Shares in FTSE 250 drugmaker Hikma Pharmaceuticals popped this morning despite the company swinging to a loss for 2017 amid yet another US regulatory setback.
The group's pre-tax loss was $738m (£529m), down 451 per cent due to the impairment of the West-Ward Columbus business it acquired in 2016. Core profit before tax was down nine per cent compared with 2016 to $328m.
Core group revenue edged down one per cent to $1.9bn, though sales were up one per cent at a constant currency rate.
Shares were up 12.6 per cent at 982.3p at the time of writing, however, as the firm's boss promised "transformational changes across the group".
In the year ahead, Hikma expects its injectables business to generate revenue of between $750m and $800m and its generics unit to rack up $550m to $600m in sales. Revenue at its branded arm is expected to grow in the mid-single digits at constant currency rates.
Why it's interesting
Hikma's executive chairman Said Darwazah said West-Ward Columbus' performance was hampered by the "increasingly competitive dynamics of the US market", including intense pricing pressure.
The firm's generics business reported a more than $1bn operating loss in 2017, largely due to charges against West-Ward Columbus, which were related to the company's pipeline and "a change in the expected market opportunity of certain products".
This was further impacted by the delays to the approval of a generic version of GlaxoSmithKline's asthma drug, Advair.
"As a result of these headwinds, we have had to take an impairment related to the West-Ward Columbus business to reflect our updated view of the fair value of this business," Darwazah said.
The US Food and Drug Administration this week told Hikma it would have to conduct a further clinical study evaluating its generic drug.
Hikma said it expects to be able to submit a response to the FDA with new clinical data as early as possible in 2019.
What Hikma said
Darwazah said the company delivered a "strong" performance in 2017 at a challenging time for the industry.
To be more competitive and achieve our ambitious goals, we are making transformational changes across the group.
We recently announced the appointment of Siggi Olafsson as chief executive officer. Siggi is an exceptional leader with extensive experience in the industry. He is the right person to take the business to the next level.
I am confident that the investments we have made across our businesses in 2017 – in our people, our capabilities and our facilities – leave us well positioned to achieve our strategy for growth.
Since arriving at Hikma, I can already see the incredible potential of this business and I’m confident that the operational improvements already under way will deliver substantial value to our customers, employees, investors and the wider community.