REG - Hikma Pharmaceutical - Final Results
26/02/2025 07:15
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RNS Number : 4515Y Hikma Pharmaceuticals Plc 26 February 2025
Strong 2024 performance and a positive outlook for 2025
London, 26 February 2025 - Hikma Pharmaceuticals PLC ('Hikma' or 'Group'), the
multinational pharmaceutical company, today reports its audited results for
the year ended 31 December 2024.
Riad Mishlawi, Chief Executive Officer of Hikma, said:
"It's been another strong year for Hikma with double digit revenue growth,
increased profits and a resilient margin. We continued to invest in the
business to support our future progress, with a strategic acquisition
alongside new partnerships and agreements. This momentum combined with our
diversified portfolio, leading market positions and increasing investment in
R&D, underpin our positive outlook for 2025 and confidence in the
future."
Reported results (statutory) 2024 2023 Change Constant currency
$ million $ million change
Revenue 3,127 2,875 9% 9%
Operating profit 612 367 67% 71%
Profit attributable to shareholders 359 190 89% 98%
Cashflow from operating activities 564 608 (7)% -
Basic earnings per share (cents) 162 86 88% 98%
Total dividend per share (cents) 80 72 11% -
Core results(2) (underlying) 2024 2023 Change Constant currency(1)
$ million $ million change
Core revenue 3,156 2,875 10% 10%
Core operating profit 719 707 2% 4%
Core EBITDA(2) 824 810 2% 4%
Core profit attributable to shareholders 495 492 1% 5%
Core basic earnings per share (cents) 224 223 0% 4%
STRONG FINANCIAL PERFORMANCE
· Double-digit Group core revenue growth, ahead of expectations
o Group core revenue up 10%, including contribution from Xellia acquisition
(9% organic). Reported Group revenue up 9%
o Core revenue up in all three business segments - Injectables up 10%,
Branded up 8% and Generics up 11%, supported by breadth of portfolio and
recent launches
o Growth in all regions, led by North America
· Core Group operating profit up 2% to $719 million at a margin of
22.8% (2023: 24.6%)
o Injectables core operating profit up 5% with margin of 35.3% (2023:
36.9%). Excluding Xellia, Injectables core operating margin was 35.7%. Branded
core operating profit up 11% with margin of 24.6% (2023: 23.8%)
o Generics core operating profit down 11% with margin of 16.4% (2023:
20.5%), reflecting the expected higher royalties for our authorised generic of
sodium oxybate
o Group reported operating profit up 67%, reflecting an impairment reversal
in our Generics business and lower operating profit in the previous year
resulting from the impairment of our Sudan business and a legal settlement
provision
· Strong cashflow from operating activities of $564 million (2023: $608
million)
o Good operating performance slightly offset by increased trade receivables
reflecting strong sales towards the end of the year
· Robust balance sheet and high returns
o Leverage at 1.4x net debt(3) to core EBITDA (31 December 2023: 1.2x)
o Return on average invested capital of 16.9%(4)
o Full-year dividend of 80 cents per share, up 11%, reflecting confidence in
our future prospects
CONTINUED STRATEGIC PROGRESS TO DRIVE FUTURE GROWTH
· Invested to further expand and diversify portfolio
o Acquired Xellia Pharmaceuticals' US finished dosage form business, further
strengthening the Injectables business
o Agreed to acquire 17 Takeda brands licensed to Hikma, enhancing future
Branded profitability
o Strengthened R&D, manufacturing and commercial capabilities
· Signed new agreements and partnerships
o Expanded our Generics contract manufacturing (CMO) business with a
significant agreement with a global pharmaceutical company. Expected to start
contributing meaningfully in 2027
o Entered into exclusive commercial partnership with Emergent BioSolutions
in January 2025 for Kloxxado(®) (naloxone HCl 8mg) in the US to increase
patient access to this lifesaving medicine
· Strong pipeline supporting consistency of new launches
o 132 new product launches across the business
o Launched liraglutide injection in the US, the first approved ANDA for a
generic GLP-1 referencing Victoza(®), helping improve patient access to this
class of medications
STRONG 2025 GROUP OUTLOOK
· Group revenue growth of 4% to 6%
· Group core operating profit in the range of $730 million to $770
million, after an increase in investment in R&D of around 20% in 2025
Further information:
A pre-recorded presentation will be available at www.hikma.com
(http://www.hikma.com) at 07:00am GMT. Hikma will also hold a live Q&A
webinar at 9:00am GMT, and a recording will be made available on the Company's
website.
To join via conference call please dial:
United Kingdom (Local): +44 20 3936 2999
United Kingdom (Toll-Free): +44 800 358 1035
United States (Local): +1 845 213 3398
United States (Toll-Free): +1 855 9796 654
Access Code: 292359
For further information please contact Deepa Jadeja - djadeja@hikma.com
(mailto:djadeja@hikma.com) .
Hikma (Investors):
Susan Ringdal +44 (0)20 7399 2760/ +44 (0)7776 477050
EVP, Strategic Planning and Global Affairs
Guy Featherstone +44 (0)20 3892 4389/ +44 (0)7795 896738
Director, Investor Relations
Layan Kalisse +44 (0)20 7399 2788/ +44 (0)7970 709912
Senior Associate, Investor Relations
FTI Consulting (media):
Ciara Martin +44 (0) 7779 775 979
About Hikma:
Hikma helps put better health within reach every day for millions of people
around the world. For more than 45 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
North America, 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 9,500 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 (http://www.hikma.com)
Hikma Pharmaceuticals PLC (LSE: HIK) (NASDAQ Dubai: HIK) (OTC: HKMPY)
(LEI:549300BNS685UXH4JI75) (rated BBB-/stable S&P, BBB-/positive Fitch)
STRATEGIC REVIEW
It has been another strong year for Hikma. Group core revenue growth of 10%
(9% reported Group revenue growth) was ahead of our upgraded expectations and
Group core operating profit of $719 million was in line with upgraded
guidance.
We are the seventh largest supplier of generic medicines in the US(5), and the
third largest supplier of generic injectable products by volume in that
market(6). We also maintained our position as the second largest
pharmaceutical company, by sales, in the MENA region(7).
We made excellent strategic progress during the year, with momentum building
across our three businesses. Continued investment in R&D and business
development is strengthening our differentiated pipeline and we are enhancing
our manufacturing offering and commercial presence.
We also remain focused on the sustainability topics that are most material to
our business, as well as those that are most relevant to our stakeholders.
During 2024 we conducted a double materiality assessment, which will inform
future updates to our sustainability framework and strategy.
Injectables
Our Injectables business, which manufactures and supplies generic injectable
and specialty medicines to hospitals across North America, Europe and MENA,
had another successful year. We delivered an impressive top-line
performance, with strong revenue growth in each of our three geographies, and
core operating profit growth for the division of 5%.
During the year we were successful in acquiring the US finished dosage form
business of Xellia Pharmaceuticals. This acquisition will diversify and enrich
our injectables portfolio and pipeline, expand our US-based manufacturing
capacity, bringing complex manufacturing technologies, and support the
long-term growth of the Injectables business.
We continued to broaden and diversify our portfolio, with 89 new launches
across the business, including 12 in the US. On top of this, we added
products through the Xellia acquisition, which also enhanced our pipeline.
With our new R&D centre in Zagreb complementing our existing footprint, we
are well positioned to develop more complex products over the medium term.
We are also enhancing our differentiation through partnership, one example in
2024 being the launch of our first GLP-1 product in December, liraglutide.
Our MENA Injectables business remains a solid contributor to growth, with both
biosimilars and our own portfolio of medicines contributing to the strong
performance. In Europe, our own products grew 20% in 2024. We benefitted
from our recent entries into France, the UK and Spain and our growing
portfolio of products, which enabled us to respond to market shortages.. We
also had a strong year for new product submissions and approvals, supporting
future growth. Our CMO business performed in line with expectations,
accelerating in the second half of 2024. We will continue to pursue CMO
opportunities where we see value for both us and our strategic partners.
Branded
Our Branded business, which supplies branded generics and in-licensed patented
products across the MENA region, had another very strong year with good growth
across most of our markets. We grew revenue 8% with a strong core operating
margin of 24.6%.
We have a unique business in the region, leveraging our global expertise to
meet local market needs. Over the past few years, we have been investing in
enhancing our pipeline and portfolio, focusing on launching more complex and
first-to-market products that are tailored to local needs, such as oncology
products and medicines used to treat chronic illnesses. This has been driving
our growth and supporting our strong margins. We continue to make great
progress and we are gaining market share in key therapeutic areas, including
in diabetes and multiple sclerosis.
Generics
Generics, which supplies oral, respiratory and other generic and specialty
products to the North American retail market, had an excellent year,
generating over $1 billion in revenue for the first time, with margins in line
with our expectations. We are delivering growth in our more complex products,
we increased our market share in sodium oxybate, and our leading nasal spray
franchise performed well in 2024.
Generics core operating profit was lower than the exceptionally strong result
we delivered in 2023 due to the expected increase in royalties on our
authorised generic of sodium oxybate.
We have strengthened our teams across this business, including the appointment
of Hafrun Fridriksdottir, our new President of Generics, and a new head of
Generics R&D with significant respiratory experience. With their
expertise, we are sharpening our focus on R&D to ensure we are investing
in the right products and executing projects effectively.
We are also working to maintain and enhance our manufacturing strength.
Importantly, we are delivering our strategy to grow our CMO offering for this
business. We signed a new contract in 2024 with a global pharmaceutical
company, which we expect to start contributing meaningfully in 2027. This will
help support medium-term revenue growth and profitability for Generics, while
improving utilisation of our Columbus, Ohio facility.
We have also focused on maximising the potential of our specialty products and
post-year end, signed a partnership agreement with Emergent BioSolutions to
market our Kloxxado(®) naloxone nasal spray. This partnership combines
Hikma's excellent nasal spray manufacturing capabilities with Emergent's
well-established naloxone HCl nasal spray commercial expertise and strong
stakeholder engagement.
2025 Outlook
We are confident that we are well placed to deliver another year of growth in
2025.
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, after an
increase in investment 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 Injectables 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
Xellia acquisition and our evolving product and geographic mix. We will
continue to launch new products, leverage 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 will continue to launch products and sign partnerships,
bringing more chronic medications to patients.
We expect Generics revenue to be broadly flat, with a good performance from
some of our more differentiated products offsetting price erosion on the base
business. We will 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 Generics to be around 16%.
We expect Group core net finance expense to be between $90 million to $95
million, reflecting the current interest rate environment and an increase in
borrowing related to the Xellia 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.
FINANCIAL REVIEW
The financial review set out below summarises the reported and core(8)
performance of the Hikma Group and our three main business segments,
Injectables, Branded and Generics for the year ended 31 December 2024.
Group
2024 2023 Change Constant currency
$ million $ million change
Revenue 3,127 2,875 9% 9%
Core revenue 3,156 2,875 10% 10%
Gross profit 1,415 1,390 2% 2%
Gross margin 45.3% 48.3% (3.0)pp (3.2)pp
Core gross profit 1,448 1,407 3% 3%
Core gross margin 45.9% 48.9% (3.0)pp (3.2)pp
Operating profit 612 367 67% 71%
Operating margin 19.6% 12.8% 6.8pp 7.3pp
Core operating profit 719 707 2% 4%
Core operating margin 22.8% 24.6% (1.8)pp (1.3)pp
Core EBITDA 824 810 2% 4%
Core EBITDA margin 26.1% 28.2% (2.1)pp (1.6)pp
Group core revenue was up 10% reflecting strong growth across all three
businesses. Excluding the Xellia acquisition, Group core revenue grew 9%,
ahead of our guidance range of 6% to 8%. Group reported revenue, which is
stated after a $29 million provision relating to rebate adjustments following
a change in prior years estimates in the US, was up 9%.
Group core gross profit grew 3% and core gross margin was 45.9%. The expected
reduction in Generics profitability relating to higher royalties on our
authorised generic of sodium oxybate was more than offset by a strong
performance across the broader Generics portfolio as well as Injectables and
Branded.
Group reported operating expenses were $803 million (2023: $1,023 million).
Group core operating expenses were $729 million (2023: $700 million).
Reported selling, general and administrative (SG&A) expenses were $671
million (2023: $767 million). This change reflects the provision taken in 2023
related to a legal settlement. Core SG&A expenses were $568 million (2023:
$544 million), up 4%, reflecting higher employee benefits, legal expenses and
continued investment in sales and marketing in the US.
Reported and core research and development (R&D) expenses were $141
million (2023: $149 million), representing 4.5% of Group core revenue (2023:
5.2%).
Reported other net operating income was $11 million (2023: $75 million
expense). This change primarily reflects the impairment reversal related to
our complex respiratory portfolio in 2024, as well as the impact in 2023
relating to the impairment charge taken on our Sudanese business. Core other
net operating expenses were $18 million (2023: $4 million), primarily
comprising foreign exchange-related costs in Egypt.
Group reported operating profit grew 67% and Group core operating profit
increased by 2%, with a core operating margin of 22.8%.
Group core revenue by business segment
2024 2023
$ million $ million
Injectables 1,324 42.0% 1,203 41.8%
Branded 769 24.4% 714 24.8%
Generics 1,037 32.9% 937 32.6%
Others 26 0.8% 21 0.7%
Total 3,156 2,875
Group core revenue by region
2024 2023
$ million $ million
North America 1,940 61.5% 1,749 60.8%
MENA 985 31.2% 909 31.6%
Europe and ROW 231 7.3% 217 7.5%
Total 3,156 2,875
Injectables
2024 2023 Change Constant currency change
$ million $ million
Revenue 1,306 1,203 9% 9%
Core revenue 1,324 1,203 10% 10%
Gross profit 668 655 2% 2%
Gross margin 51.1% 54.4% (3.3)pp (3.3)pp
Core gross profit 690 657 5% 5%
Core gross margin 52.1% 54.6% (2.5)pp (2.6)pp
Operating profit 371 358 4% 4%
Operating margin 28.4% 29.8% (1.4)pp (1.3)pp
Core operating profit 468 444 5% 6%
Core operating margin 35.3% 36.9% (1.6)pp (1.4)pp
Injectables core revenue grew 10% in 2024, benefiting from our broad portfolio
across the three geographies, contribution from the Xellia acquisition and
recent launches, including liraglutide injection, our generic GLP-1 product in
the US. Excluding the Xellia impact, organic core revenue growth was 8%, at
the top end of our guidance range. Injectables reported revenue grew 9%, which
is stated after an $18 million provision relating to rebate adjustments
following a change in prior years estimates in the US.
In North America we benefited from good demand for our broad portfolio, recent
launches and growth in Canada, supported by $24 million sales contribution
from the Xellia acquisition, which closed in September.
In Europe and rest of the world (ROW) we delivered good growth across all our
established and recently entered markets. Our own products grew 20%, driven by
our expanding portfolio and ability to address market shortages. Our CMO
business performed in line with expectations, accelerating in the second half.
In MENA we saw strong growth across most of our markets, supported by new
launches and good demand across our broad portfolio.
Injectables core gross profit grew 5% and core gross margin contracted due to
product mix, which includes the slightly dilutive impact of the Xellia
acquisition and an increased contribution from partnered products.
Injectables reported operating profit grew 4%. Injectables core operating
profit grew 5% and core operating margin was 35.3%. This reflects the change
in gross profit. Excluding Xellia, Injectables core operating margin was
35.7%.
During the year, the Injectables business had 20 launches in North America, 16
in MENA and 53 in Europe and ROW. We submitted 137 filings to regulatory
authorities across all markets.
Branded
2024 2023 Change Constant currency change
$ million $ million
Revenue 769 714 8% 9%
Core revenue 769 714 8% 9%
Gross profit 402 351 15% 15%
Gross margin 52.3% 49.2% 3.1pp 2.6pp
Core gross profit 402 366 10% 10%
Core gross margin 52.3% 51.3% 1.0pp 0.5pp
Operating profit 182 95 92% 108%
Operating margin 23.7% 13.3% 10.4pp 12.1pp
Core operating profit 189 170 11% 20%
Core operating margin 24.6% 23.8% 0.8pp 2.4pp
Our Branded business performed very well in 2024, with good growth across most
of our markets. Revenue was up 8%, at the top of our guidance range, as we
benefited from a growing and diversified portfolio of oncology products and
medicines used to treat chronic illnesses.
Branded reported gross profit grew 15% and core gross profit grew 10%, with
core gross margin improving by a percentage point. This reflects an improving
product mix driven by our shift towards higher value medicines.
Branded reported operating profit increased significantly, reflecting the
impact of the $69 million impairment charge and cost in relation to halting
our operations in Sudan in 2023. Core operating profit grew 11% and core
operating margin expanded to 24.6%. This reflects the improvement in core
gross profit, which more than offset the negative foreign exchange impact
related to the currency devaluation in Egypt.
During the year, the Branded business had 36 launches and submitted 59 filings
to regulatory authorities. Revenue from in-licensed products represented 27%
of Branded revenue (2023: 29%).
Generics
2024 2023 Change
$ million $ million
Revenue 1,026 937 9%
Core revenue 1,037 937 11%
Gross profit 346 387 (11)%
Gross margin 33.7% 41.3% (7.6)pp
Core gross profit 357 387 (8)%
Core gross margin 34.4% 41.3% (6.9)pp
Operating profit 167 147 14%
Operating margin 16.3% 15.7% 0.6pp
Core operating profit 170 192 (11)%
Core operating margin 16.4% 20.5% (4.1)pp
Generics core revenue grew 11% in 2024, ahead of our guidance, driven by good
demand across our differentiated portfolio, particularly for our respiratory
products. Generics reported revenue grew 9%, which is stated after an $11
million provision relating to rebate adjustments following a change in prior
years estimates.
The decrease in Generics reported and core gross profit and the lower core
gross margin of 34.4% was primarily due to the higher royalties on our
authorised generic of sodium oxybate, when compared to last year. This was
partially offset by an improvement in product mix across the base business.
Generics core operating profit decreased, reflecting the reduction in gross
profit, which was partially offset by lower sales and marketing costs.
Reported operating profit includes the impairment reversal related to our
complex respiratory portfolio.
In 2024, the Generics business launched seven products and had a record number
of product submissions, with ten filings submitted to regulatory authorities,
as we continue to work on further enhancing our pipeline and building
differentiation in our product portfolio.
Other businesses
Other businesses, which includes our 503B compounding business, as well as
Arab Medical Containers (AMC), a manufacturer of plastic specialised medicinal
sterile containers, and International Pharmaceuticals Research Centre (IPRC),
which conducts bio-equivalency studies, contributed revenue of $26 million in
2024 (2023: $21 million) with an operating loss of $9 million (2023: $9
million loss). We are making good progress in growing our compounding business
and continue to invest in building our manufacturing and commercial
compounding capabilities.
Research and development
Our investment in R&D of $141 million and our business development
activities enable us to continue expanding the Group's product portfolio.
During 2024, we had 132 new launches and received 136 approvals. To ensure the
continuous development of our product pipeline, we submitted 206 regulatory
filings.
2024 submissions(9) 2024 approvals(10) 2024 launches(10)
Injectables 137 86 89
North America 18 18 20
MENA 25 16 16
Europe & ROW 94 52 53
Branded 59 43 36
Generics 10 7 7
Total 206 136 132
Net finance expense
2024 2023 Change Constant currency change
$ million $ million
Finance income 8 7 14% 14%
Finance expense 167 95 76% 73%
Net finance expense 159 88 81% 77%
Core finance income 8 7 14% 14%
Core finance expense 93 90 3% 0%
Core net finance expense 85 83 2% (1)%
Reported net finance expense increased to $159 million primarily due to the
remeasurement of contingent consideration related to business combinations.
Core net finance expense increased to $85 million (2023: $83 million),
reflecting borrowing to finance the Xellia acquisition.
We expect core net finance expense to be around $90 million to $95 million in
2025(10).
Tax
The Group incurred a reported tax expense of $93 million (2023: $89 million)
and a reported effective tax rate of 20.4% (2023: 31.7%). Excluding the tax
impact of exceptional items and other adjustments, Group core tax expense was
$138 million (2023: $131 million). The core effective tax rate was 21.7%
(2023: 20.9%).
We expect the Group core effective tax rate to be around 22% in 2025.
Profit attributable to shareholders and earnings per share
Reported profit attributable to shareholders was $359 million (2023: $190
million). Core profit attributable to shareholders was $495 million (2023:
$492 million). Reported basic earnings per share was 162 cents (2023: 86
cents). Core basic earnings per share was 224 cents (2023: 223 cents).
Dividend
The Board is recommending a final dividend of 48 cents per share (2023: 47
cents per share) bringing the total dividend for the full year to 80 cents per
share (2023: 72 cents per share). The proposed dividend will be paid on 1 May
2025 to eligible shareholders on the register at the close of business on 21
March 2025, subject to approval at the Annual General Meeting on 24 April
2025.
Net cash flow, working capital and net debt
The Group generated operating cash flow of $564 million (2023: $608 million).
This change primarily reflects increased trade receivables reflecting strong
sales towards the end of the year.
Group working capital days were 240 at 31 December 2024. Compared to the
position on 31 December 2023, Group working capital days decreased by three
days from 243 days.
Capital expenditure was $165 million (2023: $169 million). In the US, $49
million was spent 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
for general formulations in Tunisia and Algeria, as well as strengthening our
oral oncology capabilities in Algeria. In Europe, we spent $36 million
enhancing our manufacturing capabilities, including adding lyophilisation
capacity in Portugal.
We expect Group capital expenditure to be in the range of $170 million to $190
million in 2025.
The Group's total debt was $1,306 million at 31 December 2024 (31 December
2023: $1,191 million).
The Group's cash balance at 31 December 2024 was $188 million (31 December
2023: $215 million).
The Group's net debt was $1,118 million at 31 December 2024 (31 December 2023:
$976 million). We continue to have a healthy balance sheet, with a net debt to
core EBITDA ratio of 1.4x (31 December 2023: 1.2x).
Net assets
Net assets at 31 December 2024 were $2,321 million (31 December 2023: $2,209
million). Net current assets were $285 million (31 December 2023: $761
million). This primarily reflects the reclassification of the five-year
Eurobond, which matures on 9 July 2025, as short-term financial debt.
The Board
The Board of Directors that served during the twelve-month period to 31
December 2024 and their respective responsibilities can be found on the
Leadership team section of www.hikma.com (http://www.hikma.com) .
Cautionary statement
This preliminary 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 exceptional items and other
adjustments set out in Note 5.
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 Injectables 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 2024 represent reported 2024 numbers translated
using 2023 exchange rates, excluding price increases in the business resulting
from the devaluation of currencies.
Core EBITDA
Core EBITDA is earnings before interest, tax, depreciation, amortisation,
adjusted for exceptional items and other adjustments (Note 5).
2024 2023
$ million $ million
Reported operating profit 612 367
Depreciation and impairment charges in relation to property, plant and 96 110
equipment
Impairment reversals on property, plant and equipment (16) -
Amortisation and impairment charges in relation to intangible assets 122 131
Impairment reversal on intangible assets (44) -
Depreciation and impairment charges in relation to right-of-use assets 10 18
Reorganisation costs 11 -
Pre-production set-up costs 4 -
Provision for rebates adjustment 29 -
Provision related to expected North America opioid legal settlement - 129
Provision against inventory related to halted operations in Sudan - 17
Impairment charge on financial assets - 29
Impairment charge on other current assets - 2
Cost from halted operations in Sudan - 7
Core EBITDA 824 810
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 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 includes short and long-term financial
debts (Notes 10 and 13), lease liabilities, net of cash and cash equivalents
and restricted cash.
Group net debt 31 Dec 2024 31 Dec 2023
$ million $ million
Short-term financial debts (642) (150)
Short-term leases liabilities (11) (11)
Long-term financial debts (607) (975)
Long-term leases liabilities (46) (55)
Total debt (1,306) (1,191)
Cash and cash equivalents 188 205
Restricted cash - 10
Net debt (1,118) (976)
ROIC
ROIC is calculated as core operating profit after tax divided by the average
invested capital (calculated as the average of the opening and closing total
equity plus net debt). This measures our efficiency in allocating capital to
profitable investments.
ROIC 2024 2023
$ million
Core operating profit 719 707
Total tax (158) (144)
Core operating profit after tax 561 563
Net debt 1,118 976
Equity 2,321 2,209
Invested capital (at 31 December) 3,439 3,185
Invested capital (at 1 January) 3,185 3,161
Average invested capital 3,312 3,173
ROIC 16.9% 17.7%
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 "aims", "anticipates",
"believes", "budget", "estimates", "expects", "forecasts", "goals", "intends",
"objectives", "outlook", "plan", "project", "risks", "seek" "scheduled",
"targets" 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 "could", "may", "might", "probably", "should",
"will" or "would" 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. In
particular, these include statements relating to future actions, product
authorisations, future performance or results of current and anticipated
products, sales efforts, expenses, the outcome of contingencies such as legal
proceedings, dividend payments and financial results. 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 UK Market Abuse Regulation 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. Any forward looking
statement above and 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 this cautionary statement. 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 over the year,
and are set out in the 2024 annual report on pages 80 - 88, which will be
available in March 2025. 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.
((1)) Constant currency numbers in 2024 represent reported 2024 numbers
translated using 2023 exchange rates, excluding price increases in the
business resulting from the devaluation of currencies
(2) Core results throughout the document are presented to show the underlying
performance of the Group, excluding exceptional items and other adjustments
set out in Note 5 of this release. Core results are a non-IFRS measure. See
page 14 for a reconciliation to reported IFRS results
(3) Group net debt is calculated as Group total debt less Group total cash.
Group net debt is a non-IFRS measure that includes short and long-term
financial debts (Notes 10 and 13), lease liabilities, net of cash and cash
equivalents and restricted cash, if any. See page 15 for a reconciliation of
Group net debt
(4) Refer to page 15 for reconciliation
(5) IQVIA MAT November 2024, includes all generic injectable and generic
non-injectable products by sales
(6) IQVIA MAT November 2024, generic injectable volumes by eaches, excluding
branded generics and Becton Dickinson
(7) Based on internal analysis by using data from the following source: IQVIA
MIDAS® Monthly Value Sales data for Algeria, Egypt, Jordan, Kuwait, Lebanon,
Morocco, Saudi Arabia, Tunisia and UAE, for the period: calendar year 2024,
reflecting estimates of real-world activity. Copyright IQVIA. All rights
reserved.
(8) Core results throughout the document are presented to show the underlying
performance of the Group, excluding exceptional items and other adjustments
set out in Note 5 of the consolidated financial statements set out in this
release. Core results are a non-IFRS measure
(9) Pipeline projects submitted, approved and launched by country in 2024.
MENA numbers include only the five major markets (Algeria, KSA,
Egypt, Morocco and Jordan)
(10) Based on the composition of the Group's net debt portfolio as at 31
December 2024, a one percentage point increase/decrease in interest rates
would result in a $6 million increase/decrease in net finance cost per year
(2023: $3 million increase/decrease)
Hikma Pharmaceuticals PLC
Consolidated income statement
For the year ended 31 December 2024
2024 2024 2024 2023 2023 2023
Core
Exceptional items and other adjustments
Reported
Core
Exceptional items and other
Reported
results
(Note 5)
results
results
adjustments
results
(Note 5)
Note $m $m $m $m $m $m
Revenue 3 3,156 (29) 3,127 2,875 - 2,875
Cost of sales (1,708) (4) (1,712) (1,468) (17) (1,485)
Gross profit/(loss) 1,448 (33) 1,415 1,407 (17) 1,390
Selling, general and administrative expenses (568) (103) (671) (544) (223) (767)
Impairment loss on financial assets, net (2) - (2) (3) (29) (32)
Research and development expenses (141) - (141) (149) - (149)
Other operating expenses (21) (31) (52) (9) (71) (80)
Other operating income 3 60 63 5 - 5
Total operating expenses (729) (74) (803) (700) (323) (1,023)
Operating profit/(loss) 4 719 (107) 612 707 (340) 367
Finance income 8 - 8 7 - 7
Finance expense (93) (74) (167) (90) (5) (95)
Gain from investment at fair value through profit or loss (FVTPL) 1 - 1 2 - 2
Group's share of profit of joint venture 1 - 1 - - -
Profit/(loss) before tax 636 (181) 455 626 (345) 281
Tax 6 (138) 45 (93) (131) 42 (89)
Profit/(loss) for the year 498 (136) 362 495 (303) 192
Attributable to:
Non-controlling interests 3 - 3 3 (1) 2
Equity holders of the parent 495 (136) 359 492 (302) 190
Earnings per share (cents)
Basic 8 224 162 223 86
Diluted 8 221 161 221 85
Hikma Pharmaceuticals PLC
Consolidated statement of comprehensive income
For the year ended 31 December 2024
2024 2024 2024 2023 2023 2023
Core
Exceptional items and other adjustments
Reported
Core
Exceptional items and other
Reported
results
(Note 5)
results
results
adjustments
results
(Note 5)
Note $m $m $m $m $m $m
Profit/(loss) for the year 498 (136) 362 495 (303) 192
Other comprehensive income/(expense)
Items that may subsequently be reclassified to the consolidated income
statement:
Currency translation and hyperinflation movement (55) - (55) (3) - (3)
Deferred tax on currency translation - - - 1 - 1
Items that will not subsequently be reclassified to the consolidated income
statement:
Change in investments at fair value through other comprehensive income (6) - (6) (13) - (13)
(FVTOCI)
Remeasurement of post-employment 11 (1) - (1) - - -
benefit obligations
Total other comprehensive expense for the year (62) - (62) (15) - (15)
Total comprehensive income/(expense) for the year 436 (136) 300 480 (303) 177
Attributable to:
Non-controlling interests 3 - 3 2 - 2
Equity holders of the parent 433 (136) 297 478 (303) 175
436 (136) 300 480 (303) 177
Hikma Pharmaceuticals PLC
Consolidated balance sheet
At 31 December 2024
2024 2023
Note $m $m
Non-current assets
Goodwill 9 382 388
Other intangible assets 9 774 712
Property, plant and equipment 1,278 1,096
Right-of-use assets 48 45
Investment in joint venture 11 10
Deferred tax assets 6 293 226
Financial and other non-current assets 84 103
2,870 2,580
Current assets
Inventories 986 891
Income tax recoverable 24 49
Trade and other receivables 949 824
Cash and cash equivalents 188 205
Other current assets 116 120
Assets classified as held for sale - 11
2,263 2,100
Total assets 5,133 4,680
Current liabilities
Short-term financial debts 10 642 150
Lease liabilities 11 11
Trade and other payables 650 568
Income tax payable 78 74
Provisions 11 122 152
Other current liabilities 12 475 384
1,978 1,339
Net current assets 285 761
Non-current liabilities
Long-term financial debts 13 607 975
Lease liabilities 46 55
Deferred tax liabilities 6 18 25
Provisions 11 36 7
Other non-current liabilities 14 127 70
834 1,132
Total liabilities 2,812 2,471
Net assets 2,321 2,209
Equity
Share capital 40 40
Share premium 282 282
Other reserves (374) (282)
Retained earnings 2,362 2,158
Equity attributable to equity holders of the parent 2,310 2,198
Non-controlling interests 11 11
Total equity 2,321 2,209
Hikma Pharmaceuticals PLC
Consolidated statement of changes in equity
For the year ended 31 December 2024
Share Share Other reserves Translation reserve related to assets classified as held for distribution Retained earnings Equity attributable to equity holders of the parent Non-controlling interests Total
capital
premium
equity
Merger and revaluation reserves Translation reserve Capital redemption reserve Employee benefit trust (EBT) reserve Total other reserves
Note $m $m $m $m $m $m $m $m $m $m $m $m
Balance at 40 282 35 (302) 2 - (265) (14) 2,092 2,135 13 2,148
1 January 2023
Profit for the year - - - - - - - - 190 190 2 192
Change in investments at fair value through other comprehensive income - - - - - - - - (13) (13) - (13)
(FVTOCI)
Currency translation and hyperinflation movement - - - (3) - - (3) - - (3) - (3)
Deferred tax on currency translation - - - - - - - - 1 1 - 1
Total comprehensive income for the year - - - (3) - - (3) - 178 175 2 177
Cost of equity-settled employee share scheme - - - - - - - - 25 25 - 25
Dividends paid 7 - - - - - - - - (137) (137) (4) (141)
Other comprehensive income accumulated in equity related to assets classified - - - (14) - - (14) 14 - - - -
as held for distribution
Balance at 31 December 2023 and 1 January 2024 40 282 35 (319) 2 - (282) - 2,158 2,198 11 2,209
Profit for the year - - - - - - - - 359 359 3 362
Change in investments at fair value through other comprehensive income - - - - - - - - (6) (6) - (6)
(FVTOCI)
Remeasurement of post-employment benefit obligations 11 - - - - - - - - (1) (1) - (1)
Currency translation and hyperinflation movement - - - (55) - - (55) - - (55) - (55)
Total comprehensive income for the year - - - (55) - - (55) - 352 297 3 300
Cost of equity-settled employee share scheme - - - - - - - - 27 27 - 27
Deferred tax on equity-settled employee share scheme - - - - - - - - 1 1 - 1
Purchase of shares held in employee benefit trust (EBT) (38) (38) - (38) - (38)
Exercise of equity-settled employee share scheme - - - - - 1 1 - (1) - - -
Dividends paid 7 - - - - - - - - (175) (175) (3) (178)
Balance at 31 December 2024 40 282 35 (374) 2 (37) (374) - 2,362 2,310 11 2,321
Hikma Pharmaceuticals PLC
Consolidated cash flow statement
For the year ended 31 December 2024
2024 2023
Note $m $m
Cash flow from operating activities
Cash generated from operations 15 689 737
Income taxes paid (125) (131)
Income taxes received - 2
Net cash inflow from operating activities 564 608
Cash flow from investing activities
Purchase of property, plant and equipment (165) (169)
Proceeds from disposal of property, plant and equipment - 18
Purchase of intangible assets (70) (35)
Additions to investments at FVTOCI (2) (27)
Proceeds from sale of investment at FVTOCI - 1
Acquisition of businesses, net of cash acquired 17 (150) (98)
Cash receipt related to assets held for sale 10 -
Advance payment related to non-financial assets - (23)
Payments of contingent consideration liability (12) (7)
Interest income received 8 7
Net cash outflow from investing activities (381) (333)
Cash flow from financing activities
Proceeds from issue of long-term financial debts 684 778
Repayment of long-term financial debts (536) (841)
Proceeds from short-term financial debts 387 437
Repayment of short-term financial debts (411) (467)
Repayment of lease liabilities (21) (10)
Dividends paid 7 (175) (137)
Distributions to non-controlling interests (3) (4)
Interest and bank charges paid (84) (82)
Purchase of shares held in employee benefit trust (EBT) (38) -
Decrease (increase) in restricted cash 10 (10)
Payments of co-development and earnout payment agreement (1) (1)
Net cash outflow from financing activities (188) (337)
Net decrease in cash and cash equivalents (5) (62)
Cash and cash equivalents at beginning of year 205 270
Foreign exchange translation movements (12) (3)
Cash and cash equivalents at end of year 188 205
Hikma Pharmaceuticals PLC
Notes to the consolidated financial statements
1. Accounting policies
General information
Hikma Pharmaceuticals PLC is a public limited liability company incorporated
and domiciled in the United Kingdom under the Companies Act 2006.
The Group's principal activities are the development, manufacture and
commercialisation of a broad range of generic, specialty and branded
pharmaceutical products across a range of dosage forms.
Basis of preparation
Hikma Pharmaceuticals PLC's consolidated financial statements have 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. International Financial Reporting Standards as issued by the International
Accounting Standards Board ("IFRS Accounting Standards").
The consolidated financial statements have been prepared under the historical
cost convention, except for the revaluation to fair value of certain financial
assets and liabilities.
The accounting policies included in this note have been applied consistently
other than where new policies have been adopted.
The presentational currency of the Group's consolidated financial statements
is the US dollar, as the majority of the Group's business is conducted in US
dollars.
The financial information does not constitute the Company's statutory accounts
for the years to 31 December 2024 or 2023 but is derived from those accounts.
The auditors have reported on those accounts and their report (i) was
unqualified, (ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006 in respect of the accounts for the year to 31 December 2024
or 31 December 2023.
Adoption of new and revised standards
The following amendments to accounting standards have been issued and are
effective for annual periods beginning on 1 January 2024.
IFRS 16 (Amendments) Lease Liability in a Sale and Leaseback
IAS 1 (Amendments) Classification of Liabilities as Current or Non-Current
IAS 1 (Amendments) Non-current Liabilities with Covenants
IAS 7 and IFRS 7 (Amendments) Supplier Finance
Arrangements
These amendments had no significant impact on the consolidated financial
statements but may impact the accounting for future transactions and
arrangements.
The following new accounting standards and amendments to accounting standards
that had been issued but were not mandatory for annual reporting periods
ending on 31 December 2024 were not adopted early.
IAS 21 (Amendments) Effective 1 January 2025 Lack of Exchangeability
IFRS 9 and IFRS 7 (Amendments) Classification and Measurement of Financial Instruments
Effective 1 January 2026
IFRS 9 and IFRS 7 (Amendments) Contracts referencing Nature-dependent Electricity
Effective 1 January 2026
IFRS 19 (Standard) Subsidiaries without Public Accountability: Disclosures
Effective 1 January 2027
IFRS 18 (Standard) Effective 1 January 2027 Presentation and Disclosure in Financial Statements
Annual Improvements to IFRS Accounting Standards-Volume 11 Effective 1 January - IFRS 1 First-time Adoption of International Financial Reporting Standards
2026
- IFRS 7 Financial Instruments: Disclosures
- Guidance on implementing IFRS 7 Financial Instruments: Disclosures
- IFRS 9 Financial Instruments
- IFRS 10 Consolidated Financial Statements
- IAS 7 Statement of Cash Flows
The Group is currently assessing the implications of applying the
new standards and amendments on the Group's consolidated
financial statements.
Revenue recognition
Revenue is recognised in the consolidated income statement when control of the
goods or services are transferred to the customer at an amount that reflects
the consideration to which the Group expects to be entitled in exchange for
those goods or services. The point at which control passes is determined by
each customer arrangement, but generally occurs on delivery to the customer.
The Group has generally concluded that it acts as principal in its revenue
arrangements because it typically controls the goods before the transfer to
the customer.
The Group manufactures certain medicines on behalf of customers. In most
cases, control is transferred to the customer over time, as these medicines
have no alternative use, and the Group has an enforceable right to payment for
performance completed to date. For the majority of these arrangements,
progress towards satisfying the Group's performance obligations is measured
based on the units of product approved by the quality control department.
Revenue represents the amounts receivable after the deduction of discounts,
value added tax, other sales taxes, allowances given, provisions for
chargebacks, accruals for estimated future rebates, returns and price
adjustments. The methodology and assumptions used to estimate rebates and
returns are monitored and adjusted regularly in light of contractual and
historical information.
The Group does not expect to have any contracts where the period between the
transfer of the promised goods or services to the customer and payment by the
customer exceeds one year. As a consequence, the Group does not adjust any of
the transaction prices for time value of money.
Variable consideration
The ultimate net selling price is calculated using variable consideration
estimates for certain gross to net adjustments.
Chargebacks
In the US, the Group sells its products directly to wholesale distributors,
generic distributors, retail pharmacy chains and mail-order pharmacies. The
Group also sells its products indirectly to independent pharmacies, managed
care organisations, hospitals, and group purchasing organisations,
collectively referred to as 'indirect customers'. The Group enters into
agreements with its indirect customers to establish pricing for certain
products. The indirect customers then independently select a wholesaler from
which they purchase the products at agreed-upon prices. The Group will provide
credit to the wholesaler for the difference between the agreed-upon price with
the indirect customer and the wholesaler's invoice price. This credit is
called a chargeback. The provision for chargebacks is based on historical
sell-through levels by the Group's wholesale customers to the indirect
customers, and estimated wholesaler inventory levels. As sales are made to
large wholesale customers, the Group continually monitors the provision for
chargebacks and makes adjustments when it believes that actual chargebacks may
differ from estimated reserves
Returns
The Group has a product return policy that allows customers to return
the product within a specified period prior to and subsequent to the
expiration date. Provisions for returns are recognised as a reduction
of revenue in the period in which the underlying sales are recognised.
The Group estimates its provision for returns based on historical experience,
representing management's best estimate. While such experience has enabled
reasonable estimations in the past, history may not always be an accurate
indicator of future returns. The Group continually monitors the provisions for
returns and makes adjustments when it believes that actual product returns may
differ from established reserves (see Note 12 for return sensitivity
analysis).
Rebates
In the US, rebates are granted to wholesaler distributors and direct
customers. Rebates are also granted to healthcare authorities and certain
indirect customers under contractual arrangements. Products sold in the US are
covered by various programmes (such as Medicaid) under which products are sold
at a discount.
The Group estimates its provision for rebates based on current contractual
terms and conditions as well as historical experience, changes to business
practices and credit terms. While such experience has enabled reasonable
estimations in the past, history may not always be an accurate indicator of
future rebate liabilities. The Group continually monitors the provisions for
rebates and makes adjustments when it believes that actual rebates may differ
from established reserves. (see Note 12 for rebates sensitivity analysis).
Performance obligation
Free goods
Free goods are issued to certain customers as an alternative to discounts.
These free goods give rise to a separate performance obligation, which
requires management to allocate the transaction price to the original goods
and the related free goods. Revenue for free goods is recognised when they
are transferred to the customer and a contract liability is recognised when
the free goods are due but not yet transferred to the customer.
Contract manufacturing services
Contract manufacturing services that include commitments by the Group to make
facility space and equipment available may be deemed to include lease
components which are evaluated under IFRS 16 "Leases". For arrangements that
contain both lease and non-lease components, consideration in the contract is
allocated on a relative standalone selling-price basis. Revenue for these
components is recognised when the related obligations are satisfied, while
contract liabilities and deferred lease income are recognised for the due
unsatisfied obligations.
Exceptional items and other adjustments
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 adjusted numbers may be
calculated differently to other companies.
Adjusted measures are not substitutable for IFRS numbers and should not be
considered superior to results presented in accordance with IFRS Accounting
Standards.
Core results
Reported results represent the Group's overall performance. However, these
results can include one-off or non-cash items that mask the underlying
performance of the Group. To provide a more complete picture of the Group's
performance and to improve comparability of our consolidated financial
statements to external audiences, alongside our reported results, we provide
core results, which are a non-IFRS measure. We represent and discuss our Group
and segmental financials reconciled between reported and core results. This
presentation allows for full visibility and transparency of our financials so
that shareholders are able to clearly assess the performance factors of the
Group.
Core results mainly exclude:
- Amortisation of intangible assets other than software
- Impairment charge/reversal of intangible assets and property,
plant and equipment
- Finance income and expense resulting from remeasurement
and unwinding of contingent consideration and co-development earnout payment
agreement financial liabilities
- Items which management believes to be exceptional in nature by
virtue of their size or incidence, or have a distortive effect on current
year earnings, including but not limited to costs associated with business
combinations, one-off gains and losses on disposal of businesses, legal
expenses, reorganisation costs and any exceptional items related to tax such
as significant tax benefit/expense associated with previously unrecognised
deferred tax assets/liabilities
Our core results exclude the exceptional items and other adjustments set out
in Note 5.
Impairment of intangible assets and property, plant and equipment
At the same time each year, the Group carries out an impairment review for
goodwill and intangible assets that are not yet ready for use as follows:
(a) Goodwill is allocated to cash-generating units (CGUs). These CGUs are
tested for impairment annually, or more frequently when there is an indication
that the unit may be impaired. If the recoverable amount of the CGU is less
than its carrying amount, the impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to the unit and then to the other
assets of the unit pro rata on the basis of the carrying amount of each asset
in the unit. An impairment loss recognised for goodwill is not reversed in
subsequent periods
(b) Intangible assets that are not yet ready for use are not subject to
amortisation and are tested annually for impairment or more frequently if
events or changes in circumstances indicate that they might be impaired
Where applicable, the Group carries forward and uses the most recent detailed
calculation of a cash-generating unit's recoverable amount made in a preceding
period, provided all of the following criteria are met:
- The assets and liabilities making up the unit have not changed
significantly since the last recoverable amount calculation
- The prior calculation indicated that the recoverable amount
exceeded the carrying amount of the unit by a substantial margin, reflecting
significant headroom
- An analysis of events and changes in circumstances since the last
calculation indicates that the likelihood of the current recoverable amount
being lower than the carrying amount is remote
The Group also reviews the carrying amounts of property, plant and equipment
and intangible assets that are subject to depreciation and amortisation to
determine whether there is any indication that those assets are impaired. If
such indication exists, the recoverable amount of the asset is estimated to
determine the extent of the impairment loss (if any).
If the recoverable amount of an asset (or CGU) is lower than its carrying
amount, the asset (or CGU) is written down to its recoverable amount. The
resulting impairment loss is recognised immediately in the consolidated income
statement.
When an impairment loss for the asset, other than goodwill, subsequently
reverses, the carrying amount of the asset is increased to the revised
estimate of its recoverable amount. However, the increased carrying amount
should not exceed the carrying amount that would have been determined had
there been no impairment in prior years. A reversal of an impairment loss is
recognised immediately in the consolidated income statement.
The recoverable amount of an asset or a cash-generating unit is the higher of
its fair value less costs of disposal and its value in use.
2. Going concern
The Directors believe that the Group is well diversified due to its geographic
spread, product diversity and large customer and supplier base. Taking into
account the Group's current position and its principal risks for a period
longer than 12 months from the date of signing the consolidated financial
statements, a going concern analysis has been prepared using realistic
scenarios, applying a severe but plausible downside which demonstrates that
the Group would maintain sufficient liquidity headroom. Therefore, the
Directors believe that the Group and its subsidiaries are adequately placed to
manage their business and financing risks successfully, despite the current
uncertain economic outlook. Having assessed the principal risks, the Directors
considered it appropriate to adopt the going concern basis of accounting in
preparing the consolidated financial statements.
Covenants on major financial debt arrangements are suspended while the Group
retains its investment grade status from two rating agencies. As of 31
December 2024, the Group's investment grade rating was affirmed by S&P and
Fitch.
3. Revenue
Business and geographical markets
The following tables provide an analysis of the Group's reported revenue by
segment and geographical market, irrespective of the origin of the
goods/services:
Injectables Generics Branded Others Total
Year ended 31 December 2024 $m $m $m $m $m
North America 877 1,026 - 8 1,911
Middle East and North Africa 214 - 759 12 985
Europe and rest of the world 202 - 10 6 218
United Kingdom 13 - - - 13
1,306 1,026 769 26 3,127
Injectables Generics Branded Others Total
Year ended 31 December 2023 $m $m $m $m $m
North America 808 937 - 4 1,749
Middle East and North Africa 195 - 703 11 909
Europe and rest of the world 189 - 11 6 206
United Kingdom 11 - - - 11
1,203 937 714 21 2,875
The top selling markets are shown below:
2024 2023
$m $m
United States 1,887 1,726
Saudi Arabia 301 261
Algeria 213 189
2,401 2,176
In 2024, included in revenue arising from the Generics and Injectables
segments are sales the Group made to three wholesalers in the US, each
accounting for equal to or greater than 10% of the Group's revenue: $424
million (14% of Group revenue), $364 million (12% of Group revenue) and $307
million (10% of Group revenue). In 2023, revenue included sales made to three
wholesalers: $365 million (13% of Group revenue), $370 million (13% of Group
revenue) and $278 million (10% of Group revenue), respectively.
The following table provides contract balances related to revenue:
2024 2023
$m $m
Net trade receivables 896 789
Deferred income (Notes 12 and 14) 58 21
Refund liability (Note 12) 151 158
Indirect rebates and other allowances (Note 12) 173 145
Trade receivables are non-interest bearing and typical credit terms range from
30 to 90 days in North America, 30 to 120 days in Europe and 180 to 360 days
in MENA.
4. Business segments
For management reporting purposes, the Group is organised into three principal
operating divisions - Injectables, Branded and Generics. These divisions are
the basis on which the Group reports its segmental information.
Core operating profit, 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:
2024 2024 2024 2023 2023 2023
Core
Exceptional items and other adjustments
Reported
Core
Exceptional items and other
Reported
results
(Note 5)
results
results
adjustments
results
(Note 5)
Injectables $m $m $m $m $m $m
Revenue 1,324 (18) 1,306 1,203 - 1,203
Cost of sales (634) (4) (638) (546) (2) (548)
Gross profit 690 (22) 668 657 (2) 655
Total operating expenses (222) (75) (297) (213) (84) (297)
Segment result 468 (97) 371 444 (86) 358
2024 2024 2024 2023 2023 2023
Core
Exceptional items and other adjustments
Reported
Core
Exceptional items and other
Reported
results
(Note 5)
results
results
adjustments
results
(Note 5)
Branded $m $m $m $m $m $m
Revenue 769 - 769 714 - 714
Cost of sales (367) - (367) (348) (15) (363)
Gross profit 402 - 402 366 (15) 351
Total operating expenses (213) (7) (220) (196) (60) (256)
Segment result 189 (7) 182 170 (75) 95
2024 2024 2024 2023 2023 2023
Core
Exceptional items and other adjustments
Reported
Core
Exceptional items and other
Reported
results
(Note 5)
results
results
adjustments
results
(Note 5)
Generics $m $m $m $m $m $m
Revenue 1,037 (11) 1,026 937 - 937
Cost of sales (680) - (680) (550) - (550)
Gross profit 357 (11) 346 387 - 387
Total operating expenses (187) 8 (179) (195) (45) (240)
Segment result 170 (3) 167 192 (45) 147
2024 2024 2024 2023 2023 2023
Core
Exceptional items and other adjustments
Reported
Core
Exceptional items and other
Reported
results
(Note 5)
results
results
adjustments
results
(Note 5)
Others¹ $m $m $m $m $m $m
Revenue 26 - 26 21 - 21
Cost of sales (27) - (27) (24) - (24)
Gross profit (1) - (1) (3) - (3)
Total operating expenses (8) - (8) (6) - (6)
Segment result (9) - (9) (9) - (9)
1. Others mainly comprises Arab Medical Containers
LLC, International Pharmaceutical Research Centre LLC and the 503B compounding
business
2024 2024 2024 2023 2023 2023
Core
Exceptional items and other adjustments
Reported
Core
Exceptional items and other
Reported
results
(Note 5)
results
results
adjustments
results
(Note 5)
Group $m $m $m $m $m $m
Segments' results 818 (107) 711 797 (206) 591
Unallocated expenses1 (99) - (99) (90) (134) (224)
Operating profit/(loss) 719 (107) 612 707 (340) 367
Finance income 8 - 8 7 - 7
Finance expense (93) (74) (167) (90) (5) (95)
Gain from investment at fair value through profit or loss (FVTPL) 1 - 1 2 - 2
Group's share of profit of joint venture 1 - 1 - - -
Profit/(loss) before tax 636 (181) 455 626 (345) 281
Tax (138) 45 (93) (131) 42 (89)
Profit/(loss) for the year 498 (136) 362 495 (303) 192
Attributable to:
Non-controlling interests 3 - 3 3 (1) 2
Equity holders of the parent 495 (136) 359 492 (302) 190
1. Reported unallocated expenses primarily comprise
employee costs, professional fees, IT and legal expenses. The decrease
compared to the prior year is mainly attributable to provisions for legal
settlements recognised in 2023 (Notes 5 and 11)
The following table provides an analysis of the Group's non-current assets2 by
geographic area:
2024 2023
$m $m
North America
US 1,518 1,301
Canada 30 36
1,548 1,337
Middle East and North Africa
Jordan 344 348
Algeria 125 104
Morocco 92 89
Saudi Arabia 75 71
Others 93 75
729 687
Europe and rest of the world
Portugal 147 147
Germany 40 42
Others 41 47
228 236
United Kingdom 7 11
2,512 2,271
2. Non-current assets exclude deferred tax assets,
investments at FVTOCI, restricted cash and other financial assets
6. Exceptional items and other adjustments
Exceptional items and other adjustments are disclosed separately in the
consolidated income statement to assist in the understanding of the
Group's core performance. Exceptional items and other adjustments have been
recognised in accordance with our accounting policy outlined in Note 1; the
details are presented below:
Injectables Branded Generics Unallocated Total Tax effect Impact on profit for the year
$m $m $m $m $m $m $m
Intangible assets amortisation other than software SG&A (51) (6) (35) - (92) 25 (67)
Impairment reversals on intangible assets and property, plant and equipment Other operating income - - 60 - 60 (14) 46
Impairment charges on intangible assets and property, plant and equipment Other operating expenses (17) (1) (13) - (31) 7 (24)
Remeasurement of contingent consideration and other financial liability Finance expense - - - (71) (71) 16 (55)
Unwinding of contingent consideration and other financial liability Finance expense - - - (3) (3) 1 (2)
Provision for rebates adjustment Revenue (18) - (11) - (29) 7 (22)
Reorganisation costs SG&A (7) - (4) - (11) 2 (9)
Pre-production setup costs Cost of sales (4) - - - (4) 1 (3)
Exceptional items and other adjustments (97) (7) (3) (74) (181) 45 (136)
Non-controlling interest -
Equity holders of the parent (136)
- Intangible assets amortisation other than software of $92 million
(Note 9)
- Impairment reversals: $60 million related to complex respiratory
CGU, primarily driven by improved performance and sustained forecasted
profitability. Of this amount, $44 million was allocated to intangible assets
(Note 9) and $16 million to property, plant and equipment
- Impairment charges: $22 million impairment on intangible assets
mainly comprises $14 million related to marketing rights following the
termination of business development contracts and $8 million related to a
product-related intangible asset due to the discontinuation of a pipeline
product (Note 9). Additionally, there were impairment charges on property,
plant and equipment of $9 million mainly related to machinery and equipment
associated with discontinued projects
- Remeasurement of contingent consideration and other financial
liability: $71 million represents the finance expense resulting from the
valuation of the liabilities associated with the future contingent payments in
respect of contingent consideration recognised through business combinations
(Notes 12 and 14)
- Unwinding of contingent consideration and other financial
liability: $3 million represents the finance expense resulting from the
unwinding of contingent consideration recognised through business combinations
(Notes 12 and 14)
- Provision for rebates adjustment: $29 million represents a change
in historical estimates in relation to prior years rebates
- Reorganisation costs: $11 million of reorganisation costs related
to a global restructuring program. Completion of these activities is projected
in 2025, with an estimated additional cost of approximately $5 million. This
program will improve efficiencies across various Group functions, including
R&D activities benefitting from the integration of Xellia Croatia (R&D
centre)
- Pre-production setup costs: $4 million related to the
manufacturing plant acquired through the Xellia business combination (Note
17). These costs are incurred during the pre-operational phase where
commissioning and refurbishment of the plant is taking place. Completion of
these activities is projected for early 2027, with the estimated additional
expenses of approximately $25 million to be incurred in 2025 and 2026
Tax effect
- The tax effect represents the tax effect on pre-tax exceptional
items and other adjustments which is calculated based on the applicable tax
rate in each jurisdiction
In the previous year, exceptional items and other adjustments were related to
the following:
Injectables Branded Generics Unallocated Total Tax effect Impact on profit for the year
$m $m $m $m $m $m $m
Impairment and cost in relation to halted operations in Sudan ___1 (14) (69) - - (83) (13) (96)
Legal settlement SG&A - - - (129) (129) 27 (102)
Intangible assets amortisation other than software SG&A (47) (6) (35) - (88) 17 (71)
Impairment charge on intangible assets Other operating expenses (18) - (9) (5) (32) 7 (25)
Impairment charge on right-of-use assets and property, plant and equipment Other operating expenses (7) - (1) - (8) 2 (6)
Remeasurement of contingent consideration and other financial liability Finance expense - - - (2) (2) 1 (1)
Unwinding of contingent consideration and other financial liability Finance expense - - - (3) (3) 1 (2)
Exceptional items and other adjustments (86) (75) (45) (139) (345) 42 (303)
Non-controlling interest (1)
Equity holders of the parent (302)
1. The impact on the consolidated income statement
line items is shown below
- Impairment and costs in relation to halted operations in Sudan: In
April 2023, violent conflict erupted in the Sudanese capital of Khartoum. The
conflict subsequently escalated in other areas of the country. The Group
evaluated the effect on the carrying values of the Group's assets, and as a
consequence, a loss of $76 million was recognised to reflect the fall in the
recoverable amount of the assets listed below. A further $7 million of
employee benefits, hyperinflation and other expenses from the halted
operations was classified as exceptional items on the basis that no revenue
was generated after the operations were halted
Injectables Branded Generics Unallocated Total
$m $m $m $m $m
Provision against inventory Cost of sales (2) (15) - - (17)
Impairment charge on financial assets Net impairment loss on financial assets (12) (17) - - (29)
Impairment charge on intangible assets Other operating expenses - (3) - - (3)
Impairment charge on property, plant and equipment Other operating expenses - (25) - - (25)
Impairment charge on other current assets Other operating expenses - (2) - - (2)
Cost from halted operations in Sudan SG&A - (6) - - (6)
Cost from halted operations in Sudan Other operating expenses - (1) - - (1)
(14) (69) - - (83)
- Provision for legal settlements: On 1 February 2024, the Group
reached an agreement in principle to resolve the vast majority of the
opioid-related cases brought against Hikma Pharmaceuticals USA Inc. by US
states, their subdivisions, and tribal nations. The agreed-upon settlement is
not an admission of wrongdoing or legal liability. The Group booked a total
provision of $129 million to cover the expected settlement amount for all
related cases in North America (Note 11)
- Intangible assets amortisation other than software of $88 million
(Note 9)
- Impairment charge on intangible assets: $32 million mainly
comprises $11 million in relation to product-related intangible assets as a
result of the decline in performance and forecasted profitability and $16
million marketing rights due to the termination of business development
contracts. Additionally, $5 million of impairment charge relates to software
(Note 9)
- Impairment charge on property, plant and equipment and
right-of-use assets: $8 million of impairment charge mainly relates to a
leased property with no future plans of utilisation
- Remeasurement of contingent consideration and other financial
liability: $2 million represents the finance expense resulting from 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 12 and 14)
- Unwinding of contingent consideration and other financial
liability: $3 million represents the finance expense resulting from the
unwinding of contingent consideration recognised through business combinations
and the financial liability in relation to the co-development earnout payment
agreement (Notes 12 and 14)
6. Tax
2024 2024 2024 2023 2023 2023
Core
Exceptional items and other adjustments
Reported
Core
Exceptional items and other
Reported
results
(Note 5)
results
results
adjustments
results
(Note 5)
$m $m $m $m $m $m
Current tax
Current year 142 (2) 140 117 (2) 115
Adjustment to prior years 18 - 18 (1) - (1)
Deferred tax
Current year 1 (43) (42) 11 (40) (29)
Adjustment to prior year (23) - (23) 4 - 4
138 (45) 93 131 (42) 89
UK corporation tax is calculated at 25% standard rate (2023: 23.5% blended
rate).
The Group incurred a tax expense of $93 million (2023: $89 million); the
reported and core effective tax rates are 20.4% and 21.7% respectively
(2023: 31.7% and 20.9% respectively). The reported effective tax rate is
lower than the standard rate primarily due to the earnings mix.
Taxation for all jurisdictions is calculated at the rates prevailing in the
relevant jurisdiction.
The charge for the year can be reconciled to profit before tax per the
consolidated income statement as follows:
2024 2023
$m $m
Profit before tax 455 281
Tax at the UK corporation tax rate of 25% (2023: 23.5%) 114 66
Profits taxed at different rates (26) (21)
Permanent differences:
- Non-deductible expenditure 4 3
- Other permanent differences 2 2
- Research and development benefit (4) (3)
State and local taxes 2 2
Temporary differences:
- Rate change and movement in the recognition of tax losses and 1 (3)
other temporary differences
Impact of the halted operations in Sudan - 32
Change in uncertain tax positions (3) 9
Unremitted earnings 1 (1)
Prior year adjustments (5) 3
Pillar 2 Top up Tax 7 -
Tax expense for the year 93 89
Profits taxed at different tax rates relate to profits arising in overseas
jurisdictions where the tax rate differs from the UK statutory rate. Permanent
differences relate to items which are non-taxable or for which no tax relief
is ever likely to be due. The major items are expenses and income disallowed
where they are covered by statutory exemptions, foreign exchange differences
in some territories and statutory reliefs such as research and development.
Rate change, tax losses and other deductible temporary differences for which
no benefit is recognised include items for which it is not appropriate to
recognise deferred tax.
The change in the uncertain tax positions relates to the balance the Group
holds in the event a revenue authority successfully takes an adverse view
of the positions adopted by the Group in 2024 and prior years. As at 31
December 2024, the Group's uncertain tax positions, excluding advanced
payments, amounted to $54 million (2023: $59 million). The Group released $3
million in 2024 (2023: $13 million) primarily due to the resolution of some
audits with the relevant tax authorities. The impact from the currency
exchange difference was a $2 million reduction to the aggregate balance in
2024 (2023: $nil). If all areas of uncertainty were audited and all areas
resulted in an adverse outcome, management does not believe any material
additional tax would be payable beyond what is provided.
Prior year adjustments include differences between the tax liability recorded
in the tax returns submitted for previous years and the estimated tax
provision reported in a prior year's consolidated financial statements. This
category also includes adjustments to the tax returns against which an adverse
uncertain tax position has been booked and included under 'change in uncertain
tax positions' above.
Tax contingent liabilities
Due to the Group operating across a number of different tax jurisdictions, it
is subject to periodic challenge by local tax authorities on a range of
tax matters arising in the normal course of business. These challenges
generally include transfer pricing arrangements, other international tax
matters and the judgemental interpretation of local tax legislation.
A tax contingent liability is not provided for but is disclosed if:
- tax payments are not probable in the future on challenges by tax
authorities; or
- it is a present tax obligation, but the amount cannot be measured
reliably
Publication of tax strategy
In line with the UK requirement for large UK businesses to publish their tax
strategy, the Group's tax strategy has been made available on the
Group's website.
Global minimum tax - Pillar Two
Pillar Two legislation has been enacted, or substantively enacted, in certain
jurisdictions where the Group operates. The legislation became effective for
the Group's financial year beginning 1 January 2024. The Group is in scope of
the enacted or substantively enacted legislation and has performed
an assessment of the Group's potential exposure to Pillar Two income taxes
for the year ended on 31 December 2024.
The assessment of the potential exposure to Pillar Two income taxes is based
on the most recent information available regarding the financial performance
of the constituent entities in the Group. Based on the assessment, the Group
has identified potential exposure to Pillar Two income taxes in respect of
profits earned in the UAE and Jordan. The potential exposure comes from the
constituent entities (mainly operating subsidiaries) in these jurisdictions
where the expected Pillar Two effective tax rate is below 15%. The top up tax
has been calculated in accordance with the OECD guidance and has been included
in the tax amounts disclosed above. We estimate that the total Pillar Two top
up tax to be $7 million. The Group is continuing to assess the impact of the
Pillar Two income taxes legislation and related updates on its future
financial performance.
Deferred tax
Recognition of deferred tax assets
The recognition of deferred tax assets is based on the current forecast
of taxable profits arising in the jurisdiction in which the deferred tax
asset arises. A deferred tax asset is recognised to the extent that there are
forecast taxable profits within a reasonable period.
This exercise is reviewed each year and, to the extent forecasts change, an
adjustment to the recognised deferred tax asset may be made.
Recognition of deferred tax assets is driven by the Group's ability to utilise
the deferred tax asset which is reliant on forecast taxable profits arising in
the jurisdiction in which losses are incurred.
Deferred tax assets and liabilities have been offset only where it is
appropriate to do so. The following is the analysis of the deferred tax
balances (after offset) for financial reporting purposes:
As at 31 December
2024 2023
$m $m
Deferred tax assets 293 226
Deferred tax liabilities (18) (25)
275 201
The table below represents the deferred tax movement in 2024:
Returns and inventory-related provision(2) Intangible assets Other provisions Unremitted earnings Research and Development Others Total
and accruals
$m $m $m $m $m $m $m
1 January 2024 90 54 59 (3) - 1 201
Reclassification(1) - - - - 29 (29) -
(Charge)/credit to income 16 20 (1) (1) 13 18 65
Equity adjustment - - - - - 1 1
Currency translation and hyperinflation impact (1) 1 (1) - - 9 8
At 31 December 2024 105 75 57 (4) 42 - 275
1. During the current year, the Group reclassified the
deferred tax asset arising from Research and Development expenditures,
previously included in "Others", given its materiality, in accordance with IAS
12
2. This category also includes the deferred tax
related to elimination of unrealised profit
The table below represents the deferred tax movement in 2023:
Returns and inventory-related provision1 Intangible Other Unremitted earnings Others Total
assets
provisions
and accruals
$m $m $m $m $m $m
1 January 2023 83 46 16 (4) 32 173
(Charge)/credit to income 7 8 43 1 (34) 25
Currency translation and hyperinflation impact - - - - 3 3
At 31 December 2023 90 54 59 (3) 1 201
1. This category also includes the deferred tax
related to elimination of unrealised profit
The Group has a potential deferred tax asset of $457 million (2023: $288
million) of which $293 million (2023: $226 million) has been recognised.
The unrecognised deferred tax asset comprises of tax losses, short term
timing differences and non-refundable tax credits.
No deferred tax asset has been recognised on gross temporary differences
totalling $273 million (2023: $288 million), with a tax effect of $65 million
mainly due to the unpredictability of the related future profit streams. Of
these gross temporary differences, $205 million (2023: $200 million) relate to
losses, of which $202 million are UK losses that don't expire. No deferred tax
is recognised against the losses due to significant uncertainty regarding
future taxable income forecasts in the relevant jurisdictions. None of the
non-UK losses are expected to expire in 2025. The remaining $68 million
represent other unrecognised gross short-term temporary differences that
relate to multiple jurisdictions.
In addition, the company has been granted Cantonal tax credits in Switzerland
of $99 million (CHF90 million). These Swiss non-refundable tax credits can be
utilised over a 10-year period through from the fiscal year 2024 until they
expire in 2033. Due to the operation being in its infancy, it is not currently
probable that the benefit of the non-refundable tax credit will be realised.
Therefore, no deferred tax asset has been recognised on this item.
During the year an increase in the deferred tax liability has been recognised
on temporary differences relating to the unremitted earnings of overseas
subsidiaries of $1 million (2023: $1 million reduction). No deferred tax
liability has been recognised on the remaining unremitted earnings of
$499 million (2023: $414 million), as the Group is able to control the timing
of the reversal of these temporary differences and it is probable that
they will not reverse in the foreseeable future.
Mandatory temporary exception
The Group has applied the temporary exception issued by the IASB in May 2023
from the accounting requirements for deferred taxes in IAS 12. Accordingly,
the Group neither recognises nor discloses information about deferred tax
assets and liabilities related to Pillar Two income taxes.
7. Dividends
Paid in Paid in
2024
2023
$m $m
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2023 of 47 cents (31 December 104 82
2022: 37 cents) per share
Interim dividend during the year ended 31 December 2024 of 32 cents (31 71 55
December 2023: 25 cents) per share
175 137
The proposed final dividend for the year ended 31 December 2024 is 48 cents
(2023: 47 cents).
The proposed final dividend is subject to approval by shareholders at the
Annual General Meeting on 24 April 2025 and has not been included as a
liability in these consolidated financial statements. Based on the number of
shares in free issue at 31 December 2024 (220,431,263), the final dividend
would be $106 million.
8. Earnings per share (EPS)
Basic EPS is calculated by dividing the profit attributable to equity holders
of the parent by the weighted average number of Ordinary Shares in free issue
during the year after deducting Treasury shares and shares held in employee
benefit trust (EBT). Treasury shares have no right to receive dividends, and
the employee benefit trust (EBT) has waived its entitlement to dividends.
However, while the voting rights attached to treasury shares are not
exercisable, shares in the EBT retain their voting rights.
Diluted EPS is calculated after adjusting the weighted average number of
Ordinary Shares used in the basic EPS calculation for the conversion of all
potentially dilutive Ordinary Shares.
Core basic and diluted EPS are intended to highlight the core results of the
Group before exceptional items and other adjustments.
2024 2024 2024 2023 2023 2023
Core
Exceptional items and other adjustments
Reported
Core
Exceptional items and other
Reported
results
(Note 5)
results
results
adjustments
results
(Note 5)
$m $m $m $m $m $m
Profit attributable to equity holders of the parent 495 (136) 359 492 (302) 190
The number of shares used in calculating basic and diluted EPS is reconciled
below:
2024 2023
Number Number
Weighted average number of Ordinary Shares in free issue
Basic EPS 221,333,249 220,862,103
Effect of potentially dilutive Ordinary Shares:
Share-based awards 2,160,072 1,506,611
Diluted EPS 223,493,321 222,368,714
2024 2024 2023 2023
Core
Reported
Core
Reported
EPS
EPS
EPS
EPS
Cents Cents Cents Cents
Basic 224 162 223 86
Diluted 221 161 221 85
9. Goodwill and other intangible assets
The changes in the carrying value of goodwill and other intangible assets for
the years ended 31 December 2024 and 31 December 2023 are as follows:
Goodwill Other intangible assets
Product-related intangibles Software Other identified intangibles Total
$m $m $m $m $m
Cost
Balance at 1 January 2023 797 1,350 141 285 2,573
Additions - 10 1 33 44
Disposals - - (4) (3) (7)
Translation adjustments (1) (1) - 2 -
Business combination - 63 - - 63
Balance at 31 December 2023 and 1 January 2024 796 1,422 138 317 2,673
Additions - 24 - 49 73
Disposals - - - - -
Translation adjustments (8) (7) (1) (2) (18)
Business combination (Note 17) 2 73 - - 75
Balance at 31 December 2024 790 1,512 137 364 2,803
Accumulated Amortisation and Impairment
Balance at 1 January 2023 (408) (793) (98) (150) (1,449)
Charge for the year - (73) (8) (15) (96)
Disposals - - 4 3 7
Impairment charge - (13) (5) (17) (35)
Translation adjustments - 1 - (1) -
Balance at 31 December 2023 and 1 January 2024 (408) (878) (107) (180) (1,573)
Charge for the year - (72) (8) (20) (100)
Disposals - - - - -
Impairment reversal - 44 - - 44
Impairment charge - (8) - (14) (22)
Translation adjustments - 2 - 2 4
Balance at 31 December 2024 (408) (912) (115) (212) (1,647)
Carrying amount
At 31 December 2024 382 600 22 152 1,156
At 31 December 2023 388 544 31 137 1,100
Of the total intangible assets other than goodwill, $157 million (2023: $152
million) are not yet available for use.
Goodwill
Goodwill is allocated from the acquisition date to the CGUs that are expected
to benefit from the synergies of the business combination. The carrying amount
of goodwill has been allocated as follows:
As at 31 December
2024 2023
$m $m
Injectables 227 228
Branded 155 160
Total 382 388
In accordance with the Group policy, goodwill is tested annually for
impairment during the fourth quarter or more frequently if there are
indicators that goodwill may be impaired. The impairment test was performed by
calculating the recoverable amount of the CGUs to which the goodwill is
allocated, based on discounted cash flows by applying an appropriate discount
rate that reflects the risk factors associated with the cash flows under which
these CGUs sit. These values are then compared to the carrying value of the
CGUs to determine whether an impairment is required. Where applicable, the
Group carries forward and uses the most recent detailed calculation of a
cash-generating unit's recoverable amount made in the preceding period.
CGUs impairment testing
Details related to the discounted cash flow models used in the impairment
tests of the CGUs are as follows:
Valuation basis, terminal growth rate and discount rate Valuation basis Terminal growth rate (perpetuity) Discount rate
2024 2023 2024 2023
Injectables VIU 2.5% 2.5% 12.6% 12.6% Pre−tax
Branded VIU 2.4% 2.5% 14.3% 17.4% Pre−tax
Generics VIU 1.0% n/a 10.7% n/a Pre−tax
Complex respiratory FVLCD -1 n/a 8.1% n/a Post-tax
Key assumptions Projected cash flows based on:
- Sales growth rates, informed by pricing and volume assumptions
-
Profit
margins
and
profit
margin
growth
rates
for
marketed
and
pipeline
products
-
Expected
launch
dates
for
pipeline
products
Terminal
growth
rates
Discount
rates
Determination of assumptions Growth rates are internal forecasts based on both internal and external market
information, informed by historical experience and management's best estimates
of the future
Margins
reflect
past
experien
ce,
adjusted
for
expected
changes
in the
future
Establis
hing the
launch
date and
probabil
ity of a
successf
ul
product
approval
for
pipeline
product
s
Terminal
growth
rates
are
based on
the
Group's
experien
ce in
its
markets
Discount
rates
for each
CGU are
derived
from
specific
regions/
countrie
s
Period of specific projected cash flows 5 years
1. The majority of projected cash flows for the
Complex respiratory CGU extend over a seven-year period (2023: eight years)
Complex respiratory CGU
The improved performance of the Complex respiratory CGU was considered as an
indicator for an impairment reversal assessment. As a result, the Group
evaluated the recoverable amount of the CGU using a fair value less costs of
disposal (FVLCD) model, being the higher value compared to value in use (VIU).
The evaluation resulted in an impairment reversal of $60 million, with $44
million allocated to intangible assets and $16 million to property, plant and
equipment on a pro rata basis. The reversal reflects sustained performance
improvement and forecasted profitability, bringing the revised carrying amount
of the CGU to $127 million. This valuation methodology uses significant inputs
which are not based on observable market data, therefore this valuation
technique is classified as a level 3 valuation.
The Group performed sensitivity analysis over the valuation of the CGU. The
analysis assumed an increase/decrease of one percentage point in the discount
rate or a 10% decline/improve in the projected cash flows. Applying those
sensitivities would decrease/increase the value of the CGU by approximately $7
million and $22 million, respectively.
Injectables CGU
In accordance with IAS 36, the Group conducted its annual impairment test for
the Injectables CGU by carrying forward the most recent detailed calculation
of its recoverable amount from the preceding period. This approach was
considered appropriate as the assets and liabilities of the CGU have not
changed significantly since last year's recoverable amount calculation, and
the previous calculation indicated that the recoverable amount significantly
exceeded the carrying amount of the CGU. Additionally, an analysis of events
and changes in circumstances since the prior assessment indicated that the
likelihood of the current recoverable amount being lower than the carrying
amount is remote.
Branded CGU
The Group conducted its annual impairment test for the Branded CGU, as it
includes goodwill and other intangible assets not yet available for use. The
valuation did not result in any impairment for the CGU and indicated that
sufficient headroom exists even under reasonable changes in key assumptions.
Generics CGU
The Group conducted its annual impairment test for the Generics CGU, as it
includes material intangible assets not yet available for use. The valuation
did not result in any impairment for the CGU and indicated that sufficient
headroom exists even under reasonable changes in key assumptions.
The Group monitors the development of climate-related risks and assessed the
qualitative and quantitative impact which is not expected to have a material
impact on the consolidated financial statements nor the recoverable amount of
the CGUs.
Product-related intangible assets
Product rights not yet available for use
Product rights not yet available for use amounts to $84 million (2023: $75
million); no amortisation has been charged against them. The Group performs an
impairment review of these assets annually. The result of this test was an
impairment charge of $8 million in the Injectables segment due to the
discontinuation of a pipeline product (2023: $3 million in the Generics
segment).
Product rights
Product rights consist of marketed products of $516 million (2023: $469
million) which include two products in the injectables CGU valued at
$118 million (2023: $129 million) and $52 million (2023: $nil) with a
remaining useful life of eleven years (2023: twelve years) and fifteen years,
respectively. Additionally, a product in the Complex respiratory CGU is valued
at $120 million (2023: $87 million) following a $44 million impairment
reversal allocated as part of the CGU overall reversal (see page 36). This
product has a remaining useful life of seven years (2023: eight years).
The product rights have an average estimated useful life of twelve years.
Software
Software intangibles mainly represent the Enterprise Resource Planning
solutions that are implemented in different operations across the Group in
addition to other software applications, of which $1 million is not yet
available for use (2023: $1 million). The software has an average estimated
useful life that varies from three to ten years.
As at 31 December 2024, no impairment charge was identified (2023: $5
million).
Other identified intangibles
Other identified intangibles comprise marketing rights, customer relationships
and trade names of $152 million (2023: $137 million) of which $72 million
represent assets not yet available for use (2023: $76 million). The Group
performs an impairment review of other identified intangible assets that are
not yet available for use annually, and performs impairment indicators
assessment for assets in use. The result of this test was an impairment charge
of $1 million in the Injectables segment and $13 million in the Generics
segment due to the discontinuation of certain marketing rights contracts
(2023: $17 million).
Marketing rights
Marketing rights are amortised over their useful lives commencing in the year
in which the rights are ready for use with estimated useful lives varying from
two to ten years.
Customer relationships
Customer relationships represent the value attributed to existing direct
customers that the Group acquired on business combinations. The customer
relationships have an average estimated useful life of fifteen years.
Trade names
Trade names were mainly recognised on the acquisition of Hikma Germany GmbH
(Germany) with estimated useful lives of ten years.
10. Short-term financial debts
As at 31 December
2024 2023
$m $m
Bank overdrafts 4 2
Import and export financing2 14 44
Short-term loans 3 -
Current portion of long-term loans (Note 13) 621 104
642 150
The increase in the current portion of long-term loans is primarily
attributable to the Eurobond maturing in July 2025.
2. Import and export financing represents short-term
financing for the ordinary trading activities of the Group
2024 2023
% %
The weighted average interest rates incurred are as follows:
Bank overdrafts 21.03 13.34
Import and export financing 8.37 7.10
Short-term loans 5.19 4.75
11. Provisions
Provision for end of service indemnity Provision for legal settlements Total
$m $m $m
Balance at 1 January 2023 32 - 32
Additions 3 129 132
Utilisations (5) - (5)
Balance at 31 December 2023 and 1 January 2024 30 129 159
Additions 3 - 3
Remeasurement of post-employment benefit obligations 1 - 1
Utilisations (5) - (5)
Balance at 31 December 2024 29 129 158
2024 2023
$m $m
Due within one year 122 152
Due after more than one year 36 7
158 159
Provision for end of service indemnity relates to employees of certain Group
subsidiaries and includes immaterial amounts for defined benefit plans. This
provision is calculated based on relevant laws in the countries where each
Group company operates, in addition to their own policies. For defined benefit
plans, changes in net liability due to actuarial valuations and changes in
assumptions resulted in a remeasurement loss of $1 million (2023: $nil). In
2024, the Group reclassified this provision to non-current, as most of the
balance is not expected to be settled within the next 12 months.
Legal provision is related to the expected settlement amount for legal
matters, of which $7 million is expected to be settled after more than one
year (Note 5).
12. Other current liabilities
As at 31 December
2024 2023
$m $m
Deferred income (Note 14) 28 21
Refund liability 151 158
Contingent consideration (Note 14) 85 25
Co-development and earnout payment - 1
Acquired contingent liability (Note 14) 20 13
Indirect rebates and other allowances 173 145
Others 18 21
475 384
Deferred income includes contract liabilities related to the Group's
obligations for contract manufacturing services, for which payment has been
received or is receivable. It also includes contract liabilities for free
goods owed to certain customers as an alternative to discounts. Additionally,
deferred income comprises deferred lease income arising from the lease
component within contract manufacturing services.
As at 31 December 2024, total deferred income was $58 million (2023: $21
million). The current portion of $28 million related to contract liabilities
(2023: $21 million). The non-current portion of $30 million (2023: $nil)
comprised $13 million in contract liabilities and $17 million in deferred
lease income.
During the year, revenue of $21 million (2023: $25 million) was recognised as
performance obligations were satisfied.
Refund liability relate to provisions for product returns, where the Group
allows customers to return products within a specified period prior to and
subsequent to the expiration date. The key assumptions included in calculating
this provision are estimations of the product shelf life, estimations of
revenue estimated to be subject to returns and the estimated returns rate of
1.39% (2023: 1.47%) as informed by both historical return rates and
consideration of specific factors like product dating and expiration, new
product launches, entrance of new competitors, and changes to contractual
terms. Based on the conditions existing at the balance sheet date, a ten-basis
point increase/decrease in the returns and allowances rate would
increase/decrease this provision by approximately $11 million (2023: $11
million).
Indirect rebates and other allowances: mainly represent rebates granted to
healthcare authorities and certain indirect customers under contractual
arrangements. This includes provision for rebates adjustment of $29 million,
reflecting a change in historical estimates related to prior years' rebates
(Note 5).
At 31 December 2024, the provision balance relating to the indirect rebates
was $100 million (2023: $96 million). The key inputs and assumptions included
in calculating this provision are the historical relationship between
contractual rebate payments to revenue, past payment experience, changes to
pricing and sales levels, estimation of 'in channel' inventory at the
wholesalers and retail pharmacies and estimated future sales trends (including
customer mix). Based on the conditions existing at the balance sheet date, a
ten-basis point increase/decrease in the rebates rate of 4.9% (2023: 4.7%)
would increase/decrease this provision by approximately $2 million (2023: $2
million).
The following table provides the movement for the deferred income, refund
liability and indirect rebates and other allowances for the years ended
31 December 2024 and 2023 were as follows:
Deferred income Refund liability Indirect rebates and other allowances Total
$m $m $m $m
Balance at 1 January 2023 25 168 101 294
Additions 21 43 261 325
Utilisations (25) (52) (218) (295)
Translation adjustment - (1) 1 -
Balance at 31 December 2023 and 1 January 2024 21 158 145 324
Additions 58 55 334 447
Utilisations (21) (61) (306) (388)
Translation adjustment - (1) - (1)
Balance at 31 December 2024 58 151 173 382
2024 2023
$m $m
Current 352 324
Non-current (Note 14) 30 -
382 324
13. Long-term financial debts
As at 31 December
2024 2023
$m $m
Long-term loans 729 582
Long-term borrowings (Eurobond) 499 497
1,228 1,079
Less: current portion (Note 10) (621) (104)
Non-current financial loans 607 975
Breakdown by maturity:
Within one year 621 104
In the second year 118 604
In the third year 129 100
In the fourth year 117 208
In the fifth year 242 59
In the sixth year 1 4
1,228 1,079
Breakdown by currency:
US dollar 1,156 1,002
Euro 9 21
Jordanian dinar 7 13
Algerian dinar 31 29
Moroccan dirham 23 11
Tunisian dinar 2 3
1,228 1,079
The financial debts are held at amortised cost.
Major financial debt arrangements include:
a) $1,150 million syndicated revolving credit facility that matures on 4
January 2029. At 31 December 2024, the facility had an outstanding balance of
$240 million (2023: $nil) and a fair value of $240 million (2023: $nil) and an
unutilised amount of $910 million (2023: $1,150 million). The facility can be
used for general corporate purposes.
b) A $500 million 3.25%, five-year Eurobond with a rating of BBB- (S&P
& Fitch) that matures on 9 July 2025. At 31 December 2024, the facility
had an outstanding balance of $499 million (2023: $497 million) and a fair
value of $493 million (2023: $481 million). The proceeds were used for general
corporate purposes. At 31 December 2024, the balance was classified as
short-term financial debts (Note 10).
c) A $400 million five-year syndicated loan facility that matures on 13
October 2027. At 31 December 2024, the facility had an outstanding balance of
$162 million (2023: $315 million) and a fair value of $162 million (2023: $315
million). The proceeds were used for general corporate purposes.
d) A $200 million eight-year loan facility from the International Finance
Corporation and Managed Co-lending Portfolio program that matures
on 15 September 2028. At 31 December 2024, the facility had an outstanding
balance of $185 million (2023: $100 million) and a fair value of $185 million
(2023: $100 million). The proceeds were used for general corporate purposes.
e) A $150 million ten-year loan facility from the International Finance
Corporation that matures on 15 December 2027. At 31 December 2024, the
facility had an outstanding balance of $63 million (2023: $86 million) and a
fair value of $61 million (2023: $80 million). The proceeds were used
for general corporate purposes.
Covenants on major financial debt arrangements are suspended while the Group
retains its investment-grade status. As of 31 December 2024, the carrying
value of long-term debt subject to covenants was immaterial, and the Group was
in full compliance with those respective covenants. Covenants that must be
complied with after the reporting date do not affect the classification of the
related borrowings as current or non-current. Accordingly, all such borrowings
remain classified as non-current liabilities.
2024 2023
% %
The weighted average interest rates incurred are as follows:
Bank loans (including the current bank loans) 6.18 5.76
Eurobond1 3.68 3.68
1. The Eurobond effective interest rate includes
unwinding of discount amount and upfront fees
14. Other non-current liabilities
As at 31 December
2024 2023
$m $m
Contingent consideration (Note 12) 68 16
Acquired contingent liability (Note 12) 29 54
Deferred income (Note 12) 30 -
127 70
Contingent consideration liability represents a contractual liability arising
from business combinations to make payments to third parties in the form of
milestone payments that depend on the achievement of certain regulatory
approvals; and payments based on future sales of certain products. The current
portion of these liabilities are recognised in other current liabilities
(Note 12).
The contingent consideration liability is accounted for as a financial
liability at fair value under IFRS 9.
The acquired contingent liability was recognised as part of business
combination. On acquisition, the acquired contingent liability was recognised
at fair value under IFRS 3 'Business Combinations' and it is subsequently
measured at the higher of the amount that would be recognised under IAS 37
'Provisions, Contingent Liabilities and Contingent Assets' and the amount
initially recognised less any settlements made in respect of the liability.
15. Cash generated from operating activities
2024 2023
$m $m
Profit before tax 455 281
Adjustments for depreciation, amortisation and impairment charges/reversals
of:
Property, plant and equipment 80 110
Intangible assets 78 131
Right-of-use assets 10 18
Gain from investment at fair value through profit or loss (FVTPL) (1) (2)
Cost of equity-settled employee share scheme 27 25
Finance income (8) (7)
Finance expense 167 95
Foreign exchange loss and net monetary hyperinflation impact 16 6
Group's share of profit of joint venture (1) -
Loss on sale of assets held for sale 1 -
Changes in working capital:
Change in trade and other receivables (144) (24)
Change in other current assets 4 (9)
Change in inventories (112) (115)
Change in trade and other payables 78 88
Change in other current liabilities 36 13
Change in provisions (1) 127
Change in other non-current assets - 5
Change in other non-current liabilities 4 (5)
Cash flow from operating activities 689 737
16. Reconciliation of movement in net debt
2024 2023
$m $m
Interest-bearing loans and borrowings (Notes 10 and 13)
Balance at 1 January 1,125 1,213
Proceeds from issue of long-term financial debts 684 778
Proceeds from issue of short-term financial debts 387 437
Repayment of long-term financial debts (536) (841)
Repayment of short-term financial debts (411) (467)
Amortisation of upfront fees 3 2
Foreign exchange translation movements (3) 3
Balance at 31 December 1,249 1,125
Lease liabilities
Balance at 1 January 66 70
Additions 11 6
Business combination (Note 17) 2 -
Adjustments (1) -
Repayment of lease liabilities (21) (10)
Balance at 31 December 57 66
Total Debt 1,306 1,191
Cash and cash equivalents (188) (205)
Restricted cash - (10)
Net debt1 1,118 976
1. Net debt includes long and short-term financial
debts and lease liabilities, net of cash and cash equivalents and restricted
cash (if any). Net debt excludes co-development and earnout payments, acquired
contingent liabilities and contingent consideration
17. Business combination
Xellia Pharmaceuticals (Xellia)
On 10 September 2024, the Group completed the acquisition of Xellia
Pharmaceuticals' US finished dosage form (FDF) business, related assets and
100% of the issued share capital of Xellia Croatia (R&D centre) for a
total consideration of $202 million. This comprises a cash payment of $153
million, a contingent consideration of up to $50 million, subject to the
achievement of certain regulatory and commercial milestones minus working
capital adjustment of $1 million. The acquisition has been accounted for as a
business combination in accordance with IFRS 3 'Business Combinations'.
The fair value of net assets acquired in the transaction and the goodwill are
provisional, with the identifiable assets and liabilities recognised as
follows:
$m
Property, plant and equipment 115
Product-related intangible assets (Note 9) 73
Inventories 14
Cash and cash equivalents 3
Right-of-use assets 2
Lease liabilities (2)
Other payables (5)
Net identifiable assets acquired 200
Add: Goodwill (Note 9) 2
Total consideration 202
Satisfied by:
Cash consideration 153
Contingent consideration (Note 12) 50
Working capital adjustments (1)
202
Cash consideration 153
Less: cash and cash equivalents acquired (3)
Net cash outflow arising from acquisition 150
The Group believes this acquisition will drive long-term growth and success by
supporting the expansion of the Injectables segment while diversifying and
strengthening its portfolio. Furthermore, the acquisition of the manufacturing
site, along with complex manufacturing technologies, will enhance capacity and
capabilities after the plant's commissioning and refurbishment is completed.
Additionally, the integration of R&D teams from both companies will
strengthen research and development capabilities.
The goodwill recognised reflects synergies from expanded manufacturing
capacity, enhanced sales, marketing, and R&D capabilities, and the
diversification of the business portfolio and is not amortisable for tax
purposes. Goodwill has been allocated to the Group's Injectables segment.
Product-related intangible assets comprise product rights of $73 million
measured at fair value using a Multi-Period Excess Earnings Method (MPEEM).
Property, plant and equipment mainly include land and buildings valued at $52
million, as well as machinery, equipment and assets under construction valued
at $63 million. These assets were mainly valued using the cost approach.
As part of this acquisition, the Group recognised contingent consideration of
$50 million as of the acquisition date. The amount was calculated on the
assumption of a 100% probability of successfully achieving certain regulatory
and commercial milestones. Since payment is expected within one year, no
adjustment for net present value has been made to the value of the contingent
consideration.
The acquisition-related cost of $2 million was recognised as an expense under
selling, general and administrative expenses in the consolidated income
statement.
The business was acquired on 10 September 2024, contributing $24 million in
revenue on both a reported and core basis, with a $1 million reported loss for
the year and a core profit of $3 million. Had the acquisition occurred on the
first day of the financial year, it would have contributed approximately $83
million to the Group's core revenue and a core profit of $11 million.
18. Contingent liabilities
Standby letters of credit and letters of guarantees
A contingent liability existed at the balance sheet date in respect of standby
letters of credit and letters of guarantees totalling $49 million (2023:
$55 million) arising in the normal course of business. No provision for these
liabilities has been made in these consolidated financial statements.
A contingent liability existed at the balance sheet date for standby letters
of credit totalling $14 million (2023: $14 million) for potential stamp duty
obligations that may arise from the repayment of loans by intercompany
guarantors. It's not probable that any 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
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.
In the proceedings noted herein, the Group currently believes it has
meritorious defences and intends to vigorously defend itself. From time to
time, however, the Group may settle or otherwise resolve these matters on
terms and conditions that it believes to be in its best interest. Litigation
outcomes and contingencies are unpredictable and excessive verdicts can occur.
Any legal proceeding, regardless of the merits, might result in substantial
costs to defend or settle or otherwise negatively affect our business.
- In Re Generic Pharmaceuticals Pricing Antitrust Litigation. Starting
in 2016, more than 30 complaints have been filed against Group entities in the
United States on behalf of putative classes of direct and indirect purchasers
of generic drug products, as well as several individual direct action retailer
and third party payor plaintiffs. These complaints allege that more than forty
generic pharmaceutical defendants, including the Group entities, engaged in
conspiracies to fix, increase, maintain and/or stabilise the prices and market
shares of certain generic drug products during the periods of approximately
2010 to 2016. The plaintiffs seek unspecified treble monetary damages, which
can be significantly higher than the profits Hikma made on the alleged drug
products, and equitable injunctive relief under federal and state antitrust
and consumer protection laws. The lawsuits have been consolidated in a
multidistrict litigation (MDL) in the United States District Court for the
Eastern District of Pennsylvania (In re Generic Pharmaceuticals Pricing
Antitrust Litigation, No. 2724, (E.D. Pa.)). At this point in the proceedings,
the Group does not believe sufficient evidence exists to make a reasonable
estimate of any potential liability.
- Xyrem® (Sodium Oxybate) Antitrust Litigation. Starting in June 2020,
more than 20 complaints have been filed in the United States on behalf of both
individual plaintiffs and putative classes of direct and indirect purchasers,
as well as third party payors, of Xyrem® against certain Group entities, Jazz
Pharmaceuticals PLC, and other defendants. These complaints allege that Jazz
and its subsidiaries entered into unlawful "pay-for-delay" anticompetitive
reverse payment agreements with Hikma in settling patent infringement lawsuits
over Xyrem® and delaying generic competition to Xyrem®. The plaintiffs in
these lawsuits seek treble monetary damages, which can be significantly higher
than the profits Hikma makes from selling sodium oxybate, and equitable
injunctive relief under federal and state antitrust and consumer protection
laws. Currently, most of these cases have been consolidated for pretrial
purposes in multidistrict litigation ("MDL") in the United States District
Court for the Northern District of California (In re: Xyrem (Sodium Oxybate)
Antitrust Litigation, No.2966, (N.D. Cal.)). A jury trial involving most of
the MDL plaintiffs has been scheduled to start May 19, 2025. Hikma was also
named as a defendant in a substantially similar action filed by Aetna Inc. in
California state court (Aetna Inc. v. Jazz Pharms., Inc. et al, No. 22 CV
010951 (Cal. Super. Ct.)). The Aetna matter does not yet have a trial date. At
this point, the Group does not believe sufficient evidence exists to make a
reasonable estimate of any potential liability.
- Amarin Pharma Inc. v. Hikma Pharmaceuticals PLC. 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, distribution
and marketing of its generic icosapent ethyl product infringe 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 alleged patented
methods but rather is approved only for a different indication not covered by
any valid patents. In January 2022 the district court dismissed the lawsuit,
and Amarin appealed the court's ruling to the United States Court of Appeals
for the Federal Circuit. On June 25, 2024, the Federal Circuit reversed the
district court's decision, held that Amarin has plausibly pleaded a potential
claim for induced infringement, and remanded the case for further proceedings
at the district court. A trial is scheduled to begin September 8, 2026.
Meanwhile, Hikma has petitioned the United States Supreme Court to review the
appeals court decision. At this point, the Group does not believe sufficient
evidence exists to make a reasonable estimate of any potential liability.
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