Hikma Pharmaceuticals Plc · LSE:HIK
Hikma Pharmaceuticals — H1 2014 Earnings Presentation
34 slides from Hikma Pharmaceuticals's earnings presentation, Aug 20, 2014
Slide 1: Hikma Pharmaceuticals PLC H1 2014 Interim Results
Hikma Pharmaceuticals PLC H1 2014 Interim Results 20 August 2014
Slide 2: Disclaimer
► This document, which has been issued by Hikma Pharmaceuticals PLC (the “Company”), comprises the written materials/slides for a presentation This document and its contents are confidential and may not be reproduced, presentation. reproduced redistributed or passed onon, directly or indirectly, ind
Slide 3: Investing for growth: H1 2014 highlights
Investing for growth H1 2014 highlights ► Group delivered an excellent performance in H1 2014 ► Launched 38 new products across our MENA markets and signed 4 licensing agreements ► Continued to enhance focus and capabilities of our MENA sales force ► Acquired assets of Bedford Laboratories, includin
Slide 4: Financials
AIKMA QUALITY
Slide 5: Consolidated P&L: Strong Group performance in H1 2014
Consolidated P&L Strong Group performance in H1 2014 Revenue Adjusted operating Net income EPS – adjusted, diluted* ($m) profit* ($m) (cents) ($m) + 16% 738 638 + 30% 245 + 132% 169 + 43% 189 88.0 61.6 73 H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 4 * Before the amortisation of
Slide 6: Branded: Stable revenue and increased investment in sales and marketing
Branded Stable revenue and increased investment in sales and marketing g Revenue($ million) Adjusted1 operating profit ($ million) 60 - 9% 59 +1% 54 250 257 259 40 200 20 150 0 100 H1 2013 H1 2014 Operating margin 50 H1 2013 H1 2014 Change Reported 20 6% 20.6% 18 9% 18.9% -1 1.7pp 7pp 0 H1 2013 H1 2
Slide 7: Injectables: Excellent revenue growth and profitability
Injectables Excellent revenue g growth and p profitability b y Revenue ($ million) Adjusted1 operating profit ($ million) 346 350 140 38 142 +103% + 41% 120 300 40 100 246 250 268 41 80 200 60 70 40 40 150 165 20 100 0 H1 2013 H1 2014 50 Operating margin H1 2013 H1 2014 Change - H1 2013 H1 2014 Repo
Slide 8: Bedford acquisition: Slightly dilutive during tech transfer, strongly accretive thereafter
Bedford acquisition Slightly dilutive during tech transfer, strongly accretive thereafter ► The Bedford assets will begin contributing revenue in 2016 as we re-launch products to the market, reaching around $150 million illi off revenue in i 2017 ► Operating costs from 2014 onwards will comprise: $9
Slide 9: Generics: Continued market opportunities and reintroduction of products
Generics Continued market opportunities and reintroduction of products drove strong performance Revenue ($ million) Adjusted1 operating profit ($ million) 85 - 4% 140 82 - 3% 75 79 132 65 120 128 55 100 45 35 80 25 15 60 5 -5 H1 2013 H1 2014 40 O Operating ti margin i 20 H1 2013 H1 2014 Change Repor
Slide 10: Cash flow: Strong cash flow driven by our US businesses
Cash flow Strong cash flow driven by our US businesses Operating cash flow ($ million) ► Operating cash flow increased by $64 million to 200 $200 million, illi reflecting fl ti theth very strong t performance f off the th 200 US Injectables and Generics businesses + 47% 180 ► Cash primarily used to
Slide 11: Capital expenditure: Investing in quality and capacity for future growth
Capital expenditure Investing in quality and capacity for future growth Capital expenditure ($ million) ► Maintenance and equipment additions across our 35 MENA facilities, including Algeria, Egypt, Jordan, Morocco, Saudi Arabia, Sudan and Tunisia 31 + 19% 30 5 ► Adding Injectables capacity – comple
Slide 12: Product related investments
Product related investments Expanding and enhancing our product portfolio Product related investments ($ million) 15 ► The increase in product related investments capitalised on the balance sheet reflects the 14 broader approach we are taking to developing our portfolio across the Group ► We are sup
Slide 13: Balance sheet: Strong financing position
Balance sheet Strong g financing gpposition Net debt position at 30 June 2014 ($ million) ► Net debt of $175 million, million reflecting very strong cash flows in H1 2014 289 290 175 ► Expecting full year financing expense of around 190 $38 million following Bedford acquisition 90 Short-term Long-te
Slide 14: Outlook for 2014
Outlook for 2014 Group revenue Around 5% growth Branded Low single digit revenue growth, with an adjusted operating margin below 2013 Above 20% revenue growth, with adjusted operating margin of around 35%, Injectables before slight dilution from Bedford Generics Around $200 million, with adjusted op
Slide 15: Branded
AIKMA QUALITY
Slide 16: Momentum in recent product launches supported by strong local R&D
Momentum in recent product launches supported by strong local R&D will drive future growth Recent MENA product launches by country Egypt - recent launches through local R&D Central R&D 40 H1 2014 37 launches Local R&D 2013 69 launches 35 5 2012 47 launches 2011 40 launches 30 4 15 7 4 5 5 25 13 5 20
Slide 17: Speed to market will drive future growth
Speed to market will drive future growth Examples of first generic to market launches in MENA Product Market Therapeutic Launch Market ► Strategic focus on launching first or second category date share generic on the market $918.0 (%) m Imatinib Jordan Oncology Nov 2010 90% ► Key advantages: − Highe
Slide 18: Local manufacturing is providing a competitive advantage
Local manufacturing is providing a competitive advantage Tunisia $918.0 Lebanon m Jordan Iraq Morocco Jordan Kuwait Algeria $786.6 $ Bahrain Libya m Qatar Egypt $730.9 m UAE Saudi Arabia Oman Sudan Hikma UAE Yemen Sharjah Operations 17 Manufacturing plants
Slide 19: Strong route to market and focus on commercial excellence
Strong route to market and focus on commercial excellence is a competitive advantage Our large team of around 1,849 Our distribution sales ppeople p detail doctors strategy is tailored by across our MENA markets market to use a mix of • Expert teams Hikma-owned and third structured by party distribu
Slide 20: Injectables
AIKMA QUALITY
Slide 21: Bedford acquisition supports our global Injectables growth strategy
Bedford acquisition supports our global Injectables growth strategy Building a leading global manufacturer of high quality, affordable generic injectable products for patients across our markets Commercial Pipeline Operational Investing for Employees Sustainability opportunities pp development p exc
Slide 22: Maximising portfolio opportunities through focus on higher value products
Maximising portfolio opportunities through focus on higher value products ► Large and broad product portfolio across our markets Injectables products by market* – Helps build strong relationships with customers – Well positioned to take advantage of market US opportunities 77 MENA 66 Europe 54 ► Str
Slide 23: Strong product pipeline will drive sustainable growth
Strong product pipeline will drive sustainable growth US Injectables product pipeline at 30 June 2014 ► Broad approach to pipeline development – Increased investment in R&D – 43 product submissions in H1 2014 across our Hikma products 82 markets Bedford products 62 ► Submitted first pre-filled syrin
Slide 24: High quality global manufacturing facilities are a key differentiator
High quality global manufacturing facilities are a key differentiator ► High quality global manufacturing footprint Investment in – Ability to maintain secure supply and high customer service levels high quality ► Breadth of manufacturing capabilities supports a large product portfolio manufacturing
Slide 25: Generics
AIKMA QUALITY
Slide 26: Re-launching products at Eatontown and leveraging our MENA facilities
Re-launching products at Eatontown and leveraging our MENA facilities US prednisone market, Jun-13 to Jun-14 ($ million) ► Re-introduced a further 10 products during H1 2014 $20 0 $20.0 Re-launching ► Successfully re-building market share in re- products to the launched products, such as prednisone
Slide 27: Investing in R&D and business development to build a strong pipeline
Investing in R&D and business development to build a strong pipeline Generics product pipeline at 30 June 2014 ► Developing related growth strategies that build on and reinforce a strong legacy business ► Diversification into new areas with Diversification attractive market dynamics – such as into n
Slide 28: Group
AIKMA QUALITY
Slide 29: Our diversified business model continues to deliver strong growth
Our diversified business model continues to deliver strong growth Group revenue ($ million) Acquired Baxter Baxter’ss Multi Source Injectables (US) Acquired EPCI (Egypt) Acquired Bedford (US) Acquired 94.1% of Promopharm i(Morocco) Entered JV in Ethiopia Acquired Elie Pharmaceuticals (Sudan) Acquire
Slide 30: Appendix
AIKMA QUALITY
Slide 31: Revenue by segment and region
Revenue by segment and region H1 2014 revenue by segment H1 2014 revenue by region 35.0% 47.0% 40.0% 54.0% 1.0% 6 0% 6.0% 17.0% Branded Injectables Generics Other MENA US Europe & ROW 30
Slide 32: Consolidated P&L
Consolidated P&L Strong Group performance in H1 2014 $ million H1 2014 H1 2013 Change Revenue 738 638 +16% Gross profit 441 353 +25% Gross margin 59.8% 55.3% +4.5pp Operating profit 236 143 +65% Adjusted operating profit1 245 189 +30% Adjusted operating margin 33.2% 29.6% +3.6pp EBITDA2 269 182 +48%
Slide 33: Cash flow statement
Cash flow statement $ million H1 2014 H1 2013 Profit before tax and minority interest 219 111 Adjustments for non-cash items 39 57 Change in working capital (14) (18) Income tax paid (60) (32) Other 16 18 Net cash generated from operating activities 200 136 I Investment in i property, plant l and d
Slide 34: Balance sheet
Balance sheet $ million Jun-14 Jun-13 Growth $ Growth % Cash 289 125 164 131% Trade and other receivables 418 389 29 7% Other current assets 6 3 3 100% Inventories 309 273 36 13% Total current assets 1 022 1,022 790 232 29% Intangible assets 444 435 9 2% Tangible fixed assets 447 424 23 5% Investmen
Hikma Pharmaceuticals — H1 2014 Earnings Presentation on 6ix