Sustainability report

Sustainability report


Despite pricing pressures and growing competition in all its markets, Aspen recorded a 31% growth in gross revenue from continuing operations during the year (2010: 20%). Organic business growth was achieved through effective sales and promotional strategies and continuous focus on customer relationship management in South Africa and Australia, this was achieved by redirection of the commercial focus to the private sectors in Latin America and East Africa and through the launch of new products across its territories. As such, the Group maintained its unbroken consecutive annual growth in revenue.

Investment in a lucrative product pipeline is recognised as a key driver of organic growth in generic pharmaceutical companies. Aspen’s product pipeline includes a calculated selection of products which, upon launch, are likely to place Aspen in a strong position to recognise value from the penetration of targeted therapeutic categories. During the year, Aspen took steps to review its new business development and product launch processes with the objective of improving the efficiency and effectiveness with which the value in the product pipeline is converted into successful product launches in all geographies. The inherent potential value of Aspen’s five-year product pipeline has been evaluated at USD8,9 billion at 31 December 2010 (31 December 2009: USD6,7 billion) which augurs well for future growth from product launches.

Aspen’s product pipeline            
 Therapeutic category South Africa
Asia Pacific
Latin America
Analgesic 20 152 124   296
Anaesthetic 9 4   13
Anti-histamine 6 29   35
Anti-microbial 40 58 128 13   239
Anti-viral 2 17   19
ARV 62   62
Cardiovascular 52 1 489 1 484 3   3 028
Central nervous system 49 384 812 2   1 247
Cold and flu 49 55   104
Dermatological 21   21
Endocrine 46 14 217 1   278
Gastrointestinal 49 276 461   786
Hormonal 4 745   749
Immunomodulator 15 101 82   198
Musculoskeletal 2 155 52   209
Oncology 28 267 94   389
Ophthalmic 3 56 188   247
Respiratory 7 368 99   474
Urinary 5 33 426   464
Vitamin, Herbal and Complementary 6 44   50
Total 454 3 353 5 082 19   8 908
Anticipated launch in:            
0 – 2 years 369 2 370 739 19   3 497
2 – 5 years 85 983 4 343   5 411
Total 454 3 353 5 082 19   8 908
Important explanatory notes to the product pipeline table:
1. With the exception of SSA, values stated have been derived from IMS. IMS is an independent measure of the pharmaceutical market in the respective territories. Public sector tender sales have been excluded. The IMS values reported records the annual value of the originator’s product for the year to 31 December 2010 for products which were in Aspen’s pipeline at 30 June 2011.
2. In the absence of IMS data, values for SSA represent Aspen’s estimate of the value of the total private sector in East Africa per molecule.
3. In assessing the potential value to Aspen of the molecule to be launched, the following needs to be taken into consideration:
(i) The generic equivalent of an originator molecule trades at a discount to the original product.
(ii) The entry of generic products to the market will result in greater competition.
4. Products which are already registered are not included.
5. Products have only been included where Aspen has a physical product dossier in hand. Not all products have been submitted to the applicable regulatory authorities for registration.

In developed pharmaceutical markets, the healthcare regulators’ intention to reduce the average cost of medicines has translated into legislated price reductions in many countries. This pricing pressure has diluted revenue value growth prospects in South Africa, Australia and in Europe. In order to mitigate current and expected pricing risk in sustaining revenue growth, Aspen has targeted its customer base and product offering in most segments. In both Latin America and SSA, there are better margins to be made in the private sectors where doctors and patients have the opportunity to make choices regarding the selection of high quality medicines which carry the premium associated with the assurance gained by choosing a credible brand. Concerted efforts have been made in both regions to dilute the public sector business in favour of growing the private sector exposure. The benefits of this strategy are starting to be realised – the reliance on public sector business has been reduced substantially in both Latin America and at Shelys. The acquisition of the Sigma pharmaceutical business in Australia is a catalyst for new growth prospects at Aspen Australia. Sigma added a generic product range and the highly regarded Herron consumer brand as well as branded and OTC portfolios which complement Aspen Australia’s existing offering. Aspen Australia is well positioned to maintain its impressive historic growth record in Australasia and to accelerate its South East Asia expansion strategy with the added competitive advantage of being able to leverage the “made in Australia“ label for exports into countries like China, the Philippines, Taiwan and Indonesia. As critical mass is attained through distribution of product portfolios into South East Asian countries, it is intended to establish Aspen representation in these countries. This point has been realised in the Philippines where Aspen has incorporated a company and plans to have sales representation in the field before the end of the financial year.

The acquired global brands have been Aspen’s springboard into multiple territories. The investment made in establishing Aspen’s international distribution network, into which the global brands are being transitioned, has extended the Group’s supply chain capability to a vast number of markets. The established global supply chain can be leveraged for the distribution of additional products from the Aspen pipeline on an individual country, regional or global basis. Licensing arrangements with other leading pharmaceutical companies who are seeking to partner with an established and proven operator such as Aspen, particularly in the Group’s area of strength in emerging markets, is another growth avenue under investigation.