Hikma Pharmaceuticals Aktie

Good day, ladies and gentlemen, and welcome to Hikma Pharmaceuticals April 2026 Trading update. [Operator Instructions]. I will now hand over to the Hikma IR team. Please go ahead.

Good morning, everyone, and welcome to Hikma's analyst call following the publication of our trading update this morning. I'm Guy Featherstone, Investor Relations.

Before we start, we'd like to remind you that any forward-looking statements or projections made by Hikma during this call are made in good faith based on information currently available and are subject to risks and uncertainties that may cause actual results to differ materially from those projected. For further information, please see the Principal Risks and Uncertainties section in Hikma's latest annual report.

We have our senior management team on the call today. We're joined by Said Darwazah, CEO; Mazen Darwazah, Executive Vice Chairman and Deputy CEO, MENA; Khalid Nabilsi, Deputy CEO, North America and Europe; Areb Kurdi, acting CFO. And we also have Susan Ringdal, Investor Relations on the call.

With that, I'll hand over to Said for some opening remarks.

Thank you, Guy. Good morning, everyone, and thank you for joining us today.

We have made an encouraging start to the year with all 3 of our businesses performing in line with our expectations. Demand remains robust across our core markets and our teams are executing well. I've been particularly encouraged by the energy across the organization following the changes we made towards the end of last year. Those changes are having the intended effects, and we feel well positioned going forward.

We are pleased to be reiterating our full year 2026 group guidance today, and we remain confident in our ability to execute our plans over the remainder of the year. In February, I set out 3 key priorities for Hikma: agility, stability and investment. I'd like to update you briefly on progress made against each of these in the past couple of months.

To start with agility. A key priority for me is ensuring that we allocate both capital and management attention to the areas where we have the strongest competitive advantage and that we can respond quickly to changing market dynamics. In Injectables, for example, we are taking a number of actions to improve agility across the business. These include strengthening our supply chain and reducing bottlenecks, enhancing our specialty commercial capabilities and service levels, improving manufacturing flows and reviewing and refining our R&D priorities to ensure they are tightly focused.

We are also being decisive on strategy. As an example, we have decided to exit the 503B compounding business. This allows us to concentrate fully on our 3 core businesses and focus our resources where we see the greatest long-term value.

The second priority I called out was stability. Reiterating our guidance today is an important signal, and we want to reassure you that this is a strong and stable business. I am confident in Hikma's future and in our ability to deliver consistently. A critical element of stability is having the right people in the right roles. Over recent months, we have added new talent and made important internal promotions across supply chain, commercial, procurement and quality. We are also in the final stages of appointing a new head of CMO, which will further strengthen our operational capabilities.

Thirdly, investments. We are making the investments necessary to strengthen both our operations and our product pipeline, supporting growth in the years ahead. We continue to make good progress on our capacity expansion projects, including in Bedford and Columbus in the U.S. and in Saudi Arabia, all of which will support future demand across key markets.

R&D remains a clear priority for the group. We're investing in complex and differentiated technologies. And during the period, we signed a device partnership to support our generic Ellipta development program. This reinforces our long-standing commitment to inhalation technologies and differentiated products. What we are doing today is about laying the foundation for consistent long-term profit growth across the group.

Our Branded business consistently delivered strong revenue and profit growth and remains a key driver of group performance.

Hikma Rx is performing in line with expectations with the base portfolio performing well and contract manufacturing emerging as an increasingly important growth lever over the medium term.

In Injectables, the actions we are taking give me confidence that the business can return to a higher growth trajectory. We also remain financially disciplined. We have a strong balance sheet, ongoing dividend growth and an active share buyback program, which together enable us to invest in the business while continuing to deliver attractive returns to our shareholders.

Finally, a brief word on the geopolitical environment. We continue to closely monitor developments in the Middle East. Demand in the region remains robust, and we are maintaining continuity of supply. While we have experienced some inflationary cost pressures, we remain confident in our ability to manage these through disciplined cost control, strong operational performance and resilient supply chain.

To conclude, Hikma is a strong, well-diversified company with 3 attractive businesses, clear strategic priorities and a long track record of delivery. We are focused on stability today, agility in how we operate, thoughtful investment and long-term sustainable growth. And we are confident in our ability to deliver on these priorities in 2026 and beyond.

Thank you. I will now hand over to the operator to open the floor for questions.

[Operator Instructions] Our first question comes from the line of Zain Ebrahim of JPMorgan.

Zain Ebrahim, JPMorgan. My first question would just be on the revenue growth outlook for the year. If you could comment on the phasing that we should expect between H1 and H2 revenue growth given that it sounds like Branded is off to a very strong start and Injectables is doing well as well and Rx in line. So just any thoughts on phasing, both for revenue growth and core EBIT growth through the year that would be helpful.

And my second question is on the decision to discontinue the 503B compounding business. Just if you could expand as to what led to that decision and where you expect to focus more strategically in terms of the launch opportunities you have ahead of you in Injectables or within the other segments as well would be helpful?

On the group revenue, we expect, as in prior years, to have more weight on the second half. And on the profit, we expect them to be equal, but on the -- when we look into segment by segment, we expect the second half for Injectables to have higher revenues and profits as well. On the Branded, as per prior years, we have more heavy on the first half in terms of revenue and profit; and with the Rx, it's more equal.

On the 503B, as you know, we entered into the compounding business in 2021; and till 2025, it remained to be small. It's a different model than our sterile injectable model. So -- and it's taking too much time to grow the business and causing some distraction. So the decision was to wind down and focus on our main business and allocating the resources into whether time, efforts, money into our Injectables business. It's very, I would say, immaterial for 2026. And even in the coming years, still a small contribution in our plan coming from this business. And now we are planning -- intending to sell the site, and we expect good price for it.

Your next question comes from the line of Christian Glennie of Stifel.

Maybe just on the inhalation device and the partnership. Just to maybe -- can -- would it be safe to assume this is obviously leveraging your Advair and the relationship with Vectura that that's -- you talked about it being an established partner whether that's the sort of similar pattern here?

And then just to clarify where you're at broadly with that program in terms of the need for clinical trials and/or any expectation around when this product might be reached in the market?

I just want to clarify. It's -- we are not talking about Vectura. We are not disclosing our partner. There's a new partner that we are working on. Still, it's in the early stage. So -- and it's -- the plans are moving very well. It supports our inhalation program across our Rx strategy. So -- and things are moving according to the plan, and we are expediting the execution on that.

Okay. And then if I could follow up on the 503B. You -- other revenues in the group broadly were tended to be around the sort of 10% to low-teens in revenue numbers. They did an increase. We got to $40 million in 2025. So what was the -- what would have been the proportion of that $40 million that was $503B-based revenues?

We never disclosed the revenue for the compounding business. It's a very, I would say, minimal, and it's included in the Others, not in the Injectables. It has some sales, but it's not significant to the group. And it's -- as I said, it's not a part of the Injectables. It's less than $15 million, and it's not going to have any material impact on a group outlook as a whole.

Maybe Christian, I could also just clarify that the Others line of our revenue includes revenue from smaller businesses, medical containers, IPRCs. So the total amount that we disclosed under Others wasn't fully attributed to the compounding business. So the compounding business was just a small part of that revenue line.

Your next question comes from the line of Victor Floch of BNPP.

Maybe just a quick follow-up on the 502 (sic) [ 503 ] wind down because I think I remember that at the time of launch of that activity, you had a specific facility attached to the 502B (sic) [ 503B ] business. So can you maybe discuss what you're going to do with that one? Are you going to use the capacity for injectables or like for CMO? Or are you just contemplating to potentially just like sell that facility at some point?

Yes. The plan is to sell the facility, so this is our plan. And we have some good price for it. So there are several interest in the site, and we are selling it at a site.

This business overall has been very immaterial to the overall group, and it required a lot of attention, regulatory and others because the regulatory environment has changed significantly over the last 4 or 5 years. So it will be -- it is a welcome move internally. And as I said, the business has been totally immaterial relative to the overall story.

Your next question comes from the line of Natalia Webster of RBC.

I have 2, please, both related to the Middle East. The first just around your revenue exposures. You're referencing robust demand there, but are you able to talk a bit more about this in terms of your exposures and performance by country? And then the second question on the cost inflation side. Are you able to talk more on what levers you have to manage the inflationary increases here?

Well, the Middle East, as you know, we have 18 different markets, and we have clusters. So we have North African cluster, which consists of Morocco, Algeria, Tunisia and then we have Egypt, and we have Saudi Arabia as a cluster, and then we have the Levant as another cluster. So we are balanced across 3. So the 3 of them make the total of the total amount of sales as a group. But for our largest market, it's the Saudi market after the U.S. And in terms of demand, we are seeing robust demand because of the situation and governments are asking us to stockpile on certain products, and they are asking to have a supply some of them up to 6 months according to the local authority needs. So we are well positioned. And as you know, we have manufacturing capabilities across these markets. So we are well positioned to supply the needs once they arise, and they are arising on a daily basis.

In terms of the inflation, we're expecting inflation. We're already seeing inflation, but we are confident that we can absorb this within the strong performance of the Branded business and also the close control of the cost.

Your next question comes from the line of Kane Slutzkin of Deutsche Bank.

Just a quick follow-up on the inflation story. I'm just wondering from a sort of inventory or a raw materials perspective, how many months do you guys sort of rebuy or forward buy and how much are you sitting on?

And then just on Injectables, at the sort of prelims sort of calculated sort of ex Xellia you were sort of -- you've gone backwards in the U.S. I'm just wondering how should we be thinking about that portfolio ex Xellia in terms of the growth there, maybe perhaps even ex TYZAVAN, which seems like it's seeing some good demand?

So for the injectable business, underlying business and the base business is doing very well in the U.S. or in Europe or in MENA. So it's in line with our expectation. Of course, Xellia product, specifically TYZAVAN is ramping up. We are seeing good demand. We're seeing customer converting. It takes some time, but it's in line with what we have planned at the beginning of the year.

In terms of inventory levels, we started the year with good inventory levels, and we have experienced team that are making sure that we have the right inventory levels and APIs and the raw materials across the group.

Okay. And maybe just one last one. Just on the CMO sort of deal, the '27 story. Is there any update on that or is that still the details behind that still discrete?

Still no change. We are progressing very well on the CMO even on the expansion. As we highlighted in prior occasions that we'll be starting producing maybe towards the end of this year, early next year. So it's moving well on the Rx. On the other divisions, no change on the Injectables, the same customers that we have, and it's moving according to the plan.

[Operator Instructions] Your next question comes from the line of Sebastien Jantet of Panmure Liberum.

Actually, most of the questions have been asked already, but I just wanted to ask one on the kind of Advair part of the business. There's been, I think, at least 1 new entrant coming into that market. I'm wondering how that market is panning out? And are you having to kind of give up anything for price in terms of maintaining your volumes there?

So far, Advair is doing very well. We haven't seen any new entrant yet. It's doing very well so far.

Your next question comes from the line of Beatrice Fairbairn of Berenberg.

So on the Injectables segment, you noted accelerating demand for TYZAVAN. I suppose, could you give us some more color about how you expect it to contribute through the year and whether or not you still expect to kind of see a stronger 2027 in terms of this product? And then on the Hikma Rx segment, could you just talk a little bit about how the sodium oxybate market is playing out? Is this broadly in line with expectations? And then my final question is just on the nasal epinephrine U.S. filing. Is this -- can you confirm whether this is still on track for 2026?

So TYZAVAN, as I said earlier, it's doing in line with our plans. So it's ramping up. We are seeing -- we are converting customers into -- [indiscernible] different forms into our ready-to-use. It's going to be more H2 weighted, so sales are ramping up, but we are going to see a stronger sales in the second half of the year.

On the epi nasal, we continue to see -- we have good discussions with the FDA. And we are planning to file in this year in the U.S. We filed in the U.K. last year, and we are planning to file in Europe as well in H1 of 2026. So it's -- there are -- of course, there is a delay in the U.S. filing because the FDA asked for clinical studies, but this is going to strengthen our file. And I think it's moving in the right direction.

In terms of sodium oxybate, we continue to supply our authorized generic. So we commercialize it as an AG. We are very pleased with the ongoing performance and there's, of course, several generic players. We are holding our market share as per our original expectation. And as announced by Jazz, the originator for whom the authorized generic is coming from, we extend our AG agreement with them till December 31, 2029, and can be, of course, terminated by the end of this year. And as part of the extension, the royalties by Hikma to Jazz was renegotiated.

[Operator Instructions] Your next question comes from the line of Beatrice Fairbairn of Berenberg.

Apologies, I had 1 more follow-up question. In the full year release, you noted that you expect the Others segment to be breakeven during 2026. With the wind down of the 503B business, I just wanted to check whether or not this still holds?

So the 503B was about to -- it was on the breakeven. But on the Others segment, we think it will be slightly positive, excluding the 503B.

Your next question comes from the line of James Vane-Tempest of Jefferies.

This is Chris Richardson on behalf of James. I was just wondering if you could quickly comment on the FX impact you expect, whether due to the Middle East or globally in each of the different segments?

We see -- we saw some depreciation in some of the North African countries during the breakout of the conflict, but now they're stabilizing. So we don't see a big impact. And we -- on the countries close to the conflict like the GCC or Jordan, all the currencies are pegged to the dollar.

Our next question comes from the line of Christian Glennie of Stifel.

Yes. Just thinking, I mean, the sort of usual question around sort of biosimilars and just some observations, thoughts there about any sort of rethink of the strategy. Obviously, there was an acquisition in the space up here yesterday talking about a golden era of biosimilars, of course, and we've seen others make some significant inroads there. Just I know the previous sort of commentary around the approach on biosimilars, but just wondering if there's any nuance here, any observations around what you think about that as a market and/or the sort of strategy going forward to take maybe a better share of that market?

As you know, we are very active in the biosimilars area in the Middle East and the MENA market, we were the first to launch with our global cooperation with Celltrion to start with, and then we followed up with new technologies. So we're still robust on biosimilars in the MENA. We are adding new product lines, and we're launching new ones, and we have alliances with other companies that we already announced about, especially on oncology biosimilars with Chinese companies. So we are very active in that domain. And today, we are the leading provider of biosimilars in the MENA in terms of dollar value.

Yes. For the U.S., biosimilars are very small contributor to us. So still, we launched some product at a very competitive price. So very little -- I would say, a small contribution coming from it. But we continue to look into biosimilar opportunities that would fit with our longer-term strategy. So still for us today, a small contributor, but we are evaluating.

There are no further questions on the conference line. I will now hand over to Hikma team for closing remarks.

Thank you, everybody, for joining us this morning. Again, we reiterate that we have started the year on a very good note, and we feel very, very comfortable that we will achieve our targets for this year, and we are all in a very, very up-mood and continuing to move this business forward. Thank you so much, everyone.

Okay. Good morning, everyone. I'm Guy Featherstone, Investor Relations. Before we start, I'd like to remind you that any forward-looking statements or projections made by Hikma during this call are made in good faith based on information currently available and are subject to risks and uncertainties that may cause actual results to differ materially from those projected. For further information, please see the Principal Risks and Uncertainties section in Hikma's annual report.

Thank you for joining this Q&A meeting for Hikma's 2025 full year results. Our pre-recorded presentation is available on our website, and this will be a Q&A session. We're joined today by Said Darwazah, CEO; Mazen Darwazah, Executive Vice Chairman and Deputy CEO; Khalid Nabilsi, Deputy CEO, North America and Europe; Hafrun Fridriksdottir, President, U.S. and Global Head of R&D. We're also joined by Jon Kafer, who heads up the U.S. Injectables Commercial Business. And we have Areb Kurdi recently appointed acting CFO; and Susan Ringdal, Investor Relations, also in the room.

And with that, I will hand over to Said.

Thank you very much, and good morning, everybody, and to my old friends, hello again. The decision for me to take over as CEO again was not really a very easy decision, giving up the beach and the sun and the good life was difficult. But I really felt very strongly compelled to do this, okay? I remember before we IPO-ed, we were discussing the ideas of IPOing and not IPOing and my father saying my worry is that one day, the team we lose sight of the long term and start looking at short-term and short-term wins. This is the only thing that I'm worried about. And frankly, in many ways, this is what happened. I think the company had sort of started looking at short-term wins and fixation on modules of the injectable and so on and really lost track. So that's why I felt very, very strongly about coming back again. And as you know also, I had to -- I decided to give up the Chair position to concentrate 100% for the next 2 years on the CEO role.

I want to also remind you that last time when I came in, we had a similar situation with Rx business, the generic business was also doing not very well when I had to step in back again. And for a long -- for a period of a year or so, everybody was on us saying get rid of this division, it's weighing you down. Why are you keeping it? But we said we will do what's required. We set reasonable targets of GBP 100 million to GBP 130 million in EBIT, and we said we will fix it. And here we are, a few years later, we're looking at that business, and it has margins of close to 20% and EBIT of GBP 200 million or so.

So we've done this before. And we feel -- I feel, we feel that we know exactly what needs to be done. It really is not a complicated formula. It's a simple formula. You need to do the right investments. You need to get the right people, the right talent, and take quick decisions.

So as I've said this morning, my focus is very clear. So number one, you want stability. We want this 2 years where people can relax and focus on what is required for them rather than worry who is going to come in and what's going to happen. So we're reassuring our people, our stakeholders, our investors. This is -- Hikma is a very, very strong company, and we have a slide that shows the CAGR of the last 5-year growth. This company has consistently delivered growth and quite good growth. Also, I'd like to remind you all that we have EBITDA margins of 25% while many of our competitors are striving to get to 22%.

The second thing is agility. We want to implement a structure of quick decision-making and to allow people across the Board to take these decisions. We don't want the decision-making to be centralized with one or a few people or the executive committee. Rather, we need to empower people across the Board to take decisions. I've always said companies that empower their youngsters, their under 40 crowd are the ones that will be here tomorrow, those that do not will disappear. So we'll be focusing on empowering everybody across the business so that we take these decisions.

And the investment, we have to accelerate the investment. We have to take the investments that we need to do. So one of the first things we've done is we've taken the R&D budget out of the segment. So the segment heads cannot play with R&D budget to achieve their targets. It's now a corporate decision. We have a budget for it, which is an aggressive budget. We have spent last year building the team. As you remember, we acquired a great team in Croatia. Hafrun joined the company 2 years ago now and Hafrun has a long, long track record in R&D, and she is directly in charge of the R&D team.

So the other things we need to do is hire the right people. Again, Jon took over as Commercial Head of North America or U.S. injectables and immediately said we need to hire so many people. Well, what are you doing? We need to -- somebody said, Jon, go ahead and do it, and he has already hired so many people and added to the team. We also hired a supply chain. We have now a fantastic supply chain team in place that will be working to make sure that we don't have bottlenecks across the group. And we are still looking to hire some more people like ahead of CMO. We are interviewing now. We want to hire somebody that has a lot of experience in CMO because we feel very strongly that Hikma is well primed to be a major CMO supplier.

And finally, what I started by saying the fear of my father when we went IPO-ed, long-term growth, focus on the long term, and that's what we are doing now. We are focused on the long term. We are doing the right investments. We are adding, as we said, the R&D budget is much higher than it was before. I think we're targeting 5% to 6% now to spend on R&D. Hiring the right people. Giving the plant managers the decision to buy the right equipment when they needed, not waiting for central engineering to come before they can buy that.

So all these changes that we are taking, all these changes we are implementing, I think, will be excellent for the future.

Then I think we have to look at the structure that we are saying, why this new structure? Some people have said it looks too complex. In my opinion, for me at least and for the team, it's a very simple structure. The MENA team is a fantastic team, strong team that has been doing an excellent job for the last 40 years. Hikma this year was #1 company in MENA among all companies, this is a big deal. And it's the MENA team that has delivered this. Mazen and his team have been doing this. So it was a no-brainer that the injectables and the MENA report to them instead of being a distraction for the whole team.

And then Europe and, let's say, North America, U.S.A., they share many plants, and they share the products. So although doing businesses in Europe is different, but it's the same products and the same manufacturing teams. Khalid has been with us for quite some time now, and he has shown to be doing a great job. He understands this business, and we believe that it was time for him to step up and take a strong P&L position. I am very comfortable that he will do a great job. And Hafrun since she joined the company, has just [indiscernible] us all. She has done such an incredible job with Rx, such an incredible job with the R&D team and hiring the right people and getting the right things in place and at some point, we will be sharing a clear R&D strategy for everybody. We are more than comfortable that with the help of Jon and his team and the Rx team that has already proven to be an extremely effective team, we are very confident that this is the right way to go.

So we believe it's an extremely good company. We're in a very good position. We have a strong track record, a very strong record of growth. We will be investing heavily in the next 2 years. And we know that we will go back to the -- moving forward, we will go back to much stronger growth than what we have shown. Although what we have done is still quite good. We believe that we will do much better than that.

It's James Gordon from Barclays. Maybe first question, just on the organizational structure you mentioned, and I do follow the logic about having people in each geography running the geography. But then at least your reporting, I believe, is still injectables, Rx and branded. So might you actually just change the company and make it by the 3 geographies rather than the 3 types of division. Because ultimately, who is ultimately responsible for injectables now because it seems like lots of people have got responsibilities is the first question, maybe if I break them up.

Well, we said that for this year and maybe for the foreseeable future, we'll continue to report the injectable results because we didn't want to say, why are you running away from that? But reality from a management point of view, when you look at Europe and the U.S.A., it's 90% of the injectable business. And as I said, it is very different from the MENA injectables. The MENA injectables, there's a lot of products that are in-licensed and brought up from outside while the U.S. is much more focused than Europe on manufacturing. So Khalid, Hafrun, obviously, but ultimately Khalid is in charge of the U.S. and Europe and will be in charge. And of course, myself, I will be working very, very closely with them. So I think this gives us the opportunity to really focus on the business rather than -- I think just forget the tail end, which is the MENA injectables. And as I said, I'm very comfortable that the MENA team will do a much better job than before. So the bulk of the business now, there is a clear focus on it. And we will be reporting geographically as well as segmentally for the foreseeable future.

Maybe just the second question would be, so what is the outlook now for injectables as in what's going to make it grow faster? And is the idea that now you've reset the margin to the level of this year, but you'd have a similar growth rate on the top line as you were previously hoping for?

First of all, as we said, the amount -- the budget for the R&D is much bigger than it was the year before. So actually, if R&D growth was similar to the years before, then the results will be much better. But we said, no, we have to do this. We have to take this decision now. We have to invest. So again, it's investing. There's really -- it's not -- you have to invest in the right people. And as I said, we have hired many, many people and there's still more to come. The R&D team, and we will be sharing more about R&D moving forward. And we believe that Hikma is extremely well positioned for CMO business. And we are in the process of recruiting a Head of CMO in addition to the CMO team we have. So all these things will be working together to achieve, let me say, growth in the midterm to long term for the injectables.

So James, just on the outlook for the injectable business. We know that this is not something that we would like to be growing. It's we have challenges at '25, and this is something that we know that and '26. There are different reasons for this. It's -- as I said in my presentation, is reduced CMO. One of our main customers want to do a domestic manufacturing in the U.S. So we have a reduced contribution from that. This is something that we cannot offer until we have Xellia up and running in 2028. We are less optimistic on, let's say, the biosimilar that we have, although it's a very small part of our business and liraglutide. And one of the product launches -- main product launches has been pushed. So of course, going forward, we are going to go back to return to very good growth for the injectable on top line and in terms of the EBIT. So any company, any business goes into challenges, '25, '26 was a challenging year. I think from here, from '27, we are going to see a different outlook for the injectable business, as we used to see in the past.

And just some examples. So of course, TYZAVAN is an important product for us. That will drive some of the growth that we achieved this year, but we expect that to do even better in 2027. So that will be an important growth driver. Some of the products that we expected to launch this year push to next year. So that will be, again, another growth driver for '27. We've got, of course, continued expansion in Europe. That's been an important growth driver for us. That will continue. MENA has been also a good business. We signed 6 new biosimilars in MENA. So there is -- there are a lot of opportunities to grow, but I think as Khalid said, this is sort of a reset.

So the challenge is, obviously, as you right point out with the injectables and what we're doing with it. But I'd also like to remind everybody, this is a much bigger company than just the injectables, right? We have 3 very strong divisions. Two of them that are doing extremely well. The MENA is growing at a very fast rate with very good margins. And the Rx as I said, has done much better than anybody anticipated 2 years ago, if I told you we'd be doing 20% margins and this kind of EBITDA, people -- why did we keep on pushing you to sell it? So we -- there will be a lot of focus. There will be a lot of investment and we feel very, very strongly that in the medium to long term, this business will -- it is already, in my opinion, one of the best businesses. If you compare our margins to our competitors yesterday who upgraded from 18% to 19%. We are way ahead of them. Again, other competitors saying we want to be at 22% EBITDA, we are at 25% EBITDA. So this is a very good business. It's driven by 3 engines. And as we said, the focus is on long-term cost and total profitability growth in earnings per share rather than just focus on -- keep on focusing. And I think this is what really hurt us the last few years. The over focus on the margins of the injectables where people are saying, don't sell anything less than 32, don't accept anything. If I can get $300 million worth of orders opportunity and 28%, I shouldn't take them. Of course, we need. So that's why the focus will be on top line growth and bottom line growth rather than margin.

If I may add a little bit about that, how we are going to grow the injectable business moving forward. I don't know if you had the opportunity to listen to our presentation this morning. But I mean we talked -- at least talked a lot about the ready-to-use platform. And even though, of course, the first product is TYZAVAN, as Susan mentioned, but we have multiple others in the pipeline and -- but those products that will be launched probably in early '28. So do you not see short-term, I mean, growth because of those products, but we have multiple products in the pipeline and I talked about, I think, 15 ready-to-use product in our pipeline. And so of course, moving forward, we will see the revenue and we will see the growth from this platform, which I'm very excited about. So I just to revisit, I think it's a really good business.

Zain Ebrahim, JPMorgan. So the first question would just be a follow-up on the previous answer in terms of what you described on the CMO challenges from one of your customers wanting to switch the manufacturing from Europe to the U.S. So how do you see that risk going forward for the rest of the injectables CMO business? And just broadly, how do you see outlook for CMO overall from here, I know you've got the -- there's the small molecule contract in Rx contributing this year, ramping next year. So just to remind us how you're seeing that outlook?

Well, the first thing we did, we looked at our plants in the U.S.A., for instance, we looked at the Cherry Hill plant. And see -- so what were the bottlenecks, what was needed. Many times, it's a small thing that you need to do to increase capacity. So working on increasing capacity significantly at Cherry Hill and that will help us with the CMO business as more and more companies want to manufacture in the U.S.A. Of course, we'll talk about the Rx later CMO because they already have a lot of orders in business. And then we acquired the Bedford site specifically for this. And it's a big site. It has a lot of equipment in it. It needs to be reengineered in a more modern way. We're working on that diligently, sometimes new lines take a bit long to get -- you need to order them it takes 1.5 years to 2 years for the lines to be again. After they come in, you have to install, qualify and get FDA approval. So it's a bit of a long process, long-winded. That's why we're guiding to '28. But with most of the CMO, the big business you get the order and the expectation as you deliver 2 to 3 years down the road. They don't expect to deliver tomorrow because it's a process of moving products and so on. So that's why we feel very strongly about hiring ahead of CMO, somebody that has already strong experience, has well good knowledge of the industry and has good contacts with the companies that want to have CMO business. So we're very confident like in '28 and forward for the injectables will have a very strong CMO business. For now, we will be showing that the Rx already has very strong CMO business. So overall, it will become a quite significant part of our business, let's say, 3 years down the road.

Very helpful. And second question is on R&D. So an increase of 5% to 6% of group sales. Are you now comfortable with that as a ratio in terms of thinking about that level going forward? And I...

You ask me or you ask her? If you ask her, she says, no, we need more. If you ask me, it's enough.

And when do we say pay off from those investments? Because I know you mentioned '28 for the ready-to-use but you started something increase in R&D last year. So just to...

Yes, of course, we slightly increased the investment in R&D last year, but that was I mean, really a slight increase. But we also reorganized R&D organization. So now we have a global R&D organization. And we also moved activity from U.S. into Croatia. So of course, that is clearly helping significantly on the injectable business, but we also have a very strong team focusing on inhalation, semisolid and liquids in Columbus in Ohio and then, of course, our team in Jordan is focusing on solid oral. So I strongly believe that we have the right team in place. Would always like more money for R&D, yes, of course, I would, so Said is correct there, but I feel very confident with 5% to 6% of the revenue in spent of R&D. I think that's just in line with what our competitors are doing.

And we are going to see these returns coming into the coming years. Some of it will come in '27, some of it to come in '28 or '29 onwards.

Yes. Of course. R&D takes time, everyone knows that.

Beatrice Fairbairn at Berenberg. You discussed the focus on long-term growth. I mean one of the targets out there is this kind of GBP 5 billion 2030 revenue target. My question really was does it still stand? And would you be able to give some color in terms of what is needed to get there and how that looks like over the coming years? And then just on your delay systems timing of some of the product launches and injectables, do you feel like the new time line that you've got are realistic and kind of how confident you that you're going to be able to launch these products on time.

Why don't you take this first part about the GBP 5 billion?

Yes. So the GBP 5 billion, when we set the GBP 5 billion target, we said that this was -- it was an aspirational target, but we felt that it was very achievable with the business plan that we had and our business model, which has been to do bolt-on acquisitions as a matter, of course. So we still do feel comfortable that GBP 5 billion is within reach. It is -- we have -- we definitely see an acceleration of growth after 2026. And I think today, it would require a bit of inorganic growth, but yes, it is very much within the reach.

[indiscernible] organic growth. It's not like we are talking about transformation, like more of a product acquisition. So we are very close to the aspirational target of GBP 5 billion. And if you look into the 3 businesses, like the branded is delivering very good growth and acceleration. If you look into the past, it was 5%, 6%. Today, we are guiding more at 7% to 8%. This is driving growth, high-value products that we are getting into the MENA region. If you look into the number of licensing deals that we've been signing over the past 5 years has increased significantly. And now we are becoming more and more the partner of choice. So this is going to be a key driver. Rx has grown with the CMO business. We are going to see more contribution coming in '27, '28, '29. So this is as well going to drive the growth. And injectable, of course, with all these RTUs and the products that we are working on, it's going to accelerate the growth for the injectable business. Remember, the injectable business has a large portfolio. So there will be always opportunities. There will always be shortages. Europe, we are seeing a very good growth. Great potential, especially that the market is lacking products. So we are being the, I would say, most reliable hospital supplier in Europe now. All hospitals are coming to us and governments coming to us, say, we want this product. The agility that we have in Europe, providing the products on time is differentiating us versus others. And this is why we've seen 23% growth this year in the injectable in Europe. Same for MENA. It's not just like the 6 biosimilar. We have many products that we have that we are going to launch in MENA for biosimilars. So this is going to be the growth driver and we are very confident of our ability to continue growing the business. As said, '25, '26 might look challenging for the business, but this is a business cycle. But from here, we are going to continue growing.

The short answer is yes, the GBP 5 billion is very achievable. We are extremely confident in our '26 guidance. And yes, the injectable launches that we'll be seeing in '28 and further will deliver the kind of growth that we need to be there.

Victor Floch, BNP Paribas. Maybe just 1 question on Rx. That one seems to be -- to go pretty well. And it looks like you have like even some room in terms of margin. You've been investing even like more than what you're using -- actively investing for injectables. So can you discuss like the different moving parts this year? I mean the base business, I mean, I think there might be some competition on certain products. On the other -- on the flip side, you have some service payment from your CMO partner. And are you expecting at some point to be able to update the market on was that CMO? What kind of -- what is the product? And what are the economics behind that? I mean, just have a bit more visibility on the CMO because it's a huge moving plant for Rx for sure.

Yes. So this year, the revenue from the CMO business will probably be around 10% of our business, but our target in 2030 is up to 20%, at least my target. So we are not going to share the name of our customers, but we are working with not only 1 big customer, but actually multiple and some of them were talking about contracts which have not been signed but are in negotiation phase and we will be signing within the next, let's say, next few months. So that's going very well. And you also asked about the base business. For example, a product like Advil has been doing very well last year, and we expect the same this year. Fluticasone, we are the biggest volume driver in U.S. for fluticasone, as an example or for nasals, so -- and that is a business which continues to do very well. And all our base business has been doing really well last year, and we haven't really seen any change at least for the first 2 months of the year. So it's quite -- it's more stable than maybe most people believe it is.

And I can just remind people that we have Jon who's the Commercial Head of Injectables on the line; and Mazen, Deputy CEO for MENA. So don't hesitate to address questions to them as well.

Certainly for Jon. You should really ask him questions now because he woke up very early for you.

Christian Glennie, Stifel. Again, not to belabor the point, but on injectables and the margin, just to be clear around it's been quite a dramatic shift, right, from mid-30s to high 20s now. There isn't something sort of -- well, combination, one is you talked about the extra investments needed implication potentially maybe that you were underinvested before to some extent. So the margin was sort of where it was at -- and/or is that fair? And then the second part is, is there something more structural around the market from a sort of pricing and competition issue that means margin has -- the direction of travel has gone.

Okay. So first one, as I said, I mean, clearly, we said we're taking the R&D budgets out of the divisions and putting as a corporate. So clearly indicating that at some point, division heads were sort of reducing R&D expenditure to get higher margins. So by taking that out and having it as a corporate with a fixed number that we agree on, I think that will -- there will be lower margins a little bit to start with. But we are very confident that with the investments they are making in R&D, the new pipeline, the expansion in the manufacturing and the CMO that we will be achieving higher margins mid- to long-term. Okay.

The second question was?

Structural something in the market because you've got [indiscernible].

There's always competition. There's always people coming in. You lose a few products. We lost 2 or 3 products that not lost. We have competition coming in 2 or 3 products that we're doing extremely well. And that's why when you have such a well-diversified portfolio and you have so many products, other products can pick up and the new launches can pick up. So the market has always been competitive. It's always been competition is coming in. Do we feel that there's more competition in some areas, yes, in some areas, no. But we are confident that with all the changes we're making, we are fine.

It's not like structural change in the market. It's the pricing is around, let's say, if we exclude the 2 top products that we have, it's 4% or almost less. So low to mid-single digit plus erosion that we've seen in this business. So nothing is abnormal.

And maybe if I may add. So I think over the last few years, the supply from third party has increased significantly. And third party, of course, is not as profitable as if you're making the product internally. So I think it has been going from 20% to 30% over the last few years. So that's, of course, affecting the profitability. But also, I mean, there are different part of the business, which has higher profit than other parts. Of course, while you are building the business -- injectable business in MENA, which is less profitable than the business in U.S. and in Europe, of course, that will affect the overall injectable profitability, and that business has clearly been growing as well. So those are at least 2 reasons in addition to...

If you exclude the MENA margins, both for the Europe and North America injectable business, the margin is not 30%.

Maybe the natural follow-up, I know you're probably reluctant to guide beyond kind of '26, but just to get a sense for that margin and is '27 to '28 the floor? And then maybe that's similar until you really get into Xellia and then margins to improve? Or is this...

And again, we're saying we're very comfortable that '28 and further margins improve. I think once we assess everything and we have the plan, the right plan in place. Are we going to be giving...

May I take this one. In a way we'll be guided to '27, '28. And I said in my presentation this morning, you can assume this is for the coming few years, but it's not like if we have an opportunity that is top 30, we are going to say no to it. So we don't want to be strictly held on these margins because we are going to focus on growing the profits and the EPS rather than just focusing on the margin, as I mentioned.

So you can't consider like this '27 or '28 to the next 3 years. But what has changed, just repeating to what I said earlier this morning. From the November, when we said the floor is 30% is literally increased investments in R&D. We are increasing GBP 15 million this year versus last year in injectable. You look into the investments that we are having, as I mentioned, fitting in sales and marketing, so -- and the CMO. This is why we are going down like 2 to 3 percentage points. It's not something structural in the business, but it's more investing for the future.

Just going to jump to the line for a quick question.

[Operator Instructions] Our first question comes from the line of Kane Slutzkin of Deutsche Bank -- Deutsche Numis.

Just -- sorry, could you just clarify, I missed the last point on the higher R&D in injectables. But could you just sort of clarify sort of lower guide as sort of those moving factors between higher R&D versus the lower CMO work like in terms of which has moved the needle more there? I assume it's the R&D, but if you could just clarify that.

And then just -- you're obviously spending some time doing the strategic review. I'm just wondering at what point do you think you will be able to sort of reinstate a midterm or a new midterm guide?

And then just finally, on the buyback, just I guess, why has it sort of taken so long to do it? And could we see a more permanent feature going forward if shares sort of remain where they are?

I think I can maybe take the R&D question. If I could hear him correctly. I think he was asking for the spending for R&D and the overall increase in spending for R&D this year compared to last year is around $45 million year-over-year. I think that was your question, but I'm not really.

Kane, could you just repeat your last question?

Yes, I was just wondering sort of in that lower guide, how much of it is sort of the lower CMO work you referred to versus R&D in terms of what's impacting the guide down?

Injectables margin guide, how much is CMO versus [indiscernible].

I think, Kane, it's more evenly split across R&D, sales and marketing and CMO. I would say those are the 3 biggest factors there of more or less the same magnitude.

And the buyback, I agree with you, is taking too long, but we have taken the decision to do that GBP 250 million this year.

In terms of the medium-term guide, I think we'll get back to you on that. We know that it's important for the market. We want to get it right. And so yes, I think we'll come back to you.

Thank you. There are no further questions. I'd now like to hand the call back to the Hikma team.

Julie Simmons, Panmure Liberum. Just on a more product-specific basis. I'm wondering with TYZAVAN. Clearly, you've just launched it. It feels like the sort of momentum is pushed out a little bit to '27. Are you noticing anything from the first sales in the market there?

This is Jon.

You're on mute Jon.

No, I am not on mute. Okay, great. Good morning, everybody. So we are an active launch mode for TYZAVAN. Let me just frame the market because this is important to understand because the RTU bag platform will follow a similar pattern. Vancomycin is a widely used product within the U.S., there's about 41 million grams of the product used in multiple forms from a very lyophilized powder to a frozen bag to obviously our ready-to-use bag. What we are selling is a system and a process change, which in large hospital systems and large hospital groups that by default, TYZAVAN would become the vancomycin of choice. So it is really more of a process change.

Now to put it in perspective, we have already converted 13% of the entire gram market with our existing vancomycin ready-to-use bag. So we have a platform. We will expand that. Within that network, there's about 22,000 sites of care that use vancomycin within the U.S., all forms, long-term care, hospitals and such. Our existing customer base on the existing bag product represents about 15% of those sites. So there is a very large universe of hospitals and health systems that have not used our historical bag. So there is a large opportunity there. So you have to think in terms of it as a process progression. So we're going to expand our existing base by expanding the usage of the product without restriction, and then we're also penetrating the customer bases that have been -- that have not used our bag in the past. So yes, this is going to be a progression into the back half of the year. But the momentum that we're seeing right now is very active and very encouraging.

And just following up on that from a sort of RTU perspective longer term. Do you think once a site has switched over to 1 RTU, it makes it easier to switching to another for a different product?

Yes. And that's exactly why the way we're approaching this first one is extremely important. We want to make sure we have the processes in place. Hospitals and groups, they have to reprogram medical -- electronic medical record systems, infusion pumps, SOPs, ordering patterns, storage platforms because you're bringing in a new form. So as we work with TYZAVAN as the foundational product, we want to make sure we fully integrate it properly. And I do believe that, that will help us going forward with the additional bags as they come to market.

Charlie Haywood, Bank of America. First one is just in our models, would it be reasonable to assume that a I guess, at this stage, mid -- 30% midterm injectable margin is off the table, given focus on profitable growth. And then I'll get to the second one in a sec.

Yes.

Okay. And then the second one is just on the midterm guide, which obviously since giving you, we've seen 2 cuts too. So first is, I guess, talk through the decision to issue the midterm guide if there were some underlying concerns on the spending, the short-term focus to give that?

And then secondly, sort of how can you reassure us and the market that this is sort of the last of the big cuts and we're back to something profitable. We can be returning some in growth from here.

Again, as I said before, it's not a complicated formula. You do -- you have the right people. You have the right equipment, you have the right facilities, you have the right R&D. All of these things, when you invest properly, you take timely decisions to take -- to move the business forward. This is a formula for success, and we've got this formula for 40 years. So we sort of slowed down decision-making. It became too centralized. We were not investing properly in the right places, and now we're reversing that. So that's why we feel very confident that midterm, we will deliver what we're talking about.

And this is why, as well, '27 is going to be a year where we -- '27 is going to be as well a year that we'll see a growth. So it's the bottom on the injectable. And from here, we are going to grow the top line and in bottom line. In addition to the other 2 businesses, they continue to grow, as I said earlier.

Just a third one if I may. You talked to obviously heavy investment in the next 2 years. How confident are you that this is a 2-year journey of heavy investment, and that won't spill into 3 or 4 as the investments start continuing?

The investment is -- it's not a short term. It will continue to be, but we will see that -- we'll start seeing the results of what we're doing now, 3 years down the road and will it further, but when we look at our 5-year CapEx, our 5-year R&D orders, all this will continue to grow.

Maybe just to add to what Said just mentioned. In terms of the R&D, it takes time to see results, as Hafrun said, in terms of sales and marketing, these are quick wins. So you invest today, it's not like going to take so much time till you get the returns. And this is what Jon is focusing on. So you will have these investments and at the same time, give you an example on the supply chain, having somebody now focusing on the global supply chain would reduce our inventory levels will reduce the slow-moving items, which it was very big this year, failure to supply, so the immediate impact will be significant improvement to margins. So this is why we are saying that we are moving in the right direction. And I think the results of this will come in the coming years, and we are confident about our medium-term outlook.

Christopher Richardson from Jefferies. A couple if I may. You lowered CDMO or CMO expectations, sorry, for the year as some customers require domestic production, which you said you can't offer. I was just wondering if there are any reasons for that.

It's -- as we said, in Xellia, our Bedford acquisition is going to be up and running towards 2028. So it's the same machinery, the same lines. It's replicate to what we have in Portugal. Now we couldn't offer because we don't have that facility up and running. So once we have that facility up and running, towards the end of '27, early '28, we'll be able to offer.

And as I said, again, the Cherry Hill plant and the other plants we looked at optimizing the capacity there looking at the bottlenecks, bringing in the lines that are required to up the manufacturing capacity.

And if I can add something about the Rx business because we are only talking about injectables and as I mentioned, I mean, we have this huge, I mean, of course, manufacturing site in Ohio, both for solid orals, for nasals, for inhalations. And that site has been getting a lot of attraction over the last year or so since all this discussion about domestic manufacturing started to happen in U.S. So there's a lot of interest in us in producing products for different clients. So I think this is going to be a big opportunity for us moving forward, both in the Rx and also in the injectable business.

Many times clients come in, let's say, for the solid oil, then they feel you're very comfortable with you and they open up and move injectables and other things to for you.

Great. And just the guide cut in November was due to equipment delays. I was just wondering what the situation is now and what caused you to walk away from '27 and whether the timing for Bedford has changed at all?

There's no change to the guide that we had in late November. So all what we said that we are going to ramp up -- start ramping up towards the end of '27 and the commercialization will start '28. So no change to our plans.

Great. And maybe just a quick follow-on. I was wondering if you could comment on the oral generics pipeline and the margins in U.S. Rx excluding any Xyrem impact.

Excluding, sorry?

The impact of Xyrem?

Sodium oxybate. Okay. So last year, sodium oxybate was dragging down our profitability so the rest of the business was actually compensating for the low profit of that product. We managed to negotiate a better deal, at least for this year and for next year. So we will have slightly better profit on that product. But -- so it will not be dragging down the overall profit for the Rx business. Is it helping this year? It potentially will.

Zain, some more.

Zain Ebrahim from JPMorgan. Thanks for the follow-up. So on CMO, you mentioned you're looking for a new head of CMO. So just the characteristics you're looking for in the Head of CMO in terms of the type of -- the kind of the profile that you're looking at and when we could expect the appointment? And does this mark a potential shift to making CMO like a fourth division that we source also about in the past in terms of strategically. So integrating the Rx and injectable team.

Historically, we used to the CMO as a fill-up. So we focus -- this is extra capacity, let's get products to fill it up. And then when we were approached or we found a client to come in and use the Rx side it was more of a long-term agreement. So long-term agreements require dedicated facilities, they require dedicated lines and sometimes dedicated teams, and it's a lot of investment to do that. And it takes time to come in and -- but it's a long term. So this is the right -- this is what we want to do, not just bringing in short-term fixes. So to do that, you need somebody that has been doing that for a very long time that knows which companies require CMO business. And also, I think more importantly, when you do the contract, when you're looking at, let's say, 5 billion tablets or something, $0.05 per tablet extra gives you $50 million in profitability. So having the right negotiation skills, the right contract skills all these things. So this is what we're looking at.

Now we have this but we think that getting a very senior person that has done this successfully is the right way to go. And as I said, we are interviewing, there are several people out there that are available with this kind of talent. And yes, it could be a fourth division very much so.

Just a question on the CMO headwind for '26. Is that -- was that 1 customer you lost, that's gone from Europe to U.S. I guess how is that conversation and how are conversations with the remaining customers to ensure that won't happen with someone else before the '28?

It was 1 of our customers. It's not like they are shying away completely. They still have business with us, but they decided to -- some of their manufacturing for their own benefits. They wanted to have it in the U.S. So it's not like the business is going down. It's to replace, it's going to take some time to get a new customer, but we are confident of our ability to continue growing the CMO business. So it's a matter of time. But when we have the Xellia, of course, up and running, and we will have much more clients, much more capacity to offer as well.

There's a lot of demand for U.S. manufacturing and I think the Bedford acquisition and what we're doing now although it's going to take a little time. But like I said, if you want to get a client that will work with you long term, anyway, it will take 2 years before you can move in the product. So now is the right time to get the clients and get the orders so you can put the processes in and do the submissions and all these things, the tech transfers and so on and so by '28 and more, you'll be ready to launch. So it's the demand is there, and we are talking to a lot of companies.

So what they are saying is that if we would have that capacity in U.S. to take on those products in U.S., we could probably potentially have kept that customer. So -- but we didn't have the capacity at that time. So I think that's -- but now we are building that. So moving forward, we are.

And if you remember as well, when we did this acquisition and we took the Bedford site on, it was because we were reasonably capacity constrained in our existing facilities. And so we weren't really very actively selling CMO business at the moment because we're pretty much and we don't have a lot of spare capacity for CMO without the Bedford site.

Christian Glennie. Thanks for the follow-up. Just maybe on Rx and just a couple of ones there on the I think you've alluded to a couple of other things around the moving -- the margin to 20% just to clarify the step-up this year to 20%? And is the 20%, again, another kind of the base for the business going forward, do you think?

And then just finally on nasal epinephrine, what's the update there? And obviously, it's been delayed. So what's the expectation around that? I think it had been seen as potentially quite a significant product for you. So just an update there.

So maybe first on the margin. Is 20% the best we can do? No, I think probably you will probably see some improvement moving forward as, I mean, in '27, even '28 as well. I'm not going to give you any numbers, but I think -- I don't think that's necessarily the top of the pie. With regards to epinephrine as I think we -- I talked about last time when they had this conversation, we -- there were some requirements from FDA to run some additional study. That study is ongoing and we are planning to submit in U.S. in, let's say, after a few months now. And we did file a product in U.K. last year, we will be filing in Europe as well. And we are actively discussing our licensing product in Europe. So that's -- yes, so that's the update. But because we have been working so closely with FDA over the last year or so on the product, I strongly believe that the review time will potentially be shorter than and maybe we thought in the beginning. So it will be an exciting product for us.

Somebody asked Mazen a question about the MENA. He's bored.

James from Barclays again. Just we're talking about margins, and we're talking about generic margin and an injectable margin?

Rx.

Rx, apologies. But then I've also heard effectively, you're going to centralize R&D spend and that we could think of the divisions as being a bit ex R&D. You're going to think about what that ex R&D performance is. So if we're rebuilding our models of today, is that how we should be thinking about Hikma now? And are you going to start giving us then what the margins are for these 3 divisions without R&D and then the central R&D line? What do we do with [indiscernible]?

Eventually, this year, we did not want to -- too much changes to you -- changing your model. But eventually, next year, you'll start seeing the margin without the R&D. With and without.

Bridge this year and then we do a rebuild for our next year. Yes.

Mazen, I think it would be great. Maybe I think 1 of the strengths for the business in the MENA in the past year has been all of the partnerships that we've signed. We have excellent momentum in terms of signing new partnerships. Maybe you could just talk a bit about why Hikma seems to be the partner of choice and MENA.

You are on mute. Mazen, mute.

No, he's not. The sound is just very low.

Looks like he's on mute.

Luckily, you didn't ask him any questions.

Okay. Next question till he comes back.

[indiscernible] Said for closing remarks at this point.

Sorry?

Closing remarks.

Well, again, it's -- first of all, it's good for me. I'm very happy to be back as CEO, and I'm very happy to give up the Chair position to be able to do this. We have an extremely good team. We work very, very well together. We have, I think, a very, very strong business. As we said, if you look at the last 5-year CAGR and the years before, you've seen how this business continues to grow. We will continue to grow. We are taking quick decisions. We are implementing a culture of quick decision-making. I also talked about the younger people in the company. So for instance, from now on, the executive committees and the leadership council and so on, we will have -- we will mix and match not only beyond seniority, we will be having more younger people join. There is obviously something we didn't talk about, a lot of focus on AI and seeing how AI can be implemented to move the business forward. So all in all, I feel very, very positive about this. This is a strong company that has been growing for a very long term, has very solid foundation as a strong leadership team and a lot of talent across the board. And I'm very confident that we will be delivering the kind of growth that we expect from ourselves and our shareholders expect from us. Thank you. Thank you, everyone. Appreciate you joining us.

Hello, everyone. Today, we announced our financial results, and I am pleased with the performance Hikma delivered in 2025, growing the business and delivering the results aligned with market expectations. We launched 84 products during the year, continued to sign new partnerships and achieved the important business milestone. And I am very proud to say that we became the largest pharmaceutical company in MENA by sales for the first time in the history of the company. We have 3 excellent businesses, all with unique strengths. To be clear, we also had our challenges. We have begun implementing changes in the business to address these, including to the leadership, and we have been taking a close look at where we need to strengthen the group, in particular, our injectable business.

Branded, our MENA business, is truly best-in-class. We are a leader in the region where we operate among the large multinationals. We have a strong team with local market expertise, a broad portfolio of world-class products, a wealth of manufacturing capabilities and excellent customer relationships. Branded is a consistently strong performer and a true backbone of Hikma's strength. Hikma Rx has become an increasingly important business for us in recent years as we have pursued growth in higher-value areas such as our more complex medicines and through offering CMO services.

I'm excited by the rapid progress we are making in Hikma Rx. We are one of the leading U.S. domestic producers of generic medicines, and we are proud of the positive impact this business is having on the U.S. healthcare landscape. For injectables, while our margins are very strong for the industry, we must continue to invest to achieve the full potential of this business. We are increasing our investment in R&D, in people and in CapEx to position ourselves for higher levels of consistent profitable growth.

We are entering '26 energized and focused on delivering our strategy. While we have had to adjust our expectations, I am confident that guidance we are providing for this year is realistic and reflects the investments we need to make. I am excited to show that we can deliver on this over the year ahead. Hikma has a rich history and a track record of growth. The work we do at Hikma is important, improving access to quality healthcare for hundreds of millions of people, and it is our talented people who make this happen. I would like to thank my Hikma colleagues for their hard work throughout 2025. Thank you very much.

Good day, ladies and gentlemen, and welcome to Hikma November 2025 Trading Update.

[Operator Instructions]

I will now hand over to Investor Relations for opening remarks. Please go ahead.

Thank you. Before we start, we'd like to remind you that any forward-looking statements or projections made by Hikma during this call are made in good faith based on information currently available and subject to risks and uncertainties that may cause actual results to differ materially from those projected. For further information, please see the Principal Risks and Uncertainties section in Hikmas's latest annual report. And with that, let me hand over to our CEO, Riad Mishlawi.

Many thanks. Good morning, everyone, and thank you for all joining this call regarding our November trading update that we have published this morning. Before we come to your questions, I want to briefly cover a handful of key points in the update. Firstly, the business is performing well, and we are on track to meet our 2025 guidance. It is really encouraging to see all 3 businesses doing well. Secondly, we know that there is a key focus on the injectable margins. We have always achieved industry-leading margins and we are confident now that this will continue. But we have said this morning that we now expect the injectable margins to be around 30% over the medium term. I want to very clearly explain what is behind this change, particularly given that we have delivered margins over -- above the mid-30s in recent years.

There are 4 key reasons: Bedford, R&D, partnerships and geographical expansions. Let me take you into each one in turn. So first, Bedford. As a reminder, we bought this U.S. site through the Xellia acquisition last year. While this capacity will be a welcome addition to our U.S. operations, we have seen delays in machinery largely driven by global supply chain issues. This means that we now expect the site to be operational towards the end of 2027, with commercial production and revenue accelerating in '28. We will keep manufacturing Tyzavan as a third-party until this time.

Point number two is R&D. Our plans from 2026 onwards see a meaningful pickup in R&D spend. Today, we've announced a restructuring of the group R&D function. And we are now looking closely at R&D spend allocation and ensuring that we are positioning ourselves to succeed when it comes to the pipeline, part of this involving spending more than we had done in recent years. This is a great thing for us as the pipeline is crucial for our growth and with Hafrun running this business and the new facility in Zagreb, I'm really excited about what we can deliver in the future.

The third reason is our strategy of leveraging partnership, both in terms of commercialization and manufacturing. For example, Liraglutide. This is an important GLP-1 and has been a good contributor post launch. We partnered to launch this product, which really removed all the risk on us. But with shared economics with partnership, it means that the margin will come at a lower rate. The same will be in the case for our biosimilar products, important products, good contributors, but at lower margins. These are all complex products and partnerships help us bring those to the market more quickly.

The fourth point is our fantastic growth in Europe and MENA. They're excellent markets and our confidence in them has already grown in recent months. But again, the margins here are lower than the U.S., still very healthy. But the outsized growth in ex-U.S. will impact the margins. One final point on injectables as part of the broader restructuring, Bill Larkins has stepped down as President, and I will run it on a temporary basis until his successor is appointed. I'm excited by what I have seen. The business has exciting prospects for future growth that can continue to deliver strong, sustainable industry-leading margins. Finally, at the group level, we are revisiting our medium-term expectations today, primarily to reflect the shift in the injectable margins. Let me pass it to Khalid just to step through those details.

Thank you, Riad. Our 2024 to 2027 group revenue CAGR of 6% to 8% is now expected to be at the lower end of the range, which is in line with current consensus. 2024 to 2027 group core EBIT CAGR is now expected to be 5% to 7%. The EBIT revision is largely reflective of our revised expectation on timing of going fully operational in Bedford as well as our updated assumptions on the injectables margin as already set out by Riad. This will be partially offset by an even better performance from Hikma Rx, which is being driven by the strong base portfolio, a growing pipeline and our CMO offering. The margin for Rx could go up to 20%. This change to our group core EBIT guidance reflects a low single-digit percentage downgrade to consensus group core EBIT for '26 and 2027.

Great. Thank you, Khalid. I want to finish with a reminder that we are maintaining our target of reaching $5 billion of group revenue in 2030. This ambition is supported by our future confidence in the injectable business and the 4 specific points that I had made relating to that. It also reflects our leading position in MENA with our world-class branded business and the outlook here is fantastic as we continue to take share, launch products, sign partnerships and ultimately deliver profitable growth.

And this also takes into account that our Rx business remains on a strong footing. Products across the base business continue to grow well with more complex products in our respiratory and nasal spray categories underpinning our performance. So that's the summary. Let's stop here and hand over to your questions.

[Operator Instructions]

Your first question comes from the line of Zain Ebrahim of JPMorgan.

My first question is just on the overall for 2026. It sounds like you said low single-digit core EBIT but the consensus is what you're thinking for the next two years. So are you expecting to see profitable growth in both '26 and in 2027 would be maybe the first question. And on the second question, just in terms of Rx and the increased confidence in Rx margins over the midterm, how much of that is being driven by the updated agreement with Jazz over the Xyrem royalties? And how much of that is being driven by the underlying Rx CMO?.

Yes. For 2026, if we look into like even all the segments, we've seen a strong growth even for the group, in general, we will see a strong growth in 2026. So all 3 businesses are growing. Even the Injectable business, we are lowering the margin but still going to show growth. As I mentioned, the generic Rx is going to show a growth where margins are going close to 20%, which is a very strong growth. And this will continue in 2027. In terms of our medium-term guidance, the shift and as I mentioned, it's a low single-digit downgrade to the consensus. And it's like a result of shifting execution of some of the plans from 1 year to another. So this is what caused like you have some operational costs in 1 year, but the associated revenues will come on the following year, which is 2028.

So what's driving the growth in Rx? So we have a strong portfolio. The base business, we have a solid product. We have the pipeline. We have the CMO business, which we are going to get as well -- grow the business in '26 and '27. We have services that we are now doing for our CMO partner. So there are different, I would say, elements for growth for the generic business. And now it's a very, I would say, healthy business, providing healthy margin to the group as whole.

Yes. I think just to add to this one, I think the strategy of the Rx that we had designed a couple of years ago is now we're seeing the result of that. So we -- as we have mentioned before, we have talked a lot about that, that what were the strengths of the Rx and how can we capitalize on it. And one of them was, can we use contract manufacturing. And in this case, and we had told the market that we had signed a meaningful contract manufacturing. This is coming to fruition in the very near future as we speak, actually.

Again, we wanted to strengthen our R&D, and we had mentioned that the spend on R&D in this division has increased significantly. And in fact, from '24 to '27, we expect to increase close to 70% and we're also looking at the base business, and getting more equipment, getting more capacity just to make sure that we are responding to the demand that we have in the base business. So every element of this business has worked out, right? Every element has worked out exactly as we designed it. And this is what we're doing with the rest of the company. Each division has its own strategy and it has own elements of what we need to do, including the injectables and the branded as well.

Your next question comes from the line of Charlie Haywood of Bank of America.

Thanks, Charlie Haywood, Bank of America. I have 2 on the injectable margins, please. So just in terms of the updated outlook for the 30% midterm injectable margins, could you help us understand, I guess, why now is the time to update the market on this outlook versus, I guess, sort of prior earlier commentary around mid-30s. I think it's not entirely clear what has changed within your midterm versus, let's say, 6 months ago when you gave the midterm outlook there?

And then the second one is the cadence of injectable margins from here to that 30%. Is it fair to think of around the 30% levels where we should think you will get to by 2027, and we're sort of straight line from 32%, 33% from here to that 30% in '27? Or how should we think about the cadence of that injectable margin development?

Yes. I think it's a good question. What happened in the last 6 months that would drive us to make that statement. I think several things, but the main thing about it is the Bedford facility. Bedford facility, we're counting on it. It was happening really at the border line in the medium term. So what was happening, the whole action was happening in '27. That's when the facility is going to start. That's when Tyzavan was going to be transferred to. We are going to be making a lot of products there. Contract manufacturing will be expanded into this facility. So there were many things happening in 2027 that we were counting on in the past.

We had been notified by the suppliers of the machinery that, that will not be possible. It would be a delay of 6 months. So that shifted into '28. So nothing really has changed in the plan. It's just a shift in the plan because the facility now is not going to be on in '27, which means all those benefits that we were counting on to happen in '27 will be shifting in '28. And this is why we are reiterating our 2030.

So we -- although there is some softness in the margins today, we still say 2030, we will be able to get to where we need to get. And that's because we believe in the '28 beyond that when we have everything online, our strategy is starting to pay off. Our spend on R&D is starting to pay off, all the stuff that we're doing now I think we will see a big acceleration there. Also, the other point is we really want to give the market the number that we are very, very, very confident that we can get. We want to make sure that we will do better than this number. But we want to give a number that we don't -- there's a lot of focus on this margins in the past years. The injectable margins has always been a big focus. And that's why we want to make sure that whatever number we are going to put against it, it has to be achieved, and we have to be confident that we achieve it and never come back and try to do better.

It's similar to what we have done with the Rx business in the past when there was some concern. I mean we set a floor of $100 million to $120 million of EBIT, and we continue executing and delivering and over deliver on what we promised the market. So the 30% is the floor, around 30% is the floor.

Going back to how the cadence is, I think we just need to follow what we are guiding. I think it's 30% is what we're guiding right now. Hopefully, we can do better. But I think this is where we want to be, and this is where we feel very comfortable of achieving. But of course, we will be really looking to do better. But for now, I think we want everybody to focus on the 30% which is, by the way, it is still very, very high margins for this business that compare to the industry standard. Sorry, go ahead.

Your next question comes from the line of Christian Glennie of Stifel.

Maybe just a follow-up there, specifically just a further clarification. Are you implying that for both margin cadence for both injectables and generics, Rx, is it 30% then for 2026 for injectables margin? Or is there a sort of 30% by '27 scenario? And does the Rx margin similarly step up to 20% in 2026? Or is there sort of more of a medium-term progression to 20%?

Yes. Actually, we are not giving guidance today on 2026. But I think we are happy to assume 30% margin for this business from now until 2026 on the medium term and a similar case for the generic business, but it will accelerate and hopefully, it will expand in the following years. But again, we are not giving guidance at this stage. But we are confident in achieving the 20% in '26 for the generic business close to -- sorry, close to 20% for the Rx business.

And then I guess in terms of R&D investment as it relates to injectables, just a bit more on that, what are some of these areas of investment and what's the sort of potential benefit of that in terms of margin?

When it comes to R&D, I don't think it is specific to the injectables. It's something that we had identified a while ago that we need to increase our spend in R&D in all divisions. So in all divisions, significantly in the Rx, for example, we have done, as I mentioned, if you compare it to what we're planning to do, it will be an increase of 70% in the medium term. So in the injectables, it will be around 50%. So this is a significant increase, but we believe that this increase is necessary. In fact, we believe that it's overdue.

I think we should have probably spent -- started spending money on R&D much more before that. But I think now we really believe that this is something that is needed for the business, is needed to continue the margins that we have, continue to the growth that we have. And it's not only the spend, it's also how you organize, how you are going to leverage the experience of others, how you are going to make sure that there is a program that is extremely rich in the company, and that's why we not only increased the spend, but also restructured the whole R&D. I think now R&D is one unit. We will benefit from all the experiences out there. The important part is, if you remember, the acquisition of Xellia added a very nice center in Zagreb with 80-plus people, scientists there that are very competent.

We want to build on that. So that's what prompted us to say, listen, let's just put the focus on R&D right now. Let's spend more money on R&D. Let's reorganize ourselves, let's get people that are competent and go after complex challenging products and not be satisfied with just going by the low-margin, simple products. And that's why the shift and the spend is there.

And maybe one quick final one on Tyzavan, just some expectations around obviously started to roll it out now, some expectations around that maybe for '26, both in terms of absolute revenue and/or the margin impact of Tyzavan specifically on the business?

Well, I can't give you exact numbers, but what I can tell you that Tyzavan is a very important product for many, many reasons. One, it is an important molecule to start with. This is something that hospitals depend on. There's probably over 40 tonnes of vancomycin that gets sold in major hospitals in one way or another, almost all of that gets converted from powder to liquid form before they're administered to patients. We are -- we have a product and is unique in the market. It's room temperature, that's stable for quite some time, 16 months. It's got all different strengths because vancomycin is administered to a ratio of body weight. So the ease of use of this product is fantastic. It is patented product that's very challenging to make and so forth. I can say a lot of things about this product.

So we're very excited about it. We are excited that we will be in a market where we can have the demand that we need. We already started with a similar product before which is vancomycin ready-to-use. This one is much more superior than that one. So we know the market well. We know how this market will play out. We hope the growth will be as steep as everybody is thinking, but we're very excited. This is a great product, and we're excited about it. And we're concentrating right now on a very healthy launch that will start as we speak today.

Your next question comes from the line of Victor Floch of BNP Paribas.

Victor Floch, BNP Paribas Exane. So maybe first question on the recent announcement from Hims & Hers to launch, they are planning to launch an oral testosterone next year. So I was wondering if you could discuss whether it might further increase the competitive landscape there? And my second question is the more a big picture question on the back of the recent discussion from the FDA to streamline the biosimilar development and basically have the development time and costs. I was just wondering, in that context, would you -- would you be able to comment on where biosimilars are going to fit in your strategic priorities. So now you are basically like working with partners, but could we expect that at some time you could move forward and become a bit more active in terms of development? Or is it like too far away for you?

Can you please repeat the first one? We got the second one, I believe you're talking about the biosimilar strategy, but what was your first question?

First one was on Hims & Hers plan to launch an oral testosterone next year in the U.S. And so I know that, that product in the U.S. has been quite under pressure lately. So I was wondering if whether like the new competitor might trigger like more competition in 2026 for you?

Let me start with the second question. I think from the biosimilar strategy, as you know, we have 2 biosimilars that have been approved in -- and the recent ones, I think. And we always knew that we will not be in the top 5 of those biosimilars when we launched. So our agreement with our partner considered the fact that we would have to have very competitive pricing in order for us to compete. And I think because we have looked forward for this and we kind of predicted this, we were doing well. I think we're launching right now. We have the demand that we need. Actually, we have asked for more units from our suppliers. So we -- I cannot tell you much about how this is going to pan out, but we know that we have the demand today, and we know that we have the right pricing for us to compete in. So there's not much to say about that. We are just -- we have just launched one and we're planning to launch the other one in the next few months.

About the ondansetron market, as you know, ondansetron is probably the largest -- one of the largest units when it comes to units in the U.S. So I think if I remember correctly, it's about 70 million units. The problem with this product is that it's a very, very low price. I think it's in the 20s, $0.25, $0.26, $0.27 right now. Competition is coming mainly from China, I think, Chinese companies through an agent, they're selling a lot in the U.S. We used to be -- we used to make a lot of this product, but we decided to make it more for capacity filler rather than the primary product in our portfolio. So it is an interesting product. It's something that we do well because we also make the raw material. So we're backward integrated. We're also forward integrated. We can make a lot of it easily in our integrated lines. But still, the pricing has gone down to a level where we only look at it as more of a capacity filler rather than a strategic product.

Next question comes from the line of Beatrice Fairbairn of Berenberg.

I had a few questions, if that's all right. So firstly, would you possibly be able to quantify how much of the injectable margins kind of guidance expectations was related to Bedford versus product and geographic mix as well as setting out what you're seeing kind of the MENA and European injectables market. And then secondly, could you just clarify the time line for bringing the other Xellia products in-house once the Bedford site is online and kind of what your expectations are there?

Do you want to take the first one, Khalid?

Yes. It's highlighted in Riad's note. It's part mainly the Bedford cost that are bringing the margins down, especially for 2027, as we said, it's shifting. But there are several reasons, increasing in R&D. We mentioned earlier this year that we have competition on some products like calcitonin and testosterone. The liraglutide, we're seeing more competition on it. But this is a part of the business. And as we said, we are setting the margin around 30% as a floor. So we are not breaking it down between MENA or the geographic mix. Both are growing. We are investing as well in these markets.

So if you look now, we have operation and plants in Morocco, in Algeria, and we are building one in Saudi Arabia. These as well are incurring some costs. So it's a geographic mix. It's bringing the margins down, but we are investing for the future. So it's all investment related. And we are very confident of this business that will continue to deliver higher than the industry standards margin.

Let me just add to this a couple of things. I think when it comes to the injectables, we had -- the injectables had always been very much dependent on manufacturing. Capacity is very, very important. Manufacturing complex injectables was very important. And historically, we had all invested in difficult to make products, and that sustained a very good growth for a long time. So when you are impacted with capacity, your plans are impacted severely. And in this case, this is exactly the situation in this case. We were depending on adding this capacity of better online because we had a lot of products that needed to be transferred to a new capacity.

We had -- especially when we're talking about a product like the vancomycin that we're talking about. So when this gets delayed, the whole shift gets delayed. But the cost continues. Your facilities, you need to hire the people, you need to get your quality systems going, you need to get your IT system. There's a lot you have to do to prepare for validating the facility and get it going. And all of that cost has to be prepared ahead of time. But when you have costs falling in 1 year and the benefit falling in another year, it shows a big difference. And this is our case here. We're going from 27%, which is our limit over the medium term to '28 and we're stopping on '27. So it shows that big gap there. But this really this big gap is that we are incurring a lot of cost without benefit in return. And we see this benefit very much in '28.

When we'll be having the Xellia products transferred? Again, Tyzavan is our most important product, and we are in the process of transferring that. It doesn't mean that will be ready for us. So of course, there's steps for it. So you transfer the methods, you transfer the manufacturing, you have to file to the FDA for approval. So all these steps we will take. We started with those steps, and we think that we should be able to transfer the most important product in '26. There are other products. There are smaller products, but we are all going to be working on the transfer in '26. In fact, we have about 40-plus batches of transfer products that will be made in the facility in the next, I would say, 10 months. So we are using that time to do the transfers, to do a lot of R&D while we are waiting for the rest of the equipment to come in and validate the facility and become commercialized.

A question comes from the line of Kane Slutzkin, of Deutsche Bank.

Just a quick clarification on the guidance. I mean you said you're not giving sort of guidance for '26. I'm just wondering the low single-digit cut you were sort of referring to, I guess, for '27, does that -- just to confirm, that includes you getting to sort of close to 20% in margins in Rx? That's the first one. And then just quickly on sort of post '27, I mean, I don't want to sort of look too long term, but you have sort of said you're still comfortable in your sort of long term.

I'm just wondering the mix -- in injectables, the mix story, the R&D story, I guess, that's here to stay, but the Bedford piece is kind of what you're calling out as the main driver. So assuming this is just pushing out the plan, I mean, do you see sort of long-term potential to get your margins sort of back up to where they sort of were? Or is it more a case of let's get the short- to medium-term guidance sort of on spot now and deal with that at a later date?

Well, we hope so. I think there is a -- we're doing a lot today to get us back to a healthy margin. But I think before we promise something that we can't get, we have to ensure something that we can sustain, and show some number that the market can depend on. And we -- our goal is to beat that number. Our goal is to accelerate this beyond that one. There is a lot that is happening in growth in MENA and in Europe. We like it. But again, it's taken away from those very, very high margins. But I think as we go on and grow the U.S. market as well and get into interesting products and get our R&D to start delivering, I think we will have very, very healthy -- hopefully, we can get to much higher than 30%.

But for now, I think we're going to stick to the 30%. We're going to promise that, and we're going to try to beat it every year. But there's no need for us to get to the 29%, 30%. We know that in 2030, we are going to say that $5 billion seems to be very achievable with this business. But exactly how and when and all of this, I think we'll leave it to when the time gets closer. Did I answer your question?

Yes. No, that's perfect. Just sort of a clarification on the sort of -- you're talking about sort of low single-digit cut. Does that include the sort of potential to get to 20% in Rx. I assume that does?

Yes, it does.

Perfect. And maybe just last one, is there anything to call out on the sort of competition you had for your 2 products in injectables? Anything that's sort of worsened or is it sort of just normal course of business, as you say?

No. I mean I think it was a big hit. It all happened. It was a perfect storm for us happening all in the same year, and this is why it was one of the reasons why we had to decrease our margins in August. But it's behind us now. We just have to manage it. This is the type of business headwinds come every now and then, and we'll have to deal with it. So it's behind us right now, and we're just dealing with it as we go..

The next questions if from the line of James Vane-Tempest of Jefferies.

Two, if I can, on injectables and I'll just come back for one on the generics business. So when we think about 2025, many people are concerned, at least thinking about the second half margin on injectables. I know you're not sort of giving sort of detailed numbers by quarter, but I just wondering if you could comment on the weighting of Q3 and Q4 and how dependent that is on the final quarter?

And then my second question is just on injectables margin. Raid, you gave sort of 4 points. I guess I'm curious, firstly, on R&D, sort of the step-up you're sort of highlighting on why that's different to what you outlined in detail at the Capital Markets Day so less than 6 months ago.

And also, I was actually wondering if there's a possible fifth reason which is potential pressure on the base business. You've mentioned previously China, some other kind of competitors. I was just wondering when we think about that longer-term margin, whether you're now assuming more aggressive competition in your base business, and then I'll come back for U.S. and generics.

Let me start with the last one. So competition is part of this business. You need to be aware of it, you need to deal with it, and you need to be ahead of it. So yes, we do have pressures. Yes, we do have price erosions. This comes and goes. But we have the strengths, too. We do have the muscles and the strengths. We manufacture very efficiently. We have large facilities. Our supply chain is simple. It is mainly made in the U.S.

So supply chain is much shorter. We can respond to the dynamics in the market at much better than any company 4,000 or 5,000 miles away from there. So we are in the market. We play in the market. We understand the market, and we try to predict what happens to the market. This is the name of the game. This is what you have to do to fend yourself against the competition, but the competition is not going to go away. And that's basically what happens with the competition. As far as -- your second question was about margins.

And in terms of the margins for 2025, if you look into it on a group level, it's relatively flat half to half. But as we said, injectables, it's going to be H2 weighted because timing of the CMO business, incremental benefits coming from new launches. So it's the same message that we had in the past. Branded, it's -- as we said, it will be H1 weighted, similar to 2024, but maybe not the same extent. And the same case for the Rx. So it's no change to our messaging on 2025.

The question was more, is it more Q4 weighted than Q3. Just to understand the bridge to essentially hit your guidance. Are you able to kind of comment in terms of whether the timing of deliveries is more Q4?

We have many launches that will come in Q4, which we announced like today, you saw we announced a biosimilar, Tyzavan. We are preparing for the launch, it will come. So this will contribute as well to the profitability. The business has been like month-by-month accelerating in top line growth, whether in -- across the 3 regions, whether U.S., MENA and Europe. So we are seeing increased level of sales. So some launches will come as well like in this month, November. So we are executing, and this is why we looked into every single product, and we are confident that on delivering on what we promised the market.

Yes. I think -- we talk about Tyzavan enough, but we are launching it in the third -- the fourth quarter. So you would imagine, this quarter would be stronger than other quarters since you add an interesting product to it. We also are adding some products that we were out of for a while that we had some -- we are waiting for some regulatory answer, and we are relaunching it, like lorazepam. So it is a progression. As you add more product to your portfolio, of course, you will get stronger. So there's always all -- many -- a lot of it is happening in the fourth quarter.

And then my follow-up question on the U.S. Rx business, again, a clarification question. Earlier on the call, you mentioned this segment margins will be getting closer to 20% in 2026, and this would continue into 2027. So I was just sort of wondering whether this is entirely driven by the new royalty payable to Jazz. And I guess if you're sort of saying it should probably continue into 2027. I imagine this assumes that the sodium oxybate business is relatively stable given the options you have.

I don't think that this is the biggest contributor. I think there are a lot of things that contribute to the growth of this business. I think the contract manufacturing business will be going well at that time. Our base business, we have added some lines. We had increased our supply. There's a lot of demand on some of the liquid products that we have. Advair is doing very well. We have few small products that we are launching. I mean, I think there's a lot of good factors that contribute to that growth. Of course, also Jazz and the agreement and the sodium oxybate is a contributor. But I wouldn't think that this is meaningful.

And just add to what Riad just mentioned, even 2027, we are conservative on sodium oxybate. So as mentioned by Riad, it's many factors driving this. This is now becoming a very solid business in all aspects.

It's got the right foundation right now. I think it's got the right foundation, it's got the right product and the future is very, very bright. We are developing very interesting product. We're focusing on inhalation respiratory. Interesting how to make products. So there's a lot in the pipeline as well. So beyond the medium term also, we see a very healthy business.

Your next question comes from the line of Sidhartha Modi of Barclays. Your line is now open.

Let's move on to the next question. Our next question comes from the line of Sebastien Jantet of Panmure Liberum.

Three questions, if I may, and apologies if some of these have been answered. I've had a few problems with my line dropping on and off. So just the first one is just around -- if you could just comment on the background for generic pricing and whether you've seen any signs of that kind of improving or whether we're in the normal kind of a price cut cycle there?

Second question is just around kind of your U.S. capacity and obviously, Trump's pushing to onshore a lot of manufacturing. I'm wondering whether you've seen an increase in inquiries around CMO contracts and whether you're planning to lean into those. And the third one is just around the kind of balance sheet. And obviously, shares are off today. I'm wondering whether you're considering doing a buyback to support the shares at this price.

Okay. Maybe we can start backwards. How about we start with the buyback? Khalid, you need to say something about it.

Yes, we don't do buyback because the share price is down. Of course, we -- the Board would like to invest in the business, and we still see potential to invest in the business. Now it's something that we would consider on an annual basis. But if we see that it's the right time to do a buyback, of course, the Board will consider this. Today, there's nothing on the table that we do a share buyback. But if the Board changed the outlook and we see that it's a good investment for us and nothing available for to do M&A, then they might consider this. So just to answer for you today, we are not announcing any share buyback.

And your second question is about U.S. capacity and U.S. demand and are we getting CMO. Yes, we have -- a lot of people are knocking on our door for CMO, not only for the U.S. also for our European facilities. We do have a good track record for CMO. We have good quality record. Our facilities are very automated. We're investing a lot in new equipment, always state of-the-art. So we kind of the people that we work with in CMO are very impressed and very happy with us. So we get a lot of questions if we can expand our CMO. But today, we can't because our capacity is really at a limit where we can't take any more clients. And this is why we're looking so much forward for putting Cleveland online because we expect that Cleveland will take a lot of our capacity into CMO.

We are expanding our manufacturing in the U.S. as we had announced. We will be spending a lot of money expanding our existing facilities and of course, building out the Cleveland facility. It's a big investment. It's not only Cleveland though, in Cherry Hill, we're adding more lines and also as well in Cherry Hill -- in Columbus, significant investment is going to be put there as we speak today. We're building new buildings. We're adding more equipment, both for our core business and for our new contract manufacturing client.

And also with Columbus having that capacity, we also attract small CMOs. We're taking on small opportunities with small CMO whenever we can. So everything -- I think everything is getting into -- getting together into the strategy of the Rx business in terms of their facility, their manufacturing and so forth. Generic pricing, in general, it's still as it was before, it's still not stable. It's still up and down really depending on -- are you talking about -- both I think the generic and the injectables they're kind of like a midpoint -- mid- to high erosion that we see. Injectables a little bit less, I would say, low to mid, but they haven't changed for a couple of years. This is where they are today, and we haven't seen a significant change.

[Operator Instructions] Your next question comes from the line of Sidhartha Modi of Barclays.

It's a very bad line. You try asking the question, Sid. If not, you can email it through me.

Moving on our next question comes from the line of Beatrice Fairbaim of Berenberg.

Thank you for taking my follow-up question. I just wanted to ask on the R&D structure change and how that kind of holistically impact the pipeline and product launches and kind of how do you expect this to evolve in terms of you going forward?

Thank you for the question. I think it's a great question because it's significant. It's a significant change. We haven't -- having all the divisions join together with R&D, we're benefiting a lot. We're benefiting a lot in terms of redundancies. Every division had its own regulatory, every division had its own labeling team. Every division had its own product management. We had redundancies in those. And I think putting them all under one roof, not only we save the redundancies, but also we reinvest that into the formulation, into the method development, into where it really counts. So that's the main structure.

We also benefit from the expertise of the team. There are some great scientists in one division that we can use it in other divisions. So -- but what motivated us the most to do something like this is 2 things. One, the fact that we really need to do something about R&D. R&D hasn't been delivering what we want to deliver if we want to continue the growth. So 2 things we have to do, one, to spend more money on R&D; and two, is structure ourselves that the money that we spend will be worthwhile and will come back with a lot of benefits. So structuring was number one and number two was spending. So this is what we're doing both things.

And we're lucky that we have Hafrun who has great experience in R&D and structuring R&D and leading global teams and leading the global team becomes very, very complex. She has great experience in this. She had to help putting that structure together, and we're very happy to have her help us do all of this. And maybe just to add, the Croatian facility that has been added to our network also played a critical role. Now we have a lot more than we had before. We have a lot of pipeline products that were really half finished that we have to spend money to get them finished. We have to organize ourselves to make sure they're transferred into the right facility. All that motivated us to say, listen, let's sit down and redraw it the way it's supposed to be, knowing what we have in resources and knowing how much money we would like to spend. So that's exactly what we did.

Your next question comes from the line of Christian Glennie of Stifel.

I just wanted to follow up on the Rx and the margin improvement to 20% next year. Just to understand because on the one hand, you're saying no real significant changes in terms of Jazz and Xyrem royalties, the new -- the large new sort of CMO contract. I think the benefit of that doesn't really follow. That's more sort of a 2027 story in terms of that being a meaningful contribution. So I'm still a little bit struggling on the margin improvement and expansion within Rx for the next year on what the key drivers are?

Well, I think as we said before, there are many, although the 2027 will be very meaningful for contract manufacturing, but that starts in '26 and it gets stronger in '27. So it's not only in '27, it's starting. So it does contribute to the revenues. As you know, there's preparation, the services that you need to do, there are some preparations of batches that you need to do, the stability that you need to do. So there are a lot of services that needs to be done.

The contract manufacturing itself, I think we are anticipating that will be in '27, but the preparation for that, which is significant, will be in '26. So that's one benefit that we're going to get. But I think we should underline that the base business is doing well, and this is important. We've seen good demand on our existing product. We're expanding some of the lines that we have where we added new lines, liquid lines. We will be adding another Advair line. So I think expanding in our capacity also is helping in this business. And of course, we do have products that we are going to be launching. They may be small, but collectively, they will be also contributing significantly to that. So as I said, it's not one that is working well. It's all of them are working together and that collectively they're contributing well to the business.

Maybe then quickly on the second half on the injectables as well on the margin, just to clarify that there isn't some -- maybe some OpEx restructuring saving here to help you deliver that 34% or so in the second half is implied by retaining your full year guidance?

No. I think the main important part is that we've always said that contract manufacturing, which is really the biggest margins that we have of was coming in fourth quarter, and that didn't change and that did deliver. Usually, contract manufacturing is the most predictable part of your business. You know ahead of time when you're going to make it because you promise your customer, your customer gives you ahead of time, the forecast and you manufacture accordingly.

So it was very predictable that we will be doing contract manufacturing later on. And as I said before, there were some products that we were out of in the market that we are relaunching in the fourth quarter and also new products like Tyzavan that we launched already, and we believe that this is going to continue picking up until the end of the year. So again, not one thing that we're contributing to, but it wasn't any restructuring or any significant thing like this. It's more had to do with the business.

Your next question comes from the line of Miles Dixon of Peel Hunt.

Forgive me if I missed it, but can I just ask on the specifics of R&D. You've talked about a 20% step-up in R&D spend in FY '25. Are we thinking about a similar kind of step-up into '26? And what's the internal expectations around when that additional spend might start delivering for the business?

Yes. R&D, I mentioned that before, is significantly increasing year-on-year. We restructured for this increase. We are hiring for this increase. So that has been planned. The portfolio is being picked and some of the projects that we are working on today, we are in the midst of execution. So there's not much guesses there. We have a plan. We have the leaders identified. We have the products in the portfolio identified. When will this start paying off? Some later than others and some earlier than others. So it really depends. There are some projects that are towards completion. There are some projects that are -- that needs a lot more time for them to complete.

But we will be seeing significant change, I think, '28 on. We talked about epinephrine, for example, in the Rx, we think that's probably around the right time when it comes in. That's a big product that required a lot of spending, a lot of R&D, a lot of technical knowledge as well as a lot of studies. And then there are a few other products that are in this category. So we are also -- we have also some products that we -- some of the pipeline R&D products that were in Zagreb when we acquired Zagreb that needs to be completed. So there are many of those products in different phases. But I think significantly, usually R&D takes 3 to 5 years when you see the results. So this is why we're saying '28 on, you should be able to see a lot of the effort that we're putting together coming to fruition.

Please note that Barclays has sent in their e-mail regarding their question. I'd now like to hand the call back to the Investor Relations for final remarks.

Just for the Barclays question from Sidhartha, 2 very short questions, Riad. Just firstly on biosimilar strategy and what the timeline is for our launches on denosumab and ustekinumab and any update on strategy there? And then on the Columbus CMO project, if there's any update on the branded product there, which we know is in Phase III. Do we have any updates there?

For the biosimilars, we have talked about the biosimilars. We are starting to launch the biosimilars. We launched one and I believe the second one will be launched in January. There is not very, very high expectations that those will be a big product. They will be meaningful. They will contribute to the growth of the business. But again, we are #8, #7. So it's not that we are going to grab and take a big market share. But the market is big.

We're coming in and competing on price. We have a good base for the price. We have good transfer cost from our partner. And we already have orders and we already are launching and selling products. In fact, we had asked our partners to increase what we had anticipated will be before. So we think it's going to be better than we expected. But again, it's not those big blockbuster products. It's just a good decent products, that's what they are. On the -- what's the other question? On the CMO?

Yes, if there's any comment at all around the CMO projects and on the products itself, if there's any.

I'm sorry, we can't talk much about. We are limited, but what we can say about the CMO, with just say that it's meaningful. We say that it's going well. A lot of the work has been really put into it. And we hope that this is going to be as we expected a very, very good contributor to this business.

There are no further questions on the conference line. I will now hand over to Riad for final remarks.

Well, thank you very much for joining us for this call. We want to reiterate 2 things. I think the first thing is we want to reiterate our -- that this business is a good business. We have done a lot to continue the growth of this business. In fact, a couple of years ago, we looked at the business and we looked at all the parts of that business, and we put a strategy for each of those parts. We looked at Rx. And as you remember, a lot of you have followed us before, Rx was extremely weak. We didn't know what the strategy would be with it. But since then, things have changed dramatically. This is a strong business. The growth is very bright. Future is very bright. The growth is very apparent. So we put the strategy together and we executed.

The same thing happened with the branded. We put a strategy together. We reshuffled the leadership. We put a lot of emphasis on BD, and you see the results they're delivering. The growth is very, very healthy. Injectables is the same. We did put a strategy together and that strategy was based on expanding our very much needed capacity, getting into interesting product, put more money in R&D, try to get some pipelines through both our organic R&D and through BD. And that also is in the works. So there's a lot that's been happening exactly with that. New facilities have been built in Algeria, in Morocco, Italy has expanded, Portugal has expanded. Cherry Hill new lines are coming in. And of course, the Cleveland facility with the new technology will be online very soon.

So we are in the midst of executing the injectable strategy. We will see the benefit of that very apparent in '28 on. During that time, we will be running a very healthy business at around 30% of margins. And I think we are going to be preparing for steep growth after that. So good business, and we just want to make everybody trust the numbers that we give out and make sure that we have looked at those numbers, and we are very confident that those numbers are achievable. And with that, thank you very much, and hope to see you soon.

CEO, Riad Mishlawi; and CFO of Khalid Nabilsi.

Before we start, I'd like to remind you that any forward-looking statements or projections made by Hikma during this call are made in good faith based on information currently available and are subject to risks and uncertainties that may cause actual results to differ materially from those projected. For further information, please see the Principal Risks and Uncertainties section in Hikma's latest annual report.

And with that, I'll hand over to Riad for some opening remarks before we go to Q&A.

Thank you very much. Good morning, everyone. Let me start by maybe a few words summarizing the half -- the first half. I believe we had a strong half. We have a strong revenue growth of about 6%. That's driven by volume growth across all segments. All the segments are doing well, as expected.

I think the big story and the most impressive part of it all is we had revenue growth of 12% in the Injectables division. Revenue growth means that we have good demand on our products. And that's very, to be honest, it's a good indication for us that all the investments that we're doing in expanding our facilities and increasing our capacity will all bring in good results, and that's happening as we speak today.

And the growth did not happen in 1 region. We have 26% growth in Europe, and that's something also very impressive. MENA, 16%. And MENA has been doing this year-on-year for the past few years and continues to do so. And of course, in the U.S., we have a growth of 8%.

That's all driven by new launches, driven by the volume increases and, of course, the Xellia portfolio that we had acquired middle of last year.

The Branded revenue is up 4%, and the Branded division has been doing really well year-on-year with not only good growth but also very stable margins, very stable profitability. That's a division that everybody questions whether geopolitical problems, if we are going to be impacted at all. I think it's doing right the opposite. I think the political instability is bringing us new business, and this business has been doing really, really well. And of course, we're doing a lot to feed it in new products. We're doing a lot of BD. And as you know, we acquired a few products, like the Takeda products, last year.

And finally, the Rx division, the revenue is about flat, broadly flat, I would say. And that's a division that everybody was worried about for a while. So I think we -- what we did this year, pretty obvious that it's very stable, poised for growth, good R&D team, we're doing a lot in R&D. And of course, you know that we had announced a big CMO contract that I think it will be going into the full throttle in a couple of years, starting next year. We're doing a lot of investment in that division. And I think the fruits of all this investment is going to be pretty obvious.

So I think there's a lot of good news. There are some slight, I would say, unexpected headwinds, especially in the margins of the Injectables. That is why we dialed down the Injectables slightly. The good thing about it is that this is temporary. This is not something that would last. It's mainly driven by the FX, the strength of the euro. As you know, some of our cost in the Injectables in Europe and we pay it in euro. That had a slight effect. And of course, the uncertainty and the unclarity and created some inflationary costs like shipping, some of the tariffs that we have to pay, some of the inventory and so forth, that also added to that. It didn't really affected that much, but we wanted to make sure that we're very transparent, we'll see how things are going, but we also want to be realistic that there are some headwinds and we have to kind of face them.

But as a whole, I think we are reiterating our group guidance, and that's what's important. We continue to expect the group revenue for the year will be between 4% and 6%; core operating profit in the range of $730 million to $770 million in 2025. And the slight adjustments that we did with the Injectables is exactly just to reflect what was happening, what has happened, and that would be -- has been accounted for right now and I think that will be behind us from now on.

I think -- and you could see the Branded -- there's no FX headwind in the Branded. This is usually where the FX is, but in this case, it's not. It's in the euro, something unexpected. As you all know, in the beginning of the year, everybody thought that, between the euro -- there would be parity between the euro and the dollar. It really -- the opposite has happened, and that's what skewed our numbers a little.

I just think -- I just wanted to make one point, is that I was listening at the -- at our share price this morning, and we had hit 52 low this morning, and 3 months ago, 4 months ago, I believe we were at 52-week high. And I believe that where we're sitting today, we have a much, much stronger business than we had 3, 4 months ago. Everybody was worried about, for example, about the Rx business, our ex generic business as we called it. Everybody was worried. What are we going to do with it? A lot of suggestions, should we sell it, should we get rid of it? The sum of the parts. We had all of that.

What we have today is a very, very strong division delivering. We have a great R&D setup there. We brought a leader that understands how it's run. We found out a great contract manufacturing contract that will stabilize a lot of the income and give you a lot of profit, something that is predictable and it's going to be -- it's going to come. And also, we are submitting very critical products such as the epinephrine.

So we have transformed this division from the time when we used to sit there 2 years ago and say, want to bring between $100 million and $120 million. Well, brought in $190 million last year. Was that -- the $190 million last year. We're anticipating to bring in $170 million this year. It's doing well. It's got a great future. And if all the products that we are submitting is going to get approved, that will be an incredible division.

Despite all that, there is a lot of spending on R&D, focus on R&D, and still we're able to come up with numbers that are -- exceeded what we had said before.

If you look at the Branded, year-on-year growth, year-on-year is stable. Profitability is high. It has increased significantly from 3, 4 years before. And it continues to do so. We're signing a lot of contracts, we're signing a lot of BD contracts.

And as I said before, the political instability in that region is making a lot of the big branded company that operates in that region, come back to us and say, are you local? Do you understand? Why don't you [indiscernible] our products? And we had this very successful in finding a lot of those big products into our own and add into our portfolio. And you can see that from the numbers.

Injectables, I mean, I used to be, as you all know, Head of the Injectables. And I can tell you, I know all the injectables competitors that work with us and our peers in the same markets. We are double or high -- much higher in the margin than anybody that -- everybody wonders how we are able to get the margins.

And let me remind you that we get this margin while we are operating in the U.S. About 60% of our products of the Injectables are made in the U.S. and the rest are made in Europe. So we're not in low-cost areas. We're not in India. We're not in China. We're not in any of those low-cost areas. And we're still able to get margins that are higher than everybody else competing with us.

And without any sexy ones, we don't have big products. We have generic, simple products. But we're able to squeeze so much out of those. We have -- we run very efficient operations. And the efficient operations are continuing to grow. We have Bedford, we're investing in Bedford that is going to be an incredible facility with technologies that are very unique in the U.S. and in the injectables area. We're investing in Cherry Hill. We're adding more lines. There are a lot of investments that are happening across all injectables. We've built new facilities in North Africa. We doubled the capacity and [ lipolization ] in Italy. We are breaking ground for a very sophisticated state-of-the-art facility in Saudi Arabia. So a lot of investment is happening in this division, because we really believe it and we believe that we can do better than anybody else operating in the same field.

So it's very confusing to all of us how we see going through 52-week lows to a 52-week high. Is it the reaction of what happens on the day? Or are we evaluating the company based on what they have in the future and how they're growing and prospects of the future? So if it is about the future, I can assure you that the future of this company is more positive than it's ever been. We are looking at how we are going to be organized to be more effective.

We are absorbing 11% more or $11 million more in R&D than we have in previous years. We're still able to get numbers -- we're still able to get an EBITDA number higher than any of our peers. We are operating, as I said, in all -- most of our products are coming from expensive territories like the U.S. and Europe, and we're still able to manage profitability...

We increased in R&D [indiscernible] as we highlighted year-on-year, and we still delivered.

And we believe in R&D. We believe that this is our future. We believe in growth. We are not going to cut R&D so we can get the numbers and everybody is -- we need to invest in the future, and R&D is one of them. I think the reason why our [indiscernible] has suffered for a while is because the R&D investment was limited. If we want to grow, we need to invest in R&D, but not only invest in R&D, invest in smart R&D.

So you all know what we had -- what the people that we have brought in, very R&D focused, very science focused. They know -- they do not only how to sell the product, but also how to develop it and how to make it. So we're counting on those people, we're counting on all of the organizations. And there's a lot more to do, and I think the results show it. So if the FX come in because the euro was unexpected and we have to dial down 1.5% on your margins, it's sad to see that we have been looked at as a -- or the reaction is that severe. But that's how the market goes and that's what we need to do.

So we'll open for questions.

[Operator Instructions]

[indiscernible] continuing this advantage? Like what would you do to be able to keep your high margin -- and we all know there's more and more competition coming on, like so how would you maintain your high margin at this field?

I think the formula is simple, and we mastered the formula. I think the higher margins didn't come only last year. For the last 14 years, if you look at injectables, maybe 15 years, I haven't looked exactly where and what, we have been delivering 34-plus. We even have some years that we got to 40%. So it's not a formula that is strange to us. It's a formula that we follow and it's been working well with us.

But I think even now, we think that we can even do much better in terms of organize R&D better. This is something that we were not very strong at. We've recruited now people that understand this very well. We reorganized our R&D much better. We have a nice center [indiscernible] now that we had acquired with the Xellia acquisition that we are going to capitalize on, we're going to reorganize it, spend some money on it.

So we believe that we -- the money that we are going to spend in R&D is going to come back much more than ever because of the location where we're spending it and because of how we are organizing ourselves. We're putting synergies together, we're identifying the synergies across all divisions. We're doing a lot in that area because we do believe in R&D.

So basically when it comes to revenue, when it comes to margins, I don't see there's anything different. In fact, we used to get those margins without any, as I said, sexy products or big, high-margin or whatever product that [indiscernible] products. We had simple, generic products, and we're able to get that margin.

However, today, we do have that product. We do have [indiscernible] that is a very unique, protected for the next 10 years, only one in the market, product that has huge potential. There's 30 to 40 tons of [indiscernible] being sold in the U.S. And we are the only one that is ready to use that, and we are -- we have a patent on that one that will stay with us for quite some time.

So we do have unique products right now. We have a lot of 505(b)(2) and [indiscernible]. So if we were able to get that 35-plus margins in the past, we should be able to even do better now.

[indiscernible] with Berenberg. So in the [indiscernible] group outlook takes into account the impact from tariffs and related inflationary pressures. Would you be able to kind of quantify this? Which areas is impacting those And anything you're kind of doing to offset this?

Okay. Yes, thank you for your questions. I really need to clarify the tariffs thing. The impact of the tariff is not that big today, especially in our P&L. It might be in the balance sheet because as you know, if you buy raw materials [indiscernible] warehouse, it's in your balance sheet, not on the P&L. So the impact on the P&L is not that much.

However, there's an impact nevertheless. Tariffs are, today, we are all anticipating what will happen. We're all trying to predict what will happen. Things are changing daily, as you all know. We know that there is some tariff on Europe, but we don't know if generic drugs are going to be included or not. But considering all of that, our U.S. presence is bigger than anybody else. So in the future, we are going to be -- if tariffs is going to be severe, I think we are in a great position. If we're actually going to put that 50% in India, most of the companies in the U.S. are getting their products from India, the Indian companies, and many of them are sourcing their products from India and China. So we are not.

So we have also less risk in terms of the tariff. But today, the tariff is there. It's not big -- it's not affecting us big time. We have only 5% of our products totally in the whole group that comes from China. And in the U.S., it's even much less than that. So it's not going to be a big number, especially from China.

From Europe, we don't know what's going to happen. If it does, it's going to be a slight, small number. But we still don't know. But if you compare us to the industry, I think we're sitting on top of everybody else because of the way that we're structured.

And this like indirect impact, like increase in shipping costs, because of [indiscernible] shipping cost increase, you see that, as Riad mentioned, very minimal impact for this year [ itself ]. But combined, maybe it's around $6 million, $7 million like impact between shipping, inventory. It's not a significant amount that affects us.

The significant, like why we've come down on our margin, it's mainly the FX. When you have -- when we gave the guidance, the euro was, to the dollar, $1.04. Today it's $1.16. If our cost base in euro is higher than our euro income, this will have an impact on -- translational impact, translates today EUR 100 million -- to dollar, it was $104 million. Today the same EUR 100 million, it's USD 116 million. So this is the impact. This is why we brought our...

I think what's important for investors is when they look at some downgrade, to see if this is structural or not. This is not a structural downgrade. This is not a structural impact on the company. This is something that we're reacting to the environment around this, something that we cannot control. Shipping has gone up. At one point when there was this tariff war that's happening between China and the U.S., there were no containers. Everybody wants to ship now before the tariffs go in effect. So you pay 2, 3x more if you want to ship your product out [indiscernible] overseas coming in here. That eventually will have a small effect. You add those little, small things together, it becomes a number. It brings you number 1%, 1.5%.

But the important part, again, is this a structural problem or is this a temporary problem? It is not -- definitely not a structural problem. Or even that there is something that we would just say also in the announcement about product mix, and I want to make that point. We, as you saw the increase and the growth that we're having, a lot of it is coming from Europe, 26% Europe. So 26% at a lower margin than the U.S.. So the growth is great, but also if you want to maintain your margin, it should not be growing that much because it's going to -- but you are growing in areas where there's less margin than you do in the U.S.

Adding to that the fact of Xellia. Xellia, as you know, is bringing in -- is this a public number [indiscernible]? Can we say all the numbers? Yes, roughly. Roughly around 50 million, a little bit less than that. But these products are coming from third party while we are getting our facility [indiscernible]. Facility, as we all told you, we are -- we have the facility that is ready to take on this product in and more, and have room to also grow that in these technologies, like we have [indiscernible] [ backfilling ] and [ vial]. It does take time. But right now, we're depending on third party.

You depend on third party, you are not going to make the very big 35-plus margin. You are going to make less. You have to pay for the third party. You have to pay for shipping. All that will go on to disappear once you have your facility up and going in Bedford, and which we are anticipating to do that in 2027. So all of the pressures that we have in our margins today to be more than double our peers, this will do even better in the very near future because of what we're doing.

Kane Slutzkin from Deutsche. Just on the Injectables piece. In April, you've sort of spoken about new entrants coming in, 2 of your larger products. Just wondering how it's looking there, how have you reacted whether it's sort of from the pricing or just volume?

And then just on the CMO deal, I think you mentioned something around 26 [indiscernible] 27. Just want to confirm that. And where in sort of clinical development is that asset, if we -- if I may ask?

You're talking about CMO?

Yes.

What was the first part, I'm sorry?

About the product mix, Injectables...

Yes, about the product mix. I mean this is our business, right? This is the business that we have. So you have to anticipate, you have to look ahead. You know that competition is going to come, you know that some products are going to be -- you're going to lose some margins and you are going to have to pick them up some other way. This is going to happen.

So yes, unfortunately, this happened at the same time, 2 of our big products got competition and then we have to dial in on the market share as some of the profits did impact us. But we made it up in another way.

So the impact of this is, yes, it does go up and down, but not so significantly because our portfolio is one of the largest in the U.S. We have 175-plus molecules in the U.S. in Injectables. Some will go down, some will go up. You just have to be able to be paying attention to the market being there before everything happens.

We did anticipate those coming in. We did anticipate that we're going to -- we're going to lose market share. We'll see how we are going to -- how these competitors, how reliable they are, and then we react. So we've been in this business for quite some time, we know how to deal with competition. But yes, this is one.

But the other one that actually affected us is the fact that the growth in other areas were the lower margins. So this is where the product mix was going to happen.

As far as the contract manufacturing, we all told you, I think this is not new to all of you, that there's going to be a big, sizable investment in our facility by our clients to facilitate the ability to produce for them the high-technology products that we are going to be making for them. And this is going on today. We are building, we're adding equipment. It's significant. It's significant value that we're putting in that facility, that they are putting in our facility.

And that shows a lot to the trust that a big branded company would do coming in and putting hundreds of millions in new facility to make it ready. They trust your quality program. You trust your ability to technically be able to produce, and giving you a very huge critical product for you to make for them. So it tells you about what they have found. And these guys, they are very picky. They're branded companies. They get the best of the best. They hire the best of the best, and they come to you and see you, and they were able to give you a big critical product that I think says volumes about your ability and about your capabilities as well.

This is what's happening right now. I think we are building right now. We start next year with slight volumes. Towards the end of the year, we expect that will increase significantly. It all depends on the approval time, we're anticipating sometime next year. But it's not our products, we really don't know. We know that that's the forecast that we're getting. But we're very excited about starting as soon as this product gets...

[Audio Gap]

And first question comes from James Gordon with JPMorgan.

James Gordon taking over. One question was just about Injectables margins. So you've turned the margin this year. And so I think you may have partly answered, but is it fair that the majority of the trim is because of FX? Or how much of it is FX versus the other factors that you talked about?

And then sort of connected to that, should we extrapolate the margin comment or guide for this year to next year? Or do you think things will be different next year? That would be the first question, please.

Second question would be a GLP-1. So it sounds like your [indiscernible] reasonably well. But [indiscernible] do sema. It sounds like you're not doing sema [indiscernible] next year, but are you going to do it in Europe and in U.S.?

And then the third one would be, we heard about Hikma Rx, the generics pipeline quite a bit, the event a few months ago. How quickly do you think that's going to start coming? Do you think we're going to see [indiscernible] generics pipeline coming through next year? Or do we need to be a bit more patient?

Okay. You want to take the margin part?

Yes. So if you look into the margin, when we gave the guidance mid-35, as Riad mentioned, we've anticipated in that when we gave the guidance that there will be some [indiscernible] on some of these products. But maybe it's slightly higher than what initially was. So you bring it to the low end of our margin.

But the main impact is coming from the FX. So you could assume like around $13 million, $14 million, $15 million coming from FX of euro. And the $6 million coming from the other costs related to indirect impact of tariffs, shipping inventories. So this is where we got into the 32%, 33% margins you see today.

As far as GLP-1, as you know, liraglutide is -- we started this one, we're the only one in the market, after Teva introduced authorized generics. So we introduced ours 25 of December, I believe, on Christmas Day last year. Done well. Today we are -- we just have 1 competitor that has been added to this group. The product is doing well. We still are -- we're still selling it, although I think at a lower price but we had managed to also renegotiate the transfer price to us. So our margins are still healthy.

We -- as you know, there were a lot of compounding happening in the GLP-1 last year. So a lot of people that wanted to get to the semaglutide didn't have to buy it straight from the manufacturer or from -- they compounded their product. And the reason why is because they were allowed to, because the product was in shortage. Well, since then, the product is not in shortage and compounded and not allowed to do that anymore. So the semaglutide went back to the high price that it has always been, which gave the opportunity for liragludtide.

The difference is, if you don't know, the liraglutide, very similar in indication to the semaglutide, except it's daily while semaglutide was weekly. So of course, for convenience everybody would prefer to go to the semaglutide. But because of the cost now, especially that you can get it compounded, then we're seeing demand increasing on the liraglutide.

Whether we are going to the semaglutide, I think it's still patented. There are a couple of countries in Europe that will be -- the patent will be expired next year. And I think Canada will be one also, and a few countries like Brazil and -- but by and large, I think most of countries will still be restricted by patent.

The thing about patent that maybe people don't understand, it's not about selling the product in the patented countries, about not being allowed to even make the product if it's patented. So I can't make the product in Portugal and sell it in Canada because it's not patented in Canada. You can't even make it in Europe because it's patented in Europe. So it's not about only where you sell, it's also where you make.

So this is not something that we're entertaining and doing. We have some deals for the MENA market to bring in this product. I don't have the exact date for you. But of course, in MENA, we are the largest, the strongest local company. And we always are looking out for interesting products like these. We do have a deal that we are trying to finalize or we should be introducing this product. I don't want to say when, but depending on -- we are actively looking for it.

And I think the last question was -- I think that's it, right? I think the question was about Rx?

That's right. [indiscernible] you've been investing more in generics or Rx R&D. When does that boost start coming in? Is that a '26 story? Or do we need to be a bit more patient?

Yes. So as you know, I always say our business is like Christmas trees. You plant a tree today, so you can set up in 7 years. You have to anticipate, you have to be patient. You have to -- nothing that you do today is going to get your results tomorrow. You have to wait.

In our case, in Rx, it's exactly what we're doing. But the good news is we can tell you what we're submitting. So we did tell you that we are submitting a very interesting product like epinephrine, nasal. Very unique product, extremely valuable one. Very easy to administer and a huge demand and potential on it. We have done all the studies successfully. We had a lot of conversations with the FDA. And we're anticipating submitting this product towards the end of this year, which means that this -- if you give it 18 months of the regular review time, if all goes well, I think we should have it within that range of time. And that will give a big boost to the Rx. it's not the only product that we're submitting, but this is a product that I can talk to you about because we made that public.

But I can tell you that bringing Hafrun in, that was her focus. She revamped the entire R&D department. She brought in new people, it's a lot of focus. We're working on interesting products. We're submitting a lot of products. And I think the result of all that is going to be apparent soon.

But while we're doing this and spending more on R&D, we're still getting great results for the Rx. I mean it's not like it's suffering because we're taking away the money and putting in R&D. We're putting more in R&D, significantly more on R&D still. We're coming with really high teens profitability margins, operating profit. So it's doing a lot better than we ever thought.

And the contract manufacturing effect that is going to bring to it is definitely going to take -- to make this division extremely interesting.

The next question is from Victor Floch with BNP Paribas.

So maybe first one on tariffs. So I mean, it's fair to say that concerns for the EU pharma, that meaningfully eased since Liberation Day. But on the flip side, it's fair to say that it's now broadly assumed that the EU pharma manufacturing capabilities will have to be rebalanced overseas. So in this context, just wondering if you've seen any significant uplift in terms of interest for your CMO offering. So this was my first question.

Then on U.S. compounding, I think you framed it as a key driver for the midterm -- sorry, for the long term and your $5 billion 2030 guidance objective. Should we expect at some point that you will be able to refine the [indiscernible] contribution from this business to top line and potentially [indiscernible] guidance that would help us to better capture this opportunity?

And finally, on liraglutide. So I think last quarter, you've added to the fact that the expected end of semaglutide compounding could be a tailwind for your liraglutide generic as it will represent a low-cost option compared to the [indiscernible] list price of [indiscernible] down. So in the meantime, we [indiscernible] seen that the company is still very much alive, capturing something like 50% of the semaglutide markets. And also we've seen Lilly and Novo going for direct-to-consumer cash channels.

So just wondering if we -- if you still believe that it could like materialize as a tailwind for liraglutide, and with semaglutide generics, do you think that you could drive like growth with liraglutide even though company is still very much alive? So that's all for me.

I'll start to answer some of them, Khalid will help me with some. Let me start with the tariffs. Again, it's not clear for us what -- how tariff is going to come about. I mean we heard that there were some agreements with Europe. We heard the 15% there. But we really don't know if that includes the generic drugs, if that includes something else, or excludes. This is still unclear for us. We're trying to clarify it. We're trying to talk to the government to see if -- but unfortunately, the confusion is not only limited to us, everybody else, a lot of people are confused. So we hope that this will be cleared soon. And then we'll see if this is going to give us to be any effect on us or not.

But even if it has an impact on the industry, we are well positioned, as Riad mentioned. So we are well positioned in terms of our manufacturing plants are in the U.S. The Bedford expansion that we have, even for the Injectable business, will be ready in the coming, let's say, 18 months. So we'll be able to benefit from that.

Yes. So we have built the business for -- to make sure that the local companies, they operate in the local market. So a lot of the U.S. revenue that we get is generated [ and born ] in the U.S. So there would be -- if there is tariffs and if it's [indiscernible], as I said before, it will affect us. It will affect all the industries. It will affect a lot of the peers that we're competing with, a lot of them. I think the effect on us will be there, but it will be as minimal as you compare it to our peers. That's something we're looking for.

I think the government is they are looking at the tariffs and they are careful about how they are going to implement it. Because as you know, shortages in the U.S. is still there, especially in the injectables. If you are going to put the tariffs, you have to be very careful not to increase that problem or create [indiscernible] on that.

So this is why there's a lot of bet and forth on this one. Sometimes we hear it included, sometimes we hear it's excluded. Sometimes we here if the API is Chinese, sometimes we hear that if you transform, the API is not. So there is really a great unclear definition on how the tariff is going to be implemented. Again, I think the government has their challenges as well, and that's why there's a lot of back and forth.

As far as the U.S. compounding, our compounding business is doing great. I think we are in the right direction. A few things are happening in compounding. And I don't know if you guys are following the compounding business, but the compounding business has been very much challenged by the FDA in the last few years, last 2 years in particular.

FDA just don't want compounding to be a different business or have a linear rules than the core business. So if you are doing injectables, these rules apply. They don't care if you're doing it by compounding or you're doing it aseptic to aseptic or doing it from aseptic to non-aseptic. The rules apply.

In the past, when the compounding started, there were some rules that were a little bit lenient, I would say. They were a little bit more you can get away with. Right now, the FDA is coming back and withdraw those rules. And they are going to -- they're putting their foot down and they're saying the way you have to act that way, or else. And that created a lot of warning letters. It created a lot of people going out of business and a lot of pressures.

So if you look and read about compounding, you'll see a lot of our peers, even the largest, have gotten warnings letters in the last 2 years. Fortunately for us, we are creating a compounding in the way that we learn how to do aseptic business, which is our core business, and we just copied what we do, but on a smaller scale. So when it comes to compliance, we have probably one of the cleanest record in compliance.

So that's from the compliance point of view, which is very critical and a big risk in compounding. So that has been put to bed. We've done a lot of investment to make sure that this is done. Of course, it's not easy, when you have a batch, we make our average batch, in Cherry Hill, for example, it's 1 million units. Our average batch in the compounding center is 300, 400 units.

So to scale that down is incredible. You have to use everything differently. You have to use a lot of manual steps. But that has been now done. We've gotten all the approvals of all the states. We've gotten the blessing of the FDA. We know what we need to do. From last year to this year, we had tripled the revenue of this center.

But it's way short where we need to be. Our aspiration, we think that we can be the leader of the compounding business in the United States. We need to do it slowly. This is a very critical one. You don't want to make a mistake. And in this industry, trust is very, very important. Your clients need to trust you. They depend on your product. You're not going to stop an operation because the bag of [ Xanthanol ] did not come in and you cannot do a heart surgery that you're going to make a $600,000 from it, and now because of $20, you don't want to be canceling that. That they don't want, and that, you do it once and they will cut you out. So you need to build your trust. That is that what we're doing.

And it's very much proven by the fact that we have tripled the revenue there. We're short from our goal. We think our goal would be big. We think that we should be, in the next 2, 3 years, we should be really hitting the hundred of millions, hopefully 100 million soon, and build on that one.

So there's a lot of automation that has to happen. We have equipment that are on order for the center. I think there is a lot that we learned in the last 2 years what we need to do. We thought it would be very typical and similar to the business that we have. It's not. It's the relationship, the way that you sell, the way that you make, the way that you [ inspect it ], all of that is different. But we all know that now and the -- it's only going up from now on.

So compounding I'm happy about. The future is bright. And we are really implementing our strategy exactly as we designed it.

Finally, the liraglutide and the semaglutide question. I'm not sure if you know that the semaglutide will not be off-patent until 2031, in some cases, 2030. But it's not in the near future. So it's not going to be at a time when you are going to have liraglutide and semaglutide, both generic and both competing. Of course, semaglutide when it comes to generic, liraglutide will have very weak case for. Nobody is going to take a daily product when they can do it weekly.

And who knows, by then, you can take 1 maybe every year. This industry is advancing so much. They said that the oil is going to come up now, very effective. And so this industry is moving. Today we know that liraglutide is doing well. Semaglutide is patented and with a very high price. And we are managing to get some revenue at the liraglutide. And that's all we hope for and we're managing this as the industry evolves and as competitors are coming into the market.

Our next question is come from the line of [indiscernible] with [ Libero].

Just 3 questions, if I may. First of all, just on the Branded margins, obviously, you had quite strong margins in the first half. You're guiding to margins for the year sitting at around 25% or so. You've obviously got a stronger growth coming through in the second half. So I'm just trying to understand what are some of the drivers that are going to impact the margins in the second half in the Branded division.

Second question is just around the Injectables business, and you've called out in the past calcitonin and testosterone as products where you've seen some competition. And you said you've reacted to that. I'm wondering if you could just let us -- or give us a sense of whether that pressure is ongoing or whether you're seeing that pressure beginning to stabilize.

And then the last question was just on vancomycin. I'm just wondering if you could give us an update on the black box and whether you've had any progress on that front.

Do you want to take the first one?

I'll take the first one. So the Branded business, it's a similar case to last year. Last year we had a strong weighted H1, and we delivered margins in line what we have this year. This is mainly was due to the timing of the tenders. So this year is going to be similar to last year, but maybe to a lesser extent.

I would say the Branded business is delivering an excellent performance. I think maybe it's slightly now, given that there's no currency impact, maybe this will improve a little bit on where we've guided initially. But it's going to be around the 25%. So it's on the top end of our guidance, I would say.

For the Injectables, the 2 products that we have difficulties in, or, let's say, we face competition and I think we did say that in April, is testosterone and calcitonin. We did anticipate the product coming in. We've been in a leading position with testosterone for years. It was just a matter of time before somebody comes. There are 7 right now people that are in the market. So for us to be able to continue the lead on the testosterone for the past years was magical. So it was only a matter of time before this is not going to hold.

I mean it doesn't mean that we are -- we lost the entire thing. It is -- we still have it, but of course, with the competition, prices are going to suffer.

This is a very tough product to make, and that's why -- and expensive to make. So it's not an easy product. But the margins are very, very healthy. Of course, if you are going to lose some of that margin, you have to replace it maybe with more volume or less margin. That's exactly what we have been done.

This is why you see -- and this is why it's such a great indication when you see our revenue had gone up. It shows that we can replace, by volume, we can replace the higher margins with medium margins but more volume just to replace what we had lost. Calcitonin, I would say the same exact thing.

But I think the product mix that we refer to is not the loss of those -- the margins of those products. It's the fact that we have other geographies with lower margins growing faster than the ones with higher margins. You saw that MENA and Europe had grown at a much higher pace than the U.S., at a lower margin than the U.S., so -- and what we anticipated. So [indiscernible] and Xellia, of course, where we're adding a significant revenue with healthy margins, but with less margins than our organic products.

So with that, the combination of that, that really had a little bit of pressure. Not much, but we offset a lot of it. But still we're discounting a very small number related to that.

And finally, for the vancomycin. We did get approval for the vancomycin for removing the box. And the new products without the box is called TYZAVAN now. It's going to be a branded product, patented, unique to the market. And that will be replacing our product that we used to call [ Vancoready ], which used to have the black box. So we are in the transition doing so. We are expected to launch TYZAVAN in -- towards the end of the year. And as you know, it's a branded product, so it needs to be detailed. But we are very optimistic that this product, as soon as we get the momentum going, it will be a very, very big and interesting product for us.

But yes, there's no black box on TYZAVAN. It's safe to be used with everyone, including [indiscernible].

Our last question is from [ Siddharta Mowbray ] with Barclays.

Continuing with the last question, TYZAVAN was approved. But then like what I got from my call with IR, is there is still some inventory left for [ Vancoready ] and you would like to exhaust that inventory before you can launch TYZAVAN in a meaningful way. So I just wanted to know how much of that inventory is left and like would this spill over in the next year?

My second question is on the contribution of 503B compound and your CMO business into your $5 billion peak sales ambition in -- yes, I mean in the future here. How much of that would come from these 2 businesses? And what would be the impact on margins?

And third, if I may ask you like one last question. A lot of manufacturers, branded manufacturers, have been talking about DTC sales. Do you want to give any color, if such thing is implemented, what would be the impact on Hikma's generic business? Would it be a headwind or a tailwind to you?

Sorry, sir, please could you just repeat the third part of the question?

Yes. So the first question that I asked was about TYZAVAN. And I mean basically, what we are told is like there is still some inventory left for [ Vancoready ] and we would like to exhaust that inventory. So how much of that is left?

Just the third part.

Yes, the third question was about DTC sales. Like a lot of branded manufacturers have been talking about DTC sales in the U.S. What would be its impact on the generic business of Hikma and like do you see this as a headwind or a tailwind for yourself? Direct-to-patient sales is what I mean.

Well, I'll talk to you -- I'll talk to the TYZAVAN. TYZAVAN today is being manufactured by third party. So the flexibility of dealing with manufacturing, with the forecast and inventory and all that is not as flexible as if we make it ourselves. So as you know, if you have a third party making it for you, you have to give them the forecast ahead of time and you have to give them a committed forecast. This is number one.

The second thing is TYZAVAN and those bagged products, the label and exploration and all that is printed straight on the bag. So you have to not only be able to anticipate, but you have to commit to it with the label on it. So there's a lot of parts that you have to pay attention when we put orders in, when you -- how much risk you're going to have and how much [ dating ] are you willing to sacrifice because you're not going to make the product ahead of approvals and wait until the approval happens, which we do in some cases. But in this case, the expiration date is printed on the bag.

So if you do it before the approvals and wait, you might only get a few months left by the time you have approval. So the risk is big. And of course, this is not made by you, so the flexibility is not there.

And that's why the strategy is to get all the inventory done with [ Vancoready ] while we are making the change to TYZAVAN. This is going on as we speak. TYZAVAN is being manufactured today. And we are depleting all of our [ Vancoready ] before we have the TYZAVAN up. We don't want the customer to have 2 types of products. We want the product to go away and replaced by a better formulated product without a black box.

As far as our goal of the $5 billion in 5 years, I think we're very much compliant with that and we reiterate that and we think we can get that. It's not an impossible goal at all. As you see, our revenue is growing, our -- all our divisions are striving to get there. So we have no worry about that.

Now how much CMO would the $5 billion include? It would be a significant part of our business. I cannot tell you exactly how much. But I would say it would be a lot more than what we're doing today. I don't know if that is going to tell you much, but I really can't tell you an exact number because it depends on many things. Contract manufacturing is going to be coming. We have today contract manufacturing in our businesses, as you know, today. We are adding a significant contract manufacturing in Columbus that will be making this critical product for a branded company as we had announced before. That will add significantly to the revenue of contract manufacturing.

And from the Injectables point of view, as Bedford gets completed, we believe that a lot of contract manufacturers that we deal with today would want more volume that we are limited to give to today because of our limited capacity and our capacity is more working for us than the contract manufacturers. But we will be happy to add more volume to them once the Bedford facility is complete.

So with the Bedford facility and with the CMO in Columbus, we believe that a significant amount of contract manufacturing will be added to the business that we have today.

How much of the -- how much of the compounding business is going to be in the $5 billion? I hope -- I don't know, I hope a lot. Let's see. We are working very, very hard in this business because we see there's an opportunity there. This is not going to go away. This is a need that hospitals actually really, really need. They've been very hesitant to trust somebody. And whenever they trust someone, they get big warning letters and big compliance problems with the FDA. The biggest leader of compounding today has gotten 2 warning letters in 2 years in a row, and a lot of other ones that have closed some facilities and a hit with warning letters in others. We have been spared. We have been compliant and we have been doing that very slowly because we don't want to get into that position.

So I think we are now -- we built a great foundation to build a great business on. And I hope by 2030 this business will be significant and doing really well.

And the last thing is direct business. We love direct business. I think it's great if we can do it, and we are doing it. And we're trying to increase it. But there are a lot of difficulty. Today, our dependency on GPO and the business is about 50% in the Injectables. And the Branded is a lot more when we go through the PBMs.

Direct business is difficult because of the contracts that hospitals have with the GPOs and how the business really runs. So there's some compliance that hospitals need to have. So if you are a hospital that works with a GPO, you have some commitment to be in compliant to continue taking volumes from them, and they give you some credit to the volume that you take from them. So with that, it makes it very difficult for them to buy directly from you. They have to go to the wholesaler. They have to go through the GPO contracts.

So we like it, we like to increase it, but there are some difficulties in logistics of how to go about. We do have a significant one today, more than our peers in direct, and direct selling to our clients.

Yes. Lastly, I think I would say that the compounding business is direct, and it has to be direct. By law, you cannot go to a wholesaler. It has to be straight from your manufacturer to the customer. So as we grow this business also, direct sales also going to increase.

There are no questions from the line. I'll pass the conference back over to Riad Mishlawi for any further remarks.

Well, thank you very much and thanks for your questions. I think I just want to reiterate what I said in the beginning.

We have a better business today than we've had 3 months ago, or than we had last year or the year before. We have grown the business significantly. We have put the foundation to grow the business. But we know that this business is not a business that the reaction or the result happens immediately. It does take time.

Today we are investing in this business. And you can see how we are investing in this business. We're increasing our R&D spend. We had changed the organization and the people in the organization. We identified our needs. We identified that R&D is something that needs to be improved. And we did exactly that. We created, we brought leaders that understand R&D. And we are giving money to spend on R&D. We've created a portfolio selection committee that knows exactly what products to go after.

We enhanced our BD team, and now BD is going beyond what we know. We are going to China, we're going to India, we're going to Europe. We're going to all where the opportunities are to see if we can bring in technology and expedite the approvals or the portfolio that we have.

We have been increasing our infrastructure. We'll be spending around $200 million in capital expenditure every year. And that's for a good reason. You can see Bedford facility, now we'll have state-of-the-art facility in Ohio. We have Cherry Hill that we are adding more and more lines. It's extremely modern now with a lot of robotics there and making a lot of products. Same thing with Portugal, we're adding another plant in Portugal.

Our capacity is not only being built, but it's being utilized. In the Injectable, our capacity is being utilized at a very, very high level. In the Rx, our capacity is being utilized by us. And it will be also utilized a lot of it by the contract manufacturer.

So the money that we're spending on capital expenditure in both IT and automation, in capacity, in equipment, all that is going to benefit the future. It's benefiting us now, but we can see the future is definitely going to be benefited, especially with the indicators that we see today.

Our volumes today or our capacity today is at a very high level, especially in the Injectables. Our demand is there, you can see 12% increase top line. It shows you that the demand is there. So there's no worry about where that is going to be utilized. Our contract manufacturing demand is very, very strong. We have a lot of contract manufacturers coming to us, especially on how we are positioned. We have [indiscernible] contract -- client redundancy in the U.S. and in Europe. We have plants that are capable to do the same thing. So if you want to have a safe product, you make it in the U.S. and you make it in Europe, you're very -- you reduce your risk significantly with this redundancy.

So we have all what it takes for us to grow and we are growing and we are showing the growth. But again, you have to spend before you see results. We are spending and we are continuing to show good results. So it's not that we are spending and sacrificing the margins. On the contrary, we are spending and we're still bringing in higher revenue, higher margins and the top of the industry. I mean I look at a lot of our peers, we had head of our peers' results in the quarter. You look at other results. Still with the downgrade, the slight downgrade that we did in the Injectables, we're still on top of our -- on the top of the chart when it comes to margins and growth in revenues.

So we think we have a good business. We think the future of the business is fantastic. And whatever we're doing today, we'll be doing it better tomorrow. Thank you very much.

That concludes the Hikma interim results. Thank you for your participation. You may now disconnect your line.

Thank you, everyone, for joining our 2025 half year results presentation. I'm Riad Mishlawi, CEO of Hikma, and I am joined here by Khalid Nabilsi, our CFO.

Let me start by saying how pleased I am with the progress we've made in the first half of the year. We've delivered strong revenue growth and built solid momentum across the business. While operating profit was down against a strong comparator, demand remains robust across our portfolio, and we've successfully launched new products that are already contributing to our growth. We also made significant strides in strengthening our pipeline and enhancing our manufacturing capabilities. This is not just about today's performance, but about building for the future.

We've signed new strategic partnerships that will further expand our reach and capabilities, and we've done all this while maintaining healthy profitability, demonstrating the resilience and the agility of our business model. We are executing against our strategic priorities, and this is clearly paying off. We're well positioned for an excellent second half, and we remain firmly on track to meet our full year guidance.

I'll go into more details by business segment later in the presentation. But first, I'll hand over to Khalid, who will walk you through the financials.

Thank you, Riad, and hello, everyone. Reflecting on Hikma's 2025 performance so far, we delivered results in line with expectations for the first half. We grew revenue 6%, driven by robust volumes across all business segments and regions, with recent launches and the benefit of the now fully integrated Xellia acquisition all contributing to growth.

Group core operating profit declined by 7% in the first half of 2025 to $373 million due to a combination of regional and product mix, FX headwinds and the unusually strong H1 weighting of the Branded and Rx businesses in 2024. We maintain our expectation of overall growth in core operating profit for the full year. These impacts are reflected in our 5% year-on-year decline in core EBITDA and 5% year-on-year decline in core basic earnings per share for the first half of 2025. H1 2025 operating cash flow came at $161 million versus $198 million in the 2024 comparable period, partly due to the decline in operating profit, but primarily driven by the timing of tax payments.

Now taking a closer look at the segmental performance in the first half, starting with Injectables. We continue to see consistent and strong momentum on the top line with 12% core revenue growth year-on-year, benefiting from recent launches and the Xellia acquisition, which closed in September 2024. We are delivering strong growth in our European and MENA businesses with revenue growing at 26% and 16%, respectively. In Europe, we benefited from an expanding portfolio and market shortages dynamic, while MENA benefited from increasing demand in our existing portfolio. Core operating profit was down 7% and core operating margin was 30% compared with 36.3% in H1 2024. The decline was due to change in product and geographic mix as well as an increase in costs related to the appreciation of the euro. It is important to remember that even at 30%, these are industry-leading margins supported by the breadth of our portfolio, frequency of launches and our focus on efficiency, cost and quality.

We are pleased to see the products acquired in the Xellia acquisition contributing to revenue, albeit at a lower margin in the short term, while we complete our Bedford upgrades to bring the manufacturing of these products in-house. We remain excited for the full year Injectables performance as we expect new launches to provide a tailwind in the second half in addition to the natural H2 weighting of our higher-margin CMO operations.

Turning to Branded. The business continues to deliver throughout our markets in MENA with 4% growth on the top line and 3% operating profit growth, with H1 operating margin of around 30%. We saw a slight contraction in gross margin from 55% to 53%, reflecting the significant H1 weighting of higher-margin oncology tenders in H1 2024. Our strategy of focusing on high-value chronic medications continue to deliver nicely, aligning with the regional trends for increasing demand for these treatments. Overall, we remain the second largest pharmaceutical company in MENA by sales, up from fourth in 2021. We continue to pursue portfolio expansion within Branded, with 14 product launches and 36 regulatory filings in the first half of 2025.

Now looking at our Hikma Rx business, formerly known as Generics. Our strategy in this business is to operate more within the differentiated and complex prescription medication space, enabling us to achieve greater returns. We have seen a solid performance across the Hikma Rx portfolio in H1, with good growth from inhalation products and encouraging volumes across the business. Due to the usual competitive dynamics in this business, we saw expected levels of price erosion in the mid- to high single digits, which combined with 2024 H1 weighting, resulted in an 11% year-on-year contraction in gross profit flowing through to our core operating profit. We were successful in offsetting a meaningful increase in our R&D spend through cost reductions in other areas such as sales and marketing spend. We are excited by the continued development of the Hikma Rx portfolio, launching 3 new products and submitting 3 new regulatory filings in H1 2025. So overall, a solid segmental results across our various businesses in the first half of 2025 and encouraging momentum into the second half of the year.

We maintain a robust balance sheet with leverage ratio below 2x at 1.7x net debt to core EBITDA. This was up slightly versus 1.4x in December 2024, reflecting our lower EBITDA in H1 2025 and higher debt utilization to fund recent acquisitions. Our low net debt also reflects the healthy level of cash within the business. We continue to invest in upgrades and new capacity to increase our local production capabilities reflected in our $68 million in CapEx in the first half of 2025. As mentioned at the start, our operating cash flow came in at $161 million for the first half of 2025 versus $198 million in the first half of 2024. The delta is primarily due to the timing of tax payments, which represented a $60 million cash outflow in H1 2025 versus $36 million in H1 2024.

Finally, we are pleased to be reiterating our group level full year 2025 guidance with 4% to 6% of revenue growth and core operating profit in the range of $730 million to $770 million as we continue to execute on our strategy in the year defined by unpredictability. While we maintain our group level guidance, the segmental contributions change slightly. For Injectables, we continue to expect strong delivery on the top line, but we now expect a core operating margin between 32% to 33% adjusted from mid-30s. This is primarily due to the strengthening of the euro against the U.S. dollar as well as some inflationary pressure on shipping and other expenses.

In contrast, we expect FX to be a modest tailwind to our Branded business and now expect 6% to 7% revenue growth on both a constant currency and reported basis. Our core operating margin expectation for this segment remain close to 25%. Our Rx guidance is unchanged at flat on the top line year-on-year and around 16% core operating margin.

Thank you. I will now hand back over to Riad to provide a closer look at our business strategy execution.

Thank you, Khalid. As you've just heard, we delivered a solid first half with a good momentum heading into the second half. This performance reflects our continued investment across commercial, operational and R&D, the foundations of our long-term growth.

If we look at some of our achievements by business segment, starting with Injectables, which is our largest business. This business is at an exciting time of its development, with a range of new initiatives underway across geographies focused on expanding market share, enhancing local manufacturing capabilities and strengthening the pipeline. We've made strong progress in the first half, delivering all these priorities. In Europe, we are gaining market share supported by successful launch of new products and our ability to respond swiftly to the market shortages.

In MENA, where we are the leading supplier of injectable medicines, we are seeing strong demand across our oncology, biotechnology and anti-infectives portfolio. We also launched our first diagnostic product through our partnership with Guardant Health. In the U.S., we're laying the groundwork for future growth by building an integrated commercial team to support our upcoming specialty launches, ensuring we're ready to compete in high-value segments. We are also making strong headway in advancing our pipeline across the markets.

We received U.S. FDA approval for TYZAVAN and ustekinumab, important additions to our portfolio that reflect our ability to bring high-value products to market. These products will be supported by our specialty commercial team and are expected to launch later this year. Our Zagreb pipeline has expanded significantly, growing from 9 to 22 active projects. These span innovative and generic products as well as opportunities for EU expansion. While Injectables' operating profit was down in the first half, looking ahead to the second half, we expect to return to strong profit growth, supported by a pickup in CMO activity for Injectables and new product launches. Beyond 2025, the investments we are making today are set to drive strong revenue growth and profit growth over the medium term, while maintaining our industry-leading margins.

Turning to Branded. This business continues to build impressive momentum. We're delivering strong profitable growth, underpinned by our strategic investments in high-value treatments for chronic conditions. In the first half, we've broadened our portfolio in oncology, diabetes and multiple sclerosis, driven by meaningful engagement with key opinion leaders. This is enabling us to deliver greater value to both patients and health care providers across the region. We've reinforced our position in the epilepsy market through successful new launches, and we're proud to introduce the first generic version of a key breast cancer therapy in Algeria. We also initiated our first value-added medicine project, which is equivalent to the 505(b)(2) filing in the U.S., another important step in tailoring our portfolio to regional needs.

Our commitment to manufacturing excellence remains a priority. We're investing in expanding our capacity and capabilities, strengthening our role as a trusted local manufacturer of high-quality medicines, backed by global expertise. Notably, we have initiated the expansion plans for a new oncology facility in KSA. We're also progressing well with the in-house transfer of the Takeda portfolio, which will enhance our operational control and efficiency. I'm excited by the potential of this business. It's a stable, steadily growing operation with an excellent margin profile, and we're confident in its continued success.

Finally, our Rx division, formerly known as Generics. We continue to defend and grow our key value drivers, particularly in inhalations and nasals, where we have strong market positions. A key priority for this business has been to strengthen our pipeline, ensuring we have the capabilities and the partnerships in place to deliver consistent high-quality launches over the long term. I'm pleased to say that we're making excellent progress. We are increasingly leveraging synergies with our MENA R&D teams, including the co-development of solid oral formulation. We've also established new R&D capabilities in Zagreb, further broadening our pipeline.

And there's more to come. In the second half, we plan to file epinephrine nasal spray, an important addition to our nasal portfolio. We'll also kick off key projects to support our inhalation pipeline. Operationally, we are pushing forward with key initiatives. We've delivered on key milestones for our CMO business, reinforcing our reputation as a trusted partner. We also expanded our inhalation capacity, which is already translating into increased market share. Looking ahead, our broad and differentiated pipeline will drive future growth. This business is on a much stronger footing now. It is stable and steadily growing with an excellent margin profile.

Before we close, I want to take a step back and reflect on the bigger picture and remind you of our strategic journey. From inception through 2024, our focus has been clear, strengthening the fundamentals of our business. We've made significant progress during this phase: streamlining operations, reinforcing our core capabilities and building a strong foundation that positions us well for the future. Now in 2025 and 2026, we're entering a pivotal phase. We are significantly investing in our business. sowing the seeds for long-term success. These investments are deliberate and forward-looking, ensuring we are structurally set up to scale and lead in the years ahead.

From 2027 onwards, we expect to see the returns on these investments materialize. This is when growth will accelerate, powered by the groundwork we're laying today. The progress we've made in the first half across R&D, commercial and operations shows that we're delivering what we said we would. We know there is more work to do, but we're confident in our strategy, in our execution and in our ability to create long-term value. Thank you very much.