Hikma Pharmaceuticals PLC · LSE:HIK
Hikma Pharmaceuticals — UBS Global Generic & Speciality Pharmaceuticals Conference 2007
37 slides from Hikma Pharmaceuticals's conference presentation, May 9, 2007
Slide 1: Hikma Pharmaceuticals PLC – UBS Global Generic & Speciality Pharmaceuticals Conference
HIKMA PHARMACEUTICALS PLC UBS GLOBAL GENERIC & SPECIALITY PHARMACEUTICALS CONFERENCE NEW YORK 8-9 MAY 2007
Slide 2: About Hikma
About Hikma ■ Founded in Jordan in 1978 ■ Multinational business developing, manufacturing and marketing generic and in-licensed pharmaceuticals on a global scale ■ Operations in MENA, US and Europe ■ Sales in 40 countries ■ First Arab company to obtain FDA approval Page 1
Slide 3: Our diversified and successful business model
Our diversified and successful business model Branded Generics Injectables Focus on Middle East Focus on US market Sales in US, Europe and N. Africa (MENA) & MENA 2006 revenue: 2006 revenue: 2006 revenue: $130.1 million $113.7 million $67.6 million Page 2
Slide 4: Revenue by business segment and region
Revenue by business segment and region 2006 revenue by segment 2006 revenue by region 41.0% 49.7% 21.3% 1.8% 40.9% 9.3% 35.9% Generic Branded Injectable Other US MENA Europe Page 3
Slide 5: Broad geographic coverage
Broad geographic coverage ■ Multinational scope of Hikma’s operations -Manufactures in six countries -Sales in 40 countries ■ Cost-effective R&D and manufacturing activities -In countries with lower labour and infrastructure costs ■ Geographic spread of Hikma’s operations reduces its risk profile Ma
Slide 6: API sourcing strength
API sourcing strength ■ APIs represent a significant raw material cost ■ Strong relationships with approximately 70 suppliers ■ APIs sourced from Europe, Japan, US, India, China, Taiwan, Korea ■ At least 2 qualified suppliers for all key products -in-licensed products sourced from the licensors ■ 12
Slide 7: Efficient, experienced and successful R&D team
Efficient, experienced and successful R&D team ■ 158 professionals and scientists Enables Hikma to -23 based in US, 7 in Portugal and 128 in the MENA region where Provide customers with complete product Benefits offerings – dosages and forms costs are lower (117 in Jordan and 11 in Saudi Arabia) Sel
Slide 8: R&D is delivering results
R&D is delivering results 98 regulatory approvals in 2005 191 regulatory approvals in 2006 120.0 120.0 117 100.0 100.0 80.0 80.0 63 57 103 60.0 60.0 37 40.0 40.0 51 51 20.0 33 20.0 11 4 5 14 12 6 4 2 6 0.0 2 0.0 New products Branded Line extensions Injectables Generics Branded Injectables Generics N
Slide 9: Product pipeline for future growth
Product pipeline for future growth Current product portfolio Pending approvals 40.0 180.0 184 160.0 35.0 37 140.0 30.0 120.0 25.0 118 100.0 23 20.0 21 95 80.0 83 15.0 17 60.0 10.0 11 40.0 50 43 8 20.0 5.0 0.0 0.0 267 168 138 Branded Injectables Generics Branded Injectables Generics New products Line
Slide 10: Strong industry dynamics in MENA driving Branded growth
Strong industry dynamics in MENA driving Branded growth Per capita drug spending(1) (US $) 900 841 800 700 600 500 400 370 299 300 216 208 200 133 118 94 100 78 33 32 45 21 20 14 0 a ic ia ia ia y a ce an nd ry t t AE SA ai yp bi an si er ak bl an ga an uw rd ra la us U U Eg m pu lg ov om Po un Jo i
Slide 11: Strong marketing capabilities in the MENA region
Strong marketing capabilities in the MENA region 96 sales and 16 sales and marketing staff 19 sales and marketing staff marketing staff 80 sales and marketing staff 34 sales and marketing staff 153 sales and 9 sales and Yemen marketing staff marketing staff 7 sales and 20 sales and
Slide 12: Increasing market share in core Branded markets
Increasing market share in core Branded markets JORDAN SAUDI ARABIA Market Position Market Share Market Position Market Share Company 2005 2006 2005 2006 Company 2005 2006 2005 2006 HIKMA AND JPI 1 1 6.8% 7.3% GLAXOSMITHKLINE 1 1 10.5% 10.8% DAR AL DAWA 1 2 7.0% 7.0% SPIMACO 2 2 7.2% 7.4% NOVARTIS 3
Slide 13: Leveraging the Branded portfolio across MENA
Leveraging the Branded portfolio across MENA Product approvals in 2006 Pending approvals across the MENA region UAE UAE Iraq Iraq Yemen Yemen Egypt Egypt Tunisia Tunisia GCC GCC Syria Syria Bahrain Bahrain Oman Oman Qatar Qatar Kuwait Kuwait Lebanon Lebanon Sudan Sudan Saudi Arabia Saudi Arabia Alge
Slide 14: Developing our portfolio of products under license
Developing our portfolio of products under license ■ Attractive partner for licensors -Broad geographic coverage spanning 17 countries Products under license -More than 300 Branded sales reps as a % of 2006 Branded sales (plus 58 in Injectables ) 65.9% ■ Opportunity to benefit from data exclusivity
Slide 15: Strong Injectables growth in the MENA region
Strong Injectables growth in the MENA region ■ Continued roll-out of new products 120 -6 new products launched in Jordan ■ Leveraging investment made in sales and 100 marketing in 2005 -58 sales reps in the MENA region ■ Extensive geographic reach maximises potential 80 of product portfolio -32 appr
Slide 16: Expanding our European Injectables operations
Expanding our European Injectables operations ■ Continued roll out of new products 35 -5 products launched in 2006 -29 products for sale in Germany 30 ■ Enhanced sales and marketing capabilities delivering growth 25 -14 sales reps across region ■ Accelerating regulatory approvals 20 -28 approvals in
Slide 17: Developing our Injectables presence in the US
Developing our Injectables presence in the US ■ Newly established sales organisation 25 -Shifting away from contract manufacturing -Own products account for 44% of sales, compared to 21% in 2005 20 -5 new sales reps ■ Limited product portfolio -9 products marketed 15 ■ Strong pipeline -25 pending ap
Slide 18: Entering the injectable oncology market
Entering the injectable oncology market ■ Oncology expected to become 2nd largest pharmaceutical market by 2010 ■ 2009 is key year for patent expiries ■ Acquisition of Ribosepharm provides excellent platform to develop a presence in oncology -12 injectable oncology products currently in product port
Slide 19: Future Generic growth dependent on new products
Future Generic growth dependent on new products ■ Growth will be driven by new products 35 -Strong pipeline 31 -FDA approval times increasing 30 -Time from approval to launch – 3 to 6 months 25 ■ More competitive pricing for new products -Accept lower margins to gain market share 20 20 ■ Continued f
Slide 20: A consistent strategy for growth
A consistent strategy for growth ■ Consolidate our strong Branded market position in the MENA region by launching new products, increasing our under-licensed products, expanding our geographic reach and taking market share ■ Grow our Injectables business by expanding our product portfolio, developin
Slide 21: Confidence in our ability to deliver further strong growth
Confidence in our ability to deliver further strong growth Outlook for 2007 ■ Updating guidance to include Ribosepharm ■ Now expect sales growth in excess of 30% ■ Gross margin in line with 50.0% achieved in 2006 - Ribosepharm should impact positively on gross margin ■ Ribosepharm’s sales and market
Slide 22: Q&A
Q&A
Slide 23: Appendix
APPENDIX
Slide 24: Financial summary
Financial summary ($ million) 2006 2005 Increase Revenue 317.0 262.2 20.9% Gross profit 158.5 135.8 16.7% R&D costs 18.3 16.5 10.8% Operating profit 75.2 69.2 8.7% Profit before tax 75.6 64.4 17.4% Profit attributable to shareholders 54.5 43.9 24.3% Diluted earnings per share (cents) 31.0 28.3 9.5%
Slide 25: Continuing a track record of strong growth
Continuing a track record of strong growth Branded revenues ■ Consistent revenue performance - 39.9% growth in 2006 (US$ million) 3-yr CAGR: + 34.8 % 130.1 120 ■ Strong growth across the MENA region, especially in Saudi Arabia and 100 Jordan 93.0 80 ■ JPI consolidated from September 74.0 2006 60 - C
Slide 26: Stable performance in a competitive market
Stable performance in a competitive market Generic revenues ■ Price erosion partially offset by (US$ million) 3-yr CAGR: +1.3% volume increases 120 115.2 113.7 ■ Delays of new product launches 109.4 100 106.2 ■ Renewal of lisinopril contract 80 60 40 20 0 2003 2004 2005 2006 Annual Growth -2.8% 8.5%
Slide 27: Developing through strong growth
Developing through strong growth Injectables revenues ■ 37.1% growth in sales (US$ million) 70 ■ Particularly strong growth in MENA 67.6 3-yr CAGR: +44.8% - Saudi Arabia and Sudan 60 - New customers and distribution 50 channels 49.3 40 ■ Strong growth in Europe 30 - Germany performing well 28.9 - Ho
Slide 28: Gross profit
Gross profit (US$ million) 160 158.5 140 120 135.8 100 108.4 80 94.2 60 40 20 0 2003 2004 2005 2006 Gross Margins Change vs. 2005 2003 2004 2005 2006 (percentage points) Branded 48.6% 53.6% 57.8% 53.4% -4.4 Generic 53.7% 54.1% 54.1% 52.6% -1.5 Injectables 39.8% 33.7% 37.4% 41.9% +4.5 Group 50.6% 51.
Slide 29: Operating expenses
Operating expenses (US$million) Change 90 84.2 +23.8% 0.6 80 68.0 70 1.5 30.3 +34.1% 60 22.6 50 18.3 +10.9% 40 16.5 30 20 35.0 +27.9% 27.4 10 0 2005 2006 Operating expenses as a percentage of Group revenue 2005 2006 Change (percentage points) G&A 8.6% 9.6% +1.0 R&D 6.3% 5.8% -0.5 S&M 10.4% 11.0% +0.
Slide 30: Operating profit
Operating profit (US$ million) 80 70 75.2 69.2 60 62.7 50 55.6 40 30 20 10 0 2003 2004 2005 2006 Operating Margins Change vs. 2005 2003 2004 2005 2006 (percentage points) Branded 21.2% 30.3% 30.9% 30.3% -0.6 Generic 40.0% 38.6% 33.6% 31.7% -1.9 Injectables 18.5% 14.1% 17.2% 19.8% +2.6 Group 29.9% 29
Slide 31: Profits attributable to shareholders
Profits attributable to shareholders All figures US$m 2006 2005 PROFIT BEFORE TAX 75.6 64.4 Tax (19.6) (19.5) Effective tax rate 26.0% 30.2% Profit for the year 56.0 45.0 Attributable to: Minority interest 1.5 1.1 Equity holder of the parent 54.5 43.9 Diluted earnings per share (cents) 31.0 28.3 Pro
Slide 32: Cash flow
Cash flow All figures US$m 2006 2005 NET CASH FLOW FROM OPERATING ACTIVITIES Profit before tax and minority interest 75.6 64.4 Adjustments for non-cash items 13.8 13.8 CASH FOW BEFORE WORKING CAPITAL 89.4 78.2 Change in working capital (35.1) (24.1) Income tax paid (19.4) (17.8) Interest received 5.
Slide 33: Expanding production facilities to meet growth plans
Expanding production facilities to meet growth plans ■ 7,500 m2 cephalosporin plant in Portugal completed - Expected to be operational early 2007 Capital expenditure (US$ million) - All cephalosporin lines plus dedicated 60.0 laboratory, packing and warehousing facilities 53.2 2.5 ■ New production a
Slide 34: Net working capital
Net working capital Twelve months ending 31 December 200 Stock days Stock days (excl JPI) 160 Excluding JPI, using the count back method to calculate Debtor days 120 debtor days, debtor Debtor days (excl JPI) days were stable at 102 days and 103 days as at Dec 31st 80 Creditor Days 2005 and Dec 31st
Slide 35: Net cash
Net cash Twelve months ending 31 December 2006 (US$ million) 86.9 150 25.0 141.1 91.6 25 (32.2) (28.9) (21.9) (36.8) (100) 2005 2005 2006 2006 Long-Term Borrowing 2005 2006 Short-Term Borrowing Debt / Equity 18.8 % 19.0 % Investments in Cash Deposits, Cash and Net Debt / Equity -30.2 % -7.1 % Cash E
Slide 36: Balance sheet
Balance sheet All figures US$m 2006 2005 Cash, cash equivalent and collateralised cash 91.6 141.1 Trade and other receivables* 121.8 82.6 Other current assets 2.7 3.2 Inventories 83.7 58.0 TOTAL CURRENT ASSETS 299.8 284.9 Intangibles assets 23.9 7.7 Property. Plant and equipment 156.8 91.2 Other lon
Slide 37: Global investor base
Global investor base Institutional investors by region 35% 1% 28% 18% 18% UK Middle East Cont Europe US Far East & Aus Source: Investor Insight, Company data. Institutional investors made up 69.56% of the free float as of 29 December 2006. Page 36
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