Hikma's injectables biz rides competitors' woes to new heights
Jordan-based Hikma has become the second largest player in the U.S. sterile injectables market by riding a wave of manufacturing woes that has washed over competitors. And while it struggles with problems at its own tablet manufacturing plant, its injectables business keeps on growing as competitors like Hospira ($HSP) continue to struggle.
In fact, Hikma says injectables sales in the U.S. last year grew 83%, up $134 million, or 82.6%, to hit $296.2 million. That is 63% of its total injectables revenue of $470 million. For 2012 the entire company had an adjusted profit of $120 million on $1.1 billion in sales. Besides U.S. injectables business, it saw extensive growth throughout its home region in the Middle East.
And the timing of the report couldn't be much better, coming just two weeks after Hikma informed markets it had received some unsolicited interest and would consider selling the growing injectables business. That came the day after Mylan ($MYL) announced that it was buying India's Strides Arcolab's injectables business for $1.6 billion.
Hikma has only been doing injectables seriously for a few years. In 2010 it bought Baxter International's ($BAX) injectables business for about $112 million and has since beefed it up. The buyout came at about the time that other companies, like U.S. market leader Hospira, ran into plant problems, which interrupted supplies and provided a big demand for important injectable drugs. Hikma's injectables business may now be worth close to $1.6 billion.
Other areas of its manufacturing, however, have struggled. It received an FDA warning letter last year for its tablet making plant in Eatonville, NJ, and has been investing there since to fix problems which resulted in it releasing lithium and digoxin tablets that failed size specifications. Hikma in December restarted production there but reported that a 33% falloff in generic sales because of the plant problems had led that division to a $21 million operating loss. It has indicated it is considering "alternative options" for the business, which can be code for a sale.