Aspen Falls After Managers Tell Analysts Second Half Was WeakerKamlesh Bhuckory and John Bowker
Aspen Pharmacare Holdings Ltd., Africa’s largest generic-drugs maker, fell the most in more than five years after the company told analysts on a call that second-half trading was weaker.
The shares declined 6.2 percent, the most since April 2009, to 288 rand by the close yesterday in Johannesburg, paring the gain this year to 7.2 percent. The FTSE/JSE Africa All Share Index has advanced 9.5 percent in 2014.
“The company guided for a softer second half in South Africa because of government tender volumes that were lower than anticipated,” Mathew Menezes, an analyst at Johannesburg-based Avior Research who was on the call, said by phone yesterday. Aspen also reported a “disappointing second half in South America because of problems with the supply chain.”
Aspen supplies medicines in more than 150 countries and last year bought injectable thrombosis brands, including a manufacturing site and inventory, from London-based GlaxoSmithKline Plc for 700 million pounds ($1.2 billion). The company’s second half runs through June 30.
Chief Executive Officer Stephen Saad was “as surprised as anyone” by the share price fall, he said by mobile-phone yesterday. “It was a normal trading update. I didn’t see it being very different from what the analysts had projected. If there was anything that we deemed to be problematic we would have put out a cautionary” statement.
Greg Lan, a director for Aspen Asia Pacific (Pty) Ltd, sold 24,479 shares for 7.6 million rand ($716,000), Aspen said in a statement yesterday. Trevor Ziman, another director at the same unit, sold 12,000 units for 3.7 million rand.
Aspen’s South Africa unit “had a disappointingly lower second half,” Deputy Chief Executive Officer Gus Attridge said on the conference call, a recording of which has been heard by Bloomberg News. “The anti-retroviral tender values have been significantly down on expectations. This has not only affected revenue but impacted on margins.”
Media were not invited to listen to the call. A number is provided on the website of the company that enables a caller to listen to a recording.
In South America, the company had “supply difficulty” concerning products made by Merck & Co. Inc., Attridge said. Aspen bought a manufacturing unit from the U.S. drugmaker and took an option to purchase a products business in a $1 billion deal last year.
Menezes said he considered the setbacks to be “temporary” and that the company’s long-term prospects were good.