ii view: Hikma Pharmaceuticals injects big dose of caution

Full-year results to 31 December

• Revenue up 7% to $3.35 billion
• Core operating profit up 3% to $741 million
• Reported operating profit down 11% to $542 million
• Final dividend of 48 US cents per share
• Total 2025 dividend up 5% to 84 US cents per share
• Net debt up 24% to $1.39 billion

Guidance:

• Expects full-year 2026 revenue growth of between 2% and 4%
• Planning a new share buyback of $250 million over 2026
• Expects full-year 2026 core operating profit of between $720 million to $770 million

Chief executive Said Darwazah said:

"Strong momentum in our Branded and Hikma Rx businesses and growth in all our geographies enabled us to deliver Group revenue and profit growth in line with guidance, and resilient margins. 

“The leadership changes that we are announcing today will enable us to execute the Group strategy with more agility and greater accountability.”

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ii round-up:

Hikma Pharmaceuticals (LSE:HIK) supplies over 800 medicines and products globally.

Products fall into the three categories of injectables, generics and branded medicines.

Therapeutic categories include anti-infectives, cardiovascular, central nervous system, diabetes, oncology, pain management and respiratory.

For a round-up of these latest results, please click here. 

ii view:

Founded in Jordan in 1978, Hikma today employs around 9,400 people. The UK headquartered company operates 29 manufacturing plants, many in North America, along with three Research and Development facilities. 

Hikma highlights itself as a top three provider of generic sterile injectables by volume and a key supplier of non-injectable generic medicines in the USA. Injectables accounted for most sales over this latest year at 42% followed by generic medicines - its RX division - at 31%, and branded medicines most of the 27% balance.

Geographically, North America dominated 2025 sales at 59%, followed by the Middle East and North Africa at 33%, and Europe and the Rest of the World 8%.

For investors, disappointing 2026 sales and profit forecasts, likely hindered by increased marketing and R&D costs, offer caution. Rising energy prices could begin to hurt production costs going forward. Possible changes to US tariffs and ongoing government pressures to reduce drug sale prices cannot be ignored, while legal proceedings are considered typical for the pharmaceutical industry, including litigation and government investigations.

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On the upside, the relatively new chief executive will likely look to rejuvenate the group’s strategy. A new £250 million share buyback programme offers some share price support in 2026. A previously aborted takeover approach should not be forgotten, while a forecast dividend yield of close to 5% is attractive. 

For now, a consensus analyst fair value estimate just above £19 per share is way above the current share price, which is at a multi-year low. That said, a series of cautious outlook comments and a withdrawal of medium-term guidance may leave more risk averse investors sidelined for now.

Positives: 

• Diversity of products
• Attractive dividend yield (not guaranteed)

Negatives:

• Currency translation can hinder performance
• Legal proceedings considered typical

The average rating of stock market analysts:

Buy