Hikma Pharmaceuticals profits drop on weaker Generics sector

Hikma Pharmaceuticals shares plummeted 8.1% to 1,618.5p in late morning trading on Thursday, after the company reported a 27% operating profit drop to $239 million in HY1 2022 against $326 million the year before.

Hikma attributed its declining profits to lower pricing in its Generics sector and a high comparative in HY1 2021 due to an impairment reversal.

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The FTSE 100 group confirmed a flat revenue of $1.2 billion year-on-year, including strong performance in Injectables and Branded offsetting weaker pricing in Generics, with chronic medications driving 80% of branded revenue growth across the financial term.

“Hikma’s resilient first half performance is a testament to the strength of our core underlying business, supported by the breadth and depth of our portfolio and capabilities,” said Hikma Pharmaceuticals CEO and executive chairman Said Darwazah.

“Double digit profit growth in our Injectables and Branded businesses has helped to offset a decline in Generics caused by industry-wide competitive pressures.”

Hikma announced a profit attributable to shareholders fall of 30% to $173 million from $248 million year-on-year.

The pharmaceutical firm also noted a 25% slide in cashflow from operating activities to $169 million against $224 million in HY1 2021.

The company mentioned a basic EPS decrease of 29% to 76.2c million compared to $1.07 in the previous year.

FY 2022 guidance

Hikma reported an anticipated Injectables revenue increase in the mid to high-single digits, along with a Branded revenue growth in the low-single digits.

The group mentioned an expected Generics revenue between $650 million to $675 million.

“Our increasingly differentiated portfolio, market leading positions, unique manufacturing footprint and the strength of our customer relationships form a strong foundation for further progress and we are confident in our outlook for the future,” said Darwazah.

“We expect to maintain good momentum in Branded and Injectables and for Generics to return to growth in 2023.”

Hikma Pharmaceuticals hiked its dividend by 6% to 19c per share from 18c per share last year.

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