(MENAFN - Jordan Times) AMMAN — Hikma Pharmaceuticals enhanced its optimism for the future with its groundbreaking state-of-the-art Research and Development (R&D) facility in Jordan up and running and plans for a new logistics facility. It also reiterates guidance for the current year after favourable 2006 results.
"Hikma's strength has always been its investment in training and its people," Mazen Darwazah, group vice chairman and MENA CEO told
The Jordan Times on Tuesday.
"We currently have 180 employees working in our new R&D facility. The facility houses $12 million of unparalleled equipment in the region. We will continue to invest in R&D at a rate of 5-6 per cent of sales."
R&D costs went up by 10.8 per cent to $18.3 million in 2006.
Hikma's product portfolio and product pipeline have continued to develop in 2007. In the first two months of the year it received 14 regulatory approvals, submitted nine regulatory filings and launched four new products.
At the end of 2006, Hikma had a total of 105 new products under development, the majority of which should receive marketing authorisations in differing strengths and/or product forms between 2007 and 2009.
During 2006, Hikma was granted 191 regulatory approvals across all geographies. In addition, the company submitted a total of 88 regulatory filings, including 54 new product applications. As of December 31, 2006, Hikma had a total of 117 pending approvals in Jordan, the United States and Europe.
"We ended 2006 with a total of 176 products in our portfolio in 397 dosage strengths and forms, including the 23 products launched during the year and 26 under-licence products. In addition, at Jezeera Pharmaceutical Industries (JPI) we have 125 products pending approval," Darwazah said.
Hikma is in the process of building a new 300-square-metre Logisctics facility in Mushata near the Queen Alia International Airport in a designated duty-free zone.
"We are spending $10 million to get this project off the ground. The facility should be completed in about 14 months," said Darwazah.
Any group expansion in Jordan will take place in Mushata, due to the limited space at its main site.
In preliminary results announced last week, the company posted a 17.4 per cent rise in 2006 pretax profit and said strong sales in its branded and injectable drugs businesses this year should help offset tough trading in US generics.
Pretax profits climbed to $75.6 million, from $64.4 million the previous year.
The group performed well in 2006, achieving revenue of $317 million, up 20.9 per cent from 2005. Gross margin for the group was 50 per cent, down from 51.8 per cent in 2005, but still very strong when compared to industry peers.
Operating profit grew by 8.7 per cent to $75.2 million, while operating margins decreased to 23.7 per cent, compared to 26.4 per cent in 2005, primarily as a result of increased overheads related to their new Algerian plant, the continued price erosion in the generic business and an increase in the group's general and administrative expenses.
The group will pay a dividend of 4 cents per share.
Sales climbed 21 per cent to $317 million.
Diluted earnings per share were 31 cents, up 9.5 per cent from 28.3 cents in 2005.
"Benefiting from the strength and diversity of our business model, in 2006, Hikma increased its capacity, having completed and commenced production at the Algerian plant, completed the construction of a new dedicated cephalosporin plant in Portugal and invested in improving the manufacturing facilities in Jordan, Italy and the US. We also started our acquisition strategy," the vice chairman told
The Jordan Times.
Hikma consolidated its position in the fast growing Saudi Arabian and the wider Gulf Cooperation Council markets through the acquisition of the remaining 52.5 per cent share of JPI.
In January 2007, Hikma bought Ribosepharm GmbH, an oncology company specialising in the marketing and distribution of injectable oncology products in Germany. This acquisition is expected to enhance its injectable product portfolio, develop its sales and marketing capabilities and provide it with an excellent platform from which to enter the large and fast-growing oncology market.
In its branded business, Hikma was able to leverage the investment made in sales and marketing in 2005 to drive significant growth across existing and newer markets. Through these efforts, it achieved market share gains in each of the three largest markets — Algeria, Saudi Arabia and Jordan.
In its injectable business, it delivered strong sales growth as Hikma continued to develop its sales and marketing infrastructure. Sales were particularly strong in the Middle East and North Africa (MENA) region, especially in Saudi Arabia and Sudan, where it established new customer relationships and distribution channels.
Sales growth was also strong in Europe, and especially in Germany, where distribution agreements with Hospira enhanced the company's product offering and facilitated the penetration of its products in the European market. In the United States, it set up a specialised distribution company, Hikma Pharmaceuticals (USA) Inc., with a dedicated sales force for injectables.
In its generic business, sales declined by 1.3 per cent compared to 2005 as a result of continued price erosion and a limited contribution from new product launches. However, Hikma renewed its sales contract with the US Department of Veterans Affairs for the supply of Lisinopril.
"We are very pleased with the performance of Hikma in our first full year as a listed company. Our diverse business model continues to provide strong growth, particularly in our branded and injectable businesses, which more than compensated for the industry-wide market challenges in the generic business in the US," Samih Darwazah, chairman and Chief Executive of Hikma, said in a statement.
"In 2006, we consolidated our strong position in Saudi Arabia and completed construction of our state-of-the-art injectable cephalosporin plant in Portugal, continuing to deliver on the objectives we promised at the IPO. This year, we have continued this trend, recently acquiring Ribosepharm, and we look forward to 2007 with considerable confidence," he added.
Outlook
The construction of its new injectable cephalosporin plant in Portugal was completed by the year end. The plant is under validation, but has been cleared by the Portugese regulatory authority, Infarmed, for its design and logistics. It awaits Food and Drug Administration inspection and approval, but continues to be on track to begin commercial production in the first half of 2007.
Hikma expects both its branded and injectable businesses to deliver strong sales growth in 2007, through a focus on key products, the launch of new products and expansion into new markets. It also expects the pricing environment in the United States to remain competitive. However, it will work diligently to minimise the effects of this pricing pressure on its generic business by introducing new products and retaining our strategic focus on reducing raw material costs.
"Further development of our injectable product portfolio and our injectable sales, marketing and manufacturing capabilities is essential to our growth strategy for this business and we will continue to work to achieve this both through organic growth and acquisitions. At the same time, we remain focused on our aim to consolidate our strong position in the MENA region and we continue to evaluate acquisition opportunities in our target markets — Egypt, Morocco and Turkey. We are confident that the strength and diversity of our business will enable us to continue our track record of delivering strong growth within the group," said the vice chairman.
"Consolidation of our position in the MENA region and expansion of our injectable business remain key strategic objectives and we will continue to look for opportunities to expand our operations both organically and through acquisitions." the chairman said in the statement.
Hikma presently has facilities in Jordan, Saudi Arabia, Algeria, Tunisia, Italy, Germany and the United States.