- Nigerian finance minister says country needs to tap its non-oil revenues
- Ivory Coast slashes budget on low cocoa prices, President Says
- Nigeria's Buhari Suspends Top Aides Over Graft Allegations
- Economic Growth in Sub-Saharan Africa Rebounds to a Projected 2.6% in 2017
- Kenyan Economy Expands at Fastest Pace in Five Years in 2016
JOHANNESBURG (Capital Markets in Africa) – Aspen Pharmacare Holdings Ltd. fell the most in more than a month after The Times of London reported that Africa’s biggest maker of generic drugs is in a dispute with Spanish authorities over proposed price increases on some cancer treatments.
Employees at the Durban, South Africa-based company discussed destroying a stock of cancer drugs in Spain if a demand to raise prices by as much as 4,000 percent wasn’t met, The Times reported on April 14, citing internal emails. The stock fell as much as 4.6 percent in Johannesburg on Tuesday, the most since March 10, and traded 3.4 percent lower at 270.45 rand as of 2:02 p.m. local time.
“Aspen looks forward to the opportunity to demonstrate the integrity and legality of its practices in the context of these legal processes,” the company said in a statement on Tuesday. The drugmaker won’t comment on the specific allegations, “out of respect for the integrity of ongoing legal processes with European regulators,” it said.
If Aspen is fined, it would follow a 5-million euro ($5.3 million) penaltyby Italian antitrust officials last year for raising prices on cancer drugs by as much as 1,500 percent starting in 2014. Both disputes relate to an anti-tumor drug package Aspen bought from GlaxoSmithKline Plc., a former shareholder. Aspen, which also sells products such as hormones, infant formula and antiretroviral medicines in more than 150 countries, said last month it sees pressure on drug prices, especially in Europe, in its second-half through June.
“The amount fined may be small, but if the company carries on with this behavior it will knock Aspen’s reputation and over the longer term that may have a material impact on its share price,” said Asief Mohamed, chief investment officer of Aeon Investment Management, which holds Aspen stock.
The cancer drugs referred to in The Times report generated 60 million euros ($64 million) revenue in the European Union during fiscal 2016, Aspen said. Total revenue was 35.6 billion rand ($2.7 billion) last year.
“Governments are looking for increased revenue and it’s an easy win to fight drug pricing,” Neil Brown, an equity analyst at Electus Fund Managers in Cape Town, said by phone. “This specific issue may blow over, but I expect as an industry we’ll see these types of issues coming up more regularly.”