Jordanian drugs company Hikma Pharmaceuticals (HIK) has upgraded its revenue growth forecasts for the third time this year, now standing at 20% versus the original 10% expectation. The market initially liked the news as the shares advanced 2%, yet by early afternoon they trade up a mere penny at £10.91.


The upgrade follows a spike in growth during the six months to July, despite a squeeze on health budgets in the US and Europe. This included a 20% increase in turnover to $638.3 million thanks to sales of its generic antibiotic doxycycline, which prevents and treats malaria. Its taxable profits almost doubled (92.9%) to $111.6 million.


Cash generation was also strong, up $88.9 million to $136 million, which funded a 7p per share interim dividend, up from the 6p per share that the board approved at the same point in 2012.

Web - Hikma - 21 August


The FTSE 250 constituent develops, manufactures and markets branded, generic and in-licensed products through its branded MENA, global injectables and US generics operations. Read our interview with the company from May.


Branded revenues grew 3.2% in the first half and Hikma believes it is on track for an 11% full-year improvement, while sales in its generics operations jumped 136.6% to $132 million year-on-year, raising its sales expectations for the business to $230 million.


The board’s decision not to sell its injectables business earlier this year following several unsolicited approaches looks like a good call. In the first half of 2013, sales were 9.5% higher than during the same period a year earlier, with an adjusted operating margin of 28.6%. The business was driven by strong performances in the US and Europe and management believe it is on track to deliver low double-digit revenue growth for the full year.


There could be more to come. Hikma launched 63 products in the first half of the year and secured approval for 65 products. Management says the pipeline remains strong.

Issue Date: 21 Aug 2013