Ann Crotty Writer-at-large

Pharmaceuticals group Aspen’s share price lost more than 4% on Tuesday after reports in the UK and Australia detailing the company’s aggressive pricing strategy for off-patent cancer drugs it bought from GSK several years ago. At Tuesday’s close of R269.69 the share was near its 12-month low and substantially off its record high of R436 reached in February 2015.

A curt note referring to legal action in Italy and claiming sub judice did little to settle concern. "Aspen looks forward to the opportunity to demonstrate the integrity and legality of its practices in the context of these legal processes," it said.

The oncology products at the centre of the controversy generated €60m in financial 2016. The group’s revenue for the year was R35.6bn.

The pricing at the centre of an article in the UK’s The Times happened in the UK, Spain and Italy from 2012. There was brief public discussion of the matter in SA in October 2016 after the Italian competition authorities levied a €5.2m fine on Aspen.

But neither the recent results nor the analysts’ presentation mentioned this fine or the February announcement by Spanish authorities that they were investigating similar allegations. Several of small shareholders have rebuked Aspen for not communicating on the matter more effectively.

The Italian competition authorities said Aspen had set price increases of up to 1,500% for life-saving and irreplaceable drugs. They said Aspen had purchased the products from GlaxoSmithKline, whose patents had expired decades earlier, and started negotiations with the sole aim of obtaining a high price increase despite the absence of any economic justification. "The negotiation strategy adopted by Aspen was so aggressive to reach the credible threat of interrupting the direct supply of the drugs to the Italian market," said the Italian authorities.

Aspen has said there was no increase in the price of the drugs for almost 50 years, noting that it had made no economic sense to supply the drugs at the old prices.

Although there has been little discussion about the matter in SA, in Europe it has become a hot topic. Delegates to a cancer conference in Amsterdam in January heard how the price of off-patent cancer drugs, including Aspen’s, had risen drastically in recent years. "Prices aren’t as high as in the US, but these are generic drugs and should be available at close to the cost of production," said a leading British academic.

Please sign in or register to comment.