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Finweek English Edition - - MARKETPLACE - ed­i­to­rial@fin­week.co.za

Re­ports in Bri­tish news­pa­pers last month that Aspen in 2014 had threat­ened to stop sup­ply­ing Spain with cer­tain generic cancer drugs un­less prices in­creased by 4 000% sent the share price plum­met­ing in mid-April. The re­ports, pub­lished in The Times and The In­de­pen­dent, al­leged that Aspen had ex­ploited a le­gal loop­hole that “al­lows drug com­pa­nies to change the price of medicines if they are no longer branded un­der the same name”. Aspen ac­quired the brands in ques­tion from Glax­oSmithK­line in 2009.

Aspen was fined over €5bn in Oc­to­ber 2016 for un­fair pric­ing of its cancer drugs in Italy, where prices were in­creased by as much as 1 500% af­ter threats that it would halt sup­ply un­less Ital­ian reg­u­la­tors ap­proved the in­creases, Money­web re­ported. Aspen is ap­peal­ing the rul­ing. The phar­ma­ceu­ti­cal com­pany’s fail­ure to in­form share­hold­ers of the fine last year – it said the size of the fine was “im­ma­te­rial” in the broader Aspen con­text – con­trib­uted to a de­cline in its share price to 26 350c/share from a high at 36 500c/share.

The news­pa­per re­ports also trig­gered a re­quest from the DA for the Com­pe­ti­tion Com­mis­sion to in­ves­ti­gate its pric­ing in South Africa. Aspen said in a state­ment that prices in SA are gov­erned by the depart­ment of health, which es­tab­lishes a uni­ver­sal fixed price for each phar­ma­ceu­ti­cal prod­uct, and that it has com­plied with this frame­work.

In terms of the Euro­pean al­le­ga­tions, Aspen said the mat­ter is sub ju­dice and that it “looks for­ward to the op­por­tu­nity to demon­strate the in­tegrity and le­gal­ity of its prac­tices in the con­text of these le­gal pro­cesses”. How to trade it: Aspen re­cov­ered con­sid­er­ably in the last week of April within its medium-term bear trend. How­ever, the re­sis­tance trend­line would only be breached above 29 000c/share. A pos­i­tive break­out would be con­firmed through the 30 000c/share level, with po­ten­tial gains to 35 000c/share and then 38 850c/share. Go long above 30 000c/share with a tight trail­ing stop-loss. Al­ter­na­tively, fail­ure to trade beyond 29 000c/share would mark de­feat, or a lack of in­vestor con­fi­dence – thereby at­tract­ing more sell­ers, who may drag the share price to 24 700c/share.

Aspen said in a state­ment that prices in SA are gov­erned by the depart­ment of health, which es­tab­lishes a uni­ver­sal fixed price for each phar­ma­ceu­ti­cal prod­uct, and that it has com­plied with this frame­work.

By Mox­ima Gama

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