Aspen sells its portfolio of six brands to Swiss Acino Pharma.
- Aspen’s sale of its prescription drug brands to a Swiss company, Acino, is seen as a decent price.
- The Swiss pharmaceutical group Acino is expected to gain a foothold in the South African market with this sale.
- The approximately R 1.8 billion transaction is expected to be finalized by the end of the year.
Aspen Pharmacare’s decision to sell a batch of its brands to a Swiss pharmaceutical company, Acino, for R 1.8 billion is seen as a “decent price” and would shift the focus of the company to its core business.
The group announced on Friday that it had reached an agreement to offload six of its branded products, barely a year after reaching a sweet spot with the agreement to manufacture the Johnson & Johnson Covid-19 single-dose vaccine out of its plant in Gqeberha. .
According to Karl Gevers, portfolio manager at Benguela Global Asset Managers, Aspen appears to have gotten a decent price for the company.
“Aspen’s strategy to reduce its level of debt has been to sell assets and in doing so clean up its portfolio. I don’t think Aspen is forced to sell at this point because it has made good progress in reducing its level of debt. to more manageable levels, ”Gevers said.
Aspen, which in recent years had embarked on an acquisition drive that included the purchase of a GlaxoSmithKline manufacturing plant, the anesthetic rights of AstraZeneca and an infant formula business in 2014, s ‘was in debt, which caused him to withhold the payment of dividends for 2019 and Fiscal Years 2020. He then sold the formulas business in 2019.
Now the company’s brands, Altosec, Aspen, Granisetron, Ciavor, Grantryl, Trustan and Zuvamor – some of which are used for the treatment of gastroenterology, erectile dysfunction and cardiovascular disease – are discontinued.
According to Gevers, the portfolio represents around 1.35% of the turnover of the Aspen group and 3% of the turnover of regional brands.
“It’s important, but it probably won’t change Aspen’s position in the market much.”
Although Aspen’s debt has shrunk, as reported in his latest financial report, PSG wealth manager Schalk Louw believes the deal would help him further reduce his debt level which had skyrocketed to the continuation of its intense acquisition process.
“I think it’s meant to reduce their debt levels and focus the business. They’ve gotten into a lot of debt with the expansions, and it’s eaten away at them,” Louw said.
Aspen last month said it reduced its net debt to R16.3 billion at the end of June, from R35.2 billion the year before.
“If you look at the story of Aspen, the company has really focused on growth and has been very successful in doing it, and that’s what investors want.”
Acino, headquartered in Zurich, operates in emerging markets with a focus on affordable healthcare, where it supplies leading companies through contract manufacturing and licensing.
According to Aspen, the brands sold generated sales of Rand 512 million in the fiscal year ended at the end of June. The two companies also entered into a manufacturing agreement, under which Aspen will supply its manufactured products to Acino for seven years.