Aspen profits up

22 August, 2006 at 8:25 am | Posted in Companies | Leave a comment

Generic HIV/Aids drug manufacturer Aspen Pharmacare said yesterday that “normalised” profit a share for the year was up 32 percent to R1.821, but it still made most of its money from other pharmaceutical products.

Aspen’s chief executive, Stephen Saad, said the 242 percent increase in net profit to R638 million was not a good indicator of the company’s financial performance as it included a number of one-off items, in particular a R282 million charge for a black empowerment deal in the prior period.

Saad said sales of antiretrovirals (ARVs) were still a small part of the business, but the sales had come off a low base and the potential market in Africa was vast. ARV sales were R266 million for the year to June out of total company sales of R3.45 billion.

He said the biggest growth market for ARVs was continentwide, where 1 million out of 5 million to 6 million people who needed treatment for HIV/Aids were getting it.

The company said significant further expansion of this market was expected as the World Health Organisation sought to achieve universal access to the drugs by 2010.

At present, Aspen, Africa’s largest manufacturer of generics, supplied ARVs to about 300 000 patients through public and private healthcare providers.


Saad said the company’s margins had come under pressure as the government had frozen drug prices for three years, while the rand had weakened by 15 percent in the past financial year.

As a result, he said the only way to grow profit was through volume growth. Sales were up 23 percent for the period.

But he said the company was in discussions with the department of health and hoped for normal price increases in future years.

Sales in the company’s biggest division, pharmaceuticals, were up 24 percent to R2.05 billion.

Aspen said it had a “robust” future product pipeline in the generics market, which would see it maintaining its leading role in this market.

The consumer division raised revenue by 24 percent to R795 million on the back of increased market share in baby milk formula and the introduction of Playgirl deodorants.

The company declared a distribution of 62c a share to be paid out to shareholders, up 29 percent on the year and covered three times by headline earnings a share.

Aspen was 0.82 percent lower at R36.20. The pharmaceuticals and biotechnology sector was 0.82 percent lower.

There is plenty of room for improvement but overall I would say a satisfactory set of results.


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