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Hikma Pharmaceuticals eyes aggressive regional expansion

Friday, Apr 06, 2012

Gulf News

Dubai Hikma Pharmaceuticals, the London and Nasdaq Dubai-listed pharmaceutical group with a strong presence in the Middle East and North Africa (Mena) region, has plans to expand in the region through more acquisitions this year, Khalid Nabilsi, chief financial officer, told Gulf News in a recent interview.

The company is looking at opportunities in large regional markets such as Iraq, Turkey and North Africa. Nabilsi said while Turkey is a big market, Africa is a relatively unexplored market with huge potential.

The company has sales in more than 40 countries across Europe, the Mena region and the United States. However, nearly 50 per cent of its sales come from the Mena region.

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Despite the Arab Spring, the company said it reported robust sales growth in the Middle East and North Africa in countries such as Algeria, Sudan and Jordan and GCC states. Hikma made significant investments in the region in 2011, expanding its manufacturing operations.

The company established a presence in Morocco, the fourth largest Mena market, through the acquisition of 94.1 per cent of Promopharm S.A.

In Sudan, Hikma added a manufacturing plant and a portfolio of locally registered products. Through strategic investments in India and China, the group acquired minority stakes in Unimark Remedies Limited and in Hubei Haosun Pharmaceutical Co Ltd last year.

Across its other Mena markets and particularly in Egypt, Tunisia and Algeria, amid unrest, Hikma invested more than $50 million (Dh183.6 million) in upgrading and expanding its manufacturing facilities. Outside the Mena region, Hikma inaugurated a new facility at the injectables manufacturing site in Portugal.

Injectables business

In 2011 the company also completed the acquisition of Baxter’s Multisource Injectables business, doubling the size of Hikma’s global injectables business. Hikma aims to bring the MSI injectable products into the European and Mena markets in the coming years.

Last year, the company spent more than $320 million in acquisitions and expansion largely funded through debt. This year it has plans to go ahead with similar investments, with bank funding.

“There are huge opportunities in the Mena region for expansion. In the current market environment, bank funding is cheap and our bankers are with us in our plans,” Nabilsi said.

The company, with a net debt of $422 million, is leveraged 2.5 times its net debt to gross earnings and has a net debt to equity ratio of 54 per cent.

While short-term borrowings were $156 million at the end of last year, long-term borrowings were $363 million.

Hikma has a strong presence in the region in the branded generics, injectables and generic segments of the pharma business.

The company launched 43 branded products across all markets, including six new compounds and 12 new dosage forms and strengths.

The injectables business launched 43 products in various dosage forms across all Hikma markets, with 21 launches in the Mena region covering a wide range of therapeutic categories.

Despite a small dip in its net profits last year, the company expects strong bottom-line growth this year. While the company’s revenue grew 25 per cent to $918 million last year, its net profits dipped 2.2 per cent to $100.9 million.

“Some of our key regional markets were impacted by the political turmoil. But the rapid and effective response to the events of the Arab Spring by local management and the dedication and perseverance of employees enabled Hikma to quickly stabilise Mena operations.”

Nabilsi is expecting a strong performance in 2012 with more than 20 per cent revenue growth — reflecting the investments it made across the group in 2011 and the excellent growth opportunities he foresees for its businesses, particularly in the Mena region and in the global injectables market.

By Babu Das Augustine?Deputy Business Editor

© Gulf News 2012. All rights reserved.

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