Drug maker Hikma eyes up more acquisitions

Hikma last month agreed to acquire the US generic drugs business of Boehringer Ingelheim for $2.65 billion as it looks to bolster its US and generics market share.

Hikma has 27 manufacturing facilities in 11 countries, and its products are sold in over 50 countries worldwide. Ali Jarekji / Reuters

The Jordanian drug maker Hikma Pharmaceuticals has an appetite for more acquisitions as it seeks to double its revenue every four years, a company executive said.

“We are looking for opportunities for acquisitions in this part of the world and other parts,” said Mazen Darwazah, president and chief executive of Mena and emerging markets.

“Our leverage is still in a range where we can do more acquisitions, and we still have good scope to do other smaller acquisitions as we go forward.”

London-listed Hikma last month agreed to acquire the US generic drugs business of Boehringer Ingelheim for US$2.65 billion as it looks to bolster its US and generics market share.

Last year, Hikma bought the assets of Bedford Laboratories, an Ohio-based maker of injectable drugs, for $300 million, also from Boehringer Ingelheim.

The Amman-based company posted a 21 per cent rise in pretax profit to $362m last year, even as sales from its generics division plummeted. Overall revenue grew 9 per cent to $1.48bn.

Nevertheless, the group, warned that its revenue growth forecast of 6 per cent for this year at constant exchange rates could be affected by about 3 per cent or $45m if current forex trends persist, such as the euro’s weakness against the US dollar. But the firm still has big ambitions.

“We will develop and aspire to double in size every four years,” said Mr Darwazah. Since 2005, the company’s revenue has grown at a compound annual growth rate of 21 per cent as acquisitions helped to boost profitability.

Hikma also is venturing into new territories and returning to markets where it once operated in, but left due to a lack of ­governance.

“We believe that now is a good time to go to China and Sub-Saharan Africa because of the need for health care and the establishment of strong governance controls,” said Mr Darwazah.

The company has also set sights on the Commonwealth of Independent States countries for growth. It has identified land for operations in Kazakhstan. Hikma started off in 1978 with the manufacturing of branded generic pharmaceutical products for the Middle East market. In the 1990s it started to expand outside Mena.

In 2005, it listed on the London Stock Exchange, and started an aggressive acquisitions strategy, snapping up assets from US to Egypt.

The US is increasingly contributing more of group revenues at 51 per cent last year, up from 46 per cent a year earlier. The Mena market contributed 43 per cent of revenues, down from 47 per cent in 2013.

The injectable drugs business accounted for 48 per cent of total group revenues last year, up from 39 per cent, while the generics division accounted for 15 per cent of the revenues, down from 20 per cent. The rest was held by branded medicines.

“We are scanning opportunities in different asset classes in both orals, injectables, in oncology business, in the biosimilar [large molecule generics] business,” said Mr Darwazah.

Hikma has 27 manufacturing facilities in 11 countries, and its products are sold in over 50 countries worldwide.

“We are looking at opportunities for growth in the Mena region,” said Mr Darwazah. “Governments are spending more, we have population growth and we have many therapeutic classes not covered in the Mena region.”

The Arabian Gulf healthcare market is projected to grow at an annual rate of 12 per cent to $69.4bn by 2018 from $39.4bn in 2013, according to Alpen Capital, a Dubai-based financial services advisory firm.

“We are witnessing a huge number of patients coming in with diabetes and obesity in the Mena region,” said Mr ­Darwazah.

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