Aspen looks at fur­ther pur­chases

The Star Early Edition - - COMPANIES - Bloomberg

ASPEN Phar­ma­care Hold­ings sees fur­ther ac­qui­si­tions in the next 12 months as strong rev­enue and lower cap­i­tal ex­pen­di­ture re­store its fire­power af­ter the pur­chase of two anaes­thet­ics port­fo­lios last year.

The po­ten­tial deals will prob­a­bly be made in the South African com­pany’s ex­ist­ing phar­ma­ceu­ti­cal mar­kets, with wom­ens’ health a pos­si­ble area of ex­pan­sion, chief ex­ec­u­tive Stephen Saad, 53, said in an in­ter­view at Aspen’s head­quar­ters in Dur­ban on Fri­day. The drug maker, which has oper­a­tions in more than 150 coun­tries, will fo­cus on emerg­ing rather than de­vel­oped mar­kets, the bil­lion­aire said.

“We’re in a great space to make fur­ther ac­qui­si­tions be­cause we have our teams in the right place and we’re gen­er­at­ing cash,” the chief ex­ec­u­tive said. “The more we can build on emerg­ing mar­ket plat­forms, the more ex­cited we are. To per­form in Asia Pa­cific is go­ing to be im­por­tant for Aspen. Latin Amer­ica and Africa are im­por­tant for Aspen.”

Saad’s com­ments reaf­firm his com­mit­ment to the deal mak­ing that’s pro­pelled the busi­ness he co-founded as a generic drugs spe­cial­ist 20 years ago into South Africa’s ninth-largest listed com­pany with a mar­ket value of R131 bil­lion. The 2016 pur­chases of anaes­thet­ics port­fo­lios from UK gi­ants Glax­oSmithK­line and As­traZeneca for at least $885 mil­lion (R11.55bn) tre­bled the group’s bor­row­ings to R35.7bn as of end De­cem­ber, ac­cord­ing to Aspen’s most re­cent fi­nan­cial re­sults.

Or­ganic growth across the com­pany should bring that down, the chief ex­ec­u­tive said. Sales are ex­pected to have risen 19 per­cent to R42.3bn in the year to June, ac­cord­ing to an­a­lysts.

Aspen shares rose 2.3 per­cent to R287.10 by the close in Jo­han­nes­burg on Fri­day, mov­ing the stock into pos­i­tive ter­ri­tory for the year to date. Saad owns about 12 per­cent of the drug maker, with his stake val­ued at about R15.7bn.

Saad was de­fi­ant when ad­dress­ing a €5.2 mil­lion (R77.51m) fine im­posed on Aspen by Ital­ian reg­u­la­tors for rais­ing the price of cancer drugs by as much as 1 500 per­cent, say­ing that the ex­tent of the in­crease over­shad­owed the low price of the treat­ment in ques­tion, which had not been raised for more than half a cen­tury.

Ramp­ing up prices to un­rea­son­able levels “isn’t in our DNA – it’s not what Aspen stands for,” the chief ex­ec­u­tive said. “We’ve clearly got some reg­u­la­tors very com­fort­able with our pric­ing.”

He said he couldn’t com­ment on a sim­i­lar in­ves­ti­ga­tion by EU reg­u­la­tors, be­cause it’s still in progress.One change Aspen is mak­ing to the way it does busi­ness is to al­ter the way the com­pany re­ports fi­nan­cials, Saad said. – Bloomberg

PHOTO: BLOOMBERG

The Aspen Phar­ma­care Hold­ings of­fices in Dur­ban.

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