Bashar Shomali, Group Treasurer of Hikma Pharmaceuticals, outlined the listed Jordanian generic drug manufacturer’s plans to consolidate its position in the Middle East North Africa region via M&A. Shomali, who heads up Hikma’s M&A operations and was interviewed by this news service at the company’s headquarters in Amman, Jordan, said that the firm’s USD 300-400m warchest meant it “has the capacity to take on any firm in the region”, aside from a few of the larger Egyptian-based firms, which he declined to name.
The leading Egyptian producers include Egyptian International Pharmaceutical Industries (EIPICO), Amoun Pharma, now owned by private equity firms Capital International Private Equity Fund and Citigroup Venture Capital, and South Egypt Drug Industries (SEDICO). Technopharma Egypt, a subsidiary of Pharco Corporation, is the second largest private share holding pharmaceutical company in Egypt.
Shomali specifically identified Syria, Morocco and Iraq as target markets. And while he emphasized that larger companies in Egypt were off limits as far as its current capital structure allowed, Hikma did have funding options at its disposal if such deals became real possibilities. One of the possible funding sources he referred to was the Abu Dhabi-based sovereign wealth fund Mubadala Development Company. The SWF’s name came up in the interview when Shomali was asked if Hikma had ever held talks with Mubadala, which he confirmed had happened about 18 months ago. However he said that the nothing concrete had come out of the talks, and emphasized that as a family-controlled company, Hikma was not a viable takeover target in the way that many western, listed companies were.
Last March Mubadala chief operating officer Waleed Ahmed Al Mokarrab Al Muhairi had told this news service that the fund was actively exploring whether to add the pharmaceutical industry as one of the main business focuses of the group. Industry bankers recently flagged Hikma as an ideal target for Mubadala as it is the largest pharmaceutical group based in the MENA region and that it could use the company as a vehicle for acquisitions. Jordanian government sources said the acquisition of Hikma to create an Arab-based multinational player would be welcomed but that the country would oppose the sale of the company to non-Arab pharmaceutical groups.
Hikma’s CEO Mazen Darwazah told this news service in February that while the company received constant takeover approaches its plan was to remain independent. Darwazah had also said that company would be comfortable with a USD 200-300m acquisition and that it did not need to raise any funding to do so. Acquisition targets need to be accretive and to have a synergy with existing therapeutic classes in territories where it is already present but also in new countries, he said, adding that it also made acquisitions to acquire technology.
Hikma has a market capitalization of GBP 1.3bn (USD 2.1bn).
Shomali said that the firm’s consolidation strategy included greenfield investments as well as M&A and that this depended on a number of factors, such as the licensing options available in the target country. He described the Iraqi market as a priority for its MENA consolidation strategy and was keen to learn about any drug-manufacturing targets available in that country.
“We are looking at a number of options [in Iraq] and will do something soon,” said Shomali, who expressed frustration at the limited options that had been made available to the company so far. He noted that the Iraqi market had been its most important one prior to 1991 and that its growth potential was significant. Shomali, who is regularly on the receiving end of investment banker’s pitches, said that he would be particularly impressed if any of them came to him with Iraqi target opportunities that they themselves had visited.
