Hikma Pharmaceuticals cuts generics guidance again

Hikma Pharmaceuticals cut forecasts for its generics business on Thursday for the third time this year as it pointed to challenging market conditions in the US.

Due to greater than expected price and volume erosion, the group now expects revenue from the generics business to be around $600m for the year, with core operating margin in the low single digits. Hikma said it expects the challenging market conditions to continue in 2018, adding that it is actively pursuing new commercial opportunities and focusing on the execution of its pipeline to help offset continuing price erosion.

“We are also identifying further cost savings for this business, which will include the consolidation of our oral manufacturing operations in the US,” it said.

The company also gave an update on its generic version of GlaxoSmithKline’s asthma treatment, Advair, for which it received a complete letter response from the US Food and Drug Administration back in May. Since then, Hikma has had “constructive discussions” with the FDA and has been able to clarify and address the majority of the questions raised.

However, it said on Thursday that there remains an outstanding issue regarding its Clinical Endpoint study.

“We firmly disagree with the FDA's position and we are progressing with a dispute resolution process. We now expect this process to be completed in the first quarter of 2018, at which point we will update the market and provide further details on timelines.”

Partner Vectura, which has formulated the drug and provided the puffer device for the Advair generic, said it and Hikma "remain confident in the approvability of our product" and "are committed" to bringing the drug to the market "as quickly as possible".

At 1040 GMT, Hikma shares were down 6.5% to 973.50p. But Numis said the weakness was "overdone" and upgraded the stock to 'buy' from 'add', pointing to "diverse growth drivers" and "excellent long-term prospects through organic growth and M&A".