Hikma Pharmaceuticals H1 Earnings Call Highlights

Key Points

• Hikma maintained its full-year guidance after first-half sales, EBIT and EBITDA rose by nearly 8%, while earnings per share increased 5%. Management expects second-half performance to be affected by higher R&D, promotional and recruitment spending, as well as uncertainty in MENA.
• The company said its injectables business has stabilized through increased staffing, equipment, supply-chain investment and safety stocks. TYZAVAN adoption is building, with more meaningful progress expected in the fourth quarter, while new injectables submissions are likely to support growth from 2028 onward.
• Hikma is expanding U.S. and European manufacturing capacity, expects a major Rx contract to enter commercial production in 2027, and is selling its small loss-making U.S. 503B compounding business. The share buyback is nearly complete, with about $230 million deployed.

Hikma Pharmaceuticals LON: HIK said it reiterated its full-year guidance after reporting higher sales, earnings and per-share profit in its 2026 interim results, while outlining further investment in manufacturing capacity, research and development, and commercial capabilities.

Chief Executive Officer Said Darwazah said sales increased in the first half, while EBIT and EBITDA each rose by nearly 8% and earnings per share increased 5%. He said the company had met one of its principal objectives for the year by stabilizing its injectables business, while its MENA and Hikma Rx operations continued to perform well.

“We have three engines to drive” the company, Darwazah said, referring to the injectables, branded MENA and Rx businesses. He said the company expects the injectables unit to begin contributing more substantially to top- and bottom-line growth from next year.

Guidance Maintained Amid Investment and MENA Uncertainty

Management said it remained comfortable with full-year guidance, though it expects continued investment to weigh on the second half. Darwazah said R&D spending will increase further in the latter half of the year, alongside increased promotional spending in MENA and recruitment for additional senior roles.

Acting Chief Financial Officer Areb Kurdi said first-half branded sales reflected the usual seasonal weighting of the tender business, with roughly 55% of annual branded sales expected in the first half. The first half also benefited from sales and marketing events that were postponed because of regional conditions and travel constraints; those expenses are expected to occur in the second half.

The company said its MENA business benefited early in the year from government stockpiling following the start of the war, although Kurdi said this had normalized toward the end of the first half. Management remained cautious on the outlook for the region because of uncertainty, potential currency volatility and supply-chain disruptions.

Susan Ringdal, Hikma’s executive vice president of strategic planning and global affairs, said the branded segment’s strong first-half profit weighting means group performance is expected to be somewhat lower in the second half. Hikma said it sees sustainable mid-to-high single-digit revenue growth and margins in the mid-20% range for the branded business over the medium term.

Injectables Stabilization, TYZAVAN Ramp and Manufacturing Investment

Darwazah said Hikma has invested heavily to address supply constraints in injectables, including hiring personnel at all levels, adding equipment, strengthening supply-chain operations and building safety stock. He said the company had historically faced an issue of supplying market demand rather than a lack of demand.

The buildup of safety stocks should enable Hikma to respond to market shortages and pursue more profitable opportunities, according to Darwazah. The company has also expanded its injectables R&D resources in Croatia and expects an acceleration in product submissions, although management said those submissions are more likely to support growth from 2028 onward.

On TYZAVAN, Hikma’s ready-to-use vancomycin product, Darwazah said adoption is increasing monthly as hospital buying groups and individual hospitals add the product to their formularies and begin stocking it. He said the final three months of 2026 should provide a clearer indication of the product’s trajectory for 2027.

Management said it has expanded the commercial organization supporting TYZAVAN, growing the team from several people a year ago to more than a dozen employees. Darwazah said the company expects more substantial progress in the fourth quarter as converted hospital groups begin using the product.

Hikma said injectable pricing has remained relatively stable, with no significant erosion seen during the first half. Darwazah attributed part of that environment to more rigorous U.S. Food and Drug Administration inspections and enforcement. In the Rx business, management said oral generic products continue to face price pressure, estimated by Ringdal at mid-single-digit levels, while inhalation and nasal products have faced less pressure.

CMO Plans and U.S. Manufacturing Position

The company expects injectable contract manufacturing organization, or CMO, revenue to be weighted toward the second half, similar to the prior year. Ringdal said Hikma has good visibility over the scheduled business, although injectable CMO revenue is still expected to be slightly lower in 2026 than in 2025.

For Hikma Rx, Kurdi said the company is progressing as planned on CMO and expects to begin commercializing its major contract next year. Ringdal said the contract generated service revenue during 2026 preparation work and is expected to enter a full year of commercial production in 2027.

Hikma maintained its target for CMO to account for 20% of Rx revenue by 2030. Darwazah said the company sees significant demand but is still seeking to hire a senior commercial executive for the CMO operation before the end of the year.

Management also emphasized its U.S. manufacturing footprint in discussing possible pharmaceutical tariffs. Ringdal said the majority of products Hikma sells in the U.S. are made domestically, while Darwazah said the Rx business is almost entirely U.S.-manufactured. The company is expanding capacity at Cherry Hill and expects its Bedford injectables facility to come online in 2028.

Darwazah said Hikma’s investments in Ohio manufacturing and R&D have received up to $50 million in state incentives over 10 years. Management said potential tariffs have not changed its U.S. investment strategy.

Portfolio Actions and European Expansion

Hikma said it is unwinding and seeking a buyer for its U.S. 503B compounding business, which management described as a small, loss-making contributor that had become a distraction for the injectables organization. Kurdi said the business has been classified as held for sale and is expected to be sold within 12 months, potentially much sooner, with interest from prospective buyers.

Darwazah said the company is placing greater emphasis on expansion in Europe, including investments in its German and Italian manufacturing sites as well as its Portuguese operations. Hikma is also expanding into France and Spain.

Rather than focusing solely on injectables in Europe, the company is evaluating opportunities in areas including ophthalmics and ointments, Darwazah said. In the U.S., Hikma expects to focus more on product acquisitions, particularly in specialty products that can utilize its expanding promotional organization.

Hikma said its share buyback program is nearly complete, with approximately $230 million deployed and close to 12 million shares acquired. Management said there is little remaining under the current authorization and that any future program would be reviewed later.

About Hikma Pharmaceuticals (LON:HIK)

At Hikma we help put better health within reach, every day. By creating high-quality medicines and making them accessible to the people who need them, we help to shape a healthier world that enriches all our communities. We help deliver this by living our culture, delivering our strategy, and acting responsibly. We are a trusted, reliable partner and dependable source of over 820+ (as of Feb 2026) high-quality generic, specialty and branded pharmaceutical products that hospitals, physicians and pharmacists need to treat their patients across North America, MENA and Europe.

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