Ann Crotty Writer-at-large
European Competition Commissioner Margrethe Vestager.  Picture: AFP PHOTO/EMMANUEL DUNAND
European Competition Commissioner Margrethe Vestager. Picture: AFP PHOTO/EMMANUEL DUNAND

The Aspen share price held up reasonably well on Tuesday after confirmation that the European Commission had launched a Europe-wide investigation into alleged price hiking of critical cancer drugs.

Although significantly off its 12 month-high of R385 on Tuesday Aspen closed 1.24% firmer at R278.72.

In a Sens announcement released on Monday, Aspen said it was not in a position to comment on the commission’s proceedings, but confirmed its commitment to fair and open competition in markets in the EU and around the world.

"Aspen takes compliance with competition laws very seriously and will work constructively with the European Commission in its process."

Aspen, criticised in April for not informing shareholders of price-hiking investigations in Spain and the UK and a fine in Italy, has told shareholders it will keep them advised of any material developments. "Shareholders should exercise care when reacting to information on this matter, which has not been released by Aspen Holdings," the Sens statement said.

The commission investigation will cover 26 of the 27 European member countries. Italy, which fined Aspen €5m in October for price hikes of up to 1,500%, will not be included.

In a statement European Competition Commissioner Margrethe Vestager said: "Companies should be rewarded for producing these pharmaceuticals to ensure that they keep making them into the future. But when the price of a drug suddenly goes up by several hundred percent, this is something the commission may look at.

"More specifically, in this case we will be assessing whether Aspen is breaking EU competition rules by charging excessive prices for a number of medicines."

The commission can fine companies up to 10% of their global turnover for contravening competition rules. A fine of this magnitude would be a hefty blow to Aspen, which has grown significantly thanks to its overseas expansion strategy. That strategy has focused on purchasing patents of expiring best-selling drugs. The rights to the oncology drugs at the centre of the pricing controversy had been bought from GlaxoSmithKline several years ago.

In response to dramatic media coverage following an investigation by The Times (UK) in April, Aspen attempted to play down the significance of the issue, saying the drugs had generated turnover of just €60m in financial 2016.

The Times reported on Tuesday that this was the first time the commission had investigated a drug company for excessive pricing.

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