South African firm Aspen Pharmacare has posted revenues of ZAR36.12 billion (USD2.62 billion) in the 12 months to the end of June 2015, representing 22.4% growth year on year.
IHS Life Sciences perspective | |
Significance | Aspen Pharmacare (South Africa) has reported year-on-year (y/y) revenue growth of 22.4% and 3.9% y/y profit growth in the 12 months to the end of June 2015. |
Implications | Revenue growth was driven by strong performance in international markets and South Africa, although the company noted that this performance reflects the integration of a number of acquisitions that were not present in the previous financial year. |
Outlook | Aspen has begun a shift towards more international markets with the recent divestment of its Australian and Singaporean businesses as well as some of its South African portfolio. |
Aspen Pharmacare (South Africa) has announced financial results for the 12 months ending 30 June 2015. During the period, Aspen recorded revenues of ZAR36.12 billion (USD2.62 billion), representing 22.4% year-on-year (y/y) growth on the previous financial year. Aspen noted that its results broadly benefits from acquisitions that closed in the financial year. Aspen's profits for the year totalled ZAR5.20 billion, up 3.9% y/y. A copy of Aspen's results can be accessed here.
Aspen Pharmacare's financial results | ||
| 2014/15 (ZAR, mil.) | Y/Y, % change |
Aspen's net revenues | 36,127 | 22.4 |
Cost of sales | 18,872 | 19.5 |
Selling and distribution expenses | 5,614 | 27.6 |
Administration expenses | 2,818 | 70.5 |
Operating income* | 8,822 | 15.1 |
Operating margin** | 24.4 | 2 pp decrease |
Profit for the year | 5,199 | 3.9 |
* IHS Life Sciences estimate: net revenues minus cost of sales, general, and administrative expenses. Does not include other operating income/expenses, investment income, and financing costs. ** IHS Life Sciences estimate: operating income as a percentage of net sales Source: Aspen Pharmacare | ||
In South Africa, Aspen's largest individual market, the company recorded revenues of ZAR8.60 billion, representing a 15.5% y/y growth rate. Revenue growth in the country was driven by the awarding of a contract to supply anti-retroviral medicines to the South African HIV treatment programme, new product launches, and infant nutritionals (see South Africa: 30 December 2014: Aspen, Cipla among winners of South African HIV drug tender). Aspen has however warned that the weak rand, and high wage and utility overheads, has placed some pressures on its South African business.
Aspen Pharmacare's revenue by region | ||
2014/15 (ZAR, mil.) | Y/Y, % change | |
International | 18,567 | 45.9 |
South Africa | 8,603 | 15.5 |
Asia Pacific | 8,107 | -4.8 |
Sub-Saharan Africa | 2,769 | 0.9 |
Source: Aspen Pharmacare | ||
In the Asia-Pacific region, Aspen's revenues declined 4.8% y/y to total ZAR8.11 billion. In the region, revenue growth in Australia among branded pharmaceuticals and infant nutritionals, alongside a strong performance in Japan, did not offset the ending of some licence agreements and contracts. Aspen suggested that these terminations were due to a reshuffle of the company's strategy in the region.
Aspen's Sub-Saharan Africa business achieved y/y revenue growth of 0.9%. This meagre growth was attributed to "supply problems".
In Aspen's international markets, which include the United States, Europe, the Commonwealth of Independent States (CIS), and Latin America, revenues grew 45.9% to total ZAR18.57 billion. Growth in this region has been attributed to the acquisition of assets in the 2014/15 financial year and sales of active pharmaceutical ingredients (APIs), among other factors. These elements helped to offset the impact of the divestment of Aspen's fondaparinux products in the US and supply issues in Latin America (see United States - South Africa: 11 September 2014: Aspen Pharmacare reports 53% revenue growth in FY2014 as Mylan acquires US rights to Arixtra).
Outlook and implications
Aspen has stated that it remained focused on a number of key priorities, including increasing manufacturing capacity, lowering costs in its anti-coagulant and infant nutrition businesses, and building up its API business. The company said that it has explored the potential of mergers and acquisitions (M&A), especially in relation to the company's infant nutritional business.
Aspen has divested a significant number of assets so far in 2015, perhaps capitalising on the heightened appetite of the pharmaceutical industry for M&A to part with some underperforming or non-strategic assets. Among the parts of the business Aspen has divested is its Australian and Singaporean businesses, which were acquired by India-headquartered Strides Arcolab in May for USD301 million (see Australia - India - Singapore - South Africa: 21 May 2015: Aspen Pharmacare divests Australian and Singapore portfolios to Strides Arcolab for USD301 mil.). Around the same time, Aspen announced that US firm Endo International had acquired 60 medicines from Aspen in South Africa (see United States - South Africa: 12 May 2015: Endo to acquire range of products from Aspen's portfolio for USD130 mil.). In June, Aspen announced that it planned to expand its presence in Brazil (see Brazil: 4 June 2015: Aspen Pharma to invest USD6.4 mil to expand generics production in Brazil).