Hikma will keep injectables manufacturing

For the last several years the business model for Hikma's injectable drug business has gone something like this: Market leader Hospira ($HSP) reports a problem and Hikma picks up more business. The strategy has worked so well that the company says it will keep the rapidly growing division despite the fact big drugmakers are interested in buying it, and analysts say it might fetch up to $2 billion. 

In an announcement today, the Jordan-based company said, "Hikma is uniquely positioned to create significant further value by retaining this business and leveraging its high quality manufacturing facilities." CEO Darwazah said, "After a thorough review of strategic options for the injectables business, we are confident that retaining and continuing to invest in this business is the best option for shareholders."

Hikma's decision to hold onto the business "validates that there is more value in that business and that they think they can grow it," Panmure Gordon London analyst Savvas Neophytou told Bloomberg.

Hikma in late February said it has gotten unsolicited interest in the injectable drug business and needed to thoroughly evaluate them against growth potential in fairness to shareholders. That announcement came on the heels of Mylan ($MYL) agreeing to pay India's Strides Arcolab $1.6 billion for Agila Specialities, its injectable drug business. Sources told Bloomberg that both Amgen ($AMGN) and Novartis ($NVS) were sizing up the Hikma operation, which it has been growing since buying the foundation from Baxter International ($BAX) for about $112 million in 2010. 

The Middle East company continues to benefit in the U.S. from the manufacturing problems of competitors like Hospira, which has been trying for several years to show the FDA that it's on top of its manufacturing and quality problems. In March, however, Hospira received another setback following an FDA re-inspection of its Rocky Mount, NC, plant. Instead of getting the positive feedback it expected, it was handed a 21-page Form 483 with more to-dos on it. At about the same time, Hikma reported results of finances for 2012, showing its injectables sales in the U.S. grew 83%, up $134 million, or 82.6% to hit $296.2 million. That is 63% of its total injectables revenue of $470 million.

- here's the release
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