Abu Dhabi, UAEWednesday 24 April 2019

Hikma buys Boehringer’s US generic drugs business to shore up market share

The deal adds 88 high-value products in specialisations such as oncology and respiration, and also increases Hikma’s pipeline of products under research and development to 89.

Hikma Pharmaceuticals of Jordan has acquired the US generic drugs business of Boehringer Ingelheim for $2.65 billion as it looks to bolster its falling market share in the US.

The acquisition includes Boehringer Ingelheim Roxane, the production arm of the German company, and Roxane Laboratories, its research and development and sales and marketing arms.

The deal adds 88 high-value products in specialisations such as oncology and respiration, and also increases Hikma’s pipeline of products under research and development to 89.

“The transaction has significant strategic value for us, transforming our position and scale in the US generics market,” said Said Darwazah, Hikma’s chief executive.

“The acquisition also significantly expands our manufacturing capacity and technological capabilities.”

Hikma expects to increase Roxane’s revenue from the current $725 million to $775m in 2017.

Shares of the London-listed Hikma climbed 9.1 per cent to 2,270 pence on Tuesday.

Hikma will pay $1.18bn in cash and issue 40 million new shares to Boehringer Ingelheim, representing 16.71 per cent of its issued share capital, at £23.50 a share.

The US is Hikma’s major market for generic medicine and it accounted for 51 per cent of the group’s revenues, while the Middle East and North Africa region accounted for 43 per cent. But Hikma’s generics division is coming under pressure, with revenue expected to fall to $200m this year from $216m last year. Its gross profit was $150m last year, down from $206m in 2013.

One of the factors was the declining US sales of doxycycline, which is used to treat sexually transmitted diseases, in the face of increasing competition.

“With this acquisition, Hikma has the opportunity to bring new products to the [Middle East and North Africa] region,” said a Hikma spokesman.

In the Arabian Gulf, as governments foot most of the healthcare bills, the focus is on checking surging medical costs.

In the UAE, the government has been encouraging the use of generic medicine for treatments.

In 2012, the UAE government funded 68 per cent of healthcare spending, according to a Deloitte report this year.

“Overall health care spending is expected to increase 6.9 per cent a year, from an estimated $14bn in 2013 to $19.6bn in 2018,” it said.

Last year, Hikma bought the assets of Bedford Laboratories, an Ohio-based maker of injectable drugs, for $300m from Boehringer Ingelheim.

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Updated: July 28, 2015 04:00 AM

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