GSK, Aspen end alliance
SA collaboration continues
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.
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.