Hikma Pharmaceuticals announced it was revising its full year expectations after experiencing challenging conditions in the US generics market, according to a trading update. The news saw its share price drop by 8%.
The company said that its injectables and branded businesses were delivering a good performance this year and for the Group overall, it continues to expect full year revenue to be around $2.0bn in constant currency in 2017.
In a statement it said: “We remain committed to driving value from our marketed products, bringing new products to market, increasing efficiencies and delivering cost savings. Our strong cash flow and balance sheet are providing a solid foundation for the Group and will support continued investment across each of our businesses to ensure we can deliver long- term, sustainable growth."
The global Injectables business offset the impact of increased competition on a number of products. For the full year in 2017, Hikma continues to expect global Injectables revenue to be around $775m, with a very strong core operating margin of around 39%.
It added that whilst this reflects the resilient performance of the business this year, it expects competition to intensify in 2018 and margins to return to more normalised levels.
The company said that as a result of greater than expected price and volume erosion, it expects Generics revenue to be around $600m for the full year and core operating margin to be in the low single-digits. It also expects these market conditions to persist in 2018 and are actively pursuing new commercial opportunities and focusing on the execution of its pipeline to help offset continuing price erosion across the industry.
Hikma also announced that it was in dispute with the Food and Drug Administration (FDA) over plans to launch a generic copy of GlaxoSmithKline’s popular lung drug Advair in the US. The dispute between the Jordan-based firm, its partner Vectura and the US FDA delays any eventual approval of the generic version of the drug.
The company said that the performance of its Branded business has been steadily improving in the second half and sales are expected accelerate through the remainder of the year as a result of seasonality and new product launches.
The trading update said: “We are reiterating our expectation for Branded revenue growth in the mid-single digits in constant currency in 2017. On a reported basis, we continue to expect revenue and core operating profit to be broadly in line with 2016. As previously guided, this reflects an adverse currency impact, primarily due to the devaluation of the Egyptian pound against the US dollar.”