Aspen Pharmacare plans R3.4bn ‘single-biggest investment’ in booming high-tech niche
The funds will go towards the production of sterile anaesthetics
Aspen Pharmacare says it will make SA’s “single-biggest pharmaceutical investment” when it pours another R3.4bn into its manufacturing facility in Port Elizabeth.
The funds would go towards the production of sterile anaesthetics — “a niche, high-tech manufacturing capability that presents both domestic and export opportunities”, Aspen senior executive Stavros Nicolaou said.
Nicolaou was speaking at SA’s inaugural investment conference, where President Cyril Ramaphosa aimed to raise funds as part of his plan to get $100bn in new investments into SA.
Nicolaou said Ramaphosa’s drive to create “a more predictable, stable investment environment and reducing regulatory burden in key economic sectors, such as the pharmaceutical sector, is very encouraging”.
“While Aspen operates manufacturing plants in many geographies, it has chosen SA as the location for its largest and most critical manufacturing facilities.”
While Aspen was encouraged by the government’s “investment direction”, a number of regulatory hurdles remained in the pharmaceutical sector, Nicolaou said.
“Our latest investment undertaking is a clear vote of confidence in the president’s commitment to resolving these hurdles and establishing a more conducive investment climate in the sector, bringing with it the momentum for further pharmaceutical investments.”
The investments in its Port Elizabeth site would transform the facility into “one of the world’s leading global hubs for anaesthetic products” and would boost the Eastern Cape economy.
Aspen’s shares have plunged in the weeks after the drug-maker announced its annual results in September. The stock closed at R142.08 on Friday, nearly half of the R272.50 the day prior to its results statement.
André Bekker, an equity analyst at Arqaam Capital, said earlier in October the sell-off ensued because investors had been left disappointed by the group’s numbers, including operating margins, cash flows and gearing levels, which meant “the narrative around the Aspen story has changed a bit”.
Other analysts have said the sale of Aspen’s nutritionals business for less than the market expected had also contributed to the decline.
Earlier in October, Aspen’s founders bought R110m of the company’s shares.
CEO Stephen Saad bought R93.9m worth of stock on the open market, while his deputy, Gus Attridge, bought shares worth R15.6m.
“We bought the shares because we believe in Aspen and what we do,” Saad told Business Day.