Annual Report for the year ended 30 June 2009
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Chairman’s report  
Dr Judy Dlamini
photographed at the
OSD Facility, Port Elizabeth (left)


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.


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.


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.


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.


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.


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

22 October 2009

Global expansion
The strength of the South African business remains
fundamental to the Group's performance and to its future.
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