Entanglements with the FDA over its West-Ward plant in New Jersey seriously nicked the earnings of Jordan-based Hikma Pharmaceuticals.
The company today reported that revenue in its generics division was off 27% to $55.8 million in the first half of 2012 because of "additional compliance work at the Eatontown facility and increased pricing pressure." The result was fewer sales of generic drugs.
The FDA in February nailed Hikma's West-Ward Pharmaceuticals subsidiary with a warning letter over manufacturing and testing issues that led to the release of lithium and digoxin tablets that failed size specifications. The FDA also said there were issues achieving the proper dissolution rate for the lithium carbonate tablets, a slow-release version often used with bipolar patients. West-Ward has changed the manufacturing process for the drug a number of times since Nov. 25, 2008, but failed to document the effects of those changes, the FDA noted in its warning letter.
Problems with generics were offset by growth in Hikma's sterile injectables business, an area in which the company has said it will try to build market share by taking advantage of the production problems of competitors. Hikma in 2010 paid Baxter International ($BAX) about $112 million for its sterile injectables business. It has since expanded that area. It reported a nearly doubling of sales in that division to $225 million, which hiked the company's total revenue nearly 35% to $532.3 million.
The problems in Eatontown, however, will continue to be a drag on the company's earnings this year. CEO Said Darwazah says much of the company's earnings will be driven by sales in the Middle East and North Africa. Hikma reduced its 2012 revenue guidance to $115 million for the generics division but kept a 20% revenue growth estimate for the company in place.
"In our generics business, where operations have been disrupted by additional compliance work, we expect sales to gradually improve in the second half," Darwazah says in a statement.
- here's the earnings release
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