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Hikma to retain injectables unit

Result of strategic review after acquisition interest

Hikma to retain injectables unit

Hikma Pharmaceuticals has decided to retain its injectable drug business after completing a strategic review, despite earlier suggestions it would sell the unit.

The announcement suggests Hikma's management believes there is growth potential in the business, with the board noting that there had been a "significant amount of interest" shown by third parties since it said it was entertaining offers.

Hikma said in March it decided to look into the future of the division after being sent unsolicited offers in the wake of Mylan's $1.6bn deal to acquire Strides Arcolab's injectables unit.

Amgen and Novartis have both been mentioned in connection with offers for the unit amid suggestions that it could go for as much as $2.2bn, given the strong growth forecasts for injectable drugs in the coming years.

Analysts at Panmure Gordon have suggested that one of the main reasons for hanging onto the unit is the ongoing manufacturing problems with Hospira's rival injectables business, which failed another inspection by the US FDA earlier this year.

FDA inspectors detailed a number of quality compliance issues with Hospira's Rock Mount facility in North Carolina in March, prompting Hospira to say that its ability to supply the market with some products may become constrained.

Panmure Gordon suggests Hospira's woes could mean that Hikma's "tail winds in injectables will continue", raising its forecasts for injectable division sales from $524m to $580m in fiscal year 2013 and $667m the following year.

Growth for injectable medicines is expected to outstrip the overall pharmaceuticals market in the coming years, rising by around 13 per cent a year according to some estimates, in part because of near-term opportunities presented by current injectable drug shortages but also other factors such as a shift towards biologic therapies.

"We are confident that retaining and continuing to invest in this business is the best option for shareholders," commented Hikma chief executive Said Darwazah.

"Injectables offers excellent long-term growth prospects and will remain an integral part of our overall growth strategy," he added.

18th April 2013

From: Sales

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