Aspen looks east to grow

2013-03-10 10:00

Aspen Pharmacare said this week it is looking to expand further in Asia to counter slack demand and regulatory pressures in Australia, one of its biggest markets.

Aspen, based in Durban, has made an aggressive push overseas to benefit from patent expires on bestselling name-brand drugs worth billions of US dollars. This has helped to fuel a more than six-fold increase in its share price since early 2008.

But the company, 19% owned by Britain’s GlaxoSmithKline, said it might struggle to grow further in Australia, owing to slowing demand and state intervention on pricing.

“Growth is going to slow because actual pharmaceutical demand is not growing,” Gus Attridge, Aspen’s deputy chief executive, said, referring to Australia.

Aspen, which reported a 17% increase in half-year profit this week, plans to build a factory in Indonesia and open offices in several southeast Asian nations, including Malaysia and Thailand by year-end.

It expects its Asia-Pacific division to become its biggest revenue generator in the coming year after acquiring Australia’s Sigma Pharmaceuticals and GlaxoSmithKline brands in Australia last year.

Attridge said Aspen, which made about R750?million in sales from its business in Latin America, was steering clear of acquisitions in the region because of high valuations.

Aspen’s headline earnings per share rose 17%, to R3.71 in the six months to end-December, helped by a robust showing in the Asia-Pacific business.

Sales increased 20% to R9?billion in core earnings, the Asia-Pacific unit increasing by 29%, helped by strengthening currencies.

Shares in Aspen fell 0.8% to R185.50 on Friday, lagging a slightly higher JSE Top-40 index.

It is currently trading at about 30 times its historic earnings, or about double the average for the index. – Tiisetso Motsoeneng, Reuters

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