Adcock Ingram's headquarters in Midrand, Johannesburg. Picture: FINANCIAL MAIL
Adcock Ingram's headquarters in Midrand, Johannesburg. Picture: FINANCIAL MAIL

Adcock Ingram’s share price has extended its growth streak outperforming the market in 2017. But an analyst has warned that the latest health regulations could put a damper on the firm.

The JSE listed pharmaceutical company manufactures and markets healthcare products to both the private and public sectors. On Tuesday, the share was up 0.63%, to R59.12 from a previous close of R58.75.

The share price has increased since the company announced its first cash surplus since 2011 in February.

The firm raised more than R300m after selling its Indian sales and marketing business and a majority stake in the Ghanaian enterprise.

Gryphon Asset Management portfolio manager Casparus Treurnicht said since the lows of January 2016, Adcock outperformed the market by 44% when it rose from R39 to current levels of R59. "Also, compared with Aspen, the share performed even better for an outperformance of 110% since the beginning of 2015."

Rival Aspen was up 1.89% at R290.50 at the close of the JSE on Tuesday, while Ascendis was 1.73% higher, to R21.75.

Graphic: RUBY-GAY MARTIN
Graphic: RUBY-GAY MARTIN

Adcock’s share price has gone up by 22% since the start of 2017, but there was a drop of 1.5% last week, breaking two consecutive weeks of gains.

While Adcock had been a good performing stock over the past year and a half, Treunicht said the uncertainty caused by new healthcare regulations in SA could also affect investors’ appetite for investing in the sector negatively.

Regulations under the new South African Health Products Regulatory Agency were expected to speed up medication registration processes, but the draft national policy on intellectual property outlines reforms to the patent law that, once implemented, will limit pharmaceutical patent monopolies. "It all adds up as to why some selling might be taking place in Adcock," he said.

The pharmaceutical industry operates under a controversial and highly regulated web of legislation that aims to balance the interests of the end-users, medical aid companies, manufacturers and patent holders.

Adcock CEO Andrew Hall said that the group would be looking at acquisitions and adding products in personal and baby care to supplement its new sunscreen offerings.

Please login or register to comment.