Better health. Within reach. Every day - Hikma Pharmaceuticals PLC 2021 Interim Results
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Better health. Within reach. Every day. Hikma Pharmaceuticals PLC 2021 Interim Results
Disclaimer Save to the extent required by law, neither Hikma Pharmaceuticals PLC nor any of its affiliates (Hikma), nor any other party, is under any duty to update or inform you of any changes to such information. In particular, it should be noted that the financial information relating to Hikma contained in this document may not have been audited and in some cases is based on management information and estimates. No reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness. No representation or warranty, express or implied, is given by or on behalf of Hikma or its directors, officers or employees, advisors or any other person as to the accuracy or completeness of the information or opinions contained in this document and no liability whatsoever is accepted for any such information or opinions or any use which may be made of them. Certain statements in this presentation, are forward-looking statements, including under the US federal securities laws, including the Private Securities Litigation Reform Act of 1995. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Any forward-looking statements made by or on behalf of Hikma speak only as of the date they are made and are based upon the knowledge and information available to the directors on the date of this presentation. Forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Hikma does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak as only of the date of this presentation. By participating in, listening to or accessing this document or by accepting any copy of this document, you agree to be bound by the foregoing limitations. All names, logos, and trademarks are properties of their respective owners and are used for identification purposes only. Hikma Pharmaceuticals PLC 2
Continued strategic progress and achieved strong Group core revenue and profit
growth
Ongoing strategic progress:
Resilient broad portfolio Continued to develop our Expanded our portfolio Continued to engage with the communities
delivering results across pipeline through R&D and with successful new in which we operate and make progress on
three business segments partnerships launches controlling our environmental impact
Strong financial performance:
Core1 Core Core operating Operating Core basic
revenue operating profit profit margin cash flow earnings per share
$1,216m $309m 25.4% $224m 96.5¢
1 Core results are presented to show the underlying performance of the Group, excluding exceptional items and other adjustments
Hikma Pharmaceuticals PLC 3
Injectables
The US market continues to face some volatility
Diagnosis visit gap1
• Patients are being cautious to
140M
enter hospitals
120M The Diagnosis
Visit Gap
• Fewer diagnostic tests were
-978M
100M
Total Gap of Diagnosis
80M Visits in 2020 administered in 2020 and this
60M
(Unique patient-provider diagnosis events)
trend continues in 1H21
Expected diagnosis visits in 2020
-19%
40M
if there was no COVID-19 % of Expected Diagnosis • Missed diagnosis visits have
20M Actual diagnosis visits in 2020
Visits in 2020 a direct effect on prescription
0M
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec utilization, elective procedures
• Vaccine deployment and other
Impact on elective surgeries in the US1
triggers will influence how and
40% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
when the gap will close, or a
20% new baseline is set
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
Hikma Pharmaceuticals PLC 2 IQVIA data, week on week analysis of data, data week ending June 25, 2021 5
Benefitting from broad portfolio and flexible manufacturing
US Injectables revenue by competition and revenue contribution1
119 products
Market leader for 58%
of these products
35%
2 competitors
in our portfolio
Top 3 for 81%
of these products
Sole
player 2% 28%
3-5 competitors
Top 3 for 52%
11
of these products
36% products launched2
>6 competitors
1 Revenue based on 1H 2021 US Injectables revenue, does not include contract manufacturing.
Competitors based on IQVIA MAT May 2021
2 As at July 2021
Hikma Pharmaceuticals PLC 6
Strong growth in MENA and Europe supporting overall Injectable segment
MENA
+12% $77 million
• Broad portfolio and reach across
5 year CAGR 1H21
markets allowing us to fill market gaps
United States • Significant sales force
$318 million • Partner of choice
1H21
+4% Europe
5 year CAGR
+17% $97 million
• Broad portfolio delivering results
5 year CAGR
1H21 • Launching new products across markets
• Strong manufacturing capabilities
positions us as a partner of choice
• Good demand for contract manufacturing
Hikma Pharmaceuticals PLC 7
Generics
Strength and resilience of this business is delivering results
Strong foundation
• Continued to drive demand for
our differentiated portfolio
• Manufacturing flexibility enabling
us to capture market opportunity Expanding portfolio
• Successfully launching new products
• Increasing differentiation by building
specialty portfolio
• Exceptional contribution from new
launches
Driving efficiencies
• Identified portfolio optimization opportunities
• Continued to improve service levels and achieve
manufacturing efficiencies
Hikma Pharmaceuticals PLC 9
ConfidentialStrong commercial capabilities enabling us to capture market share
Gradual increase in icosapent ethyl market share1 Good progress with generic Advair Diskus® launch
100.0%
100.0%
We secured strategic business and are confident
90.0% 94.2%
92.2% 91.0% in our ability to achieve target market share
88.7% 88.4% 88.5% 87.4%
80.0% 85.2%
70.0%
60.0%
1
50.0% 2
Launch has been
40.0%
positive, received
30.0% good feedback
from customers
20.0% 14.6% 3
11.3% 11.6% 11.5% 12.6%
7.8% 9.0%
10.0% 5.8%
0.0%
0.0% Volume growth will appear as customers
Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21
work through incumbent inventory
Hikma Amarin
1IQVIA monthy TRx, June 2021
Hikma Pharmaceuticals PLC 10Leveraging our position as a leading supplier of nasal sprays in the US
Naloxone HCl market overview1
100%
90% 30% 38% Retail • Increasing access to important
80%
medication through retail and
government business
70% • Building Hikma Community Health
as a vehicle for broad education
60%
initiatives
50% • Leveraging our position as leading
supplier of nasal sprays and
40% “There is an urgent need for
commercial expertise to meet
patient needs additional resources to combat
30%
this epidemic, and KLOXXADOTM
• Builds upon Hikma Specialty
20%
experience with branded will provide an important new
Public retail sales tool for those on the front lines
10% 70% 62% Health of this fight.”
0% DESIREE CREVECOEUR-MACPHAIL2
Units Sales
1Hikma internal analysis
2 Ph.D.,
Assistant Professor of Psychology, Chapman University and former Director of Quality
Assurance and Utilization Management for the Los Angeles Centers for Alcohol and Drug Abuse
Hikma Pharmaceuticals PLC 11Branded
Delivering growth in Tier 1 markets and benefitting from strong commercial
capabilities
Selected MENA markets by size2
Tier
1
Saudi Arabia
Iraq
+9% • Benefitted from the flexibility of our
manufacturing and commercial operations
Tier
2 UAE Saudi • Resilient performance from broad portfolio
Arabia
Egypt
Lebanon
Tier 1
Jordan
$31 markets +13% • Some COVID-19 related demand and pull-
forward of demand for certain products
Morocco
billion delivering
market growth
• Good performance from broader portfolio
Sudan
Tunisia Egypt
Algeria
Tier
3 +39% • Improved management of commercial strategy
and stock levels at wholesalers delivering results
Others Algeria
• Captured market opportunities due to competitor
disruptions
• Launched first product from new oncology plant
Tier 4
Hikma Pharmaceuticals PLC 2 Fitch Solutions estimates pharma market sales 2020 13Finance Khalid Nabilsi, Chief Financial Officer
Group financial highlights
1H20 1H21 % change
Core1 revenue $1,132 million $1,216 million +7%
Core gross profit $577 million $616 million +7%
Core operating profit $284 million $309 million +9%
Core EBITDA2 $328 million $358 million +9%
Core net income $205 million $223 million +9%
Basic earnings per share3 87.6 cents 107.4 cents +23%
Core basic earnings per share3 85.3 cents 96.5 cents +13%
Interim dividend per share 16 cents 18 cents +13%
1 Core results are presented to show the underlying performance of the Group, excluding exceptional items and other adjustments. Core results are a non-IFRS measure and a reconciliation to reported IFRS measures is provided in our 2021 interim results press
2 Core EBITDA is earnings before interest, tax, depreciation, amortisation, impairment and exceptional and other items. EBITDA is a non-IFRS measure, see 2021 interim press release for a reconciliation to reported IFRS results. Core EBITDA is calculated for trailing
twelve months ended 30 June 2021
3 In June 2020, Hikma purchased 12.8 million ordinary shares from Boehringer Ingelheim, which are being held in treasury.
Hikma Pharmaceuticals PLC 15Injectables
Core revenue Core operating profit Core revenue
(million) (million)
● Constant currency ● Constant currency
Good growth in MENA, reflecting good demand for our
$600 $250 portfolio and biosimilars
(5)%
$200 Strong growth in Europe, reflecting good demand for
$500 $485 1% $492 $204 contract manufacturing and new launches
(8)% $187
$63 $97 $150
0.2% Launched new products across all markets
$400 $75
$100 Reduced demand for COVID-19 related products in the
$77
US vs strong 1H20
$347
$300 $50
$318 Slowdown in elective surgeries
$0
$200 1H20 1H21 Core operating profit
Less favourable product mix in the US
$100
Operating margin
1H21 Negative foreign exchange movements in MENA
constant
1H20 1H21 Change currency Change
$0
1H20 1H21 Reported 39.6% 35.6% (4.0)p 37.4% (2.2)p
US MENA Europe Core 42.1% 38.0% (4.1)p 39.9% (2.2)p
Hikma Pharmaceuticals PLC 16Generics
Core revenue Core operating profit Core revenue
(million) (million)
$120
Good demand for differentiated products
$400 8% $100 Strong contribution from new launches
$400 39% 100
$369 $80 Increased competition on certain products
$60
72
$300
$40
Core operating profit
$20
$200 Improved product mix driven by new launches
$0
1H20 1H21 Lower operating expenses due to timing of R&D
spend
$100
Operating margin
1H20 1H21 Change
$0 Reported 27.6% 33.5% 5.9pp
1H20 1H21
Core 19.5% 25.0% 5.5pp
Hikma Pharmaceuticals PLC 17Branded
Core revenue Core operating profit Core revenue
(million) (million)
● Constant currency ● Constant currency
Good growth in Tier 1 and other markets
$350 $80
Benefitting from our local presence in Algeria
17% $319 47%
$300
$60 $64
16% Continued demand in Egypt for COVID-19 related
$275 25% products
$250 $51
$40
Captured opportunities in the private market in
Saudi Arabia
$200
$20
More balanced distribution of revenue across the
$150 year
$0
1H20 1H21 Core operating profit
$100
Improvement in product mix
Operating margin
$50
1H21 Increase in SG&A and foreign exchange losses
constant
1H20 1H21 Change currency Change
$0
1H20 1H21 Reported 16.7% 18.5% 1.8pp 21.7% 5.0pp
Core 18.5% 20.1% 1.6pp 23.2% 4.7pp
Hikma Pharmaceuticals PLC 18Core R&D and capital expenditure
Core R&D Cash capital expenditure
(million) (million)
$70 $80
$66 $65
$60
$62
$59 $60
$50
US $26
$40
$38
$40
$30 $29
MENA
$20
$20 $22
$10
Europe
$6 $10
$0 $0
1H20 1H21 1H20 1H21
● Invested 5% of Group core revenue in core R&D ● Upgrading, expanding packaging and adding new technologies in US
● The slight decreased reflects timing of spend. Expect higher ● Strengthening and expanding manufacturing and warehousing
investment in the second half of the year capabilities in MENA
● Expanding and strengthening capabilities in Europe
Hikma Pharmaceuticals PLC 19Cash flow and balance sheet
Debt and leverage
(millions)
860 932 932
777
Operating cash flow
637
685 Jun-20 Jun-21
1.4x 1.2x Operating cash flow 292 224
0.7x Operating cash flow/core
0.9x 26% 18%
0.9x revenue
697 0.4x
546 605 606
361
242
2016 2017 2018 2019 2020 1H21
Net debt Total debt Net debt/core EBITDA
Hikma Pharmaceuticals PLC 20Raised 2021 guidance
Injectables Generics Branded
● Revenue: ● Revenue: ● Revenue growth in constant
mid-single digits $810 million to $830 million currency:
● Core operating margin: ● Core operating margin: mid-single digits
37% to 38% 22% to 24%
Net finance expense Capital expenditure Tax
● Net finance expense: ● Capital expenditure: ● Core effective tax rate:
c.$50 million $140 million to $160 million 22% to 23%
Hikma Pharmaceuticals PLC 21Hikma is well positioned to deliver sustainable growth
Three global Diversified
Businesses revenue stream
Strategic financial Manufacturing sites with close
flexibility proximity to key markets
Little product Lifelong commitment
concentration to quality
Hikma Pharmaceuticals PLC 23Appendix
1H21 exceptional items and other adjustments
Bridge between 1H21 core and reported operating profit Bridge between 1H21 core and reported net income
(million) (million)
$17 million $25 million
$326
$309 $17 $9 248
$29 $46 $223 $17
Core operating Intangible Impairment Reported Amortisation and Unwinding and
Core net Tax impact on Reported
profit amortisation (other reversal of product operating profit exceptional items remeasurement
income exceptional net income
than software) related intangibles included in of contingent items
operating profit consideration
and other
financial liability
(net)
Hikma Pharmaceuticals PLC 25
Confidential2021 expected exceptional items and other adjustments
Bridge between 2021 core and reported operating profit Bridge between 2021 core and reported net income
(million) (million)
$(14) million $5 million
$1
$60 $46 $14 $21
Core Intangible Impairment Reported Core net Amortisation and Remeasurement Tax impact on Reported
operating amortisation reversal of operating income exceptional of contingent exceptional net income
profit (other than product related profit items included in consideration, items
software) Intangibles operating profit financial liability
and asset (net)
These figures are based on estimates and are subject to change These figures are based on estimates and are subject to change
Graphs are not to scale Graphs are not to scale
Hikma Pharmaceuticals PLC 26
ConfidentialGroup core revenue by segment and region
1H21 Group core revenue by segment 1H21 Group core revenue by region
US
Injectables 59%
41% Generics
33%
Other MENA
EU & ROW
Branded 0% 33% 8%
26%
Hikma Pharmaceuticals PLC 27
ConfidentialCore finance expense
1H21 core finance expense
(million)
$30
$25
$25
Other bank charges, including
5 commissions and factoring
$20
$15 Effective interest rate:
12 3.77%
Interest on loans
$10
Effective interest rate:
$5
8 Interest and fees on 4.41%
(including commitment and amortised upfront fees)
Eurobond ($500m)
$0
1H21 .
Hikma Pharmaceuticals PLC 28
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