Hikma Pharmaceuticals Plc · LSE:HIK
Hikma Pharmaceuticals — FY2017 Earnings Presentation
36 slides from Hikma Pharmaceuticals's earnings presentation, 2018
Slide 1: Hikma Pharmaceuticals PLC 2017 Preliminary Results
Better health. Within reach. Every day. Hikma Pharmaceuticals PLC 2017 Preliminary Results
Slide 2: Disclaimer
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
Slide 3: Strategic highlights
Strategic highlights Hikma Pharmaceuticals PLC 2017 Preliminary Results 3
Slide 4: Group highlights: 2017 financial highlights
Group highlights 2017 financial highlights ▲ Group revenue down 1% and up 1% on $1.94b a constant currency basis Revenue ▲ Core1 operating profit of $386 million and core operating profit margin of 19.9% $386m ▲ Strong cash flow generation, providing Core operating profit strategic and financial fle
Slide 5: Segment highlights
Segment highlights Benefiting from our diversified business model 2017 Revenue 2017 Segment operating Highlights contribution profit contribution1 Injectables ▲ Remained resilient in the face of new competition ▲ Expanded manufacturing capability ▲ Continued to transfer and launch Bedford products ▲
Slide 6: Injectables: Increasing our market share in the US generic injectables market
Injectables Increasing our market share in the US generic injectables market US generic injectables market share1 US generic injectables market share1 December 2017 (eaches) December 2017 (sales) 600 2,000 1,800 500 1,600 1,400 400 1,200 300 1,000 800 200 600 400 100 200 0 0 MAT Dec 2016 Eaches MAT
Slide 7: Injectables: Benefitting from a broad portfolio and barriers to entry
Injectables Benefitting from a broad portfolio and barriers to entry US Injectables products by revenue contribution US Injectables portfolio by number of competitors1 5% 8% 10% 10% 13% 53% 32% 68% <$5million ≤2 $5 million - $10 million 3-5 6-8 $10 million - $20 million ≥9 >$20 million 1 IQVIA US 20
Slide 8: Injectables: Leading the market in new launches
Injectables Leading the market in new launches Number of Injectable launches in the US 2016 - 20171 Hikma 26 Auromedics 16 Mylan 16 Fresenius 10 Sagent 8 Pfizer 6 Teva 5 Dr. Reddy's 4 Claris 2 Novartis/Sandoz 2 0 5 10 15 20 25 30 1IQVIA US 2018 and Hikma internal data Hikma Pharmaceuticals PLC 2017
Slide 9: Injectables: Focusing on new therapeutic entities and more complex products
Injectables Focusing on new therapeutic entities, differentiated delivery forms and more complex products US Injectables pipeline Addressable market size >$5 billion1 Type of product Presentations2 Prefilled syringes and autoinjectors 27 Infusion bags 47 44% Lyophilized 47 56% Complex 13 Small and l
Slide 10: US generic market environment
US generic market environment Customer consolidation and increased competition is driving significant price erosion Customer consolidation1 Injectable generic market sales by year1 ($billions) $12 $10 $8 $6 $4 $2 90% of all non-injectable generic products $- 2014 2015 2016 2017 Approved ANDAs per mo
Slide 11: Generics: Focusing on strengthening customer relationships
Generics Focusing on strengthening customer relationships to maximise the potential of our portfolio Our customers value: We are: Quality ▲ Commitment to quality Focusing on improving service levels ▲ No supply interruptions due to quality issues Products ▲ Breadth of portfolio: differentiated, diff
Slide 12: Generics: Driving further cost savings to improve profitability
Generics Driving further cost savings to improve profitability Consolidation of our manufacturing and Striving for a leaner workforce distribution centres ▲ Consolidation of Generics manufacturing ▲ Significant headcount reduction since facilities and distribution centres underway acquisition ▲ Buil
Slide 13: Generics Pipeline: Focusing on higher-value opportunities
Generics Pipeline Focusing on higher-value opportunities Generics pipeline1 Pipeline by layers of differentiation December 2016 – December 2017 December 2016 120 8% 100 35% 23% We reprioritised the 80 pipeline, discontinuing 37 products, to focus on most valuable opportunities 73 60 34% One layer
Slide 14: Generics: Bringing first-wave generics to market
Generics Bringing first-wave generics to market Proportion of PIV1 products in pipeline Disclosed Generics PIV pipeline Zytiga® Saphris® Janssen Allergan Ampyra® Xtandi® Acorda Astellas 40% Tarceva® Zortress® Genentech Novartis Afinitor® Uloric® Novartis Takeda 60% Vascepa® Gleevec® Amarin Novartis
Slide 15: Branded: Strong fundamentals continue to support MENA growth
Branded Strong fundamentals continue to support MENA growth Growth vs. Size (USD)1 Growth vs. Size (local currency)1 2016 - 2017 2016 - 2017 4.0 4.0 3.5 3.5 3.0 3.0 ALG ALG 2.5 2.5 KSA KSA 2.0 2.0 1.5 1.5 UAE UAE EGY EGY LEB 1.0 1.0 TUN MOR LEB MOR JOR 0.5 0.5 JOR TUN 0.0 0.0 KUW KUW -0.5 -0.5 -40.0
Slide 16: Branded: Outpacing market growth in Saudi Arabia
Branded Outpacing market growth in Saudi Arabia driven by new launches Saudi Arabia The local market Our performance ▲ Market size: $3.2 billion ▲ 0% growth 2016-2017 7th 5% Largest Branded Growth 2016-2017 pharmaceutical revenue in constant currency company contribution ▲ Changes in government regu
Slide 17: Branded: Strengthening our local presence in Algeria
Branded Strengthening our local presence in Algeria to support future growth Algeria The local market Our performance ▲ Market size: $2.2 billion ▲ 10% growth 2016-2017 in constant currency 4th 1% Largest Branded Growth 2016-2017 pharmaceutical revenue in constant currency company contribution ▲ Alg
Slide 18: Branded: Consistently delivering double digit growth in Egypt
Branded Consistently delivering double digit growth in Egypt Egypt The local market Our performance ▲ Market size: $2.0 billion ▲ 25% growth 2016-2017 in constant currency 11th 22% Largest Branded Growth 2016-2017 pharmaceutical revenue in constant currency company contribution ▲ Egyptian pharma mar
Slide 19: Branded: Reinforcing our position as a partner of choice in MENA
Branded Reinforcing our position as a partner of choice in MENA Increasingly, leading multi-national pharmecutical companies are approaching us to form partnerhips, recognising our unique skills and experience Partnerships with More than Doubled the 37% of Branded 52 companies 85 products number of
Slide 20: Our strategy: Establishing Hikma as a leader across our markets
Our strategy Establishing Hikma as a leader across our markets Research and innovation Develop more complex and differentiated products and use innovative technologies to address doctor/patient needs People Hikma’s Productivity Ensure effective organisation, 5 Optimise operations and drive efficienc
Slide 21: Financial highlights
Financial highlights Hikma Pharmaceuticals PLC 2017 Preliminary Results 21
Slide 22: Group financial highlights
Group financial highlights Delivered a solid performance in a challenging year ($ million) (Cents) 200 2,500 Basic EPS 109.2 100 118.5 105.0 33 34 66.5 (346.2) 0 Core basic Dividend 2,000 1,972 -100 EPS per share -200 (351.3) -300 1,500 -400 2016 2017 Constant currency 989 1,000 1,950 1,936 506 500
Slide 23: Injectables: Maintained strong profitability
Injectables Maintained strong profitability Revenue Core1 operating profit ($ million) ($ million) 900 400 800 781 0.3% 783 350 340 83 87 300 -7% 315 700 -1% 91 103 250 600 607 200 586 500 150 400 776 100 300 50 0 200 2016 2017 100 Operating margin - 2017 Constant 2016 2017 2016 2017 Change currency
Slide 24: Generics: Revenue growth and profitability impacted by industry headwinds
Generics Revenue growth and profitability impacted by significant industry headwinds Revenue Core1 operating profit ($ million) ($ million) 275 +2% 40 604 615 35 250 35 225 30 -37% 200 25 175 20 150 15 22 125 10 100 5 75 0 50 2016 2017 25 Operating margin - 2016 2017 Change 2016 2017 Reported -2.4%
Slide 25: Branded: Maintained solid profitability
Branded Maintained solid profitability Revenue Core1 operating profit ($ million) ($ million) Constant currency Constant currency 140 600 2% 565 10% 123 120 550 29 556 500 -4% 149 536 100 112 2% 114 450 80 400 60 350 40 300 20 250 200 0 2016 2017 150 100 Operating margin 50 2017 Constant 0 2016
Slide 26: Cash flow: Achieved record operating cash flow
Cash flow Achieved record operating cash flow Operating cash flow ($ million) 500 ► Operating cash flow was $443 million, up from $293 million 450 ► Increase reflects the investment in working capital 443 required in 2016 to support West-Ward Columbus 400 35% following the acquisition in February 20
Slide 27: Capital expenditure
Capital expenditure Continued investment in capacity and capabilities to support future growth Capital expenditure ► Expanded the manufacturing capacity and capabilities ($ million) of our Injectables and Generics businesses 140 ► Maintained and upgraded our equipment in a number of MENA markets 122
Slide 28: Product-related investments
Product-related investments Optimised investment in our pipeline Product-related investments1 ► R&D and product-related investments represented 6% ($ million) of Group revenue in 2017 ► Reduction in R&D expense, following detailed review 180 of Generic’s R&D programme which identified opportunities
Slide 29: Balance sheet: Healthy leverage ratios maintained
Balance sheet Healthy leverage ratios maintained Net debt position ► Net debt of $546 million, down from $697 million at 30 December 2017 ($ million) ► Reduction reflects increase in cash flow from 400 operations ► Financing position remains strong 231 200 162 Short-term Long-term borrowing borrowin
Slide 30: Outlook for full year 2018
Outlook for full year 2018 Injectables Net finance expense ▲ Revenue: $750 - $800 million ▲ Net finance expense: ~$55 million ▲ Core operating margin: low - mid 30’s Generics Capital expenditure ▲ Revenue: $550 - $600 million ▲ $120 - $140 million ▲ Core operating margin: low single digits Branded T
Slide 31: Appendix
Appendix Hikma Pharmaceuticals PLC 2017 Preliminary Results 31
Slide 32: Revenue by segment and region
Revenue by segment and region 2017 revenue by segment 2017 revenue by region 28% 40% 33% 62% 0.4% 32% 5% Branded Injectables Generics Other MENA US Europe & ROW Hikma Pharmaceuticals PLC 2017 Preliminary Results 32
Slide 33: Consolidated P&L
Consolidated P&L Constant $ million 2017 2016 Change currency change Revenue 1,936 1,950 -1% 1% Gross profit 967 986 -2% 0% Gross margin 50.0% 50.6% -0.6pp -0.4pp Operating profit -747 302 -347% -342% Core operating profit1 386 419 -8% -4% Core operating margin 19.9% 21.5% -1.6pp -1.2pp EBITDA2 488
Slide 34: Cash flow statement
Cash flow statement $ million 2017 2016 Profit before tax (738) 210 Adjustments for non-cash items 1,169 174 Change in working capital 32 (95) Income tax paid (103) (76) Other 83 80 Net cash generated from operating activities 443 293 Purchases of property, plant and equipment (107) (122) Purchase o
Slide 35: Balance sheet
Balance sheet $ million 2017 2016 Growth $ Growth % Inventories 488 459 29 6% Trade and other receivables 705 759 -54 -7% Cash 231 162 69 43% Other current assets 150 68 82 121% Total current assets 1,574 1,448 126 9% Goodwill and intangible assets 785 1,719 -934 -54% Property, plant and equipment 8
Slide 36: Exchange rate movements impacting 2017 revenue and profit
Exchange rate movements impacting 2017 revenue and profit Currency 2017 2016 Change% Average Average USD/Algerian Dinar 1% 110.9802 109.4432 USD/British Pound 4% 0.7755 0.7432 USD/Egyptian Pound 77% 17.8891 10.1112 USD/EUR -2% 0.8848 0.9053 USD/Japanese Yen -4% 112.1826 116.8907 USD/Jordanian Dinar