COMPETITION COMMISSION INVESTIGATION
Aspen shares stable as market sees big picture
The market is keeping a close eye on the global move to review pharmaceutical practices, says analyst
Aspen’s share price on the JSE has remained resilient, after local competition authorities launched an investigation into alleged excessive pricing in the provision of certain cancer medicines in the country.
Last week, the Competition Commission announced it was investigating Aspen and multinational pharmaceutical manufacturers Roche and Pfizer for suspected excessive pricing of their cancer drugs.
Aspen’s share price was unmoved after the announcement on Tuesday last week, closing at R275 on the day. It rose 0.55% on both Wednesday and Thursday to end the week at R278.01. On Monday, Aspen closed almost unchanged at R277.86. In total, the share price fell 0.28% for the week.
Portfolio manager at Gryphon asset management Casparus Treurnicht said there was a global move to review pharmaceutical practices and how they had been operating over the past few years from an ethical point of view. The market was keeping a close eye.
"Should there be any penalties from this region then this would be treated as a nonevent as I wouldn’t expect it to be anything more than R3m," Treurnicht said. "Share prices might have hit a wall for the next few months unless drastic positive news comes to the fore."
Aspen’s head of strategic trade, Stavros Nicolaou, said investors were sensible enough to connect the dots and retain their faith in the business as pharmaceutical prices were regulated in SA.
Aspen confirmed that the drugs under investigation had increased, on average, 6.25% a year since 2009, when Aspen bought the drug portfolio from GlaxoSmithKline. That was in line with single-exit pricing.
Nicolaou said the products had combined turnover of about R3m in the private market in SA, which was "subeconomic".
In March, the group reported revenue was up 13% to R19.8bn for the six months to December, while normalised headline earnings per share increased 6% to 692c. However, sales to customers in sub-Saharan Africa declined 1% to R4.6bn.
Meanwhile, Aspen’s appeal against the Italian Competition Authority ruling relating to its portfolio of oncology products distributed in Italy has been dismissed. Aspen will have to pay a €5.2m fine plus interest.