Aspen Pharmacare expects FY mid-single digit earnings growth

JOHANNESBURG (Reuters) - Aspen Pharmacare expects a boost from a sterile manufacturing contract for mRNA products reaching the market and portfolio acquisitions in the second half after the South African drugmaker reported a 2% rise in half-year core profit.

The company said it anticipates mid-single digit growth in normalised earnings before interest, tax, depreciation and amortization (EBITDA) for its 2024 financial year.

"The targeted growth is underpinned by expected reported revenue growth in both Commercial Pharmaceuticals and Manufacturing," Aspen said.

Aspen reported normalised EBITDA growth of 5.2 billion rand ($272.75 million) in the six month ended December, while group revenue grew 10% to 21.1 billion rand.

The company said it exceeded its guided performance, growing normalised EBITDA ahead of the prior comparable period.

By 1332 GMT shares in Aspen were up 5.47%.

The group's second half "will be the start of the journey to both realising the tangible benefits from sterile manufacturing investments and delivering a predictable growing base in the commercial pharmaceuticals business."

Africa's biggest drugmaker invested around 10 billion rand ($524.5 million) to manufacture sterile products - or medicines injected directly into the bloodstream - in South Africa and France, anticipating a major demand for COVID-19 vaccines.

But the demand never materialised, leaving it with idle capacity which hurt revenue and forced it to scout for new partnerships, including with Novo Nordisk.

With the sterile manufacturing contract for mRNA vaccines now reaching the commercialisation stage, it will benefit revenue in the last quarter of its second half, Aspen said.

The group's manufacturing business expects a contribution of 500 million rand to flow in the second half from the initiation of sterile contracts. The volume ramp up onwards will contribute at least 3 billion rand in financial year 2025 and no less than 4 billion rand in 2026, Aspen said.

"We've got to the stage across the group where we probably got contracts signed for about half of our (sterile) capacity," Chief Executive Stephen Saad told Reuters.

For the Commercial Pharmaceuticals business, it expects a 1 billion rand revenue boost to second-half revenue, boosted by the distribution and promotion agreement with U.S. pharmaceutical giant Eli Lilly for sub-Saharan Africa and the product purchase agreement with Viatris for Latin America.

($1 = 19.0650 rand)

(Reporting by Nqobile Dludla, Editing by Louise Heavens, Ros Russell and David Evans)

By Nqobile Dludla