Author: Shauneen Beukes

Johannesburg – JSE-listed Aspen Pharmacare Holdings Limited (APN), a global multinational specialty pharmaceutical company, has reported a strong performance for the year ended 30 June 2023. SALIENT HIGHLIGHTS Revenue grew by 5% (-3% in constant exchange rate (“CER”)) to R40 709 million (FY2022: R38 606) Normalised EBITDA rose by 1% (-6% in CER) to R11 100 million (FY2022: R11 012 million) Normalised headline earnings per share declined by -8% (-15% in CER) to 1 498,5 cents (FY2022: 1 627,6 cents) Headline earnings per share decreased by -4% (-11% in CER) to 1 405,4 cents (FY2022: 1 461,2 cents) Earnings per share decreased by -18% (-23% in CER) to 1 176,9 cents (FY2022: 1 432,3 cents) Dividend declared to shareholders increased by 5% to 342 cents per ordinary share (FY2022: 326,0 cents) Aspen has concluded three sterile manufacturing agreements at is French manufacturing facility and progressed a further agreement at the Gqeberha facility to an advanced technical stage subtantially progressing its medium-term strategy to fill its sterile manufacturing capacity An agreement was concluded with Eli Lilly and Company (“Lilly”) to distribute and promote products in Sub-Saharan Africa, subject to conditions precedent and competition authority approvals Aspen celebrates 25 years as a JSE-listed pharmaceutical company Stephen Saad, Aspen Group Chief Executive said, “We are pleased to announce solid results for the year with record revenue and normalised EBITDA delivered in H2 2023. Pleasing reported revenue growth was achieved by Commercial Pharmaceuticals and Manufacturing of 6%  and 3%  respectively, despite the volatile global trading environment.” “We have achieved outstanding progress in our endeavours to secure addition manufacturing volumes for our newly installed expanded sterile production capacities. We are tracking well to achieve our  previous guidance of related contributions of R2 billion in calendar year 2024, increasing to R4 billion in calendar year 2025.” “These new long-term collaborative opportunities in Manufacturing, together with the Serum agreement, concluded in 2022, will provide substantial support to our medium-term strategy to fill our sterile manufacturing capacity. This in turn presents a potential annual contribution of at least R8 billion per annum.” “In addition, the product distribution agreement announced with Lilly ealier today, together with the recent Amgen and Viatris announcements, will provide growth momentum in our Commercial Pharmaceuticals segment. “ “We continue to actively explore additional contract manufacturing opportunities as well as further product portfolio enhancements to further drive growth into the future.” STERILE MANUFACTURING AGREEMENTS SECURED Aspen is pleased to announce that it has now secured three sterile manufacturing agreements with multinational pharma companies for production at its French manufacturing facility. These new long-term opportunitiestogether with the Serum agreement , concluded in 2022, will materially contribute to the foundation of Aspen’s medium-term strategy to fill its sterile manufacturing capacity. Additional agreements are under negotiation including one agreement for the Gqeberha facility already progressed to an advanced technical transfer stage. COMMERCIAL PHARMACEUTICALS MAKES ADVANCES IN ITS PORTFOLIO ENHANCEMENT STRATEGY Aspen has concluded an agreement with Eli Lilly Export S.A. a subsidiary of Eli Lilly and Company (“Lilly”), in terms of which Aspen will distribute and promote Lilly’s products in Sub-Saharan Africa for an initial term of 10 years, automatically renewable for two further periods of 5 years (“the Transaction”). The sales revenue of the Lilly portfolio in Sub-Saharan Africa was approximately ZAR 440 million[1] in 2022. This is expected to be materially increased by the launch of key Lilly pipeline products in the short to medium term. The pipeline includes Lilly’s Tirzepatide, marketed globally as Mounjaro®, a molecule currently under evaluation by SAPHRA and expected to be launched in South Africa in the near future. The Transaction is conditional upon the fulfilment of customary conditions precedent applicable to transactions of this nature, including competition authority approvals.  It is anticipated that the Transaction will complete by the end of Q1 of calendar 2024. The recently announced agreement for the acquisition of a portfolio of products from Viatris is an exciting and significant step forward in building on and expanding our footprint in Latin America. The annualised revenue for the product portfolio is USD92 million and includes well-known brands such as Viagra, Lipitor, Zyloft, Norvasc, Lyrica, and Celebrex. This transaction will enable Latin America to become a greater contributor to Regional Brands going forward. These transactions, together with the recently announced transaction securing distribution rights for Amgen products in Southern Africa, will enhance the Commercial Pharmaceuticals product portfolio in emerging markets and aligns with the previous guidance of adding incremental annualised revenue upwards of USD100 million in Latin America and South Africa. GROUP FINANCIAL RESULTS HIGHLIGHTS 1 Per IQVIA data 1 The Group assesses its operational performance using constant exchange rate (“CER”) and all segmental performance-related commentary is made with reference to the underlying CER trends. The table above compares performance to the prior comparable period at reported exchange rates and at CER. 2 The CER % change is based upon the performance for year ended 30 June 2022 recalculated using the average exchange rates for year ended ended 30 June 2023. 3 Operating profit before depreciation and amortisation adjusted for specific non-trading items as defined in the Group’s accounting policy. 4 Normalised headline earnings per share (“NHEPS”) represents headlines earnings per share (“HEPS”) adjusted for specific non-trading items as defined in the Group’s accounting policy. 5 Dividend declared on 29 August 2023, and paid 26 September 2023 (2022: Declared on 31 August 2022 and paid 26 September 2022). GROUP PERFORMANCE The Group achieved the guided recovery from H1 with H2 2023, delivering record revenue and normalised EBITDA. Factors which negatively impacted the first half performance relative to the prior comparative period included the Russia-Ukraine war, inflationary pressures, COVID lockdowns and volume-based procurement (“VBP”) impacts in China, the loss of COVID vaccine revenue as well as investing in non-revenue generating technical transfer activities relating to the onboarding of new sterile manufacturing opportunities. Group revenue for the financial year ended 30 June 2023 grew 5% (-3% CER) to R40 709 million, with Commercial Pharmaceuticals revenue growing 6% (-1% CER) and Manufacturing revenue increasing by 3%… Continue reading Aspen revenue exceeds R40 billion with accelerated medium-term growth anticipated

Johannesburg – JSE-listed Aspen Pharmacare Holdings Limited (APN), a global multinational specialty pharmaceutical company, has reported creditable unaudited interim Group financial results for the six months ended 31 December 2022.   Salient Highlights   Revenue decreased by 1% (-6% in constant exchange rate (“CER”)) to R19,2 billion (December 2021: R19,4 billion) Normalised EBITDA decreased by 11% (-15% in CER) to R5,1 billion (December 2021: R5,7 billion) Normalised headline earnings per share decreased by 17% (-21% in CER) to 679.6 cents (December 2021: 816.4 cents) Headline earnings per share decreased by 15% (-20% in CER) to 660.6 cents (December 2021: 777.2 cents) Earnings per share decreased by 18% (-23% in CER) to 602.0 cents (December 2021: 736.2 cents) Improved Commercial Pharma gross profit margins helped deflect inflationary headwinds Significant advances have been made in contract negotiations with multinational customers seeking to secure a portion of Aspen’s sterile manufacturing capacities The technical transfer project for manufacture of the finished dose form vaccines licensed from Serum Institute of India is well advanced   Stephen Saad, Aspen Group Chief Executive said, “The Group’s performance under challenging trading conditions was anticipated and is aligned to guidance previously shared for the first half of the financial year. Consistent with our previous communications, we are optimistic that the results for the second half of this financial year will not only exceed those reported for the first half but will also exceed those of the second half of the prior year. We are pleased to report that we are at advanced stages of contract negotiations to fill a portion of  the additional sterile manufacturing capacities we have developed. Once concluded, this new manufacturing business is anticipated to realise a contribution of R2 billion in the 2024 calendar year, increasing to R4 billion in calendar year 2025. During the second half of this financial year we also anticipate closing important product portfolio transactions which will further enhance the Commercial Pharmaceuticals businesses in Latin America and South Africa.”   GROUP HIGHLIGHTS   Key Financial Indicators1 GROUP PERFORMANCE   The Group has delivered a creditable and resilient performance under challenging trading conditions. As previously guided, relative to the prior comparative period, this half was impacted by the Russian/Ukraine war, inflationary pressure, COVID lockdowns and volume-based procurement impacts in China as well as the loss of COVID vaccine sales. These headwinds had some offsets from improved margins in Commercial Pharmaceuticals.   Group revenue for the six months ended 31 December 2022 declined by 1% (-6% CER) to R19 150 million with Commercial Pharmaceuticals revenue growing 2% (-4% CER). Manufacturing revenue declined by 10% (-12% CER). Gross profit fell by 5% (-9% CER) as the reduction in Manufacturing gross profit margins from lost COVID vaccine contributions more than offset the improvement in Commercial Pharmaceuticals gross profit margins. Normalised EBITDA recorded negative growth of 11% (-15% CER) at R5 083 million. Lower net interest costs partly mitigated the increase in net financing costs arising from net foreign exchange losses of R234 million following the weakening of emerging market currencies. NHEPS declined by 17% (-21% CER) to 679,6 cents.   The Group’s leverage ratio remained comfortably below target levels with reported net borrowings of R18,8 billion.  During this period of uncertainty, given the war in Ukraine and COVID related supply impacts, there was increased investment in inventory by the Manufacturing segment. We have sufficient confidence to substantially unwind this working capital investment in the second half of the financial year.   Aspen successfully concluded agreements with each of the Bill & Melinda Gates Foundation (“the Gates Foundation”) and the Coalition for Epidemic Preparedness Innovations (“CEPI”) to support African regional manufacturing capacity for an affordable supply of vaccines.   Important advances were also made in the negotiation of key manufacturing contracts.   SEGMENTAL PERFORMANCE (AT CER) Commercial Pharmaceuticals   Commercial Pharmaceuticals revenue, comprising Regional Brands and Sterile Focus Brands, declined by 4% to R14 547 million. Revenue was negatively impacted, primarily by the divestment of certain products in South Africa in March 2022 as well as by the challenges documented earlier. The improved gross profit margin percentage resulted in a lower decline in gross profit of 2% to R8 728 million.   Regional Brands   Revenue from our largest segment, Regional Brands, increased by 2% to R9 355 million with 7% growth from each of Australasia and the Americas being the major contributors. Excluding the impact of the product divestment in South Africa (R294 million), Regional Brands revenue grew 6% with growth in Africa Middle East of 5% on a comparable product basis.   Gross profit percentage was up at 59,7% (H1 2022: 57,0%), driven by cost of goods savings and favourable sales mix.   Sterile Focus Brands   Revenue from Sterile Focus Brands decreased by 13% to R5 192 million due to the aforementioned challenges in both Russia and China.   Although the gross profit percentage of 60,5% was lower than the prior year comparable period (H1 2022: 61,4%), it is an improved margin compared to the second half of the previous financial year (H2 2022: 59,0%). The cost of goods savings from insourcing production has more than offset higher inflationary and logistic cost pressures.   Manufacturing   Manufacturing revenue decreased by 12% to R4 603 million attributable to the lower COVID vaccine sales. Heparin revenue was impacted by the prioritisation of technical transfer work related to new customers offset by increased pricing to counter the rising cost of raw heparin.   The Manufacturing business has a high fixed cost base and consequently gains and losses of contribution are extremely impactful on profit margins. Gross profit margins were significantly lower at 5,2% (H1 2022: 19,2%), largely impacted by the loss of contribution from the manufacture of the COVID vaccine. This was exacerbated by revenue foregone to facilitate non-revenue generating technical transfer costs needed for the on-boarding of new sterile manufacturing opportunities. The receipt of the grant funding from the Gates Foundation and CEPI helped to partially offset sterile production costs related to the introduction of… Continue reading Aspen reports a creditable and resilient performance under challenging trading conditions