Adcock Ingram reports increase in HEPS despite challenging environment
CEO Andy Hall says conditions are challenging, especially when ‘seen in the light of the recent disappointing single exit price increase’
Pharmaceutical group Adcock Ingram on Wednesday reported a 33% increase in first-half headline earnings per share (HEPS) from continuing operations to R1.93, which was at the upper end of its recent guidance.
Group turnover in the six months to end-December was up 7.4% to R3.2bn, mainly driven by a realised average price increase of 5.2%.
Medicine prices are controlled by the Health Department in SA and companies are usually allowed only one price increase a year.
The company’s gross margin improved to 38%, from 36.1%, thanks to what it said was a stronger rand, increased antiretroviral (ARV) throughput at its Wadeville factory and improved sales mix.
"We are pleased with the quality of earnings, and the operational and strategic progress achieved," CEO Andy Hall said in a statement.
"However, the operating environment remains challenging in SA, especially seen in the light of the recent disappointing SEP [single exit price] increase of 1.26% and ongoing financial pressure on consumers."
The Pharmaceutical Task Group‚ which represents key drug manufacturer associations, recently took the matter up with the department, arguing that the 1.26% increase in single exit price did not take into account high input costs faced by drug manufacturers.
Adcock declared an interim dividend of 86c, which was up 37% on the year-earlier period.