QUALITY AFFORDABLE MEDICINES GLOBALLY
The past year has been a watershed for Aspen in that
the Group has
transformed from a regionally focused operation to a truly
global business. The earnings contribution from international operations
has increased significantly and amounted to slightly less than half of
Group earnings. The marked expansion of the international business should
not, however, overshadow the achievements and positioning of Aspen’s
South African business which remains the foundation of
the Group.
CONCENTRATION ON EMERGING MARKETS
Core to the Group’s increased global footprint has been a concentration
on emerging markets. Aspen has acquired businesses in Latin America and
sub-Saharan Africa in the period since March 2008. These territories
have been identified as strategic focus areas, along with the Asia Pacific
region in which the Group already has an established business in Australia.
The characteristics of these emerging markets have much in common with
South Africa. From a demographic perspective, common features are a growing
population, increasing numbers of the aged and an expanding middle class
which is susceptible to lifestyle diseases who have heightened awareness
of brands, price and quality. In pharmaceuticals, the shift towards generic
medicines is gaining momentum in almost all emerging markets although
in several countries this has been more pronounced in the public sector.
Trading conditions are generally challenging and there are frequently
barriers to entry.
The Group businesses in the emerging markets will concentrate on applying
the fundamental elements of Aspen’s formula which has proven so successful
in South Africa. The primary element of this formula is the supply of
high quality medicines at affordable prices. This is supported by extensive
sales representation and excellent service delivery. No doubt there will
be a number of challenges along the way, but I have confidence that should
this formula be successfully applied, these markets will become an important
factor in Aspen’s growth over the next few years.
SOUTH AFRICAN BUSINESS REMAINS FUNDAMENTAL
The internationalisation of the Group should not in any way be seen
as a dilution of the role of the South African business. Over the past
year, the South African business grew its share in all the market segments
in which it performs. This converted into revenue growth of 30%. The
strength of the South African business remains fundamental to the Group’s
performance and to its future.
The South African business is also a catalyst to the growth of the international
businesses. Aspen has invested close to R1,5 billion in capital
projects in South Africa over the last five years. These capital projects
have transformed Aspen from a domestic producer to a manufacturer with
the capability to supply various dosage forms to any market in the world.
The South African production facilities are an important future supplier
to the Group’s international businesses. Exports from South Africa amounted
to almost R600 million in 2009 and are set to continue growing.
The other key contribution from the South African operations to the
international businesses is in product development. Aspen’s extensive
product portfolio in South Africa provides many opportunities for the
international businesses to access intellectual property which supports
new product registrations in additional territories. The nature of the
South African product portfolio is particularly relevant to other emerging
markets where many of the health challenges and disease patterns are
similar.
INVESTMENT IN SOUTH AFRICA
Aspen has played a meaningful role in sustaining the pharmaceutical
industry in South Africa and has been a pioneer in developing an international
pharmaceutical business for the country. The Group has also played an
important role as a responsible corporate citizen in South Africa. The
growth of Aspen has created over 1 000 new jobs for South Africans since
2001, many of these are positions in areas of advanced technology. The
Group has introduced production and pharmacological technologies to the
country for the first time as it has raised its standards to the highest
international levels. Aspen was the first company on the African continent
to launch a generic ARV for the treatment of HIV/AIDS. Today Aspen is
responsible for supplying a significant volume of the ARVs required in
South Africa and Aspen ARVs support some one million lives across Africa.
The Group supports many upliftment projects in South African society
and has been involved in the building or expansion of six community healthcare
clinics in different parts of the country. Aspen continues to support
the Friends of Mosvold Trust, a bursary assistance programme in KwaZulu-Natal,
which has produced 12 doctors and four pharmacists to date. Aspen’s commitment
to the application of BBBEE Codes of Good Practice is reflected by the
chairmanship of the Transformation Committee by Group Chief Executive,
Stephen Saad. Independent rating agency, Empowerdex, has recently verified
Aspen as a Level 4 contributor under the BBBEE Codes of Good Practice,
confirming that the Group has achieved its medium-term rating objective.
KING III TO GET FOCUS
In the year ahead Aspen will pay particular attention to its governance
structures across the expanded Group, taking consideration of the guidance
contained in King III which comprises a code of principles and a report
on best practice recommendations relating to corporate governance. Account
will also be taken of the requirements of the new Companies Act promulgated
in South Africa. The responsibilities of Boards of Directors have been
further emphasised in these recent publications. Aspen is fortunate to
be well served by a Board of skilled and experienced directors who are
committed to upholding the Group’s record of sound corporate governance.
I thank them for their ongoing support. I also record Aspen’s gratitude
to Pasco Dyani for the service he rendered as a director since his appointment
in 2006 until he stepped down in February 2009.
The exceptional results of the past year would not have been possible
without the skills and dedication of the thousands of men and women who
work for Aspen on five continents. This diversity of personnel across
many geographies underscores the importance of teamwork as one of the
Group’s key values.
A POSITIVE YEAR AHEAD
Aspen has made significant progress in establishing an international
business over the past year. The South African business is well positioned
and will continue to be the most influential part of the Group. Completion
of the series of strategic transactions with GSK announced in May 2009
is expected in the next few months and will further support the Group’s
strategies in South Africa, sub-Saharan Africa and internationally. I
believe that all Aspen’s stakeholders can look forward to another exciting
year ahead.
Dr Judy Dlamini
Chairman
22 October 2009 |
