Nicola Mawson
6 March 2009
Johannesburg — INTERNATIONAL sales bolstered pharmaceutical company Aspen despite the global slowdown.
The pharmaceutical group said yesterday that the growth driver in the six months to December had been its international business, with international operating profits exceeding those of the South African unit for the first time.
Aspen increased headline earnings per share for the six months 77% to 193,8c on revenue growth of 91% to R4,3bn. Operating profit was up 84% at R1,2bn.
CEO Stephen Saad said that despite almost doubling revenue in the first half, Aspen still saw sales being positive as South African prices rose and new capacity came on line, boding well for the local division's growth. However, group expansion raised gearing to 56%, although the interest was covered six times.
Additional capacity will be coming on line this year at the Port Elizabeth site with capital investment near R1bn. Extra capacity in the Oral Solid Dosage Facility will increase output, and additional solid-dose manufacturing capacity should be on line by year-end as a new tablet production plant comes on line. Extra solid-dose manufacturing and packing capabilities will cater for higher demand from domestic and international businesses.
The Sterile Facility will provide Aspen with production capabilities in injectables, hormonal injectables and eye drops for all major international markets. It is undergoing validation, with the first supply of eye drops to the US expected before the end of the financial year.
Aspen said the international business would keep driving growth for years. It was establishing an international distribution network, to which it would add more global brands. Aspen grew its international business substantially with purchases in Latin America and east Africa. With effect from last June, it acquired four globally branded products. Aspen now supplies product to more than 100 countries with revenue of R1,93bn, up from R460m in the previous corresponding period.
It was looking at expanding existing brands into new global markets. "The development of product pipelines for the international businesses is a major focus area for the group, the benefits of which are expected to become apparent in two to three years' time," Aspen said.
The Bangalore oncology facility got its first international accreditation, and commercialisation of products should start next year. Its licensing deal with GlaxoSmithKline was moving ahead, and first products would be on the shelf next year.
It also expected to improve growth in the local market after the state improved the single exit price 13,2% from February, which "will provide relief from sharply higher supply costs and should allow for a return to more reasonable profit margins in the second half of the year".
Aspen lifted its private pharmaceutical market share to 13% and its generics market share to 36%. Operations in SA improved revenue 32% to R2,3bn on strong pharmaceutical sales.
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