TIDMHIK
RNS Number : 8513U
Hikma Pharmaceuticals Plc
04 August 2022
Hikma's diversified business delivers resilient H1
performance
Strong Injectables and Branded growth helps to offset
challenging environment in Generics
London, 4 August 2022 - Hikma Pharmaceuticals PLC ('Hikma' or
'Group'), the multinational pharmaceutical company, today reports
its interim results for the six months ended 30 June 2022.
Said Darwazah, Executive Chairman and Chief Executive Officer of
Hikma, said:
"Hikma's resilient first half performance is a testament to the
strength of our core underlying business, supported by the breadth
and depth of our portfolio and capabilities. Double digit profit
growth in our Injectables and Branded businesses has helped to
offset a decline in Generics caused by industry-wide competitive
pressures. Our increasingly differentiated portfolio, market
leading positions, unique manufacturing footprint and the strength
of our customer relationships form a strong foundation for further
progress and we are confident in our outlook for the future. We
expect to maintain good momentum in Branded and Injectables and for
Generics to return to growth in 2023."
Group H1 highlights:
Reported results (statutory) Constant currency(2)
$ million H1 2022(1) H1 2021(1) Change change
------------- ----------- -------
Revenue 1,213 1,216 (0)% 1%
Operating profit 239 326 (27)% (26)%
Profit attributable to shareholders 173 248 (30)% (30)%
Cashflow from operating activities 169 224 (25)% -
Basic earnings per share (cents)(3) 76.2 107.4 (29)% (29)%
Interim dividend per share (cents) 19.0 18.0 6% -
------------------------------------- ------------- ----------- ------- ---------------------
Core results(4) (underlying) Constant currency(2)
$ million H1 2022 H1 2021 Change change
------------------------------- ---------- -------- ------- ---------------------
Revenue 1,213 1,216 (0)% 1%
Core operating profit 296 309 (4)% (3)%
Core profit attributable to
shareholders 209 223 (6)% (6)%
Core basic earnings per share
(cents)(3) 92.1 96.5 (5)% (4)%
------------------------------- ---------- -------- ------- ---------------------
Resilient first half performance
-- Group revenue flat - strong performance in Injectables and
Branded offseting impact of weaker pricing in Generics
-- Stable reported gross margin of 50.4%, reflecting positive
product mix
-- Core operating profit down 4% to $296 million reflecting
lower profit in Generics. Reported operating profit down 27%,
primarily reflecting a high comparative in H1 2021 due to an
impairment reversal
-- Good cashflow from operating activities of $169 million while
maintaining healthy inventory to ensure continuity of supply
-- Maintained comfortable leverage with net debt(5) to EBITDA(6)
of 1.7x at 30 June 2022 (31 December 2021 0.6x), having completed
the acquisitions of Custopharm and the Canadian assets of Teligent
and a buyback of $300 million shares during the period
-- Interim dividend of 19 cents per share
Strong performance in Injectables and Branded partially offsets
decline in Generics
-- Global Injectables revenue grew strongly, up 9%, driven by
the US base business, the Custopharm and Teligent acquisitions, and
a good performance in Europe. Injectables core operating profit
increased by 12% and core operating margin expanded to 38.8%
-- Branded achieved good growth in several key markets, with
revenue up 6%. An improved product mix drove growth in core
operating profit of 16% and core operating margin of 21.8%
-- Generics was impacted by the highly competitive environment
in the US and slower than expected ramp up of recent launches,
resulting in an 18% fall in revenue and core operating margin of
17.6%
Strategic progress positions business for future growth
-- Successfullly completed the acquisitions of Custopharm and
Teligent's Canadian assets
-- Expanded our European footprint through entry into the French
injectables market
-- Investing in local injectables manufacturing in MENA to
support growing product portfolio
-- Benefited from strong demand for our oncology products in
Algeria supported by our continued investment in local
manufacturing
-- Strong contribution from chronic medications - driving 80% of
Branded revenue growth in H1
-- Continued investment in commercial capabilities to support
development of growing speciality portfolio and more resilient
growth opportunities in Generics
Outlook for full year 2022
-- Injectables - we continue to expect revenue growth to be in
the mid to high-single digits and core operating margin to be
between 36% to 37%
-- Branded - we now expect revenue to grow in the low-single
digits on a reported basis. On a constant currency basis, we expect
Branded revenue to grow in the mid-single digits. We expect core
operating profit to be more evenly split across the year
-- Generics - we now expect revenue to be in the range of $650
million to $675 million and core operating margin to be between 15%
to 16%
Further information:
A pre-recorded presentation will be available at www.hikma.com
at 07:00 BST. Hikma will also hold a live Q&A conference call
at 10:30am BST, and a recording will be made available on the
Company's website.
To join via conference call please dial:
United Kingdom: 0800 640 6441
United Kingdom (local): 020 3936 2999
All other locations: +44 20 3936 2999
Access code: 155618
For further information please contact Tiina Lugmayer -
tlugmayer@hikma.com .
Hikma (Investors):
Susan Ringdal
EVP, Strategic Planning and Global +44 (0)20 7399 2760/ +44 (0)7776
Affairs 477050
Guy Featherstone +44 (0)20 3892 4389/ +44 (0)7795
Associate Director, Investor Relations 896738
Layan Kalisse +44 (0)20 7399 2788/ +44 (0)7970
Senior Associate, Investor Relations 709912
Teneo (Press):
Charles Armitstead / Camilla Cunningham +44 (0)7703 330269/ +44 (0)7464 982426
About Hikma:
Hikma helps put better health within reach every day for
millions of people around the world. For more than 40 years, we've
been creating high-quality medicines and making them accessible to
the people who need them. Headquartered in the UK, we are a global
company with a local presence across the United States (US), the
Middle East and North Africa (MENA) and Europe, and we use our
unique insight and expertise to transform cutting-edge science into
innovative solutions that transform people's lives. We're committed
to our customers, and the people they care for, and by thinking
creatively and acting practically, we provide them with a broad
range of branded and non-branded generic medicines. Together, our
8,700 colleagues are helping to shape a healthier world that
enriches all our communities. We are a leading licensing partner,
and through our venture capital arm, are helping bring innovative
health technologies to people around the world. For more
information, please visit: www.hikma.com
Hikma Pharmaceuticals PLC (LSE: HIK) (NASDAQ Dubai: HIK) (OTC:
HKMPY) (LEI:549300BNS685UXH4JI75) (rated BBB-/stable S&P and
Ba1/stable Moody's)
STRATEGIC REVIEW
At Hikma, by creating high-quality products and making them
accessible to those who need them, we are helping to shape a
healthier world that enriches all our communities. Our broad and
diversified portfolio, excellent manufacturing footprint and
commitment to quality, coupled with the ever-growing need for
healthcare globally, puts us in a position of strength.
The breadth and diversity of our business is demonstrated by our
world-class Injectables business with state-of-the-art
manufacturing capabilities, a broad, profitable product portfolio
and a market leading position in the US, where we are the second
largest supplier of generic sterile injectables by volume(7) . In
MENA, we are a top-four pharmaceutical company(8) with a strong
brand and extensive local manufacturing facilities in attractive,
growing markets. Our high-quality Generics business is delivering a
solid operating margin despite the current challenging pricing
environment. Continued investment in our portfolio of speciality
products will strengthen and diversify the Generics business to
underpin future growth.
Strong growth in Injectables with expanding growth
opportunities
Our Injectables business delivered strong growth, with revenues
up 9% in the first half of 2022. Organic revenues grew by 5%(9) ,
with further growth coming from the integration of the Custopharm
and Teligent acquisitions during the half.
In the US, we are benefiting from more normalised demand
following the impact of the pandemic, and from new product
launches. Our portfolio now has more than 130 products. We also
continued to leverage the flexibility and quality of our
manufacturing capabilities to address market shortages,
strengthening our customer relationships and reaffirming us as a
supplier of choice.
In Europe and Rest of World (ROW)(10) , we grew revenue from our
own products and contract manufacturing and benefited from a
contribution from the Teligent acquisition in Canada.
We are gradually building our Canadian business, focusing on
establishing relationships with customers and the regulator, Health
Canada, and by introducing new products. We currently market 29
products in Canada, with more in the pipeline. We are already
playing an important role in helping alleviate drug shortages in
the Canadian market by leveraging our US business to import key US
FDA-approved products.
In the MENA region, our Injectables revenues declined slightly
on a reported basis primarily due to weaker sales in Lebanon and
Iraq. This was mostly offset by successful new launches, as well as
good performance of our biosimilar products as we continue to
launch into new markets and grow our market share.
Good performance across several MENA markets is driving further
progress in Branded
Our Branded business continues to benefit from our established
presence in the region, with our 23 manufacturing plants, 2,000
strong experienced salesforce and a broad portfolio of our own and
in-licenced products. Strong revenue growth in the first half was
driven by good performance across most of our markets as we benefit
from an increasingly diversified portfolio of high-value
treatments. Algeria, Morocco and Iraq performed particularly well
in the first half. While we have been impacted by weaker
currencies, particularly in Egypt, our momentum in our underlying
business remains strong, enabling us to grow revenue in both
reported and constant currency.
We are focused on key chronic diseases such as diabetes,
multiple sclerosis and cancer and in the first half c.80% of our
revenue growth came from products in these chronic disease areas.
We are increasing our share in the diabetes market and are now one
of the top ten players(11) in this therapeutic area driven by our
strong performance in Saudi Arabia, Algeria and Iraq. We are also
establishing a stronghold in multiple sclerosis treatment with
growth in sales of our dimethyl fumarate product in Saudi Arabia,
Algeria and Tunisia.
Continued efficiencies helping to partially offset the impact of
a weak pricing environment in Generics
Our Generics business has delivered lower revenue and profit in
the first half due to the intense competitive environment in the US
market, which is driving low-double digit price erosion and
mid-single digit volume erosion. We are also experiencing a slower
than expected ramp up of recent launches as a result of
competition, including for icosapent and generic Advair Diskus(R) .
By focusing on cost management and operating efficiencies, we
delivered a solid operating margin. Over the medium-term, we have a
well-diversified pipeline of new products and we are focused on
improving our product mix with an emphasis on more complex and
specialty products that will improve the resilience of the
business.
A diversified business well positioned for future growth
We invested 6% of revenue in R&D in the first half. We are
committed to ensuring we have a differentiated portfolio that is
fit for the future and are focused on looking for opportunities to
add more differentiated and higher value products through R&D
and business development opportunities. This is key to our growth
plans and we are pleased with the ongoing progress our teams are
making.
Our R&D teams are performing well. We have more than 260(12)
products in the pipeline across our businesses, with a focus on
being in the therapeutic areas where we have the most experience
and see the most value, such as oncology, immunology, CNS and
respiratory. Our pipeline is not reliant on any single product, but
aims to continue to build on our portfolio breadth, which in turns
brings both growth and resilience.
We also continued to enter new partnerships and build on
existing ones, leveraging our strong capabilities to increase
patients' access to high-value products. During the first half, we
strengthened our strategic partnership with Celltrion in MENA,
signing two exclusive agreements for biosimilars - for the
commercialisation of Yuflyma(TM) , the first adalimumab biosimilar
with a high concentration, low-volume and citrate-free formulation,
and for Remsima(R) subcutaneous, the first subcutaneous formulation
of infliximab. These agreements complement and strengthen our
growing biosimilar portfolio in the region.
Investing in capacity and expanding our manufacturing
capabilities is also key to accommodate our growing portfolio. We
consistently invest between 5% and 7% of sales on capital
expenditure. Today, we have 32 manufacturing plants supporting a
broad portfolio of c.700 products. These investments, as well as
our quality culture, differentiate us from our peers and provide us
with the flexibility to capture local market opportunities,
ensuring we maintain a good supply of our medicines to customers
and patients across our markets. In the first half of 2022, we
invested $63 million in capital expenditure across the Group, with
a focus on our Injectables business, where we continue to add
capacity - we installed lyophilisation capabilities in Egypt and
Morocco, progressed with our Algerian plant, which we expect to be
operational in 2024, and added new filling and packaging lines in
the US.
We also continued to grow through entering new markets and
adjacencies. In the first half, we had a good contribution in
Injectables from Canada, following the acquisition of the Canadian
assets of Teligent. We have also entered France and have ambitions
to be a top player in this large European market. We have continued
to make progress with our compounding business in the US, which
supplies compounded sterile medicines to hospitals. We are
increasing state licences as we proceed with the careful rollout of
this important business.
Acting Responsibly
Improving access to more affordable medicine is at the core of
our business; we use our capabilities and global reach to produce
high-quality medicines and make them available to the people who
need them. Our broad product portfolio and pipeline enables this,
and in the first half, we continued to broaden our portfolio and
grow our R&D pipeline, while also investing into new lines and
capabilities at our plants.
But our efforts go beyond our core business. Across our
locations, we are making medicines more accessible to vulnerable
populations through local outreach, medicine donations and disease
awareness initiatives.
We are also pleased with the progress we are making when it
comes to the environment. At the start of the year, we put in place
a carbon emissions reduction target and have various emissions
reduction initiatives in place across the business. We are also
increasingly looking at our Scope 3 emissions, with our procurement
and sustainability teams working closely with our suppliers to
better understand the impact of our supply chain.
Our employees are at the core of our responsibility strategy -
we shape and share an inclusive culture where everyone can thrive
and has access to the tools to be at their best.
We are a business founded on delivering better health and doing
so at the highest levels of quality, while acting responsibly in
all that we do. This not only benefits our communities and
patients, but also helps us recruit the best people to take the
business forward.
Outlook for full year 2022 and beyond
For Injectables, we continue to expect revenue growth to be in
the mid to high-single digits and core operating margin to be
between 36% to 37%. This reflects the strength of our underlying
business, supported by our broad product portfolio and flexible
manufacturing capabilities, as well as the contribution from recent
acquisitions, which will help us more than offset an expected
increase in costs in the second half due to inflation.
Looking forward, we expect Injectables revenue growth to
accelerate over the medium term driven by our investment in
adjacent growth areas such as compounding, our entry into new
markets and our ongoing commercial, R&D and manufacturing
strength.
For Branded, given the strong performance in the first half, we
now expect revenue to grow in the low-single digits on a reported
basis. On a constant currency basis, we expect Branded revenue to
grow in the mid-single digits. We expect core operating profit to
be more evenly split across the year. This is an upgrade from our
previous guidance of mid-single digit revenue growth, excluding the
impact of 2021 hyperinflation.
We are confident that revenue growth in our Branded business
will accelerate over the medium term driven by our expanding
portfolio and focus on chronic medications, combined with our
manufacturing, R&D and commercial expertise in the MENA
region.
For Generics, given the persistent challenges of the US generics
market, we now expect revenue to be in the range of $650 million to
$675 million, down from $710 million to $750 million, and core
operating margin to be between 15% to 16%, down from around
20%.
We expect our Generics business to return to growth in 2023,
driven by new launches including Ryaltris(TM) and generic Xyrem(R)
.
We expect Group core net finance expense to be around $68
million and the core effective tax rate to be in the range of 22%
to 23%.
We expect Group capital expenditure to be in the range of $140
million to $160 million.
Impact of inflation on the Group
Across the Group, the effects of the global inflationary
environment are increasingly impacting our business. While we have
been managing this where we can by keeping a tight control on costs
and looking at operating efficiencies, we expect to see an increase
in costs due to inflation in the second half of the year and this
has been reflected in our guidance.
Board and management changes
During the first half of the year, we have seen continued
evolution of the Board and management team. On 25 April, Dr Pamela
Kirby, Chair of the Remuneration Committee, stepped down from her
role, handing her responsibilities to Nina Henderson.
On 24 June, Siggi Olafsson left his role as CEO of Hikma to
pursue another opportunity and Said Darwazah, Hikma's Executive
Chairman and former CEO, resumed all CEO responsibilities. Siggi
left Hikma on a strong footing, having worked hard to drive
strategic momentum across all our businesses, especially during the
challenging days of the pandemic.
The Board, assisted by an external agency, has commenced a
search for a new CEO, and will take its time in ensuring the right
individual is chosen to take Hikma forward. In the meantime, Said
brings significant experience and a deep knowledge of Hikma,
providing important strategic continuity.
FINANCIAL REVIEW
The financial review set out below summarises the performance of
the Group and our three main business segments: Injectables,
Branded and Generics, for the six months ended 30 June 2022.
Group
$ million Constant
currency
H1 2022 H1 2021 Change change
Revenue 1,213 1,216 (0)% 1%
--------- -------- -------- ----------
Gross profit 611 616 (1)% (1)%
--------- -------- -------- ----------
Core gross profit 623 616 1% 1%
--------- -------- -------- ----------
Core gross margin 51.4% 50.7% 0.7pp 0.1pp
--------- -------- -------- ----------
Operating profit 239 326 (27)% (26)%
--------- -------- -------- ----------
Core operating profit 296 309 (4)% (3)%
--------- -------- -------- ----------
Core operating margin 24.4% 25.4% (1.0)pp (0.3)pp
--------- -------- -------- ----------
EBITDA 346 358 (3)% (3)%
--------- -------- -------- ----------
Group revenue was flat, as a strong performance from our
Injectables and Branded businesses offset a decline in Generics.
Core gross margin increased slightly, with the product mix in our
Injectables and Branded businesses more than compensating for a
decline in Generics gross margin.
Group operating expenses were $372 million (H1 2021: $290
million). Excluding adjustments related to the amortisation of
intangible assets (other than software) of $43 million (H1 2021:
$29 million) and expenditure from other items of $2 million (H1
2021: $46 million income), Group core operating expenses were $327
million (H1 2021: $307 million).
Selling, general and administrative (SG&A) expenses were
$299 million (H1 2021: $261 million). Excluding the amortisation of
intangible assets (other than software) of $43 million, core
SG&A expenses were $256 million (H1 2021: $232 million), with
the increase reflecting enhanced commercial activities in MENA and
our investment in sales and marketing in Generics as we move to a
more specialty product offering.
Core and reported research and development (R&D) expenses
were $69 million (H1 2021: $59 million), representing 6% of revenue
(H1 2021: 5%), in line with our target for annual investment in
R&D.
Other net operating expenditure was $1 million (H1 2021: $30
million net income). Excluding other adjustments(13) , core other
net operating income was $1 million (H1 2021: $16 million net
expense). This reflects income from product disposals and legal
settlements, as well as a lower impact from currency headwinds when
compared to the prior period.
The reductions in core operating profit by 4% and core operating
margin to 24.4% were primarily driven by the decline in Generics,
but partially offset by the performance of Injectables and
Branded.
Group revenue by business segment
$ million H1 2022 H1 2021
Injectables 538 44% 492 41%
------ ---- ------ ----
Branded 339 28% 319 26%
------ ---- ------ ----
Generics 330 27% 400 33%
------ ---- ------ ----
Others 6 1% 5 0%
------ ---- ------ ----
Total 1,213 1,216
------ ---- ------ ----
Group revenue by region
$ million H1 2022 H1 2021
US 691 57% 718 59%
------ ---- ------ ----
MENA 414 34% 396 33%
------ ---- ------ ----
Europe and ROW 108 9% 102 8%
------ ---- ------ ----
Total 1,213 1,216
------ ---- ------ ----
Injectables
$ million Constant
currency
H1 2022 H1 2021 Change change
Revenue 538 492 9% 11%
-------- -------- ------- ----------
Gross profit 297 273 9% 9%
-------- -------- ------- ----------
Core gross profit 309 273 13% 13%
-------- -------- ------- ----------
Core gross margin 57.4% 55.5% 1.9pp 1.1pp
-------- -------- ------- ----------
Operating profit 178 175 2% (1)%
-------- -------- ------- ----------
Core operating profit 209 187 12% 10%
-------- -------- ------- ----------
Core operating margin 38.8% 38.0% 0.8pp (0.5)pp
-------- -------- ------- ----------
Our largest business, Injectables, performed strongly in the
first half, with both our own products and the recent acquisitions
of Custopharm and the Canadian assets of Teligent contributing to
the growth in both revenue and core operating profit. Organic
growth was 5%(14) .
US Injectables revenue was up 14% to $361 million (H1 2021: $318
million), reflecting a good contribution from our broad product
portfolio and recent launches, as well as a contribution from
Custopharm, which we closed in April.
Europe and Rest of World (ROW)(15) Injectables revenue was up 4%
to $101 million (H1 2021: $97 million). In constant currency,
Europe and ROW Injectables revenue increased by 15%, reflecting
good demand across our portfolio of own products, including recent
launches, and a contribution from the Canadian Teligent
acquisition.
In MENA, Injectables revenue was $76 million, down 1% (H1 2021:
$77 million), or up 1% in constant currency. This was primarily due
to weaker sales in Lebanon and Iraq, which was partially offset by
successful new launches, as well as good performance of our
biosimilar products as we continue to launch into new markets and
grow our existing market share. We expect performance to be
weighted towards the second half of the year.
Injectables core gross profit and margin increased due to an
improvement in product mix and the contribution from recent
acquisitions, which more than offset an increase in costs due to
inflation.
The increase in Injectables core operating profit, which
excludes the amortisation of intangible assets (other than
software) and other adjustments(16) , was driven by the
strengthening in gross margin, which more than offset an increase
in operating expenses reflecting higher R&D and sales and
marketing spend as we invest for future growth and enter new
markets and adjacencies such as France, Canada and our new sterile
compounding business in the US.
During H1 2022, the Injectables business launched two products
in the US, seven in MENA and 29 in Europe and ROW. We submitted 28
filings to regulatory authorities across all markets. We further
developed our portfolio through new licensing agreements.
For Injectables, we continue to expect revenue growth to be in
the mid to high-dingle digits and core operating margin to be
between 36% to 37%.
Branded
$ million Constant
currency
H1 2022 H1 2021 Change change
Revenue 339 319 6% 9%
-------- -------- ------- ----------
Gross profit 174 153 14% 15%
-------- -------- ------- ----------
Core gross profit 174 153 14% 15%
-------- -------- ------- ----------
Gross margin 51.3% 48.0% 3.3pp 2.7pp
-------- -------- ------- ----------
Operating profit 70 59 19% 31%
-------- -------- ------- ----------
Core operating profit 74 64 16% 27%
-------- -------- ------- ----------
Core operating margin 21.8% 20.1% 1.7pp 3.2pp
-------- -------- ------- ----------
The Branded business had a strong first half, with revenue up
6%, driven by a good performance across our markets.
Branded core and reported gross profit grew 14% and margin
improved by three percentage points, reflecting an improvement in
product mix, driven by good demand for our growing oncology
portfolio and products used to treat chronic illnesses, such as
diabetes and multiple sclerosis, as well as our successful
promotion of new launches.
Branded core operating profit, which excludes the amortisation
of intangibles (other than software)(17) , grew strongly, primarily
reflecting the improvement in gross profit, which more than offset
the negative impact of foreign exchange related to currency
devaluation in North Africa.
During H1 2022, the Branded business launched 13 products and
submitted 24 filings to regulatory authorities. Revenue from
in-licensed products represented 36% of Branded revenue (H1 2021:
41%).
Given the strong performance in the first half, we now expect
Branded revenue to grow in the low single-digits on a reported
basis. On a constant currency basis, we expect Branded revenue to
grow in the mid-single digits. We expect core operating profit to
be more evenly split across the year.
Generics
$ million H1 2022 H1 2021 Change
Revenue 330 400 (18)%
-------- -------- --------
Gross profit 137 188 (27)%
-------- -------- --------
Core gross profit 137 188 (27)%
-------- -------- --------
Gross margin 41.5% 47.0% (5.5)pp
-------- -------- --------
Operating profit 36 134 (73)%
-------- -------- --------
Core operating profit 58 100 (42)%
-------- -------- --------
Core operating margin 17.6% 25.0% (7.4)pp
-------- -------- --------
The decline in Generics revenue was driven by the challenging
competitive environment in the US. We experienced sustained low
double-digit price and mid-single digit volume erosion through the
first half, and a slower than expected ramp up in recent
launches.
Generics core and reported gross profit decline and margin
reduction to 41.5% was primarily a result of the impact of price
and volume erosion.
Generics core operating profit, which excludes the amortisation
of intangible assets (other than software) and impairment charge
adjustments(18) decreased primarily due to the reduced gross margin
and an increase in sales and marketing costs as we continued to
develop our commercial capabilities as we build our speciality
business.
During H1 2022, we launched two products from our R&D
pipeline.
We are taking considerable steps to lower costs and drive
efficiencies, which will enable us to maintain operating margin in
the high teens and to better position the business for future
growth.
Given the persistent challenges of the US generics market, we
now expect Generics revenue to be in the range of $650 million to
$675 million and core operating margin to be between 15% to
16%.
Other businesses
Other businesses primarily comprise Arab Medical Containers
(AMC), a manufacturer of plastic specialised medicinal sterile
containers and International Pharmaceuticals Research Centre
(IPRC), which conducts bio-equivalency studies. These businesses
contributed revenue of $6 million (H1 2021: $5 million) with an
operating profit of $2 million (H1 2021: $1 million).
Research and development
Our investment in R&D and business development is core to
our strategy and enables us to continue expanding the Group's
product portfolio. During H1 2022, we had 53 new launches and
received 69 approvals. To ensure the continuous development of our
product pipeline, we submitted 54 regulatory filings.
H1 2022 submissions(1) H1 2022 approvals(19) H1 2022 launches(19)
(9)
Injectables 28 41 38
----------------------- ---------------------- ---------------------
US 6 5 2
----------------------- ---------------------- ---------------------
MENA 8 10 7
----------------------- ---------------------- ---------------------
Europe and ROW 14 26 29
----------------------- ---------------------- ---------------------
Generics 2 3 2
----------------------- ---------------------- ---------------------
Branded 24 25 13
----------------------- ---------------------- ---------------------
Total 54 69 53
----------------------- ---------------------- ---------------------
Net finance expense
Constant
currency
H1 2022 H1 2021 Change change
Finance income 13 30 (57)% (57)%
-------- -------- ------- ----------
Finance expense 35 37 (5)% (3)%
-------- -------- ------- ----------
Net finance expense 22 7 214% 228%
-------- -------- ------- ----------
Core finance income 1 1 0% 0%
-------- -------- ------- ----------
Core finance expense 33 25 32% 36%
-------- -------- ------- ----------
Core net finance expense 32 24 33% 38%
-------- -------- ------- ----------
On a reported basis, net finance expense was $22 million (H1
2021: $7 million). This comprised $13 million finance income and
$35 million finance expense. Excluding other adjustments(20) , core
net finance expense was $32 million (H1 2021: $24 million). This
comprised $1 million finance income and $33 million finance
expense. The increase compared with H1 2021 reflects the rising
interest rate environment, combined with increased borrowing due to
the acquisitions of Custopharm and Teligent's Canadian assets.
We now expect core net finance expense to be around $68 million
for the full year.
Profit before tax
Reported profit before tax was $215 million (H1 2021: $319
million). Core profit before tax was $262 million (H1 2021: $285
million), reflecting the overall group performance, combined with
the increase in finance expense due to an increase in net debt and
interest rates.
Tax
The Group incurred a reported tax expense of $41 million (H1
2021: $71 million). Excluding the tax impact of other adjustments,
the Group core tax expense was $52 million in H1 2022 (H1 2021: $62
million). The core effective tax rate for H1 2022 was 19.8% (H1
2021: 21.8%). We continue to expect the Group's core effective tax
rate to be around 22% to 23% for the full year.
Profit attributable to shareholders
Profit attributable to shareholders was $173 million (H1 2021:
$248 million). Excluding the amortisation of intangible assets
(other than software) and other adjustments(21) , core profit
attributable to shareholders decreased by 6% to $209 million (H1
2021: $223 million).
Earnings per share
Constant
currency
H1 2022 H1 2021 Change change
Basic earnings per share (cents) 76.2 107.4 (29)% (29)%
-------- -------- ------- ----------
Core basic earnings per share
(cents) 92.1 96.5 (5)% (5)%
-------- -------- ------- ----------
Diluted earnings per share (cents) 75.9 106.9 (29)% (29)%
-------- -------- ------- ----------
Core diluted earnings per share
(cents) 91.7 96.1 (5)% (4)%
-------- -------- ------- ----------
Weighted average number of Ordinary
Shares for the purposes of basic
earnings ('m) 227 231 (2)% -
-------- -------- ------- ----------
Weighted average number of Ordinary
Shares for the purposes of diluted
earnings ('m) 228 232 (2)% -
-------- -------- ------- ----------
The decrease in earnings per share reflects the performance of
the Group, which was partially offset by the impact of the Group's
buy back of 12.5 million ordinary shares in the first half of
2022.
Dividend
The Board is recommending an interim dividend of 19 cents per
share (approximately 16 pence per share) (H1 2021: 18 cents per
share). The interim dividend will be paid on 19 September 2022 to
eligible shareholders on the register at the close of business on
19 August 2022.
Net cash flow, working capital and net debt
The Group generated operating cash flow of $169 million (H1
2021: $224 million). This reflects the decline in reported
operating profit and an increase in inventories.
Group working capital days were 261 at 30 June 2022. Compared to
the position on 31 December 2021, Group working capital days
increased by 23 days from 238 days, as we replenished inventory to
ensure continuity of supply. When compared to 30 June 2021 working
capital days reduced by five days.
Cash capital expenditure was $63 million (H1 2021: $65 million).
In the US, $23 million was spent upgrading equipment, expanding
packaging areas and adding new technologies at our Cherry Hill,
Dayton and Columbus sites. In MENA, $29 million was spent primarily
on adding new injectables manufacturing capabilities in Morocco and
Algeria. In Europe, we spent $10 million, adding new high speed
liquid filling lines in Portugal as well as upgrading equipment in
Italy and expanding warehousing in Germany. We now expect Group
capital expenditure to be
around $140 million to $160 million in 2022.
The Group's total debt was $1,551 million at 30 June 2022 (31
December 2021: $846 million). Total debt increased primarily to
finance the acquisitions of Custopharm and Teligent's Canadian
assets.
The Group's cash balance was $371 million (31 December 2021:
$426 million). The Group's net debt (excluding co-development and
earnout payments, acquired contingent liabilities and contingent
consideration) was $1,180 million at 30 June 2022 (31 December
2021: $420 million)(22) . We continue to have a very strong balance
sheet with a net debt to EBITDA ratio of 1.7x.
Net assets
Net assets at 30 June 2022 were $2,191 million (31 December
2021: $2,467 million). The reduction is due to the share buyback
carried out during the first half and an increase in our borrowing.
Net current assets increased to $1,134 million (31 December 2021:
$1,078 million).
Responsibility statement
We confirm that to the best of our knowledge:
These interim financial statements for the six months ended 30
June 2022 have been prepared in accordance with: (a) the Disclosure
Guidance and Transparency Rules sourcebook of the UK's Financial
Conduct Authority; and (b) IAS 34 (Interim financial reporting), as
contained in UK-adopted International Financial Reporting Standards
(IFRS), as issued by the International Accounting Standards Board
(IASB). The interim financial statements should be read in
conjunction with the annual consolidated financial statements for
the year ended 31 December 2021.
The interim results announcement includes a fair review of the
information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the enterprise
during that period; and any changes in the related party
transactions described in the last annual report that could do
so.
By order of the Board
Said Darwazah Khalid Nabilsi
Executive Chairman and Chief Executive Chief Financial Officer
Officer 3 August 2022
3 August 2022
The Board
The Board of Directors that served during all or part of the
six-month period to 30 June 2022 and their respective
responsibilities can be found on the Leadership team section of
www.hikma.com .
Cautionary statement
This interim results announcement has been prepared solely to
provide additional information to the shareholders of Hikma and
should not be relied on by any other party or for any other
purpose.
Definitions
We use a number of non-IFRS measures to report and monitor the
performance of our business. Management uses these adjusted numbers
internally to measure our progress and for setting performance
targets. We also present these numbers, alongside our reported
results, to external audiences to help them understand the
underlying performance of our business. Our core numbers may be
calculated differently to other companies.
Adjusted measures are not substitutable for IFRS results and
should not be considered superior to results presented in
accordance with IFRS.
Core results
Reported results represent the Group's overall performance.
However, these results can include one-off or non-cash items which
are excluded when assessing the underlying performance of the
Group. To provide a more complete picture of the Group's
performance to external audiences, we provide, alongside our
reported results, core results, which are a non-IFRS measure. Our
core results exclude the other adjustments set out in Note 5.
Group operating profit H1 2022 H1 2021
$million $million
Core operating profit 296 309
----------- ----------
Unwinding of acquisition related inventory (12) -
step-up
----------- ----------
Intangible assets amortisation other
than software (43) (29)
----------- ----------
Impairment charges/(reversals) of product
related intangibles (2) 46
----------- ----------
Reported operating profit 239 326
----------- ----------
Constant currency
As the majority of our business is conducted in the US, we
present our results in US dollars. For both our Branded and
Injectable businesses, a proportion of their sales are denominated
in a currency other than the US dollar. In order to illustrate the
underlying performance of these businesses, we include information
on our results in constant currency.
Constant currency numbers in H1 2022 represent reported H1 2022
numbers translated using H1 2021 exchange rates, excluding price
increases in the business resulting from the devaluation of
currencies and excluding the impact from hyperinflation accounting.
Lebanon and Sudan are considered hyperinflationary economies,
therefore the spot exchange rate as at 30 June 2022 was used to
translate the results of these operations into US dollars.
EBITDA
EBITDA is earnings before interest, tax, depreciation,
amortisation, impairment charges/reversals and other items.
EBITDA
$ million H1 2022 H1 2021
Reported operating profit 239 326
-------- --------
Depreciation 44 44
-------- --------
Amortisation 49 34
-------- --------
Unwinding of acquisition related 12 -
inventory step-up
-------- --------
Impairment charges/(reversals) 2 (46)
-------- --------
EBITDA 346 358
-------- --------
Working capital days
We believe Group working capital days provides a useful measure
of the Group's working capital management and liquidity. Group
working capital days are calculated as Group receivable days plus
Group inventory days, less Group payable days. Group receivable
days are calculated as Group trade receivables x 365, divided by
trailing 12 months Group revenue. Group inventory days are
calculated as Group inventory x 365 divided by 12 months Group cost
of sales. Group payable days are calculated as Group trade payables
x 365, divided by 12 months Group cost of sales.
Group net debt
We believe Group net debt is a useful measure of the strength of
the Group financial position. Group net debt is calculated as Group
total debt less Group total cash. Group total debt excludes
co-development and earnout payments, acquired contingent
liabilities and contingent consideration.
Group net debt
$ million Jun-22 Dec-21
Short-term financial debts (128) (112)
-------- -------
Short-term lease liabilities (9) (9)
-------- -------
Long-term financial debts (1,340) (651)
-------- -------
Long-term lease liabilities (74) (74)
-------- -------
Total debt (1,551) (846)
-------- -------
Cash 371 426
-------- -------
Net debt (1,180) (420)
-------- -------
Forward looking statements
This announcement contains certain statements which are, or may
be deemed to be, "forward looking statements" which are prospective
in nature with respect to Hikma's expectations and plans, strategy,
management objectives, future developments and performance, costs,
revenues and other trend information. All statements other than
statements of historical fact may be forward-looking statements.
Often, but not always, forward-looking statements can be identified
by the use of forward looking words such as "intends", "believes",
"anticipates", "expects", "estimates", "forecasts", "targets",
"aims", "budget", "scheduled" or words or terms of similar
substance or the negative thereof, as well as variations of such
words and phrases or statements that certain actions, events or
results "may", "could", "should", "would", "might" or "will" be
taken, occur or be achieved.
By their nature, forward looking statements are based on current
expectations and projections about future events and are therefore
subject to assumptions, risks and uncertainties that are beyond
Hikma's ability to control or estimate precisely and which could
cause actual results or events to differ materially from those
expressed or implied by the forward looking statements. Where
included, such statements have been made by or on behalf of Hikma
in good faith based upon the knowledge and information available to
the Directors on the date of this announcement. Accordingly, no
assurance can be given that any particular expectation will be met
and Hikma's shareholders are cautioned not to place undue reliance
on the forward-looking statements. Forward looking statements
contained in this announcement regarding past trends or activities
should not be taken as a representation that such trends or
activities will continue in the future.
Other than in accordance with its legal or regulatory
obligations (including under the Market Abuse Regulation ((EU) No.
596/2014) and the UK Listing Rules and the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority), Hikma does
not undertake to update the forward looking statements contained in
this announcement to reflect any changes in events, conditions or
circumstances on which any such statement is based or to correct
any inaccuracies which may become apparent in such forward looking
statements. Except as expressly provided in this announcement, no
forward looking or other statements have been reviewed by the
auditors of Hikma. All subsequent oral or written forward looking
statements attributable to Hikma or any of its members, directors,
officers or employees or any person acting on their behalf are
expressly qualified in their entirety by the cautionary statement
above. Past share performance cannot be relied on as a guide to
future performance. Nothing in this announcement should be
construed as a profit forecast.
Neither the content of Hikma's website nor any other website
accessible by hyperlinks from Hikma's website are incorporated in,
or form part of, this announcement.
Principal risks and uncertainties
The Group faces risks from a range of sources that could have a
material impact on our financial commitments and ability to trade
in the future. The principal risks are determined via robust
assessment considering our risk context by the Board of Directors
with input from executive management. The principal risks facing
the company have not materially changed in the last six months
although the impacts of global inflationary pressures and supply
chain challenges are being closely monitored. The principal risks
are set out in the 2021 annual report on pages 54 - 63. The Board
recognises that certain risk factors that influence the principal
risks are outside of the control of management. The Board is
satisfied that the principal risks are being managed appropriately
and consistently with the target risk appetite. The set of
principal risks should not be considered as an exhaustive list of
all the risks the Group faces.
Principal risks What does the risk cover?
Industry dynamics The commercial viability of the industry and business
model we operate may change significantly as a result
of political action, economic factors, societal pressures,
regulatory interventions or changes to participants
in the value chain of the industry.
----------------------------------------------------------------
Product pipeline Selecting, developing and registering new products
that meet market needs and are aligned with Hikma's
strategy to provide a continuous source of future growth.
----------------------------------------------------------------
Organisational Developing, maintaining and adapting organisational
development structures, management processes and controls, and
talent pipeline to enable effective delivery by the
business in the face of rapid and constant internal
and external change.
----------------------------------------------------------------
Reputation Building and maintaining trusted and successful partnerships
with our stakeholders relies on developing and sustaining
our reputation as one of our most valuable assets.
----------------------------------------------------------------
Ethics and compliance Maintaining a culture underpinned by ethical decision
making, with appropriate internal controls to ensure
staff and third parties comply with our Code of Conduct,
associated policies and procedures, as well as all
applicable legislation.
----------------------------------------------------------------
Information and Ensuring the integrity, confidentiality, availability
cyber security, and resilience of data, securing information stored
technology and and/or processed internally or externally from cyber
infrastructure and non-cyber threats, maintaining and developing technology
systems that enable business processes, and ensuring
infrastructure supports the organisation effectively.
----------------------------------------------------------------
Legal, regulatory Complying with laws and regulations, and their application.
and intellectual Managing litigation, governmental investigations, sanctions,
property contractual terms and conditions and adapting to their
changes while preserving shareholder value, business
integrity and reputation.
----------------------------------------------------------------
Inorganic growth Identifying, accurately pricing and realising expected
benefits from acquisitions or divestments, licensing,
or other business development activities.
----------------------------------------------------------------
Active pharmaceutical Maintaining availability of supply, quality and competitiveness
ingredient (API) of API purchases and ensuring proper understanding
and third-party and control of third-party risks.
risk management
----------------------------------------------------------------
Crisis response Preparedness, response, continuity and recovery from
and business disruptive events, such as natural catastrophe, economic
continuity turmoil, operational issues, pandemic, political crisis,
and regulatory intervention.
----------------------------------------------------------------
Product quality Maintaining compliance with current Good Practices
and safety for Manufacturing (cGMP), Laboratory (cGLP), Compounding
(cGCP), Distribution (cGDP) and Pharmacovigilance (cGVP)
by staff, and ensuring compliance is maintained by
all relevant third parties involved in these processes.
----------------------------------------------------------------
Financial control Effectively managing income, expenditure, assets and
and reporting liabilities, liquidity, exchange rates, tax uncertainty,
debtor and associated activities, and in reporting
accurately, in a timely manner and in compliance with
statutory requirements and accounting standards.
----------------------------------------------------------------
[1] Throughout this document, H1 2022 refers to the six months
ended 30 June 2022 and H1 2021 refers to the six months ended 30
June 2021
2 Constant currency numbers in H1 2022 represent reported H1
2022 numbers translated using H1 2021 exchange rates, excluding
price increases in the business resulting from the devaluation of
currencies and excluding the impact from hyperinflation accounting.
Lebanon and Sudan are considered hyperinflationary economies,
therefore the spot exchange rates as at 30 June 2022 were used to
translate the results of these operations into US dollars
3 During the first half, Hikma bought back 12.5 million shares
as a result of the $300 million share buyback announced on 24
February 2022, 11 April 2022 and 11 May 2022
(4) Core results throughout the document are presented to show
the underlying performance of the Group, excluding other
adjustments set out in Note 5. Core results are a non-IFRS measure
and a reconciliation to reported IFRS measures is provided on page
16
5 Group net debt is calculated as Group total debt less Group
total cash. Group net debt is a non-IFRS measure. See page 17 for a
reconciliation of Group net debt to reported IFRS figures
6 EBITDA is earnings before interest, tax, depreciation,
amortisation, impairment and other items. EBITDA is a non-IFRS
measure, see page 16 for a reconciliation to reported IFRS results.
For the purposes of the leverage calculation, EBITDA is calculated
for trailing twelve months ended 30 June 2022
7 Source: IQVIA MAT through June 2022, generic injectable
volumes by eaches, excluding branded generics.
8 Source: IQVIA Midas MAT March 2022 for Algeria, Egypt, Jordan,
Kuwait, Lebanon, Morocco, Saudi Arabia, Tunisia, UAE. USD sales
9 This excludes revenue contribution from Custopharm of $15
million and Teligent's Canadian assets of $7 million
1 (0) Following our entry into Canada, we now report revenues
from this market under 'Europe and Rest of World' Injectables
1 (1) IQVIA Midas MAT May 2022 for Algeria, Egypt, Jordan,
Kuwait, Lebanon, Morocco, Saudi Arabia, Tunisia, UAE
1 (2) Pipeline as at 30 June 2022. Includes products for US
Injectables, Generics and Branded top five markets (Algeria, KSA,
Morocco, Jordan and Egypt)
1 (3) In H1 2022, other adjustments comprised a $2 million
impairment of product related intangible assets. In H1 2021
comprised a $46 million impairment reversal of product related
intangibles. Refer to Note 5 for further information
1 (4) This excludes revenue contribution from Custopharm of $15
million and Teligent's Canadian assets of $7 million
1 (5) Following our entry into Canada, we now report revenues
from this market under 'Europe and Rest of World' Injectables
1 (6) In H1 2022, adjustments comprised amortisation of
intangible assets other than software of $19 million and unwinding
of acquisition related inventory step-up of $12 million. In H1
2021, adjustments comprised amortisation of intangible assets other
than software of $12 million. Refer to Note 5 for further
information
1 (7) In H1 2022, amortisation of intangible assets other than
software was $4 million. In H1 2021, amortisation of intangible
assets other than software was $5 million. Refer to Note 5 for
further information
([1]) 8 In H1 2022, adjustment comprised a $2 million impairment
of product related intangibles and amortisation of intangible
assets other than software, of $20 million. In H1 2021, adjustments
comprised a $46 million impairment reversal of product related
intangibles and amortisation of intangible assets other than
software of $12 million. Refer to Note 5 for further
information
1 (9) New products submitted, approved and launched by country
in H1 2022
2 (0) In H1 2022, other adjustments comprised $12 million
related to the remeasurement of contingent consideration and $2
million related to the unwinding of contingent consideration and
other financial liability. In H1 2021, other adjustments comprised
$29 million related to the remeasurement of contingent
consideration and $12 million related to the unwinding and
remeasurement of contingent consideration and other financial
liability. Refer to Note 5 for further information
2 (1) In H1 2022, other adjustments comprised $47 million of
other adjustments included in operating profit and $11 million tax
effect. In H1 2021, other adjustments comprised $34 million of
other adjustments included in operating profit and $9 million tax
effect. Refer to Note 5 for further information
2 (2) Group net debt is a non-IFRS measure that includes long
and short-term financial debts (Note 15), lease liabilities and net
of cash. Group net debt excludes co-development and earnout
payments, acquired contingent liabilities and contingent
consideration (Note 14 and 16). See page 17 for a reconciliation of
Group net debt to reported IFRS results
Independent review report to Hikma Pharmaceuticals PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Hikma Pharmaceuticals PLC's condensed
consolidated interim financial statements (the "interim financial
statements") in the interim results press release of Hikma
Pharmaceuticals PLC for the 6 month period ended 30 June 2022 (the
"period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial
Reporting', International Accounting Standard 34 'Interim Financial
Reporting' as issued by the International Accounting Standards
Board (IASB) and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the condensed consolidated interim balance sheet as at 30 June 2022;
-- the condensed consolidated interim income statement and
condensed consolidated interim statement of comprehensive income
for the period then ended;
-- the condensed consolidated interim cash flow statement for the period then ended;
-- the condensed consolidated interim statement of changes in
equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim results
press release of Hikma Pharmaceuticals PLC have been prepared in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and as issued by the International
Accounting Standards Board (IASB) and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' (ISRE) issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
results press release and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with this ISRE.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim results press release, including the interim
financial statements, is the responsibility of, and has been
approved by the directors. The directors are responsible for
preparing the interim results press release in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. In preparing the interim
results press release, including the interim financial statements,
the directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the interim results press release based on
our review. Our conclusion, including our Conclusions relating to
going concern, is based on procedures that are less extensive than
audit procedures, as described in the Basis for conclusion
paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of
complying with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority and
for no other purpose. We do not, in giving this conclusion, accept
or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
H1 2022 H1 2021
Exceptional Exceptional
items items
and other and other
H1 2022 adjustments H1 2022 H1 2021 adjustments H1 2021
Core (Note Reported Core (Note Reported
results 5) results results 5) results
Note $m $m $m $m (Unaudited) $m (Unaudited) $m
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
-------------- -------------- ------------ ------------------ ---------------- --------------
Revenue 3 1,213 - 1,213 1,216 - 1,216
Cost of sales (590) (12) (602) (600) - (600)
------------ --------------
Gross
profit/(loss) 623 (12) 611 616 - 616
-------------- -------------- ------------ ------------------ ---------------- --------------
Selling, general
and
administrative
expenses (256) (43) (299) (232) (29) (261)
Net impairment
loss
on financial
assets (3) - (3) - - -
Research and
development
expenses (69) - (69) (59) - (59)
Other operating
expenses (17) (2) (19) (18) - (18)
Other operating
income 18 - 18 2 46 48
-------------- -------------- ------------ ------------------ ---------------- --------------
Total operating
(expenses)/income (327) (45) (372) (307) 17 (290)
Operating
profit/(loss) 4 296 (57) 239 309 17 326
Finance income 1 12 13 1 29 30
Finance expense (33) (2) (35) (25) (12) (37)
Loss from
investment
at fair value
through
profit and loss
(FVTPL) (2) - (2) - - -
-------------- -------------- ------------ ------------------ ---------------- --------------
Profit/(loss)
before
tax 262 (47) 215 285 34 319
Tax 6 (52) 11 (41) (62) (9) (71)
Profit/(loss) for
the half-year 210 (36) 174 223 25 248
============== ============== ============ ================== ================ ==============
Attributable to:
Non-controlling
interests 1 - 1 - - -
Equity holders
of the parent 209 (36) 173 223 25 248
-------------- -------------- ------------ ------------------ ---------------- --------------
210 (36) 174 223 25 248
============== ============== ============ ================== ================ ==============
Earnings per share
(cents)
Basic 92.1 76.2 96.5 107.4
Diluted 91.7 75.9 96.1 106.9
London
3 August 2022
Hikma Pharmaceuticals PLC
Condensed consolidated interim income statement
Hikma Pharmaceuticals PLC
Condensed consolidated interim statement of comprehensive
income
H1 2022 H1 2021
Reported results Reported results
Note $m (Unaudited) $m (Unaudited)
Profit for the half-year 174 248
Other Comprehensive Income
Items that may subsequently be reclassified to the consolidated
income statement, net of
tax:
Currency translation and hyperinflation movement (68) (31)
Effect of change in fair value of hedging financial derivatives (1) -
Items that will not subsequently be reclassified to the
consolidated income statement, net
of tax:
Change in investments at fair value through other comprehensive
income (FVTOCI) 9 (8) -
Total other comprehensive income for the half-year (77) (31)
------------------ ------------------
Total comprehensive income for the half-year 97 217
================== ==================
Attributable to:
Non-controlling interests (1) -
Equity holders of the parent 98 217
------------------ ------------------
97 217
================== ==================
Hikma Pharmaceuticals PLC
Condensed consolidated interim balance sheet
30 June 31 December
2022 2021
Note $m $m
(Unaudited) (Audited)
Non-current assets
Goodwill 8 394 285
Other intangible assets 8 857 607
Property, plant and equipment 1,059 1,072
Right-of-use assets 73 74
Investment in joint ventures 10 10
Deferred tax assets 151 183
Financial and other non-current assets 9 59 47
2,603 2,278
------------- ------------
Current assets
Inventories 765 695
Income tax receivable 62 60
Trade and other receivables 10 831 816
Cash and cash equivalents 11 371 426
Other current assets 12 113 97
Assets classified as held for distribution 2 -
2,144 2,094
------------- ------------
Total assets 4,747 4,372
============= ============
Current liabilities
Short-term financial debts 15 128 112
Lease liabilities 9 9
Trade and other payables 13 428 468
Income tax payable 66 57
Other provisions 31 31
Other current liabilities 14 348 339
1,010 1,016
------------- ------------
Net current assets 1,134 1,078
------------- ------------
Non-current liabilities
Long-term financial debts 15 1,340 651
Lease liabilities 74 74
Deferred tax liabilities 24 24
Other non-current liabilities 16 108 140
1,546 889
------------- ------------
Total liabilities 2,556 1,905
============= ============
Net assets 2,191 2,467
============= ============
Equity
Share capital 19 41 42
Share premium 282 282
Other reserves (240) (60)
Translation reserve related to assets held for distribution (14) -
Retained earnings 2,107 2,189
------------- ------------
Equity attributable to equity holders of the parent 2,176 2,453
Non-controlling interests 15 14
------------- ------------
Total equity 2,191 2,467
============= ============
The condensed consolidated interim financial information of
Hikma Pharmaceuticals PLC for the six-months period ended 30 June
2022 were approved by the Board of Director of the Company on 3
August 2022.
Said Darwazah Mazen Darwazah
Executive Chairman Executive Vice Chairman
Hikma Pharmaceuticals PLC
Condensed consolidated interim statement of changes in
equity
Translation Equity
reserve attributable
Merger related to equity
and Capital Total to assets shareholders
revaluation Translation redemption other held Retained Share Share of the Non-controlling Total
reserves reserve reserve reserves for distribution(2) earnings capital premium parent interests equity
Note $m $m $m $m $m $m $m $m $m $m $m
------------ -------------- ----------- --------- -------------------- ---------- -------- ---------- ------------- ---------------- -------
Balance at 1
January
2021 119 (199) - (80) - 1,892 41 282 2,135 13 2,148
------------ -------------- ----------- --------- -------------------- ---------- -------- ---------- ------------- ---------------- -------
Profit for the
half-year 46 - - 46 - 202 - - 248 - 248
Currency
translation
and
hyperinflation
movement - (31) - (31) - - - - (31) - (31)
Total
comprehensive
income for the
half-year 46 (31) - 15 - 202 - - 217 - 217
------------ -------------- ----------- --------- -------------------- ---------- -------- ---------- ------------- ---------------- -------
Total
transactions
with owners,
recognised
directly in
equity
Cost of
equity-settled
employee share
scheme - - - - - 16 - - 16 - 16
Dividends paid 7 - - - - - (78) - - (78) - (78)
Balance at 30
June 2021
(unaudited) 165 (230) - (65) - 2,032 41 282 2,290 13 2,303
============ ============== =========== ========= ==================== ========== ======== ========== ============= ================ =======
Balance at 31
December 2021
(audited)
and 1 January
2022 164 (224) - (60) - 2,189 42 282 2,453 14 2,467
Profit for the
half-year - - - - - 173 - - 173 1 174
Change in the
fair
value of
investments
at FVTOCI - - - - - (8) - - (8) - (8)
Effect of change
in fair value
of
hedging
financial
derivatives - - - - - (1) - - (1) - (1)
Currency
translation
and
hyperinflation
movement - (66) - (66) - - - - (66) (2) (68)
------------ -------------- ----------- --------- -------------------- ---------- -------- ---------- ------------- ---------------- -------
Total
comprehensive
income for the
half-year - (66) - (66) - 164 - - 98 (1) 97
------------ -------------- ----------- --------- -------------------- ---------- -------- ---------- ------------- ---------------- -------
Total
transactions
with owners,
recognised
directly in
equity
Transfer of
merger
reserve(1) 19 (129) - - (129) - 129 - - - - -
Issue of
Ordinary
Bonus Share 19 - - - - - (1,746) 1,746 - - - -
Cancellation of
Ordinary Bonus
Share 19 - - - - - 1,746 (1,746) - - - -
Cost of
equity-settled
employee share
scheme - - - - - 10 - - 10 - 10
Deferred tax
arising
on share based
payments - - - - - 1 - - 1 - 1
Dividends paid 7 - - - - - (83) - - (83) - (83)
Ordinary Shares
purchased and
cancelled 19 - - 1 1 - (300) (1) - (300) - (300)
Shares buyback
transaction
cost 19 - - - - - (3) - - (3) - (3)
Other
comprehensive
income
accumulated
in equity
related
to assets held
for
distribution(2) - 14 - 14 (14) - - - - - -
Acquisition of
subsidiaries - - - - - - - - - 2 2
Balance at 30
June 2022
(unaudited) 35 (276) 1 (240) (14) 2,107 41 282 2,176 15 2,191
============ ============== =========== ========= ==================== ========== ======== ========== ============= ================ =======
1. $129 million of the merger reserve balance which relates to
Columbus business acquisition was transferred to retained earnings
as a result of the capitalisation of the Company's merger reserve
(Note 19).
2.Translation reserve related to assets held for distribution
represent cumulative translation loss recognised in other
comprehensive income attributable to equity holders of the parent
in relation to Pharma Ixir Co. Ltd which is currently under
liquidation.
Hikma Pharmaceuticals PLC
Condensed consolidated interim cash flow statement
H1 H1
2022 2021
Note $m (Unaudited) $m (Unaudited)
--------------- ---------------
Cash flows from operating activities
Cash generated from operations 17 213 312
Income taxes paid (44) (88)
Net cash inflow from operating activities 169 224
Cash flow from investing activities
Purchases of property, plant and equipment (63) (65)
Purchase of intangible assets (56) (29)
Proceeds from disposal of intangible assets 6 -
Addition of investments at FVTOCI (14) (1)
Acquisition of subsidiary undertakings net
of cash acquired (373) -
Proceeds from investment divestiture - 1
Interest income received 1 1
Acquisition related amounts held in escrow (4)
account -
Payments of contingent consideration liability (3) -
Milestone payments of acquired contingent
liability - (11)
Net cash outflow from investing activities (506) (104)
Cash flow from financing activities
Proceeds from issue of long-term financial
debts 950 3
Repayment of long-term financial debts (254) (21)
Proceeds from short-term borrowings 183 219
Repayment of short-term borrowings (165) (202)
Repayment of lease liabilities (4) (7)
Dividends paid 7 (83) (78)
Interest and bank charges paid (27) (25)
Revolving credit facility upfront fees paid (5) -
Share buyback (300) -
Share buyback transaction cost (3) -
Payment to co-development and earnout payment
agreement (1) (1)
Net cash inflow/(outflow) from financing
activities 291 (112)
Net (decrease)/increase in cash and cash
equivalents (46) 8
Cash and cash equivalents at beginning
of the half-year 426 323
Foreign exchange translation movements (9) (9)
Cash and cash equivalents at end of the
half-year 11 371 322
=============== ===============
Hikma Pharmaceuticals PLC
Notes to the condensed consolidated interim financial
statements
1. General information
Hikma Pharmaceuticals PLC is a public limited liability company
incorporated and domiciled in England and Wales under the Companies
Act 2006. The registered office address is 1 New Burlington Place,
London W1S 2HR, UK.
The Group's principal activities are the development,
manufacturing , marketing and selling of a broad range of generic,
branded and in-licensed pharmaceuticals products in solid,
semi-solid, liquid and injectable final dosage forms.
2. Accounting policies
Basis of preparation
The unaudited condensed consolidated interim financial
statements (financial statements) for the six months ended 30 June
2022 have been prepared on a going concern basis in accordance with
UK-adopted International Accounting Standard 34, 'Interim Financial
Reporting' (IAS 34), IAS 34 as issued by the International
Accounting Standards Board (IASB), and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
The accounting policies adopted in the preparation of the
financial statements are consistent with those followed in the
preparation of the Group's annual consolidated financial statements
for the year ended 31 December 2021, with the exception of changes
in estimates that are required in determining the provision for
income taxes in accordance with IAS 34 at 30 June 2022.
The interim report does not include all of the notes of the type
normally included in an annual financial report. Accordingly, this
report is to be read in conjunction with the annual report for the
year ended 31 December 2021, which has been prepared in accordance
with:
i) UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies
reporting under those standards
ii) IFRS as issued by the International Accounting Standards Board (IASB)
The financial information does not constitute statutory accounts
as defined in section 435 of the Companies Act 2006. A copy of the
statutory accounts for 2021 has been delivered to the Registrar of
Companies. The auditors' report on those accounts was unqualified,
did not draw attention to any matters by way of emphasis and did
not contain any statement under Section 498 (2) or (3) of the
Companies Act 2006. These interim financial statements have been
reviewed, not audited.
The currency used in the presentation of the accompanying
financial statements is the US dollar ($) as most of the Group's
business is conducted in US dollars.
New standards interpretations and amendments adopted by the
Group
The following revised Standards and Interpretations have been
issued and are effective for annual periods beginning on 1 January
2022. The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective .
New standards interpretations and amendments adopted by the
Group continued
IAS 16 (Amendments) Property, Plant and Equipment: proceeds
before intended use
---------------------------- ------------------------------------------------
IFRS 3 (Amendments) Reference to the conceptual framework
---------------------------- ------------------------------------------------
IAS 37 (Amendments) Onerous contracts - cost of fulfilling
a contract
---------------------------- ------------------------------------------------
Annual improvements to IFRS -- Improvements to IFRS 9 Financial Instruments
standards 2018-2020 -- Improvements to IFRS 16 Leases
---------------------------- ------------------------------------------------
These amendments had no significant impact on the interim
financial statements of the Group but may impact the accounting for
future transactions and arrangements.
Going concern
The Directors have considered the going concern position of the
Group at 30 June 2022. The Directors believe that the Group is well
diversified due to its geographic spread, product diversity and
large customer and supplier base. The Group's business activity,
together with the factors likely to affect its future development,
performance and position are set out in this Interim Results Press
Release. The Interim Results Press Release also includes a summary
of the financial position, cash flow and borrowing facilities.
At 30 June 2022 the Group had undrawn long term committed
banking facilities of $658 million. The Group's total debt at 30
June 2022 was $1,551 million while the Group's cash and cash
equivalents at 30 June 2022 balance was $371 million making the net
debt(1) $1,180 million. The Group's net debt(1) to trailing EBITDA
of 715 million ratio was 1.7x at 30 June 2022. Taking into account
the Group's current position and its principal risks for a period
of at least 12 months from the date of this results announcement ,
a going concern analysis has been prepared using realistic
scenarios applying a severe but plausible downside considering the
principal risks facing the business including delays to the
pipeline, lower sales of newly launched products, increased price
erosion impacting existing products, increased inflationary risks,
and disruption in certain MENA markets, which shows sufficient
liquidity headroom. Therefore, the Directors believe that the Group
and its subsidiaries are adequately placed to manage its business
and financing risks successfully, despite the current uncertain
economic and political outlook. Having reassessed the principal
risks, the Directors have concluded it is appropriate to
adopt the going concern basis of accounting in preparing the
interim financial information and there is no material uncertainty
requiring disclosure in this regard.
Financial covenants are suspended while the Group retains its
investment grade status from two rating agencies (2) .
Nevertheless, the covenants are monitored and the Group was in
compliance on 30 June 2022 and expects to remain in compliance with
those covenants in the period to 31 December 2023 even in the event
of severe but plausible downside scenarios. As of 30 June 2022, the
Group's investment grade rating was affirmed by S&P and
Fitch
1. Group net debt is a non-IFRS measure that includes long and
short-term financial debts (Note 15), lease liabilities, net of
cash and cash equivalents. Group net debt excludes co-development
and earnout payments, acquired contingent liabilities and
contingent consideration (Notes 14 and 16)
2. Rating agencies: means each of Fitch, Moody's and S&P or
any of their affiliates or successors
3. Revenue from contracts with customers
Business and geographical markets
The following table provides an analysis of the Group's sales by
segment and geographical market, irrespective of the origin of the
goods/services:
Branded Injectables Generics Others Total
H1 2022 (unaudited) $m $m $m $m $m
-------- ------------ --------- ------- -------
United States - 361 330 - 691
Middle East and North
Africa 335 76 - 3 414
Europe and Rest of
the World 4 97 - 3 104
United Kingdom - 4 - - 4
339 538 330 6 1,213
======== ============ ========= ======= =======
Branded Injectables Generics Others Total
H1 2021 (unaudited) $m $m $m $m $m
-------- ------------ --------- ------- -------
United States - 318 400 - 718
Middle East and North
Africa 316 77 - 3 396
Europe and Rest of
the World 3 95 - 2 100
United Kingdom - 2 - - 2
319 492 400 5 1,216
======== ============ ========= ======= =======
The top selling markets are shown below:
H1 2022 H1 2021
$m $m
---------------- ----------------
(Unaudited) (Unaudited)
---------------- ----------------
United States 691 718
Saudi Arabia 115 114
Algeria 70 52
Egypt 65 66
941 950
================ ================
In H1 2022, included in revenue arising from the Generics and
Injectables segments are sales the Group made to two wholesalers in
the US accounting for equal to or greater than 10% of the Group's
revenue on an individual basis of $167 million (14% of Group
revenue) and $158 million (13% of Group revenue), in H1 2021: $186
million (15% of Group revenue) and $149 million (12% of Group
revenue).
4. Business segments
For management reporting purposes, the Group is organised into
three principal operating divisions - Injectables, Generics and
Branded. These divisions are the basis on which the Group reports
its segmental information.
Core operating profit/(loss), defined as 'segment result', is
the principal measure used in the decision-making and resource
allocation process of the chief operating decision maker, who is
the Group's Chief Executive Officer.
Information regarding the Group's operating segments is reported
below:
H1 2022
Exceptional H1 2021
items Exceptional
and other items
H1 2022 adjustments H1 2022 H1 2021 and other H1 2021
Core (Note Reported Core adjustments Reported
results 5) results results (Note results
Injectables (Unaudited) (Unaudited) (Unaudited) (Unaudited) 5) (Unaudited) (Unaudited)
$m $m $m $m $m $m
------------- -------------- ------------- ------------- --------------- -------------
Revenue 538 - 538 492 - 492
Cost of sales (229) (12) (241) (219) - (219)
-------------- ------------- --------------- -------------
Gross
profit/(loss) 309 (12) 297 273 - 273
------------- -------------- ------------- ------------- --------------- -------------
Total
operating
expenses, net (100) (19) (119) (86) (12) (98)
------------- -------------- ------------- ------------- --------------- -------------
Segment result 209 (31) 178 187 (12) 175
============= ============== ============= ============= =============== =============
H1 2022
Exceptional H1 2021
items Exceptional
and other items
H1 2022 adjustments H1 2022 H1 2021 and other H1 2021
Core (Note Reported Core adjustments Reported
results 5) results results (Note results
Branded (Unaudited) (Unaudited) (Unaudited) (Unaudited) 5) (Unaudited) (Unaudited)
$m $m $m $m $m $m
------------- -------------- ------------- ------------- --------------- -------------
Revenue 339 - 339 319 - 319
Cost of sales (165) - (165) (166) - (166)
------------- -------------- ------------- ------------- --------------- -------------
Gross profit 174 - 174 153 - 153
------------- -------------- ------------- ------------- --------------- -------------
Total
operating
expenses (100) (4) (104) (89) (5) (94)
------------- -------------- ------------- ------------- --------------- -------------
Segment result 74 (4) 70 64 (5) 59
============= ============== ============= ============= =============== =============
H1 2022
Exceptional H1 2021
items Exceptional
and other items
H1 2022 adjustments H1 2022 H1 2021 and other H1 2021
Core (Note Reported Core adjustments Reported
results 5) results results (Note results
Generics (Unaudited) (Unaudited) (Unaudited) (Unaudited) 5) (Unaudited) (Unaudited)
$m $m $m $m $m $m
------------- -------------- ------------- ------------- --------------- -------------
Revenue 330 - 330 400 - 400
Cost of sales (193) - (193) (212) - (212)
-------------- ------------- ------------- --------------- -------------
Gross profit 137 - 137 188 - 188
------------- -------------- ------------- ------------- --------------- -------------
Total
operating
expenses, net (79) (22) (101) (88) 34 (54)
------------- -------------- ------------- ------------- --------------- -------------
Segment result 58 (22) 36 100 34 134
============= ============== ============= ============= =============== =============
H1 2022
Exceptional H1 2021
items Exceptional
and other items
H1 2022 adjustments H1 2022 H1 2021 and other H1 2021
Core (Note Reported Core adjustments Reported
results 5) results results (Note results
Others(1) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 5) (Unaudited) (Unaudited)
$m $m $m $m $m $m
------------- -------------- ------------- ------------- --------------- -------------
Revenue 6 - 6 5 - 5
Cost of sales (3) - (3) (3) - (3)
------------- -------------
Gross profit 3 - 3 2 - 2
------------- -------------- ------------- ------------- --------------- -------------
Total
operating
expenses (1) - (1) (1) - (1)
------------- -------------- ------------- ------------- --------------- -------------
Segment result 2 - 2 1 - 1
============= ============== ============= ============= =============== =============
1 . Others mainly comprises Arab Medical Containers LLC and
International Pharmaceutical Research Center LLC.
H1 2022 H1 2021
Exceptional Exceptional
items and items and
H1 2022 other H1 2022 H1 2021 other H1 2021
Core adjustments Reported Core adjustments Reported
results (Note 5) results results (Note 5) results
Group (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
$m $m $m $m $m $m
------------- ------------ ------------- ------------- ------------ -------------
Segment result 343 (57) 286 352 17 369
------------ ------------- ------------- ------------ -------------
Unallocated
expenses(1) (47) - (47) (43) - (43)
------------- ------------ ------------- ------------- ------------ -------------
Operating
profit/(loss) 296 (57) 239 309 17 326
------------- ------------ ------------- ------------- ------------ -------------
Finance income 1 12 13 1 29 30
Finance expense (33) (2) (35) (25) (12) (37)
Loss from
investment at
FVTPL (2) - (2) - - -
Profit/(loss)
before tax 262 (47) 215 285 34 319
------------- ------------ ------------- ------------- ------------ -------------
Tax (52) 11 (41) (62) (9) (71)
Profit/(loss) for
the half-year 210 (36) 174 223 25 248
============= ============ ============= ============= ============ =============
Attributable to:
Non-controlling
interests 1 - 1 - - -
Equity holders of
the parent 209 (36) 173 223 25 248
------------- ------------ ------------- ------------- ------------ -------------
210 (36) 174 223 25 248
============= ============ ============= ============= ============ =============
1. Unallocated corporate expenses mainly comprise employee
costs, third-party professional fees, IT, and travel expenses.
5. Exceptional items and other adjustments
Exceptional items and other adjustments are disclosed separately
in the condensed consolidated income statement to assist in the
understanding of the Group's core performance.
H1 2022 Generics Injectables Branded Unallocated Total
$m $m $m $m $m
---------- ------------- --------- ------------- -------
Exceptional Items - - - - -
---------- ------------- --------- ------------- -------
- - - - -
Other adjustments
Unwinding of acquisition
related inventory step-up Cost of sales - (12) - - (12)
Impairment of product
related Other operating
intangible assets expenses (2) - - - (2)
Selling,
Intangible assets general and
amortisation administrative
other than software expenses (20) (19) (4) - (43)
Remeasurement of contingent
consideration Finance income - - - 12 12
Unwinding of contingent
consideration and other
financial liability Finance expense - - - (2) (2)
Exceptional items and other
adjustments included in
profit before tax (22) (31) (4) 10 (47)
---------- ------------- --------- ------------- -------
Tax effect Tax 11
-------
Impact on profit for the
half-year (36)
=======
Other adjustments:
- Unwinding of acquisition related inventory step-up reflects
the unwinding of the fair value uplift of the inventory acquired as
part of Custopharm Topco Holdings, Inc. business combination and
Teligent Inc. assets acquisition ($10 million and $2 million,
respectively) (Note 20).
- Impairment of product related intangible assets of $2 million
relates to impairment charge of specific product related intangible
assets due to discontinuation.
- Intangible assets amortisation other than software of $43 million.
- Remeasurement of contingent consideration finance income
represents the income resulting from the valuation of the
liabilities associated with the future contingent payments in
respect of contingent consideration recognised through business
combinations (Notes 14 and 16).
- Unwinding of contingent consideration and other financial
liability finance expense represents the expense resulting from the
unwinding and the valuation of the liabilities associated with the
future contingent payments in respect of contingent consideration
recognised through business combinations and the financial
liability in relation to the co-development earnout payment
agreement (Notes 14 and 16).
The tax effect represents the tax effect on pre-tax other
adjustments which is calculated based on the applicable tax rate in
each jurisdiction.
H1 2021 Generics Injectables Branded Unallocated Total
$m $m $m $m $m
---------- ------------- --------- ------------- -------
Exceptional Items - - - - -
---------- ------------- --------- ------------- -------
Other adjustments
Impairment reversal
of
product related Other operating
intangibles income 46 - - - 46
Selling,
Intangible assets general
amortisation and administrative
other than software expenses (12) (12) (5) - (29)
Remeasurement of
contingent Finance
consideration income - - - 29 29
Unwinding and
remeasurement
of contingent
consideration
and other financial Finance
liability expense - - - (12) (12)
Exceptional items and
other adjustments included
in profit before tax 34 (12) (5) 17 34
---------- ------------- --------- ------------- -------
Tax effect Tax (9)
-------
Impact on profit for the
half-year 25
=======
In H1 2021 other adjustments related to the following :
- $46 million impairment reversal in respect of generic Advair
Diskus(R) intangible asset as a result of launching the product
following FDA approval in April 2021 of an amendment submitted to
its Abbreviated New Drug Application in January 2021.
- Intangible assets amortisation other than software of $29 million.
- Remeasurement of contingent consideration finance income
represented the income resulting from the valuation of the
liabilities associated with the future contingent payments in
respect of contingent consideration recognised through business
combinations (Notes 14 and 16).
- Unwinding and remeasurement of contingent consideration and
other financial liability finance expense represented the expense
resulting from the unwinding and the valuation of the liabilities
associated with the future contingent payments in respect of
contingent consideration recognised through business combinations
and the financial liability in relation to the co-development
earnout payment agreement (Notes 14 and 16).
The tax effect represented the tax effect on pre-tax exceptional
items and other adjustments which is calculated based on the
applicable tax rate in each jurisdiction.
6. Tax
The Group incurred a tax expense of $41 million (H1 2021: $71
million). The reported effective tax rate for H1 2022 is 19.1% (H1
2021: 22.3%), representing the best estimate of the average annual
effective tax rate expected for the full year on a legal entity
basis, applied to the pre-tax income for H1 2022 and adjusted for
the tax effect of any discrete items recorded in the same
period.
The application of tax law and practice is subject to some
uncertainty and amounts are provided where the likelihood of a cash
outflow is probable.
The effective tax rate is broadly in line with the UK tax rate
of 19%.
During 2021, the OECD published a framework for the introduction
of a global minimum effective tax rate of 15%, applicable to large
multinational groups. On 20 July 2022, HM Treasury released draft
legislation to implement these 'Pillar 2' rules with effect for
accounting periods beginning on or after 31 December 2023. The
Group is reviewing these draft rules to understand any potential
impact.
7. Dividends
H1 2022 H1 2021
$m $m
------------ ------------
(Unaudited) (Unaudited)
------------ ------------
Amounts recognised as distributions to equity
holders in the period:
Final dividend for the year ended 31 December
2021 of 36 cents (2020: 34 cents) per share 83 78
83 78
============ ============
The proposed interim dividend for the H1 2022 is 19 cents (H1
2021: 18 cents) per share.
The proposed interim dividend will be paid on 20 September 2022
to eligible shareholders on the register at the close of business
on 20 August 2022.
Based on the number of shares in issue at 30 June 2022 of
220,113,304 the total proposed interim dividends amount is $42
million.
8. Goodwill and other intangible assets
The changes in the carrying value of goodwill and other
intangible assets for the periods ended 30 June 2022 and 31
December 2021 are as follows:
Goodwill Other intangible assets Total
--------- ------------------------------------------ --------
Product-related Other
intangible identified
assets Software intangibles
$m $m $m $m $m
--------- ---------------- --------- ------------- --------
Cost
Balance at 1 January 2021 697 1,041 145 205 2,088
Write-down - - (14) - (14)
Additions - 14 11 58 83
Reclassification - 3 - (3) -
Translation adjustments (4) (2) - (3) (9)
--------- ---------------- --------- ------------- --------
Balance at 31 December
2021 693 1,056 142 257 2,148
--------- ---------------- --------- ------------- --------
Additions - 42 - 11 53
Acquisition of subsidiaries 120 251 - - 371
Disposals - (3) - - (3)
Translation adjustments (11) (2) (2) (5) (20)
--------- ---------------- --------- ------------- --------
Balance at 30 June 2022 802 1,344 140 263 2,549
--------- ---------------- --------- ------------- --------
Accumulated Amortisation
and Impairment
Balance at 1 January 2021 (408) (629) (81) (94) (1,212)
Write-down - - 1 - 1
Charge for the year - (59) (11) (14) (84)
Impairment reversal - 60 - - 60
Impairment charge - (23) - (1) (24)
Translation adjustments - 1 - 2 3
--------- ---------------- --------- ------------- --------
Balance at 31 December
2021 (408) (650) (91) (107) (1,256)
--------- ---------------- --------- ------------- --------
Charge for the period - (36) (6) (7) (49)
Impairment charge - (2) - - (2)
Disposals - 3 - - 3
Translation adjustments - 2 1 3 6
--------- ---------------- --------- ------------- --------
Balance at 30 June 2022 (408) (683) (96) (111) (1,298)
--------- ---------------- --------- ------------- --------
Carrying amount
At 30 June 2022 394 661 44 152 1,251
At 31 December 2021 285 406 51 150 892
========= ================ ========= ============= ========
The current period intangible assets from acquisition of
subsidiaries relating to the acquisition of Custopharm Topco
Holdings, Inc. , are set out in Note 20.
The current period product related additions mainly relate to
the acquisition of the Canadian assets of Teligent Inc (Note
20).
During the period, the Group performed a review of its CGUs and
other intangible assets, considering whether any indicators of
impairment or impairment reversal existed at 30 June 2022 in the
context of IAS 36. As a result, an impairment charge of $2 million
in respect of specific product related intangible assets within the
Generics CGU was recognised due to discontinuation.
9. Financial and other non-current assets
30 June 31 December
2022 2021
$m $m
(Unaudited) (Audited)
Investments at FVTOCI 42 36
Other non-current assets 17 11
59 47
Investments at FVTOCI include investments through the Group's
venture capital arm, Hikma International Ventures and Development
LLC and Hikma Ventures Limited, which are not held for trading and
which the Group has irrevocably elected at initial recognition to
recognise in this category.
During the period, the venture arm invested in five new
companies and increased investment in two ventures.
One of the investments is a listed company with a readily
determinable fair value that falls under level 1 valuation (Note
18). Its value is measured at the share price market value. The
other investments are unlisted shares without readily determinable
fair values that fall under level 3 valuation (Note 18), their fair
value is measured based on observable price changes in orderly
transactions for the identical or a similar investment of the same
issuer.
During the period, total change in fair value was a net loss of
$8 million (H1 2021: $nil) recognised in other comprehensive
income.
Other non-current assets balance at 30 June 2022, mainly
represent long term receivables, a sublease arrangement in US and
upfront fees on a syndicated revolving credit facility. At 31
December 2021, the balance mainly represent long term receivables
and a sublease arrangement in the US.
10. Trade and other receivables
30 June 31 December
2022 2021
$m $m
Gross trade receivables 1,130 1,107
Chargebacks and other allowances (295) (275)
Related allowance for expected credit loss (51) (51)
Net trade receivables 784 781
VAT and sales tax recoverable 44 32
Other receivables 3 3
Net trade and other receivables 831 816
The fair value of receivables is estimated to be not
significantly different from the respective carrying amounts.
11. Cash and cash equivalents
30 June 31 December
2022 2021
$m $m
(Unaudited) (Audited)
Cash at banks and on hand 276 155
Time deposits 72 249
Money market deposits 23 22
371 426
Cash and cash equivalents include highly liquid investments with
maturities of three months or less which are convertible to known
amounts of cash and are subject to insignificant risk of changes in
value.
Money market deposits comprise investment in funds at FVTPL that
are subject to insignificant risk of changes in fair value and can
be readily converted into cash that fall under level 1 valuation
(Note 18).
12. Other current assets
30 June 31 December
2022 2021
$m $m
(Unaudited) (Audited)
Prepayments 80 65
Investment at FVTPL 22 24
Others 11 8
113 97
Investments at FVTPL represents the agreement the Group entered
into with an asset management firm in 2015 to manage a $20 million
portfolio of underlying debt instruments. The investment comprises
a portfolio of assets that are managed by an asset manager and is
measured at fair value; any changes in fair value go through the
condensed consolidated income statement. These assets are
classified as level 1 valuation (Note 18) as they are based on
quoted prices in active markets.
Others mainly represents compensation due from suppliers in
relation to inventory price adjustment.
13. Trade and other payables
30 June 31 December
2022 2021
$m $m
(Unaudited) (Audited)
Trade payables 255 262
Accrued expenses 160 194
Other payables 13 12
428 468
The fair value of payables is estimated to be not significantly
different from the respective carrying amounts.
14. Other current liabilities
30 June 31 December
2022 2021
$m $m
(Unaudited) (Audited)
Contract liabilities 199 213
Co-development and earnout payment (Note 16 and
18) 2 2
Acquired contingent liability (Note 16) 9 15
Contingent consideration (Note 16 and 18) 25 12
Indirect rebates and other allowances 85 80
Others 28 17
348 339
Contract liabilities: the Group allows customers to return
products within a specified period prior to and subsequent to the
expiration date. In addition, free goods are issued to customers as
sale incentives, reimbursement of agreed upon expenses incurred by
the customer or as compensation for expired or returned goods.
Indirect rebates and other allowances: mainly represents rebates
granted to healthcare authorities and other parties under
contractual arrangements with certain indirect customers.
15. Financial debts
Short-term financial debts
30 June 31 December
2022 2021
$m $m
(Unaudited) (Audited)
Bank overdrafts 5 3
Import and export financing(1) 70 58
Short-term loans 1 3
Current portion of long-term loans 52 48
128 112
1.Import and export financing represents short-term financing
for the ordinary trading activities of the Group.
Long-term financial debts
30 June 31 December
2022 2021
$m $m
(Unaudited) (Audited)
Long-term loans 898 207
Long-term borrowings (Eurobond) 494 492
Less: current portion of long-term loans (52) (48)
Long-term financial loans 1,340 651
Breakdown by maturity:
Within one year 52 48
In the second year 35 44
In the third year 32 37
In the fourth year 522 524
In the fifth year 736 23
In the sixth year 14 22
Thereafter 1 1
1,392 699
The loans are held at amortised cost.
Major arrangements entered into by the Group:
a) A syndicated revolving credit facility of $1,175 million was
entered into on 27 October 2015. On 29 December 2021, $1,150
million of the initial $1,175 million were renewed (effective 4
January 2022) until January 2027 with an extension option of 2
years. At 30 June 2022 the facility has an outstanding balance of
$710 million (2021: $nil) and a $440 million unused available limit
(2021: $870 million). The utilised facility was used to finance
acquisitions and for other general corporate purposes.
b) A ten-year $150 million loan from the International Finance
Corporation was entered into on 21 December 2017. There was full
utilisation of the loan in April 2020. Quarterly equal repayments
of the long-term loan commenced on 15 March 2021 with an
outstanding balance at 30 June 2022 of $118 million (fair value of
$118 million). The loan was used for general corporate purposes.
The facility matures on 15 December 2027.
c) A $500 million (carrying value of $494 million, and fair
value of $475 million) 3.25%, five-year Eurobond was issued on 9
July 2020 with a rating of BBB- (S&P & Fitch) which is due
in July 2025. The proceeds of the issuance were used for general
corporate purposes.
d) An eight-year $200 million loan facility from the
International Finance Corporation and Managed Co-lending Portfolio
program was entered into on 26 October 2020. There was no
utilisation of the loan as of 30 June 2022. The facility matures on
15 September 2028 and can be used for general corporate
purposes.
Interbank Offered Rates (IBORs) Reform
As at 30 June 2022, approximately 46% ($710 million) of the
Group's utilised debt portfolio as well as $762 million of the
Group's unutilised debt facilities, have USD LIBOR as the benchmark
interest rate. The unutilised
debt facilities relate mainly to the Group's syndicated
revolving credit facility and the $200 million IFC loan. The Group
has not identified any other significant IBOR exposures that are
expected to be impacted by IBOR reform.
The Group is monitoring the market developments surrounding the
IBOR reform. To date the Group has identified the need to amend the
credit facilities which reference USD LIBOR to be replaced with
alternative reference rate that is expected to be economically
equivalent to USD LIBOR.
16. Other non-current liabilities
30 June 31 December
2022 2021
$m $m
(Unaudited) (Audited)
Contingent consideration (Note 14 and 18) 32 58
Acquired contingent liability (Note 14) 70 68
Co-development and earnout payment (Note 14 and
18) 2 2
Others 4 12
108 140
Contingent consideration and acquired contingent liability
represent contractual liabilities to make payments to third parties
in the form of milestone payments that depend on the achievement of
certain US FDA approval milestones, and royalty payments based on
future sales of certain products. These liabilities were recognised
as part of the Columbus business acquisition. The current portion
of these liabilities are recognised in other current liabilities
(Note 14).
17. Cash generated from operating activities
H1 H1
2022 2021
$m (Unaudited) $m (Unaudited)
Profit before tax 215 319
Adjustments for:
Property, plant and equipment depreciation 39 39
Intangible assets amortisation and impairment
charges/(reversals), net 51 (12)
Right-of-use of assets depreciation 5 5
Unwinding of acquisition related inventory step-up 12 -
Loss from investment at FVPTL 2 -
Movement in provisions - 1
Gains on disposal of intangible assets (6) -
Cost of equity-settled employee share scheme 10 16
Finance income (13) (30)
Finance expense 35 37
Foreign exchange loss and net monetary hyperinflation
impact 8 16
Changes in working capital:
Change in trade and other receivables (7) (63)
Change in other current assets (25) 11
Change in inventories (78) 11
Change in trade and other payables (19) (60)
Change in other current liabilities (16) 22
Cash flow from operating activities 213 312
18. Fair value of financial assets and liabilities
The fair value of financial assets and liabilities is included
at the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced
or liquidation sale.
The following financial assets/liabilities are presented at
their carrying values which approximates to their fair value:
-- Cash at bank and on hand and time deposit- due to the
short-term maturities of these financial instruments and given that
generally they have negligible credit risk, management considers
the carrying amounts to be not significantly different from their
fair values
-- Short-term loans and overdrafts approximate to their fair
value because of the short maturity of these instruments
-- Long-term loans - loans with variable rates are re-priced in
response to any changes in market rates and so management considers
their carrying values to be not significantly different from their
fair values
Loans with fixed rates relate mainly to:
-- $500 million (carrying value at 30 June 2022 of $494 million,
and fair value at 30 June 2022 of $475 million) Eurobond accounted
for at amortised cost. The fair value is determined with reference
to a quoted price in an active market as at the balance sheet date
(Note 15)
-- A ten-year $150 million loan from the International Finance
Corporation with outstanding balance of $118 million (fair value at
30 June 2022 of $118 million). Fair value is estimated by
discounting future cash flows using the current rates at which
similar loans would be made to borrowers with similar credit
ratings and for the same remaining maturities of such loans (a
level 2 fair value)
-- Receivables and payables - the fair values of receivables and
payables are estimated to not be significantly different from the
respective carrying amounts
Management classifies items that are recognised at fair value
based on the level of the inputs used in their fair value
determination as described below:
-- Level 1 : Quoted prices in active markets for identical assets or liabilities
-- Level 2 : Inputs that are observable for the asset or liability
-- Level 3 : Inputs that are not based on observable market data
The following financial assets/liabilities are presented at
their fair value:
Level Level
Fair value measurements 1 2 Level 3 Total
At 30 June 2022
Financial Assets
Investments at FVTPL (Note 12) 22 - - 22
Money market deposit (Note 11) 23 - - 23
Investments in listed companies at FVTOCI (Note 9) 5 - - 5
Investments in unlisted shares at FVTOCI (Note 9) - - 37 37
Total financial assets 50 - 37 87
Financial Liabilities
Co-development and earnout payment liabilities (Note 14 and 16) - - 4 4
Contingent consideration liability resulting from the acquisition of the Columbus
business
(Note 14 and 16) - - 57 57
Hedging financial derivatives - 1 - 1
Total financial liabilities - 1 61 62
Level Level
Fair value measurements 1 2 Level 3 Total
At 31 December 2021
Financial Assets
Investments at FVTPL (Note 12) 24 - - 24
Money market deposit (Note 11) 22 - - 22
Investments in listed companies at FVTOCI (Note 9) 14 - - 14
Investments in unlisted shares at FVTOCI (Note 9) - - 22 22
Total financial assets 60 - 22 82
Financial Liabilities -
Co-development and earnout payment liabilities (Note 14 and 16) - - 4 4
Contingent consideration liability resulting from the acquisition of the Columbus
business
(Note 14 and 16) - - 70 70
Total financial liabilities - - 74 74
The following table presents the changes in Level 3 items for H1
2022, and the year ended 31 December 2021:
Financial Financial
asset liability
$m $m
Balance at 1 January 2021 25 94
Settled - (4)
Remeasurement of contingent consideration and other financial
liability recognised in finance income - (29)
Unwinding of contingent consideration and other financial
liability recognised in finance expense - 13
Change in fair value of investments at FVTOCI 24 -
Additions 3 -
Sale of investment at FVTOCI (30) -
Balance at 31 December 2021 and 1 January 2022 22 74
Settled - (3)
Remeasurement of contingent consideration and other financial
liability recognised in finance income - (12)
Unwinding of contingent consideration and other financial
liability recognised in finance expense - 2
Change in fair value of investments at FVTOCI 1 -
Additions 14 -
Balance at 30 June 2022 37 61
The critical areas of estimates in relation to the valuation of
the contingent consideration are the probabilities assigned to
reaching the success-based milestones and management's estimate of
future sales. The valuation for the payments that are based on
future sales is based on a discounted cash flow model applied to
projected future sales for a period of 5 years using a post-tax
discount rate of 8.1%. The key assumption used for this valuation
is the sales projections informed by pricing and volume
assumptions. The valuation for milestone payment is based on 100%
probability of success-based milestone discounted using a discount
rate of 4.7%.
If the future sales were 5% higher, the fair value of the
contingent consideration will increase by $2 million (H1 2021: $5
million) and if they were 5% lower the contingent consideration
will decrease by $3 million (H1 2021: $5 million). (Notes 14 and
16).
If the probability assigned to reaching the success-based
milestones were 5% lower, the fair value of the contingent
consideration will decrease by $1 million (H1 2021: $1 million)
(Notes 14 and 16).
19. Share capital
Issued and fully paid - included in shareholders'
equity:
Number of
shares $m
31 December 2021 and 1 January 2022 (audited) 244,331,288 42
Exercise of employees share scheme 1,114,919 -
Ordinary Shares purchased and cancelled (12,499,670) (1)
Issue of Ordinary Bonus Share 1 1,746
Cancellation of Ordinary Bonus Share (1) (1,746)
30 June 2022 (unaudited) 232,946,537 41
At 30 June 2022, of the issued share capital, 12,833,233 (2021:
12,833,233) are held as Treasury shares and 220,113,304 (2021:
231,498,055) shares are in free issue.
Bonus Share issuance and cancellation
As a result of the establishment of the Hikma Pharmaceuticals
PLC (Company) as the ultimate parent company of the Hikma
Pharmaceuticals PLC Group, and the Company's acquisition of
Columbus business in 2016, a merger reserve of $1,746 million was
recorded on the Company's balance sheet. This merger reserve did
not form part of the Company's distributable reserves.
At the 20 May 2022 Extraordinary General Meeting (EGM), the
Board approved the capitalisation of the merger reserve and the
issuance of a Bonus Share with a $1,746 million nominal value. This
share was subsequently cancelled through a capital reduction,
creating $1,746 million of distributable reserves to the
Company.
Share buyback programme
During the period, the Group executed a share buyback programme
of $300 million. A total of 12,499,670 shares were purchased and
cancelled. The Group incurred $3 million of transaction cost
directly attributable to the share buyback which was recognised in
equity.
Treasury Shares
At 30 June 2022, the Group holds 12,833,233 as Treasury shares
(31 December 2021: 12,833,233). The voting rights attached to these
Treasury shares are not capable of exercise.
20. Acquisitions
Custopharm Topco Holdings, Inc.
On 21 April 2022, the Group acquired 100% of the issued share
capital of Custopharm Topco Holdings, Inc. for a cash consideration
of $373 million on a debt and cash-free basis from Water Street
Healthcare Partners (Water Street), following approval from the US
Federal Trade Commission.
Custopharm Topco Holdings, Inc. is the parent of five companies
including two companies with 16% and 10% non-controlling interests'
ownership.
The net assets acquired in the transaction and the goodwill are
provisional pending the final valuation of those assets.
The assets and liabilities recognised as a result of the
acquisition are as follows:
$m
Product related intangible assets (Note 8) 251
Property, Plant and Equipment 1
Inventories, net 34
Trade receivables, net 31
Cash and cash equivalents 19
Trade and other payables (6)
Other current liabilities (9)
Deferred tax liabilities (47)
Net identifiable assets acquired 274
Add: goodwill 120
Net assets acquired 394
Less: non-controlling interests (2)
Total consideration 392
Satisfied by:
Cash consideration 392
Less: Cash and cash equivalents acquired (19)
Net cash outflow arising from acquisition 373
20. Acquisitions continued
The goodwill arising represents the synergies that will be
obtained by integrating Custopharm and its R&D capabilities,
adding an experienced team with a proven ability to develop and
commercialise complex sterile
injectable products into the existing business and increasing
the scale of the Injectables business. Goodwill will not be
deductible for tax purposes.
For the non-controlling interests, the Group recognised the
proportion of the net identifiable assets and liabilities.
Acquisition related costs amounted to $2 million (2021: $2
million) are included in the selling, general and administrative
expenses in the condensed consolidated interim income
statement.
The fair value of acquired trade receivables is $31 million. The
gross contractual amount for trade receivables due is $55 million,
none of which is expected to be uncollectible. Chargebacks and
other allowances are deducted from the gross amount to arrive at
the trade receivables balance of $31 million.
The business was acquired on 21 April 2022 and contributed $15
million revenue, $4 million reported loss and $9 million core
profit (excluding amortisation of intangible assets and the
unwinding of the inventory step-up resulting from the fair
valuation of those assets) for the period.
If the acquisition had occurred on the first day of the
financial year, the acquisition would have contributed
approximately $43 million to Group revenue, $16 million reported
loss and $18 million core profit (excluding amortisation of
intangible assets and the unwinding of the inventory step-up
resulting from the fair valuation of those assets).
Teligent asset acquisition
On 17 January 2022, Hikma announced that it has agreed to
acquire the Canadian assets of Teligent Inc. (Teligent), the
transaction was completed on 2 February 2022 and Hikma paid a cash
consideration of $46 million.
The acquisition was assessed under the optional concentration
test in IFRS 3 and was determined to be an asset acquisition, since
substantially all the fair value of the gross assets acquired is
concentrated in a group of similar identifiable assets namely
Intangible assets - Product rights, with significantly the same
risk characteristics, as they relate to mature products with
similar profit margins and distribution channels (Note 8).
21. Related party balances and transactions
No significant transactions between the Group and its associates
and other related parties were undertaken during the half-year. Any
transactions between the Company and its subsidiaries have been
eliminated on consolidation.
22. Contingent liabilities
Guarantees and letters of credit
A contingent liability existed at the balance sheet date in
respect of external guarantees and letters of credit totalling $47
million (31 December 2021: $45 million) arising in the normal
course of business. No provision for these liabilities has been
made in these financial statements.
A contingent liability existed at the balance sheet date for a
potential stamp duty obligation of $10 million (31 December 2021:
$10 million) that may arise for a repayment of a loan by
intercompany guarantors. It is not probable that the repayment will
be made by the intercompany guarantors.
Legal proceedings
The Group is involved in a number of legal proceedings in the
ordinary course of its business, including actual or threatened
litigation and actual or potential government investigations
relating to employment matters, product liability, commercial
disputes, pricing, sales and marketing practices, infringement of
IP rights, the validity of certain patents and competition
laws.
Most of the claims involve highly complex issues. Often these
issues are subject to substantial uncertainties and, therefore, the
probability of a loss, if any, being sustained and/or an estimate
of the amount of any loss is difficult to ascertain. It is the
Group's policy to provide for amounts related to these legal
matters if it is probable that a liability has been incurred and an
amount is reasonably estimable.
Starting in 2016, several complaints have been filed in the
United States on behalf of putative classes of direct and indirect
purchaser of generic drug products, as well as several individual
direct purchasers opt-out plaintiffs. These complaints, which
allege that the defendants engaged in conspiracies to fix,
increase, maintain and/or stabilise the prices of the generic drug
products named, have been brought against certain Group entities
and various other defendants. The plaintiffs generally seek damages
and injunctive relief under federal antitrust law and damages under
various state laws. The Group denies having engaged in conduct that
would give rise to liability with respect to these civil suits and
is vigorously pursuing defense of these cases. At this point, the
Group does not believe sufficient evidence exists to make any
provision.
Starting in June 2020, several complaints have been filed in the
United States on behalf of putative classes of direct and indirect
purchasers of Xyrem(R) against certain Group entities and other
defendants. These complaints allege that Jazz Pharmaceuticals PLC
and its subsidiaries entered into unlawful reverse payment
agreements with each of the defendants, including Hikma, in
settling patent infringement litigation over Xyrem(R). The
plaintiffs in these lawsuits seek treble damages and a permanent
injunction. The Group denies having engaged in conduct that would
give rise to liability with respect to these lawsuits and is
vigorously pursuing defence of these cases. At this point, the
Group does not believe sufficient evidence exists to make any
provision.
Numerous complaints have been filed against certain Group
entities with respect to the manufacture of opioid products. Those
complaints now total approximately 841 in number. These lawsuits
have been filed against distributors, branded pharmaceuticals
manufacturers, pharmacies, hospitals, generic pharmaceuticals
manufacturers, individuals, and other defendants by a number of
cities, counties, states, other governmental agencies and private
plaintiffs in both state and federal courts. Seven cases have been
filed in Canadian courts. Most of the federal cases have been
consolidated into a multidistrict litigation in the Northern
District of Ohio. These cases assert in general that the defendants
allegedly engaged in improper marketing and distribution of opioids
and that defendants failed to develop and implement systems
sufficient to identify suspicious orders of opioid products and
prevent the abuse and diversion of such products. Plaintiffs seek a
variety of remedies, including restitution, civil penalties,
disgorgement of profits, treble damages, attorneys' fees and
injunctive relief. The Group denies having engaged in conduct that
would give rise to liability with respect to these civil suits and
is vigorously pursuing defense of these cases. At this point, the
Group does not believe sufficient evidence exists to make any
provision.
In November 2020, Amarin Pharmaceuticals filed a patent
infringement lawsuit against certain Group entities in the United
States District Court for the District of Delaware (No. 20-cv-1630)
alleging that Hikma's sales and distribution of its generic
icosapent ethyl product infringes three Amarin patents that
describe certain methods of using icosapent ethyl. Amarin sought an
injunction barring Hikma from selling its generic product as well
as unspecified damages. Hikma's product is not approved for the
patented methods but rather is approved only for a different
indication not covered by any valid patents. In January 2022 the
court dismissed the lawsuit, and as of the date of this results
announcement , Amarin has stated that it intends to appeal the
court's dismissal. The Group denies the allegations and will
vigorously defend against them if necessary. The Group does not
believe sufficient evidence exists to make any provision.
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END
IR BCGDIIBGDGDX
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August 04, 2022 02:00 ET (06:00 GMT)
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