Hikma’s Innovation, R&D Leads to Global Expansion

Hikma being listed at London Stock Exchange

“Innovation, said Steve Jobs, “distinguishes between a leader and a follower.” By that standard, Jordan-originated multinational company Hikma Pharmaceuticals falls in the category of a ‘leader.’

With a modest start from Jordan in 1978, Hikma has grown into a global pharmaceutical giant with 176 pharmaceutical products in 397 dosage strengths and forms in 40 different countries.

In the beginning, Hikma’s “primary focus” was to develop branded pharmaceuticals business across Middle East and North Africa (MENA). Today, the company has become a leading pharmaceutical giant having a significant presence in MENA, United States and Europe. The company’s strength can be gauged from the fact that its total revenue shot to $448.8m in 2007, an increase of 41.6% from the previous year, underlying revenue growth of 28%.

The buzzwords that sum up Hikma’s miraculous rise are: Innovation, Research & Development, and Acquisitions. These words define the corporate identity of Hikma. These words have breathed life into Hikma or vice versa.

Since its inception, Hikma has persistently indulged in innovation. No wonder in barely three years after entering the United States, it became FDA compliant in 1994. Two years later, it became the first Arab company to get FDA approval.

It was because of Hikma’s innovation that it started manufacturing injectable pharmaceutical products in Portugal in the year 1997. Four years later, it began manufacturing injectable powdered cephalosporin for the MENA and Portugal. Since then, as the company website puts it, Hikma has expanded significantly, both organically and through acquisition.

Hikma's business

Hikma’s business can be broadly divided into three categories: Branded, Generics and Injectables.

With an impressive experience of almost three decades in pharmaceuticals, Hikma has an array of branded products of “consistently high standard.” It is because of this reputation that multinationals turn to Hikma to manufacture and market their branded pharmaceuticals under in-licensing agreement. Hikma has 236 branded products (including 33 in-licensed products). In 2007, Branded products yielded a whopping profit of $198.9m.

In Generics, the company sells unbranded generic products in the United States, one of the world’s most competitive pharmaceutical markets. To satisfy “cost-conscious” customers, Hikam sells a broad range of high and low volume products. This business operates under West-ward label. The company has 44 non-branded generic products whose profit was $124.2m in 2007.

In Injectable business, Hikma manufactures and sells generic injectable pharmaceuticals as well as some branded injectable products under license. Hikma is becoming a leader in this category with their injectables being sold in MENA, Europe and United States. Injectables, consisting of 73 products, produced a profit of $121.2m.

A Strong R&D team

Hikma success also lies in its strong research and development team. The company has 127 scientists and experts dealing with pharmaceutical formulation, process optimization, analytical chemistry and drug delivery. The R&D team consists of strong technical expertise which focuses on niche and higher margin products. The team looks for products with a strong market potential or the products which are fast growing in therapeutic categories.

Hikma’s R&D capabilities have been taken seriously. In 2007 alone, the company received 129 product approvals in a range of therapeutic categories. With effective R&D, Hikma has a strong pipeline of products waiting approval.

Strategy Emboldened by LSE (London Stock Exchange) Listing

Hikma’s listing on LSE (London Stock Exchange) in November 2005 marked the beginning of a new era in the Company’s development giving it major financial flexibility.

Hikma’s strategy is simple: to build a strong and diverse product portfolio; to expand geographic reach; to develop and leverage global research and development capabilities. Its strategy also aims to “maintain the very high standards” for manufacturing capabilities.

Across its three core businesses (Branded, Generics and Injectables), Hikma has three strategic aims:

1. To consolidate strong market position in the MENA region by launching new products, expanding geographic reach and increasing market share.

2. To grow Injectable business by expanding product portfolio, developing manufacturing capabilities and strengthening sales and marketing network.

3. To continue to pursue profitable growth and maintain significant cash generation in the United States by focusing on high margin, niche product opportunities.

For Hikma, 2007 was the year of acquisitions. Hikma made four acquisitions: Alkhan Pharma (Egypt), Arab Pharmaceutical Manufacturers - APM (Jordan and Saudi Arabia), Ribosepharm and Thymoorgan (Germany).

On Course for Major Global Expansion

In just a year’s time Hikma’s product portfolio base has been transformed: It launched 28 new products, received 167 approvals across all businesses and geographies and submitted 74 regulatory filings in Jordan, the US and Europe alone.

Said Darwazah, Chief Executive of Hikma, is confident that the company has never been in such a strong position before.

“Our position as a leading pharmaceutical manufacturer in the MENA region is stronger than ever,” he said. He was equally confident about the company’s portfolio base and manufacturing capabilities.

“We have an excellent product portfolio, a large and growing sales and marketing team and excellent manufacturing capabilities that enable us to take advantage of the extremely favourable market environment in which we operate,” he said.

Acquisitions in MENA region have boosted the morale of its Chairman. “Through the two acquisitions we made in the region this year, we are rolling out our successful business model into new markets like Egypt and strengthening our position in our core and developing markets like Jordan, Saudi Arabia and the other Gulf countries,” he said.

With an enviable balance sheet, Hikma’s future looks radiant. The Group gross margin made a healthy 49.3%, 14.8% increase in profit attributable to shareholders, which strengthened its balance sheet and the company’s ability to finance future growth. The company also raised gross proceeds of $160m to fund acquisition of APM.

Mr. Darwazah is hopeful that 2008 will be extremely fruitful for the company.

“We expect another year of strong performance in 2008 driven by our Branded and Injectable businesses as we continue to grow Hikma into a leading specialty pharmaceutical company and deliver high returns on investment to our shareholders,” he said.

Copyright Material: http://www.dinarstandard.com/innovation/Hikma071308.htm

A Poona Diary

Poona: Rise in high-rises

What do you do when a torrent of thoughts keep pouring in like Poona's intermittent raindrops? You try to store them in transient human memory. But human memory is no safe deposit vault. Reliance on human memory is untenable in today's fast-paced world where history is being digitally recorded. So how does one treat the torrential thoughts? Should the thoughts be allowed to fall like Niagara Falls or should we make those thoughts still like dam water? Words are the only way one can standstill the moments.

As the rain gods emptied their water drums, I was compelled to uncork my bottled thoughts. If rains can wash away the layered dirt, thoughts can cleanse one's conscience. Poona is the city of purity!

Poona, once a grand empire of Maratha emperors, has become an emperor of education. It was Nehru who had crowned Poona as "Oxford of the East." Poona is a towering educational hub for Easterners who look at Oxford with awe and reverence. I was lucky to be part of the great Indian "Oxford" which taught me common sense as well as the fine art of unravelling a communal mind. When Gujarat 2002 genocide took place under the edgy knife of the great Indian butcher, I was in the second year of my graduation. In those days the best way to recognize a communalist was to give him morning newspaper and observe his wrinkles making various angles. Most of the student faces wouldn't frown; they would develop some uneasy lines and the lines suggested a sinister smile. That smile was a defeat of human conscience.

In the last six years Poona has transformed into an adult city. If adolescence creates hormonal imbalances adulthood makes visible signs of its arrival. Poona, no doubt, has become adult, but it suffers from mall mentality; the newest economic disease plaguing India. High-rises do not reflect a city's growth; it mirrors corporate greed. Should we measure a city's growth by abundance of malls and high-rises or by number of beggars on a posh M.G. Road? The answer lies in the economic principle of moderation. In economics, too much of anything is bad.

Poona is Bombay's competing cousin: frequent traffic jams, rising pollution levels, sudden increase in crime and violence. But yet Poona is a far better cousin than Bombay. The difference between Poona and Bombay is that of a noun and an adjective: Poona is fun, Bombay is funny!
Was 'Poona' a spelling mistake? Or a result of colonial hangover?

No. Poona is more civilized than Pune.

Raj Thackeray's threat is visible on nameplates of foreign fast food giants like Pizza Hut and Dominos: they have learned to write their names in Marathi. It is altogether a different matter that Maharashtra assembly has passed a resolution to this effect. I am not against Marathi language; I am against the compulsion. Raj threat can result in electoral loss of the ruling class so there is a race to appease the Marathi Manoos. Not long ago, Uddhav Thackeray and Ramdas Athavale were at loggerheads to appease the Marathi Manoos: Shiv vada pav versus Bheem vada pav! Can vada pav economically uplift a community? My Marathi friends don't think so!

A short visit to Symbiosis, my alma mater, reveals that it has changed completely. Printed forms are history and internet is no longer a mystery! There are no queues. It offers an excellent lesson to Bombay's colleges.

Poona is a city of endless opportunities where opportunity knocks as well as lingers.

Afterthought: Why is Mulayam getting really Mulayam for Sonia Gandhi? Because he is the velvet carpet of UPA chairperson!