Durban – It is important to respond to the issues raised pertaining to Aspen in the article published in the Guardian on Saturday, 28 January 2017 under the title “Drugs firms are accused of putting cancer patients at risk over price hikes” (https://www.theguardian.com/society/2017/jan/28/nhs-drug-firms-cancer-patients-at-risk-prices-inflated) in a balanced manner and in so doing give context to the allegations made.
• The mentioned pricing for Aspen’s products is, in real terms, low and just a fraction of the alternate treatments in each of the particular therapeutic classes. The average price per tablet of the Aspen products is below £2 and the average price per bottle of 25 tablets is below £50. This is a demonstration of Aspen’s commitment to ensuring the supply of these extremely complex products, both affordably and at the highest quality. While the percentage increases in respect of the Aspen products, when considered in isolation, appear to be substantial, these increases are from a very low and unsustainable price base, having not been increased over decades.
• Busulphan is raised as the highest percentage price increase. Total sales in the UK at this higher pricing are about £15,000 per month. This will neither put pressure on any healthcare budget nor benefit any share price. The revenue from these sales hardly covers the costs of the regulatory infrastructure, fees for pharmacovigilance, let alone the increasing requirements demanded by regulators including new analytical method development, need for improved and specialist contained manufacture and numerous additional reporting requirements.
• Aspen has never failed to supply product when it is available. We do acknowledge supply shortages of one of our products. We have been continuously addressing this supply shortage and are trying to improve supply globally. To suggest supply has been withheld is simply factually incorrect and bordering on mischievous. The Health Care Regulators are aware of the supply challenges and are working with Aspen to expand supply sources.
• It is confusing to suggest that generic drugs can be manufactured for less than the cost of the raw materials. This would be commercially unsustainable as it implies the generic drugs would be sold at below cost?
• The facts above are equally applicable to the Italian Competition Authority (“ICA”) matter reported in October 2016. The products in question had not undergone any price increases in Italy for more than fifty years prior to the increase that had been negotiated with the Italian Health Authorities. The weighted average price for a pack of 25 tablets of each of the four products concerned in this matter is now in the order of €2 per tablet, also constituting a fraction of the cost of alternate treatments in each of the particular therapeutic classes.
• Based on legal advice received, the ICA’s decision has been appealed to an independent and competent court in Italy on the grounds that the finding is materially flawed from both a procedural and substantive perspective. Aspen remains confident that it will be awarded a full annulment of the ICA’s decision in terms of this appeal.
• Aspen pricing was not set arbitrarily. In most countries, Aspen cannot set pricing without regulatory approval. In many European countries, a transparent understanding of factors considered in arriving at proposed prices was demanded by the regulators. Based on these investigations, pricing was agreed and approved by the regulator concerned.
In order to achieve a consistent supply of life saving medication, it is important that the detail is thoroughly understood and all relevant factors are properly and fairly considered. This will avoid sensationalising important issues. We trust that the above response will help clarify the issues raised and assist in achieving balanced and fair reporting.
Johannesburg. Stephen Saad, Aspen Group Chief Executive, was announced as the winner of the Entrepreneur of the Year Award at the All Africa Business Leaders Awards (AABLA) gala banquet in Johannesburg.
At the Awards, hosted in partnership with CNBC Africa, Stephen Saad said, “You work at something and you build something together with the team and seldom have time to look back. To be recognized for it in this way is wonderful and particularly so for Aspen. We are a company with roots in South Africa and manufacturing in South Africa. We’ve grown our local talent to become a world player and Aspen is just a wonderful South African story.”
Saad said that the biggest challenges faced, besides business basics, was breaking into a generics market and making really big investments around quality and investment.
“Aspen competes with multinationals – we started a domestic company and have gone offshore to become a global company manufacturing in South Africa for domestic and export markets,” added Mr Saad.
“Going forward we will continue to look for strategic partners. We have completed a number of significant transactions and Aspen has built a really strong foundation now. Our aspiration in the short term is to build on that base and to double our size.”
The AABLA, Africa’s most respected business awards, honours remarkable leadership and salutes game changers of business on the continent for their continuing commitment to excellence, developing best practices and innovative strategies.
Aspen’s comparable revenue increases by 12% to R35.4 billion
Johannesburg – JSE Limited listed Aspen Pharmacare Holdings Limited (APN), a leading pharmaceutical company in the southern hemisphere, has announced positive results for the year ended 30 June 2016 notwithstanding economic pressures and currency weaknesses.
Stephen Saad, Aspen Group Chief Executive said, “The positive results underpin the strong foundation set which the business will build on in the 2017 financial year. The recent transactions, with a focus on anaesthetics which has been identified as a key therapeutic category for the Group’s strategic development plans, will further strengthen Aspen’s presence in the hospital sector. The International business remained the largest contributor to Group revenue and delivered strong comparable revenue growth. Manufacturing revenue from South Africa’s Active Pharmaceutical Ingredients (“APIs”) and finished dose forms showed pleasing growth of 52% and 69% respectively. Asia Pacific recorded a 11% comparable revenue increase to R7,4 billion, with Japan leading Asia’s 29% increase in sales. Gross revenue in sub-Saharan Africa increased 18% to R3,3 billion.”
As reported in the interim results, the factors set out below have significantly affected comparability with the results of the prior year and need to be considered when assessing performance for the 2016 financial year:
The profit arising from the Divestments, the currency devaluation loss and the hyperinflationary adjustments relating to Venezuela are excluded, in addition to other specific non-trading items, in determining normalised performance. In order to provide meaningful comparability of the financial performance of the ongoing underlying business, a comparable measure has been determined by removing the contribution from the Divestments and including the results of Aspen’s business in Venezuela translated at VEF628.34 per USD in the prior reporting period.
The key performance measures for the Group for the year ended 30 June 2016 and the percentage change from the prior year are summarized as follows:
|Revenue||Operating profit before amortisation||HEPS**|
|Comparable normalised***||R35,4 billion||+12%||R9,4 billion*||+9%||1 222,0 cents||+15%|
|Normalised||R35.6 billion||-2%||R9,5 billion*||+3%||1 263,7 cents||+10%|
|Unadjusted||R35,6 billion||-2%||R9,6 billion||+7%||889.0 cents||-23%|
* operating profit before amortisation, adjusted for specific non-trading items
** headline earnings per share
*** The comparable information has been derived from the reviewed financial information and has not been reported on by Aspen’s auditors. This information has been prepared for illustrative purposes only and is the responsibility of the Board of Directors of Aspen
The International Business increased comparable revenue 19% to R18,9 billion and grew comparable operating profit before amortisation, adjusted for specific non-trading items (“EBITA”), 15% to R5,9 billion.
Commercial revenue from pharmaceutical product sales to health care providers in Europe and the Commonwealth of Independent States (“Europe CIS”) improved 22% to R8,5 billion. The acquisition of Mono-Embolex, a thrombolytic product with almost all of its sales in Germany, in the second half of the previous year further strengthened Aspen’s portfolio in this therapeutic area.
In Latin America (excluding Venezuela), revenue to customers increased 3% to R3,5 billion. Nutritional sales were the growth driver, increasing 18% and Infacare was successfully launched in Mexico, securing an important government tender. Aspen has suspended trade in Venezuela pending an improvement in the economic conditions.
Sales to customers in the North America and the Middle East North Africa territories increased strongly off relatively low bases, growing by 42% and 51% respectively.
Manufacturing revenue continued to advance with particularly strong growth in active pharmaceutical ingredient (“API”) sales of 19% to R4,0 billion.
The installation of a new high speed pre-filled syringe filling line at Aspen Notre Dame de Bondeville was completed during the period and commercial production is underway. At Aspen Oss the capital expenditure projects include adding new production capabilities and maintaining the sustainability of the site.
SOUTH AFRICAN BUSINESS
Comparable revenue in South Africa was down 1% at R8,1 billion. Nutritionals products maintained their growth momentum, adding 11% to revenue and there were impressive increases in manufacturing revenue for both APIs (+52%) and finished dose forms (+69%). The pharmaceutical business was however constrained by supply problems, which were compounded by sub-optimal prioritisation of available capacity, leading to a weak second half performance. Private sector comparable pharmaceutical revenue was 7% lower. Margins came under pressure from a weakening local currency, which raised the cost of imports and from operating expense growing faster than sales. This was the primary cause of the comparable EBITA for the South African business dropping 15% to R1,5 billion.
The new high volume, high potency multipurpose API facility at Fine Chemicals has commenced production. The high containment facility in Port Elizabeth has been completed and manufacturing trials are in progress. Construction of the additional specialist sterile manufacturing facility in Port Elizabeth is progressing and a number of capacity enhancement projects are also underway at this site. These capital projects will provide an important strategic advantage to the Group by enabling it to add value to its expanding portfolio of products that require complex manufacture.
ASIA PACIFIC BUSINESS
In the Asia Pacific region, comparable revenue was up 11% to R7,4 billion and comparable EBITA was 10% higher at R1,6 billion. In Australasia, sales of pharmaceuticals to customers increased 2% to R4,4 billion with a strong performance from core pharmaceutical products in a challenging trading environment being offset by a reduced contribution from licensed products in the process of being phased out. Revenue from the nutritionals range was 6% higher at R1,0 billion. Sales to customers in Asia continued to grow, climbing 29% with Japan leading the way.
Gross revenue in sub-Saharan Africa increased 18% to R3,3 billion. Currency weakness across the region and unfavourable new VAT legislation in Tanzania squeezed margins, but a compensation payment in the Collaboration assisted the region to raise EBITA 31% to R0,4 billion.
The transactions announced after the closing of the 2016 financial year represent further steps in Aspen’s strategy to move towards sharpened focus on key therapy areas and to move away from areas where the Group is less able to add value. This intent is also reflected in the Divestments completed earlier in the year. A key element of Aspen’s inorganic expansion strategy is to acquire products within therapeutic areas that are both niche in nature and complementary to its existing operations. Anaesthetics have been identified as a therapeutic category aligned to the Group’s strategic development plans. The AZ portfolio and the GSK portfolio are complementary, providing Aspen with a leading range of anaesthetic products distributed globally. As a category of pharmaceuticals that primarily involves sterile manufacturing and that is dispensed largely in hospitals and clinics, anaesthetics present an opportunity to leverage both Aspen’s existing hospital focused sales force that is currently promoting thrombolytic products and, potentially in due course, sterile manufacturing capabilities. Furthermore, the key territories in which the anaesthetics are sold represent an excellent fit with Aspen’s existing operational geographic footprint and those territories where the Group has ambitions to establish a presence. The transactions also have initiated the establishment of a material business in China where the acquisition of the thrombolytic products from GSK creates synergistic opportunities with the acquired AZ Portfolio.
Significant work has been done in effectively consolidating the major acquisitions that were concluded in the 2015 financial year, including bringing three major manufacturing sites into the Aspen supply network and transferring more than 2 000 new employees to Aspen. The foundation has been well set for the business units to continue to build on the positive results delivered in the 2016 financial year. The South African private sector pharmaceutical division is expected to record growth in the forthcoming year although the first half will continue to suffer from supply issues.
Inventory carrying levels remain too high in certain business units and various projects are underway to rectify this position. Inevitably though, working capital will need to be built to sustain the recent acquisitions.
Aspen trades in a diversified mix of currencies that generally diminishes currency risk on a Group-wide basis. This risk has been further mitigated by the replacement of USD debt with EUR debt, achieving better matching between trading cash flows and borrowings.
In the 2015 final results announcement, Aspen identified a number of projects aimed at delivering synergies from recent acquisitions, targeting an additional R2,5 billion in EBITA from these synergies by the 2019 financial year. These projects include lowering the cost of goods for the thrombolytic products, improving margins in the infant nutritionals business, bringing new manufacturing capacity and technologies on-line, building the third party API business and leveraging acquired intellectual property. Particular opportunities have been identified to build a niche business based on supply of specialised APIs and finished dose forms to the United States. Significant progress has been made over the last year in regard to the realisation of these synergies and the first benefits came through late in the past year. Aspen is confident that this target will be achieved and exceeded. Benefits of approximately R300 million came through during the past financial year. It is anticipated that between R500 million and R1 billion in further synergies will be achieved in the 2017 financial year. The realisation of these synergies, ongoing organic growth from the base business and the added contribution from the recently announced anaesthesia acquisitions are expected to result in a strong increase in earnings in the 2017 financial year.
Shauneen Beukes, Shauneen Beukes Communications
Tel: +27 (012) 661-8467 : Cell: +27 82 389 8900
On Behalf Of:
Stephen Saad, Aspen Group Chief Executive
Tel: +27 (031) 580-8603
Gus Attridge, Aspen Deputy Group Chief Executive
Tel: +27 (031) 580-8605
Zihle Mgcokoca, Aspen Investor Relations Manager
Tel: +27 (031) 580-8649
Aspen is a leading global player in specialty, branded and generic pharmaceuticals with an extensive basket of products that provide treatment for a broad spectrum of acute and chronic conditions experienced through all stages of life. Aspen continues to increase the number of lives benefitting from its products, reaching more than 150 countries.
Aspen has a strong presence in both emerging and developed countries. Its emerging market footprint includes Sub-Saharan Africa, Latin America, South East Asia, Eastern Europe and the Commonwealth of Independent States, comprising Russia and the former Soviet Republics. From a developed world perspective Aspen is one of the leading pharmaceutical companies in Australia and has a growing presence in other developed countries, most notably in Western Europe.
Aspen operates with an established business presence in approximately 50 countries spanning 6 continents and employs more than 10,000 people. The Group operates 26 manufacturing facilities across 18 sites. Aspen holds international manufacturing approvals from some of the most stringent global regulatory agencies including the FDA, TGA and EMA. Aspen’s manufacturing capabilities are scalable to demand and cover a wide variety of product-types including oral solid dose, liquids, semi-solids, steriles, biologicals, APIs and infant nutritionals.
Aspen, with a market capitalisation of approximately $10 billion, is the largest pharmaceutical company listed on the JSE Limited (share code: APN) and ranks amongst the top 20 listed companies on this exchange. For more information visit: http://www.aspenpharma.com/
We may make statements that are not historical facts and relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable. These are forward looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “believe”, “anticipate”, “expect”, “intend”, “seek”, “will”, “plan”, “indicate, “could”, “may”, “endeavor”, “prospects” and “project” and similar expressions are intended to identify such forward looking statements, but are not the exclusive means of identifying such statements. By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that predictions, forecasts, projections and other forward looking statements will not be achieved. If one or more of these risks materialize, or should underlying assumptions prove incorrect, actual results may be very different from those anticipated. The factors that could cause our actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward looking statements are discussed in each year’s annual report. Forward looking statements apply only as of the date on which they are made, and we do not undertake other than in terms of the Listings Requirements of the JSE Limited, any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. All profit forecasts published in this report are unaudited.
Aspen Holdings is pleased to announce that its wholly owned subsidiary, Aspen Global Incorporated (“AGI”), has signed an agreement with AstraZeneca AB and AstraZeneca UK (“AstraZeneca”) whereby AGI will acquire the exclusive rights to commercialise AstraZeneca’s global (excluding the USA) anaesthetics portfolio (“the Transaction”).
AstraZeneca’s anaesthetics portfolio comprises seven established medicines, namely Diprivan (general anaesthesia), EMLA (topical anaesthetic) and five local anaesthetics (Xylocaine/Xylocard/Xyloproct, Marcaine, Naropin, Carbocaine and Citanest) (“the Portfolio”). The products in the Portfolio are sold in more than one hundred countries worldwide including China, Japan, Australia and Brazil. These products generated revenue of US$ 592 million in the year ended 31 December 2015.
In terms of the concluded agreement, as consideration for the commercialisation rights, AGI will pay US$520 million and double-digit percentage royalties on sales of the Portfolio. Additionally AGI will make sales related payments of up to US$250 million based on sales in the 24 months following completion. AGI and AstraZeneca have also signed a supply agreement whereby AstraZeneca will supply the anaesthetic products to AGI. This supply agreement has an initial period of 10 years.
The commercial activities will transition to AGI in the short to medium term in accordance with an agreed plan. During the transition period AstraZeneca will continue to provide certain commercialisation services to AGI.
Based on the terms of the agreements and Aspen’s current cost of funding, Aspen’s interest in the Portfolio would have generated a contribution to profit before tax of approximately US$100 million in the year ended 31 December 2015.
AGI’s upfront investment will be funded from new debt facilities which have been secured.
A key element of AGI’s inorganic expansion strategy is to acquire products within therapeutic areas that are both niche in nature and complementary to its existing operations. To this end, AGI has identified anaesthetics as a therapeutic category that presents the opportunity to add significant value to the Aspen Group. As a category of pharmaceuticals that primarily involves sterile manufacturing and that is dispensed largely in hospitals and clinics, anaesthetics present an opportunity to leverage both Aspen’s existing hospital focused sales force that is currently promoting anti-coagulants and, potentially in due course, sterile manufacturing capabilities. Furthermore, the key territories in which the Portfolio is sold represent an excellent fit with Aspen’s existing operational geographic footprint and those markets on which its future strategy is focussed.
By entering into the Transaction, Aspen gains immediate access not only to a global portfolio of exceptionally strong brands but also to the scientific and strategic expertise of AstraZeneca, one of the world’s major pharmaceutical companies and a leader in the area of anaesthetics.
The transaction is subject to customary closing conditions and is anticipated to complete during the first quarter of Aspen’s 2017 financial year.
Categorisation of the Transaction
The Transaction is categorised as a Category 2 transaction in terms of the JSE Limited Listings Requirements.
Durban, 9 June 2016
Sponsor: Investec Bank Limited
About AstraZeneca’s anaesthetics portfolio
Cream Anaesthesia of skin for needle insertion, superficial surgical procedures, genital mucosa (eg, prior to superficial surgical procedures or infiltration), leg ulcers, to facilitate mechanical cleansing/debridement
Patch Anaesthesia of intact skin in connection with minor procedures, such as needle insertion and surgical treatment of localized lesions
Surgical anaesthesia epidural block for surgery, including caesarean section, intrathecal, major nerve block and field block
Acute pain management: continuous epidural infusion or intermittent bolus, field block, intra-articular injection, continuous peripheral nerve block infusion or intermittent injections
Acute pain management in paediatrics for peri-and postoperative pain; caudal epidural block, peripheral nerve block
Aspen is a leading global player in specialty and generic pharmaceuticals with an extensive basket of products that provide treatment for a broad spectrum of acute and chronic conditions experienced through all stages of life. Aspen continues to increase the number of lives benefitting from its products, reaching more than 150 countries.
Aspen has a strong presence in both emerging and developed countries. Its emerging market footprint includes Sub-Saharan Africa (where it is the largest pharmaceutical company), Latin America, South East Asia, Eastern Europe and the Commonwealth of Independent States, comprising Russia and the former Soviet Republics. From a developed world perspective Aspen is one of the leading pharmaceutical companies in Australia and has a growing presence in other developed countries, most notably in Western Europe.
Aspen operates with an established business presence in approximately 50 countries spanning 6 continents and employs more than 10,000 people. The Group operates 26 manufacturing facilities across 18 sites. Aspen holds international manufacturing approvals from some of the most stringent global regulatory agencies including the FDA, TGA and EMA. Aspen’s manufacturing capabilities are scalable to demand and cover a wide variety of product-types including oral solid dose, liquids, semi-solids, steriles, biologicals, APIs and INs.
Aspen, with a market capitalisation of approximately $10 billion, is the largest pharmaceutical company listed on the JSE Limited (share code: APN) and ranks amongst the top 20 listed companies on this exchange.
AstraZeneca is a global, innovation-driven biopharmaceutical business that focuses on the discovery, development and commercialisation of prescription medicines, primarily for the treatment of cardiovascular, metabolic, respiratory, inflammation, autoimmune, oncology, infection and neuroscience diseases. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide. For more information please visit: www.astrazeneca.com
Port Elizabeth. JSE-listed Aspen, the largest pharmaceutical manufacturer in the southern hemisphere, earlier today hosted Deputy President Cyril Ramaphosa and Minister of Health Dr Aaron Motsoaledi at its Port Elizabeth-based flagship manufacturing site.
The visit provided an opportunity to discuss Aspen’s economic growth and export contributions to South Africa, and to demonstrate its globally recognised specialized manufacturing technologies. Aspen is the leading supplier of medicines to the South African public and private sectors, with approximately 1 in 4 medicines dispensed in the public sector being an Aspen product.
Stavros Nicolaou, Aspen Senior Executive, Strategic Trade said, “The visit further strengthens the collaboration between Government and Aspen, and provides additional impetus to jointly finding homegrown solutions to the challenges that face South Africa’s economic and healthcare system. This collaboration also dispels some myths that Government and the private sector are at odds with one another.”
“Aspen has significantly expanded its global footprint. It has an active presence in 76 countries and distributes product to more than 150 countries. This expansion has been mirrored by our ongoing investment in local manufacture which in the past 18 months has exceeded R2 billion, and which continues to contribute to economic growth and export prospects. Our more recent developments include a High Containment Suite to produce high potency and oncological products, and a second Small Volume Parental facility with highly specialised, pre-filled syringe capability for niche low molecular weight heparin injectables for domestic and offshore markets. We also produce the unique MDR-TB injection, Capreomycin (Capstat)® as well as more than 40 million units of Murine® eye drops, the USA’s second largest over the counter eyed drop brand.”
In his capacity as the Chairperson of the South African National AIDS Council (SANAC), Deputy President Ramaphosa said, “I salute Aspen for having the foresight to build these plants here in Port Elizabeth, therefore creating valuable high tech jobs. It allows us as Government to purchase medicines that Aspen produces at affordable prices.”
Nicolaou added that Aspen’s latest capex spend positions it as a global leader in a number of niche therapeutic areas, such as injectable anti-coagulants (thrombotics), infant nutrition and male and female hormonal health. This investment has further enabled it to re-locate off shore manufacture back into South Africa, which provides for significant export opportunities.
“Aspen has ambitious global plans in selected niche, specialist therapeutic areas. These plans are consistent with and aligned to Government’s industrialisation plans. We remain committed to an ongoing contribution to diversify South Africa’s economy, unlock local investments, further establish economic linkages with SME’s, provide job and export opportunities and contribute to the overall challenge of tackling the stubborn inclusive growth challenge we face. Aspen is proof that technology-driven companies will continue to significantly contribute to South Africa’s economic growth,” said Nicolaou.
Present at the visit was CEO of Proudly SA, Advocate Leslie Sedibe, who said, “Aspen’s investment in local manufacture and its state of the art facility is a clear demonstration of SA’s global competitiveness in support of DTI’s call to strengthen SA’s industrialization programme through the support for local products. Proudly SA supports Aspen’s achievements in this regard.”
While Aspen has 28 manufacturing facilities at 8 sites around the world, South Africa remains the Group’s preferred manufacturing destination, proving that this country’s pharmaceutical manufacture can compete with among the best in the world. Aspen employs over 3000 people in the Eastern Cape across its PE and East London sites.
BusinessDay TV - The week that was - 10 June 2016 - Join Simon Brown, Giulietta Talevi and Sasfin Securities' David Shapiro as they discuss Aspen’s R7 billion deal with AstraZeneca
Aspen, AstraZeneca ink R7BN deal - Aspen CEO Stephen Saad speaks to Alishia Seckam and Stephen Gunnion about the group’s R7 billion deal with AstraZeneca that will add seven established medicines in 100 countries to the group’s portfolio;
CNBC Captains of Industry 15 March 2016 - Stephen Saad speaks to CNBC Africa’s Executive Director Bronwyn Nielsen on the challenges of doing business in the pharmaceutical industry, succession planning, diversification and expansion
Stavros Nicolau interviewed for CNN's Marketplace Africa.
BusinessDay TV - Aspen posts 14% rise in H1 profit
Stephen Saad, CEO of Aspen, speaks to Alishia Seckam about first-half results, which show a 14% rise in normalised HEPS
Fine Business Radio presenter, Lindsay Williams chats to Stephen Saad about Aspen’s interim results
CNBC Africa - Talking Stocks: 18 February 2016
CNBC Africa's Gugulethu Cele talks to Sean Ashton and Liam Hechter from Anchor Capital talk about Aspen with Liam and Sean both rating Aspen as a Buy