Author: bpc

Johannesburg – JSE listed Aspen (Apn), Africa’s largest pharmaceutical manufacturer, has recorded consistently positive results for the period ended December 2007. Revenue increased by 15 percent to R2.2 billion (R1.9 billion). Operating profit increased by 24 percent to R634 million (R 512 million). Earnings per share increased by 31 percent to 125.0 cents (95.3 cents). Headline earnings per share (HEPS) increased 15 percent to 109.6 cents (95.6 cents). This excludes the profit of R54 million earned on the part disposal of United Kingdom-based Co-pharma and the South African natural products portfolio. Stephen Saad, Aspen Group Chief Executive said “the Group’s retention of its ranking as the leading pharmaceutical company in the South African private and public market sectors was endorsed in the positive results reported. Aspen’s offshore operations showed steady growth with the Australian business delivering excellent returns. The pharmaceutical division within the South African business performed well, despite the delay in the registration process of new products from the Group’s robust pipeline. The commitment to the current investment in manufacturing infrastructure is a critical element of Aspen’s strategy and will provide additional capacity to meet increased demand from local and offshore markets. SOUTH AFRICAN OPERATIONS The South African business grew revenue by 14% to R1,771 billion (R1.550 billion) whilst earnings before interest, tax and amortisation (“EBITA”) increased by 17% to R577 million (R493 million). Finished dosage form pharmaceuticals performed well, increasing revenue by 21%, but this was tempered by negative growth in the active pharmaceutical ingredient (“API”) business and in the trading results of the consumer division. Growth momentum from new product launches was retarded due to fewer new product registrations than anticipated. Aspen increased its share of the public sector tenders awarded mid-way through the period despite intense competition, particularly from importers. Revenue from finished dosage form anti-retrovirals ARVs increased by 78% to R308 million. Fine Chemicals Corporation, the 50% owned API business, experienced reduced demand for its key products which lowered revenue and contracted margins. The Consumer division increased revenue by 3%. The downturn in the retail cycle was compounded by the discontinuation of a leading range of laxatives resulting from the regulator banning phenolphthalein. Margins came under additional pressure due to a sharp rise in the price of the critical ingredients for the manufacture of infant nutritionals arising from a worldwide shortage of milk. The natural products portfolio was sold off into a new entity at a profit before tax of R42 million. Aspen has retained 20% of the new company. Aspen’s investment in manufacturing capability and capacity in Port Elizabeth continued and now exceeds R1 billion. Plant validation has commenced at the Sterile Facility with commercial production scheduled for the second half of 2008. The first phase of the upgrade of the Heritage Manufacturing Facility will commence during the latter part of 2009, while enhancements to the packaging capacity at the Solid Dosage Facility should be complete before the end of 2008. International Operations Revenue from the international businesses grew by 19% to R460 million and EBITA increased by 52% to R118 million. Aspen Australia recorded excellent returns with revenue increasing by 20% to R312 million (R259 million) while EBITA improved by 30% to R48 million. UK-based Aspen Resources also performed well, increasing its contribution to EBITA by 24% to R36 million (R29 million). Aspen disposed of 51% of Co-pharma, the Group’s other UK business for R31 million, recording a profit on disposal of R17 million. Astrix, the Indian ARV API manufacturer owned 50% by Aspen, increased its contribution to Group revenue by 82% to R82 million whilst EBITA grew 41% to R18 million. Aspen has expanded its international footprint. The Strides Arcolab (“Strides”) of India transaction provides for a presence in the lucrative oncology market with the rights to 32 oncology products in development having been acquired as part of the deal. Aspen also concluded an agreement to acquire a 50% interest in Strides’ Latin American business comprising operations in Brazil, Mexico and Venezuela with effect from 1 March 2008 for a consideration of USD 152,5 million. Prospects A strong product pipeline and the leadership position in a growing market leaves the South African pharmaceutical business positively positioned with upside potential should there be an increase in the flow of product registrations received. Margins will however come under pressure until the announcement of the annual price increases by the Department of Health. The previous increase was effected on 1 January 2007. It is understood that this year’s increase may have been delayed so as to implement the increase in conjunction with the finalisation of the terms of the international benchmarking legislation. The recent sharp weakening in the rand will place further pressure on margins as imported input costs rise. The pricing regulations provide a mechanism to cater for additional price increases. The South African public sector ARV tender is due for award in May 2008. Despite increased competition, Aspen expects to remain a leading supplier of ARVs to the state. The consumer division in South Africa remains vulnerable to the retail cycle. The infant nutritional products have absorbed a sharp increase in raw material costs driven by global shortages and this position will be closely monitored. The international businesses are expected to continue performing well. While Aspen Australia is driving initiatives to improve its product offering, Astrix is becoming established as a leading supplier of first line ARV APIs. Opportunities to broaden Aspen’s reach into African markets have been identified and are being actively pursued. Aspen’s joint ownership in the Latin American businesses is expected to yield exciting developments in the foreseeable future. The Group’s extensive intellectual property portfolio will be an important growth driver in this territory in the future.

Johannesburg – JSE listed Aspen (Apn), Africa’s largest pharmaceutical manufacturer, has announced a sound set of results for the financial year ended June 30, 2007. These results take into account the higher effective tax rate of 28,9% (2006:25.3 percent). Revenue increased by 17% to R4,026 billion (R3.449 billion). Operating profit increased by 20% to R1,077 billion (R968 million). Headline earnings per share (HEPS) grew by 13% to 210,1 cents (185.4 cents). Capital distribution of 70 cents (62 cents) per ordinary share was declared. Stephen Saad, Aspen Group Chief Executive said “these are solid results. The South African pharmaceutical division has performed well again and there has been excellent growth in the ARV business. We are now the largest pharmaceutical company in the private market as well as in the public sector. Our international business has also recorded good growth.” SOUTH AFRICAN OPERATIONS The South African business remains the key driver of the Group’s performance. Revenue grew by 15% to R3,266 billion (R2,849 billion) and EBITA showed a 20% increase to R1,053 billion (R913 million). The Pharmaceutical Division underpinned the strong returns of the South African business. Revenue increased by 17% to R2,397 billion (R2,054 billion). Adjusting for the effect of the sale of 50% of Fine Chemicals Corporation (Pty) Limited (FCC) midway through the prior financial year, revenue increased by 20% on a like-for-like basis. Finished dosage form (FDF) pharmaceuticals showed a 19% increase in revenue. In April 2007, Aspen topped the market share charts for the total private pharmaceutical market for the first time. The Group retained its generic leadership position with an unchanged 35%. Aspen increased its share of the over-the-counter (“OTC”) market, despite this sector’s pedestrian growth. Sales of FDF ARVs reached R439 million, denoting a growth of 65%. Aspen increased its ARV offering towards the end of the financial year with the introduction of Viread® and Truvada®, originator products distributed on behalf of Gilead Life Sciences, which are considered amongst the leading treatments available for HIV/AIDS today. Aspen has achieved strong growth in the export of ARVs into Africa and it is one of the leading suppliers of ARVs on the continent reaching some 500 000 patients. The Consumer Division reported satisfactory growth in revenue of 9% to R869 million. Toothpastes and infant nutritional brands delivered good increases. Investment in Aspen’s Group Operation’s production capabilities continued, with the total investment since 2003 set to pass R1 billion in the year ahead. The construction of the Sterile Facility is nearing completion with commercial production scheduled for the second half of calendar 2008. An upgrade project on the heritage General Facility has commenced which will add capacity and technology to this facility. An extension to the Oral Solid Dose (OSD) Facility will realise additional bottle packing capacity to cater for the increasing demand for this packaging format for ARVs. INTERNATIONAL OPERATIONS The international business increased revenue 26% to R760 million and raised EBITA by 31% to R145 million. These results benefited from a full year of contribution form the Astrix joint venture (2006: contribution for six months). Aspen Australia was the leading contributor to the international business. Results were bolstered by selective product portfolio expansion and a strengthening of the Australian dollar relative to the rand. Revenue increased by 28% to R509 million (R396 million) and EBITA increased by 35% to R71 million (R53 million). Aspen Resources, the UK-based intellectual property and sourcing company, also benefited from relative Rand weakness in growing EBITA by 40% to R56 million. Poor performance with a negative contribution to EBITA of R4 million was however recorded by Co-pharma, the Group’s other UK-based company which trades in the commodity generics sector. Aspen’s USA business is focused on assessing market opportunities in that territory and trading activity was not material. Astrix, the Indian-based manufacturer of ARV APIs, which is 50% owned by Aspen, experienced reducing margins in the second half of the year as competition in this market intensified. Supply of the ARV APIs to Aspen accounted for almost half of the Astrix revenue. PROSPECTS Aspen is well set to maintain its leadership position in the South African pharmaceutical market. Growth prospects for the year ahead are positive, with the investment made in the product pipeline and the production facilities expected to give added momentum to the Group’s performance. Announcement of the public sector tender awards for the next two years is imminent. Aspen is optimistic that it will secure an increased share of this business. The ARV tender is due for submission later this year for award early in 2008. Aspen expects to remain an important supplier of ARVs to the South African government. Aspen’s growth trajectory in ARVs is expected to be maintained. The Group has the production capacity and the product offering to deliver to the increased demand for ARVs as the World Health Organisation works towards its target of universal access by 2010. The legislative environment for pharmaceuticals remains uncertain. This is by no means a circumstance confined to the South African market. The responsibility for delivery of healthcare, which is borne by governments throughout the world, inevitably gives rise to interventions by the regulator which can influence business prospects. Aspen continues to engage actively with the DoH on matters such as international benchmarking and the annual price review. The nomination of pharmaceuticals as a strategic industry by the South African governments is taken to be an extremely positive development. Aspen looks forward to working with government in building the industry in South Africa. The continued investment in the Group’s manufacturing facilities is of strategic importance. This investment has allowed Aspen to raise its manufacturing standards, which is particularly pertinent with South Africa’s entry into the Pharmaceutical Inspection Convention (“PIC”) with effect from 1 July 2007. The manufacturing standards and capacity established by Aspen have positioned the Group to reach export markets and to enter into manufacturing and trade partnerships with leading multi-national pharmaceutical companies. In an increasingly competitive global pharmaceutical market Aspen will seek to utilize the strength… Continue reading Aspen operating profit exceeds R1bn

Johannesburg – JSE listed Aspen (Apn), Africa’s largest pharmaceutical manufacturer, has recorded positive results for the period ended December 2006. Revenue increased by 15 percent to R1,936 billion (R1.687 billion). Net profit after tax rose 15 percent to R332 million (R288.5 million). Earnings per share increased by 13 percent to 95,3 cents (84,5 cents). Headline earnings per share (HEPS) increased 11 percent to 95,6 cents (86.3 cents). Stephen Saad, Aspen Group Chief Executive said “the Group’s key business units performed well and the product pipeline is in good shape to support future growth. Despite the absence of a price increase in South Africa during the period, finished dosage form pharmaceuticals grew revenue by 21% in this market, driven by organic growth and recent product launches. The 5.2% pricing increase announced by the Department of Health (DoH”) in January 2007 will only reflect in second half revenue. Aspen has improved its generic market share, despite increased international interest in this sector. ARVs delivered good growth as the government’s roll-out plan gains momentum. The contribution form Offshore Operations, in particular Australia, was also pleasing.” SOUTH AFRICAN OPERATIONS Revenue from the South African business grew by 11% to R1,550 billion and earnings before interest, investment income, tax and amortisation (“EBITA”) by 16% to R493 million. These results are distorted by the sale of 50% of the equity in Fine Chemicals Corporation Limited (“FCC”) midway through the prior financial year. Consequently, only half of the results achieved by FCC are consolidated into the results for the current period. Furthermore, the comparative period EBITA has been reduced by a R14 million write down in the fair value of FCC. The Pharmaceutical Division performed well, growing revenue by 14% despite the inclusion of only 50% of FCC. On a like-for-like basis revenue growth was 21%. Aspen has improved its generic market share over the six months (IMS data reflects at 35% market share for the twelve months to December) despite increased international interest in this business sector. In the second year of a two year tender cycle, the Public Sector business has been flat. Revenue from FDF antiretrovirals (“ARVs”) increased by 66% from R104 million to R173 million. FCC, the active pharmaceutical ingredient (“API”) manufacturer, matched the strong first half performance delivered in the prior year at both revenue and operating profit. The weaker rand and a strong export order book should assist in maintaining this momentum. The Consumer Division increased revenue by 6% to R432 million. Revenue performance was influenced by a slowing in growth by the infant nutritional range which consolidated substantial gains made in the prior year. Profit margins have however expanded as costs have been trimmed. High production levels have been maintained as stock levels have been raised to ensure optimum service levels to the market. Construction of the sterile facility is on track. Initial validation of this facility is planned for the beginning of 2008. The sterile facility is designed to US Food and Drug Administration standards. INTERNATIONAL OPERATIONS Aspen’s international operations increased revenue by 31% and EBITA by 51%. This was achieved despite a poor performance from Co-pharma, but with the benefit of the inclusion of Astrix, the India-based API joint venture which commenced business in January 2006. Aspen Australia recorded revenue of R259 million, an increase of 24%, whilst improving EBITA by 36% to R37 million. Both Pharmaceutical and Consumer Divisions showed robust growth with the Consumer Division benefiting from new product additions. Aspen Resources, the UK based intellectual property and sourcing company, produced another positive performance, raising EBITA by 32% to R29 million. Co-pharma returned a small loss despite increased volumes. Astrix, which specializes in ARV APIs, increased its contribution to gross revenue from R67 million in its first six months of trade to R80 million. The largest portion of this increase was attributable to trade with Aspen. PROSPECTS The South African pipeline remains a rich source of future product launches as a consequence of continuous attention. The DoH has established a mechanism for annual price increases, taking into account changing economic fundamentals to which the industry is exposed. Aspen’s implementation of the 5,2% price increase will assist in relieving the pent up margin pressures caused by cost inflation and exchange rate weakness over the extended period when price increases were barred. The legislative environment for pharmaceuticals does however remain uncertain. The regulator has invited comment on the proposed international benchmarking legislation. Given the proposed structure of this legislation it is not possible for Aspen to evaluate the potential impact until greater clarity has been achieved in respect of originator products. Aspen is confident that the regulator will take due consideration of pertinent factors raised in comment by the industry. Aspen’s ARV offering continues to expand by product and territory providing scope for further strong growth in this life sustaining treatment category. Viread and Truvada, originator products which are leading second line treatments, will both be launched into African markets by Aspen before the end of the financial year. Growing capacity utilization in the oral solid dose (“OSD”) production facility will lead to enhanced production efficiencies. Opportunities to provide manufacturing services from the OSD facility for multi-national pharmaceutical companies are presently under consideration. There has also been substantial international interest in the production capabilities offered by the sterile facility due to commence commercial production towards the end of 2008. Aspen has already concluded a long-term agreement for production from the sterile facility with a subsidiary of Prestige Brands Inc., a leading supplier of eye drops in the USA and Canadian market. As has been previously communicated, the current year is one in which Aspen is focusing on the consolidation of past gains and on establishing the platform for the implementation of growth strategies through to the end of the decade. The benefits of these initiatives should be reflected in the results of the forthcoming financial year.