Aspen Pharmacare, Africa’s largest pharmaceutical manufacturer has announced a 33% increase in revenue for the six months to December 32 last year but warns that performance may decline due to single exit prices imposed on anti-retroviral (ARVs) by the health minister.
Single exit price refers to legislation instructing medicine manufacturers to sell their products at the same price to their entire customer base, regardless of the size and levels of consumption.
Health Minister Aaron Motsoaledi has said that no consideration would be given to any price increase until the end of 2011.
Aspen said it had experienced significant growth which led to an increase on headline earnings from continuing operations by 35% to R1.147bn, while medicine manufacturing revenue surged by 33% to R5.99bn.
Buoyed by Aspen’s performance, group CEO Stephen Saad said the company had retained its pole position in the market.
“The South African pharmaceutical division’s consistent performance ensured that Aspen
retained its position as the leader in the South African pharmaceutical market,” he said.
Saad revealed that smooth business integration had also contributed to the success of the company. In 2009, Aspen entered into a partnership with Glaxo-
SmithKline (GSK) in a deal valued at R3.5bn.
“The successful integration of the GSK business has further contributed and Aspen is now ranked first in the branded product segment. Aspen’s international and sub-Saharan Africa businesses also performed well, delivering increased revenue and operating profit across the group,” he said.
Saad singled out the South African business entity as the single largest performer for the group. Aspen said the local business increased revenue by 29% to R3.3bn and improved operating profit by 23% to R96m.
“The pharmaceutical division led the growth in revenue raising sales by 36% to R2.682bn,” Aspen said
Aspen, however, warned shareholders that the South African consumer business would be affected by the ending in April 2011 of the Pfizer infant milk licence agreement, which generated annual sales of approximately R250m.
“Pfizer has taken the decision to enter the South African market itself following the acquisition of the infant milk franchise as part of its takeover of Wyeth. Aspen has expanded its own infant milk offering with the introduction of the Infacare Gold range in order to replace the Pfizer brands,” the company said.
Despite the single exit pricing on ARVs, the company was excited after winning 41% of the ARV tender.
“In the recently adjudicated ARVs tender, Aspen was awarded 41% by value of the anticipated ARV requirements of the South African government over a two-year period. This validated the cost competitiveness of the group’s production capabilities,” Aspen said.
The health department awarded ARV contracts worth R3.62bn to various companies last year. The government was to announce six more ARV contracts being negotiated.
The competition among manufacturers has led to price decreases of between 20% and 70%, which according to analysts would hit bottom line including that of Aspen.
It is not all gloom for medicine manufacturers like Aspen, according to a recent report called South African Healthcare Market Analysis, released by an international research firm, the industry was poised for 23% growth by 2013.
The report revealed that a number of factors including HIV-Aids, TB and diabetes would spur health care spending in the near future. Demand for primary health care drugs such as generics and antibiotics would help push profits up for pharmaceuticals in the country, said the report.
“The launch of new products from the extensive product pipeline will provide organic growth across all major markets. The expanded business in the Asia Pacific region is expected to provide further momentum,” Aspen said.
Latin America was a core focus as a region with great potential. Aspen would pursue opportunities to add to its portfolio of global brands.
Single exit price refers to legislation instructing medicine manufacturers to sell their products at the same price to their entire customer base, regardless of the size and levels of consumption.
Health Minister Aaron Motsoaledi has said that no consideration would be given to any price increase until the end of 2011.
Aspen said it had experienced significant growth which led to an increase on headline earnings from continuing operations by 35% to R1.147bn, while medicine manufacturing revenue surged by 33% to R5.99bn.
Buoyed by Aspen’s performance, group CEO Stephen Saad said the company had retained its pole position in the market.
“The South African pharmaceutical division’s consistent performance ensured that Aspen
retained its position as the leader in the South African pharmaceutical market,” he said.
Saad revealed that smooth business integration had also contributed to the success of the company. In 2009, Aspen entered into a partnership with Glaxo-
SmithKline (GSK) in a deal valued at R3.5bn.
“The successful integration of the GSK business has further contributed and Aspen is now ranked first in the branded product segment. Aspen’s international and sub-Saharan Africa businesses also performed well, delivering increased revenue and operating profit across the group,” he said.
Saad singled out the South African business entity as the single largest performer for the group. Aspen said the local business increased revenue by 29% to R3.3bn and improved operating profit by 23% to R96m.
“The pharmaceutical division led the growth in revenue raising sales by 36% to R2.682bn,” Aspen said
Aspen, however, warned shareholders that the South African consumer business would be affected by the ending in April 2011 of the Pfizer infant milk licence agreement, which generated annual sales of approximately R250m.
“Pfizer has taken the decision to enter the South African market itself following the acquisition of the infant milk franchise as part of its takeover of Wyeth. Aspen has expanded its own infant milk offering with the introduction of the Infacare Gold range in order to replace the Pfizer brands,” the company said.
Despite the single exit pricing on ARVs, the company was excited after winning 41% of the ARV tender.
“In the recently adjudicated ARVs tender, Aspen was awarded 41% by value of the anticipated ARV requirements of the South African government over a two-year period. This validated the cost competitiveness of the group’s production capabilities,” Aspen said.
The health department awarded ARV contracts worth R3.62bn to various companies last year. The government was to announce six more ARV contracts being negotiated.
The competition among manufacturers has led to price decreases of between 20% and 70%, which according to analysts would hit bottom line including that of Aspen.
It is not all gloom for medicine manufacturers like Aspen, according to a recent report called South African Healthcare Market Analysis, released by an international research firm, the industry was poised for 23% growth by 2013.
The report revealed that a number of factors including HIV-Aids, TB and diabetes would spur health care spending in the near future. Demand for primary health care drugs such as generics and antibiotics would help push profits up for pharmaceuticals in the country, said the report.
“The launch of new products from the extensive product pipeline will provide organic growth across all major markets. The expanded business in the Asia Pacific region is expected to provide further momentum,” Aspen said.
Latin America was a core focus as a region with great potential. Aspen would pursue opportunities to add to its portfolio of global brands.
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