Africa’s largest pharmaceutical manufacturer has five times as many South African patients using its anti-retroviral (ARV) products as it had just more than a year ago.
Sixteen months ago Aspen Pharmacare won a 58% stake of the government’s ARV tender, worth R1,2-billion in turnover to Aspen over three years.
Despite the Department of Health only procuring R83-million-worth of ARVs from Aspen in those 16 months, company CEO Stephen Saad says it has seen the number of South African patients using its ARVs grow from 20 000 a year ago to 100 000, a 500% increase.
Saad says the company currently has an additional 200Â 000 patients using its ARV products in the rest of sub-Saharan Africa.
Saad says the private sector ARV market has also grown considerably because ARVs are now included as a prescribed minimum benefit.
“We have been very successful selling ARVs into Africa,” he says, adding that Aspen’s total ARV market in Africa is worth R266-million.
Saad says about a year ago turnÂover from ARVs was worth only 2% of Aspen’s total. In just more than 12 months ARV sales have grown to contribute 8% of its total.
He says that the demand for ARVs in sub-Saharan Africa has been estimated at between five and six million patients. With current capacity Aspen could supply 1,5-million to two million patients.
The main obstacle to Aspen capturing larger market share in other African countries is product registration, which in some countries has been very slow.
“I wish I could tell you that this frustration has gone but it hasn’t,” he says.
Aspen has identified 2008 as the key year for its expansion into sub-Saharan Africa and, Saad says, the two years from 2008 to 2010 will be crucial to determining its market share.
If Aspen manages to capture enough market share to match its capacity, it could see an additional 500% increase in the number of ARV patients it supplies by 2009.
“It would be a massive increase for us, but we still have to go out there and get those patients,” says Saad, explaining that the company faces stiff competition from Indian manufacturers.
The current debate about South Africa’s ARV roll-out programme rages, with government spokesÂperson Joel Netshitenzhe declaring in May this year that about 134 000 people were on the public health sectors’s ARV programme.
This prompted responses from HIV/Aids activists who said the figures quoted by the government were inflated. Fatima Hassan, an attorney with the Aids Law Project, said the figures for patients on the government’s ARV treatment programme were more likely between 90 000 and 100 000.
Aspen announced a 235% increase in headline earnings per share two weeks ago and a 96% increase in operating profit to R968-million.
The company’s great year can be attributed to a growth in the generic market across the board in South Africa and the positive response to the 20 to 30 new products it launched in the past financial year.
Aspen has a 33,6% share of the generic market in South Africa and a 11,7% share of the over-the-counter market.
Saad said it had gained considerable market share with the launch of its new infant milk formula brand that was targeted at the lower end of the market.
He says the company had originally bought the infant milk formula business because it believed there would be tie-ins with the ARV industry, but that these products were performing very well in the market.
Saad also highlights a deal that Aspen concluded with Indian pharmaceutical company Lupin, which is the world’s largest supplier of tuberculosis (TB) drugs.
The deal made good business sense, he says, because research has shown that there was a huge overlap in patient base with 66% of all TB patients in South Africa testing positive for HIV. There are currently 500 000 new cases of TB diagnosed in South Africa every year.
Aspen has also formed a joint venture, Astrix, with another Indian pharmaceutical company Matrix. “If you can’t beat them join them,” says Saad.
The R233-million deal was finalised in January this year and gives Aspen a 50% share in Astrix and access to all of its ARV chemicals, allowing Aspen to control the whole value chain.