Hikma will finance the acquisition through new committed debt facilities although the Company also continues to review actively other financing options, including a potential equity issuance. The Company expects to assume control of APM by the end of the year.
Said Darwazah, CEO of Hikma, commented: “The acquisition of APM further consolidates our strong position in the MENA region and enhances our opportunities for growth across all of these markets. We see clear opportunities for synergies through a complementary pipeline, an enlarged sales and marketing team and increased manufacturing scale. We are tremendously excited about the potential of this combination and I look forward to working with APM’s experienced and successful team.”
Consolidating Hikma’s Jordanian market position: In the first half of 2007, 27% of APM’s sales were generated in Jordan, where it is the third largest pharmaceutical manufacturer with a market share of approximately 5%. The acquisition of APM will strengthen Hikma’s market position in Jordan, increasing its market share to approximately 12%, and will create clear commercial and operational synergies.
Enhancing Hikma’s leadership position in the MENA region: APM currently distributes its products in more than 25 countries, including 14 MENA markets. APM’s strong presence in these MENA countries will help further to consolidate Hikma’s position as the leading pharmaceutical manufacturer in the region. APM has a market share in Saudi Arabia, its largest market, of just over 1%. With Hikma’s 3.9% of the Saudi market, the combined Group will have a market share of approximately 5%. Other important markets for APM include the United Arab Emirates and the other Gulf Cooperation Council (“GCC”) countries, Iraq, Tunisia and Yemen.
Gaining scale through complementary product portfolios: APM’s currently marketed portfolio of 106 products and 221 dosage strengths and forms will enhance the product offering available to Hikma’s enlarged sales force by expanding existing product lines, strengthening existing therapeutic areas and adding new molecules. APM’s portfolio includes oral, injectable and dermatological products and spans a number of therapeutic categories, including cardiovascular, diabetes and oncology. APM has recently received FDA approval to manufacture and market an anti-viral product in the US market. APM’s products will also be leveraged to create new revenue opportunities, by introducing them into markets like Algeria and Egypt, where Hikma already has a presence.
APM also brings a portfolio of 5 in-licensed products, including Actos®, Takeda’s blockbuster drug for the treatment of diabetes. Hikma’s expertise in marketing in-licensed products and the strength of the combined sales force should drive incremental sales of these products.
Hikma will also benefit from APM’s pipeline of 35 products. Expanding Hikma’s sales and marketing team Combining Hikma and APM’s sales and marketing teams will create one of the largest sales and marketing forces in the MENA region. APM will add a sales force of more than 200, bringing the combined team to over 1,000 employees. This will make Hikma an even more attractive partner for licensing. Leveraging APM’s technical and manufacturing capabilities APM’s strong technical and research and development expertise can be combined with Hikma’s excellent sales and marketing capabilities and international management skills to maximise the potential of the enlarged group.
APM has high quality manufacturing facilities which are complementary to Hikma’s existing facilities and capabilities and will help to expand current manufacturing capacity. Its three primary manufacturing plants are located in Jordan and include facilities for the manufacture of oral and injectable penicillins, topical preparations, and lyophilised oncology products.
APM’s solid financial position: For the year ended 31 December 2006, APM had net sales of JD 29.1 million ($41.0 million), operating income of JD 5.7 million ($8.0 million) and net income of JD 5.1 million ($7.2 million). At the end of 2006, APM had total assets of JD 65.2 million ($91.9 million) and total liabilities of JD 8.5 million ($11.9 million). In the six months to 30 June 2007, APM achieved net sales of JD 18.0 million ($25.4 million), operating income of JD 3.6 million ($5.1 million) and net income of JD 3.5 million ($4.9 million). This strong performance is expected to be maintained in the second half of the year.
Hikma expects significant revenue synergies to be derived from the distribution of APM’s product across its network. Further synergies are expected to be derived from the increase in production capacity, operational efficiencies and enhanced R&D capabilities. The Company currently expects one-off integration costs of approximately $3.0 million.
Merrill Lynch International is acting as exclusive financial adviser to Hikma Pharmaceuticals PLC.
Conference call and audio webcast said Darwazah, Chief Executive Officer and Bassam Kanaan, Chief Financial Officer, will host a conference call on Monday 10 December 2007 for analysts and investors at 15.00 hrs (GMT). The conference call will be audio webcast and can be accessed through the Company website www.hikma.com. To participate in the conference call, please dial +44 (0)208 817 9301 from within in the UK or +1 886 629 2704 from the United States. A recording of the conference call will be available for seven days. To listen, please dial +44 (0)20 7806 1970 or +1 866 239 0765 and enter the pass code 4918047#.
Enquiries:
Hikma Pharmaceuticals PLC
Susan Ringdal
Investor Relations Director
