GSK, Aspen end al­liance

SA col­lab­o­ra­tion con­tin­ues

The Star Early Edition - - BUSINESS REPORT - Siseko Njobeni Sandile Mchunu

BRI­TISH phar­ma­ceu­ti­cal com­pany Glaxo- SmithK­line (GSK) will pay JSE-listed branded and generic phar­ma­ceu­ti­cal prod­ucts group Aspen Phar­ma­care £45 mil­lion (R760.55m) to end a so-called sub-Sa­ha­ran Africa col­lab­o­ra­tion be­tween the two com­pa­nies.

“Phar­ma­care and GSK had agreed to can­cel the rights of Phar­ma­care to col­lab­o­rate in the sub-Sa­ha­ran busi­ness of GSK and that GSK would pay Phar­ma­care £45m as con­sid­er­a­tion for the can­cel­la­tion of the (sub-Sa­ha­ran Africa) col­lab­o­ra­tion,” Aspen said yes­ter­day.

The move will lead to the can­cel­la­tion of Aspen’s rights to col­lab­o­rate in the sub-Sa­ha­ran busi­ness of GSK.

Aspen first an­nounced the can­cel­la­tion of the col­lab­o­ra­tion in Septem­ber last year.

Aspen, the largest phar­ma­ceu­ti­cal com­pany listed on the JSE, ac­quired the rights as part of a bas­ket of trans­ac­tions with GSK in 2009. The col­lab­o­ra­tion gen­er­ated ap­prox­i­mately R2.6 bil­lion of gross rev­enue in the 2016 fi­nan­cial year.

GSK and Aspen en­tered into a col­lab­o­ra­tion ar­range­ment for the com­mer­cial­i­sa­tion of a port­fo­lio of branded pre­scrip­tion phar­ma­ceu­ti­cal prod­ucts in sub-Sa­ha­ran Africa. The port­fo­lio of prod­ucts, sup­ported by a strong dis­tri­bu­tion net­work, was meant to in­crease af­ford­able healthcare in sub-Sa­ha­ran Africa.

In a state­ment yes­ter­day, GSK said the col­lab­o­ra­tion be­tween the two drugs mak­ers in South Africa re­mains in place. GSK said the trans­ac­tion was in line with GSK’s strat­egy of sim­pli­fi­ca­tion through fo­cus­ing on core ther­a­peu­tic ar­eas. GSK has al­ready di­vested its anaes­the­sia port­fo­lio, con­sist­ing of Ul­tiva, Nim­bex, Tracrium, Mi­vacron and Anec­tine to Aspen.

Aspen sup­plies more than 650 branded medicines, spe­cial­is­ing in gener­ics and treat­ments for HIV/Aids and tu­ber­cu­lo­sis. The can­cel­la­tion fol­lows on the heels of GSK’s de­ci­sion – also an­nounced in Septem­ber last year – to dis­pose of the re­main­ing 6.2 per­cent in­ter­est in Aspen. The dis­posal trans­lated to 28.2 mil­lion or­di­nary shares after GSK sold the shares to in­sti­tu­tional in­vestors for R300 a share or R8.47bn.

GSK started di­vest­ing its stake in Aspen in Novem­ber 2013 when it sold 28.2 mil­lion shares for about R7bn. In 2015, the com­pany sold the same num­ber of shares through in­sti­tu­tional in­vestors for R372 a share, rais­ing R10.5bn.

Aspen chief ex­ec­u­tive, Stephen Saad, said GSK’s dis­posal of its Aspen shares would not af­fect the on­go­ing col­lab­o­ra­tion be­tween the two com­pa­nies in South Africa.

GSK’s chief strat­egy of­fi­cer, David Red­fern, is still a mem­ber of Aspen’s board of di­rec­tors.

Saad said GSK’s dis­posal of the shares re­lieved Aspen share­hold­ers of the un­cer­tainty caused by GSK’s in­ten­tion to dis­pose of its in­ter­ests.

On the other hand, GSK chief fi­nan­cial of­fi­cer Si­mon Dinge­mans said the dis­posal com­pleted “a suc­cess­ful phased ap­proach to re­al­is­ing that value which we can now de­ploy be­hind the group’s pri­or­i­ties.”

Aspen’s shares on the JSE yes­ter­day closed 0.53 per­cent down at R282.08. PALLINGHURST Re­sources gained 11.9per­cent on the JSE last month after the com­pany an­nounced it had ben­e­fited from a strong surge in man­ganese prices last year.

Although Pallinghurst’s share price re­mained flat for the bet­ter part of yes­ter­day on the JSE at R4.70 per share, the price has been pos­i­tive since the be­gin­ning of last month and moved from R4.20 per share to R4.70 a share lev­els.

De­spite the continuing growth trends, the com­pany’s share price is way off from its record high of R5.40 per share recorded in Novem­ber 2015.

Pallinghurst has been boosted by its sub­sidiary Tshipi é Ntle Man­ganese Min­ing (Tshipi).

Tshipi’s suc­cess­ful pro­duc­tion ramp-up and the strong mar­ket en­vi­ron­ment in man­ganese prices dur­ing the year im­proved dra­mat­i­cally.

The price of man­ganese in­creased from less than $1.50 (R21) per dry met­ric ton unit (DMTU) in January last year to re­cent prices of more than $7 per DMTU.

This rep­re­sents a five-fold in­crease. The com­pany said Tshipi’s op­ti­mi­sa­tion of its cost base had also con­trib­uted to its ex­pec­ta­tion of record prof­its dur­ing its fi­nan­cial year end­ing Fe­bru­ary 28.

Un­der­val­ued

An in­de­pen­dent trader, who did not want to be named, said Pallinghurst ben­e­fited from “a strong uptick in the man­ganese prices in 2016 as well as a weak­ened South African cur­rency”.

The com­pany said its net as­set value per share was R5.62 as at the end of June. The trader be­lieved the com­pany was still un­der­val­ued at R4.70 per share, based on yes­ter­day’s price. Pallinghurst has a pri­mary list­ing on the JSE and a sec­ondary list­ing on the Ber­muda Stock Ex­change.

As a re­sult of an­tic­i­pated growth in prof­its, Tshipi aimed to dis­trib­ute about R1 bil­lion to its share­hold­ers, Jupiter Mines, a 49.9 per­cent share­holder in Tshipi.

In re­turn Pallinghurst, an 18.45 per­cent share­holder in Jupiter, ex­pects to re­ceive R140 mil­lion at the end of March.

The group said the above dis­tri­bu­tions were sub­ject to there be­ing no ma­te­rial ad­verse change in mar­ket con­di­tions.

Phar­ma­care and GSK have agreed to can­cel the rights of Phar­ma­care to work to­gether in the sub-Sa­ha­ran busi­ness of GSK, but on­go­ing col­lab­o­ra­tion be­tween the two pharma gi­ants in South Africa will con­tinue.

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