Coronavirus | Aspen gets a boost from 'unusually' high demand for drugs

Aspen says it is witnessing unsual demand for its drugs.
Aspen says it is witnessing unsual demand for its drugs.

The eruption of the coronavirus pandemic may prove to be a blessing in disguise for drug manufacturer, Aspen Pharmacare, as the company says it is fielding unusually high demand for its drugs.

The company's share price, which has been on an upward trajectory since mid-March, when Aspen announced that it is ramping up its production to prepare for Covid-19 demand, rose 3% on the JSE after the publication of the trading update on Friday morning.

Aspen spent the past two years scrambling to keep its house in order as its admission to anti-competitive behaviour and high debt levels irked investors, wiping away 55% of the company's market value between January 2018 and 31 December 2019.

But when it became clear that Covid-19 was spreading beyond China, Aspen altered production schedules in its different manufacturing plants in anticipation of an upsurge in demand which appears to have paid off.

Unusual demand surge

On Friday, the company said in a trading update published on the Stock Exchange News Service that it is experiencing "elevated demand" for some of its drugs, such as the Sterile Brands in Europe.

Aspen's Commercial Pharmaceuticals business consist of two segments, the Sterile Brands and Regional Brands. The company said both have certain products that have relevance in the management of Covid-19.

The Sterile Brands that saw particularly abnormal demand in Europe houses anaesthetics and thrombosis products and includes consumer brands like GlaxoSmithKline and AstraZeneca. The Regional Brands, which house prescription products like respiratory drug Foxair and over-the-counter medicines like painkiller Mybulen, also saw an uptick in demand.

"These products are of critical importance in the clinical management of patients infected with Covid-19 and we are making every effort to support the healthcare authorities in Europe and the other regions where we operate," said the company in the SENS statement.

Aspen, which also produces anaesthetics for different surgeries, said the elevated demand in Covid-19 management drugs helped offset the expected decline in that group of drugs as people postpone elective surgeries and patients undergo dialysis less frequently. It added that the declines in elective surgical procedures is also being countered by increased hospitalisation rates of medically ill patients in Europe.

Drugs not related to Covid-19 also flying off shelves

Even for products not related to the management of Covid-19, Aspen said households are buying more of its everyday medicines.

"Stockpiling of everyday healthcare products and advanced filling of prescriptions by consumers in response to the Covid-19 pandemic has had a positive impact on the Regional Brands business. This has led to overstocking in supply channels and in households which we anticipate will result in decreased demand over the next few months as stock levels equalise," said the company.

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