Aspen Pharmacare gets R9.9bn boost from development finance consortium

Africa’s biggest drug manufacturer, Aspen Pharmacare, has secured a €500m (R9.9bn) loan package from a development finance consortium led by the World Bank’s International Finance Corporation (IFC), further bolstering its plans for the development of medicines and vaccines for Africa.

It follows a financing deal announced three years ago by the partnership, which saw Aspen receive a €600m long-term debt financing package to boost its vaccine manufacturing capacity.

The partnership was launched during French President Emanuel Macron’s visit to SA at the height of the Covid-19 pandemic, which cast the spotlight on Africa’s lack of vaccine manufacturing capacity. African nations’ reliance on imports left them last in line when Covid-19 shots were in short supply globally, and a similar scenario is playing out now with mpox.

Aspen Pharmacare CEO Stephen Saad said the company had been approached to manufacture mpox vaccines, but would only do so if two key conditions were met. “We have learnt from Covid-19: someone else must pay for the tech transfer, and we need an absolute assurance of volumes,” he said.

Aspen invested heavily in Covid-19 vaccines at its sterile manufacturing plant in Gqeberha, but its plans to sell its own brand of Johnson & Johnson’s jab in Africa foundered after demand for shots collapsed.

The new €500m loan package has been granted to Aspen Treasury Ireland, a wholly owned subsidiary of Aspen. It includes €150m from the IFC’s own account and €350m in parallel loans mobilised from its consortium partners, the French development institution Proparco, the German development institution DEG and the US International Development Finance Corporation.

Aspen sealed a deal with the Serum Institute of India in 2022 to bottle four childhood vaccines that it will market and distribute under its own brand in Africa, and was contracted by Novo Nordisk in 2023 to make insulin for Africa.

“The IFC is completely aligned with what we are trying to achieve: to make products in Africa for the African market, and to build African human capacity and [pharmaceutical manufacturing] infrastructure,” Saad said in an interview with Business Day shortly after the company released its results for the year to end-June.

Aspen’s share price plummeted on the day after its performance fell short of the guidance issued to the market at the release of its half-year results. It said in March that it expected to deliver mid-single-digit growth in normalised earnings before interest, tax, depreciation and amortisation (ebitda) for the full year, but reported only a 1% increase to R11.26bn, compared to R11.1bn last year. Normalised ebidta is a profit measure used in SA that strips out certain one-off items.

The company’s performance was dented by higher acquisition-related transaction costs and higher-than-expected price decreases incurred in China due to the government’s move to volume-based procurement, Saad said.

Revenue rose 10% to R44.7bn, compared to R40.7bn last year, while headline earnings per share fell 3% to 1,356.6c, compared to 1,405.4c previously.

Aspen declared a dividend of 359c per share, up 5% on last year’s dividend of 342c.

Aspen’s share price fell the most since March 2019, down 13.23% to R206, giving it a market cap of R91.93bn.

kahnt@businesslive.co.za