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Aspen HIV Drug Stockpiles Rise as South African Provinces Delay

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July 25 (Bloomberg) -- Aspen Pharmacare Holdings Ltd. has growing stockpiles of unsold HIV/AIDS drugs as South African provinces delay the provision of new three-in-one pills approved by the government in April last year.

Africa’s largest generic-drugs maker has about 3 million packs of fixed-dose combination pills stored in its warehouses, Stavros Nicolaou, Aspen’s head of strategic trade, said by phone. There are about 600,000 patients every month that have not been started on the new drugs, he said.

“There’s a cumulative effect that becomes significant after six to eight months,” Nicolaou said. “When you stockpile, it ties up a lot of working capital and you could have used the manufacturing capacity for other drugs.”

Health Minister Aaron Motsoaledi said this week that South Africa plans to almost double the number of people that receive free HIV/AIDS drugs to about 4.5 million over the next three years. That’s as it starts to treat HIV-positive people with a CD4 blood cell count of 500, compared with below 350 now, a test that relates to the strength of the immune system. The move to include people with less compromised immune systems is in line with World Health Organization recommendations.

Better cohesion is needed between decisions “at a national policy level and what the provinces are doing on the ground,” Nicolaou said. “An uptick in the ordering of new drugs will help deplete the stockpiles.”

Aspen, which supplies medicines in more than 150 countries, told analysts last month that its South African unit “had a disappointingly lower second half” because of worse than expected tenders for anti-retroviral drugs.

The shares fell 6.2 percent on June 27, the day of the call, the most in five years. The stock was down 0.2 percent at 294 rand at the close in Johannesburg, having gained 9.4 percent in 2014.

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net John Bowker, David Risser

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