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Hikma sounds the earnings alarm sending shares crashing

A tough and competitive market hit the firm's Generics business
Hikma sounds the earnings alarm sending shares crashing
Hikma certainly wasn't the investment to be in this morning!

Shares in Hikma Pharmaceuticals (LON:HIK) were marked down 7% after the company lowered guidance for sales of generic products and warned of an “increasingly challenging environment”.

The competition in this particular arena has meant the company has been forced progressively chop back its revenue estimate for the unit, which now stands at US$620mln for the year; in April the figure was US$800mln.

Total revenues are set to be in the order of US$2bn.

Interim results from the FTSE 250 ‘druggie’, which also specialises in injectable products, were lacklustre with sales up 1% at US$895mln, bit operating profits off US$8mln at US$113mln.

Tough market

“In the US, where competition is increasing and pricing pressure is intensifying, sales in our Injectables business were resilient and we maintained our track record of strong profitability,” said chairman Said Darwazah.

“The tougher market conditions did however continue to limit growth in our Generics business. 

“We remain focused on executing our Generics strategy and we have strengthened the management team and further restructured the cost base to provide a robust and efficient platform to support pipeline execution and future growth.”

The shares, off 35% in the year to date, fell 95.96p to 1,227p, valuing the business at just under £3bn.

Strenghens Takeda ties

Separately, Hikma said it has strengthened ties with Japanese giant Takeda by expanding its licensing and distribution agreement in the Middle East and North Africa (MENA).

The two will focus their expertise on promoting cardiovascular and diabetes treatments, according to Mazen Darwazah, the company’s head of emerging markets.  

“We are pleased to be building on our partnership with Takeda to bring important medicines to the MENA region,” he added.

“By working with global partners we are strengthening our product portfolio in growing therapeutic areas and reinforcing our commitment to improving patient access to quality medicines."

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