Hikma, which already has a strong foothold in North Africa, intends to invest deeper there. The Jordan-based company has created a joint venture in Ethiopia that will build a manufacturing plant.
HikmaCure will be a 50-50 joint venture between Hikma and MIDROC Pharmaceuticals, which is part of Sheikh Mohammed Hussein Al Amoudi's MIDROC Group. The two will equally share a $22.3 million cash investment for working capital and to build a manufacturing and distribution facility in the country. It expects to have the plant up and producing in 2017.
"Expanding our presence into sub-Saharan Africa is a key strategic priority for Hikma and this is an excellent first step," said Hikma CEO Said Darwazah. "We believe Ethiopia offers strong growth potential in the medium to long term and our investment at this stage will enable us to be well positioned in the market. We will continue to explore opportunities to build our presence in the sub-Saharan region."
While the plant is being built, the partners will get started with the joint venture distributing Hikma products in the market, with help from MIDROC to get them registered and the operation going. They point out that Ethiopia has a population of 94 million people, 64% of whom are under 25 years old. The Ethiopian pharmaceutical market is valued at only about $500 million but is growing at a compound annual rate of 15%. It is projected to hit $1 billion in sales in 2018 as the country builds out its healthcare infrastructure and incomes rise. Currently, about 75% of the drugs sold there are imported.
Hikma has been growing, in part, through greater sales in North Africa and the Middle East, where it claims to be the market leader. The company also has benefited by filling drug shortages in the U.S. market. In its latest earnings report, the drugmaker reported revenues up nearly 20% for the first 6 months of 2013 to $638.3 million. It raised its revenue guidance to 20% growth for the year. But it has had some manufacturing setbacks as well. It received a warning letter last year for the plant in Eatontown, NJ, operated by its West-Ward division and in November decided it must temporarily close it to get problems resolved. This summer it reported that the plant was "slowly reintroducing products to the market."
- here's the announcement