Aspen expands global footprint

Johannesburg - Africa's biggest pharmaceutical group, Aspen Pharmacare, will issue 16% of its ordinary share capital as it moves in on the territory of multinational pharmaceutical leader GlaxoSmithKline (GSK).

Aspen will issue 68.5 million ordinary shares as a non-cash consideration for GSKs manufacturing facility in Bad Oldesloe, Germany. Aspen will operate the facility as a going concern and acquire rights to distribute GSK products in South Africa.

In addition, subsidiary Aspen Global will purchase eight specialist products from GSK for worldwide distribution. It follows an announcement in June when GSK sold Aspen the rights to four of its products.

The newly-acquired products include Alkeran, Leukeran and Purinethol for the treatment of cancer, Kemadrin (Parkinson's disease), Lanvis and Myleran (leukaemia), Trandate (high blood pressure) and Septrin, a broad-spectrum anti-microbial.

Aspen and GSK will also collaborate to market and sell prescription pharmaceutical products in sub-Saharan Africa, excluding South Africa, Lesotho and Swaziland.

The new firm will be known as GSK Aspen Healthcare for Africa. The rest of GSK's product range in South Africa will be sold and distributed by Aspen. The duration of these two agreements will be a minimum of 20 years.

Aspen CE Stephen Saad said the company sees this as an opportunity to expand into the rest of Africa. "We are particularly excited by the vaccines; we believe we will be able to offer proper healthcare for the African continent."

Healthcare for Africa

GSK's president for emerging markets, Abbas Hussain, said the strategic relationship with Aspen supports GSK's strategy to accelerate sales growth in emerging markets.

He also praised Aspen's delivery track record. "The combination of our commercial activity in sub-Saharan Africa is highly complementary. This means we can provide more medicines of value to more patients in these counties together."

During the 2008 financial year, GSK sold products worth about R800m in sub-Saharan Africa, excluding sales of R581m in South Africa.

The Bad Oldesloe facility manufactures products for 130 markets, including the products acquired by Aspen. The parties agreed to a 10-year supply arrangement for GSK's retained products manufactured at the facility.

Saad said there will be operational synergy, and that the real asset for Aspen would be the acquisition of highly skilled GSK staff.

The transaction is valued at about R3.47bn, while GSK acquires the right to nominate one Aspen board member.

GSK will maintain a presence in South Africa through its retained consumer healthcare business and the GSK scientific and medical office.

After the announcement on Tuesday, Aspen shares took a beating, trading 5.7% down at 4 781c.

However, Frost & Sullivan analyst Peter Breitenbach said it was a good deal for both companies. "It leverages the skills both companies have, and takes them into emerging markets where the real growth is."

The transaction is subject to approval, and is expected to be completed before the end of 2009.

- Fin24.com