Hikma Pharmaceuticals PLC · LSE:HIK
Hikma Pharmaceuticals — FY2013 Earnings Presentation
40 slides from Hikma Pharmaceuticals's earnings presentation, Mar 12, 2014
Slide 1: Hikma Pharmaceuticals PLC 2013 Preliminary Results
Hikma Pharmaceuticals PLC 2013 Preliminary Results
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, reproduced redistributed or passed on, on directly or indirectly indirectly, to a
Slide 3: Our diversified business model continues to deliver strong growth
Our diversified business model continues to deliver strong growth Group revenue ($ million) Acquired Baxter’s Multi Source Injectables (US) Acquired EPCI (Egypt) A Acquired i d 94 94.1% 1% off Promopharm P h i(M i(Morocco) ) E t d into Entered i t JV in i Ethi Ethiopia i Acquired Elie Pharmaceutical
Slide 4: Consolidated P&L: Strong Group performance in 2013
Consolidated P&L Strong Group performance in 2013 Revenue Adjusted operating Net income EPS – adjusted, diluted* ($m) profit* ($m) (cents) ($m) +23% 1,365 413 +113% 1,109 212 +112% +128% 138.4 194 100 60.8 2012 2013 2012 2013 2012 2013 2012 2013 3 * Before the amortisation of intangible assets (excl
Slide 5: Branded: Strong improvement in profitability
Branded Strong improvement in profitability reflects focus on higher value products Revenue ($ million) Adjusted1 operating profit ($ million) Constant currency + 9% 140 135 + 8% 570 120 124 550 554 100 500 529 + 5% 80 450 60 400 40 350 300 20 250 0 2012 2013 200 Operating margin 150 2013 100 2012 2
Slide 6: Injectables: Strong revenue growth and improved profitability
Injectables Strong revenue growth and significant improvement in profitability Revenue ($ million) Adjusted1 operating profit ($ million) 536 + 14% 81 160 500 470 + 35% 166 140 450 78 92 120 400 123 96 100 350 363 80 300 296 60 250 40 200 20 150 0 2012 2013 100 Operating margin 50 2012 2013 Change -
Slide 7: Generics: Doxycycline opportunity drives profitability
Generics Doxycycline y y opportunity pp y drives p profitabilityy and covers remediation Revenue ($ million) Adjusted1 operating profit ($ million) 166 $39 million of 155 non-recurring 268 remediation 135 250 and other one- off costs 115 + >200% 200% + 158% 95 200 75 55 150 35 15 100 104 -5 2012 201
Slide 8: Cash flow
Cash flow Strong cash flow reflects exceptional profitability of doxycycline Operating cash flow ($ million) ■ Operating cash flow increased by $153 million to $337 million ■ Sales of doxycycline generated exceptionally strong cash flows 337 ■ Uses of operating cash included: 300 – Capex of $59 mill
Slide 9: Capital expenditure
Capital expenditure Investing in quality and capacity for future growth Capital expenditure ($ million) 60 59 ■ Maintaining our facilities, upgrading equipment and adding + 16% capacity across our MENA facilities, including Algeria, Egypt, 51 Jordan Saudi Arabia and Tunisia Jordan, 50 16 13 ■ Added
Slide 10: Product-related investments
Product-related investments Expanding and enhancing our product portfolio Product-related investments ($ million) 40 + 23% 37 ■ The increase in product-related investments, capitalised on the balance sheet, reflects the broader approach we are taking to developing our portfolio across the Group 30 3
Slide 11: Balance sheet
Balance sheet Strong g financing gpposition position at 31 December 2013 (($ million)) Net debt p ■ Net N t debt d bt off $267 million, illi reflecting fl ti significant i ifi t pay 179 175 down of long-term borrowings 180 80 ■ Full year net finance expense of $35 million Short-term Long-term borrow
Slide 12: Summary: Outlook for 2014
Summary Outlook for 2014 4 ► Group revenue growth of around 5% ► Branded revenue growth of around 10% in constant currency , with adjusted operating margin in line with 2013 ► Injectables revenue growth of above 20% and an improvement in adjusted operating margin ► Generics revenue of around $170 mi
Slide 13: Branded
AIKMK QUALITY
Slide 14: Clear strategy to drive continued growth in MENA and emerging markets
Clear strategy to drive continued growth in MENA and emerging markets SAUDI LEVANT & LEADING ARABIA & ALGERIA OTHER PHARMACEUTICAL OTHER MARKETS COMPANY IN GCC MENA AND EMERGING EMERGING EGYPT MOROCCO MARKETS MARKETS OPERATIONAL PIPELINE EXCELLENCE INVESTING FOR COMMERCIAL EMPLOYEES SUSTAINABILITY D
Slide 15: Our strong presence in Algeria offers excellent growth opportunities
Our strong presence in Algeria offers excellent growth opportunities ► Strong competitive position in $2.3 billion1 market: New product launches in Algeria, 2011 to 2013 – 3rd largest pharmaceutical company 16 – 6.3% market share 15 6 AI 4 CV ► Continued momentum in new product launches 4 CNS Maximi
Slide 16: Focusing on higher value sales and investing for growth in Egypt
Focusing on higher value sales and investing for growth in Egypt 2013 Egypt revenue by therapeutic category ► Growing our share of $2.4 billion1 market A ti i f ti Anti-infectives ► Focus on higher value products – 13 launches Maximising ► Strengthened sales team – added 1722 sales Alimentary tract
Slide 17: Improving profitability in Saudi Arabia and a strong pipeline for growth
Improving profitability in Saudi Arabia and a strong pipeline for growth Split of private market and tenders sales in KSA, 2012-2013 ► Large and growing $2.6 billion market Delivered strong revenue growth th ► Launched 13 products in private Tender market Private ► Took decision to significantly cut
Slide 18: Strengthening our operations in Morocco to drive growth
Strengthening our operations in Morocco to drive growth Product launches, submissions and approvals in Morocco ► Morocco is a $1 billion market 39 40 ► Launched 5 products, despite challenging 2 Diabetes 34 regulatory environment Maximising 2 Pain management portfolio 1 Respiratory ► Restructured sa
Slide 19: Increasing geographic coverage and growing our portfolio in Iraq
Increasing geographic coverage and growing our portfolio in Iraq Iraq market ► Fast growing $1.3 billion market Population size 31.0 million ► Strong growth driven by good penetration of Kurdistan in northern Iraq Average life expectancy 70 years ► Begun expanding geographic coverage – hired Maximis
Slide 20: Injectables
AIKMK QUALITY
Slide 21: Clear strategy to drive continued growth across our geographies
Clear strategy to drive continued growth across our geographies UNITED STATES MENA LEADING GLOBAL INJECTABLES 68%* 17%* MANUFACTURER EUROPE 15%* OPERATIONAL PIPELINE EXCELLENCE INVESTING FOR COMMERCIAL EMPLOYEES SUSTAINABILITY DEVELOPMENT AND COST GROWTH CONTROL MAXIMISING STRENGTHENING MAINTAINING
Slide 22: Strong momentum in driving Injectables growth across our geographies
Strong momentum in driving Injectables growth across our geographies Global Injectables revenue, 2008 to 2013 ($ million) 5 YEAR GROWTH CAGR: 29% 536 500 470 400 316 300 200 157 149 144 100 0 2008 2009 2010 2011 2012 2013 21
Slide 23: Focusing on opportunities in the large and growing US market
Focusing on opportunities in the large and growing US market US injectables market sales by value ($ billion) ► Large and fast growing US generic 100 Generic '08-'13 CAGR: 19% injectables market is valued at around $7.6 $7 6 76 7.6 billion 7.0 7.1 11.3 80 4.6 10.3 3.6 10.0 9.6 3.1 8.4 60 7.4 ► Stron
Slide 24: Developing a strong product pipeline to drive continued growth
Developing a strong product pipeline to drive continued growth US Injectables product approvals and submissions in 2013 ► Increased investment in R&D 60 – Driving strong momentum in product submissions and approvals – Enabling approvals of more complex filings, 39 36 including PIVs and 505(b)2s 26 ►
Slide 25: Our strategy is successfully growing our US market share by value
Our strategy is successfully growing our US market share by value US generic Injectables market share (million eaches) US generic injectables market share ($ million) 40.0% 1,400 36.9% 35.0% 1,200 15.2% 30.0% 12.0% 1 000 1,000 25.0% 10.1% 800 8.7% 20.0% 15.2% 14.5% 600 7 4% 7.4% 15.0% 5.8% 400 5.2%
Slide 26: Strong pipeline will drive growth in MENA Injectables business
Strong pipeline will drive growth in MENA Injectables business MENA Injectables revenue in 2013 by market ► MENA injectables market estimated at around $2.6 billion billion* Algeria ► Around 70% of our MENA Injectables revenue is coming from only four markets Saudi Arabia Jordan Maximising ► Opportu
Slide 27: Investment in our product pipeline is driving growth in Europe
Investment in our product pipeline is driving growth in Europe EU Injectables revenue in 2013 by market (excluding CM) ► Focusing on our key European markets – Germany, Italy and Portugal ► Launched 17 products in 2013 Maximising Germany portfolio ► Offsetting double-digit price erosion with strong
Slide 28: Ensuring operational excellence and investing in global Injectables growth
Ensuring operational excellence and investing in global Injectables growth ► Significantly reduced the overhead costs of the global Injectables business ► Leveraging vertically integrated API supply for new product development, particularly oncology products Operational ► Increased flexibility throu
Slide 29: Generics
AIKMK QUALITY
Slide 30: Developing robust strategy for future growth
Developing robust strategy for future growth HIGH QUALITY PROVIDER OF UNITED GENERICS IN THE STATES US OPERATIONAL PIPELINE INVESTING FOR COMMERCIAL EXCELLENCE AND EMPLOYEES SUSTAINABILITY DEVELOPMENT GROWTH COST CONTROL DELIVERING OUR STRENGTHENING ENSURING STRATEGY MAXIMISING INVESTING IN AND SUST
Slide 31: Developing our strategy for the Generics business
Developing our strategy for the Generics business ► Maximising the potential of our base portfolio and gradually re-building our market position: – Re-introduced 10 products at Eatontown in 2013 Maximising portfolio – Additional 15 products to be re-introduced at Eatontown during 2014 opportunities
Slide 32: Developing our strategy for Generics business
Developing our strategy for Generics business ► Invested in significantly strengthening our operations during 2013 – Added 28 new hires in roles to strengthen our quality systems – Recruited 9 new hires to strengthen our manufacturing operations – Upgraded key manufacturing equipment, such as new ta
Slide 33: Group
AIKMK QUALITY
Slide 34: Strong growth outlook for 2014 and beyond
Strong growth outlook for 2014 and beyond ► The Group delivered an excellent performance in 2013 and is well positioned for another strong year in 2014 ► In MENA, our strategic focus on higher value products and operational efficiencies is improving profitability ► We continue to see exciting opport
Slide 35: Appendix
AIKMK QUALITY
Slide 36: Consolidated P&L: Strong Group performance in 2013
Consolidated P&L Strong Group performance in 2013 $ million 2013 2012 Change Revenue 1,365 , 1,109 , +23% Gross profit 764 504 +52% Gross margin 56.0% 45.4% +10.6 Operating profit 352 167 +111% Adjusted operating profit1, 2 413 194 +113% Adjusted operating margin 30.3% 17.5% +12.8 EBITDA3 427 226 +8
Slide 37: Cash flow statement
Cash flow statement $ million 2013 2012 Profit before tax and minority interest 298 132 Adjustments for non-cash items 107 68 Change in working capital (22) (29) Income tax paid (84) (25) Other 38 38 Net cash generated from operating activities 337 184 Investment in property, plant and equipment (59
Slide 38: Balance sheet
Balance sheet $ million 2013 2012 Growth $ Growth % Cash 175 179 (4) (2)% Trade and other receivables 439 328 111 34% Other current assets 7 3 4 133% Inventories 276 272 4 1% Total current assets 897 782 115 15% Intangible assets 447 433 14 3% T Tangible ibl fi fixed d assets t 443 420 23 5% Investm
Slide 39: Revenue by segment and region
Revenue by segment and region 2013 revenue by segment 2013 revenue by region 41% 47% 39% 46% 7% 20% Branded Injectables Generics Other MENA US Europe & ROW 38
Slide 40: Injectables sales by region
Injectables sales by region 2013 Injectables revenue by region 68% 17% 15% MENA US Europe & ROW 39