May 19, 2017 / 6:54 AM / 8 months ago

Hikma cuts revenue forecast on generic Advair delay; shares sink

(Reuters) - Hikma Pharmaceuticals Plc (HIK.L) lowered its full-year revenue forecast on Friday to reflect a delay in the launch of its generic asthma drug amid pricing pressures in the United States, sending its shares down to a three-year low.

Earlier this month, the drugmaker said U.S. regulators decided not to approve its generic version of GlaxoSmithKline Plc’s (GSK.L) blockbuster lung drug Advair, citing “major” issues with the application.

Hikma shares fell as much 7.5 percent to 1,573 pence, their lowest since May 2014. They were top percentage losers on the FTSE 100 bluechip index .FTSE and the pan-European Stoxx 600 index .

The company, which makes and markets branded and non-branded generic and injectable drugs, now expects full-year revenue to be in the range of $2 billion-$2.1 billion at constant currency, down from its earlier forecast of $2.2 billion.

Hikma lowered its 2017 revenue forecast for its generics business to $670 million, down from its earlier forecast of $800 million.

“This assumes we do not launch our generic version of Advair Diskus in 2017 and reflects the intensifying competitive environment in the U.S.,” the company said in a statement.

Hikma and its partner Vectura Group Plc (VEC.L) are in a race with Mylan (MYL.O) to launch the first U.S. generic copy of Advair. The U.S. FDA has already delayed approval of Mylan’s (MYL.O) version.

Hikma and Mylan received so-called complete response letters from the FDA that were categorized as major. Dealing with a major amendment to a generic drug application means a delay of 10 months for an FDA response, according to agency guidelines.

    Consensus estimates have been cut materially since the FDA’s complete response letter was received on May 10, but analysts expect these will need to be slashed even further given the increased pressure on the U.S. generics business.

    Express Scripts Holding Co (ESRX.O) on Thursday said its Econdisc group purchasing organization (GPO), which purchases generics for Kroger and SuperValu, will participate in the Walgreens Boots Alliance Development GPO.

    Morgan Stanley analysts say Express Script’s latest move is a sign of the intensifying competition and the consolidating customer base in the U.S. generics space.

    “We believe (this) is a significant development in the generic drug supply chain; in our view, this could propagate further pricing headwinds and drive sentiment lower,” Jefferies analysts said in a note.

    Hikma maintained full-year revenue estimate for its injectables unit at a range of $800 million-$825 million, with core operating margin seen in the high 30s.

    Reporting by Sanjeeban Sarkar and Tenzin Pema in Bengaluru; Editing by Sunil Nair and Gopakumar Warrier

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