Cipla Medpro South Africa Ltd. rose the most in a month as the generic drugmaker said distribution pacts remain intact after Chief Executive Officer Jerome Smith resigned before a disciplinary hearing scheduled for today.
The stock advanced as much as 6.1 percent, the biggest intraday gain since Aug. 31, to 7.17 rand and traded at 7.14 rand by 10:53 a.m. in Johannesburg, paring its loss since Smith was suspended on Aug. 15 to 15 percent.
Smith’s departure is unlikely to affect agreements in place with its partner in India, Cipla Medpro Chairman Sibusiso Luthuli said by phone from Johannesburg. Cipla Ltd. of India entered a supply and manufacturing arrangement with Cipla Medpro in 2005. It doesn’t own a stake in the South African company.
“We are talking to them on a regular basis and they are very supportive,” Luthuli said. “There is very strong management in place; this is not a one-man show. It’s been business as usual.”
Smith faced more than 20 charges including gross misconduct, the company said in a statement today. He canceled his work contract with the company on Oct. 5 and said he would claim damages. Smith was suspended after claiming bonuses worth 1.6 million rand ($182,000) in 2010 and 2 million rand in 2011 that weren’t approved by the board, it said. Other charges included dishonesty and breaches of his fiduciary duty.
“I think Cipla Medpro remains a very good business,” Ferdi Heyneke, a trader at Afrifocus Securities in Johannesburg, said by phone today. “They have dropped a lot from the publicity when the news first hit the market so reassuring investors is something that could see the shares recover.”