Aspen Pharmacare has warned that profits could be affected by a contract dispute, which is likely to shave off several billion from its manufacturing business.
The dispute relates to a manufacturing and technology agreement with a manufacturing customer for mRNA products, it said, while an impairment of R770m in respect of related technology could also arise in 2025.
In a statement, the company said that normalised earnings before interest, taxation, depreciation and amortisation may be R2bn lower than previously guided, and that that this measure of profit could be less than 50% of what it reported for 2024.
News24 reports that Aspen, valued at about R73bn on the JSE, owns sterile facilities in Gqeberha and in France and its manufacturing entails active pharmaceutical ingredients as well as finished dose form products manufactured for third parties.
Manufacturing had made up 32%, or R14bn, of the group's revenue in 2024 but only accounted for about R1.85bn of its about R11bn in normalised earnings before interest, tax and depreciation (ebitda) for the year ended June 2024.
Last month, Aspen confirmed that it stopped exporting eye drops to the US and Canada after one of its facilities was flagged by the US Food and Drug Administration (FDA).
The FDA, which regulates the safety of medicines and drugs in the US, said Aspen SA Sterile Operations in Gqeberha had violated good manufacturing practice regulations for finished pharmaceuticals.
Aspen said the revenue from the eye drops was not material to its results.
“The industry has been, and we expect, will continue to be affected by the current turbulent and unpredictable world trading environment,” the group said on Tuesday.
“Furthermore, those that sell products in the US are likely to look to source these products from manufacturing sites within the US. Other countries and continents have also been impacted as health security and independence have become a greater priority.”
News24 article – Aspen flags potential R2bn hit amid dispute (Restricted access)
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