By Nqobile Dludla
JOHANNESBURG (Reuters) -Aspen Pharmacare fell short of its targeted mid-single digit growth in core profit on Tuesday, but is betting on GLP-1 drug contracts to boost future earnings.
Aspen’s shares shed 13.23% to 213.60 rand by market close.
For the year to June 30, Africa’s biggest drugmaker recorded normalised headline earnings per share of 14.92 rand, little changed from the 14.98 rand a year earlier.
At its half-year results, Aspen had guided mid-single digit growth in normalised earnings before interest, tax, depreciation and amortisation (EBITDA) for its 2024 financial year.
While it achieved a record second-half normalised EBITDA of 6.1 billion rand, up 17% compared to the first half, EBITDA for the full period rose only 1% to 11.3 billion rand ($628.77 million).
It blamed the shortfall on the greater than expected impact of the Chinese government’s volume-based procurement (VBP), under which the country buys drugs and medical devices in bulk at a discount.
The company has invested heavily meanwhile in manufacturing sterile products – or medicines injected directly into the bloodstream.
Over the next two years, earnings at Aspen’s manufacturing unit will be supported by increased sterile filling capacity, it said.
Without naming the company, it said it has secured a commercial licence for the intellectual property necessary to commercialise GLP-1 drugs – a class of highly effective diabetes and obesity drugs – following the expiry of the originator product patents.
It said it will be the exclusive global supplier of these products to the licensor.
“What we found was that there was shortage of manufacturing, and in return we have asked for the rights to be able to sell the product in largely emerging markets, markets outside of Europe and the U.S.,” Chief Executive Officer Stephen Saad told Reuters.
Separately, last year Aspen signed a deal to distribute and promote the U.S. pharmaceutical giant Eli Lilly’s diabetes drug Mounjaro throughout South Africa.
Saad told Reuters he hoped the South African launch of Mounjaro would be towards the end of this year.
($1 = 17.9716 rand)
(Reporting by Nqobile DludlaEditing by David Goodman and Barbara Lewis)
