October 24, 2014 / 6:50 AM / 5 years ago

Hikma Pharma shares slip on FDA warning for Portugal plant

(Reuters) - Drugmaker Hikma Pharmaceuticals Plc said the U.S. health regulator had raised issues related to environmental monitoring at its plant in Portugal, which some analysts said accounts for about a quarter of the company’s U.S. injectibles sales.

Shares in the Jordanian company fell more than 6 percent on Friday as the warning added to disappointment of weak branded drug sales and a case filed by Takeda Pharmaceutical Co against the approval of Hikma’s drug for gout flares.

Hikma’s stock was the top percentage loser on the FTSE-250 Midcap Index in the morning.

Hikma, which makes and markets branded and non-branded generics and injectibles, said it received a warning letter from the U.S. Food and Drug Administration on Thursday following an inspection of the plant in March.

The drugmaker did not specify what the issues were but said it did not anticipate any impact on its full-year financial forecast or the manufacturing or distribution of products from the plant.

Hikma makes powder, liquid and lyophilized injectible drugs at the Portugal plant, which started in 1997.

However, Citi Research analysts said Hikma had a dedicated R&D line in Portugal and the warning letter would impact approval of new products from that facility.

“We estimate Portugal remediation will likely be less disruptive and expensive vs Eatontown, but acknowledge that resolving warning letters typically tends to be a long drawn out process.”

Hikma had to suspended manufacturing at its Eatontown facility in New Jersey for over a year after it received an FDA warning letter in February 2012.

The plant underwent extensive remediation work before getting the go-ahead to restart in April.

Hikma has 27 plants in 11 countries.

Most analysts, however, said that since the warning letter was issued seven months after the inspection, it is unlikely that it was too severe and would require shutting the plant.

Hikma, which grew at a rapid pace last year on the back of a shortage for the antibiotic doxycycline, has seen strong demand for its high-margin injectibles, particularly in the United States.

Hikma strengthened the business earlier this year by acquiring Boehringer Ingelheim’s U.S. generic injectibles business and manufacturing operations in Ohio.

The injectibles business accounted for $536 million, or 39 percent of the company’s revenue in 2013, with U.S. injectibles sales bringing in 68 percent of that. The company said earlier this year it expected the business to grow 20 percent in 2014.

Hikma shares were down 5.7 percent at 1791 pence at 1015 GMT (6:15 a.m EDT). The stock has risen 18 percent over the past 4 weeks on speculation that the company is in talks to buy privately held U.S. rival CorePharma.

Reporting by Roshni Menon in Bangalore; Editing by Gopakumar Warrier and Don Sebastian

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