Aspen Pharmacare CEO Stephen Saad said the company is now in a position to ramp up organic growth initiatives after selling off its Asia-Pacific operations for A$2.37bn (about R26.5bn) at the end of last year.
In an interview with Business Day, Saad said Aspen’s balance sheet is finally debt-free for the first time since he founded the company in 1997. “It is the first time in 30 years that this business has been debt-free. This gives us a big opportunity to focus on cash flow and pursue organic growth more aggressively,” he said.
Markets cheered the announcement at the end of December that Aspen had secured a surprise offer from Melbourne-based BGH Capital for 100% of the Asia-Pacific business, excluding China, at a valuation roughly 11 times the outfit’s forward earnings before interest, tax, depreciation and amortisation (ebitda).
On top of the premium price, the sale allows Aspen to sharpen its focus on higher growth prospects such as GLP-1 injectables, which have taken the world by storm in recent years.
Business Day reported in January that Aspen is proceeding with two injectable GLP-1 products: generic semaglutide and Eli Lilly’s tirzepatide, branded Mounjaro. While both products are prescribed for patients with diabetes, there is also strong demand for their use in weight loss.
Aspen expects to launch its generic semaglutide in Canada later this year. The patent on semaglutide, held by Novo Nordisk, will expire in many emerging markets this year.
Saad told investors in January that the share price still did not reflect the true value of the company, even though its stock has climbed 15% this year after soaring more than 20% on the day of the announcement of its Asia-Pacific sale.
In its results for the six months to end-December, Aspen said the R26.5bn sale proceeds would “effectively eliminate most of the group’s net debt, setting the foundation for improved balance sheet flexibility” and “supporting future capital allocation”.
It reported 4% revenue growth and 11% normalised ebitda growth in commercial pharmaceuticals, its most material business segment, citing strong demand for Mounjaro in South Africa. Efforts to restructure its Chinese operations boosted profitability, it said.
However, R695m in one-off restructuring costs was recorded for the reshaping of its loss-making sterile finished dosage form manufacturing facilities in South Africa and France. That is expected to cut costs further in the coming months.
As a result, HEPS was down 35% year on year at R4.17, while revenue slipped 4% to R21.09bn.
With additional reporting from Kabelo Khumalo
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