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Regional Brands

Regional Brands

Our Regional Brands are geographically diverse with a strong foundation in South Africa and strongly weighted towards emerging markets. These territories represent some of our most established footprints, with the Aspen brand carrying in-country awareness and value. The products within this segment have strong brand equity and are actively promoted through our experienced regional marketing and sales teams.

 2019
R’million
2018 (CER)
R’million
Change
%
Gross profit percentage54,9%56,2%
Revenue
Developed markets6 3036 265 1
Emerging markets11 51411 471
Total17 81717 736

Key brands

BrandType of anaesthetic
MybulenAnalgesic
FoxairRespiratory
CircadinSleeping aid
ZyloricUric acid production inhibitor
BorstolCough medicine

% of total group revenue

19%

65% EM revenue contribution

35% DM revenue contribution

regional-brands-pie

Performance

Regional Brands revenue was flat at R17,8 billion. South Africa, Australasia and Latin America contributed just over 75% to Regional Brands revenue.

The above performance has been diluted by generic pricing pressure across our Europe CIS Oncology portfolio which contracted 23% due to downward pricing pressure.

Developed markets

Developed markets revenue increased 1% to R6,3 billion, largely due to a good performance from our Australasian business, which contributed 53%. Australasian revenues grew 5% to R3,4 billion with key brands enjoying double-digit growth. While Australasia is a strategic territory for us and continues to deliver growth, regular prescribed minimum price cuts require our ongoing assessment of our product portfolio and business model in this country.

Emerging markets

Emerging markets revenue was flat at R11,5 billion, with growth in Latin America and MENA offset by declines in Asia Pacific and developing Europe while SSA was flat. Despite regional macroeconomic uncertainty, Latin American revenue grew 6% to R2,1 billion buoyed by a 10% increase in Spanish Latin America. Aspen has a solid position across Spanish Latin America with key Regional Brands maintaining positive growth trajectories.

Revenue in SA was slightly negative, delivering R7,1 billion, unfavourably impacted by the strike action at the South African manufacturing sites towards the end of the financial year. Aspen generated R1,3 billion in revenue from the sale of ARVs to the public sector in FY2019. In line with our social commitment to South African patients, we continue to manufacture ARVs for the South African public sector at our South African oral solid dose manufacturing site in Port Elizabeth. The largest input cost to ARVs is the API, which is priced in US dollar, resulting in foreign exchange risk to Aspen, in addition to the working capital risks inherent to this business. Aspen has entered into an agreement to partner on public sector ARVs with Laurus Labs, a leading ARV API supplier which will neutralise the risk exposure.

Prospects

We have completed the strategic review of the South African commercial business and split the diverse portfolio in two divisions, namely Aspen's branded portfolio and the Ethicare division, the latter including commoditised and traded molecules. The review has highlighted an opportunity for growth in consumer health and OTC products. In August 2019, we operationalised additional liquid capacity to support the growth of the South African business. We expect that the heightened consumer focus we have achieved with the creation of the two new divisions, the agreement on ARV API supply as well as the new liquid capacity to support growth in this region.

In Australasia, our portfolio has been reshaped with our exit from commodity generics and has delivered growth despite the prescribed price cuts. We are confident that the complexity and therapeutic index of our brands in this country will mitigate against the ongoing pricing regulation.

In August 2019, Aspen received the US FDA ANDA approval for the HPC 1ml preservative-free single dose vial, at which time we earned a USD10 million milestone. Aspen will receive a further USD20 million in milestone payments, subject to our United States partner achieving USD30 million in net sales of HPC. A profit share agreement is in place for net sales above USD30 million.

Australia: Prescription insomnia market, Circadin versus peers
(MAT values, AUD‘million)

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Topical local anaesthetics global market
(market share)

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