Full Year 2024 Hikma Pharmaceuticals PLC Earnings Call - Pre-Recorded

Riyadh: and Executive R&D side, as I mentioned earlier. In addition to our pipeline, we have been executing on our strategy to expand selectively into adjacent markets and businesses. For example, we have had great wins in building our CMO business.

I mentioned earlier.

In addition to our pipeline, we have been executing on our strategy to expand selectively into adjacent markets and businesses.

For example, we have had great wins and building our CMO business, we signed a significant long term agreement with a global pharma company for the generic business, which we expect to start contributing meaningfully in 2027.

Riyadh: We signed a significant long-term agreement with a global pharma company for the generic business, which we expect to start contributing meaningfully in 2026.

Finally, our last pillar people our responsibility.

Riyadh: Finally, our last pillar, people and responsibility. Having a culture that empowers our people is essential to achieving long-term success. This year I have traveled to many of our locations around the world and spoken with hundreds of our people, and I continue to be humbled by their commitment, diligence, and experience.

Having a culture that empowers our people is essential to achieving long term success.

This year has traveled to many of our locations around the world and spoken with hundreds of our people and I continue to be humbled by the commitment diligence and experience.

Riyadh: we have put in place a number of initiatives aimed at enhancing employee career progression, recognition, and well-being. We also continue to advance our sustainability strategy, improving access to medicine as at the heart of everything that we do. And through our product launches and access campaigns, we continue to improve patient access to the essential medicines they need.

We have put in place a number of initiatives aimed to enhancing employee career progression recognition and there'll be we also continued to advance our sustainability strategy improving access to medicine at the heart of everything that we do and through our product launches and access campaign, we continued to improve page.

<unk> access to the essential medicines they need.

In addition, we conducted a double materiality assessment this year as we work to understand better our most material sustainability areas.

Riyadh: In addition, we conducted a double materiality assessment this year as we work to understand better our most material sustainability areas. We're investing across our market, building out our infrastructure, launching new products, and deploying our healthy balance sheet on value-enhancing acquisitions. I'm very proud of our strong performance today, and our ambition is to achieve even more.

We're investing across our market building out our infrastructure launching new products and deploying our healthy balance sheet on value enhancing acquisitions.

They are proud of our strong performance to date and our ambition is to achieve even more we have exciting opportunities coming over the next five years and over the next two slides I will provide more details on some of the key milestones we expect to achieve.

Riyadh: We have exciting opportunities coming over the next five years, and over the next two slides, I will provide more details on some of the key milestones we expect to achieve. Over the short term, 2025 and 2026, our focus will be on continued investment across the business to ensure we are set up for future success. Starting with our injectable business, we are focused on three areas. This business is at an exciting time of its development, with a range of new initiatives underway across all geographies, including new market entries, multiple capacity expansion projects, and recent acquisition of Zelia's U.S.

Over the short term 2025, and 2026, our focus will be on continued investment across the business to ensure we are set up for future success.

Starting with our injectable business, we are focused on three areas.

This business is at an exciting time office development with a range of new initiatives underway across all geographies, including new market entries multiple capacity expansion projects and recent acquisition of failures U S assets and R&D Center incentive.

Riyadh: Assets and R&D Center in Zambia. Over 2025 to 2026, a key focus for this business is on the integration of Zelia, including the R&D center in Zagreb. and completing the build-out of the optimization of the Bedford manufacturing facility. In 2025, we will have a full year contribution from ZERIO's marketed products, and we will continue to work on maximizing and growing contribution from these products. When it comes to our R&D priority, and through the experience that the team will be enhancing our efficiency and adding more complex projects for internal development. focusing on dosage forms that bring value to customers, such as ready-to-use products.

Over 2025 to 2036 key focus for this business is on the integration of failure, including R&D Center incentive.

And completing the buildout of the optimization of the Bedford manufacturing facility in.

2025, we will have a full year contribution from <unk> marketed products and we will continue to work on maximizing and growing contribution from these products.

When it comes to our R&D priority and through the experience as a team we will be enhancing our efficiency and adding more complex projects or internal development.

Focusing on dosage forms that bring value to customers such as ready to use products, we will invest in developing the negative sides to become the center of excellence for ICU and convenience products for hospitals and patients.

Riyadh: We will invest in developing the negative side to become the center of excellence for RTU and convenience products for hospitals and patients. Some key launch opportunities include reformulated vancomycin ready-to-use product, which offers great potential. as well as long-acting injectable suspensions in the U.S. We also expect to launch our U.S. biosimilar products over this period. In addition, we are expanding our manufacturing footprint in MENA and expect the new plants in Morocco and Algeria to be fully operational from 2026 on. We will also continue to expand our market share across Syria.

Some key launch opportunities include reformulated vancomycin ready to use product, which offers great potential as.

As well as a long acting injectable suspension in the U S. We also expect to launch our U S. Biosimilar products over this period.

In addition, we're expanding our manufacturing footprint in Mena and expect the new plants and were Oklahoma, Algeria to be fully operational from 2026.

We will also continue to expand our market share across Europe.

Turning to the branded business. This business has been building excellent momentum over the past few years. Looking ahead, we will continue to invest in growing our pipeline of oncology products and treatments used to treat <unk>.

Riyadh: Turning to the branded business, this business has been building excellent momentum over the past few years. Looking ahead, we will continue to invest in growing our pipeline of oncology products and treatments used to treat chronic illnesses to meet the high unmet needs across the region. We're focusing on introducing first-to-market and first-generic products and we expect to launch Finasteride, a new generation alopecia medication and bispos combination. as first-to-market opportunities over this period. We're also targeting new therapy areas, including GLP-1s and metastatic breast cancer, and we continue to expand our presence in other key areas such as multiple sclerosis.

Illnesses to meet the high unmet needs across the region.

We're focusing on introducing first to market and first generic products and we expect to launch finasteride and new generation alopecia medication and business combination.

First to market opportunities over this period.

We're also targeting new therapy areas, including DLP ones and metastatic breast cancer and we continue to expand our presence in other key areas such as multiple sclerosis.

And finally, we're investing in enhancing our manufacturing capacity and capability.

Riyadh: And finally, we're investing in enhancing our manufacturing capacity and capability, strengthening our position as a local manufacturer and supplier of high-quality medicines with industry-leading global expertise, such as enhancing our oncology capabilities in Saudi Arabia, Algeria, and Egypt.

Strength in strengthening our position as a local manufacturer and supplier of high quality medicines was industry, leading global expertise such as enhancing our oncology capabilities in Saudi Arabia, Algeria and Egypt.

And then finally as generics this business has an excellent year in 2024, achieving over $1 billion in revenue for the first time.

Riyadh: And then finally, generics. This business has an excellent year in 2024, achieving over $1 billion in revenue for the first time. One of our key priorities for generics over 2025 to 2026 is improving our pipeline. We have limited near-term pipeline opportunities, and this is why we will increase our new spend in 2025. This will help us enhance the breadth and the complexity of our portfolio, including adding more NC-1 and first-to-file opportunities. We're also improving our R&D efficiency and structure, which we've already started in 2024. We're already increasingly leveraging synergies, opportunities of our MENA R&D teams, including for the co-development of solid oil formulation.

One of our key priorities for generics over 20, 25% to 2026 is improving our pipeline.

We have limited near term pipeline opportunities and this is why we will increase R&D spend in 2025. This will help us enhance the breadth and complexity of our portfolio, including adding more and see minus one and first to file opportunities.

We're also improving our R&D efficiency and structure.

We've already started in 2024, we're already increasingly leveraging synergies.

Facilities of our Mena R&D teams, including for the co development of solid oral formulation and in addition, we're building an R&D team and doesn't have to broaden our pipeline.

Riyadh: In addition, we're building an R&D team in Zagreb to broaden our pipeline. Beyond this, in 2025 we will start preparing our facility for the new CMO opportunity. and we're increasing our respiratory and nasal capacity by adding new manufacturing lines. This will help us meet growing demand and improve production efficiency. Lastly, we're expanding our geographic presence and we'll be launching our first product in Canada over the spring. As you can see, we have a lot of great initiatives in place that will drive and accelerate our growth. Over the medium to long term, from 2027 to 2029, we will start to see the return of this investment.

Beyond this in 2025, we will start preparing our facility for the new CMO opportunities.

And we are increasing our respiratory and nasal capacity by adding new manufacturing line. This will help us meet growing demand and improve production efficiency.

Lastly, we are expanding our geographic presence and we'll be launching our first product in Canada over this period.

As you can see we have a lot of great initiatives in place that will drive and accelerate our growth over the medium to long term from 2007 to 2029, who will start to see the return of this investment. During this time, we have an ambition for our injectables to become the market leader and ready to use formulation. This.

Riyadh: During this time, we have an ambition for our injectables to become the market leader in ready-to-use formulation. This will be supported by the new Bedford facility, which will be fully operational and ramping up production. Our pipeline and portfolio becomes increasingly specialized and differentiated across the group, with the launch of epinephrine nasal spray and additional inhalation products in the generics, We will see an increased contribution from our CMO business as the generic contract kicks off and we add new opportunities in both the generic and the injectable business. We'll have more capacity across MENA for the branded business, notably in Saudi Arabia.

Will be supported by the new Bedford facility, which will be fully operational and dropping ramping up production.

Our pipeline our portfolio becomes increasingly specialized and differentiated across the group.

With the launch of epinephrine nasal spray and additional inhalation products and the generics for example.

We will see an increased contribution from our CMO business as the generic contract kicks off and we add new opportunities in both the generic and injectable businesses.

We'll have more capacity across Mena for the branded business, notably in Saudi Arabia. We will also start to benefit from the improved efficiency as a result of the Takeda product acquisition supporting the branded profitability and finally, we will have more momentum in our 500, <unk> compounding business and the increased scale across our.

Riyadh: We will also start to benefit from the improved efficiency as a result of the Takeda product acquisition, supporting the branded profitability. And finally, we will have more momentum in our 503B compounding business and increased scale across our European business.

European business.

All of this positions the group for growth and I'm excited for 2025 and beyond I will now hand, it over to <unk> to take us through the financials.

Riyadh: All of this positions the group for growth and I'm excited for 2025 and beyond.

Khaled: I will now hand it over to Khaled to take us through the financials. Thank you Riyadh and hello everyone. I'm pleased to share that Hikma had a fantastic year in 2024. We saw double-digit core revenue growth ahead of our expectations as well as profit growth with a group core operating profit of 719 million euros dollar in line with our guidance which we upgraded during the year. This is an excellent result. Good growth in profit in branded and injectables helped to offset the expected reduction in generic profitability that resulted from increased royalties on our authorized generic of sodium oxalate.

Speaker Change: Thank you Lee and Hello, everyone.

Speaker Change: I am pleased to share that Hikma had a fantastic year in 2024.

Speaker Change: We saw double digit core revenue growth ahead of our expectations as well as profit growth for the <unk>.

Speaker Change: Core operating profit of $719 million in line with our guidance, which we upgraded during the year.

Speaker Change: This is an excellent result.

Speaker Change: Good growth in profit and branded and Injectables help to offset the expected reduction in generic profitability that resulted from increased royalties on our authorized generic of sodium oxidate.

Speaker Change: The board is recommending a full year dividend of <unk> 80 per share up from 72.

Khaled: The Board is recommending a full-year dividend of $0.80 per share, up from $0.72. Looking ahead, we are confident about our future. As Riyadh highlighted, we've been making strategic investments in 2024, including bolt-on acquisitions and partnerships which support our growth plan.

Speaker Change: Looking ahead, we are confident about our future.

Speaker Change: As <unk> highlighted what's been making strategic investments in 2024, including bolt on acquisitions and partnerships, which supports our growth plans.

Speaker Change: Now, let's take a look at the financial performance of each business segment.

Khaled: Now, let's take a look at the financial performance of each business segment. starting with our injectable business. This segment had a strong year, with a 10% increase in core revenue, driven by our growth portfolio, recent launches, and contribution from the Zilli acquisition. Organic core revenue growth excluding Zelia was 8%, which is at the top end of our guidance range. In North America, we continue to broaden our portfolio by consistently launching new products. In 2024, we have 20 launches across both the U.S. and Canada, including little glutide injection. In Europe and rest of the world, we delivered good revenue growth across all our established and recently entered markets, driven by sales of our expanding portfolio of own products, which grew 20%.

Speaker Change: Starting with our injectable business.

Speaker Change: This segment had a strong year with a 10% increase in core revenue driven by our portfolio recent launches and contribution from Brazil acquisition.

Speaker Change: Organic core revenue growth, excluding <unk> was 8%, which is at the top end of our guidance range.

Speaker Change: And North America, we continue to broaden our portfolio by consistently launching new products. In 2024, we had 20 launches across both the U S and Canada, including <unk> injection.

Speaker Change: And Europe and rest of the World. We delivered good revenue growth across all our established and recently entered markets driven by sales of our expanding portfolio of products, which grew 20%.

Speaker Change: Our contract manufacturing business performed in line with expectations accelerating in the second half.

Khaled: Our contract manufacturing business performed in line with expectations, accelerating in the second half. In MENA, we saw strong revenue growth across most of our markets, supported by new launches and good demand across our broad portfolio. Injectables core operating profit grew by 5% and core operating margin was 35.3% compared to 36.9% in 2023. Excluding Zelia, injectable core operating margin was 35.7%. The contraction in margin is primarily due to the product mix, which includes the slightly dilutive impact of the Zelia acquisition and increased contribution from partner products.

Speaker Change: In Mena, we saw strong revenue growth across most of our markets supported by new launches and good demand across our broad portfolio.

Speaker Change: Injectable core operating profit grew by 5%.

Speaker Change: Core operating margin was 35, 3% compared to 36, 9% in 2023.

Speaker Change: Excluding failure injectable core operating margin was 35, 7% contraction.

Speaker Change: Contraction in margin is primarily due to the product mix, which includes the slightly dilutive impact of any acquisition and increased contribution from partner products.

Speaker Change: I think two branded without seeing momentum pick up in this business. Thanks to our ongoing investments to expand our portfolio of oncology products and medicines used to treat chronic illnesses.

Khaled: Turning to Branded, we are seeing momentum pick up in this business. Thanks to our ongoing investments to expand our portfolio of oncology products and medicines used to treat chronic illness. Our focus on launching more high-value and first-to-market products tailored to local needs drove growth and supported strong margins. In 2024, branded core revenue grew 8% and core operating profit was up by 11%, with core operating margin improving to 24.6%. In constant currency, core operating profit grew an impressive 20%.

Speaker Change: Our focus on launching more high value and first to market products tailored to local needs drove growth and supported strong modules.

Speaker Change: In 2024 branded core revenue grew 8% and core operating profit was up by 11% with core operating margin improving to 24, 6% in constant currency core operating profit grew an impressive 20%.

Speaker Change: Finally genetics this business achieved over $1 billion in revenue for the first time with core revenue up 11% ahead of our upgraded guidance.

Khaled: Finally, Genetics. This business achieved over $1 billion U.S. in revenue for the first time, with core revenue up 11% ahead of our upgraded guidance. This excellent performance was driven by good demand across our differentiated portfolio, particularly for our respiratory products. Core Operating Profit came in at $170 million USD, ahead of our expectations at the beginning of the year, but down 11% versus 2023. An improvement in product mix across our base business helped to offset the higher royalties on our authorized generic of sodium oxalate.

Speaker Change: This excellent performance was driven by good demand across our differentiated portfolio, particularly for our respiratory products.

Core operating profit came in at $170 million ahead of our expectations at the beginning of the year, but down 11% versus 2023.

Speaker Change: An improvement in product mix across our base business helped to offset the higher royalties on our authorized generic of sodium oxide.

Speaker Change: To ensure continued growth we need to keep investing in building our pipeline of differentiated products.

Khaled: To ensure continued growth, we need to keep investing in building our pipeline of differentiated products. In 2024, we invested $141 million in R&D, representing 4.5% of revenue. This spend contributed to us making over 200 submissions across the group. Going forward, we plan to increase our spend and expect a 20% increase in our R&D cost in 2025.

Speaker Change: In 2024, we invested $141 million in R&D, representing four 5% of revenue.

Speaker Change: This spend contributed to us making over 200 submissions across the globe.

Speaker Change: Going forward, we plan to increase our spend and expect a 20% increase in our R&D cost in 2025.

Speaker Change: We continue to invest in our manufacturing capacity to support our growing portfolio in the U S. We spent 49 million U S dollar on upgrades.

Khaled: We continue to invest in our manufacturing capacity to support a growing portfolio. In the U.S., we spent $49 million on upgrades, new technologies, and capacity expansion across our Cherry Hill and Columbus sites. In MENA, $80 million was spent strengthening and expanding our local manufacturing capabilities, including general formulations in both Tunisia and Algeria, as well as strengthening our oral oncology capabilities in Algeria. In Europe, we spend 36 million US dollars enhancing and expanding our manufacturing capabilities, including adding litholization capacity in Portugal.

Speaker Change: New technologies and capacity expansion across our Cherry Hill and Columbus sites.

Speaker Change: In Mena 80 million was spend strengthening and expanding our local manufacturing capabilities, including general formulations in both Tunisia, and Algeria, as well as planting our oral oncology capabilities in Algeria.

Speaker Change: In Europe, we spend $36 million, enhancing and expanding our manufacturing capabilities, including adding localization capacity in Portugal.

Speaker Change: We have a robust balance sheet and the group continues to generate a healthy level of cash with operating cash flow of $564 million from 2024, the decrease compared to the previous year, primarily reflects increased trade receivables due to strong sale.

Khaled: We have a robust balance sheet, and the group continues to generate a healthy level of cash with an operating cash flow of $564 million in 2024. The decrease compared to the previous year primarily reflects increased trade receivables due to strong sales toward the end of the year. The group's total debt increased slightly to $1.3 billion due to the Zillia acquisition. We continue to have a healthy balance sheet with a net debt-to-core EBITDA ratio of 1.4 times.

Speaker Change: Towards the end of the year.

Speaker Change: The group total debt increased slightly to $1 3 billion dollar utilization acquisition will continue to have a healthy balance sheet with a net debt to core EBITDA ratio of one four times.

Speaker Change: Finally, the outlook for 2025.

Khaled: Finally, the outlook for 2025. As Riyadh highlighted, 2024 was a year of excellent strategic progress, positioning us well for continued growth in 2025 and beyond. We expect group revenue to grow in the range of 4% to 6%. We expect core operating profit to be in the range of $730 million to $770 million. This is after an increase in investments in R&D of around 20% in 2025 across our three segments to support the development of our global pipeline underpinning medium to long-term growth. We expect injectable revenue to grow in the range of 7% to 9%, and for core operating margin to be in the mid-30s, reflecting the full-year impact of the Zelia acquisition and our evolving product and geographic mix.

Speaker Change: As <unk> highlighted 2024, it was a year of excellent strategic progress positioning us well for continued growth in 2025 and beyond.

Speaker Change: We expect group revenue to grow in the range of 4% to 6%.

Speaker Change: We expect core operating profit to be in the range of $730 million to $770 million.

Speaker Change: This is after an increase in investments in R&D of around 20% in 2025 across our three segments to support the development of our global pipeline underpinning medium to long term growth.

Speaker Change: We expect injectable revenue to grow in the range of 7% to 9%.

Speaker Change: Fourth quarter operating margin to be in the mid thirties, reflecting the full year impact of the <unk> acquisition, and our evolving product and geographic mix.

Khaled: We will continue to launch new products, leveraging our high quality manufacturing capabilities, and expand in recently entered markets. We expect branded revenue to grow 6% to 7% in constant currency. We expect core operating margin to be close to 25%. We remain focused on growth across the MENA region, and we will continue to launch products and sign partnerships, bringing more chronic medications to patients. We expect generic revenue to be broadly flat with a good performance from some of our more differentiated products offsetting price erosion on the base business. We'll be investing more into R&D during 2025 to ensure the pipeline is well-placed to support medium to long-term growth and are pleased to be able to guide to core operating margin for generic to be around 16%.

Speaker Change: We will continue to launch new products, leveraging our high quality manufacturing capabilities and expand and recently entered markets.

Speaker Change: We expect branded revenue to grow 6% to 7% in constant currency, we expect core operating margin to be close to 25%. We remain focused on growth across the Mena region, and we will continue to launch products and signed partnerships and bringing more chronic medications to patients.

Speaker Change: We expect generic revenue to be broadly flat with a good performance from some of our more differentiated products offsetting price erosion on the base business would be investing more into R&D. During 2025 to ensure the pipeline is well placed to support medium to long term growth and are pleased to be able to go to.

Speaker Change: Operating margin for genetic to be around 16%.

Speaker Change: We expect group coordinate signings to be in the range of 90 to 95 million U S. Dollar.

Khaled: We expect Group Core Net Finance to be in the range of $90 to $95 million USD, reflecting the current interest rate environment and an increase in borrowing related to the Zelia acquisition. We expect the Core Effective Tax Rate to be around 22%. We expect group capital expenditure to be in the range of $170 million to $190 million.

Speaker Change: Reflecting the current intrastate environment, an increase in borrowings related to the <unk> acquisition.

Speaker Change: The core effective tax rate to be around 22%.

Speaker Change: We expect our group capital expenditure to be in the range of $170 million to 190 million U S. Dollar.

Speaker Change: Thank you and I will hand, now back to the App.

Riyadh: Thank you and I will hand now back to Riyad. To close, I'm excited of how Hikma is positioned and all the plans we have in place to continue to deliver growth. We have three fantastic businesses with strong market positions and unique strengths. We are focused on harnessing the right opportunities for growth through R&D, partnership, and enhanced manufacturing. And finally, our financial strength puts us in a perfect position to deliver on our goals with low leverage, strong cash generation, and the ability to consistently deliver high returns on invested capital. I look forward to keeping you updated on our progress.

Speaker Change: To close I'm excited of how <unk> positioned and all the plans we have in place to continue to deliver growth.

Speaker Change: We have three fantastic businesses with strong market positions and unique strengths.

Speaker Change: We are focused on harnessing the right opportunities for growth through R&D partnership and enhanced manufacturing.

Speaker Change: And finally, our financial strength puts us in a perfect position to deliver on our goals with low leverage strong cash generation and the ability to consistently deliver high returns on invested capital.

I look forward to keeping you updated on our progress. Thank you.

Riyadh: Thank you.