Hikma Pharmaceuticals Plc · LSE:HIK
Hikma Pharmaceuticals — H1 2016 Earnings Presentation
36 slides from Hikma Pharmaceuticals's earnings presentation, Aug 24, 2016
Slide 1: Hikma Pharmaceuticals PLC H1 2016 Interim Results
Hikma Pharmaceuticals PLC H1 2016 Interim Results 24 August 2016
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 H1 2016 and excellent strategic progress
A solid financial performance in H1 2016 and excellent strategic progress INJECTABLES Selling specialised generic and branded injectable products globally $357 m 40% of Group revenue1 GENERICS BRANDED Selling non-injectable generic products across Selling branded generics and the US in-licensed prod
Slide 4: Financial performance
Financial performance
Slide 5: Group financial highlights
Group financial highlights Solid first half performance ($ millions) 1,000 (Cents) 905 900 67.3 71.4 56.2 882 800 34.1 48.2 700 25.7 709 11 11 600 Basic EPS Core basic EPS Dividend per share 500 H1 2015 H1 2016 Constant currency 446 400 425 400 300 197 215 200 227 204 194 127 176 100 142 109 0 Reven
Slide 6: Injectables: Maintaining excellent profitability
Injectables Maintaining excellent profitability Revenue ($ million) Core1 operating profit ($ million) Constant currency Constant currency 175 400 +2% 149 +5% 360 150 344 350 146 146 42 0% 35 +4% 125 300 43 43 357 100 250 266 272 75 50 200 25 150 0 H1 2015 H1 2016 100 50 Operating margin 2016 -
Slide 7: Generics: Consolidation of West-Ward Columbus and a decline in specific market opportunities
Generics Consolidation of West-Ward Columbus and a decline in specific market opportunities, as expected Revenue ($ million) Core1 operating profit ($ million) 40 275 257 35 250 193 30 33 225 200 25 +225% 20 175 - 76% 150 15 125 10 100 5 8 75 79 0 H1 2015 H1 2016 50 64 Operating margin 25 H1 2015 H1
Slide 8: Branded: A strong improvement in underlying profitability
Branded A strong improvement in underlying profitability Revenue($ million) Core1 operating profit ($ million) Constant currency Constant currency 80 74 300 284 +1% 149 +28% 282 60 250 -6% 264 58 -5% 55 40 200 20 150 0 H1 2015 H1 2016 100 Operating margin 2016 50 H1 2015 H1 2016 Change Constant
Slide 9: Amortisation and exceptional items impacted Group operating profit and net income
Amortisation and exceptional items primarily related to West-Ward Columbus impacted Group operating profit and net income in H1 176 18 $55 million 20 39 18 121 4 Core operating profit Intangible amortisation Inventory related Acquisition, integration Release of contingent Gain from sale of Reported
Slide 10: Cash flow
Cash flow Strong underlying cash flow excluding the impact of acquisition and integration costs Operating cash flow ($ million) ► Operating cash flow was $99 million, down from $125 Roxane acquisition and million in H1 2015 reflecting West-Ward Columbus integration costs acquisition and integration
Slide 11: Capital expenditure
Capital expenditure Continued investment in capacity and capabilities to support future growth Capital expenditure ($ million) ► Expanding Injectables capacity and capabilities in the 60 US – including pre-filled syringes and opthalmics 55 50 ► Investing in the West-Ward Columbus facility ► Continue
Slide 12: Product-related investments
Product-related investments Expanding and enhancing our product portfolio Product-related investments1 ($ million) R&D (P&L expense) ► Significant increase in R&D investment: Product-related investments ► Consolidation of West-Ward Columbus – 80 (balance sheet) investing in the development of their
Slide 13: Balance sheet
Balance sheet Financing position remains strong following West-Ward Columbus acquisition Net debt position at 30 June 2016 ($ million) ► Net debt of $819 million, up from $135 million 800 ► Reflects completion of West-Ward Columbus 593 acquisition in February 2016 600 ► Financing position remains st
Slide 14: Outlook for 2016
Outlook for 2016 Group revenue • In the range of $2.0 billion to $2.1 billion in constant currency • Revenue growth in the mid to high-single digits Injectables • Core operating margin of around 38% • Revenue in the range of $640 million to $670 million - includes ten months of Generics West-Ward Co
Slide 15: Injectables
Injectables
Slide 16: Positioning our global injectables business for long-term sustainable growth
Positioning our global injectables business for long-term sustainable growth Acquired Bedford Transferred equipment Labs and Ben Venue and machines to our manufacturing facility plants in Europe and Capacity expansion in in the US the US Portugal Pipeline enhancement with high barrier to entry produ
Slide 17: Maintaining strong market share in US injectables
Maintaining strong market share in US injectables US generic Injectables market share (million eaches) US generic injectables market share ($ million) 40.0% 30.0% 36.7% 33.0% 30.0% 19.1% 20.0% 18.9% 20.0% 13.3% 13.5% 15.3% 13.5% 12.3%12.6% 10.0% 8.7% 7.8% 10.0% 7.5% 6.8% 5.3% 5.7% 5.5% 5.3% 5.3% 5.0
Slide 18: Bedford's portfolio provides higher value growth potential
Bedford's portfolio provides higher value growth potential 9 products approved Over 30 On track to products launch 20 Portfolio of 82 products by transferred products to our the end of facilitates 2017 6 products launched 17
Slide 19: Strengthening our operations in Europe and building capacity for future growth
Strengthening our operations in Europe and building capacity for future growth ► Accessing new markets - through 23 product approvals and successful new product acquisition ► Launched 17 products in the EU in H1 2016 ► Capacity expansion in Portugal will enable us to participate in more tenders acro
Slide 20: Continued focus on building our injectables platform in MENA
Continued focus on building our injectables platform in MENA ► MENA injectables market size: approx. $3.1 bn* ► Began roll out of new products in Egypt – launched three products in H1 2016 ► 190 dedicated sales and marketing reps ► Increased focus on adding partnerships and licensing ► Over 100 prod
Slide 21: Generics
Generics
Slide 22: Significantly enhancing our presence in non-injectables in the US
Significantly enhancing our presence in non-injectables in the US Attractive market Larger scale and Advanced R&D State-of-the-art fundamentals stronger presence capabilities facilities Expected CAGR of around Seventh largest generics Advanced laboratories with Complex formulation and 6% bet
Slide 23: Successfully progressing with the integration of West-Ward Columbus
Successfully progressing with the integration of West-Ward Columbus H1 2016 H2 2016 • Function integrated • Continue to evaluate synergy Finance Finance • Evaluated synergy opportunities opportunities • Sub-functions integrated Supply • Begin building out warehouse Supply • Signed lease for new ware
Slide 24: Driving strong growth from West-Ward Columbus' differentiated pipeline
Driving strong growth from West-Ward Columbus’ differentiated pipeline West-Ward Columbus revenue guidance and drivers of future growth 2016* 2017** 2018 and beyond Revenue below $650 million on a Revenue between $700 million and pro forma basis $750 million High potential pipeline includes products
Slide 25: Branded
Branded
Slide 26: Continued focus on higher value product launches
Continued focus on higher value product launches Product launches per market (Number of products) Includes higher value Includes first generic respiratory product, Prospan cardiovascular product, Rosuvastatin Sudan, 1 Oman, Algeria, 1 3 Includes 2 oncology launches Tunisia, 2 Includes our first Egyp
Slide 27: Improving productivity and enhancing efficiencies across the region
Improving productivity and enhancing efficiencies across the region Combined managerial positions across key functions Implemented the SAP system and increased Tunisia Lebanon $918.0 automation m Jordan Iraq Morocco Jordan Began programme to Kuwait Algeria standardise Hikma $786.6 production process
Slide 28: Summary
Summary
Slide 29: Building a leading global provider of generic pharmaceuticals
Building a leading global provider of generic pharmaceuticals Delivering high quality, affordable medicines to patients • Leading global injectables manufacturer • Leading pharmaceutical manufacturer in MENA and emerging markets • High quality provider of non-injectable generics in the US Commercial
Slide 30: Appendix
QUALITY Appendix
Slide 31: Bridge between core and reported operating profit and net income
Bridge between core and reported operating profit and net income in 2016 *** These figures are based on estimates and are subject to change *** 44 24 42 18 4 Core operating profit Intangables Inventory related Acquisition, Release of contingent Gain from sale of Reported operating amortisation other
Slide 32: Revenue by segment and region
Revenue by segment and region H1 2016 revenue by segment H1 2016 revenue by region 40% 30% 60% 34% 6% 30% Branded Injectables Generics Other MENA US Europe & ROW 31
Slide 33: Consolidated P&L
Consolidated P&L Solid Group performance in 2016 Constant currency $ million H1 2016 H1 2015 Change change Revenue 882 709 +24% +28% Gross profit 425 400 +6% +12% Gross margin 48.2% 56.4% -8.2pp -7.1pp Operating profit 121 194 -38% -27% Core operating profit1 176 204 -14% -3% Core operating margin 2
Slide 34: Cash flow statement
Cash flow statement $ million H1 2016 H1 2015 Profit before tax and minority interest 83 170 Adjustments for non-cash items 46 43 Change in working capital (38) (72) Income tax paid (30) (38) Other 38 22 Net cash generated from operating activities 99 125 Investment in property, plant and equipment
Slide 35: Balance sheet
Balance sheet $ million Jun-16 Dec-15 Growth $ Growth % Cash 253 593 (340) -57% Trade and other receivables 671 488 183 38% Other current assets 147 28 119 425% Inventories 496 251 245 98% Total current assets 1,567 1,360 207 15% Intangible assets 1,759 607 1,152 190% Tangible fixed assets 982 507 4
Slide 36: Exchange rate movements impacting 2016 revenue and profit
Exchange rate movements impacting 2016 revenue and profit Currency 2016 2015 Change% Average Average USD/Algerian Dinar 108.0838 95.736 (11)% USD/Egyptian Pound 8.4602 7.5700 (11)% USD/Moroccan Dirham 9.786 9.391 (4)% USD/Tunisian Dinar 2.053 1.938 (6)% USD/Sudanese Pound 11.2740 6.3171 (44)% 35
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