| Tue 16 Sep 2008, 13:30 | | APN - Aspen establishes its international platform for future growth |
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APN
APN
APN - Aspen establishes its international platform for future growth
Aspen Pharmacare Holdings Limited ("Aspen")
(Incorporated in the Republic of South Africa)
(Registration Number 1985/002935/06)
(Share code APN & ISIN: ZAE000066692)
PRESS RELEASE
Aspen establishes its international platform for future growth
Johannesburg - JSE listed Aspen Pharmacare Holdings Limited, Africa`s largest
pharmaceutical manufacturer, is pleased to announce positive results for the
year ended 30 June 2008. The Group delivered sustained growth from its existing
bases in South Africa, Australia and Asia. A series of significant transactions
were concluded to expand the Group`s footprint into Latin America, East Africa
and more than 100 new markets globally. This sets the platform for a new growth
trajectory.
GROUP PERFORMANCE:
Group revenue increased by 21% to R4.9 billion (R4.0 billion).
Group operating profit improved by 14% to R1.2 billion (R1.1 billion).
Group earnings per share increased by 19% to 245.3 cents (205.7 cents).
Group headline earnings per share (HEPS) grew by 10% to 231.3 cents (210.1
cents)
Stephen Saad, Aspen Group Chief Executive said, "Aspen has retained its
leadership position in the South African market, while the Group has increased
its presence in emerging markets with particular growth in the southern
hemisphere. In addition, Aspen`s worldwide product portfolio has been expanded
by the addition of four established branded products from GlaxoSmithKline
("GSK") and an investment in an oncology franchise."
SOUTH AFRICAN OPERATIONS CONTINUE TO LEAD THE MARKET
The South African business grew revenue by 15% to R3.8 billion and increased
operating profit to R1.1 billion. The Pharmaceutical division recorded
satisfactory revenue growth of 17% at R2.8 billion, amidst increasing pricing
pressures, adverse economic conditions, sharp rises in the cost of materials and
legislative challenges. The annual single exit price increase of 6.5% was
granted in May 2008, four months later than anticipated. Closure of Chinese raw
material facilities ahead of the Beijing Olympics led to a worldwide shortage of
raw materials resulting in sharp base price increases which impacted the cost of
manufactured goods.
The Consumer division increased revenue by 9% to R950.9 million.
Aspen Two
Despite heightened competition and challenging market conditions, Aspen
continued to be the preferred supplier to the public sector. More than 70% of
the volumes in the South African government`s anti-retroviral ("ARV") tender,
awarded in June 2008, were secured, providing further evidence of Aspen`s
international competitiveness.
A SURGE OF ACTIVITY IN ASPEN`S INTERNATIONAL OPERATIONS
Aspen Australia continued its impressive record of growth with revenue up 39% to
R708.9 million and EBITA up by 34% to R95.7 million. In a market which faces
price cuts, Aspen Australia delivered organic growth through innovative
management, making it the sixth largest pharmaceutical company in Australia in
terms of the number of Aspen products prescribed.
Indian-based ARV active pharmaceutical ingredient ("API") producer, Astrix,
benefitted from the rise in demand for ARV`s. Astrix`s revenue doubled to R198.8
million with EBITA growing proportionally to R47.3 million.
Aspen increased its presence in emerging markets with the conclusion of deals in
Latin America and East Africa. In March Aspen acquired 50% of the Latin
American businesses from Strides which are situated in Brazil, Mexico and
Venezuela. This holding has since been raised to a controlling interest of 51%.
In May 60% of Shelys Africa was purchased, providing access to the Tanzanian,
Kenyan and Ugandan markets.
Close to year-end, Aspen announced two watershed deals with leading
multinational GSK. Four branded products, namely, Eltroxin, Imuran, Zyloric and
Lanoxin, were acquired for GBP170 million, giving Aspen access to more than 100
new global markets. In a subsequent deal, a licensing and supply agreement was
signed whereby GSK will source a range of generic products from Aspen and its
Bangalore-based joint venture, Onco Therapies ("Onco"), for distribution into
its developing markets. Onco will commence commercialisation of specialist
oncology and generic products in 2010.
COMMITTED INVESTMENT IN MANUFACTURING CAPABILITY
The Group`s investment in manufacturing capabilities in South Africa continued
during the year with capital expenditure of R379.3million.
The upgrade to the Heritage Facility in Port Elizabeth is progressing according
to schedule and is aimed at maintaining pace with increasing international
production standards as well as adding capacity. The US Food and Drug
Administration-accredited Oral Solid Dosage Facility, underwent further
expansion to unlock additional capacity to meet increased domestic and export
demand. The Sterile Facility is in the process of being validated with the
commercialisation of eye drops for export into the US market expected during the
first half of 2009.
more
Aspen Three Last
PROSPECTS
As a consequence of the Group`s transformation during the past twelve months
profits from international operations are expected to more than double during
the forthcoming year. The international business currently contributes 16% to
the Group`s operating profit.
In spite of moderate growth from the South African business, the Pharmaceutical
division is favourably positioned as the market leader in both the private and
the public sectors. A healthy product pipeline has the potential to further
accelerate performance. As South Africa`s generics brand of choice, Aspen is
suitably positioned to benefit from the local and emerging market switch to
quality generics. Increased manufacturing capabilities, a credible international
presence and a diverse portfolio of products bodes well for continued growth
prospects.
Pricing pressures, legislation and inflationary factors continue to pose
challenges to the pharmaceutical industry in general. Aspen will mitigate and
manage these risks through new procurement initiatives, efficient commercial
management and proactive engagement with legislators.
Since its listing in 1998, Aspen has delivered an unbroken growth trajectory in
both revenue and EBITA at a compound annual growth (CAGR) of 52% and 58%
respectively. Shareholders have shared in this success through a CAGR of 50% in
HEPS over the last ten years. The Group has embarked on a path of
internationalisation by the successful conclusion of a number of strategic
transactions over the past year. The acquired businesses and products add
immediate value to Aspen`s earnings potential, supported by an established
infrastructure which should enable growth to be sustained into the next decade.
\ends
Issued by: Shauneen Beukes, Shauneen Beukes Communications
Tel: +27 (012) 661-8467: Cell: +27 82 389 8900
On Behalf Of: Stephen Saad, Aspen Group Chief Executive
Tel: +27 (031) 580-8603: Cell: +27 83 303 4833
Gus Attridge, Aspen Deputy Group Chief Executive
Tel: +27 (031) 580-8605: Cell: +27 83 628 8813
Roshni Gajjar, Aspen Investor Relations
Tel: +27 (031) 580-8649: Cell: +27 82 879 1826
Woodmead
16 September 2008
Sponsor: Investec Bank Limited
Date: 16/09/2008 13:30:01 Produced by the JSE SENS Department.
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