Johannesburg – JSE Limited listed Aspen Pharmacare Holdings Limited (APN), the fifth largest generic company in the world and Africa’s largest pharmaceutical manufacturer, has announced excellent results for the year ended 30 June 2014. GROUP PERFORMANCE Revenue increased by 53% to R29.5 billion. Operating profit rose by 47% to R7.4 billion. Normalised headline earnings, being headline earnings adjusted for specific non-trading items, was up 27% to R4.9 billion. Normalised headline earnings per share advanced 27% to 1064 cents. A capital distribution of 188 cents per ordinary share was declared by way of a capital reduction payable out of contributed tax capital to shareholders. Stephen Saad, Aspen Group Chief Executive said, “The Board is pleased with the Group’s performance, particularly that of the International business which was the most significant growth driver and the largest business segment contributor to revenue and to operating profit. Accelerated revenue from Latin America bodes well for that region while Asia remains an important growth territory. The South African business continues to retain its position as the leading pharmaceutical company in the private and public sectors of this market, and Sub-Saharan Africa also delivered a pleasing performance.” SIGNIFICANT TRANSACTIONS A number of significant transactions were completed during the financial year and were influential in the performance of the Group. These transactions have created important new opportunities for Aspen in both product offering and geographic coverage. The key terms of these transactions are set out below: The acquisition of the active pharmaceutical ingredient (“API”) manufacturing business, primarily in the Netherlands, from MSD for EUR 31 million net of cash acquired, became effective 1 October 2013 and trades as Aspen Oss and Aspen API. The acquisition of a portfolio of 11 branded finished dose form molecules from MSD in a related transaction for USD 600 million, of which USD 67 million is subject to delayed payment terms, became effective on 31 December 2013. The acquisition of the Arixtra and Fraxiparine/Fraxodi thrombolytic brands worldwide (excluding China, India and Pakistan) from GlaxoSmithKline (“GSK”) for GBP 505 million became effective on 31 December 2013. In a connected transaction which became effective on 30 April 2014, a further GBP 194 million was paid to GSK for the acquisition of the specialised sterile production site in France which manufactures these brands and the related inventory. This business trades as Aspen Notre Dame de Bondeville (“Aspen NDB”). The acquisition from Nestlé of certain licence rights to infant nutritional intellectual property, net assets, including a production facility in Mexico, and shares in infant nutritional businesses in several countries in Latin America for a purchase consideration of USD180 million was completed with effect from 28 October 2013. The acquisition from Nestlé of certain rights to intellectual property licenses and net assets of the infant nutritionals business previously conducted by Pfizer in certain southern African territories, including South Africa, was approved by the competition authorities and became effective on 27 January 2014. The purchase consideration for this transaction of USD 43 million was prepaid in the prior financial year. INTERNATIONAL BUSINESS The International business advanced revenue 242% to R12.7 billion and increased operating profit before amortisation, adjusted for specific non-trading items (“EBITA”), 144% to R3.6 billion. The margin percentage in the International business narrowed as a consequence of lower margin rates in the Aspen Oss business and in the infant nutritional business in Latin America acquired during the year. The International business gained most from the significant transactions completed during the financial year and contributed 40% of Group gross revenue and 47% of Group EBITA. Performance was also boosted by organic growth from the pre-existing global brands portfolio. With effect from 1 January 2014 Aspen introduced a specialised sales and marketing team into Europe and the Commonwealth of Independent States (formerly the Soviet Union) (“CIS”) for the first time. Aspen now has a substantial footprint across Europe and the CIS with more than 400 active sales and marketing focused personnel in 18 countries, the majority of whom transferred from GSK in terms of the arrangements under the acquisition of Arixtra and Fraxiparine. Revenue from customers in Europe CIS was over 5 times greater than the prior year at R7.2 billion. Of this amount, R4.0 billion was derived from sales of finished dose form pharmaceuticals to healthcare providers and the major portion of the balance was from sales of APIs. There was also a strong acceleration of revenue from customers in Latin America where sales climbed 122% to R3.5 billion. The acquisitions made by the Group accounted for the largest portion of this increase despite some supply issues, supported by good performances in Mexico and Venezuela. In the Rest of the World, sales to customers were up 181% to R1.7 billion influenced by an increased exposure to the US resulting from the acquisitions concluded during the year and by positive progress in the Middle East North Africa territory. Significant activity has been undertaken at the Aspen Oss API manufacturing site and also at the Aspen NDB specialist sterile manufacturing site. At both of these sites it has been necessary to disentangle the manufacturing operations from the systems of the vendors. Capital expenditure projects are also ongoing at both these sites. At Aspen Oss, improvements to the safety profile of the site are receiving urgent attention and at Aspen NDB, additional capacity is being added with the construction of an entirely new production area. On 10 September 2014, Aspen Global Incorporated (“AGI”) entered into an agreement with Mylan Ireland Limited (“Mylan”) in terms of which AGI will dispose of its rights to commercialise the fondaparinux products it recently acquired from GSK (being Arixtra and the authorised generic thereof) in the United States (“US”) to Mylan. AGI will also enter into a supply agreement to supply these fondaparinux products to Mylan on specified terms. The transaction will complete upon the satisfaction of certain conditions precedent, including regulatory approvals. Mylan will pay Aspen USD 225 million upon completion of the transaction. An additional USD 75 million will be held in escrow and… Continue reading Aspen’s revenue soars by 53% to R29.5 billion
