Hikma cuts offer for Boehringer's U.S. generic drug unit

* Hikma agrees with Boehringer on lower price for Roxane

* Cash component of initially $1.18 bln cut by $535 mln

* Roxane's 2016 sales now seen below 2015 levels (Adds Boehringer statement, bullet points, rebates)

By Noor Zainab Hussain and Esha Vaish

Feb 10 (Reuters) - Hikma Pharmaceuticals Plc almost halved the cash portion of its offer for Boehringer Ingelheim's U.S (Other OTC: UBGXF - news) . generic drugs business on Wednesday, after further due diligence revealed that the unit's 2015 revenue would be lower than expected.

Higher-than-expected rebates to drug wholesalers and an unforeseen rise in raw material costs compounded an increase in competition that had already been factored in, Hikma said in a statement, which was confirmed by Boehringer.

Shares (Berlin: DI6.BE - news) in Hikma, which said the deal was now expected to cut adjusted earnings this year, fell as much as 20 percent, marking their sharpest fall in nearly seven years. The stock was the biggest loser on the FTSE 100 (NasdaqGS: Z - news) index.

Hikma in July agreed to buy the unit, Roxane, for about $2.65 billion in cash and stock, moving to become the sixth biggest provider of generic drugs in the United States and gain scale in a highly competitive market.

The sector had its biggest deal-making streak in history last year, with global transactions totalling $673 billion, according to Thomson Reuters (Dusseldorf: TOC.DU - news) data, as large drugmakers bought up smaller rivals, makers of generic medicines consolidated and insurers teamed up.

The Jordanian company, which makes and markets branded and non-branded generic and injectable drugs, reduced the cash component of the deal by $535 million from $1.18 billion, but kept the stock portion unchanged.

Boehringer said it confirmed the detail of Hikma's statement and that the revised deal was still "the right decision for both companies", declining to comment further.

The Roxane deal, with sales targets of $725 million to $775 million in 2017, was expected to help significantly bulk up Hikma's generics division, which brought in $215 million in 2014, or 15 percent of sales.

However, Hikma said it now expected Roxane's full-year 2016 revenue to be lower than 2015 and slashed 2017 guidance to between $700 million and $750 million.

Roxane's cost of sales for 2015 was slightly higher than previously anticipated, as higher volumes and a change in product mix drove up raw material costs, Hikma said.

This further depresses prospects for the struggling unit, which has been hurt by slower-than-anticipated sales growth of a drug to treat gout flares, resulting in Hikma cutting the division's full-year 2015 revenue forecast twice.

Hikma said it still expects the deal to "strongly" add to earnings from 2017. (Additional reporting by Ludwig Burger and Patricia Weiss; Editing by Sunil Nair and Alexander Smith)