REVENUE GROWTH FOR THE FUTURE

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 USD’million	Asia Pacific USD’million	Latin America USD’million	SSA2 USD’million		Total USD’million
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

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.