(Reuters) - Hikma Pharmaceuticals Plc (HIK.L) on Thursday said 2017 revenue would be at the lower end of its forecasts, citing increased pricing pressures in the generic drug industry, sending its shares to a more than three-year low.
The Jordan-based firm, which makes and markets branded and non-branded generic and injectable drugs, said it now expected 2017 revenue to be about $2 billion, at the lower end of its previous forecast of $2 billion-$2.1 billion.
The company had already cut its full-year guidance in May to the range of $2 billion-$2.1 billion at constant currency from $2.2 billion.
Hikma’s London-listed shares dropped as much as 17 percent to a three and a half-year low of 1101 pence.
“Price erosion by the entire generics industry has been significant,” Brian Hoffmann, president of the company’s U.S. generics business told Reuters.
“Earlier in the year we were experiencing lower price erosion levels than the rest of the industry. However, since then the level has increased,” Hoffmann said.
Hoffman said to boost profitability Hikma was re-negotiating its contracts with suppliers and third-party vendors to cut costs.
The company said it would look to maintain the current level of its workforce in the business as it was operating below its full headcount.
“While we believe that a guidance downgrade was somewhat anticipated given previous commentary this quarter from generics companies, downgrades across all the divisions highlights the headwinds the company is facing,” Morgan Stanley analysts wrote.
Teva Pharmaceutical (TEVA.TA), the world’s biggest generics drugmaker, reported a drop in second-quarter earnings earlier this month, citing accelerating price erosion in the United States.
Hikma’s lower guidance in May followed a decision by U.S. regulators not to approve its generic version of GlaxoSmithKline Plc’s (GSK.L) blockbuster lung drug Advair, citing “major” issues with the application.
The company also lowered full-year revenue guidance on Thursday for a second time in its generics business by $50 million to about $620 million in 2017. Hikma’s initial forecast had been $800 million.
Hikma said it expected revenue from its injectables business, that accounts for 40 percent of the total, to be at around $775 million, down from its prior estimate range of $800 million-$825 million.
It also said it had multiple interactions with the FDA since receiving the decision on its generic version of Advair and was “making progress on answering their questions.”
“We still have a number of questions outstanding that we continue to work with them on,” Hoffmann said, adding that the company had no clear timeline yet on product approval.
The company reported a 1 percent rise in revenue to $895 million for the six months ended June 30, but missed analysts estimates of $932 million. Core operating profit of $176 million was in line with last year.
The company said in a separate statement on Thursday it had signed a deal with Japan’s Takeda Pharmaceutical (4502.T), which grants Hikma exclusive rights to manufacture and commercialize three of Takeda’s primary care products in Middle East and North Africa.
Reporting By Justin George Varghese in Bengaluru; Editing by Edmund Blair and Jane Merriman