Aspen. Picture: BLOOMBERG/WALDO SWIEGERS
Aspen. Picture: BLOOMBERG/WALDO SWIEGERS

Africa’s largest drug company, Aspen Pharmacare, has agreed to sell its Japanese business to Sandoz, a division of Novartis, for a total consideration of €400m (R6.58bn).

This is the latest disposal from the company, which is seeking to focus on its core pharmaceuticals business as it grapples with a hefty debt burden due to acquisitions. Fears it could breach debt covenants prompted its share price to halve in 2018.

The deal, which is still subject to approval, will consist of an upfront cash consideration of €300m, and a deferred consideration of €100m, contingent on the Japanese business achieving certain supply criteria and licensing opportunities.

Graphic: KAREN MOOLMAN
Graphic: KAREN MOOLMAN

If the deal goes ahead, Aspen’s subsidiary Aspen Global Incorporated (AGI), will transfer all its shares in wholly owned Aspen Japan KK to Sandoz, as well as all intellectual property.

Aspen’s portfolio in Japan comprises off-patent medicines with a focus on anaesthetics and speciality brands, Novartis said on Monday.

AGI has also entered into a five-year manufacturing and supply agreement with Sandoz for the supply of active pharmaceutical ingredients, semifinished and finished goods related to the portfolio of divested brands.

The agreement, which will take effect from completion of the transaction, includes an additional two-year extension option. 

“The acquisition of Aspen’s Japanese operations would significantly strengthen our position in this country, a stable but growing generics market,” Sandoz CEO Richard Saynor said.

Gels well

“We are committed to helping address patient and customer needs in the market as we aspire to become the world’s leading and most valued generics company,” he said.

Aspen said on Monday it does not believe its portfolio and operational platform in Japan provides it with sufficient scale and leverage in that market, though it gels well with Sandoz’s Japanese portfolio and product pipeline.

Aspen CEO Stephen Saad spoke to Business Day TV about the firm's decision to sell its Japanese business to Sandoz.

In May, Aspen finalised the sale of its portfolio of prescription and over-the-counter drugs sold mainly in Australia and New Zealand to Mylan, for a maximum consideration of 188-million Australian dollar (R1.9bn).

In June, it finalised the sale off its nutritionals business to French company Lactalis, resulting in a net cash inflow of €635m.

Net debt has fallen to R40bn as of end-June, from R53.2bn at the end of December, with the company’s market capitalisation standing at R51.67bn on Monday morning.

Aspen’s share price rose 2.46% to R115.98 in morning trade on Monday, paring its year-to-date loss to 13.97%.

gernetzkyk@businesslive.co.za