The Hikma Pharmaceuticals plc (LON:HIK) (HIK.L) share price has fallen 5% after the release of a trading statement. The Hikma share price may have fallen because it now expects full year revenue to be in the range of $2 to $2.1 billion in constant currency in 2017. This updated outlook is due to a change in guidance for Hikma’s Generics business. It has changed the expected launch timing of a key product and has experienced some price erosion on its marketed products.
The guidance for its Generics business revenue is now $670 million for 2017. This reflects an increasingly competitive environment in the US, although through a focus on portfolio optimisation and continued cost savings, it expects to achieve a slight improvement in profitability for its Generics business in 2017.
While the downgrade to guidance for Hikma’s Generics business is disappointing, its Injectables and Branded divisions are performing in line with expectations. Therefore, the overall performance of the business is expected to be relatively robust, given the improvements which are due to be made to the Generics business.
In the last 6 months, the Hikma share price has fallen 3%. That’s a worse performance than other pharmaceutical companies such as GlaxoSmithKline plc (LON:GSK) (GSK.L), AstraZeneca plc (LON:AZN) (AZN.L) and Shire PLC (LON:SHP) (SHP.L). The GlaxoSmithKline share price is up 8%, AstraZeneca has surged 20% higher and Shire is up 1%.
In my view, Hikma has investment appeal for the long run. I believe it has a good strategy which could help it to overcome the current difficulties it faces. While its share price may decline further in the short run as the stock market digests today’s update, I feel it offers capital growth potential over the long run due in part to increasing demand for lower-cost healthcare across the globe.