Hikma expands in Egypt with EPCI acquisition

Jordan's Hikma Pharmaceuticals has continued its strategy of growth by acquisition with a deal to buy Egyptian Company for Pharmaceuticals & Chemical Industries (EPCI) for around $22m.

Hikma has been present in Egypt since 2007 but said the addition of EPCI will boost its product portfolio and manufacturing capacity in the North African region, adding a portfolio of 35 products in 46 dosages and strengths, including three cephalosporin anti-infectives.

The acquisition also adds a cephalosporin production facility and an additional general formulation manufacturing plant in Egypt, said the company.

Egypt is one of the fastest-growing markets in the Middle East and North Africa (MENA) region, which is Hikma's primary area of operations, and is valued at around $2.3bn, according to IMS Health data. It grew almost 11 per cent in the 12 months to June 2012, outstripping more mature markets such as the US, Europe and Japan.

Analysts at Panmure Gordon said the deal was "consistent with management strategy" and would allow Hikma to boost what has been a "sub-scale" position in the Egyptian market, where it is currently ranked sixteenth.

The new product lines – which the investment bank estimates bring in around $5m-$6m a year at present – should see good growth as they are fed into Hikma's broader distribution network across the MENA region, which is currently valued at around $28bn and is forecast for robust growth in the next decade.

"We continue to find the markets in which Hikma operates very attractive," said the analysts in a research note yesterday.

"Clearly adverse geopolitical developments are still on-going [but] in our view, structural changes that result in broader distribution of wealth and higher standards of education in MENA should benefit the pharmaceutical market long term."

Egypt is in the midst of a financial crisis as a result of continuing political instability, with tensions between the incumbent government and liberal opposition rising and public protests discouraging tourists and investors alike.