Jordan's Hikma looking to bolster presence in Africa
Reuters, Saturday 13 Oct 2012
Drugmaker says ramping up its presence on the continent is a natural progression after deriving over half its revenues from the Arab world

Jordan's Hikma Pharmaceuticals Plc said it is looking to expand in Africa over the next two to three years, through building its own plant or by making an acquisition of up to $300 million.

The company, which makes and sells branded and generic drugs, said it would be a natural progression to ramp up its presence in the African continent, given that it derives more than half its revenue from the Middle East and North Africa (MENA) region.

"We really want to change from a pure MENA company into an emerging markets company by looking into the rest of Africa and some other markets," Hikma's Chief Executive Said Darwazah told Reuters.

"Within the next two to three years, we should start making some good inroads into the Africa market."

Darwazah was Jordan's Minister of Health from 2003 to 2006.

Hikma, which was founded in Amman in 1978, said it has the ability to spend up to $200 million to $300 million on a single deal but is still to decide if it wants to build its own plant or make an acquisition.

"Half of our facilities have been greenfield operations and half of them acquisitions. There is more of a feeling that we would have to do more greenfield operations," Darwazah told Reuters.

The company said it expected to sustain its first-half performance in the second half of the year.

Hikma, which listed on the London Stock Exchange in 2005, said the bulk of its second-half growth would come from its U.S. injectables business that now accounts for about 60 percent of its overall injectable sales.

Hikma has been benefiting from a drug shortage in the United States as rivals like Hospira Inc are facing stringent regulatory scrutiny due to quality issues.

The majority of Hikma's growth for the six months ended June 30 came from its generic injectables business, which nearly doubled on strong sales in the United States.

Hikma expanded its injectables business through the $112 million acquisition of Baxter's injectables business in 2010.

The company's injectables business specialises in the anti-infectives category, and is growing its presence in the musculoskeletal, cardiovascular and oncological therapeutic areas.

Hikma is also looking at re-engineering its U.S. generic drugs business, after the company received a warning letter from the U.S. Food and Drugs Administration (FDA) about operations at its Eatontown oral dosage facility in New Jersey.

"We want to change the way we do this business. We are trying to move the manufacturing out of the United States and into the MENA FDA-approved facilities that we have there," Darwazah told Reuters.

Sales from its generics division fell 27 per cent for the first half ended 30 June due to continuing price competition and the steps it had taken to comply with the FDA.

Hikma's generics division reported an operating loss of $3.3 million for the six months ended 30 June.

The company expects its generics business, which contributes 10.5 per cent of its overall revenue, to break even for the full year.

Shares in Hikma, which has a market value of about $2.28 billion, have risen about 17 per cent so far this year. They closed at 724.5 pence.