Said Darwazah Chief Executive Officer
211 highlights Strong Group performance in a challenging year 95 9 MSI PROMOPHARM $11.2 m $918.m 85 8 75 BRANDED + 9.6% $37.9 m INJECTABLES + 23.3% $36.7 m GENERICS - 11.3% $19.7 m OTHER $.1m $786.6m $12.3 m 7 $73.9m 65 6 55 5 21 Group Revenue Branded Injectables Generics Others 211 Organic Revenue MSI Promopharm 211 Group Revenue Page 1
Khalid Nabilsi Chief Financial Officer
Consolidated P&L Strong Group performance in a challenging g year $ million 211 21 Change Revenue 918. 73.9 + 25.6% Gross profit 395.3 357.3 +1.6% Gross margin 43.1% 48.9% - 58 5.8 Operating profit 118.7 135.1-12.1% Adjusted 1 operating profit 145.8 143. +2.% Adjusted operating margin 15.9% 19.6% -3.7 Adjusted 2 net income 1.9 13.1-2.2% Basic EPS (cents) 41.3 51.4-19.7% Adjusted diluted EPS (cents) 51. 52.4-2.6% Dividend per share (cents) 13. 13. - Effective tax rate 11.1% 17.7% - 6.6 Page 3 1 Before the amortisation of intangible assets (excluding software) and exceptional items (including acquisition and integration costs of $16.4 million and an inventory adjustment of $1.8 million) 2 Before the amortisation of intangible assets (excluding software) and exceptional items
Branded Robust growth, despite the Arab Spring disruptions Revenue ($ million) 5 Organic 1 growth of 9.6%, ahead of 7% guidance 45 4 35 3 394.2 + 12.1% growth + 9.6% organic growth 441.9 432.1 Egypt and Tunisia back to normal and recovery beginning in Libya Good growth across other key MENA markets Algeria, Sudan, Jordan, GCC 25 2 Successful completion of strategic acquisition in Morocco 15 1 Strengthened manufacturing capacity and capabilities in Sudan, Algeria, Egypt and Tunisia 5 21 211 Page 4 1 Before the Promopharm acquisition
Branded Relatively stable operating margin despite inflationary pressure in MENA Gross profit ($ million) 24 22 2 18 16 14 12 1 8 6 4 2 + 5.2% 214.1 23.4 21 211 Gross margin 21 211 Change Reported 51.6% 48.4% - 3.2 Adjusted operating profit ($ million) 12 1 8 6 4 2 + 9.3% 15.1 96.2 21 211 Operating margin 21 211 Change Reported 25.% 22.3% - 2.8 Adjusted 1 24.4% 23.8% -.6 Page 5 1 Before the amortisation of intangible assets (excluding software) and exceptional items
Injectables Doubled Injectables sales to $316 million, with strong growth across all markets Injectables revenue by region ($ million) 18 16 14 $162.22 162.2 12.3 MSI MSI 12 1 8 6 4 2 29.9 + 4.1% 41.9 + 24.7% +14.2% 78.2 62.7 64.9 $75.4 Promopharm 74.1 21 211 21 211 21 211 USA Europe MENA Page 6
Injectables Excellent e improvement e in operating margin Gross profit ($ million) Adjusted operating profit ($ million) 5 12 1 + 79.7% 127.6 4 + 19.5% 54.9 36.8 8 6 4 71. + 18.8 % 85. Injectables incl. MSI Injectables ex MSI 3 2 26.2 + 4.3% Injectables incl. MSI Injectables ex MSI 2 1 21 211 21 211 Gross margin 21 211 Change Reported 45.1% 4.4% - 4.7 Operating margin 21 211 Change Reported 15.1% 14.4% -.7 Adjusted 1 16.7% 17.4% +.7 Organic 2 15.1% 17.5% +2.5 25 Page 7 1 Before the amortisation of intangible assets (excluding software) and exceptional items 2 Before the MSI and Promopharm acquisitions
Generics Sales of $155 million, in line with guidance Revenue ($ million) 2 Reported sales declined by 11.3% 18-11.3% Excluding exceptional colchicine sales in 21, 174.5 16 Generics achieved double-digit revenue growth in 154.8 211 14 12 1 Strong volume growth was partially offset by accelerating pricing pressure 8 6 4 2 21 211 Page 8
Generics Margin decline reflects exceptional benefit of colchicine sales in 21 Gross profit ($ million) Adjusted operating profit ($ million) 8 81.8 5 51.3 7-36.2% 6 4-66.6% 5 4 52.2 3 3 2 2 1 1 17.1 21 211 Gross margin 21 211 Change Reported 46.9% 33.7% - 13.1 21 211 Operating margin 21 211 Change Reported 29.3% 11.% - 18.2 Adjusted 1 29.4% 11.1% 1% -18.3 Page 9 1 Before the amortisation of intangible assets (excluding software)
Cash Flow Strong management of working capital Operating cash flow ($ million) 18 Group operating cash flow was $147.5 million, excluding the $21.1 million impact of the working capital financing for the MSI acquisition 16 152.5 14 147.5 21 211 ex MSI 211 incl MSI Change 12 1 8 126.4 Receivable days** 18 18 15 (3) Inventory days 178 159 149 (29) Payable days 73 69 61 (12) Working capital days ** 213 198 193 (2) 6 4 Operating Cash Flow / Sales 2.9% 16.1% 13.8% (7.1) 2 21 * 211 Page 1 * Group operating cash flow in the 21 Annual Report of $144.8 million has been adjusted to $152.5 million to exclude acquisition costs of $7.7 million in 21 and reclassify these within investing activities ** Certain items included within trade receivables in the 21 Annual Report have been reclassified. The calculations of receivable days and working capital days for 21 reflect these reclassifications
Capital expenditure Increased capex to support Branded and Injectables growth Capital expenditure ($ million) 8 Expansion of our manufacturing capacity and capabilities in MENA 7 69. - Algeria, Egypt and Tunisia 6 5 4 3 49.1 68 6.8 7.5 34.8 + 4.5% 15.9 5.8 47.3 Machinery and equipment for our new lyophilisation facility in Portugal Investment in machinery and equipment for our MSI business 2 1-21 211 MENA Europe US Page 11
Balance sheet Solid balance sheet after investments of $325 million in 211 Net debt position at 31 December 211 ($ million) 4 363. 211 21 3 2 Short-term borrowing 156.2 Net debt 421.9 11.1 Net debt/ebitda 2.55x.58x Net debt/equity.54x.14x 1 83.3 84.2-1 Long-term borrowing Cash & cash equivalents -66.3-97.3-2 21 211 Page 12
Summary Positive outlook for 212 Group revenue growth of around 2% Increased investment in R&D to be around 4.5% of Group sales Group finance expense of around $32 million Capital expenditure in the range of $85 million to $9 million Effective tax rate to be around 2%, reflecting the change in geographic sales mix Page 13
MENA REVIEW Said Darwazah Chief Executive Officer
Continuing to deliver strong growth and increase MENA market share Leading pharmaceutical companies in the MENA market Rank Unit sales Vl Value Avg Rx $ Growth Market share 211 (M) $M Price % % MENA PRIVATE MARKET 3,369 9,833 2.92 11.7 SANOFI 1 241 837 3.47 8.1 8.5 GLAXOSMITHKLINE 2 258 747 2.9 9.5 7.6 NOVARTIS 3 174 635 3.65 16.1 6.5 PFIZER 4 87 526 6.1 7.4 5.4 HIKMA PHARMA 5 17 383 3.58 12.4 3.9 MERCK & CO 6 33 279 8.46 9.9 2.8 SPIMACO 7 57 251 4.4 14.9 2.6 ASTRAZENECA 8 27 242 8.96 13.9 2.5 ABBOTT 9 3 217 7.23 8.9 2.2 NOVO NORDISK 1 49 213 4.35 14.3 2.2 Page 15 Source: IMS Healthcare YTD12/211. Private retail sales for 9 top MENA markets (Algeria, Egypt, Jordan, Kuwait, Lebanon, Morocco, Saudi Arabia, Tunisia and UAE). Data excludes tender and injectables sales.
Despite Arab Spring, fundamental MENA growth drivers remain intact In May 211, the In December 211, interim Egyptian Saudi Arabia allocated Morocco announced the In March 211, the Jordanian Government agreed US4.4bn for investment in expansion of healthcare Government announced it to increase the the healthcare sector in assistance to benefit 8.5 had increased its social safety healthcare budget to January 212* million people** package in the 211 budget 11% of total by US$65m* expenditure* 21 YTD growth 3.% 211 YTD growth 25.% 2.% 15.% 1.% 5.%.% -5.% Egypt KSA Algeria Morocco UAE Lebanon Tunisia Jordan Kuwait MENA Page 16 Source: IMS Healthcare YTD12/211 and YTD 12/21. * Business Monitor International ** Epsicom Business Intelligence
Investment in facilities and people strengthens our MENA operations Morocco Total sales reps by country at December 211 Acquired local manufacturing facility Added 137 sales reps Added 22 products* Algeria Completed and inaugurated a new penicillin facility Tunisia Completed facilities upgrades to increase capacity and efficiency i Morocco 137 Tunisia 56 Algeria 186 Libya 28 Lebanon Jordan 81 261 Egypt 44 Sudan 75 Syria 5 Iraq 42 Saudi Arabia 253 Yemen 4 Kuwait 8 Bahrain 7 & Qatar 7 UAE 5 Oman 9 Egypt Increased manufacturing capacity by 2% Sudan Acquired local manufacturing facility Added 48 products** Jordan Begun expansion of chemical facility Invested over $215 million in acquisitions and capex in MENA in 211 Page 17 * 192 of which are new products to Hikma ** 17 of which are new products to Hikma
Our robust business model limited the Arab Spring impact 211 revenue growth in Egypt, Tunisia and Libya Egypt and Tunisia benefitted from: 12.1% 1% 21 211 - Local manufacturing - Local management and sales teams - Experience of operating in politically unstable markets - Commitment to our employees (3.3%) (33.2%) Strength of our local team enabled swift re- entry into Libya Egypt Tunisia* Libya Page 18 Source: Hikma Branded and Injectables sales in 21 and 211 * Sales in 21 are proforma sales to include the full year effect of Ibn Al Baytar which was consolidated from April 21 on a reported basis
Growth in MENA Injectables will be driven by new product launches Targeted Injectables launches in key MENA markets, 212-216* 25 2 2 15 1 12 1 11 11 5 6 Algeria Egypt GCC Iraq Jordan KSA Page 19 * Refers to the launch of new molecules in new markets, not including any additional launches of different dosage forms and strengths
Product portfolio development will be key growth driver in MENA Optimising product portfolio Focus on maximising sales of high value, high margin products Cut tail products New product launches More aggressive focus on the registration and launch of new products Identified 4 strategic molecules for fast track programme In-licensed partnerships Focus on building pipeline of products from existing in-license partners Develop new relationships and at different stages in the development process Unimark Leverage our investment in Unimark to supplement our in-house R&D activities Page 2
Successfully integrating Promopharm in Morocco 4th largest MENA market 8.7% growth in 211 Hikma people in place in Morocco supporting integration and business development opportunities Expected to growsales team from 137 to 2 by the end of 213 Begun work to register 2 strategic Hikma products in Morocco launch around 214 Potential MENA licensing opportunities Page 21
USA REVIEW
Injectables will be the key driver of future growth in the US US generics market value Product segment 211 Sales (value) 211 growth (%) No. of players (sales greater than $1 million) Orals $3.31bn +5.7 38 Injectables $7.9bn +53.25 14 Others $6.73bn +22.9% Total US Generics market $44.13bn +13.8% 48 Page 23 Source: IMS Health, National Sales Perspectives, YTD December 211
Developing an increasingly strong position in the US injectables market Top US generics injectables suppliers (million eaches) 6, 5, 41.2% 4, 3, 2, 17.3% 14.5% 1, 6.6% 4.2% 3.8% 3.4% 2.4% 1.4%.9%.9%.8% Page 24 Source : IMS Health MAT 12/211
Swift integration of the MSI business is delivering sales growth and increased profitability Headcount (FTE) Production units (millions) 1 8 6 4 2 May-11-11.5% Headcount has been reduced by c.12% + 9.3 % Increased monthly production driven by restructuring of manufacturing processes and reorganisation of facilities Dec-11 May-11 Dec-11 Units produced per labour hour + 33. % Production cost per unit has significantly reduced as a result of headcount reductions and process efficiency improvements May-11 Dec-11 Page 25
Hikma s underlying US Injectables business is performing well US Injectables Total products marketed 211 US Injectables revenue excluding MSI 25 CNS 2 2 21 Anti-infectives 15 Others, 16% Cardiovascular 13 Cardiovascular, CNS, 47% 17% Others 1 4 9 Anti-infectives, 2% 5 3 26 27 28 29 21 211 Page 26
Building a differentiated product pipeline to drive growth US Injectables product pipeline 25 2 21 15 15 16 1 1 5 Pipeline ANDAs Dormant ANDAs R&D partnerships & differentiated products Products under- development Page 27
Increased scale of our global Injectables business is driving growth in Europe and MENA tender sales 211 Europe Injectables revenue ($ million) 9 Highly productive and efficient European facilities remain a key manufacturing hub 8 7 6 62.7 + 24.7 % 78.2 - Portuguese facilities produce for US, Europe and MENA - New lyophilisation plant inaugurated in October 211 5 4 3 Increased high value contract manufacturing opportunities in Europe - Benefiting from high quality reputation and track record of delivery 2 1 Increased scale is driving greater success in European and MENA tenders 21 211 Page 28
Maintained market position in US oral generics market US generic oral market Orals 29 ( s) 21 ( s) 211( s) Total prescriptions written 2,49,483 2,576,24 2,76,71 Market growth +7.2% +6.9% +5.7% Hikma (West-Ward) Ward) Total prescriptions written 33,77 44,23 53,261 Growth +37.7% +3.9% +2.49% Total prescriptions written (excl. colchicine) 31,254 4,945 52,779 Growth (excl. colchicine) +32.5% +31.% +29% Hikma (West-Ward) rank 17 13 13 Hikma (West-Ward) market share 1.4% 1.7% 1.95% Page 29 Source: IMS Health YTD December 211. Number of prescriptions filled in the US generics market for oral pharmaceuticals.
Short term focus on leveraging our MENA facilities. R&D investment driving future growth Percentage of Generics sales produced in MENA* US Generics product pipeline 3.% 25.% 5% 25.1% 21.2% 26.8% 3 25 22 26 2.% 2 15.% 15 1.% 7.2% 9.4% 1 5.%.% 27 28 29 21 211 5 1 Unimark** 2 R&D partnerships and differentiated products Pipeline ANDAs Products underdevelopment Page 3 * Oral generic products produced at our FDA approved facilities in Jordan and Saudi Arabia and sold in the US. Sales figures exclude colchicine ** Unimark brings a portfolio of potential ANDAs. We made 1 product submission in 211. We will begin the process for selecting additional submissions in 212.
CONCLUSION
Conclusion Group revenues ($ million) Acquired Baxter s Multi Source Injectables (US) in May 211 Acquired minority stake in Unimark (India) and Haosun (China) Acquired 94.1% of Promopharm in Morocco Acquired Elie Pharmaceuticals in Sudan Inauguration of Dar Al Arabia in Algeria HIKMA established in Jordan. Licenses from Fujisawa Japan Acquired Ibn Al Baytar/ Medicef In Tunisia Acquired Al Dar Al Arabia in Algeria Began manufacturing operations in Trust Pharma Algeria. Acquisition of the 52.5% of JPI not previously owned dby Hikma West-ward (US) acquired Hikma Farmaceutica (Portugal) established Started operations at Jazeera Pharmaceutical Industries (JPI) in Saudi Arabia) 1 2 1 2 2 3 5 6 9 1 16 23 35 63 57 54 51 Acquired Ribosepharm and Thymoorgan (Germany) in H1 27. Acquired Alkan (Egypt) and APM (Jordan) in H2 27. Became public company listed on LSE. Acquired Hikma Italy. Hikma Pharma (Holding Co) established in Jersey. Acquired majority interest in clinical pharma research lab (IPRC) 67 138 9 99 15 76 262 188 212 317 449 581 637 731 918 197 78 198 8 198 81 198 82 198 83 198 84 198 85 198 86 198 87 198 88 198 89 199 9 199 91 199 92 199 93 199 94 199 95 199 96 199 97 199 98 199 99 2 2 1 2 2 2 3 2 4 2 5 2 6 2 7 2 8 2 9 21 1 21 11 Page 32
Appendix
Revenue by segment and region 211 revenue by segment 211 revenue by region 48.1% 55.4% 16.9% 34.6%.6% 34.4% 1.% Branded Generics Injectables Other MENA US Europe & ROW Page 34
Injectables sales by region 211 Injectables revenue by region 51.4% 23.9% 24.8% MENA US Europe & ROW Page 35
Cash flow statement $ million 211 21 Profit before tax and minority interest 93.9 121. Adjustments for non-cash items 56.3 38.1 Change in working capital (54.7) 4.7 Income tax paid (2.1) (32.7) Other 33. 21.4 Net cash generated from operating activities 126.4 152.5 Investment in property, plant and equipment (69.) (49.1) Purchase of intangible assets (9.) (4.1) Acquisition of subsidiaries (217.8) (23.) Investment in associated companies (38.6) - Interest received.5.3 Other (9.6) (16.2) Net cash used in investing activities (343.5) (92.1) Issuance of new shares 2.4 3.4 Change in debt 324.1 (26.6) Dividends paid (25.2) (23.1) Interest paid (23.8) (13.8) Other (27.8) (1.1) Net cash generated from financing activities 249.7 (61.2) Page 36
Balance sheet $ million 211 21 Growth $ Growth % Cash 97.3 66.3 31. 46.8% Trade and other receivables 315.9 237.2 78.7 33.2% Other current assets 7.4 8.4-1. >119% Inventories 239.3 182.2 57.1 31.3% Total current assets 659.9 494.1 165.8 33.6% Intangible assets 48.8 269.1 139.7 51.9% Tangible fixed assets 421.44 317.5 13.9 32.7% Investment in associated companies and joint ventures 37.4-37.4 >2% Other long-term assets 48.2 35.1 13.1 37.3% Total long-term assets 915.8 621.7 294.1 47.3% Total assets 1,576 1,116 46 41.2% Financial debts and capital lease obligations 156.2 83.3 72.9 87.5% Trade accounts payable 171.1 127.6 43.5 34.1% Other current liabilities 63.3 57.8 5.5 9.5% Total current liabilities 39.6 268.6 122. 45.4% Long-term financial debts and capital lease obligations 363. 84.2 278.9 >2% Other long-term liabilities 23.4 12.7 1.7 84.3% Total long-term liabilities 386.4 96.9 289.4 >2% Total liabilities 777 366 411 112.4% Minority interest 22.1 6.4 15.7 >2% Total shareholders equity 777 744 33 4.4% Total liabilities and shareholders equity 1,576 1,116 46 41.2% Page 37
Branded Launching new products and developing markets Product launches in 211 Product approvals in 211 45 4 4 45 4 35 3 35 3 31 25 25 2 2 15 1 11 15 1 8 14 8 5 5 MENA & ROW 1 1 Europe 3 5 MENA & ROW Europe New compounds New dosage forms and strengths Total product tlaunches New compounds New dosage forms and strengths Total product approvals Page 38
Branded Pipeline for future growth Product submissions in 211 Pending approvals in 211 8 3 7 6 61 25 218 5 2 4 15 145 3 2 19 1 76 1 7 MENA & ROW Europe 5 MENA & ROW 3 4 Europe 14 New compounds New dosage forms and strengths Total submissions i New compounds New dosage forms and strengths Total pending approvals Page 39
Injectables Launching new products and developing new markets Product launches in 211 Product approvals in 211 3 9 8 25 2 21 7 6 5 15 12 4 33 1 7 7 3 2 22 5 4 3 2 1 1 US MENA & ROW Europe 1 5 6 6 1 1 1 1 US MENA & ROW Europe New compounds New compounds New dosage forms and strengths New dosage forms and strengths Total product tlaunches Total product approvals Page 4
Injectables Pipeline for future growth Product submissions in 211 Pending approvals in 211 1 24 9 22 8 2 7 6 18 16 14 144 5 45 12 4 1 3 2 1 8 15 15 5 26 8 7 3 8 6 4 2 21 36 36 39 61 59 19 12 US MENA & ROW Europe US MENA & ROW Europe New compounds New dosage forms and strengths Total submissions i New compounds New dosage forms and strengths Total pending approvals Page 41
Generics Launching new products 1 Product launches in 211 Product approvals in 211 14 14 14 8 12 6 5 5 1 8 4 6 5 2 2 4 2 US US New compounds New compounds New dosage forms and strengths Total product tlaunches New dosage forms and strength Total product approvals Page 42
Generics Pipeline for future growth Product submissions in 211 Pending approvals in 211 1 4 8 7 7 35 3 6 25 2 22 22 22 4 3 15 2 1 5 US US New compounds New dosage forms and strengths Total submissions i New compounds New dosage forms and strengths Total pending approvals Page 43