Hikma Pharmaceuticals PLC · LSE:HIK
Hikma Pharmaceuticals — H1 2009 Earnings Presentation
44 slides from Hikma Pharmaceuticals's earnings presentation, Aug 27, 2009
Slide 1: 2009 Interim Results
HIKMA PHARMACEUTICALS PLC 2009 Interim Results 27 August 2009
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, redistributed or passed on, directly or indirectly, to any other person or publis
Slide 3: Said Darwazah, Chief Executive
Said Darwazah Chief Executive
Slide 4: H1 2009 highlights
H1 2009 highlights ■ Group revenues up 7.2% to $321.5 million ■ Profit attributable to shareholders up 31.4% to $43.2 million ■ Branded business continues to grow faster than MENA market ■ Continue to build our Injectables business across all regions ■ Significant improvement in Generic sales and pr
Slide 5: Bassam Kanaan, Chief Financial Officer
Bassam Kanaan Chief Financial Officer
Slide 6: Consolidated P&L
Consolidated P&L All figures in $ million H1 2009 H1 2008 Change Net sales 321.5 299.9 +7.2% Gross profit 151.2 135.0 +12.0% Gross profit margin 47.0% 45.0% +2.0 Operating profit 57.2 47.1 +21.5% Operating profit margin 17.8% 15.7% +2.1 Profit before tax 50.5 39.3 +28.5% Tax (6.5) (5.9) +9.3% Effect
Slide 7: Impact of exchange rate fluctuations
Impact of exchange rate fluctuations ■ Negative impact on sales and operating profit in the Branded business ■ Negative impact on sales in the Injectables business ■ Algerian Dinar, Egyptian Pound and Sudanese Pound continue to depreciate against the US Dollar Impact of exchange rate fluctuations Ch
Slide 8: Revenue by segment and region
Revenue by segment and region H1 2009 revenue by segment H1 2009 revenue by region Page 7
Slide 9: Branded: New launches and focused sales and marketing drive sales
Branded New launches and focused sales and marketing drive sales Net sales ($ million) ■ Branded sales continue to outperform MENA market + 9.3% -12.5% growth in constant currency ■ More focused sales and marketing efforts with focus on promotion of new and recently launched products ■ Excellent pro
Slide 10: Branded: Strong margins
Branded Strong margins Gross profit ($ million) Operating profit ($ million) +5.2% + 7.3% Gross margin Operating margin H1 08 H1 09 Change H1 08 H1 09 Change 54.0% 53.0% -1.0 29.0% 27.9% - 1.1 Page 9
Slide 11: Injectables: Currency and strategy implementation impact first half sales
Injectables Currency and strategy implementation impact first half sales Net revenue ($ million) ■ Injectables sales down 16.0% - down 8.6% in constant currency - 16.0% ■ US sales down as we implement strategy to reduce private label sales ■ European sales down on currency and continued price erosio
Slide 12: Injectables: Operating margins reflect lower H1 sales
Injectables Operating margins reflect lower H1 sales Gross profit ($ million) Operating profit ($ million) -13.6 % -33.6% Gross margin Operating margin H1 08 H1 09 Change H1 08 H1 09 Change 42.0% 43.2% 1.2 16.7% 13.2% -3.5 Page 11
Slide 13: Generics: Successful operational improvements and favourable market environment
Generics Successful operational improvements and favourable market environment Net sales ($ million) ■ Sales up 43.2% reflecting strengthened management team and focused sales, marketing and operational improvements + 43.2 % ■ Volume and price increases across product portfolio ■ Strong demand for a
Slide 14: Generics: Rapid return to profitability
Generics Rapid return to profitability Gross profit ($ million) Operating profit ($ million) +251.4% + 205.7 % Gross margin Operating margin Change vs. Change vs. H1 08 H1 09 H1 08 H1 08 H1 09 H1 08 15.8% 33.8% +18.0 -14.0% 14.8% + 28.8 Page 13
Slide 15: Operating expenses
Operating expenses Good control of costs keeps operating expenses in line Operating expenses as a % of Group revenue ■ Decrease in sales and marketing expenses as % of revenue Change - economies of scale gained from H1 08 H1 09 vs. H1 08 acquisitions Sales & Marketing 15.7% 14.7% (1.0%) - increased
Slide 16: Cash flow: Significant improvements in cash generation
Cash flow Significant improvements in cash generation Operating Cash Flow ($ million) ■ Considerable improvement in working capital ■ Operating cash flow up $30.8 million, funding capex and financing costs + 570% H1 2008 H1 2009 Change Receivable days(1) 125 115 (10) Inventory Days(2) 194 179 (15) P
Slide 17: Capital expenditure
Capital expenditure Lower capex follows three years of substantial capacity expansion Capital expenditure ($ million) 35 ■ Expansion of liquid injectables lines in Portugal 29.2 30 - 45.7 % ■ Expansion of manufacturing capacity in Algeria 5.8 25 ■ Maintenance capex in other regions 20 5.2 15.9 ■ We
Slide 18: Balance sheet: Improved leverage to support growth
Balance sheet Improved leverage to support growth Net debt at 30 June 2009 ($ million) ■ Further reductions in net debt keep the Group in a very strong financing position -164.4 ■ Unutilised debt facilities of $194 million as at 30 June 2009 Jun 09 Jun 08 Net debt/EBITDA* 1.14x 1.57x Net debt/Equity
Slide 19: Outlook for 2009
Outlook for 2009 ■ Re-iterate our expectations for Group revenue growth of approximately 10% at current exchange rates - 15% in constant currency reflecting the strength of the underlying business ■ Gross margin improvement of 1 to 2 percentage points ■ Strong growth in Branded – ahead of underlying
Slide 20: Said Darwazah, Chief Executive
Said Darwazah Chief Executive Page 19
Slide 21: Measuring our progress against our strategic priorities
Measuring our progress against our strategic priorities Our strategy has six core priorities: ■ Strengthening our leading position in the MENA region ■ Developing our product range across all our businesses in growing therapeutic areas ■ Extending our reach and diversity through partnerships ■ Incre
Slide 22: Strengthening our leading position in MENA
Strengthening our leading position in MENA Avg Rx Unit sales Value sales Value %Growth % Market Rank (‘000) $ (‘000) $ (Value) share MENA PRIVATE MARKET 1,466,454 3,964,265 2.70 5.9 SANOFI-AVENTIS 1 123,558 391,472 3.17 -7.3 9.9 GLAXOSMITHKLINE 2 107,072 310,592 2.90 9.2 7.8 NOVARTIS 3 60,905 214,92
Slide 23: Strengthening our leading position in MENA
Strengthening our leading position in MENA YTD/6/09 YTD/6/09 Unit Growth Value Growth Top 9 MENA markets 8.5% 5.9% Hikma in MENA 13.4% 14.3% Egypt 9.0% 13.9% Hikma in Egypt 14.8% 12.0% Saudi Arabia 10.0% 13.2% Hikma in Saudi Arabia 14.6% 18.6% Algeria 6.0% -6.7% Hikma in Algeria 20.7% 11.9% Lebanon
Slide 24: Strengthening our leading position in the MENA region
Strengthening our leading position in the MENA region Sales and marketing staff Country 30 June 2009 Syria Tunisia Lebanon Algeria 221 Jordan Iraq Morocco Tunisia 15 Kuwait Libya 33 Algeria Bahrain & Qatar Egypt 343 Libya Egypt Sudan 83 Saudi Arabia UAE Jordan 218 Lebanon 59 Oman Iraq 18 Sudan Yemen
Slide 25: Developing our product range in growing therapeutic areas
Developing our product range in growing therapeutic areas 70 63 61 60 50 40 40 35 30 20 15 13 10 9 10 8 6 3 2 3 0 Anti-infectives Cardiovascular Alimentary CNS Respiratory New compounds pending New dosage forms and strengths pending Total pending across MENA Page 24
Slide 26: Developing our product range in growing therapeutic areas
Developing our product range in growing therapeutic areas Page 25
Slide 27: Developing our product range in growing therapeutic areas
Developing our product range in growing therapeutic areas 2008 H1 2009 Yr on YR Market H1 Yr on Yr Market 2008 $ Value $ Value Growth share 2009 Growth share Rank (000) (000) % % Rank % % MENA Cardiovascular and Diabetes market* 614,215 26.3 313,097 -2.1 SANOFI-AVENTIS 1 135,907 25.3 22.1 1 50,569 -
Slide 28: Developing our product range in growing therapeutic areas
Developing our product range in growing therapeutic areas Page 27
Slide 29: Extending our reach and diversity through partnerships
Extending our reach and diversity through partnerships ■ Moving closer to target of 50% of sales from in- licensed products - 38.6% or $73.5 million of H1 2009 Branded sales from in-licensed products ■ 24.9% growth in Branded in-licensed sales ■ Actos® sales up 50.5% in top MENA markets* ■ Blopress®
Slide 30: Increasing the scale of our speciality Injectables business
Increasing the scale of our speciality Injectables business MENA Expecting excellent growth for the full year driven 8 7 7 by: 7 6 5 4 ■ Expansion of the product portfolio 4 3 -7 launches in H1 2 2 - 8 launches expected in H2, including first 1 oncology products 0 H1 2009 launches H1 2009 approvals
Slide 31: Increasing the scale of our speciality Injectables business
Increasing the scale of our speciality Injectables business US 5 ■ US Injectables strategy prioritises own product sales over private label* 4 3 ■ Private label provides short term benefits… 3 (manufacturing throughput, cash generation) 2 2 ■ …but longer term consequences (lose control 1 of customer
Slide 32: Increasing the scale of our speciality Injectables business
Increasing the scale of our speciality Injectables business Europe 16 14 ■ Underlying business is stable in Europe 14 12 10 10 ■ Expanding our product portfolio 8 -14 launches across Europe in H1, including 11 6 5 in oncology 4 3 2 -7 launches expected in H2 0 H1 2009 launches H1 2009 approvals ■ On
Slide 33: Leveraging our expertise and capacity in the US market
Leveraging our expertise and capacity in the US market Market share improvements for key products Generics sales by customer 50% 40% H1 2008 30% 20% 10% H1 2009 0% xin o ril r xin clo on op e o M a al ig t ap ef h D o C ep Is C C H1 2008 H1 2009 Source: IMS Health Source: IMS Health Page 32
Slide 34: Leveraging our expertise and capacity in the US market
Leveraging our expertise and capacity in the US market Global products as a % of Generic sales Global products as a % of US sales Page 33
Slide 35: Conclusion
Conclusion ■ Continue to strengthen our leading position in MENA - Excellent prospects for continued growth in Branded ■ Exciting opportunities for continued development of our product portfolio - Growing our market position in key therapeutic areas ■ Excellent progress in developing and strengtheni
Slide 36: Appendix
APPENDIX
Slide 37: Cash flow: Significant improvements in cash generation
Cash flow Significant improvements in cash generation All figures US$m H1 2009 H1 2008 Profit before tax and minority interest 50.5 39.3 Adjustments for non-cash items 25.6 27.9 Change in working capital (30.1) (57.7) Income tax paid (9.7) (4.0) Net cash generated from operating activities 36.2 5.4
Slide 38: Maintaining our world-class manufacturing and API sourcing capabilities
Maintaining our world-class manufacturing and API sourcing capabilities Key activities Key objectives Manufacturing Measuring productivity and asset utilisation, Creating flexible, efficient, quality manufacturing optimising the network with centres of excellence Supply planning Integrating supply p
Slide 39: Branded: Launching new products and developing new markets
Branded Launching new products and developing new markets Product launches in H1 2009 Product approvals in H1 2009 60 25 22 50 48 20 40 15 30 10 8 20 12 5 5 10 5 0 0 MENA Europe & ROW MENA Europe & ROW New compounds New compounds New dosage forms and strengths New dosage forms and strengths Total pr
Slide 40: Branded: Pipeline for future growth
Branded Pipeline for future growth Product submissions in H1 2009 Pending approvals in H1 2009 79 500 80 460 450 70 400 60 350 50 300 40 250 28 200 30 150 20 18 100 11 65 56 10 50 32 0 0 MENA Europe & ROW MENA Europe & ROW New compounds New compounds New dosage forms and strengths New dosage forms a
Slide 41: Injectables: Launching new products and developing new markets
Injectables Launching new products and developing new markets Product launches in H1 2009 Product approvals in H1 2009 16 16 14 14 14 12 12 10 10 10 8 8 7 7 6 6 5 4 4 4 4 4 2 2 2 2 1 0 0 0 0 US MENA Europe & ROW US MENA Europe & ROW New compounds New compounds New dosage forms and strengths New dosa
Slide 42: Injectables: Pipeline for future growth
Injectables Pipeline for future growth Product submissions in H1 2009 Pending approvals in H1 2009 50 49 180 176 45 160 40 140 35 120 30 100 25 80 20 60 15 40 10 29 5 6 19 3 20 14 5 2 9 10 1 1 1 4 4 5 0 0 US MENA Europe & ROW US MENA Europe & ROW New compounds New compounds New dosage forms and stre
Slide 43: Generics: Launching new products
Generics Launching new products Product launches in H1 2009 10 8 6 4 3 3 2 2 0 US New compounds New dosage forms and strengths Total product launches
Slide 44: Generics: Pipeline for future growth
Generics Pipeline for future growth Product submissions in H1 2009 Pending approvals in H1 2009 10 40 35 35 35 8 30 27 25 6 20 4 15 2 2 2 10 2 5 0 0 US US New compounds New compounds New dosage forms and strengths New dosage forms and strengths Total submissions Total pending approvals
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