Hikma Pharmaceuticals PLC (HIK) Earnings Call Transcript & Summary

Great. Thank you all for coming. It's great to have so many guests here. We know it's a long way to come, but I think it's much longer for our team to be honest, than for the team from London because what I was really surprised to find out is that I think the Jordan team flew 7.5 hours to get here. And I think on a direct flight, and I think the Saudi flight may have been even longer. So it seems like, come visit us here in Morocco, but actually, our team is very spread out across the region. But we're very, very pleased to have you all here today. I think you will really be able to learn a lot about our business over the course of the day. We have the GMs of all of our sites here. So whilst we'll give you an overview of the branded business, we'll also -- you'll also be able to deep dive into our key markets, whether it's through a Q&A session that we will host or over lunch, the coffee breaks or dinner. So we really feel that this is such an important part of our business. We often get feedback that people don't understand it. They feel it's a bit of a black box and so we're hoping to open up that box, help you understand the business and help you realize how great the opportunities are that we have and the potential of this business going forward. So how the day will work is I'm going to pass over to Mazen, who is our Vice Chairman and the President of the MENA region. And then he will introduce the rest of the team, and we will go through a presentation. And then we will have a Q&A panel, so that will give you a chance to ask questions to the full team. We'll have a coffee break within that, and then we'll have lunch. And then after lunch, we have a presentation on our Moroccan business, and we'll organize everyone into groups and then we'll head off on the tour. So when we finish up the tour is probably around 3:30, a chance for one more coffee before you hit the traffic of Casablanca. But we hope we have a great day, and I'm just going to show a quick video on our business, and then we'll get started.

So good morning again, and welcome to Morocco. My name is Tareq Darwazeh. I'm the Chief Operating Officer for the MENA region. I joined Hikma in 2008, I started in sales and marketing, as a medical rep, worked throughout the MENA for 3 years and then I joined our business in the U.S. Back then, we were growing in Injectables globally, so I worked on the integration of back then, the Multi-Source Injectables facility that we acquired for Baxter. I stayed there for 3 years, then I came back to the MENA with the mandate of building out the injectables business and it actually developed into a hospital business. So I got exposure to the MENA throughout that time span, then I moved in sales and marketing for the branded business. And then throughout that, I developed to leading and working directly with Mazen and the rest of the team on the MENA region as a whole, where I manage the P&L for the MENA with Mazen, we work on the strategy. And I work very closely with the team throughout the different markets. And I'm very excited today to start off by explaining the MENA to you a bit, and then it's going to be followed by a strategic expansion of the MENA, we're going to go over our strategy and Samer will be presenting that. And following that, we're going to go over the Injectables business to give you a snapshot of how we operate through our global presence, where we bring it more into the MENA, and the presentation will be done by Sherif, who is leading the Injectables and Hospital business in the region now. So to start out, for the MENA, we are -- we have a very unique presence. As Mazen mentioned earlier, Morocco is our last frontier, but we're present across 17 different markets. And in every market, we have a different business operating model that caters to the market. So we look at our markets based on clusters, and we have a tier model for the market. So our largest market in terms of tiers are Saudi Arabia, Algeria and Egypt, and that's based on the potential of the market, on our presence, and as well on how we see the market developing into a growth strategy on a growth phase over the next years. Then we have our Tier 2 markets where we have a strong presence as well. We have manufacturing facilities in a lot of our Tier 2 markets. And these are markets where we believe the potential for growth is higher, and we're investing more and more in. Then we move to our smaller markets, which are Tier 3 and Tier 4 markets where we have different business models to cater for those markets. But it's worth mentioning that in all our markets and in all our tiers, we have boots on the ground. We have strong local teams that work with the regulators, that work with Hikma to bring new technologies, new therapeutic areas to cater to the market. So we don't have a one-fit model for every market. However, we have a one-stop shop solution in the MENA region as a whole. And it's worth noting that over 40% -- or around 40% of our business in the MENA is under license. So we bring in a lot of novelty products, a lot of technologies, a lot of specialized products, and we group them with our existing products. And when we work with our partners and licensors, we provide a one-stop shop solution for them. So we do a lot of tech transfer into our facilities to the MENA because a lot of MENA markets have a closed system. So the sites are actually market access sites where if something is not manufactured locally, it may be done from importation in certain markets. So what we do is we're bringing the technology, we tech transfer it, and we start producing the medicines locally in order to grow and develop within the market. And this is why you're going to see a heavy manufacturing footprint in the MENA, but this is by design. And this is what enables us to grow faster as Hikma to take a leading position in the market and to shape it. So in terms of our ambition today, we have a very strong market presence. We're the second largest player in the MENA. We have a very deep understanding of the local regulatory system, the regional healthcare landscape. And as Mazen mentioned and as you will see throughout the presentation, our teams work very closely with regulators on bringing new technologies, a lot of instances where we don't have landscape in the MENA, for example, for biosimilars, when we started working in biosimilars, there were no regulations for biosimilars. So we actually work with the regulators on having a ground framework for registering biosimilars. We connected across different authorities in the region due to our position. So this helped us develop the market. And what we did, we -- not only did we increase access to more affordable medication, but we also gave patients different alternatives, and we give governments and our partners as well more access to medication, which works within our vision and mission. We have excellent customer relationships. We're the trusted partner of choice, for regulators, for licensors and for patients because our strategic initiatives are and our portfolio is changing to become into more chronic medications. We're delivering more high-value products, more first generics where we add value, and we give the patients a faster, better second choice. We give them more affordable medications and we're expanding our offerings more holistically throughout the region. So this is just a quick snapshot. At Hikma, we've grown organically and inorganically. And this shows how we've been growing over the last 45 or 47 years throughout the MENA. We have a lot of manufacturing presence. We work with different companies to bring different innovations and technologies, and we are still looking at different opportunities to grow within MENA to build on our footprint because we're very well positioned in the MENA to deliver on more technologies, to deliver on newer products within our current and existing infrastructure since we're present across all of MENA and this is a very unique position that we're in because we invested early in the MENA and this is why today, we're able to grow and develop further in the MENA because of our extensive footprint throughout the region. And speaking of our footprint today, we're powerhouse in the region, operate in 17 different markets. We have 20 manufacturing plants today as we speak with more to come. We have 5 R&D centers to support our growth in the region. We have close to 6,000 team members in the MENA where 1/3 of them are boots on the ground, working daily with relationships and interactions with the doctors. So our reach within the region is also very strong, which enables us to promote and build on our products. And just a quick snapshot of the MENA and how we operate today. We're on 25% of the group revenue for 2023, we're 21% of the group operating profit. This -- the MENA accounts for 32% of the group revenue when we look at branded and injectables, in terms of injectables we're 7% of the group revenue. And if we were to jump into the MENA just to give -- to go over the holistic picture of the MENA, today the MENA market is at $39.5 billion, 41% of the total MENA sales regionally are coming from generic products where we see a growth in that, and we foresee a very strong growth. The governmental sector contributes to 31% of the total MENA health care spend. And post-Arab Spring, this is increasing more and more because governments are looking more for localization. They want safety and security, post-COVID, a lot of governments are becoming more wary of their supply chain. So they're promoting local investments for manufacturing. They're also increasing the health care spend on more preventative healthcare, more on lifestyle diseases. They're looking more -- they're increasing the hospital beds. So as a region, we foresee very strong growth within the region because the dynamics and the life expectancy are increasing in the MENA. So it's all working in the favor of the industry in terms of growth, and it's giving very good economic indicators. And the noncommunicable diseases in the MENA are expected to grow at a higher rate as mentioned earlier. The aging population in the MENA is also working in terms of improved healthcare standards, the life expectancy 74 years, it's gone up a few years in the last 10, 15 years. So the macroeconomic trends are also showing the positive factors for the MENA in terms of growth. And as I mentioned or as you mentioned earlier today, Hikma is the second largest pharma player within the region. We've gone up 3 ranks from 2020, and this came due to our portfolio, due to the way we operate in the market due to our new launches, due to our efficiency in terms of delivering on a model of growth in the market because of our presence, our reach, this all paid off as we grew within the region. So we really understand the region. We know how to operate, and we're investing a lot within the region to grow and develop on it. And this is just a snapshot of our rank in the overall markets, and it's worth noting that over the last couple of years, we've really, really heavily invested in our portfolio. And this is something that's delivering a lot of growth for us now. And today, most of our prescriptions have shifted to more to chronic prescriptions, which are in line with our strategy for growth and development. And it's more consistent business down the road. So the way we're thinking has changed drastically over the last 5 to 10 years in the MENA, and we are seeing that today more and more. We have a very strong track record of expansion and of growth within the region. And this is just -- since we've talked about the past, now we're talking about the present and the future. We've historically grown at 6% in terms of revenue compounded annual growth. Today, we're working to increase that to 7% to 8%. And our operating profit has also increased from 20% to the mid-20s over the last couple of years in the MENA and we're looking to maintain that position. And now I'm going to call over my colleague, Samer Al Ansari, who is our Vice President of Marketing, to join. Thank you.

Thank you, Tareq. So good morning, everyone, and welcome again to Morocco. I'll try in the coming slides, just to give you some sort of highlights on our strategy, ambition and our strategy how to achieve this ambition as well as going through the progression that we have in the past few years, just to show you how things have worked for us in MENA. So I start first of all with our ambition. And our ambition is very clear. As mentioned earlier, we need to become the leading pharmaceutical player within MENA. And that's mainly by bringing products that are addressing the unmet needs, the big burden that Tareq mentioned earlier, which is going more and more towards the noncommunicable diseases in an affordable way so that we can increase even the share of patients that can use such medications. And our strategy reaching there is based on 3 core pillars. The first one is having the right products, a robust pipeline, a product that is tailored and is addressing the unmet needs within MENA, a product that is first to market, so we need to register it as soon as possible and a product that's differentiated, so it won't be easy to copy. Then we need, of course, the operational efficiency, the enough supply of this product at a competitive price. And finally, and the most important part in MENA is that we need to reach the right customers with the right message, and that's all related to the value proposition part. So what I'll do in the coming slides, I'll just take you through each and every one of these pillars. And maybe we can show more examples on how this is being done in the past and how we are planning to do it in the future. So let's start first with the robust pipeline. Again, our aim is definitely to match with the needs that are there in the market with where the burden is coming. And thus, as you can see from the slide, it just resembles to some extent, where the noncommunicable diseases are going are represented here with chronic diseases within our portfolio. This is a portfolio of different time intervals. 8 years back, we were at 44% of our chronic disease, where we were an anti-infective company. By 2024 and end of this year, we are expecting to reach 59% contribution of chronic diseases. And by the next 5 years, based on our current pipeline, we are expecting to reach even to 63% contributed from products that are related to chronic diseases. Now I'll go in detail, and I'll just give a more detailed approach to how our pipeline is progressing. And I selected here 3 of the core diseases that are really causing the biggest burden in MENA. And I guess they are also presenting some burden at a global level, but let's take them one by one. So I take with the lifestyle diseases as the first part. And if you know the lifestyle diseases is a cluster of diseases related to diabetes, hypertension, hyperlipidemia as well as obesity. And I'll give you an example. When talking about diabetes, at a global setting, the prevalence of diabetes is almost from 7% to 9%. In MENA, it reached up to 16% and in some markets even exceeding the 20%. So it's a big burden. And our role as Mr. Mazen has just mentioned, is that really we need to bring the right medication to our patient and contribute to solving these burdens of such diseases. So we were aiming all the time to bring new generations of antidiabetics. In the past, we had a really good deal with Takeda by bringing products like innovative DPP-4s as well as active TZD to the MENA market, Recently, we've launched the third generic dapagliflozin, a class of SGLT-2, if you know this class, which is really a good class because it's giving not just a protection against diabetes but also against cardiovascular and kidney problems. We are extending on this launch with a combined dapa and metformin. We were the first so far to launch it in 3 of our core markets, Saudi Arabia, Jordan and Iraq. And we are extending on the family itself with launching the empagliflozin as well with its classes. In the midterm, of course, our eyes like what's going on right now globally in the midterm, we are looking for even at the GLP1 group, where we need really to fight against obesity. I mean the cause of all evils. So that's what we have in the midterm view. With regards to oncology, and let's move now to specialty medicine. Before moving there, of course, there's also the hypertension and hyperlipidemia. And I would say that the market is saturated in a way with account mitigations that are there. But we've led that market with candesartan as well as some valsartans and recently, we launched azilsartan, a very unique new ARB in the hypertension arena. And we are moving one or more towards resistant cases with more combinations, but also having an eye on pulmonary hypertension, a unique part of the hypertension that's really making sense for our patients with some products in our pipeline. Dyslipidemia is another big story in MENA, where almost I think about 50% to some extent the prevalence. And at that moment, we are really doing well with statins, rosuvastatin, atorvastatin, but we are bringing now the combinations there, which is rosuva/ezetimibe that will be launched soon as well as we are going into new even generations of products that can work with the resistance of statins. So let's move now to the specialty medicines, like oncology as well as immunology. With oncology, we're the first to bring oral oncology. We have our own first manufacturing site within MENA that was in Jordan for oral oncology. And we started with hematologic malignances mainly focusing on chronic myeloid leukemias as well as chronic lymphocytic leukaemias with dasatinib, [indiscernible] et cetera, but we moved more and more towards solid tumors as well. So this year, we are launching the Palbociclib for breast cancer as well as Abiraterone for prostate cancer. In the midterm, we are even going for renal cell carcinoma, expanding more in hematological tumors through the acute myeloid leukemia area, but it's there, and there are like really new medications in this regard. And hopefully, in the future, we are even going more and more towards ovarian cancer, which is really studying right now in MENA in a way. Regarding immunology and immunosuppressants. I think if I'm going there, there's like a lot of products, but I'll focus on 2 of the diseases that are really causing a burden, one of which is the multiple sclerosis, I mean, you all know about multiple sclerosis and how it's impacting the life of patients. And we were the first actually to bring a generic oral multi sclerosis products, and that was dimethyl fumarate. With adding fingolimod there as well, we managed really to get the leadership in this market at an affordable price. So the base of patients that we're using such products increased and the convenience increased. So they were able to at least take this medication better than the injections. This year, we are launching a very unique product within multiple sclerosis called cladribine. This product is used twice per year. So imagine the amount of compliance that we will get for the patients by adhering to their medication by this product. Nevertheless, I'd like to mention that specialty medicines are really difficult to make. So with cladribine as well as with dimethyl fumarate, it's not that easy. With dimethyl fumarate, it's like mini tabs, encapsulated that really need special equipment to be created. Now moving even to rheumatoid arthritis and ulcerative colitis and if you are aware and familiar with the JAK2 inhibitors and the JAK inhibitors, those are medications that are really efficient, and they are bridging between the traditional treatment so far as well as the biologics like tofacitinib, like baricitinib, and we are having even a really, very unique one that would be a surprise, but that will come hopefully in the midterm for the JAKs as well. Moving on. So now we have like these products that are tailored to the local needs that are really related to the billion of diseases. What we need right now is to bring these products as soon as possible to the market. And when saying being first to the market, that's really important from 2 perspectives. The first one is definitely related to the patients, because bringing affordable medications to the patients will increase the utilization as well, enhance their life when having affordable version of the product. But also it is good for us. When you are the first 2 markets, you start by building your brand equity before competitors start coming in, and you start also gaining share of the patients that are using your product. So how can we do that in MENA to get a product from the selection to the markets you go through 3 different stages. The first one is related to availability of the API, the active pharmaceutical ingredients. And that's not something easy. When we talk about new products, you could imagine, there's no supply at a global level. Nobody is interested in creating the API until there is like people asking for such APIs. And the second part is related to the patency where in most cases, like countries like China, India, et cetera, you'll find there's patencies for the API. So nobody is going to -- so this is really a stage limiting process for a lot of companies because we'll be waiting, putting the product on hold until API is available, while in Hikma, when all the other competitors are still searching for APIs, the second stage of development is related to the R&D and the development of the product itself. And that's really an important stage because we build on our long years of experience that we have, especially able to work with complicated processes and decrease the development time of such products. And the final stage, which is really not an easy stage and it's a complex stage is the registration phase. And when I'm saying registration phase, I'm talking that when the product is compiled by the R&D and it's ready to be submitted, now you go, and I think you're all aware of how the FDA and such regulatory bodies work. But when I'm telling you, we have 17 different markets with 17 different systems that they are having their own requirements, needs. So it's really crucial for companies to have the local knowledge, know-how, understanding what kind of deficiencies, inquiries that could come from the authorities so you would be either fulfill that when we submit the file or be able to answer immediately when such inquiries comes up. These inquiries are what makes the products delayed in launch. So solving it all, that will make sense, and then we will have our products as fast as possible to the market. Now just to say that we are working that up. So in the past 5 years, 65% of our new launches were either first to market or first generic. And what we are looking at when we look at our pipeline for the next 5 years, we are expecting 75% of our products to be either first to market or first generic. And first to market means we are even before the originator and first generic is that we are the first to come to the market after the generic. This is just a slide that shows the regulatory environment in MENA and how it's really not that easy. Again, 17 different markets, with files that are related to a lot of stuff like analytical reports, technical expertise, sorry bio equivalent studies, stability studies et cetera that are really different from one market to another. But in terms of the file that's submitted, but also even when we reach the pricing stage where pricing itself in MENA is related to reference pricing. And not understanding the rules and the reference countries, et cetera, and submitting the wrong price, you will get a rejection and then you will have to appeal, and that all takes time, and then comes the reimbursement. And I would say clearly that in MENA, it was all based on budget impacts but we are moving more and more towards a health economist and health technology assessment and the stuff that they need for understanding completely what's going on with this and speaking the same language as the health economists are as well as and I will talk about it more when we go to the central -- the customer centricity. It's important for us as a leading pharmaceutical company within the MENA is to drive this change, and this is exactly what we are doing. So moving on now to the third element of the right pipeline. So we have a product that's related to the local needs or in the market, we have a product that is registered and is first to market. What we need now is to have a bit of differentiation that will make this product difficult to copy by competitors. And this what -- it will give us more time in the market just to continue building our bond equity. They need more share before competitors are able to copy and bring their products in as well as the complicated difficult products are what really is bringing the right solutions to our patients. So when talking about depreciation, I'm just giving to give you 3 examples of how we differentiate our products. First differentiation example on know-how differentiation. So that's our R&D and that's related to the years of years of experience. So when talking about the know-how, and I will give 1 example, which is related to impurities and controlling impurities. I think you are aware with the nitrosamine impurity that came as a trend in the past few years where authorities are really interested, and it's like a carcinogenic impurity. And some products were even withdrawn from the market, partially related even to originators themselves like varenicline, like metformin, valsartan. So this is not something easy to handle. And now governments are asking in MENA for such kind of limitation for such impurities. Our R&D team managed to come up with a mitigation process that can control limits this impurity. Helping us right now, we're talking about dapa metformin that was launched, and we are the only ones in the market so far because others are still working on solving this impurity issue. Another part of differentiation is definitely the capabilities and the technical complexity. We talked about our operational and our sites in the MENA, the oncology side that refers to bring so far in different markets, whether Jordan, Algeria, the API side that we have, the immunology side, in the past, the penicillin and the cephalosporin sites, these are all creating a big barrier to entry for competitors because no one can now build a manufacturing site and still build his own expertise and start bringing products to the market. That will really take time until they can copy this. It's not just the sites. It's also what's within the sites. So when talking about technical differentiation, and there's a lot of examples. And I will just try to simplify it as much as possible. So when we are trying, for example, to get a soluble product, increasing the solubility of certain products so that we can work on is not easy sometimes like what we did with cladrabine and others to increase the solubility means we need a complicated medical reaction through complications, et cetera, which is not easy, it needs expertise as well as machines. We have also some areas like hot melt extrusion, which is like a completely difficult technique with machineries that's needed for us to transfer certain products into that liquid form. And then to take the product back from liquid form to solid form, sometimes you need like freeze drying. And you need a sort of nitrogen level at so low temperatures which is not a lot of companies can do. They might learn with time, but that takes a lot of time. And that's really bringing us to being the only ones playing in this market. And finally, it's related to the BD, and as Mr. Mazen mentioned, we have 40% of our business coming from BD. We are considered like a partner of choice. We have more than 100 products so far with almost 60 different partners that we are working with that entrust their products with us, whether through manufacturing, marketing or promoting. And putting this clear, when going for BD, it means that either we have a product that is patented and you can't go around this patency, a product that does not have the API and we can't create the API or a product that needs a very complicated procedure that we can do, and those 3 are big differentiators for us when we launch such products. Now we are really looking into innovative products to bring from partnership and licensing like we talked about the GLP-1. We talked about the long-acting antipsychotics. We are also moving more and more to build agreements on pipeline-wise from companies that have really strong technical know-how like what we did with SK Biopharma that are really good in CNS, and we are bringing one of their product called cenobamate that will be launched soon. And it's a really unique antiepileptic product. And finally, we are trying to move further beyond the pills. So we are moving to the diagnostics. Our first experience. I guess my colleague Sherif will put more light on it, which is related to the Guardant Health. But we are also considering outside oncology, women health as well as anti-infectives. So far, 75% of our pipeline that's coming -- in the coming 5 years is differentiated in a way or another. So we have the right product, we have a first to market. It's really differentiated. So we have good data, what's needed now? We need the capacity. We need our operational efficiency to give us the right quantities when needed as a competitive price. And here, it comes to 2 arms. The first one is related definitely to the capacity where we are currently working on upgrading our manufacturing sites to increase the capacity by using high-scale speed machinery that also will help us in reducing cost, like tableting machines, powder filling machines, et cetera. Definitely, we are talking about the sites. We're talking about oncology, the immunology, we still have like a lot of ideas of how we can really differentiate ourselves through the sites. And definitely, you are talking about the advanced manufacturing machines, whether that's a bilayer machines, whether that's your talking about the hot melt extrusions, et cetera, to just upgrade our sites, not just the normal site. And I think you will be visiting one of these sites, and hopefully, you'll be amazed with what you will see. Then we are talking about our cost discipline and how we can minimize our cost. And I would say the operational excellence is one part of doing that by making sure that we are really optimizing the way we do business. And then there's definitely the alignment between demand and supply of really managing our inventory to the right level and of course, keeping an eye with having dual and sometimes 3 suppliers for the API. So we make sure that we are really getting the best price. And finally, we have right products, we have right operations, but that's not enough. Some products really failed and failed hard because they really don't understand the market. And when talking about the market in MENA. And I guess Mr. Mazen mentioned this clearly that it is called a branded generic market. And what does a branded generic market means is that the prescription comes with a brand name, not with the scientific or generic name. So in the past, the king of everything is the healthcare person, the doctor. He is the one that do the prescription. And then it has to go to the payers to make sure that the product is available, the pharmacist has to dispense it, and the patient has to take it, and that's it. Now COVID has changed all our lives, right, and it did the same in MENA. So when doctors are not available, patients have to go knock the door on the pharmacists. Pharmacists start to becoming more involved. They are now the frontiers. They are counseling the patients and taking the first decisions, payers with the burden of the budget start taking higher responsibilities. They are looking for the best options, not just budget impact. So the concept of health technology assessment starts coming in. And patients, they were dictating everything. They are now really learning more and more about their diseases and dictating what they need from the healthcare professionals. And so if you don't really understand such complexity and how to handle each of these -- those stakeholders, it's a disaster, and it won't work, and a lot of products can really fail this. So in MENA, we have really a full understanding of what we are doing. We have 2,000 person on the ground that are really going and visiting the different stakeholders. So when talking about physicians, they are still having value differently. They are the ones that are bringing the prescriptions, and everyone is going there. So we need to provide something that's beyond just a high-quality bill because everyone is saying, we are a high-quality contract. So we start engaging them and more interactive approach just to give them education, get them in making them feel that they are really getting something out of us, which is like the new technologies that we are producing them to like creating local guidelines that really fits their patients in MENA, so its more like solutions. For pharmacists, we are driving the new role. So it's more of like helping them at a medical level through digital platforms, direct visits. So providing them with continuous medical education. I think I got so excited that the mic stops working. So that's what we do with them. Now the counseling itself is a technique that is missing in and the pharmacist role in the past was just to sell the product. Now they are really taking this role, and we are so proud to be partners in that. And then definitely, there is the payers. And we have drove the whole process. So we started getting all the key health economists. You know there's like a lot of models at a global level, whether that's the [indiscernible], I mean, you can count it and then in MENA, there's nothing. And we needed to be pioneering in this. We are a leader, so we have to drive the MENA. We brought all those health economists in a program that took us years to try to come up with something that really makes sense. They are looking at us as a partner of choice, and we are looking at the process as being highly proactive. So whatever comes in from their end will definitely help us later on in creating our own solutions that match what they need. And finally, and the most important element of all of this is the patients, and we need to empower the patients. This is part of our responsibility, but we also need to be felt like we are not just a pharmaceutical company. We are much more than that. So we created the digital platform called [Foreign Language] and that's in Arabic, and you are in Morocco, I thought you have studied some Arabic. So what [Foreign Language] means it's a nice life. So we try to brighten things up. It's 12 campaigns per year. Each campaign is variety of things like interactions with healthcare professionals, some influencers, tips and information. It's all of our diseases, but it's also going towards well-being. So far, we have more than 1.5 million followers on this platform, almost 7 million -- 700 million reach, and I think we have the highest engagement so far, especially when talking about Facebook and Instagram with almost 4.3% from our audience. It's really helping our community, helping our patients. And I guess this is part of what we should be doing. It's not just the pill, it's all -- the whole story. And our army on the ground. So we are visiting in MENA around 70,000 to 80,000 healthcare professionals. Imagine with around 2,000 commercial team. Now we have a sales force that's going and knocking the doors and do the detailing. We have the medical teams themselves that are really contributing to the medical part not just selling as you see, we are the first to market with a lot of products, and we are driving the know-how in these products. We have a market access team that's currently working with the payers, whether that's on the model itself, but also on the ground with different products. And we have definitely the commercial team that's working side by side with the pharmacist just to make sure that we are there and supportive as much as we can as well, we have a lot of commodity products that are not promoted anymore. And it's more of like selling them. Patients with associations with the medical teams that we have, with the digital platforms that we have, we are really trying to do our best. I will leave you now before moving to my colleague, Sherif with a small video that will take you through what we are doing in MENA for the different stakeholders. And I hope if you have any questions that I'm very available that you can ask and shoot. So thank you.

Excellent. Good morning, everyone. Thank you very much for coming. It's great to be here. My name is Sherif Shafick. I head the Injectables business and the Hospital business in MENA. I have been doing that since September only. Before that, I spent 3 years doing business development. So I'll talk to you about business development, and then I'll talk a bit about the injectors. And in the business development, I'll be talking about the full MENA, so it's the combination of branded and all Injectables. Over the past 2.5 years, we have been very, very active in business development. So in roughly 31 months or something, we have signed 31 agreements, this is very, very aggressive and very accelerated. If you compare it to our previous history, prior to 2022, we used to sign on average 4 to 5 agreements. And this is, in a sense, normal and expected, we have a strong balance sheet. We are a big player. We are the second largest company in MENA. We have a very strong commercial infrastructure and a very strong manufacturing infrastructure. And our -- there are lots of partners who are willing to work with us and would be happy to work with us, and we deliver at the end of the day. So this acceleration was also combined with a different shift in our business development strategy, which is moving towards more and more innovative highly sophisticated products. So if you look at the table, and these are just examples, not all our agreements are announced, by the way. So over the 31 agreements we announced a fraction only of this. But if you look at this, you'd find that across the all horizons, the current, the mid and the long-term horizon, we have projects that could make impact, and you'll find also that it is of increasing sophistication. So at the bottom you would have complex products. These are products that are difficult to manufacture, difficult to develop, but you would see competition in there like biosimilars, like long-acting injectables. But as you move up, you will also see highly differentiated top tier products, innovative products that are patented, like Remsima subcutaneous that's a biobetter, like toripalimab this is a breakthrough PD-1 that we have licensed, and we are very hopeful about. We think with this product, we would be able to improve access for immunotherapy in the region. Today PD-1s are being used, but not all eligible patients get to access PD-1s. We think we can make a transformation in cancer patients lives with these products. XCOPRI, which my colleague Samer mentioned about. And as we mentioned, we have a wider agreement with SK Biopharma, which allows us access to their full pipeline in the future. And then there are also highly differentiated technologies, something we announced earlier this year that we are very excited about is our partnership with Guardant Health. Guardant Health is a genomic diagnostic company. They have various products and tests in the oncology space. With this partnership, we will be able to help governments screen populations for cancer. And we would also be able to help doctors and patients to identify what is the best treatment for their patients and the best treatment pathway. So overall, it has been a very accelerated great period for us in the past 3 years or so. And I think there is only more to come. So we are just starting. We're just scratching the tip of the surface if I may say, to put that, to give you a glimpse of this. Today, we have 160 open opportunities that we are looking at. So you can imagine in MENA, just for MENA, so you can imagine there will be more and more business coming out of this. Now if I move to Injectables and -- so MENA Injectables is part of MENA and part of the Global Injectables segment. As you know, the Global Injectables segment is a $1.2 billion business, increasing and growing. We are roughly 16% of that in MENA. And it has been a growing business, we have a double-digit CAGR over the past years, and we think it will continue to be a strong growing business. This business, let me talk a bit about it. So we are present in 16 markets. KSA is the largest market. Morocco, where we are, is a top-tier market for our selling Injectables. We have a portfolio of 122 unique molecules and more than 270 SKUs and we continue to launch a lot of products. So we are very active in terms of launching products through R&D and business development. And nearly 1/3 of this business is biosimilars. So the composition of this business is different from the rest of the global Injectables because nearly 1/3 of the business is biosimilars, nearly a quarter is innovative products, patented originated products. And then the rest are generics maybe 45%. And the generics maybe 1/3 of them are complex generics and then another 2/3 is standard Injectable generics. And this is essentially a hospital business. So our focus is with hospitals. Our key customers are authorities, payers, doctors, therapeutic area experts, pharmacists and obviously, patients. And we leverage synergies with branded. So I'm both part of the injectable group but also part of the MENA group, and we leverage synergies with the branded across the organization across different therapy areas. Now I want to talk a bit about this business in terms of its diversity, as Mazen mentioned, diversification of the business is very important for us. And this is a business that's uniquely positioned for differentiation in MENA. This injectable business has a world class generic Injectables group behind it. So in the generic space, we are able to get products to the market and develop products far faster than competition. That's a very strong advantage for us. And we are investing into manufacturing footprint also in North Africa and in the future in other countries. And you will see the size in Morocco, we think it's a very good and impressive site. And with this local presence with local manufacturing, with the group R&D behind us. What's left is the customer centricity as Samer -- my colleague Samer was mentioning and the people. And we have a very strong commercial infrastructure in MENA, which we are utilizing in this business. So the generics business will continue to grow and is a unique business within our injectables. The other business, which is unique is biosimilars. So I actually joined Hikma in 2015 to build and lead the biosimilars business. And Hikma's history with biosimilars was way before that. So we started looking at biosimilars in 2008, 2009. By 2010, we signed an agreement with CellTrion, which allowed us their pipeline of products of biosimilars. And CellTrion then was a small company in Korea that's doing something called biosimilars. So we were way ahead of the market. So by the -- even by the time I came in 2015, biosimilars was still a very new area. If you think about the first ever biosimilar approval by the U.S. FDA was in April 2015. So in MENA, as Mazen was mentioning, there weren't regulatory pathways when we started for biosimilars. They were not sure how to price it. They were not sure how to divest it even. They were not sure how to -- doctors were not sure should they switch patients, which patients should they put on biosimilars and patients didn't want to -- were not sure if they should be switched to biosimilars. And so -- we used this period we spent a lot of years in shaping and forming this market. And this allows us until today a unique position in this market. And it also allowed us a unique position in the healthcare ecosystem in MENA. And as Mazen mentioned, one of the great things we did in this business is we expanded access to biologics. And I have personally seen patients, who would describe how life-changing our entry was because they would stay on conventional therapies for years instead of moving to biologic. And with our entrance, now they are able to access these biologics, which are transformational. And this is -- so the biosimilar business is another business that will continue to grow. In early 2020, in the biosimilar unit with the management team, we figured we should not be in only the biosimilar business, we should be in the wider biologic and precision medicine business. And from there, started the strategy of adding different innovative biologics, adding diagnostics like Guardant Health and all of that. And so on the other side of this slide is the innovative and think of generics biosimilar is an innovative as engines working together to drive growth and to allow us to offer a unique, very complete offering in MENA, and innovative with all the differentiation with all the different sophistication continuing. So from simple originator products to precision medicines products. And I want to give an example in oncology of how this gives us a unique edge in the market. This is a simplified patient journey for oncology. I'll not go through it. It's -- I just want to make a specific point from it, which is across the cancer continuum, we are able to help in screening and diagnosing cancer. We are able to help doctors identify and patients identify the best treatment for their cancer. We are able to -- we have a significant cytotoxic chemotherapeutic generic injectable portfolio. We have a significant targeted oral oncology portfolio through the branded segment. We have biosimilars. We have immunotherapy, PD-1s. We are getting more and more innovative biologics. If you think about it, this is unparalleled in this part of the world. It's probably -- there are probably very few companies even in big pharma, who can claim such a very, very massive and wide presence. And our intention is to continue to expand this presence in the future to be able to help the patients across their needs. So where -- so with such a platform, where do we go from here is something we have been -- we always think about, right? We have this very wide portfolio. We have relationships across the healthcare ecosystem. We have a strong global injectable segment behind us. We have great people and a strong commercial infrastructure, and we are building manufacturing. So where do we get from there? We think we have the potential to change the way patients are treated with all of this picture together. And I think our business will continue in the future to evolve into 3 business or 3 segments in pipeline. The foundation portfolio, which will count as the generic portfolio. This will continue to grow through our investments in manufacturing. This will allow us flexibility and addressing demand, it will allow us flexibility in any customizing products to the market, and it will allow us cost efficiency. And also, it allows us government relations and stronger relationships with authorities, which helps the wider business. The other parts of the business would be the differentiated portfolio. And biosimilars with time, will move between all 3 of these, so there will be differentiated, some of them would be maybe commoditized in the future and some of them would be in the precision medicine space. So this differentiated portfolio. We will continue to grow this business. We will benefit from our sites in MENA to extend the life cycle of the products. And we will continue to utilize our commercial infrastructure to bring more of these products to the patients. And then the precision medicine business, and we think this will continue to be a growing area. There is a lot of opportunity for us to continue to grow more here, and it will be a profitable area, and we are also very excited about it. The thing I'm sure we will continue to commit to is ensuring that patients get access to the best treatments in MENA. This is something no matter what we would always deliver on. Thank you. And with that, I hand over to my colleague, Tareq.

Thank you, Sherif. Thank you, Samer, for showing us the different parts of the business, how we're operating. And now to tie it all together, this is just a summary and a snapshot of what we discussed. So our strategy is leveraging our global expertise and our global and our local knowledge to deliver on healthcare needs across the MENA. In summary, we're focusing on high-value first-to-market generics, which place us in unique position to build on the market and develop more and leading the way of how the market operates in the future. Our portfolio and pipeline, our focused on chronic illnesses, which yield more consistent prescriptions and more high-value prescriptions for Hikma and for the patients as well in terms of providing the first generics for chronic medications. We're expanding on differentiation of complex products and partnering with innovative companies which falls within our portfolio and within our strategy to provide a holistic solution for our patients and for the regulators as well where we give them a very high-quality products from a trusted partner. We're consistently investing in local manufacturing and in the communities we're in and then building on the infrastructure of the markets that we operate in, and we're evolving into a holistic healthcare company through the presence across the patient journey, as you mentioned, through our different therapeutic areas through these different classes. Now in Hikma, where we believe and from what we're seeing is we're very well placed for organic growth. We have a very strong growth trajectory and a very strong track record of margin expansion in our branded business. This is just a quick snapshot of the financials we discussed earlier. And for the injectables, we're also in a very unique position where we're leveraging our global injectables presence with our local MENA markets. We're investing in injectable manufacturing in the region, which will also give us more access to those local markets that we're operating in, where we will develop a leading position in those markets. These are just another snapshot of what we discussed earlier in terms of the growth and margin. So thank you all.

Yes. So thank you all very much. We've got -- we're pretty much on time. We will take 15 minutes for a coffee break, and then we'll come back and we have a Q&A panel, probably we'll have about an hour to go through Q&A. Try some Moroccan tea, if you haven't tried it yet, and the sweets, they're really -- you put your diet to the side today and have some of these sweets. Okay. Great. So thanks for -- sorry, I'll let everyone go a little longer. I lost track of time, chatting. So we have a panel here. And really, this is just your chance to ask your questions. But as you saw from the bios, you have the GMs of our key markets, you have the Head of MENA operations. Samer, obviously, as you've heard from him already in terms of all of our commercial activities. So this team can answer all of your questions, I'm sure. So really, I think we'll open it up. If we feel -- if the IR team feels that there are certain topics that we'd love you to hear about, but the question hasn't been asked yet, then we may jump in. But otherwise, we'll leave it to you drive the Q&A. We will hand you the mic. If you put your hand up, we'll hand you the mic, if you just don't mind talking into the mic, that would be great.

James Gordon from JPMorgan. Two questions on growth areas. One is on GLP-1s, which are mentioned on some of the slides. So the GLP-1s, is it just Victoza, which is a product that I think the patent is just going and something like semaglutide, which is a really big opportunity, would only be like in the 2030s? Or might that be a bit earlier? And would we think on this one, would you be more like a distributor because someone else will be doing the API and you will be using your fill finish or what bit of the GLP-1 would you be doing? How much of it would be Hikma versus actually more just distributing someone else's GLP-1s once the patents go in the 30s? That's the first question. Maybe I'll pause there and then ask the second one.

So again, as mentioned, I mean, GLP-1s is something that is a -- so it's crucial again, as I mentioned, so moving from the SGLT-2, DPP-4 that have been there now the GLP-1 is what's coming on. I don't think we can disclose right now which kind of GLP-1 that we are bringing, but there's definitely one that's on our pipeline right now, that is coming. The way that we are going to work with such products. I mean, those are like peptides. So we are considering both, but I think the beginning would be definitely through just bringing the finished product.

The other question was Saudi. I think on the fact sheet, you said you've got something like 6% share in Saudi, and it looks -- if I look at some of the other slides, that would imply at least on the IQVIA data that Saudi is almost all of your sales which I think it probably isn't, probably the IQVIA overstates it. So how big -- how focused is your business in Saudi? Is Saudi your biggest market? And Saudi looks like a really high growth potential market, but I think there's some domestic Saudi companies that also invest in lots of manufacturing. I don't know if they might have a bit of an advantage in terms of being seen as local companies. So there are 2 parts question, how much is Saudi of the overall business? And is that a big opportunity? Is it also a bit of a risk also that some local companies get quite aggressive in terms of how competitive they are?

So Saudi I would say it's almost like 1/4 of our total business. IQVIA numbers definitely the way they are counting of the prices, the public prices that is already included. But in general, it's just like 1/4 of our business. What's the other question?

I'll take that. In terms of local competition, as the MENA is developing, the healthcare systems are maturing, we will see and we are seeing a lot of local competitors come up. However, they will take some market share, they will compete, but I believe or we believe as Hikma, that our position in a much more unique position where we have stronger capacities. We have a global reach. We have a very strong knowledge base. So they will compete, but the market is big enough for everybody to compete, but we still see ourselves in terms of our pipeline, in terms of our innovation, in terms of our integration, in terms of our operating model where we still have more of a competitive advantage down the road.

If I may add to that as well. I mean we are a global company with local presence. So we've been in Saudi Arabia, I mean, almost for us, it's forever, right? It's -- we've been there for so long. With our manufacturing on the ground, we are looked at as also a local player, and that gives us as much advantage as any other let's say, like you put it local or Saudi local companies starting up.

So yes, I think maybe just to add to Saudi Arabia because I'm managing this territory this time. So we do have big ambitions in this market. It is definitely the biggest market in the MENA with market size exceeding $2 billion. Though there is -- and we are ranked #1 actually there with market share exceeding 6%. Now, we just announced that we will have a new project where we are planning to realize our injectables there plus our oral oncology medications. And we believe that this kind of localization will give us edge, and we will be ahead of the market, as always.

Emily Field from Barclays. One question about that I've tried to show the share of government payers versus private payers. And I think you mentioned that new since the Arab Spring, the government share was increasing, which you -- I believe you said you viewed as a good thing. In the U.S., obviously, we think the opposite in terms of pricing that it's better for private to have a larger service. So I was just wondering if you could give some color on why you think that is a good thing. And then a financial question. Obviously, there's been some pretty significant margin expansion over the last few years and approaching sort of more of a mid-20s level. Do you have any sort of longer-term goals for margin expansion? Because you're growing the top line quite rapidly, but obviously still heavily investing in the business.

So I'll take the first one. In terms of the U.S. model, it's very different than the MENA markets because, as you know, the U.S. is a freely priced market. You have GPOs, you have GPOs for the hospital segment, then you have very big retail channels. The MENA market is scattered more and more. Now in terms of the governmental healthcare is certainly decreasing. That's a good thing because the whole healthcare sector and the percentage of GDP spend is increasing from governments and they're focusing more. So you're going to have more local tenders, they may be lower margin business, but they're still a very big substantial part of the business where you move your volumes. So the market is becoming more organized, you're having unified purchasing group. So with Hikma and with our capacities and with our very strong manufacturing capabilities, we view this as something positive for us because we believe we can capture more share. We have a very strong efficient position in the market. In terms of the volume, in terms of the question regarding margins, we were in the low 20s in the last couple of years, and we've worked very hard to reach the mid 20s, but we're going to stick to the mid-20s over the next couple of years.

Paul Cuddon from Deutsche Bank. Just going a bit high level. I mean, you said your ambition is to become the largest pharmaceutical company by sales in MENA. So I mean how far have you got to go and how long might that take? Yes.

So based on the IQVIA figures, Sanofi is the #1. And the difference between us and Sanofi is something between 15% which I believe is something that working hard as we are doing right now, it could be done. And it's like an ambition. It's our ambition where need really to be. So it's something that we look for.

I'm pretty sure I've been covering Hikma for about 10 years or more, and I'm sure back then you had 2,000 sales reps and that's basically not changed. So are you having a bit of an opportunity now to invest in the sales force? Are there any areas where you're looking to expand to drive faster market share gains? Or are you focusing more on your investments on digital and other ways to reach the patients?

So our commercial excellence team, actually are the ones that's working on making sure that we have sufficient reps that can really make the most optimized calls. So that's why what I was saying is that we are currently visiting about 70,000 healthcare professions. And to put in mind that products have their own life cycles. So some products are completely out of promotion and others are coming in. So it's fine to see that the number of results that's a good sign that we are optimizing our resources.

Also bear in mind that we are moving more and more towards specialty as we have explained for both segments and specialty requires a different structure in terms of sales force. So this is in line with our strategy and how we are moving.

And if I may add the quality of our sales over the last couple of years, have also shifted more to chronic medications to more high-value products. So the return on investment that you're getting from your boots on the ground is higher. You're maintaining same number, but you also have strong back-end support functions where you have the medical team, the market access, liquid marketing that are driving more efficiency together holistically with the sales team. So you are maintaining the number. We're investing where it's needed to drive more efficient, more high-value sales, more chronic prescriptions and also through the optimization of our portfolio. As Samer mentioned, we're weeding out older products based on life cycle to move to more commoditized approach where you detail them to more of a commercial presence rather than a branded generic presence. So it's a combination factor.

Dominic Lunn from Morgan Stanley. So obviously, on manufacturing, you've obviously talked about your local manufacturing presence in countries in MENA being an advantage. I understand part of it comes from a regulatory perspective, but there's a preference to use locally manufactured products when available. So my question is if you have a manufacturing presence in a country, does that give you a license to then parcel in the rest of the drugs in your portfolio ahead of competitors? Or does that reference only apply to drugs actually manufactured in the country? And how many markets actually have this model of preference for a local product?

So in terms of -- as we mentioned, the MENA 17 markets with 17 different regulatory authorities, each one has their own regulatory framework. Now a lot of markets, what they do and to be specific, Egypt today, Algeria, Morocco, Tunisia have a growth market system where if it's manufactured locally, in one way or another, it's done from importation, whether it's through a box as they have in Egypt. So in Egypt, the regulatory framework is they have 10 boxes, you have 1 originator, 1 imported generics and 8 locals, and you can't enter a new registration. So in a way, the market is closed. Algeria has a different system where if it's manufactured locally, they ban it from being imported. So every market has its own story. So being a local manufacturer gives you an edge because it's a market access site. Now in terms of bringing your portfolio, it depends on what you -- so some governments, for example, allow you to do secondary packaging for a while then to bring the products in, but it's not a guaranteed path for to bring the product in because if it's localized, then it's localized, and it may be from scratch in certain instances.

It's Seb Jantet from Panmure Liberum. So a couple of questions. First, just on the regulatory environment. So you said the 17 different regulatory environment, what's the chance of that changing and there being some form of mutual recognition because, clearly, having different regulatory environments in lots of small countries is a barrier to medicines in the long term, and you have seen some signs of regulators starting to think together. So just the first question on that side.

Actually, within the foreseeable future, probably it's not going to happen. I am speaking because I was on the other side of the equestion, I was first question, within the foreseeable future, probably what you are asking, probably will never see the light for a variety of reasons. I was on the other side of the question, I was on the regulator side for some time. And myself tried it, I was telling some of your colleagues during the coffee break. When I was Minister of Health for Jordan, the Arab League had meetings for the different minister of the health and I brought this subject because I personally see the commonalities between them are very high. So why not just complete that whole you think it's much easier to have just 1 file for me and like the rest of the world. And variety of reasons, we -- honestly we failed to do that. The good news, the big part of the different countries are basically the same. So probably 95% with the requirements and Saudi Arabia are not different from Jordan. So there are those minor details and certain requirements, and this is what Hikma's strength is. We know all of these because we have local regulatory teams within each countries, from those countries, they know the rules and regulations and they know how to register the product fast, get the best price and market faster than other companies. If you want to be selfish, probably it's a nice thing to have, for me because MENA from our perspective it's our backyard.

Just want to add that we are working with the different regulators in MENA, the same way that we are working with the health economists, in a way that we can facilitate some processes, link them all together to try to come up with similar route in markets. But I don't think [indiscernible] mentioned, I don't think it will reach to the level that they will have on system.

Actually to add what we're seeing is regulators want more and more localization actually. So there -- every country is pushing for more localization. So -- in a way, it's moving in the other direction, especially post COVID because there were a lot of disruptions in supply chain. So all the countries are thinking of how do I secure my own supply everybody's cared for the security in terms of healthcare. So they're pushing more towards localization. And there's a fine balance. You can't manufacture everything everywhere. You have to think where you can excel, where you can add value where you can maximize, so this is how we navigate across it.

And if I could just ask a couple of questions about pricing, and I appreciate this may be kind of quite difficult to answer in a concise format, but I'm trying to understand how the framework pricing is set in the larger countries. And what are they taking into account when they look at the framework pricing? And then secondly, just to follow that up, you kind of mentioned that you see government being more of a payer as an opportunity, but what is the risk on pricing? Because obviously, what we see in other markets is the government gets much more aggressive on pricing and you get into a cycle where you're being honest if reimbursement cuts every year on pricing.

The basic system in the different countries are probably the same. They use the country of origin price and we use a basket of countries in the region and globally as a reference. And they look at similar products that are already registered and priced. Using this combination, they will set a price for that particular molecule. And they make adjustments for the dosage form and there's combination and the pack size with adjustment. And on MENA countries, they reference each other, For example, Jordan referenced Saudi Arabia. Saudi Arabia looks at Jordan. So we take utmost care when we launch our products is where to register first. And then which the next country we go to we call it the second wave. Sometimes we do that at the level of the SKU, not at the product because it makes a difference in the way the countries make their price. The other thing we do is because of our local presence, we anticipate what are the changes in the pricing regulations, and we have added discussions with the different regulators, what will be the impact because and the regulator would not only the intention is to get the lowest price, but they would like the drug to be available. So at such and such regulation, you may drive the prices down, but you will not have the drug.

Alistair Campbell from RBC. Just a couple of questions. The first question is in up the top-level question, when you think about the next sort of 5 to 10 years for the business, is it sort of focused on your current 17 markets? Or are there any geographies you look to maybe expand into as opportunities in the time of medium to long term? And then the second question is maybe a bit more granular. Oncology is clearly an important growth driver for the business going forward. You're talking about precision medicine. So I just want to get a sense of broadly across MENA, how penetrated are the diagnostics themselves in terms of identifying those patients? And so how important for your growth is there actually increasing penetration of diagnostics alongside the pharmaceuticals themselves?

So I'm going to answer the first part is that today, as a MENA team, we're looking on managing the MENA and in terms of geographical expansion, if it makes sense, we will geographically expand. But our focus now and our panel discussion before the MENA and I think moving forward, as opportunities come we'll expand globally. Now in terms of the diagnostics, I think Sherif will answer.

Driving diagnosis would be important for us. It's as we get into more and more precision medicine, diagnostics is a key area to grow that, and that's something that we are working to ensure that we [indiscernible].

So just following on that. Do you have a sense of broadly in MENA, how penetration, usage or diagnosis will compare to, say, for instance, Europe or U.S. Is it fairly low? Is it kind of medium?

It's lower than the U.S. and Europe. That's for sure. I think that number will vary depending on the diagnostic obviously. There are -- and even within MENA, MENA is a wide range of countries, right? So a country like UAE or Saudi Arabia would be different from a country like [indiscernible].

In terms of in terms of expansion, you have to remember we still have some markets in the MENA that we operate in only on exports. Now I will anticipate sometime down the line where we'll be forced to manufacture in these markets. I'll give you a good idea. Iraq, I was just talking to one of your colleagues, in the 90s, Iraq was one of our biggest markets, which constitutes around -- I'm talking 1993, it used to constitute around 40%, 50% of our groups sales before going to the U.S. Today, it's minimal. So the potential of growth in Iraq is big. But today, the regulation in Iraq to have your own oeration doesn't exist. You need an Iraqi partner. So we are waiting until the situation becomes more clear where we can have our own operations in Iraq, because it makes sense to do that. If you go into Egypt, Egypt when we bought the first company, our market tracking was 49. Today, we are #8. Now to grow from 8 to the top tiers, we still have lots of opportunities that we need to find a proper product, the proper portfolio and how to expand our market share. Plus, we need to mitigate the risk. I always tell this very critical in the MENA. Today, Hikma can double its sales in the MENA. But the problem is how will you collect your money? So you have to be prudent how much risk you want to take? How is your cash flow? How are your receivables? And how to mitigate the risk of currency fluctuations. You remember 2 or 3 years ago, we took a hit on Lebanon that cost us about $15 million or $18 million for hyperinflation. We changed our business model. We took hit on Sudan that costed us, I think, around $80 million or $100 million. But yet, we were able to expand to other markets. So what's crucial about the MENA is how much risk you want to take and how to keep a healthy balance sheet. So this also plays a lot in how we will expand in the MENA going forward.

Beatrice Fairbairn with Berenberg. I was just wondering what percentage of branded sales are through tender sales versus out of pocket? And how is this expected to change in the future?

Sorry, are you talking about percentage of private versus developmental?

Yes, tender versus out of pocket.

30-70 for now. What we are expecting is that the whole model in MENA is again, in 17 different markets with different models. I'm talking about the healthcare system. So I think there is a movement from what we had right now towards national health insurance where coverages are increasing. Government is involved in supporting the invoice of the healthcare, and then the collaboration is between the private and the governmental sector in providing the services. It's happening right now in some of the markets and we're expecting that this will expand further. So that's why it's expected that the governmental expenditure involving us will increase, but that will not limit the private partnering [indiscernible].

And just another question. During the November trading update, it was noted that Hikma was very active on the BD side, what sort of M&A targets would the company be pursuing?

Can you repeat the question, because I can't hear.

Yes, sorry. During the November trading update, it was noted that Hikma is particularly active from the BD side, what sort of targets would the company be purusing? I know you mentioned like more innovative medicines, et cetera.

So in terms of M&A, we're obviously, we need to grow organically and inorganically, but we can't disclose any deals or any potential pipeline. But just to give you an idea of when we look at a target acquisition, we always look for something that will give us either expanded growth within a geography. So for example, if we're present in one manufacturing technology in a region, we look for a new technology or we'd look for new reach or expanded market share or products that fit within our portfolio. So we're always looking for the strategic right fit. And once this comes, obviously, we'll jump on it and take action.

Guy Bettschart from Kiegar. Can you talk a bit about your relationship with CellTrion and how you manage the risks with regard to that, how do you prevent them from increasing the prices too much or reducing supply given such a key supplier?

It's a very healthy relationship. They are a long-term partner since 2010. We have contracts in place, obviously. So that regulates these things. But we also work in partnership. We have a lot of respect for each other. We are -- we have relations across both companies. So all the way from the Chairman of the company along with Mazen all the way to the teams and to the working groups and to that. So I think overall, CellTrion is a very healthy relationship.

And just to add to that, with all our licensors and partners, we view it as a long-term partnership where it's a win-win. So we both have to go together. So by the end of the day, it has to make sense for both and we always work together to find an avenue to maintain a healthy relationship where both parties grow together.

Yes, Christian Glennie with Stifel. Just on the -- thinking about the nature of -- if I understand correctly in terms of these branded generics, the doctor has to write the brand name on the prescription things. So -- and that's been the way it's sort of largely operational. What is -- are there any indications or any reasons why it might move to a more standard generic market where even if you write the brand name, you get a substitute for a generic as is typical in many markets that it becomes a more standard generic market, if it does, what might change for you guys in that concept?

I mean it's -- when we say it's like very branded generic its just branded generic, nevertheless there is exceptions here and there where shifts and switching of prescription is happening in the pharmaceutic level. And I think the move more and more towards the national health insurance, that could also dictate the prescriptions to come with a generic need. But putting in mind that we've been there for so long, almost around 50 years now. So the brand equity of Hikma's products is really very solid. And when we talked about the operational efficiencies, we talked about 2 very important arms, one of which is definitely the capacity, but the other one is the cost effectiveness, and that's when it can give us edge both ways because product shortages are something that happen for a period of time especially with the increase or decrease in demand. And from the other end, it's all about also the cost that we have. And that's for the general generics. But then we talked a lot about the differentiation, right, where we have a little bit of complexity, 75% of pipeline. And that will give us the upper hand when talking about being there only with originators. So that's a real opportunity because then we will be the only generic. And then we are talking about chronic diseases as well. So chronic diseases are more sustainable in a way that patients are taking the medication and they keep on using it rather than every day, you would have to generate a new prescription. So I think those all are really something that we can secure our prescription in the coming future.

In addition to this, we also govern our business through, as Tareq said, since we are one-stop shop since we have the widest portfolio with many therapeutic areas, including the commodity products. That makes us very attractive for all of the wholesalers, for the big hospitals, for the groups to do a contract and we created through our business through our safety, a strong commercial arm, which is the key account or the work managed to make a contract abundant for our portfolio. So what we are governing our buying process in addition to the prescription. So we covered the all areas. And Hikma needs to be a step ahead in the market and part of shaping the market. So definitely, when it change, we will be in the middle of this and we will be part of this change.

If you allow me to add as well, I think we've had a conversation during the break from the -- because Samer mentioned the efficiencies and the capacities that we had this discussion. Having multiple manufacturing sites as well. That gives us an edge when it comes to that subject because of the efficiencies we can use and the expertise of the different sites and the different manufacturing in different countries, we can transfer it all across the group. This is besides the global expertise that can give us that cost efficiency as well. And this is very important even if the market shifts.

We also -- I mean, sometimes we explain our commercial infrastructure in a simplified manner, right, because it's certainly easier messaging. But our commercial infrastructure is far more than sales. It's far more than prescription. So as [indiscernible] was saying, there is market access, there is a lot of medical, there is marketing, there is sales, and there are multichannels, and we are present and very strong across all the channels of the ecosystem. So it's -- we think we are in a pretty secure position in terms of our commercial capabilities.

And then maybe on this -- effectively, you're talking about the acceleration of growth on the revenue side, maybe you've done 6% over the last few years. You're targeting 7% to 8%. I know there's probably a number of drivers behind that. Obviously, there's a mix in portfolio, it's innovative products that -- is it possible to rank some of the sort of key top 3 key drivers that are the key things from your side that will deliver that 7% to 8% acceleration of growth over the next few years?

I think we have mentioned, if you look back to the slides where we were talking about those therapeutic areas that are already causing the highest burden and this is where we are really putting our money. So diabetes -- definitely diabetes is something that is growing and growing very fast. And we are really a major player there. And then you look at the oncology where our sites, our differentiation, our BD deals. And then you look at even the immunological products, whether that's in multiple sclerosis or moving to rheumatoid arthritis et cetera. These are the complex medications that are driving the growth there forward.

And then maybe just a final one on BD. It sounds like you talked about 160, was it live opportunities now. Just put that in context of maybe where you would have been a few years ago? And just a bit of a sense for what sort of the nature of those partners on the other side of the table, is there much of a shift there and how you expect that progress and the reasons why you're seeing a step-up in BD interest as seen as partner of choice?

Sure. So I mean, to put it in context, on average, we used to sign 4 to 5 agreements a year. That's our average from 2012 to 2022. Today, what we showed in the slide was 31 agreements in 31 months, which is 12 agreements a year roughly. So it's a very, very significant acceleration. And in terms of active opportunities, it's similar to that, it's in line with that. So again, it's almost 3x or maybe 4x what we used to do. In terms of opportunities, they would be similar to what we mentioned. So it's -- I think there is a lot of work on pipeline opportunities like the ones with SK Biopharmaceutical, opportunities where we get full access to pipeline. And also work on differentiated innovative products and also the opportunity in these areas -- in the areas where we mentioned it's a priority for us in areas like CNS, like diabetes, oncology, immunology and all of these areas. Obviously, a continuation of the precision medicine and biologic. So there also opportunities in the biologic space, whether the current monoclonal antibodies, the up and coming ADCs, bispecifics, lots of opportunities also in this area that we are looking at. And the expansion in the rest of the precision medicine to get us to be a wider healthcare provider than the current -- than just a medicine provider. So I think this is where the future would be. Also, complex generics continues to be an area we are pursuing through partnerships. Not all partnerships are only commercialization partnerships for us and MENA. There are partnerships that would be co-development, there are partnerships that would be manufacturing and lot of our partnerships are still manufacturing-based, we would manufacture the products. And there are areas also where we are looking at how to get more control over our products.

Sorry, just one follow-up, please. Just looking at the success that you've had with biosimilars kind of within the region. So there's 2 questions relating to the under penetration of PD-1s and other kind of immuno-oncology therapies at the moment. Was it the price that was the initial problem for the originator brands? Or was it trust in the products that the Hikma association has helped and then build? And to what extent might PD-1s and other therapies be a major future driver for the Hikma business?

In biosimilars, it was a combination of things. So - price is a factor, but also knowing how to work across the whole ecosystem. Ecosystems are complex. Whose decision is it to use more biologics. It's not just the doctor's decision. There needs to be guidelines, and who decides guidelines? It's a combination of multi stakeholders. And then there has to be the budget from the government and there has to be the willingness to do it. There has to be reimbursement systems to be put in place or changes any policy. So it is a relatively complex process to expand access to a specific treatment, especially the expensive treatments like biologics, and a lot of the companies that have such products do not have a similar presence to Hikma in MENA. And I'm not talking only about the small and midsized biotech companies, who certainly don't have this experience with MENA and are far better off partnering with us. But even some of the big pharma are not necessarily that big in MENA. And do not necessarily know the best ways to improve the access. So part of it was pricing, of course, but it was not only pricing. If you look at what happened in biosimilars in other markets that started with us, you will see that in Europe, for instance, the market just stopped, right? So we launched Infliximab almost in line with Europe, as an example. And in Europe, you could see the market dropping because the -- it was -- it's a lower price, it's a far lower price. There is more usage a bit with the market overall. Our market was not dropping because we diverted. We helped in diverting these cost savings into more access, which helps patients. So the thinking for PD-1s and other biologics -- it's not just PD-1s, PD-1s and all of the other innovative products would be exactly the same. How do we ensure we use our infrastructure to get more access -- to give patients more access to these medicines. It's sort of an ethical responsibility also on us, that's why we are very keen to do it. If some of these innovative products if we don't partner on them, they might -- the patients might not be able to have them.

Sorry, can I ask a follow-up on margins? And you've seen a quite significant margin expansion in the last few years. And that's come despite the investments you've been making, obviously, you have been doing more go local, lots of expansion, which typically would have been ahead -- instinctively would be a headwind to margins. So you've seen that margin expansion despite those perceived headwinds. You're talking about still looking to invest across building out more regions. So -- which we've seen hasn't actually been that much of a headwind necessarily to that margin expansion. So you're at mid-20s, just conceptually any reason why we shouldn't see some further margin expansion over the next 3, 4 years because we haven't seen that the sort of investments being much -- that much of a headwind to margin?

So the investments haven't been a headwind to margin because of multi factors. So our product mix has changed. The price per prescription has gone up. So we worked really, really hard to take up the margins. And we believe we should maintain the position in the next 5 years to stabilize where we're at. Given all the new products, all the investments, the different therapeutic areas we're getting in, the different facilities, managing 17 countries has its OpEx, it has its CapEx. But we believe with our current pipeline, our future pipeline and our product mix and the way we're shaping ourselves in terms of driving efficiencies, we should maintain where we're at today, mid-20s, which is what we're currently at.

I'm just going to jump in with a quick question if that's all right. Just talking about the growth drivers and it will be great to hear from you about Algeria. We've -- obviously it's been a phenomenal performer over the past several years. So maybe go into a bit of why we've been very successful in Algeria. And also as in Morocco and other market you oversee, can we replicate that kind of success in this market as well?

Actually, our success in Algeria came by design, like always Hikma, the success is by design. We capitalize on our strong foundation that we started in the '90s, as Mazen mentioned, through our strong operational plans that we have. And we compliment this with all the needed stuff, the portfolio, the pipeline to end up with a very strong portfolio. We specialize in the portfolio we shaped ourselves according to the market dynamics according to the healthcare system in Algeria, and we were able to structure ourselves toward the therapeutic areas, diabetes, oncology. We were the first one to complete the oncology through the local site and we made benefit of this. We led the change in the habit of even the restriction and patient pool by entering the local oncology for the first time in Algeria, and we succeeded to serve much more patients. On the other hand, reflected for us to grow in Algeria. The same happened also with the specialized therapy areas like the diabetes and multiple sclerosis. Also we were also the first in the market to deploy such important and specialized area. For that, we continue our success. We always used to be successful and pioneer in Algeria, and now we are much more in the excellence phase of our business. Definitely we will mimic this in Morocco where we are and will see one of the state-of-the-art of our site that you will visit now in the Injectables to bring Injectables fast, to make use of our expertise in Portugal to our sites to make the similar, to transfer the technology here. Also in Algeria, by the way, we are -- soon we'll also launch our new site in the Injectables. So by this, definitely, we will succeed. We will increase our opportunities here.

And I believe also, yes, it's worth mentioning that most of the local players, they go for the easy way, which is the oral dosage forms. Now we select the easy way and the hard way. So by being the Injectables in Morocco, I believe we will have a great differentiation and strategy, especially that we will be the first one who will bring hard to make injectables, especially lyophilised injectables. So we will be the first who will introduce this technology in this country, which is very important.

I'm just going to go, as I've got the mic, the follow-up for Tamer on Egypt, you're VP of Egypt and Sudan. And obviously, it's in a market with some troubles with FX recently, but it's a large and important market for us. If you could just elaborate on why it's an important market for us and our ambitions there?

Egypt is a great country and very -- it's a Tier 1 market, whether it's volume-based and basically, we are very well positioned over there. Egypt is 114 million people. They lived over there, which is entitled a huge potential, we can capitalize on. We have the first oncology plant in Egypt. We have the first immunosuppressant plant. We will continue our success in Egypt to have more unique products and launch more innovative products with our partners and basically to continue the success story of Hikma over there.

And Guy, if I may just answer in relation to FX, we've been in the MENA for a very, very long time, and we're used to managing the headwinds of the FX. And this is something we know happens -- is going to happen. It's going to continue happening in MENA. And so this is how we manage our business, how we look at our cash flows and how we spread ourselves in those markets to deal with the FX.

So yes, I've got one and I guess it's kind of linked into FX. I mean, obviously, one of the ways of offsetting that is by exporting product from here over to kind of your other markets. So I'm wondering to what extent your local manufacturing here is used to support other markets? Or is it just supporting your home market?

So within the MENA, we have different sites and different classifications for sites. So some sites are centers of excellence where they export globally. Some sites are market access sites where they work only for a local market. But in general, we do export a lot within MENA from one side to another based on the regulatory requirements, based on the products because some products we manufacture, for example, in Morocco, we have our own R&D for Morocco. Morocco has different requirements for registration in terms of stability, which are not across the region, but they're closer to Africa. So it could be a good side to manufacture from Morocco to Africa down the road. We also export from Tunisia to other markets, some to Africa, some to other markets within MENA, we export from Jordan, Saudi Arabia to Iraq, from different sites to Libya. So we do export internally and we use that to offset and hedge. So we've done that in Egypt actually to offset the currency export from Egypt to Iraq, to Yemen, to Tunisia and also to Libya. So we look in terms of our product optimization. And sometimes -- and this is the uniqueness of Hikma, sometimes a certain market may want the product by itself. So when we look at the products, we look at our products across the region, and we look at them globally, some products we sell everywhere. But some products you may sell across MENA and some products you may have in one market only in MENA based on the market needs, whether it's through buying a file or whether it's through working on it through R&D. So we do have the flexibility in our model allows us for that in order to give us the opportunity to be flexible and maximize for the market.

Just to add to what Tareq has said, basically, this starts when we do an R&D for the product itself, we decide we have to launch it. That continue basically where it can be more efficient more will be very lean to supply to the market. We can be very reactive. So we study all these aspects and we decide that this product should be launched in Saudi Arabia first or in Jordan or in basically in one of the 20 manufacturing facilities that we have which is basically -- we'll be able to leverage the potential for the product, the availability for the product. And this will it makes sense also for us from a cost perspective and efficiency.

And if you allow me to add to that as well, I mean, Tareq touched on that is not only the finished products between our sites. We go as far as capturing opportunities in different markets by semifinished products by different blends and which gives us an edge where even if there's an opportunity or a big tender that we can increase our revenues or our presence and we utilize that between our different sites, which this is, again, where the edge is versus other competitors not being there able to do that and be acting very quickly to react to such opportunities.

Last chance. Any more questions. Otherwise, we're right on time. So I would say thank you to all of you for participating in the panel. We'll go to lunch. We've got an hour for lunch. Of course, our whole team will be there. So you can carry on learning about the business over lunch. We'll come back in here for a short presentation from our Moroccan team, and then we'll go out and see the site.