LONDON: Jordan's Hikma Pharmaceuticals has suffered disruption to its key branded drug business — particularly in Egypt, Libya and Tunisia — and expects slower growth from the unit in 2011. Investors have fretted about Hikma's sales due to political turmoil in the Middle East and North Africa, since 61 percent of its revenue comes from the region, and its stock has fallen more than a fifth since the end of January. Overall revenue is expected to grow around 7 percent in 2011, or just under half the rate seen last year, the London-listed company said on Wednesday. The branded business started 2011 with double-digit growth but it has been hit disruptions in manufacturing, sales and distribution. As a result, these branded operations are now expected to show full-year growth of 7 percent, assuming affected markets return to normal by the middle of 2011. Industry analysts said the cautious outlook for branded drugs would trigger some downgrades to 2011 forecasts and brokerage Peel Hunt cut its price target to 670 pence from 720p, rating the stock a "sell." Shares in Hikma, which markets branded generics and in-licensed products across the Middle East and North Africa, as well as generics in the United States, fell 1.8 percent to 690p by 1100 GMT, underperforming a 0.3 fall in UK mid-caps. Reform "will open markets" Chief Executive Said Darwazah said he was confident the disruption was short-term and that economic reform in the region would increase demand for medicines in the long run. Hikma has operations in 17 Middle Eastern markets. It is particularly reliant on sales in Saudi Arabia and Algeria, where Darwazah said business was continuing as normal. Libya accounts for only around 2 percent of sales. "There's clearly a lot of apprehension. But what the region is going through right now is very much in the right direction," Darwazah told Reuters. "Yes, there will be some short-term disruption but I see what's happening as opening up the markets for the future." Hikma remained committed to its goal of doubling sales every four years, Darwazah said, and would continue to scour markets such as Morocco and Syria for potential acquisitions. It doubled its US business in October by buying Baxter's injectables division for $112 million and Darwazah said last month he could make acquisitions worth between $500 million and $600 million this year. The Amman-based company reported a 14.8 percent rise in 2010 sales to $730.9 million, just ahead of forecasts, but a 27.6 percent rise in pretax profit to $121.0 million was light of expectations. Analysts had expected Hikma to report pretax profit of $128.9 million for the year on revenue of $728.6 million, according to a Thomson Reuters I/B/E/S. The company plans to pay a full-year dividend of 13 cents a share, up from 11 cents in 2009.
