Good morning, everybody. Welcome to the people here in the room. You made it through the weather to visit our office, so it's great to see people face to face. Also welcome to the people on the line. We are very pleased to talk to you today, both from a personal point of view of seeing people face to face for the first time in two years, but secondly, to talk about the great results that we had in 2021. I'm not going to go through the results. I think you saw the press release, and we have the presentation this morning. A strong growth in all three businesses in 2021. A lot of new launches, many business development deals. Challenging environment still in the U.S., but overall, I think, the performance was really good in all three businesses, and a strong guidance for 2022. With that, I was just going to open it up for question and answer. Maybe we start in the room here, and then go online a little bit later on, when we are running out of questions in the room. Who wants to start? Yeah. Emily Field from Barclays. Maybe just to start, you know, the deflationary environment in generics, I believe you're talking about, low double-digit inflation for 2022. The factors driving that, you know, if you expect that to persist or kind of what you think is a more normalized environment for a generic price deflation. Yeah. What we saw in 2021 was a gradual worsening of the pricing environment. You see that on the slides we put up this morning, that 2020 was particularly good year in a way. We had the price erosion of around 4% for the generics business in 2020. We guided 6%-8% or mid to high single digits last year pricing. Our pricing came out just about 8% for the full year in 2021, maybe 8.5%, so it was just about 8%. We saw that throughout the year, that the focus of the customers had been the security of supply in 2020. There were very few tenders or auctions happening in 2020. I sometimes say there was like a pent-up demand from the customers of tendering out the portfolio. We got so many tenders coming in in the first half that impacted then the second half in terms of pricing. That's how it started. I think also maybe some of our peers had inventory issues because there were less volume in the market during COVID due to less diagnoses. We are back to normal volume in the market as we showed in our slides. We have the feeling that at least some of our peers have inventory issues and therefore pushed down the price a little bit in the market. In terms of how long will this last, you never know. I believe, and I've been doing this now for just over 20 years, the pricing in the U.S. is cyclical. It really is cyclical. You know, I've been very close to the market in the U.S. since 2010. You can see that you usually have maximum two challenging years, and then you usually have three to four very decent years. We had 2016 and 2017, which was challenging years from pricing. We had 2018, 2019 and 2020 quite good years. We had a change of the storm a little bit in 2021. We are forecasting low double-digit pricing for 2022 based on the tenders that we see and expectation in the market. I'm still optimistic on the market. This is cyclical, and I hope, I'm hoping also like if there's any extra inventory of our competitors, that will flush through hopefully in the first half of the year. I'm optimistic about the market, but clearly we are in a little bit different environment today than 24 months ago, for example. Somebody has to go now. Peter Verdult, Citi. Three questions. Just remind myself. PANDAS. Teva talking about PANDAS, right? The change in FDA regulations where drugs that are approved pre-1984 and are being converted to a sort of 505(b)(2). That could have implications for generic companies in terms of post-marketing surveillance or potential litigation. I think they're saying they might have to withdraw at least 30 products potentially from the market, and some of them are on the shortage list. I think there are two that stand out for Hikma, dexamethasone and digoxin. Just wondering if that is on your radar or not. Then specifically to Hikma, on the generics outlook, I mean the margin's pretty impressive. You always said 20% is good and you're guiding to 25%, or 20%, so 24%-25%. Is that all just product mix or, you know, some analysts are saying it's just because you're not spending as much. Just wanted to get a sense there because it does feel that you're finally conceding that the revenue outlook for things like Advair and Vascepa might not be as big as people hyped. Then lastly, on the buyback. I mean, in the past you said, look, it's a bit like giving a kid candy to a kid, and it's a short-term impact. What is the signaling or thought behind doing the buyback now? Just to help prop up the, you know, the earnings outlook, or how should we interpret that buyback? Thank you. Do you want to start on the buyback, Khalid? Yeah, I'll start on the buyback. I think, in terms of our capital allocation priorities since the Capital Markets Day in 2018, we have four priorities. One is investing in organic growth, M&A, BD, acquisition, and this has not changed. Today, our balance sheet is very strong. We have a very low leverage, even within our industry. We have the flexibility, so a buyback of $300 million, up to $300 million is not going to affect our ability to pursue further acquisition. I mean, during this year, we had a couple of signed some licensing deal, acquired few products. We did Custopharm. It's not going to have an impact on our financial flexibility. It's in a way the board and the management, we believe that the market is not reflecting the intrinsic value of the company, and therefore, maybe a share buyback just shows that we believe in the prospects of the company and the future. When will you have to do it yourself? We are going to do it over this before the end of this year, so it's gonna spread over the during this year. On the older ADAs approved prior to 1984, as you said, Pete, in your question, it's only affecting two products for us. It's relatively small. I think also to keep in mind is I don't think the FDA wants us to take these products off the market because there will be a shortage on the market, especially on these two products that we have. Digoxin is a life-saving drug, but I think most of the applications are very old in the market, and it would be very bad for the market. The second thing on dexamethasone, it's very important, especially now during COVID, but it's a relatively small product outside of COVID season. We keep an eye on it. I'm not sure it will be as drastic as Teva is painting it. You know, out of the 85-86 products we have in generics, it's only two of them that we are monitoring at the moment. For Digoxin, I doubt if it will come through. We are ready for it, but that's. I don't think that's how it is. I don't think it's how it's gonna be. No, so the question is basically if the bio study is older. We need to check, but I don't think digoxin is at risk. Dexamethasone might be at risk, but we need to look into that. In terms of generic margin, so remember when I joined four years and four days ago, the company, I basically set out my ultimate goal in five years' time would be to have a gross margin in the mid-40s and the net operating profit in the 20s. We have achieved that. Even in a year where we are guiding to a double-digit price erosion, similar to what we saw in 2017, we are guiding to net operating profit 24%-25%. That highlights to you what we have done to this business. This is not the same business. If I remind you of the numbers in 2017, our net operating profit was 3.6%, and our gross margin was 36%. Now we are guiding 23% to, 24%-25% net operating profit in a similar pricing environment as we are forecasting. Totally different business. In terms of investment, we are continuing with the investment, so it's not we are getting to this level by cutting the R&D or cutting the sales. We are launching big specialty products. We hope we will bring Ryaltris to the market sometime around middle of this year. We have the approval in hand, but the supply is not available yet from Glenmark. Glenmark is responsible for the supply for us. Our best estimation is probably soon in third quarter that we'd be ready. We will miss the main allergy season. We need to start to build up samples. We are expanding our promotion of Kloxxado. Really, it's not cost cutting. It's control of the cost, of course. I think you saw that the gross margin for the generics in 2021 has never been higher. We showed 47% gross margin. Show me any peers that don't have injectables with like-for-like comparison. This is really amazing results, and it's about the work the team has done over the last four years. I feel, you know, I have maintained, I have never committed to say it's going to be in the mid-20s, but I think this business, even in tough years like this business should continue to deliver a net operating profit in the 20s. I'm very confident about that. Thibault Boutherin, Berenberg. My first question on the generic Xyrem. I think it's clearly the guidance with the launch in the middle of the year. Just if you could give us a little bit color on what you're expecting in terms of market share uptake, timing of competition launch, and I guess the kind of mid- to long-term outlook for the generic in terms of does it have a longer pay value than usual generics or not? Yeah. Just also on Kloxxado, if you could maybe give us a little bit of color on the early trends in the launch, what's different compared to what you were expecting before launch and the strategy you explained to us in the past months and quarters. Maybe just to finish on the biosimilar. Some of the biosimilar agreements you've made have only trials ongoing in China. Just if you could tell us more about your confidence of obtaining FDA approval with these trials, when we saw what recently happened with Eli Lilly and Innovent drug recently where the FDA basically doesn't seem to be ready to approve at least branded biologics based on a study conducted exclusively in China. Let me start on your last question around the biosimilar. Last year we signed two biosimilar deals with Bio-Thera on ustekinumab and with Gedeon Richter on denosumab. Both really good companies, very impressive development. In terms of Gedeon Richter, they're doing a global trial. I'm not even sure they have a site in China. In terms of Bio-Thera, they have patients in China, but they're running their trial in six different countries, so it will not be solely based on Chinese population, the phase III study for sure. Overall, we read the guidance from the FDA and on this issue came right around the Eli Lilly analysis of their Innovent product. I don't think it affects the biosimilars per se, but no matter what, we are running a global trial for both products. We don't think that will be an issue for neither development. You know, you keep an eye on it, but I think it's a specialty product issue. You know, I'm more confident of course, by having a global trial behind the development for these. Your first question, if you could just repeat it, please. Yes. The first question. Let me take the Kloxxado while you're looking the other one up. Yeah, yeah. Sorry. Yeah, let me do Xyrem. Xyrem, we obviously have no guarantee when it's launched. We are saying around midyear. It could be a little bit into the second half of the year of course. But our best estimation is around mid-year. It's difficult to give the exact timing. Xyrem or sodium oxybate is a specialty product in a closed system. We have seen now that the branded companies tend to retain a significant market share when you come into the market and the best example is Advair. Today, I think GSK in fourth quarter was 52% market share. Our expectation is that the brand will maintain some market share due to the closed system on so few payers around this product. Because if only one payer decides to stay with Jazz, that could mean 60% of the patients. This is a very different situation. When you're modeling it, you need to think about that. We obviously don't know, and we will know it when we launch the product. That is what we have seen as an action. We are keeping an eye on it. Remember that we included in the guidance that the timing of the launch is difficult to say because that is based on the decline of Xyrem. I'm not going to help you to model this in too much detail, but you have to recognize that if an acceleration takes place, the volume has declined quite significantly on top of that, the brand might keep some of the market. We are ready to go. The good thing is this is an authorized generic, so we will get the supply from Jazz whenever this is reached, this level. We also have access to the REMS program. We are ready to move whenever the calculation tells us that we can have an accelerated approval. We feel it's going to be, as I said, around mid-year, but we haven't even seen the sales numbers in January yet. It's monitoring how the sale is going because it's not like you can pick up Xyrem in IQVIA, I'm sure you know. In terms of Kloxxado, we are very pleased with the feedback on Kloxxado. Though, we are working now in two forms with the communities where we are going to different states in the U.S. and buying into their police departments and get it on the register. We have had a good feedback because the feedback, especially from the emergency workers and police departments, they like to have a higher dose instead of having to give two doses of 4 mg because that is two things they have to have on their belt. We, you know, but there is a tender cycles in the state, so it takes a little bit of time. Remember, we only launched this at the end of August of last year, but we're really pleased with that. On the prescription thing, they have started to come. You can see that there's slowly every week more and more, there's a growth in the prescription, still relatively low. We also got one of the major pharmacy chains in the U.S. to keep it in stock, as an emergency medicine in their pharmacies. That is a big win for us. It takes time, but it's as per expectation or a little bit better. It is a good thing. Maybe the follow-up question, has the generic version of Narcan impacted our sales? It really hasn't because the generic solely focuses on the prescription market. Generics wouldn't go into the communities. You need a totally different sales force, and it's costly. The impact of the generic 4 mg, which Teva introduced to the market and that really hasn't impacted our sales as we expected. Hi, Christian Glennie from Stifel. Just to follow up then I guess on a couple of products. You know, we expected a step up last year or at some point generic Advair, generic Vascepa. We've seen generic Advair around 8%, Vascepa 12%-14%, I think. What is the expectation then? I mean, have you got supply sorted on Vascepa? What's the expectation with both products as it relates obviously to your guidance for the generics overall? If I take both products, in terms of icosapent, the challenge here is we got a third player in the market that's now actively marketing at the moment. Apotex introduced by the end of last year as a new entrant to the market. We don't know if Teva is coming or not. They have approval in hand, but they haven't launched the product. At the same time, there's still a shortage of supply in the market. If you look at IQVIA for fourth quarter, you still see that Amarin remains about 80%. Apotex is still at 0% because they just launched by the end of December, so they don't register yet, but they are active in the market in early this year. I think we came up 14% and Dr. Reddy's at 6%. You can still see that there is a shortage everywhere in the market. We are working everywhere to increase our supply. I think for the time being, we expect increase a little bit through the year. The factor in increase would mean to our expectation that the FDA has to inspect some sites both for us and maybe for the others. That's the reason because the queue of the FDA to get a quality inspection for foreign plants is very long at the moment, and this is not a priority. There could be some time until you see a big step-up in the generics with a significant API supply in the market. Three-player market is quite competitive, but only around 20% of last year, probably a little bit more now, in terms of business. In terms of generic Advair, the Teva got approval in December. They haven't launched yet. I read the analyst notes as you did about them, so they are expecting to launch soon, whatever soon means. In the market obviously Mylan and Prasco. In terms of others that could come in to keep an eye on, I think Lannett in their press release on their second quarter earnings, they said they're expecting a letter from the FDA in February, and there's not many days left of February, so let's see what the letter says. Cipla has indicated that they're waiting for feedback on their deficiency responses from the FDA. It is. There are more companies thinking about it. In terms of our market share, I think in fourth quarter on average, we had about 20% of the generic market. 10% of the total market, if you count it like that or, you know, roughly. I think you will see still an increase because it's been a gradual increase to that. We have plenty of supply. We don't have any shortage of supply. We have manufacturing lines. We probably could supply nearly the whole market if it would be needed. Overall, it is going to be significantly more competitive product in 2022 than it was in 2021. Do you think Advair will grow this year, in 2021? I don't guide on really on individual products. It depends also on when Teva comes and if Cipla comes or anyone else. You know, so there's so many things outside of our control that can affect it. Hi, Siggi. It's Paul Cuddon from Numis. Just pivoting to the injectables business. I'm just wondering if you could provide a bit of a overview of the pricing environment kind of around the world within injectables. The margins taking a bit of a step down next year, to what extent is that sort of a cautious assumption reflecting maybe the contract manufacturing and where might that lead in the next few years? I mean, just generally on your customer service proposition, closeness to the hospitals, I mean, is anybody starting to kind of match that to your levels? Yeah. Good question. Overall, the injectable business did extremely well in 2021. The reason I say that is that the comparator in 2020 is very tough because we were selling, especially in the first half of 2020, so much of the COVID-related treatment. The comparison, remember mid-year, we were not growing in the U.S. and on full year basis, our U.S. business grew 4%, which is very significant because we have a strong comparator in 2020. In terms of our U.S. business, we've been doing very well. We launched 15 products in 2021. We continued to gain market share, so we became number two in the market. We overtook Fresenius in terms of volume in the U.S. market. Pfizer is still the biggest, but we became number two. In terms of our service level, we are really second to none. We've been really good in dealing with that. In terms of the margin, I think 2021 we did 37.6% or 37.6%, yeah, 37.6% net operating profit, which is a really strong profit. You have to always keep in mind that U.S. has the highest profit and MENA and Europe have a lower profit. Both MENA and Europe are growing faster than the U.S. There will be a little bit dilution always on the net operating profit. There is more dollars at the end of the day, but the faster I grow in Europe and MENA versus the U.S. market, there will be a little bit of dilution in the business. In terms of 2022, we are excited about that in terms of the new launches. We expect to be in the similar numbers as previously, 10-15 new launches for the U.S. injectables. The growth in Europe will continue. We expect to have our first revenues in France. With the small acquisition we did in Canada of Teligent Canada bankruptcy of the assets of Teligent Canada, gave us a little bit of platform to launch our own products. We have registered nine products already in Canada, but we have not launched it because if you launch only with nine products, you are loss-making. We wanted to sit on our hands until we have a big enough portfolio to offer. In MENA, we will continue on the biosimilars, getting more approval, and that will really drive the growth of the injectables in MENA in 2022. Especially on Herzuma and Rituximab. You know, we are getting the approvals through in more and more countries every year. Still Remsima is performing very well. In terms of the profit, I've always maintained that you should think about the injectables 35% as the base. We always hope to do a little bit better than that. You know, shortages in the market usually mean you do a little bit better. You can't then bring shortages into your forecast, as you know, that would be, you know. For example, Fresenius, even though they have challenges after the Melrose Park plant, it really hasn't benefited anyone because they have done a good job in managing that quite well. Overall, I'm very excited about the injectables. We have the first sale of our compounding. Compounding, we kicked that off. We have now a manufacturing plant that is fully running with validated processes. The challenges are that you need to license in every state in the U.S. We are just starting, we're between five and 10 states at the moment. We expect that will come through the year. Some of the states require us to have the FDA to visit before. We need to wait for the FDA to visit. This is why in 2022, don't expect a big contribution from this. This will be the start year. Hopefully midyear, my thinking is I can give you more of a forecast of long term, what this business can do. We will see more of the market. We will have better information from the hospitals. This is the kickoff that we see in 2022. Just adding back to the margin. In 2021, there was some impact in the injectables margin coming from FX. If you exclude that, and there is an appendix some explanation about the hyperinflationary impact which affected the injectables more, the margin would be higher, like 38.9% in constant currency. Slightly higher than 2020 as well. Just on that pricing environment, your typical, I think. Just, yes, we focus a lot on generic price deflation and things like that. A lot of investors will ask me, well, what's the injectables falling then? We are still remaining that it's low to mid. Think of it, we are not seeing the pricing impact there because I've always said and maintained that the service level that we have and the relationship and how we have been able to step into when others have not been able to deliver has a little bit helped us to maintain pricing better on the injectable side than on the non-injectable side, on the U.S. generics. I'm much more positive on the injectable pricing environment in the U.S. than maybe on the non-injectables. Thank you. Is it possible? Yeah. Operator, if you open the line for questions online. Sure. Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two to restore your question. If you're joining via web browser, kindly press the flag icon on your web browser to ask a question. When preparing to ask your question, please ensure your phone is unmuted locally. We now have a first question from Max Herrmann from Stifel. Please go ahead. Great. Thanks very much for taking my question. It was just really a follow-up on the injectables, again, on the pricing, just 'cause we've seen this week from Fresenius commentary about you know, tougher pricing environment in their injectables business. I know you said your customer relationships mean you don't expect a change from your previous guide. Just wanted to try to understand you know, are their relationships not as strong or what is the difference they're seeing a change in the market. I just wanted to understand why you're not seeing that change. The issue is between Fresenius and Hikma, the key difference is the portfolio that we have. Our portfolio, we have over 120 products, but all of our products are relatively small. When we get a competition on a single molecule, that doesn't affect us nearly as much as when Fresenius. Fresenius has at least fve very big products in the hundreds of millions in revenue. When they get a competition or new entrants on these bigger molecules, it's obviously reflected in more price erosion that we see in the market. The build up of the portfolio, I think Fresenius has a really good relationship with the customers. I don't think there's a big difference there. It's really the build up of the portfolio why we are reporting a little different numbers of how we see the pricing in the market. Where for us, having a very large portfolio, but really no blockbusters to talk about in, you know, I would love to have their blockbusters, but also at the same time in a tough pricing environment, it is better to have smaller products and a lot of them. Just final last question was just on Custopharm. Can you, I know you've missed this, but can you update us in terms of the completion and what the process is at the moment in terms of the regulatory review? By the way, Custopharm is not included in the injectable guidance. You know, obviously we don't know the exact numbers today, and we don't know exactly when we close, so it wouldn't be right to try to guide for those numbers. In terms of when this transaction closes, it's at the same time as we said when we announced. We expected by mid-year or before, hopefully in the second quarter of this year. We are working closely with the FTC. You know, nothing is quick in this process, but really there's no outstanding issues. We are very comfortable on the transaction itself and we expect that to happen in second quarter. Great. Thanks, guys. Thank you. We now have our next question from James Vane-Tempest from Jefferies. Please proceed with your questions. Yes. Hi. Thanks for taking my questions. Just starting with injectables, apologies if I missed it, but can you give us a little bit of clarity around the 35%-37% margin? And is this based on regional mix or is it more based on new launches? Just to give us a flavor of that. I'm just looking at 2021, I guess despite, you know, Europe and MENA growing really well, which we know are low margin, you know, you're still in the middle of your guidance. I mean, if the underlying, you know, U.S. margin's going up, just given the growth that it delivered and where you came with the full year. The second question is just on Custopharm. I appreciate it's still to close, you're not guiding specifically. just as a scenario to help us, if it was to close, say, the middle of the year, can you give us a sense in terms of what, you know, the contribution would be to the business? Thank you. On the margin itself, it is overall. It's still a strong margin. In terms of the 35%-37%, it has to do with the regional mix, a little bit, you know, differentiation. There is an increase in the cost of transportation. There's a little bit of increase in cost of manufacturing that we are dealing with in this business because you have to remember for the U.S., half the volume that we sell in the U.S. is coming from Portugal. There is a tiny bit of increase in that cost that you really cannot push back to the customers. It's nowhere near that some of our peers are seeing because we have a good control. But that's part of it. Part of it is that the biosimilars in MENA are growing the fastest, and biosimilars, because we are sharing the profit with Celltrion, naturally has a lower profitability. A part of that is also, you know, how the contract manufacturing comes in overall. Overall, there's no big change in the business that means that the profitability is going way down. It's small things here and there. The regional, a little bit of increase in transportation costs, and then more sales of the partnership products, which means naturally impacting our operating profit. Second question, if you re- It's about Custopharm. Custopharm, yes. Custopharm, the FTC doesn't allow me even to visit them. I really don't know what their budget is for 2022. That's why I'm very blindsided. Remember when we announced the transaction, we said that a rough estimate of the revenue for full year 2021 was $80 million. That's really all I have. I have no update on that to say, because we need to treat each other as competitor until the transaction closes. That's in a way, James, the only indication I can give you is what we announced when the transaction was announced in September. Thank you. One more line. Thank you. We now have our next question from Nicholas Fowler from Barclays. Please proceed with your questions. Hi there. Thanks so much for taking my question. Just thought I had a quick question on the R&D. I know that it's difficult for you to guide towards revenue, specifically on the individual products and business lines. Just thinking about what guidance looks like for 2022, some of the brokers have been explaining that they expect R&D overall to increase. How do you kind of see R&D and also the allocation across the regions as well? We should expect to see probably MENA and Europe with the greatest allocation to R&D? Yeah. R&D is roughly. We don't guide on R&D, by the way. What we have been delivering since I joined the company, at least, is approximately 6% of revenue on R&D. Could be a little bit less, a little bit more, but that's really what has come out over the last few years. I can't guide you on 2022. In terms of where the most money is being spent, when you look at the numbers, we spend more on generics and injectables than we do in MENA. The simple reason for that is such a big portion of our pipeline in MENA is also business development. We do our own development, but also we complement or basically mix the two together, where we have specialty products in the pipeline, which is done by our partners. Around, we have delivered around 6% of global revenue, more on generics and injectables versus MENA. That's really how far I can take you in terms of the allocation of the R&D. Okay. Thank you. Okay. Peter Verdult, Citi. Just two questions, starting with Khalid on cash flow. Pretty strong. Great. Oh, I'm sorry. Very strong. Quite strong. On a serious note, you've during the quarter you were making clear that you had higher inventories and you that was putting you in good stead. But of course, there's been robust growth. But is there anything meaningful change in the inventory levels that you're holding, receivables, payables that is helping? Then secondly, for both of you maybe, on the MENA region, I know there's hyperinflation effects, but if we put that to one side, anything you wanna highlight in terms of country performance? Then more broadly, you've had this long-standing strategy of holding the cost base, delivering a better portfolio. I mean, it feels to me like it was years ago that you did Vraylar, Vitabiotics, the biosimilar deal. When might we dream that you actually that starts to sort of translate into a better top line performance and margins maybe just finally getting off that bottom around 20%? Sure. Khalid will answer. In terms of cash flow, there was a focus from the beginning of the year, all the management team on how we want to manage inventory levels. Because if you look into 2020 versus 2019, it went up. We have actually a project that we've done with all the segments and involved many of the supply chain, purchasing team, finance, to look into how we are going to optimize our inventory level. You can see this drove our inventory down and really drive the increase in our operating cash flow. It's one side. It's not just the cash flow, as well as receivables. Now we have much more control over our receivables. We put in place certain controls that, when countries cancel, different levels of authorization and control mechanics to the credit limits, which help as well controlling the receivable balances, in a way. All of these help with the targets that we are setting to the regions as well and how they are going to achieve the cash flow target, help to improve our cash flow. We've been working on this since some time, not just in this year. We've been delivering year on year on our cash flow. It's not, it's nothing I would say specific other than the inventory, but it's much more control and bringing the inventory into a more normalized level. Yeah. Also I think on inventory, we are very selective what we keep more inventory of, you know, because of delay in transportation and things like that. The same as shortage of rubber stoppers for our injectable business, and then we shifted more rubber stoppers, you know. It’s not like finance takes everything down. You can see that our inventory 2021 is a little bit more than 2019 but lower than 2020. Is that right? Yeah. Yeah. 2020 was. 2020 was very high because the pandemic was going on and we let a little bit loose. It was better to have more inventory than less. There was an opportunity to fix that a little bit in 2021. In terms of MENA, the country I call out, which did amazing in 2021 but also in 2020 was Algeria. Algeria now is our star market in MENA. Well executed on all fronts. They introduced a new oncology plant. We got eight products from a brand new plant to the market. The beauty in Algeria is you are alone. If you manufacture locally, then others cannot import it. I think we grew Algeria 42%, if I remember correctly. Very strong growth. But we also grew in Egypt, you know, not at the same level. These are tier one markets. In Saudi Arabia, it is still a very strong market. What happened in 2021 was that the government restructured the governmental tenders, so there was a delay in the tenders. The tender part of the business didn't perform maybe as well, but I'm saying that's a timing for me. There were six or seven different tenders in Saudi Arabia for different parts, different hospitals, different regions. They now have one central tender for the whole country. By doing that, there is a delay in the tendering business that's happening. It will benefit us going forward. The retail side of the business in Saudi did very, very well, which was encouraging. Jordan did well, probably the best performance in Jordan that we have seen, at least since I joined the company. We feel really good about the MENA. In terms of profitability, if you take out the hyperinflation, they delivered a low 20s profitability. The hyperinflation, I'm sure you saw it. It took me forever to understand why it's done like this. I think, though, the hyperinflation obviously increased our revenue but decreased the profitability. The branded business delivered in constant currency a low 20s profitability, which is where it has been for years as well too. In terms of when we can raise that into the 23%-24%, we don't know. you know, as you can see, it is no matter how we deliver on the business, it seems to be eaten up by FX and hyperinflation accounting and things like that. That's my biggest thing. We launched the Gedeon Richter Ryaltris in the first country end of last year. It takes a long time to register products in MENA, up to three years approval time in many of the markets, especially for specialty drugs they don't recognize. We are hopeful. You know, the ultimate goal is we want to be just over 50% branded generics, just under 50% specialty drugs. Also you have to keep in mind is when I introduce specialty drugs, I'm sharing the profit with the partner at the same time. Hopefully there is a better Better utilization of my OpEx, better utilization of my sales force, because we have a big sales force. We have 3,000 sales reps and sales support, and I need to grow and better utilize. It's like an overhead in a plant, the more I manufacture, the less the overhead is impacting. It's the same I'm thinking about for the MENA region, but it's just taking a little bit, it takes time. What is your question even better? Even better. You should see the inventory of rubber surfaces they have. It's beautiful. Yeah, the volume in MENA as well is increasing, so it's not. The business itself is doing very well. As Siggi mentioned, you get bits and pieces from FX from different countries. It's like 18 countries, each country has its own currency. But it's in a way, we are managing that. I think this year we are targeting to improve as well. Maybe the last point on MENA is that I think five, six, seven years ago, between 50% and 70% of our sales there was antibiotics. Now, over 50% is chronic medications, and antibiotics is down to 20%-30% of our sales, which tells you that this strategy of gaining more chronic medication, relying less on the old plans are still good. They're still very valid, but the growth is more in the chronic medication because the movement is less. I'm really pleased with that. We showed that on the slide, but over 60% of our portfolio being chronic medication it's a huge improvement of the portfolio markup that we have for the business. Any more questions online? Nothing. Any more questions in the room? Yeah. Thank you. Thibault Boutherin with Berenberg. Just, two more questions. Yeah. The first one just on the operating margin for the branded business. When we think about the kind of normalized base of low-teens for 2022, will we see some sort of negative base effect in the first half, which means that we'll probably be below this kind of normalized margin because of the hyperinflation hanging on in the first half? That's my first question. Second question, just on the compounding business, if you could tell us a little bit more about, you know, this is a kind of new industry, so who are the competitors, kind of structure of the market, and just kind of could you give us a little bit more details on what you're doing here. Thank you. Do you want to start? Well, on the first question, I think if you look into the H1 and H2, in a way, how much we have achieved. There's a lot of, I would say, cost controls in the second half in order to manage our costs. This is like we put a plan into how to reduce our costs and control our costs, which helped, as well, the margins. But a big chunk of the inflationary impact took place at year-end because it took us by surprise, to be honest with you, because the currency in Sudan was stabilizing, but suddenly the CPI index. Showed a different level to the stabilization of the currency. A big chunk of the FX took place in the second half and therefore affected the margin. If we exclude that, you would see more of a normalized level on margin for the second half, and margin would be stronger than the first half for the branded business. In terms of the 503(b) business, it is a big and growing business. It's estimated there was an FDA conference, virtual conference last year about this business. It's estimated that the total market is between $2.3 billion and $4.6 billion. The reason nobody knows is the direct sale to the hospital, which doesn't hit any wholesalers. How it happened is that you have a courier from your plant straight to the hospitals because it's made for each patient in a way. In terms of the environment, in the U.S. today, there are 67 companies that say they're into 503(b). They have approximately 75 manufacturing plants for this business. The biggest company is QuVa, Nephron, CAPS. Those are the top three, I think, in terms of the business. Maybe you have any- They are not public, so It's a guess. I honestly don't know. I think it's probably in the hundreds of millions, the biggest ones. You know, it's maybe 100-something millions, but it's a pure guess from my point of view. In terms of the portfolio opportunity, it's pretty big. You know, there are different opportunities. Also, when there is a shortage in the market, what the FDA allows the compounders to do is to compound this product for the hospitals, you know, if there's a shortage on the listed drug. The first focus is sterile to sterile compounding, where you take a drug and you make it into a bag when it's often bagged, and you mix it. What we heard, and the reason why we got into it, is when we met with the hospitals, the hospital pharmacists, the doctors and the nurses, this industry has been inundated with quality issues. If you go online and go on the FDA website, and you look at the 483s and warning letters that this industry has had, it's a long reading. This is like all volumes of Harry Potter, you know. There is a long reading. They came to us and said, "This is not a reliable industry." It's a way of utilizing the quality system we have for the pharmaceutical companies and the SOPs, the validation, the stability testing to change this industry into something different. Really revamp it in a way that will better the quality, but also will give the hospitals more trust in the products that's coming in. That's really where we came to this. There is a need in this growing market for a high-quality supply. We have a big and beautiful plant. I'm really hoping if this damn pandemic goes away, that I could invite you to see the plant, maybe this year or early next year, because we are ready. It's running. It's estimating we will have 100 people there. In the video that went on social media, you could see a little bit of video from the plant itself, where it is. The idea behind it's a big market. We have to obviously start from zero. We have this idea. We thought about doing an M&A, you know, because it takes a long time to start from zero. We went against that because what you take is the quality record of the companies that you're buying, and instead of starting fresh and taking maybe an extra one or two years to build up the trust, that was how we thought about it. The thinking is it's the quality of the pharmaceutical industry we are introducing into the 503(b) business. Yeah. Oh, yeah. If you take a microphone or. Yeah, just a very quick one. I expect the answer is no, given the mix of your business. Is there any potential impact, direct or indirect, from Russia-Ukraine conflicts? No. That's a quick answer. Other than that. Back on the short side today. Yeah, you're back. Yeah. It's all Ukraine today. Siggi, it's Keyur Parekh from Goldman. A couple of kind of questions for you. One is kind of you've announced $300 million buyback, which is kind of reflective of this great cash flow you had last year. What level is it also reflective of, in your view, lack of inorganic growth opportunities kind of across the industry? One of the things kind of people want you to do is grow faster. Is this $300 million in buyback kind of because you're not seeing enough growth opportunities? You can do $300 million plus everything else kind of you want to do. That's question number one. The second is, if press reports are to be believed, kind of there could be a different owner to one of the large generic players by the end of the year. It could be in private equity hands. How big if that was to happen, how do you think that kind of changes the competitive environment kind of for the broader industry? What does it mean kind of for Hikma? Lastly, as you kind of enter this new market on 505(b)(3) how should we think about the margin profile for the business kind of over the next few years? Because you've kind of, as you said, you evaluated inorganically entering that market versus doing it organically for a very low base. I presume it is going to be margin dilutive for you kind of in the next couple of years, but any kind of help there would be helpful. Thank you. Yeah. Let me start on the last first. In terms of the margin, clearly when you're starting and kicking off a business and you hire 100 people who have very little sales, there will be a little dilution to the margin this year, you know. But overall, when we are up and running and when the business is growing and when we have the licenses, we wouldn't expect this to be diluted. It's basically only the startup cost that is impacting the margin. Do you want to take the cash? Yeah. If you can't, then I can. Yeah. In terms of the share buyback, it's if you listen to this year, we've done 2021. We've done several, like, we had a couple of, I would say, business and DD activities. The team is still looking into several opportunities, of course. A buyback of $300 million is not going to impact us in terms of doing any organic or inorganic growth because the firepower that we would have is still above $1 billion, $1 billion and something. Even our net debt today is 0.6 x. If the share buyback is going to increase its minimum level, and it's not going to affect our ability to do bigger acquisitions. It's just how the management believe that the market is not really seeing the intrinsic value of the business and the value of the business and the multiple that we are creating there. On Sandoz, if you look at the profile of Sandoz versus our profile, we really are only overlapping in U.S. They are 55% European company, and then they're all around the world. They don't have a big business in MENA. The U.S. business, yes, we are competing with them on the injectables and on solid oral in the U.S. I don't think it's changing so much. They have been declining double digits in the U.S. over the last few years versus where we have been growing double digits. They have a very different portfolio of products they're dealing with. They sold their solid oral business. They got it back. There have been many challenges that they have been facing. I don't think a new owner of Sandoz will fundamentally affect us. I think it will be a lot of integration that needs to take place, you know, to make this into a standalone company. I'm not sure it will be operational by year-end. You know, overall, I think the impact on us, it's very little to nil, overall. Just, following up. With 505(b)(3), you said when you get to- 503(b) When you get to that kind of steady state, it won't be margin diluted. How long before you get to that steady state? I'm hoping that it will be so small this year. It's just a tiny bit of margin dilutive this year. Next year, I'm hoping that we will already not be dilutive. It might not be accretive next year, but maybe in the third year it could be a tiny bit accretive if the plan goes ahead as we expect. Any last questions? Very good. I just want to thank you all. Great to see you face to face, and thanks to the people on the phone. Hope we can see you all soon face to face again. Thank you. Thank you. Thank you. Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.