Aspen sells its portfolio of six brands to the Swiss Acino Pharma.
- Aspen’s sale of its prescription drug brands to a Swiss company, Acino, is seen as a decent price.
- Swiss pharmaceutical group Acino is expected to strengthen its presence in the South African market through the sale.
- The approximately R1.8 billion transaction is expected to be completed by the end of the year.
Aspen Pharmacare’s decision to sell a batch of its brands to a Swiss pharmaceutical company, Acino, for R1.8 billion is seen as a “decent price” and would shift the company’s focus 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 hitting a sweet spot with the agreement to manufacture the Johnson & Johnson Covid-19 single-dose vaccine out of its Gqeberha plant. .
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 debt level has been to sell assets and in the process clean up its portfolio. I don’t think Aspen is forced to sell at this point as it has made some good progress in reducing its level of debt to more manageable levels,” Gevers said.
Aspen, which had embarked on an acquisition drive in recent years that included buying a manufacturing plant from GlaxoSmithKline, anesthesia rights from AstraZeneca and an infant formula business in 2014 , had gone into debt, causing it to withhold the dividend payment for 2019 and Financial Years 2020. It then sold the formula 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 accounts for approximately 1.35% of Aspen Group revenue and 3% of regional brand revenue.
“He’s important, but probably won’t change Aspen’s market position much.”
Although Aspen’s debt has decreased, as shown in its latest financial statements, Schalk Louw, a wealth manager at PSG, believes the deal would help it further reduce its level of debt which had skyrocketed following its intensive acquisition track.
“I think it’s to address their debt levels and focus the business. They got into a lot of debt with the expansions, and it came back to them,” Louw said.
Last month, Aspen announced that it had reduced its net debt to 16.3 billion rand at the end of June, from 35.2 billion rand the previous year.
“If you look at the history of Aspen, the company has been really focused on growth and has been very successful at doing that, 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 revenue of R512 million in the year to the end of June. The two companies have also entered into a manufacturing agreement, which will see Aspen supply its manufactured products to Acino for seven years.