Better health.
Within reach.
Every day.
Shaping a
healthier world
© Hikma Pharmaceuticals PLC
Annual Report 2024
Hikma puts better health within reach,
every day. By creating high-quality
products and making them accessible
to those who need them, we are helping
to shape a healthier world that enriches
all our communities.
Better health.
Within reach.
Every day.
Contents
1. Core results are presented to show the underlying performance of the Group, excluding the exceptional items and other adjustments set out in Note 6 of the Group consolidated
financial statements
2. Core basic earnings per share is reconciled to basic earnings per share in Note 14 of the Group consolidated financial statements
3. We have committed to reducing Scope 1 and Scope 2 greenhouse gas emissions (market-based) by 25% by 2030, using a 2020 baseline year. For reporting in this Annual Report,
we have used data from January to September of 2024 and conducted an uplifting exercise to estimate quantities for October to December 2024. More information on this methodology
can be found on our website
Delivering strategic
progress and strong
financial results
Driving top-line growth
double-digit Group core
revenue growth
Adding differentiation
to the portfolio through
acquisition and partnerships
Increasing scale
of our manufacturing through
automation and increased
capacity
Investing for the future
4.5% of Group core revenue
invested in R&D for continued
growth
Expanding our portfolio
132 products launched
Positive outlook
as we build on strong
momentum with a clear
strategy for growth
Revenue
$3,127m
+9% 2023: $2,875m
Core1 revenue
$3,156m
+10% 2023: $2,875m
Value of our donated
medicines
$4.1m
2023: $4.9m
Reduction in Scope 1 and 2
GHG emissions since 20203
15%
2023: 15%
Strategic report
What we do
2
Executive Chairman’s statement
4
CEO’s statement
6
Our strategy
8
Our business model
12
Investment case
14
Our progress
18
Our markets
20
Stakeholder engagement
24
Business and financial review
30
Group overview
31
Injectables
32
Branded
36
Generics
40
Group performance
42
Sustainability
44
Acting responsibly at Hikma
46
TCFD disclosure
62
Risk management
78
Going concern and longer-term viability
87
Non-financial and sustainability
information statement
90
Corporate governance report
Executive Chairman’s overview
94
Corporate governance at a glance
96
Board of Directors
98
Executive Committee
100
Corporate governance
101
Committee reports
105
Annual report on remuneration
125
Other statutory disclosures
140
Financial statements
Independent auditors’ report
148
Consolidated financial statements
156
Notes to the consolidated financial
statements
161
Company financial statements
207
Notes to the Company financial
statements
209
Shareholder information
Shareholder information
214
Employee enablement
score
69%
2020: 64%
Employee engagement
score
73%
2020: 73%
Operating profit
$612m
+67% 2023: $367m
Core operating profit
$719m
+2% 2023: $707m
Profit to shareholders
$359m
+89% 2023: $190m
Core profit to shareholders
$495m
+1% 2023: $492m
Basic earnings per share
162c
+88% 2023: 86c
Core basic earnings per share2
224c
0% 2023: 223c
Dividend per share
80c
+11% 2023: 72c
Non-financial
highlights
Financial highlights
Shaping a healthier world...
by developing our pipeline
in growing therapeutic areas
by leveraging our role as a
leading healthcare provider
in MENA
by focusing on quality
manufacturing
by expanding our patient reach
by investing for the future
Read more on page 10
Read more on page 16
Read more on page 22
Read more on page 34
Read more on page 38
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$3,156m
US
Germany
Croatia
Italy
Tunisia
Jordan
Egypt
Algeria
Morocco
Portugal
UK
KSA
4
3
1
2
4
3
1
1
1
1
1
2
3
5
3
1
2
1
A culture of progress and belonging
Our purpose
Our values
Better health.
Within reach.
Every day.
We are one Hikma, supporting each
other, driving onwards, growing our
business and pursuing our collective
promise – to put better health within
reach, every day. At the heart of this
are our three values: innovative,
caring and collaborative
Innovative
Caring
Collaborative
Segmental core revenue
$3,156m
Branded
$769m
2023: $714m
Generics
$1,037m
2023: $937m
Other
$26m
2023: $21m
Injectables
$1,324m
2023: $ 1,203
Injectables
We supply hospitals across our markets
with generic and specialty injectable
products, supported by our manufacturing
facilities in the US, Europe and MENA.
Branded
We supply branded generics and
in-licensed patented products from our
local manufacturing facilities to retail and
hospital customers across the MENA region.
Generics
We supply oral, respiratory and other
generic and specialty products to the
North American retail market, leveraging
our state-of-the-art manufacturing facility
in Columbus, Ohio.
Read more on page 32
Read more on page 36
Read more on page 40
Our business segments
Our markets
North America
Our large manufacturing facilities in
the United States (US) supply generic
and specialty products to the US and
Canadian markets across a broad range
of therapeutic areas, including respiratory,
oncology and pain management. We also
have two R&D facilities to support
sustainable growth.
MENA
We sell branded generics and in-licensed
patented products across the Middle East
and North Africa (MENA). We have
manufacturing facilities in six MENA
countries, including US FDA-inspected
plants in Jordan and Saudi Arabia, all
supported by local R&D centres. Around
2,000 sales representatives and support
staff market our brands to healthcare
professionals across 17 markets.
Europe and rest of the world
Our injectable manufacturing facilities in
Portugal, Italy and Germany have a range
of capabilities, including dedicated capacity
for oncology and cephalosporins. These
facilities supply injectable products to
North America, MENA and a growing
number of markets in Europe. We also
have R&D centres in Portugal and Croatia.
We bring patients across North America,
MENA and Europe a broad range of generic,
specialty and branded pharmaceutical products.
c.2,350
Employees
61.5%
Group core revenue
c.5,800
Employees
31.2%
Group core revenue
c.1,350
Employees
7.3%
Group core revenue
Global reach
9,500
Employees
29
Manufacturing plants
9
R&D centres
800+
Products
What we do
Manufacturing plants
R&D centres
Corporate HQ
2
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Looking ahead
While I regularly reflect on how far Hikma
has come, and the importance we place
on providing access to healthcare in our
markets, I am most excited about what
more we can do. The leadership team
are ambitious, with varied and
complementary strengths, giving me great
confidence in Hikma’s ability to continue
to grow for many years to come. With our
pipeline, the investment into our
manufacturing plants, our strong
relationships with customers and suppliers,
and our solid financial footing, we are
perfectly placed to grow and support
patients across our markets.
Said Darwazah
Executive Chairman
Executive Chairman’s statement
Everything we do is driven by the needs of our patients.
I am grateful to all our people who have spent another
year working hard to ensure we continue to put better
health within reach, every day.
Helping shape a healthier world
Hikma was founded, and continues to
operate, as a purpose-driven organisation.
We started out over 45 years ago bringing
high-quality, essential medicines to markets
in the Middle East and North Africa (MENA).
We have evolved into a global healthcare
company, playing a critical role serving
patients across North America, Europe
and MENA.
In 2024 we have continued to deliver
on our mission to help shape a healthier
world, and our leadership teams are
advancing this agenda across our markets.
We have been launching new products,
signing partnerships, investing more into
research and development, building new
manufacturing plants, and deploying capital
through acquisition to ensure we are well
placed for continued growth.
Serving our stakeholders
We have a wide range of stakeholders and
you can read about how we engage and
address their needs on page 24 of this Annual
Report. Our shareholders are our owners,
and we regularly engage with our investor
base, take time to listen to them and ensure
they understand both our financial
performance and our strategic direction.
Our CEO, Riad, will discuss strategy more
in the following pages.
Our customers include hospitals,
pharmacists, buying groups, and of course
patients. Of critical importance to this group
is quality and reliability of products, and this
reflects our own priorities. Quality is
integrated into all that we do – we are
regularly inspected by the US FDA and other
local authorities and we value the input we
get through these interactions. You can read
more about our quality focus on page 60
of this report.
Another stakeholder group critical to our
success is our people. Our people are Hikma,
and they bring us a huge amount of expertise
as well as ideas on what more we can do to
deliver our purpose. We are focused on how
we can retain and recruit the best talent.
When I visit our sites around the world, I
always value the time I spend talking with
people in our operational facilities and
offices. We have an impressive team, and this
gives me confidence that Hikma’s future
remains bright.
Governance
In 2024, we continued to ensure that
the whole Board is engaging closely with
the business and contributing their expert
and independent viewpoints to the running
of Hikma. As well as our regular meetings
in London, we took the opportunity to
meet at our facility in Casablanca, Morocco.
These off-site Board meetings are a fantastic
opportunity for our Directors to see more of
Hikma and meet with the people who are
critical to our success. You can read more
about the Board’s activities and the
Casablanca trip in the Corporate governance
section on pages 103 of this report.
I have confidence in
our strategy and the
leadership team in
place to deliver on it,
and drive future
growth.”
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5
CEO Statement
I am pleased with the excellent financial performance
we have delivered during my first full year as CEO,
ahead of initial expectations, and I am more confident
than ever that we have the right strategy in place to
deliver growth for many years to come.
Reflecting on my first full year as CEO of
Hikma, I am proud of the significant strides
forward we have made in 2024. This year
has been marked by a robust financial
performance, strategic deployment of
capital, the strengthening of our leadership
team, and a renewed focus on innovation
and sustainability.
I have been working closely with both our
Executive Committee and the Leadership
Council, in executing our broader strategy.
We are ensuring the Group is differentiated
and positioned for sustained growth and
innovation.
Strong financial performance
I am delighted with the outcome of our hard
work in 2024. Group core revenue grew 10%
(reported growth of 9%), ahead of the
expectations we set out last February, and
upgraded in August.
In a year where we had a significant, one-off,
profit headwind in our Generics business,
I was also pleased with the slight growth in
Group core operating profit, again ahead
of our upgraded expectations.
Injectables
We had another successful year in
Injectables. We delivered an impressive
top-line performance, with strong revenue
growth in each of our three geographies and
core operating profit growth for the division
of 5%.
During the year we were successful in
acquiring the US finished dosage form
business of Xellia Pharmaceuticals. This
acquisition will diversify and enrich our
injectables portfolio and pipeline, expand our
manufacturing capacity, bringing complex
manufacturing technologies, and support the
long-term growth of the Injectables business.
We continued to broaden and diversify our
portfolio, with 89 new launches across the
business. On top of this, we added products
through the Xellia acquisition, which also
enhanced our pipeline. With our new R&D
centre in Zagreb complementing our existing
footprint, we are well positioned to develop
more complex products over the medium
term. We are also enhancing our
differentiation through partnership, one
example in 2024 being the launch of our first
GLP-1 product in December, liraglutide.
Our MENA Injectables business remains
a solid contributor to growth, with both
biosimilars and our own portfolio of
medicines contributing to the strong
performance. In Europe, double-digit sales
of our own medicines underpinned growth in
our key markets. We also continue to pursue
CMO opportunities where we see value for
both us and our strategic partners.
Branded
I am hugely proud of the progress our
Branded business has made in recent years.
In 2024, we grew core revenue 8% and core
operating profit an impressive 11% with core
operating margin expanding to 24.6%. This
business has seen a step change in margin
over the past two years, driven by product
mix as we increasingly focus on higher value
medicines. Our focus on therapeutic areas
such as cardiovascular, diabetes, and
oncology is allowing us not only to address
critical healthcare challenges effectively,
but also to provide a consistent and more
profitable revenue stream.
The performance is strong across our
markets and I am excited by the plans of our
leadership teams on the ground to keep
delivering growth. During the year we hosted
both our Board and several of our investors
during two visits to our site in Casablanca,
Morocco. These showcased the strength of
our facilities and the ambitions we have to
become the leading healthcare company in
MENA. Both groups came away more
knowledgeable on our strengths in the
region and excited for the future potential.
Generics
Our Generics business is on a very firm
footing. We generated over $1 billion in
revenue for the first time, with margins in line
with our expectations. We are delivering
growth in our more complex products, such
as our generic Advair Diskus® dry powder
inhaler, we increased our market share in
sodium oxybate, and our leading nasal spray
franchise performed well in 2024. Operating
profit was lower than the exceptionally strong
result we delivered in 2023 due to the
expected increase in royalties payable on our
authorised generic of sodium oxybate.
We have strengthened our teams across this
business, including the appointment of
Hafrun Fridriksdottir, our new President of
Generics, and a new head of Generics R&D
with significant respiratory experience. With
their expertise, we are sharpening our focus
on R&D to ensure we are investing in the right
products and executing projects effectively.
We are also working to maintain and enhance
our manufacturing strength. Importantly, we
are delivering our strategy to grow our CMO
offering. We signed a new contract in 2024
which we expect to start contributing
meaningfully in 2027. This will help support
medium-term revenue growth and
profitability for Generics.
We have also focused on maximising the
potential of our specialty products and
post-year end, signed a partnership
agreement with Emergent BioSolutions to
market our Kloxxado® naloxone nasal spray.
Our clearly defined strategy
I set out our refreshed strategy in this letter
last year, and I am pleased with the progress
we are making against our key priorities and
how we are putting our plans into action.
Firstly, we are always striving for excellence,
by enhancing and leveraging the foundation
we have. This year, we have continued to
evolve the technologies in our plants and
our portfolio has grown, both organically and
through acquisition. We now have over 800
products in our portfolio globally and our
capacity to produce these products
continues to expand.
Secondly, we diversify and differentiate.
We had 132 launches across the business in
2024, and added to our R&D capabilities
through the Xellia acquisition, which brings the
new R&D centre in Zagreb with a track record
of developing complex products. Across the
Group, we are focused on pipeline execution.
We have strengthened our teams in all three
businesses and have been working on
improving R&D efficiency. We have made great
progress against this strategic pillar, ensuring
we have a healthy pipeline for growth.
Thirdly, we invest in our people and operate
sustainably. This year, I have travelled to
many of our locations around the world,
and spoken with hundreds of our people
and I continue to be humbled by their
commitment, diligence and experience.
We have been working to enhance career
development and progression and will launch
a new grading structure in 2025 with clearer
career levels and detail on the skills needed
for advancement. You can read more about
how we empower our people in our case
study on page 26 of this report.
We also appointed a new VP, Sustainability in
2024, a senior position focused on advancing
our sustainability strategy, and we have been
spending time this year conducting a double
materiality assessment, as we work to
understand better our most material
sustainability areas.
Well placed for future growth
Hikma is a growth company – we are
investing across our markets, building out our
infrastructure, launching new products and
deploying our healthy balance sheet on
value-enhancing acquisitions.
I am excited for 2025 and beyond. With the
incredible, diligent team we have in place, I
am extremely confident in our ability to grow,
and continue to help shape a healthier world.
Injectables
42% ($1,324m)
Branded
24% ($769m)
Generics
33% ($1,037m)
Other
1%
($26m)
Total
$3,156m
Injectables
56%
Branded
23%
Generics
21%
1. Core operating profit is $719 million. Before
unallocated corporate costs of $99 million and
operating loss from Other business of $9 million,
core operating profit contribution from business
segments is $827 million
Core revenue – 2024
Core operating profit – 20241
We have exciting
strategic momentum and
are very well positioned
for 2025 and beyond.”
Find out more about
our Strategy on page 8
Find out more about
our KPIs on page 18
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Our strategy
We aim to deliver consistent and profitable growth by
building a leading generics and specialty pharmaceutical
company, putting better health within reach, every day.
Our purpose-led strategy
Diversify and
differentiate
People and
responsibility
Strive for
excellence
Our strategic pillars
Our approach
KPIs
Develop
Expand
Empower
Act
Enhance
Leverage
a more differentiated pipeline
into adjacent businesses and geographies
our people and cultivate a unified culture
responsibly across our local markets and
communities
operational efficiencies and embrace new
technologies, maintaining our high quality levels
our broad portfolio and strong commercial
capabilities
– Percentage of revenue from
new business over 3 years
– Employee engagement and
enablement
– Reduction in Scope 1
and 2 emissions
– Core revenue
– Core operating profit
– Return on average invested
capital
Find out more about our KPIs on page 18
Find out more about our risks on page 80
Find out more about our strategic progress
on page 31
8
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Shaping a
healthier world...
…by developing our pipeline
in growing therapeutic areas
We are increasingly leveraging our active
pharmaceutical ingredient (API) manufacturing
facility in Jordan to introduce vertically integrated
products for all our businesses, particularly for our
MENA portfolio.
In MENA we are seeing the impact of a rapidly
growing population, increasing prevalence of
cancer and chronic diseases, and disparities in
healthcare access. As a result, we have enhanced
our focus on R&D and are investing in higher-value
medicines, focusing on those used to treat chronic
illnesses. We are introducing first-to-market and
first-generic products and are investing in sales
and marketing to support these efforts – 75% of
our top 20 pipeline projects over the next five years
are planned as first to market or first generic
opportunities. We also work with global innovators
to bring treatments and wider healthcare solutions,
including Guardant Health for cancer diagnostics,
Rakuten Medical for cancer treatments and Junshi
Biosciences for an anti-PD-1 monoclonal antibody.
We aim to have a portfolio and pipeline that is tailored
to the needs of our markets, with an increasing number
of complex products with high barriers to entry.
The portfolio and pipeline for our Injectables
business addresses a wide range of therapeutic
areas, and a large portion of our pipeline is focused
on drug delivery methods or dosages that will
improve processes in hospitals, such as products
delivered in ready-to-use formats. This is further
strengthened through the Xellia acquisition. Today,
around 30% of our Injectables pipeline products
are classified as differentiated or complex.
Our Generics pipeline is addressing the market
need for more complex generic products. We are a
leader in nasal sprays and have strong respiratory
capabilities. We will leverage this expertise as we
develop the next-generation generics in these and
other areas. We continue to enhance our pipeline
and building differentiation, including increasing the
number of 505(b)(2) and other complex filings.
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Generics
Branded
Injectables
Our business model
Our diversified business model allows us to
respond to the many opportunities and threats
we face, while delivering for our stakeholders.
Offer a broad product portfolio
We offer a broad and differentiated
portfolio of more than 800 products.
It includes high-quality generic and
branded generic medicines, and
a growing number of in‑licensed,
specialty and compounded products.
Develop and innovate
We are developing a more differentiated
pipeline to meet the evolving needs of
patients and healthcare professionals
through investments in R&D, partnerships
and strategic acquisitions.
Manufacture and maintain quality
Our extensive and high-quality
manufacturing capabilities are at the heart
of what we do. We have 29 plants across the
Group that supply our global markets with a
broad range of injectable, oral, respiratory and
other generic and specialty products, including
13 US FDA-inspected plants and 12 EMA-
inspected plants.
Market across geographies
We distribute our products through
experienced sales and marketing teams.
In the MENA region, around 2,000
representatives and support staff market
our brands to doctors and pharmacists,
while our sales teams in North America
and Europe sell to wholesalers, pharmacy
chains, governments and hospital
purchasing organisations.
Better health within reach every day
Our resources
Our business segments
What we do
Financial
Investment in R&D, manufacturing
facilities, partnerships and M&A
collectively enable us to expand
our product portfolio, technical
capabilities and operations.
People
We have a highly skilled, diverse
and effective workforce. Through
continuous investment in the
development of our people and
by hiring new talent, we secure
our future.
Relationships
Strong relationships with
regulators, customers and health
authorities across all our markets,
and successful collaborations
with industry partners, enable
us to deliver on our purpose.
Values
Our culture of progress
and belonging is backed
by our values – innovative,
collaborative and caring.
Capabilities
We have extensive commercial,
R&D, manufacturing and distribution
capabilities across our markets,
focused on quality and efficiency.
Sustainable business
We act responsibly, advancing
health and wellbeing,
empowering our people,
protecting the environment
and building trust through
quality in everything we do.
Return on average
invested capital
We have a strong track record
of generating high returns on our
investments.
Empowering our people
By focusing on the
development of our people,
we provide long and rewarding
careers for our talented and
diverse workforce.
Patient benefits
We provide patients across
our markets with high-quality
medicines.
15%
Reduction in Scope 1 and
2 since base year 2020
16.9%
Return on average
invested capital in 2024
800+
Products
73%
Employee
engagement
score
69%
Employee
enablement
score
The value we create
Find out more about our KPIs on page 18
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Our
purpose-led
strategy
Diversify and
differentiate
Strive for
excellence
People and
responsibility
A strong business model with significant opportunities
to further enhance our portfolio, drive growth and
deliver value for shareholders.
A solid platform with a
unique business model
A clear strategy for growth
Increasingly diverse
portfolio and pipeline
Proven track record and
strong financial position
Our presence and positioning
Strategic execution driven by our three pillars
Trust, quality and agility
– A broad portfolio that is tailored to local market needs
– Targeting increase in R&D spend to 6–7% of Group revenue
to ensure the consistent development of new products
– Growing presence in specialty, complex and higher-value
products, which offer less competition and higher margins
– Strong momentum in new product launches across
our markets
132
launches in 2024
300+
products in our pipeline
Broad portfolio and growing investment in R&D
Innovation through partnerships and acquisitions
– Enhancing our pipeline by adding innovative products
through value-creating partnerships
– Adding to the strength of our base business through
strategic acquisitions
1.4x
net debt/core EBITDA3
26.1%
Core EBITDA3 margin
16.9%
Return on average invested
capital4
+7%
5-year revenue CAGR
+7%
5-year core EBIT CAGR
Delivering growth and high returns
– Strong cash generation with $564 million operating
cash flow in 2024
– A strong balance sheet that provides financial flexibility
to support future growth. See page 35 for our most recent
acquisition
Our balance sheet strength
Investment case
Leading market positions
– 7th largest in the US1
– 2nd largest in MENA2
Expanding manufacturing footprint
29 plants across our markets, with additional
facilities being established
Global player with local expertise
We are a trusted partner known for our
commitment to quality and reliability
of supply
We work closely with governments
and regulators to ensure highest
quality standards
Agile supply chain, flexible manufacturing
and leading technical capabilities
Enhance
operational efficiencies and embrace new
technologies, maintaining our high quality levels
Leverage
our broad portfolio and strong commercial
capabilities
Develop
a more differentiated pipeline
Expand
into adjacent businesses and geographies
Empower our people and cultivate a unified culture
Act
responsibly across our local markets
and communities
1. IQVIA MAT November 2024, includes all generic injectable and generic non-injectable products, by sales
2. Based on internal analysis by using data from the following source: IQVIA MIDAS® Monthly Value Sales data for Algeria, Egypt, Jordan, Kuwait, Lebanon, Morocco, Saudi Arabia, Tunisia
and UAE, for the period: calendar year 2024, reflecting estimates of real-world activity. Copyright IQVIA. All rights reserved
3. Core results are presented to show the underlying performance of the Group, excluding the exceptional items and other adjustments set out in Note 6 of the Group consolidated financial
statements. Core results are a non-IFRS measure. See page 43 for a reconciliation to reported IFRS results
4. See reconciliation on page 43
See page 8 for more information
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…by focusing on quality manufacturing
Shaping a
healthier world...
This manufacturing strength is complemented by
Hikma’s centralised engineering team and modular
approach to new site construction, both of which
play a pivotal role in maintaining operational
excellence. The engineering team is responsible for
streamlining processes, implementing innovative
solutions, and ensuring that all manufacturing
operations run smoothly and efficiently.
Their expertise and coordinated efforts enable
Hikma to consistently meet market demands and
regulatory requirements, reinforcing the Group’s
reputation for reliability and excellence in the
pharmaceutical industry.
For example our new Injectables sites, which are
near completion, in Algeria and Morocco are built to
one modular design, based on our site in Portugal,
with the projects overseen centrally.
Manufacturing strength is one of our greatest assets
and a key differentiator for us. We have 29 plants and
continuously invest in expanding and enhancing our
capabilities, strengthening our position as a local
supplier with global expertise.
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Hikma Pharmaceuticals PLC | Annual Report 2024
Our progress
We are delivering on our strategy and measuring
our performance with key performance indicators (KPIs).
Strategic priority
Strive for excellence
Diversify and differentiate
People and sustainability
KPI
Core1 revenue
($m)
Core1 operating profit
($m)
Return on average
invested capital2
(%)
New business
(%)
Employee engagement
(%)
Scope 1 and 2 (market-based)
emissions reduction (%)
$3,156m
$719m
16.9%
Percentage of revenue from new
business over three year periods
Period
Target
1 January 2023 to 31 December 2025
16%
1 January 2024 to 31 December 2026
15%
1 January 2025 to 31 December 2027
16%
73%
(2020: 73%)
15%
Reduction in Scope 1 and 2
since base year 2020
2,553
2,341
2,517
2,875
3,156
2020
2021
2022
2023
2024
566
632
596
707
719
2020
2021
2022
2023
2024
17.6
15.6
17.7
16.9
17.4
2020
2021
2022
2023
2024
Employee enablement
(%)
69%
(2020: 64%)
2020
20244
Total emissions
(tCO2e)
144,899
123,307
% reduction
from 2020
–
15%
We have committed to reducing Scope 1
and Scope 2 GHG emissions (market-based)
by 25% by 2030, using a 2020 baseline year.
Description
Total annual core revenue
generated across all businesses
Core operating profit
Core operating profit after tax
divided by average invested capital
(calculated as the average of the
opening and closing total equity
plus net debt3)
Percentage of core revenue from new
business measured over the period defined
in the table above. New business includes
products launched, new contracts and new
geographies
Global employee engagement
and enablement scores
Change in Scope 1 and 2 (market-based)
greenhouse gas emissions using a 2020
baseline
Why is it a KPI?
This measures our ability to
maximise value from our current
product portfolio across our global
markets and generate revenue from
new launches
This measures our ability to grow
revenue and maintain quality
while delivering efficiencies
and ensuring cost control
This measures our efficiency in
allocating capital to businesses
and projects
This will measure our ability to extract
value from our global product pipeline
and new business opportunities
Engagement measures people’s pride in
working for Hikma, their willingness to
recommend Hikma as an employer and
their desire to stay long term. Enablement
measures whether people find their work
fulfilling and rewarding and whether they
feel supported to achieve their full potential
We strive to minimise our environmental
impacts and are committed to making
our operations more energy efficient
2024
performance
Group core revenue grew double-
digit, reflecting strong growth
across all three businesses,
supported by contribution from
the Xellia acquisition and recent
launches
The increase was driven by strong
performance in Injectables and
Branded, which offset the
expected reduction in Generics
relating to higher royalties payable
on our authorised generic of
sodium oxybate
Continue to generate high levels
of return
This metric is measured on a cumulative
basis and we will start reporting on this in
2025. We made good progress against these
targets in 2024 – launched 132 products,
signed new contract manufacturing
agreements and continued to make
progress in new markets
We completed Hikma’s ‘People Voice
Survey’ in January 2024 and initiated an
action plan in response to employees’
feedback. Refer to ‘empowering our people’
case study on page 26 for more information
on the steps taken
While the Group grows, supported by
capacity expansion and higher levels
of production, we are maintaining our
emissions level through investments
in efficiency and renewables
Link to remuneration
R
R
R
1. Core results are presented to show the underlying performance of the Group, excluding the exceptional items and other adjustments set out in Note 6 in the Notes to the consolidated
financial statements
2. 2020 to 2023 ROIC numbers have been restated to reflect new methodology of calculation. See reconciliation on page 43
3. Group net debt is calculated as Group total debt less Group total cash. Group total debt excludes co-development agreements and contingent liabilities
4. For reporting in this Annual Report, we have used data from January to September of 2024 and conducted an uplifting exercise to estimate quantities for October to December 2024.
More information on this methodology can be found on our website
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Hikma Pharmaceuticals PLC | Annual Report 2024
Hikma Pharmaceuticals PLC | Annual Report 2024
Financial
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Corporate
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Strategic
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The US pharmaceutical market is expected to grow
between 2% to 5% annually over the next five
years.1 The US generics market is the largest in the
world – around 90% of prescriptions filled are for
generics and biosimilars, which account for only
13% of prescription drug spending.5 Losses of
exclusivity are expected to accelerate, paving the
way for more generic and biosimilar entrants. More
recently, the US market has seen significant growth
in therapies based on glucagon-like peptides (ie
GLP-1) primarily through wider usage for obesity.1
The US generics market remains competitive. There
has been a higher number of competitors and an
acceleration in the FDA’s generic drug approval
process over the last decade. In 2024, the FDA
approved approximately 808 Abbreviated New
Drug Applications (ANDAs), 68 (8%) of which were
first-time generic approvals.6
The European pharmaceutical market continues to
grow, driven by increased healthcare demand, an
ageing population, and higher generic medicines
uptake, particularly as governments look to
maintain more sustainable healthcare budgets.
67% of dispensed medicines in Europe are for
generics, which account for 29% of pharmaceutical
spending.8
Market consolidation and pricing dynamics are
creating shortages and increasing the risk of
reduced access to important medicines in the
region. According to Medicines for Europe, more
than two-thirds of generic medicines on the market
have only one or two suppliers.9
The MENA pharmaceutical market is expected to
grow around 5% annually over the next four years.10
This is underpinned by a fast growing and ageing
population. This in turn is driving an increase in
prevalence of chronic diseases across the region,
particularly cardiovascular, diabetes, cancer, and
respiratory diseases.11
At the same time, many countries are looking to
strengthen and develop their local pharmaceutical
markets by incentivising local production and
applying import restrictions. Some governments
are also shifting towards unifying procurement to
reduce cost and improve patient access.
The US is our largest market, and we are well placed
to capture growth opportunities. We are the
seventh largest generic company by sales
(injectable and non-injectable)7 and have four US
manufacturing plants supporting our broad
portfolio of products. We also recently added
significant scale to our US operations and
enhanced our US injectable manufacturing
capabilities and portfolio through the Xellia
acquisition, which will add a new manufacturing
facility once our upgrade project is complete.
To ensure continued growth, we consistently launch
new products and are increasingly focusing our
development activities on complex generic
products that require advanced manufacturing
technologies.
Our presence in the region is growing gradually.
We have an agile supply chain and strong local
footprint, with manufacturing facilities in Portugal,
Italy and Germany supplying injectable products to
our markets. In addition, we have a broad and
growing portfolio of products and we have recently
expanded our commercial reach by entering the UK
and Spain in 2024, following our 2022 entry into
France. We are well placed to supply hospitals and
their patients with the medicines they need and
thanks to the strength of our operations, we have
been able to respond to market shortages.
In addition, we will leverage our new R&D centre in
Zagreb, Croatia to develop new products for our
European markets.
We have a unique business in the region, leveraging
our global expertise to meet local market needs. We
are the second largest pharmaceutical company in
the region by sales12 and have a deep
understanding of the regional healthcare
landscape, including the ability to navigate the
complex regulatory environment, having operated
there for more than 45 years. The market offers a lot
of potential for growth, and we are well positioned
to capture this.
We are investing in enhancing our pipeline and
portfolio, focusing on launching more complex
and first-to-market products that are tailored to
local needs. We are also gaining market share in
key therapeutic areas, including in diabetes and
multiple sclerosis. In addition, we are investing in
enhancing our manufacturing capacity and
capabilities, strengthening our position as a local
manufacturer and supplier of high-quality
medicines with industry-leading global expertise.
1. IQVIA, Global Use of Medicines 2024, Outlook to 2028
2. United Nations available at https://bit.ly/42wOzqk
3. WHO available at https://bit.ly/3EqjFpB
4. IQVIA, Global Oncology Trends 2024, Outlook to 2028
5. AAM, AAM, The U.S. Generic & Biosimilar Medicines Savings Report, September 2024
6. FDA generic drugs program activities report, YTD November 2024 monthly performance,
includes approvals and tentative approvals, available at https://bit.ly/4jY70dP and
https://bit.ly/4hC8rx6
12. Based on internal analysis by using data from the following source: IQVIA MIDAS®
Monthly Value Sales data for Algeria, Egypt, Jordan, Kuwait, Lebanon, Morocco, Saudi
Arabia, Tunisia and UAE, for the period: calendar year 2024, reflecting estimates of
real-world activity. Copyright IQVIA. All rights reserved
7. IQVIA MAT November 2024. Includes all generic injectables and generic
non-injectable products
8. Medicines for Europe available at https://bit.ly/4gnyvKN
9. Medicines for Europe available at https://bit.ly/40ORJEG
10. Fitch updated data October 2024 (Market size values were extracted from
Fitch solutions)
11. Available at https://bit.ly/42txkq9
Key trends shaping the global
pharmaceutical market:
– Scientific advances and improved access to
healthcare are contributing to a rise in life
expectancy. The world’s population is expected to
increase by 2 billion people by 20502, with the
number of people aged 60 or over expected to
double to reach 2.1 billion3
– An ageing population and changing lifestyles are
contributing to an increase in the prevalence of
chronic illnesses, such as cardiovascular, cancer,
respiratory and diabetes. The incidence of cancer
is expected to increase rapidly, particularly in
lower-income countries, with an estimated increase
of over 12 million new cases annually through 20504
– Rising healthcare costs are increasing demand for
more affordable healthcare solutions
– Brand losses of exclusivity are expected to
accelerate over the next five years for small
molecules and biologics. This will create more
opportunities for generics and biosimilars to enter
the market than in the past five years, when patent
expirations were at historic lows1
The global pharmaceutical market is expected to reach
$2.3 trillion in 2028, growing at between 5% and 8% per
annum.1 Demographic trends and changing lifestyles are
leading to evolving healthcare needs. This, coupled with
macroeconomic dynamics, is driving increased demand
for more affordable healthcare globally.
Strategic response
Strategic response
Strategic response
61.5%
North America share of Group core 2024
revenue
7.3%
Europe share of Group 2024 core revenue
31.2%
MENA share of Group 2024 core revenue
2 billion
increase in world population by 20502
2x
people aged 60 or above expected
to double by 20503
Our markets
The US generics
market remains
the largest in the
world
Demand for
generics in
European markets
continues to
grow steadily
Attractive
healthcare
trends in MENA
provide potential
for growth
Find out more about our approach to
identify, analyse and evaluate strategic
and emerging risks on page 80
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Hikma Pharmaceuticals PLC | Annual Report 2024
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While the scope and reach of Hikma’s operations
have expanded, improving patients’ access to
health remains our central purpose nearly 50
years later. Today, we are a global company with
a local presence across North America, MENA
and Europe.
We continue to expand our reach and commercial
presence, particularly for our Injectables business
in Europe. We have an established presence in
Portugal, Italy and Germany, with manufacturing
plants in each of these markets. Over the last three
years, we entered France, the UK and Spain.
We have an agile supply chain, a growing product
portfolio and regional manufacturing capabilities,
enabling us to provide patients with more direct
and rapid access to important medicines. We are
already seeing the benefit this is having on the
patients we serve. For example, when we entered
into the Spanish market earlier this year, we were
able to immediately help hospitals with oncology
products that were in shortage.
As we grow as a business, we are able to enhance
the positive impact we have.
Shaping a
healthier world...
…by expanding our patient reach
across our markets
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Hikma Pharmaceuticals PLC | Annual Report 2024
Hikma Pharmaceuticals PLC | Annual Report 2024
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Corporate
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Strategic
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Read more about how we are addressing the needs of our
stakeholders by:
Developing our pipeline in growing therapeutic areas page 11
Focusing on quality manufacturing page 17
Expanding our patient reach across our markets page 23
Investing for the future page 35
Leveraging our role as a leading healthcare provider in MENA
page 39
Find out more about how the Board engages with
stakeholders on page 95
Stakeholder engagement
Our vision is of a healthier world that enriches all of our
communities. For more than 45 years, we have been
dedicated to transforming people’s lives by providing
the medicine and support that they need every day.
Healthcare professionals
and patients
Our purpose is to put better health within reach, every day for
healthcare professionals (HCPs) and their patients. We engage
with doctors, clinicians and pharmacists to better understand
their needs, helping them treat the patients they serve.
Why is it important to engage with this group and what do they
expect from us?
HCPs and patients need us to:
– consistently provide a broad portfolio of products
– improve access to high-quality, affordable medicines
It is essential that we align our commercial activities, operations
and R&D efforts to the changing needs of patients and HCPs.
How we engage across the Group
– Our commercial teams meet regularly with healthcare professionals
to better understand their needs and keep them informed about our
products
– In MENA, we run regular forums bringing together key opinion leaders,
HCPs and global research institutes to share knowledge and raise
awareness of healthcare trends and disease management
– We meet with patient advocacy groups for diseases such as
multiple sclerosis, cardiovascular disease and diabetes, as well as drug
overdose and addiction therapies
How we engage at Board level
– The Compliance, Responsibility and Ethics Committee is responsible
for direct oversight of the Group’s approach to ethical issues associated
with HCPs
– Our management teams present to the Board at least once per year,
providing updates on how we are addressing the needs of patients
and healthcare providers across our markets
Outcomes and actions
– Work with global innovators to bring treatments and wider healthcare
solutions to MENA, including Guardant Health for cancer diagnostics,
Rakuten Medical for cancer treatments and Junshi Biosciences for an
anti-PD-1 monoclonal antibody
– Hosted a Train the Trainer programme in Dubai with over 60
Gastrointestinal (GI) doctors and 12 international GI trainers, with
the aim of sharing expertise and updates on advanced procedures
– Through the consumer-focused platform, Hiyat Hilweh, we raise
awareness for patients on conditions and diseases most prevalent
in MENA, including hypertension and breast cancer
– Launched a generic GLP-1, liraglutide injection, in the US, helping
improve patient access to this class of medicines
– Expanded patient reach in Europe through entry into UK and Spain
Helped alleviate shortages of oncology products in Spain
– Acquired the rights from Takeda to 17 brands currently licensed to Hikma
for MENA. Hikma will continue to commercialise all brands and will, over
time, move the manufacture of these products in-house. This will help
ensure the continuity of supply of these important medicines, which are
widely used by patients across the region
Our purpose of putting better health within reach, every day,
guides everything we do now and into the future. Our teams work
diligently to stay connected to all of our stakeholders, considering
their interests and communicating with them on a regular basis.
This helps drive the long-term sustainable growth of our business.
It also helps us better understand their needs and informs our
day-to-day commercial and operational decisions, our long-term
investments in our business and our people, as well as our
sustainability framework.
Stakeholders and the Board
The Directors consider their duties to stakeholders at each
Board meeting, and in their capacity as members of the
respective Board committees, and are particularly aware of their
duty to promote the success of the Group for the benefit of all its
stakeholders. Over the next few pages, we set out how we engage
with our key stakeholders and build issues that are important to
them into our decision making, in accordance with section 172 of
the Companies Act 2006. Through case studies, we have outlined
how groups of stakeholders were taken into consideration in
Board decisions.
Our stakeholders
Patients and healthcare professionals
Employees
refer to Acting responsibly page 46
Customers
Communities and environment
refer to Acting responsibly page 46
Government and regulators
Suppliers
Investors
refer to Investment case page 14
Customers
Our customers are our business partners and we are
committed to providing them with a consistent and reliable
supply of high-quality medicines. We work closely with Group
Purchasing Organisations (GPOs), hospitals, retailers,
wholesalers and other customers to build strong relationships
and enhance service levels.
Why is it important to engage with this group and what do they
expect from us?
Customers need us to:
– offer a broad product portfolio
– have a consistent and reliable supply of medicines
– maintain service levels
Our commercial teams work closely with our different customers to
understand their needs, reduce drug shortages and ensure we invest in
the products, manufacturing capacity and capabilities needed to meet
their requirements.
How we engage across the Group
– We have commercial, sales and marketing teams dedicated to
our varied customer groups in North America, MENA, and Europe
– Our customer discussions inform our pipeline decisions, in an effort
to bring them the products most in need
How we engage at Board level
– Commercial leads present to the Board at least once a year providing
updates on our customer relationships and how we are meeting
customer needs
– As part of its strategic review process, the Board reviews
information on the generic pharmaceutical customer landscape
– The Board periodically receives industry updates from leading
external professional groups
Outcomes and actions
– Continued to build our portfolio to address specific growing healthcare
needs and therapeutic areas. In 2024 we had 132 new launches across
our markets
– Continued to work closely with our customers to understand their needs
and improve service levels. In addition, in line with our customer
requirements and the Drug Supply Chain Security Act, our sites are well
positioned to ship fully aggregated products
– In response to the need for more high-quality US manufacturing
capacity, we signed a significant new long-term contract manufacturing
agreement with a global pharmaceutical company, which will leverage
our capabilities in our Columbus, Ohio facility. Subject to FDA approvals,
expected to start contributing meaningfully in 2027
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Hikma Pharmaceuticals PLC | Annual Report 2024
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Employees
Our employees have always been at the heart of everything we
do. As the driving force behind Hikma’s growth and success,
our people are our most valuable asset.
Why is it important to engage with this group and what do they
expect from us?
Our employees need us to:
– support them and provide development and growth opportunities
– protect their health and safety
– foster a diverse and inclusive culture
The passion and commitment of our people to our values is key to
delivering our purpose and supports our growth plans. One of our key
strategic priorities is to build a culture that inspires and enables our
people, one in which they are empowered to drive innovation and are
committed to caring for customers, patients and communities around
the world.
How we engage across the Group
– We are committed to empowering our people by offering ongoing
training and diverse learning experiences that are accessible and
engaging. Our goal is to support career growth and lifelong learning
for all employees
– Our Group-wide principles for ensuring employee health and safety
are outlined in our Group Environmental, Health and Safety Policy
Statement, which is available on our website www.hikma.com.
We also have local policies and procedures in place
– We conduct employee surveys and use this feedback to improve
our performance and culture
– We have an active internal communications programme to keep
employees engaged and informed on Group strategy, progress,
culture, values and sustainability
How we engage at Board level
– Nina Henderson has Board-level responsibility for employee
engagement. She undertakes an active programme of engagement
each year and reports formally to the Board on her findings
– The Board receives regular reports on communications activities with
employees, including employee surveys and events or feedback that
are reported by the Chief Executive Officer
Outcomes and actions
– Developed an action plan that addresses employees’ concerns and
needs following feedback from our ‘People Voice Survey’. Refer to
‘empowering our people’ case study for details
– Ensured a smooth onboarding of our new employees as part of the Xellia
acquisition integration. Key members of senior management, Injectables,
R&D, investor relations and communications visited the newly acquired
Zagreb site and held townhalls to answer any questions
– We introduced a new Group policy that promotes diversity, reflecting our
commitment to provide an environment that supports growth, eliminates
barriers, and allows all our employees to thrive
Stakeholder engagement
continued
Employee engagement
Having a strong culture that empowers our people is a key pillar in
our strategy and essential to achieving long-term success. In
January 2024, we completed the ‘People Voice Survey’, which
provided our employees with the platform to anonymously
submit their feedback on various topics, including engagement,
enablement, employee development and wellbeing. This helps us
to understand what we are doing well and where we can improve.
Outcomes and long-term implications
The survey provided great insight. We initiated a Group action
plan in response to employees’ feedback, which focused on:
– enhancing career development and progression: we are
introducing a new grading structure, which offers clearer
career levels and details on the skills needed for advancement
within or across functions. This will be launched in 2025
– recognising employees and enhancing motivation: we
launched our Employee Recognition Programme, Hikma
Honours, which allows our people to recognise each other
across locations and departments, in line with our values. It is a
non-monetary programme that complements our local reward
programmes and helps connect our people across our global
footprint, while supporting a positive and inclusive work
environment
– improving wellbeing: we implemented several local and group
initiatives to enhance mental, social, physical, and financial
wellbeing. These initiatives include wellness days and
wellbeing benefits such as supporting employees who have
children with disabilities and improved access to gym facilities
In addition to the Group-wide action plan, each site developed
its own plan to address local needs, and managers also
developed a plan specific to their team.
The Board received the initial results of the survey in February
2024, and key areas for focus were identified for action. Updates
to the Board were scheduled throughout the year to monitor
progress and ensure implementation. Employees also received
an update during the year on the key actions agreed and what
had been implemented as a result.
1. Centers for Disease Control and Prevention available at: https://bit.ly/3u4aruA
Double materiality assessment
Objectives
In 2024, we conducted a comprehensive double materiality
assessment (DMA). This initiative was aligned with the European
Sustainability Reporting Standards (ESRS) requirements, which
are part of our Corporate Sustainability Reporting Directive
(CSRD) obligations.
Process and stakeholders engaged
To identify the ESG issues most material for Hikma, we engaged
a diverse group of internal and external stakeholders. This
engagement was conducted through a series of workshops
and interviews, either directly or indirectly via proxy.
We directly engaged with key internal stakeholders, including
members of the Board and the Executive Committee, and
subject matter experts for health and safety, water management,
human rights, anti-bribery and corruption, and communications.
Additionally, we engaged with external stakeholders such as
Civica Rx and the Access to Medicine Foundation. For other
critical stakeholders, including our customers, patients,
healthcare professionals (HCPs), communities, government and
regulatory bodies, suppliers, and investors, their perspectives
were gathered through proxy groups. These proxy groups refer
to internal teams that work closely with and regularly engage
these stakeholders, ensuring their insights and feedback were
accurately represented and integrated into our decision-making
processes.
After the interviews were finalised, key findings were analysed,
and a prioritised list of material topics was established that will
be used to update our sustainability framework in 2025.
Communities and
environment
Our vision is to create a healthier world that enriches all our
communities by developing high-quality medicines and making
them accessible to those who need them. We are a responsible
and sustainable company and have a duty of care towards our
communities and the environment.
Why is it important to engage with this group and what do they
expect from us?
Our communities value our efforts to:
– improve healthcare quality and access to medicines
– strengthen educational infrastructures
– support local communities and people in need
– minimise our impact on the environment
Since its inception, Hikma has been dedicated to transforming
people’s lives by providing the medicines they need and supporting the
communities where we live and work. Making positive contributions to the
communities where we operate, and providing assistance to those in need,
supports long-term, sustainable growth, while positively impacting society.
We also strive to minimise our environmental impacts and are committed
to making our operations more energy efficient.
How we engage across the Group
– We have developed collaborative partnerships and programmes to
promote positive change and address the needs of our communities.
These initiatives include increasing access to medicine, supporting
education and assisting refugees and low-income groups
– We work internally to progress our understanding of climate-related
risks and opportunities and are working to achieve our greenhouse gas
emissions reduction target
How we engage at Board level
– The Board, through the CREC, oversees our sustainability strategy and
monitors our progress against our ESG-related targets
– Our Executive Vice Chairman sits on our Access to Medicine Committee,
which is co-chaired by our Executive Vice President of Corporate
Development and M&A
– Our Executive Vice President of Strategic Planning and Global Affairs,
who reports directly into our CEO, oversees our sustainability team, with
our newly appointed VP of Sustainability responsible for implementation
of the Group sustainability strategy. More information on our
sustainability efforts can be found on pages 46 to 77 and on our
governance and management of ESG issues on page 48
Outcomes and actions
– Delivered $4.1 million in medicine donations in 2024 (value based on cost
of goods)
– Achieved a 15% reduction in Scope 1 and 2 GHG emissions since 2020
– Expanded our tertiary education scholarship programme, in partnership
with UNHCR, bringing the total to 80 students across Jordan, Algeria,
and Egypt
– Conducted a comprehensive double materiality assessment.
Refer to case study on page 27 for more details
– Prioritised water management in water-stressed locations.
Refer to page 59 for more information
Empowering our people
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Government and regulators
Our industry is highly regulated and we must operate
in accordance with a wide range of industry and government
policies and regulations, including those of the US Food and
Drug Administration (FDA), the European Medicines Agency
(EMA), MENA health authorities and other regulatory agencies
across our markets.
Why is it important to engage with this group and what do they
expect from us?
Our regulators expect us to:
– adhere to regulatory requirements
– maintain high-quality manufacturing facilities
– provide safe and effective medicines
Quality is in everything we do and has been since our inception.
We need to ensure that our quality systems operate in full compliance
with the requirements of international agencies as well as domestic
regulatory bodies.
How we engage across the Group
– We have strong internal pharmacovigilance, regulatory and quality
teams who ensure our quality systems operate in full compliance
with the regulatory requirements of the FDA, the EMA, MENA health
authorities and other regulatory agencies across our markets
– We work closely with local governments and regulatory bodies to ensure
current and proposed regulations and policies support patients’ needs
and our operations
How we engage at Board level
– The Board receives regular reports on relations with regulators,
particularly from a manufacturing quality and product approval
perspective, and receives an update on legal matters at each meeting
– The Board oversees the Group’s risk programme and receives reports
on relevant issues, which include specific principal risks covering
product quality and safety and legal, regulatory and intellectual property
Outcomes and actions
– Engaged in shaping US generic pharmaceutical policies and legislation
as a member of the Association of Accessible Medicines (AAM)
trade association
– Regularly engage with US elected officials and policymakers to help
educate key members of Congress and their staff about Hikma’s position
as one of the largest US generic medicine providers, our strong and
growing US manufacturing capabilities, our broad portfolio of essential
medicines and our ability to help solve domestic drug shortages. Our
goal is to develop and maintain supportive relationships with those who
are developing and enacting legislation that strengthens the US supply
of high-quality generic medicines, including those we produce
– Regularly meet with governing bodies and industry regulators in MENA
to understand the unmet healthcare needs in key markets and ensure
our product portfolio addresses them
– In 2024 we served as a silver sponsor at the ninth GCC Regulatory
Affairs Pharma Summit, held in Dubai. The event gathered key
stakeholders from health authorities across the GCC and MENA
regions, alongside representatives from both regional and international
pharmaceutical sectors, fostering insightful discussions on the evolving
regulatory landscape
Suppliers
We have an extensive global network of suppliers who provide
us with the goods and services needed for us to deliver our
medicines. We actively engage with our suppliers to ensure
the social, ethical and environmental standards we require
are upheld.
Why is it important to engage with this group and what do we expect
from them?
We want our suppliers to:
– uphold high ethical standards
– operate in a responsible and sustainable manner
– work collaboratively to build strong relationships
Our suppliers are critical to our business, and their products and expertise
support us in the delivery of high-quality medicines to patients around the
world. Working together and building strong relationships not only enables
us to deliver on our purpose but it also ensures we have a sustainable and
resilient supply chain.
Operating responsibly and ethically is vital to our long-term success,
and we work with our suppliers to ensure the social and ethical standards
we require are upheld.
How we engage across the Group
– We conduct quality audits, in line with our Group audit policy and
regulatory requirements, prior to on-boarding new API suppliers and
on a regular basis for our current supplier base
– We reinforce our local sourcing and procurement presence in our key
supplier markets to secure preferred access to capacity, innovation
and pricing
– We share our Supplier Code of Conduct through our supplier onboarding
process, which sets out the standards we expect from all our suppliers,
including fundamental principles on human rights, modern slavery and
our sustainability expectations
– We conduct initial and ongoing due diligence to assess third-party risks
and run sustainability assessments through EcoVadis and our Hikma
sustainability questionnaire, and regularly work with our suppliers to
improve their sustainability maturity levels
– We engage with our suppliers to understand their commitments and
efforts to reduce greenhouse gas (GHG) emissions as well as the future
impact on our emissions
How we engage at Board level
– The Board receives updates on supplier issues as part of its review
of operational matters
– The Board oversees the Group’s risk programme and receives reports
on relevant issues, which include specific principal risks covering API
and third-party risk management, and ethics and compliance
– The Compliance, Responsibility and Ethics Committee is responsible
for direct oversight of the Group’s approach to ethical issues associated
with suppliers
Outcomes and actions
– Through our partnership with EcoVadis and our sustainability
questionnaire, we have assessed suppliers who cover over 60%
of our annual procurement spend
– Actively engaged with key suppliers who generate (from the purchased
goods and services) just over 55% of our Scope 3 footprint
– Established a dedicated process to identify suppliers at risk of modern
slavery, following the creation of a specialised task force
– Enhanced the use of automation in the Supplier Code of Conduct
acknowledgment process, ensuring that our expectations are clearly
communicated and understood before commencing collaboration
Investors
We maintain regular contact with investors to ensure they
have a thorough understanding of our business. Our investors
are largely global institutions and include both equity and
debt holders.
Why is it important to engage with this group and what do they
expect from us?
Our investors want us to:
– deliver sustainable long-term value
– effectively communicate our long-term strategy, financial
and operational performance and growth drivers
– meet industry and global standards for good Environmental,
Social and Governance (ESG) practices
We ensure our investors have an in-depth understanding of our
operations, financial performance, growth drivers and ESG efforts.
The Board receives regular updates and feedback on these activities.
This helps ensure that the views of our investors are considered in the
Board’s decision-making.
How we engage across the Group
– We maintain regular contact with our shareholders through a
comprehensive investor relations (IR) programme of conferences,
roadshows, meetings and site visits
– We maintain regular dialogue with our debt holders and rating agencies
– We communicate our strategy and financial performance through
regular financial reporting and investor events, such as the Annual
General Meeting (AGM)
– A targeted external communications programme ensures we are
informing key audiences on our strategic progress and impact on
our communities
How we engage at Board level
– The Board receives regular updates on the IR programme,
including investor feedback from the AGM, IR meetings and
investor perception studies
– The Executive Directors are informed of investor engagement
activities on a regular basis
– The Non-Executive Directors make themselves available to meet with
investors as required in the conduct of their responsibilities (eg as Chair
of a committee) and are available to shareholders at the AGM to answer
related questions
Outcomes and actions
– Maintained regular contact with our analysts and investors
to give business updates. We met with 167 investors in 2024
– Hosted a site visit for sell-side analysts and investors at our
manufacturing facility in Casablanca, Morocco, which provided a deep
dive into our MENA business and the opportunity to meet with the
MENA leadership team
– Provided EC and Board members with third-party perception studies
to guage investor sentiment
– Engaged in a constructive dialogue with shareholders and proxy advisers
prior and following the AGM to explain the rationale behind the Rule 9
Waiver (Buyback Waiver) and address any concerns they may have
At Hikma, we are committed
to acting in the best interest
of all our stakeholders.”
Stakeholder engagement
continued
28
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Corporate
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Business and financial review
A strong 2024 performance, with growth in all
three businesses, and a positive 2025 outlook.
Thanks to our dedicated teams,
we were able to deliver another
year of growth. We continue to
make excellent strategic
progress and are in a good
position for the future.”
Khalid Nabilsi
Chief Financial Officer
Reported results (statutory)
2024
$ million
2023
$ million
Change
Constant
currency1
change
Revenue
3,127
2,875
9%
9%
Operating profit
612
367
67%
71%
Profit attributable
to shareholders
359
190
89%
98%
Cashflow from
operating activities
564
608
(7)%
–
Basic earnings per share
(cents)
162
86
88%
98%
Total dividend per share
(cents)
80
72
11%
–
Core results2 (underlying)
2024
$ million
2023
$ million
Change
Constant
currency1
change
Core revenue
3,156
2,875
10%
10%
Core operating profit
719
707
2%
4%
Core EBITDA2
824
810
2%
4%
Core profit attributable
to shareholders
495
492
1%
5%
Core basic earnings per share
(cents)
224
223
0%
4%
Strong financial performance
Double-digit Group core revenue growth,
ahead of expectations
– Group core revenue up 10%, including contribution from Xellia
acquisition (9% organic). Reported Group revenue up 9%
– Core revenue up in all three business segments – Injectables up
10%, Branded up 8% and Generics up 11%, supported by breadth of
portfolio and recent launches
– Growth in all regions, led by North America
Core Group operating profit up 2% to $719 million
at a margin of 22.8% (2023: 24.6%)
– Injectables core operating profit up 5% with margin of 35.3% (2023:
36.9%). Excluding Xellia, Injectables core operating margin was
35.7%. Branded core operating profit up 11% with margin of 24.6%
(2023: 23.8%)
– Generics core operating profit down 11% with margin of 16.4% (2023:
20.5%), reflecting the expected higher royalties for our authorised
generic of sodium oxybate
– Group reported operating profit up 67%, reflecting an impairment
reversal in our Generics business and lower operating profit in the
previous year resulting from the impairment of our Sudan business
and a legal settlement provision
Strong cashflow from operating activities of
$564 million (2023: $608 million)
– Good operating performance slightly offset by increased trade
receivables reflecting strong sales towards the end of the year
Robust balance sheet and high returns
– Leverage at 1.4x net debt3 to core EBITDA (31 December 2023: 1.2x)
– Return on average invested capital of 16.9%4
– Full-year dividend of 80 cents per share, up 11%, reflecting
confidence in our future prospects
Continued strategic progress
to drive future growth
Invested to further expand and diversify portfolio
– Acquired Xellia Pharmaceuticals’ US finished dosage form business,
further strengthening the Injectables business
– Agreed to acquire 17 Takeda brands licensed to Hikma, enhancing
future Branded profitability
– Strengthened R&D, manufacturing and commercial capabilities
Signed new agreements and partnerships
– Expanded our Generics contract manufacturing (CMO) business
with a significant agreement with a global pharmaceutical company.
Expected to start contributing meaningfully in 2027
– Entered into exclusive commercial partnership with Emergent
BioSolutions in January 2025 for Kloxxado® (naloxone HCl 8mg) in
the US to increase patient access to this lifesaving medicine
Strong pipeline supporting consistency
of new launches
– 132 new product launches across the business
– Launched liraglutide injection in the US, the first approved ANDA
for a generic GLP-1 referencing Victoza®, helping improve patient
access to this class of medications
Strong 2025 Group outlook
– Group revenue growth of 4% to 6%
– Group core operating profit in the range of $730 million to
$770 million, after an increase in investment in R&D of around
20% in 2025
Group
Group core revenue was up 10% reflecting strong growth across all
three businesses. Excluding the Xellia acquisition, Group core revenue
grew 9%, ahead of our guidance range of 6% to 8%. Group reported
revenue, which is stated after a $29 million provision relating to rebate
adjustments following a change in prior years estimates in the US,
was up 9%.
Group core gross profit grew 3% and core gross margin was 45.9%.
The expected reduction in Generics profitability relating to higher
royalties on our authorised generic of sodium oxybate was more than
offset by a strong performance across the broader Generics portfolio
as well as Injectables and Branded.
Group reported operating expenses were $803 million (2023:
$1,023 million). Group core operating expenses were $729 million
(2023: $700 million).
Reported selling, general and administrative (SG&A) expenses were
$671 million (2023: $767 million). This change reflects the provision
taken in 2023 related to a legal settlement. Core SG&A expenses were
$568 million (2023: $544 million), up 4%, reflecting higher employee
benefits, legal expenses and continued investment in sales and
marketing in the US.
Reported and core research and development (R&D) expenses were
$141 million (2023: $149 million), representing 4.5% of Group core
revenue (2023: 5.2%).
Reported other net operating income was $11 million (2023:
$75 million expense). This change primarily reflects the impairment
reversal related to our complex respiratory portfolio in 2024, as well as
the impact in 2023 relating to the impairment charge taken on our
Sudanese business. Core other net operating expenses were
$18 million (2023: $4 million), primarily comprising foreign exchange-
related costs in Egypt.
Group reported operating profit grew 67% and Group core operating
profit increased by 2%, with a core operating margin of 22.8%.
1. Constant currency numbers in 2024 represent reported 2024 numbers translated using
2023 exchange rates, excluding price increases in the business resulting from the
devaluation of currencies
2. Core results throughout the document are presented to show the underlying
performance of the Group, excluding exceptional items and other adjustments set out in
Note 6 of this report. Core results are a non-IFRS measure. see page 43 for a
reconciliation to reported IFRS results
3. Group net debt is calculated as Group total debt less Group total cash. Group net debt is
a non-IFRS measure that includes short and long-term financial debts (Notes 24 and 28),
lease liabilities (Note 17), net of cash and cash equivalents (Note 22) and restricted cash
(Note 19), if any. See page 43 for a reconciliation of Group net debt
4. Refer to page 43 for reconciliation
30
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Business and financial review
continued
We supply hospitals across our markets with generic
and specialty injectable products, supported by our
manufacturing facilities in the US, Europe and MENA.
Injectables
Injectables
2024
$ million
2023
$ million
Change
Constant
currency
change
Revenue
1,306
1,203
9%
9%
Core revenue
1,324
1,203
10%
10%
Gross profit
668
655
2%
2%
Gross margin
51.1%
54.4%
(3.3)pp
(3.3)pp
Core gross profit
690
657
5%
5%
Core gross margin
52.1%
54.6%
(2.5)pp
(2.6)pp
Operating profit
371
358
4%
4%
Operating margin
28.4%
29.8%
(1.4)pp
(1.3)pp
Core operating profit
468
444
5%
6%
Core operating margin
35.3%
36.9%
(1.6)pp
(1.4)pp
Injectables core revenue grew 10% in 2024,
benefiting from our broad portfolio across
the three geographies, contribution from the
Xellia acquisition and recent launches,
including liraglutide injection, our generic
GLP-1 product in the US. Excluding the Xellia
impact, organic core revenue growth was 8%,
at the top end of our guidance range.
Injectables reported revenue grew 9%, which
is stated after an $18 million provision relating
to rebate adjustments following a change in
prior years estimates in the US.
In North America we benefited from good
demand for our broad portfolio, recent
launches and growth in Canada, supported
by $24 million sales contribution from the
Xellia acquisition, which closed in September.
In Europe and rest of the world (ROW) we
delivered good growth across all our
established and recently entered markets.
Our own products grew 20%, driven by our
expanding portfolio and ability to address
market shortages. Our CMO business
performed in line with expectations,
accelerating in the second half.
In MENA we saw strong growth across most
of our markets, supported by new launches
and good demand across our broad portfolio.
Injectables core gross profit grew 5% and
core gross margin contracted due to
product mix, which includes the slightly
dilutive impact of the Xellia acquisition
and an increased contribution from
partnered products.
Injectables reported operating profit grew
4%. Injectables core operating profit grew 5%
and core operating margin was 35.3%. This
reflects the change in gross profit. Excluding
Xellia, Injectables core operating margin
was 35.7%.
During the year, the Injectables business had
20 launches in North America, 16 in MENA
and 53 in Europe and ROW. We submitted 137
filings to regulatory authorities across all
markets.
Outlook for 2025
In 2025, we expect Injectables revenue to
grow in the range of 7% to 9%. We expect
core operating margin to be in the mid-30s.
Core revenue
Core operating margin
2024
$1,324m
2023
$1,203m
2024
35.3%
2023
36.9%
Double-digit core revenue
growth supported by a
global growing portfolio.”
33
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32
Hikma Pharmaceuticals PLC | Annual Report 2024
Strategic
report
1
IQVIA MAT November 2024, generic injectables volume by
eaches, excluding branded generics and Becton Dickinson
Hikma has grown to become a top three US supplier
of generic injectable medicines.1
In June 2024, following discussions with
management, the Board approved the acquisition
of Xellia Pharmaceuticals’ US finished dosage form
business. This included a commercial portfolio and
pipeline of differentiated products, a manufacturing
facility in Bedford, Ohio, sales and marketing
capabilities, and an R&D centre in Zagreb, Croatia.
Once the Bedford facility is fully operational after
refurbishment, this acquisition will significantly
expand our US Injectables manufacturing capacity
and will add complex manufacturing technologies.
In addition, it helps enrich our portfolio and pipeline
as well as improves our ability to serve the growing
needs of hospitals, healthcare professionals,
and patients.
We have been steadily growing our global Injectables
business through a combination of strategic
acquisitions, expansion of manufacturing capabilities
and investment in R&D.
Shaping a
healthier world...
…by investing for the future
34
35
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Financial
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Corporate
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Strategic
report
Business and financial review
continued
We supply branded generics and in-licensed patented
products from our local manufacturing facilities to
retail and hospital customers across the MENA region.
Branded
Core revenue
Core operating margin
2024
$769m
2023
$714m
2024
24.6%
2023
23.8%
Branded
2024
$ million
2023
$ million
Change
Constant
currency
change
Revenue
769
714
8%
9%
Core revenue
769
714
8%
9%
Gross profit
402
351
15%
15%
Gross margin
52.3%
49.2%
3.1pp
2.6pp
Core gross profit
402
366
10%
10%
Core gross margin
52.3%
51.3%
1.0pp
0.5pp
Operating profit
182
95
92%
108%
Operating margin
23.7%
13.3%
10.4pp
12.1pp
Core operating profit
189
170
11%
20%
Core operating margin
24.6%
23.8%
0.8pp
2.4pp
Our Branded business performed very well in
2024, with good growth across most of our
markets. Revenue was up 8%, at the top of
our guidance range, as we benefited from a
growing and diversified portfolio of oncology
products and medicines used to treat
chronic illnesses.
Branded reported gross profit grew 15% and
core gross profit grew 10%, with core gross
margin improving by a percentage point. This
reflects an improving product mix driven by
our shift towards higher value medicines.
Branded reported operating profit increased
significantly, reflecting the impact of the
$69 million impairment charge and cost in
relation to halting our operations in Sudan in
2023. Core operating profit grew 11% and core
operating margin expanded to 24.6%. This
reflects the improvement in core gross profit,
which more than offset the negative foreign
exchange impact related to the currency
devaluation in Egypt.
During the year, the Branded business had 36
launches and submitted 59 filings to
regulatory authorities. Revenue from
in-licensed products represented 27% of
Branded revenue (2023: 29%).
Outlook for 2025
In 2025, we expect Branded revenue to grow
in the range of 6% to 7% in constant currency.
We expect core operating margin to be close
to 25%.
Strengthened product mix
is driving increasingly
profitable growth.”
37
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Corporate
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36
When Hikma was founded in 1978, its central purpose
was to fill a profound gap in access to high-quality
affordable medicines across the Middle East and
North Africa region. Over the years, our journey has
evolved into a story of expansive growth, all aimed
at improving patient access.
Today, Hikma is the second-largest
pharmaceutical company in MENA by sales.1
Our unique position in the region stems from
our deep understanding of local healthcare
landscapes, including the complex regulatory
environment, combined with our global expertise.
We have a commercial presence across 17 markets
and 20 manufacturing plants, enabling us to meet
the region’s healthcare needs.
We have a long-term view to operating across
our markets in MENA. This year, we celebrated our
30th anniversary of operating in the
Algerian market.
We entered in 1994 and have since built strong
relations with the local healthcare community and
have significant investments in building new
manufacturing capabilities. In 2006, we opened
our first manufacturing plant in the market,
followed by three others, including the first local
oral oncology manufacturing plant.
As we continue to enhance our leading position
in MENA, we remain focused on our duty and
responsibility to bring new treatments, access,
and innovative solutions into the region.
…by leveraging our role as a leading
healthcare provider in MENA
Shaping a
healthier world...
1
Based on internal analysis by using data from the following
source: IQVIA MIDAS® Monthly Value Sales data for Algeria,
Egypt, Jordan, Kuwait, Lebanon, Morocco, Saudi Arabia,
Tunisia and UAE, for the period: calendar year 2024,
reflecting estimates of real-world activity. Copyright IQVIA.
All rights reserved
Financial
statements
Corporate
governance
Hikma Pharmaceuticals PLC | Annual Report 2024
Hikma Pharmaceuticals PLC | Annual Report 2024
Strategic
report
39
38
Generics
2024
$ million
2023
$ million
Change
Revenue
1,026
937
9%
Core revenue
1,037
937
11%
Gross profit
346
387
(11)%
Gross margin
33.7%
41.3%
(7.6)pp
Core gross profit
357
387
(8)%
Core gross margin
34.4%
41.3%
(6.9)pp
Operating profit
167
147
14%
Operating margin
16.3%
15.7%
0.6pp
Core operating profit
170
192
(11)%
Core operating margin
16.4%
20.5%
(4.1)pp
Generics core revenue grew 11% in 2024,
ahead of our guidance, driven by good
demand across our differentiated portfolio,
particularly for our respiratory products.
Generics reported revenue grew 9%, which is
stated after an $11 million provision relating to
rebate adjustments following a change in
prior years estimates.
The decrease in Generics reported and core
gross profit and the lower core gross margin
of 34.4% was primarily due to the higher
royalties on our authorised generic of sodium
oxybate, when compared to last year. This
was partially offset by an improvement in
product mix across the base business.
Generics core operating profit decreased,
reflecting the reduction in gross profit, which
was partially offset by lower sales and
marketing costs. Reported operating profit
includes the impairment reversal related to
our complex respiratory portfolio.
In 2024, the Generics business launched
seven products and had a record number of
product submissions, with ten filings
submitted to regulatory authorities, as we
continue to work on further enhancing our
pipeline and building differentiation in our
product portfolio.
Outlook for 2025
In 2025, we expect Generics revenue to be
broadly flat. We expect core operating margin
to be around 16%.
Differentiated portfolio
and strong operations are
driving double-digit core
revenue growth.”
Business and financial review
continued
We supply oral, respiratory and other generic and specialty
products to the North American retail market, leveraging our
state-of‑the-art manufacturing facility in Columbus, Ohio.
Generics
Core revenue
Core operating margin
2024
$1,037m
2023
$937m
2024
16.4%
2023
20.5%
41
Hikma Pharmaceuticals PLC | Annual Report 2024
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40
Hikma Pharmaceuticals PLC | Annual Report 2024
Strategic
report
Business and financial review
continued
Other businesses
Other businesses, which includes our 503B compounding business,
as well as Arab Medical Containers (AMC), a manufacturer of plastic
specialised medicinal sterile containers, and International
Pharmaceuticals Research Centre (IPRC), which conducts bio-
equivalency studies, contributed revenue of $26 million in 2024 (2023:
$21 million) with an operating loss of $9 million (2023: $9 million loss).
We are making good progress in growing our compounding business
and continue to invest in building our manufacturing and commercial
compounding capabilities.
Research and development
Our investment in R&D of $141 million and our business development
activities enable us to continue expanding the Group’s product
portfolio. During 2024, we had 132 new launches and received 136
approvals. To ensure the continuous development of our product
pipeline, we submitted 206 regulatory filings.
2024 submissions1
2024 approvals1
2024 launches1
Injectables
137
86
89
North America
18
18
20
MENA
25
16
16
Europe & ROW
94
52
53
Branded
59
43
36
Generics
10
7
7
Total
206
136
132
Net finance expense
2024
$ million
2023
$ million
Change
Constant
currency
change
Finance income
8
7
14%
14%
Finance expense
167
95
76%
73%
Net finance expense
159
88
81%
77%
Core finance income
8
7
14%
14%
Core finance expense
93
90
3%
0%
Core net finance expense
85
83
2%
(1)%
Reported net finance expense increased to $159 million primarily due
to the remeasurement of contingent consideration related to business
combinations. Core net finance expense increased to $85 million
(2023: $83 million), reflecting borrowing to finance the Xellia
acquisition.
We expect core net finance expense to be between $90 million to
$95 million in 2025.2
Tax
The Group incurred a reported tax expense of $93 million (2023:
$89 million) and a reported effective tax rate of 20.4% (2023: 31.7%).
Excluding the tax impact of exceptional items and other adjustments,
Group core tax expense was $138 million (2023: $131 million). The core
effective tax rate was 21.7% (2023: 20.9%).
We expect the Group core effective tax rate to be around 22% in 2025.
Profit attributable to shareholders and earnings
per share
Reported profit attributable to shareholders was $359 million (2023:
$190 million). Core profit attributable to shareholders was $495 million
(2023: $492 million). Reported basic earnings per share was 162 cents
(2023: 86 cents). Core basic earnings per share was 224 cents
(2023: 223 cents).
Dividend
The Board is recommending a final dividend of 48 cents per share
(2023: 47 cents per share) bringing the total dividend for the full year
to 80 cents per share (2023: 72 cents per share). The proposed
dividend will be paid on 1 May 2025 to eligible shareholders on the
register at the close of business on 21 March 2025, subject to approval
at the Annual General Meeting on 24 April 2025.
Net cash flow, working capital and net debt
The Group generated operating cash flow of $564 million (2023:
$608 million). This change primarily reflects increased trade
receivables reflecting strong sales towards the end of the year.
Group working capital days were 240 at 31 December 2024. Compared
to the position on 31 December 2023, Group working capital days
decreased by three days from 243 days.
Capital expenditure was $165 million (2023: $169 million). In the US,
$49 million was spent on upgrades, new technologies and capacity
expansion across our Cherry Hill and Columbus sites. In MENA,
$80 million was spent strengthening and expanding our local
manufacturing capabilities, including for general formulations in
Tunisia and Algeria, as well as strengthening our oral oncology
capabilities in Algeria. In Europe, we spent $36 million enhancing our
manufacturing capabilities, including adding lyophilisation capacity
in Portugal.
We expect Group capital expenditure to be in the range of $170 million
to $190 million in 2025.
The Group’s total debt was $1,306 million at 31 December 2024
(31 December 2023: $1,191 million).
The Group’s cash balance at 31 December 2024 was $188 million
(31 December 2023: $215 million).
The Group’s net debt was $1,118 million at 31 December 2024 (31
December 2023: $976 million). We continue to have a healthy balance
sheet, with a net debt to core EBITDA ratio of 1.4x (31 December
2023: 1.2x).
Net assets
Net assets at 31 December 2024 were $2,321 million (31 December
2023: $2,209 million). Net current assets were $285 million
(31 December 2023: $761 million). This primarily reflects the
reclassification of the five-year Eurobond, which matures on
9 July 2025, as short-term financial debt.
Definitions
We use a number of non-IFRS measures to report and monitor the
performance of our business. Management uses these adjusted
numbers internally to measure our progress and for setting
performance targets. We also present these numbers, alongside our
reported results, to external audiences to help them understand the
underlying performance of our business. Our core numbers may be
calculated differently to other companies.
Adjusted measures are not substitutable for IFRS results and should
not be considered superior to results presented in accordance
with IFRS.
Core results
Reported results represent the Group’s overall performance. However,
these results can include one-off or non-cash items which are
excluded when assessing the underlying performance of the Group.
To provide a more complete picture of the Group’s performance to
external audiences, we provide, alongside our reported results, core
results, which are a non-IFRS measure. Our core results exclude the
exceptional items and other adjustments set out in Note 6.
Constant currency
As the majority of our business is conducted in the US, we present
our results in US dollars. For both our Branded and Injectables
businesses, a proportion of their sales are denominated in a
currency other than the US dollar. In order to illustrate the
underlying performance of these businesses, we include
information on our results in constant currency.
Constant currency numbers in 2024 represent reported 2024
numbers translated using 2023 exchange rates, excluding price
increases in the business resulting from the devaluation of currencies.
Core EBITDA
Core EBITDA is earnings before interest, tax, depreciation,
amortisation, adjusted for exceptional items and other adjustments
(Note 6).
2024
$ million
2023
$ million
Reported operating profit
612
367
Depreciation and impairment charges/
reversals in relation to property, plant
and equipment
96
110
Impairment reversals on property, plant
and equipment
(16)
–
Amortisation and impairment charges in
relation to intangible assets
122
131
Impairment reversal on intangible assets
(44)
–
Depreciation and impairment charges in
relation to right-of-use assets
10
18
Reorganisation costs
11
–
Pre-production set-up costs
4
–
Provision for rebates adjustment
29
–
Provision related to expected North
America opioid legal settlement
–
129
Provision against inventory related to
halted operations in Sudan
–
17
Impairment charge on financial assets
–
29
Impairment charge on other current
assets
–
2
Cost from halted operations in Sudan
–
7
Core EBITDA
824
810
Working capital days
We believe Group working capital days provides a useful measure of
the Group’s working capital management and liquidity. Group working
capital days are calculated as Group receivable days plus Group
inventory days, less Group payable days. Group receivable days are
calculated as Group trade receivables x 365, divided by 12 months
Group revenue. Group inventory days are calculated as Group
inventory x 365, divided by 12 months Group cost of sales. Group
payable days are calculated as Group trade payables x 365, divided
by 12 months Group cost of sales.
Group net debt
We believe Group net debt is a useful measure of the strength of the
Group financial position. Group net debt includes short and long-term
financial debts (Notes 24 and 28), lease liabilities (Note 17), net of cash
and cash equivalents (Note 22) and restricted cash (Note 19), if any.
Group net debt
31 Dec 2024
$ million
31 Dec 2023
$ million
Short-term financial debts
(642)
(150)
Short-term leases liabilities
(11)
(11)
Long-term financial debts
(607)
(975)
Long-term leases liabilities
(46)
(55)
Total debt
(1,306)
(1,191)
Cash and cash equivalents
188
205
Restricted cash
–
10
Net debt
(1,118)
(976)
ROIC
ROIC is calculated as core operating profit after tax divided by the
average invested capital (calculated as the average of the opening
and closing total equity plus net debt). This measures our efficiency
in allocating capital to profitable investments.
ROIC
$ million
2024
2023
Core operating profit
719
707
Total tax
(158)
(144)
Core operating profit after tax
561
563
Net debt
1,118
976
Equity
2,321
2,209
Invested capital (at 31 December)
3,439
3,185
Invested capital (at 1 January)
3,185
3,161
Average invested capital
3,312
3,173
ROIC
16.9%
17.7%
1. Pipeline projects submitted, approved and launched by country in 2024. MENA numbers
include only the five major markets (Algeria, KSA, Egypt, Morocco and Jordan)
2. Based on the composition of the Group’s net debt portfolio as at 31 December 2024, a
one percentage point increase/decrease in interest rates would result in a $6 million
increase/decrease in net finance cost per year (2023: $3 million increase/decrease)
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44
Sustainability
46
Acting responsibly
50
Advancing health and wellbeing
54
Empowering our people
56
Protecting the environment
60
Building trust through quality
in everything we do
62
Aligning with the Task Force
for Climate-related Financial
Disclosures (TCFD)
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45
Adapting to evolving
patient needs
As a manufacturer of generic medicines, we
recognise our role in responding to evolving
patient needs that are driven by factors
such as climate change, changing
demographics and socio-economic
development.
Climate change is among the most
significant health threats globally. It is
expected to create both direct health
impacts through heat waves, droughts, and
other extreme weather events, as well as
indirect health impacts such as increased
prevalence of vector-borne and respiratory
diseases, food and water insecurity,
undernutrition, and forced displacements.
Additionally, population demographics are
influencing disease prevalence, with ageing
populations and urbanisation contributing
to shifts in health needs and challenges.
In addition, economic and inflationary
challenges are making healthcare less
accessible to patients.
We recognise our role in mitigating the
health-related impacts of these challenges.
We do so by prioritising the availability and
access of medicines, addressing and
anticipating national health priorities and
evolving patient needs, and working within
our markets to launch more products
and strengthen the resilience of
healthcare systems.
Acting responsibly at Hikma
Being a responsible organisation and advancing our
sustainability agenda is integral to how we do business.
Pursuing a strong sustainability strategy
helps to create long-term value for both
Hikma and our stakeholders and supports
our purpose of putting better health within
reach, every day
We remain focused on the sustainability
topics that are most material to our business
success, as well as those that are most
relevant to our key stakeholders. These
material issues form the basis of our
sustainability framework and strategy, and
we align our business with these priorities.
In 2024, we conducted a double materiality
assessment (DMA) and will update our
framework and strategy according to the
DMA findings in 2025. More information on
the DMA is available on page 48.
Our Acting Responsibly framework consists
of four pillars:
– Advancing health and wellbeing
– Empowering our people
– Protecting the environment
– Building trust through quality in
everything we do
This section outlines how we address our
most material sustainability issues and
highlights some of the major activities,
milestones, and achievements we have made
throughout the year. More information on
sustainability will be provided in our
upcoming Sustainability Report 2024.
Advancing health
and wellbeing
Empowering
our people
Protecting the
environment
Building trust
through quality in
everything we do
Providing better healthcare and
supporting our communities
– Access to medicines
– Corporate social
responsibility
– Providing better health
– Supporting education
– Helping people in need
Shaping an inclusive culture
where everyone can thrive
– Recruitment, retention
and promotion
– Progress and belonging
– Ensuring health and safety
Minimising our impact on
the planet
– Reduction of greenhouse
gas emissions (GHG)
– Sustainable supply chain
– Water management
– Waste management
Upholding ethical standards
and acting with integrity
– Ethics and compliance
– Product quality and safety
– Corporate governance
$4.1m
cost of our donated medicines 245+
Employees trained through
Multipliers and Blanchard
leadership programmes
15%
Reduction achieved in our
Scope 1 and 2 emissions
since the 2020 base year
10
Maintaining membership
in the FTSE4Good for
ten consecutive years
Read more on page 50
Read more on page 54
Read more on page 56
Read more on page 60
For more information visit
www.hikma.com/sustainability
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continued
We prioritise sustainability issues that are most
impactful, create shared value for our business
and stakeholders, mitigate business risks, and
ensure we continue to operate responsibly and
ethically. Our sustainability framework was
developed through an internal materiality
assessment that integrated both current and
anticipated legislative requirements and best
practices. Global sustainability standards such
as GRI, sector-specific standards as outlined by
SASB, and ratings frameworks including MSCI,
Sustainalytics, and FTSE4Good are all
considered to help us fully understand material
issues from an external perspective.
We take into account the perspectives of all our
key stakeholders on ESG matters, including
investors, patients and healthcare professionals,
employees, customers, communities,
governments, regulators, and suppliers.
In 2024, we conducted a double materiality
assessment (DMA) as part of our broader
sustainability strategy and with the purpose of
refreshing our material ESG issues, updating our
sustainability framework, and preparing for
compliance with European Sustainability
Reporting Standards (ESRS) materiality
requirements that are part of our Corporate
Sustainability Reporting Directive (CSRD)
obligations. The DMA results emphasised our
material ESG issues, the most significant of
which are Product Quality and Patient Safety
and Access to Medicines. As part of our
continued focus on sustainability, we will
integrate the DMA results into our
sustainability framework.
We also put new targets in place to drive
emissions reduction and water-use efficiency
which are tied to Executive Remuneration.
See page 56 for more details.
Governance of sustainability
Board of Directors
Overarching oversight of sustainability
Executive Committee
Leadership and alignment of sustainability with corporate strategy
Sustainability team
Executive Sponsor-led:
Steer and coordination
ESG Committee:
Access to Medicine
ESG Committee:
Environmental Sustainability
Global functions and
site management teams
Employee networks
Prioritising the right issues
We are proactive in assessing and ensuring
our preparedness with evolving regulations,
obligations and best practices around the
management and reporting of ESG issues.
There are several regulatory developments
that we have identified that will impact our
reporting in future years.
Corporate Sustainability
Reporting Directive (CSRD)
In 2023, the CSRD entered into force and
established a harmonised sustainability
reporting regime for companies operating in
the European Union. Companies that are
within the scope of CSRD have to report on
relevant disclosure requirements from the 12
European Sustainability Reporting Standards
(ESRS) for material sustainability matters and
comply with the EU Taxonomy Directive.
We are preparing to report in alignment with
CSRD at the Group level. To align with CSRD
requirements, in 2024 we have focused on
conducting a double materiality assessment
and increasing our overall preparedness. We
will continue preparing for compliance with
CSRD reporting timelines, with the first
financial year requiring reporting (for certain
Hikma EU entities) being 2025. We are
monitoring the EU Omnibus Initiative and the
potential impacts it will have on CSRD
reporting requirements and timelines and will
amend our approach accordingly.
UK Sustainability Reporting Standards
(SRS) and IFRS Sustainability Disclosure
Standards
The UK SRS will set out corporate disclosures
for UK-based companies and is expected to
be published in 2025, subject to the outcome
of a public consultation. SRS disclosures will
form the basis for UK companies to report on
sustainability-related risks and opportunities.
SRS is using the International Financial
Reporting Standards (IFRS) Sustainability
Disclosure Standards as a baseline to
develop their reporting framework, which our
teams consider when developing our ESG
reporting. The IFRS includes both the
International Sustainability Standards Board
(ISSB) and Task Force on Climate-Related
Financial Disclosures (TCFD) reporting
standards.
CDP Climate Change and Water
We have been reporting in alignment with
CDP Climate Change since 2010 and
introduced CDP Water Security reporting in
2024. We will disclose more details about our
CDP scores in our 2024 Sustainability Report
(published in Q2 2025) and will continue to
enhance our reporting and governance of
climate change and water security issues.
Our alignment with evolving
stakeholder expectations
Expectations around sustainability reporting
among stakeholders such as regulators,
investors, customers and others continue to
evolve. We align our reporting and disclosures
with these frameworks where the information
is most relevant for our internal and external
stakeholders.
We also use standards such as GRI and SASB
to facilitate the comparability of our ESG
performance with those of our industry
peers. Our climate-related disclosures are
disclosed in alignment with the Greenhouse
Gas (GHG) Protocol and will ensure that our
GHG accounting maintains alignment
following its expected 2025 Corporate
Standard update.
We have prioritised a set of metrics to
monitor internally including those related to
employee health and safety (such as Lost
time incidents and Lost time incident rate),
emissions, water and waste management.
We are refining data integrity and quality to
ensure key metrics are measured and
disclosed with a robust level of assurance.
We have completed our DMA and will be
using the results to update our ‘Acting
Responsibly’ framework in 2025.
Sustainability reporting readiness
Achieved an ESG
rating score of BBB
Ranked in the 11th percentile of
the Pharmaceuticals sub-industry
(where first is lowest risk)
Constituents since 2014
Achieved a score of B for
CDP Water 2024
Signatory to the United Nations
Global Compact
Supporters of the UN Sustainable
Development Goals
Signatory to the United Nations
Women’s Empowerment Principles
Signatory to the
Modern Slavery Act
Our sustainability performance and commitments
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Access to medicines
At Hikma, we work to enhance lives by
ensuring access to affordable, high-quality
medicines. This is at the heart of our
corporate purpose: putting better health
within reach, every day.
We fulfil our purpose by developing and
launching high-quality products at
competitive prices across our markets, by
expanding production capacity, and by
entering new markets. We also work with
patients, healthcare providers and other
stakeholders to assist patients and enable
a more robust healthcare ecosystem. More
information summarising our approach to
access to medicine can be found in the
sustainability section of our website.
Governance
We have in place an Access to Medicine
Committee chaired by two members of the
Executive Committee, the Executive Vice
Chairman and President of MENA, who also
sits on the Board of Directors, and the EVP,
Corporate Development and M&A. The aim of
the Committee is to strengthen collaboration
across our business in promoting equitable
access and improving the patient journey.
During the year, we explored across our
business the ways in which we can bring
equitable access to medicines for patients.
In 2025, we will work to improve reporting and
communication around access and patient
impacts by measuring and disclosing metrics
related to the issue.
MENA
We operate 20 manufacturing plants in MENA
and are completing new injectable plants in
Algeria and Morocco. We are now the second
largest pharmaceutical company by sales1
and we continue to expand our local
manufacturing capacity to ensure patients
have access to critical medicines throughout
the region.
Across the region, our areas of focus align
closely with national healthcare priorities and
disease burdens, and we work with relevant
stakeholders to strengthen national
healthcare systems. Our commercial teams
regularly collaborate with doctors, clinicians,
and pharmacists to improve disease
awareness, healthcare standards, and access
to quality medical care in the region.
North America
In the US, we are the seventh largest generic
medicines manufacturer.2 We supply a broad
range of injectable and non-injectable
products to patients in the US and, more
recently, in Canada. We operate
manufacturing, R&D, and distribution
facilities across New Jersey and Ohio and are
a leading provider of oral solid, liquid, and
nasal generic medicines distributed to
patients through pharmacies, hospitals,
health benefits programmes, and other
customers.
We are also a top three manufacturer of
injectable medicines by volume 3 and operate
a sterile compounding business focused on
providing high-quality, ready-to-administer
injectable medications that are customised
to the specific needs of hospital patients in
the US.
Our work also involves coordination with
policymakers to better address persistent
drug shortages and to align our domestic
production with the needs of patients and
medicine availability. Working with partners
such as the Remedy Alliance is ensuring the
alleviation of common barriers such as supply
and price for patients.
Europe
We manufacture sterile injectable products in
Portugal, Italy and Germany which supply our
global markets. We continue to grow,
acquiring a new R&D centre in Croatia and
expanding our capacity in Portugal. We also
sell injectable medicines across Europe, with
a commercial presence in Germany, Italy,
France, Spain, the UK and Portugal.
Providing better healthcare and
supporting our communities
Advancing health
and wellbeing
1. Based on internal analysis by using data from the following source: IQVIA MIDAS® Monthly Value Sales data for Algeria,
Egypt, Jordan, Kuwait, Lebanon, Morocco, Saudi Arabia, Tunisia and UAE, for the period: calendar year 2024, reflecting
estimates of real-world activity. Copyright IQVIA. All rights reserved
2. IQVIA MAT November 2024, includes all generic injectable and generic non-injectable products by sales
3. IQVIA MAT November 2024, generic injectable volumes by eaches, excluding branded generics and Becton Dickinson
Acting responsibly at Hikma
continued
Medicine donation programme
We partner with local and international NGOs
such as Direct Relief and Jordan Hashemite
Charity Organization (JHCO), donating
medicine to patients in need and providing
aid and relief to those impacted by natural
disasters and conflicts. Through our
programmes, we are able to ensure urgent
care reaches underserved population
segments, such as low-income groups,
displaced persons and those lacking
sufficient medical coverage.
Medicine donations
(COGS) $m
2024
$4.1m
2023
$4.9m
2022
$4.3m
We work to enhance
lives by ensuring
access to affordable,
high-quality
medicines.”
Hikma community health initiative
Naloxone training events
help build understanding
of this vital tool that
individuals, families,
first responders and
communities can quickly
use to reverse overdoses
and save lives.”
During 2024 we continued our long-
standing commitment to working with
government officials, health care providers,
non-profit organisations and the public
health community to increase the
accessibility of the overdose reversal
medicine naloxone.
The US Centers for Disease Control and
Prevention (CDC) estimates that more
than 107,000 Americans died from drug
overdoses in 2023, with many deaths
attributed to illicit fentanyl. As a US-based
manufacturer of multiple forms of
overdose reversal medicines and
treatments for opioid use disorder, Hikma
is proud to have donated more than
600,000 doses of naloxone over the last
three years.
Through our Hikma Community Health initiative, we partner with those on the frontlines of the overdose public
health emergency across the US
In 2024, we partnered with US state
government bodies and community
organisations to expand access to our
naloxone portfolio and provided a Co-Pay
Assistance Programme for eligible
individuals, further increasing access and
decreasing out-of-pocket costs for this
life-saving medication.
We also supported multiple overdose
awareness days and naloxone training
events with community partners and
government leaders.
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Helping people in need
Acting responsibly at Hikma
continued
Community engagement is central to our sustainability agenda.
We organise activities across our global footprint to address social
and economic challenges facing our communities, and empower
our employees with opportunities to make positive and
meaningful change.
Community outreach
Providing better health
We work to address unmet healthcare
needs by conducting community outreach
and providing in-kind medicine donations
to patients in need
Supporting education
We are committed to providing our people
and communities with opportunities to
realise their full potential through
continuous learning and development
Helping people in need
We believe in supporting the communities
in which we live and work through local
non-profit sponsorships and empowering
our employees to support our neighbours
in need
Where we focus
Community outreach highlights
4,700+
volunteers
10,600+
volunteering hours
98
partners globally
$3.9m
charitable donations
Providing access to clean water for
families in Egypt
In 2024, we expanded our effort to provide access
to clean water for people in Egypt
The project, completed in partnership with Al-Orman Association
and focusing on the Fayoum Governorate, will directly benefit more
than 1,400 people by providing them with sustainable access to
clean water. This project builds on the success of our 2022 water
access project through which we funded the construction of water
wells and enabled five families to receive access to clean water.
Supporting food banks for
those in need
Providing healthy meals for people in our
communities
Since 2020, our US locations have collaborated with
local food banks and pantries to assist community
members in need. Given the various financial
challenges faced by communities, more and more
people are finding access to free meals essential as
they try to make ends meet. We continue to support
our partners financially and adapt our programmes
to their needs, including organising volunteer activities,
fundraisers, and donations.
In 2024, Hikma reinforced its dedication by becoming
the Fresh Food Sponsor for The Emergency Assistance
Center (TEAC), aiding those facing food insecurity. We
supplied a variety of fresh produce and other essential
food items. Overall, Hikma contributed over 160,000
meals to food banks across the United States.
Supporting education
Supporting education for
displaced persons
Since 2021, Hikma Pharmaceuticals has been
supporting UNHCR, the UN Refugee Agency
through their Albert Einstein German
Academic Refugee Initiative (DAFI). The DAFI
programme offers scholarships to refugees,
providing an opportunity to attain higher
education
In 2024, we expanded our tertiary education
scholarship programme to include 40 more students,
bringing the total to 80 in Jordan, Algeria, and Egypt.
This support enables talented refugees to access
higher education, transforming lives and benefiting
families and communities. Hikma’s support has
improved the long-term stability of refugee-hosting
communities and contributed to development in host
and origin countries. Additionally, in 2024, Hikma
funded two DAFI scholars joining an Innovation Camp
to learn about social entrepreneurship and develop
impactful initiatives.
© UNHCR/Claire Thomas
160,000
meals contributed by Hikma
to food banks across the US
Providing better health
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Shaping an inclusive culture
where everyone can thrive
Empowering
our people
Employee wellbeing and
health and safety
We are committed to our people and to
ensuring that the employee experience
improves over time. The feedback of our
people is consistently taken into
consideration, including through the People
Voice Survey. The survey findings guide our
approach to employee engagement and
wellbeing. Our ambition is to foster an
inclusive environment where every employee
feels like they truly belong.
We continue to prioritise the health
and safety of our people. Our Group
Environmental Health and Safety policy
statement, updated in 2024, strengthened
and standardised our approach to ensuring
the wellbeing of our employees and other
workers at our locations globally.
Investing in our people
At Hikma, we focus on learning and
development to improve the capabilities
of our employees and enhance their career
potential.
In 2024, we continued to roll out our
Leadership Development Programme,
which is designed to help improve and build
employees’ managerial skills. It includes a
360-degree feedback assessment and a
comprehensive 12-month development plan.
This year, 246 employees across our markets
took part in this programme.
In 2024, we rolled out global initiatives
focused on the physical, mental and
emotional health of our people. These
include mental health and mindfulness
webinars for employees, enhanced
workspaces for pregnant employees
and wellness days focused on nutritional
and physical awareness.
Strengthening our culture of
progress and belonging
We believe that a diversity of views,
experiences, and backgrounds strengthens
the effectiveness of our workforce and
supports our ability to successfully deliver
our purpose and strategy. We remain
committed to promoting our culture of
progress and belonging, which provides all
employees with opportunities for personal
and professional growth. We believe in
fostering an inclusive workplace where all
employees feel they belong, and as they grow
and develop, so does Hikma.
In 2024, we introduced a new policy that
reflects our commitment to maintaining a
workplace where everyone can be
themselves and achieve their potential, and
ensures our company represents the
communities that we serve. We also
introduced a comprehensive training
programme for managers and employees
through which our people can further their
understanding of the benefits of our inclusive
culture and our commitment to these values.
Acting responsibly at Hikma
continued
In 2024, we rolled
out global initiatives
focused on the
physical and mental
health of our people.”
Extending support to
employees with children
facing disability
During the year, we established a
support system for employees with
children facing disability
At Hikma, part of how we embody our
value of caring is by extending support
to our employees and their families when
they are in need.
Recognising the challenges faced by
employees with children who have
disabilities, Hikma introduced a targeted
financial support initiative in 2024. This
program has already benefited over 25
employees, particularly in regions where
government assistance is limited. By
providing financial aid for therapy,
specialised education, and essential
equipment, this initiative eases the
emotional and economic burdens on our
employees. It reflects our commitment to
holistic wellbeing, ensuring our people
feel supported both at work and in
their personal lives, fostering a culture
of belonging.
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Acting responsibly at Hikma
continued
Minimising our impact
on the planet
Protecting the
environment
We are committed to making
our operations greener and to
improving our environmental
performance
In 2024, our Scope 1 and 2 emissions
(market-based) measured 123,307 tonnes
of carbon dioxide equivalent (tCO2e),
maintaining a 15% emissions decrease from
our 2020 base year.1
During the year, we developed solar energy
generation capacity in Jordan, Morocco and
Saudi Arabia, and pursued energy efficiency
measures globally.
Continuous investments in energy efficiency,
cleaner technologies and renewable energy
generation has helped us maintain a stable
emissions footprint even as we pursue
significant site expansions and production
increases. Nonetheless, we remain
committed to our goal of reducing emissions
by 25% by 2030.
Our Scope 1 and 2 emissions
reduction target
In 2021, we put in place a target to reduce our
Scope 1 and 2 GHG emissions by 25% by
2030, using a 2020 baseline and market-
based calculations. The target was developed
using the absolute contraction approach and
is in line with the Paris Climate Agreement’s
well-below 2°C scenario.
We are making good progress towards
achieving our target. Compared to our base
year (2020), our 2024 Scope 1 and 2
emissions have decreased by 15%.
We have achieved emissions reductions
largely through the expansion of green
electricity procurement in all of our European
facilities and through investments in
renewable energy infrastructure and other
initiatives to improve energy efficiency across
our sites.
Methodology and assurance
We quantify and report our organisational
GHG emissions in alignment with the World
Resources Institute’s Greenhouse Gas
Protocol Corporate Accounting and
Reporting Standard, and in alignment with
the Scope 2 guidance.
We consolidate our organisational boundary
according to the operational control
approach, as described in the GHG Protocol
Reporting Standard. This includes all our
facilities and locations where we have
operational control.
For reporting in this Annual Report, we have
used data from January to September of
2024 and estimated quantities for October
to December 2024.
Our Sustainability Report, published later
in 2025, will contain updated emissions and
environmental data for full-year 2024. More
information on our data management
methodology can be found here
www.hikma.com/responsibility.
We have internal sustainability reporting
criteria for key metrics that guide our
sustainability reporting. The criteria define
our reporting boundary and conditions for
restatements, and establish a unified
hierarchy for estimating consumption where
actual data are not available.
Our emissions calculation does not contain
any material omissions, as determined by the
reasonable level of assurance received on
this data. In some cases, where any month’s
data is missing, it has been estimated using
the following methodology: using data from
one year prior to the month to be estimated
or previous year as proxy, calculate an
average daily consumption over that period
and apply that to the number of days within
the month to be estimated.
EcoAct was engaged by Hikma to provide
independent third-party reasonable
verification of its direct (Scope 1) and indirect
(Scope 2 and selected Scope 3) GHG
emissions, as detailed in this report. Based on
the data and information provided by Hikma
and the processes and procedures followed,
it is EcoAct’s verification opinion that the
following GHG emissions totals are fairly stated
and free from material error for 2024.
Verified emissions by EcoAct include:
– Scope 1 emissions – Combustion of
gaseous fuels (natural gas, diesel, petrol
and LPG) Fugitive refrigerant gases
– Scope 2 emissions – Purchased electricity
consumption (location and market-based)
– Scope 3 emissions – Emissions including
Category 3: fuel and energy related
activities not included in Scope 1 or Scope
2 (FERA), Category 5: Waste generated in
operations (including water), and Category
7: Employee commuting
UK emissions
The Group operates one location within the
United Kingdom, where we are listed, which is
an office building that is managed by a third
party. During the year, the UK site consumed
891 MWh of energy, which is equivalent to
194 tCO2e.
The energy consumption is measured by
meter readings provided by the managing
agent and relates to electricity and gas used
for heating, cooling and general office power.
Reported fuel use between 2020 and 2024
for the UK was an estimate that was
developed based on employee headcount.
The Group does not provide transport within
the UK other than via private hire vehicles for
which consumption data is not available.
GHG emissions: Scope 3
We began measuring our indirect, Scope 3
emissions in 2021, prioritising the oversight of
emissions most relevant to our business. We
continue to refine the quality of our emissions
measurements and engage with our suppliers
to better understand their commitments to
emission reductions.
In 2024, the change in emissions from the
Purchased Goods & Services category was
primarily driven by our team’s continuous
efforts to enhance the accuracy and
reliability of our Scope 3 reporting. A key
milestone was the adoption of supplier-
specific emission factors, enabling us to
capture real emissions data rather than
Target
2024 Progress
Status
Our aim for 2025
By 2030, reduce our
scope 1 and scope
2 emissions by 25%
(baseline: 2020)
We invest in energy
efficiency and renewable
energy generation, which
enables us to minimise our
emissions while continuing
to grow as an organisation
Continue to pursue renewable
energy and energy efficiency
solutions and explore long-term
green energy procurement
opportunities where we operate
By 2026, revise long-
term carbon reduction
targets and implement
key renewable energy
projects
Idenfitied and implemented
opportunities to improve
energy efficiency and
reduce carbon emissions
and identified key
renewable energy projects
Continue efforts to drive
efficiency and emissions
reductions and to begin
implementation of key
renewable energy projects
By 2028, deliver key
aspects of the ISO
46001 water efficiency
management system in
the MENA region
Conducted site-level
assessments to identify
opportunities to improve
water management
Begin implementation of water
stewardship standards at
relevant sites
Timeframe:
Long-term
Short-term
Status:
Achieved
On track
Partially achieved
GHG emissions (tCO2e)
2020
(base year)
2022
20231
20242
Scope 1 – Combustion of fuel and operation of facilities
47,372
42,346
43,830
37,625
Scope 2 (market-based) – Electricity
97,527
78,140
79,897
85,682
Total Scope 1 and 2 emissions (market-based)
144,899
120,486
123,727
123,307
Year-on-year change in Scope 1 and 2 emissions (market-based)
N/A
(10%)
3%
0%
Change in Scope 1 and 2 emissions (market-based) since base year 2020
N/A
(17%)
(15%)
(15%)
Scope 2 (location-based) – Electricity
94,949
79,601
83,536
89,247
GHG emissions
(tCO2e)
2024
123,307
37,625
85,682
2023
123,727
2022
120,486
2020
(base year)
144,899
43,830
79,897
78,140
47,372
97,527
42,346
Scope 1
Scope 2
1. Our 2024 reported figures for energy and emissions are based on actual consumption for Q1-Q3 and a Q4 estimation as
explained in the Methodology and assurance section. Locations relevant to the Xellia acquisition have been included in
our GHG and energy footprint from the formal date of acquisition, as we do not currently consider the acquisition to be a
significant structural change, based on the principles of the GHG Protocol Corporate Standard
1. Our 2023 reported figures for emissions reflect full year actual values as reported in our Sustainability Report 2023
2. Our 2024 reported figures for energy and emissions are based on actual consumption for Q1-Q3 and a Q4 estimation as explained in the Methodology and assurance section. Locations
relevant to the Xellia acquisition have been included in our GHG and energy footprint from the formal date of acquisition, as we do not currently consider the acquisition to be a significant
structural change, based on the principles of the GHG Protocol Corporate Standard
UK emissions (as a percentage of Group Scope 1 and 2 emissions)
0.16%
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Acting responsibly at Hikma
continued
relying on database averages. This shift not
only improved precision but also reflected
the impact of suppliers’ own decarbonisation
initiatives.
In 2024, we refined our methodology by
correctly categorising employees using
private cars versus those utilising company-
provided transportation (reported under
Scope 2). This adjustment ensures more
precise calculations and is reflected in the
reduction in Employee Commuting.
We also intensified our focus on refining data
quality by transitioning more categories—
most notably packaging materials for
devices—from a monetary-based to a
quantity-based calculation approach. As a
result of internal analyses conducted during
the year, we revised our upstream and
downstream reporting methodology and
will introduce Category 9: Downstream
transportation and distribution in
future reports.
Furthermore, the overall reduction in
emissions was also influenced by a decrease
in direct spend and a shift towards markets
with lower emission coefficients, primarily
due to reduced sourcing from China.
Assurance of Scope 3 emissions data
For calculation of the remaining Scope 3
categories (Category 1: Purchase of goods
and services, Category 2: Capital goods,
Category 4: Upstream transportation and
distribution, and Category 6: Business Travel),
we worked with an external third party, Sievo
Oy, to assess our carbon footprint for these
categories. Sievo has contracted Ernst &
Young (EY) under a ‘limited assurance
engagement’, as defined by International
Standards on Assurance Engagements 3000
(ISAE 3000) to report on the methodology
and the emission factors used behind the
‘CO2 Analytics’ tool (the Tool) as of 2023.
The full verification statements can be found
here: www.hikma.com/sustainability.
Sustainable supply chain
Through our partnership with EcoVadis and
the use of our internally developed
sustainability questionnaire, we are further
enhancing our understanding of the
sustainability maturity of our suppliers,
currently covering over 60% of our annual
spend. We actively engage with suppliers
identified as having flagged risks, requesting
and supporting the implementation of
recommended corrective action plans.
Notably, we have already observed
improvements among suppliers who
have been reassessed after taking
corrective actions.
Our goal is to continue to leverage both
EcoVadis and our sustainability questionnaire
to increase the proportion of major spend
suppliers that are screened for sustainability
criteria and continue to monitor and improve
the mapping of Scope 3 emissions.
We continued our efforts to proactively
engage with our procurement community
and key suppliers to raise awareness about
the sustainability maturity levels of our
supply base. Our efforts included targeted
outreach to mostly primary materials
suppliers, encompassing those who
represent just over 55% of Hikma’s Scope 3
emissions footprint.
These direct engagements provide insights
into their carbon reduction and energy
efficiency goals. They also highlight
opportunities for collaboration projects
aimed at reducing our own carbon footprint.
Looking ahead, we aim to expand the
application of sustainability criteria to a larger
proportion of our key suppliers. This will be
achieved through collaboration with EcoVadis
and, if needed, by leveraging Hikma’s own
sustainability questionnaire for selected
suppliers. This approach reflects our ongoing
commitment to fostering sustainable
practices and promoting responsible
business operations across our supply chain.
All our suppliers, both new and existing,
undergo thorough assessment through
our third-party Moody’s platform to ensure
compliance with comprehensive due
diligence protocols.
As part of this process, we evaluate all
suppliers for any potential risks, including but
not limited to financial stability, modern
slavery, and ethical practices. Our due
diligence monitoring is ongoing, ensuring that
all vendors—whether newly onboarded or
long-standing partners—are consistently
subject to our third-party risk
management process.
Our cross-functional Modern Slavery Task
Force, comprising members from
procurement, legal, and compliance,
continue to implement our thorough
risk-based approach in assessing risk for all
forms of modern slavery.
Through this approach, we identified certain
suppliers with potential risks and issued
additional modern slavery questionnaires
for further assessment, while also leveraging
EcoVadis. We actively engaged with these
suppliers, working closely to ensure their
responses were comprehensive and
addressing any concerns to confirm that
no viable risks remain.
Looking ahead, our approach will continue
to be implemented, ensuring it remains
aligned with evolving best practices and
legal standards.
GHG emissions, Scope 3 (tCO2e)
Scope 3
category
Category
description
Notes
2022
2023
2024
1
Purchased goods and services
669,856
717,778
681,235
2
Capital goods
31,873
36,773
46,580
3
Fuel & energy related activities not included in Scope 1
or Scope 2
34,175
30,246
31,683
4
Upstream transportation and distribution
34,284
32,001
32,084
5
Waste generated in operations (including water)
4,058
3,105
2,079
6
Business travel
1,790
6,834
8,312
7
Employee commuting
7,881
10,241
8,401
8
Upstream leased assets
•
not relevant
–
–
–
9
Downstream transportation and distribution
•
relevant, not yet calculated
–
–
–
10
Processing of sold products
•
not relevant
–
–
–
11
Use of sold products
•
relevant, not yet calculated
–
–
–
12
End of life treatment of sold products
•
relevant, not yet calculated
–
–
–
13
Downstream leased assets
•
not relevant
–
–
–
14
Franchises
•
not relevant
–
–
–
15
Investments
•
relevant, not yet calculated
–
–
–
Total1
783,917
836,978
810,374
Energy consumption (MWh)
2020
(base year)
2022
2023
20241
UK
Rest of
the world
Total
UK
Rest of
the world
Total
UK
Rest of
the world
Total
UK
Rest of
the world
Total
Electricity
129
223,634
223,763
116
247,011
247,127
167
217,653
217,820
168
236,151
236,319
Fuels
871
217,644
210,528
882
178,326
210,528
882
212,731
213,613
723
183,758
184,481
Emissions intensity by revenue2 (tCO2e / $m revenue)
2022
2023
2024
Scope 1 and 2 emissions (market-based) / revenue
47.9
43.0
39.1
Scope 1 and 2 emissions (location-based) / revenue
48.4
44.3
40.2
Water and waste management
The use of water and the management of
waste are critical for the pharmaceutical
manufacturing process and we have policies
and practices in place to ensure we manage
water both effectively and in compliance with
laws and regulations.
Following assessments of water-related risks
across our locations, we conducted deep
dive analyses of our facilities located in
water-scarce areas. In order to address water
scarcity in our locations of operation, we are
improving water management systems and
identified opportunities and gaps to
conserve and use water more efficiently.
1. Our 2024 reported figures for energy and emissions are based on actual consumption for Q1-Q3 and a Q4 estimation as
explained in the Methodology and assurance section. Locations relevant to the Xellia acquisition have been included in
our GHG and energy footprint from the formal date of acquisition, as we do not currently consider the acquisition to be a
significant structural change, based on the principles of the GHG Protocol Corporate Standard
2. Emissions intensity is calculated using Group-wide revenue ($m)
–
Revenue 2022: 2,517
–
Revenue 2023: 2,875
–
Revenue 2024 (core): 3,156
1. Changes in Scope 3 emissions totals between years is partially due to continuous refinement of calculation methodology and the introduction of new emissions categories to our
reporting boundary
GHG emissions, Scope 3
(tCO2e)
2023
836,978
30,246
10,241
6,834
3,105
32,001
717,778
669,856
36,773
31,873
34,284 1,790
2022
749,742
7,881
4,058
2024
810,374
31,683
8,401
8,312
2,079
34,175
32,084
681,235
46,580
Purchased goods and services
Capital goods
Employee commuting
Fuel & energy related activities not included in Scope 1 or Scope 2
Upstream transportation and distribution
Waste generated in operations (including water)
Business travel
We conducted a
deep‑dive analysis
of water consumption
for sites located in
water-stressed areas.”
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Maintaining
constituency in
FTSE4Good Index
We maintained our membership of
the FTSE4Good Index Series for the
tenth consecutive year.
The FTSE4Good is an index of LSE-listed
companies that demonstrate strong
Environmental, Social and Governance
(ESG) practices as measured against
globally recognised standards. The index
assesses the sustainability-related
performance of companies, particularly
around addressing themes including
human rights, anticorruption,
environmental performance, health and
safety, and community engagement.
FTSE4Good assessments are used by
a wide variety of market participants to
develop responsible investment funds
and other products.
Acting responsibly at Hikma
continued
Ethics and Compliance
We maintain our commitment to upholding
the highest ethical standards in the conduct
of our global business operations. This is
grounded in our values: innovative, caring,
and collaborative. These values serve as the
foundation for our governance framework.
Our Code of Conduct (Code) sets out
behaviours we expect from our employees as
we conduct our business, and provides an
overview of our legal, regulatory, and ethical
requirements.
Our Code provides guidance to our
employees and partners on the ethics of
Hikma’s business activities through the
identification and discussion of various risks
associated with our business. Hikma
employees are trained on the Code as part of
their orientation and are provided refresher
training on an annual basis. In 2024, the Code
of Conduct training completion rate was 98%.
In addition to our Code, we have also
developed policies and procedures designed
to help employees and third parties put these
behaviours into practice. The Compliance
Team provides comprehensive trainings in all
regions where Hikma operates to raise
awareness and prevent Compliance risks that
might create exposure for the Company.
Through our global compliance programme,
we have adopted internal controls and risk
management processes to ensure the
responsible and ethical conduct of our
business. This includes compliance with all
relevant global and local laws, codes and
regulations wherever we operate.
We believe in transparency and promoting a
culture that encourages employees to raise
any concerns about potential violation of laws
and regulations, or any other behaviours or
incidents that do not comply with our Code.
Our speak up channels provide both internal
and external stakeholders the ability to raise
their concerns confidentially, in alignment
with all applicable laws and regulations.
All cases received are reviewed, and
investigated, as appropriate, by our Legal and
Compliance teams. Substantiated violations
of our Code or other policies and procedures
are addressed through corrective actions,
protective measures and when deemed
necessary, disciplinary actions.
Our Compliance, Responsibility and Ethics
Committee (CREC) provides oversight of our
global compliance programme and the
management of associated risks, including
bribery and corruption. At Hikma, we have
a zero-tolerance policy for bribery and
corruption. As a publicly listed company on
the London Stock Exchange (LSE), we are
subject to the regulations of the UK Listing
Authority. We also comply with the UK
Bribery Act 2010 and the US Foreign Corrupt
Practices Act, as well as global anti-
corruption standards and local anti-bribery
and corruption laws.
Ethical supply chain
Our Supplier Code of Conduct plays a pivotal
role in our onboarding process, ensuring
suppliers adhere to applicable laws, uphold
high-quality standards, and conduct
business ethically. This commitment fosters
trust and transparency across our operations.
The Code addresses key areas such as
regulatory compliance, labour rights—
including the prevention of modern
slavery— product quality assurance, and
environmental sustainability.
By enforcing these standards, we continue to
mitigate risks related to fraud, contamination,
and non-compliance, thereby protecting the
integrity of our supply chain. The Code is
publicly available on our website.
All our suppliers, both new and existing,
undergo thorough assessment through our
third-party Moody’s platform to ensure
compliance with comprehensive due
diligence protocols. The platform uses a set
of risk evaluation criteria to place third parties
into categories based on level of risk.
High-risk third parties are subject to
enhanced due diligence processes. Third
parties are continuously monitored to
identify potential reputational and
compliance risks including sanctions, adverse
media coverage and political affiliations. It is
seamlessly integrated with our ERP system,
Moody’s risk data, and EcoVadis’s
sustainability rating tool to ensure full
transparency and adherence to our risk
processes.
Our cross-functional Modern Slavery Task
Force, comprising members from
procurement, legal, and compliance,
continue to implement our thorough
risk-based approach in assessing risk for all
forms of modern slavery.
Through this approach, we identified certain
suppliers with potential risks and issued
additional modern slavery questionnaires
for further assessment, while also leveraging
EcoVadis. We actively engaged with these
suppliers, working closely to ensure their
responses were comprehensive and
addressing any concerns to confirm that no
viable risks remain.
Looking ahead, our approach will continue to
be implemented, ensuring it remains aligned
with evolving best practices and legal
standards.
Upholding ethical standards
and acting with integrity
Building trust
through quality
in everything
we do
Product quality and safety
Ensuring the wellbeing and safety of our
patients is the core of our mission. We uphold
a strict pharmacovigilance framework to
safeguard against patient harm and to
guarantee the safe, effective use of
our products.
We have globally aligned processes to
identify, assess, and communicate any
changes in the benefit-risk balance of our
products and to implement timely corrective
and preventative actions.
Our pharmacovigilance efforts span the
entire lifecycle of our products on a global
scale, adhering to all regional regulations
and deadlines for safety reporting.
Pharmacovigilance is monitored at the
highest levels of our business and is included
in our enterprise risk management process,
which is overseen by the Executive
Committee and the Board on a regular basis.
To ensure the applicability, adequacy, and
effectiveness of our pharmacovigilance
system, we monitor our worldwide
compliance metrics on a monthly basis.
These metrics are documented in global
pharmacovigilance monthly reports and are
discussed in global pharmacovigilance
monthly meetings. Furthermore, findings
from pharmacovigilance audits and
inspections and the status of implementing
corrective and preventative actions are
discussed in quarterly pharmacovigilance
quality meetings.
Our marketed products (either manufactured
by Hikma or outsourced through partners)
comply with Current Good Manufacturing
Practices (cGMPs). We implement quality
oversight on our suppliers, partners and
sub-licensors to ensure that these
stakeholders are in full compliance with
regulatory standards and Hikma
requirements. Quality agreements are in
place to focus on compliance to cGMPs and
define each party’s responsibilities.
Risk-based cGMP audits are also conducted
on suppliers by our global quality team and
other reputable third-party consultants.
Through our global
compliance
programme, we have
adopted internal
controls and risk
management
processes to ensure
the responsible and
ethical conduct of
our business.”
We uphold a strict
pharmacovigilance
framework to ensure
the safe and effective
use of our products.”
1. Starting year for short-term CSA range from 2021 to 2024, depending on date that the CSA was last assessed.
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Disclosure
Consistency
Status
Reference
Strategy
a) Describe the climate-related risks
and opportunities the organisation
has identified over the short,
medium, and long term
– Through climate scenario analyses (CSA), Hikma has identified and
assessed climate-related risks associated with carbon pricing, energy
pricing and water stress, and physical impacts on our facilities, such as
floods and storms. Hikma has also evaluated climate-related
opportunities, including conducting a CSA that assessed the financial
opportunity of increasing onsite renewable energy (RE) capacity within
our facilities
– In 2024, Hikma expanded the scope of its CSA to assess water stress
risk to include Columbus (OH, USA), Morocco, Portugal, and Tunisia
Page 69
b) Describe the impact of climate-
related risks and opportunities on
the business, strategy, and
financial planning
– The financial impact of climate-related risks has been considered over
three time horizons to 2050
– Until 2030, which we consider to be short-term for the purpose of
climate-related risk analyses, the financial impact is not material as per
materiality definition on page 69
– We incorporate climate-related risks and opportunities into our
business strategy and financial planning by budgeting for energy and
water-use efficiency, increasing renewable energy capacity, and working
with third-party advisors and consultants
Page 70,
71
c) Describe the resilience of the
organisation’s strategy, considering
different climate-related scenarios,
including a 2°C or lower scenario
The results of our CSA show that climate change is not expected to have a
material impact on the Group’s financial viability for the short-term time
horizon to 2030. Our CSA, longer-term viability statement and impairment
tests are aligned through common scenario inputs. Given the limited
expectations for climate-related financial impacts, the Group believes that
its strategy is robust and will be resilient to climate change in the time
horizon to 2030
Page 75
Risk management
a) Describe processes for identifying
and assessing climate-related risks
– In 2024 we reviewed and updated our climate-related risk and
opportunities register including input from business stakeholder
workshops, peer review benchmarking, our risk management
programme, and other sources
– The TCFD Working Group assessed risks and opportunities from the
updated risks register in terms of likelihood, velocity, and impact at
Group level
– In 2024, we also conducted a renewable energy (RE) opportunity CSA
through which we assessed the financial opportunity of increasing RE
capacity within our facilities
– Expansion of water stress CSA in 2024 (see Strategy point above)
Page 66,
67
b) Describe processes for managing
climate-related risks
Climate-related risks are identified, assessed, and managed by teams
across the organisation, steered by our Sustainability function. The risk
score and our risk appetite determine the level of escalation and
monitoring within Hikma’s risk management framework
Page 66,
67
c) Describe how processes for
identifying, assessing and
managing climate-related risk are
integrated into overall risk
management
We regularly assess climate-related risks and review TCFD alignment as
part of our enterprise risk management process, where climate change is
characterised as an Emerging Risk
Page 68
Task Force on Climate-related
Financial Disclosures (TCFD)
This section includes disclosures that are consistent with the
requirements outlined within the TCFD as well as the mandatory
reporting requirements set out in the Companies Act relating to
Climate-related Financial Disclosures (CFD).
As a UK-listed company, and in accordance with UK Listing Rule (UKLR) 6.6.6(8), this section summarises our progress as of 31 December 2024
against the four TCFD pillars and 11 TCFD recommendations. Our approach follows the TCFD’s All Sector Guidance. Data and records that
support these disclosures are retained in accordance with the UK Financial Conduct Authority requirements for listed entities. Our disclosures
are fully consistent with nine of the TCFD recommendations and partially consistent with two recommendations, as set out on pages 62 and 63,
recognising that we will continue to improve and refine our implementation of the recommendations. Our TCFD and CFD disclosures have
supported the awareness and integration of climate-related issues into our broader business strategy.
Compliance statement and index table
Consistency:
Consistent
Work in progress
Disclosure
Consistency
Status
Reference
Governance
a) Describe the board’s oversight of
climate-related risks and
opportunities
– The Board has ultimate responsibility for Hikma’s Sustainability strategy
and monitors the impact of climate change on the Group and the
Group’s impact on the environment. Climate-related risks are
considered by the Board and are included in the Enterprise Risk
Management programme. The Board also reviews progress in relation
to the metrics and targets defined for climate-related risks and
opportunities
– The VP of Sustainability oversees the implementation of the Group
sustainability strategy and the identification of climate-related risks
and opportunities
Page 66
b) Describe management’s role in
assessing and managing climate-
related risks and opportunities
– Hikma’s VP Sustainability, who reports into the EVP Strategic Planning
and Global Affairs – a member of the Executive Committee (EC), leads
the Group’s assessment of climate-related risks and opportunities and
manages these through the cross-functional TCFD Working Group,
which includes relevant internal stakeholders
– The Environmental Sustainability Committee, chaired by two Executive
Committee members including our Chief Executive Officer, oversees our
climate-related action plans
Page 66
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TCFD Disclosure
continued
Trigger points
In line with good risk management practice, the TCFD Technical Guidance recommends that a CSA programme should be re-assessed when
the context of the organisation changes.
The following “Trigger points” have been adapted from TCFD Technical Guidance and have been assessed by Hikma as part of the CSA
Programme in 2024.
Trigger point
Assessment
1. Key location changes in a company’s portfolio. If companies
expand into new regions, they are likely to encounter novel
physical and transition risks
In April 2023, Hikma halted operations in Sudan due to ongoing
conflict. This reduced Hikma’s exposure to the climate-related risk
of flooding as Sudan was determined through CSA to be a location
at high risk of extreme weather events, particularly flooding.
In September 2024, Hikma acquired Xellia’s US-based finished dosage
form business and related assets, including a manufacturing site in
Bedford (OH), an R&D centre in Zagreb (Croatia) and a commercial
office in Chicago (IL). These facilities will be included in future CSA
assessments.
2. Release of updated climate scenarios and models which may
impact the projections of risks and opportunities
NA
3. Developments in climate-related policies previously unforeseen
during the original climate scenario analysis process
NA
4. Changes to company’s strategies or operations leading to
changes in the materiality of climate risks and opportunities to
the business
There have not been any significant changes to the Group’s strategy
or operations that change the exposure to climate-related risks in
2024, other than the change in operational footprint noted in
Trigger Point 1 above.
Disclosure
Consistency
Status
Reference
Metrics and targets
a) Disclose metrics used to assess
climate-related risks and
opportunities in line with strategy
and risk management process
Metrics used to assess our climate-related risks and opportunities include
Scope 1, 2 and 3 emissions, electricity consumption, emissions intensity,
water consumption and waste generation among others
Page 77
b) Disclose Scope 1, Scope 2 and
Scope 3 GHG emissions and
related risk
We disclose details of our Scope 1, Scope 2 and seven relevant categories
in Scope 3 GHG emissions
Four Scope 3 categories have been determined to be not relevant. Four
categories are determined to be relevant but not yet calculated and we are
working to introduce disclosures for these categories in the near term.
We will introduce Scope 3 categories 11 and 12 in 2025 and anticipate
reporting against categories 9 and 15 in 2026
Increasing energy costs and carbon pricing present potential risks to
our business
Pages
56- 59
c) Describe targets used to manage
climate-related risks and
opportunities and performance
against targets
We manage our climate-related risks and opportunities and performance
against the following Scope 1 and 2 and water-related targets:
– Reduce our Scope 1 and 2 GHG emissions by 25% by 2030, using a 2020
baseline
– By 2026, revise long-term carbon reduction targets and implement key
renewable energy projects
– By 2028, deliver key aspects of the ISO 46001 Water Efficiency
Management System in the MENA region
We currently do not have Scope 3 targets in place but proactively engage
with our key suppliers to raise awareness about sustainability. We are
working to improve our understanding of emissions in our value chain and
have an ambition to introduce Scope 3 targets in the medium term. We will
consider this disclosure as consistent once a Scope 3 target has been set
and established
– In addition, we are actively engaging with our value chain partners to
partially mitigate the impact of carbon cost pass-through in the future
Page 56
Key improvements in 2024
– Refined our climate scenario narratives,
providing deeper insights into potential
climate-related risks and opportunities,
including the significance of their financial
impacts
– Strengthened our water stress CSA by
expanding research scope to include
Columbus (OH, USA), Morocco, Portugal,
and Tunisia
– Developed renewable energy opportunity
CSA to assess the financial opportunity of
pursuing renewable energy solutions
globally at our facilities
– Conducted a double materiality
assessment (DMA) to refresh our
materiality index in line with CSRD
requirements. The DMA includes analysis
of potential environmental risks,
opportunities and impacts (IROs) over
short-, medium- and long-term time
horizons (less than one year, between 1-5
years and longer than five years
respectively)
– As part of the DMA process, we engaged
critical business stakeholders to identify
potential climate-related risks and
opportunities that could influence their
business areas and conducted an
employee survey to prioritise sustainability
topics including climate change
– Developed a methodology for introducing
most of our relevant Scope 3 categories
that are not yet calculated (Category 9, 11
and 12)
Key improvements planned for 2025
– We will continue to assess Scope 3
categories that are considered to be
relevant, but not yet calculated and where
possible include them in our reporting
scope
– We will align the findings of the DMA with
potential future CSAs that improve our
understanding of potential climate-related
risks and opportunities
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Financial
statements
Strategic
report
Corporate
governance
Governance
Board level oversight
Our Board of Directors, led by the Chairman
of the Board, oversees our environmental
sustainability strategy and considers
climate-related matters throughout the year.
Our EVP Strategic Planning and Global Affairs
and VP of Sustainability provide ESG-related
updates to the Board, including climate-
related risks and opportunities, progress
against environment-related targets and any
changes in risk status, in scheduled bi-annual
presentations and in more regular updates to
the Board’s Compliance, Ethics and
Responsibility Committee (CREC). ESG-
related initiatives have been included in our
five-year capital expenditure business plan,
overseen by the Board. The Board has
ultimate responsibility for the Group’s
approach to risk management and internal
control and cliimate related risks are included
in our Enterprise Risk Management process.
The Audit Committee oversees risk
management and internal control activities
with delegated authority from the Board (see
Risk Management section, page 80).
The TCFD Working Group presented the
findings from the TCFD work this year to the
Audit Committee. A general progress report
is sent to the Chairman of the Board three
times a year. The report includes a section
on TCFD-related projects progress and
environmental impact reporting.
The Remuneration Committee linked
environment-related targets to the 3-year
Long Term Incentive Plan (LTIP) for the
Executive Chairman, the Executive Vice
Chairman of the Board and the CEO. The
targets were related to emissions reduction
and approach to water stewardship. More
information on metrics linked to Executive
Remuneration can be found at 116.
Management level leadership
Our EVP Strategic Planning and Global
Affairs, who reports directly into our CEO,
heads up the TCFD Working Group that
started in 2021 and consists of senior
representatives from Group Risk
Management, Procurement, Finance,
Sustainability and Investor Relations. This
group leads our internal cross-functional
efforts to integrate the TCFD
recommendations into our business and
meets on a regular basis. Our VP of
Sustainability, who reports to our EVP of
Strategic Planning and Corporate Affairs, sets
the sustainability strategy and the alignment
of TCFD findings and recommendations with
the broader corporate strategy.
Our crisis and continuity teams work closely
with members of the TCFD Working Group
and provide insight into the potential impact
of climate-related risks on our operations.
In addition, external consultants help
progress our understanding of Hikma’s
climate-related risks and opportunities. The
Environmental Sustainability Committee
reviews metrics, progress against TCFD
recommendations and our targets and
oversees the development of action plans.
We continue to focus on strengthening our
ESG governance, including climate change, at
all levels of the organisation.
Risk management
Process for identifying and assessing
climate-related risks
We identify and assess climate-related risks
using a range of approaches. We conduct risk
identification and assessment exercises as
part of the enterprise risk management
process with all risk owners across the
business (see page 80 for details on our risk
processes). The outcomes of these reviews
feed into the TCFD working group’s
assessment of the most relevant climate-
related risks for Hikma. The TCFD working
group monitors relevant current and
emerging regulation, market risks,
reputational risks, technology risks and acute
and chronic physical risks.
The Board has overall responsibility for
climate-related risks and opportunities
(CRROs), while the Executive Committee
provides leadership in managing them.
Sustainability, risks and opportunities, and TCFD governance
Board
Oversight of Group sustainability strategy, risk and opportunity management,
and TCFD consistency
Executive Committee
Leadership in implementing sustainability strategy, risk and opportunity
management, and TCFD consistency
Sustainability management team
Led by the VP of Sustainability,
oversees sustainability matters and
the identification of climate related
risks and opportunities
TCFD Working Group
Cross functional working group that
includes senior leaders in Finance,
Risk, Sustainability, Procurement,
Legal and Investor Relations teams
Finance team
Site management and operational
teams
Risk management team
Investor relations team
Crisis and continuity management
Procurement team
The VP of Sustainability oversees the
identification, assessment and management
of CRROs, and works with other functions
including the Risk Management team to
integrate them into the Group’s overall risk
management process. Updates to CRROs are
considered on an annual basis.
CSA methodology
To assess Hikma’s climate-related risks and
opportunities over the short, medium and
long-term, we have undertaken, with third
party support, a CSA and financial impact
assessment. The CSA assessed a range of
potential climate-related risks and
opportunities across different climate
scenarios and time horizons incorporating
public reference projections for changes
to the climate system, socio-economic
pathways, energy market dynamics,
technological progress and financial risks.
To support the narrative and understanding
of climate-related risks and opportunities, we
refined our climate scenario narratives in
2023. These narratives were informed by
climate projections, per the table below. We
have been performing CSA since 2021 and
are continuously improving our insights. The
table shows the details of the climate
scenarios that we used over the years.
2024 CSA review
In 2024, we went through an independent
review of our CSA work and our efforts to
align with the TCFD recommendations,
concluding that we have a well-developed
TCFD response, year-on-year improvement
and clear management processes to assess
climate-related risk. We conduct annual
reviews of our CSA methodology and in 2024
we incorporated a broader geographic
boundary to assess water stress and
conducted an assessment on pursuing onsite
renewable energy opportunities. Our CSA
exercises are robust, using publicly available
data and projections.
Time horizons used for CSA
Term
Years
Financial alignment
Short term
Up to 20301
Include 5-year Business Plan and 3-year LTVS
Medium term
2031–2040
Next 8–16 years, asset life of equipment
Long term
2041–2050
Next 17–26 years, asset lifetime of properties and facilities
1. The start date of the CSA range from 2021 to 2024, depending on the specific theme
Climate scenario narratives
Low Carbon world (~1.5°C)
Orderly
This is a ‘Net Zero by 2050’ aligned
scenario where global temperature
rise is limited to 1.5°C warming. The
transition is smooth and immediate.
Transition risks are likely to
be experienced associated with
the transition to a green economy
however, physical risks will be reduced.
Low Carbon world (~1.5–2°C)
Disorderly
This is a ‘Net Zero by 2050’ aligned
scenario where global temperature rise
is limited to 1.5°C but the transition is
divergent and/or delayed.
Significant transition risks are likely
to be experienced associated with the
transition; however, physical risks will
be reduced.
High Carbon world (~3–4°C)
This is a ‘business-as-usual’ scenario
where global temperatures rise to
3–4°C above pre-industrial levels.
Climate policies are not sufficient
to achieve official commitments and
physical risks considerably increase
resulting in catastrophic impacts.
The Low Carbon world-Disorderly transition is considered the most relevant scenario to Hikma and those scenario assumptions have
been used in financial statement preparations for alignment.
TCFD Disclosure
continued
Our governance
structure ensures we
are effectively
managing our TCFD-
related activities in the
Board and across the
organisation.”
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Strategic
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Corporate
governance
Risks
Climate projections1
Associated climate scenario narrative
Timeline
Last assessed
Low Carbon
world
Orderly
Low Carbon
world
Disorderly
High Carbon
world
Physical risks
Impact of
storms
– NOAA and Bank of England 1.5°C, 2°C, 4°C, based off
various NGFS Scenarios
–
Y
Y
2030,
2040,
2050
2021
Impact of
floods
– IPCC RCP4.5 (~2.4°C), IPCC RCP8.5 (4°C)
–
Y
Y
2030,
2040,
2050
2023
Impact of
water stress
– IPCC RCP 1.9, IPCC RCP 2.6, IPCC RCP 8.5
– NGFS NZ, NGFS Divergent NZ, NGFS Current Policies
– CBES LA, CBES NAA
– IEA APS, IEA NZE, IWEA STEPS
– Carbon Brief
Y
Y
Y
2030,
2040,
2050
2024
Transition risks and opportunities
Impact of
carbon pricing
– IPCC RCP 1.9, IPCC RCP 2.6, IPCC RCP 8.5
Y
Y
Y
2030,
2040,
2050
2023
Impact of
energy pricing
– NGFS NZ, NGFS Divergent NZ, NGFS Current Policies
– CBES LA, CBES NAA
– IEA APS, IEA NZE, IEA STEPS
– Carbon Brief
Y
Y
Y
2030,
2040,
2050
2023
Impact of
pursuing RE
opportunities
Y
Y
Y
2030,
2040,
2050
2024
1
CBES = Climate Biennial Exploratory Scenario, IEA = International Energy Agency, IPCC = Intergovernmental Panel on Climate Change, NGFS = Network for Greening the Financial System,
NOAA = National Oceanic and Atmospheric Administration, NZ= Net-zero
Integrating risk management processes
Climate-related risks are identified, assessed,
and managed by teams across the
organisation, depending on the nature of the
risk. Our risk management framework (see
page 80) provides a structure for significant
risks to be escalated and integrated into our
enterprise risk management process.
Examples of how climate-related risks are
managed and integrated into existing risk
management activities include:
– Longer-term viability assessment:
environment and climate change related
risks are included in the scenario modelling
(see page 88)
– Crisis and continuity management
programme: site assessments of physical
risks and controls are undertaken (see
page 86)
– TCFD alignment is considered as part of
the ‘Reputation’ principal risk
– Climate change occurrence is monitored
as an emerging risk
TCFD Disclosure
continued
Strategy
Risks and opportunities identified
In 2024, we expanded our CSA on water
stress risk to include locations of some of our
larger facilities including in Columbus (OH,
USA), Morocco, Portugal and Tunisia. We also
assessed and quantified the opportunity of
developing renewable energy solutions at our
facilities, conducted a general CSA
programme review and a review of our
alignment with the TCFD CSA Guidance (see
table below). These actions were taken after
our TCFD Workshop that was organised in
2023 with stakeholders from different
businesses, corporate functions and
geographical regions for the purpose of
identifying and reviewing how climate change
might impact our strategic business drivers.
Participants in the 2023 TCFD Workshop
included our TCFD Working Group (Investor
relations, Finance, Sustainability, Risk,
Procurement) as well as management from
Operations, R&D, Manufacturing,
Engineering, Supply Chain and Commercial.
We explored how external influencing factors
such as regulation, technology, energy costs,
changing medical needs, supply chain
vulnerability and the political landscape
might translate into climate-related risks to
our business, and what kind of climate-
related opportunities might arise. The impact
of storms on our business has not been
reassessed since 2021 because the
conditions remain the same for which we
reached our previous conclusions on
the matter.
Our updated climate-related risk register
consists of 16 risks and opportunities.
Through our risk management framework and
assessment methodologies, we selected the
following climate-related risks (four risks) and
opportunities (one opportunity), deemed to
be most relevant and for which modelling
could be enhanced, for further analysis:
Physical risks
– Impact of extreme weather events
including impact of severe floods and
storms
– Impact of chronic changes to the
natural environment, including increased
water stress
Transition risks
– Impact of carbon pricing, including carbon
pricing mechanisms, carbon pass-through
costs in the supply chain and the increase
cost of raw materials
– Impact of energy pricing
Climate-related opportunities
– Impact of pursuing renewable energy
solutions globally, including through
generation, power purchasing
agreements and an active energy
supply management strategy
Basis for determining which risks and
opportunities are most relevant
Materiality
For the purpose of climate risk analysis, we
apply a risk scoring matrix that considers
likelihood, velocity of risks, financial impact,
and a wide variety of possible impacts
including but not limited to delivery of
strategic objectives, patient safety, product
quality, reputation, continuity of supply,
management time and effort to remediate.
In the context of climate risk analysis, the
CSA results do not exceed our climate-related
financial materiality threshold in the most
relevant scenario Low Carbon world-
Disorderly transition.
We have been
performing CSA since
2021 and continuously
improve our insights.”
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Strategic
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Corporate
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Step in TCFD CSA guidance1
Consistency
Key improvements and next steps
Engaging stakeholders
Consistent
Continue to engage and inform key stakeholders about any current and
future developments in our CSA approach, and to ensure that our
stakeholders understand the purpose of the CSA process, the key steps
conducted and the outcomes
Problem definition
Consistent
We conducted qualitative workshops to ensure our focal question was
relevant to our business strategy and priorities and linked to our CSA work
Assessing context and identifying driving
forces and uncertainties
Consistent
We conducted a workshop engaging key stakeholders to identify our key
business drivers and review the list of identified climate-related risks
and opportunities
We conducted a quantitative analysis of energy pricing risk after it was
flagged through the workshop as a potential missing risk
Understanding and describing scenario
outcomes/pathways and writing
qualitative scenario narratives
Consistent
We produced robust scenario narratives for three separate future
climate scenarios: Orderly Transition, Disorderly Transition and High
Carbon Scenario.
We will continue to utilise these narratives to effectively inform stakeholders
across the business about identified climate risks and opportunities
Quantification of risks, opportunities
and financial impacts
Consistent
We work with third party experts to review applied models and identify/
implement improvements, as well as to review the materiality of risks and
opportunities and update accordingly
Checking quality and avoiding pitfalls
Consistent
We work with third party experts to conduct annual health checks of our CSA
work and integrate recommendations and findings accordingly.
We periodically update our CSA work and refine the scenarios and models
used, and integrate the findings into our overall strategy
Strategic management using scenarios
Consistent
We assess the strategic relevance of risks that have not currently undergone
quantitative modeling and ensure continuous monitoring and assessment
of external environment and resilience strategies
Disclosure
Consistent
We include the following in our annual disclosures:
– Explanation of how identified risks and opportunities were prioritised
– Clearly defined conditions for risk and opportunity assessment, including
clear time horizons, likelihood and magnitude
– Disclosure of financial impacts of risks from the quantitative modeling
– Details of the climate scenarios used
– Disclosure of all time frames considered
– Explanation of how CSA results are integrated into our strategy and how
our strategy may change to accommodate risks and opportunities
identified
1
For more information on CSA guidance, refer to Task Force on Climate-related Financial Disclosures Guidance on Scenario Analysis for Non-Financial Companies (2020), https://www.
fsb-tcfd.org/
TCFD Disclosure
continued
CSA findings
Below are summaries of our CSA findings.
Financial impact – range across scenarios
2030: Short-term
2040: Medium-term
2050: Long-term
Climate scenario narratives used
Transition risks
Impact of carbon pricing
Reflected as potential increase in
procurement costs in assessed
categories due to carbon fee, if
unmitigated (not cumulative)
$3m – $10m
$7m – $40m
$8m – $76m
Low Carbon world – Orderly transition
Low Carbon world – Disorderly transition
High Carbon world
How did we calculate the potential financial impact of carbon pricing?
We used the EcoAct Carbon and Energy Pricing Tool, which is informed by academic research, CDP data, and publicly available carbon price
projections from the International Energy Agency. Cost exposure is calculated based on projected carbon and energy prices, combined
with Hikma’s projected consumption of relevant goods and services.
How would this risk affect operations and financial planning?
Direct emissions from Hikma’s purchased goods and services will be regulated by (future) carbon pricing mechanisms, climate regulation
and carbon tax. Carbon pass-through costs from 3rd parties in our supply chain, who are subject to carbon pricing (such as transport,
distribution suppliers) will have an indirect impact on our cost base. Raw materials and packaging costs may increase due to climate-related
constraints on plastics, labour and energy. We incorporated the following categories in our analysis: finished and semi-finished goods,
upstream transport, energy, API, packaging, excipients, and intermediates.
Our diverse global presence (North America, Europe, MENA) sees varying degrees of sustainability advancement in our manufacturing
countries, which necessitates constant monitoring and agile adaptation to evolving market conditions. For the time horizon to 2050 in a
Low Carbon world – Disorderly transition, carbon prices will increase, however we deem the financial impact still not material at this stage.
Although the range exceeds the materiality threshold in the context of climate-related risks, it is important to note that the upper end of the
range arises in the Low Carbon world – Orderly transition, a scenario that we deem unlikely to happen.
How are we managing this risk?
We routinely look at ways to manage our procurement costs and offset price increases. Our sustainable procurement programme aims to
better understand the carbon impact of purchased goods and services. As a key mitigation strategy, we engage with key material suppliers
to understand their carbon reduction objectives and the activities they are undertaking to move to renewable energy and increase energy
efficiency in their operations. Through supplier engagement, we expect to be able to partially mitigate the impact of carbon cost pass-
through in the future. In our CSA, we calculated different potential mitigation scenarios, where the impact of carbon pricing would be
constrained. While current exposure is low, it is expected that carbon costs will increase over the coming decade as more countries
establish carbon prices. We continue to monitor developments.
What is our level of resilience to this risk?
We consider our level of resilience to the risk of carbon pricing over the short, medium and long term to be high. This is based on robust
governance structure that includes Executive-level leadership in environmental sustainability and Board-level responsibility of the issue.
Moreover, we have in place Group-wide targets and teams at the site level to identify and capitalise on relevant opportunities that emerge.
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TCFD Disclosure
continued
Financial impact – range across scenarios
2030: Short-term
2040: Medium-term
2050: Long-term
Climate scenario narratives used
Transition risks
Impact of energy pricing
Reflected as potential increase in
procurement costs in assessed
categories due to carbon fee, if
unmitigated (not cumulative)
$3m – $12m
$7m – $19m
$14m – $25m
Low Carbon world – Orderly transition
Low Carbon world – Disorderly transition
High Carbon world
How did we calculate the potential financial impact of energy pricing?
We used the EcoAct Carbon and Energy Pricing Tool, which is informed by price projections from the EnerData EnerFuture database.
Cost exposure is calculated based on projected energy prices, combined with Hikma’s projected consumption of electricity and natural gas.
How would this risk affect operations and financial planning?
It is not certain that Hikma will face increasing energy costs over time, as governments have not pledged to implement policies directly
intended to increase the cost of electricity and natural gas. However, limiting factors such as increasing energy demand because of
population growth, technology and renewable energy investment, in combination with interrupted supply because of natural disasters,
conflicts and limited metals may increase energy pricing in our value chain. The financial impact relates to the potential change in Hikma’s
energy cost from a 2022 baseline, reflecting an increase in energy cost for electricity and natural gas at our manufacturing sites and offices.
In both Low Carbon world scenarios, electricity prices rise through 2030 but tend to fall sharply afterwards, counterbalancing the impact
of increased consumption. To further improve the modelling, transition to lower carbon energies should be included, as well as increased
on-site generation capacity, which would reduce consumption and cost exposure.
How are we managing this risk?
Hikma is continuously evaluating opportunities to transition to renewable energy in each of our three regions (North America, Europe,
MENA). Opportunities differ in potential, depending on the maturity of the markets that we operate in and the required financial
investments. Where price increases might occur, Hikma may choose to accelerate site and country-specific adjustments to substitute
natural gas for electricity and vice-versa, based on the relative price of available energy sources. Future modelling should account for
this possibility.
What is our level of resilience to this risk?
We consider our level of resilience to the risk of energy pricing over the short, medium and long term to be high. This is based on robust
governance structure that includes Executive-level leadership in environmental sustainability and Board-level responsibility of the issue.
Moreover, we have in place Group-wide targets and teams at the site level to identify and capitalise on relevant opportunities that emerge.
Financial impact – range across scenarios
2030: Short-term
2050: Long-term
Climate scenario narratives used
Physical risks
Increased frequency of extreme weather
events
Reflected as potential event cost caused
by extreme weather event (not
cumulative)
No impact
anticipated
$25m (storms)
Low Carbon world – Disorderly transition
High Carbon world
How did we calculate the potential financial impact of storms?
To calculate the potential financial impact of severe storms, we used data from the ThinkHazard database, the National Hurricane Centre
and the National Oceanic and Atmospheric Administration portal to determine climate-related risk exposure baselines. A financial impact
matrix was developed with degrees of asset and inventory loss or damage, and the length of operational shutdown was assumed based on
the qualitative and quantitative narrative for each storm category in the Saffir-Simpson Hurricane Wind Scale.
How did we calculate the potential financial impact of floods?
Hikma sites and key supplier sites were screened for both pluvial and coastal flood risk using the Aqueduct Flood Hazard Maps. In addition,
a 15 km radius around Hikma sites was screened for indirect pluvial flooding risk. Financial modelling was conducted using operational
disruption and loss from inundation at facility.
How would this risk affect operations and financial planning?
Extreme weather events impacting our facilities might cause interrupted manufacturing or supply of key resources. They may impact
national infrastructure and could lead to power outages, restrictions on access for supply chain and workforce leading to downtime, lost
sales, fines and ultimately in the end reputational damage. Extreme weather events may also impact critical suppliers leading to downtime,
lost sales, fines, and reputational damage. While no sites were identified with direct exposure to inundation risk, more research is needed to
assess the indirect inundation risk.
We conducted an analysis of the financial impact of an extreme storm impacting a site in the US. Through this analysis, we concluded that
the potential financial implications of physical risks under the worst-case scenario High Carbon world (for extreme weather events) are
anticipated to remain minimal through at least 2030.
How are we managing this risk?
With the insights from our modelling and understanding that these risks are not significant to our sites at this stage, we will continue to
engage with our operational facilities teams in the highest risk regions to ensure our business continuity and recovery processes are fit
for purpose.
What is our level of resilience to this risk?
The findings of our LTVS analyses for extreme weather indicates that our broad geographical footprint provides us with a robust level
of resilience towards extreme weather events in one location.
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TCFD Disclosure
continued
Financial impact – range across scenarios
2030: Short-term
2050: Long-term
Climate scenario narratives used
Physical risks
Impact of water stress
Reflected as potential water cost
(cumulative)
$8m – $9m
$17m – $22m
Low Carbon world – Disorderly transition
Low Carbon world – Orderly transition
High Carbon world
How did we calculate the potential financial impact of water stress?
We looked at the potential future cost of water and potential EBIT loss due to production downtime as a result of water rationing. Total future
water costs in our CSA consist of municipal water supply costs and water tanker costs (including fuel price projections). We assumed that
the cost of municipal and tanker water change proportionally to water stress and a production site’s water consumption will increase
proportionally to the growth rate. At the same time, the number of days with a lack of access to water supply increases proportionally to the
degree of water stress and the site’s water storage mitigation. All total costs are based off future water consumption projected using the
Hikma production growth rate.
How would this risk affect operations and financial planning?
Given that water is used for cleaning in our manufacturing processes, we consider water stress a risk. Water stress is likely to increase in the
future due to increases in demands for water from growing populations and industry and from a decrease in fresh water supply due to
climate change. Shortage and potential rationing of water could potentially lead to disrupted operations and could financially impact Hikma
both through increased cost of water supply and from loss of EBIT from production downtime. Only direct and tangible financial impacts
have been assessed in the 2023 and 2024 CSAs. Other consequences such as impacts on the workforce, increased political unrest or
conflict, and impacts to third parties have not been assessed, but Hikma acknowledges them. Our CSA initially focused on four countries
(Jordan, Saudi Arabia, Algeria and Egypt) in 2023, and expanded its focus to include Columbus (OH, USA), Morocco, Portugal and Tunisia.
This ensured that all countries that we determined as water stressed are included in our analysis (Algeria, Egypt, Jordan, Morocco, Saudi
Arabia and Tunisia). The analyses show that Hikma faces potential water stress in both baseline and future projection scenarios, resulting in
increased water costs and potential loss of EBIT due to production downtime. At this stage, impact figures are not currently material and are
partially mitigated by storage capacity.
How are we managing this risk?
To mitigate the risk of water shortage, we hold onsite storage capacity. Other mitigation actions include implementing water reduction and
saving initiatives on site. Our executive remuneration and long-term incentive goals steer us towards achieving good water management at
all Hikma’s sites in MENA (where water stress is most apparent) by establishing water management systems, processes and targets, and
implementing opportunities for efficient water use. More information on metrics linked to Executive Remuneration can be found at 116.
What is our level of resilience to this risk?
We consider our organisation to have a high level of resilience on this issue due to our robust governance of environmental sustainability,
our management of water-related issues at the global, regional and site levels and our focus on water-related goals and targets to drive more
efficient consumption in water-scarce regions.
Financial impact – range across scenarios
2030: Short-term
2040: Medium-term
2050: Long-term
Climate scenario narratives used
Energy cost opportunity
Impact of pursuing renewable energy
(RE) solutions
Reflected as the potential financial
benefit for Hikma to generate its
electricity through onsite RE generation
and RE-based Power Purchasing
Agreements (PPAs). (cumulative)
$85m – $109m
$176m – $213m
$244m – $267m
Low Carbon world – Disorderly transition
Low Carbon world – Orderly transition
High Carbon world
How did we calculate the potential financial impact of pursuing RE solutions?
The analysis focused on answering the question: “What would be the financial benefit for Hikma to pursue RE solutions through onsite
electricity generation, as opposed to continuing to purchase electricity from the grid?” To answer this question, we compared the cost of
onsite renewable energy generation with the projected cost of electricity under different scenarios. We conducted a comparative analysis
using scenario-specific energy consumption and cost data from previous carbon and energy pricing analyses for 24 sites, including only sites
with over one GWh of annual consumption. These figures were compared with a technology-specific Levelised Cost of Electricity (LCOE),1 for
developing solar and wind (onshore and offshore) capacity across the countries of the 24 prioritised sites. The difference indicates the
potential cost savings in three scenarios across short-, medium- and long-term. The figures represent estimates based on desktop research
that utilised various assumptions to generate estimated savings over the relevant time horizons.
How would this opportunity affect operations and financial planning?
Given that the majority of our energy consumption is sourced from electricity, given our previous analyses on carbon and energy pricing, we
consider the development of onsite RE capacity to be an opportunity. This analysis indicates that onsite solar generation has the largest savings
potential. To date, we have onsite solar capacity in Jordan, KSA and Portugal; and are installing solar capacity in our Cherry Hill facility in the US.
How are we managing this opportunity?
We are continuously assessing the feasibility of developing or expanding onsite RE capacity at our sites. In 2024, we expanded solar
generation in our Salt facility which also provides our MENA Head Office in Amman with green electricity through wheeling.2 We also installed
solar generation in the Kingdom of Saudi Arabia (KSA) and Morocco and are exploring the installation of onsite solar generation in other
locations in 2025. For more details on the actions we have taken and are taking to increase renewable energy consumption and generation,
please see the Protecting the environment section on page 56.
Resilience of our strategy
The results of our CSA show that climate change is not expected to have a material impact on the Group’s strategy or financial viability for
the time horizon to 2030. Our CSA, longer-term viability statement and impairment tests are aligned through common scenario inputs.
We will continue to strengthen our monitoring metrics and understand where we need to improve our mitigation controls.
Our model inputs in the CSA do not include mitigating actions on the part of Hikma, our suppliers, or governments, for example, and
cover time horizons well beyond our current business planning. We recognise that climate-related risks and opportunities will continue to
develop over a significantly longer period and believe that we will be able to adapt our strategy and respond appropriately to emerging
climate-related risks and opportunities that could have a material impact on the Group in the future. Where we identify any areas for
improvement, we will build clear action plans and ownership to address these gaps and ensure our long-term resilience.
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TCFD Disclosure
continued
Metrics and targets
As we continue to grow, we remain dedicated to minimising our environmental footprint. We are actively measuring and managing our energy
and water consumption and are regularly reviewing opportunities to improve efficiency. We acknowledge the environmental impact of
manufacturing and delivering medicines and are committed to the efficient and responsible management of energy, water, and waste within
our organisation and throughout our value chain. To sustain our success, it is crucial that we manage resources responsibly and consider the
long-term environmental impacts in the places where we do business.
Metrics to assess climate-related risks and opportunities
We monitor our Scope 1, Scope 2 and material Scope 3 emissions, as well as metrics related to the consumption of energy. This data is included
in the Sustainability section (page 56). We will continue to develop our methodology for calculating our Scope 3 emissions categories that are
relevant but not yet calculated. The development of onsite RE capacity presents an opportunity for our business and we monitor the
percentage of RE-sourced energy, both onsite and purchased. In addition, as part of the ‘Reputation’ principal risk (see page 84), we monitor
our performance against external ESG ratings.
Executive remuneration
We have adopted carbon and water-related targets as part of management’s Long-Term Incentive Plan. More details can be found in the
Governance section on page 101.
The table below indicates the metrics we have in place that are linked to our climate-related risks and improve our understanding of the impacts
of these risks. More details on the progress against our targets is available in the Sustainability section.
Transition risks
Targets
Relevant metrics
Impact of carbon
pricing
Reduce Scope 1 and 2 GHG emissions by 25% by
2030, using a 2020 baseline
See page 56 for more information on our 2030 target
and progress achieved to date
Our 2026 target is to revise long-term carbon
reduction targets and implement key renewable
energy projects
Scope 3 target not set
– Absolute emissions Scope 1, 2 (Location-based
and market-based)
– Emissions intensity (revenue and employee
headcount) Scope 1, 2 (Location-based and
market-based)
– Absolute emissions Scope 3 in category 1
(purchased goods and services) and category 4
(upstream transportation)
Impact of energy
pricing
No target set
– Absolute energy consumption
– Energy consumption mix
– Percentage renewable energy generated/purchased
Physical risks
Targets
Relevant metrics
Increased frequency
of extreme weather
events
No target set
– Proportion of facilities in an area subject to flooding
or storms
– Number of sites with business continuity plans that
cover impact of severe weather events
Impact of water
stress
Achieve good water management at Hikma’s MENA
sites
Our 2028 target is to deliver key aspects of the ISO
46001 Water Efficiency Management System in the
MENA region
See page 56 for more information on our target and
progress achieved to date
– Change in m3 water withdrawal
– Change in m3 water consumption in countries with
high water stress
– Change in m3 water discharge
– Change in m3 water treatment
– Progress of water efficiency measures
– Water consumption intensity
Opportunities
Targets
Relevant metrics
Energy cost
opportunity
No target set
– Cost of standard electricity and fuels
– Cost of renewable solutions
We are committed to continuously evaluating our environmental impacts and to implementing mitigations and capitalising on opportunities. In
2025, we will continue to enhance and refine the metrics we use to monitor risks and opportunities and expand the robustness of our analyses.
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80
Risk management framework
81
Risk management activities
82
Case study: Artificial Intelligence (AI)
and Hikma
82
Principal risks and uncertainties
87
Going concern and longer-term
viability
Risk
management
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Risk management
enables us to fulfil our obligations and
provides assurance that our activities
are appropriately controlled.
Risk appetite
The Board determines the nature and extent
of the principal risks it is willing to take and
communicates this through the Group risk
appetite. The risk appetite outlines expected
management strategies and details limits and
tolerances on risk exposure for each of the
principal risks. It forms the foundation of the
ERM framework and guides management
decision-making across the Group. The risk
appetite is reviewed twice a year at Board
level and is monitored by management
on an ongoing basis.
Risk governance
The Board has overall accountability for
the Group’s approach to risk management
and internal control. The Audit Committee
oversees risk management and internal
control activities with delegated authority
from the Board.
The Audit Committee reviews the material
risks facing the Group, considering different
sources of assurance, including executive
management, internal audit, and external
audit. The Chair of the Audit Committee
is a standing member of the Compliance,
Responsibility and Ethics Committee (CREC)
to ensure connection between the Board
Committees with primary risk oversight
responsibilities.1
Risk management
framework
Risk context
Our purpose is to put better health within
reach, every day for healthcare professionals
and their patients. We bring patients across
North America, MENA and Europe a broad
range of generic, specialty and branded
pharmaceutical products.
The future is uncertain and carries risks for
our business. These risks may be threats or
opportunities related to our strategy and
delivery of our goals, our activities and
processes, the expectations of our
stakeholders, or our key relationships
and dependencies.
Find out more about the internal and external
context for risk management for the Group
in the ‘Our strategy’ (pages 8–9),
‘Our business model’ (pages 12–13) and
‘Our markets’ (pages 20–21) sections of
this report.
Risk strategy
Effective management of risk is fundamental
for the long-term success of the Group.
We operate an Enterprise Risk Management
(ERM) framework to ensure that we are
comprehensive and structured in our
approach. The framework enables a thorough
view of our risk exposure to be developed,
which informs our decision-making and
improves our strategic, tactical, operational
and compliance processes. The approach
Internal audit provides independent
assurance of the Group’s internal control
environment. For more details on our internal
audit approach see page 113.
The Group risk management function
enables and drives effective risk
management practices, guides global risk
owners in assessing and reporting their risks,
coordinates emerging risk assessments, and
establishes connections and partnerships
across the organisation to promote and
develop a responsible risk culture.
Compliance and internal control functions
with professional expertise in managing risk
and internal control in specialist areas are
in place across the organisation.
The CEO and Executive Committee have
direct ownership of risk management for the
Group. Risk management accountability is
fully embedded within their executive
responsibilities.
As part of the risk governance framework,
Executive Committee and Leadership
Council members, and other senior
executives are assigned responsibility for
specific principal risks. Together, they
coordinate risk management activities across
the organisation to manage risk exposure in
line with the risk appetite.
In 2024, we improved our risk
assessments and responses through
increased cross-functional reviews.
Risk management and internal control across the organisation
Complementary management units perform and provide assurance over risk management and internal control through standards,
accountability and oversight. Independent and external assessments are additional sources of information for management.
Compliance and
internal control
Corporate Compliance
Quality Compliance
Group Risk Office
Internal controls
and assurance
Other compliance teams
Front-line
management
Operational activity
Management reviews
Executive
accountability
Executive Committee
Global risk owners
External advisers
Independent
assurance
Internal audit
External assessments
External audit
Board
oversight
Board of Directors
Audit Committee
Compliance,
Responsibility
and Ethics Committee
Risk management
activities
Risk management activities occur at all levels
of the organisation. The ERM framework
provides structure for these activities to
ensure consistency of approach, alignment
to the risk appetite and monitoring of our
risk exposure across the Group.
The Group risk management function
coordinates regular risk assessments to
review management of risks we already know
about, and to identify, analyse and evaluate
new and emerging risks. These assessments
are consolidated through the Group risk
management function and reported to
the Executive Committee by the global
risk owners.
Compliance and internal control functions,
and internal audit, also conduct regular
formalised risk assessments in relation
to their mandates.
Summarised reports and key outcomes
of risk assessments are reviewed by
management teams, the Audit
Committee and Board.
In addition to these core reporting processes,
various other risk management activities
occurred during the year.
Risk management in practice
Our ability to effectively manage risk enables
delivery of our objectives. To ensure we are
action-oriented in managing threats and
opportunities we categorise our risks
considering significance of exposure and
the opportunity for management action.
An example of risk management in practice
is seen in the case study on the next page.
Strategic risks
Group-level strategic risk assessments are
conducted by the Executive Committee
and Board of Directors. A formal review is
conducted on an annual basis to consider
threats and opportunities related to our
strategy from internal and external
perspectives and over various time horizons.
Emerging risks
Emerging risks are those that are newly
identified and have the potential to become
significant risks for the Group, those that
may already be well known but are rapidly
changing, or those that are developing over a
longer term that may have significant impact
on our ability to achieve our objectives.
Often driven by forces outside our control,
emerging risks may be mitigated by existing
control frameworks but are assessed to
determine if any aspects fall outside current
processes or if the controls in place may
become inadequate as the risk develops.
Our approach involves establishing
cross-functional teams to assess the threats
and opportunities, recognising these may
develop over an extended timeframe. The
risk assessment methods deployed vary and
may involve engaging with external experts,
scenario modelling, engagement with
existing risk mitigation programmes, and
development of new risk mitigation and
control strategies that will be sustainable
over the longer term.
We scan for emerging risks in a wide array
of domains, including economics and
geopolitics, social and demographic,
technology, legal and regulatory, environment
and sustainability, global and local workforce,
and business and competitive environment.
We focus our emerging risk assessments and
monitoring according to likelihood, impact
and velocity.
Examples of emerging risks that are
monitored include geopolitical instability
in the Middle East, development of
generative artificial intelligence, uncertainty
related to global trade policies, and physical
and transitional climate change-related
risks and opportunities.
Double materiality assessment
This year, we conducted a double materiality
assessment (DMA) to identify and prioritise
the sustainability topics most relevant to our
business. The assessment results highlighted
several material topics, with the most
significant being Product Quality and Patient
Safety and Access to Medicines, (see
page 48).
These and the other material topics identified
are monitored and managed under relevant
principal risks, ensuring they are integrated
into our risk management framework and
decision-making processes.
Internal control activities
Compliance and internal control functions
across the Group develop and manage
internal control systems, frameworks and
processes for their areas of focus as part of
risk mitigation strategies, to meet internal
and external expectations, and to ensure
compliance with regulatory requirements.
In 2024, we evaluated our internal control
framework in preparation for the updated UK
Corporate Governance Code 2024 (the 2024
Code) Provision 29 requirements for a
declaration of effectiveness of the material
controls at 31 December 2026.
Through this evaluation, material risks and
internal controls have been mapped. The
programme will continue to enhance controls
in relevant frameworks and launch training on
best practices for formal controls.
Priorities for 2025
In 2025 we will continue to develop
connections and partnerships between
compliance and internal control functions,
and external groups to bring greater
assurance for the Group.
We will continue to prepare and adapt to the
2024 Code.
We will further develop sustainability and
climate-related risk assessments alongside
existing and upcoming regulations, see the
‘Sustainability reporting readiness’ section
on page 49 for more details.
1. Full committee terms of reference are available on
www.hikma.com
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Risk management
continued
Industry dynamics
Risk description
Management actions
The commercial viability of the
industry and business model we
operate may change significantly
as a result of geopolitical events,
macroeconomic factors, local
political action, societal pressures,
regulatory interventions or changes
to participants in the value chain of
the industry.
– Signed significant new long-term manufacturing agreement in Generics segment
– Acquired Xellia commercial capabilities, product portfolio and manufacturing facility, including aseptic
premix bag filling capabilities
– Expanded commercial presence in new markets in Europe
– Completed construction phase of new manufacturing plants in Morocco, Algeria and Tunisia to enhance
production capacity
– Grew commercial presence in MENA markets through targeted business development initiatives
– Continued local investment in line with localisation requirements
– Increased focus on developing consumer healthcare business for MENA
– Improved access to diabetes treatments and strengthened leading position in oncology
Product pipeline
Risk description
Management actions
Selecting, developing and
registering new products that
meet market needs and regulations,
aligned with Hikma’s strategy to
provide a continuous source of
future growth.
– Launched liraglutide injection in the US, the first approved generic GLP-1 referencing Victoza®
– Launched first specialty injectable product in the US, Combogesic
– Acquired and integrated Xellia R&D pipeline assets and R&D Centre in Zagreb, and with acquired
manufacturing capability, opened up opportunity to introduce pipeline projects that require aseptic bag line
technology
– Strengthened management across R&D teams
– Established in-house extractables and leachables risk mitigation capability
– Signed business development deals to bolster MENA pipeline and increase patient access to needed
treatments
– Acquired the rights to Takeda brands currently licensed to Hikma for MENA with production to move
in-house, ensuring continuity of supply
People
Risk description
Management actions
Developing, maintaining and
adapting organisational structures,
management processes and
controls, and talent attraction and
retention to enable effective delivery
by the business in the face
of rapid and constant internal
and external change.
– Took actions at site, function, and team levels to address areas of improvement identified in the People Voice
Survey, see page 26
– Developed plans to address high turnover rates in specific countries and functions
– Development of a new grade structure, wellbeing programmes, new recognition programmes
– Established a specialist department to promote our culture, drive engagement and ensure supportive
environments for all our people
– Implemented training programmes and leadership development initiatives to build local expertise and
improve employee retention
– Enhanced succession planning programme for senior roles
– Optimised the MENA operating model for central functions and local sites
In 2024, we embraced the transformative
potential of artificial intelligence (AI) (and
machine learning (ML)) technologies to
drive automation, innovation, and
efficiency.
AI oversight
Recognising the importance of responsible
and ethical deployment, we established an
AI Advisory Board (AIAB) to ensure that we
leverage AI responsibly to drive excellence
and improve efficiencies across the
business, helping us deliver on our
purpose of putting better health within
reach, every day.
With a focus on exploration, education,
and governance, the AIAB has set out
principles related to data privacy,
accountability, explainability, transparency,
fairness, bias detection, security, safety,
validity, and reliability.
Policy, governance and risk management
frameworks have been developed and
integrated with our approach to using AI.
AI initiatives
Exploration: deployment of AI tools for
controlled uses; encouraging engagement
through internal innovation competition
to identify opportunities and use cases.
Education: training made available for all
employees to support understanding and
use of AI tools; engagement with relevant
functions on AI-related threats and
opportunities.
Governance: issued AI guidelines
to all employees; conducting risk
assessments for AI suppliers; ongoing
monitoring of regulatory and legal
developments. Through these
initiatives, Hikma is committed to
harnessing AI’s potential while ensuring
ethical and effective implementation.
Case study: Artificial intelligence (AI) and Hikma
Principal risks and uncertainties
The Group faces risks from a range of sources that could have
a material impact on our financial commitments and ability
to trade in the future.
The Board performs robust assessments of strategic, operating
and emerging risks for the Group, considering our risk context,
and input from executive management.
In 2024, as a result of the conflict in the Middle East, Hikma supported
our people in Lebanon and closely monitored impacts on increased
shipping costs and lead times. The situation is managed to the degree
possible by local, regional and group management teams across
multiple principal risk areas, overseen by the Executive Committee
and Board.
The Board determined that the principal risks facing the Group have
not materially changed over the year and that there are no new
principal risks to be added.
The set of principal risks should not be considered as an exhaustive
list of all the risks the Group faces. Certain risk factors are outside
the control of management.
The Board recognises that the principal risks are dynamic and
that management of these risks must be continuous as the risk
environment changes. The Board is satisfied that the principal
risks are being managed appropriately and consistently within
the target risk appetite.
Effectively managing these risks is directly linked to the performance
of our strategic KPIs (see pages 18–19) and the delivery of the strategic
priorities outlined on pages 8–9.
The principal risks are set out below with examples of management
actions that help to control the risk; the actions described do not
include all actions taken by management.
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Legal, regulatory and intellectual property
Risk description
Management actions
Complying with laws and regulations,
and advising on their application.
Managing litigation, governmental
investigations, sanctions,
contractual terms and conditions
and adapting to their changes while
preserving shareholder value,
business integrity and reputation.
– Established an AI Advisory Board with other departments to oversee the development, deployment, and
impact of artificial intelligence technologies on the Group’s operations, see page 82
– Continuous monitoring and assessment of developments in global legal and regulatory landscape and
potential impacts on the Group
– Worked on finalising the in principle settlement for the vast majority of opioid-related lawsuits and defending
remaining lawsuits in North America, see page 172
– Monitored and managed litigation activity in the US, including various anti-trust matters, see page 198
– Continued to implement comprehensive data privacy and security measures to protect sensitive information
and comply with data protection regulations, including in MENA markets
– Continued to secure, maintain, and enforce patents and other intellectual property where appropriate to
protect the Group’s proprietary assets
– Strengthened corporate governance practices to ensure transparency, accountability, and ethical conduct
within the organisation
– Provided legal support and oversight for successful acquisitions and other strategic transactions, ensuring
they are completed smoothly and in compliance with all legal requirements
– Conducted regular training sessions for employees on legal and compliance matters to foster a culture of
awareness and adherence to legal standards
Inorganic growth
Risk description
Management actions
Identifying, accurately pricing and
realising expected benefits from
acquisitions or divestments,
licensing, or other business
development activities.
– Maintained a healthy pipeline of opportunities to achieve Hikma growth strategy
– Extensive due diligence of each acquisition in partnership with external support in order to strategically
identify, value, and execute transactions
– Extensive Board engagement to review major acquisitions proposed by the Executive Committee to ensure
strategic alignment
– Post-acquisition performance (financial and non-financial) monitored closely to ensure integration and
delivery on business plan
– Post-transaction reviews highlighted opportunities to improve effectiveness of processes
– Continue to grow our pipeline through business development (BD) and enhance the effectiveness of BD
teams by adding additional resources
– Closed the acquisition of Xellia Pharmaceuticals’ US finished dosage form (FDF) business and related assets
and began integration
– Acquired the rights to a portfolio of Takeda brands for the MENA region, enhancing product offerings in key
therapeutic areas
Active pharmaceutical ingredient (API) and third-party risk management
Risk description
Management actions
Maintaining availability of supply,
quality and competitiveness of
API purchases and ensuring
proper understanding and
control of third-party risks.
– Maintained rigorous selection and qualification process for new API suppliers
– Continued to secure API supply continuity through qualification of alternate sources (internal or external)
and stocking strategies
– Proactively managed inventory levels to avoid disruptions in supply chain and mitigate impact from inflation
and global trade uncertainty (eg strategic buy, increased inventory level)
– Continuous focus on building long-term supply contracts and strategic partnerships
– Enhanced automated due diligence screening process for onboarding and continuous monitoring of third
parties, including modern slavery, politically exposed persons, sanctions and other risk areas
– Embedded and continued to expand programme assessing the sustainability performance of our suppliers
Reputation
Risk description
Management actions
Building and maintaining trusted
relationships with our stakeholders
relies on developing and sustaining
our reputation as one of our most
valuable assets.
– Completed double materiality assessment (DMA) (see page 48)
– Engaged on a regular basis with investors and analysts, including the attendance of conferences, hosting
meetings with management and investor relations, including site visit to manufacturing facility in
Casablanca, Morocco
– Continued to build strong relationships with current and potential future CMO partners
– Internal and external monitoring and management of issues that may impact reputation
– Focused our editorial delivery to communicate our progress against our business strategy and acting
responsibility framework, leveraging our digital communication channels to engage external and internal
stakeholders
Ethics and compliance
Risk description
Management actions
Maintaining a culture underpinned
by ethical decision-making, with
appropriate internal controls to
ensure staff and third parties
comply with our Code of Conduct,
associated policies and procedures,
as well as all applicable legislation.
– Updated and refreshed various Corporate and local Compliance policies and procedures, including ABC,
Conflict of interest, Gifts, Hospitality and Entertainment
– Collaborated with Legal and Procurement to implement enhanced due diligence processes for modern
slavery risk assessment
– Continued participation in international anti-corruption initiatives, including the Partnering Against
Corruption Initiative (PACI)
– Continued review of the effectiveness of our compliance programmes and alignment to international best
practice expectations, including areas of anti-bribery and whistleblowing management
Information and cyber security, technology and infrastructure
Risk description
Management actions
Ensuring the integrity,
confidentiality, availability and
resilience of data, securing
information stored and/or processed
internally or externally from cyber
and non-cyber threats, maintaining
and developing technology systems
that enable business processes, and
ensuring infrastructure supports the
organisation effectively.
– Monitored opportunities and threats related to artificial intelligence (AI) and machine learning (ML) systems
through AI Advisory Board
– Updated disaster recovery runbooks for strategic assets
– Partnered with legal to review and establish controls to ensure compliance with Data Privacy Legislation
in relevant MENA markets
– Partnered with Saudi FDA to ensure serialisation compliance and integration with agency systems
– Enhanced Cyber Security Operations capabilities
– Automated third-party cyber-risk assessments into the procurement process on the Ivalua platform. This
ensures consistent and efficient evaluation of cybersecurity risks associated with new and existing suppliers
– Completed external assessment of information security maturity aligned to the industry-standard NIST
cybersecurity framework and the CMMI maturity model
– Maintained alignment with ISO 27001 standards
Risk management
continued
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Crisis and continuity management
Risk description
Management actions
Developing, maintaining and
adapting capabilities and processes
to anticipate, prepare for, respond
and adapt to sudden disruptions
and gradual change, including
natural catastrophe, economic
turmoil, cyber events, operational
issues, pandemic, political crisis,
and regulatory intervention.
– Responded to disruptive events with values-led decision-making, prioritising the protection of the health
and safety of our employees and patients, including situation in Lebanon
– Enhanced recovery plans for disruptions to IT applications
– Closely monitoring developments in the Middle East and assessing potential impact on our people and
business
– Continued to embed our integrated crisis and continuity management (CCM) programme
– Reviewed and refreshed business impact analyses and business continuity plans for all manufacturing sites,
incorporating assessments of climate change-related threats
– Coordinated IT Continuity and Disaster Recovery assessments at all manufacturing sites and key IT locations
– Reviewed and upgraded site emergency response arrangements and capabilities across our facilities
– Delivered instructor-led training to employees across the organisation to develop our resilience capability
Product quality and safety
Risk description
Management actions
Maintaining compliance with current
Good Practices for Manufacturing
(cGMP), Laboratory (cGLP), Clinical
(cGCP), Compounding (cGCP),
Distribution (cGDP) and
Pharmacovigilance (cGVP) by staff,
and ensuring compliance is
maintained by all relevant third
parties involved in these processes.
– Hikma Quality Council provides oversight and shares best practice across the Group
– Quality and safety culture driven throughout the organisation by global initiatives and regularly reinforced by
communication from senior executives
– Continuous monitoring and assessment of potential contaminants in drug products (eg nitrosamines,
penicillins, non-penicillin beta-lactams, monobactams)
– Facilities maintained as inspection-ready for assessment by relevant regulators
– Ongoing oversight of cGMP compliance of third parties supplying finished goods, APIs, raw materials,
packaging components and other GMP services
– Continuous monitoring of quality critical incidents and activities through Notification to Management
process implemented across the Group
– Continuous monitoring of the safety of products to detect any change to risk-benefit balance through the
global pharmacovigilance system
– Continued to provide governance through cross-functional Drug Safety Committee and PV Quality
Committee
– Initiated integration of the acquired Xellia R&D into our quality systems
– Overseeing upgrades to the acquired Xellia manufacturing facility to incorporate automation in our
manufacturing processes
Financial control and reporting
Risk description
Management actions
Effectively managing income,
expenditure, assets and liabilities,
liquidity, exchange rates, tax
uncertainty, debtor and
associated activities, and reporting
accurately, in a timely manner
and in compliance with statutory
requirements and accounting
standards.
– Managed financial and business challenges related to foreign exchange and access to USD in adverse
conditions in Egypt
– Completed formal competitive tender for external audit services
– Embedded enhanced enterprise-wide fraud prevention and detection programme
– Implemented enhanced processes and controls to manage rebates and ensure compliance
– Aligned reporting on minimum standard set of controls for finance and related processes to enable
disclosure against Provision 29 of the 2024 Code, see page 112
Risk management
continued
Going concern and longer-term viability
In accordance with the UK Corporate Governance Code 2018
Provisions 30–31 and other regulatory disclosure requirements,
going concern and longer-term viability assessments are provided.
Assessment of position and prospects
The Group’s current and forecast financial positions are used
to assess the going concern position and longer-term viability.
The position and prospects of the Group are assessed at
Executive Committee meetings and at the end of the financial
year. The assessments consider strategic and operational updates,
principal and emerging risks, financial reporting and forecasting
from the Chief Financial Officer, and through the development of
a business plan. The business plan takes into account our current
position, specific risks and uncertainties facing the business and
known changes to our organisation and business model.
The Executive Committee assesses the future strategic positioning
of Hikma as a company in the context of the changing business
environment. Aspects of this analysis are shown in ‘Our markets’
(see pages 20–21).
These various assessments are presented to the Audit Committee
and Board of Directors for independent scrutiny of management’s
assumptions and modelling approach. The Board also receives
regular updates on operational, strategic and financial matters
from executives.
Financial position
The financial position of the Group as at 31 December 2024 was:
– net cash flow from operating activities was $564 million
– overall net debt was $1,118 million (1.4 times core EBITDA)
– available borrowing capacity is $924 million of committed undrawn
long-term facilities (see Note 29 of the Group consolidated financial
statements on page 195). These facilities are well-diversified across
the subsidiaries of the Group and are with a number of financial
institutions
Covenants on major financial debt arrangements are suspended
while the Group retains its investment grade status from two rating
agencies. As of 31 December 2024 the Group’s investment grade
rating was affirmed by S&P and Fitch.
Future prospects
The Group’s base case forecasts take into account reasonably
possible changes in trading performance, including those that
may arise related to various inflationary effects, currency volatility,
facility renewal sensitivities, and maturities of long-term debt.
Assumptions
Financial modelling for the business plan and the going concern
and viability assessments is subject to assumptions related to:
– launch and commercialisation of new products
– market share and product demand rates
– maintenance of certain product prices
– political and social stability
– ability to increase operational efficiency and reduce central costs
– effective tax rate being within the current guidance range
– ability to refinance existing debt upon maturity (for longer-
term viability)
Going concern
For the purposes of assessing the going concern position, the base
case and a forecast including severe but plausible downside risks
were analysed over a period longer than 12 months from the date
of signing the financial statements.
The analysis shows that Hikma is well placed to manage its business
and financial risks successfully despite current uncertainties and
confirms that the going concern basis should be used in preparing
the financial statements.
The Directors reviewed and challenged management’s forecasts,
downside assumptions and mitigation strategies, and believe that the
Group is adequately placed to manage its business and financing
risks successfully.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for a period
longer than 12 months from the date of signing the financial
statements and therefore continue to adopt the going concern basis
in preparing the financial statements, with no material uncertainties.
Severe but plausible downside
risk scenarios are used to test
the viability of the Group.”
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Longer-term viability
Viability period
The longer-term viability of the Group is assessed for a period longer
than for the going concern analysis.
The Directors determined that a three-year period, ending on
31 December 2027, constitutes an appropriate period over which to
provide its viability statement.
This is the timeframe for acquisitions and business development
opportunities to become integrated into the business, and for pipeline
products to contribute as marketed products. Forecasts are more
accurate in the near term than in the long term and this limitation
also applies to our viability assessments.
Stress testing, modelling and sensitivity analysis
Management developed severe but plausible risk scenarios that
could impact the business adversely.
The Group’s strategic objectives, principal risks (PR), assessments
of longer-term emerging risks (ER), management input, real-world
examples and the financial modelling assumptions listed above
were used to design the scenarios. Realistic but extremely severe
adjustments were further applied for sensitivity analysis.
The following hypothetical severe but plausible risk scenarios were
reviewed and assessed.
Longer-term viability scenarios
– Scenario 1: Industry dynamics (PR): Potential significant levels of
price erosion over and above business plan assumptions
– Scenario 2: Product pipeline (PR): Potential significant
and extensive delays to strategic product launches
– Scenario 3: Ethics and compliance (PR): The implications of a
systemic failure of the corporate compliance programme leading
to a regulator investigation were explored, including reputational
impact, fines and legal fees, loss of sales, remediation expenses,
and additional compliance costs
– Scenario 4: Product quality and safety (PR): A prolonged regulator-
imposed restriction of a major US FDA-inspected manufacturing
site was modelled, factoring in loss of sales and remediation
expenses, as well as a reduction to operating costs
– Scenario 5: Crisis and continuity management (PR): Escalation
and development of situations of political and social instability
in MENA markets were assessed with loss of sales recognised
– Scenario 6: API and third-party risk management (PR):
Significant disruptions to our raw and packaging materials
supply chain were modelled
– Scenario 7: Climate change (ER): Disruption as a result of extreme
weather events was assessed with impacts on certain facilities
including property damage and business interruption (see also
our disclosures related to climate change on pages 62–77)
– Scenario 8: Information and cyber security, technology and
infrastructure (PR): Impacts of a ransomware attack affecting
endpoints and ERP systems were modelled with potential loss
of sales, general business interruption, and response and
remediation costs
– Scenario 9: Legal, regulatory and intellectual property (PR):
Potential for financial loss as a result of ongoing legal proceedings,
see pages 198-199
Longer-term viability analysis
The consequences of each of these severe but plausible risk
scenarios were modelled over the forecast period and the impacts
on EBITDA, ability to meet our debt obligations, and cash flow
were determined. Combinations of these scenarios occurring were
also assessed for this exercise.
The analysis shows that although the scenarios are severe, they
do not threaten the viability of Hikma. Headroom was comfortably
maintained throughout the viability period for each of the risk
scenarios and scenario combinations.
The analysis did not rely on management actions that could be taken
in the circumstances to reduce the impact and consequences of the
risk events. Such actions, the ongoing implementation of the
Enterprise Risk Management (ERM) programme and other risk
mitigation initiatives, and investment in infrastructure and change
initiatives are anticipated to continue to enhance organisational
resilience and support longer-term viability.
The outcome of these various quantitative and qualitative
assessments leads management to believe that Hikma is resilient
to downside risk scenarios over the three-year period. This is largely as
a result of our financial position (in particular our strong balance sheet
and low levels of debt) and is supported by the fact that our business
is well diversified through geographic spread, product diversity, and
large customer and supplier bases. Further details are provided in the
‘Our strategy’ (pages 8–9), ‘Our business model’ (pages 12–13),
and ‘Our markets’ (pages 20–21) sections of this report.
The Directors reviewed and challenged management’s longer-term
viability analysis and confirm that they have a reasonable expectation
that Hikma will be able to continue in operation and meet its liabilities
as they fall due and over the viability period.
Risk management
continued
Our assessments show that
Hikma is resilient to downside
risk scenarios.”
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Non-financial and sustainability information statement
The table below summarises our position on matters relevant to the Non-Financial Reporting Directive, in line with the requirements of sections
414CA and 414CB of the Companies Act 2006. All references made are to publicly accessible information.
Summary
Further information and policies
Our business model
– Our diversified business model allows us to respond to the
many opportunities and risks we face, while delivering value
for our stakeholders
– Our business model, pages 12–13
Principal risks
– Our risk management framework is designed to ensure we
take a comprehensive view of risk. This includes financial
and non-financial risks that may impact our business and
stakeholders
– Risk management, pages 80–86
Environmental
matters
– We are committed to making our operations more energy
efficient and environmentally responsible
– We continue to improve the way we monitor our impacts,
pursuing projects that reduce our environmental footprint
– We have put in place a target to reduce our Scope 1 and 2 GHG
emissions by 25% by 2030, using a 2020 baseline
– We are aligning our internal processes and our public
disclosures are consistent with the Task Force on Climate-
related Financial Disclosures (TCFD) recommendations
– We are aligned with the disclosure requirements of Climate
Related Financial Disclosures (CFD) as articulated in the
Companies Act
– Board-level oversight of environmental sustainability
– Environmental matters are incorporated in our risk
management framework
– We promote environmental sustainability in our supply chain
– Protecting the environment, pages 56–59
– TCFD, pages 62-77
– Supplier Code of Conduct1
Employees
– Our employees have always been at the heart of everything we
do. As the driving force behind Hikma’s growth and success,
our people are our most valuable asset
– We are committed to investing in the development
of our workforce and in protecting their health and safety.
We have 9,500 employees across North America, MENA,
Europe and ROW
– Stakeholder engagement: employees, page 26
– Empowering our people, pages 54–55
– Code of Conduct1
– Upholding ethical standards and acting with integrity,
pages 60–61
– Group Environmental, Health and Safety
Policy Statement1
– Principal risk: People, page 83
1. Our public policies, codes and statements are available on www.hikma.com
Summary
Further information and policies
Social matters
– In all of our markets, we work to meet social needs locally and
improve lives. We have developed programmes in key areas to
address social challenges:
– providing better health
– supporting education
– helping people in need
– Where our activities relate to other social matters, we seek to
understand the perspective of all stakeholders, determine our
role and make clear our position based on our values and
purpose
– Stakeholder engagement, pages 24–29
– Advancing health and wellbeing, pages 50–53
– Product quality and safety, page 61
– Addressing drug shortages in the US1
– Animal testing position1
– Principal risk: Reputation, page 84
– Access to medicines, pages 50-51
– Tax strategy statement1
Respect for
human rights
– We respect and uphold the principles of the Universal
Declaration of Human Rights both within Hikma and across our
value chain
– We object in the strongest possible terms to the use of any of
our products for the purpose of capital punishment
– Upholding ethical standards and acting with integrity,
pages 60–61
– Code of Conduct1
– Supplier Code of Conduct1
– Modern slavery act policy statement1
– Use of products in capital punishment1
– Principal risk: Reputation, page 84
Anti-bribery
and corruption
– Our Compliance, Responsibility and Ethics Committee leads
our efforts to strengthen anti-bribery and corruption policies
and manage associated risks
– As a publicly-listed company on the London Stock Exchange,
we abide by the regulations of the UK Listing Authority. We
operate in compliance with the UK Bribery Act 2010, the Foreign
Corrupt Practices Act as well as local laws and regulations
– Upholding ethical standards and acting with integrity,
pages 60–61
– Code of Conduct1
– Supplier Code of Conduct1
– Speak up channels1
– Principal risk: Ethics and compliance, page 84
– Compliance, Responsibility and Ethics Committee
report, pages 114–115
Non-financial KPIs
– We monitor the position, performance and impact of Hikma
across a wide range of financial and non-financial KPIs.
Non-financial KPIs are used to measure progress towards our
strategic priorities (pages 18–19), our exposure to risks
(pages 82-86), and are in place in other areas throughout the
organisation as part of Hikma’s long-term sustainable growth
strategy and our commitment to helping people and improving
the communities in which we operate
– GHG emissions reduction target, page 56
– Protecting the environment, pages 56–59
– Employees engagement and enablement, page 19
– Audit Committee report, pages 109–113
– Compliance, Responsibility and Ethics Committee
report, pages 114–115
– Diversity disclosures, page 97
The Strategic report was approved by the Board of Directors and signed on its behalf by:
Riad Mishlawi
Chief Executive Officer
25 February 2025
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94
Executive Chairman’s overview
96
Corporate governance at a glance
98
Leadership
101
Corporate governance
105 Nomination and Governance
Committee report
109 Audit Committee report
114
Compliance, Responsibility and Ethics
Committee report
116
Remuneration Committee report
125
Annual report on remuneration
140 Other statutory disclosures
Corporate
governance
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Corporate
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Executive Chairman’s overview
We are committed to high standards of
transparency in corporate governance reporting
and work hard as a Board to provide strong and
stable leadership, supported by our corporate
governance framework.
Dear Shareholders
Hikma continued to perform well in 2024,
making excellent progress against our
strategic objectives. After a number of
changes to our Board over the past two years,
2024 represented a period of stability, giving
the Board the opportunity to fully support
the CEO in establishing himself in his new
role, while continuing to deliver against our
strategy. The Board also looked to the future
with a focus on succession planning, agreeing
actions for continuous improvement following
the external Board performance review (more
details on page 106), and preparations for
future reporting requirements in relation to
corporate governance and the evolving
landscape for sustainability reporting.
Succession planning and Board
composition
A key priority for the Board in 2024 was to
review succession plans for Board and senior
management roles, noting that two
independent Non-Executive Directors would
reach nine years of service in 2025, and
taking into consideration the changes to the
Executive Committee that occurred in late
2023 and early 2024. The Nomination and
Governance Committee supported the Board
in this endeavour with a detailed review of
succession plans for the independent
Non-Executive Directors and for the senior
management population, in conjunction with
the Chief People Officer. Further information
is included in the Nomination and
Governance Committee report on page 105.
In relation to the independent Non-Executive
Directors, John Castellani will reach nine
years of service in March 2025 and will retire
from the Board at the 2025 AGM. I thank John
for his significant contribution to Hikma over
the past nine years and wish him all the best
for the future. Nina Henderson will reach nine
years of service in October 2025 and will
retire from the Board by the end of the year,
allowing Hikma to benefit from Nina’s
experience for the remainder of this year. As
announced in our 2023 Annual Report, Nina
will step down as Remuneration Committee
Chair and as a member of all Board
Committees following the 2025 AGM.
As disclosed in our 2023 Annual Report,
the Board approved the following succession
plans for the independent Non-Executive
Directors to take effect from the 2025 AGM:
– Deneen Vojta will succeed John Castellani
as Chair of the Compliance, Responsibility
and Ethics Committee
– Cynthia Flowers will succeed Nina
Henderson as Chair of the Remuneration
Committee
– Laura Balan will succeed Nina Henderson
as the designated independent Non-
Executive Director for workforce
engagement
Inclusion and diversity
As a Board, we embrace diversity in all forms
and believe that different perspectives and
opinions enhance decision-making. Our
Board Diversity Policy sets the approach to
the diversity of Hikma’s Board and its
Committees in line with the gender and
ethnic diversity objectives set by the UK
Listing Rules, the FTSE Women Leaders
Review and the Parker Review. We are proud
to report that Hikma continues to meet all
objectives set for diversity under the Board
Diversity Policy. The Board Diversity Policy is
available on our website at www.hikma.com
and information on Board diversity is
included on pages 97 and 142.
We are equally committed to supporting
inclusion and diversity beyond the
boardroom. Our Remuneration Committee
has integrated targets into the performance
measures for variable remuneration, in
jursidictions where permitted under
applicable local laws, to increase diversity
within the senior management population.
Further detail is included in the 2022 and
2023 Annual Reports.
We are pleased to report an increase in the
representation of women in senior leadership
roles over the past year and are proud of the
high level of ethnic diversity among the senior
management population. Information on our
senior management and wider workforce
diversity is included on page 97 and
information on our broader inclusion
initiatives is included on page 55. Further
information on the Board’s oversight of
diversity is included in the Nomination and
Governance Committee report on pages 107
to 108.
Corporate governance reporting
Following the publication of the UK Corporate
Governance Code 2024 (the 2024 Code) in
early 2024, we have spent time
understanding the new requirements and
preparing to report on the 2024 Code in our
next Annual Report. To demonstrate our
commitment to corporate governance
reporting, we have updated our disclosure on
key Board activities to more explicitly link
Board decisions and their outcomes to
Hikma’s strategy and objectives, complying
early with the updated principles of the 2024
Code. The updated disclosures in relation to
key Board activities in 2024 can be found on
pages 103 to 104.
Workforce engagement
Our people are core to Hikma’s growth
aspirations and delivery of our strategy.
To enhance the Board’s understanding of our
colleagues’ perspectives, Nina Henderson is
our designated independent Non-Executive
Director for workforce engagement, as
defined under Provision 5 of the UK
Corporate Governance Code 2018. Nina has
undertaken an active programme of
engagement each year which has contributed
to ensuring that workforce perspectives are
considered in Board and Committee
decision-making, and that the Board, outside
of our Executive Directors, is visible among
our colleagues. In 2024, the engagement
programme was organised in conjunction
with the CEO and Nina formally reported to
the Board on her observations.
As an aspect of her engagement activities,
Nina listens to the workforce on career
perspectives and reward, including
remuneration matters.
In early 2024 the Board received the results
of the People Voice Survey, Hikma’s
employee engagement survey. During the
course of 2024, the Board received updates
on the additional engagement undertaken
with local management teams to identify
areas for focus, agreed action plans, and
monitored progress against those actions.
As noted above, Laura Balan will succeed
Nina as the designated independent
Non-Executive Director for workforce
engagement. To ensure a smooth handover
of responsibilities, Nina and Laura have been
working together this past year.
In 2024, Non-Executive Directors visited
Hikma sites and engaged with the workforce,
including:
– participation in the senior leaders forum in
Madrid (Spain)
– visits to manufacturing facilities in Riyadh
(KSA), Milan (Italy), Columbus and Bedford
(OH, US) and Portugal. During these visits,
Non-Executive Directors were able to meet
with local management and the wider
workforce, tour manufacturing facilities
and R&D laboratories, and visit Hikma
customers including hospitals and
physicians.
– visits to corporate offices in Portugal,
Riyadh (KSA), Munich (Germany),
Columbus and Bedford (OH, US), Berkeley
Heights (NJ, US) to meet with local
management and engage with the local
workforce in informal settings over lunches
and dinners
– meeting with forty women employees in
Riyadh (KSA) for a conversation centred on
workplace skills, ambitions and career
development. Valuable insights were
gained on their contributions to Hikma and
ideas to support fellow Hikma colleagues
– a visit to our site in Casablanca, Morocco
for the annual Board strategy meeting,
during which the Board visited the new
Hikma injectables manufacturing facility
and held a dinner with local management
Further detail on our workforce engagement
activities and outcomes, including a case
study on the People Voice Survey, is included
in our Section 172 statement on page 26.
Stakeholder engagement
In the lead-up to, and following the 2024 AGM
and in readiness for the 2025 AGM, Hikma
undertook a detailed shareholder
consultation exercise to gain feedback on the
Rule 9 Waivers sought at the 2024 AGM and
prepare for the renewal of the Rule 9 Waivers
at the 2025 AGM. The aim of the consultation
process was to explain the purpose of the
Rule 9 Waivers and address any concerns.
Following feedback from shareholders, we
have developed an FAQ document which is
available on our website at www.hikma.com.
Further information on the shareholder
consultation exercise is included on page 102
and in the FAQ document.
In addition to the shareholder consultation
relating to the Rule 9 Waivers, the Board
undertakes significant efforts to understand
and, in taking decisions, consider the
interests and perspectives of all of our
stakeholders, including customers, suppliers,
employees, regulators, investors and the
communities in which we operate. Further
details, including examples of the outcomes
and actions from our stakeholder
engagement activities, are included in our
Section 172 statement on pages 24 to 29.
Information on our Supplier Code of Conduct
is included on page 60.
Looking ahead
On behalf of the Board, we look forward to
building on the success of 2024 to create
long-term sustainable growth for the benefit
of all stakeholders in 2025 and beyond.
Said Darwazah
Executive Chairman
This year the Board has
focussed on supporting
the CEO in establishing
himself in his new role.”
Said Darwazah
Executive Chairman
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Corporate governance at a glance
Diversity1 (as at 31 December 2024)
Ethnicity
Gender
Board2
Senior management3
Board
Senior management3
1
2
3
4
5
Minority ethnic
4 (36%)
1. White/Caucasian
25 (29%)
Women
5 (45%)
Women
26 (30%)
White
7 (64%)
2. Minority ethnic,
the minority ethnic
group includes:
31 (36%)
Men
6 (55%)
Men
61 (70%)
Executive Committee2
– Middle Eastern
25 (29%)
– Asian
4 (5%)
– Mixed/Multiple
ethnic groups/
two or more races
1 (1%)
– Other
1 (1%)
3. Prefer not to say
2 (2%)
4. Did not respond
16 (18%)
5. Unknown4
13 (15%)
Executive Committee
Group
Minority ethnic
4 (44%)
Women
3 (33%)
Women
3,352 (35%)
White
5 (56%)
Men
6 (67%)
Men
6,082 (64%)
Prefer not to say
81 (1%)
UK senior management
As required by the Parker Review in 2024, the composition of our senior
management team working in the UK is 82% White/Caucasian and 9%
Minority ethnic. 9% did not respond to the survey.
Hikma subsidiary company directors
As required by the Companies Act 2006, the composition of our subsidiary
company boards is 48 men (80%) and 12 women (20%).
1. Diversity data collection is conducted in compliance with applicable laws and regulations
2. Relates to Board and Executive Committee members who identify with one of the relevant categories under UK Listing Rule 6, Annex 1
3. Senior management refers to senior direct reports to the CEO and Executive Chairman, and the senior leaders who report directly to them (excluding administrative roles)
4. Ethnic diversity data excludes our employees in France, Portugal, Germany, Spain and Italy due to local GDPR and labour law issues
Board composition
31 December
2024
after 2025
AGM
Executive Chairman
9%
10%
Other Executive Directors
18%
20%
Non-Independent Non-Executive Directors
9%
10%
Independent Non-Executive Directors
64%
60%
2024
After 2025 AGM
In compliance with Provision 11 of the 2018 Code, when excluding the
Chairman, the Independent Non-Executive Directors represent 70% of the
Board as at 31 December 2024 and 67% of the Board after the AGM in April
2025 following the retirement of John Castellani.
Independent Director tenure (as at 31 December 2024)
Number
%
0—3 years
3
42%
4—6 years
2
29%
7—9 years
2
29%
Skills and experience
Number of Directors who have significant and current experience
Number of Directors with experience
Governance
ESG
International experience
Regulatory and political
Pharmaceutical
Total
Manufacturing
Sales
Business ethics and integrity
Cybersecurity
Commercial
Listed environment
Finance
Strategy and risk
4
6
3
5
8
5
5
6
5
4
3
1
7
8
6
6
7
8
9
2
9
2
10
11
10
11
11
11
11
10
11
11
11
11
11
9
5
4
3
The Board delegates some of its powers to the CEO and operates
with the assistance of five committees.
The Board is responsible for establishing the Group’s purpose,
values and strategy, and ensuring these are aligned with its culture.
The Board maintains a list of matters that can only be approved by
the Board. The matters reserved to the Board and Terms of
Reference for each Committee can be found on our website at
The Board
see pages 94-144 for corporate governance
see pages 98-99 for Director biographies
CEO
Executive Committee
see page 100
Nomination and
Governance
Committee
see pages 105-108
Audit Committee
see pages 109-113
Compliance,
Responsibility
and Ethics
Committee
see pages 114-115
Remuneration
Committee
see pages 116-139
Disclosure
Committee
see our website
www.hikma.com
Governance framework
www.hikma.com. The Board delegates certain matters to its
Committees to assist it in discharging its responsibilities. Committee
reports can be found on pages 105 to 139.
The Board delegates responsibility for running the business and
executing the strategy to the CEO, who is supported in this role by
the Executive Committee. Biographies for our Executive Committee
members can be found on page 100.
Attendance
Board
(8 scheduled and
1 unscheduled meetings)
Nomination and
Governance Committee
(4 scheduled meetings)
Audit Committee
(5 scheduled meetings)
Compliance,
Responsibility
and Ethics Committee
(4 scheduled meetings)
Remuneration Committee
(5 scheduled and
1 unscheduled meetings)
Directors
Meetings
attended
Attendance
Meetings
attended
Attendance
Meetings
attended
Attendance
Meetings
attended
Attendance
Meetings
attended
Attendance
Said Darwazah
9/9
100%
–
–
–
–
Riad Mishlawi
9/9
100%
–
–
4/4
100%
–
Mazen Darwazah
9/9
100%
4/4
100%
–
4/4
100%
–
Victoria Hull
9/9
100%
4/4
100%
5/5
100%
–
–
Ali Al-Husry
9/9
100%
–
–
–
–
Patrick Butler1
2/3
67%
1/1
100%
–
0/1
0%
–
John Castellani
9/9
100%
–
5/5
100%
4/4
100%
5/6
83%
Nina Henderson2
8/9
89%
4/4
100%
5/5
100%
4/4
100%
6/6
100%
Cynthia Flowers
9/9
100%
4/4
100%
5/5
100%
–
6/6
100%
Douglas Hurt
9/9
100%
4/4
100%
5/5
100%
4/4
100%
6/6
100%
Laura Balan
9/9
100%
–
5/5
100%
–
6/6
100%
Dr Deneen Vojta
9/9
100%
4/4
100%
–
4/4
100%
–
Board Chair
Committee Chair
1. Patrick Butler retired from the Board on 29 February 2024
2. Nina Henderson was unable to attend the short-form Annual Report sign off meeting on 21 February 2024 owing to a pre-existing commitment. Nina was in attendance for the
long-form year-end sign off meeting on 15 February 2024
Where a Director was unable to attend a meeting, comments on the business of the meeting were shared with the Chair in advance of the meeting.
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Leadership – Board of Directors
A
Audit Committee
C
Compliance, Responsibility and
Ethics Committee
N
Nomination and Governance Committee
R
Remuneration Committee
Committee Chair
1
2
3
4
5
6
7
8
9
10
11
1. Said Darwazah
Executive Chairman
Appointed: 1 July 2007
(joined Hikma in 1981)
Nationality: Jordanian
Experience: Said served as Chief Executive Officer
from June 2022 to August 2023 and from July 2007
to February 2018 and has served as Executive
Chairman since May 2014. Said was Chairman and
Chief Executive of Hikma’s group holding company
from 1994 to 2003 and Minister of Health for the
Hashemite Kingdom of Jordan from 2003 to 2006.
Said has over 40 years of experience in extensive
leadership roles at Hikma.
Qualifications: Industrial Engineering degree from
Purdue University, MBA from INSEAD.
Other appointments: Chairman of Royal Jordanian
Airlines, Dead Sea Touristic & Real Estate
Investments, and the Health Care Accreditation
Council Jordan. Vice Chairman of Capital Bank,
Jordan. Board Member of INSEAD.
7. Nina Henderson
A C N R
Independent Non-Executive Director
Appointed: 1 October 2016
(Employee Engagement from 2019)
Nationality: American
Experience: Nina brings extensive experience
of manufacturing and distribution, marketing,
remuneration committee and stakeholder
engagement, gained through her executive and
non-executive career. Nina was Corporate VP of
Bestfoods and President of Bestfoods Grocery
prior to its acquisition by Unilever. During a 30-year
career with Bestfoods, she held a wide variety of
Global and North American executive general
management and marketing positions. Nina has
previously served as a director of Royal Dutch Shell,
AXA Financial, The Equitable Companies,
DelMonte, Pactiv and Walter Energy.
Qualifications: Honours graduate and BSc from
Drexel University.
Other appointments: Non-Executive Director and
Chair of Remuneration Committee at CNO
Financial Group Inc and International Workplace
Group plc. Director of the Foreign Policy
Association, St. Christopher’s Hospital for Children,
VNS Health and Commissioner of the Smithsonian
National Portrait Gallery. Vice Chair of the Board of
Trustees, Drexel University.
2. Riad Mishlawi
C
Chief Executive Officer
Appointed: 1 September 2023
(joined Hikma in 1990)
Nationality: Lebanese
Experience: Riad was appointed as Chief Executive
Officer in September 2023, bringing deep
knowledge of Hikma, the pharmaceutical industry
and a strong track record of delivering profitable
growth and strategic expansion. From 2011 to 2023,
Riad served as Hikma’s President of Injectables,
significantly expanding the Injectables product
portfolio and manufacturing footprint while
maintaining focus on quality and efficiency, helping
transform the Injectables business into a
recognised market leader. Since joining Hikma in
1990, Riad has held various positions of increasing
responsibility including Head of Manufacturing
Operations at the Group’s former Generics facility
in Eatontown, New Jersey. He left Hikma in 1998 to
join Watson Pharmaceuticals, where he was
Executive Director of Operations. Riad returned to
Hikma in 2004 and held a series of positions in the
Group’s Injectables business.
Qualifications: BSc in Engineering and an MS
in Engineering and Management from George
Washington University.
Other appointments: None
8. Cynthia Flowers
A N R
Independent Non-Executive Director
Appointed: 1 June 2019
Nationality: American
Experience: Cynthia brings detailed knowledge of
the pharmaceutical and biotechnical sectors and
healthcare practitioner experience to the Board.
Cynthia was President and CEO of the North
American divisions of the global pharmaceutical
companies Ipsen and Eisai, and also held general
management positions at Amgen and Johnson
& Johnson. For nearly a decade Cynthia served on
the Women’s Leadership Advisory Board at Harvard
University’s Kennedy School of Government.
Qualifications: BSN from the University of Delaware
and Executive MBA from Wharton School at the
University of Pennsylvania.
Other appointments: Non-Executive Director of
Lisata Therapeutics Inc. and Relevate Health Inc.
Chief Executive Officer of OMEZA Holdings Inc.
3. Mazen Darwazah
C N
Executive Vice Chairman, President of MENA
Appointed: 8 September 2005
(joined Hikma in 1985)
Nationality: Jordanian
Experience: Mazen is responsible for the strategic
and operational direction of the business across
the MENA region. During his 39 years of service
at Hikma, Mazen has held an extensive range of
positions within the Group. He has previously
served as the President of the Jordanian
Association of Manufacturers of Pharmaceuticals
and Medical Appliances.
Qualifications: BA in Business Administration
from the Lebanese American University,
Advanced Management Plan from INSEAD.
Other appointments: Senator in the Jordanian
Senate. Trustee of Birzeit University and King’s
Academy. Member of HM King Abdullah’s Economic
Policy Council. Board Director at Rakuten Medical
Inc.
9. Douglas Hurt
A C N R
Independent Non-Executive Director
Appointed: 1 May 2020
Nationality: British
Experience: Douglas brings significant financial
experience, having served as Finance Director of
IMI PLC from 2006 to 2015. Prior to this, he held a
number of senior finance and general management
positions at GlaxoSmithKline PLC, previously having
worked at Price Waterhouse. His career has
included several years working in the US as a Chief
Financial Officer and significant experience in
European businesses as an Operational and
Regional Managing Director. Douglas previously
served as Senior Independent Director and
Chairman of the Audit Committee of Tate & Lyle plc
and Vesuvius PLC, Chairman of Countryside
Partnerships PLC, and Non-Executive Director and
Chair of the Audit Committee of the British
Standards Institution.
Qualifications: Chartered Accountant and a
Fellow of the ICAEW, MA (Hons) in Economics
from Cambridge University.
Other appointments: None.
4. Victoria Hull
A N
Senior Independent Director
Appointed: 1 November 2022 as Non-Executive
Director (Senior Independent Director from
28 April 2023)
Nationality: British
Experience: Victoria has extensive senior executive
experience across a broad range of business, legal,
commercial and governance matters and strong
international experience. In her executive career,
Victoria was an Executive Director and General
Counsel of Invensys plc and Telewest
Communications plc. Victoria is a solicitor and
began her career at Clifford Chance LLC. Victoria
also served as Senior Independent Director of Ultra
Electronics plc, and was previously Non-Executive
Director and Chair of the Remuneration Committee
at Network International Holdings plc.
Qualifications: Solicitor, LLB (Hons) in Law from
the University of Southampton.
Other appointments: Non-Executive Director and
Chair of the Remuneration Committee of IQE plc.
Non-Executive Director at IMI plc and Serco Group
plc.
10. Laura Balan
A R
Independent Non-Executive Director
Appointed: 1 October 2022
Nationality: Romanian and British
Experience: Laura brings a deep understanding
of international business, the pharmaceutical
industry globally, key sector trends and dynamics.
Laura is a retired partner of The Capital Group
Companies, the US investment manager, where
she was an investment analyst for 17 years, covering
the European healthcare and pharmaceutical
industries. Prior to this, Laura held associate and
analyst roles at The Goldman Sachs Group Inc,
where she focused on European healthcare and
pharmaceutical investment research.
Qualifications: CFA Charterholder, BA (Hons)
in International Business from the Academy of
Economic Studies in Bucharest, Romania.
Other appointments: Trustee and Chair of the
Finance, Audit & Risk Committee of the Charter
Schools Educational Trust.
5. Ali Al-Husry
Non-Executive Director
Appointed: 14 October 2005
(joined Hikma in 1981)
Nationality: Jordanian
Experience: Ali joined Hikma as Director of Hikma
Pharma Limited and held various management and
leadership roles within the Group, before stepping
into an advisory role in 1995. Ali brings great
financial experience to the Board as well as an
in-depth knowledge of the MENA region and Hikma
Pharmaceuticals. Ali was a founder of Capital Bank,
Jordan, and served as CEO of Capital Bank, Jordan
until 2007.
Qualifications: Mechanical Engineering degree
from the University of Southern California, MBA
from INSEAD.
Other appointments: Director of Endeavour Jordan,
Microfund for Women, Capital Bank, Jordan, and
DASH Ventures Limited.
11. Dr Deneen Vojta
C N
Independent Non-Executive Director
Appointed: 1 November 2022
Nationality: American
Experience: Deneen is a healthcare executive
with extensive experience in clinical medicine,
scientific research, and care delivery. Deneen is the
Executive Vice President (EVP), Health Solutions for
Blue Shield California. Previously she served as
EVP, Research and Development for UnitedHealth
Group (UHG) and as Founder and CEO of MYnetico,
which was acquired by UHG. She also served as
Chief Medical Officer of ARIA Health Care System
and Health Partners of Philadelphia. In 2022,
Deneen was named a Modern Healthcare’s Top
Innovator, in 2014, she was an Emmy® Award winner
and in 2013, a CES® Innovation Design &
Engineering Innovation Honoree.
Qualifications: MD from the Temple University
School of Medicine, BS in Behavioral Neuroscience
from the University of Pittsburgh.
Other appointments: EVP for Health Solutions at
Blue Shield of California. Member of the Advisory
Board of The Center for Health Incentives &
Behavioral Economics at Penn Medicine.
6. John Castellani
A C R
Independent Non-Executive Director
Appointed: 1 March 2016
Nationality: American
Experience: John brings experience of the
pharmaceutical and biotechnical sectors, business
ethics, and political and regulatory knowledge to
the Board. John was President and Chief Executive
Officer of Pharmaceutical Research and
Manufacturers of America (PhRMA) from 2010 to
2015. Prior to that he was President and Chief
Executive of Business Roundtable, an association
of leading US company chief executives. During his
career John has also held senior positions with
Burson-Marsteller, Tenneco, and General Electric.
Qualifications: BSc in Biology from Union College
Schenectady, New York.
Other appointments: Director of 5th Port and the
Maine Coastal Healthcare Alliance.
Other Directors who
served during 2024
Patrick Butler
Non-Executive Director
Patrick Butler retired from the Board on 29
February 2024.
Company Secretary
Helen Middlemist
Appointed: 1 January 2024
(joined Hikma in 2022)
Role: Helen is responsible for advising on
relevant law, regulation and best practice
in relation to Hikma’s listing on the London
Stock Exchange.
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Hikma Pharmaceuticals PLC | Annual Report 2024
Financial
statements
Strategic
report
Corporate
governance
Leadership – Executive Committee
Corporate governance report
UK Corporate Governance Code compliance
Hikma is committed to high standards of
corporate governance and we work hard to
apply the Principles of the UK Corporate
Governance Code 2018 (the 2018 Code) and
the Markets Law of the Dubai Financial
Services Authority (the Markets Law). The
2018 Code and associated guidance are
available to view on the Financial Reporting
Council’s website at www.frc.org.uk.
The report on pages 94 to 144 describes how
the Board has applied the 2018 Code and
Markets Law throughout the year ended
31 December 2024. Other than Provisions 9
and 19, as referred to in the following section
on the Executive Chairman, Hikma has
complied with all Provisions of the 2018 Code
throughout the year.
Our commitment to corporate
governance reporting
Following the publication of the UK
Corporate Governance Code 2024 (the
2024 Code) in January 2024, the Board
has spent time understanding the new
requirements, mapping Hikma’s practices
against the updated Principles and
Provisions and preparing to report on the
2024 Code from 1 January 2025 (except
for the new Provision 29 on internal
controls, which will be reported on from
1 January 2026).
To demonstrate our commitment to
transparent corporate governance
reporting, we have updated our disclosure
on key Board activities to more explicitly
link Board decisions and their outcomes
to Hikma’s strategy and objectives. Key
Board activities in 2024 can be found on
pages 103 to 104.
Executive Chairman
The Board acknowledges that Said
Darwazah’s position as Executive Chairman,
his previous role as CEO and his overall
tenure are departures from Provisions 9 and
19 of the 2018 Code. The background to this
role, rationale for the role and safeguards to
support our governance structure are
summarised below.
Background
The Executive Chairman role was created in
February 2018, following the appointment of
a new CEO. Previously, Said Darwazah was
the Executive Chairman and CEO. The Board
continues to consider that it is important
to retain corporate memory, important
relationships and the culture of the
organisation, and views the retention of
Said’s services as valuable in developing
Hikma’s strategy.
The Board consulted shareholders prior to
Said’s appointment as Executive Chairman
and CEO in May 2014 and following the
change to the position of Executive
Chairman in February 2018.
Rationale
The Board is focused on the commercial
success of Hikma and believes that
continuing the position of Executive
Chairman is the best way to achieve success
for Hikma for the following reasons:
– Continuity of strategy: Said has been
a driving force behind the strategic
success of the business since 2007 and
the Board believes that it is important for
the continued success of the Group that
he remains in a strategic role. The
Executive Chairman’s role is to develop
the Group’s strategy in conjunction with
the CEO. The division of responsibilities
for our Executive Chairman and CEO
are available on our website at
www.hikma.com
– Profile: the Executive Chairman position is
highly visible inside and outside Hikma,
providing leadership to the Board and
management of the Group, acting as an
ambassador with business partners and
advisers to the organisation
– Shareholder support: on a rolling five-year
basis, shareholder votes have been in
favour of the Executive Chairman’s
re-election at the Annual General Meeting
(AGM), with an average vote of 96%
in favour
– Stakeholder engagement: a significant
number of Hikma’s key political and
commercial relationships across the
MENA region, Asia and some continental
European countries are built on the
long-term trust and respect for the
Darwazah family such that the role
of the Executive Chairman remains key.
During 2024 the Executive Chairman
undertook an active programme of
stakeholder engagement activities, joining
the CEO and CFO at the Jefferies London
Healthcare Conference, where they met
with investors, partners and advisers to
discuss Hikma’s strategic progress and
strong position for continued success in
2025 and beyond. In 2024 the Executive
Chairman received recognition for his
contributions to healthcare, being named
on the Arabian Business Healthcare
Visionaries list and ranked second on
Forbes’ Middle East Top 100 Healthcare
Leaders, 2024. These accolades reflect on
the Executive Chairman’s decades of
leadership at Hikma, and the Group’s
ongoing impact on the healthcare industry
Safeguards
The Board continues to operate the following
enhanced governance controls to support
the Executive Chairman role:
– Governance structure review: the
independent Non-Executive Directors
meet after every Board meeting in a private
session chaired by the Senior Independent
Director. They also undertake an annual
review of the appropriateness of the
governance structure, the division of
responsibilities between the Executive
Chairman and the CEO, safeguards and
shareholder views. During their 2024
meeting, the independent Non-Executive
Directors reviewed the succession plan,
stakeholder views and the effectiveness of
the governance controls in place to
support the Executive Chairman role, and
concluded that the Executive Chairman
role should continue
– Board role statements: The division of
responsibilities for our Executive Chairman
and CEO are available on our website at
www.hikma.com
– Senior Independent Director role: the
Senior Independent Director has an
enhanced role at Hikma, taking joint
responsibility, with the Executive
Chairman, for the annual Board
performance review, setting the Board
agenda, agreeing action points and the
minutes of the meetings
– Committee Chair roles: the Chairs of
the Board Committees and the Director
responsible for workforce engagement
undertake a significant amount of work
in the discharge of their responsibilities
– Transparency and engagement: Hikma
has always had the highest regard for
shareholders, with several of the original
investors from before listing still investing
and supporting Hikma today. Over the c.19
years since flotation Hikma has maintained
the highest standards of shareholder
engagement, which reflects the
importance placed in maintaining strong
investor relations and governance
The Board considers that the Executive
Chairman role is key to Hikma and does not
intend to make any changes to this structure
in the medium term. Should shareholders
require any further information relating to
these matters, questions may be directed
to the Company Secretary.
1. Riad Mishlawi
Chief Executive Officer
2. Mazen Darwazah
Executive Vice Chairman, President of MENA
For biographical details, see page 98
3. Hussein Arkhagha
Chief People Officer
Joined: 2001 Nationality: Jordanian
Role: Hussein was appointed as Chief People
Officer in September 2023. He is responsible for the
Human Resources and Compliance Departments,
and overseeing legal and Company Secretarial
Departments. Hussein has been a standing
member of the Executive Committee since 2017.
Hussein has held several executive positions during
24 years at Hikma, including Chief Counsel and
Company Secretary, General Counsel, Head of
Legal/MENA, Head of Shareholders’ Department
and Head of Tax.
Qualifications: Hussein holds a Master’s degree in
International Business Law from the University of
Manchester, under the UK Chevening Scholarship
Programme.
4. Bassam Kanaan
Executive Vice President,
Corporate Development and M&A
Joined: 2001 Nationality: Jordanian
Role: Bassam was appointed EVP, Corporate
Development and M&A in 2014 and has Group-level
responsibility for strategic development,
acquisitions, and alliances. He also has oversight of
the IT function, Global Procurement and Hikma
Ventures. Bassam has held several executive
positions during 23 years with Hikma, including
Chief Financial Officer in the period from 2001 to
2012, and President & COO for MENA and EU from
2012 to 2014. Bassam played a leading role in
preparing for Hikma’s IPO in 2005 and in its
subsequent M&A activity.
Qualifications: US Certified Public Accountant,
Chartered Financial Analyst, BA from Claremont
McKenna. International Executive MBA from
Northwestern University.
5. Khalid Nabilsi
Chief Financial Officer
Joined: 2001 Nationality: Jordanian
Role: Khalid was appointed as Chief Financial
Officer in 2011 and is responsible for Group finance,
including reporting and capital management.
Khalid has held several leadership positions within
Hikma’s financial functions during 23 years with
Hikma, including VP Finance.
Qualifications: Certified Public Accountant.
MBA from the University of Hull.
6. Susan Ringdal
Executive Vice President,
Strategic Planning and Global Affairs
Joined: 2005 Nationality: American
Role: Susan has served as EVP, Strategic Planning
and Global Affairs since 2012 and is responsible
for strategic planning, investor relations, corporate
communications, and sustainability. Prior to joining
Hikma, Susan worked for Alliance Unichem and
Morgan Stanley.
Qualifications: BA in History from Cornell
University. MBA from London Business School.
7. Dr Bill Larkins
President of Injectables
Joined: 2022 Nationality: American
Role: Bill was appointed as President of Hikma’s
Injectables business in September 2023. Bill has
extensive experience in the sterile injectable
generic market, having previously served as Chief
Executive Officer of Custopharm, which was
acquired by Hikma in 2022, and until September
2023 served as Hikma’s Senior Vice President,
R&D, Injectables.
Qualifications: BSc in Chemistry from Purdue
University and a PhD in Analytical Chemistry
from The Ohio State University.
9. Dr Hafrun Fridriksdottir
President of Generics
Joined: 2024 Nationality: Icelandic and American
Role: Hafrun joined Hikma in April 2024 as
President of Hikma’s Generics business. Prior to
joining Hikma, Hafrun held senior executive roles at
leading global pharmaceutical companies including
Alvotech, Teva Pharmaceuticals, Allergan and
Actavis, and most recently has served in advisory
and board roles for several biotech and mid-sized
pharma companies.
Qualifications: MS Degree in Pharmacy and a PhD
in Physical Pharmacy from the University of Iceland.
8. Julie Hill
Senior Vice President, Corporate
Quality Compliance/Health and Safety
Joined: 2016 Nationality: American
Role: Julie has served as Senior Vice President,
Corporate Quality Compliance/Health and Safety
since February 2024. Julie joined Hikma through the
2016 acquisition of Roxane Laboratories and most
recently served as Vice President, Quality, for
Hikma’s Generics business. Prior to that, she served
in various leadership roles with Hikma and
predecessor companies at Hikma’s Columbus,
Ohio, generics manufacturing facility.
Qualifications: Bachelor of Science degree in
Biochemical Engineering from Purdue University.
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Hikma Pharmaceuticals PLC | Annual Report 2024
Financial
statements
Strategic
report
Corporate
governance
Culture
To demonstrate our commitment to transparent corporate governance
reporting, we have updated our disclosure on key Board activities to
more explicitly link Board activities, decisions and their outcomes to
Hikma’s strategy and objectives.
Our values
We are
Innovative
We are
Caring
We are
Collaborative
Key Board activities in 2024
Our values
Hikma’s values build on our founder’s vision
of Hikma as a company with high ethical
standards, where our people thrive in a
supportive environment.
These values were introduced in 2020,
following engagement with our workforce
and a thorough review of our culture by
the Board.
In the boardroom, we are reminded of our
values regularly and are guided by them
when making decisions and engaging with
the Executive Committee and the wider
workforce. Read more about our values at
www.hikma.com.
Further information on the Group’s activities
as they relate to culture is available on
pages 19, 26, 54 to 55 and 60 to 61.
Indicators of culture reviewed by the Board
and its Committees:
– reviewing the volume and nature of
whistleblowing reports and outcome
of any investigations
– internal audit reports and findings, as
attitudes to regulators and internal audit
can give an early indication of potential
culture-related issues
– feedback reports on workforce
engagement activities
– monitoring compliance with our Code of
Conduct
– reports from the Compliance,
Responsibility and Ethics Committee
– results of our workforce engagement
surveys
– first-hand experience from engagement
with the workforce during site visits
Strategic pillars:
Business and strategy
Link to strategic priorities
Approved the acquisition of parts of Xellia Pharmaceuticals. This delivers on our strategy and supports the
long-term growth of the Injectables business. It adds a differentiated portfolio and pipeline, significantly expands
Hikma’s US Injectables manufacturing capacity, adds complex manufacturing technologies and enhances Hikma’s
R&D capabilities
Received updates on the signing of a significant new long-term CMO contract with a global pharmaceutical
company. Our CMO business is key to our Generics strategy, supporting stronger revenue growth and profitability,
while improving the utilisation of our Columbus, Ohio site
Approved an agreement in principle to resolve the opioid related cases brought against Hikma Pharmaceuticals
USA Inc. by US states, their subdivisions, and tribal nations. These cases represent the vast majority of cases
brought against Hikma related to the manufacture and sale of prescription opioid medications. The agreed upon
settlement is not an admission of wrongdoing or legal liability. The Board considered investors, the long-term
success of the Group, and maintaining high standards of business conduct
Oversaw the launch of Combogesic®, our first specialty injectable product in the US, and expanded commercial
presence in Europe with entries into Spain and the UK
In line with the Board-approved strategy, strengthened product mix in our Branded business through continued
shift towards higher value medicines
Held the annual two-day strategy meeting in Casablanca, Morocco, during which the Board visited the new Hikma
injectables manufacturing facility and discussed the Group strategy, progress and future plans for growth
Reviewed and approved the five-year business plan, capital expenditure plan and budget for 2025
Reviewed business development opportunities throughout the year and completed post-acquisition reviews of
Custopharm and the Canadian assets of Teligent, which were acquired in 2022
Independence
2024 AGM voting result
The Board reviews the independence of each
of its Non-Executive Directors during the year
as part of the annual corporate governance
review and succession planning process,
which includes consideration of progressive
refreshment of the Board. We are committed
to ensuring that the Board comprises a
majority of independent Non-Executive
Directors, who objectively challenge
management, balanced against continuity
on the Board. This is also important to meet
the independence requirements of the
Board Committees.
The Board considers Victoria Hull, John
Castellani, Nina Henderson, Cynthia Flowers,
Douglas Hurt, Laura Balan and Dr Deneen
Vojta to be independent as at the date of this
report. These individuals have extensive
experience of international pharmaceutical,
financial, corporate governance and
regulatory matters, bring strong independent
oversight, continue to demonstrate
independence and were not associated with
Hikma prior to joining the Board.
On 1 March 2025, John Castellani will reach
nine years of service on the Board, which
Provision 10 of the 2024 Code identifies as a
circumstance likely to impair or which could
appear to impair a non-executive director’s
independence. To preserve the
independence of our Board, John will step
down from the Board following the AGM in
2025.
The Board does not view Ali Al-Husry as
an independent Director. This is due to the
length of his association with Hikma, having
held an executive position with Hikma prior
to listing, and his involvement with Darhold
Limited, Hikma’s largest shareholder.
However, Ali continues to bring to the
Board broad corporate finance experience,
in-depth awareness of the Group’s history,
and a detailed knowledge of the MENA
region, which is an important and
specialist part of the Group’s business.
At the AGM held on 25 April 2024 (2024
AGM), Hikma received significant votes
(defined as above 20% under Provision 4 of
the 2018 Code) against Resolution 22 (the
Rule 9 Waiver (Buyback Waiver)). The Rule 9
Waiver (Buyback Waiver) sought the approval
of independent shareholders for a waiver
obtained from the Panel on Takeovers and
Mergers in respect of any obligation that
could arise, pursuant to Rule 9 of the
Takeover Code, for the Darhold Concert Party
(as defined in the 2024 Notice of AGM) to
make a general offer for all the issued
Ordinary Share capital of Hikma, following
an increase in the percentage of shares held
by the Darhold Concert Party to 30% or
more, resulting from the exercise by Hikma
of the authority to purchase its own Ordinary
Shares pursuant to Resolution 20 (which
received approval from 99.32% of
those voting).
The Board continues to believe that in order
to promote the success of Hikma and act in
the best interests of shareholders, Hikma
should have the flexibility to return value to
shareholders through a possible future
buyback programme. Had the Rule 9 Waiver
(Buyback Waiver) not been approved, Hikma
would not be able to effect such a buyback
programme.
Hikma engaged in a constructive dialogue
with its shareholders and proxy advisers
ahead of and following the 2024 AGM, to
explain the rationale behind the Rule 9
Waiver (Buyback Waiver) and address any
concerns they may have. This included
individual meetings with our largest 20
independent shareholders on the Rule 9
Waiver and a broader engagement
programme with the next 50 independent
shareholders to provide further explanations
of the Rule 9 Waiver, which together
represented a large percentage of Hikma’s
independent voting capital. The meetings
held with investors and proxy advisers were
productive and informative, and following this
engagement, we consider that the rationale
for the Rule 9 Waiver is well understood by
our largest shareholders. We also
acknowledge that a Rule 9 Waiver is not a
market-typical resolution and the associated
safeguards that accompany it may not be well
understood. To address this point and to
prepare for the 2025 AGM, we have
commenced a further programme of
shareholder engagement and have prepared
an FAQ document based on the most
common queries and concerns raised on
Rule 9 Waivers. This document is available on
our website at www.hikma.com. Should
shareholders require any further information
relating to the Rule 9 Waiver, questions may
be directed to the Company Secretary or the
Investor Relations team.
In accordance with the requirements of
Provision 4 of the 2018 Code:
– We provided additional information in our
announcement of the AGM voting result on
25 April 2024, including feedback received
from shareholders to understand the
reasons behind the result and the actions
we intended to take
– On 24 October 2024, we provided a further
update within the six-month period
prescribed by Provision 4 of the 2018 Code
on the actions taken since the 2024 AGM
– We included a final summary above on the
impact the feedback has had
– Preparations are underway to seek
shareholder approval for a renewal of the
Rule 9 Waiver at the 2025 AGM. This
includes a further shareholder
engagement campaign and the creation of
an FAQ document based on the most
common queries and concerns raised by
shareholders on Rule 9 Waivers, which is
available on our website at
www.hikma.com. Further detail on the
Rule 9 Waiver is included in the
explanatory notes to the 2025 Notice of
AGM, available at www.hikma.com.
Corporate governance report
continued
Strive for
excellence
People and
responsibility
Diversify and
differentiate
102
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Hikma Pharmaceuticals PLC | Annual Report 2024
Financial
statements
Strategic
report
Corporate
governance
Key Board activities in 2024 continued
Performance, risk and operations
Link to strategic priorities
Received reports from the CEO and CFO at each meeting which included progress against strategic objectives,
financial performance and key areas of focus
Monitored key legal matters which were summarised by the Group General Counsel in regular legal reports
Received updates from management on quality compliance, health & safety, pharmacovigilance
and regulatory affairs
Reviewed the Group risk report and approved the principal risks and risk appetite, and the emerging risks
Received and discussed the annual update on cyber security, which included training on cyber awareness for
Board members
Approved the annual statements on Modern Slavery and Tax Strategy, which are available on our website at
www.hikma.com
Following a formal competitive audit tender process, approved the reappointment of PwC as external auditor
of the Company from 2026 onwards. More information can be found on page 110
Corporate governance and succession planning
Link to strategic priorities
Planned and completed the 2024 external Board performance review. More information on the process, insights
and outcomes of the Board performance review can be found on page 106
Oversaw the orderly succession for the independent Non-Executive Directors handing over responsibilities
in April 2025
Ensured high-quality leadership in place to drive the next phase of growth for our Generics business, receiving
updates on the appointment of Hafrun Fridriksdottir as President of Generics
Received reports from Committee Chairs on the work of the Board committees
Reviewed the new corporate governance reporting requirements under the 2024 Code, mapping Hikma’s practices
against the updated Principles and Provisions
Stakeholder focus
Link to strategic priorities
Considered the results of Hikma’s People Voice Survey, the recommended areas of focus and actions, and the
progress made against action plans. More information can be found on page 26
Approved a progressive dividend policy to return value to shareholders. This resulted in an increased dividend of
72 cents per share for the full year 2023 (2022: 56 cents per share). The expected full-year dividend for 2024 is
80 cents per share
Received reports from the designated Non-Executive Director for workforce engagement on feedback received from
our people during visits to Hikma sites in Portugal, KSA, US
Approved the UK Carbon Reduction Plan which confirms Hikma’s commitment to achieving Net Zero emissions
by 2050 for its UK sites. The UK Carbon Reduction Plan is available on our website at www.hikma.com
Considered the feedback provided from investors as part of the annual investor perception report
Undertook an engagement programme with investors regarding the Rule 9 waiver. More information can be found on
page 102
More information on stakeholder engagement activities and outcomes is included in our Section 172 statement on pages 24 to 29
Strategic
pillars:
Corporate governance report
continued
Strive for
excellence
People and
responsibility
Diversify and
differentiate
104
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Financial
statements
Strategic
report
Corporate
governance
Dear Shareholders
The Nomination and Governance Committee (NGC or the Committee)
has continued to play a key role in the oversight of the Group’s
governance arrangements and succession planning.
Succession
The Committee oversees succession for both Executive and
Non-Executive Directors and reviews the succession plans for
these roles. Below Board level, the Committee is responsible for
ensuring that appropriate arrangements are in place for senior
positions, including the Executive Committee.
Executive
As identified during the 2023 Board evaluation, a key priority for 2024
was to review succession plans for the Board and Executive
Committee. During 2024 the Committee undertook a detailed review
of succession plans for the Executive Committee and certain other
senior roles, prepared by the Chief People Officer, Hussein Arkhagha.
The Committee intends to build on this work in 2025, maintaining the
format of regular updates to review succession planning for the
Executive Directors.
The Committee also received updates on the appointment by the
CEO of two new Executive Committee members: Julie Hill, Senior Vice
President, Corporate Quality Compliance/Health and Safety joined
the Executive Committee in February 2024, and Hafrun Fridriksdottir,
President of Generics joined Hikma and the Executive Committee in
April 2024. Both bring outstanding leadership qualities and valuable
insights to the Executive Committee and Hafrun has the research and
development leadership capabilities to drive Hikma’s Generics
business in its next phase of growth.
Non-Executive
As disclosed in our 2023 Annual Report, following recommendation
by the Committee, the Board approved the following succession plans
in February 2024, to take effect from the 2025 AGM:
– Deneen Vojta will succeed John Castellani as Chair of the
Compliance, Responsibility and Ethics Committee when John steps
down from the Board at the conclusion of the 2025 AGM
– Cynthia Flowers will succeed Nina Henderson as Chair of the
Remuneration Committee at the conclusion of the 2025 AGM
– Laura Balan will succeed Nina Henderson as the designated
independent Non-Executive Director for workforce engagement
at the conclusion of the 2025 AGM
Each successor has shadowed the incumbent in their role for the past
year to ensure a smooth handover of responsibilities.
In 2025 the Committee will review and update the Board skills matrix.
The skills matrix will be mapped against Hikma’s strategic priorities to
identify key skills and experience required to support the delivery of
the strategy and inform future Non-Executive Director recruitment.
Nomination and Governance Committee
Activities in 2024
– Agreed succession plans for two independent Non-
Executive Directors who will retire in 2025, having reached
nine years of service
– Completed a detailed review, with the Chief People Officer,
of the succession plans for the Executive Committee and
certain senior roles
– Conducted an externally facilitated Board performance
review to evaluate the effectiveness of the Board and its
Committees
– Reviewed Hikma’s readiness to report against the UK
Corporate Governance Code 2024 from the financial year
2025
Priorities for 2025
– Monitor the implementation of actions agreed as part of the
2024 Board performance review
– Continue to refine succession planning for the Executive
Committee and senior management
– Review and update the Board skills matrix to inform future
Non-Executive Director recruitment
Victoria Hull
Chair, Nomination and
Governance Committee and
Senior Independent Director
Letter from the Chair
Tenure
We anticipate that independent Non-Executive Directors will generally
serve for a period of up to nine years or, if required to facilitate
an orderly transfer of responsibilities, no later than the next Annual
General Meeting (AGM) of the Company following the ninth
anniversary of their appointment. All appointments are formally
reviewed after three years and again at six years.
Except for John Castellani, who will retire from the Board at the
conclusion of the 2025 AGM, each Director will stand for re-election at
the 2025 AGM. The position of each Director was reviewed during the
year as part of the consideration of succession arrangements,
independence issues, the annual governance structure review, the
BPR and the ongoing dialogue between the Executive Chairman and
the SID.
Time commitment
The Committee continues to review the external commitments
of each Director with a view to ensuring that the benefits of the
additional experience from their external commitments are not
outweighed by reductions in their commitment to Hikma. The
Directors achieve excellent attendance and spend significant time
delivering their responsibilities. Accordingly, the Committee considers
that there is currently an appropriate balance. The Committee will
continue to monitor the situation.
Inclusion and diversity
The Board Diversity Policy, which applies to the Board and its
committees, sets out the Board’s ongoing commitment to ensure
that the Board and its committees are an inclusive place that
welcomes different cultures, perspectives, and experiences from
across the globe.
Information on Board, Executive Committee and senior management
diversity is summarised on page 97 and included in the prescribed
format required under the UK Listing Rules on page 142. Hikma
supports the recommendations of the Parker Review and the FTSE
Women Leaders Review in relation to Board diversity and has adopted
the objectives for Board diversity set by both reviews. The Board
Diversity Policy is available at www.hikma.com.
At a Group level, Hikma’s objective is to ensure that it has an inclusive
workplace that welcomes different cultures, perspectives and
experiences from across the globe. Hikma is committed to attracting,
retaining and developing talented people, irrespective of their race,
colour, religion, age, sex, sexual orientation, gender identity, marital
status, national origin, present or past history of mental or physical
disability and any other factors either protected from consideration
by law or not related to a person’s ability to perform the relevant role.
This statement is included in our Code of Conduct and communicated
to all employees.
Nomination and Governance Committee
continued
Executive Chairman performance review
The Executive Chairman and I meet regularly to discuss matters
including Board succession planning, the performance of the Board
and how his role helps deliver and enhance that performance. This
builds on discussions that I hold with the independent Non-Executive
Directors as a group and commentary received through the BPR and
other stakeholder engagement processes. The Remuneration
Committee is an important input to this process as they assess the
Executive Chairman’s performance as part of the determination of
performance-based compensation.
Director performance reviews
The Executive Chairman, having taken into account the comments
from the Board performance review and discussions with the SID,
reviewed the performance of each of the Directors during the year
and concluded that each Director contributes effectively to the Board,
brings particular areas of skill and experience, which ensures the
Board as a whole has the right capabilities, and devotes sufficient time
to their role. The Committee has concluded that the relevant Directors
be recommended to shareholders for re-election at the 2025 AGM.
Board composition
During the year, the Committee reviewed the composition of the
Board and its committees. This review included consideration of the
skills and attributes of each member, the balance between
constructive challenge and empowerment of the executive, the
results of the 2024 BPR and the current and desired levels of
perspectives and experiences in the Boardroom.
Skills and experience
The Board believes it is important for Directors to demonstrate the
highest level of integrity, a challenging and constructive style and
have significant international experience at an executive level. The
Committee regularly considers whether there may be gaps in fulfilling
the specific and in-depth experience that the Board requires as a
whole, which focuses on the following areas:
– strategy, culture and leadership
– business environment in the US, Europe and the MENA region
– pharmaceutical manufacturing and distribution
– development of new healthcare capabilities
– listing regulations, investor perceptions and governance
Hikma supports Directors in their continued professional
development. As the Directors are highly experienced, their training
needs tend to be related to either ensuring awareness of changes
in the business, political and regulatory environments, or bespoke
training on particular areas for development. Therefore, Hikma
provides financial support for specific training requests and ensures
that Directors are briefed by internal and external advisers on a
regular basis.
During the year, the Board received briefings on matters including
the pharmaceutical competitive environment, healthcare business
development activity, external stakeholder perspectives, investor
perceptions, market sentiment, cybersecurity, business intelligence,
capital markets, emerging risks and regulatory developments.
Hikma’s inclusive workplace welcomes
different cultures, perspectives and
experiences from across the globe.”
Board performance review
In line with the UK Corporate Governance Code 2018 (the 2018 Code)
we undertake a formal and rigorous annual evaluation of performance
of the Board, its committees, the Chairman and individual Directors.
We operate a three-year cycle of an external Board Performance
Review (BPR) in year one, followed by internal reviews in years two and
three. Our last external evaluation took place in 2021, so in 2024,
Hikma undertook an external BPR. Hikma engaged Lintstock Limited
(Lintstock) to facilitate this process. Lintstock is an advisory firm that
specialises in Board reviews and had no pre-existing connections,
beyond conducting Board reviews, with Hikma or any individual Director.
Process
A questionnaire was issued in August 2024 to be
completed by all Board members. The questionnaire
covered:
– Board composition and dynamics
– Board support and meeting management
– The Board’s performance on key areas such as strategy,
risk and people
– Priorities for change
A questionnaire was also issued for each Board Committee
and was completed by Committee members.
One-to-one interviews were held with each Board member
in September 2024
Findings of the questionnaires and interviews were
collated, anonymised, and a summary report was
produced in October 2024
Discussions of the insights and recommendations were
held in November 2024 with the SID, Executive Chairman,
CEO, Committee Chairs and Group Company Secretary
In December 2024, the Board discussed the findings and
agreed an action plan for 2025, which is set out in the
following paragraphs
The 2024 BPR was led by myself, as SID, with the support of the
Group Company Secretary.
Insights from 2024
Overall, the Board operates to a high standard and continues to add
real value to the business. Board dynamics were seen to be positive,
with results showing a high level of respect between Board members,
an environment that allows robust discussions, and an appropriate
balance of support and challenge to management.
Lintstock’s report highlighted the collective willingness of the Directors
to participate in a constructive manner and identify areas for continuous
improvement. A summary of the agreed actions is set out below.
Action plan for 2025
The Board noted key findings and agreed the following actions
for 2025:
Key finding
Actions
Strategic updates Enhancements to the format of the CEO report
and time allocated for discussion, to ensure a
regular cadence of updates to the Board on key
strategic topics and initiatives.
Board governance Identified key policies and procedures to
update during 2025, including refinements to
the Board protocol for paper submissions.
Succession
planning
Refresh the Board skills matrix and map against
Hikma’s strategy to identify key skills and
experience, informing future Board recruitment.
Sustainability
Acknowledging the changing landscape of
sustainability reporting and regulation, review
responsibilities for sustainability topics among
the Board committees and update terms of
reference as necessary.
Independent
Non-Executive
Directors
Noting that Hikma’s largest shareholder is
represented on the Board, increase the number
of meetings of the independent Non-Executive
Directors.
BPR
Improvements to the process for individual
Director performance reviews for 2025.
Progress against actions from 2023
Good progress has been made against the actions identified as part
of the 2023 BPR:
– Succession and talent management: as noted on page 105,
significant progress has been made in this area with succession
plans approved for key Board roles following the planned retirement
of two independent Non-Executive Directors in 2025. For the
Executive Committee and senior management, the NGC received
regular updates throughout the year from the Chief People Officer
on succession plans and associated processes for talent
management. This has been built into the annual meeting calendar
for future years
– Strategy and growth: strengthened discussions of strategic issues
by integrating key topics into the annual Board calendar
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Strategic
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Corporate
governance
Audit Committee
Dear Shareholders
The Audit Committee (the Committee) has had a busy year
performing its duties in relation to the matters delegated to it by
the Board.
During the year, the Committee continued to play a key role in
assisting the Board in its oversight of financial reporting and
auditing matters, including conducting a formal competitive external
audit tender process. More information on the external audit tender
process and outcome can be found on page 110 of this report. The
Committee’s activities also included reviewing and monitoring the
integrity of the Group’s financial information, the internal and external
audit processes, and the Group’s systems of internal controls and risk
management, including preparing for the additional requirements
under Provision 29 of the 2024 Code.
Audit Committees and External Audit:
Minimum Standard
The Committee confirms that it complies with the obligations set out
under the Audit Committees and the External Audit: Minimum
Standard, published by the Financial Reporting Council (FRC) in May
2023. Disclosures in line with the reporting obligations are included
within this Committee report on pages 109 to 113 and an explanation
of the entity’s accounting policies can be found on pages 161 to 166.
External audit
The external audit was undertaken by PricewaterhouseCoopers LLP
(PwC) and has been since their appointment in May 2016. PwC were
originally appointed following a competitive tender process in 2015.
Mr Nigel Comello was appointed as the senior statutory auditor in May
2022. The Committee recommends the re-appointment of PwC for
2025. We believe the independence and objectivity of the external
auditor and the effectiveness of the audit process are safeguarded
and strong. The Company has complied with the Statutory Audit
Services Order for the financial year under review.
Effectiveness
During the year, the Committee reviewed the work of PwC and
concluded that they provided an effective audit, were appropriately
challenging, had constructive relationships with the relevant parties
and that the senior statutory auditor provided clear and constructive
leadership to the audit team. As part of this review the Committee
examined the following areas:
– Audit quality and technical capabilities: the Committee
considered that the external auditor undertook an effective and
in-depth assessment and verification exercise in respect of the
financial statements and associated disclosures for the year ended
31 December 2024 and provided a high level of expertise. The
Committee provided feedback on the auditor’s performance as
part of its regular meetings with them without management
present. The Committee also took into account the reports of the
FRC, including the Audit Quality Inspection Supervision report, and
continues to believe that there is an open and appropriately
challenging relationship between the audit leadership team, the
Committee and management. Management also conducted a
formal review of audit quality and effectiveness using a survey
where feedback was provided by Committee members and
management. The key outcomes were summarised and considered
by the Committee in their assessment of the auditor
– Independence: the Committee regularly reviews the independence
safeguards of the auditor and remains satisfied that auditor
independence has not been compromised. During the year, the
Committee received reports on the application of its policies on the
provision of non-audit services and employment of former
employees of the external auditor. The Committee is satisfied that
the auditor is independent
Activities in 2024
– Conducted a formal competitive external audit tender
process and recommended that the Board reappoint
PricewaterhouseCoopers LLP as external auditor of the
Company from 2026 onwards, subject to shareholder
approval at the 2026 AGM
– Prepared for the additional reporting requirements under
Provision 29 of the 2024 UK Corporate Governance Code
(the 2024 Code)
– Monitored the implementation of fraud prevention controls
and associated training in readiness for the new offence of
failure to prevent fraud introduced under the Economic
Crime and Corporate Transparency Act (ECCTA)
– Reviewed the Group’s tax policies, procedures and internal
controls
Priorities for 2025
– Oversee the testing of Hikma’s fraud prevention controls in
readiness for the new requirements related to failure to
prevent fraud introduced under the ECCTA
– Oversee the process to meet disclosure requirements under
the EU Corporate Sustainability Reporting Directive (CSRD)
for financial year starting 1 January 2025
– Continue to implement enhancements to our internal
controls following the publication of the 2024 Code
– Conduct an external review of the effectiveness of Hikma’s
internal auditor in line with new Global Internal Audit
Standards published by the Institute of Internal Auditors (IIA)
Letter from the Chair
Douglas Hurt
Chair, Audit Committee
One of the pillars of the Group’s strategy is ‘people and responsibility’.
The Group’s approach to our people’s progress, belonging, succession
and appointments are a core part of this pillar. The Committee
monitors the diversity metrics which are detailed on page 97 and uses
these as a reference point when considering the level of achievement
against its diversity initiatives. Hikma has successful empowerment
and talent development programmes to help all of our people make
the most of their potential, for more information please see pages 54
and 55. Further detail on workforce diversity is provided on page 97.
The Group’s talent acquisition policies for the three most senior
staff grades require a balanced list of candidates to support our
diversity goals.
Ethnicity
The Board considers that it has demonstrated strong ethnic diversity
since the formation of Hikma and has four Directors from ethnic
minority backgrounds (when assessed against UK ONS criteria),
representing 36% of the Board, including the Executive Chairman and
CEO. The Board has adopted and meets the objectives set by the
Parker Review and UK Listing Rules.
In August 2024, the Parker Review announced that their 2024 survey
would focus on the ethnic diversity of senior management1 working in
the UK (rather than the global workforce as requested in 2023). The
Committee carefully considered the voluntary recommendation for
FTSE 350 companies to set themselves a target for the percentage of
the UK senior management team who self-identify as being from an
ethnic minority by 2027, and its appropriateness for Hikma. Following
a detailed review the Committee decided not to set an ethnic diversity
target for its UK senior management team for the following reasons:
– Hikma has a diverse geographic footprint and a global workforce
with high levels of diversity (36% of our global senior management1
population self-identify as being from an ethnic minority)
– There is a small UK workforce, accounting for c.13% of the senior
management1 population
In order to demonstrate focus on the issues raised by the Parker
Review in relation to senior management ethnic diversity, Hikma
reaffirmed its commitment to:
– Monitoring senior management1 ethnic diversity across our global
operations on an annual basis, using a voluntary survey to collect
data. The survey contained an expanded list of ethnicities sensitive
to Hikma’s workforce, and individuals had the option to respond by
selecting ‘prefer not to say’
– Providing enhanced ethnic diversity disclosures by continuing to
report on the ethnic diversity of our global senior management1
population, in addition to the UK senior management population
requested by the Parker Review. The enhanced disclosures can be
found on page 97
Gender
Since its founding, Hikma has actively promoted inclusion across its
operations. Our Board has good gender diversity with women
representing 45% of the Board. The Board has adopted and meets
the objectives set by the FTSE Women Leaders Review and diversity-
related disclosures under the UK Listing Rules to have at least 40% of
Board members identifying as women.
The Board also supports the voluntary target set by the FTSE Women
Leaders Review, to increase the diversity of the senior management
team1. In jurisdictions where permitted under local law,
our Remuneration Committee has integrated targets to increase
gender diversity within the senior management1 population into
the performance measures for variable remuneration; further detail
is included in the 2022 and 2023 Annual Reports. These targets are
not intended to act as quotas, preferences or set-asides and
selections will continue to be made based on merit. Information on
our senior management1 gender diversity is included on page 97.
Governance review
As in previous years, the Committee undertook the annual review of
the Group’s governance arrangements in conjunction with the Group
Company Secretary. This year the exercise included a review of the
structure and composition of the Board and its committees, Board
succession planning, and the external BPR. The Committee also
received a regulatory update in relation to corporate reporting and
reviewed Hikma’s readiness to report against the UK Corporate
Governance Code 2024 from the financial year 2025. Our governance
framework can be found on page 96, and further information on
Hikma’s Board, committees and corporate governance practices
is available at www.hikma.com.
For and on behalf of the Nomination and Governance Committee.
Victoria Hull
Chair, Nomination and Governance Committee
and Senior Independent Director
25 February 2025
1
Senior management refers to senior direct reports to the CEO and Executive Chairman,
and the senior leaders who report directly to them (excluding administrative roles)
Nomination and Governance Committee
continued
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Strategic
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Corporate
governance
Audit Committee
continued
Significant matters related to the financial statements
As part of its work reviewing the financial statements of the Group and the report of the auditor, the Committee considered and discussed the
following important financial matters:
Matters considered in relation
to the financial statements
The Committee’s review and actions
Impairment review
Management conducted an impairment review of intangible assets, right-of-use assets, and property,
plant, and equipment. This resulted in a recommended impairment reversal of $60 million for the
complex respiratory CGU, alongside a total impairment charge of $22 million for various individual
intangible assets and $9 million for property, plant, and equipment. The Committee reviewed
management’s approach and recommendations and concluded that the proposals were appropriate.
More information can be found in Notes 15 and 16 on pages 179 to 182.
Business combination of Xellia
Pharmaceuticals
The Committee reviewed and challenged the accounting treatment of the acquisition as a business
combination, including the estimates and judgements underpinning the valuation of the acquired
assets, and concluded that they were appropriate. A third-party expert conducted the valuation
exercise. More information can be found in Note 34 on page 197 to 198.
Revenue recognition
The Committee reviewed the Group’s revenue recognition policies and their application by
management. This included assessing the model used to estimate chargebacks, in-channel
inventories, and chargeback rates. The Committee also evaluated deductions for customer rebates,
returns and government rebates (including the adjustment made in respect of prior years), and
approved the disclosures on year-end estimates and their sensitivity to assumption changes.
The Committee also reviewed the application of the Group’s revenue recognition policy with respect
to a significant contract manufacturing arrangement, focusing specifically on the recognition of
revenue and contract liabilities associated with the Group’s commitments to provide facility space
and equipment under the terms of the arrangement.
More information on revenue recognition can be found in Notes 2 and 3 on page 162 and 166.
Exceptional items and other
adjustments
Management presents core results to monitor performance, set targets, and assess progress. Core
results are a non-IFRS measure which exclude exceptional items and other adjustments. These
figures are also presented alongside reported results to external audiences, providing a clearer view
of the Group’s underlying performance, a more complete picture of its results, and enhanced
comparability of consolidated financial statements. Exceptional items and other adjustments for the
year are detailed in Note 6 on page 171.
The Committee assessed management’s presentation of non-core items and concluded that the
classification and proposed disclosures for non-IFRS items were appropriate and in accordance with
Hikma’s policy.
Taxation
Hikma’s worldwide operations are highly integrated and involve a number of cross-border supply
chains, which results in judgement being required to estimate the potential tax liabilities in different
jurisdictions. The Committee took advice from professional services firms and management in
assessing the reasonableness of the Group’s provisions for uncertain tax positions, which amounted
to $54 million, and in reviewing the deferred tax assets in key markets, which amounted to
$293 million. More information can be found in Note 12 on pages 175 to 177.
The Committee reviewed the appropriateness of the disclosures in the Annual Report, and reviewed
and approved the Group’s tax strategy statement, which is available on our website at
www.hikma.com.
Ensuring the integrity of financial
reporting and providing oversight
of our systems for internal control
and risk management.”
– Challenge and judgement: the Committee considers that PwC
provide appropriate challenge to the management team which
results in the Company’s position being fully considered and
supported and, where appropriate, further strengthened. The
Committee believes that PwC have demonstrated well-considered
and clear-sighted judgement in the matters on which they have
provided opinion and that they have been open to an appropriate
level of challenge and debate. Examples of PwC’s professional
scepticism and challenge, as noted by the Committee, include their
in-depth audit and challenge of the assumptions used in the
impairment review exercise, particularly regarding the reversal of
impairment for the complex respiratory cash-generating unit (CGU)
and the accounting treatment of the Xellia Pharmaceuticals
acquisition as a business combination
– Non-audit services: the Committee’s policy on non-audit services
is available on our website www.hikma.com. The Committee has
discretion to grant exceptions to this policy where it considers that
exceptional circumstances exist and that independence can be
maintained, while having due regard to the FRC’s ethical standards
for auditors, meaning that non-audit fees will be capped at 70% of
the average audit fees paid in the previous three consecutive
financial years. In 2024, PwC provided assurance services related to
the interim review and other non-audit services with a total value of
$519,000 (2023: $553,000). These services are within the ordinary
course of services provided by the auditor
The Committee confirms that the statutory audit services for the
financial year under review were conducted in compliance with the
Competition and Markets Authority Order, and competitive audit
tender processes were undertaken in 2015 and 2024.
Auditor’s fee
$3.4m
PwC
1 Jan –
31 Dec 2024
$3.4m
$0.5m
12.8%
87.2%
1 Jan –
31 Dec 2023
(restated)1
$3.7m
$0.5m
11.9%
88.1%
Audit-related fees
Other non-audit services
1. Amounts have been restated to reflect final amounts billed in relation to 2023
Audit tendering
As a UK public interest entity, Hikma is required to carry out an audit
tender every ten years and rotate the external auditor every 20 years.
PwC was first appointed as external auditor in May 2016 following a
tender in 2015, therefore, the current Annual Report is the ninth report
that they have audited. PwC rotated the senior statutory auditor in
2019 and 2022. In accordance with the audit tendering guidelines, and
as reported in our 2023 Annual Report, a key priority for the
Committee in 2024 was to plan for and conduct a competitive external
audit tender.
The Committee undertook a formal competitive tender during 2024,
which concluded with the Board accepting the Committee’s
recommendation that PwC be reappointed as external auditor of the
Company from 2026 onwards, subject to shareholder approval at the
2026 AGM.
The tender followed the process outlined in the FRC’s Audit
Committees and the External Audit: Minimum Standard, and is
summarised below:
– April 2024: the Committee approved the proposed tender process
and timeline
– May to August 2024: review of potential audit firms, including
independence considerations. This review included firms outside
the ‘Big 4’, but after consideration of geographical coverage they
were not progressed
– September 2024: Invitations to Tender were circulated to three
firms, one of which was unable to participate due to resource
constraints. Requests for Proposal (RFP) were circulated to the
remaining bidding firms
– September 2024: firms provided with detailed information on the
Company, including organisation structure, risk and control,
accounting, reporting and audit scope
– September 2024: meetings arranged with members of the
Committee and senior management
– October 2024: firms submitted proposal documents in response
to the RFP
– November 2024: final presentation made by each firm to the
Committee, with the CFO, Group Financial Controller and other
members of senior management in attendance
A transparent and non-discriminatory scorecard system was used to
evaluate the proposals, focusing primarily on the proposed audit
approach and effectiveness, communication skills, competencies and
the utilisation of technology. Having considered the scoring criteria,
key factors, input and observations from each Committee member
and members of management, and the proposal documents and
presentations themselves, the Committee submitted the two
candidate firms to the Board for consideration, with a
recommendation that PwC be reappointed as external auditor of the
Company from 2026 onwards, which was accepted by the Board.
Position and prospects
During the year, management undertook an annual review of the
Company’s strategic direction and an extensive assessment of the
Group’s short-term and medium-term prospects, including
the budget for 2025 and the five-year business plan, respectively.
Management presented and received the Board’s approval and
commentary on the full strategy, budget and five-year business plan.
Having taken account of how the business has responded to
the changing business environment, the business plan, principal risks
and uncertainties facing the Group and other relevant information,
the Committee has concluded that the Group continues to have
attractive prospects for the future.
Going concern and longer-term viability
The Committee considered the going concern position as detailed on
page 87 and the longer-term viability assessment as detailed on
page 88. The Committee gave careful consideration to the period of
assessment used for the Viability Statement and concluded the time
period of three years remained appropriate.
Having reviewed and challenged the downside assumptions, forecasts
and mitigation strategy of management, the Committee believes that
the Group is adequately placed to manage its business and financing
risks successfully and has a reasonable expectation that the Group
has adequate resources to continue in operation and meet its
liabilities as they fall due and over the viability period. The Committee
was comfortable with recommending to the Directors that they adopt
the going concern basis in preparing the financial statements.
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Audit Committee
continued
– Risk management: the ERM framework provides a structure for risk
management activities to occur at all levels of the organisation,
including management of principal risks and uncertainties (detailed
on pages 82 to 86) and emerging risks. Risk reporting processes
ensure the Executive Committee and the Board are engaged in
the design and implementation of new control initiatives and
provide oversight of existing programmes
– Financial performance: Hikma’s financial performance and
forecasting reports are reviewed by the Board to aid the
understanding of the underlying performance of the business,
deviations from expectations and management’s operational
challenges and responses
– Ethics: the business integrity and ethics procedures and
controls that are led by the Compliance, Responsibility and Ethics
Committee (CREC). To ensure consistency and awareness between
these committees’ responsibilities, the Audit Committee Chair is
a standing member of the CREC
– Governance: our overall approach to corporate governance,
including compliance with the UK Corporate Governance Code,
is led by the Nomination and Governance Committee
– External auditor: the regular and confidential dialogue with the
external auditor
During the year, the Committee received updates from Hikma’s
Internal Controls and Assurance team on:
– preparations to comply with Provision 29 of the 2024 Code, which
will come into effect from financial year 2026
– the fraud prevention and detection programme, which builds on
existing practices and policies and further supports the Group’s
internal control environment with formalised controls. The
programme was launched to ensure compliance with the newly
legislated criminal offence of failure to prevent fraud, which will
come into force on 1 September 2025
– the results of internal assurance of controls
The Committee also maintains a programme of in-depth reviews into
specific financial and operational areas of the business. These reviews
allow the Committee to meet key members of the management team
and provide independent challenge. During 2024, the Tax team
presented a deep dive on their organisational structure, mandate,
strategy, processes, systems and controls. The Committee
deliberated with management and the Tax team during the
presentation, gaining comfort in relation to the general control
environment surrounding the tax function of the Group, in addition
to the various assurance activities undertaken by internal audit and
internal controls and assurance.
Internal audit
The internal audit of Hikma is performed by EY, who report directly
to the Chair of the Committee. There is a regular programme of
interaction between EY and the Committee.
EY assess each facility and the Group’s major processes over a
three-year period. For major sites, assessments are more frequent.
Management is required to respond to findings within an agreed time
period and ensure mitigation or remediation of all high-risk findings
within six months.
During the year, the Committee monitored progress with the internal
audit programme for 2024 and reviewed and approved the plan for
2025. EY and management work closely together to deliver the
internal audit plan, develop action plans for points raised, and ensure
that the Committee receives appropriate and timely information. The
Committee also received updates on the IIA’s new Global Internal
Audit Standards (the Standards) which were published in January
2024 and became effective in January 2025, to ensure Hikma’s timely
compliance with the Standards.
During the year, the Committee continued to monitor the
performance and independence of the internal auditors in
accordance with the policies that have been established. The
Committee assessed the effectiveness of the internal audit function
by reviewing its reports, progress against the 2024 plan and meeting
with internal audit without management present. The Committee
considers that EY bring significant pharmaceutical and MENA
market experience which is complemented by the experience of
other third-party experts where required and concluded that EY
continue to perform an effective internal audit programme and
remain independent.
Membership of the Committee
The Committee comprises solely independent Non-Executive
Directors, who as a whole, have competence and experience relevant
to Hikma’s business and the industry in which it operates. I am
considered by the Board to have significant recent and relevant
financial experience chiefly related to my work with other audit
committees, having been a finance director of another listed entity
and having held senior financial positions in other entities.
Biographical details of the Committee members can be found on
pages 98 and 99. The Board is satisfied that the Committee has the
resources and expertise to fulfil its responsibilities.
As Chair of the Audit Committee, I remain available to shareholders
and stakeholders should they wish to discuss any matters within this
report or under the Committee’s area of responsibility whether at the
AGM or by writing to the Company Secretary.
For and on behalf of the Audit Committee.
Douglas Hurt
Chair, Audit Committee
25 February 2025
Fair, balanced and understandable reporting
Hikma is committed to clear and transparent disclosure and seeks
to continuously improve the clarity of its reporting. At the request of
the Board, the Audit Committee considers whether Hikma’s Annual
Report is fair, balanced and understandable and that the narrative is
consistent with the financial information. The Committee’s
assessment is underpinned by a statement from the Reporting
Committee following their comprehensive review of the Annual
Report. The Reporting Committee is comprised of representatives
from Finance, Investor Relations, Risk, Reward, Sustainability and
Company Secretariat and is supported by divisional and functional
heads, as required.
The Reporting Committee’s activities include:
– initiating the review process for the Annual Report significantly
before the year-end, considering external developments, issuing
guidance to contributors and identifying areas for improvement
– obtaining input from external advisers, including the external and
internal auditors, designers, corporate brokers and public relations
advisers
– undertaking several multi-functional reviews of the disclosures
as a whole prior to the publication of the Annual Report to ensure
consistency and accuracy across the document as a whole
– overseeing an extensive verification process to ensure the
accuracy of disclosures
Each member of the Audit Committee and the Reporting Committee
is satisfied that the 2024 Annual Report is fair, balanced and
understandable and has recommended the adoption of the
Report and Accounts to the Board.
Verification
The qualitative disclosures in the Annual Report are subject to adviser
review, internal review and external audit processes. Our internal
teams have also provided additional verification and support in
respect of each material statement of fact, which assisted the
Committee in its determination that the report and financial
statements taken as a whole are fair, balanced and understandable.
Reporting controls
Hikma’s key controls and risk management systems relating to the
financial reporting process include the enterprise resource planning
system, the processes in the ‘Fair, balanced and understandable’ and
‘Verification’ sections described earlier in this letter, the review of the
financial statements and disclosures that is undertaken by the
Executive Committee, and detailed internal financial control
processes necessitating the verification of financial records at a local,
regional and Group level.
Risk management and internal control
The Board is ultimately responsible for ensuring that Hikma’s systems
of internal controls and risk management processes are effective
and has delegated responsibility for reviewing their effectiveness
to the Committee.
Risk management
The Committee has continued to receive reports on the operation
of the Group’s Enterprise Risk Management (ERM) framework which
includes the material controls and programme for enhancing the
Group’s risk management efforts. Management escalated certain risks
that materialised during the year for Board attention and oversight,
for example the conflicts in the Middle East, legal matters, product
quality controls, and talent attraction and retention challenges in
certain markets. Such instances serve to hone escalation and
disclosure protocols and learnings are taken to improve risk
mitigation programmes.
The Board continued to exercise oversight of cyber risks during the
year, including presentations from management on enhancements to
security systems, new security services, key metrics, assessment
activities, notable threat events and the outcome of an internal audit.
The CIO also provided a briefing on cyber awareness and protection,
specific to Directors and Executive Committee members as attractive
targets for technology-driven fraud attempts. Further information on
Hikma’s management of cyber risks, associated assessments and
certifications is included on page 84.
As in previous years, management and the Board have undertaken
a robust assessment of the Group’s emerging risks as well as the
annual review of the principal risks. The Committee and the Board
have considered the principal risks facing the Group and have
decided that no adjustments were required in the year under review.
The Board and management have also reviewed the appetite for
those principal risks and have concluded that it remains appropriate.
Further information regarding the Group’s risk management activities
is available in the risk management section on pages 80 to 88.
Internal control
In preparation to report against Provision 29 of the 2024 Code from
1 January 2026, Hikma has launched a Group controls programme to
map identified material risks against the existing controls mitigating
them. The material risks were identified by assessing management’s
top risks, using an impact grid. The work continues on further
enhancing and improving controls in the relevant frameworks, and
documenting the levels of assurance currently obtained.
The key elements of our internal control framework are as follows:
– a documented and disseminated reporting structure with clear
policies, procedures, authorisation limits, segregation of duties
and delegated authorities
– written policies and procedures for functional areas with specific
responsibility allocated to individual managers
– a comprehensive system of internal financial reporting that includes
regular comparison of results against budget and forecast and
a review of KPIs, each informed by management commentary
– an established process for reviewing the financial performance
and providing support to Hikma companies and associates
together with direct support from Hikma’s finance function
– annual budgets, updated forecasts and medium-term business
plans for Hikma that identify risks and opportunities and that
are reviewed and, where appropriate, approved by the Board
– a defined process for controlling capital expenditure which
is detailed in the governance framework
Effectiveness
The Board is satisfied that Hikma’s systems for internal control are
in accordance with the FRC’s guidance, and have been in place
throughout the year under review and up to the date of approval of
the Annual Report and Accounts. The Board reviews the effectiveness
of these systems at least annually as part of the processes for the
Annual Report, and throughout the year when reviewing Internal
Controls and Assurance testing outcomes as well as risk management
reports. The Board has not identified any material weaknesses.
In making this assessment, the Board takes into account:
– Internal audit: the Committee receives regular reports from the
internal auditors and other third-party experts who review relevant
parts of the Group business operations, assess Hikma’s processes,
identify areas for improvement, monitor progress, and undertake
their own assessment of the risks facing Hikma
– Internal controls and assurance: the Committee receives regular
reports from the Internal Controls and Assurance team, who review
relevant parts of the finance function and operational processes,
based on a risk-based testing plan. The team assesses Hikma’s
processes, identifies areas for improvement, and monitors
remediation progress
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Compliance, Responsibility
and Ethics Committee
Dear Shareholders
During 2024, the Compliance, Responsibility and Ethics Committee
(CREC or the Committee) continued to promote and oversee our
commitments to business integrity, compliance, communities and
ethical conduct, and broadened its remit to oversee key aspects of
Hikma’s sustainability strategy. This report focuses on the matters that
the Committee addressed during the year. Further details related to
the structure of our Anti-Bribery and Corruption (ABC) compliance and
integrity programme are available on our website at www.hikma.com.
I will reach nine years of service with Hikma in March 2025 and will
retire from the Board at the 2025 AGM. In readiness for my retirement,
the Board approved Deneen Vojta as successor for the Chair of the
CREC in February 2024. Deneen has served as a member of the CREC
since her appointment to the Board in November 2022 and has taken
a keen interest in Hikma’s sustainability programme and its impact on
broader stakeholders. Deneen and I have worked closely together
during the past year to ensure an orderly succession, and I am pleased
to leave the role of Chair of the CREC in safe hands.
Hikma’s compliance programme
ABC programme
Our Anti-Bribery and Corruption (ABC) compliance programme
continues to perform in a highly effective manner. The ABC
programme has strong support from the Board, the CREC and the
CEO, and the Chief Compliance Officer has direct access to the
Committee. During the year, the Committee reviewed and approved
updates to the Group Anti-Bribery and Corruption Policy.
Commitment to integrity
The Committee and the Board are very proud of Hikma’s
commitment to high standards of business integrity. It includes
the Board’s long-standing, zero-tolerance approach to bribery and
corruption which has been demonstrated in numerous instances,
including being a founding member of the World Economic Forum’s
Partnering Against Corruption Initiative.
Codes of Conduct
The Committee continues to oversee the development and promotion
of Hikma’s Code of Conduct, which embodies the important moral
and ethical values that are critical to the Group’s success. The Code of
Conduct guides all the Committee’s activities and is the key reference
point for all our employees.
Our Supplier Code of Conduct reinforces our commitment to
integrity and transparency in all our business dealings, as it sets
out the highest ethical standards we expect from all our suppliers.
The Codes of Conduct referred to above can be found at
www.hikma.com/who-we-are/codes-and-standards
Speak up
The Committee receives regular reports on issues identified through
our speak up channels, which provide both internal and external
stakeholders a resource to raise concerns about suspected
misconduct confidentially and anonymously. Our procedures require
that all reports received via our speak up channels are investigated by
senior and independent employees.
The Committee is satisfied that all speak up reports raised in 2024
were investigated and appropriately addressed, and that our speak
up procedures remain effective and compliant with applicable law.
The overall level of speak up reports received is within the normal
range for an organisation of our size.
The Chair of the Audit Committee is a standing member of the CREC
and vice versa, which ensures that any relevant issues are considered
by the right people within our governance structure. Both Committee
Chairs report all relevant matters considered by their committees to
the Board. Speak up matters are reported and considered as part of
this process.
Activities in 2024
– Continued to monitor ABC compliance developments, our
speak up programme and business integrity, supported by
regular reports from independent third parties
– Monitored Hikma’s sustainability activities, including those
relating to reporting and disclosure, water management,
emissions and driving a sustainable supply chain
– Reviewed, and where applicable under the Committee’s
Terms of Reference, approved updates to key policies
– Monitored the delivery of ethical and social responsibility
aspects of our CSR programme
– Enhanced our modern slavery statement following updates
to our due diligence and supplier onboarding processes
Priorities for 2025
– Assist with the delivery of the ethical and social
responsibility aspects of our sustainability programme
– Support the transition of the Committee Chair following the
retirement of John Castellani at the end of the 2025 AGM
– Clarify responsibilities for sustainability oversight and
reporting among the Board committees. More information
can be found on page 106
John Castellani
Chair, Compliance, Responsibility
and Ethics Committee
Letter from the Chair
Doing the right thing by conducting
business with integrity and transparency
and in accordance with the law.”
Training
During the year, we continued with our training programmes for the
Code of Conduct, ABC, speak up, anti-money laundering, Criminal
Finances Act, data privacy and protection, antitrust and related
matters, both virtually and in person. The programmes have been
developed with assistance from external experts and are provided to
employees virtually through their personalised corporate training
portal. Our training programmes include worked examples and tests
to ensure and enhance understanding.
Internal auditing and monitoring
The Committee receives regular updates on the monitoring
programme conducted by the Hikma Compliance team. In addition,
the Committee retains independent third parties to conduct periodic
and recurring audits of our governance and transparency and the
compliance programme and related activities.
Ethics
Corporate Social Responsibility
The Committee oversaw, encouraged and supported the
corporate social responsibility programme, which is clearly linked
to our founder’s desire to improve lives, particularly through health
and educational development opportunities for the least privileged.
During the year, the Committee approved updates to the Group CSR
Projects, Corporate Sponsorships and Charitable Donations Policy,
strengthening our governance process across these key areas. The
sustainability section of this Annual Report provides a detailed
assessment of our efforts in relation to corporate social responsibility
and is available on pages 50 to 53.
Ethical issues
The Committee oversaw Hikma’s response to ethical issues arising
during the year. There are no matters to report.
Modern slavery
Hikma is committed to taking the required actions to identify, prevent
and mitigate modern slavery in the form of forced or compulsory
labour and human trafficking in any of its businesses, operations
or supply chains across the globe.
To enhance oversight, risk assessment, and due diligence efforts in
preventing and addressing modern slavery risks in our supply chain,
Hikma has established a Modern Slavery Task Force (MS Task Force),
comprising members from the Legal, Procurement, and Compliance
teams. The MS Task Force collaborates to review and enhance our risk
assessment and due diligence process, ensure their effective
implementation, and develop clear strategies for addressing potential
instances of modern slavery, should they arise.
Key measures in support of this goal include:
– a global Supplier Code of Conduct that requires our suppliers
and third parties who represent or conduct business on behalf
of Hikma to comply with all applicable laws, rules, regulations, and
ethical standards, including with respect to forced or compulsory
labour and human trafficking
– enhanced third-party due diligence processes with updated risk
criteria to identify and address modern slavery risks within our
supply chain
– training on third-party risk assessment and due diligence
processes for employees involved in third-party onboarding
– continuing our partnership with EcoVadis, a leader in
sustainability ratings, to assess our main supplier base for any
risk of modern slavery or human rights abuses
– training Hikma staff on labour standards and how to recognise
and respond to any incidences of modern slavery
– an anonymous speak up line to empower Hikma employees,
consultants, suppliers and third parties to report potential issues,
including those related to modern slavery
– engaging with supply chain partners and the operational part of
our business if and when any risk of modern slavery is identified
Hikma’s modern slavery statement is available at www.hikma.com.
Sustainability
The Committee received regular updates on Hikma’s sustainability
strategy and related activities, including those related to water
management, emissions and driving a sustainable supply chain.
The Committee monitored developments in reporting and disclosure
requirements and received updates on our preparations to report
against the Corporate Sustainability Reporting Directive (CSRD) from
financial year 2025, including an externally facilitated double
materiality assessment which will be used to update our sustainability
framework and determine the scope for CSRD reporting. More
information on our sustainability activities can be found on
pages 56 to 59.
Regulations
The General Counsel attends all Committee meetings and reports to
the CREC on relevant matters that arise, including pertinent changes
to the regulatory landscape. The legal team has developed training
programmes on antitrust, prevention of tax evasion, trade sanctions
and data protection, which have been undertaken by colleagues
whose roles require training or awareness.
Antitrust, anti-money laundering (AML) and trade sanctions
The General Counsel oversees Hikma’s compliance with the
antitrust, AML and trade sanctions legislation, among other matters.
The General Counsel has created procedures for the management
of these matters which have been reviewed and approved
by the CREC.
Criminal Finances Act
The General Counsel is responsible for ensuring compliance with
the Criminal Finances Act. The CREC has approved procedures that
have been recommended by the General Counsel and reviewed
those procedures at appropriate intervals. The procedures are
designed to respond to the requirements of the prevention of tax
evasion legislation from the UK government. Hikma’s processes and
procedures in this regard are proportionate to its risk of facilitating
tax evasion, which is relatively low. Hikma is steadfast in applying
the principles of the UK prevention of tax evasion legislation across
its businesses and will continue to oversee matters of compliance.
Data protection
The General Counsel is responsible for Hikma’s data protection
policies which are designed to ensure compliance with all
applicable legislation.
I remain available to discuss with shareholders any matter within this
report or under the Committee’s area of responsibility, by writing to
the Company Secretary.
For and on behalf of the Compliance, Responsibility and
Ethics Committee.
John Castellani
Chair, Compliance, Responsibility and Ethics Committee
25 February 2025
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Granted an average pay increase of 4.5%, prioritising high-inflation
countries and continuing our commitment to a living wage.
All merit salary increases in 2024 and 94% of bonus funding was
awarded to employees below executive management.
Executive Directors 2025 salary review
As part of our annual compensation review, the Committee conducts
a through benchmarking analysis comparing Executive Director
positions’ compensation to that of executives in global
pharmaceutical and FTSE peers of comparable size and complexity.
The Committee also recognized the strong Group performance
delivered and resultant shareholder return.
The Executive Directors did not receive a base pay adjustment for
2024. Based on the above factors considered, the Committee
approved moderate 2025 base pay increases for the Executive
Chairman of 2%, raising his salary to $1,040,000 per annum, and for
the Executive Vice Chairman of 3% bringing his base salary to
$830,000 per annum. These increases are below the planned 2025
average base pay increase of 4.2% for the global workforce.
Riad Mishlawi was promoted to CEO on 1 September 2023. Under his
leadership, Hikma delivered strong 2024 financial results while
returning shareholder value demonstrated by relative Total
Shareholder Return (TSR). The CEO drove a clear strategy for the core
business, developed new business via acquisitions and partnerships,
strengthened Hikma’s talent asset and enhanced collaboration. The
Committee conducted compensation benchmarking, which
compared the CEO’s compensation to executives in global
pharmaceutical and FTSE peers of comparable size and complexity.
This analysis confirmed a material gap in the CEO’s salary and his total
Target Direct Compensation (TDC) opportunity versus these peers
and significantly below US compensation where 60% of Hikma’s
revenue is delivered. In view of his strong performance and
demonstrated leadership, the Committee approved a 4.2% salary
increase equal to the broader employee salary increase plus an
additional 15.8%. This total increase of 20% results in a base pay
$1,200,000 per annum. Therefore, his target TDC opportunity of
$4,596,000 will be just above median when compared to FTSE peer
groups, but remaining below Global and US Pharma peers.
Shareholder experience
Over the 12 months to 31 December 2024 Hikma’s strong performance
delivered a TSR of 15.0% versus 9.7% for the FTSE 100 (excluding
financial services) and 1.5% for the FTSE 350 Pharma and Biotech
segment. Globally, Hikma operates within a subset of the
pharmaceutical industry focused on generic medicines with a
significant presence in the US. Hikma’s TSR of 15.0% continues to
outperform its CEEMEA Healthcare peers (8.4%) and its US Mid Cap
generics and injectables peers (-3.0%).
2024
2023
Change
Core EPS
224
223
–
Share price increase
1,993p
1,789p
11.4%
TSR (L1Y)
Hikma
15.0%
FTSE comparators (excluding financial services)
FTSE 100
9.7%
FTSE 350 Pharma & Biotech
1.5%
Generic Pharmaceutical peers
Large Cap Specialty/Generics
40.4%
CEEMEA Healthcare
8.4%
US Mid Cap Generics and injectables
(3.0%)
Dear Shareholders
On behalf of the Remuneration Committee (the Committee), I am
pleased to present our 2024 remuneration report which, reviews the
Committee’s work during the year, provides a summary of our
Remuneration Policy, and details compensation decisions based on
policy implementation for 2024 and looks ahead to 2025.
Hikma’s Remuneration Policy
The Committee acts on behalf of the Board of Directors, to ensure
that the Remuneration Policy is aligned with the Group’s corporate
strategy and fosters the Group’s long-term success, while enhancing
shareholder value.
The current Remuneration Policy received strong shareholder support
with 98.24% voting in favour and 91.44% voting for its application at
the 2024 AGM. For 2024, there were no changes to the policy’s design.
The performance awards set out in the policy are linked to the
achievement of the Group’s business plan and delivery of its
corporate strategy, in alignment with Hikma’s shareholder experience.
During 2025, the Remuneration Policy will be reviewed to ensure its
continued relevance to driving Hikma’s growth in a global context,
with shareholder input considered in shaping future policy direction.
Committee’s activities during the year
To ensure that our remuneration practices are in line with the evolving
business landscape and best practices, the Committee has engaged
in extensive analysis and discussions regarding talent motivation,
reward and attraction, Group performance, shareholder expectations,
and emerging governance trends.
During the year the Committee:
– Conducted an assessment of performance and incentive plans
– Monitored performance against pre-determined objectives and
performance metrics, and their alignment to shareholder experience.
– Analysed Executive Director remuneration in the context of peer
compensation benchmarking across global markets.
– Implemented an evaluation process for CEO leadership
Wider employee population
Engaged directly with employees by visiting Group sites to gain
insights on the ground, and to ensure our practices remain responsive,
transparent and aligned to our executive remuneration philosophy.
Supported the evolution of the Group’s career development
philosophy to foster employee growth, support talent development
and retention.
Remuneration Committee
Letter from the Chair
Nina Henderson
Chair, Remuneration
Committee
2024 performance outcomes
Hikma’s Remuneration Policy is composed of three components,
base salary, the only fixed portion, and variable components of annual
bonus and long-term incentives.
Annual bonus
The outcomes described below relate to the annual bonus for the year
ended 31 December 2024. In addition to the financial and strategic
outcomes, the Committee assesses Executive Director performance
holistically to ensure payments are appropriate and justified using a
framework shown on 124. This year the Board added a formal appraisal of
the CEO’s leadership which was subsequently shared with the Executive.
Financial outcomes
During the 2024 financial year Hikma delivered strong performance
across all three of its businesses delivering Group core revenue of
$3,156m (2023: $2,875), a 10% growth. Core operating profit delivered
$719m versus 2023 of $707m representing 2% growth.
Both the Generics and Injectable businesses achieved double digit core
revenue growth, 11% and 10% respectively. The Branded business also
delivered strong core revenue growth of 8%, the top end of our guidance
range. Branded core operating profit increased by 11% and Branded core
operating margins expanded by 800bp to an impressive 24.6%
No discretion has been applied by the Committee.
Strategic outcomes
The Executive Chairman was set a performance objective to review
Hikma’s financing structure, business constituents and locations. The
Board are satisfied that the Group is in a strong position to deliver
sustainable growth.
The Executive Vice Chairman was set a performance objective of
delivering a clear and sustainable strategy for MENA growth. He was
set targets to continue our expansion in the Kingdom of Saudi Arabia
(KSA) to facilitate an increase of our footprint in this key market, and to
enter into new partnerships in MENA to secure additional future
revenues. These were all completed in the year.
The CEO was set a performance objective of ensuring that the Group
was appropriately structured to continue to deliver growth. This
included strengthening leadership talent , embedding the Leadership
Council set up at the end of 2023 and implementing a new operating
model in MENA to support faster decision making. The Board is
confident that strong leadership is in place to drive delivery of
Hikma’s strategy.
The CEO was set a further objective to deliver revenue growth through
the expansion of existing contracts or the signing of new partnerships
as discussed in the Strategic report on page 9.
The Board continues to be conscious of the impact of Hikma’s
business on the environment and particularly its operations in water
stressed regions. The Executive Directors were collectively set an
objective to establish water related targets for Jordan, KSA, Algeria
and Egypt . There has been progress in efficiency and monitoring
efforts which will support a strong foundation for water stewardship.
2024 bonus outcomes
The total 2024 incentive payments, as a percentage of base salary, for
the Executive Directors are summarised in the following table and
correlate well to the Group’s performance and shareholder returns
2024
2023
Cash and
deferred shares
Cash and
deferred shares
Executive Chairman
146.8%
161.3%
CEO
148.5%
166.3%
Executive Vice Chairman
155.7%
168.7%
Details of the calculation of these payments are included on
pages 127-129. These amounts will be delivered as 50% cash and 50%
deferred into shares for a period of 3 years. Malus and clawback
provisions apply.
2024 EIP vesting
The Executive Incentive Plan (EIP) was the previous Remuneration
Policy in place throughout 2022. The LTIP vesting in 2024 relates to
Elements B and C granted in 2022 and 2021 respectively under the EIP.
Remuneration Policy 2025 implementation
The Committee’s annual bonus and LTIP target setting process is
rigorous. Starting with Hikma’s annual and strategic business plan,
multiple data points including targets for previous awards, targets
among our global pharmaceutical and FTSE peers and analyst
target consensus are combined to produce key performance
measurements.
Operation of 2025 annual bonus
The 2025 bonus will be based on performance measures weighted
80% financial and 20% strategic deliverables. The financial element
focuses on revenue and profit and the strategic element will be a
combination of initiatives related to Hikma’s strategy.
Fifty percent of any bonus payment for Executive Directors will be
paid in cash with the remainder deferred into shares for a period of
three years. The maximum bonus will be 200% of base salary.
Further details on the targets can be found on page 136.
Long-term Incentive Plan (LTIP) 2025 grants
A Performance Share Plan (PSP) award of a maximum of 300% of
base salary to Executive Directors based on achievement of the
following performance conditions measured from 1 January 2025:
– Relative TSR against FTSE 50-150 peer group excluding investment
trusts (20% weighting)
– Business development and portfolio expansion (35% weighting)
– Compound annual growth of EPS (35% weighting)
– Strategic measures (10% weighting)
Further details regarding the performance conditions for the award
are included on page 137.
Concluding remarks
Following the 2025 AGM, I will step down as Chair of Hikma’s
Remuneration Committee. Hikma’s Remuneration Policy has evolved
to support the Group’s growth trajectory. It focuses on a pay for
performance philosophy and ensuring that the policy remains fit for
the purpose of talent reward, retention and acquisition. As
announced, Cynthia Flowers will become Chair. Cynthia and the
Committee will continue to foster a remuneration approach that
provides the talent required to deliver Hikma’s business plans and
strategy resulting in shareholder value.
On behalf of the Committee, I would like to thank our shareholders
for their continued engagement and valuable input. I commend the
Remuneration Report to you and look forward to receiving your
support at our Annual General Meeting on 24 April 2025.
Nina Henderson
Chair, Remuneration Committee
25 February 2025
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Mazen Darwazah
5,144
32.3%
19.3%
21.9%
31.2%
Riad Mishlawi
7,683
46.9%
Said Darwazah
6,390
32.6%
48.8%
18.6%
48.4%
2,000
3,000 4,000 5,000 6,000 7,000
8,000
1,000
0
2,000
3,000 4,000 5,000 6,000 7,000
8,000
1,000
0
2,000
3,000 4,000 5,000 6,000 7,000
8,000
1,000
0
Fixed
Annual Bonus
LTIP
Said Darwazah
% Achievement of max
73%
Pay out
$1,494,844
Mazen Darwazah
% Achievement of max
78%
Pay out
$1,255,936
Riad Mishlawi
% Achievement of max
74%
Pay out
$1,485,079
Achieved
Lapsed
Remuneration at a glance
2024 single remuneration figure ($m)
2024 annual bonus outcome
2024 vesting outcomes
2025 single remuneration opportunity ($m)
Shareholder experience
The table below shows the alignment of executive pay to
TSR performance.
The Executive directors’ shareholdings are significantly above the
required minimum, demonstrating their strong commitment to the
Group and alignment with shareholder interests. This substantial
investment reflects their confidence in the Group’s future and
reinforces the linkage between executive remuneration and
long-term shareholder value.
The Committee is committed to maintaining a fair and proportionate
approach to Executive Director pay. In line with this, the
remuneration of the Executive Directors remains closely aligned
with the average employee cost, ensuring that pay is balanced and
reflects the broader experience of all employees within the Group.
During 2024, share awards vested under the prior Remuneration
Policy (EIP) under which performance criteria had to be met before
an award was granted. Element B is attributed to earnings in 2024;
Element C was attributed to earnings in the year of grant (2021).
See page 126 for details.
Hikma’s Executive Directors have substantial equity interests,
which strongly aligns their long-term interests with shareholders.
The performance outcome for the annual bonus reflects the strong
business performance for the year. Maximum achievement is 200%
of salary. Delivery of the award is 50% in cash and 50% in shares
(subject to a 3 year holding period). Malus and clawback
provisions apply.
The following charts show the potential projected remuneration
available for 2025 at maximum opportunity (excluding the impact
of share price appreciation).
TSR and total Executive pay
Value of Executive holdings
Wider workforce
Executive Director shareholding
Employee cost and average executive pay ($m)
Mazen Darwazah
2,903
43%
33%
42%
42%
Riad Mishlawi
3,507
16%
Said Darwazah
3,538
42%
25%
33%
23%
2,000
3,000
4,000
1,000
0
2,000
3,000
4,000
1,000
0
2,000
3,000
4,000
1,000
0
Fixed
Annual Bonus
LTIP
0
1
2
3
4
5
6
0
100
200
300
400
500
600
Average total pay to
Executive Directors ($m)
TSR from 1 January 2014
Average Executive Director pay
Hikma Pharmaceuticals PLC TSR
2016 2017 2018 2019 2020 2021 2022 2023 2024
6.0
4.3
4.9
3.2
4.3
3.7
4.6
4.4
3.1
3.7
4.3
FTSE 100 TSR
FTSE 350 Pharmaceuticals & Biotechnology TSR
2015
2014
0
5
10
15
20
25
30
35
40
Executive Director
shareholding value ($m)
Share price
($)
Executive Director shareholding
Share price (as at year-end in US dollars)
2018
2017
2019
2020
2021
2022
2023
2024
782
591
551
15.30
21.89
26.40
34.43
680
422
515
30.03
18.75
22.77
571
24.95
347
0
100
200
300
400
500
600
700
800
Executive Director pay
($m)
Average employee cost
($)
Executive Director pay
Average employee cost
2016
2017
2018
2019 2020 2021 2022 2023 2024
55,762 55,862 53,727
53,796
53,625
3.7
4.6
4.4
3.1
62,622 62,932
63,455
4.3
4.3
4.9
3.2
0
10,000
20,000
30,000
40,000
50,000
60,000
0
1
2
3
4
5
6
3.7
65,428
Element
Said Darwazeh
Mazen Darwazeh
Riad Mishlawi
B
Shares granted
34,652
26,812
22,099
Shares vested
100%
100%
100%
Value
876,138
677,912
558,749
C
Shares granted
19,830
13,903
17,120
Shares vested
100%
100%
100%
Value
501,380
351,522
432,861
Total value of
shares vested
1,377,517
1,029,434
991,610
The chart below shows the remuneration outcome for the Executive
Directors for 2024 illustrating the significant proportion of
remuneration delivered as variable pay.
1. Fixed pay includes Base pay, bonus and benefits.
1. Fixed pay includes salary for 2025 and a 10% pension contribution. Benefits are
based on the 2024 figure.
Shareholding
requirement
$m
Number
of shares
required
Current
shareholding
Actual holding
as a % of
requirement
Said
Darwazah
3,054
122,403 14,354,267
11,727%
Mazen
Darwazah
2,420
97,007
8,195,622
8,448%
Riad
Mishlawi
3,000
120,239
133,302
110%
118
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Financial
statements
Strategic
report
Corporate
governance
Remuneration Policy
Strive for
excellence
Diversify and
differentiate
People and
responsibility
Fixed remuneration
Element
Key features of operation of policy
How we will implement for 2025
Link to strategy
Salary, benefits
and pension
– Salaries are set with reference to:
pay increases for the wider
workforce, salaries in peer
companies from the global
pharmaceutical sector and UK
listed companies
– CEO increase to reflect
performance and position
against peers
– Executive Chairman and
Executive Vice Chairman salary
increase below wider workforce
average
– No change to benefits and
pensions which remain aligned
with policy
– Provides a base level to
support recruitment and
retention of Executive Directors
with the necessary experience
and expertise to deliver
the Group’s strategy
Annual bonus
– Maximum 200% salary
Target 100% of salary
Threshold 50% of salary
– Half deferred into awards over
Hikma shares for three years
– Malus and clawback provisions
apply
– Targets for core revenue and
core operating profit
– KPIs focused on key strategic
priorities
– Payouts as follow:
Below threshold: zero
Threshold: 25% of max
Target: 50% of max
– Remuneration Committee
assessment of performance in
the round
See page 124 for details
– Financial metrics set with
reference to business plans
and shareholder return
– Strategic measures reviewed
annually to support the
achievement of the Group’s key
strategic priorities
LTIP
Performance
shares
– Maximum face value 300% salary
Target 62.5% max (187.5% salary)
Threshold 25% max (75% salary)
– Three year performance period
and two year holding period
– Malus and clawback provisions
apply
– Dividend equivalents may be
accrued on the shares earned
from the LTIP awards based on
dividends paid to shareholders
during the vesting period.
Dividends may also accrue during
the post-vesting holding period.
– Targets set for:
Core compound EPS growth
Revenue from new business
over 3 years
Relative TSR performance
compared to FTSE 50-150
(excluding investment trusts)
ESG measure
– Remuneration Committee
assessment of performance in
the round
See page 124 for details
– To incentivise and reward
long-term performance and
align the interests of Executive
Directors with those of
shareholders
Shareholding
requirements
– 300% of salary
– 5 year period from date of
appointment to board to
achieve
– Two-year shareholding
post-employment
– Promotes long term alignment
with shareholders
– Promotes focus on
management of corporate risks
Differences between the policies for Executive Directors and employees, consideration of shareholder views and consideration of
conditions elsewhere in the Group
Employees were not directly consulted on the executive Remuneration Policy. All employees receive a salary, pension, and medical insurance
on a similar basis to the Executive Directors. Additionally, all employees participate in a cash bonus scheme, which is similar to the annual
bonus. The Committee reviews detailed internal and summary benchmarking data and is satisfied that the level of remuneration
is proportionate across the wider employee population. Further information is available on page 29 regarding how the Committee takes account
of shareholder views when developing and implementing the Remuneration Policy.
Directors Remuneration Policy
This section of the report provides a summary of the current policy for the remuneration of the Directors. This policy was approved by
shareholders at the AGM on 28 April 2023 and took effect from this date for 3 years. Full details of the policy can be found on pages 99 to 106
of the 2022 Annual Report as well as at www.hikma.com.
The Remuneration Policy is designed to support the long-term interests of the Group. The Group is committed to paying for performance and
rewarding the senior management team only when its goals are achieved. Each year the remuneration framework and the packages of the
Executive Directors and members of the Executive Committee are reviewed by the Committee to ensure that they continue to achieve this
objective.
The Committee takes into account multiple reference points when setting pay including companies in the FTSE 100 and the broader global
pharmaceutical sector.
The Committee takes the following areas into account when reviewing the policy:
– Emphasis on maximising shareholder value
– Ongoing global growth and expansion of the group
– The importance of attracting and retaining top senior management
– Remuneration arrangements for the wider workforce
– Commitment to aligning with best practices as outlined by shareholders and their representatives
– Adherence to the principles of the UK Corporate Governance Code 2018 (the 2108 Code)
The Committee considered the operation of the Remuneration Policy in terms of the 2018 Code as follow:
Clarity: the Committee regularly engages with shareholders, their representative bodies and management to explain the approach
to executive pay and gain their perspectives.
Simplicity: the rationale, structure and strategic alignment of each element of pay has been explained in the Remuneration Policy.
Risk: the balance between fixed and variable pay is appropriate, with objectives aligned with long-term shareholder interests.
Predictability: the pay opportunity for pay for performance is clear.
Proportionality: executives are incentivised under the Remuneration Policy to achieve stretching annual targets. Additionally the policy builds
in stretching targets over three-year performance periods for the Long Term Incentive Plan awards. The Committee assess performance at the
end of each performance period against underlying business results and in an internal and external context.
Alignment with culture: Hikma’s purpose and values are reinforced through the strategic objectives set out in the Remuneration Policy.
Details of the performance measures for the short-term incentive for the year ending 31 December 2024 and how they are aligned to Group
strategy and the creation of shareholder value are set out on pages 127-129. Annual short-term incentive targets for the 2025 financial year
are shown on page 136. Targets that are commercially sensitive will be disclosed retrospectively in next years’ Remuneration Report.
Performance measures for the 2025 Long Term Incentive award are shown on page 137. These performance targets are designed to be
stretching but achievable and are set based on Hikma’s corporate business plan and strategies, and the impact on shareholder return.
Summary of our Remuneration Policy
The table below summarises the current Remuneration Policy for the Executive Directors which can be found on pages 99 to 106 of the 2022
Annual Report as well as at www.hikma.com. The Committee is not proposing any changes to the policy for 2025.
Year 1
Year 2
Year 3
Year 4
Year 5
Up to Year 10
Fixed pay
Salary, benefits
and pension
Annual bonus
1-year
performance
period
50% paid in cash, 50% deferred into shares for 3 years
No further performance conditions
Malus and clawback apply
LTIP
Performance shares with a 3 year performance period
2 year holding period
No further performance conditions
Malus and clawback apply
Shareholding
requirements
Period of 5 years from date of appointment to achieve a requirement of 300% salary
2 year shareholding requirement post departure
120
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Financial
statements
Strategic
report
Corporate
governance
Illustrations of application of Remuneration Policy
The following charts show the potential projected total remuneration available for 2025 at four levels of performance: minimum, target,
maximum and maximum with assumed share price appreciation of 50% (in accordance with the 2018 Code). The impact of potential share price
appreciation is omitted from the other three scenarios:
Said Darwazah
2025
Target
Maximum
Equity
growth
Minimum
1,190
100%
1,190
1,950
46.6%
1,040
24.9%
1,190
28.5%
4,180
3,120
48.8%
2,080
32.6%
1,190
18.6%
6,390
3,120
39.2%
1,560
19.6%
2080
26.2%
1,190
15%
7,950
0
Total remuneration $000
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Mazen Darwazah
2025
Target
Maximum
Equity
growth
Minimum
994
100%
994
1556
46%
830
24.6%
994
29.4%
3,380
2,490
48.4%
1,660
32.3%
994
19.3%
5,144
2,490
39%
1,245
19.5%
1,660
26%
994
15.6%
6,389
Total remuneration $000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Riad Mishlawi
2025
Target
Maximum
Equity
growth
Minimum
1,683
100%
1,683
2,250
43.8%
1,200
23.4%
1,683
32.8%
5,133
3,600
46.9%
2,400
31.2%
1,683
21.9%
7,683
3,600
38%
1,800
19%
2,400
25.3%
1,683
17.7%
9,483
Total remuneration $000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Fixed pay
Annual Bonus
LTIP
LTIP – share price appreciation Commuting
The scenarios in the graphs are as follows:
– fixed pay includes salary, benefits, and pension. The numbers are based on the base salary for 2025, the cost of benefits provided in 2024
and a pension contribution of 10% of base salary.
– annual bonus is shown as a percentage of base salary, with minimum, target and maximum shown as 0%, 50% and 100% respectively of
maximum opportunity.
– LTIP is shown as a percentage of base salary, with minimum, target and maximum performance shown as 0%, 62.5% and 100% of maximum
opportunity respectively.
– share price appreciation has been calculated as a 50% increase in the value of the LTIP between the date of grant and vesting
– no dividend accrual has been incorporated in the values relating to the LTIP
Remuneration Policy table for the Chair and Non-Executive Directors
Non-Executive Directors’ (NEDs) fees are set by the Board under the direction of the Executive Directors having considered the:
– pay practice in FTSE and sector peers
– extensive travel required to undertake the role
– significant guidance and support required from the NEDs
– the time required to fulfill their responsibilities
Application of Remuneration Committee decision : Whilst there is no maximum, the practice is to remain within the parameters of FTSE peers.
NEDs do not participate in the Group’s pension or incentive arrangements. The annual fees payable to newly recruited NEDs will follow the
policy for fees payable to existing NEDs, whose fees comprise:
Component
Approach
Basic fee
An underlying fee for undertaking the duties of a Director of Hikma, chiefly relating to Board, strategy, and shareholder meetings.
Provides a level of fees to support recruitment and retention of NEDs with the necessary experience.
Committee
membership fee
A composite fee for taking additional responsibilities in relation to Committee membership. Usually, NEDs are members of at
least three committees.
Committee
Chair/employee
engagement fee
The Committee Chairs undertake additional responsibilities in leading a committee and are expected to act as a sounding board
for the executive that reports to the relevant committee. The Director responsible for workforce engagement receives a similar fee
due to the additional requirements of that role. The chairmanship fee is paid in addition to the membership fee and a Senior
Independent Director fee is paid to the individual in that position.
Expenses
The Group pays expenses incurred wholly in relation to the position of NEDs and ensures that Directors do not incur a tax liability
as a result. The Group retains discretion to provide for an allowance structure as an alternative to the latter payment.
Remuneration Policy
continued
122
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Financial
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Strategic
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Corporate
governance
Assessment of incentive outcomes
A comprehensive evaluation of the Group’s and Executive Directors’ performance ensuring the annual bonus payout and long-term incentive
vesting are appropriate and justified.
The quality of earnings
The Committee will review the results to ensure they accurately reflect underlying performance and take into account
any exceptional items.
Executive Director leadership
The Committee carries out a formal evaluation of the CEO
Overall Group performance
This includes factors such as market share, competitor benchmarking, sustainability, people and culture, strategic progress,
stakeholder engagement, and analyst feedback.
The impact on shareholder value
The Committee considers absolute and relative shareholder return over the relevant periods including dividend payment(s)
Consider any other internal and external inputs
This includes factors such as reputation or risk-related issues, changes in accounting standards, and input from the CRE Committee,
Audit Committee, and management functions. The Committee will also consider the impact of any external factors.
Outcome consistencies
Consider whether bonus and LTIP outcomes are consistent with performance criteria. The Committee does not apply discretion
unless there are exceptional circumstances.
Final Annual bonus and LTIP outcomes
Single total figure (audited)
The following table shows a single figure of remuneration¹ in respect of qualifying services for the 2024 financial year, together with the
comparable figures for 2023.
Director
Year
Fixed pay
Variable pay
Total
Salary
Benefits
Pension
Total fixed
Bonus and
Deferred
Shares)
Shares
vested (EIP
element B)2,3
Total
variable
Said Darwazah
2024
1,018,000
82,678
65,962
1,166,640
1,494,844
876,138
2,370,982
3,537,622
2023
1,018,389
75,328
65,315
1,159,032
1,641,665
772,442
2,414,107
3,573,139
Mazen Darwazah
2024
806,787
97,179
64,895
968,861
1,255,936
677,912
1,933,848
2,902,709
2023
806,837
67,004
65,223
939,064
1,361,276
539,381
1,900,657
2,839,721
Riad Mishlawi
2024 1,000,000
362,839
100,000
1,462,839
1,485,079
558,749
2,043,828
3,506,667
2023
333,333
182,045
33,333
548,711
554,213
449,909
1,004,122
1,552,833
1. All figures are in (USD)
2. Share price at vesting date in 2024 was $ 25.28 (£ 19.94) and foreign exchange rate of $ 1.268 to £1
3. The EIP was applicable for the period 2020-2022 and full details are provided on pages 79 to 84 of the 2019 Annual Report. The new Policy was approved at the AGM held on 28 April 2023
and applied from 28 April 2023
Salary
Please see Chair’s letter (page 116) for commentary on salaries. The application of benefits remains unchanged and pensions are aligned with
the wider workforce under the Directors Remuneration Policy.
Executive Director
Individual
Salary
Change
2025
2024
%
Executive Chairman
Said Darwazah
$1,040,000
$1,018,000
2.2%
CEO
Riad Mishlawi
$1,200,000
$1,000,000
20.0%
Executive Vice Chairman
Mazen Darwazah
$830,000
$806,787
2.9%
Benefits (audited)
Said Darwazah received transportation benefits of $57,040 (2023 $50,783) and medical benefits of $25,638 (2023: $24,546). Mazen Darwazah
received transportation benefits of $71,604 (2023: $44,974) and medical benefits of $25,575 (2023: $22,030). Social security payments made
in Jordan, that are required to be paid by Jordanian law, are not considered to be a benefit.
Riad Mishlawi received a transportation allowance of $60,568 (2023: $20,687) medical benefits of $26,926 (2023: $52,983). In 2023 he was
asked to relocate to the US for a period of 2 years and received housing support of $180,000 and tax equalisation support of $95,345.
Pension (audited)
Said Darwazah and Mazen Darwazah have global roles and are paid in a number of locations. Pension contributions are only made on the
proportion of salary received in Jordan, where they participate in the Hikma Pharmaceutical Defined Contribution Retirement Benefit Plan
(the Jordan Benefit Plan) on the same basis as other employees. Under the Jordan Benefit Plan, Hikma matches employee contributions made,
up to a maximum of 10% of applicable salary. Riad Mishlawi receives a cash allowance of 10% of base salary in lieu of pension.
Remuneration Policy
continued
Annual report on remuneration
124
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Strategic
report
Corporate
governance
Vested share awards (audited)
During 2024, the share awards in the following tables vested for Executive Directors under the prior Remuneration Policy. Under the EIP,
performance criteria had to be met before an award was granted. There were three award types under the EIP which are treated in the following
manner in respect of the single remuneration figure on page 125.
– Element A – a cash bonus that is payable immediately and attributed to the earnings for the performance year. 2022 was the last payment
of Element A of the EIP
– Element B – an award of shares that vests two years after grant subject to there being no forfeiture events and is attributed to the earnings
in respect of the year in which it vests (i.e. two years after being granted)
– Element C – an award of shares that vests three years after grant and, due to their being no further performance requirements, is attributed
to the earnings for the performance year in the same manner as Element A
The tables below detail share awards (Elements B and C) vesting during the year ended 31 December 2024.
Said Darwazah – EIP
EIP element
Maximum number
of shares capable
of vesting
% Shares vesting
Forfeiture
Number of
shares vested
Total value
of vested shares2
Element B3
34,652
100%
Nil
34,652
$876,138
Element C
19,830
100%
N/A
19,830
$501,380
Total
54,482
54,482
$1,377,518
Mazen Darwazah — EIP
EIP element
Maximum number
of shares capable
of vesting
% Shares vesting
Forfeiture
Number of
shares vested
Total value
of vested shares
Element B3
26,812
100%
Nil
26,812
$677,912
Element C
13,903
100%
N/A
13,903
$351,522
Total
40,715
40,715
$1,029,434
Riad Mishlawi – EIP1
EIP element
Maximum number
of shares capable
of vesting
% Shares vesting
Forfeiture
Number of
shares vested
Total value
of vested shares
Element B3
22,099
100%
Nil
22,099
$558,749
Element C
17,120
100%
N/A
17,120
$432,861
Total
39,219
39,219
$991,610
1. The shares that vested for Riad Mishlawi were in respect of grants made before appointment as CEO
2. Share price at vesting date was $ 25.28 ( £19.94 and foreign exchange rate of $ 1.268 to £1)
3. Element B shares are attributed to earnings in respect of the year of vest and are included in the single remuneration figure on page 125
Policy deviation
During 2024, the Committee has not deviated from the Remuneration Policy approved by shareholders at the AGM on 28 April 2023.
Annual report on remuneration
continued
Performance conditions – satisfaction
Executive Chairman
Weight
Threshold
50% of salary awarded
Target
100% of salary awarded
Maximum
200% of salary awarded
Results
Achievement
% of salary
Financial
Core revenue
30%
Target -10%
$2,763m
Target
$3,070m
Target +10%
$3,377m
$3,156m
Target to
maximum
38.4%
Core operating
profit (COP)
50%
Target -10%
$620m
Target
$689m
Target +10%
$758m
$719m
Target to
maximum
71.8%
Strategic
Financing structure 10%
The financing and business structure was thoroughly assessed and after
recommendations to the Board, appropriate actions were taken
Maximum
20.0%
Water related
targets
10%
Strong progress has been made in efficiency and monitoring efforts which will support a
strong foundation for water stewardship
Target to
maximum
16.6%
Total
100%
Acceptable
Good
Excellent
146.8%
Performance outcome
The above performance results in performance remuneration under the new Policy as follows (audited):
Participant
Calculation
Receive
Executive
Policy element
Salary
Maximum
potential (% of
salary)
Application
% of salary
Value of bonus/shares
Receive
Executive
Chairman
Cash bonus
$1,018,000
100%
73.42%
$747,422
Cash now (March 2025)
Deferred
shares
100%
73.42%
$747,422
Shares deferred for a period of 3 years
Total
200%
146.84%
$1,494,844
Note. All shares vesting are subject to continued employment and a holding period after vesting. These shares may not be sold until 5 years after grant.
2024 annual bonus performance outcome: (audited)
Readers are directed to the commentary on business performance
that is included in the Chair’s letter on pages 116-117.
The section sets out the performance conditions and targets for 2024
and their level of satisfaction for each Executive Director.
Performance conditions – rationale and
measurement
The Executive Directors shared a number of common performance
conditions as detailed below. Additional individual performance
conditions are detailed for each Executive Director in their respective
sections along with their weighting.
Financial measures
– Core revenue
Historically, the pricing of generic pharmaceutical products has
decreased with time. The Committee is cognisant that this could lead
to declining revenue over the longer term, which could ultimately
result in a declining business overall. By ensuring that a significant
proportion of performance remuneration is based on revenue, the
Committee is able to ensure that the Executive Directors are focused
on mitigating pricing declines by maximising the potential of the
in-market portfolio, launching new products, and developing the
pipeline. See page 1 of the Strategic report for further detail on the
performance related to this target.
– Core operating profit (COP)
Ultimately, the COP is a key measure of value to Hikma’s shareholders.
Given the highly competitive business environment in which Hikma
operates, the Executive Directors must focus continuously on
optimising Hikma’s cost base.
Strategic measures
– Water related targets
The Board remains mindful of Hikma’s environmental impact,
particularly in regions facing water stress. The Executive Directors
were collectively tasked with setting water-related targets for Jordan,
KSA, Algeria and Egypt, and making progress towards these goals.
Executive Chairman (audited)
In addition to the common performance conditions set out above the
Executive Chairman was set the following:
- Financing structure
The correct financing structure, business constituents and locations
are critical to the future growth of Hikma. The Executive Chairman
was required to review these and provide the Board with
recommendations.
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Performance conditions – satisfaction
Executive Vice Chairman
Weight
Threshold
50% of salary awarded
Target
100 % of salary awarded
Maximum
200% of salary awarded
Results
Achievement
% of salary
Financial
Core revenue
12%
Target -10%
$2,763m
Target
$3,070m
Target +10%
$3,377m
$3,156m
Target to
maximum
15.4%
Core operating
profit (COP)
18%
Target -10%
$620m
Target
$689m
Target +10%
$758m
$719m
Target to
maximum
25.8%
MENA revenue
20%
Target -10%
$858m
Target
$953m
Target +10%
$1,048m
$983m
Minimum to
target
26.5%
MENA COP
30%
Target -10%
$188m
Target
$209m
Target +10%
$230m
$225m
Target to
maximum
53.0%
Strategic
Strategic expansion
in KSA
5%
Expansion in the Kingdom of Saudi Arabia (KSA) supported our strategy to expand our
manufacturing and commercial operations
Target to
maximum
6.7%
Review MENA
strategy
MENA business
development
5%
The MENA strategy was thoroughly assessed and after recommendations to the Board
were made, appropriate actions were taken
Maximum
10.0%
5%
The number of business development projects signed in 2024 was in excess of the
approved budget
Maximum
10.0%
Water related
targets
5%
Strong progress has been made in efficiency and monitoring efforts which will support a
strong foundation for water stewardship.
Target to
maximum
8.3%
Total
100%
Acceptable
Good
Excellent
155.7%
Performance outcome
The above performance results in performance remuneration under the new Policy as follows (audited):
Participant
Calculation
Receive
Executive
EIP Element
Salary
Maximum
potential (% of
salary)
Application
% of salary
Value of bonus/
shares
Receive
Executive
Vice Chairman
Cash bonus
806,787
100%
77.84%
$627,968
Cash now (March 2025)
Deferred
shares
100%
77.84%
$627,968
Shares deferred for a period 3 years
Total
200%
155.67%
$1,255,936
Note. All shares vesting are subject to continued employment and a holding period after vesting. These shares may not be sold until 5 years after grant.
Annual report on remuneration
continued
Performance conditions – satisfaction
CEO
Weight
Threshold
50% of salary awarded
Target
100% of salary awarded
Maximum
200% of salary awarded
Results
Achievement
% of salary
Financial
Core revenue
30%
Target -10%
$2,763m
Target
$3,070m
Target +10%
$3,377m
$3,156m
Target to
maximum
38.4%
Core operating
profit (COP)
50%
Target -10%
$620m
Target
$689m
Target +10%
$758m
$719m
Target to
maximum
71.8%
Strategic
Effective structure
5%
Effective leadership has been put in place through both internal and external appointments Maximum
10.0%
Execution of
Strategy
5%
Completed and implemented the approved strategy in the year by extending CMO and
compounding businesses and strengthening R&D
Maximum
10.0%
Operating model
5%
The MENA region operating model was updated to support faster decision making
Maximum
10.0%
Water related
targets
5%
Strong progress has been made in efficiency and monitoring efforts which will support a
strong foundation for water stewardship.
Target to
maximum
8.3%
Total
100%
Acceptable
Good
Excellent
148.5%
Performance outcome
The above performance results in performance remuneration under the new Policy as follows (audited):
Participant
Calculation
Receive
Executive
Policy element
Salary
Maximum
potential (% of
salary)
Application
% of salary
Value of bonus/shares
Receive
CEO
Cash bonus
$1,000,000
100%
74.25%
$742,540
Cash now (March 2025)
Deferred
shares
100%
74.25%
$742,540
Shares deferred for a period of 3 years
Total
200%
148.51%
$1,485,079
Note. All shares vesting are subject to continued employment and a holding period after vesting. These shares may not be sold until 5 years after grant.
Executive Vice Chairman (audited)
In addition to the common performance conditions set out on
page 127, the Executive Vice Chairman was set the following
performance conditions:
Financial measures
– MENA revenue and COP
The Executive Vice Chairman is responsible for this region. The
Committee considered financial metrics to be the best method
of ensuring delivery of the strategy that could be measured in an
objective manner that is readily understandable by investors.
Measured by audited MENA revenue compared to target MENA
revenue for the year ended 31 December 2024 and by audited
MENA COP compared to target MENA COP for the year ended
31 December 2024.
CEO (audited)
In addition to the common performance conditions set out on
page 127, the CEO was set the following performance conditions:
Strategic Measures
– Effective organisational structure for senior executives
Effective leadership in the organisation is critical for setting up the
Group for future success. The CEO was given a target to review the
structure of senior leadership and implement changes to ensure that
the right team are in place to deliver the Group strategy. Measured by
evidence of structural and personnel changes and the delivery of
initiatives by the Leadership Council.
Strategic measures
– Strategic expansion in KSA
To ensure continued focus on Hikma’s presence in the region, the
Executive Vice Chairman was requested to establish a regional
headquarter, expand manufacturing capacity and establish an R&D
center. Measured by progress made in the establishment of capability
in KSA.
– Review MENA strategy
The MENA region continues to contribute significantly to the Group’s
revenue. To safeguard future revenues, the Executive Vice Chairman
was ask to present a clear future strategy for the region and its
markets, highlighting capital allocation required for investment.
Measured by the Committee’s assessment of the strategy.
MENA business development
To support expansion in the region, the Executive Vice Chairman was
set the target of entering into at least two new alliances and/or
licensing opportunities, including at least one new technology.
Measured by the number of agreements completed in 2024.
– Execution of the approved Group strategy
To support this, the CEO was tasked with recruiting strong leadership
and developing a robust business plan for the Generics business. In
addition, he was required to expand the Generics business by signing
of at least one additional CMO contract or extending an existing
contract by adding at least one product.
– Assess Hikma’s operating model
The CEO was asked to work closely with the Executive Vice Chairman
to develop the strategy for MENA. An important part of this was to
ensure that the correct organisational structure was in place to deliver
sustainable profitable growth. Measured by the Committee’s
assessment of the strategy.
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Long-term incentive awards made during the year ended 31 December 2024 (audited)
On 9 April 2024, Said Darwazah and Mazen Darwazah and Riad Mishlawi received awards of performance shares under the Hikma
Pharmaceuticals plc Long-Term Incentive Plan 2023 as a percentage of salary as outlined below. The three-year period over which performance
will be measured is 1 January 2024 to 31 December 2026.
The performance measures for these awards are outlined below:
Measure
Rationale
Weighting
Threshold
Target
Maximum
Core compound EPS growth for
1 January 2024 to 31 December 2026
Alignment with shareholders’ return
30%
1%
2%
5%
Percentage of revenue from
new business over 3 years
Developing revenue from new business
is a key element of Hikma’s business plan
40%
12%
15%
18%
Relative TSR performance compared to
FTSE 50-150 (excluding investment trusts) Alignment with shareholders’ return
20%
Median
–
Upper
Quartile
Retention of employees measured by a
reduction in voluntary turnover measured
against the 2023 base number
Retention and cost management
10%
7%
10%
13%
Details of the value of these awards1 are shown in the table below:
Executive Director
Date of grant
Award made
Grant price2
Face value
$000
Face value
as % salary
Said Darwazah
9 April 2024
129,792
$23.53
$3,054,006
300%
Mazen Darwazah
9 April 2024
102,863
$23.53
$2,420,366
300%
Riad Mishlawi
9 April 2024
127,497
$23.53
$3,000,004
300%
1. No award vests for performance below threshold, 25% at threshold and 62.5% at target
2. The share price was determined by the average closing price in the five business days preceding the grant date
The proportion of the awards outlined above that will vest will depend on the achievement against the performance objectives and their
continued employment. The final value that vests may be zero if the threshold performance for each of the objectives is not achieved.
The vesting outcome of the awards will be disclosed in the 2026 Annual Report.
Annual report on remuneration
continued
Outstanding share awards (audited)
Hikma continued to operate the EIP with the final award being made in May 2023. The first award under the new LTIP was made on 30 May 2023.
The outstanding share awards in respect of each of the Executive Directors are:
Participant
Share scheme
Quantum
Director
Scheme description1,3
Type of interest
Date
of award
Date of vesting
% Salary
Shares (max)
Face value2
Said Darwazah
EIP Element C
Conditional award
25-Feb-22
25-Feb-25
53%
18,420
$544,311
EIP Element B
Conditional award
30-May-23 30-May-25
57%
31,679
$584,161
EIP Element C
Conditional award
30-May-23 30-May-26
36%
19,761
$364,393
LTIP 20232
Conditional award
30-May-23 30-May-26
241%
132,783
$2,448,519
LTIP 20244
Conditional award
09-Apr-24
09-Apr-27
300%
129,792
$3,054,006
Deferred
Shares 20245
Conditional award
09-Apr-24
09-Apr-27
81%
34,884
$820,821
Total
367,319
2023: 257,125
$7,816,211
2023: $6,353,163
Riad Mishlawi
EIP Element C
Conditional award
25-Feb-22
25-Feb-25
55%
18,691
$552,319
EIP Element B
Conditional award
30-May-23 30-May-25
79%
36,371
$670,690
EIP Element C
Conditional award
30-May-23 30-May-26
67%
30,749
$567,012
LTIP 20232
Conditional award
30-May-23 30-May-26
139%
75,339
$1,389,251
LTIP 20232,6
Conditional award
31-Aug-23
31-Aug-26
23%
12,263
$226,130
LTIP 20244
Conditional award
09-Apr-24
09-Apr-27
300%
127,497
$3,000,004
Deferred
Shares 20245
Conditional award
09-Apr-24
09-Apr-27
28%
11,777
$277,113
Total
312,687
2023: 212,632
$6,682,519
$5,306,268
Mazen
Darwazah
EIP Element C
Conditional award
25-Feb-22
25-Feb-25
54%
14,844
$438,640
EIP Element B
Conditional award
30-May-23 30-May-25
83%
36,171
$666,993
EIP Element C
Conditional award
30-May-23 30-May-26
47%
20,650
$380,786
LTIP 20232
Conditional award
30-May-23 30-May-26
241%
105,233
$1,940,497
LTIP 20244
Conditional award
09-Apr-24
09-Apr-27
300%
102,863
$2,420,366
Deferred
Shares 20245
Conditional award
09-Apr-24
09-Apr-27
84%
28,926
$680,629
Total
308,687
2023: 217,613
$6,527,911
2023: $5,319,848
1. The performance criteria for Elements B and C of the EIP are assessed before a grant is considered. Additionally, Element B is subject to forfeiture criteria for the first two years after grant
2. The face value is calculated as the monetary value of the award at the point of grant converted to the number of shares using the 30-day average share price to the 31 December of the
performance year. The 30 day average share price used for awards granted in 2022 was $29.55(£22.20), 2023 $18.44(£15.15). The actual value received by Executive Directors under the
share incentive arrangements is dependent upon the share price of Hikma at the time of vesting, the satisfaction of performance criteria and the non-occurrence of forfeiture events
(EIP Element B only). Forfeiture would apply to 50% of any unvested Element B shares if the financial performance in any year is less than 30% of the target. 2023 numbers have been
restated to reflect the correct face value
3. The minimum value of the awards at vesting will be the share price on the day of vesting multiplied by the number of shares vesting. If the Executive Director leaves employment during
the vesting period, the normal position is that zero shares vest. If all the forfeiture conditions occur in each year of the vesting period under Element B only, zero shares will vest.
The weighting of each forfeiture condition has a proportional impact on the vesting percentage under Element B only
4. The face value was determined by the average closing price in the five business days preceding the grant date, $23.53(£18.64)
5. The deferred shares granted in 2024 relate to the 50% of the 2023 annual bonus deferred into shares
6. The LTIP award granted to Riad Mishlawi on 31 August 2023 represented an exceptional award on his apppointment to the position of CEO
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The applicable share prices for Hikma during the period under review were:
Date
Market price
(Closing price)
1 January 2024
1,787p
31 December 2024
1,993p
2024 Range (low to high)
1,772p to 2,088p
25 February 2025
2,296p
Dilution
In accordance with the guidelines set out by the Investment Association applicable in 2024, Hikma can issue a maximum of 10% of its issued
share capital in a rolling ten-year period to employees under all its share plans and a maximum of 50% of this (representing 5% of issued share
capital) for discretionary share plans. The following table summarises the current level of dilution resulting from Hikma’s share plans since 2015:
Type of plan
Granted in a
rolling ten-year
period
Granted during
the year
Discretionary Share Plans (5% Limit)
4.7%
0.76%
Director share interests (audited)
Said Darwazah, Mazen Darwazah and Ali Al-Husry are Directors and shareholders of Darhold Limited. Darhold holds 60,000,000 Ordinary
Shares in Hikma. The table below breaks down their shareholdings in Hikma by shares effectively owned through Darhold and shares held
personally or by connected people as at 31 December 2024. The cancellation and issuance of shares in Darhold and Hikma, as well as changes
in the number of Hikma shares held by Darhold, can lead to a degree of variation in the ‘Effective Hikma shares’.
Darhold
Personal
Director
Interest in
Darhold
Effective
Hikma shares
Shares
(incl. connected
people)
Total
shareholding
Said Darwazah
22.50%
13,501,800
852,467
14,354,267
Mazen Darwazah1
11.34%
6,803,400
1,392,222
8,195,622
Ali Al-Husry2
8.32%
4,992,600
1,162,811
6,155,411
1. Mazen Darwazah holds his shares in Darhold Limited through a family trust
2. Ali Al-Husry holds his shares in Hikma and Darhold Limited through a family trust
The following table sets out details of the Directors’ shareholdings in Hikma as at 31 December 2024 and, where there are shareholding
requirements, whether these have been met:
Ownership requirements
Total
Scheme Interests
Total
Director
Percentage
of salary
Number
of shares
Requirement
fulfilled?
Shares
owned2
Awards subject
to performance
conditions3
Awards not
subject to
performance
conditions6
Share
interests
Said Darwazah1
300%
122,403
Yes
14,354,267
294,254
73,065
14,721,586
Riad Mishlawi
300%
120,239
Yes
133,302
251,470
61,217
445,989
Mazen Darwazah2
300%
97,007
Yes
8,195,622
244,267
64,420
8,504,309
Ali Al-Husry4
N/A
N/A
N/A
6,155,411
N/A
N/A
6,155,411
Patrick Butler5
N/A
N/A
N/A
3,875
N/A
N/A
3,875
John Castellani
N/A
N/A
N/A
3,500
N/A
N/A
3,500
Nina Henderson
N/A
N/A
N/A
7,100
N/A
N/A
7,100
Cynthia Flowers
N/A
N/A
N/A
1,100
N/A
N/A
1,100
Douglas Hurt
N/A
N/A
N/A
4,500
N/A
N/A
4,500
Deneen Vojta
N/A
N/A
N/A
1,000
N/A
N/A
1,000
Laura Balan
N/A
N/A
N/A
N/A
N/A
N/A
–
Victoria Hull
N/A
N/A
N/A
N/A
N/A
N/A
–
1. Including shares effectively owned through Darhold as per the table above
2. Mazen Darwazah holds his shares in Darhold Limited through a family trust, in which he has a beneficial interest
3. This includes element B awards made under the EIP (see page 126) and the LTIP under the new Policy.
4. Ali Al-Husry holds his shares in Hikma and Darhold Limited through a family trust, in which he has a beneficial interest
5. Patrick Butler stepped down on 29 February 2024
6. This includes element C awards made under the EIP (see page 126) and deferred shares under the annual bonus plan of the current remuneration policy
The share price used to calculate whether the shareholding requirements have been met is the price on 31 December 2024 of £19.93 and foreign
exchange rate of $1.252 to £1 on the same date.
There have been no changes in the interests of the Directors in the shares of Hikma between 31 December 2024 and the date of this report.
Director share interests (audited) continued
The following table sets out the changes in the share interests of Directors during the year under review and up to the date of this report.
Other than as detailed in the table, the Directors’ share interests in Hikma did not change during the period.
Director
Date
Event
Number of shares
Said Darwazah
26/02/2024
Vesting of 2021 EIP Element C. Retained all Shares
19,830
Said Darwazah
26/02/2024
Vesting of 2022 EIP Element B. Retained all Shares
34,652
Riad Mishlawi
26/02/2024
Vesting of 2021 EIP Element C. Retained all Shares
17,120
Riad Mishlawi
26/02/2024
Vesting of 2022 EIP Element B. Retained all Shares
22,099
Riad Mishlawi
07/05/2024
Dividend reinvestment
736
Riad Mishlawi
23/09/2024
Dividend reinvestment
509
Mazen Darwazah
26/02/2024
Vesting of 2021 EIP Element C. Retained all Shares
13,903
Mazen Darwazah
26/02/2024
Vesting of 2022 EIP Element B. Retained all Shares
26,812
Scheme interests (audited)
The following table sets out details of the ‘scheme interests’ of the Directors. Element B and C of the EIP have been included because they have
service conditions in excess of one year.
Type of interest
Share interests with performance
measures
Director
Shares
Share options
Yes
No
Said Darwazah
367,319
–
294,254
73,065
Riad Mishlawi1
312,687
–
251,470
61,217
Mazen Darwazah
308,687
–
244,267
64,420
All other directors
–
–
–
–
1. Riad Mishlawi was appointed CEO with effect from 1 September 2023
Total shareholder return
During the last ten years, Hikma’s performance has been below the FTSE 100 and FTSE 350 Pharmaceuticals & Biotechnology segment, a
relatively small group of companies that are mainly focused on developing new drugs. During the last 12 months, Hikma has outperformed these
peer groups (see table on page 116). The Remuneration Committee has chosen these comparators because it uses executive compensation
benchmarking data from the FTSE 100 and the pharmaceutical industry when considering compensation for the Executive Directors.
0
100
200
300
31 Dec
2014
24 Dec
2015
31 Dec
2016
28 Dec
2019
30 Dec
2017
29 Dec
2018
27 Dec
2020
31 Dec
2021
31 Dec
2022
30 Dec
2023
29 Dec
2024
82.9%
122.2%
21.8%
Hikma Pharmaceuticals PLC
FTSE 100
FTSE 350 / Pharmaceuticals and Biotechnology - SEC
Annual report on remuneration
continued
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Remuneration table
The following table sets out the total remuneration, including amounts vesting under short-term and long-term incentive plans, for each
financial period in respect of the Directors holding the positions of Executive Chairman and CEO. The total figures for the financial years 2017
and 2016 are higher than would otherwise be the case due to a change of incentive plan. In accordance with the Regulations, the 2017 and 2016
totals include LTIPs vesting during the relevant period (which were granted three years before) and Element C of the EIP which was granted in
respect of the relevant period. The Regulations require Element C to be treated in a similar way to the annual bonus, although it is an award of
shares that will vest three years after grant.
Said Darwazah — Executive Chairman
Riad Mishlawi— Chief Executive Officer
Year
Total
Bonus as
% max1
Deferred share
awards as
% max2
Total
Bonus as
% max1
Deferred share
awards as
% max2
2024
$3,537,622
73%
73%
$3,506,667
74%
74%
2023
$3,573,139
81%
81%
$1,552,833
83%
83%
2022
$3,402,078
37%
38%
N/A
N/A
N/A
2021
$4,586,119
62%
67%
N/A
N/A
N/A
2020
$4,059,653
73%
77%
N/A
N/A
N/A
2019
$4,448,934
74%
78%
N/A
N/A
N/A
2018
$4,501,217
88%
90%
N/A
N/A
N/A
2017
$3,538,646
0%
0%
N/A
N/A
N/A
2016
$6,308,238
71%
68%
N/A
N/A
N/A
2015
$7,316,042
98%
98%
N/A
N/A
N/A
1. For the years 2014-2022 the ‘Bonus as % max’ column comprises cash under Element A of the EIP paid immediately and shares under Element C of the EIP that are released three years
after grant. For the years 2023-2024 the figure comprises the cash element of the annual bonus
2. For the years 2014-2022 the ‘deferred share award as % max’ column includes Element B of the EIP, shares that vest in two years from the date of grant provided that the Executive
remains in employment and forfeiture events have not occurred. For the years 2023-2024 the figure comprises the shares element of the annual bonus deferred for 3 years
Non-Executive Directors (audited)
In December 2022, the Executive Directors reviewed the fees paid to Non-Executive Directors and made a number of changes that came
into effect from 1 January 2023, the full details of which can be found on page 121 of the Annual Report 2022. No subsequent changes
have been made.
Fee (all elements)
$
Taxable benefits1
$
Total
$
Name
Board position
2024
2023
2024
2023
2024
2023
Patrick Butler2
Non-Executive Director
21,401
136,234
1,082
973
22,483
137,207
Ali Al-Husry
Non-Executive Director
115,632
112,546
1,329
4,170
116,961
116,716
John Castellani
Independent Director and
CRE Committee Chair
147,574
143,636
17,573
16,056
165,147
159,692
Nina Henderson
Independent Director,
Remuneration Committee
Chair and Workforce
Engagement Lead
166,740
162,290
10,930
14,085
177,670
176,375
Cynthia Flowers
Independent Director
128,409
124,982
2,816
9,697
131,225
134,679
Douglas Hurt
Independent Director and
Audit Committee Chair
153,963
149,854
–
–
153,963
149,854
Laura Balan
Independent Director
128,409
124,982
–
–
128,409
124,982
Victoria Hull
Senior Independent Director
and Nomination and Governance
Committee Chair
166,740
149,196
420
77
167,160
149,273
Deneen Vojta
Independent Director
128,409
124,982
15,776
2,072
144,185
127,054
1. ‘Taxable benefits’ includes certain accommodation expenses for Non-Executive Directors that are wholly related to their attendance at Board meetings and are in accordance with
normal Hikma expense policy
2. Patrick Butler was Senior Independent Director and Nomination and Governance Committee Chair until April 2023 and retired from the Board on 29 February 2024
Payments to past Directors (audited)
There were no payments made to past Directors during 2024.
Payments for loss of office (audited)
There were no payments for loss of office during the financial year.
Terms of appointment and service
Service contracts
The details of the service contracts of the Executive Directors of Hikma in force at the end of the year under review are available for inspection
at Hikma’s registered office at 1 New Burlington Place, London W1S 2HR, were:
Executive Director
Notice period
Contract date
Unexpired term of contract
Potential termination payment
Said Darwazah
12 months
1 July 2007
Rolling contract
12 months’ salary and benefits
Riad Mishlawi
12 months
11 April 2023
Rolling contract
12 months’ salary and benefits
Mazen Darwazah
12 months
25 May 2006
Rolling contract
12 months’ salary and benefits
The Executive Directors are not appointed for a specified term and, therefore, do not have an outstanding term that requires disclosure.
Letters of appointment
The Non-Executive Directors have letters of appointment with Hikma, not service contracts, which are available for inspection at Hikma’s
registered office at 1 New Burlington Place, London W1S 2HR. Appointments are made for a period of 36 months and then reviewed.
Non-Executive Director
Date of appointment
Notice period
Ali Al-Husry
14 October 2005
1 month
Pat Butler
1 April 2014
1 month
John Castellani
1 March 2016
1 month
Nina Henderson
1 October 2016
1 month
Cynthia Flowers
1 June 2019
1 month
Douglas Hurt
1 May 2020
1 month
Laura Balan
1 October 2022
1 month
Victoria Hull
1 November 2022
1 month
Deneen Vojta
1 November 2022
1 month
Hikma complies with the 2018 Code requirement that all Directors be subject to election or annual re-election by shareholders.
External appointments
Hikma recognises that Executive Directors may be invited to take up non-executive directorships or public sector and not-for-profit
appointments, and that these can broaden the experience, network and knowledge of the Director, from which Hikma can benefit.
Executive Directors may accept external appointments as long as they do not lead to a conflict of interest and are allowed to retain any fees.
During the year under review, Said Darwazah received fees of $4,100 (2023: $4,100), There were no other fees paid to Executive Directors
relating to external appointments. External appointments are detailed in their Director profiles on pages 98 and 99.
Implementation of Policy
In February 2025, the Remuneration Committee reviewed the base salaries for Executive Directors and agreed an increase of 2% for the
Executive Chairman, 3% for the Executive Vice Chairman and 20% for the CEO with effect from 1 January 2025.
Annual report on remuneration
continued
134
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Hikma Pharmaceuticals PLC | Annual Report 2024
Financial
statements
Strategic
report
Corporate
governance
Annual bonus design for year ending 31 December 2025
The measures and targets for the annual bonus plan will be reviewed annually by the Committee and those agreed for 2025 are:
Area
Description
Rationale
Weighting1
Executive
Chairman
Executive
Vice
Chairman
CEO
Financial
Group/Division
Revenue
Historically, the pricing of generic pharmaceutical products has
decreased with time. The Committee recognises that this could
lead to declining revenue over the longer term, which could
ultimately result in a declining business overall.
By ensuring that a significant proportion of performance
remuneration is based on revenue, the Committee is able to ensure
that the Executive Directors are focused on mitigating pricing
declines by maximising the potential of the in-market portfolio,
launching new products, and developing the pipeline. Please see
page 16 of the Strategic report for the detail on this target
30%
30%
30%
Group Core/
Divisional EBIT
Ultimately, core operating profit is a key measure of value to Hikma’s
shareholders. Given the highly competitive business environment
in which Hikma operates, the Executive Directors must focus
continuously on optimising Hikma’s cost base.
50%
50%
50%
Strategic
Enhance strategy
execution
The effective execution of the Group’s strategy is critical to creating
long-term value for shareholders. The Executive Chairman will drive
delivery of the strategy to optimise performance and value creation
10%
10%
Sustainability
Drive cost effective near-term renewable energy projects, research
medium-term renewable capacity and set the long-term strategic
direction for carbon reduction.
10%
5%
5%
Strategic execution To continue Hikma’s growth the CEO and Executive Vice Chairman
have been set a number of targets regarding commercial
development and business plans. These will be disclosed in the
2025 Annual Report
15%
5%
1. The financial weightings for the Executive Vice Chairman are 12% Group Revenue,18% Core EBIT, 20% MENA Revenue and 30% MENA Core EBIT
The Committee has discretion to adjust the pay out to reflect the underlying business performance and any other relevant factors. Details of
the financial and strategic targets for the year ended 31 December 2025 will be disclosed retrospectively in next year’s Annual Report on
remuneration, by which time the Board will no longer deem them commercially sensitive.
Long term incentive awards to be made in year ending 31 December 2025
The Committee intends to issue a Performance Share Plan (PSP) award to the Executive Directors. Under the Policy long-term incentive
measures will be reviewed annually by the Committee and will be designed to drive Hikma business strategy and align with the delivery of
value to shareholders. It is proposed that the following targets will be set for the 2025 award and measure over the period 1 January 2025 to
31 December 2027:
Measure
Rationale
Weighting
Threshold
Target
Maximum
Core compound EPS growth
for 1 January 2025 to 31 December 20271
Alignment with shareholders’ return
35%
5%
8%
11%
Percentage of revenue from new business over
3 years
Developing revenue from new business is a
key element of Hikma’s business plan
35%
13%
16%
20%
Relative TSR performance compared to
FTSE 50-150 (excluding investment trusts)
Alignment with shareholder’s return
20%
Median
–
Upper
quartile
Sustainability
To establish a global culture and framework
for good water stewardship
10% Progress against key aspects of
the ISO 46001 Water Efficiency
Management System in high water-
extracting MENA sites
It is proposed that a PSP share award of 300% is made to the Executive Directors subject to the measures in the above table.
Annual report on remuneration
continued
Shareholder approval
Annual report on remuneration (25 April 2024 AGM)
Annual report on remuneration (28 April 2023 AGM)
Remuneration Policy (28 April 2023 AGM)
Votes available
183,621,063
Votes cast
183,617,785
For
91.44%
Against
8.56%
Withheld
3,278
Votes available
174.909,650
Votes cast
174,904,505
For
97.16%
Against
2.84%
Withheld
5,145
Votes available
174,909,661
Votes cast
174,905,422
For
98.24%
Against
1.76%
Withheld
4,239
136
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Hikma Pharmaceuticals PLC | Annual Report 2024
Financial
statements
Strategic
report
Corporate
governance
Director and average employee compensation change
The table below shows the percentage change in the Executive Directors and Non-Executive Directors , benefits and bonus for the five years
between 2020 and 2024 compared with the percentage change in the average of each of those components of pay for employees (excluding
the Executive Directors).
Director and average
employee compensation
change – salary1
Salary
Benefits
Bonus
Average percentage change
Average percentage change
Average percentage change
2019-
2020
2020-
2021
2021-
2022
2022-
2023
2023-
2024
2019-
2020
2020-
2021
2021-
2022
2022-
2023
2023-
2024
2019-
2020
2020-
2021
2021-
2022
2022-
2023
2023-
2024
Said Darwazah
0%
0%
0%
0%
0%
-16%
-21%
-3%
40%
10%
-1%
-17%
-40%
73%
-9%
Riad Mishlawi2
N/A
N/A
N/A
N/A
200%
N/A
N/A
N/A
N/A
99%
N/A
N/A
N/A
N/A
168%
Mazen
Darwazah
0%
5%
4%
3%
0%
1%
-30%
-52%
113%
45%
-1%
-6%
-15%
30%
-8%
Patrick Butler5
2%
-3%
-8%
2%
-84%
0%
0%
0%
22%
11%
N/A
N/A
N/A
N/A
N/A
Ali Al-Husry3
3%
5%
-8%
3%
3%
-40%
-64% -100%
0%
-69%
N/A
N/A
N/A
N/A
N/A
John Castellani3
3%
5%
-8%
7%
3%
-24%
-30%
135%
-11%
5%
N/A
N/A
N/A
N/A
N/A
Nina
Henderson3
3%
5%
-3%
13%
3%
-18%
-30%
-41%
96%
-26%
N/A
N/A
N/A
N/A
N/A
Cynthia Flowers3
77%
5%
-8%
3%
3%
0%
-29%
-24%
45%
-72%
N/A
N/A
N/A
N/A
N/A
Douglas Hurt3
0%
86%
-8%
3%
3%
0%
0%
0%
0%
0%
N/A
N/A
N/A
N/A
N/A
Laura Balan3,4
0%
0%
0%
76%
3%
0%
0%
0%
0%
0%
N/A
N/A
N/A
N/A
N/A
Victoria Hull3,4
0%
0%
0%
86%
12%
0%
0%
0%
0%
422%
N/A
N/A
N/A
N/A
N/A
Deneen Vojta3,4
0%
0%
0%
84%
3%
0%
0%
0%
-16%
629%
N/A
N/A
N/A
N/A
N/A
Employees ($m)
2%
4%
3%
1%
9%
1%
7%
3%
1%
11%
0%
9%
-10%
20%
-13%
Growth in
number of
Employees
1%
0%
1%
2%
4%
1%
0%
1%
2%
4%
1%
0%
1%
2%
4%
Average per
Employee
1%
4%
2%
-1%
5%
0%
0%
8%
-1%
7%
-1%
0%
-3%
18%
-16%
Average per the
listed parent
Company
Employee
1%
16%
11%
-29%
36%
35%
-54%
-39%
6%
58%
6%
18%
-16%
-18%
49%
1. The current Remuneration Policy was introduced on 28 April 2023. NED fees are paid in GBP and reported in USD so an element of changes will be as a result of exchange rate differences
2. Riad Mishlawi was appointed as CEO with effect from 1 September 2023 and therefore comparative figures are not provided
3. Non Executive Directors do not participate in the bonus plan
4. These NEDs were appointed during 2022
5. Patrick Butler stepped down on 29 February 2024
Hikma’s pay review, which took effect from 1 January 2024, awarded average percentage increases in wages and salaries of 4.5% (2023: 4%)
for existing employees (with certain exceptions for jurisdictions experiencing very high inflation). The nature and level of benefits to employees
in the year ended 31 December 2024 were broadly similar to those in the previous year (2023: unchanged).
UK gender and CEO pay ratios
Hikma has 30 employees employed in the UK and, as a result, is exempt from gender pay and average employee: CEO pay disclosure
requirements. The small number of employees and significant diversity of roles and seniority in the UK makes meaningful gender pay
comparisons in the UK difficult. The ratio of total CEO pay to the average Group employee is 19:1 using a simple average methodology.
Hikma is committed to paying fairly and not discriminating on gender or other grounds.
Annual report on remuneration
continued
Relative importance of spend on pay
The following table sets out the total amount spent in 2023 and 2024 on remuneration of Hikma’s employees and major distributions to
shareholders.
Distribution expense
2023
2024
% change
from 2023
wto 2024
Employee
$610 million
$654 million
7.2%
Distributions to shareholders 1
$137 million
$175 million
28.0%
1. The Group purchased 12,833,233 shares during 2020 at a cost of $292 million, which is excluded from the distributions to shareholders in accordance with the regulations. Those shares
are held in treasury and do not receive dividends
Committee membership and attendance
Members and attendance
Member
Meetings
Attendance
Nina Henderson (Chair)
6
6
John Castellani
6
5
Cynthia Flowers
6
6
Douglas Hurt
6
6
Laura Balan
6
6
Where a Director was unable to attend a meeting, their comments on the business of the meeting were shared with the Chair in advance of
the meeting.
Advice and support
The Committee seeks the assistance of senior management (CEO, CPO, VP Total Reward and Company Secretary) on matters relating to policy,
performance and remuneration but ensures that no Director takes part in discussions relating to their own remuneration or benefits.
Willis Towers Watson (WTW) continue to provide independent advice to the Committee in relation to market practice, UK corporate governance
best practice, incentive plan review and target setting. The total fees for advice to the Committee during the year, including advice relating to
the CEO compensation undertaken in 2024, were $112,769 (2023: $121,244). WTW was appointed by the Committee in 2016 following a
competitive tender process. WTW adheres to the Remuneration Consultants Group Code of Conduct. They charge their fees on a time
spent basis. They provide no other services to the Group other than Remuneration Committee advice and compensation benchmarking.
The Committee is satisfied that the WTW team providing remuneration advice do not have connections with Hikma that may impair their
independence.
During the year the Committee instructed Mercer to conduct a MENA region specific benchmarking exercise on a fixed fee basis of $6,000
(2023: $6,000). Mercer are a recognised expert in the region in question.
Except as disclosed on page 101 Hikma has complied with all the relevant principles and provisions of the 2018 Code throughout the year.
Closing statement
We have continued to develop our approach to remuneration reporting this year and the Committee hopes that this has aided your
understanding of our Remuneration Policy and practices. Please do not hesitate to contact me if you have any questions or observations.
For and on behalf of the Remuneration Committee.
Nina Henderson
Chair of the Remuneration Committee
25 February 2025
138
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Hikma Pharmaceuticals PLC | Annual Report 2024
Hikma Pharmaceuticals PLC | Annual Report 2024
Financial
statements
Strategic
report
Corporate
governance
Other statutory disclosures
Directors’ report and Strategic report
The Directors’ report and Strategic report for the year ended
31 December 2024 comprise pages 92 to 144 and pages 1 to 91.
This report forms the management report for the purposes of the
Disclosure and Transparency Rules. Readers are asked to cross refer
to the other sections of the Annual Report to the extent necessary
to meet Hikma’s reporting obligations as follows (statements that
are not applicable have been excluded):
– Likely future developments of Hikma: Strategic report
and the Business and financial review, pages 1 to 43
– Related party transactions: Note 37 to the Group
financial statements, page 203
– Going concern statement: Risk management report, page 87
– Longer-term viability statement: Risk management report, page 88
– Greenhouse gas emissions: Sustainability report, pages 56 to 59
– Financial instruments and risk: Notes 2 and 29 to the Group
financial statements, pages 165 to 166 and pages 190 to 195
– Stakeholder and S.172 Statement, pages 24 to 29
For the purposes of UK Listing Rule 6.6.1, shareholders are directed in
accordance with the following table to notes in the consolidated
financial statements:
Item
Reference
Interest capitalised and associated tax relief
See Notes 11 and 12 on
pages 174 to 177
Publication of unaudited
financial information
None
Details of long-term incentive schemes
See Note 36 on pages
199 to 202
Waiver of emoluments by Directors
None
Allotment of securities for cash,
including by major subsidiaries
None
Controlling entities/parent undertakings
of Hikma
None
Contracts of significance with a material
interest of a Director or controlling
shareholders
None
Services provided to Hikma by
controlling shareholders
None
Arrangements by which shareholders have
agreed to waive current or future dividends
See Note 31 on page
195
Controlling shareholder agreements
and associated obligations
Hikma does not
have any controlling
shareholders within the
meaning of the
UK Listing Rules
Principal activity
The principal activities of Hikma are the development, manufacture
and marketing of a broad range of generic, branded and in-licensed
pharmaceutical products. Hikma’s pharmaceutical operations are
conducted through three business segments: Injectables, Branded
and Generics. The majority of Hikma’s operations are in the MENA
region, North America and Europe. The Company does not have
overseas branches within the meaning of the Companies Act 2006
(the Act).
Hikma’s net sales, gross profit and segmental results are shown
by business segment in Note 5 to the Group financial statements
on pages 169 and 170.
Results
The reported profit attributable to shareholders of Hikma
Pharmaceuticals PLC for the year in 2024 was $359 million
(2023: $190 million).
Dividend
The Board is recommending a final dividend of 48 cents per share
(2023: 47 cents per share) bringing the total dividend for the full year
to 80 cents per share (2023: 72 cents per share). The proposed
dividend will be paid on 1 May 2025 to eligible shareholders on
the register at the close of business on 21 March 2025, subject
to approval at the Annual General Meeting on 24 April 2025.
Creditor payment policy
Hikma’s policy, which is also applied by all subsidiaries and will
continue in respect of the 2025 financial year, is to settle terms
of payment with all suppliers when agreeing the terms of each
transaction and to ensure that we abide by those terms of payment.
Trade creditors of Hikma at 31 December 2024 were equivalent to 76
days’ purchases (2023: 76 days), based on Group trade payables
multiplied by 365, divided by trailing 12 months’ Group cost of
goods sold.
Political donations
Hikma’s policy prohibits the payment of political donations and
expenditure within the meaning of the Act. No payments were made
in 2024.
Research and development
Hikma’s investment in research and development (R&D) during 2024
represented 4.5% of Group revenue (2023: 5.2%). Further details on
Hikma’s R&D activities can be found on pages 12 to 42.
Significant contracts
Due to the nature of Hikma’s business, members of Hikma are party
to agreements that could alter or be terminated upon a change of
control of Hikma following a takeover. However, none of these
agreements is individually deemed to be significant in terms of its
potential impact on the business of Hikma taken as a whole. The
Directors are not aware of any agreements between Hikma and its
Directors or employees that provide for compensation for loss of
office or employment that occurs because of a takeover bid. There are
no persons with whom Hikma has contractual or other arrangements,
who are deemed to be essential to the business of Hikma.
Directors
It is the Board’s policy that all Directors should seek election or
re-election on an annual basis. Accordingly, Said Darwazah, Riad
Mishlawi, Mazen Darwazah, Ali Al-Husry, Nina Henderson, Cynthia
Flowers, Douglas Hurt, Laura Balan, Victoria Hull and Deneen Vojta will
seek re-election at the 2025 AGM. John Castellani will retire from the
Board at the conclusion of the 2025 AGM, having reached nine years
of service in March 2025.
Indemnities and insurance
Hikma maintains an appropriate level of Directors’ and Officers’
insurance. The Directors benefit from qualifying third-party
indemnities made by Hikma that were in force during the year and as
at the date of signing this report. These indemnities are uncapped in
amount in relation to losses and liabilities that Directors may incur
to third parties in the course of the performance of their duties.
Auditors
Each person who was a Director of Hikma at the date when this report
was approved confirms that:
– so far as the Director is aware, there is no relevant audit information
of which Hikma’s auditors are unaware
– the Director has taken all the steps that they ought to have taken as
a Director to make themself aware of any relevant audit information
and to establish that Hikma’s auditors are aware of that information
This confirmation is given and should be interpreted in accordance
with the provisions of section 418 of the Act.
Workforce engagement
Nina Henderson is the designated Non-Executive Director to engage
with the workforce under the UK Corporate Governance Code 2018
(the 2018 Code) and has undertaken various workforce engagement
activities, as described on pages 26 and 95. Hikma continued to
operate its existing workforce engagement mechanisms which include
intra-Group communications, social networking, an open door policy
for legitimate union representatives and the operation of share
incentive arrangements. Hikma does not discriminate against
a potential employee on grounds of disability and will make
reasonable adjustments to employ and develop disabled people.
Nina will reach nine years’ service at Hikma during 2025 and will be
succeeded as the designated Non-Executive Director for workforce
engagement by Laura Balan with effect from close of business at the
AGM in 2025, as disclosed in our Board succession plan on page 94
of our 2023 Annual Report.
Stakeholder engagement
Further information on the Board’s engagement with stakeholders
is detailed in our Section 172 Statement on pages 24 to 29.
140
141
Hikma Pharmaceuticals PLC | Annual Report 2024
Hikma Pharmaceuticals PLC | Annual Report 2024
Financial
statements
Strategic
report
Corporate
governance
Diversity disclosures pursuant to UK Listing Rule 6.6.6R
The UK Listing Rules require listed companies to state whether they have met certain targets on board diversity and disclose in a prescribed
format information on the diversity of their board and executive committee. The information in the table below is at 31 December 2024, which
is the date selected as the reference date within Hikma’s accounting period. The targets set out in the UK Listing Rules are that:
– at least 40% of the individuals on its board of directors are women
– at least one of the following senior positions on its board of directors is held by a woman (the chair, SID, CEO or CFO)
– at least one individual on its board of directors is from a minority ethnic background
As at the reference date, the Board of Hikma meets all three targets above.
Gender diversity
Number
of Board
members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO,
SID and Chair)¹
Number
in Executive
Management
Percentage
of Executive
Management
Men
6
55%
2
6
67%
Women
5
45%
1
3
33%
Not specified/prefer not to say
–
–
–
–
–
Ethnic background diversity
Number
of Board
members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO,
SID and Chair)¹
Number
in Executive
Management
Percentage
of Executive
Management
White British or other White (including minority-white groups)
7
64%
1
5
56%
Mixed/Multiple ethnic groups
–
–
–
–
–
Asian/Asian British
–
–
–
–
–
Black/African/Caribbean/Black British
–
–
–
–
–
Other ethnic group
4
36%
2
4
44%
Not specified/prefer not to say
–
–
–
–
–
Each member of the Board or Executive Management has confirmed their gender and ethnic background to the Company Secretary and the
above data has been collated from those records.
1. The CFO is not appointed to the Board
Equity
Capital structure
Details of the issued share capital, together with movements in
the issued share capital during the year, can be found in Note 31
to the Group financial statements on page 195. Hikma has one class
of Ordinary Shares of 10 pence each (Shares) which carries no right
to fixed income. Each share carries the right to one vote at general
meetings of Hikma.
As at 31 December 2024:
Type
Nominal value
In issue
Issued
during
the year
Cancelled
during
the year
Shares
10 pence
234,719,686
805,082
–
During 2024, Hikma issued Shares solely pursuant to the exercise of
awards made under the 2018 Management Incentive Plan and 2014
Executive Incentive Plan.
There are no specific restrictions on the size of a holding or on the
transfer of shares, which are both governed by the general provision in
Hikma’s Articles of Association (the Articles) and prevailing legislation.
The Directors are not aware of any agreements between holders of
Hikma’s shares that may have resulted in restrictions on the transfer
of securities or on voting rights. No person has any special rights with
regard to the control of Hikma’s share capital and all issued shares are
fully paid.
Share buyback
At the Annual General Meeting (AGM) on 25 April 2024, shareholders
gave the Directors authority to purchase shares from the market up to
a limit of 22,188,520 Ordinary Shares, being 10% of the Company’s
issued Ordinary Share capital (excluding treasury shares) as at 15
March 2024. This authority expires at the earlier of 25 July 2025 or the
2025 AGM, which is scheduled for 24 April 2025. During 2024, no
Ordinary Shares were purchased by the Company.
Below is a summary of share buyback activity undertaken by the
Company prior to 2024.
During 2022, the Company purchased and cancelled 12,499,670
Ordinary Shares.
During 2020, the Company purchased 12,833,233 Ordinary Shares
from Boehringer Ingelheim (the ‘Treasury Shares’). The Treasury
Shares are held in treasury and, accordingly, do not receive
dividends and do not exercise voting rights.
Share issuance
At the AGM on 25 April 2024, the Directors were authorised to issue
relevant securities up to an aggregate nominal amount of £7,396,175
and to be empowered to allot equity securities for cash on a non-pre-
emptive basis up to an aggregate nominal amount of £4,437,704 at any
time up to the earlier of the date of the 2025 AGM or 25 July 2025. The
Directors propose to renew these authorities at the 2025 AGM for a
further year. In the year ahead, other than in respect of Hikma’s
obligations to satisfy rights granted to employees under its various
share-based incentive arrangements, the Directors have no present
intention of issuing any additional share capital of Hikma.
Details of the employee share schemes are set out in Note 36 to
the Group financial statements on pages 199 to 202. As at 31
December 2024, the Hikma Pharmaceuticals Employee Benefit Trust
(EBT) held 1,455,190 shares. The EBT has waived its entitlement to a
dividend. Other than the EBT and the Treasury Shares, no other
shareholder has waived the right to a dividend.
Pre-emptive issue of shares
During the year under review, and in the period since the date of
Hikma’s Initial Public Offering on 1 November 2005, Hikma did not
issue any shares pursuant to an authority given by shareholders
at an AGM to issue shares for cash on a non-pre-emptive basis,
other than in respect of the placing undertaken on 17 January 2008.
Powers of the Directors
The powers of the Directors are determined by the Articles, the 2018
Code and other relevant UK legislation. The Articles give the Directors
the power to appoint and remove Directors. The power to buy back,
issue and allot shares contained in the Articles is subject to
shareholder approval at each AGM. The Articles, which are available
on the website, may only be amended by special resolution of
the shareholders.
Substantial shareholdings
As at 31 December 2024, Hikma had been notified pursuant
to sections 89A to 89L of the Financial Services and Markets Act
2000 and Rule 5 of the Disclosure and Transparency Rules of the
UKLA of the following interests in the voting rights attaching to the
share capital of Hikma:
Name of shareholder
Number of Shares
Percentage held1
Darhold Limited2
60,000,000
27.04%
Wellington Management Group LLP
11,556,882
5.21%
BlackRock Group
10,003,617
4.51%
1. The percentages detailed relate to voting rights in the Company. Therefore, the Treasury
Shares have been excluded from the denominator for this calculation
2. Said Darwazah, Mazen Darwazah and Ali Al-Husry, each being a Director and shareholder
of Hikma, are shareholders and Non-Executive Directors of Darhold Limited. See page
132 for details of their interests in Darhold Limited
Between 31 December 2024 and 25 February 2025, being the date at
which this report is signed, no changes in substantial shareholdings
were notified to Hikma.
Annual General Meeting
The AGM of Hikma will be held at Sofitel St James, 6 Waterloo Place,
London SW1Y 4AN on Thursday 24 April 2025, starting at 11.30 am.
The Notice convening the meeting is given in a separate document
accompanying this document, and includes a commentary on the
business of the AGM, explains how shareholders can take part
and includes notes to help shareholders exercise their rights
at the meeting.
Hikma provides for the vote on each resolution to be by poll rather
than by show of hands. This provides for greater transparency and
allows the votes of all shareholders to be counted, including those
cast by proxy. The level of proxies lodged for each resolution is
projected onto a screen as each resolution is put to the meeting.
A ‘vote withheld’ explanation is included in the Notice.
Electronic communications
Hikma’s preference is to communicate through Hikma’s website,
rather than in paper form. Shareholders are encouraged to visit the
website to access Hikma’s Annual Reports and half-year and final
results presentations. Shareholders who wish to receive paper
communications can elect to do so using our shareholder portal
(www.hikmashares.com) or through Hikma’s Registrar, MUFG
Corporate Markets.
Other statutory disclosures
continued
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Statement of directors’ responsibilities in respect of
the financial statements
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have prepared the
Group financial statements in accordance with UK-adopted
international accounting standards and the Company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 “Reduced Disclosure Framework”, and applicable
law). In preparing the Group financial statements, the Directors have
also elected to comply with International Financial Reporting
Standards issued by the International Accounting Standards Board
(IFRSs as issued by IASB).
Under company law, Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and Company and of the profit or
loss of the Group for that period. In preparing the financial statements,
the Directors are required to:
– select suitable accounting policies and then apply them
consistently;
– state whether applicable UK-adopted international accounting
standards and IFRSs issued by IASB have been followed for the
Group financial statements and United Kingdom Accounting
Standards, comprising FRS 101, have been followed for the
Company financial statements, subject to any material departures
disclosed and explained in the financial statements;
– make judgements and accounting estimates that are reasonable
and prudent; and
– prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Group and Company will
continue in business.
The Directors are responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s and
Company’s transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable
them to ensure that the financial statements and the Directors’
Remuneration Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the
Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report and Accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s and
Company’s position and performance, business model and strategy.
Each of the Directors, whose names and functions are listed in the
Directors’ report confirm that, to the best of their knowledge:
– the Group financial statements, which have been prepared in
accordance with UK-adopted international accounting standards
and IFRSs issued by IASB, give a true and fair view of the assets,
liabilities, financial position and profit of the Group;
– the Company financial statements, which have been prepared in
accordance with United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair view of the assets, liabilities
and financial position of the Company; and
– the Annual Report includes a fair review of the development and
performance of the business and the position of the Group and
Company, together with a description of the principal risks and
uncertainties that it faces.
In the case of each Director in office at the date the Directors’ report
is approved:
– so far as the Director is aware, there is no relevant audit information
of which the Group’s and Company’s auditors are unaware; and
– they have taken all the steps that they ought to have taken as a
Director in order to make themselves aware of any relevant audit
information and to establish that the Group’s and Company’s
auditors are aware of that information.
The Directors’ report was approved by the Board of Directors and
signed on its behalf by:
Said Darwazah
Executive Chairman
25 February 2025
Riad Mishlawi
Chief Executive Officer
25 February 2025
Other statutory disclosures
continued
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Independent auditors’ report
to the members of Hikma
Pharmaceuticals PLC
156 Consolidated income statement
157
Consolidated statement of
comprehensive income
158 Consolidated balance sheet
159
Consolidated statement
of changes in equity
160 Consolidated cash flow statement
161
Notes to the consolidated
financial statements
207 Company balance sheet
208 Company statement
of changes in equity
209 Notes to the Company
financial statements
Financial
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Independent auditors’ report to the members
of Hikma Pharmaceuticals PLC
Report on the audit of
the financial statements
Opinion
In our opinion:
– Hikma Pharmaceuticals PLC’s Group financial statements and
Company financial statements (the “financial statements”) give a
true and fair view of the state of the Group’s and of the Company’s
affairs as at 31 December 2024 and of the Group’s profit and the
Group’s cash flows for the year then ended;
– the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards
as applied in accordance with the provisions of the Companies
Act 2006;
– the Company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, including FRS 101
“Reduced Disclosure Framework”, and applicable law); and
– the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual
Report, which comprise: the Consolidated and Company balance
sheets as at 31 December 2024; the Consolidated income statement,
the Consolidated statement of comprehensive income, the
Consolidated cash flow statement and the Consolidated and
Company statements of changes in equity for the year then ended;
and the notes to the financial statements, comprising material
accounting policy information and other explanatory information.
Our opinion is consistent with our reporting to the Audit Committee.
Separate opinion in relation to IFRSs
as issued by the IASB
As explained in note 2 to the financial statements, the Group, in
addition to applying UK-adopted international accounting standards,
has also applied international financial reporting standards (IFRSs) as
issued by the International Accounting Standards Board (IASB).
In our opinion, the Group financial statements have been properly
prepared in accordance with IFRSs as issued by the IASB.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities
for the audit of the financial statements section of our report. We
believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as
applicable to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit
services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in Note 7, we have provided no non-audit
services to the Company or its controlled undertakings in the period
under audit.
Our audit approach
Overview
Audit scope
– Our audit included full scope audits of four components, an audit of
specific financial statement line items of one additional component
and audit procedures performed centrally over certain specific
material balances at locations around the Group and over central
consolidation and adjustment entities. Full scope components
account for 81% of revenue and in excess of 70% of core profit
before tax.
Key audit matters
– Valuation and accuracy of gross to net rebates and returns
adjustments in the US (Group)
– Determination of the recoverable amount of the Complex
Respiratory and Generics Cash Generating Units (CGUs) (Group)
– Recoverability of the carrying amounts in respect of investments
in subsidiaries (Company)
– Valuation of acquired intangible asset as part of the Xellia business
combination (Group)
Materiality
– Overall Group materiality: $31 million (2023: $31 million) based
on approximately 5% of core profit before tax.
– Overall Company materiality: $38 million (2023: $37.6 million) based
on approximately 1% of total assets.
– Performance materiality: $23 million (2023: $23.2 million) (Group)
and $28.5 million (2023: $28.2 million) (Company).
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional
judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest
effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters, and any comments we make on the results of our procedures
thereon, were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Valuation of acquired intangible asset as part of the Xellia business
combination is a new key audit matter this year. Otherwise, the key
audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Valuation and accuracy of gross to net rebates and returns
adjustments in the US (Group)
Management is required to make estimates in respect of revenue recognition,
specifically the level of returns and rebates to be realised against the Group’s
revenue. The Group recorded significant revenue deductions for the year
ended 31 December 2024 and determined provisions for indirect customer
rebates, indirect non-customer rebates and returns.
In aggregate, these estimates are complex, material to the financial statements
and require significant estimation by the directors to establish an appropriate
provision and accordingly this was determined to be a key audit matter.
Refer to the Audit Committee review of areas of significant judgement,
accounting policies (note 2), critical accounting judgements and key sources of
estimation uncertainty (note 3), trade and other receivables (note 21) and other
current liabilities (note 27) in the Group financial statements.
We considered the Group’s processes for making judgements in this area and
performed the following procedures:
– we assessed the revenue recognition policy and design and
implementation of applicable controls in place around the rebates and
returns process;
– we tested returns, rebates payments and credit memos throughout the
year by agreeing selected transactions back to the underlying source
documentation including customer claims and settlement information;
– we confirmed channel inventory with major wholesalers or performed
alternative procedures where confirmations were not received;
– we developed an independent expectation or tested management’s
process for the largest elements of the provisions at 31 December 2024
using assumptions and inputs based on contracted prices and rebate
terms, historical rebates, discounts, channel inventory levels, and invoices
received and/or payments made, as applicable, subsequent to year-end
to validate provisions. We compared this expectation to the actual
provision recognised by the Group; and
– we considered the historical accuracy of the Group’s estimates in previous
years and the effect of any adjustments to prior years’ provision in the
current year’s results.
Based on the procedures performed, we did not identify any material
differences between our independent expectations and the provision
recorded. We also evaluated the disclosures in note 2, note 3, note 21 and
note 27 which we consider to be appropriate.
Determination of the recoverable amount of the Complex
Respiratory and Generics Cash Generating Units (CGUs) (Group)
The Group has property, plant and equipment (“PPE”) of $1,278 million (2023:
$1,096 million) and intangible assets of $1,156 million (2023: $1,100 million).
Management conducted its annual impairment assessment process which
included:
– assessing whether indicators of impairment and/or impairment reversal
existed in relation to PPE and intangible assets as at 31 December 2024,
performed at the CGU level, being the lowest level at which largely
independent cash inflows are generated; and
– performing impairment testing for goodwill and indefinite lived or
unamortised assets at the CGU level or higher, as appropriate.
The Generics CGU has a material amount of unamortised assets. Management
performed a full impairment assessment on this CGU and did not identify any
impairment or conclude it is sensitive to reasonably possible changes in key
assumptions. Also, management concluded that the conditions that gave rise
to the previous impairment had not reversed.
In the current year, management conducted an impairment reversal
assessment for the Complex Respiratory CGU given the improved performance
and sustained changes in the conditions that gave rise to previous impairment
in this CGU. An impairment reversal of approximately $60 million was recorded
as a result, with approximately $44 million allocated to intangible assets and
$16 million allocated to property, plant and equipment.
The determination of the recoverable amount of a CGU requires the exercise of
judgement and involves significant estimation of certain key assumptions. The
assessment of whether there has been a sustained improvement in the
conditions that gave rise to a previous impairment, to support an impairment
reversal, also involves a significant degree of judgement and careful
consideration.
This includes, but is not limited to, consideration of actual performance in the
year and management’s view of future cash flow forecasts. These forecasts are
based on management’s expectations of external factors such as market
competition, likelihood of regulatory product approvals and changes to
regulations in addition to management’s own intentions. These impact key
assumptions like market share, pricing, revenue growth and profit margins.
Accordingly, the determination of the recoverable amount as part of the
impairment / impairment reversal assessment of the Complex Respiratory and
Generics CGUs was determined to be a key audit matter.
Refer to the Audit Committee review of areas of significant judgement,
accounting policies (note 2), critical accounting judgements and key sources of
estimation uncertainty (note 3), goodwill and other intangible assets (note 15)
and property, plant and equipment (note 16) in the Group financial statements.
We performed the following audit procedures in order to evaluate the
reasonableness of management’s impairment and impairment reversal
assessment and its conclusions:
– we reconciled the carrying values of the CGUs to underlying financial
records and understood the CGUs constituents;
– we obtained management’s five-year business plan (5YBP), reconciled the
cash flows used in management’s assessments to this plan, and verified
that the plan was approved by the Board;
– we evaluated the current year performance of the respective CGUs
against prior year forecasts, compared the previous 5YBP to the current
year 5YBP and challenged management to understand the reasons for
changes in the performance of both CGUs;
– we analysed the changes to forecasts for key contributor products to
assess whether these changes have a material impact on the recoverable
amounts of the CGUs. In relation to the Complex Respiratory CGU, we
have evaluated whether these changes represent “sustained change”
under the requirements of IAS36 for impairment reversal. We also
challenged management on the non-reversal of impairment in the
Generics CGU and whether the conditions that gave rise to the historical
impairment in this CGU had reversed;
– we made enquiries of management including the commercial, regulatory
and legal teams to further understand the key inputs and assumptions
underpinning the forecasts for the overall CGU and in respect of key
contributor products. We corroborated and challenged these key inputs
and assumptions from these enquiries with available third party data (e.g.
IQVIA market intelligence, analyst reports), by inspecting correspondence
with the regulator and agreeing key information to contracts; and
– we utilised our internal valuation experts to independently determine
the reasonableness of management’s discount rate for these CGUs.
Based on our procedures we consider management’s conclusions to be
reasonable.
We also evaluated the disclosures in note 2, note 3, note 15 and note 16
and consider these to be appropriate.
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Key audit matter
How our audit addressed the key audit matter
Valuation of acquired intangible asset as part of the Xellia business
combination (Group)
During the year, the Group completed the acquisition of Xellia Pharmaceuticals’
US finished dosage form (FDF) business, related assets and 100% of the issued
share capital of Xellia Croatia (R&D centre) for total consideration of
$202 million. This comprises a cash payment of $153 million, a contingent
consideration of up to $50 million (subject to the achievement of certain
regulatory and commercial milestones) minus working capital adjustment of
$1 million. The acquisition has been accounted for as a business combination in
accordance with IFRS 3 ‘Business Combinations’.
IFRS 3 ‘Business Combinations’ requires assets and liabilities acquired in
business combinations to be recognised at their fair value, with the difference
between the consideration paid and the fair value of net assets acquired
recognised as goodwill. A purchase price allocation exercise to value the
net assets acquired has been performed by management assisted by an
external expert.
Product related intangible assets acquired were valued at $73 million.
$53 million of this relates to one specific marketed asset. The valuation of the
asset involves estimation in respect of key assumptions like future sales growth,
margins and market share assumptions. Also, there is judgement involved in
assessing whether synergies included in the valuation are buyer specific or
whether they were available to other market participants.
Refer to the Audit Committee review of areas of significant judgement,
accounting policies (note 2), Business combinations (note 34) in the Group
financial statements.
We performed the following audit procedures in relation to the valuation of
the acquired intangible:
– obtained and reviewed the sale and purchase agreement (SPA) to gain an
understanding of the key terms of the acquisition;
– deployed our valuations experts and engaged with management and with
management’s third-party experts to assess the methodology employed
for calculating the fair value of the product related intangible asset and the
appropriateness of the key assumptions used, including the discount rate
assumption;
– evaluated management’s treatment of synergies within the cash flows to
assess whether the cash flows represented market participant
assumptions;
– challenged management’s key future cash flow projections including, but
not limited to, sales growth, margins, and market share by comparing to
historical information and trends and third-party evidence in respect
forecasted size of the market; and
– verified that the fair value adjustment was consistent with the accounting
standard requirements.
Based on the evidence obtained, we did not identify any material issues with
the valuation and considered the fair value of the acquired intangible asset
to be appropriate.
We also evaluated the disclosures in note 2 and note 34 and consider these
to be appropriate.
Recoverability of the carrying amounts in respect of investments in
subsidiaries (Company)
The investments in subsidiaries of $3,291 million (2023: $3,303 million) are
held at cost less accumulated impairment in the Company balance sheet at
31 December 2024. An impairment charge of $12 million was recognised this
year.
Investments are tested for impairment if impairment indicators exist. If such
indicators exist, the recoverable amounts of investments in subsidiaries are
estimated in order to determine the extent of the impairment loss, if any. Any
such impairment loss is recognised in the income statement.
The impairment assessment was identified as a key audit matter due to the size
of the underlying investment carrying values at 31 December 2024. Impairment
indicators were identified in connection with certain investments in subsidiaries
due to the carrying value of investments exceeding the net assets of the
underlying subsidiaries. As a result, the recoverable amount of the investments
was determined, being the higher of fair value less cost of disposal or the value
in use, in order to determine the headroom over carrying values, if any. The
determination of the recoverable amount requires the application of
management judgement and involves estimation, particularly in determining
the key assumptions to be applied in preparing cash flow projections. Refer to
accounting policies (note 2) and Investment in subsidiaries (note 3) in the
Company financial statements.
We performed the following audit procedures in relation to the carrying
amounts of investments in subsidiaries:
– we evaluated management’s assessment of whether any indicators of
impairment existed by comparing the carrying values of investments
in subsidiaries with the net assets of the underlying subsidiaries at
31 December 2024;
– for investments where the net assets were lower than the carrying values,
we assessed the recoverable amounts by reference to the value in use of
the investments compared to carrying values at 31 December 2024;
– where applicable, we verified that the recoverable amounts of investments
were consistent with the recoverable amounts of the related CGUs tested
for goodwill impairment purposes, leveraging the work undertaken as part
of the Group audit; and
– we separately evaluated the difference between the carrying value of the
Company’s investments in subsidiaries and the Group’s market
capitalisation.
Based on the procedures performed, we noted no material issues arising
from our work. We also evaluated the disclosures in note 2 and note 3 and
consider these to be appropriate.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial statements
as a whole, taking into account the structure of the Group and the
Company, the accounting processes and controls, and the industry
in which they operate.
As at 31 December 2024, Hikma Pharmaceuticals PLC had 59
subsidiaries and one joint venture as part of the Group. These entities
may operate solely in one segment but more commonly operate
across two. Each component submits a Group reporting package to
Hikma’s central accounting team including its income statement and
balance sheet prepared under Group accounting policies which are in
accordance with the accounting standards.
As a consequence of implementing ISA (UK) 600 Revised in this year’s
audit, we have refined our process for identifying components. In
selecting the components that are in scope this year and establishing
the overall approach to the Group audit, we determined the type of
work that needed to be performed by us, as the Group engagement
team, or component auditors in other PwC network firms operating
under our instruction, to ensure that we had sufficient coverage from
our audit work over each relevant line of the Group financial
statements. Where the work was performed by our component
auditors, we determined the level of involvement we needed to have
in their audit work in order to be able to conclude whether sufficient
appropriate audit evidence had been obtained as a basis for our
opinion on the Group financial statements as a whole.
We instructed component teams in the US, Jordan, Saudi Arabia and
Algeria to audit reporting packages of certain entities in these
territories and report to us the results of their work. Certain individual
balances for the US were audited by our component team based in
Jordan. We also engaged our component team in Portugal to perform
an audit over specific balances. In addition to instructing and
reviewing the reporting from our component audit teams, we
conducted file reviews and participated in key meetings with local
management both remotely and in person. We had regular dialogue
with component teams throughout the year and performed site visits
to the US, Jordan and Algeria.
In addition to the work performed by our component teams, central
audit procedures were performed by the Group engagement team in
relation to specific material balances not covered by component
auditors. The Group consolidation and related central consolidation
and other adjustments, financial statement disclosures and corporate
functions were also audited by the Group engagement team. This
included our work over central taxation adjustments, valuation of
goodwill and intangible assets and major transactions.
Taken together, audit work over the full scope components and
central procedures performed covered approximately 81% of the
Group’s revenue and in excess of 70% of the Group’s core profit before
tax. In addition to the audit procedures noted above, we also
performed disaggregated analytical review procedures over certain of
the Group’s smaller and lower risk components that were not directly
included in our Group audit scope. We also performed a full scope
audit of the Company to a separate Company standalone materiality.
This provided the evidence we needed for our opinion on the
consolidated financial statements taken as a whole.
The impact of climate risk on our audit
As explained in the Sustainability Report, the Group is mindful of its
impact on the environment and is focussed on ways to reduce climate
related impacts. In planning and executing our audit we have
considered the Group’s risk assessment process to identify and
model the potential impact of climate change on the financial
statements and further engaged with our own sustainability experts.
Based on this, we understand that the key impact to the Group could
be a potential increase in input costs for energy intensive supplies
such as active pharmaceutical ingredients and packaging materials
due to carbon pricing. This would impact the financial statement line
items and estimates associated with future cash flows since the
impact of climate change is expected to become more notable in the
medium to long term. The key areas impacted include recoverability
of goodwill, intangible assets and deferred tax assets. We note that
management’s assessment is that the impact on Hikma is currently
not financially material, nevertheless, we have continued to assess
managements forecasts to ensure it reflects the impact of climate
change and any climate change related commitments in the cash
flows particularly in the context of the Group’s target to reduce Scope
1 and 2 GHG emissions by 25% by 2030. We have not identified any
matters as part of this work which contradict the disclosures in
the Annual Report or lead to any material adjustments to the
financial statements.
Independent auditors’ report to the members
of Hikma Pharmaceuticals PLC
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For each component in the scope of our Group audit, we allocated a
materiality that is less than our overall Group materiality. The range of
materiality allocated across components was between $12 million and
$28.5 million. Certain components were audited to a local statutory
audit materiality that was also less than our overall Group materiality.
We use performance materiality to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the scope of our audit
and the nature and extent of our testing of account balances, classes
of transactions and disclosures, for example in determining sample
sizes. Our performance materiality was 75% (2023: 75%) of overall
materiality, amounting to $23 million (2023: $23.2 million) for the
Group financial statements and $28.5 million (2023: $28.2 million)
for the Company financial statements.
In determining the performance materiality, we considered a number
of factors – the history of misstatements, risk assessment and
aggregation risk and the effectiveness of controls – and concluded
that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above $1.5 million (Group
audit) (2023: $1.5 million) and $1.9 million (Company audit) (2023:
$1.8 million) as well as misstatements below those amounts that, in
our view, warranted reporting for qualitative reasons.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – Group
Financial statements – Company
Overall materiality
$31 million (2023: $31 million).
$38 million (2023: $37.6 million).
How we determined it
Based on approximately 5% of core profit before
tax
Based on approximately 1% of total assets
Rationale for
benchmark applied
The Group’s principal measure of earnings is core
results. Management believes that it reflects the
underlying performance of the Group and is a
meaningful measure of the Group’s performance
to stakeholders.
Total assets is used as the benchmark as the
Company’s principal activity is to hold the Group’s
investments and perform treasury functions on
behalf of the Group.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group’s and the
Company’s ability to continue to adopt the going concern basis of
accounting included:
– agreeing the underlying cash flow projections to board approved
forecasts, assessing how these forecasts are compiled, and
assessing the accuracy of management’s forecasts;
– evaluating the key assumptions within management’s forecasts;
– considering liquidity and available financial resources;
– verifying the suspension of loan covenants due to maintaining an
investment-grade rating by reviewing loan agreements, validating
the credit rating with agencies and obtaining and reviewing the
lender agreement;
– assessing whether the severe but plausible downside scenario
prepared by management appropriately considered the principal
risks facing the business;
– evaluating the feasibility of management’s mitigating actions in the
severe but plausible downside scenario.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group’s and the
Company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
In auditing the financial statements, we have concluded that the
directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the Group’s and the
Company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK
Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the directors’ statement in the financial
statements about whether the directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections
of this report.
Reporting on other information
The other information comprises all of the information in the Annual
Report other than the financial statements and our auditors’ report
thereon. The directors are responsible for the other information. Our
opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or,
except to the extent otherwise explicitly stated in this report, any form
of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an
apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a
material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing
to report based on these responsibilities.
With respect to the Strategic report and Directors’ report, we also
considered whether the disclosures required by the UK Companies
Act 2006 have been included.
Based on our work undertaken in the course of the audit, the
Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic report and Directors’ report
In our opinion, based on the work undertaken in the course of the
audit, the information given in the Strategic report and Directors’
report for the year ended 31 December 2024 is consistent with the
financial statements and has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the Group and
Company and their environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic report
and Directors’ report.
Directors’ Remuneration
In our opinion, the part of the Annual report on remuneration to be
audited has been properly prepared in accordance with the
Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in
relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the Company’s
compliance with the provisions of the UK Corporate Governance Code
specified for our review. Our additional responsibilities with respect to
the corporate governance statement as other information are
described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the corporate
governance statement, included within the Corporate governance
section is materially consistent with the financial statements and our
knowledge obtained during the audit, and we have nothing material to
add or draw attention to in relation to:
– The directors’ confirmation that they have carried out a robust
assessment of the emerging and principal risks;
– The disclosures in the Annual Report that describe those principal
risks, what procedures are in place to identify emerging risks and an
explanation of how these are being managed or mitigated;
– The directors’ statement in the financial statements about whether
they considered it appropriate to adopt the going concern basis of
accounting in preparing them, and their identification of any
material uncertainties to the Group’s and Company’s ability to
continue to do so over a period of at least twelve months from the
date of approval of the financial statements;
– The directors’ explanation as to their assessment of the Group’s
and Company’s prospects, the period this assessment covers and
why the period is appropriate; and
– The directors’ statement as to whether they have a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period of their
assessment, including any related disclosures drawing attention to
any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term
viability of the Group and Company was substantially less in scope
than an audit and only consisted of making inquiries and considering
the directors’ process supporting their statement; checking that the
statement is in alignment with the relevant provisions of the UK
Corporate Governance Code; and considering whether the statement
is consistent with the financial statements and our knowledge and
understanding of the Group and Company and their environment
obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
– The directors’ statement that they consider the Annual Report,
taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess the
Group’s and Company’s position, performance, business model
and strategy;
– The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems; and
– The section of the Annual Report describing the work of the Audit
Committee.
We have nothing to report in respect of our responsibility to report
when the directors’ statement relating to the Company’s compliance
with the Code does not properly disclose a departure from a relevant
provision of the Code specified under the Listing Rules for review by
the auditors.
Independent auditors’ report to the members
of Hikma Pharmaceuticals PLC
continued
152
153
Hikma Pharmaceuticals PLC | Annual Report 2024
Hikma Pharmaceuticals PLC | Annual Report 2024
Corporate
governance
Strategic
report
Corporate
governance
Strategic
report
Financial
statements
Responsibilities for the financial statements
and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of directors’ responsibilities
in respect of the financial statements, the directors are responsible for
the preparation of the financial statements in accordance with the
applicable framework and for being satisfied that they give a true and
fair view. The directors are also responsible for such internal control as
they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Group’s and the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the Company or to
cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with
laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is
detailed below.
Based on our understanding of the Group and industry, we identified
that the principal risks of non-compliance with laws and regulations
related to patent protection, product safety (including but not limited
to the United States Food and Drug Administration regulations),
competition and antitrust laws, pricing practices and legislation, and
anti-bribery and corruption legislation (including but not limited to the
Foreign Corrupt Practices Act), and we considered the extent to which
non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations that have
a direct impact on the financial statements such as applicable tax
legislation, the Companies Act 2006 and Listing Rules of the Financial
Conduct Authority (FCA). We evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial statements
(including the risk of override of controls), and determined that the
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if,
in our opinion:
– we have not obtained all the information and explanations we
require for our audit; or
– adequate accounting records have not been kept by the Company,
or returns adequate for our audit have not been received from
branches not visited by us; or
– certain disclosures of directors’ remuneration specified by law are
not made; or
– the Company financial statements and the part of the Annual
report on remuneration to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were
appointed by the members on 12 May 2016 to audit the financial
statements for the year ended 31 December 2016 and subsequent
financial periods. The period of total uninterrupted engagement
is nine years, covering the years ended 31 December 2016 to
31 December 2024.
Other matter
The Company is required by the Financial Conduct Authority
Disclosure Guidance and Transparency Rules to include these
financial statements in an annual financial report prepared under the
structured digital format required by DTR 4.1.15R - 4.1.18R and filed on
the National Storage Mechanism of the Financial Conduct Authority.
This auditors’ report provides no assurance over whether the
structured digital format annual financial report has been prepared
in accordance with those requirements.
Nigel Comello
(Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
25 February 2025
principal risks were related to posting inappropriate journal entries
to manipulate financial results and management bias in accounting
estimates. The Group engagement team shared this risk assessment
with the component auditors so that they could include appropriate
audit procedures in response to such risks in their work. Audit
procedures performed by the Group engagement team and/or
component auditors included:
– making enquiries of management and the Group’s legal counsel,
including consideration of known or suspected instances of
non-compliance with laws and regulations and fraud;
– assessment of matters reported on the Group’s whistleblowing
hotline and results of management’s investigation of such matters;
– challenging assumptions made by management in its significant
accounting estimates particularly in relation to the estimation of
rebate and returns provisions and the determination of the
recoverable amount of the Complex Respiratory and Generics
CGUs (see related key audit matters above); and
– identifying and testing journal entries, in particular any journal
entries posted with unusual account combinations.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to
events and transactions reflected in the financial statements. Also,
the risk of not detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number
of items for testing, rather than testing complete populations. We will
often seek to target particular items for testing based on their size or
risk characteristics. In other cases, we will use audit sampling to
enable us to draw a conclusion about the population from which the
sample is selected.
A further description of our responsibilities for the audit of the
financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for
the Company’s members as a body in accordance with Chapter 3 of
Part 16 of the Companies Act 2006 and for no other purpose. We do
not, in giving these opinions, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or
into whose hands it may come save where expressly agreed by our
prior consent in writing.
Independent auditors’ report to the members
of Hikma Pharmaceuticals PLC
continued
154
155
Hikma Pharmaceuticals PLC | Annual Report 2024
Hikma Pharmaceuticals PLC | Annual Report 2024
Corporate
governance
Strategic
report
Corporate
governance
Strategic
report
Financial
statements
Consolidated income statement
For the year ended 31 December 2024
2024
Core
results
2024
Exceptional items
and other
adjustments
(Note 6)
2024
Reported
results
2023
Core
results
2023
Exceptional items
and other
adjustments
(Note 6)
2023
Reported
results
Note
$m
$m
$m
$m
$m
$m
Revenue
4
3,156
(29)
3,127
2,875
–
2,875
Cost of sales
(1,708)
(4)
(1,712)
(1,468)
(17)
(1,485)
Gross profit/(loss)
1,448
(33)
1,415
1,407
(17)
1,390
Selling, general and administrative expenses
(568)
(103)
(671)
(544)
(223)
(767)
Impairment loss on financial assets, net
(2)
–
(2)
(3)
(29)
(32)
Research and development expenses
(141)
–
(141)
(149)
–
(149)
Other operating expenses
9
(21)
(31)
(52)
(9)
(71)
(80)
Other operating income
9
3
60
63
5
–
5
Total operating expenses
(729)
(74)
(803)
(700)
(323)
(1,023)
Operating profit/(loss)
5
719
(107)
612
707
(340)
367
Finance income
10
8
–
8
7
–
7
Finance expense
11
(93)
(74)
(167)
(90)
(5)
(95)
Gain from investment at fair value through
profit or loss (FVTPL)
1
–
1
2
–
2
Group's share of profit of joint venture
18
1
–
1
–
–
–
Profit/(loss) before tax
636
(181)
455
626
(345)
281
Tax
12
(138)
45
(93)
(131)
42
(89)
Profit/(loss) for the year
498
(136)
362
495
(303)
192
Attributable to:
Non-controlling interests
3
–
3
3
(1)
2
Equity holders of the parent
495
(136)
359
492
(302)
190
Earnings per share (cents)
Basic
14
224
162
223
86
Diluted
14
221
161
221
85
Consolidated statement of
comprehensive income
For the year ended 31 December 2024
2024
Core
results
2024
Exceptional items
and other
adjustments
(Note 6)
2024
Reported
results
2023
Core
results
2023
Exceptional items
and other
adjustments
(Note 6)
2023
Reported
results
Note
$m
$m
$m
$m
$m
$m
Profit/(loss) for the year
498
(136)
362
495
(303)
192
Other comprehensive income/(expense)
Items that may subsequently be reclassified
to the consolidated income statement:
Currency translation and
hyperinflation movement
(55)
–
(55)
(3)
–
(3)
Deferred tax on currency translation
–
–
–
1
–
1
Items that will not subsequently be
reclassified to the consolidated
income statement:
Change in investments at fair value through
other comprehensive income (FVTOCI)
19
(6)
–
(6)
(13)
–
(13)
Remeasurement of post-employment
benefit obligations
26
(1)
–
(1)
–
–
–
Total other comprehensive expense
for the year
(62)
–
(62)
(15)
–
(15)
Total comprehensive
income/(expense) for the year
436
(136)
300
480
(303)
177
Attributable to:
Non-controlling interests
3
–
3
2
–
2
Equity holders of the parent
433
(136)
297
478
(303)
175
436
(136)
300
480
(303)
177
156
Hikma Pharmaceuticals PLC | Annual Report 2024
Hikma Pharmaceuticals PLC | Annual Report 2024
157
Strategic
report
Corporate
governance
Financial
statements
Consolidated balance sheet
At 31 December 2024
2024
2023
Note
$m
$m
Non-current assets
Goodwill
15
382
388
Other intangible assets
15
774
712
Property, plant and equipment
16
1,278
1,096
Right-of-use assets
17
48
45
Investment in joint venture
18
11
10
Deferred tax assets
12
293
226
Financial and other non-current assets
19
84
103
2,870
2,580
Current assets
Inventories
20
986
891
Income tax recoverable
24
49
Trade and other receivables
21
949
824
Cash and cash equivalents
22
188
205
Other current assets
23
116
120
Assets classified as held for sale
–
11
2,263
2,100
Total assets
5,133
4,680
Current liabilities
Short-term financial debts
24
642
150
Lease liabilities
17
11
11
Trade and other payables
25
650
568
Income tax payable
78
74
Provisions
26
122
152
Other current liabilities
27
475
384
1,978
1,339
Net current assets
285
761
Non-current liabilities
Long-term financial debts
28
607
975
Lease liabilities
17
46
55
Deferred tax liabilities
12
18
25
Provisions
26
36
7
Other non-current liabilities
30
127
70
834
1,132
Total liabilities
2,812
2,471
Net assets
2,321
2,209
Equity
Share capital
31
40
40
Share premium
282
282
Other reserves
(374)
(282)
Retained earnings
2,362
2,158
Equity attributable to equity holders of the parent
2,310
2,198
Non-controlling interests
11
11
Total equity
2,321
2,209
The consolidated financial statements of Hikma Pharmaceuticals PLC, registered number 5557934, on pages 156 to 206 were approved by the Board
of Directors on 25 February 2025 and signed on its behalf by:
Said Darwazah
Executive Chairman
25 February 2025
Riad Mishlawi
Chief Executive Officer
Consolidated statement of
changes in equity
For the year ended 31 December 2024
Other reserves
Translation
reserve
related to
assets
classified as
held for
distribution
Share
capital
(Note 31)
Share
premium
Merger and
revaluation
reserves
Translation
reserve
Capital
redemption
reserve
Employee
benefit
trust (EBT)
reserve
(Note 31)
Total
other
reserves
Retained
earnings
Equity
attributable
to equity
holders of
the parent
Non-
controlling
interests
Total
equity
Note
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
Balance at
1 January 2023
40
282
35
(302)
2
–
(265)
(14)
2,092
2,135
13
2,148
Profit for the year
–
–
–
–
–
–
–
–
190
190
2
192
Change in investments
at fair value through
other comprehensive
income (FVTOCI)
19
–
–
–
–
–
–
–
–
(13)
(13)
–
(13)
Currency translation
and hyperinflation
movement
–
–
–
(3)
–
–
(3)
–
–
(3)
–
(3)
Deferred tax on
currency translation
–
–
–
–
–
–
–
–
1
1
–
1
Total comprehensive
income for the year
–
–
–
(3)
–
–
(3)
–
178
175
2
177
Cost of equity-settled
employee share
scheme
36
–
–
–
–
–
–
–
–
25
25
–
25
Dividends paid
13
–
–
–
–
–
–
–
–
(137)
(137)
(4)
(141)
Other comprehensive
income accumulated
in equity related to
assets classified as
held for distribution
–
–
–
(14)
–
–
(14)
14
–
–
–
–
Balance at
31 December 2023
and 1 January 2024
40
282
35
(319)
2
–
(282)
–
2,158
2,198
11
2,209
Profit for the year
–
–
–
–
–
–
–
–
359
359
3
362
Change in investments
at fair value through
other comprehensive
income (FVTOCI)
19
–
–
–
–
–
–
–
–
(6)
(6)
–
(6)
Remeasurement of
post-employment
benefit obligations
26
–
–
–
–
–
–
–
–
(1)
(1)
–
(1)
Currency translation
and hyperinflation
movement
–
–
–
(55)
–
–
(55)
–
–
(55)
–
(55)
Total comprehensive
income for the year
–
–
–
(55)
–
–
(55)
–
352
297
3
300
Cost of equity-settled
employee share
scheme
36
–
–
–
–
–
–
–
–
27
27
–
27
Deferred tax on
equity-settled
employee share
scheme
–
–
–
–
–
–
–
–
1
1
–
1
Purchase of shares
held in employee
benefit trust (EBT)
(38)
(38)
–
(38)
–
(38)
Exercise of equity-
settled employee
share scheme
–
–
–
–
–
1
1
–
(1)
–
–
–
Dividends paid
13
–
–
–
–
–
–
–
–
(175)
(175)
(3)
(178)
Balance at
31 December 2024
40
282
35
(374)
2
(37)
(374)
–
2,362
2,310
11
2,321
158
Hikma Pharmaceuticals PLC | Annual Report 2024
Hikma Pharmaceuticals PLC | Annual Report 2024
159
Strategic
report
Corporate
governance
Financial
statements
Consolidated cash flow statement
For the year ended 31 December 2024
2024
2023
Note
$m
$m
Cash flow from operating activities
Cash generated from operations
32
689
737
Income taxes paid
(125)
(131)
Income taxes received
–
2
Net cash inflow from operating activities
564
608
Cash flow from investing activities
Purchase of property, plant and equipment
(165)
(169)
Proceeds from disposal of property, plant and equipment
–
18
Purchase of intangible assets
(70)
(35)
Additions to investments at FVTOCI
(2)
(27)
Proceeds from sale of investment at FVTOCI
–
1
Acquisition of businesses, net of cash acquired
34
(150)
(98)
Cash receipt related to assets held for sale
10
–
Advance payment related to non-financial assets
–
(23)
Payments of contingent consideration liability
(12)
(7)
Interest income received
8
7
Net cash outflow from investing activities
(381)
(333)
Cash flow from financing activities
Proceeds from issue of long-term financial debts
684
778
Repayment of long-term financial debts
(536)
(841)
Proceeds from short-term financial debts
387
437
Repayment of short-term financial debts
(411)
(467)
Repayment of lease liabilities
(21)
(10)
Dividends paid
13
(175)
(137)
Distributions to non-controlling interests
(3)
(4)
Interest and bank charges paid
(84)
(82)
Purchase of shares held in employee benefit trust (EBT)
(38)
–
Decrease (increase) in restricted cash
19
10
(10)
Payments of co-development and earnout payment agreement
(1)
(1)
Net cash outflow from financing activities
(188)
(337)
Net decrease in cash and cash equivalents
(5)
(62)
Cash and cash equivalents at beginning of year
205
270
Foreign exchange translation movements
(12)
(3)
Cash and cash equivalents at end of year
22
188
205
Notes to the consolidated
financial statements
1. Adoption of new and revised standards
The following amendments to accounting standards have been issued
and are effective for annual periods beginning on 1 January 2024.
IFRS 16 (Amendments)
Lease Liability in a Sale and Leaseback
IAS 1 (Amendments)
Classification of Liabilities as Current or
Non-Current
IAS 1 (Amendments)
Non-current Liabilities with Covenants
IAS 7 and IFRS 7
(Amendments)
Supplier Finance
Arrangements
These amendments had no significant impact on the consolidated
financial statements but may impact the accounting for future
transactions and arrangements.
The following new accounting standards and amendments to accounting
standards that had been issued but were not mandatory for annual
reporting periods ending on 31 December 2024 were not adopted early.
IAS 21 (Amendments)
Effective 1 January 2025
Lack of Exchangeability
IFRS 9 and IFRS 7
(Amendments)
Effective 1 January 2026
Classification and Measurement of
Financial Instruments
IFRS 9 and IFRS 7
(Amendments)
Effective 1 January 2026
Contracts referencing Nature-dependent
Electricity
IFRS 19 (Standard)
Effective 1 January 2027
Subsidiaries without Public
Accountability: Disclosures
IFRS 18 (Standard)
Effective 1 January 2027
Presentation and Disclosure in Financial
Statements
Annual Improvements to
IFRS Accounting
Standards—Volume 11
Effective 1 January 2026
– IFRS 1 First-time Adoption of
International Financial Reporting
Standards
– IFRS 7 Financial Instruments:
Disclosures
– Guidance on implementing IFRS 7
Financial Instruments: Disclosures
– IFRS 9 Financial Instruments
– IFRS 10 Consolidated Financial
Statements
– IAS 7 Statement of Cash Flows
The Group is currently assessing the implications of applying the
new standards and amendments on the Group’s consolidated
financial statements.
2. Accounting policies
General information
Hikma Pharmaceuticals PLC is a public limited liability company
incorporated and domiciled in the United Kingdom under the Companies
Act 2006. The address of the registered office is stated on page 215.
The Group’s principal activities are the development, manufacture and
commercialisation of a broad range of generic, specialty and branded
pharmaceutical products across a range of dosage forms.
Basis of preparation
Hikma Pharmaceuticals PLC’s consolidated financial statements have
been prepared in accordance with:
i. UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
ii. International Financial Reporting Standards as issued by the
International Accounting Standards Board (”IFRS Accounting
Standards”).
The consolidated financial statements have been prepared under the
historical cost convention, except for the revaluation to fair value of
certain financial assets and liabilities.
The accounting policies included in this note have been applied
consistently other than where new policies have been adopted.
The presentational currency of the Group’s consolidated financial
statements is the US dollar, as the majority of the Group’s business
is conducted in US dollars.
Going concern
The Directors believe that the Group is well diversified due to its
geographic spread, product diversity and large customer and supplier
base. Taking into account the Group’s current position and its principal
risks for a period longer than 12 months from the date of signing the
consolidated financial statements, a going concern analysis has been
prepared using realistic scenarios, applying a severe but plausible
downside which demonstrates that the Group would maintain sufficient
liquidity headroom. Therefore, the Directors believe that the Group and
its subsidiaries are adequately placed to manage their business and
financing risks successfully, despite the current uncertain economic
outlook. Having assessed the principal risks, the Directors considered it
appropriate to adopt the going concern basis of accounting in preparing
the consolidated financial statements. (see page 87).
Covenants on major financial debt arrangements are suspended while
the Group retains its investment grade status from two rating agencies.
As of 31 December 2024, the Group’s investment grade rating was
affirmed by S&P and Fitch.
Basis of consolidation
The consolidated financial statements incorporate the results of
Hikma Pharmaceuticals PLC (the Company) and entities controlled
by the Company (together, the Group).
All subsidiaries and the Company’s financial statements are consolidated
up to 31 December each year.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition
method. All identifiable assets, liabilities and contingent liabilities acquired
are measured at fair value on the acquisition date. All acquisition-related
costs are recognised in the consolidated income statement as incurred.
The consideration is measured at the aggregate fair values of assets
given, liabilities incurred or assumed, and equity instruments issued by
the Group in exchange for control of the acquiree, at the acquisition date.
Where applicable, this consideration may include the fair value of assets
or liabilities resulting from a contingent consideration arrangement.
Contingent consideration classified as an asset or liability is a financial
instrument and, within the scope of IFRS 9 ‘Financial Instruments’, is
measured at fair value, with changes in fair value recognised in the
consolidated income statement in line with IFRS 9.
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Notes to the consolidated financial statements
continued
2. Accounting policies continued
Subsequent changes to those fair values can only affect the measurement
of goodwill, where they occur during the ‘measurement period’ and are
as a result of additional information becoming available about facts and
circumstances that existed at the acquisition date. All other changes are
dealt with in accordance with relevant IFRS Accounting Standards. This will
usually mean that changes in the fair value of consideration are recognised
in the consolidated income statement.
Goodwill arising on acquisition is recognised as an asset and initially
measured at cost, being the excess of the aggregate of consideration,
non-controlling interest and any fair value of previously held equity
interest over the fair values of the identifiable net assets acquired. If, after
reassessment, the Group’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and acquired contingent liabilities exceeds
the cost of the consideration, the gain is recognised immediately in the
consolidated income statement.
The non-controlling interest in the acquiree is initially measured at the
non-controlling interest’s proportion of the net fair value of the assets,
liabilities and acquired contingent liabilities recognised.
If the initial accounting for a business combination is incomplete by the
end of the reporting period in which the combination occurs, the Group
reports provisional amounts for the items for which the accounting is
incomplete. Those provisional amounts are adjusted during the
measurement period, or additional assets or liabilities are recognised,
to reflect new information obtained about facts and circumstances that
existed as of the acquisition date that, if known, would have affected the
amounts recognised as of that date.
The measurement period is the period from the date of acquisition
to the date the Group obtains complete information about facts and
circumstances that existed as of the acquisition date and is subject to
a maximum of one year.
Revenue recognition
Revenue is recognised in the consolidated income statement when
control of the goods or services are transferred to the customer at an
amount that reflects the consideration to which the Group expects to
be entitled in exchange for those goods or services. The point at which
control passes is determined by each customer arrangement, but
generally occurs on delivery to the customer.
The Group has generally concluded that it acts as principal in its revenue
arrangements because it typically controls the goods before the transfer
to the customer.
The Group manufactures certain medicines on behalf of customers.
In most cases, control is transferred to the customer over time, as these
medicines have no alternative use, and the Group has an enforceable
right to payment for performance completed to date. For the majority
of these arrangements, progress towards satisfying the Group’s
performance obligations is measured based on the units of product
approved by the quality control department.
Revenue represents the amounts receivable after the deduction
of discounts, value added tax, other sales taxes, allowances given,
provisions for chargebacks, accruals for estimated future rebates,
returns and price adjustments. The methodology and assumptions
used to estimate rebates and returns are monitored and adjusted
regularly in light of contractual and historical information.
The Group does not expect to have any contracts where the period
between the transfer of the promised goods or services to the customer
and payment by the customer exceeds one year. As a consequence, the
Group does not adjust any of the transaction prices for time value of money.
Variable consideration
The ultimate net selling price is calculated using variable consideration
estimates for certain gross to net adjustments.
Chargebacks
In the US, the Group sells its products directly to wholesale distributors,
generic distributors, retail pharmacy chains and mail-order pharmacies.
The Group also sells its products indirectly to independent pharmacies,
managed care organisations, hospitals, and group purchasing
organisations, collectively referred to as ‘indirect customers’. The Group
enters into agreements with its indirect customers to establish pricing
for certain products. The indirect customers then independently
select a wholesaler from which they purchase the products at agreed-
upon prices. The Group will provide credit to the wholesaler for the
difference between the agreed-upon price with the indirect customer
and the wholesaler’s invoice price. This credit is called a chargeback.
The provision for chargebacks is based on historical sell-through levels
by the Group’s wholesale customers to the indirect customers, and
estimated wholesaler inventory levels. As sales are made to large
wholesale customers, the Group continually monitors the provision for
chargebacks and makes adjustments when it believes that actual
chargebacks may differ from estimated reserves.
Returns
The Group has a product return policy that allows customers to return
the product within a specified period prior to and subsequent to the
expiration date. Provisions for returns are recognised as a reduction
of revenue in the period in which the underlying sales are recognised.
The Group estimates its provision for returns based on historical
experience, representing management’s best estimate. While such
experience has enabled reasonable estimations in the past, history
may not always be an accurate indicator of future returns. The Group
continually monitors the provisions for returns and makes adjustments
when it believes that actual product returns may differ from established
reserves (see Note 27 for return sensitivity analysis).
Rebates
In the US, rebates are granted to wholesaler distributors and direct
customers. Rebates are also granted to healthcare authorities and certain
indirect customers under contractual arrangements. Products sold in the
US are covered by various programmes (such as Medicaid) under which
products are sold at a discount.
The Group estimates its provision for rebates based on current
contractual terms and conditions as well as historical experience,
changes to business practices and credit terms. While such experience
has enabled reasonable estimations in the past, history may not always
be an accurate indicator of future rebate liabilities. The Group continually
monitors the provisions for rebates and makes adjustments when it
believes that actual rebates may differ from established reserves.
(see Notes 21 and 27 for rebates sensitivity analysis).
Performance obligation
Free goods
Free goods are issued to certain customers as an alternative to discounts.
These free goods give rise to a separate performance obligation, which
requires management to allocate the transaction price to the original
goods and the related free goods. Revenue for free goods is recognised
when they are transferred to the customer and a contract liability is
recognised when the free goods are due but not yet transferred to
the customer.
2. Accounting policies continued
Contract manufacturing services
Contract manufacturing services that include commitments by the Group
to make facility space and equipment available may be deemed to include
lease components which are evaluated under IFRS 16 “Leases”. For
arrangements that contain both lease and non-lease components,
consideration in the contract is allocated on a relative standalone selling-
price basis. Revenue for these components is recognised when the related
obligations are satisfied, while contract liabilities and deferred lease income
are recognised for the due unsatisfied obligations.
Share-based payments (Note 36)
At the Company’s discretion and subject to the achievement of Group
and personal performance criteria in the prior year, employees
(including Executive Directors) of the Group receive restricted share-
based awards, whereby employees render their services in exchange
for shares or rights over shares (equity-settled transactions).
Additionally, a share-based award was introduced to Executive Directors
under the 2023 Remuneration Policy, which represents a performance
share plan with performance measured over certain non-market and
market conditions in future years.
The cost of share-based payment transactions with employees for
restricted awards is measured based on the fair value at the grant date.
Fair value is determined using the share price at the grant date, discounted
for dividends, except for awards granted to Executive Directors, where no
adjustment is made since participants receive dividends during the vesting
period in the form of additional shares. The cost of these share-based
payments is recognised on a straight-line basis over the performance year
and the vesting period, with a corresponding increase in equity.
The cost of share-based payments’ transactions with Executive Directors
for the performance awards is measured by reference to the fair value at
the date at which the share-based payments are granted. Fair value is
determined based on Monte Carlo methodology for the market condition
portion. For non-market conditions, fair value is determined based on the
share price at the date of the grant, no discounting for dividend yield is
applied as participants will receive the benefit of dividends paid during
the vesting period in the form of additional shares. The cost is recognised,
together with a corresponding increase in equity, on a straight-line basis
over the vesting period after the grant date.
The Group revises its estimate of the number of equity instruments
expected to vest, and the impact of the revision on the original estimates
(except for the portion related to a market vesting condition). The impact,
if any, is recognised in the consolidated income statement, such that the
cumulative expense reflects the revised estimate, with a corresponding
adjustment to equity reserves.
The dilutive effect of outstanding share-based payments is reflected in the
computation of diluted earnings per share.
The Group provides funding to the employee benefit trust (EBT) to acquire
Company shares, fulfilling its obligation to deliver shares when employees
exercise their awards. Shares held by the EBT are deducted from other
reserves, with a corresponding transfer to retained earnings upon their
delivery to satisfy exercise of share awards.
Taxes (Note 12)
The Group provides for income tax according to the laws and regulations
prevailing in the countries where the Group operates. Furthermore, the
Group computes and records deferred tax assets and liabilities according
to IAS 12 ‘Income Taxes’.
The tax expense represents the sum of the current tax in the current
period and deferred tax.
Current Income Tax
Current income tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities within
one year.
The current tax incurred in the period is based on taxable profit for the
year and prior year movement accounted for in the current year. Taxable
profit differs from net profit as reported in the consolidated income
statement because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items that are
never taxable or deductible. The Group’s tax incurred is calculated using
tax rates that have been enacted or substantively enacted by the
consolidated balance sheet date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities in the
consolidated financial statements and the corresponding tax bases used
in the computation of taxable profit and is accounted for using the
consolidated balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and deferred
tax assets are recognised to the extent that it is probable that taxable
profits will be available against which deductible temporary differences
will reverse. To the extent the temporary difference arises from goodwill
or from the initial recognition (other than in a business combination) of
other assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit and at the time of the transaction does
not give rise to equal taxable and deductible temporary differences, no
deferred tax is provided.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries, and interests in joint ventures,
except where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse
in the foreseeable future. Deferred tax is calculated at the tax rates that
are expected to apply in the period when the liability is settled, or the
asset is realised. Deferred tax is charged or credited in the consolidated
income statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt within equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
The carrying amount of deferred tax assets is reviewed at each
consolidated balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all
or part of the asset to be recovered.
Mandatory temporary exception
The Group has applied the temporary exception issued by the IASB in
May 2023 from the accounting requirements for deferred taxes in IAS 12.
Accordingly, the Group neither recognises nor discloses information about
deferred tax assets and liabilities related to Pillar Two income taxes.
Uncertain tax position
In line with IFRIC 23, if it is considered probable that a tax authority will
accept an uncertain tax treatment, the tax charge should be calculated
on that basis. If it is not considered probable, the effect of the uncertainty
should be estimated and reflected in the tax charge. In assessing the
uncertainty, it is assumed that the tax authority will have full knowledge of
all information related to the matter.
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Notes to the consolidated financial statements
continued
2. Accounting policies continued
Exceptional items and other adjustments (Note 6)
We use a number of non-IFRS measures to report and monitor the
performance of our business. Management uses these adjusted numbers
internally to measure our progress and for setting performance targets.
We also present these numbers, alongside our reported results, to
external audiences to help them understand the underlying performance
of our business. Our adjusted numbers may be calculated differently to
other companies.
Adjusted measures are not substitutable for IFRS numbers and should
not be considered superior to results presented in accordance with IFRS
Accounting Standards.
Core results
Reported results represent the Group’s overall performance. However,
these results can include one-off or non-cash items that mask the
underlying performance of the Group. To provide a more complete
picture of the Group’s performance and to improve comparability of our
consolidated financial statements to external audiences, alongside our
reported results, we provide core results, which are a non-IFRS measure.
We represent and discuss our Group and segmental financials reconciled
between reported and core results. This presentation allows for full
visibility and transparency of our financials so that shareholders are able
to clearly assess the performance factors of the Group.
Core results mainly exclude:
–
Amortisation of intangible assets other than software
–
Impairment charge/reversal of intangible assets and property,
plant and equipment
–
Finance income and expense resulting from remeasurement
and unwinding of contingent consideration and co-development
earnout payment agreement financial liabilities
–
Items which management believes to be exceptional in nature by
virtue of their size or incidence, or have a distortive effect on current
year earnings, including but not limited to costs associated with
business combinations, one-off gains and losses on disposal of
businesses, legal expenses, reorganisation costs and any
exceptional items related to tax such as significant tax
benefit/expense associated with previously unrecognised deferred
tax assets/liabilities
Our core results exclude the exceptional items and other adjustments
set out in Note 6.
Intangible assets (Note 15)
Intangible assets are measured at cost, less any accumulated
amortisation and impairment losses.
Intangible assets, other than goodwill, are amortised on a straight-line
basis and the expense is recognised in the selling, general and
administrative expenses.
Judgement is used to assess the degree of certainty attached to the flow
of future economic benefits that are attributable to the use of the asset
on the basis of the evidence available at the time of initial recognition,
giving greater weight to external evidence.
Expenditures on research and development activities are charged to
the consolidated income statement, except only when the criteria for
recognising an internally generated intangible asset is met, which
is usually when approval from the relevant regulatory authority is
considered probable.
Also, the Group engages with third-party research and development
companies to develop products on its behalf. Substantial payments
made to such third parties to fund research and development efforts
are recognised as intangible assets if the capitalisation criteria for an
intangible asset are met, typically when licences are acquired and certain
milestones are met. All other expenditures are charged to the
consolidated income statement.
Principal intangible assets are:
(a) Goodwill
(b) Product-related intangibles:
(i) Product files and in-licensed products recognised through
acquisitions and partnerships are amortised over their useful
economic lives once the asset is ready for use
(ii) In-process product files recognised on acquisition are amortised
over the useful economic life once the asset is ready for use
(c) Purchased software: is amortised over the useful economic life when
the asset is ready for use
Other identified intangibles are:
(d) Customer relationships: represent the value attributed to the long-
term relationships held with existing customers that the Group
acquired on business combinations. Customer relationships are
amortised over their useful economic lives
(e) Trade names: are amortised over their useful lives from the date
of acquisition
(f) Marketing rights: are amortised over their useful lives commencing
in the year in which the rights first generate sales
Details of the intangible assets useful lives are included in Note 15.
Property, plant and equipment (Note 16)
Property, plant and equipment are stated at cost on acquisition and are
depreciated on a straight-line basis except for land.
The normal expected useful lives of the major categories of Property,
plant and equipment are:
Buildings
20 to 50 years
Machinery and equipment
3 to 20 years
Vehicles, fixtures and equipment
3 to 13 years
A unit of production method of depreciation is applied to operations in
their start-up phase, as this reflects the expected pattern of consumption
of the future economic benefits embodied in the assets. When these
assets are fully utilised, a straight-line method of depreciation is applied.
Projects under construction are carried at cost, less any recognised
impairment loss. Depreciation of these assets, on the same basis as other
property, plant and equipment assets, commences when the assets are
ready for their intended use.
Any additional costs that extend the useful life of property, plant and
equipment are capitalised.
2. Accounting policies continued
Impairment of intangible assets and property, plant
and equipment
At the same time each year, the Group carries out an impairment review
for goodwill and intangible assets that are not yet ready for use as follows:
(a) Goodwill is allocated to cash-generating units (CGUs). These CGUs
are tested for impairment annually, or more frequently when there is
an indication that the unit may be impaired. If the recoverable amount
of the CGU is less than its carrying amount, the impairment loss is
allocated first to reduce the carrying amount of any goodwill allocated
to the unit and then to the other assets of the unit pro rata on the
basis of the carrying amount of each asset in the unit. An impairment
loss recognised for goodwill is not reversed in subsequent periods
(b) Intangible assets that are not yet ready for use are not subject to
amortisation and are tested annually for impairment or more
frequently if events or changes in circumstances indicate that they
might be impaired
Where applicable, the Group carries forward and uses the most recent
detailed calculation of a cash-generating unit’s recoverable amount
made in a preceding period, provided all of the following criteria are met:
–
The assets and liabilities making up the unit have not changed
significantly since the last recoverable amount calculation
–
The prior calculation indicated that the recoverable amount
exceeded the carrying amount of the unit by a substantial margin,
reflecting significant headroom
–
An analysis of events and changes in circumstances since the last
calculation indicates that the likelihood of the current recoverable
amount being lower than the carrying amount is remote
The Group also reviews the carrying amounts of property, plant and
equipment and intangible assets that are subject to depreciation and
amortisation to determine whether there is any indication that those assets
are impaired. If such indication exists, the recoverable amount of the asset
is estimated to determine the extent of the impairment loss (if any).
If the recoverable amount of an asset (or CGU) is lower than its carrying
amount, the asset (or CGU) is written down to its recoverable amount.
The resulting impairment loss is recognised immediately in the
consolidated income statement.
When an impairment loss for the asset, other than goodwill, subsequently
reverses, the carrying amount of the asset is increased to the revised
estimate of its recoverable amount. However, the increased carrying
amount should not exceed the carrying amount that would have been
determined had there been no impairment in prior years. A reversal of
an impairment loss is recognised immediately in the consolidated
income statement.
The recoverable amount of an asset or a cash-generating unit is the
higher of its fair value less costs of disposal and its value in use.
Leases (Note 17)
In accordance with IFRS 16, the Group applies a single recognition and
measurement approach for all leases, except for short-term leases and
leases of low-value assets. The Group recognises lease liabilities to make
lease payments and right-of-use assets representing the right to use the
underlying assets:
–
Right-of-use assets: The Group recognises right-of-use assets at
the commencement date of the lease (i.e. the date the underlying
asset is available for use). Right-of-use assets are measured at cost,
less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made
at or before the commencement date less any lease incentives
received. Unless the Group is reasonably certain of obtaining
ownership of a leased asset at the end of the lease term, the
recognised right-of-use assets are depreciated on a straight-line
basis over the shorter of its estimated useful life and the lease term
–
Lease liabilities: at the commencement date of the lease, the Group
recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments
include fixed payments, less any lease incentives receivable,
variable lease payments that depend on an index or a rate, and
amounts expected to be paid under residual value guarantees. The
lease payments also include the exercise price of a purchase option,
payments for optional extension periods and payments of penalties
for terminating a lease when these options are reasonably certain to
be exercised by the Group. The discount rate used to calculate the
lease liabilities is the incremental borrowing rate (IBR). The Group
estimates the IBR using observable inputs (such as market interest
rates) when available and is required to make certain entity-specific
estimates (such as the subsidiary’s stand-alone credit profile)
–
Short-term leases and leases of low-value assets: the Group applies
the short-term lease recognition exemption to its short-term leases
of machinery and equipment (i.e. those leases that have a lease
term of 12 months or less from the commencement date and do not
contain a purchase option). It also applies the lease of low-value
assets recognition exemption to leases of office equipment that are
considered of low value (below $5,000). Lease payments on short-
term leases and leases of low-value assets are recognised as an
expense on a straight-line basis over the lease term
Inventories (Note 20)
Inventories are stated at the lower of cost and net realisable value.
Purchased products are stated at acquisition costs including all
additional attributable costs incurred in bringing each product to its
present location and condition. The costs of own-manufactured products
comprise direct materials and, where applicable, direct labour costs and
any overheads that have been incurred in bringing the inventories to their
present location and condition. In the consolidated balance sheet,
inventory is primarily valued at historical cost determined on a moving
average basis, and this value is used to determine the cost of sales in the
consolidated income statement.
Provisions (Note 26)
Provisions are recognised when the Group has a present obligation (legal
or constructive) as a result of a past event, it is probable that an outflow of
resources will be required to settle the obligations and a reliable estimate
can be made of the amount of the obligation.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s
consolidated balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
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Notes to the consolidated financial statements
continued
2. Accounting policies continued
Financial assets
The Group classifies its financial assets in the following
measurement categories:
(i) Financial assets at FVTPL (Note 23)
Include listed shares, debt instruments and investment portfolios held
by the Group that are traded in an active market and are designated
as being measured at fair value through profit or loss. Gains and losses
arising from changes in fair value are recognised in the consolidated
income statement
(ii) Financial assets at FVTOCI (Note 19)
The Group irrevocably chooses to designate certain investments as
financial assets at FVTOCI as they are mainly venture capital investments
and are not held for trading. Investments in unlisted shares are measured
using a level 3 fair value which is based on cost and adjusted as necessary
for impairment and revaluations with reference to relevant available
information and recent financing rounds. For investments in listed shares,
fair value is readily determinable under level 1 valuation. (see Note 29)
(iii) Financial assets at amortised cost
Trade receivables, loans, and other receivables that have fixed or
determinable payments that are not quoted in an active market are
classified as ‘financial assets at amortised cost’.
For trade receivables and contract assets, the Group applies a simplified
approach in calculating expected credit loss. Therefore, the Group does
not track changes in credit risk, but instead recognises a loss allowance
based on lifetime expected credit losses at each reporting date.
The Group has established a provision matrix that is based on its
historical credit loss experience, adjusted for forward-looking factors
specific to the debtors and the economic environment.
Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL
or financial debts at amortised cost, representing loans and borrowings.
The classification depends on the nature and purpose of the financial
liabilities and is determined at the time of initial recognition.
(i) Financial liabilities at FVTPL (Notes 27 and 30)
Financial liabilities at FVTPL comprise contingent consideration arising
from business combinations in the form of contractual liabilities to
make milestone payments that are dependent on the achievement
of certain regulatory approvals; and payments based on future sales
of certain products.
These financial liabilities are recorded under other current liabilities
and other non-current liabilities in the consolidated balance sheet.
(ii) Financial debts
Financial debts are initially measured at fair value, net of transaction
costs and subsequently measured at amortised cost using the effective
interest method.
Cash dividend
The Company recognises a liability to pay a dividend when the
distribution is authorised and no longer at the discretion of the Company.
In accordance with the laws of the United Kingdom, a final dividend is
recognised when it is approved by the majority of shareholders and an
interim dividend is recognised when it is paid.
3. Critical accounting judgements and key
sources of estimation uncertainty
In the application of the Group’s accounting policies, which are described
in Note 2, the Directors are required to make judgements and estimates
about the carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if
the revision affects only that period or in the period of the revision and
future periods if the revision affects both current and future periods.
The Group’s Directors believe that the following accounting policies that
involve Directors’ judgements and estimates are the most critical and
might result in a material adjustment to the carrying amounts of assets
and liabilities within the next financial year.
Revenue recognition estimate (Notes 4 and 5)
The Group’s revenue recognition policies require Directors to make
estimates of the net selling price, which is complicated due to chargebacks,
product returns and rebates, which together are considered to be a critical
estimate that might result in a material adjustment.
These arrangements vary by product arrangement and buying group.
Refer to Notes 21 and 27 for sensitivity analysis.
Chargebacks
Critical estimates
The key inputs and assumptions included in calculating this provision
are estimations of ‘in channel’ inventory at the wholesalers (including
processing lag), estimated chargeback rates as informed by average
historical chargeback credits adjusted for expected chargeback levels
for new products, changes to pricing and estimated future sales trends
(including customer mix). Refer to Note 21 for sensitivity analysis.
Returns
Critical estimates
The key assumptions included in calculating this provision are
estimations of the product shelf life, returns rate for revenue subject to
returns, as informed by both historical return rates and consideration of
specific factors like product dating and expiration, new product launches,
entrance of new competitors and changes to contractual terms. Refer to
Note 27 for sensitivity analysis.
Rebates
Critical estimates
The key inputs and assumptions included in estimating this provision
are the historical relationship between contractual rebate payments to
revenue, past payment experience, changes to pricing and sales levels,
estimation of ‘in channel’ inventory at the wholesalers and retail
pharmacies and estimated future sales trends (including customer mix).
Refer to Notes 21 and 27 for sensitivity analysis.
3. Critical accounting judgements and key
sources of estimation uncertainty continued
Intangible assets – impairment testing (Note 15)
Critical judgement
–
Determining whether an impairment indication has occurred for
individual intangible assets or group of assets. In such case, the
Group assesses the qualitative factors to determine whether it is
more likely than not that the recoverable value of the intangible
asset or group of assets is less than its carrying amount as a basis
for determining whether it is necessary to perform a quantitative
impairment test
–
For previously impaired assets, an assessment is made at each
reporting date to determine whether there is an indication that
previously recognised impairment losses no longer exist or have
decreased. if such indication exists, the Group estimates the asset’s
or CGU’s recoverable amount
Critical estimates
–
Estimating revenue and cash flow forecasts (including market size,
estimated expected market share, number of competitors and net
selling prices)
–
Estimating a discount rate and specific risk premiums
–
Estimating an appropriate growth rate beyond the forecast period
–
Estimating the expected economic useful life
As a result of the annual impairment trigger assessment and impairment
testing for intangible assets, an impairment reversal of $44 million and an
impairment charge of $22 million have been identified in relation to
intangible assets (Notes 6 and 15).
Taxation (Note 12)
Tax and transfer pricing audit risk
Critical judgement
In common with most international organisations, the Group is subject
to tax and transfer pricing audits from tax authorities from time to time.
Where an outflow of funds is believed to be probable and a reliable
estimate of the outcome of the dispute can be made, management
provides for its best estimate of the liability in line with IFRIC 23 principles.
These estimates take into account the specific circumstances of each
dispute and relevant external advice, and are inherently judgemental in
nature and could change substantially over time as new facts emerge and
each dispute progresses. The Group regularly takes professional advice
to ensure the risks are appropriately analysed and managed with any
ultimate potential liability being adequately provided, and continues to
invest in its financial systems to improve the quality of the Group’s
financial data which reduces the risk of an adverse tax authority audit.
As at 31 December 2024, the Group’s uncertain tax positions, excluding
advanced payments, amounted to $54 million (2023: $59 million)
(Note 12). While it is not practical to provide a sensitivity analysis due to
the number of uncertain tax positions held and the number of
jurisdictions to which these relate, the Group reviews material uncertain
tax positions on an individual basis and believes that it has accounted for
an adequate provision for the liabilities likely to arise from open
assessments and audits and continues to re-evaluate existing uncertain
positions to determine if a change in facts and circumstances has
occurred that would make it necessary to adjust.
Contingent liabilities
Critical judgement
The promotion, marketing and sale of pharmaceutical products
and medical devices are highly regulated and the operations of
market participants, such as the Group, are closely supervised by
regulatory authorities and law enforcement agencies, including the
FDA and the US Department of Justice. As a result, the Group is subject
to certain investigations by governmental agencies, as well as other
various legal proceedings considered typical to its business relating to
employment, product liability and commercial disputes which may result
in a possible obligation depending on whether some uncertain future
event occurs in relation to legal proceedings and/or governmental
agencies’ investigations.
It is the Group’s policy to provide for amounts related to these legal
matters if it is probable that a liability has been incurred and an amount
is reasonably estimable.
A contingent liability is not provided for but is disclosed in Note 35 if:
–
payment is not probable where the Group denies having engaged
in conduct that would give rise to liability with respect to these
lawsuits and is vigorously pursuing defence of legal proceedings, or
–
it is a present obligation but the amount cannot be measured reliably
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Notes to the consolidated financial statements
continued
4. Revenue
Business and geographical markets
The following tables provide an analysis of the Group’s reported revenue by segment and geographical market, irrespective of the origin of the
goods/services:
Injectables
Generics
Branded
Others
Total
Year ended 31 December 2024
$m
$m
$m
$m
$m
North America
877
1,026
–
8
1,911
Middle East and North Africa
214
–
759
12
985
Europe and rest of the world
202
–
10
6
218
United Kingdom
13
–
–
–
13
1,306
1,026
769
26
3,127
Injectables
Generics
Branded
Others
Total
Year ended 31 December 2023
$m
$m
$m
$m
$m
North America
808
937
–
4
1,749
Middle East and North Africa
195
–
703
11
909
Europe and rest of the world
189
–
11
6
206
United Kingdom
11
–
–
–
11
1,203
937
714
21
2,875
The top selling markets are shown below:
2024
2023
$m
$m
United States
1,887
1,726
Saudi Arabia
301
261
Algeria
213
189
2,401
2,176
In 2024, included in revenue arising from the Generics and Injectables segments are sales the Group made to three wholesalers in the US, each
accounting for equal to or greater than 10% of the Group’s revenue: $424 million (14% of Group revenue), $364 million (12% of Group revenue) and
$307 million (10% of Group revenue). In 2023, revenue included sales made to three wholesalers: $365 million (13% of Group revenue), $370 million
(13% of Group revenue) and $278 million (10% of Group revenue), respectively.
The following table provides contract balances related to revenue:
2024
2023
$m
$m
Net trade receivables (Note 21)
896
789
Deferred income (Notes 27 and 30)
58
21
Refund liability (Note 27)
151
158
Indirect rebates and other allowances (Note 27)
173
145
Trade receivables are non-interest bearing and typical credit terms range from 30 to 90 days in North America, 30 to 120 days in Europe and 180 to
360 days in MENA.
5. Business segments
For management reporting purposes, the Group is organised into three principal operating divisions – Injectables, Branded and Generics.
These divisions are the basis on which the Group reports its segmental information. (See business and financial review section on page 30 for more
details on the business segments performance).
Core operating profit, defined as ‘segment result’, is the principal measure used in the decision-making and resource allocation process of the
chief operating decision maker, who is the Group’s Chief Executive Officer.
Information regarding the Group’s operating segments is reported below:
2024
Core
results
2024
Exceptional items
and other
adjustments
(Note 6)
2024
Reported
results
2023
Core
results
2023
Exceptional items
and other
adjustments
(Note 6)
2023
Reported
results
Injectables
$m
$m
$m
$m
$m
$m
Revenue
1,324
(18)
1,306
1,203
–
1,203
Cost of sales
(634)
(4)
(638)
(546)
(2)
(548)
Gross profit
690
(22)
668
657
(2)
655
Total operating expenses
(222)
(75)
(297)
(213)
(84)
(297)
Segment result
468
(97)
371
444
(86)
358
2024
Core
results
2024
Exceptional items
and other
adjustments
(Note 6)
2024
Reported
results
2023
Core
results
2023
Exceptional items
and other
adjustments
(Note 6)
2023
Reported
results
Branded
$m
$m
$m
$m
$m
$m
Revenue
769
–
769
714
–
714
Cost of sales
(367)
–
(367)
(348)
(15)
(363)
Gross profit
402
–
402
366
(15)
351
Total operating expenses
(213)
(7)
(220)
(196)
(60)
(256)
Segment result
189
(7)
182
170
(75)
95
2024
Core
results
2024
Exceptional items
and other
adjustments
(Note 6)
2024
Reported
results
2023
Core
results
2023
Exceptional items
and other
adjustments
(Note 6)
2023
Reported
results
Generics
$m
$m
$m
$m
$m
$m
Revenue
1,037
(11)
1,026
937
–
937
Cost of sales
(680)
–
(680)
(550)
–
(550)
Gross profit
357
(11)
346
387
–
387
Total operating expenses
(187)
8
(179)
(195)
(45)
(240)
Segment result
170
(3)
167
192
(45)
147
2024
Core
results
2024
Exceptional items
and other
adjustments
(Note 6)
2024
Reported
results
2023
Core
results
2023
Exceptional items
and other
adjustments
(Note 6)
2023
Reported
results
Others¹
$m
$m
$m
$m
$m
$m
Revenue
26
–
26
21
–
21
Cost of sales
(27)
–
(27)
(24)
–
(24)
Gross profit
(1)
–
(1)
(3)
–
(3)
Total operating expenses
(8)
–
(8)
(6)
–
(6)
Segment result
(9)
–
(9)
(9)
–
(9)
1. Others mainly comprises Arab Medical Containers LLC, International Pharmaceutical Research Centre LLC and the 503B compounding business
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Notes to the consolidated financial statements
continued
5. Business segments continued
2024
Core
results
2024
Exceptional items
and other
adjustments
(Note 6)
2024
Reported
results
2023
Core
results
2023
Exceptional items
and other
adjustments
(Note 6)
2023
Reported
results
Group
$m
$m
$m
$m
$m
$m
Segments' results
818
(107)
711
797
(206)
591
Unallocated expenses1
(99)
–
(99)
(90)
(134)
(224)
Operating profit/(loss)
719
(107)
612
707
(340)
367
Finance income
8
–
8
7
–
7
Finance expense
(93)
(74)
(167)
(90)
(5)
(95)
Gain from investment at fair value through
profit–or loss (FVTPL)
1
–
1
2
–
2
Group's share of profit of joint venture
1
–
1
–
–
–
Profit/(loss) before tax
636
(181)
455
626
(345)
281
Tax
(138)
45
(93)
(131)
42
(89)
Profit/(loss) for the year
498
(136)
362
495
(303)
192
Attributable to:
Non-controlling interests
3
–
3
3
(1)
2
Equity holders of the parent
495
(136)
359
492
(302)
190
1. Reported unallocated expenses primarily comprise employee costs, professional fees, IT and legal expenses. The decrease compared to the prior year is mainly attributable to provisions for legal
settlements recognised in 2023 (Notes 6 and 26)
The following table provides an analysis of the Group’s non-current assets2 by geographic area:
2024
2023
$m
$m
North America
US
1,518
1,301
Canada
30
36
1,548
1,337
Middle East and North Africa
Jordan
344
348
Algeria
125
104
Morocco
92
89
Saudi Arabia
75
71
Others
93
75
729
687
Europe and rest of the world
Portugal
147
147
Germany
40
42
Others
41
47
228
236
United Kingdom
7
11
2,512
2,271
2. Non-current assets exclude deferred tax assets (Note 12), investments at FVTOCI, restricted cash and other financial assets (Note 19)
6. Exceptional items and other adjustments
Exceptional items and other adjustments are disclosed separately in the consolidated income statement to assist in the understanding of the
Group’s core performance. Exceptional items and other adjustments have been recognised in accordance with our accounting policy outlined
in Note 2; the details are presented below:
Injectables Branded Generics Unallocated
Total Tax effect
Impact on profit
for the year
$m
$m
$m
$m
$m
$m
$m
Intangible assets amortisation other
than software
SG&A
(51)
(6)
(35)
–
(92)
25
(67)
Impairment reversals on intangible assets
and property, plant and equipment
Other operating income
–
–
60
–
60
(14)
46
Impairment charges on intangible assets
and property, plant and equipment
Other operating expenses
(17)
(1)
(13)
–
(31)
7
(24)
Remeasurement of contingent
consideration and other financial liability
Finance expense
–
–
–
(71)
(71)
16
(55)
Unwinding of contingent consideration
and other financial liability
Finance expense
–
–
–
(3)
(3)
1
(2)
Provision for rebates adjustment
Revenue
(18)
–
(11)
–
(29)
7
(22)
Reorganisation costs
SG&A
(7)
–
(4)
–
(11)
2
(9)
Pre–production setup costs
Cost of sales
(4)
–
–
–
(4)
1
(3)
Exceptional items and
other adjustments
(97)
(7)
(3)
(74)
(181)
45
(136)
Non-controlling interest
–
Equity holders of the parent
(136)
–
Intangible assets amortisation other than software of $92 million (Note 15)
–
Impairment reversals: $60 million related to complex respiratory CGU, primarily driven by improved performance and sustained forecasted
profitability. Of this amount, $44 million was allocated to intangible assets and $16 million to property, plant and equipment (Notes 9, 15 and 16)
–
Impairment charges: $22 million impairment on intangible assets mainly comprises $14 million related to marketing rights following the
termination of business development contracts and $8 million related to a product-related intangible asset due to the discontinuation of a
pipeline product (Notes 9 and 15). Additionally, there were impairment charges on property, plant and equipment of $9 million mainly related
to machinery and equipment associated with discontinued projects (Notes 9 and 16)
–
Remeasurement of contingent consideration and other financial liability: $71 million represents the finance expense resulting from the valuation
of the liabilities associated with the future contingent payments in respect of contingent consideration recognised through business
combinations (Notes 11, 27, 29 and 30)
–
Unwinding of contingent consideration and other financial liability: $3 million represents the finance expense resulting from the unwinding
of contingent consideration recognised through business combinations (Notes 11, 27, 29 and 30)
–
Provision for rebates adjustment: $29 million represents a change in historical estimates in relation to prior years rebates
–
Reorganisation costs: $11 million of reorganisation costs related to a global restructuring program. Completion of these activities is projected in
2025, with an estimated additional cost of approximately $5 million. This program will improve efficiencies across various Group functions,
including R&D activities benefitting from the integration of Xellia Croatia (R&D centre)
–
Pre-production setup costs: $4 million related to the manufacturing plant acquired through the Xellia business combination (Note 34). These
costs are incurred during the pre-operational phase where commissioning and refurbishment of the plant is taking place. Completion of these
activities is projected for early 2027, with the estimated additional expenses of approximately $25 million to be incurred in 2025 and 2026
Tax effect
–
The tax effect represents the tax effect on pre-tax exceptional items and other adjustments which is calculated based on the applicable tax rate
in each jurisdiction
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Financial
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Notes to the consolidated financial statements
continued
6. Exceptional items and other adjustments continued
In the previous year, exceptional items and other adjustments were related to the following:
Injectables
Branded
Generics
Unallocated
Total Tax effect
Impact on profit
for the year
$m
$m
$m
$m
$m
$m
$m
Impairment and cost in relation to halted
operations in Sudan
___1
(14)
(69)
–
–
(83)
(13)
(96)
Legal settlement
SG&A
–
–
–
(129)
(129)
27
(102)
Intangible assets amortisation other
than software
SG&A
(47)
(6)
(35)
–
(88)
17
(71)
Impairment charge on intangible assets
Other operating expenses
(18)
–
(9)
(5)
(32)
7
(25)
Impairment charge on right-of-use assets
and property, plant and equipment
Other operating expenses
(7)
–
(1)
–
(8)
2
(6)
Remeasurement of contingent consideration
and other financial liability
Finance expense
–
–
–
(2)
(2)
1
(1)
Unwinding of contingent consideration
and other financial liability
Finance expense
–
–
–
(3)
(3)
1
(2)
Exceptional items and other adjustments
(86)
(75)
(45)
(139)
(345)
42
(303)
Non-controlling interest
(1)
Equity holders of the parent
(302)
1. The impact on the consolidated income statement line items is shown below
–
Impairment and costs in relation to halted operations in Sudan: In April 2023, violent conflict erupted in the Sudanese capital of Khartoum.
The conflict subsequently escalated in other areas of the country. The Group evaluated the effect on the carrying values of the Group's assets,
and as a consequence, a loss of $76 million was recognised to reflect the fall in the recoverable amount of the assets listed below. A further
$7 million of employee benefits, hyperinflation and other expenses from the halted operations was classified as exceptional items on the basis
that no revenue was generated after the operations were halted
Injectables
Branded
Generics
Unallocated
Total
$m
$m
$m
$m
$m
Provision against inventory
Cost of sales
(2)
(15)
–
–
(17)
Impairment charge on financial assets
Net impairment loss on financial assets
(12)
(17)
–
–
(29)
Impairment charge on intangible assets
Other operating expenses
–
(3)
–
–
(3)
Impairment charge on property, plant
and equipment
Other operating expenses
–
(25)
–
–
(25)
Impairment charge on other current assets
Other operating expenses
–
(2)
–
–
(2)
Cost from halted operations in Sudan
SG&A
–
(6)
–
–
(6)
Cost from halted operations in Sudan
Other operating expenses
–
(1)
–
–
(1)
(14)
(69)
–
–
(83)
–
Provision for legal settlements: On 1 February 2024, the Group reached an agreement in principle to resolve the vast majority of the opioid-
related cases brought against Hikma Pharmaceuticals USA Inc. by US states, their subdivisions, and tribal nations. The agreed-upon settlement
is not an admission of wrongdoing or legal liability. The Group booked a total provision of $129 million to cover the expected settlement amount
for all related cases in North America (Note 26)
–
Intangible assets amortisation other than software of $88 million (Note 15)
–
Impairment charge on intangible assets: $32 million mainly comprises $11 million in relation to product-related intangible assets as a result of the
decline in performance and forecasted profitability and $16 million marketing rights due to the termination of business development contracts.
Additionally, $5 million of impairment charge relates to software (Notes 9 and 15)
–
Impairment charge on property, plant and equipment and right-of-use assets: $8 million of impairment charge mainly relates to a leased
property with no future plans of utilisation (Notes 9, 16 and 17)
–
Remeasurement of contingent consideration and other financial liability: $2 million represents the finance expense resulting from the valuation of
the liabilities associated with the future contingent payments in respect of contingent consideration recognised through business combinations
and the financial liability in relation to the co-development earnout payment agreement (Notes 11, 27, 29 and 30)
–
Unwinding of contingent consideration and other financial liability: $3 million represents the finance expense resulting from the unwinding of
contingent consideration recognised through business combinations and the financial liability in relation to the co-development earnout
payment agreement (Notes 11, 27, 29 and 30)
7. Audit remuneration
The Group auditor’s remuneration on a worldwide basis is as follows:
2024
2023
(restated)1
$m
$m
Fees to the company's auditor and its associates for the audit of the parent company and consolidated
financial statements
2.7
3.1
Fees to the company's auditor and its associates for the audit of the financial statements of the
Group's subsidiaries
0.7
0.6
Total audit fees
3.4
3.7
Audit-related assurance services
0.3
0.3
Other non-audit fees
0.2
0.2
Total audit and non-audit fees
3.9
4.2
1. 2023 figures have been restated to reflect final amounts billed
Audit-related assurance services relate to review procedures in respect of the interim financial information.
A description of the work of the Audit Committee is set out in the Audit Committee report on pages 109 to 113 and includes an explanation of how
auditor objectivity and independence is safeguarded when non-audit services are provided by the auditor.
8. Staff costs
The average monthly number of employees (including Executive Directors) was:
2024
2023
Number
Number
Production
5,545
5,257
Sales, general and administration
3,224
3,200
Research and development
539
510
9,308
8,967
2024
2023
$m
$m
Aggregate remuneration comprised:
Wages, salaries and bonuses
452
431
Health insurance
47
38
Social security costs
45
41
Share-based payments (Note 36)
27
25
Car and housing allowances
24
23
End of service indemnity
18
8
Post-employment benefits
16
15
Other costs and employee benefits
25
29
654
610
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Corporate
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Financial
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Notes to the consolidated financial statements
continued
9. Other operating expenses/income
2024
Core
results
2024
Exceptional items
and other
adjustments
(Note 6)
2024
Reported
results
2023
Core
results
2023
Exceptional items
and other
adjustments
(Note 6)
2023
Reported
results
Other operating expenses
$m
$m
$m
$m
$m
$m
Impairment charges (Notes 15, 16 and 17)
–
31
31
–
70
70
Forex losses, net
16
–
16
5
1
6
Others
5
–
5
4
–
4
21
31
52
9
71
80
2024
Core
results
2024
Exceptional items
and other
adjustments
(Note 6)
2024
Reported
results
2023
Core
results
2023
Exceptional items
and other
adjustments
(Note 6)
2023
Reported
results
Other operating income
$m
$m
$m
$m
$m
$m
Impairment reversals (Notes 15 and 16)
–
60
60
–
–
–
Others
3
–
3
5
–
5
3
60
63
5
–
5
10. Finance income
2024
Core
results
2024
Exceptional items
and other
adjustments
(Note 6)
2024
Reported
results
2023
Core
results
2023
Exceptional items
and other
adjustments
(Note 6)
2023
Reported
results
$m
$m
$m
$m
$m
$m
Interest income
8
–
8
7
–
7
8
–
8
7
–
7
11. Finance expense
2024
Core
results
2024
Exceptional items
and other
adjustments
(Note 6)
2024
Reported
results
2023
Core
results
2023
Exceptional items
and other
adjustments
(Note 6)
2023
Reported
results
$m
$m
$m
$m
$m
$m
Interest on bank overdrafts and loans
54
–
54
51
–
51
Interest on Eurobond
18
–
18
18
–
18
Unwinding and remeasurement of contingent
consideration and other financial liabilities
(Notes 6, 27, 29 and 30)
–
74
74
–
5
5
Other bank charges
13
–
13
14
–
14
Lease accretion of interest (Note 17)
3
–
3
4
–
4
Net foreign exchange loss
5
–
5
3
–
3
93
74
167
90
5
95
12. Tax
2024
Core
results
2024
Exceptional items
and other
adjustments
(Note 6)
2024
Reported
results
2023
Core
results
2023
Exceptional items
and other
adjustments
(Note 6)
2023
Reported
results
$m
$m
$m
$m
$m
$m
Current tax
Current year
142
(2)
140
117
(2)
115
Adjustment to prior years
18
–
18
(1)
–
(1)
Deferred tax
Current year
1
(43)
(42)
11
(40)
(29)
Adjustment to prior year
(23)
–
(23)
4
–
4
138
(45)
93
131
(42)
89
UK corporation tax is calculated at 25% standard rate (2023: 23.5% blended rate).
The Group incurred a tax expense of $93 million (2023: $89 million); the reported and core effective tax rates are 20.4% and 21.7% respectively
(2023: 31.7% and 20.9% respectively). The reported effective tax rate is lower than the standard rate primarily due to the earnings mix.
Taxation for all jurisdictions is calculated at the rates prevailing in the relevant jurisdiction.
The charge for the year can be reconciled to profit before tax per the consolidated income statement as follows:
2024
2023
$m
$m
Profit before tax
455
281
Tax at the UK corporation tax rate of 25% (2023: 23.5%)
114
66
Profits taxed at different rates
(26)
(21)
Permanent differences:
–
Non-deductible expenditure
4
3
–
Other permanent differences
2
2
–
Research and development benefit
(4)
(3)
State and local taxes
2
2
Temporary differences:
–
Rate change and movement in the recognition of tax losses and other temporary differences
1
(3)
Impact of the halted operations in Sudan
–
32
Change in uncertain tax positions
(3)
9
Unremitted earnings
1
(1)
Prior year adjustments
(5)
3
Pillar 2 Top up Tax
7
–
Tax expense for the year
93
89
Profits taxed at different tax rates relate to profits arising in overseas jurisdictions where the tax rate differs from the UK statutory rate. Permanent
differences relate to items which are non-taxable or for which no tax relief is ever likely to be due. The major items are expenses and income disallowed
where they are covered by statutory exemptions, foreign exchange differences in some territories and statutory reliefs such as research and development.
Rate change, tax losses and other deductible temporary differences for which no benefit is recognised include items for which it is not appropriate to
recognise deferred tax.
The change in the uncertain tax positions relates to the balance the Group holds in the event a revenue authority successfully takes an adverse view
of the positions adopted by the Group in 2024 and prior years. As at 31 December 2024, the Group’s uncertain tax positions, excluding advanced
payments, amounted to $54 million (2023: $59 million). The Group released $3 million in 2024 (2023: $13 million) primarily due to the resolution of
some audits with the relevant tax authorities. The impact from the currency exchange difference was a $2 million reduction to the aggregate balance
in 2024 (2023: $nil). If all areas of uncertainty were audited and all areas resulted in an adverse outcome, management does not believe any material
additional tax would be payable beyond what is provided.
Prior year adjustments include differences between the tax liability recorded in the tax returns submitted for previous years and the estimated tax
provision reported in a prior year’s consolidated financial statements. This category also includes adjustments to the tax returns against which an
adverse uncertain tax position has been booked and included under ‘change in uncertain tax positions’ above.
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Notes to the consolidated financial statements
continued
12. Tax continued
Tax contingent liabilities
Due to the Group operating across a number of different tax jurisdictions, it is subject to periodic challenge by local tax authorities on a range of
tax matters arising in the normal course of business. These challenges generally include transfer pricing arrangements, other international tax matters
and the judgemental interpretation of local tax legislation.
A tax contingent liability is not provided for but is disclosed if:
–
tax payments are not probable in the future on challenges by tax authorities; or
–
it is a present tax obligation, but the amount cannot be measured reliably
Publication of tax strategy
In line with the UK requirement for large UK businesses to publish their tax strategy, the Group’s tax strategy has been made available on the
Group’s website.
Global minimum tax – Pillar Two
Pillar Two legislation has been enacted, or substantively enacted, in certain jurisdictions where the Group operates. The legislation became effective
for the Group’s financial year beginning 1 January 2024. The Group is in scope of the enacted or substantively enacted legislation and has performed
an assessment of the Group’s potential exposure to Pillar Two income taxes for the year ended on 31 December 2024.
The assessment of the potential exposure to Pillar Two income taxes is based on the most recent information available regarding the financial
performance of the constituent entities in the Group. Based on the assessment, the Group has identified potential exposure to Pillar Two income taxes
in respect of profits earned in the UAE and Jordan. The potential exposure comes from the constituent entities (mainly operating subsidiaries) in these
jurisdictions where the expected Pillar Two effective tax rate is below 15%. The top up tax has been calculated in accordance with the OECD guidance
and has been included in the tax amounts disclosed above. We estimate that the total Pillar Two top up tax to be $7 million. The Group is continuing to
assess the impact of the Pillar Two income taxes legislation and related updates on its future financial performance.
Deferred tax
Recognition of deferred tax assets
The recognition of deferred tax assets is based on the current forecast of taxable profits arising in the jurisdiction in which the deferred tax asset arises.
A deferred tax asset is recognised to the extent that there are forecast taxable profits within a reasonable period.
This exercise is reviewed each year and, to the extent forecasts change, an adjustment to the recognised deferred tax asset may be made.
Recognition of deferred tax assets is driven by the Group’s ability to utilise the deferred tax asset which is reliant on forecast taxable profits arising in
the jurisdiction in which losses are incurred.
Deferred tax assets and liabilities have been offset only where it is appropriate to do so. The following is the analysis of the deferred tax balances
(after offset) for financial reporting purposes:
As at 31 December
2024
2023
$m
$m
Deferred tax assets
293
226
Deferred tax liabilities
(18)
(25)
275
201
The table below represents the deferred tax movement in 2024:
Returns and
inventory-related
provision2
Intangible
assets
Other
provisions
and accruals
Unremitted
earnings
Research and
Development
Others
Total
$m
$m
$m
$m
$m
$m
$m
1 January 2024
90
54
59
(3)
–
1
201
Reclassification1
–
–
–
–
29
(29)
–
(Charge)/credit to income
16
20
(1)
(1)
13
18
65
Equity adjustment
–
–
–
–
–
1
1
Currency translation and hyperinflation impact
(1)
1
(1)
–
–
9
8
At 31 December 2024
105
75
57
(4)
42
–
275
1. During the current year, the Group reclassified the deferred tax asset arising from Research and Development expenditures, previously included in “Others”, given its materiality, in accordance with IAS 12
2. This category also includes the deferred tax related to elimination of unrealised profit
12. Tax continued
The table below represents the deferred tax movement in 2023:
Returns and
inventory-related
provision1
Intangible
assets
Other
provisions
and accruals
Unremitted
earnings
Others
Total
$m
$m
$m
$m
$m
$m
1 January 2023
83
46
16
(4)
32
173
(Charge)/credit to income
7
8
43
1
(34)
25
Currency translation and hyperinflation impact
–
–
–
–
3
3
At 31 December 2023
90
54
59
(3)
1
201
1. This category also includes the deferred tax related to elimination of unrealised profit
The Group has a potential deferred tax asset of $457 million (2023: $288 million) of which $293 million (2023: $226 million) has been recognised.
The unrecognised deferred tax asset comprises of tax losses, short term timing differences and non-refundable tax credits.
No deferred tax asset has been recognised on gross temporary differences totalling $273 million (2023: $288 million), with a tax effect of $65 million
mainly due to the unpredictability of the related future profit streams. Of these gross temporary differences, $205 million (2023: $200 million) relate
to losses, of which $202 million are UK losses that don’t expire. No deferred tax is recognised against the losses due to significant uncertainty regarding
future taxable income forecasts in the relevant jurisdictions. None of the non-UK losses are expected to expire in 2025. The remaining $68 million
represent other unrecognised gross short-term temporary differences that relate to multiple jurisdictions.
In addition, the company has been granted Cantonal tax credits in Switzerland of $99 million (CHF90 million). These Swiss non-refundable tax credits
can be utilised over a 10-year period through from the fiscal year 2024 until they expire in 2033. Due to the operation being in its infancy, it is not
currently probable that the benefit of the non-refundable tax credit will be realised. Therefore, no deferred tax asset has been recognised on this item.
During the year an increase in the deferred tax liability has been recognised on temporary differences relating to the unremitted earnings of overseas
subsidiaries of $1 million (2023: $1 million reduction). No deferred tax liability has been recognised on the remaining unremitted earnings of
$499 million (2023: $414 million), as the Group is able to control the timing of the reversal of these temporary differences and it is probable that
they will not reverse in the foreseeable future.
Mandatory temporary exception
The Group has applied the temporary exception issued by the IASB in May 2023 from the accounting requirements for deferred taxes in IAS 12.
Accordingly, the Group neither recognises nor discloses information about deferred tax assets and liabilities related to Pillar Two income taxes.
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Notes to the consolidated financial statements
continued
13. Dividends
Paid in
2024
Paid in
2023
$m
$m
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2023 of 47 cents (31 December 2022: 37 cents) per share
104
82
Interim dividend during the year ended 31 December 2024 of 32 cents (31 December 2023: 25 cents) per share
71
55
175
137
The proposed final dividend for the year ended 31 December 2024 is 48 cents (2023: 47 cents).
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting on 24 April 2025 and has not been included as a
liability in these consolidated financial statements. Based on the number of shares in free issue at 31 December 2024 (220,431,263), the final dividend
would be $106 million.
14. Earnings per share (EPS)
Basic EPS is calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of Ordinary Shares in free
issue during the year after deducting Treasury shares and shares held in employee benefit trust (EBT) (Note 31). Treasury shares have no right to
receive dividends, and the employee benefit trust (EBT) has waived its entitlement to dividends. However, while the voting rights attached to treasury
shares are not exercisable, shares in the EBT retain their voting rights.
Diluted EPS is calculated after adjusting the weighted average number of Ordinary Shares used in the basic EPS calculation for the conversion of all
potentially dilutive Ordinary Shares.
Core basic and diluted EPS are intended to highlight the core results of the Group before exceptional items and other adjustments.
2024
Core
results
2024
Exceptional items
and other
adjustments
(Note 6)
2024
Reported
results
2023
Core
results
2023
Exceptional items
and other
adjustments
(Note 6)
2023
Reported
results
$m
$m
$m
$m
$m
$m
Profit attributable to equity holders of the parent
495
(136)
359
492
(302)
190
The number of shares used in calculating basic and diluted EPS is reconciled below:
Weighted average number of Ordinary Shares in free issue
2024
Number
2023
Number
Basic EPS
221,333,249
220,862,103
Effect of potentially dilutive Ordinary Shares:
Share-based awards
2,160,072
1,506,611
Diluted EPS
223,493,321
222,368,714
2024
Core
EPS
2024
Reported
EPS
2023
Core
EPS
2023
Reported
EPS
Cents
Cents
Cents
Cents
Basic
224
162
223
86
Diluted
221
161
221
85
15. Goodwill and other intangible assets
The changes in the carrying value of goodwill and other intangible assets for the years ended 31 December 2024 and 31 December 2023 are as follows:
Other intangible assets
Goodwill
Product-related
intangibles
Software
Other identified
intangibles
Total
$m
$m
$m
$m
$m
Cost
Balance at 1 January 2023
797
1,350
141
285
2,573
Additions
–
10
1
33
44
Disposals
–
–
(4)
(3)
(7)
Translation adjustments
(1)
(1)
–
2
–
Business combination
–
63
–
–
63
Balance at 31 December 2023 and 1 January 2024
796
1,422
138
317
2,673
Additions
–
24
–
49
73
Disposals
–
–
–
–
–
Translation adjustments
(8)
(7)
(1)
(2)
(18)
Business combination (Note 34)
2
73
–
–
75
Balance at 31 December 2024
790
1,512
137
364
2,803
Accumulated Amortisation and Impairment
Balance at 1 January 2023
(408)
(793)
(98)
(150)
(1,449)
Charge for the year
–
(73)
(8)
(15)
(96)
Disposals
–
–
4
3
7
Impairment charge
–
(13)
(5)
(17)
(35)
Translation adjustments
–
1
–
(1)
–
Balance at 31 December 2023 and 1 January 2024
(408)
(878)
(107)
(180)
(1,573)
Charge for the year
–
(72)
(8)
(20)
(100)
Disposals
–
–
–
–
–
Impairment reversal
–
44
–
–
44
Impairment charge
–
(8)
–
(14)
(22)
Translation adjustments
–
2
–
2
4
Balance at 31 December 2024
(408)
(912)
(115)
(212)
(1,647)
Carrying amount
At 31 December 2024
382
600
22
152
1,156
At 31 December 2023
388
544
31
137
1,100
Of the total intangible assets other than goodwill, $157 million (2023: $152 million) are not yet available for use.
Goodwill
Goodwill is allocated from the acquisition date to the CGUs that are expected to benefit from the synergies of the business combination. The carrying
amount of goodwill has been allocated as follows:
As at 31 December
2024
2023
$m
$m
Injectables
227
228
Branded
155
160
Total
382
388
In accordance with the Group policy, goodwill is tested annually for impairment during the fourth quarter or more frequently if there are indicators that
goodwill may be impaired. The impairment test was performed by calculating the recoverable amount of the CGUs to which the goodwill is allocated,
based on discounted cash flows by applying an appropriate discount rate that reflects the risk factors associated with the cash flows under which
these CGUs sit. These values are then compared to the carrying value of the CGUs to determine whether an impairment is required. Where applicable,
the Group carries forward and uses the most recent detailed calculation of a cash-generating unit’s recoverable amount made in the preceding period.
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Notes to the consolidated financial statements
continued
15. Goodwill and other intangible assets continued
CGUs impairment testing
Details related to the discounted cash flow models used in the impairment tests of the CGUs are as follows:
Valuation basis, terminal growth rate
and discount rate
Valuation basis
Terminal growth rate
(perpetuity)
Discount rate
2024
2023
2024
2023
Injectables
VIU
2.5%
2.5%
12.6%
12.6%
Pre-tax
Branded
VIU
2.4%
2.5%
14.3%
17.4%
Pre-tax
Generics
VIU
1.0%
n/a
10.7%
n/a
Pre-tax
Complex respiratory
FVLCD
–1
n/a
8.1%
n/a
Post-tax
Key assumptions
Projected cash flows based on:
– Sales growth rates, informed by pricing and volume assumptions
– Profit margins and profit margin growth rates for marketed and pipeline products
– Expected launch dates for pipeline products
Terminal growth rates
Discount rates
Determination of assumptions
Growth rates are internal forecasts based on both internal and external market information,
informed by historical experience and management’s best estimates of the future
Margins reflect past experience, adjusted for expected changes in the future
Establishing the launch date and probability of a successful product approval for
pipeline products
Terminal growth rates are based on the Group’s experience in its markets
Discount rates for each CGU are derived from specific regions/countries
Period of specific projected cash flows 5 years
1. The majority of projected cash flows for the Complex respiratory CGU extend over a seven-year period (2023: eight years)
Complex respiratory CGU
The improved performance of the Complex respiratory CGU was considered as an indicator for an impairment reversal assessment. As a result, the
Group evaluated the recoverable amount of the CGU using a fair value less costs of disposal (FVLCD) model, being the higher value compared to value
in use (VIU). The evaluation resulted in an impairment reversal of $60 million, with $44 million allocated to intangible assets and $16 million to property,
plant and equipment on a pro rata basis. The reversal reflects sustained performance improvement and forecasted profitability, bringing the revised
carrying amount of the CGU to $127 million. This valuation methodology uses significant inputs which are not based on observable market data,
therefore this valuation technique is classified as a level 3 valuation.
The Group performed sensitivity analysis over the valuation of the CGU. The analysis assumed an increase/decrease of one percentage point in the
discount rate or a 10% decline/improve in the projected cash flows. Applying those sensitivities would decrease/increase the value of the CGU by
approximately $7 million and $22 million, respectively.
Injectables CGU
In accordance with IAS 36, the Group conducted its annual impairment test for the Injectables CGU by carrying forward the most recent detailed
calculation of its recoverable amount from the preceding period. This approach was considered appropriate as the assets and liabilities of the CGU
have not changed significantly since last year’s recoverable amount calculation, and the previous calculation indicated that the recoverable amount
significantly exceeded the carrying amount of the CGU. Additionally, an analysis of events and changes in circumstances since the prior assessment
indicated that the likelihood of the current recoverable amount being lower than the carrying amount is remote.
Branded CGU
The Group conducted its annual impairment test for the Branded CGU, as it includes goodwill and other intangible assets not yet available for use. The
valuation did not result in any impairment for the CGU and indicated that sufficient headroom exists even under reasonable changes in key assumptions.
Generics CGU
The Group conducted its annual impairment test for the Generics CGU, as it includes material intangible assets not yet available for use. The valuation
did not result in any impairment for the CGU and indicated that sufficient headroom exists even under reasonable changes in key assumptions.
The Group monitors the development of climate-related risks and assessed the qualitative and quantitative impact which is not expected to have
a material impact on the consolidated financial statements nor the recoverable amount of the CGUs (See pages 62 to 77).
15. Goodwill and other intangible assets continued
Product-related intangible assets
Product rights not yet available for use
Product rights not yet available for use amounts to $84 million (2023: $75 million); no amortisation has been charged against them. The Group
performs an impairment review of these assets annually. The result of this test was an impairment charge of $8 million in the Injectables segment
due to the discontinuation of a pipeline product (2023: $3 million in the Generics segment).
Product rights
Product rights consist of marketed products of $516 million (2023: $469 million) which include two products in the injectables CGU valued at
$118 million (2023: $129 million) and $52 million (2023: $nil) with a remaining useful life of eleven years (2023: twelve years) and fifteen years,
respectively. Additionally, a product in the Complex respiratory CGU is valued at $120 million (2023: $87 million) following a $44 million impairment
reversal allocated as part of the CGU overall reversal (see page 180). This product has a remaining useful life of seven years (2023: eight years).
The product rights have an average estimated useful life of twelve years.
Software
Software intangibles mainly represent the Enterprise Resource Planning solutions that are implemented in different operations across the Group in
addition to other software applications, of which $1 million is not yet available for use (2023: $1 million). The software has an average estimated useful
life that varies from three to ten years.
As at 31 December 2024, no impairment charge was identified (2023: $5 million).
Other identified intangibles
Other identified intangibles comprise marketing rights, customer relationships and trade names of $152 million (2023: $137 million) of which $72 million
represent assets not yet available for use (2023: $76 million). The Group performs an impairment review of other identified intangible assets that are
not yet available for use annually, and performs impairment indicators assessment for assets in use. The result of this test was an impairment charge
of $1 million in the Injectables segment and $13 million in the Generics segment due to the discontinuation of certain marketing rights contracts (2023:
$17 million).
Marketing rights
Marketing rights are amortised over their useful lives commencing in the year in which the rights are ready for use with estimated useful lives varying
from two to ten years.
Customer relationships
Customer relationships represent the value attributed to existing direct customers that the Group acquired on business combinations. The customer
relationships have an average estimated useful life of fifteen years.
Trade names
Trade names were mainly recognised on the acquisition of Hikma Germany GmbH (Germany) with estimated useful lives of ten years.
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Notes to the consolidated financial statements
continued
16. Property, plant and equipment
Land and
buildings
Machinery and
equipment
Vehicles, fixtures
and equipment
Projects under
construction
Total
$m
$m
$m
$m
$m
Cost
Balance at 1 January 2023
725
819
145
262
1,951
Additions
31
20
7
112
170
Disposals
(15)
(10)
(9)
–
(34)
Transfers
43
63
6
(112)
–
Business combination
25
3
–
8
36
Transfer to assets classified as held for sale
(11)
–
–
–
(11)
Translation adjustment
(1)
(1)
(1)
2
(1)
Balance at 31 December 2023 and 1 January 2024
797
894
148
272
2,111
Additions
6
21
10
133
170
Disposals
(1)
(16)
(5)
–
(22)
Transfers
12
31
10
(53)
–
Business combination (Note 34)
52
1
–
62
115
Translation adjustment
(15)
(21)
(6)
(5)
(47)
Balance at 31 December 2024
851
910
157
409
2,327
Accumulated depreciation and impairment
Balance at 1 January 2023
(243)
(499)
(121)
(64)
(927)
Charge for the year
(23)
(49)
(12)
–
(84)
Disposals
–
7
9
–
16
Impairment charge
(14)
(8)
(1)
(3)
(26)
Translation adjustment
2
3
1
–
6
Balance at 31 December 2023 and 1 January 2024
(278)
(546)
(124)
(67)
(1,015)
Charge for the year
(24)
(48)
(15)
–
(87)
Disposals
1
16
5
–
22
Impairment reversal
1
15
–
–
16
Impairment charge
(1)
(3)
–
(5)
(9)
Translation adjustment
7
13
4
–
24
Balance at 31 December 2024
(294)
(553)
(130)
(72)
(1,049)
Carrying amount
At 31 December 2024
557
357
27
337
1,278
At 31 December 2023
519
348
24
205
1,096
Land is not subject to depreciation.
None of the Group's property, plant and equipment are pledged as collateral for long-term loans as at 31 December 2024 (2023: $nil).
As at 31 December 2024, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to
$79 million (2023: $52 million).
During the year ended 31 December 2024, $3 million of borrowing costs have been capitalised (2023: $2 million).
As at 31 December 2024, the Group recognised an impairment charge of $9 million mainly in relation to machinery and equipment associated with
discontinued projects and an impairment reversal of $16 million mainly related to machinery and equipment within the Complex respiratory CGU
(Notes 6, 9 and 15). In 2023, the Group recognised an impairment charge of $26 million mainly in relation to Sudan (Notes 6 and 9).
17. Right-of-use assets and lease liabilities
The carrying amounts of right-of-use assets recognised and the movements during the year were as follows:
Buildings
Vehicles
Total
$m
$m
$m
At 1 January 2023
51
6
57
Additions
3
3
6
Impairment
(7)
–
(7)
Depreciation expense
(7)
(4)
(11)
Balance at 31 December 2023 and 1 January 2024
40
5
45
Additions
3
8
11
Business combination (Note 34)
2
–
2
Depreciation expense
(6)
(4)
(10)
Balance at 31 December 2024
39
9
48
The carrying amounts of lease liabilities and the movements during the year were as follows:
2024
2023
$m
$m
At 1 January
66
70
Additions
11
6
Business combination (Note 34)
2
–
Accretion of interest (Note 11)
3
4
Adjustments
(1)
–
Repayments
(24)
(14)
Balance at 31 December
57
66
Current
11
11
Non-current
46
55
The following is the maturity analysis of lease liabilities:
2024
2023
$m
$m
Breakdown by maturity:
Within one year
11
11
In the second year
7
8
In the third year
5
5
In the fourth year
4
4
In the fifth year
3
3
In the sixth year
2
3
Thereafter
25
32
57
66
At 31 December 2024, lease liabilities included optional extension periods amounting to $19 million on a discounted basis (2023: $19 million).
The following are the amounts recognised in the consolidated income statement:
2024
2023
$m
$m
Depreciation expense of right-of-use assets
(10)
(11)
Impairment of right-of-use assets
–
(7)
Interest expense on lease liabilities
(3)
(4)
Expense relating to short-term leases
(4)
(2)
Total amount recognised in the consolidated income statement
(17)
(24)
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Financial
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Notes to the consolidated financial statements
continued
18. Investments in joint venture
The Group’s share in Hubei Haosun Pharmaceutical Co., Ltd. was 49% at 31 December 2024 (31 December 2023: 49%) with an investment balance of
$11 million at 31 December 2024 (31 December 2023: $10 million) and share of the profit for the year ended 31 December 2024 of $1 million (2023: $nil).
The table below represents investment in joint venture movement during the year:
2024
2023
$m
$m
Balance at 1 January
10
10
Group's share of profit of joint venture
1
–
Balance at 31 December
11
10
Summarised financial information in respect of the Group’s interests in Hubei Haosun Pharmaceutical Co., Ltd. is set out below:
As at 31 December
2024
2023
$m
$m
Total assets
25
23
Total liabilities
(5)
(5)
Net assets
20
18
Group's share of net assets of joint venture
10
9
For the
year ended
31 December
2024
For the
year ended
31 December
2023
$m
$m
Total revenue
8
7
Net profit
2
1
Group's share of profit of joint venture
1
–
19. Financial and other non-current assets
As at 31 December
2024
2023
$m
$m
Investments at FVTOCI
51
55
Advance payment related to non-financial assets
19
20
Restricted cash
–
10
Other financial assets
14
18
84
103
Investments at FVTOCI include investments which are not held for trading and which the Group irrevocably designated as measured at fair value
through other comprehensive income.
During the year, the Group increased its investment in two existing ventures by $2 million.
The total portfolio as at 31 December 2024 includes two investments in listed companies with a readily determinable fair value that falls under level 1
valuation (Note 29), their values are measured based on quoted prices in active markets. The other investments are unlisted shares without readily
determinable fair values that fall under level 3 valuation (Note 29). The fair value is estimated by management based on the cost of investment and
adjusted as necessary for impairment and revaluations with reference to relevant available information and recent financing rounds.
During the year, the total change in fair value was a net loss of $6 million (2023: $13 million net loss) recognised in other comprehensive income.
Advance payment related to non-financial assets represents cash paid in advance that will be mainly utilised against the future acquisition of product
licences, materials or finished products.
Restricted cash balance as at 31 December 2023 represents the cash margin on a long-term loan.
Other financial assets mainly represented long-term receivables and upfront fees on a syndicated revolving credit facility. At 31 December 2023,
the balance mainly represented long-term receivables, upfront fees on a syndicated revolving credit facility and a sublease arrangement.
20. Inventories
As at 31 December
2024
2023
$m
$m
Finished goods
409
351
Work-in-progress
113
125
Raw and packing materials
490
455
Goods in transit
36
24
Spare parts
52
47
Provisions against inventory
(114)
(111)
986
891
The movements in the provisions against inventory are as follows:
As at 1 January
Additions
Utilisation
Translation
adjustments As at 31 December
$m
$m
$m
$m
$m
Provisions against inventory in 2024
111
51
(41)
(7)
114
Provisions against inventory in 2023
90
81
(53)
(7)
111
The cost of inventory recognised as an expense within cost of sales in the consolidated income statement was $1,671 million, including the cost of an
inventory-related provision of $51 million (2023: $1,442 million, including the cost of an inventory-related provision of $81 million).
21. Trade and other receivables
As at 31 December
2024
2023
$m
$m
Gross trade receivables
1,362
1,222
Chargebacks and other allowances
(391)
(352)
Expected credit loss allowance
(75)
(81)
Net trade receivables
896
789
VAT and sales tax recoverable
44
35
Other receivables
9
–
Net trade and other receivables
949
824
The fair value of receivables is estimated to be not significantly different from the respective carrying amounts.
The movements in the provisions for chargebacks, other allowances and expected credit loss allowance are as follows:
As at
31 December 2023
and 1 January 2024
Additions, net
Utilisation
Translation
adjustments
As at
31 December 2024
$m
$m
$m
$m
$m
Chargebacks and other allowances
352
2,758
(2,719)
–
391
Expected credit loss allowance
81
2
–
(8)
75
433
2,760
(2,719)
(8)
466
As at
31 December 2022
and 1 January 2023
Additions, net
Utilisation
Translation
adjustments
As at
31 December 2023
$m
$m
$m
$m
$m
Chargebacks and other allowances
298
2,560
(2,505)
(1)
352
Expected credit loss allowance
53
32
(4)
–
81
351
2,592
(2,509)
(1)
433
More details on the Group’s policy for credit and concentration risk are provided in Note 29.
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Notes to the consolidated financial statements
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21. Trade and other receivables continued
At 31 December 2024, the provision balance relating to chargebacks was $273 million (2023: $236 million). The key inputs and assumptions included in
calculating this provision are estimations of ‘in channel’ inventory at the wholesalers (including processing lag) of 42 days (2023: 39 days), estimated
chargeback rates as informed by average historical chargeback credits adjusted for expected chargeback levels for new products, changes to pricing
and estimated future sales trends (including customer mix). Based on the conditions existing at the balance sheet date, an increase/decrease in the
estimate of in channel inventory by 1 day increases/decreases the provision by $6 million (2023: $6 million), and if the overall chargeback rate of 57%
(2023: 57%) increases/decreases by one percentage point, the provision would increase/decrease by $5 million (2023: $4 million).
At 31 December 2024, the provision balance relating to customer rebates was $45 million (2023: $49 million). The key inputs and assumptions included
in calculating this provision are the historical relationship between contractual rebate payments to revenue, past payment experience, changes to
pricing and sales levels, estimation of ‘in channel’ inventory at the wholesalers and retail pharmacies and estimated future sales trends (including
customer mix). Based on the conditions existing at the balance sheet date, a ten-basis point increase/decrease in the rebates rate of 4.4% (2023:
4.9%) would increase/decrease this provision by approximately $1 million (2023: approximately $1 million).
22. Cash and cash equivalents
As at 31 December
2024
2023
$m
$m
Cash at banks and on hand1
127
118
Time deposits
59
86
Money market deposits
2
1
188
205
1. In 2024, cash at banks includes $24 million placed in interest-bearing accounts (2023: $68 million)
Cash and cash equivalents include highly liquid investments with maturities of three months or less which are convertible to known amounts of cash
and are subject to insignificant risk of changes in value.
23. Other current assets
As at 31 December
2024
2023
$m
$m
Prepayments
73
72
Investment at FVTPL
25
24
Others
18
24
116
120
Investment at FVTPL comprise a portfolio of debt instruments that are managed by an asset manager and which the Group designated as measured
at fair value through profit or loss. These assets are classified as level 1 as they are based on quoted prices in active markets (Note 29).
Others balances mainly represent compensation due from suppliers in relation to inventory price adjustments.
24. Short-term financial debts
As at 31 December
2024
2023
$m
$m
Bank overdrafts
4
2
Import and export financing2
14
44
Short-term loans
3
–
Current portion of long-term loans (Note 28)
621
104
642
150
The increase in the current portion of long-term loans is primarily attributable to the Eurobond maturing in July 2025.
2. Import and export financing represents short-term financing for the ordinary trading activities of the Group
24. Short-term financial debts continued
2024
2023
%
%
The weighted average interest rates incurred are as follows:
Bank overdrafts
21.03
13.34
Import and export financing
8.37
7.10
Short-term loans
5.19
4.75
25. Trade and other payables
As at 31 December
2024
2023
$m
$m
Trade payables
358
309
Accrued expenses
266
243
Other payables
26
16
650
568
The fair value of payables is estimated to be not significantly different from the respective carrying amounts.
26. Provisions
Provision for
end of service
indemnity
Provision for
legal settlements
Total
$m
$m
$m
Balance at 1 January 2023
32
–
32
Additions
3
129
132
Utilisations
(5)
–
(5)
Balance at 31 December 2023 and 1 January 2024
30
129
159
Additions
3
–
3
Remeasurement of post–employment benefit obligations
1
–
1
Utilisations
(5)
–
(5)
Balance at 31 December 2024
29
129
158
2024
2023
$m
$m
Due within one year
122
152
Due after more than one year
36
7
158
159
Provision for end of service indemnity relates to employees of certain Group subsidiaries and includes immaterial amounts for defined benefit plans.
This provision is calculated based on relevant laws in the countries where each Group company operates, in addition to their own policies. For defined
benefit plans, changes in net liability due to actuarial valuations and changes in assumptions resulted in a remeasurement loss of $1 million (2023: $nil).
In 2024, the Group reclassified this provision to non-current, as most of the balance is not expected to be settled within the next 12 months.
Legal provision is related to the expected settlement amount for legal matters, of which $7 million is expected to be settled after more than one year
(Note 6).
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27. Other current liabilities
As at 31 December
2024
2023
$m
$m
Deferred income (Note 30)
28
21
Refund liability
151
158
Contingent consideration (Notes 29 and 30)
85
25
Co-development and earnout payment (Note 29)
–
1
Acquired contingent liability (Note 30)
20
13
Indirect rebates and other allowances
173
145
Others
18
21
475
384
Deferred income includes contract liabilities related to the Group's obligations for contract manufacturing services, for which payment has been
received or is receivable. It also includes contract liabilities for free goods owed to certain customers as an alternative to discounts. Additionally,
deferred income comprises deferred lease income arising from the lease component within contract manufacturing services.
As at 31 December 2024, total deferred income was $58 million (2023: $21 million). The current portion of $28 million related to contract liabilities
(2023: $21 million). The non-current portion of $30 million (2023: $nil) comprised $13 million in contract liabilities and $17 million in deferred lease
income.
During the year, revenue of $21 million (2023: $25 million) was recognised as performance obligations were satisfied.
Refund liability relate to provisions for product returns, where the Group allows customers to return products within a specified period prior to and
subsequent to the expiration date. The key assumptions included in calculating this provision are estimations of the product shelf life, estimations
of revenue estimated to be subject to returns and the estimated returns rate of 1.39% (2023: 1.47%) as informed by both historical return rates and
consideration of specific factors like product dating and expiration, new product launches, entrance of new competitors, and changes to contractual
terms. Based on the conditions existing at the balance sheet date, a ten-basis point increase/decrease in the returns and allowances rate would
increase/decrease this provision by approximately $11 million (2023: $11 million).
Indirect rebates and other allowances: mainly represent rebates granted to healthcare authorities and certain indirect customers under contractual
arrangements. This includes provision for rebates adjustment of $29 million, reflecting a change in historical estimates related to prior years' rebates
(Note 6).
At 31 December 2024, the provision balance relating to the indirect rebates was $100 million (2023: $96 million). The key inputs and assumptions
included in calculating this provision are the historical relationship between contractual rebate payments to revenue, past payment experience,
changes to pricing and sales levels, estimation of ‘in channel’ inventory at the wholesalers and retail pharmacies and estimated future sales trends
(including customer mix). Based on the conditions existing at the balance sheet date, a ten-basis point increase/decrease in the rebates rate of 4.9%
(2023: 4.7%) would increase/decrease this provision by approximately $2 million (2023: $2 million).
The following table provides the movement for the deferred income, refund liability and indirect rebates and other allowances for the years ended
31 December 2024 and 2023 were as follows:
Deferred income
Refund liability
Indirect rebates and
other allowances
Total
$m
$m
$m
$m
Balance at 1 January 2023
25
168
101
294
Additions
21
43
261
325
Utilisations
(25)
(52)
(218)
(295)
Translation adjustment
–
(1)
1
–
Balance at 31 December 2023 and 1 January 2024
21
158
145
324
Additions
58
55
334
447
Utilisations
(21)
(61)
(306)
(388)
Translation adjustment
–
(1)
–
(1)
Balance at 31 December 2024
58
151
173
382
2024
2023
$m
$m
Current
352
324
Non-current (Note 30)
30
–
382
324
28. Long-term financial debts
As at 31 December
2024
2023
$m
$m
Long-term loans
729
582
Long-term borrowings (Eurobond)
499
497
1,228
1,079
Less: current portion (Note 24)
(621)
(104)
Non-current financial loans
607
975
Breakdown by maturity:
Within one year
621
104
In the second year
118
604
In the third year
129
100
In the fourth year
117
208
In the fifth year
242
59
In the sixth year
1
4
1,228
1,079
Breakdown by currency:
US dollar
1,156
1,002
Euro
9
21
Jordanian dinar
7
13
Algerian dinar
31
29
Moroccan dirham
23
11
Tunisian dinar
2
3
1,228
1,079
The financial debts are held at amortised cost.
Major financial debt arrangements include:
a) $1,150 million syndicated revolving credit facility that matures on 4 January 2029. At 31 December 2024, the facility had an outstanding balance of
$240 million (2023: $nil) and a fair value of $240 million (2023: $nil) and an unutilised amount of $910 million (2023: $1,150 million). The facility can
be used for general corporate purposes.
b) A $500 million 3.25%, five-year Eurobond with a rating of BBB- (S&P & Fitch) that matures on 9 July 2025. At 31 December 2024, the facility had
an outstanding balance of $499 million (2023: $497 million) and a fair value of $493 million (2023: $481 million). The proceeds were used for general
corporate purposes. At 31 December 2024, the balance was classified as short-term financial debts (Note 24).
c) A $400 million five-year syndicated loan facility that matures on 13 October 2027. At 31 December 2024, the facility had an outstanding balance
of $162 million (2023: $315 million) and a fair value of $162 million (2023: $315 million). The proceeds were used for general corporate purposes.
d) A $200 million eight-year loan facility from the International Finance Corporation and Managed Co-lending Portfolio program that matures
on 15 September 2028. At 31 December 2024, the facility had an outstanding balance of $185 million (2023: $100 million) and a fair value of
$185 million (2023: $100 million). The proceeds were used for general corporate purposes.
e) A $150 million ten-year loan facility from the International Finance Corporation that matures on 15 December 2027. At 31 December 2024, the
facility had an outstanding balance of $63 million (2023: $86 million) and a fair value of $61 million (2023: $80 million). The proceeds were used
for general corporate purposes.
Covenants on major financial debt arrangements are suspended while the Group retains its investment-grade status. As of 31 December 2024,
the carrying value of long-term debt subject to covenants was immaterial, and the Group was in full compliance with those respective covenants.
Covenants that must be complied with after the reporting date do not affect the classification of the related borrowings as current or non-current.
Accordingly, all such borrowings remain classified as non-current liabilities.
2024
2023
%
%
The weighted average interest rates incurred are as follows:
Bank loans (including the current bank loans)
6.18
5.76
Eurobond1
3.68
3.68
1. The Eurobond effective interest rate includes unwinding of discount amount and upfront fees
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Notes to the consolidated financial statements
continued
29. Financial policies for risk management and their objectives
Credit and concentration of risk
The Group’s principal financial assets are cash and cash equivalents, trade and other receivables, and investments.
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the consolidated balance sheet are net of allowances
for expected credit loss, chargebacks, and other allowances. A provision for impairment is made based on expected credit loss which is estimated
based on previous experience, current events and forecasts of future conditions. A loan or receivable is considered impaired when there is no
reasonable expectation of recovery, or when a debtor fails to make a contractual payment for a specific period which varies based on the type of
debtor and the market in which they operate.
During the year ended 31 December 2024, the Group’s largest two customers in the MENA region represented 6.5% of Group revenue (2023: 6.8%),
5.0% from one customer in Saudi Arabia (2023: 5.1%), and 1.5% from one customer in Algeria (2023: 1.7%). At 31 December 2024, the amount of
receivables due from all customers based in Saudi Arabia was $79 million (2023: $106 million) and the amount of receivables due from all customers
based in Algeria was $63 million (2023: $57 million).
During the year ended 31 December 2024, three key US wholesalers represented 35% of Group revenue (2023: 36%). The amount of receivables due
from all US customers at 31 December 2024 was $522 million (2023: $379 million).
The Group manages this risk through the implementation of stringent credit policies, procedures and certain credit insurance agreements.
Trade receivable exposures are monitored consistently as they arise. Credit limits are set as deemed appropriate for the customer, based on a number
of qualitative and quantitative factors related to the creditworthiness of a particular customer. The Group is exposed to a variety of customers ranging
from government-backed agencies and large private wholesalers to privately owned pharmacies, and the underlying local economic risks vary across
the Group. In line with local market practice, customers in the MENA region are offered relatively long payment terms compared to customers in
Europe and North America. Typical credit terms in North America range from 30 to 90 days, in Europe 30 to 120 days, and in MENA 180 to 360 days.
Where appropriate, the Group endeavours to minimise risk by the use of trade finance instruments such as letters of credit and insurance.
The following table provides a summary of the age of trade receivables (Note 21):
Past due
At 31 December 2024
Not past due on
the reporting date
$m
Less than 90
days
$m
Between 91
and 180 days
$m
Between 181 and
360 days
$m
Over one year
$m
Total
$m
Expected credit loss rate
0.1%
0.6%
18.5%
14.8%
77.0%
5.5%
Gross trade receivables as at 31 December 2024
1,157
62
26
34
83
1,362
Expected credit loss allowance
(1)
–
(5)
(5)
(64)
(75)
Chargebacks and other allowances
(391)
–
–
–
–
(391)
Net trade receivables
765
62
21
29
19
896
Past due
At 31 December 2023
Not past due on the
reporting date
$m
Less than 90
days
$m
Between 91 and
180 days
$m
Between 181 and
360 days
$m
Over one year
$m
Total
$m
Expected credit loss rate
–
0.2%
57.5%
36.9%
70.1%
6.6%
Gross trade receivables as at 31 December 2023
1,024
71
22
16
89
1,222
Expected credit loss allowance
–
–
(13)
(6)
(62)
(81)
Chargebacks and other allowances
(352)
–
–
–
–
(352)
Net trade receivables
672
71
9
10
27
789
Market risk
The Group is exposed to foreign exchange and interest rate risks. The Group’s objective is to reduce, where it is appropriate to do so, fluctuations
in earnings and cash flow associated with changes in interest rates and foreign currency rates. Management actively monitors these exposures to
manage the volatility relating to these exposures by entering into a variety of derivative financial instruments, if needed.
Capital risk management
The Group manages its capital and monitors its liquidity to have reasonable assurance that the Group will be able to continue as a going concern and
deliver its growth strategy objectives, while reducing its cost of capital and maximising the return to shareholders through the optimisation of the debt
and equity mix. The Group regularly reviews the capital structure by considering the level of available capital and the short to medium-term strategic
plans concerning future capital spend, as well as the need to meet dividends, banking covenants, and borrowing ratios.
The Group defines capital as equity plus net debt which includes long and short-term financial debts (Notes 24 and 28), lease liabilities (Note 17),
net of cash and cash equivalents (Note 22) and restricted cash (Note 19). Group net debt excludes co-development and earnout payments, acquired
contingent liabilities and contingent consideration (Notes 27 and 30).
29. Financial policies for risk management and their objectives continued
During the year, the Group continued its strategy of obtaining debt financing at both the Group level and at the operating entities level. This enables
the Group to borrow at competitive rates and to build relationships with local, regional and international banks and is therefore deemed to be the most
effective means of raising finance, while maintaining the balance between borrowing cost, asset and liability management, and consolidated balance
sheet currency risk management.
In order to monitor the available net funds, management reviews financial capital reports on a monthly basis, in addition to the continuous review by
the Group treasury function.
At 31 December 2024, the Group’s gearing ratio (total debt/equity) was 56% (2023: 54%).
Cash management
The Group manages the deployment of cash balances to predefined limits approved by the Board of Directors under the cash/risk management
policy. Per the policy, the Group’s excess cash should be held with highly rated global and regional financial institutions. The aim of the policy is to
mitigate the risk of holding cash in certain currencies, countries and financial institutions, through a specific threshold. The Group reviews the policy
periodically to meet its risk appetite.
Foreign exchange risk and currency risk
The Group uses the US dollar as its reporting currency and is therefore exposed to foreign exchange movements primarily in the Euro, Algerian dinar,
Japanese yen, Egyptian pound, Tunisian dinar and Moroccan dirham. Consequently, where appropriate, the Group enters into various contracts, which
change in value as foreign exchange rates change, to hedge against the risk of movement in foreign-denominated assets and liabilities. Due to the lack of
open currency markets, the Algerian dinar, the Tunisian dinar, the Moroccan dirham and the Egyptian pound cannot be hedged at reasonable cost. Where
possible, the Group uses financing facilities denominated in local currencies to mitigate the risks. The Jordanian dinar and the Saudi riyal had no impact on
the consolidated income statement as those currencies are pegged against the US dollar.
Currency risks, as defined by IFRS 7, arise on account of financial instruments being denominated in a currency that is other than the functional
currency of an entity and being of a monetary nature.
The currencies that have a significant impact on the Group’s consolidated financial statements and the exchange rates used are as follows:
Year-end rates
Average rates
2024
2023
2024
2023
US dollar /Euro
0.965
0.906
0.924
0.925
US dollar /Algerian dinar
135.743
134.378
134.037
135.844
US dollar /Saudi riyal
3.750
3.750
3.750
3.750
US dollar /Pound sterling
0.799
0.786
0.783
0.804
US dollar /Jordanian dinar
0.709
0.709
0.709
0.709
US dollar /Egyptian pound
50.771
30.828
45.309
30.624
US dollar /Japanese yen
157.360
141.060
151.532
140.553
US dollar /Moroccan dirham
10.111
9.893
9.940
10.136
US dollar /Tunisian dinar
3.185
3.066
3.117
3.106
The net foreign currency exposures for the years ended 31 December 2024 and 2023 were as follows:
Financial assets/(liabilities)
US dollar
Euro
Japanese yen
Others¹
2024
$m
$m
$m
$m
Functional currency of entity:
– Jordanian dinar
141
7
(2)
5
– Euro
24
–
–
–
– Algerian dinar
(15)
–
–
–
– Saudi riyal
15
(9)
–
–
– Egyptian pound
(32)
(8)
–
–
– Tunisian dinar
–
2
–
–
– Moroccan dirham
(15)
(6)
–
–
– US Dollar
–
1
–
13
118
(13)
(2)
18
1. Others include Saudi riyal, Jordanian dinar, Pound sterling and UAE dirham
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Financial
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Notes to the consolidated financial statements
continued
29. Financial policies for risk management and their objectives continued
Financial assets/(liabilities)
US dollar
Euro
Japanese yen
Others¹
2023
$m
$m
$m
$m
Functional currency of entity:
– Jordanian dinar
99
19
(5)
13
– Euro
29
–
–
–
– Algerian dinar
(3)
–
–
–
– Saudi riyal
10
(15)
–
–
– Sudanese pound
(1)
–
–
–
– Egyptian pound
(47)
(1)
–
–
– Tunisian dinar
1
2
–
–
– Moroccan dirham
(16)
(8)
–
–
– US Dollar
–
(23)
–
4
72
(26)
(5)
17
1. Others include Saudi riyal, Jordanian dinar, Pound sterling and UAE dirham
A sensitivity analysis based on a 10% movement in foreign exchange rates would result in a $12 million (2023: $6 million) movement in foreign
exchange loss/gain on the Group results.
The Group sets certain limits on liquid funds per currency (other than the US dollar) and per country.
Interest rate risk
As at 31 December 2024
As at 31 December 2023
Fixed rate
Floating rate
Total
Fixed rate
Floating rate
Total
$m
$m
$m
$m
$m
$m
Financial liabilities
Interest-bearing loans and borrowings (Notes 24 and 28)
597
652
1,249
618
507
1,125
Lease liabilities (Note 17)
57
–
57
66
–
66
Financial assets
Interest-bearing cash and cash equivalents (Note 22)
–
85
85
–
155
155
Restricted cash (Note 19)
–
–
–
–
10
10
An interest rate sensitivity analysis assumes an instantaneous one percentage point change in interest rates in all currencies from their levels at
31 December 2024, with all other variables held constant. Based on the composition of the Group’s net debt portfolio as at 31 December 2024, a
one percentage point increase/decrease in interest rates would result in a $6 million increase/decrease in net finance cost per year (2023: $3 million
increase/decrease).
Fair value of financial assets and liabilities
The fair value of financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale.
The carrying values of the following financial assets/liabilities are not significantly different from their fair values, as explained below:
–
Cash at banks and on hand and time deposits – due to the short-term maturities of these financial instruments and given that generally
they have negligible credit risk, management considers the carrying amounts not to be significantly different from their fair values
–
Restricted cash (Note 19) – the fair value of restricted cash is not considered to be significantly different from the carrying value
–
Other financial assets (Note 19) – mainly represent long-term receivables carried at amortised cost, of which the fair value is estimated not to be
significantly different from the respective carrying amounts
–
Receivables and payables – the fair values of receivables and payables are estimated not to be significantly different from the respective
carrying amounts
–
Short-term loans and overdrafts approximate to their fair value because of the short maturity of these instruments
–
Long-term loans – loans with variable rates are re-priced in response to any changes in market rates and so management considers their carrying
values not to be significantly different from their fair values
29. Financial policies for risk management and their objectives continued
Loans with fixed rates relate mainly to:
–
$500 million 3.25%, five-year Eurobond with a carrying value of $499 million at 31 December 2024 and fair value of $493 million, accounted for at
amortised cost. The fair value is determined with reference to a quoted price in an active market as at the balance sheet date (a level 1 fair value)
(Note 28)
–
A ten-year $150 million loan from the International Finance Corporation with outstanding balance of $63 million at 31 December 2024 and a fair
value of $61 million. Fair value is estimated by discounting future cash flows using the current rates at which similar loans would be made
to borrowers with similar credit ratings and for the same remaining maturities of such loans (a level 2 fair value)
Management classifies items that are recognised at fair value based on the level of the inputs used in their fair value determination as described below:
–
Level 1: Quoted prices in active markets for identical assets or liabilities
–
Level 2: Inputs that are observable for the asset or liability
–
Level 3: Inputs that are not based on observable market data
The following financial assets/liabilities are presented at their fair value:
Fair value measurements
At 31 December 2024
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
Financial assets
Investments at FVTPL (Note 23)
25
–
–
25
Money market deposit (Note 22)
2
–
–
2
Investments in listed shares at FVTOCI (Note 19)
1
–
–
1
Investments in unlisted shares at FVTOCI (Note 19)
–
–
50
50
Total financial assets
28
–
50
78
Financial liabilities
Contingent consideration liability (Notes 27 and 30)
–
–
153
153
Total financial liabilities
–
–
153
153
Fair value measurements
At 31 December 2023
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
Financial assets
Investments at FVTPL (Note 23)
24
–
–
24
Money market deposits (Note 22)
1
–
–
1
Investments in listed shares at FVTOCI (Note 19)
2
–
–
2
Investments in unlisted shares at FVTOCI (Note 19)
–
–
53
53
Total financial assets
27
–
53
80
Financial liabilities
Co-development and earnout payment liabilities (Note 27)
–
–
1
1
Contingent consideration liability (Notes 27 and 30)
–
–
41
41
Total financial liabilities
–
–
42
42
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Notes to the consolidated financial statements
continued
29. Financial policies for risk management and their objectives continued
The following table presents the changes in Level 3 items for the years ended 31 December 2024 and 2023:
Financial
assets
Financial
liabilities
$m
$m
At 1 January 2023
38
45
Settled
–
(8)
Remeasurement of contingent consideration and other financial liability recognised in finance expense
–
2
Unwinding of contingent consideration and other financial liability recognised in finance expense
–
3
Change in fair value of investments at FVTOCI
(10)
–
Additions of investments at FVTOCI
27
–
Sale of investment at FVTOCI
(2)
–
Balance at 31 December 2023 and 1 January 2024
53
42
Settled
–
(13)
Remeasurement of contingent consideration and other financial liability recognised in finance expense
–
71
Unwinding of contingent consideration and other financial liability recognised in finance expense
–
3
Contingent consideration related to business combination in the period (Note 34)
–
50
Change in fair value of investments at FVTOCI
(5)
–
Additions of investments at FVTOCI
2
–
Balance at 31 December 2024
50
153
Investments in unlisted shares at FVTOCI represent investments in start-ups, measured at cost and adjusted for impairment and revaluations based
on relevant available information and recent financing rounds.
Contingent consideration liability represents a contractual liability arising from business combinations to make payments to third parties in the form of
milestone payments that depend on the achievement of certain regulatory approvals; and payments based on future sales of certain products.
The valuation for the payments that are based on future sales is based on a discounted cash flow model applied to projected future sales for a period
of six years (2023: seven years). The key assumption used for this valuation is the sales projections informed by pricing and volume assumptions which
were determined using a probability weighted average of different possibilities on sales growth rates, discounted using a post-tax rate of 8.1% (2023:
9.3%). The valuation for milestone payments is based on 100% probability of success. As of 31 December 2024, the milestone payments were classified
as a current liability and therefore were not impacted by the time value of money (2023: discounted using a rate of 6%).
Liquidity risk
Undiscounted cash flows for financial liabilities
Less than one
year
One to five
years
More than five
years
Total
2024
$m
$m
$m
$m
Interest-bearing long-term loans and borrowings (Note 28)
(677)
(683)
(2)
(1,362)
Interest-bearing short-term loans and borrowings (Note 24)
(3)
–
–
(3)
Interest-bearing overdrafts (Note 24)
(5)
–
–
(5)
Interest-bearing import and export loans (Note 24)
(14)
–
–
(14)
Interest-bearing lease liabilities (Note 17)
(14)
(26)
(38)
(78)
Trade and other payables (Note 25)
(650)
–
–
(650)
Contingent consideration (Notes 27 and 30)
(86)
(82)
(8)
(176)
(1,449)
(791)
(48)
(2,288)
29. Financial policies for risk management and their objectives continued
Undiscounted cash flows for financial liabilities
Less than one
year
One to five
years
More than five
years
Total
2023
$m
$m
$m
$m
Interest-bearing long-term loans and borrowings (Note 28)
(157)
(1,060)
(5)
(1,222)
Interest-bearing short-term loans and borrowings (Note 24)
–
–
–
–
Interest-bearing overdrafts (Note 24)
(2)
–
–
(2)
Interest-bearing import and export loans (Note 24)
(46)
–
–
(46)
Interest-bearing lease liabilities (Note 17)
(14)
(29)
(48)
(91)
Trade and other payables (Note 25)
(568)
–
–
(568)
Co-development and earnout payment (Notes 27 and 30)
(2)
–
–
(2)
Contingent consideration (Notes 27 and 30)
(28)
(24)
(4)
(56)
(817)
(1,113)
(57)
(1,987)
The Group regularly monitors all cash, cash equivalents and debt to maintain liquidity needs. This is done by analysing debt headroom and expected
cash flows. The Group seeks to be proactive in its liquidity management to avoid any adverse liquidity effect.
At 31 December 2024, the Group had undrawn facilities of $1,297 million (2023: $1,613 million). Of these facilities, $924 million (2023: $1,284 million) were
committed long-term facilities.
30. Other non-current liabilities
As at 31 December
2024
2023
$m
$m
Contingent consideration (Notes 27 and 29)
68
16
Acquired contingent liability (Note 27)
29
54
Deferred income (Note 27)
30
–
127
70
Contingent consideration liability represents a contractual liability arising from business combinations to make payments to third parties in the form
of milestone payments that depend on the achievement of certain regulatory approvals; and payments based on future sales of certain products.
The current portion of these liabilities are recognised in other current liabilities (Note 27).
The contingent consideration liability is accounted for as a financial liability at fair value under IFRS 9 (Note 29).
The acquired contingent liability was recognised as part of business combination. On acquisition, the acquired contingent liability was recognised at
fair value under IFRS 3 ’Business Combinations’ and it is subsequently measured at the higher of the amount that would be recognised under IAS 37
‘Provisions, Contingent Liabilities and Contingent Assets’ and the amount initially recognised less any settlements made in respect of the liability.
31. Share capital
Issued and fully paid – included in shareholders’ equity:
Number
$m
At 31 December 2022 and 1 January 2023
233,069,085
40
Shares issued for employees share scheme
845,519
–
At 31 December 2023 and 1 January 2024
233,914,604
40
Shares issued for employees share scheme
805,082
–
At 31 December 2024
234,719,686
40
As at 31 December 2024, 12,833,233 of the issued share capital were held as treasury shares (2023: 12,833,233), and 1,455,190 shares were held in
the employee benefit trust (EBT) (2023: nil). Treasury shares have no right to receive dividends, and the employee benefit trust (EBT) has waived its
entitlement to dividends. While the voting rights attached to treasury shares are not exercisable, shares held in the EBT retain their voting rights. A total
of 220,431,263 shares were in free issue (2023: 221,081,371).
In 2024, share capital increased by 805,082 shares issued to satisfy exercised share grants under the share-based compensation schemes (2023: 845,519).
Of these, 186 shares were allocated to the EBT and retained within the trust.
Shares held in the EBT were acquired using funds provided by the Group to fulfil its obligation to deliver shares when employees exercise their awards.
These shares are deducted from other reserves, with a corresponding transfer to retained earnings when utilised for the exercise of share awards. During
the year, the Group acquired 1,500,000 shares for a total consideration of $38 million, and 44,996 shares were utilised for the exercise of awards.
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Notes to the consolidated financial statements
continued
32. Cash generated from operating activities
2024
2023
$m
$m
Profit before tax
455
281
Adjustments for depreciation, amortisation and impairment charges/reversals of:
Property, plant and equipment
80
110
Intangible assets
78
131
Right-of-use assets
10
18
Gain from investment at fair value through profit or loss (FVTPL)
(1)
(2)
Cost of equity-settled employee share scheme
27
25
Finance income
(8)
(7)
Finance expense
167
95
Foreign exchange loss and net monetary hyperinflation impact
16
6
Group's share of profit of joint venture
(1)
–
Loss on sale of assets held for sale
1
–
Changes in working capital:
Change in trade and other receivables
(144)
(24)
Change in other current assets
4
(9)
Change in inventories
(112)
(115)
Change in trade and other payables
78
88
Change in other current liabilities
36
13
Change in provisions
(1)
127
Change in other non-current assets
–
5
Change in other non-current liabilities
4
(5)
Cash flow from operating activities
689
737
33. Reconciliation of movement in net debt
2024
2023
$m
$m
Interest-bearing loans and borrowings (Notes 24 and 28)
Balance at 1 January
1,125
1,213
Proceeds from issue of long-term financial debts
684
778
Proceeds from issue of short-term financial debts
387
437
Repayment of long-term financial debts
(536)
(841)
Repayment of short-term financial debts
(411)
(467)
Amortisation of upfront fees
3
2
Foreign exchange translation movements
(3)
3
Balance at 31 December
1,249
1,125
Lease liabilities (Note 17)
Balance at 1 January
66
70
Additions
11
6
Business combination (Note 34)
2
–
Adjustments
(1)
–
Repayment of lease liabilities
(21)
(10)
Balance at 31 December
57
66
Total Debt
1,306
1,191
Cash and cash equivalents (Note 22)
(188)
(205)
Restricted cash (Note 19)
–
(10)
Net debt1
1,118
976
1. Net debt includes long and short-term financial debts and lease liabilities, net of cash and cash equivalents and restricted cash (if any). Net debt excludes co-development and earnout payments,
acquired contingent liabilities and contingent consideration
34. Business combination
Xellia Pharmaceuticals (Xellia)
On 10 September 2024, the Group completed the acquisition of Xellia Pharmaceuticals’ US finished dosage form (FDF) business, related assets and
100% of the issued share capital of Xellia Croatia (R&D centre) for a total consideration of $202 million. This comprises a cash payment of $153 million,
a contingent consideration of up to $50 million, subject to the achievement of certain regulatory and commercial milestones minus working capital
adjustment of $1 million. The acquisition has been accounted for as a business combination in accordance with IFRS 3 ‘Business Combinations’.
The fair value of net assets acquired in the transaction and the goodwill are provisional, with the identifiable assets and liabilities recognised as follows:
$m
Property, plant and equipment (Note 16)
115
Product-related intangible assets (Note 15)
73
Inventories
14
Cash and cash equivalents
3
Right-of-use assets (Note 17)
2
Lease liabilities (Note 17)
(2)
Other payables
(5)
Net identifiable assets acquired
200
Add: Goodwill (Note 15)
2
Total consideration
202
Satisfied by:
Cash consideration
153
Contingent consideration (Note 27)
50
Working capital adjustments
(1)
202
Cash consideration
153
Less: cash and cash equivalents acquired
(3)
Net cash outflow arising from acquisition
150
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Notes to the consolidated financial statements
continued
34. Business combination continued
The Group believes this acquisition will drive long-term growth and success by supporting the expansion of the Injectables segment while diversifying
and strengthening its portfolio. Furthermore, the acquisition of the manufacturing site, along with complex manufacturing technologies, will enhance
capacity and capabilities after the plant’s commissioning and refurbishment is completed. Additionally, the integration of R&D teams from both
companies will strengthen research and development capabilities.
The goodwill recognised reflects synergies from expanded manufacturing capacity, enhanced sales, marketing, and R&D capabilities, and the
diversification of the business portfolio and is not amortisable for tax purposes. Goodwill has been allocated to the Group’s Injectables segment.
Product-related intangible assets comprise product rights of $73 million measured at fair value using a Multi-Period Excess Earnings Method (MPEEM).
Property, plant and equipment mainly include land and buildings valued at $52 million, as well as machinery, equipment and assets under
construction valued at $63 million. These assets were mainly valued using the cost approach.
As part of this acquisition, the Group recognised contingent consideration of $50 million as of the acquisition date. The amount was calculated on the
assumption of a 100% probability of successfully achieving certain regulatory and commercial milestones. Since payment is expected within one year,
no adjustment for net present value has been made to the value of the contingent consideration.
The acquisition-related cost of $2 million was recognised as an expense under selling, general and administrative expenses in the consolidated
income statement.
The business was acquired on 10 September 2024, contributing $24 million in revenue on both a reported and core basis, with a $1 million reported
loss for the year and a core profit of $3 million. Had the acquisition occurred on the first day of the financial year, it would have contributed
approximately $83 million to the Group's core revenue and a core profit of $11 million.
35. Contingent liabilities
Standby letters of credit and letters of guarantees
A contingent liability existed at the balance sheet date in respect of standby letters of credit and letters of guarantees totalling $49 million (2023:
$55 million) arising in the normal course of business. No provision for these liabilities has been made in these consolidated financial statements.
A contingent liability existed at the balance sheet date for standby letters of credit totalling $14 million (2023: $14 million) for potential stamp duty
obligations that may arise from the repayment of loans by intercompany guarantors. It’s not probable that any repayment will be made by the
intercompany guarantors.
Legal proceedings
The Group is involved in a number of legal proceedings in the ordinary course of its business, including actual or threatened litigation and actual or
potential government investigations relating to employment matters, product liability, commercial disputes, pricing, sales and marketing practices,
infringement of IP rights, the validity of certain patents and competition laws.
Most of the claims involve highly complex issues. Often these issues are subject to substantial uncertainties and, therefore, the probability of a loss
being sustained and/or an estimate of the amount of any loss is difficult to ascertain. It is the Group’s policy to provide for amounts related to these
legal matters if it is probable that a liability has been incurred and an amount is reasonably estimable.
In the proceedings noted herein, the Group currently believes it has meritorious defences and intends to vigorously defend itself. From time to time,
however, the Group may settle or otherwise resolve these matters on terms and conditions that it believes to be in its best interest. Litigation outcomes
and contingencies are unpredictable and excessive verdicts can occur. Any legal proceeding, regardless of the merits, might result in substantial costs
to defend or settle or otherwise negatively affect our business.
–
In Re Generic Pharmaceuticals Pricing Antitrust Litigation. Starting in 2016, more than 30 complaints have been filed against Group entities in
the United States on behalf of putative classes of direct and indirect purchasers of generic drug products, as well as several individual direct
action retailer and third party payor plaintiffs. These complaints allege that more than forty generic pharmaceutical defendants, including the
Group entities, engaged in conspiracies to fix, increase, maintain and/or stabilise the prices and market shares of certain generic drug products
during the periods of approximately 2010 to 2016. The plaintiffs seek unspecified treble monetary damages, which can be significantly higher
than the profits Hikma made on the alleged drug products, and equitable injunctive relief under federal and state antitrust and consumer
protection laws. The lawsuits have been consolidated in a multidistrict litigation (MDL) in the United States District Court for the Eastern District
of Pennsylvania (In re Generic Pharmaceuticals Pricing Antitrust Litigation, No. 2724, (E.D. Pa.)). At this point in the proceedings, the Group does
not believe sufficient evidence exists to make a reasonable estimate of any potential liability.
–
Xyrem® (Sodium Oxybate) Antitrust Litigation. Starting in June 2020, more than 20 complaints have been filed in the United States on behalf of
both individual plaintiffs and putative classes of direct and indirect purchasers, as well as third party payors, of Xyrem® against certain Group
entities, Jazz Pharmaceuticals PLC, and other defendants. These complaints allege that Jazz and its subsidiaries entered into unlawful “pay-for-
delay” anticompetitive reverse payment agreements with Hikma in settling patent infringement lawsuits over Xyrem® and delaying generic
competition to Xyrem®. The plaintiffs in these lawsuits seek treble monetary damages, which can be significantly higher than the profits Hikma
makes from selling sodium oxybate, and equitable injunctive relief under federal and state antitrust and consumer protection laws.
35. Contingent liabilities continued
Currently, most of these cases have been consolidated for pretrial purposes in multidistrict litigation (“MDL”) in the United States District Court
for the Northern District of California (In re: Xyrem (Sodium Oxybate) Antitrust Litigation, No.2966, (N.D. Cal.)). A jury trial involving most of the
MDL plaintiffs has been scheduled to start May 19, 2025. Hikma was also named as a defendant in a substantially similar action filed by Aetna Inc.
in California state court (Aetna Inc. v. Jazz Pharms., Inc. et al, No. 22 CV 010951 (Cal. Super. Ct.)). The Aetna matter does not yet have a trial date.
At this point, the Group does not believe sufficient evidence exists to make a reasonable estimate of any potential liability.
–
Amarin Pharma Inc. v. Hikma Pharmaceuticals PLC. In November 2020, Amarin Pharmaceuticals filed a patent infringement lawsuit against
certain Group entities in the United States District Court for the District of Delaware (No. 20-cv-1630) alleging that Hikma’s sales, distribution
and marketing of its generic icosapent ethyl product infringe three Amarin patents that describe certain methods of using icosapent ethyl.
Amarin sought an injunction barring Hikma from selling its generic product as well as unspecified damages. Hikma’s product is not approved
for the alleged patented methods but rather is approved only for a different indication not covered by any valid patents. In January 2022 the
district court dismissed the lawsuit, and Amarin appealed the court’s ruling to the United States Court of Appeals for the Federal Circuit. On
June 25, 2024, the Federal Circuit reversed the district court’s decision, held that Amarin has plausibly pleaded a potential claim for induced
infringement, and remanded the case for further proceedings at the district court. A trial is scheduled to begin September 8, 2026. Meanwhile,
Hikma has petitioned the United States Supreme Court to review the appeals court decision. At this point, the Group does not believe sufficient
evidence exists to make a reasonable estimate of any potential liability.
36. Share-based payments
Long-term incentive plan (LTIP)
The 2023 Long-Term Incentive Plan (LTIP) was introduced under the 2023 Remuneration Policy and was approved by shareholders at the 2023
Annual General Meeting. Under the LTIP, the Company grants performance awards and restricted deferred bonus awards to Executive Directors
of the Group, along with restricted awards for management.
Three-year LTIP performance awards
The three-year LTIP performance awards are conditional grants to the Executive Directors of the Group that are dependent on certain non-market and
market conditions with a vesting period of three years from the grant date, and are then subject to a two-year holding period.
The fair value per share is the face value of shares on the date of grant for non-market conditions. For market conditions, valuation is based on the
Monte Carlo methodology. No discounting for dividend yield is applied as participants will receive the benefit of dividends paid during the vesting
period in the form of additional shares.
The cost is recognised, together with a corresponding increase in equity, on a straight-line basis over the vesting period after the grant date. The cost for the
year was $7 million (2023: $4 million) and has been recorded in the consolidated income statement as part of selling, general and administrative expenses.
Details of the outstanding grants under this plan are shown below:
2024
grants
2023
grants
2023 grants
Total
9 April
31 August
30 May
Number
Year 2024
Beginning balance
–
27,829
608,514
636,343
Granted during the year
788,967
–
–
788,967
Dividends equivalent during the year
8,661
888
18,220
27,769
Forfeited during the year
(52,080)
–
(38,023)
(90,103)
Outstanding at 31 December
745,548
28,717
588,711
1,362,976
Exercisable at 31 December
–
–
–
–
Weighted average remaining contractual life (years)
2.27
1.67
1.41
1.89
Year 2023
Beginning balance
–
–
–
Granted during the year
27,829
648,724
676,553
Dividends equivalent during the year
–
6,350
6,350
Forfeited during the year
–
(46,560)
(46,560)
Outstanding at 31 December
27,829
608,514
636,343
Exercisable at 31 December
–
–
–
Weighted average remaining contractual life (years)
2.67
2.41
2.42
Fair value of each share at grant date $
20.62
27.06
21.13
The share price at grant date $
22.96
27.74
22.32
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Financial
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Notes to the consolidated financial statements
continued
36. Share-based payments continued
LTIP deferred bonus awards
Under this scheme, 50% of the annual bonus is deferred into an award to the Executive Directors of the Group over shares for a vesting period of three
years. Awards are subject to the achievement of Group and individual KPIs in the prior year.
The cost of share-based payments for these share awards is measured by reference to the fair value at the date at which the awards are granted. Fair
value is determined based on the share price as at the date of grant. No discounting for dividend yield is applied as participants will receive the benefit
of dividends paid during the vesting period in the form of additional shares.
The cost is recognised together with a corresponding increase in equity, on a straight-line basis over the year of performance and the vesting period
after the grant date.
The cost of the deferred bonus awards of $0.7 million (2023: $0.5 million) has been recorded in the consolidated income statement as part of selling,
general and administrative expenses.
Details of the outstanding grants under this plan are shown below:
2024 grants
Total
9 April
Number
Year 2024
Granted during the year
75,587
75,587
Dividends equivalent during the year
963
963
Outstanding at 31 December
76,550
76,550
Exercisable at 31 December
–
–
Weighted average remaining contractual life (years)
2.27
2.27
Fair value of each share at grant date $
22.96
The share price at grant date $
22.96
Two-year LTIP restricted awards
Under this award, the Group makes grants of conditional awards to management across the Group for a period of two years. Awards are dependent on
the achievement of individual and Group KPIs one year prior to the grant.
The cost of share-based payments for these share awards is measured by reference to the fair value at the date at which the awards are granted.
Fair value is determined based on the share price as at the date of grant discounted by dividend yield. This cost is recognised together with a
corresponding increase in equity, on a straight-line basis over the year of performance and the vesting period after the grant date.
The cost of the two-year LTIP awards of $11 million (2023: $nil million) has been recorded in the consolidated income statement as part of selling,
general and administrative expenses.
The weighted average exercise share price for 2024 is $25.45.
Details of the outstanding grants under this plan are shown below:
2024 grants
Total
9 April
Number
Year 2024
Granted during the year
922,023
922,023
Exercised during the year
(1,633)
(1,633)
Forfeited during the year
(66,541)
(66,541)
Outstanding at 31 December
853,849
853,849
Exercisable at 31 December
–
–
Weighted average remaining contractual life (years)
1.27
1.27
Fair value of each share at grant date $
21.75
The share price at grant date $
22.96
Expected dividend yield %
2.74%
36. Share-based payments continued
Executive incentive plan
The 2014 Executive Incentive Plan (EIP) was approved by shareholders at the 2014 Annual General Meeting. The EIP is a combined cash bonus
(element A), deferred shares (element B) and restricted shares (element C) scheme. In 2023, this plan was replaced by the 2023 Long-Term Incentive
Plan (LTIP).
Under the EIP, the Company made grants of conditional awards under element B to the senior management level of the Group. Awards were
dependent on the achievement of individual and Group KPIs over one year prior to grant and a two-year vesting period, and are then subject to a two-
year holding period during which they are subject to forfeiture conditions.
The cost of the EIP of $6 million (2023: $11 million) has been recorded in the consolidated income statement as part of selling, general and
administrative expenses and research and development expenses.
The fair value per share is the face value of share on the date of grant less the present value of dividends expected to be paid during the vesting period.
The weighted average exercise share price for 2024 is $25.29.
Details of the outstanding grants under this plan are shown below:
2023
grants
2023
grants
2022
grants
2022
grants
2021
grants
2021
grants
2020
grants
2020
grants
2019
grants
2018
grants
2017
grants
2016
grants
2016
grants
2015
grants
Total
30 May
30 May
25 Feb
25 Feb
25 Feb
25 Feb
27 Feb
27 Feb 12 March
16 May
13 Apr
11 May 17 March 10 April
Number
Year 2024
Beginning balance
153,847 583,295
115,361 399,252
100,442
–
–
–
–
14,257 27,508
–
38,350
–
1,432,312
Exercised during the year
(2,558) (15,218) (9,013) (391,377) (100,442)
–
–
–
–
–
–
–
–
– (518,608)
Forfeited during the year
(5,744) (12,638) (3,392)
(7,875)
–
–
–
–
–
–
–
–
–
–
(29,649)
Outstanding at 31 December
145,545 555,439 102,956
–
–
–
–
–
–
14,257 27,508
–
38,350
–
884,055
Exercisable at 31 December
–
–
–
–
–
–
–
–
–
14,257 27,508
–
38,350
–
80,115
Weighted average remaining
contractual life (years)
1.41
0.41
0.15
–
–
–
–
–
–
3.38
2.36
1.21
–
0.69
Year 2023
Beginning balance
–
– 126,139
421,948
109,104
334,084
134,038
–
–
14,257 27,508
–
51,350
12,012 1,230,440
Granted during the year
167,643
602,131
–
–
–
–
–
–
–
–
–
–
–
–
769,774
Exercised during the year
(13,796) (18,836) (10,778) (20,547)
(8,662) (323,926) (134,038)
–
–
–
–
– (13,000) (12,012) (555,595)
Forfeited during the year
–
–
–
(2,149)
–
(10,158)
–
–
–
–
–
–
–
–
(12,307)
Outstanding at 31 December
153,847 583,295
115,361 399,252
100,442
–
–
–
–
14,257 27,508
–
38,350
–
1,432,312
Exercisable at 31 December
–
–
–
–
–
–
–
–
–
14,257 27,508
–
38,350
–
80,115
Weighted average remaining
contractual life (years)
2.41
1.41
1.16
0.15
0.15
–
–
–
–
4.38
3.36
–
2.21
–
1.15
Fair value of each share at grant
date $
21.30
21.30
25.00
25.38
31.71
32.17
23.70
24.10
20.63
18.45
23.52
31.69
26.21
32.78
The share price at grant date $
22.32
22.32
26.14
26.14
33.09
33.09
24.91
24.91
21.75
19.09
23.98
32.15
26.98
33.24
Expected dividend yield %
2.36%
2.36%
1.50%
1.50%
1.43%
1.43%
1.67%
1.67%
1.79%
1.71%
0.97%
0.73%
0.71%
0.81%
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report
Corporate
governance
Financial
statements
Notes to the consolidated financial statements
continued
36. Share-based payments continued
Management incentive plan
The 2009 Management Incentive Plan (MIP) was approved by shareholders at the 2010 Annual General Meeting and the 2018 MIP was approved by
shareholders at the 2018 Annual General Meeting. Under the MIP, the Company made grants of conditional awards to management across the Group
below senior management level. Awards were dependent on the achievement of individual and Group KPIs one year prior to grant and a two-year
vesting period. This plan was replaced by the 2023 Long-Term Incentive Plan (LTIP).
The cost of the MIP of $3 million (2023: $10 million) has been recorded in the consolidated income statement as part of selling, general and
administrative expenses, cost of sales and research and development expenses.
The fair value per share is the face value of shares on the date of grant less the present value of dividends expected to be paid during the vesting period.
The weighted average exercise share price for 2024 is $25.27.
Details of the outstanding grants under this plan are shown below:
2023
grants
2022
grants
2021
grants
2020
grants
2018
grants
2017
grants
2016
grants
2015
grants
2014
grants
2013
grants
Total
30 May
25 Feb
25 Feb
27 Feb
16 May
19 May
11 May
14 May
11 June
17 May
Number
Year 2024
Beginning balance
545,683
327,434
–
–
707
–
–
–
–
–
873,824
Exercised during the year
(16,550)
(313,101)
–
–
–
–
–
–
–
– (329,651)
Forfeited during the year
(58,739)
(12,405)
–
–
–
–
–
–
–
–
(71,144)
Outstanding at 31 December
470,394
1,928
–
–
707
–
–
–
–
–
473,029
Exercisable at 31 December
1,958
1,928
707
4,593
Weighted average remaining contractual life (years)
0.41
0.08
–
–
3.38
–
–
–
–
–
0.41
Year 2023
Beginning balance
–
347,795
290,650
920
707
1,877
1,799
931
1,290
1,679
647,648
Granted during the year
559,930
–
–
–
–
–
–
–
–
–
559,930
Exercised during the year
(73)
(4,998) (276,357)
(920)
–
(1,877)
(1,799)
(931)
(1,290)
(1,679) (289,924)
Forfeited during the year
(14,174)
(15,363)
(14,293)
–
–
–
–
–
–
–
(43,830)
Outstanding at 31 December
545,683
327,434
–
–
707
–
–
–
–
–
873,824
Exercisable at 31 December
114
2,502
–
–
707
–
–
–
–
–
3,323
Weighted average remaining contractual life (years)
1.41
0.15
–
–
4.38
–
–
–
–
–
0.94
Fair value of each share at grant date $
21.3
25.38
32.17
24.10
18.45
22.09
31.73
32.17
27.73
14.61
The share price at grant date $
22.32
26.14
33.09
24.91
19.09
22.54
32.20
32.63
28.33
14.93
Expected dividend yield %
2.36%
1.50%
1.43%
1.67%
1.71%
1.01%
0.73%
0.71%
0.71%
1.10%
37. Related parties
Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this Note. Transactions
between the Group and its joint venture and other related parties are disclosed below.
Trading transactions:
During the year ended 31 December 2024, the Group entered into the following transactions with related parties:
Darhold Limited (Darhold): is a related party of Hikma because three Directors of Hikma jointly constitute the majority of directors and shareholders
(with immediate family members) in Darhold and because Darhold owns 25.56% (2023: 25.65%) of the share capital and 27.04% (2023: 27.14%) of the
voting capital of Hikma. Other than dividends (as paid to all shareholders), there were no transactions between the Group and Darhold Limited during
the year.
Hubei Haosun Pharmaceutical Co., Ltd.: is a related party of Hikma because the Group holds an interest of 49% in the joint venture (JV) with Haosun
(2023: 49%). During the year, total direct purchases from Haosun were $3.2 million (2023: $1.2 million). In addition, in certain countries the Group
purchases from Haosun indirectly. During the year total indirect purchases from Haosun were $0.7 million (2023: $0.7 million).
Labatec Pharma (Labatec): is a related party of the Group because Labatec is owned by the family of two Directors of Hikma. During the year, total Group
sales to Labatec amounted to $2.9 million (2023: $2.4 million), and total Group purchases amounted to $1.7 million (2023: $1.3 million). At 31 December
2024, the net amount owed by Labatec to the Group was $0.8 million (2023: $0.6 million).
Remuneration of key management personnel
The remuneration of the key management personnel (comprising the Executive Directors, Non-Executive Directors and the senior management as set
out in the corporate governance report) of the Group is set out below in aggregate for each of the categories specified in IAS 24 ‘Related Party
Disclosures’. Further information about the remuneration of the individual Directors is provided in the audited part of the Remuneration Committee
report on pages 116 to 139.
2024
2023
$m
$m
Short-term employee benefits
15.2
15.6
Share-based payments
10.7
9.5
Other benefits
1.7
0.6
27.6
25.7
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report
Corporate
governance
Financial
statements
Notes to the consolidated financial statements
continued
38. Subsidiaries and joint venture
The subsidiaries and joint venture of Hikma Pharmaceuticals PLC are as follows:
Owned by the Group
Ownership %
Ordinary Shares
Ownership%
Ordinary Shares
Company’s name
Incorporated in
Address of the registered office
At 31 December
2024
At 31 December
2023
Al Jazeera Pharmaceutical Industry S.A.R.L
Algeria
Zone d’Activité, Propriété N° 379 Section N° 04 Staoueli,
Algeria
99%
99%
Algerie Industrie Mediterraneene Du Medicament S.A.R.L. Algeria
Zone d’Activité 16/15 Staoueli, Algeria
97%
97%
Hikma Pharma Algeria S.A.R.L.
Algeria
Zone d’Activité 16/15 Staoueli, Algeria
100%
100%
SPA Al Dar Al Arabia pour la Fabrication de Médicaments Algeria
Zone d’Activité El Boustane N° 78, Sidi Abdellah, Al
Rahmania, Algeria
100%
100%
Hikma Canada Limited
Canada
5995 Avebury Rd, Suite 804, Mississauga, ON L5R 3P9,
Canada
100%
100%
Hubei Haosun Pharmaceutical Co., Ltd.1
China
No 20 Juxian Road, Gedian Economic and Technology
Development Area, Hubei, China
49%
49%
Hikma d.o.o.
Croatia
Slavonska avenija 24/6 Zagreb (Grad Zagreb), Croatia
100%
–
Hikma Pharma S.A.E
Egypt
6th of October City, 2nd Industrial Zone, Plot No.(1), Giza –
Egypt
100%
100%
Hikma Pharmaceuticals Industries S.A.E
Egypt
6th of October City, 2nd Industrial Zone, Plot No.(1), Giza –
Egypt
100%
100%
Hikma Specialised Pharmaceuticals (S.A.E)
Egypt
6th of October City, 2nd Industrial Zone, Plot No.(1), Giza –
Egypt
98%
98%
Hikma for Importation Co. LLC
Egypt
6th of October City, 2nd Industrial Zone, Plot No.(1), Giza –
Egypt
99%
99%
Hikma France
France
105 Rue Marcel Dassault, 92100 – Boulogne Billancourt –
France
100%
100%
Hikma Pharma GmbH
Germany
Lochhamer Strasse 13, 82152, Martinsried, Germany
100%
100%
Thymoorgan Pharmazie GmbH
Germany
Schiffgraben 23, DE-38690, Goslar, OT Vienenburg,
Germany
100%
100%
Hikma Services India Private Limited
India
503, Matharu Arcade, Subhash Road
Vile Parle East, Mumbai-400057, India
100%
100%
Hikma Italia S.p.A
Italy
Viale Certosa 10, 27100, Pavia, Italy
100%
100%
Hikma Pharma Limited* 2
Jersey
47 Esplanade, St Helier, JE1 0BD, Jersey
100%
100%
Arab Medical Containers LLC
Jordan
P.O. Box 80, Sahab Industrial Estate, 11512, Jordan
100%
100%
Arab Pharmaceutical Manufacturing PSC
Jordan
Al Buhaira – Salt, P.O. Box 42, Jordan
100%
100%
Hikma International Pharmaceuticals LLC (Exempt)
Jordan
122 Queen Zain AlSharaf Street, Bayader Wadi Al-Seer,
Amman, Jordan
100%
100%
Hikma International Ventures and Development LLC
(Exempt)
Jordan
Bayader Wadi Al-Seer, Industrial Area, Saleem Bin Al-
Hareth Street, Building 21, P.O. Box 182400, Amman, 11118,
Jordan
100%
100%
Hikma Investment LLC*
Jordan
Bayader Wadi Al-Seer, Industrial Area, Saleem Bin Al-
Hareth Street, Building 21, P.O. Box 182400, Amman, 11118,
Jordan
100%
100%
Hikma Pharmaceuticals LLC
Jordan
Bayader Wadi Al-Seer, Industrial Area, Saleem Bin Al-
Hareth Street, Building 21, P.O. Box 182400, Amman, 11118,
Jordan
100%
100%
Hikma Pharmaceuticals LLC (Jordan) (FREE ZONE)
Jordan
Al-Mushatta – Al Qastal Free Zone
P.O. Box 182400 11118 Amman
JORDAN
100%
100%
International Pharmaceutical Research Centre LLC
Jordan
P.O. Box 963166, Amman, 11196, Jordan
51%
51%
Sofia Travel and Tourism
Jordan
Bayader Wadi Al-Seer, Industrial Area, Saleem Bin Al-
Hareth Street, Building 21, P.O. Box 182400, Amman, 11118,
Jordan
100%
100%
Specialised for Pharmaceutical Industries LLC
Jordan
Bayader Wadi Al-Seer, Industrial Area, Saleem Bin Al-
Hareth Street, Building 21, P.O. Box 182400, Amman, 11118,
Jordan
100%
100%
Al Jazeera Pharmaceutical Industries Ltd
KSA
Riyadh Gallery, Olaya Street, P.O. Box 106229, Riyadh,
11666, Saudi Arabia
100%
100%
Hikma Pharmaceuticals for Foreign Companies
Headquarters Co.2
KSA
3005, Imam Saud bin Abdulaziz bin Mohammed Road,
7815 Riyadh 12262, Saudi Arabia
100%
100%
Hikma Pharma Industry
KSA
7709, Al Munisf, 3637
Riyadh, Saudi Arabia
100%
–
38. Subsidiaries and joint venture continued
Owned by the Group
Ownership %
Ordinary Shares
Ownership %
Ordinary Shares
Company’s name
Incorporated in
Address of the registered office
At 31 December
2024
At 31 December
2023
Société de Promotion Pharmaceutique du Maghreb
(Promopharm S.A.)
Morocco
Zone Industrielle du Sahel, Rue N. 7, Had Soualem,
Province de Settat, Morocco
94%
94%
Hikma Pharma Benelux B.V
Netherlands
Atoomweg 12, 1627 LE Hoorn, Netherlands
100%
100%
Hikma Farmaceutica, (Portugal) S.A
Portugal
Estrada Rio Da Mo no.8, 8ª, 8B-Fervenca, 2705-906,
Terrugem SNT, Portugal
100%
100%
Lifotec Farmaceutica S.G.P.S S.A*
Portugal
Estrada Nacional 9, Fervença, São João das Lampas e
Terrugem, Sintra, Portugal
100%
100%
Hikma Care for Medicines and Medical Supplies
Company
Palestine
Mahatma Ghandi Street, Betunia Ramallah, Palestine
51%
51%
Hikma Pharmaceuticals
Palestine
West Bank Al Birah, Ramallah
100%
100%
Hikma Espana S.L
Spain
Calle Anabel Segura no.11, Edificio A, planta 1a, oficina 2,
28108 – Alcobendas, Madrid, Spain
100%
100%
Pharma Ixir Co. Ltd
Sudan
Khartoum State, Buri Al Lamab Area, Block (9), Building
No. (98), Sudan
51%
51%
Savannah Pharmaceutical Industries Co. Ltd
Sudan
Sudan, Port Sudan, Egyptian Consulate Street, Building
No. (5) – Block No. (3), Hay AlMatar
100%
100%
Eurohealth International S.A.R.L.2
Switzerland
Rue des Battoirs 7, 1205 Genève, Switzerland
100%
100%
APM Tunisie S.A.R.L.
Tunisia
14 Rue 8609 – Zone Industrielle Charguia I – Tunis
Carthage 2035
100%
100%
STE D’Industrie Pharmaceutique Ibn Al Baytar*
Tunisia
11 Rue 8610 Charguia 1-2035 Tunis-Carthage, Tunisia
100%
100%
STE Medicef
Tunisia
Avenue Habib Bourguiba, Sidi Thabet, 2020 Ariana,
Tunisia
100%
100%
Hikma Emerging Markets and Asia Pacific FZ-LLC2
United Arab
Emirates
Premises 202-204, Floor 2, Building 26, Dubai Health Care
City, United Arab Emirates
100%
100%
Hikma International Trading Limited2
United Arab
Emirates
The Oberoi Centre, Level 15, Business Bay, P.O. Box
36282, Dubai, United Arab Emirates
100%
100%
Hikma MENA FZE*2
United Arab
Emirates
Office No. FZJOB1020 Jebel Ali Free Zone, Dubai United
Arab Emirates
100%
100%
Hikma UK Limited*2
United Kingdom
1 New Burlington Place, London, W1S 2HR, United
Kingdom
100%
100%
Hikma Ventures Limited2
United Kingdom
1 New Burlington Place, London, W1S 2HR, United
Kingdom
100%
100%
West-Ward Holdings Limited*
United Kingdom
1 New Burlington Place, London, W1S 2HR, United
Kingdom
100%
100%
Hikma Pharmaceuticals International Limited*
United Kingdom
1 New Burlington Place, London, W1S 2HR, United
Kingdom
100%
100%
Hikma Intelligence Limited
United Kingdom
1 New Burlington Place, London, W1S 2HR, United
Kingdom
–
100%
Eurohealth (U.S.A.) Inc
United States
200 Connell Drive, 4th Floor Berkeley Heights, NJ 07922
100%
100%
Hikma Speciality USA, Inc.
United States
1900 Arlingate Lane, Columbus, Ohio 43228
100%
100%
Hikma Labs Inc.
United States
1809 Wilson Road, Columbus, Ohio 43228
100%
100%
West-Ward Columbus Inc.
United States
1809 Wilson Road, Columbus, Ohio 43228
100%
100%
Hikma Injectables USA, Inc.
United States
36 Stults Road, Dayton, New Jersey 08810
100%
100%
Hikma Pharmaceuticals USA Inc.
United States
200 Connell Drive, 4th Floor Berkeley Heights, NJ 07922
100%
100%
Hikma Finance USA LLC
United States
200 Connell Drive, 4th Floor Berkeley Heights, NJ 07922
100%
100%
TACCA, LLC
United States
703 Palomar Airport Road, Suite 280, Carlsbad, CA 92011
90%
90%
Pytrione LLC
United States
703 Palomar Airport Road, Suite 280, Carlsbad, CA 92011
84%
84%
1. The investments in joint venture are accounted for using the equity method (Note 18)
2. Owned by Hikma Pharmaceuticals PLC (‘the Company’)
The investments in subsidiaries are all stated at cost in Hikma Pharmaceuticals PLC and are consolidated in line with IFRS 10.
The Group’s subsidiaries principally operate in trading pharmaceuticals products and associated goods and services, except for Sofia Travel and
Tourism subsidiary which coordinates employees’ travel arrangements.
Companies marked (*) were incorporated as holding companies.
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Strategic
report
Corporate
governance
Financial
statements
Notes to the consolidated financial statements
continued
39. Defined contribution retirement benefit plan
The Group has defined contribution retirement plans in four of its subsidiaries: Hikma Pharmaceuticals PLC – United Kingdom, Hikma Pharmaceuticals
LLC, Arab Pharmaceutical Manufacturing PSC and Hikma Pharmaceuticals USA Inc. The details of each contribution plan are as follows:
Hikma Pharmaceuticals PLC
Hikma Pharmaceuticals PLC has a defined contribution pension plan available for staff working in the United Kingdom whereby Hikma
Pharmaceuticals PLC contributes 10% of basic salary. Employees are immediately entitled to 100% of the contributions, accessible only upon
retirement. Hikma Pharmaceuticals PLC contributions for the year ended 31 December 2024 were $0.3 million (2023: $0.2 million).
Hikma Pharmaceuticals LLC
Hikma Pharmaceuticals LLC has an employee savings plan whereby Hikma Pharmaceuticals LLC fully matches employees’ contributions, which are
fixed at 10% of basic salary. Employees are entitled to 100% of Hikma Pharmaceuticals LLC contributions after three years of employment with the
Company. Hikma Pharmaceuticals LLC contributions for the year ended 31 December 2024 were $3.7 million (2023: $3.6 million).
Arab Pharmaceutical Manufacturing PSC
Arab Pharmaceuticals Manufacturing PSC has an employee savings plan whereby Arab Pharmaceuticals Manufacturing PSC fully matches employees’
contributions, which are fixed at 10% of basic salary. Employees are entitled to 100% of Arab Pharmaceuticals Manufacturing PSC contributions after
three years of employment with the Company. Arab Pharmaceuticals Manufacturing PSC contributions for the year ended 31 December 2024 were
$0.6 million (2023: $0.5 million).
Hikma Pharmaceuticals USA Inc.:
(401(k) Retirement Plan)
Hikma Pharmaceuticals USA Inc. has a 401(k)-defined contribution plan, which allows all eligible employees to defer a portion of their income through
contributions to the plan. Eligible employees can begin contributing to the plan after being employed for 90 days. Employees can defer up to 95% of
their eligible income into the plan, not to exceed $23,000 (2023: $22,500), not including catch-up contributions available to eligible employees as
outlined by the Internal Revenue Service. The company matches the employees’ eligible contribution dollar-for-dollar on the first 6% of eligible pay
contributed to the plan. Employer contributions vest 50% after two years of service and 100% after three years of service. Employees are considered to
have completed one year of service for the purposes of vesting upon the completion of 1,000 hours of service at any time during a plan year. Employer
contributions to the plan for the year ended 31 December 2024 were $8 million (2023: $8 million). The assets of this plan are held separately from those
of the Group. The only obligation of the Group with respect to this plan is to make specified contributions.
Deferred Compensation Plan
Hikma Pharmaceuticals USA Inc. has a defined contribution pension plan available for senior management personnel working in the United States whereby
Hikma Pharmaceuticals USA Inc. contributes up to 10% of basic salary and eligible employees can defer up to 50% of their base salary and 100% of their
variable compensation. Eligible employees are entitled to 100% of the contributions after completing 5 years of service after they become eligible for the
plan. Hikma Pharmaceuticals USA Inc. contributions for the year ended 31 December 2024 were $0.7 million (2023: $0.6 million).
Company balance sheet
At 31 December 2024
2024
2023
Note
$m
$m
Non-current assets
Investments in subsidiaries
3
3,291
3,303
Due from subsidiaries
4
39
32
Intangible assets
4
7
Right-of-use assets
2
3
Financial and other non-current assets
2
3
Property, plant and equipment
1
1
3,339
3,349
Current assets
Trade and other receivables
5
346
304
Due from subsidiaries
4
69
39
Cash and cash equivalents
6
40
46
Other current assets
7
31
31
486
420
Total assets
3,825
3,769
Current liabilities
Other payables
2
4
Due to subsidiaries
8
28
10
Short-term financial debts
9
84
61
Lease liabilities
2
2
Other current liabilities
22
19
138
96
Net current assets
348
324
Non-current liabilities
Long-term financial debts
9
288
325
Due to subsidiaries
8
75
–
Lease liabilities
1
3
364
328
Total liabilities
502
424
Net assets
3,323
3,345
Equity
Share capital
11
40
40
Share premium
282
282
Other reserves
(35)
2
Profit for the year
12
164
71
Retained earnings
2,872
2,950
Total equity
3,323
3,345
The financial statements of Hikma Pharmaceuticals PLC, registered number 5557934, on pages 207 to 213 were approved by the Board of Directors on
25 February 2025 and signed on its behalf by:
Said Darwazah
Executive Chairman
25 February 2025
Riad Mishlawi
Chief Executive Officer
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Strategic
report
Corporate
governance
Financial
statements
Company statement
of changes in equity
For the year ended 31 December 2024
Other reserves
Share
capital
Share
premium
Capital
redemption
reserve
Employee
benefit trust
(EBT) reserve
(Note 11)
Total other
reserves
Retained
earnings
Total
$m
$m
$m
$m
$m
$m
$m
Balance at 1 January 2023
40
282
2
–
2
3,062
3,386
Profit for the year
–
–
–
–
–
71
71
Total comprehensive income for the year
–
–
–
–
–
71
71
Cost of equity settled employee share
scheme
–
–
–
–
–
25
25
Dividends paid
–
–
–
–
–
(137)
(137)
Balance at 31 December 2023 and 1 January
2024
40
282
2
−
2
3,021
3,345
Profit for the year
–
–
–
–
–
164
164
Total comprehensive income for the year
–
–
–
–
–
164
164
Cost of equity settled employee share
scheme
–
–
–
–
–
27
27
Purchase of shares held in employee benefit
trust (EBT)
–
–
–
(38)
(38)
–
(38)
Exercise of equity-settled
employee share scheme
–
–
–
1
1
(1)
–
Dividends paid
–
–
–
–
–
(175)
(175)
Balance at 31 December 2024
40
282
2
(37)
(35)
3,036
3,323
At 31 December 2024 and 2023, the Company had retained earnings available for distribution of $1,998 million, which is determined with reference to
the Companies Act 2006 and to the guidance issued by the Institute of Chartered Accountants in England and Wales in 2017.
For the proposed final dividend for the year ended 31 December 2024, see Note 13 to the Group consolidated financial statements.
Notes to the Company
financial statements
For the year ended 31 December 2024
1. Adoption of new and revised standards
The impact of the new and revised standards on the Company is consistent with that on the Group. Details are given in Note 1 to the Group
consolidated financial statements.
2. Significant accounting policies
Basis of accounting
The Company financial statements have been prepared in accordance with FRS 101.
As permitted by FRS 101, the Company has taken advantage of the following exemptions from the requirements of IFRS Accounting Standards
as below:
–
Paragraph 10(d) of IAS 1 ‘Presentation of Financial Statements’ (statement of cash flows)
–
Paragraph 16 of IAS 1 ‘Presentation of Financial Statements’ (statement of compliance with all IFRS Accounting Standards)
–
Paragraph 38A of IAS 1 ‘Presentation of Financial Statements’ (requirements for minimal of two primary statements, including cash flow
statements)
–
Paragraph 45(b) and 46 to 52 of IFRS 2 ‘Share-based Payment’
–
Paragraph 111 of IAS 1 ‘Presentation of Financial Statements’ (cash flow statement information)
–
Paragraphs 134 to 136 of IAS 1 'Presentation of Financial Statements' (capital disclosures)
–
IFRS 7 ‘Financial Instruments: Disclosure’
–
Paragraph 17 of IAS 24 ‘Related Parties Disclosures’
–
Paragraph 30 and 31 of IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’
–
IAS 7 ‘Statement of Cash Flow’
–
Paragraphs 91 to 99 of IFRS 13 'Fair Value Measurement'
No individual profit and loss account is prepared as provided by section 408 of the Companies Act 2006.
The Company financial statements have been prepared under the historical cost basis, except for the revaluation to fair value of certain financial
assets and liabilities. The principal accounting policies adopted are the same as those set out in Note 2 to the Group consolidated financial statements
with the addition of the policies noted below.
Investment in subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate, provision for impairment. The carrying value of investments is reviewed for
impairment when there is an indication that the investment might be impaired. Any provision resulting from an impairment review is charged to the
Company profit and loss. Testing for impairment requires making estimates for the valuation of the investments.
Financial assets at amortised cost
Trade receivables acquired from subsidiaries through an intercompany factoring arrangement and intercompany receivables are classified
as financial assets at amortised cost and are measured at amortised cost using the effective interest method less any expected credit loss.
The Company applies a general approach in calculating expected credit loss for the intercompany receivables. At the reporting date, all outstanding
balances were considered to have low credit risk; therefore, the general approach using a 12-month probability of default was applied when assessing
expected credit loss on a 12-month period basis. The Company applies a simplified approach for the intercompany factoring arrangement.
Share-based payments
Equity-settled employee share schemes are accounted for in accordance with IFRS 2 ‘Share based payment’. The current charge relating to the
subsidiaries’ employees is recharged to the respective subsidiary.
The Company provides funding to the employee benefit trust (EBT) to acquire Company shares, fulfilling its obligation to deliver shares when employees,
including those within the Company’s subsidiaries, exercise their awards. Shares held by the EBT are deducted from other reserves, with a corresponding
transfer to retained earnings upon the exercise of share awards.
There are no critical judgements and estimates involved in applying the above accounting policies, that may have a significant risk of resulting in a
material adjustment to the carrying amount of assets and liabilities within the next financial year.
The presentational and functional currency of Hikma Pharmaceuticals PLC is the US dollar as the majority of the Company’s transactions are
conducted in US dollars.
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3. Investments in subsidiaries
The details of investment in subsidiaries are stated in Note 38 to the Group consolidated financial statements.
The following table provides the movement of the investments in subsidiaries:
2024
2023
$m
$m
Beginning balance
3,303
3,296
Additions to subsidiaries
–
7
Impairment charges
(12)
–
Ending balance
3,291
3,303
The movement for the year reflects an impairment of the investment in Hikma Ventures Limited, driven by a decline in its net asset value.
4. Due from subsidiaries
Non-current
As at 31 December
2024
2023
$m
$m
Hikma UK Limited
19
12
Hikma Pharma Industry
20
–
Al Jazeera Pharmaceuticals Industries Ltd
–
20
Hikma Emerging Markets and Asia Pacific FZ-LLC
4
4
Less: provision for expected credit loss
(4)
(4)
39
32
Current
As at 31 December
2024
2023
$m
$m
Hikma Pharmaceuticals USA Inc.
49
13
Al Jazeera Pharmaceuticals Industries Ltd
2
5
Hikma Emerging Markets and Asia Pacific FZ-LLC
7
7
Hikma MENA FZE
–
7
Arab Pharmaceutical Manufacturing PSC
4
1
Hikma Pharma S.A.E
2
3
Others
12
10
Less: provision for expected credit loss
(7)
(7)
69
39
5. Trade and other receivables
As at 31 December
2024
2023
$m
$m
Trade and other receivables
346
304
The credit risk associated with these factored receivables is similar to that of the Group’s US receivables since it relates to the same credit portfolio
and customers.
6. Cash and cash equivalents
As at 31 December
2024
2023
$m
$m
Cash at banks and on hand
8
12
Time deposits
32
34
40
46
Cash and cash equivalents include highly liquid investments with maturities of three months or less which are convertible to known amounts of cash
and are subject to insignificant risk of changes in value.
7. Other current assets
As at 31 December
2024
2023
$m
$m
Investments at FVTPL
25
24
Prepayments
5
6
Others
1
1
31
31
Investment at FVTPL comprises a portfolio of debt instruments that are managed by an asset manager and which the Company has designated as
measured at fair value through profit or loss. These assets are classified as level 1 as they are based on quoted prices in active markets (See Note 29
to the Group consolidated financial statements).
8. Due to subsidiaries
Non-current
As at 31 December
2024
2023
$m
$m
Al Jazeera Pharmaceuticals Industries Ltd
45
–
Hikma Pharmaceuticals LLC
30
–
75
–
The balances above relate to intercompany revolving credit facilities executed in the last quarter of the year used for cash management purposes.
Current
As at 31 December
2024
2023
$m
$m
Hikma Pharmaceuticals LLC
20
8
Hikma Farmaceutica, (Portugal) S.A
4
1
Hikma Pharmaceuticals for Foreign Companies Headquarters Co.
2
–
Others
2
1
28
10
Notes to the Company financial statements
continued
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Notes to the Company financial statements
continued
9. Financial debts
As at 31 December
2024
2023
$m
$m
Long-term loans
375
391
Less: current portion of long-term loans
(84)
(61)
Less: upfront fees
(3)
(5)
Non-current financial debts
288
325
Financial debts include:
a) $1,150 million syndicated revolving credit facility that matures on 4 January 2029. At 31 December 2024, the facility had an outstanding balance
of $240 million (2023: $nil) and a fair value of $240 million (2023: $nil) and an unutilised amount of $910 million (2023: $1,150 million). This facility
is available in two tranches: one tranche of $760 million for Hikma Pharmaceuticals PLC, of which $55 million was utilised (2023: $nil), and a
second tranche of $390 million for Hikma Finance USA LLC, of which $185 million was utilised (2023: $nil). This facility can be used for general
corporate purposes
b) A $400 million five-year syndicated loan facility that matures on 13 October 2027. At 31 December 2024, the facility had an outstanding balance
of $162 million (2023: $315 million) and a fair value of $162 million (2023: $315 million). This facility was granted in two tranches: one tranche of
$250 million for Hikma Pharmaceuticals PLC, of which the outstanding balance at 31 December 2024 was $72 million (2023: $205 million), and a
second tranche of $150 million for Hikma Finance USA LLC with an outstanding balance of $90 million (2023: $110 million). The proceeds were used
for general corporate purposes
c) A $200 million eight-year loan facility from the International Finance Corporation and Managed Co-lending Portfolio program that matures
on 15 September 2028. At 31 December 2024, the facility had an outstanding balance of $185 million (2023: $100 million) and a fair value of
$185 million (2023: $100 million)
d) A $150 million ten-year loan facility from the International Finance Corporation that matures on 15 December 2027. At 31 December 2024, the
facility had an outstanding balance of $63 million (2023: $86 million) and a fair value of $61 million (2023: $80 million). The proceeds were used
for general corporate purposes
The weighted average interest rates incurred by the Group are disclosed in Notes 24 and 28 to the of the Group consolidated financial statements.
10. Staff costs
Hikma Pharmaceuticals PLC has an average of 30 employees (2023: 26 employees) (excluding Executive Directors); with a total compensation
expense of $8 million (2023: $6 million), of which salaries and bonuses were $6 million (2023: $5 million), the remaining $2 million (2023: $1 million)
mainly represents national insurance contributions and other employee benefits. Further information about the remuneration of the individual
Directors is provided in the audited part of the Remuneration Committee report on pages 116 to 139.
11. Share capital
Issued and fully paid – included in shareholders’ equity:
Number
$m
As at 1 January 2023
233,069,085
40
Shares issued for employees share scheme
845,519
–
At 31 December 2023 and 1 January 2024
233,914,604
40
Shares issued for employees share scheme
805,082
–
As at 31 December 2024
234,719,686
40
As at 31 December 2024, 12,833,233 of the issued share capital were held as treasury shares (2023: 12,833,233), and 1,455,190 shares were held in
the employee benefit trust (EBT) (2023: nil). Treasury shares have no right to receive dividends, and the employee benefit trust (EBT) has waived its
entitlement to dividends. While the voting rights attached to treasury shares are not exercisable, shares held in the EBT retain their voting rights. A total
of 220,431,263 shares were in free issue (2023: 221,081,371).
In 2024, share capital increased by 805,082 shares issued to satisfy exercised share grants under the share-based compensation schemes (2023:
845,519). Of these, 186 shares were allocated to the EBT and retained within the trust.
Shares held in the EBT were acquired using funds provided by the Company to fulfil its obligation to deliver shares when employees, including those
within the Company’s subsidiaries, exercise their awards. These shares are deducted from other reserves, with a corresponding transfer to retained
earnings when utilised for the exercise of share awards. During the year, the Company acquired 1,500,000 shares for a total consideration of
$38 million, and 44,996 shares were utilised for the exercise of awards.
12. Profit for the year
The net profit in the Company for the year is $164 million (2023: $71 million), this mainly includes dividend income of $198 million (2023: $70 million)
in addition to factoring income from subsidiary, general and administrative expenses and net financing expenses. Audit fees for the Company are
included within fees to the Company's auditor and its associates for the audit of the parent company and consolidated financial statements as
disclosed in Note 7 to the Group consolidated financial statements.
13. Contingent liabilities and financial guarantees
A contingent liability existed at the balance sheet date for standby letters of credit totalling $14 million (2023: $14 million) for potential stamp duty
obligations that may arise from the repayment of loans by intercompany guarantors. It is not probable that any repayment will be made by the
intercompany guarantors.
In addition, the Company guaranteed Hikma Finance USA LLC $500 million, 3.25%, five-year Eurobond issued in July 2020 (Note 28 to the Group
consolidated financial statements). The Company has also guaranteed Hikma Pharmaceuticals USA Inc. contingent consideration related to a
business combination with a carrying value as of 31 December 2024 of $103 million (2023: $41 million) (Note 27 and 30 to the Group consolidated
financial statements). Financial guarantees issued by the Company on behalf of subsidiaries are accounted for at fair value in accordance with IFRS 9.
The fair value of these liabilities is immaterial given the low probability of default for any of the related subsidiaries.
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2025 financial calendar
20 March
2024 final dividend ex-dividend date
21 March
2024 final dividend record date
24 April
Annual General Meeting
1 May
2024 final dividend paid to shareholders
7 August*
2025 interim results and interim
dividend announced
14 August*
2025 interim dividend ex-dividend date
15 August*
2025 interim dividend record date
18 September*
2025 interim dividend paid to shareholders
* Provisional dates
Shareholding enquiries
Enquiries or information concerning existing shareholdings
should be directed to Hikma’s Registrar, MUFG Corporate
Markets, either:
– in writing to Shareholder Services, MUFG Corporate Markets,
Central Square, 29 Wellington Street, Leeds LS1 4DL
– by telephone on 0371 664 0300. Lines are open 09:00 – 17:30,
Monday to Friday excluding public holidays in England and Wales.
Calls to 0371 are charged at the standard geographic rate and will
vary by provider. Calls outside the United Kingdom are charged
at the applicable international rate
– by email to shareholderenquiries@cm.mpms.mufg.com
– online at www.hikmashares.com/welcome
Dividend payments – currency
Hikma declares dividends in US dollars. Unless you have elected
otherwise, you will receive your dividend in US dollars. Shareholders
can opt to receive the dividend in pound sterling or Jordanian dinar.
The Registrar retains records of the dividend currency for each
shareholder and only changes them at the shareholder’s request.
If you wish to change the currency in which you receive your
dividend please contact the Registrar.
Dividend payments – bank transfer
Shareholders who currently receive their dividend by cheque can
request a dividend mandate form from the Registrar and have their
dividend paid direct into their bank account on the same day as the
dividend is paid. The tax voucher is sent direct to the shareholder’s
registered address.
Dividend payments – international payment system
If you are an overseas shareholder, the Registrar is able to pay
dividends in several foreign currencies for an administrative charge
of £5.00, which is deducted from the payment. Contact the Registrar
for further information.
Website
Press releases, the share price and other information on the Group
are available on Hikma’s website www.hikma.com.
Share listings
London Stock Exchange
Hikma’s Ordinary Shares of 10 pence each (Shares) are admitted to
the Official List of the London Stock Exchange. They are listed under
EPIC: HIK, SEDOL: B0LCW08 GB and ISIN: GB00B0LCW083.
Further information on this market, its trading systems and current
trading in Hikma’s shares can be found on the London Stock Exchange
website www.londonstockexchange.com.
Global Depository Receipts (GDRs)
Hikma also has listed GDRs on Nasdaq Dubai for which Citibank
acts as Depositary. They are listed under EPIC – HIK and ISIN –
US4312882081. Further information on Nasdaq Dubai, its trading
systems and current trading in Hikma’s GDRs can be found on the
website www.nasdaqdubai.com.
American Depository Receipts (ADRs)
Hikma has an ADR programme for which Bank of New York Mellon acts
as Depository. One ADR equates to two Hikma ordinary shares. ADRs
are traded as a Level 1 (OTC) programme under the symbol HKMPY.
Enquiries should be made to:
The Bank of New York Mellon
Shareholder Correspondence
PO Box 43078
Providence RI 02940-3078
By Overnight Courier or Registered Insured Mail:
The Bank of New York Mellon
Shareholder Correspondence
150 Royall St., Suite 101
Canton, MA 02021
Tel: +201-680-6825 (for calls outside the USA)
Tel: +1-888-269-2377 (for toll-free calls within the USA)
E-mail: shrrelations@cpushareownerservices.com
Website: www.mybnymdr.com
Shareholder fraud
The Financial Conduct Authority has issued a number of warnings
to shareholders regarding boiler room scams. Shareholders may
have received unsolicited phone calls or correspondence concerning
investment matters. These are typically from overseas based ‘brokers’
who target UK shareholders, offering to sell them what often turn out
to be worthless or high-risk shares in US or UK investments. These
operations are commonly known as boiler rooms. These brokers
can be very persistent and extremely persuasive. Shareholders are
advised to be very cautious of unsolicited advice, offers to buy shares
at a discount or offers of free company reports. If you receive any
unsolicited investment advice:
– obtain the correct name of the person and organisations
– check they are authorised by the FCA by looking the firm up on
www.fca.org.uk/register
– report the matter to the FCA either by calling 0800 111 6768 or visit
www.fca.org.uk/consumers
– if the caller persists, hang up
Details of the share dealing facilities sponsored by Hikma are
included in Hikma’s mailings and are on Hikma’s website.
Hikma’s website is www.hikma.com and the registered office
is 1 New Burlington Place, London W1S 2HR.
Telephone number + 44 (0)20 7399 2760.
Shareholder information
Hikma Pharmaceuticals PLC
Registered in England and Wales number 5557934
Registered office:
1 New Burlington Place
London W1S 2HR
UK
Telephone: +44 (0)20 7399 2760
E-mail: uk-investors@hikma.com
Hikma Pharmaceuticals USA Inc.
200 Connell Drive, 4th Floor
Berkeley Heights
New Jersey 07922
US
Telephone: +1 908 673 1030
Hikma Pharmaceuticals LLC
Al-Bayader
King Adbullah The Second Street
Facing Al-Ahli Club
Amman
Jordan
Telephone: +962 6 5802900
Hikma Farmacêutica (Portugal) S.A
Estrada do Rio da Mó
8, 8A e, 8B, Fervença
2705 – 906 Terrugem
Sintra, Portugal
Telephone: +351 21 9608410
Advisers
Auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
UK
Brokers
Citigroup Global Markets Ltd
33 Canada Square
Canary Wharf
London E14 5LB
UK
J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP
UK
Registrars
MUFG Corporate Markets
Central Square
29 Wellington Street
Leeds
LS1 4DL
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© Hikma Pharmaceuticals PLC
1 New Burlington Place
London W1S 2HR
UK
T +44 (0)20 7399 2760
www.hikma.com