Aspen Expands in China as African Drugmaker Targets Growth

  • South African company adding 350 China sales representatives
  • Low-cost drugs in high demand in world’s most populous country

Aspen Pharmacare Holdings Ltd. plans to increase its Chinese presence as Africa’s biggest maker of generic drugs ramps up distribution of its low-cost pharmaceuticals in the world’s most-populous country.

The South African company will add 350 sales representatives in China “in the next few months” and plans to later increase that to 500, Chief Executive Officer Stephen Saad said in an interview at the drugmaker’s headquarters in Durban on Tuesday. Aspen wants to tap demand in the country for high-quality drugs at low prices, he said.

Stephen Saad in Durban on July 19.

Photographer: Waldo Swiegers/Bloomberg

“Aspen believes absolutely that it can expand quickly into a market such as China, because the critical thing when it comes to medicine besides the price point is quality of the product,” Saad said. “That is why we put so much effort into our manufacturing capabilities and manufacturing quality. We have the quality of drug that you can get in any multinational and it’s affordable.”

Aspen is seeking growth from the U.S. and Europe as well as China and other Asian territories, the CEO said. The company sells products such as hormones, steroids, infant formula and anti-retroviral medicines in more than 150 countries around the world. About 20 percent of revenue came from the Asia Pacific region in the six months through December, while South Africa remains the biggest contributor of sales.

Aspen bought anesthetics medicines from AstraZeneca Plc for $520 million plus add-ons last month, the latest in a string of deals, and is looking for other new products to complement the existing portfolio, Saad said.
 
“In our next financial year we want to bed down the acquisitions that we have made,” Saad said. “And we want to identify other products that can build off this range.”

Anti-Retrovirals Planning

Regarding anti-retrovirals, the Aspen CEO said regional planning on distribution and manufacturing of the medicines used to treat those with HIV would be an “unbelievably good idea” as it would reduce bureaucracy and improve access to a wider range of drugs. Almost 37 million people were living with the virus in 2015, according to UNAIDS.

“The problem currently is that each of the smaller southern African countries now want their own packaging, their own registration fees, and the volumes are too small in places like Botswana and Namibia to justify that,” Saad said.

Aspen, which has gained 23 percent this year, valuing the drugmaker at 174 billion rand ($12 billion), advanced 1.6 percent to 380.56 rand by the close in Johannesburg Wednesday. The stock has increased more than fourfold in the past five years.

The company has spent more than $2 billion on acquisitions from drugmakers including GlaxoSmithKline Plc and Merck & Co. in recent years to boost its array of medicines and manufacturing sites. London-based Glaxo sold down a 19 percent stake in the company in 2013, but remains a minor shareholder and has a stake in Aspen’s Japanese unit.

“Expanding our footprint will be quick, because of key acquisitions that we have already made, some of them quite recently,” Saad said.

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