Hikma Pharmaceuticals Plc · LSE:HIK
Hikma Pharmaceuticals — H1 2018 Earnings Presentation
32 slides from Hikma Pharmaceuticals's earnings presentation, 2018
Slide 1: 2018 Interim Results
Better health. Within reach. Every day. v Hikma Pharmaceuticals PLC 2018 Interim Results Hikma Pharmaceuticals PLC
Slide 2: Group 1H18 financial highlights
Group 1H18 financial highlights $989m $214m 21.6% 61.4¢ $185m Revenue Core1 operating Core operating Core basic Operating profit profit margin earnings cash flow per share 1 Core results are presented to show the underlying performance of the Group, excluding exceptional items and other adjustments.
Slide 3: Segment highlights
Segment highlights 1H18 revenue 1H18 core operating Highlights contribution profit contribution1 Injectables ▲ Launched 9 products in the US, including 6 former Bedford products ▲ Leveraged broad portfolio to respond to critical shortages in the US market 42% 70% ▲ Drove significant increase in sale
Slide 4: Injectables
Injectables Hikma Pharmaceuticals PLC 4
Slide 5: Injectables: leveraging portfolio to increase market share
Injectables Leveraging our broad portfolio and operational scale to increase market share US generic injectables market share1 US generic injectables market share1 (million eaches) ($ million sales) 500 $2,000 450 $1,800 400 $1,600 350 $1,400 300 $1,200 250 $1,000 200 $800 150 $600 100 $400 50 $200
Slide 6: Injectables: resilient and growing portfolio
Injectables Resilient and growing portfolio offsetting increased competition on 2017 top products US injectable products quarterly sales ($ millions) $200 Total product sales $150 Other products’ contribution increased reflecting breadth of portfolio and ability to supply Increased demand on some pr
Slide 7: Investing in manufacturing facilities to support Injectables
Injectables Investing in manufacturing facilities to support global Injectables business USA Portugal Differentiated State of the art Significant Differentiated State of the art Significant capabilities technology capacity1 capabilities technology capacity1 ▲ Controlled ▲ Sterile emulsions ▲ 300 mil
Slide 8: Improving access to important medicines in MENA
Injectables Improving access to important medicines in MENA Remsima® (infliximab) Case Study: Morocco Market size and Hikma’s market share 2017 ~65% The infliximab 2018 market has increase by >50% >75% and our Remsima® market share has grown by >10 percentage points ▲ MENA market size - $45 million
Slide 9: Generics
Generics Hikma Pharmaceuticals PLC 9
Slide 10: Signs of market stabilisation but US remains highly competitive
Generics Signs of market stabilisation but US remains highly competitive Volume growth in US non-injectables increasing High-level of ANDA approvals continues (eaches) (number of products) 6% 120 4% 100 80 2% 60 0% 2014 2015 2016 2017 2018 40 -2% 20 -4% 0 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 -6
Slide 11: Benefiting from commercial and operational improvements
Generics Benefiting from commercial and operational improvements implemented across business Driving demand for Focusing on cost Expanding our product marketed portfolio saving initiatives portfolio ▲ Improved service levels ▲ Achieved sourcing savings ▲ New product launches, and customer engagement
Slide 12: Replenishing our pipeline for future growth
Generics Replenishing our pipeline for future growth Generics pipeline (number of projects) 40 ▲ Focused on rebuilding Generics pipeline after rationalisation in 2H17, following detailed review 30 ▲ Started 9 new projects in 1H18 with market value of ~$1.1 billion ▲ Total pipeline comprises 69 produ
Slide 13: Branded
Branded Hikma Pharmaceuticals PLC 13
Slide 14: Economic environment improving in the MENA
Branded Economic environment improving in the MENA Estimated GDP growth 2017-2018 US dollar to Egyptian pound MENA 2.6% 20 GCC 2.1% 15 Algeria 2.7% 10 Egypt 5.2% Morocco 3.2% 5 Jordan 2.5% 0 0% 1% 2% 3% 4% 5% 6% Source: Focus Economics, July 2018 Source: Bloomberg Historic oil prices US dollar to Al
Slide 15: Continued focus on operational excellence across MENA
Branded Continued focus on operational excellence across MENA Roll-out of efficiency improvement programme Operational improvements in Jordan manufacturing facility (2016 – 2017) Overhead costs 8% Unit cost 15% Project completed Project underway FTE productivity 15% Project to commence in 2H18 Hikma
Slide 16: Reinforcing our position as the partner of choice in MENA
Branded Reinforcing our position as the partner of choice in MENA Long-term partner: New partner: Commercial Takeda Perrigo excellence One year after expanding Takeda Our new partnership with Perrigo partnership: gives us: ▲ Distributing and promoting new ▲ Exclusive right to license and products in
Slide 17: Group
Group Hikma Pharmaceuticals PLC 17
Slide 18: Quality: continuous investment in quality
Quality Continuous investment in quality to support our market position 2017 2018 June September December March June Sintra Eatontown Portugal USA Cherry Hill USA Thymoorgan Columbus Germany USA FDA inspections at five manufacturing facilities. Zero critical observations. Hikma Pharmaceuticals PLC 1
Slide 19: Outlook: building upon our success in 1H18
Outlook Building upon our success in 1H18 Maximising Building R&D Driving Maintaining Supporting value from pipeline profitability high-quality growth with broad product operations strong portfolio and balance sheet differentiated capabilities Hikma Pharmaceuticals PLC 19
Slide 20: Financial highlights
Financial highlights Hikma Pharmaceuticals PLC 20
Slide 21: Group financial highlights
Group financial highlights Strong financial performance in 1H18 Group financial highlights ($ million) 1H17 1H18 % change Revenue 895 989 +11% Gross profit 454 500 +10% Core operating profit 176 214 +22% Core EBITDA 215 252 +17% Core net income 109 148 +36% Basic EPS 28.8 44.0 +53% Core basic EPS 45
Slide 22: Segment results
Segment results Revenue and profit growth achieved by all three business segments Revenue ($ million) 1H17 1H18 % change Injectables 362 414 +14% Generics 305 338 +11% Branded 223 232 +4% Other 5 5 0% Group 895 989 +11% Core operating profit and margin ($ million) 1H17 1H18 % change 1H17 1H18 % chan
Slide 23: Product-related investments and capital expenditure
Product-related investments and capital expenditure Continued investment in R&D and infrastructure to support future growth Product-related investments1 ($ million) $5 ▲ Reduced R&D expenditure, following detailed $60 review of Generics R&D pipeline in 2H17 $50 $40 ▲ Expect R&D spend to increase in
Slide 24: Cash flow and balance sheet
Cash flow and balance sheet Strong cash flow and healthy leverage ratios maintained Operating cash flow Net debt position ($ million) ($ million) Dec-17 Jun-18 $240 $225 Short-term borrowing 87 90 $220 Long-term borrowing 690 631 $200 $185 Cash and cash equivalents 231 220 $180 Net debt 546 501 $160
Slide 25: Outlook for 2018
Outlook for 2018 Guidance for Generics and Injectables raised and reiterated for Branded Injectables Net finance expense ▲ Revenue: $775 - $825 million from $750 - $800 ▲ Net finance expense: ~$55 million million ▲ Core operating margin: mid to high 30s from low to mid 30s Generics Capital expenditu
Slide 26: Appendix
Appendix Hikma Pharmaceuticals PLC 26
Slide 27: 1H18 non-core items
1H18 non-core items Bridge between 1H18 core and reported operating profit Bridge between 1H18 core and reported net income ($ million) ($ million) $40 million $214 $15 $10 $15 $174 $42 million $148 $40 $106 $8 $6 Core operating Advair clinical Costs assocIated Intangible Reported Core net income Am
Slide 28: 2018 estimated non-core items
2018 estimated non-core items Bridge between 2018 core and reported operating profit Bridge between 2018 core and reported net income ($ million) ($ million) $61 million $22 $11 $28 $69 million $61 $16 $8 Core operating Advair clinical Costs associated Intangible Reported Core net income Amortisatio
Slide 29: Revenue by segment and region
Revenue by segment and region 1H18 revenue by segment 1H18 revenue by region 42% 66% 23% 28% 1% 34% 6% Branded Injectables Generics Other MENA US Europe & ROW Hikma Pharmaceuticals PLC 29
Slide 30: Consolidated P&L
Consolidated P&L Constant $ million 1H18 1H17 Change currency change Revenue 989 895 +11% +10% Gross profit 500 454 +10% +11% Gross margin 50.6% 50.7% -0.1pp +0.2pp Operating profit 174 113 +54% +56% Core operating profit1 214 176 +22% +23% Core operating margin 21.6% 19.7% +1.9pp +2.1pp EBITDA2 230
Slide 31: Cash flow statement
Cash flow statement $ million 1 H18 1H17 Profit before tax 141 100 Non-cash items and other adjustments 104 125 Change in working capital (39) 63 Income tax paid (21) (63) Net cash generated from operating activities 185 225 Purchases of property, plant and equipment (53) (47) Purchase of intangible
Slide 32: Balance sheet
Balance sheet $ million Jun-18 Dec-17 Growth $ Growth % Cash and cash equivalent 220 227 (7) (3%) Collateralised and restricted cash - 4 (4) (100%) Trade and other receivables 685 707 (22) (3%) Inventories 534 488 46 9% Income tax receivables 42 53 (11) (21%) Other current assets 64 95 (31) (33%) To
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