Hikma Pharmaceuticals PLC

Before we start, I'd like to remind you that any forward-looking statements or projections made by HICMA during this call are made in good faith based on information currently available and are subject to risks and uncertainties that may cause actual results to differ materially from those projected. For further information, please see the Principal Risks and Uncertainties section in HICMA's latest annual report. And with that, I'll hand over to Riyadh for some opening remarks before we go to Q&A. Thank you very much.

Good morning, everyone. Let me start by maybe a few words. Summarizing the half, the first half, I believe we had a strong half. We have a strong revenue growth of about 6%. That's driven by... Volume growth across all segments. All the segments are doing well, as expected. I think the big story and the most impressive part of it all is that we had revenue growth of 12% in the injectable division. Revenue growth means that we have good demand on our products, and that's very, to be honest, it's a good indication for us that All the investment that we're doing in expanding our facilities and increasing our capacity will all bring in good results, and that's happening as we speak today. And the growth is not happening in one region. We have 26% growth in Europe, and that's something also very impressive. MENA, 16%, and MENA has been doing this year on year for the past few years and continues to do so. And, of course, the U.S., we have a growth of 8%. That's all driven by new launches, driven by volume increases, and, of course, the Zellier portfolio that we had acquired middle of last year. The branded revenue is up 4%, and the branded division has been doing really well year on year with not only good growth but also very stable growth. margins, very stable profitability. That's a division that, you know, everybody questions whether, you know, do the geopolitical problems, if we are going to be impacted at all. I think it's doing quite the opposite. I think the political instability is bringing us new business, and this business has been doing really, really well. And, of course, we're doing a lot to feed it in new products. We're doing a lot of BD products. And as you know, we acquired a few products like the Takeda products last year. And finally, the RX division, the revenue is, you know, about this flat, broadly flat, I would say. And that's a division that everybody was worried about for a while. So I think what we did this year, pretty obvious that it's very stable, poised for growth, good R&D team. We're doing a lot in R&D. And, of course, you know that we had announced a big CMO contract that I think it will be going into the full throttle in a couple of years starting next year. We're doing a lot of investment in that division, and I think the fruits of all this investment is going to be pretty obvious. So I think there's a lot of good news. There are some slight surprises. I would say unexpected headwinds, especially in the margins of the injectables. This is why we dialed down the injectables slightly. The good thing about it is that this is temporary. This is not something that will last. It's mainly driven by the effects, the strength of the euro. As you know, some of our costs in the injectables is in euro, and we pay it in euro. That has slight effect. And, of course, the uncertainty and the unclarity and you know, created some inflationary costs like shipping, some of the tariffs that we'd have to pay, some inventory and so forth that also added to that. It didn't really affect it that much, but we wanted to make sure that we're very transparent, we'll see how things are going, but we also want to be realistic that there are some headwinds and we have to kind of face them. But as a whole, I think we are reiterating our group guidance, and that's what's important. We continue to expect that the group revenue for the year will be between 4% and 6%, cooperating profits in the range of $730 million to $770 million in 2025. And the slight adjustments that we did with the injectables is exactly just to reflect what's happening, what has happened, and, you know, that would be – has been accounted for right now, and I think that will be behind us from now on. I think, you know, and you can see the branded, there's no FX, Edwin, in the branded. This is usually where the FX is, but in this case, it's not. It's in the Euro, something unexpected. As you all know, in the beginning of the year, everybody thought that between the Euro, there would be parity between the Euro and the dollar. It's really not. The opposite has happened, and that will screw our numbers a little. I just wanted to make one point. I was looking at our share price this morning, and we had hit 52 low this morning, and three months ago, four months ago, I believe we were at 52-week high. And I believe that where we're sitting today, we have a much, much stronger business than we had three, four months ago. Everybody was worried about, for example, about the RX business or X generic business as we called it. Everybody was worried, what are we going to do with it? A lot of suggestions, should we sell it? Should we get rid of it? The sum of the parts, we had all of that. What we have today is a very, very strong division. Delivering, we have a great R&D set up there. We've got a leader that understands how it's run. We signed up a great contract manufacturing contract that will stabilize a lot of the income and give you a lot of profits, something that is predictable and it's going to come. And also we are submitting very critical products such as the epinephrine, So we have transformed this division from the time when we used to sit there two years ago and say it's going to bring between 100 and 120 million. Well, you know, brought in 190 last year. Is that approved? The 190 last year. We're anticipating to bring in 170 this year. It's doing well. It's got a great future. And if all the products that we are submitting is going to, you know, get approved, that will be an incredible division. Despite all that, there is a lot of spending on R&D, focus on R&D, and still we're able to come up with numbers that are exceeded what we had said before. You look at the branded. Year-on-year growth, year-on-year stable. Profitability is high. It has increased significantly from three, four years before, and it continues to do so. We're signing a lot of contracts. We're signing a lot of BD contracts. And as I said before, you know, this political instability in that region is making a lot of the big branded companies that operate in that region come back to us and say, are you local? Do you understand? Why don't you just take our products? And we have been very successful in finding a lot of those big products into our own and add them to our portfolio. And you can see that from the numbers. Injectables, I mean, I used to be, as you all know, head of the injectables. And I can tell you, I know all the injectables competitors that work with us and our peers in the same market. We are double or high, much higher in the margins than anybody there. Everybody wonders how we are able to get the margins. And let me remind you that we get this margin while we are operating in the U.S. About 60% of our products of the injectables are made in the U.S., And the rest are made in Europe. So we're not in low-cost areas. We're not in India. We're not in China. We're not in any of those low-cost areas. And we're still able to get margins that are higher than everybody else competing with us. And without any sexy ones. We don't have big products. We have generic, simple products. But we're able to squeeze so much out of those. We run very efficient operations. And the efficient operations are continuing to grow. We have Bedford. We're investing in Bedford. That is going to be an incredible facility with technologies that are very unique in the U.S. and in the injectables area. We're investing in Cherry Hill. We're adding more lines. There are a lot of investments that are happening across all injectables. We built new facilities in North Africa. We doubled the capacity and localization in Italy. We are breaking ground for a very sophisticated state-of-the-art facility in Saudi Arabia. So a lot of investment is happening in this division because we really believe in it and we believe that we can do better than anybody else operating in the same field. It's very confusing to all of us how we see, you know, going from 52-week low to 52-week high. Is it the reaction of what happens on the day, or are we evaluating the company based on what they have in the future and how they're growing and what the prospect of the future is? So if it is about the future, I can assure you that the future of this company is more positive than it's ever been. We are looking at how we are going to be organized to be more effective. We are absorbing 11% more or 11 million more in R&D than we have in previous years. We're still able to get numbers. We're still able to get an EBITDA number higher than any of our peers. We are operating, as I said, in all most of our products are coming from expensive territories like the U.S. and Europe, and we're still able to to manage for a profitability like that. And we believe in R&D. We believe that this is our future. We believe in growth. We are not going to cut R&D so we can get the numbers and everybody is, you know, we need to invest in the future and R&D is one of them. I think the reason why our X has suffered for a while is because R&D investment was limited. If we want to grow, we need to invest in R&D, but not only invest in R&D, invest in smart R&D. So you all know what the people that we had brought in, very R&D focused, very science focused. They know not only how to sell the product, but also how to develop it and how to make it. So we're counting on those people. We're counting on all of the organization, and there's a lot more to do. And I think that it's all to show it. If the effects come in because the euro was unexpected and you have to dial down 1.5% on your margins, it's sad to see that we have been looked at as, you know, the reaction is that it is. But that's how the market goes, and that's what we need to do. So we're open to questions. Yes.

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