HIKMA PHARMACEUTICALS PLC UBS GLOBAL GENERIC & SPECIALITY PHARMACEUTICALS CONFERENCE NEW YORK 8-9 MAY 2007

Transcription

1 HIKMA PHARMACEUTICALS PLC UBS GLOBAL GENERIC & SPECIALITY PHARMACEUTICALS CONFERENCE NEW YORK 8-9 MAY 2007

2 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

3 Our diversified and successful business model Branded Focus on Middle East and N. Africa (MENA) 2006 revenue: $130.1 million Generics Focus on US market 2006 revenue: $113.7 million Injectables Sales in US, Europe & MENA 2006 revenue: $67.6 million Page 2

4 Revenue by business segment and region 2006 revenue by segment 41.0% 2006 revenue by region 49.7% 21.3% 35.9% 1.8% Generic Branded Injectable Other 40.9% US MENA Europe 9.3% Page 3

5 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 Manufacturing Plants R&D Centres Page 4

6 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 employees in API sourcing teams located in Jordan, India, China and US 2 APIs manufactured for commercial use at FDA-approved API plant in Jordan API sourcing team Page 5

7 Efficient, experienced and successful R&D team 158 professionals and scientists -23 based in US, 7 in Portugal and 128 in the MENA region where costs are lower (117 in Jordan and 11 in Saudi Arabia) 35 additional scientists in Hikma subsidiaries, including 19 specialising in bio-equivalency testing Expertise in pharmaceutical formulation, bio-equivalency testing, analytical chemistry and drug delivery Particular expertise in technically challenging products and manufacturing processes such as injectables Benefits Historical Success Strong Pipeline of Products API Development Capability Enables Hikma to Provide customers with complete product offerings dosages and forms Selectively develop own API for captive use Since 1995, Hikma has achieved more than 1,100 product approvals for all regions 117 pending approvals* including 56 in the United States 105 new products under development Targeting submission of 30 new products annually for all regions Filed five drug master files since 2002; four products under development Figures are as of 31 December * In Jordan, Europe and the US. Does not include approvals pending in other countries or regions Page 6

8 R&D is delivering results 98 regulatory approvals in regulatory approvals in New products Line extensions Branded Injectables Generics Branded Injectables Generics New products Line extensions and new countries New products Line extensions and new countries Page 7

9 Product pipeline for future growth Current product portfolio Pending approvals Branded Injectables Generics Branded Injectables Generics New products Line extensions New products Line extensions Page 8

10 Page 9 Strong industry dynamics in MENA driving Branded growth Per capita drug spending (1) (US $) USA France Germany Czech Republic Hungary Poland Slovakia Russia Romania UAE Kuwait Saudi Arabia Jordan Algeria Egypt (1) Source: Merrill Lynch Estimates

11 Strong marketing capabilities in the MENA region 96 sales and marketing staff 16 sales and marketing staff 19 sales and marketing staff 80 sales and marketing staff 34 sales and marketing staff 9 sales and marketing staff Yemen 153 sales and marketing staff 20 sales and marketing staff 2 sales and marketing staff 7 sales and marketing staff With 437 (1) sales and marketing staff, Hikma has one of the largest sales forces in the MENA region (1) Does not include a further 58 Injectable employees in MENA and one sales representative in Chad Page 10

12 Increasing market share in core Branded markets JORDAN SAUDI ARABIA Market Position Market Share Market Position Market Share Company Company HIKMA AND JPI % 7.3% GLAXOSMITHKLINE % 10.8% DAR AL DAWA % 7.0% SPIMACO % 7.4% NOVARTIS % 5.7% PFIZER % 6.7% APM % 5.2% NOVARTIS PHARMA % 6.0% SANOFI-AVENTIS % 4.5% HIKMA AND JPI % 4.0% PFIZER % 4.5% SANOFI-AVENTIS % 3.8% GLAXOSMITHKLINE % 3.9% TABUK % 3.7% AMERICAN HOME % 3.6% ABBOTT % 3.6% RAM PHARM % 2.9% ASTRAZENECA % 3.4% PHARMA INT % 2.6% JULPHAR % 3.2% ALGERIA Company SANOFI-AVENTIS PFIZER GLAXOSMITHKLINE Market Position Market Share % 20.1% 7.4% 6.1% 5.1% 6.0% J&J MERCK ELI LILLY SCHERING PLOUGH ROCHE BMS % 3.0% 2.0% 2.2% 1.8% 2.1% 3.0% 2.6% 1.9% 1.9% 1.8% 1.7% NOVARTIS % 5.8% SAIDAL % 5.6% HIKMA JAZEERA % 0.0% 3.8% 0.1% Source: IMS Health MAT Dec Note: Saudi Arabia and Jordan data available on an aggregate group basis, while Algeria data is available on a company basis Page 11

13 Leveraging the Branded portfolio across MENA Product approvals in 2006 Pending approvals across the MENA region UAE Iraq Yemen Egypt Tunisia GCC Syria Bahrain Oman Qatar Kuwait Lebanon Sudan Saudi Arabia Algeria Jordan UAE Iraq Yemen Egypt Tunisia GCC Syria Bahrain Oman Qatar Kuwait Lebanon Sudan Saudi Arabia Algeria Jordan Page 12

14 Developing our portfolio of products under license Attractive partner for licensors -Broad geographic coverage spanning 17 countries -More than 300 Branded sales reps (plus 58 in Injectables ) Opportunity to benefit from data exclusivity or patent protection Products under license as a % of 2006 Branded sales 65.9% 2 licensing agreements signed in products under license as of 31 Dec 2006 (33 including injectables) -18 products under license sold in Branded at 31 Dec launched in early pending launch 34.1% Products under license Hikma own products Page 13

15 Strong Injectables growth in the MENA region Continued roll-out of new products -6 new products launched in Jordan Leveraging investment made in sales and marketing in sales reps in the MENA region Extensive geographic reach maximises potential of product portfolio -32 approvals across the region -110 pending approvals across the region (including 18 in Jordan) New customers and distribution channels enhance growth Product approvals Product filings Pending approvals New Line extensions and new countries Page 14

16 Expanding our European Injectables operations Continued roll out of new products -5 products launched in products for sale in Germany Enhanced sales and marketing capabilities delivering growth -14 sales reps across region Accelerating regulatory approvals -28 approvals in Europe and ROW Strong pipeline -20 pending approvals (including 8 for new products) Potential to expand product portfolio through acquisition of marketing authorisations -Accelerates time to market Product approvals Product filings in 2006 Pending approvals New products Line extensions and new countries Page 15

17 Developing our Injectables presence in the US Newly established sales organisation -Shifting away from contract manufacturing -Own products account for 44% of sales, compared to 21% in new sales reps Limited product portfolio -9 products marketed Strong pipeline -25 pending approvals (including 20 for new products) Growth will be driven by new products -Time to market dependent on FDA approval Product approvals Product filings in 2006 Pending approvals New products Line extensions Page 16

18 Entering the injectable oncology market Oncology expected to become 2 nd largest pharmaceutical market by 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 portfolio Strengthens injectable sales and marketing capabilities -11 experienced oncology sales representatives Significant potential to expand product offering -Acquisition of drug master files -In-house development Expertise to expand into other oncology markets in Europe, the MENA region and the US Thymoorgan acquisition integrates manufacturing into our oncology platform Page 17

19 Future Generic growth dependent on new products Growth will be driven by new products -Strong pipeline -FDA approval times increasing -Time from approval to launch 3 to 6 months More competitive pricing for new products -Accept lower margins to gain market share Continued focus on API sourcing helps to offset price declines and manage gross margin erosion Investigating product partnerships to develop opportunities Pending approvals by addressable market Timing of ANDA submissions <$50m $50m to $500m $500m to $1bm > $1bn Page 18

20 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, developing our manufacturing capabilities and strengthening our sales and marketing network Continue to pursue profitable growth and maintain significant cash generation in the US Generics by focusing on high margin, niche product opportunities Page 19

21 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 Ribosepharm should impact positively on gross margin Ribosepharm s sales and marketing expenses to be 35% - 40% of sales Investment in R&D expected to remain between 5% and 6% Tax rate expected to be below 26% Seasonal trends expected to continue, especially due to JPI consolidation IFRS 3 Page 20

22 Q&A

23 APPENDIX

24 Financial summary ($ million) Increase Revenue % Gross profit % R&D costs % Operating profit % Profit before tax % Profit attributable to shareholders % Diluted earnings per share (cents) % Proposed dividend per share (cents) * NM *Includes pre-ipo dividend of 7.5 cents per share Page 23

25 Continuing a track record of strong growth Branded revenues Consistent revenue performance (US$ million) % growth in yr CAGR: % Strong growth across the MENA region, especially in Saudi Arabia and Jordan JPI consolidated from September Contributed $11.4 million to Branded sales 20 Market share gains in our three largest markets Annual Growth 39.3% 25.7% 39.9% Page 24

26 Stable performance in a competitive market Generic revenues (US$ million) yr CAGR: +1.3% Price erosion partially offset by volume increases Delays of new product launches 80 Renewal of lisinopril contract Annual Growth -2.8% 8.5% -1.3% Page 25

27 Developing through strong growth Injectables revenues 37.1% growth in sales (US$ million) yr CAGR: +44.8% Particularly strong growth in MENA - Saudi Arabia and Sudan - New customers and distribution channels 40 Strong growth in Europe 30 - Germany performing well Hospira agreements boosting sales New sales and marketing infrastructure to support anticipated launches in 2007 Annual Growth 29.8% 70.8% 37.1% Page 26

28 Gross profit (US$ million) Gross Margins Change vs (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% 51.1% 51.8% 50.0% -1.8 Page 27

29 Operating expenses (US$million) Change % +34.1% +10.9% % Operating expenses as a percentage of Group revenue 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% +0.6 Other 0.5% 0.2% -0.3 Page 28

30 Operating profit (US$ million) Operating Margins Change vs (percentage points) Branded 21.2% 30.3% 30.9% 30.3% -0.6 Generic Injectables Group 40.0% 18.5% 29.9% 38.6% 14.1% 29.5% 33.6% 17.2% 26.4% 31.7% 19.8% 23.7% Page 29

31 Profits attributable to shareholders All figures US$m PROFIT BEFORE TAX Tax (19.6) (19.5) Effective tax rate 26.0% 30.2% Profit for the year Attributable to: Minority interest Equity holder of the parent Diluted earnings per share (cents) Proposed dividend Proposed dividend per share (cents) Page 30

32 Cash flow All figures US$m NET CASH FLOW FROM OPERATING ACTIVITIES Profit before tax and minority interest Adjustments for non-cash items CASH FOW BEFORE WORKING CAPITAL Change in working capital (35.1) (24.1) Income tax paid (19.4) (17.8) Interest received Interest paid (5.0) (5.2) Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Investment in property, plant and equipment (49.7) (23.4) Purchase of intangible assets (2.7) (0.6) Reduction of cash deposits Acquisition of subsidiary (21.6) (0.8) Other Net cash used in investing activities (72.7) (16.4) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of new shares Change in debt (7.7) (14.1) Dividends paid (7.0) (17.8) Other (0.5) (4.9) Net cash (used in)/generated from financing activities (13.6) 77.3 Page 31

33 Expanding production facilities to meet growth plans 7,500 m 2 cephalosporin plant in Portugal completed - Expected to be operational early All cephalosporin lines plus dedicated laboratory, packing and warehousing facilities New production and packaging machines added in the US and Jordan. Manufacturing plant in Algeria completed and fully operational New R&D facility and quality control labs completed in Jordan (US$ million) Capital expenditure Branded Injectables Generic Other Page 32

34 Net working capital Twelve months ending 31 December Stock days Stock days (excl JPI) Debtor days Debtor days (excl JPI) Creditor Days Debtor days (excl JPI) Excluding JPI, using the count back method to calculate debtor days, debtor days were stable at 102 days and 103 days as at Dec 31st 2005 and Dec 31st 2006 respectively (excl JPI) Debtor days (1) Stock days (2) Creditor days (3) (1) Accounts receivables, net as % of revenue multiplied by 365 (2) Inventories as a % of cost of sales multiplied by 365 (3) Trade accounts payable as a % of cost of sales multiplied by 365 Page 33

35 Net cash Twelve months ending 31 December 2006 (US$ million) (32.2) (28.9) (21.9) (36.8) (100) Debt / Equity 18.8 % 19.0 % Net Debt / Equity % -7.1 % Long-Term Borrowing Short-Term Borrowing Investments in Cash Deposits, Cash and Cash Equivalents, and Collateralized cash Hikma s strong balance sheet gives it financial flexibility to grow the business both organically and through acquisitions Page 34

36 Balance sheet All figures US$m Cash, cash equivalent and collateralised cash Trade and other receivables* Other current assets Inventories TOTAL CURRENT ASSETS Intangibles assets Property. Plant and equipment Other long term assets TOTAL LONG TERM ASSETS TOTAL ASSETS Financial debts and current finance lease obligations Trade and other payables Other current liabilities TOTAL CURRENT LIABILITIES Long term financial debts and finance lease obligations Other long term liabilities TOTAL LONG - TERM LIABILITIES MINORITY INTEREST TOTAL SHAREHOLDERS EQUITY TOTAL LIABILITIES AND SHAREHOLDERS EQUITY * Includes trade receivables of $109.3 in 2006 (2005: $72.6 m) Page 35

37 Global investor base 1% Institutional investors by region 35% 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 Page 36