Shares of Hikma plunge after lowering guidance on generics

First half revenues flat at $895 million

Hikma registered double-digit growth in the branded segment from Saudi Arabia and Egypt, its largest markets. Salah Malkawi / The National

Shares of Hikma Pharmaceuticals, Jordan's largest drug-maker, fell more than 8 per cent yesterday after the company issued a warning that growth in its generic medicine business this year would be crimped by tough market conditions.

Hikma's first half revenues were flat, up just 1 per cent year-on-year at US$895 million, coming in below analyst estimates.

The London-listed company lowered its annual forecast for its generics business for a second time, saying it expected sales of around $620m, compared with an initial target of $800m. It also cut its full year sales guidance to $2bn, at the lower end of a previous forecast.

"The group has delivered a resilient performance in the first half of 2017 in an increasingly challenging environment," said Said Darwazah, chairman and chief executive officer of Hikma.

"In the US, where competition is increasing and pricing pressure is intensifying, sales in our injectables business were resilient and we have maintained strong profitability," said Mr Darwazah, adding "tougher market conditions did, however, continue to limit growth" in the company's generics business.

Hikma stocks were hit hard in trading yesterday, falling more than 8 per cent, before regaining ground in the late afternoon.

The company suffered a blow in May, when the US's Food and Drug Administration turned down its application to produce a generic version of GlaxoSmithKline's successful Advair drug, used to treat asthma.

Separately, the company said it had reached an agreement with Japan's Takeda Pharmaceutical Company to expand its existing licensing and distribution agreement with the company. The deal will see Hikma take up the rights to register, manufacture, market and distribute three of Takeda product families in 17 Middle East and North Africa markets.

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Those four pharmaceuticals are Alogliptin, an anti-diabetic, Azilsartan, an anti-hypertensive, and Lornoxicam, an anti-inflammatory. The agreement however does not include the Egyptian market for Alogliptin.

Hikma also has the exclusive rights to manufacture Dexlansoprozole, a gastric acid secretion inhibitor, in the Middle East and North Africa region with the exception of Saudi Arabia, UAE and Egypt. The company already has an existing Lornoxicam licensing agreement for Saudi Arabia and Jordan but the new pact will allow it to expand beyond those countries in the Mideast.

"Our large sales and marketing teams, with particular expertise in promoting cardiovascular and diabetes treatments, are well positioned to drive strong demand for Takeda's products," said Mazen Darwazah, Hikma's executive vice chairman and chief executive officer of Middle East and North Africa and Emerging Markets.

"We are pleased to be building on our partnership with Takeda to bring important medicines to the MENA region. By working with global partners we are strengthening our product portfolio in growing therapeutic areas and reinforcing our commitment to improving patient access to quality medicines."