Aspen Pharmacare to sell Japanese unit

Africa's largest drug company has been disposing of assets to cut debt.

Africa’s largest drug company, Aspen Pharmacare, has agreed to sell its Japanese business to Sandoz, a division of Novartis, for a total consideration of €400 million (R6.58 billion).

This is the latest disposal from the company, which is seeking to focus on its core pharmaceuticals business as it grapples with a hefty debt burden due to acquisitions. Fears it could breach debt covenants prompted its share price to halve in 2018.

Aspen is led by Stephen Saad (pictured). The deal, which is still subject to approval, will consist of an upfront cash consideration of €300 million, and a deferred consideration of €100 million, contingent on the Japanese business achieving certain supply criteria and licensing opportunities.

If the deal goes ahead, Aspen’s subsidiary Aspen Global Incorporated (AGI), will transfer all its shares in wholly owned Aspen Japan KK to Sandoz, as well as all intellectual property.

Aspen’s portfolio in Japan comprises off-patent medicines with a focus on anaesthetics and speciality brands, Novartis said on Monday.

AGI has also entered into a five-year manufacturing and supply agreement with Sandoz for the supply of active pharmaceutical ingredients, semifinished and finished goods related to the portfolio of divested brands.

The agreement, which will take effect from completion of the transaction, includes an additional two-year extension option. 

“The acquisition of Aspen’s Japanese operations would significantly strengthen our position in this country, a stable but growing generics market,” Sandoz CEO Richard Saynor said.

In May, Aspen finalised the sale of its portfolio of prescription and over-the-counter drugs sold mainly in Australia and New Zealand to Mylan, for a maximum consideration of 188-million Australian dollar (R1.9 billon).

In June, it finalised the sale off its nutritionals business to French company Lactalis, resulting in a net cash inflow of €635 million.

Net debt has fallen to R40 billion as of end-June, from R53.2 billion at the end of December, with the company’s market capitalisation standing at R51.67 billon on Monday morning.