Industry Trend Analysis - Generic Sales To Be Central To Hikma's FY17 Expectations - OCT 2017


BMI View: Whilst the increase has slowed down compared to a year earlier, Hikma Pharmaceuticals' focus on its Generics segment has seen H116 generic sales rise faster than those of its other main segments, Injectables and Branded products. Crucially, whilst FY17 Injectables sales are anticipated to be flat compared to FY16, and Branded sales to fall slightly, Generic sales are expected to rise, helping to bolster overall revenues. Generics have now overtaken the Branded segment in terms of sales for the first time, but US market conditions will continue to hold back the segment's potential.

Hikma Pharmaceuticals' interim results for H117, ended June 30 2017, show the firm's revenue rose by 1.5% over H116, rising from USD882mn to USD895mn. However, operating profit fell by 6.6%, from USD121mn in H116 to USD113mn. The firm noted that the increase in revenue reflected the consolidation of an additional two months of West-Ward Columbus and continued Injectables growth, partially offset by lower Branded revenue. Hikma's Chairman and CEO, Said Darwazah, commented that the Group had delivered stable revenue and profitability in H117 in an increasingly challenging environment. In the US, where competition is increasing and pricing pressure is intensifying, sales in the Injectables business were resilient, but the tougher market conditions also continued to limit growth in the Generics business. Branded revenue declined in H117, primarily as a result of the devaluation of the Egyptian pound at the end of 2016 and shipment delays during Ramadan and Eid. However, Darwazah added that Hikma is confident it will deliver a much stronger performance in H216.

Injectables Remain Most Important Segment, But Generics Show Greatest Increase

Hikma's Revenues Continue To Improve
Hikma's H1 Revenues (USDmn)
Source: Hikma Pharmaceuticals, BMI

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