Aspen CEO Stephen Saad says all hands are on deck to unlock value in the group’s manufacturing business, adding the performance of the sterile unit is a drag on earnings, causing the market to undervalue the group, which has shed nearly half of its value this year.
The group’s share price is down about 43% in the past six months, slashing its value to R46bn. The decline accelerated in April when the group called an abrupt investor call and warned that its manufacturing business faced a “material contractual dispute” that might lead to core earnings plunging as much as R2bn.
Saad said the group’s value did not lie in the dispute, which is now at an arbitration phase, adding the true challenge for the group was to unlock value trapped in the manufacturing business.
To this end, Saad said the group was focused on cutting the cost base of the manufacturing business, adding a successful turnaround of the business could double the group’s market capitalisation.
“We really have to address our cost base for the reality of our world. We need to cut our cloth according to where we are, which is painful but it is what it is. Our hope is to be on the front line in the world of getting weight loss products into the world,” Saad said.
“We have to get the value unlock in manufacturing. That means fixing the cost base, bring on insulins successfully. These would give value to the manufacturing business,” he said.
We really have to address our cost base for the reality of our world. We need to cut our cloth according to where we are, which is painful but it is what it is. Our hope is to be on the front line in the world of getting weight loss products into the world.
— Stephen Saad
Aspen CEO
“The sterile business is not a bad place to be. Despite the current challenges in that unit, we are still in the good part of town. The sterile assets in my opinion are worth a lot more than our debt [of about R31bn] and therefore our commercial pharmaceutical business is more than 50% undervalued.”
Saad added those are the reasons he spent about R200m of his own money buying the group’s shares a few months ago.
The loss of a major contract in the manufacturing business led to a full-year loss of R1.1bn in the year ended June — with the group swinging from a profit of R4.4bn in the previous year.
The group’s commercial pharmaceuticals, which contribute about 70% of its revenue, reported revenue and normalised ebitda (earnings before interest, taxes, depreciation, and amortisation) growth of 10% in constant exchange rate.
The launch of type 2 diabetes drug Mounjaro in SA contributed positively to earnings with Saad saying few products in the market have seen a surge in sales soon after going to market, expecting the business to grow sales to R1bn in the next few years.
Saad said the strong momentum in commercial pharmaceuticals had been sustained, and this business was well positioned for growth.
“This is underpinned by a solid foundation of organic growth and the realisation of returns on the group’s extensive investment in its generic semaglutide GLP-1 strategy,” Saad said.
“It has been a challenging year for Manufacturing with performance being significantly affected by the loss of a material contract,” he said.
“Consequently, we have had to modify our strategy with a plan to recover lost profitability within our Finished Dose Form business by [the 2027 financial year]. Improved free cash flow generation is a key objective for the year ahead supported by reduced capital expenditure and working capital investment.”
Another positive for the group was its new insulin contract.
“Aspen is pleased to report that the validation stage of the insulin contract has been completed in our SA sterile facility. In anticipation of regulatory approvals being received shortly, commercial production has already been initiated.”
Correction: September 4 2025
This article has been corrected to reflect that Mounjaro is a type 2 diabetes drug. A previous version referred to Mounjaro as a weight-loss drug; however, it is not indicated for weight-loss in SA.
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