Breaking out of its bear trend
Pharmaceutical group Aspen, which has come under fire in recent months from regulators in Italy and the EU over the pricing of its cancer drugs, is expecting to announce further acquisitions in the next 12 months with a focus on developing markets, CEO Stephen Saad told Bloomberg in an interview on 30 June.
The group has more financial room to manoeuvre as strong revenue growth and lower capital expenditure strengthened its balance sheet, which has come under strain after two acquisitions in 2016. The purchases of the anaesthetics portfolios from GlaxoSmithKline and AstraZeneca for at least $885m led Aspen’s borrowings to treble to R35.7bn at the end of December, Bloomberg reported. Saad believes organic growth across the company should bring that figure down.
He is also confident that purchases in categories such as anticoagulants should help Aspen increase its ability to offer different types of existing medicines without incurring the cost of research and development for new drugs in areas such as cancer, Bloomberg reported.
Saad said the size of the increase in the cost of cancer drugs in Italy by as much as 1 500%, which led the regulator to impose a €5.2m fine on Aspen, was overshadowed by the low price of the treatment in question, which has not been raised for more than 50 years, Bloomberg reported. It is not in Aspen’s DNA to ramp up prices to unreasonable levels, he explained. How to trade it:
Aspen has been sliding since August 2016. Recently breaching the resistance trendline of its bear trend, upside through 30 225c/share should present a good buying opportunity with potential gains to 36 420c/share. Alternatively, go short below 26 350c/share. The downside target would be at 21 200c/share. ■