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    • Aspen Pharma suffers...

    Aspen Pharma suffers week of woe as valuation tumbles by $3 billion

    Medical Dialogues BureauWritten by Medical Dialogues Bureau Published On 2018-09-22T09:42:47+05:30  |  Updated On 17 Aug 2021 11:02 AM IST
    The Aspen Pharma share price has tumbled more than 35 per cent since it posted full-year results and announced the baby milk disposal to French dairy group Lactalis.

    JOHANNESBURG: AspenPharmacare has lost about 45 billion rand ($3 billion) of its market value in just over a week in a sell-off sparked by concern over the South African company's debt and the sale of its baby formula business.


    The company's share price has tumbled more than 35 per cent since it posted full-year results and announced the baby milk disposal to French dairy group Lactalis.


    Shares in Aspen were down 2.1 per cent at 173.52 rand at 1451 GMT on Friday, their lowest level since 2013. The week's decline has taken Aspen's valuation to less than 80 billion rand, a far cry from the 124 billion rand of a week ago.

    Analysts have attributed the stock's decline partly to Aspen's debt, which has hit levels that typically set alarm bells ringing, with net debt at four times normalised core profit.

    Aspen, meanwhile, has said it will lower its debt with proceeds from the 11.2 billion rand sale of the infant milk business.

    "I think the investment community saw it as a forced sale because they were about to breach their debt covenant. It is a highly indebted company," said Mark Loubser, a fund manager at Independent Securities.

    Increased investor caution has also been a factor, said Vestact Portfolio manager Michael Treherne, citing the heavy losses made by some Steinhoff shareholders after the furniture retailer admitted in December to accounting fraud, which nearly tipped it into bankruptcy.

    "Investors are just more cautious," Vestact Portfolio manager Michael Treherne said. "Some investors are drawing parallels between Aspen and Steinhoff and are just saying, 'I can't afford another Steinhoff'."

    Some analysts attributed Aspen's share price fall to an anaemic growth outlook and pressure expected across its therapeutic brands and other pharmaceutical brands.

    The company, which also operates in Europe, is targeting organic revenue growth of between 1 per cent and 4 per cent in its commercial pharmaceuticals business for the 2019 financial year.

    "I think it is much more to do with the past three years and the journey that Aspen has been on," said Sanlam Investment Management fund manager Ricco Friedrich.

    "The strategy that has been set may be falling short. Having said that, a 34 per cent or more fall in share price on just a 6 per cent miss in earnings is an overreaction."
    AspenAspenPharmaAspenPharmacareEuropeFrench dairyinfant milkLactalisMark LoubserMichael TreherneRicco FriedrichSanlam Investmenttherapeutic brandstumbledVestact Portfolio
    Source : Reuters

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    Medical Dialogues Bureau
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      Medical Dialogues Bureau consists of a team of passionate medical/scientific writers, led by doctors and healthcare researchers.  Our team efforts to bring you updated and timely news about the important happenings of the medical and healthcare sector. Our editorial team can be reached at editorial@medicaldialogues.in. Check out more about our bureau/team here

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