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Tue 15 Feb 2011 10:25 AM

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Drug firm Hikma aims for $500-$600m acquisitions in 2011

Jordan-based pharma company also looking at joint ventures in fast growing Gulf states

Drug firm Hikma aims for $500-$600m acquisitions in 2011
BUYOUT PLANS: Jordan-based Hikma Pharmaceuticals hopes to make $500 to $600m in acquisitions this year (Getty Images)

Jordan-based Hikma Pharmaceuticals hopes to make $500 to $600m in acquisitions this year to consolidate its position as a leading player in the Middle East and North Africa, its chief executive said on Monday.

Said Darwazah told Reuters the fast growing multinational drug manufacturer was targeting various markets not penetrated yet in the Middle East and North Africa (MENA) region, such as Morocco, Syria and beyond the Arab world to Turkey and further south in east and west Africa.

This was addition to looking at joint ventures in the fast growing Gulf states, where it already has a foothold in Saudi Arabia, he added in an interview at his office in Amman.

"We could spend between $500m to $600m this year if we find enough acquisitions," Darwazah said.

Darwazah, whose firm's sales rank number one among regional manufacturers in the MENA region, said Hikma was growing faster than the market itself in the region that it was set to maintain at least 10 percent annual growth compared to a 2 to 3 percent in mature and industrialised markets.

"That's why we are concentrating on growing the business more and more in the region with its young population and changing health patterns. Although Hikma has robust operations in the U.S. and Western Europe, MENA is still the crown jewel of the business," he said.

Hikma sells off-patent generic drugs under its own brands and in licensed products across the Middle East and North Africa and generics in the United States.

The majority of its operations are in the US - via an acquisition in 1991 and in the Middle East and North Africa, principally in Algeria, Saudi Arabia and Egypt and Jordan.

Darwazah also reiterated guidance for 2010 group financials in the low teens, with prospects of a good year in 2011.

"I feel very comfortable that 2010 targets will be met. We have seen growth in all three sectors of our business."

The MENA pharmaceuticals market currently accounts for about 55 to 60 prcent of Hikma's total revenues, which reached $637m in 2009, with the balance coming from the US generics and international injectables operations.

Hikma's latest acquisition of Baxter's US generics injectables unit for $112m to be completed this month would position the firm to become by second half of 2011 "the second largest provider in terms of volume for injectable products for hospitals," in the US market, Darwazah said.

Hikma's gained from outsourcing products from its plants in Western Europe and in Saudi Arabia and Jordan and a record on quality and compliance was helping its generics business, particularly in the United States.

Hikma also benefitted from the financial crisis impact on a health care industry whose cost cutting measures shifted purchases to higher quality cheaper generic products.

"We are typically a good provider when governments say we want to cut down the cost of medicine and we want to buy higher quality cheaper products," Darwazah.

Darwazah said the company's geographic and product diversification and an expanding manufacturing base in the region that made it a local player helped it to weather turmoil in the Middle East.

"We have a long track record of ability to navigate in areas of political turmoil, to know the markets well and to anticipate what's going on and as we enter more markets in MENA and internationally we decrease risk," Darwzah said.

Hikma's major Egyptian plant, which employs over 800 people, is operating after a short disruption during the current unrest.

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