Fixed ARV pricing may hamper Aspen’s growth
Aspen Pharmacare, Africa’s largest pharmaceutical manufacturer has announced a 33% increase in revenue for the six months to December 32 last year but warns that performance may decline due to single exit prices imposed on anti-retroviral (ARVs) by the health minister.
Single exit price refers to legislation instructing medicine manufacturers to sell their products at the same price to their entire customer base, regardless of the size and levels of consumption.
Health Minister Aaron Motsoaledi has said that no consideration would be given to any price increase until the end of 2011.
Aspen said it had experienced significant growth which led to an increase on headline earnings from continuing operations by 35% to R1.147bn, while medicine manufacturing revenue surged by 33% to R5.99bn.
Buoyed by Aspen’s performance, group CEO Stephen Saad said the company had retained its pole position in the market.
“The South African pharmaceutical division’s consistent performance ensured that Aspen retained its position as the leader in the South African pharmaceutical market,” he said.
Saad revealed that smooth business integration had also contributed to the success of the company. In 2009, Aspen entered into a partnership with Glaxo-
SmithKline (GSK) in a deal valued at R3.5bn.
“The successful integration of the GSK business has further contributed and Aspen is now ranked first in the branded product segment. Aspen’s international and sub-Saharan Africa businesses also performed well, delivering increased revenue and operating profit across the group,” he said.
Saad singled out the South African business entity as the single largest performer for the group. Aspen said the local business increased revenue by 29% to R3.3bn and improved operating profit by 23% to R96m.
“The pharmaceutical division led the growth in revenue raising sales by 36% to R2.682bn,” Aspen said
Aspen, however, warned shareholders that the South African consumer business would be affected by the ending in April 2011 of the Pfizer infant milk licence agreement, which generated annual sales of approximately R250m.
“Pfizer has taken the decision to enter the South African market itself following the acquisition of the infant milk franchise as part of its takeover of Wyeth. Aspen has expanded its own infant milk offering with the introduction of the Infacare Gold range in order to replace the Pfizer brands,” the company said.
Despite the single exit pricing on ARVs, the company was excited after winning 41% of the ARV tender.
“In the recently adjudicated ARVs tender, Aspen was awarded 41% by value of the anticipated ARV requirements of the South African government over a two-year period. This validated the cost competitiveness of the group’s production capabilities,” Aspen said.
The health department awarded ARV contracts worth R3.62bn to various companies last year. The government was to announce six more ARV contracts being negotiated.
The competition among manufacturers has led to price decreases of between 20% and 70%, which according to analysts would hit bottom line including that of Aspen.
It is not all gloom for medicine manufacturers like Aspen, according to a recent report called South African Healthcare Market Analysis, released by an international research firm, the industry was poised for 23% growth by 2013.
The report revealed that a number of factors including HIV-Aids, TB and diabetes would spur health care spending in the near future. Demand for primary health care drugs such as generics and antibiotics would help push profits up for pharmaceuticals in the country, said the report.
“The launch of new products from the extensive product pipeline will provide organic growth across all major markets. The expanded business in the Asia Pacific region is expected to provide further momentum,” Aspen said.
Latin America was a core focus as a region with great potential. Aspen would pursue opportunities to add to its portfolio of global brands.
BioSante Pharmaceuticals to Raise $25.1 Million in Registered Direct Offering
LINCOLNSHIRE, Ill.–(BUSINESS WIRE)–BioSante Pharmaceuticals, Inc. (NASDAQ: BPAX) today announced that it has received commitments from several institutional investors to purchase $25.1 million of securities in a registered direct offering. BioSante expects to receive net proceeds of approximately $23.8 million after deducting placement agent fees and other offering expenses. BioSante has entered into securities purchase agreements with these investors pursuant to which BioSante has agreed to sell an aggregate of approximately 12.2 million shares of its common stock and warrants to purchase up to approximately 4.0 million additional shares of its common stock. Each unit, consisting of one share of common stock and a warrant to purchase 0.33 of a share of common stock, will be sold for a purchase price of $2.0613, a premium to the closing price on the day before pricing.
“We are pleased to have this commitment from these new and existing institutional investors,” said Stephen M. Simes, BioSante’s president and chief executive officer. “This additional funding provides us with added financial power to continue to fund our ongoing LibiGel® Phase III clinical study program. We recently announced completion of enrollment in the first of the two LibiGel Phase III efficacy trials and expect to announce completion of enrollment in the second in the near future. LibiGel remains the lead pharmaceutical product in the U.S. in active development for the treatment of hypoactive sexual desire disorder (HSDD) in menopausal women, and we continue to believe that LibiGel has the potential to be the first product approved by the FDA for this common and unmet medical need.”
The warrants to purchase additional shares will be exercisable at an exercise price of $2.25 per share beginning immediately and will expire three years from their date of issuance. All of the securities were offered pursuant to an effective shelf registration statement. Proceeds from the transaction will be used for general corporate purposes, including continuing to fund BioSante’s LibiGel Phase III clinical study program. The offering is expected to be consummated by March 8, 2011, subject to customary closing conditions.
Rodman & Renshaw, LLC, a subsidiary of Rodman & Renshaw Capital Group, Inc., (NASDAQ: RODM), acted as the exclusive placement agent for the transaction. Oppenheimer & Co. Inc., Roth Capital Partners, LLC, JMP Securities LLC and Trout Capital, LLC acted as financial advisors.
Shelf registration statements relating to the shares of common stock and warrants issued in the offering (and the shares of common stock issuable upon exercise of the warrants) have been filed with the Securities and Exchange Commission (the “SEC”) and declared effective. A prospectus supplement relating to the offering will be filed by BioSante with the SEC. Copies of the prospectus supplement and accompanying prospectuses may be obtained directly from BioSante by contacting BioSante Pharmaceuticals, Inc., 111 Barclay Boulevard, Lincolnshire, Illinois 60069. This announcement is neither an offer to sell nor a solicitation of an offer to buy any shares of common stock or warrants of BioSante. No offer, solicitation or sale will be made in any jurisdiction in which such offer, solicitation or sale is unlawful.
About BioSante Pharmaceuticals, Inc.
BioSante is a specialty pharmaceutical company focused on developing products for female sexual health and oncology. BioSante’s lead products include LibiGel® (transdermal testosterone gel) for the treatment of female sexual dysfunction (FSD) which is in Phase III clinical development under a U.S. Food and Drug Administration (FDA) Special Protocol Assessment. BioSante also is developing a portfolio of cancer vaccines, four of which have been granted Orphan Drug designation, and are currently in several Phase II clinical trials. Other products in development are Bio-T-Gel™, a testosterone gel for male hypogonadism licensed to Teva Pharmaceuticals and an oral contraceptive in Phase II clinical development using BioSante patented technology. The company also is seeking opportunities for its other technologies.
Forward-Looking Statements
To the extent any statements made in this news release deal with information that is not historical, these are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about BioSante’s plans, objectives, expectations and intentions with respect to future operations and products and other statements identified by words such as “will,” “potential,” “could,” “can,” “believe,” “intends,” “continue,” “plans,” “expects,” “anticipates,” “estimates,” “may,” other words of similar meaning or the use of future dates. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Uncertainties and risks may cause BioSante’s actual results to be materially different than those expressed in or implied by BioSante’s forward-looking statements. For BioSante, particular uncertainties and risks include, among others, the difficulty of developing pharmaceutical products, obtaining regulatory and other approvals and achieving market acceptance; the marketing success of BioSante’s licensees or sublicensees; the success of clinical testing; and BioSante’s need for and ability to obtain additional financing. More detailed information on these and additional factors that could affect BioSante’s actual results are described in BioSante’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. All forward-looking statements in this news release speak only as of the date of this news release. BioSante undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.