilities Attract and develop talent across the Group Use M&A an
Slide 18: Maximise portfolio potential across our markets
The image part with relationship ID rId2 was not found in the file. Maximise portfolio potential across our markets We are maximising the potential of our marketed products, leveraging our skilled sales and marketing teams and building on our strong customer relationships strategy
Slide 19: Launching first-to-market generics in strategic therapeutic categories in MENA
Launching first-to-market generics in strategic therapeutic categories in MENA Egypt ► Launched two first-to-market generics to treat diabetes in 2016: • Aloglptin (Inhiglip), a generic of Vipidia • Aloglptin + Metoformin (Inhibamet), a generic of Vipdomet Algeria ► Launched rosuvastatin (Superstat)
Slide 20: Driving value from the West-Ward Columbus portfolio
Driving value from the West-Ward Columbus portfolio ► Roxane launched the first-to-market generic of GSK’s Flonase® (flucticasone propionate 50MCG nasal spray) in 2006 ► Fluticasone propionate 50MCG prescription market size was c$202 million in 2016* ► GSK launched an OTC version of Flonase® in 2014
Slide 21: Capturing opportunities with the Bedford products
Capturing opportunities with the Bedford products ► Thiotepa is a former Bedford product ► On the FDA’s Drug Shortage list in 2015 ► We worked with the FDA to expedite approval Thiotepa sales, Sep-15 to Dec-16 ($ millions) ► Re-introduced to the market in 2015 as the 5 only active approved ANDA in t
Slide 22: Optimise operations and deliver efficiencies
The image part with relationship ID rId2 was not found in the file. Optimise operations and deliver efficiencies We are investing in high-quality manufacturing facilities to improve the efficiency of our processes, whilst maintaining tight control of overheads, G&A and other operating expenses
Slide 23: Driving operational excellence in our MENA facilities
Driving operational excellence in our MENA facilities ► Continuous improvement to achieve operational excellence (OE) ► Focusing on increased standardisation, improved product quality, increased efficiencies and enhanced employee capabilities ► Engaged McKinsey to assist in developing our operationa
Slide 24: Achieving significant cost savings as we integrate WWC
Achieving significant cost savings as we integrate WWC ► Significant progress with large-scale integration of West-Ward Columbus ► Ensuring optimum cost structure to support business and enable growth ► Achieved over $35 million of cost savings in 2016 Significant progress to-date ► Identified signi
Slide 25: Develop a differentiated product portfolio by building best-in-class R&D capabilities
The image part with relationship ID rId2 was not found in the file. Develop a differentiated product portfolio by building best-in-class R&D capabilities We are enhancing our product offering and strengthening our competitive position by investing in our in-house R&D capabilities and external partne
Slide 26: Our broad US product pipeline with at least one layer of differentiation
Our broad US product pipeline with at least one layer of differentiation US Injectables pipeline, December 2016 ► Large and differentiated pipeline including: 100 • Former Bedford products • Oncology products • Pre-filled syringes • IV bags • PIV products 50 91 • Lyophilised products • Complex produ
Slide 27: High value pipeline with emphasis on PIV and 'first-to-file' opportunities
High value pipeline with emphasis on PIV and ‘first-to-file’ opportunities US non-injectables pipeline, December 2016 Total: 100 Filed: 27 Other 100 products currently in development In dev: Other: 40 11 • 33 PIV products • 25 High containment facility products • 12 DEA products PIV in dev: 33 • 11
Slide 28: Focused on launching generic Advair in 2017
Focused on launching generic Advair in 2017 ► Advair market size of $4.6 billion* in the US ► Confident we have a high-quality submission that meets the FDA guidance ► Significant interaction with the FDA, pre and post submission ► Competed a number of pre-approval inspections ► Strong partnership w
Slide 29: Use M&A and capital investment to accelerate organic growth opportunities
The image part with relationship ID rId2 was not found in the file. Use M&A and capital investment to accelerate organic growth opportunities We are investing to expand our product portfolio, technological capabilities, geographic reach and manufacturing capacity through capital investment and M&A
Slide 30: Investing in capacity and capabilities to underpin sustainable growth
Investing in capacity and capabilities to underpin sustainable growth ► Adding lyophilisation & bag capacity in Portugal and a dedicated oncology facility ► Maintaining and upgrading our capacity across MENA ► Investing in support product growth in existing and new existing capabilities for our inje
Slide 31: Strong investment case with clear potential for growth
Strong investment case with clear potential for growth Group revenue ($ million) ► Diversified business model 2000 CAGR 10-16: 18% ► Established commercial capabilities ► Strong global portfolio across diverse 1500 markets ► Experienced R&D teams and a large, differentiated pipeline 1000 ► High-qual
Slide 32: Appendix
The image part with relationship ID rId2 was not found in the file. Appendix
Slide 33: Revenue by segment and region
Revenue by segment and region 2016 revenue by segment 2016 revenue by region 40% 29% 62% 33% 5% 31% Branded Injectables Generics Other MENA US Europe & ROW 33
Slide 34: Consolidated P&L
Consolidated P&L Solid Group performance in 2016 Constant currency $ million 2016 2015 Change change Revenue 1,950 1,440 +35% +39% Gross profit 986 818 +21% +25% Gross margin 50.6% 56.8% -6.2pp -5.7pp Operating profit 302 381 -21% -9% Core operating profit1 419 409 +2% +14% Core operating margin 21.
Slide 35: Cash flow statement
Cash flow statement $ million 2016 2015 Profit before tax and minority interest 210 318 Adjustments for non-cash items 183 89 Change in working capital (95) (44) Income tax paid (76) (51) Other 71 54 Net cash generated from operating activities 293 366 Investment in property, plant and equipment (12
Slide 36: Balance sheet
Balance sheet $ million Dec-16 Dec-15 Growth $ Growth % Cash 162 593 (431) -73% Trade and other receivables 759 488 271 56% Other current assets 68 28 40 143% Inventories 459 251 208 83% Total current assets 1,448 1,360 88 6% Intangible assets 1,719 607 1,112 183% Tangible fixed assets 969 507 462 9
Slide 37: Group revenue impacted by adverse foreign currency movements
Group revenue impacted by adverse foreign currency movements Revenue ($ million) 2,001 26 12 10 3 1,950 Constant EGP SDG DZD Other Cunrrencies Reported Revenue Revenue 37
Slide 38: Group operating profit impacted by adverse foreign currency movements
Group operating profit impacted by adverse foreign currency movements Core operating profit ($ million) 465 25 8 5 8 419 Constant EGP DZD SDG Other Cunrrencies Reported Core operating profit Core operating profit 38
Slide 39: Branded revenue impacted by adverse foreign currency movements
Branded revenue impacted by adverse foreign currency movements Revenue ($ million) 600 23 10 9 2 556 Constant EGP SDG DZD Other Cunrrencies Reported Revenue Revenue 39
Slide 40: Branded operating profit impacted by adverse foreign currency movements
Branded operating profit impacted by adverse foreign currency movements Core operating profit ($ million) 154 25 7 4 6 112 Constant EGP DZD SDG Other Cunrrencies Reported Core operating profit Core operating profit 40