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Improved margins and Advair hopes lift drugmaker Hikma
March 15, 2017 / 7:28 AM / in 4 months

Improved margins and Advair hopes lift drugmaker Hikma

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(Reuters) - Drugmaker Hikma Pharmaceuticals Plc (HIK.L) posted higher than expected full-year profit thanks to higher margins and said it expects profitability in its growing generics drugs business to improve significantly this year.

Shares in Hikma, which makes and markets branded and non-branded generic and injectable drugs and is listed on the FTSE 100 in London, rose as much as 9 percent to 2317 pence and was the top gainer on the index.

"We expect the profitability of the generics business to significantly improve in 2017, driven by new product launches, an enhanced mix of sales and a continued focus on operating efficiencies," the Jordan-based company said in a statement.

Hikma, which bought Boehringer Ingelheim's U.S. generic drugs business last year maintained its expectation of $800 million (656.6 million pounds) in revenue from the generics business in 2017, in line with a reduced forecast it made in November. Overall, the group expects $2.2 billion in revenue in 2017.

Pricing for the generics industry has been going down in the single-digit range but this has been offset by bringing new, high-value products to the market, Chief Financial Officer Khalid Nabilsi told Reuters.

The industry focus is currently on Advair, used for treatment of asthma and chronic obstructive pulmonary disease.

Mylan (MYL.O) could have the first substitutable generic version of GlaxoSmithKline's (GSK.L) Advair available in the United States, assuming regulators approve its product by a target date of March 28, 2017.

A rival version from Hikma and Vectura (VEC.L) is hot on its heels, with an approval date of May 10.

New launches, primarily Advair, are expected to contribute about 15 percent of the generics revenue in 2017, said Hikma.

Core operating profit rose to $419 million for the year ended Dec. 31 from $409 million, helped by strong growth in its injectables business. Analysts on average had estimated operating profit of $375 million and noted the positive impact of improved margins.

Reporting by Arathy S Nair in Bengaluru; Editing by Keith Weir

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