Aspen Pharmacare's effective business model proves resilient

The business model has helped Aspen Pharmacare remain in full operation throughout Covid-19.

Aspen Pharmacare’s business model has proven resilient despite the difficult trading conditions. The pharmaceutical company is reporting a 9 percent increase in revenue for the year ended 30 June to R38.6 billion.

According to the group’s financial statement, the increase in group revenue was supported by 6 percent growth from commercial pharmaceuticals and 22 percent growth from its manufacturing. 

The results included: 

  • Normalised headline earning per share increased 9 percent to R14.65, favourably impacted by lower financing costs
  • Strong second half cash flows resulted in a positive cash inflow from working capital and supported a cash conversion rate of 142 percent
  • Net borrowings declined R3.8 billion to R35.2 billion

“Our relevant product portfolio, effective business continuity plans and safety measures to protect our employees have enabled us to remain in full operation throughout this period,” the group said in a statement. 

According to the statement, the volatility associated with the pandemic has had an adverse impact on the group’s results in the second half of the 2020 financial year, which has varied by timing and region. 

The hard lockdown in China significantly restricted sales of medicines there for at least three months. “Conversely, early in the first wave we experienced a spike in demand for certain of our medicines, most notably in South Africa, Australia and Mexico. This was followed by the predicted drop in demand as the resultant abnormally high inventory in-market levels were normalised.”

In Europe, there was a significant need for Aspen’s sterile products required to treat Covid-19 patients during the height of infections, but a decline in orders for products related to elective surgeries. “The period after the first wave has been characterised by continued social distancing, leading to reduced infection rates in non-Covid-19 communicable diseases and a slow and uncoordinated resumption of elective surgeries which has adversely impacted our performance,” the group stated.

Despite the many challenges experienced during the second half of the financial year, the group said that it has made great progress against each of its medium-term priorities, while maintaining the supply of its medicines to patients in need around the world.