Africa’s largest pharmaceutical manufacturer, Aspen Pharmacare, lifted headline earnings per share by 40% from 103,7 cents to 144,7 cents for the year ended June.
This was on the back of a 30% growth in revenue from R2,2-billion to R2,9-billion.
In what was described as a record year for earnings, earnings before interest, taxation and amortisation (Ebita) increased by 32% to R831-million.
The group declared a capital distribution of 48 cents, which was 60% higher than the previous year’s distribution of 30 cents.
Stephen Saad, group chief executive of Aspen, said: “Aspen’s impressive performance was bolstered by the launch of a significant number of new products; international recognition of Aspen’s world-class quality development, manufacturing and supply expertise; increased volumes; contributions from acquisitions; and co-marketing agreements.”
Excellent delivery by the South African operation resulted in a 32% (19%) revenue growth equating to an 81% (80%) contribution to the group.
This strong revenue return was augmented by the acquisitions of Fine Chemicals Corporation (FCC) and Nutricia.
The pharmaceutical division’s strong performance contributed toward a 23% (22%) revenue increase driven by increased generic volumes, new product launches and the FCC acquisition. The division’s results showed resilience in spite of the pricing freezes imposed under existing legislation.
FactiveRegistered, a Gemifloxacillin Mesylate indicated for respiratory tract infections, is a new chemical entity and has been well received by the market.
New products, volume-driven production efficiencies, savings from improved procurement and the strong rand further buffered margins.
Legislation regulating the advertising of schedule-two medicines resulted in the over-the-counter business being adversely affected.
Aspen’s infant milk-formula business coupled with a bullish retail sector, solid leading brands and good organic growth resulted in the consumer division delivering excellent results with revenue increasing by 64% (11%).
Record production levels were attained despite service delivery and inventory levels being affected as group operations struggled to meet production demand.
Aspen’s East London facility has been geared up for increased output to facilitate the demands placed on the original manufacturing facility in Port Elizabeth, which is running at maximum capacity.
“Aspen’s world-class oral solid dosage [OSD] facility was inspected and accredited by the South African Medicines Control Council, the United States Food and Drug Administration [FDA], the United Kingdom Medicines and Healthcare Products Regulatory Agency and numerous African states. These inspections hampered capacity utilisation,” the group stated.
Anticipated continued growth in production demand had prompted the ordering of additional equipment to meet future requirements, it added.
“Aspen’s stated objectives of providing world-class local production capabilities have been implemented in the approval for the construction of a Port Elizabeth-based, R200-million sterile facility capable of manufacturing injectables and eye drops. Construction is scheduled to commence shortly, which could result in production during the first half of 2007.”
Aspen’s international businesses delivered a 22% increase in revenue to R534-million. Aspen Australia’s revenue rose by 39% to R326-million albeit in an increasingly regulated market. Ebita increased by 16% to R45-million. UK business interests Aspen Resources and Co-pharma reported Ebita of R37-million and R9-million respectively.
The group’s world-class development and production capabilities for quality, affordable generics were endorsed internationally when Aspen became the world’s first generic anti-retroviral (ARV) manufacturer to receive tentative approval from the FDA for the supply of a generic triple-combination ARV therapy in a co-packed form.
This recognition qualifies Aspen as the first generic supplier under US President George Bush’s emergency plan for Aids relief (Pepfar), to which $15-billion has been committed. The approval is classified as “tentative” as there are still patents over the originator products in the US.
The Clinton Foundation also acknowledged Aspen as being one of only three ARV manufacturers worldwide to participate in its HIV/Aids programme.
Aspen was favoured in the South African government’s ARV tender awarded in March this year. The group will supply the bulk of tender volumes. Tender offtakes have started, with volumes expected to grow progressively during the three-year tender term.
Aspen’s black economic empowerment (BEE) shareholding could rise to nearly 18% following the recent R645-million deal concluded with Imithi Consortium, a broad-based consortium comprising health-care industry, trade-union and community-development groups.
Ceppwawu Investments, holding a 50,4% stake, is the lead participant in the Imithi Consortium. Ceppwawu, the investment arm of the Congress of South African Trade Unions-affiliated trade union representing Aspen employees, extended its interest in Aspen through this transaction, having previously acquired 8% of Aspen in a BEE deal in January 2002.
Looking ahead, Aspen said its future prospects are promising given the group’s robust pipeline, which is set to bolster growth.
“The group is ideally positioned for the expected generic switch as the leading provider of generic medicines in both the private and public sectors. New products will also supplement Aspen’s growing consumer product portfolio. ARV sales locally and in the Pepfar territories are expected to show material growth.
“Increased focus on optimal utilisation of production capacity as well as increased outputs from OSD will unlock production efficiencies and relieve capacity constraints on other production facilities. Export manufacturing opportunities resulting from the accreditation of the OSD facility also bode well for expansion into new markets.” — I-Net Bridge