COMPANY COMMENT: Fitter Aspen will still lick reputation wounds
No doubt the share price will recover but the group’s reputation has taken a knock from which it may never recover
The Aspen share price is slowly digging itself out of the hole into which it fell after the price-gouging allegations hit the international headlines just more than a week ago. Given that ethical issues seem to matter to investors only when controversy sticks and that news about the out-of-patent cancer drug controversy has died down (for now), it’s likely the share price will recover much of its losses. Perhaps when the dust has settled someone might undertake a cost-benefit analysis of the substantial increase in drug prices in the EU. Aspen has been dismissive of the matter, saying the drugs involved represent a very small part of its business. If this is so, the decision to raise prices looks like a poor one unless a 4,000% increase on a small part of the business represents a significant profit gain. And for long-term shareholders, will that profit gain be significant enough to compensate for the drop in the share price?
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