Hikma Pharmaceuticals Plc · LSE:HIK
Hikma Pharmaceuticals — FY2012 Earnings Presentation
43 slides from Hikma Pharmaceuticals's earnings presentation, Mar 13, 2013
Slide 1: Hikma Pharmaceuticals PLC 2012 Preliminary Results
Hikma Pharmaceuticals PLC 2012 Preliminary Results 13 March 2013
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, presentation. reproduced redistributed or passed onon, directly or indirectly, ind
Slide 3: Our strong track record of growth
Our strong track record of growth Group revenue ($ million) Acquired q Baxter’s Multi Source Injectables j ((US)) in May y 2011 Acquired 94.1% of Promopharm in Morocco Acquired Elie Pharmaceuticals in Sudan Acquired minority stake in Unimark (India) and Haosun (China) CAGR 05-12: 22.9% Acquired Ibn
Slide 4: Consolidated P&L: Strong Group performance in 2012
Consolidated P&L Strong Group performance in 2012 $ million 2012 2011 Change Revenue 1,108.7 918.0 +20.8% Gross profit 501.1 395.3 +26.8% Gross margin 45 2% 45.2% 43 1% 43.1% +2 1 +2.1 Operating profit 166.8 118.7 +40.5% Adjusted j 1 operating p g profit p 193.8 145.8 3 9% +32.9% Adjusted operating
Slide 5: Branded: Double-digit organic revenue growth with stable margins
Branded Double-digit Double digit organic revenue growth with stable margins Revenue($ million) Adjusted1 operating profit ($ million) 528.9 120 + 17.6% 123.6 + 19.7% 500 growth 100 480.7 105.1 441 9 441.9 432.1 80 400 + 11.3% organic 60 growth 300 40 20 200 0 2011 2012 100 Operating margin 2012 201
Slide 6: Injectables: Excellent growth in revenue and profitability
Injectables Excellent g growth in revenue and p profitability b y Revenue ($ million) Adjusted1 operating profit ($ million) 4 00 470.0 450 296.2 120 123.0 + 48.9% 110 400 100 90 + 123.8% 350 80 315.7 70 300 162.2 60 250 50 54.9 + 82.6% 40 200 30 20 150 77.8 78.2 10 - 0.4% 0 100 2011 2012 96.1 50 75
Slide 7: Generics: Performance reflects impact of remediation work
Generics Performance reflects impact p of remediation work Revenue ($ million) Adjusted1 operating profit ($ million) 180 16 17.1 160 11 154 8 154.8 140 - 33.0% 6 - 178.9% 120 1 2012 100 103.7 2011 -4 80 60 -9 9 (13.5) 40 -14 20 0 O Operating ti margin i 0 2011 2012 2011 2012 Change Reported p 11.0%
Slide 8: Cash flow: Strong cash flow generation and working capital management
Cash flow Strong cash flow generation and working capital management Operating cash flow ($ million) ■ Operating cash flow increased by $55.8 million to Group operating cash flow was $182.2 million, or by $34.7 million excluding a non- reduced by $21.1 million to fund recurring MSI cash injection wo
Slide 9: Capital expenditure
Capital expenditure Investment focussed on Branded growth and MSI integration Capital expenditure ($ million) ■ Maintenance and equipment additions across our 69.0 MENA facilities, including Jordan, Algeria, and 70 Egypt - 25.5% 25 5% 60 15.9 51.4 ■ Investment in our new facility in Sudan 50 5.8 47.
Slide 10: Balance sheet: Solid balance sheet
Balance sheet Solid b balance sheet position at 31 December 2012 (($ million)) Net debt p ■ Net N t debt d bt off $406.5 $406 5 million: illi 190 178.3 Increased borrowings to fund the purchase of intangible assets, capex, additional 97 3 97.3 Promopharm shares shares, MSI deferred 90 consideratio
Slide 11: Summary: Outlook for 2013
Summary Outlook for 2013 3 ► Group revenue growth of around 10% ► After the impact of currency movements, Branded revenue growth of around 9% and adjusted operating margin in line with 2012 ► Low double-digit Injectables revenue growth ► G Generics i revenue maintained i t i d att 2012 levels l l an
Slide 12: Branded
AIKMA QUALITY
Slide 13: Our success reflects our differentiated market position
Our success reflects our differentiated market position Key market characteristics in MENA Hikma’s differentiated market position 17 diverse markets with distinct operating Specialised sales teams and broad product models portfolio tailored to each market Fragmented and complex regulatory Focus on p
Slide 14: Significant investment in MENA is a key driver of growth
Significant investment in MENA is a key driver of growth Branded revenue growth and capex investment ($ million) Investment in acquisitions* Investment in capex* 250 Branded revenue growth - reported* 20% MENA market growth** 20% Branded revenue growth - organic organic* 200 170 15% 12% 13% 150 11%
Slide 15: Driving revenue growth and improved profitability in Egypt
Driving revenue growth and improved profitability in Egypt Hikma Egypt’s revenue growth ($ million) CAGR 07-12: 28% 60 50 40 30 20 10 0 2007 2008 2009 2010 2011 2012 14
Slide 16: Investing to strengthen our presence in Egypt
Investing to strengthen our presence in Egypt ► Acquired the Egyptian Company for Pharmaceuticals & Chemical Industries (“EPCI”) in January 2013 ► Adds a complementary portfolio of 35* products in 46 dosage strengths and forms ► Includes 3 original cephalosporin anti-infective brands ► Enhances anti
Slide 17: Operating successfully through market disruptions
Operating successfully through market disruptions Libyan market Libyan healthcare market Hikma’s market presence • Population: 5.6 million • Market size: $220 million • Rank: Number 1 • GDP: GDP $87 $87.9 9 billi billion • Healthcare exp: 6 6.6% 6% of GDP • Market M k t share: h 9 4% 9.4% • GDP per
Slide 18: Launching higher value products will improve profitability
Launching higher value products will improve profitability Recent MENA product launches by country 2012: 47 products launched 2012 launches 2011: 40 products launched 2011 launches 20 18 16 9 14 12 10 7 8 6 3 10 6 9 4 8 4 1 5 2 4 4 3 2 2 2 2 2 0 Egypt Algeria KSA Lebanon Jordan Tunisia Iraq Oman Kuw
Slide 19: Increased operational efficiencies provide opportunities for margin expansion
Increased operational efficiencies provide opportunities for margin expansion ► Negotiated lower API procurement costs ► R d Reduced d currency exposure on iin-licensed li d products d t API cost savings ► In-house development of strategic API ► Operational improvements, including increased batch si
Slide 20: Pursuing investment opportunities in new emerging markets
Pursuing investment opportunities in new emerging markets Why CIS? Why Sub Saharan Africa? Ukraine Russia ► Market size estimated at $20 billion ► Market size estimated at $30 billion by 2016* ► Aging population, changing lifestyles, rising ► Improved political stability and economic policy i income
Slide 21: Injectables
AIKMA QUALITY
Slide 22: Leveraging our global Injectables footprint
Leveraging our global Injectables footprint EUROPE CAPABILITIES Vials, ampoules, bags, cytotoxics, pre- A broad portfolio across a filled syringes range of product types and MANUFACTURING: US FDA, EU and MENA approved therapeutic areas manufacturing facilities in Portugal, Italy and Germany COMPETIT
Slide 23: Enhancing our global Injectables manufacturing operations
Enhancing our global Injectables manufacturing operations ► New line added to Cherry Hill ► Portugal g – new lyo y facility y began g commercial p production in 2012 Capacity expansion ► Preparation for installation of 2 high speed lines in Cherry Hill and Portugal in H1 2013 ► Excellent operational
Slide 24: Building a sustainable Injectables business in the US market
Building a sustainable Injectables business in the US market ► Optimising our product portfolio – Successfully increased prices across our portfolio in 2012 – Continuing to pursue pricing opportunities in 2013 to maximise portfolio value and offset potential tightening of current market conditions ►
Slide 25: Driving growth through our robust pipeline
Driving growth through our robust pipeline US Injectables pipeline at 31 December 2012 ► Pipeline for future growth – Developing product portfolio – including more differentiated products 25 22 – Submitted 7 ANDAs 21 20 – Received 8 approvals, including a 505(b)2 approval for phenylephrine hydrochlo
Slide 26: Continuing momentum in our key MENA markets
Continuing momentum in our key MENA markets MENA injectables sales growth ($ million) 2010 12%* 2011 11%* 2012 17% * 176%* 14%* 27%* Algeria KSA Jordan Libya Sudan Lebanon Source: Company information 25 * Growth rates represent the CAGR for the period from 2010 to 2012
Slide 27: Driving growth through our robust pipeline in MENA
Driving growth through our robust pipeline in MENA MENA Injectables product submissions 140 135 Marketed p products ((2012)) 120 Injectables submitted 5 year submission plan 100 80 80 72 60 39 38 40 34 32 26 22 21 19 19 19 18 17 20 14 14 3 0 Jordan KSA & other GCC Algeria Egypt Sudan Iraq Note: Subm
Slide 28: Growing our European business through new products, new markets and contract manufacturing
Growing our European business through new products, new markets and contract manufacturing ► Continuing to deliver strong underlying growth: – New product launches – Increased tender success – Increased manufacturing capacity – Growth in contract manufacturing ► Future growth will be driven by our s
Slide 29: Generics
AIKMA QUALITY
Slide 30: Taking action following a strategic review
Taking action following a strategic review ► Focus on fully remediating facility as soon as possible R Remediate di t ► Further strengthened quality team, including relocating a team of 6 people from Jordan ► Restarted R t t d production d ti iin llate t DDecember b 2012 – limited li it d number b R
Slide 31: Group
AIKMA QUALITY
Slide 32: Outlook
Outlook ► Excellent performance in the Branded and Injectables businesses ► Well positioned to capture exciting growth opportunities in MENA ► Strong portfolio and differentiated pipeline will drive future Injectables growth ► Minimising losses in Generics while we pursue strategic alternatives ► Po
Slide 33: Appendix
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Slide 34: Revenue by segment and region
Revenue by segment and region 2012 revenue by segment 2012 revenue by region 47.7% 55.8% 36.1% 42.4% 0.5% 9 4% 9.4% 8 1% 8.1% Branded Injectables Generics Other MENA US Europe & ROW Page 33
Slide 35: Injectables sales by region
Injectables sales by region 2012 Injectables revenue by region 63.0% 20.5% 16.5% MENA US Europe & ROW Page 34
Slide 36: Cash flow statement
Cash flow statement $ million 2012 2011 Profit before tax and minority interest 132.0 93.9 Adjustments for non-cash items 67.2 56.3 Change in working capital (28.5) (54.7) Income tax paid (24 5) (24.5) (2 1) (2.1) Other 36.0 33.0 Net cash generated from operating activities 182.2 126.4 Investment in
Slide 37: Balance sheet
Balance sheet $ million 2012 2011 Growth $ Growth % Cash 178.3 97 3 97.3 81 0 81.0 83 2% 83.2% Trade and other receivables 328.2 315.9 12.3 3.9% Other current assets 3.3 7.4 (4.1) (55.4)% Inventories 272.2 239.3 32.9 13.7% Total current assets 782.0 659.9 122.1 18.5% IIntangible t ibl assets t 433.1
Slide 38: Branded: Launching new products and developing markets
Branded Launching new products and developing markets Product launches in 2012 Product approvals in 2012 50 45 47 45 40 40 35 35 30 30 30 25 25 20 20 15 15 9 10 10 6 5 6 5 3 5 0 0 MENA & ROW Europe MENA & ROW Europe New compounds New compounds New dosage forms and strengths New dosage forms and stre
Slide 39: Branded: Pipeline for future growth
Branded Pipeline for future growth Product submissions in 2012 Pending approvals in 2012 300 90 83 80 250 221 70 200 60 50 150 138 40 100 30 23 20 50 12 11 10 11 1 1 1 1 0 0 MENA & ROW Europe MENA & ROW Europe New compounds New compounds New dosage forms and strengths New dosage forms and strengths
Slide 40: Injectables: Launching new products and developing new markets
Injectables Launching new products and developing new markets Product launches in 2012 Product approvals in 2012 90 30 80 25 70 60 20 50 15 15 40 10 30 10 22 20 5 5 5 11 5 8 8 10 7 2 2 2 3 1 1 1 1 0 0 US MENA & ROW Europe US MENA & ROW Europe New compounds New compounds New dosage forms and strength
Slide 41: Injectables: Pipeline for future growth
Injectables Pipeline for future growth Product submissions in 2012 Pending approvals in 2012 100 240 90 220 200 80 185 180 70 62 160 60 140 50 45 120 103 40 100 81 80 30 60 49 20 39 39 11 11 11 12 10 40 24 7 23 10 5 17 20 0 0 US MENA & ROW Europe US MENA & ROW Europe New compounds New compounds New
Slide 42: Generics: Launching new products
Generics Launching new products Product launches in 2012 Product approvals in 2012 10 14 8 12 10 6 8 4 6 4 4 4 4 2 2 0 US 0 US New compounds New compounds New dosage forms and strengths New dosage forms and strength T t l product Total d t launches l h Total product approvals Page 41
Slide 43: Generics: Pipeline for future growth
Generics Pipeline for future growth Product submissions in 2012 Pending approvals in 2012 10 40 35 8 30 25 6 22 22 22 20 4 4 4 4 15 10 2 5 0 0 US US New compounds New compounds New dosage forms and strengths New dosage forms and strengths T t l submissions Total b i i T l pending Total di approvals