March 7, 2013 / 10:01 AM / in 5 years

UPDATE 2-S.African drugmaker Aspen to step up Asian expansion

* Eyes expansion in Malaysia, Indonesia and Thailand

* Unlikely to buy in Latin America due to high price tags

* Headline earnings per share at 371 cents vs 316 cents

By Tiisetso Motsoeneng

JOHANNESBURG, March 7 (Reuters) - Africa’s biggest generic drugs maker, Aspen Pharmacare, said on Thursday it is looking to expand further in Asia to counter slack demand and regulatory pressures in Australia, one of its biggest markets.

Aspen, based in Durban, has made an aggressive push overseas to benefit from patent expiries on best-selling name-brand drugs worth billions of dollars, which has helped to fuel a more than six-fold increase in its share price since early 2008.

But the company, 19 percent owned by Britain’s GlaxoSmithKline, said it might struggle to grow further in Australia, due to slowing demand and government intervention on drug pricing.

“Growth is going to slow in all probability because the actual pharmaceutical demand is not growing,” Gus Attridge, Aspen’s deputy chief executive, said, referring to Australia, the company’s biggest market in south-east Asia.

Aspen, which reported a 17 percent increase in half-year profit on Thursday, plans to build a factory in Indonesia and open offices in other several southeast Asian countries, including Malaysia and Thailand by year-end.

It expects its Asia-Pacific division to become its biggest revenue generator in the coming year after acquiring Australia’s Sigma Pharmaceuticals and GlaxoSmithKline brands in Australia last year.

Attridge said the company, which made about 750 million rand in sales from its business in Latin America, was steering clear of acquisition in the region because valuations were too high.

Aspen’s headline earnings per share rose 17 percent to 371 cents in the six months to end-December helped by a robust showing at the Asia-Pacific business.

Sales increased 20 percent to 9 billion rand ($991 million) with core earnings, or EBITDA, at the Asia Pacific unit increasing by 29 percent, helped by strengthening currencies.

Shares in Aspen fell 0.8 percent to 185.50 rand as of 1415 GMT, lagging a slightly higher JSE Top-40 index. Aspen is currently trading at about 30 times its historic earnings, or about double the average for the index.

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