South Africa's Aspen reports head-turning results

While some of the biggest names in drugmaking are having a hard time growing their bottom lines, South Africa's Aspen Pharmacare Holdings is seeing the kind of growth that would be the envy of any in the business. And it claims the best is yet to come.

Aspen reported revenues were up 27% to R19.3 billion ($1.9 billion) while net income was up 25% to R3.52 billion ($354 million) for its year ending June 30. Much of that growth came from the same emerging markets that so many of the West's drugmakers have targeted, like Asia Pacific and Latin America. "While all business segments recorded substantial growth, the international business excelled with a superb performance driven by a combination of organic and acquisitive revenue growth," said Stephen Saad, Aspen Group CEO.

The company has global aspirations and in a one-two punch in June added serious heft to its worldwide opearations. The drugmaker agreed to pay GlaxoSmithKline ($GSK) about $1.1 billion for heart medicines Arixtra and Fraxiparine, along with a manufacturing site in France to produce them. Then, a week later it said it would pay $1 billion to Merck ($MRK) for 11 products and some API operations. Various parts of the deals will close between now and the first half of calendar 2014.

A year ago, Aspen executives were talking about how the company wanted to expand in Europe. But today, it said the Merck and GSK deals will be transformative to its global reach. When it gets those operations under its control, it will enable Aspen to establish its own business units in Russia and other former Soviet republics and across Europe and build its position in Latin America and Asia. It acknowledged that the buyouts will put its debt close to a self-imposed limit but also said it expects them to add significantly to its top line, particularly in the second half of its fiscal year.

Those acquisitions build on moves Aspen was already making outside of South Africa. In 2010, it paid about $880 million to buy the generics business of Australia-based Sigma Pharmaceuticals. Last year, the South African drugmaker agreed to buy the rights to 25 GSK products no longer promoted in Australia for $268 million. They included such common treatments as herpes fighter Valtrex and antibiotic Amoxil. And whatever is good for Aspen is good for GSK, which owns a nearly 20% stake in the drugmaker.

- here's the release

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