March 5, 2020 / 6:17 PM / 25 days ago

South African drugmaker Aspen expects coronavirus impact

JOHANNESBURG (Reuters) - South African drugmaker Aspen Pharmacare Holdings Ltd (APNJ.J) reported a small rise in earnings in the first half of the 2020 financial year on Thursday and said the coronavirus outbreak would impact its performance.

FILE PHOTO: An Aspen Pharmacare logo is seen at outside company offices in Woodmead, Johannesburg, South Africa, September 13, 2018. REUTERS/Siphiwe Sibeko/File Photo

Normalized earnings before interest, tax, depreciation and amortization (EBITDA) was flat at 5.26 billion rand ($337.2 million) in the six months to Dec. 31, from a restated 5.24 billion rand, the firm said in a statement.

Aspen said its manufacturing unit benefited from the restart of heparin sales to third parties, boosting normalized headline earnings per share (NHEPS) from continuing operations to 707 cents from a restated 702.4 a year earlier. NHEPS also got a lift from lower net financing costs.

The drugmaker, which is nearly 170 years old and has a presence in about 56 countries, said coronavirus had resulted in its Chinese commercial team being largely inactive since February and this would impact performance.

“To date our inventory holdings have been sufficient to prevent any negative impact arising from reliance on active pharmaceutical ingredient (API) and API intermediaries imported from China, but this risk remains under close assessment,” the firm said in a statement.

On a business as usual basis, excluding the impact of coronavirus, Aspen’s performance in the first half “creates the opportunity to outperform our previous guidance which expected our 2020 financial results to be broadly in line with the results reported for 2019,” it said.

Revenue from continuing operations increased by 3% to 18.4 billion rand.

Aspen’s commercial pharma business, which comprises regional brands such as the oncology portfolio and sterile focus brands, boosted revenue by 2% to 15.2 billion rand, supported by 6% revenue growth in regional brands.

While manufacturing revenue rose 6% to 3.2 billion rand, supported by the resumption of commercial sales of blood-thinner heparin, which added 273 million rand of sales.

Aspen had suspended heparin sales to third parties due to limited global availability as a result of the outbreak of African swine fever in China, the world’s biggest pork producer.

The drugmaker also lowered its debt to 37.9 billion rand from 39 billion rand. The firm said its leverage ratio, a measure of a firm’s ability to meet its financial obligations, came in at 3.5x against a covenant threshold of 4.0x.

The drugmaker added that it has begun an “organizational redesign” across its strategic manufacturing sites and is reviewing its manufacturing and procurement processes to ensure “we are unlocking all potential efficiencies.”

($1 = 15.6005 rand)

Reporting by Nqobile Dludla; Editing by David Clarke and Lisa Shumaker

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