Hikma Pharmaceuticals PLC · LSE:HIK
Hikma Pharmaceuticals — FY2011 Earnings Presentation
44 slides from Hikma Pharmaceuticals's earnings presentation, 2012
Slide 1: Said Darwazah, Chief Executive Officer
Said Darwazah Chief Executive Officer
Slide 2: 2011 highlights
2011 highlights Strong Group performance in a challenging year 950 PROMOPHARM MSI $11.2 m 900 $918.0m 850 $120 3 m $120.3 INJECTABLES GENERICS + 23.3% - 11.3% OTHER 800 BRANDED $19.7 m $0.1m + 9.6% $36.7 m 750 $37 9 m $37.9 $786.6m $ 700 $730.9m 650 600 550 500 2010 Group Branded Injectables Generic
Slide 3: Khalid Nabilsi, Chief Financial Officer
Khalid Nabilsi Chief Financial Officer
Slide 4: Consolidated P&L
Consolidated P&L Strong g Group ppperformance in a challenging g g yyear $ million 2011 2010 Change Revenue 918.0 730.9 + 25.6% Gross profit 395.3 357.3 +10.6% Gross margin 43 1% 43.1% 48 9% 48.9% - 5.8 58 Operating profit 118.7 135.1 -12.1% Adjusted1 operating profit 145.8 143.0 +2.0% 2.0% Adjusted
Slide 5: Branded: Robust growth, despite the Arab Spring disruptions
Branded Robust growth, despite the Arab Spring disruptions Revenue ($ million) 500 O i 1 growth ■ Organic th off 9.6%, 9 6% ahead h d off 7% guidance id + 12.1% growth 441.9 450 ■ Egypt and Tunisia back to normal and recovery 432.1 400 beginning in Libya 394.2 + 9.6% 350 organic growth ■ Good growth
Slide 6: Branded: Relatively stable operating margin despite inflationary pressure
Branded Relatively stable operating margin despite inflationary pressure in MENA Gross profit ($ million) Adjusted operating profit ($ million) 240 120 220 + 5.2% + 9.3% 200 214.1 100 105.1 203.4 180 96.2 160 80 140 120 60 100 80 40 60 40 20 20 0 0 2010 2011 2010 2011 Gross margin Operating margin 2
Slide 7: Injectables: Doubled sales to $316 million
Injectables Doubled Injectables sales to $316 million, with strong growth across all markets Injectables revenue by region ($ million) 180 $162 2 $162.2 162.2 160 120.3 140 MSI MSI 120 100 + 24.7% $75.4 +14.2% Promopharm 80 78.2 74.1 60 + 40.1% 62 7 62.7 64.9 40 41.9 20 29.9 0 2010 2011 2010 2011 20
Slide 8: Injectables: Excellent improvement in operating margin
Injectables Excellent ce e t improvement p o e e t in ope operating at g margin ag Gross profit ($ million) Adjusted operating profit ($ million) 50 120 54.9 + 79.7% 127.6 40 + 109.5% 100 36 8 36.8 80 30 85.0 + 18.8 % Injectables Injectables 71.0 + 40.3% 60 incl. MSI 26.2 incl. MSI 20 Injectables In
Slide 9: Generics: Sales of $155 million, in line with guidance
Generics Sales of $ $155 million,, in line with guidance g Revenue ($ million) ■ Reported sales declined by 11.3% 11 3% 200 180 174.5 - 11.3 % ■ Excluding exceptional colchicine sales in 2010, 160 Generics achieved double-digit revenue growth in 154.8 2011 140 120 ■ Strong volume growth was partiall
Slide 10: Generics: Margin decline reflects colchicine benefit in 2010
Generics Margin g decline reflects exceptional p benefit of colchicine sales in 2010 Gross profit ($ million) Adjusted operating profit ($ million) 80 81.8 50 51.3 70 - 36.2% 40 - 66.6% 60 50 52.2 30 40 30 20 20 17.1 10 10 0 0 2010 2011 2010 2011 Gross margin Operating margin 2010 2011 Change 2010 2
Slide 11: Strong management of working capital
Cash Flow Strong management of working capital Operating cash flow ($ million) Group operating cash flow was $147 $147.55 million million, excluding the $21.1 million impact of the working capital financing for the MSI 180 acquisition 160 152.5 2011 2011 140 147.5 2010 Change ex MSI incl MSI 120 Rec
Slide 12: Increased capex to support Branded and Injectables growth
Capital expenditure Increased capex to support Branded and Injectables growth Capital expenditure ($ million) ■ Expansion E i off our manufacturing f t i capacity it and d 80 capabilities in MENA 70 69.0 - Algeria, Egypt and Tunisia + 40.5% 60 15.9 ■ Machinery and equipment for our new 50 49.1 5.8 l
Slide 13: Solid balance sheet after investments of $325 million in 2011
Balance sheet Solid balance sheet after investments of $325 million in 2011 Net debt position at 31 December 2011 ($ million) 400 363.0 2011 2010 Net debt 421.9 101.1 300 Net debt/EBITDA 2.55x 0.58x Short-term borrowing Net debt/Equity 0.54x 0.14x 200 156.2 100 83.3 84.2 Cash & cash equivalents 0 Lo
Slide 14: Positive outlook for 2012
Summary Positive outlook for 2012 ■ Group revenue growth of around 20% ■ Increased investment in R&D to be around 4.5% of Group p sales ■ Group finance expense of around $32 million ■ Capital expenditure in the range of $85 million to $90 million ■ Effective tax rate to be around 20%, reflecting the
Slide 15: MENA Review
MENA REVIEW Said Darwazah Chief Executive Officer
Slide 16: Continuing to deliver strong growth and increase MENA market share
Continuing to deliver strong growth and increase MENA market share Leading pharmaceutical companies in the MENA market Market share U it sales Unit l V l Value A Rx Avg R $ Growth G th 2011 Rank (M) $M Price % % MENA PRIVATE MARKET 3,369 9,833 2.92 11.7 SANOFI 1 241 837 3.47 8.1 8.5 GLAXOSMITHKLINE
Slide 17: Despite Arab Spring, fundamental MENA growth drivers remain intact
Despite Arab Spring, fundamental MENA growth drivers remain intact In May 2011, the In December 2011, interim Egyptian gyp Saudi Arabia allocated Morocco announced the In March 2011,, the JJordanian Government agreed US4.4bn for investment in expansion of healthcare Government announced it to increa
Slide 18: Investment in facilities and people strengthens our MENA operations
Investment in facilities and people strengthens our MENA operations Morocco Total sales reps by country at December 2011 Egypt • Acquired local • Increased manufacturing facility manufacturing capacity by 20% • Added 137 sales reps Syria Lebanon • Added 202 products* Morocco Tunisia 5 137 56 Jordan
Slide 19: Our robust business model limited the Arab Spring impact
Our robust business model limited the Arab Spring impact 2011 revenue g growth in Egypt, gyp , Tunisia and Libya y ■ Egypt and Tunisia benefitted from: - Local manufacturing 2010 12 1% 12.1% - Local management and sales teams 2011 - Experience of operating in politically unstable markets - Commitmen
Slide 20: Growth in MENA Injectables driven by new product launches
Growth in MENA Injectables will be driven by new product launches Targeted Injectables launches in key MENA markets, 2012-2016* 25 20 20 15 12 10 11 11 10 5 6 0 Algeria Egypt GCC Iraq Jordan KSA * Refers to the launch of new molecules in new markets, not including any additional launches of differen
Slide 21: Product portfolio development key growth driver in MENA
Product portfolio development will be key growth driver in MENA ■ Focus on maximising sales of high value, high margin products Optimising product portfolio ■ Cut tail products ■ More aggressive focus on the registration and launch of new products New product launches ■ Identified 40 strategic molec
Slide 22: Successfully integrating Promopharm in Morocco
Successfully integrating Promopharm in Morocco ■ 4th largest MENA market – 8.7% growth in 2011 ■ Hikma people in place in Morocco – supporting integration and business development opportunities ■ E Expected t d to t grow sales l team t f from 137 to t 200 by b the th end d off 2013 ■ Begun work to r
Slide 23: USA Review
USA REVIEW
Slide 24: Injectables will be the key driver of future growth in the US
Injectables will be the key driver of future growth in the US US generics market value No. of players (sales Product segment g 2011 Sales ((value)) 2011 g growth (%) ( ) greater than $100 million) Orals $30.31bn +5.7 38 Injectables $7.09bn +53.25 14 Others $6.73bn +22.9% Total US Generics market $44
Slide 25: Developing an increasingly strong position in US injectables market
Developing an increasingly strong position in the US injectables market Top p US generics g injectables j suppliers pp ((million eaches)) 600,000 41.2% 500,000 400,000 300,000 17.3% 200,000 14.5% 100,000 6.6% 4.2% 3.8% 3.4% 2.4% 1.4% 0.9% 0.9% 0.8% 0 Source : IMS Health MAT 12/2011 Page 24
Slide 26: Swift integration of the MSI business
Swift integration of the MSI business is delivering sales growth and increased profitability Headcount (FTE) Production units (millions) 1000 - 11.5% ■ Headcount has + 9.3 % ■ Increased monthly 800 been reduced by production driven 600 c.12% by restructuring of 400 manufacturing g processes and 200
Slide 27: Hikma's underlying US Injectables business is performing well
Hikma’s underlying US Injectables business is performing well US Injectables j – Total p products marketed 2011 US Injectables j revenue excluding g MSI 25 CNS 20 21 20 Anti-infectives Others, 16% Cardiovascular 15 Cardiovascular, CNS, 47% 13 17% Others 10 9 Anti-infectives, 4 20% 5 3 0 2006 2007 20
Slide 28: Building a differentiated product pipeline to drive growth
Building a differentiated product pipeline to drive growth US Injectables product pipeline 25 21 20 16 15 15 10 10 5 0 Pipeline ANDAs Dormant ANDAs R&D partnerships & Products under- differentiated products development Page 27
Slide 29: Increased scale of global Injectables driving growth in Europe
Increased scale of our global Injectables business is driving growth in Europe u ope and a d MENA tender te de sasales es 2011 Europe Injectables revenue ($ million) ■ Highly productive and efficient European 90 facilities remain a key manufacturing hub 80 - Portuguese facilities produce for US, + 2
Slide 30: Maintained market position in US oral generics market
Maintained market position in US oral generics market Orals 2009 (‘000s) 2010 (‘000s) 2011(‘000s) US generic oral market Total prescriptions written 2,409,483 2,576,204 2,706,701 Market growth +7.2% +6.9% +5.07% Hikma (West (West-Ward) Ward) Total prescriptions written 33,770 44,203 53,261 Growth +3
Slide 31: Leveraging MENA facilities; R&D investment driving future growth
Short term focus on leveraging our MENA facilities. R&D investment driving future growth Percentage of Generics sales produced in MENA* US Generics product pipeline 30.0% 30 26.8% 26 25.1% 25.0% 5 0% 25 21.2% 22 20.0% 20 15.0% 15 10.0% % 9.4% 10 7.2% 5.0% 5 2 1 0.0% 0 2007 2008 2009 2010 2011 Unimar
Slide 32: Conclusion
CONCLUSION
Slide 33: Conclusion
Conclusion Acquired Baxter’s Multi Source Injectables (US) in May 2011 Acquired minority stake in Unimark (India) and Haosun (China) Acquired 94.1% of Promopharm in Morocco Group revenues ($ million) Acquired Elie Pharmaceuticals in Sudan Inauguration of Dar Al Arabia in Algeria Acquired Ibn Al Bayt
Slide 34: Appendix
Appendix
Slide 35: Revenue by segment and region
Revenue by segment and region 2011 revenue by segment 2011 revenue by region 48.1% 55.4% 16 9% 16.9% 34 6% 34.6% 0.6% 10.0% 34.4% Branded Generics Injectables Other MENA US Europe & ROW Page 34
Slide 36: Injectables sales by region
Injectables sales by region 2011 Injectables revenue by region 51 4% 51.4% 23.9% 24.8% MENA US Europe & ROW Page 35
Slide 37: Cash flow statement
Cash flow statement $ million 2011 2010 Profit before tax and minority interest 93.9 121.0 Adjustments for non-cash items 56.3 38.1 Change in working capital (54.7) 4.7 Income tax paid (2.1) (32.7) Other 33.0 21.4 Net cash generated from operating activities 126.4 152.5 Investment in property, plant
Slide 38: Balance sheet
Balance sheet $ million 2011 2010 Growth $ Growth % Cash 97.3 66.3 31.0 46.8% Trade and other receivables 315.9 237.2 78.7 33.2% Other current assets 7.4 8.4 -1.0 >119% Inventories 239.3 182.2 57.1 31.3% Total current assets 659.9 494.1 165.8 33.6% Intangible assets 408.8 269.1 139.7 51.9% T Tangibl
Slide 39: Branded: Launching new products and developing markets
Branded Launching g new p products and developing p g markets Product launches in 2011 Product approvals in 2011 45 45 40 40 40 35 35 31 30 30 25 25 20 20 15 15 14 11 10 10 8 8 5 5 3 5 1 1 0 0 0 0 MENA & ROW Europe MENA & ROW Europe New compounds New compounds New dosage forms and strengths New dosa
Slide 40: Branded: Pipeline for future growth
Branded Pipeline p for future g growth Product submissions in 2011 Pending approvals in 2011 300 80 70 250 61 218 60 200 50 150 145 40 30 100 19 76 20 50 10 7 14 0 0 0 3 4 0 0 MENA & ROW Europe MENA & ROW Europe New compounds New compounds New dosage forms and strengths New dosage forms and strength
Slide 41: Injectables: Launching new products and developing new markets
Injectables Launchingg new p products and developing p g new markets Product launches in 2011 Product approvals in 2011 90 30 80 25 70 21 60 20 50 15 40 12 33 30 10 22 7 7 20 5 4 3 10 5 6 6 2 1 1 1 1 1 1 0 0 US MENA & ROW Europe US MENA & ROW Europe New compounds New compounds New dosage forms and s
Slide 42: Injectables: Pipeline for future growth
Injectables Pipeline p for future g growth Product submissions in 2011 Pending approvals in 2011 100 240 90 220 200 80 180 70 160 144 60 140 50 45 120 40 100 80 30 26 61 59 60 20 15 15 39 40 36 36 10 8 8 7 21 19 5 3 20 12 0 0 US MENA & ROW Europe US MENA & ROW Europe New compounds New compounds New
Slide 43: Generics: Launching new products
Generics Launching g new p products Product launches in 2011 Product approvals in 2011 10 14 14 14 8 12 10 6 5 5 8 4 6 5 2 4 2 2 0 0 US 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 42
Slide 44: Generics: Pipeline for future growth
Generics Pipeline p for future g growth Product submissions in 2011 Pending approvals in 2011 10 40 35 8 7 7 30 25 6 22 22 22 20 4 15 3 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 approv