Hikma Pharmaceuticals - FY 2025 Earnings Analysis

Performance Highlights

Hikma reported FY 2025 core revenue of $3,349 million, up 6% year-on-year, and core operating profit of $741 million, up 3%, both in line with guidance revised in November 2025, with core basic EPS of 228 cents versus 224 cents in 2024. Group reported operating profit fell 11% to $542 million, primarily due to a $72 million one-off legal settlement related to sodium oxybate, while core EBITDA grew 4% to $853 million at a 25.5% margin.

The most important operating driver was the divergence in divisional performance: Branded delivered 10% revenue growth and a 26.4% core operating margin, Hikma Rx held revenue flat at $1,037 million while expanding core margin to 17.3%, and Injectables grew revenue 7% but saw core operating profit decline 6% as competition on high-value US products and a shift toward lower-margin third-party-sourced and MENA revenue compressed core margin to 31.0% from 35.3%.

Management Outlook and Forward Catalysts

For 2026, management guides group revenue growth of 2% to 4% and core operating profit of $720 million to $770 million, with Injectables margin guided to compress further to 27%–28% as R&D spend increases toward 5% of revenue, CMO activity declines, and sales and marketing investment rises. Medium-term group guidance has been withdrawn, signalling that management views 2026 as a deliberate investment year before the Bedford facility commences commercial bag, liquid, and lyophilisation production in 2028.

The central investor debate is whether Injectables margin stabilises after 2026 or continues to drift lower, with bulls pointing to a 118-product pipeline including 15 ready-to-use formulations, a $250 million buyback, and Branded's consistent 25%-plus margins as evidence of earnings quality, while bears focus on the CFO vacancy, withdrawn medium-term targets, and tariff and third-party mix risks that could keep Injectables margins under pressure through the Bedford ramp.