Operating profit dropped 21% to US$302mln on a reported basis in the year ended 31 December, as it invested in research and development and as its generic business reported an operating loss of $14mln. However, the fall in profits was better than forecasts of $281mln by analysts polled by Bloomberg.
During the period, the company invested US$150mln in research and development, compared to US$36mln in 2015, launching 34 new compounds.
The loss in the generic business was mainly due to exceptional items of US$33mln related to acquisition and integration costs of US generic prescription medicine provider West-Ward Columbus as well as the divestment of certain legacy generic products. West-Ward Columbus was called Roxane Laboratories before Hikma purchased the company in February 2016.
Hikma chairman Said Darwazah said the acquisition of West-Ward Columbus was the largest to date and was transforming the business.
“We expect the generics business to achieve significant growth in revenue and profitability in the coming years as we focus on pipeline execution and portfolio optimisation,” Darwazah said.
The acquisition contributed 10 months of revenue to the generics business total, which rose 31% to US$604mln.
Revenue in the injectables division gained 40% to US$781mln while branded arm revenue increased 29% to US$556mln.
Total group revenue increased 35% to US$1.9bn, driven by growth in the US and the Middle East and North Africa regions.
The company expects revenue in 2017 to reach US$2.2bn in constant currency. Injectables revenue is projected to reach between US$800mln to US$825mln while generics revenue is estimated at US$800mln and branded revenue is forecast to grow in the “mid-single digits”.
Hikma proposed a final dividend of 22c per share, bring the full year dividend to 33c per share, compared to 32c in 2015.
“We are well positioned across our markets, with a large and differentiated portfolio and pipeline and we are confident in the future prospects of the group,” Darwazah said.
Shares in Hikma jumped 7.48% to 2,285p in early trading.
Peel Hunt reiterated a ‘buy’ rating and said Hikma delivered a “strong set” of full year results, driven by positive mix effects in the generic injectables division. The 2017 revenue guidance of US$2.2bn is slightly below its Peel Hunt’s estimate of US$2.3bn. Peel Hunt said the guidance is conservative with plenty of scope for a beat, particularly if the generic asthma inhaled drug Advair is approved in May.
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Story by ProactiveInvestors