An employee works in the lab of Hikma Pharmaceuticals in Amman, Jordan. The British drugmaker said it has signed a non-binding agreement with Glaxo Group for the potential sale of its entire stake of 91.2 per cent in its listed subsidiary GSK Egypt. Photo: Salah Malkawi / The National
An employee works in the lab of Hikma Pharmaceuticals in Amman, Jordan. The British drugmaker said it has signed a non-binding agreement with Glaxo Group for the potential sale of its entire stake of 91.2 per cent in its listed subsidiary GSK Egypt. Photo: Salah Malkawi / The National
An employee works in the lab of Hikma Pharmaceuticals in Amman, Jordan. The British drugmaker said it has signed a non-binding agreement with Glaxo Group for the potential sale of its entire stake of 91.2 per cent in its listed subsidiary GSK Egypt. Photo: Salah Malkawi / The National
An employee works in the lab of Hikma Pharmaceuticals in Amman, Jordan. The British drugmaker said it has signed a non-binding agreement with Glaxo Group for the potential sale of its entire stake of

Economy

Hikma in talks to buy GlaxoSmithKline’s Egypt subsidiary

Transaction will result in the creation of the biggest drugmaker in the Arab region’s second-largest economy

Deepthi Nair
Deepthi Nair

January 27, 2021

  • English
  • Arabic

Hikma Pharmaceuticals said it plans to buy GlaxoSmithKline’s stake in some Middle East assets, including its pharmaceutical, consumer commercialisation and manufacturing businesses in Egypt and its drugs business in Tunisia. The acquisition is expected to create the largest pharmaceuticals company in Egypt.

The drugmaker, which was founded in Jordan and is listed on the London Stock Exchange, signed a non-binding agreement with Glaxo Group for the potential purchase of its 91.2 per cent stake in its GSK Egypt subisidiary, according to a statement on Tuesday. The transaction will be carried out by submitting a mandatory tender offer for 100 per cent of GSK company's shares.

The deal will also be subject to the completion of due diligence and regulatory approvals. The timeline and the potential value for the acquisition are yet to be disclosed.

The potential acquisition comes amid the worsening Covid-19 pandemic that has put unprecedented pressure on regional and global healthcare systems. The pandemic has led to the rapid acceleration of efforts to find solutions in the areas of diagnostics and pharmaceuticals.

The biggest market for Hikma, which produces and markets a wide range of branded and non-branded generic medicines, is the US, followed by Saudi Arabia and Egypt. Revenue for the first six months of 2020 increased by 8 per cent to $1.1bn and net profit rose 16 per cent to $212 million.

With annual revenues of about 4 billion Egyptian pounds ($254.4m), GSK Egypt has a 5 per cent share of the local pharma production market, according to a research note from investment house Naeem Brokerage. It added that the company sells more than 160 million units per annum in Egypt.

“Hikma Egypt is roughly half the size of GSK with a market share of 2.6 per cent on a year-to-date basis in 2020,” the note said.

The transaction, if successful, will create the biggest pharma producer in Egypt with a combined market share of close to 7.5 per cent in terms of sales value. This will make it larger than Novartis (with a market share of 6.7 per cent) and Sanofi (5.3 per cent).

Naeem Holdings' analysts estimated that GSK’s Egyptian operations, excluding its Tunisia business, could be valued at between $600m to $650m.

Mobile phone packages comparison
While you're here
MATCH INFO

Tottenham Hotspur 0 Everton 1 (Calvert-Lewin 55')

Man of the Match Allan (Everton)

THE SPECS

Engine: 4.0L twin-turbo V8

Gearbox: eight-speed automatic

Power: 571hp at 6,000rpm

Torque: 800Nm from 2,000-4,500rpm

Fuel economy, combined: 11.4L/100km

Price, base: from Dh571,000

On sale: this week

UAE currency: the story behind the money in your pockets
The five pillars of Islam

1. Fasting 

2. Prayer 

3. Hajj 

4. Shahada 

5. Zakat 

While you're here
Vidaamuyarchi

Director: Magizh Thirumeni

Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra

Rating: 4/5

 

Who was Alfred Nobel?

The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.

  • In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
  • Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
  • Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
The burning issue

The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.

Part three: an affection for classic cars lives on

Read part two: how climate change drove the race for an alternative 

Read part one: how cars came to the UAE

Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

Living in...

This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.

EconomyMarketsEgyptJordan