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Sterile Focus Brands

Aspen’s Sterile Focus Brands, used in an acute ospital setting, include a diverse range of sterile pharmaceutical preparations of high quality, niche medicines across the Anaesthetics and Thrombosis therapies.

2021
R’million
2020 (CER)
R’million
Change
%
Revenue 10 253 10 512 (2)
Gross profit percentage 60,7% 60,0%

Key brands

Brand Description
Diprivan General anaesthetic
Emla Local anaesthetic
Fraxiparine Low molecular weight heparin
Marcaine Regional and spinal anaesthetic
Ultiva Opioid analgesic
Xylocaine Regional anaesthetic

27%

of Group revenue

34%

of Group gross profit

sterile-focus

Performance

The Sterile Focus Brands portfolio showed resilient performance amidst headwinds in Asia and Europe CIS, withstanding global challenges. Revenue decreased by 2% to R10 253 million for the 12 months ended June 2022 as compared to the prior year. The prior year was positively impacted by COVID-19 vaccine demand showing an increase of 9%. Lower second half sales in Europe CIS and China negatively affected year-on-year growth. The geopolitical situation in Russia and Ukraine lowered sales performance in Europe CIS. Flat sales growth in Asia was maintained, despite the adverse effects of volume-based procurement (“VBP”) and the recent COVID-19 lockdowns in China. Although China has started to reopen, the hospital volumes have not returned to pre-lockdown levels and are approximately at 60-80% of volume levels. A higher gross profit of 60,7% (FY2021: 60,0%) benefited from cost of goods savings through site transfers from third-party to in-house manufacture of anaesthetics, was partially offset by the impact of VBP and higher logistical costs.

In Asia, annual revenue grew 17% to R4 491 million, driven by a full year of trade in China compared to the prior year when a hard lockdown resulted in significant lost sales. Europe CIS revenue posted a modest 2% increase in revenue, negatively affected by the absence of a repeat of the unusually high COVID-19-related demand in the prior year. This was partially offset by high thrombosis demand in Russia, where Fraxiparine was used extensively in treating medically ill pandemic patients. As Fraxiparine in Russia is a lower margin product within the Sterile Focus Brands portfolio, this caused gross profit dilution.

Prospects

Sterile Focus Brands are expected to deliver solid single-digit growth in the coming financial year. Aspen’s guidance is informed by an expected post-lockdown recovery in China and steady growth in Europe CIS notwithstanding the annualised impact of lower sales to Russia. In the medium term VBP in China will continue to remain a potential risk and Aspen has initiated several strategic plans to diversify, grow and de-risk the portfolio to ensure sustainable longterm growth.

The plan for the transfer of manufacture of a large proportion of our anaesthetic portfolio from FDF third-party contractor sites to Aspen-owned facilities in South Africa, France and Germany has commenced. This will result in steady gross margin benefits earned from Sterile Focus Brands in the medium term. Although we have made good progress in Germany, there have been delays in South Africa and France due to the reprioritisation of vaccines and COVID-19 disruptions, respectively. These delays will extend the completion date beyond the previously communicated timeline that all transfers would be completed by the end of the 2024 financial year by at least 18 to 24 months.

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