The FDA announced yesterday that it would ban unapproved oral versions of the drug colchicine, some 14 months after it approved a version of the drug made by Mutual Pharma. As we discussed in detail in our report of September 21st, Hikma has been enjoying huge profits on colchicine, having decided to remain on the market for as long as possible, despite knowing that the ban was coming. As of a few weeks ago, it had more than a 90% market share in colchicine by volume and was selling at a price at least ten times higher than it was achieving in July 2009. This explains why its generics division reported such strong results for H1 2010 but it also means that profits will dip sharply once colchicine is gone.
The FDA has given unapproved manufacturers such as Hikma 45 days to stop production and 90 days to stop shipping, so H2 2010 should also look good for the company. Hikma today put out a press release reiterating its estimate of an uplift in generic sales of at least 20% this year and the reality should be better than that, given that a 20% rise would imply H2 2010 being flat on H2 2009. However, given that we believe that more than half of the profit of the generic division is currently coming from colchicine, it’s hard to see how Hikma can avoid a collapse in generic earnings in 2011, so it had better hope that it can grow its branded operations to compensate.