Thursday, May 17, 2012


 
   By Sten Stovall 
   Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--Jordan-based Hikma Pharmaceuticals PLC (HIK.LN) Thursday said sales in the Middle East are growing despite ongoing turmoil there, reflecting the group's experience with operating in and exporting to countries ravaged by war, and the ability of local management to operate in difficult markets.

"The Arab Spring has really created a very challenging environment economically. In the non-oil-producing countries we're seeing foreign reserves go down, high inflation and rising demands from labor unions. But we grew our branded business by 28% in the first four months, so we've done extremely well," Said Darwazah, Hikma's chief executive, told Dow Jones Newswires.

The London-listed company, which sells generic and branded drugs in its home markets in the Middle East and North Africa, recently expanded its businesses in the U.S. and Europe. A year ago, Hikma bought U.S. company Baxter International Inc.'s (BAX) injectable generic-drug business, reflecting Darwazah's aim to reduce risk through geographic diversification

"We are seeing very strong growth in our injectables business. This is compensating for the slowdown in the generics business in 2012," Darwazah said in an interview, adding, "Overall, the strength of our diversified business model will again let us grow group revenue by around 20% this year."

Hikma expects its injectables business to grow this year by more than 35% globally. Much of that expansion will come from sales in the U.S., driven by capacity expansion, increased efficiency and strong demand due to shortages of injectable drugs there.

That optimism comes despite Hikma's generics business being hit by continued price competition and steps it has taken to comply with a warning letter from U.S. regulators.

In February, Hikma received a warning letter from the U.S. Food & Drug Administration about operations at its Eatontown oral dosage facility in New Jersey. Hikma said it is taking corrective steps but that they will slow sales of its generic drugs in the first half.

"We haven't had to recall any products as a result of this warning letter but the processes that we've had to put in place before we resume the shipping of products from there will take some time. We hope that the [generics] business will start to grow again in the second half," Darwazah said.

Two of Hikma's largest markets, Algeria and Egypt, delivered excellent growth in the year's first four months, benefiting from increased local production and greater manufacturing capacity, respectively. Strong performances also came from its businesses in Saudi Arabia, Tunisia and Libya, partially offsetting the impact of a slower-than-expected start to the year in Sudan and the effect of changes in its operations in Iraq.

Hikma is also being helped by its limited exposure to Europe and the euro crisis.

"We manufacture in three European countries--in Italy, German and Portugal--but most of what we produce is exported globally and that sort of neutralizes the foreign-exchange element," Darwazah said.

"If the euro falls in value, that's good news for us. And we've still managed to grow in Europe so far this year by single digits."

-By Sten Stovall, Dow Jones Newswires; +44 207 842 9292; sten.stovall@dowjones.com

(END) Dow Jones Newswires

17-05-12 1111GMT