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Drugmaker Aspen [JSE:APN] has restated its results for the year to end-June, only released last month, after the recall of the heartburn medicine Zantac in Australia.
All across the world, including in South Africa, Zantac was recalled after studies found that the ingredient Ranitidine contains traces of a by-product compound that may cause cancer after long-term exposure.
Aspen has the rights to Zantac in Australia, which is mostly sold as an over-the-counter medicine to treat heartburn, gastric reflux and ulcers.
Due to the recall, Aspen has raised an impairment of R719m after it revised the “assumptions supporting the value” of the Zantac brand. The company said this was done “on a worst-case basis, assuming that the brand will not recover from the negative impact of the recall”. Aspen is planning to relaunch the brand with a new formula in Australia.
The total revenue for Zantac in Australasia for the past year was R119 million – which represented 0.3% of Aspen’s total revenue. It said the impact of the loss of Zantac on future earnings is not considered material.
Aspen has been battling a massive debt burden, with net borrowings reaching more than R53bn a couple of months ago.
But a deal that allowed it to sell its infant milk business helped to reduce its debt to around R40 billion by the end of June.
