Hikma shares drop after asthma setback that may boost GSK

Shares in Hikma Pharmaceuticals dropped 8 per cent on Thursday morning after its efforts to win approval for a new generic asthma treatment hit a road-bump, in an update that spells good news for its FTSE 100 rival GlaxoSmithKline.

Hikma said it had received a response letter from the US Food and Drug Administration which suggested there is a “low likelihood” that it will win approval for a generic copy of GSK’s Advair treatment this year.

The company stressed that “no material issues were raised” regarding its product’s ability to substitute for Advair, and said it is “committed to bringing this important product to the US market” as soon as possible.

Shares in Hikma were down 8 per cent at publication time, to £18.00. Vectura, the FTSE 250 group which is working on the treatment with Hikma, also suffered, dropping 8.9 per cent to 132p.

The delay offers some respite to GSK, which has repeatedly warned that new generics could have a serious impact on its earnings growth this year. The company had previously predicted full-year earnings growth of up to 7 per cent could be wiped out if new rivals were approved.

The setback for Hikma follows another FDA rejection of an alternative treatment developed by Mylan in March.

However, Novartis’ generics division Sandoz is still awaiting approval for a rival treatment, and Michael Leuchten, co-head of European pharmaceutical research at UBS, said consensus estimates still assume at least one generic will be approved this year.

Shares in GSK were down 0.5 per cent at publication time, having begun trading ex-dividend today. The wider FTSE 100 was broadly flat.