Join our community of smart investors

Hikma cuts guidance

Competition has hit expectations across generics and injectables
August 18, 2017

Investors fled from Hikma Pharmaceuticals (HIK) after it cut full-year revenue guidance for its generics division to $620m (£481m) from the $800m predicted at the final results in March, citing increased competition on both prices and volumes. The group is still in discussions with the US Food and Drug Administration (FDA) over a possible generic version of Advair, GlaxoSmithKline’s (GSK) asthma drug. It said there are “no material issues regarding the substitutability of the proposed device”, but didn't give any indication of when the drug would come to market. Originally, it was expected to come to market this year and contribute 15 per cent to generics revenue.

IC TIP: Sell at 1,212p

Elsewhere, operating profit from injectables – the group’s largest division – fell by 1 per cent. Management also warned that full-year revenue would be slightly lower year on year due to increased competition in the US market and reduced shipments to the Middle East and North Africa during Ramadan and Eid. Branded products faced their own challenges, with adverse movements in a range of currencies against the dollar sending revenues down 6 per cent.

Analysts at Numis are forecasting a drop in adjusted pre tax profit to $318m, giving EPS of 98.5¢ for the full year 2017, down from $359m and 118¢ in 2016.

HIKMA PHARMACEUTICALS (HIK)  
ORD PRICE:1,212pMARKET VALUE:£2.92bn
TOUCH:1,209-1,212p12-MONTH HIGH:2,354pLOW: 1,101p
DIVIDEND YIELD:3%PE RATIO:15
NET ASSET VALUE:101¢*NET DEBT:26%
Half-year to 30 JunTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
201688283.025.711.0
201789510028.811.0
% change+1+20+12 
Ex-div:24 Aug   
Payment:22 Sep   
*Includes intangible assets of $1.69bn, or 700p a share   £1=$1.29