Aspen Targets Further Chinese Acquisitions After Glaxo Dealby
South African drugmaker boosts salesforce to 700 in expansion
Shares reverse losses; plunged after profit warning Sept. 8
Aspen Pharmacare Holdings Ltd. is seeking further acquisitions and adding salespeople in China as Africa’s biggest maker of generic drugs targets the world’s most populous country as a major growth market.
“China now is very much on our radar,” Deputy Chief Executive Officer Gus Attridge said by phone on Wednesday. In the past, “we may have avoided China because of our absence of representation there. But now China is going to be very much in scope.”
Aspen will have 700 sales people in China, its biggest sales team in the world, after completing a deal to buy a portfolio of anesthetic medicines from GlaxoSmithKline Plc for as much as 280 million pounds ($372 million) earlier this week. That agreement included the China rights to thrombolytic products Fraxiparine and Arixtra, which Durban, South Africa-based Aspen bought from the London-based company in other territories in 2014. The company wants to tap Chinese demand for high-quality drugs at low prices, Chief Executive Stephen Saad said in an interview last month.
“It really is one of the unconquered frontiers for us and we really are excited about this giving us the springboard into China,” Attridge said. “GSK had retained rights to the Chinese market and we’ve now been able to pry that away from them.”
Aspen, which sells products such as hormones, steroids, infant formula and antiretroviral medicines in more than 150 countries, said earlier on Wednesday that full-year profit increased 10 percent as the international businesses offset a fall in revenue in its home market. Comparable sales, adjusted to take out the impact of disposals, gained 12 percent to 35.4 billion rand ($2.5 billion).
The shares reversed losses and traded 1.2 percent higher at 340.07 rand at the close in Johannesburg, extending a gain for the year to 10 percent. The stock fell the most in more than two years on Sept. 8, when the company said the impact of selling the two pharmaceutical portfolios and a one-time currency-related loss in Venezuela would weigh on earnings per share.
The drugmaker is confident the decline in South Africa is temporary and it can rectify low stock levels at the unit, Attridge said. The South African business will be “back on its feet” in six months, the Deputy CEO said.
“The good news is we know how to fix South Africa and we can reverse” the drop, he said.
Aspen raised the dividend to 2.48 rand per share from 2.16 rand.