Investors on Wednesday frowned on news that Aspen Pharmacare is to pay the UK’s National Health Service (NHS) £8m after admitting anticompetitive behaviour, knocking its share price to its lowest level in nine years.

While the scale of the payment is relatively small for a company of Aspen’s size, the news deepened negative sentiment about the company, which has been punished by investors over concerns about the scale of its debt.

Aspen is SA’s biggest pharmaceutical manufacturer, with a market capitalisation of R31.75bn, and saw its shares reach an intraday low of R66.80, its worst since February 2010, before closing at R69.55, down 6.66% on the day.

“I don’t think the fine is a big issue, but it has contributed to negative sentiment,” said Asief Mohamed, chief investment officer at Aeon Investment Management.

“Their debt levels are still quite high after the sale of the infant-milk business and are still a concern,” he said. Aspen had signalled it was considering selling more assets, but this placed it in a weak position with prospective buyers, he said.

Sasfin equities analyst Alec Abraham said investors were worried that Aspen might be forced into a rights issue to raise capital if it failed to sell assets at the right price. 

Aspen sold its infant-milk business to French dairy company Lactalis in May, injecting €740m into the debt-laden firm. It has yet to disclose the effect of the sale on its net debt position, which stood at R53.5bn at the end of December.


Management has had to answer to competition authorities in several different jurisdictions in recent years. It lost its appeal against a €5.2m fine levied by the Italian Competition Authority in 2016 for excessive pricing and faces an ongoing probe by the European Competition Commission for steep price hikes in several off-patent cancer drugs it acquired from GlaxoSmithKline.

The SA Competition Commission announced an investigation into the price of some of Aspen’s cancer drugs in 2017, which it subsequently dropped.

Aspen’s agreement to pay the NHS follows an investigation by the UK Competition and Markets Authority (CMA) into alleged anticompetitive behaviour by Aspen and two rival pharmaceutical companies over fludrocortisone, a drug used to treat Addison’s disease. The CMA said it suspected Aspen had paid competitors to stay out of the market in 2016, enabling it to set prices.

The CMA said on Wednesday Aspen had recently approached it with an offer to resolve the matter. It said Aspen admitted by way of settlement that it was party to an illegal, anticompetitive agreement. In addition to paying the NHS, it had agreed to restore competition by opening the market for fludrocortisone to at least two other competitors.

The CMA said it was still investigating Aspen, which could face a fine of up to £2.1m if it is found to have broken the law. 

“The CMA launched this investigation because we consider it unacceptable for the NHS — and the taxpayers who fund it — to have to pay millions of pounds more than they should for this life-saving drug,” CMA CEO Andrea Coscelli said in a statement published on its website.

The CMA said it was continuing its investigation into the two other pharmaceutical companies that are alleged to have colluded with Aspen, but did not identify them.