Jordan-based Hikma several years ago evaluated whether to sell off its sterile injectable business and decided it was too valuable to give up. Now that part of its business is underpinning it growth and it is expected to do so in the future after it bought out a bunch of drugs and a huge plant in the U.S. from Boehringer Ingelheim.
Hikma today reported that its 16% jump in revenues in the first half of 2014 to $738 million were punched up by the 41% growth in sterile injectables. It didn't put a dollar figure to the injectables business but said growth in the U.S. was where most of that occurred, as it took advantage of "market opportunities." That is code for filling in for shortages caused when competitors have quality lapses and recalls. It said it expects its growth in that category to be greater than 20% for the year.
It didn't name the specific market opportunities but last year reported reaping big rewards selling the antibiotic doxycycline. The drug, used for treating a host of conditions--malaria, sexually transmitted diseases and Lyme disease--was in short supply for months. Although the FDA no longer lists its as in short supply, prices for the product remain high.
|Hikma CEO Said Darwazah|
"Our Injectables business delivered an excellent performance, as we captured a number of attractive market opportunities," CEO Said Darwazah said in a statement. "I am delighted we have acquired the Bedford assets, which will add products, R&D capabilities and capacity to support future growth for the global Injectables business,"
Hikma got an exclusive option on the plant from Boehringer's Ben Venue Laboratories in May after agreeing to buy the generic injectables Boehringer sold under its Bedford Laboratories brand. It paid $225 million in cash upfront and will pay up to $75 million in performance-related milestones. No additional payments were required for the plant, it said in July when it decided to take it as well.
The Bedford plant is one of the largest sterile manufacturing sites in the world but one that has been essentially unused since last year when Boehringer Ingelheim closed it. The German drugmaker had spent years and hundreds of millions of dollars to try to meet FDA quality standards after problems at the plant led to a consent decree. It finally decided it wasn't worth the investment. And Hikma doesn't see that it is worth reopening.
Executives told analysts in a call that Hikma would move the newer equipment from the plant to some of its other manufacturing facilities, including a plant in New Jersey, to expand capacity but put the Bedford site into hibernation, according to a transcript of the call from Seeking Alpha.