Hikma Pharmaceuticals H1 2026: Profit Growth Masks a Mixed Divisional Picture

Hikma Pharmaceuticals Plc has reported a solid first half of 2026, with modest revenue growth translating into a healthier increase in underlying operating profit.

Group revenue rose 4% to $1,728 million, while core operating profit increased 9% to $405 million. Core figures exclude exceptional and other adjusting items, giving investors a view of what management considers the underlying business performance.

The headline numbers are encouraging, but the detail is more mixed. Branded medicines produced another strong performance and Hikma Rx improved its profitability, while the Injectables division suffered lower margins and an 8% fall in core operating profit.

Hikma nevertheless reiterated its full-year guidance, increased the interim dividend by 6% and reported stronger operating cash flow. The original company announcement provides the complete interim financial statements.

Hikma's H1 2026 key figures

Metric	H1 2026	H1 2025	Change
Revenue	$1,728 million	$1,658 million	4%
Core operating profit	$405 million	$373 million	9%
Core operating margin	23.4%	22.5%	0.9 percentage points
Core basic earnings per share	128 cents	122 cents	5%
Operating cash flow	$214 million	$161 million	33%
Interim dividend per share	38 cents	36 cents	6%
Net debt to core EBITDA	1.9 times	1.6 times at December 2025	Higher

Core gross margin improved from 43.7% to 44.8%, helping operating profit grow more quickly than revenue. Core EBITDA, meaning underlying earnings before interest, tax, depreciation and amortisation, increased 8% to $463 million.

Reported operating profit jumped 30% to $336 million, although this flattering comparison partly reflects the $72 million legal settlement provision that affected H1 2025.

Reported profit attributable to shareholders actually fell 6% to $223 million. One important reason was the finance line: Hikma recorded a $49 million net finance expense, against $35 million of net finance income in the prior period. H1 2025 benefited from $71 million related to changes in royalty arrangements and contingent consideration liabilities.

That distinction matters. Operationally, Hikma progressed, but the reported bottom line was held back by the absence of last year's finance-related gain and by higher debt costs.

Branded remains the main growth engine

The Branded division, which supplies branded generics and licensed patented products across the Middle East and North Africa, was the standout performer.

Revenue increased 15% to $502 million, with core operating profit rising 23% to $163 million. Its core operating margin expanded from 30.4% to 32.5%.

Growth was supported by demand in important markets including Saudi Arabia and by medicines treating chronic conditions such as diabetes and cardiovascular disease. Hikma also benefited from government demand connected to the continuing regional conflict.

The division launched 16 products during the half. Fourteen of the 15 launches across its five major markets were either first-to-market products or first generics, supporting a better product mix and stronger gross margins.

Investors should not simply annualise this performance. Hikma expects Branded revenue to grow at the top end of its previous 6% to 8% range for the full year, but performance will be weighted towards H1 because of tender timing and marketing expenditure shifting into the second half.

Injectables is the weak spot

Injectables revenue was broadly unchanged at $685 million, but core operating profit fell 8% to $189 million. Core operating margin declined from 30.0% to 27.6%.

US revenue fell 4%, partly because customers were working through launch volumes during the transition from Vanco Ready to Tyzavan. Hikma said Tyzavan prescription volumes increased during the half and expects sales momentum to accelerate.

Growth of 9% in Europe and the rest of the world, alongside 6% growth in MENA, offset the US decline. However, supply disruption affecting an in-licensing partner weighed on gross margin.

Hikma is also deliberately spending more. Injectables sales and marketing expenditure increased 10%, while R&D and sales investment contributed to the profit decline. These costs may support future growth, but investors will want evidence that new launches and improved US commercial execution can rebuild margins.

Management still expects low single-digit Injectables revenue growth for 2026 and a core operating margin of 27% to 28%. Revenue and profit are expected to be weighted towards H2.

Hikma Rx delivers better quality earnings

Hikma Rx revenue was broadly flat at $520 million, but its profit performance was much stronger.

Core operating profit increased 16% to $107 million, while core operating margin rose from 17.6% to 20.6%. The improvement came from a better product mix, including higher contract manufacturing revenue and a good contribution from sodium oxybate.

Several products were launched, including extended and immediate-release tapentadol. Hikma also signed a co-development and licensing agreement covering device technology for its generic Ellipta programme.

The group expects Hikma Rx revenue to remain broadly flat for 2026, with a core operating margin close to 20%. Maintaining this improved profitability despite price erosion across the portfolio would represent useful progress.

Cash flow improves, but debt is rising

Operating cash flow increased 33% to $214 million. That is a clear positive, particularly alongside increased R&D investment and $122 million of capital expenditure.

However, net debt climbed to $1,694 million from $1,387 million at the end of 2025. Net debt to core EBITDA increased from 1.6 times to 1.9 times, reflecting the share buyback and one-off legal settlements.

Hikma launched a buyback of up to $250 million in February. By 5 August, it had purchased $227 million of shares. Buybacks can improve per-share metrics by reducing the number of shares, but they also consume cash that could otherwise reduce debt or fund investment.

The balance sheet does retain liquidity. Hikma reported $263 million of cash and $790 million of undrawn long-term committed banking facilities at the half-year end.

The interim dividend rises from 36 cents to 38 cents per share and is due to be paid on 17 September 2026 to eligible shareholders on the register at 14 August.

Full-year guidance stays in place

Hikma reiterated the following constant-currency guidance:

• Group revenue growth of 2% to 4%.
• Core operating profit of $720 million to $770 million.
• Capital expenditure of $190 million to $210 million, excluding $120 million for a partner-reimbursed Hikma Rx project.
• Core net finance expense of $99 million to $103 million.
• A core effective tax rate of around 23%.

The unchanged outlook signals that H1 trading met management's expectations rather than forcing an upgrade. That is consistent with the description of the performance as solid rather than exceptional.

For context, Hikma also reaffirmed its full-year expectations alongside growth in its H1 2025 results. The current update shows continued group progress, but with the source of growth shifting heavily towards Branded and margin recovery at Hikma Rx.

What investors should watch in H2

The key question is whether Injectables can deliver its expected second-half improvement. Tyzavan's commercial progress, restoration of supply from the affected partner and returns from increased US sales spending will be important indicators.

Branded growth remains impressive, but its H1 weighting means the second half is likely to look less dramatic. Meanwhile, Hikma Rx needs to preserve its improved margin despite generic price erosion.

Overall, the update contains more positives than negatives: core profit grew faster than revenue, margins improved, cash generation strengthened and guidance was maintained. The main counterweights are weaker Injectables profitability, higher finance costs and rising net debt during a substantial buyback programme.