Financial Archives | ��ֳ� Pharmacare

��ֳ� delivers strong results and advances its strategic ambitions

Shauneen Beukes — Mon, 03 Mar 2025 10:32:42 +0000

Johannesburg – JSE-listed ��ֳ� Pharmacare Holdings Limited (APN), a global multinational specialty pharmaceutical company, has reported positive unaudited interim Group financial results for the six months ended 31 December 2024.

Stephen Saad, ��ֳ� Group Chief Executive said, “We’re pleased to have delivered positive results operationally while also executing on and advancing our strategic ambitions. The Group has delivered double digit constant exchange rate (“CER) growth in revenue and normalised EBITDA in Commercial Pharmaceuticals coupled with strong growth in FDF Manufacturing supported by the growing contribution from sterile manufacturing contracts. Significant progress has been made in the Group’s GPL-1 initiatives which will materially benefit both Commercial Pharmaceuticals and Manufacturing into the future.”

GROUP FINANCIAL HIGHLIGHTS AND ACHIEVEMENTS

Robust CER growth in normalised EBITDA of 21% and normalised headline earnings per share of 17% underpinned by strong performances in both Commercial Pharmaceuticals and Manufacturing;
However, the strength of the ZAR against all of ��ֳ�’s trading currencies over the period significantly diluted reported performance compared to the underlying CER performance;
Commercial Pharmaceuticals delivered CER growth of 13% in revenue and normalised EBITDA;
Normalised EBITDA in the Manufacturing segment more than doubled, driven by an increased contribution from sterile contract manufacturing;
Lilly’s Tirzepatide based product, branded as Mounjaro, was successfully launched in South Africa and will be a key contributor supporting growth in the Africa Middle East region;
Successful integration of the products acquired in Latin America boosted revenue growth;
Significant progress has been made in respect of the GLP-1 initiatives, representing a material opportunity for both Commercial Pharmaceuticals and Manufacturing; and
Earnings growth has been reduced by a rise in the effective tax rate, primarily due to South Africa’s implementation of the Organisation for Economic Co-Operation and Development rules on a global minimum tax rate of 15% (“BEPS Pillar 2”).

^{1��}The Group assesses its operational performance using constant exchange rates (“CER”). The table above compares performance to the prior comparable period at reported exchange rates and at CER.
² �� The CER percentage change is based upon the performance for the six months ended 31 December 2023 recalculated using the average exchange rates for the six months ended 31 December 2024.
³ �� Operating profit before depreciation and amortisation adjusted for specific non-trading items as defined in the Group’s accounting policy.
⁴ �� Normalised headline earnings per share (“NHEPS”) is headline earnings per share (“HEPS”) adjusted for specific non-trading items as defined in the Group’s accounting policy. ��

GROUP PERFORMANCE
The Group has delivered positive half year results thanks to strong performances across all segments of the business. Group revenue for the six months ended 31 December 2024 grew 4% (9% CER) with gross profit rising well ahead of revenue at 12% (20% CER), influenced by a higher proportion of sales in Commercial Pharmaceuticals and improved profitability in Manufacturing. Normalised EBITDA was up 12% (21% CER) to R5��823 million mirrored closely by operating profit which rose 11% (23% CER).

Normalised net financing costs of R681 million increased by 20%, impacted by the carry-over effect of higher relative interest rates and increased net debt levels. Higher tax expenses, impacted by regional profit mix and the recent introduction of BEPS Pillar 2 in South Africa, diluted NHEPS growth to 5% (17% CER) with NHEPS of 724 cents. HEPS grew by 4% (16% CER) and earnings per share ended 3% higher (17% CER), affected by higher restructuring costs and intangible asset impairments respectively.

Higher working capital investment in Manufacturing inventory, largely seasonal, weighed on H1 2025 operating cash flows. The higher inventory investment has reduced the operating cash conversion rate to 63% (H1 2024: 89%). Net debt has increased from R26,9 billion to R30,0 billion in the six months to December 2024 with the leverage ratio of 2,5x remaining comfortably within the Group’s targeted range.

SEGMENTAL PERFORMANCE
Commercial Pharmaceuticals
Solid revenue growth of 7% (13% CER) to R16��102 million was augmented by the product portfolio acquisition in Latin America and supported by underlying organic CER growth in all three segments. Gross profit margins remained robust at 59,1% (H1 2024: 59,8%). Normalised EBITDA was up 13% in CER and well aligned to the revenue growth, despite absorbing proportionately higher operating expenses in the business acquired from Sandoz in China.

Prescription
Prescription Brands, the largest segment within Commercial Pharmaceuticals, enjoyed double digit growth of 19% (25% CER), recording revenue of R6��340 million. Americas, which benefitted from the added contribution from the acquired products, led the growth, followed by Africa Middle East boosted by the Lilly portfolio. Gross profit percentage of 61,0% (H1 2024: 61,6%) was supported by a favourable sales mix from Americas.

OTC
OTC revenue declined by 3% (+2% CER) to R4��743 million, impacted by order delays in Africa Middle East, but is expected to rebalance in H2 2025. Excluding Africa Middle East, the other regions enjoyed solid CER growth of 6% for the period. The Australasia OTC portfolio has, for the first time, delivered revenue equal to the region’s Prescription segment and is well positioned for future growth. Gross profit percentage of 58,4% was closely aligned to the prior period (H1 2024: 58,8%).

Injectables
The Injectables portfolio has returned to growth in H1 2025, rising 4% (10% CER) to R5��019 million. Africa Middle East growth was fuelled by the Lilly products including the successful launch of Mounjaro in South Africa during December 2024. The recent product swop transaction with Sandoz impacted Asia positively and Europe negatively, while providing a strong net benefit to Injectables growth. Gross profit percentage declined to 57,5% (H1 2024: 58,9%) influenced by the impact of national volume-based procurement (“VBP”) in China.

Manufacturing
Manufacturing revenue of R5��858 million ended 4% lower (0% CER) with growth in FDF revenue offsetting declines in the Heparin and API businesses. FDF revenue was up 59% supported by the growing contribution from sterile manufacturing contracts. The Heparin revenue reduction was anticipated as the business benefitted from the transition to a working capital light toll model in the prior year. API revenue declined by 21% to R1 888 million impacted by order phasing with a strong recovery expected in H2 2025. Gross profit percentage of 15,9% (H1 2024: 5,3%) benefitted from the higher FDF contribution with a more than twofold increase in normalised EBITDA over the prior period.

PROSPECTS
The Group has made positive progress during the reporting period and is well positioned to deliver on its strategic ambitions.

The negative effects of VBP in China and the reduction in Russia CIS sales are out of the Commercial Pharmaceuticals base, clearing the business of material risk. We anticipate double digit CER revenue and normalised EBITDA growth from Commercial Pharmaceuticals for the full year, underpinned by organic growth in all three segments and benefitting from the acquired portfolio in Latam and the exciting rollout of Mounjaro in South Africa. Following ��ֳ�’s acquisition of Sandoz’s business in China, that business will be reshaped in H2 2025 to ensure it has the capacity and flexibility to meet future opportunities and challenges.

Positive progress has been made towards commercialisation of the Novo insulin manufacturing contract with the final technical milestones expected to be completed in Q4 2025. We expect Manufacturing to continue to deliver robust growth in H2 2025 supported by a sustained strong contribution from sterile manufacturing contracts in FDF and a seasonal second half weighted rebound from the API business. The absolute growth in CER normalised EBITDA from Manufacturing in H2 2025 is anticipated to be similar to the growth achieved in H1 2025.

Localisation preferences are anticipated to be legislated in Q2 CY 2025 which will ensure that all South African dossier registrations for locally manufactured products receive priority review from SAHPRA. The regulatory pathway timelines for the Serum paediatric vaccines will benefit as a result with potential commercial sales from calendar year 2026. ��ֳ� remains committed to achieving incremental CER EBITDA growth from sterile capacity fill initiatives in FDF of R2��450 million over the period FY 2025 to FY 2026 (compared to FY 2024).

GLP-1s, sterile injectable products for the treatment of type 2 diabetes and obesity, represents the largest opportunity currently present in the global pharmaceutical industry. During the past period ��ֳ� has made significant progress in positioning itself as an owner of the intellectual property associated with generic semaglutides (a class of GLP-1s), as a manufacturer of the injectable dosage form of the medication and in establishing the appropriate marketing and distribution reach in time for launch of these products in the market. The first revenue generated by ��ֳ� from its GLP-1 initiatives could be as early as the latter part of FY 2026.

Manufacturing inventory levels are expected to reduce in H2 2025 following the seasonal growth in the first half. This reduction coupled with a cyclically stronger operating cash flow in the second half, should assist the Group in achieving an operating cash conversion rate greater than our target of 100% at year end. Finance costs are anticipated to benefit from lower effective interest rates in H2 2025 driven by the recent interest rate cuts across our EUR, ZAR and AUD debt pools. We anticipate that effective tax rates will be higher from FY 2025 onwards, impacted by the increased profit contribution from sterile manufacturing as well the retrospective introduction of the BEPS Pillar 2 legislation in South Africa.

Any forecast information in the above-mentioned paragraphs has not been reviewed or reported on by the Group’s auditors and is the responsibility of the directors.

The contents of the short form announcement are the responsibility of the Board of directors of ��ֳ�. The information in the short form announcement is a summary of the full announcement.

The full announcement is available on ��ֳ�’s website /investor-relations/#financial-results-and-presentations and can also be accessed online at https://senspdf.jse.co.za/documents/2025/jse/isse/APN/HYresults.pdf. Any investment decision must be based on the information contained in the full announcement.

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��ֳ� to participate in the Investec CEO conference in London

Shauneen Beukes — Wed, 13 Nov 2024 12:30:13 +0000

Durban – JSE Limited listed ��ֳ� Pharmacare Holdings Limited (“��ֳ�”) (APN:JSE), a global specialty and branded pharmaceutical company, announced today that Stephen Saad, Group Chief Executive and Sean Capazorio, Group Chief Financial Officer, are scheduled to participate in meetings with investors at the Investec CEO Conference on 14 and 15 November 2024.

Investors, analysts, members of the media and the general public may access the presentation on ��ֳ�’s website which will be made available on 14 November 2024, at 08:00am GMT+2/ 06:00AM GMT +00.

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��ֳ�’s revenue increases 10% underpinned by a strong second half performance

Shauneen Beukes — Tue, 03 Sep 2024 10:45:33 +0000

JSE-listed ��ֳ� Pharmacare Holdings Limited (APN), a global multinational specialty pharmaceutical company, has reported solid Group financial results for the year ended 30 June 2024.

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Stephen Saad, ��ֳ� Group Chief Executive said, “We delivered our highest ever six-month normalised EBITDA in H2 2024 growing 17% over H1 2024 and building momentum for sustainable growth. Manufacturing revenue grew by 25% led by finished dose form revenue up by 33% with Commercial Pharmaceuticals growing 4% after absorbing the impact of volume-based procurement (“VBP”) in China. Regionally concluded acquisitions in China and Latin America contributed to derisking the base Commercial Pharmaceuticals business which is well poised for future growth. Robust cash generation from earnings was underpinned by sustainably lower working capital investment, assisted by the recently announced change in the operating model of our Heparin business which released R2,9 billion in inventory.”

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“Our pursuit of manufacturing and commercial opportunities to enter the rapidly growing GLP-1 market for breakthrough products in the treatment of diabetes and obesity has advanced positively. This exciting opportunity could benefit ��ֳ� from calendar year 2026 onwards.”

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GROUP HIGHLIGHTS

Revenue increased by 10% (+5% in constant exchange rate (“CER”)) to R44,7 billion (FY 2023: R40,7 billion);
Normalised EBITDA increased by 1% (-3% in CER) to R11,3 billion (FY 2023: R11,1 billion);
Normalised headline earnings per share remained flat (-4% in CER) to 1 492,1 cents (FY 2023: 1 498,5 cents);
Headline earnings per share decreased by 3% (-7% in CER) to 1 356,6 cents (FY 2023: 1 405,4 cents)
Earnings per share decreased by 16% (-18% in CER) to 991,4 cents (FY 2023: 1 176,9 cents);
Operating cash flow per share increased 13% to 1 401,4 cents (FY 2023: 1 242,6 cents);
Dividend declared to shareholders increased by 5% to 359 cents per ordinary share (FY 2023: 342 cents).

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¹ The Group assesses its operational performance using constant exchange rates (“CER”). The table above compares performance to the prior comparable period at reported exchange rates and at CER.

² �� The CER % change is based upon the performance for the year ended 30 June 2023 recalculated using the average exchange rates for the year ended 30 June 2024.

³ �� Operating profit before depreciation and amortisation adjusted for specific non-trading items as defined in the Group’s accounting policy.

⁴ �� Normalised headline earnings per share (“NHEPS”) is headline earnings per share (“HEPS”) adjusted for specific non-trading items as defined in the Group’s accounting policy.

⁵ �� Dividend declared on 2 September 2024, to be paid on 23 September 2024 (2023: Declared on 29 August 2023 and paid 26 September 2023).

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GROUP PERFORMANCE

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H2 2024 was the start of ��ֳ�’s journey to both realising the tangible benefits from sterile manufacturing investments and the delivery of a predictable, resilient, growing Commercial Pharmaceuticals business that has managed and absorbed the volume-based procurement (“VBP”) risks in China. In FY 2024 the Group has achieved a record H2 normalised EBITDA of R6��061 million up 17% on H1 2024. The higher than anticipated negative impact of VBP resulted in ��ֳ� falling short of its targeted mid-single digit growth in EBITDA.

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Group Revenue for the reporting period was up 10% led by Manufacturing growing by 25% and Commercial Pharmaceuticals increasing by 4%. Gross Profit grew 3% diluted by an increased Manufacturing sales mix with the primary driver being the liquidation of Heparin inventory of R2,9 billion. Normalised EBITDA of R11��255 million was up 1%.

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Net financing costs of R1 232 million (R1 284 million adjusted for capital raising fees on transactions of R52 million) remained flat compared to the prior financial year. Increased net interest costs, fueled by higher rates and increased net debt levels, were offset by lower foreign exchange losses resulting from reduced volatility in emerging market currencies relative to the Euro. Financing costs in FY 2025 will continue to be influenced by the interest rate cycle and currency volatility. NHEPS of 1 492 cents ended marginally below FY 2023. HEPS declined by 3% and earnings per share ended 16% lower affected by higher acquisition related transaction costs and the impairment of VBP impacted intangible assets respectively.

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Operating cash flow per share of 1 401 cents grew 13%, supported by an improved operating cash conversion rate of 103% (FY 2023: 88%). This exceeded our internal benchmark of 100%. Solid operating cash flows, even after partial funding of the Latin American product portfolio acquisition of R2,1 billion, coupled with the benefit of reducing the Group’s investment in Heparin inventory by R2,9 billion were the key catalysts in this positive shift. Net debt increased from R22,2 billion in June 2023 to R26,9 billion in June 2024 with net acquisitions totalling R7,7��billion being key to the rise. The leverage ratio ended at 2,3x comfortably within the Group’s targeted range.

SEGMENTAL PERFORMANCE

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Commercial Pharmaceuticals

Commercial Pharmaceuticals revenue grew by 4% to R30 570 million with the growth in Prescription and OTC more than offsetting the decline in Injectables revenue. Gross profit margins were marginally lower at 59,4% (FY 2023: 60,0%) after absorbing the impact of VBP in China.

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Prescription

Prescription Brands enjoyed double digit growth of 15%, recording revenue of R11��380 million. The revenue growth was underpinned by solid organic growth in its largest region, Africa Middle East, and organic and acquisitive growth in the Americas which is now the second largest region.

Gross profit percentage was up at 60,9% (FY 2023: 60,7%) with favourable sales mix more than offsetting the impact of the regulated price cuts in Australia.

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OTC

OTC, the second largest segment in Commercial Pharmaceuticals, grew revenue by 7% to R9 706 million with all regions reporting solid growth. Gross profit percentage of 58,7% remained in line with the prior year of 58,6%.

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Injectables

Injectables was impacted by the more severe than expected outcome of VBP in China on Fraxiparine and Diprivan. Growth in Africa Middle East and the Americas (most notably Brazil) partly mitigated the overall segment sales reduction which recorded a revenue decline of 9% to R9 484 million.

Gross profit percentage declined to 58,2% (FY 2023: 60,6%) influenced by the impact of VBP, partly offset by cost of goods savings from the continuing insourcing of sterile production.

Manufacturing

Manufacturing revenue grew significantly, increasing 25% partly aided by exchange rate tailwinds. FDF revenue growth accelerated from 10% in H1 2024 to 33% at year-end, supported by an increased contribution in H2 2024 from third-party contracts for sterile manufacturing. Heparin revenue growth of R1��469 million over the comparable period was largely due to the transition to toll manufacture. API sales were up 2%, following a rebound in H1 2024.

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Gross profit of R1��307 million was 2% ahead of FY 2023. The gross profit percentage ended lower at 9,2% (FY 2023: 11,4%) influenced by the increased sales mix of Heparin and the non-recurrence of the grant funding enjoyed in the prior year.

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PROSPECTS

The Group has achieved a solid set of results for the year ended 30 June 2024 even after absorbing the more severe impact of VBP in China. The 17% growth in normalised EBITDA in H2 2024 compared to H1 2024 sets a firm foundation in building momentum for anticipated strong growth in FY 2025.

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The Commercial Pharmaceuticals business has been derisked and is well poised for future growth. We anticipate Commercial Pharmaceuticals will achieve double digit CER revenue growth in FY 2025 supported by underlying growth in all three business segments and underpinned by organic growth accompanied by annualised growth from recent portfolio acquisitions.

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For Manufacturing, we expect FDF, supported by an increased sterile capacity fill contribution, to be the main contributor to CER EBITDA growth in FY 2025. Over the period FY 2025 to FY 2026 (compared to FY 2024) we estimate CER EBITDA to increase incrementally by R2 450 million from these initiatives. This value growth is consistent with previous guidance, but the realisation may vary between the two financial years, dependant on the timing of the South African regulatory approvals.

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Supporting our capacity fill and commercial initiatives, ��ֳ� has also secured a commercial license for the intellectual property necessary to commercialise GLP-1s post the expiry of the originator product patents. In addition, ��ֳ� will be the exclusive global supplier of these products to the licensor. This exciting opportunity could benefit ��ֳ� from calendar year 2026 onwards and consequently also be additive to the capacity fill contributions for FY 2026.

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Finance costs will continue to be influenced by the interest rate cycle. We are expecting an increase in net interest costs driven by the residual impact of current higher interest rates being carried forward to FY 2025. We expect the effective tax rate to increase in FY 2025 as the profit contribution from sterile manufacturing increases.�� Lower working capital investment and strong operating cash flows should assist us in achieving an operating cash conversion rate greater than our target of 100%.

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Any forecast information in the above-mentioned paragraphs has not been reviewed or reported on by the Group’s auditors and is the responsibility of the directors. The full announcement has been released on SENS and is available on ��ֳ�’s website. Any investment decision must be based on the information contained in the full announcement.

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��ֳ� building momentum with revenue up 10% to R21,1��billion

Shauneen Beukes — Mon, 04 Mar 2024 10:51:00 +0000

Johannesburg – JSE-listed ��ֳ� Pharmacare Holdings Limited (APN), a global multinational specialty pharmaceutical company, has reported solid unaudited interim Group financial results for the six months ended 31 December 2023.

SALIENT HIGHLIGHTS

Revenue increased by 10% (2% in constant exchange rate (“CER”)) to R21,1 billion (December 2022: R19,2 billion)
Normalised EBITDA increased by 2% (-5% in CER) to R5,2 billion (December 2022: R5,1 billion)
Normalised headline earnings per share increased by 1% (-5% in CER) to 688,3 cents (December 2022: 679,6 cents)
Headline earnings per share decreased by 6% (-12% in CER) to 620,7 cents (December 2022: 660,6 cents)
Earnings per share decreased by 13% (-18% in CER) to 520,8 cents (December 2022: 602,0 cents)
Operating cash flow per share increased by 44% to 553,2 cents (December 2022: 384,3 cents)

Stephen Saad, ��ֳ� Group Chief Executive said, “Great progress has been made in delivering on our ambitious strategy to lay the foundation for strong growth. We have successfully completed the necessary steps to reach the commercialisation stage for the manufacture of mRNA platform products which will augment revenue in H2 2024. Notable financial highlights include a 10% increase in revenue and a 44% increase in operating cash flow per share. The transition to new toll manufacturing agreements for the Heparin business is expected to reduce inventory investment by R3 billion by the end of the financial year. Organic growth complemented by acquisitions is set to drive Commercial Pharmaceuticals’ revenue in H2 2024 up by some R1 billion over H2 2023. We are also pleased to report that our recently announced acquisition of products in China, which remain subject to Competition Authority approval, will mitigate the negative volume-based procurement impact from FY2025.”

Noteworthy achievements in this half include, inter alia, the following:

Sterile manufacturing contract for mRNA filling reaches commercialisation stage
Successful completion of the required trial and validation batches has resulted in the fulfillment of the suspensive conditions to the previously disclosed agreement for the manufacture of mRNA platform products. The commercialisation of this opportunity will benefit revenue and contribution in the last quarter of H2 2024. The impact of the volume ramp up and its annualisation will be materially higher from FY2025 onwards.

Heparin business transitions to a toll manufacturing model
Manufacturing agreements for the supply of heparin-based syringes are transitioning to a toll contract manufacturing arrangement. The heparin active pharmaceutical ingredient (“API”) will now be owned by the customers. This will reduce ��ֳ�’s investment in heparin inventory and increase operating cash flows in both FY2024 and FY2025. In H1 2024, ��ֳ�’s investment in heparin inventory reduced by R1 billion with a further R2 billion reduction anticipated by the end of June 2024.

China volume-based procurement (“VBP”) mitigation strategy well on track
��ֳ� announced that it had concluded agreements with Sandoz AG (“Sandoz”), including acquiring the Sandoz business in China. The net upfront consideration is EUR27.9 million followed by potential net milestone payments of EUR9.2 million. Approval for the transaction from the Competition Authority in China is anticipated in May 2024. The transaction will materially mitigate the negative impact of VBP on ��ֳ�’s existing business in China on an annualised basis from FY2025.

Commercial Pharmaceuticals portfolio enhancement strategy set to drive strong growth in H2 2024 revenue
H2 2024 will be boosted by the distribution and promotion agreement with Lilly for sub–Saharan Africa and the product purchase agreement with Viatris for Latin America. The agreement with Lilly is effective from January 2024. Subsequent years will benefit from the launch of key pipeline products including Lilly’s Tirzepatide, marketed globally as Mounjaro®. Viagra, Lipitor, Norvasc, Lyrica and Celebrex are key brands included in the product portfolio acquired for Latin America.

GROUP HIGHLIGHTS

¹The Group assesses its operational performance using constant exchange rate (“CER”). The table above compares performance to the prior comparable period at reported exchange rates and at CER.
² The CER % change is based upon the performance for the six months ended 31 December 2022 recalculated using the average exchange rates for six months ended 31 December 2023.
³Operating profit before depreciation and amortisation adjusted for specific non-trading items as defined in the Group’s accounting policy.
^4��Normalised headline earnings per share (“NHEPS”) represents headlines earnings per share (“HEPS”) adjusted for specific non-trading items as defined in the Group’s accounting policy.

GROUP PERFORMANCE
The Group has exceeded its guided performance growing normalised EBITDA ahead of H1 2023 and overcoming the negative impact of VBP in China as well as the loss of grant funding which benefitted the prior period.

Group revenue for the six months ended 31 December 2023 grew 10% (2% CER) to R21 141 million, with Commercial Pharmaceuticals revenue up 3% (-3% CER) and Manufacturing revenue increasing by 33% (17% CER). Group gross profit grew 4% (-3% CER) muted by an increased Manufacturing sales mix. Normalised EBITDA rose 2% (-5% CER) to R5 194 million. Elevated transaction costs primarily relating to acquisitions, together with increased intangible asset impairments due to the VBP impact in China, resulted in operating profit declining.

Normalised net financing costs of R566 million were 3% (-10% CER) lower than the prior year. Increased net interest costs, fueled by higher rates, were more than offset by lower foreign exchange losses resulting from reduced volatility in emerging market currencies relative to the Euro. NHEPS advanced 1% (-5% CER) aided by the lower net financing costs. Financing costs in H2 2024 will continue to be influenced by the interest rate cycle and emerging market foreign currency volatility. HEPS declined by 6% (-12% CER) and earnings per share ended 13% lower (-18% CER) affected by the higher transaction costs and intangible asset impairments respectively.

SEGMENTAL PERFORMANCE
Commercial Pharmaceuticals
��ֳ� has revised and refined its reportable segments to align to the Group’s Commercial Pharmaceuticals growth strategy. The new segments comprise Prescription, Over-the-counter (“OTC”) and Injectables which have been defined in the basis of accounting section of the financial results.

Commercial Pharmaceuticals revenue grew by 3% (CER -3%) to R 15��029 million underpinned by organic growth in OTC and Prescription offset by a decline in Injectables revenue. Gross profit margins remained consistent at 59.8% (H1 2023: 60.0%).

Prescription
Prescription Brands recorded revenue of R5��306 million enjoying steady momentum of 7% (CER 1%) aided by growth in its largest region, Africa Middle East, and the Americas. Australasia, the second largest region in this segment, was adversely impacted by further regulated price reductions.

Gross profit percentage was up at 61.6% (H1 2023: 60.7%) augmented by a favourable sales mix, which more than offset the regulated price cuts in Australia.

OTC
OTC, the second largest segment in Commercial Pharmaceuticals, grew revenue by 10% (CER 4%) to R4 893 million with all regions reporting solid growth. Gross profit percentage of 58.8% remained in line with the prior year of 58.6%.

Injectables
This segment was heavily impacted by further VBP in China and the reduction in demand in Russia CIS. Strong hormonal injectable brand growth in the Americas (most notably Brazil) partly mitigated the overall segment sales reduction which recorded a revenue decline of 6% (CER -12%) to R4��830 million.

Gross profit percentage declined to 58.9% (H1: 2023 60.5%) influenced by the impact of VBP, partly offset by further cost of goods savings from insourcing sterile production.

Manufacturing
Manufacturing revenue grew significantly, increasing 33% (CER 17%) partly aided by exchange rate tailwinds. API, the largest and most profitable segment in Manufacturing, rebounded strongly in H1 2024 with revenue growing by 18% (CER 4%). Finished Dose Form (“FDF”) revenue increased by 10% (CER -2%) impacted by the loss of final COVID vaccine sales included in the previous year. Heparin incremental revenue growth of R957 million over the comparable period was augmented by the transition to toll manufacture. Following this transition the Heparin segment which previously included the full value chain contribution from all heparin containing products being APIs and FDF sales, will now include heparin API sales only.

Gross profit percentage was in line with the prior year at 5.3% (H1 2023: 5.2%) with the loss of grant funding being offset by a strong performance from API, the benefit of additional Heparin sales and the delay to the second half of FY2024 of a technical shutdown at the Group’s French facility.

PROSPECTS
The Group has achieved results in the first half which were well aligned to guidance provided.

H2 2024 is the start of the journey to both realising the tangible benefits from sterile manufacturing investments and delivering a predictable growing base Commercial Pharmaceuticals business that has managed and successfully absorbed the VBP risks faced in China.

Based upon current exchange rates, and notwithstanding the impact of VBP in China and the loss of grant funding of USD30 million which benefitted the prior year, we anticipate mid-single digit reported growth in normalised EBITDA for FY2024. The targeted growth is underpinned by expected reported revenue growth in both Commercial Pharmaceuticals and Manufacturing.

For Commercial Pharmaceuticals, we expect the H1 2024 revenue increase to be boosted by an additional R1 billion in revenue growth targeted for H2 2024 over H2 2023. This growth will be driven organically and complemented by the inclusion of portfolio acquisitions in South Africa and Latin America partly offset by the impact of VBP in China, including the addition of Diprivan in the latest round. Manufacturing is poised to enjoy a strong second half supported by the expected contribution of R500 million flowing from the initiation of sterile contracts and a seasonally stronger performance from the API business.

We expect manufacturing inventory levels to reduce in H2 2024 as the Heparin business fully transitions to a working capital light toll manufacturing model. The lower anticipated working capital cash flow investment compared to FY2023 should assist us in achieving an operating cash conversion rate greater than our target of 100%.

During H2 2024, we will be looking to close out further opportunities, currently under discussion or diligence, to more fully utilise our available sterile capacities. We remain confident in achieving the guided contributions of at least R3 billion in FY2025 increasing to no less than R4 billion in FY2026. These contributions, together with a de-risked Commercial Pharmaceuticals’ base business will form the cornerstone for strong organic revenue and earnings growth into the future.

Any forecast information in the above-mentioned paragraphs has not been reviewed or reported on by the Group’s auditors and is the responsibility of the directors.

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��ֳ� revenue exceeds R40 billion with accelerated medium-term growth anticipated

Shauneen Beukes — Wed, 30 Aug 2023 11:45:20 +0000

Johannesburg – JSE-listed ��ֳ� Pharmacare Holdings Limited (APN), a global multinational specialty pharmaceutical company, has reported a strong performance for the year ended 30 June 2023.

SALIENT HIGHLIGHTS

Revenue grew by 5% (-3% in constant exchange rate (“CER”)) to R40 709 million (FY2022: R38 606)
Normalised EBITDA rose by 1% (-6% in CER) to R11 100 million (FY2022: R11 012 million)
Normalised headline earnings per share declined by -8% (-15% in CER) to 1��498,5 cents (FY2022: 1��627,6 cents)
Headline earnings per share decreased by -4% (-11% in CER) to 1��405,4 cents (FY2022: 1��461,2 cents)
Earnings per share decreased by -18% (-23% in CER) to 1��176,9 cents (FY2022: 1��432,3 cents)
Dividend declared to shareholders increased by 5% to 342 cents per ordinary share (FY2022: 326,0 cents)
��ֳ� has concluded three sterile manufacturing agreements at is French manufacturing facility and progressed a further agreement at the Gqeberha facility to an advanced technical stage subtantially progressing its medium-term strategy to fill its sterile manufacturing capacity
An agreement was concluded with Eli Lilly and Company (“Lilly”) to distribute and promote products in Sub-Saharan Africa, subject to conditions precedent and competition authority approvals
��ֳ� celebrates 25 years as a JSE-listed pharmaceutical company

Stephen Saad, ��ֳ� Group Chief Executive said, “We are pleased to announce solid results for the year with record revenue and normalised EBITDA delivered in H2 2023. Pleasing reported revenue growth was achieved by Commercial Pharmaceuticals and Manufacturing of 6%�� and 3%�� respectively, despite the volatile global trading environment.”

“We have achieved outstanding progress in our endeavours to secure addition manufacturing volumes for our newly installed expanded sterile production capacities. We are tracking well to achieve our�� previous guidance of related contributions of R2 billion in calendar year 2024, increasing to R4 billion in calendar year 2025.”

“These new long-term collaborative opportunities in Manufacturing, together with the Serum agreement, concluded in 2022, will provide substantial support to our medium-term strategy to fill our sterile manufacturing capacity. This in turn presents a potential annual contribution of at least R8 billion per annum.”

“In addition, the product distribution agreement announced with Lilly ealier today, together with the recent and announcements, will provide growth momentum in our Commercial Pharmaceuticals segment. “

“We continue to actively explore additional contract manufacturing opportunities as well as further product portfolio enhancements to further drive growth into the future.”

STERILE MANUFACTURING AGREEMENTS SECURED

��ֳ� is pleased to announce that it has now secured three sterile manufacturing agreements with multinational pharma companies for production at its French manufacturing facility. These new long-term opportunitiestogether with the Serum agreement , concluded in 2022, will materially contribute to the foundation of ��ֳ�’s medium-term strategy to fill its sterile manufacturing capacity. Additional agreements are under negotiation including one agreement for the Gqeberha facility already progressed to an advanced technical transfer stage.

COMMERCIAL PHARMACEUTICALS MAKES ADVANCES IN ITS PORTFOLIO ENHANCEMENT STRATEGY

��ֳ� has concluded an agreement with Eli Lilly Export S.A. a subsidiary of Eli Lilly and Company (“Lilly”), in terms of which ��ֳ� will distribute and promote Lilly’s products in Sub-Saharan Africa for an initial term of 10 years, automatically renewable for two further periods of 5 years (“the Transaction”). The sales revenue of the Lilly portfolio in Sub-Saharan Africa was approximately ZAR 440 million^[1] in 2022. This is expected to be materially increased by the launch of key Lilly pipeline products in the short to medium term. The pipeline includes Lilly’s Tirzepatide, marketed globally as Mounjaro®, a molecule currently under evaluation by SAPHRA and expected to be launched in South Africa in the near future. The Transaction is conditional upon the fulfilment of customary conditions precedent applicable to transactions of this nature, including competition authority approvals.�� It is anticipated that the Transaction will complete by the end of Q1 of calendar 2024.

The recently announced agreement for the acquisition of a portfolio of products from Viatris is an exciting and significant step forward in building on and expanding our footprint in Latin America. The annualised revenue for the product portfolio is USD92 million and includes well-known brands such as Viagra, Lipitor, Zyloft, Norvasc, Lyrica, and Celebrex. This transaction will enable Latin America to become a greater contributor to Regional Brands going forward.

These transactions, together with the recently announced transaction securing distribution rights for Amgen products in Southern Africa, will enhance the Commercial Pharmaceuticals product portfolio in emerging markets and aligns with the previous guidance of adding incremental annualised revenue upwards of USD100 million in Latin America and South Africa.

GROUP FINANCIAL RESULTS HIGHLIGHTS

¹ Per IQVIA data

¹ The Group assesses its operational performance using constant exchange rate (“CER”) and all segmental performance-related commentary is made with reference to the underlying CER trends. The table above compares performance to the prior comparable period at reported exchange rates and at CER.

² The CER % change is based upon the performance for year ended 30 June 2022 recalculated using the average exchange rates for year ended ended 30 June 2023.

³ Operating profit before depreciation and amortisation adjusted for specific non-trading items as defined in the Group’s accounting policy.

⁴Normalised headline earnings per share (“NHEPS”) represents headlines earnings per share (“HEPS”) adjusted for specific non-trading items as defined in the Group’s accounting policy.

⁵Dividend declared on 29 August 2023, and paid 26 September 2023 (2022: Declared on 31 August 2022 and paid 26 September 2022).

GROUP PERFORMANCE

The Group achieved the guided recovery from H1 with H2 2023, delivering record revenue and normalised EBITDA. Factors which negatively impacted the first half performance relative to the prior comparative period included the Russia-Ukraine war, inflationary pressures, COVID lockdowns and volume-based procurement (“VBP”) impacts in China, the loss of COVID vaccine revenue as well as investing in non-revenue generating technical transfer activities relating to the onboarding of new sterile manufacturing opportunities.

Group revenue for the financial year ended 30 June 2023 grew 5% (-3% CER) to R40 709 million, with Commercial Pharmaceuticals revenue growing 6% (-1% CER) and Manufacturing revenue increasing by 3% ��(-6% CER). Gross profit grew 3% (-4% CER) ending lower than the growth in revenue with the impressive improvement in Commercial Pharmaceutical gross profit margins being more than offset by the loss of COVID vaccine contribution in Manufacturing. Normalised EBITDA rose 1% (-6% CER) to R11��100 million.

The substantial year-on-year negative swing in net financing costs of R753 million, primarily driven by foreign exchange losses of R434 million arising from weaker emerging market currencies relative to the Euro and partly due to higher interest rates, caused NHEPS to decline by -8% (-15% CER) to 1499 cents. The lower percentage reduction in HEPS of -4% (-11% CER) compared to NHEPS is attributable to reduced transaction costs in the current financial year. The higher percentage decline in earnings per share of -18% (-23% CER), relative to HEPS is due to the prior year benefit of a profit on sale of a product portfolio divested in South Africa.

Despite the Group having to increase heparin inventory levels to support the conclusion of an extended heparin supply agreement with Viatris (which forms part of the recently announced transaction in Latin America) it managed to achieve a healthy H2 2023 cash conversion rate of 115% (H1 2023: 58%), ending the full year at 88% and growing operating cash flow per share by 5%.

SEGMENTAL PERFORMANCE

Commercial Pharmaceuticals

Commercial Pharmaceuticals revenue, comprising Regional Brands and Sterile Focus Brands, grew by 6% (CER -1%) to R29 412 million aided by a resilient second half growth of 11% (CER +1%) compared to H2 2022. This growth was achieved even after the divestment of products in South Africa as well as the challenges documented earlier.�� Improved gross profit margins resulted in a gross profit growth of 10% (CER +2%) to R17��647 million, well exceeding revenue growth.

Regional Brands
The Regional Brands segment, which comprises 46% of Group revenue, increased by 8% (CER +1%) to R18��824 million. Excluding the impact of the prior year product portfolio divestment in South Africa (R381 million), revenue grew 11% (CER +3%) with Australasia being the key contributor recording growth of 15% (CER +7%) underpinned by the performance of its growing OTC segment. Regional Brands have shown resilience, stability, and sustained growth in a volatile global trading environment.

Gross profit percentage was well up at 59.6% (FY2022: 56.5%), augmented by cost of goods savings and a favourable sales mix which more than offset inflationary pressures.

��

Sterile Focus Brands

Full year revenue grew by 3% (CER -6%) to R10��588 million. Sterile Focus Brands enjoyed a strong revenue rebound in the second half, recording growth of 14% (CER +2%) against H2 2022 compared to a decline in first half revenue of -6% (CER -13%) due to the afore-mentioned challenges in both Russia and China.

Gross profit percentage of 60.6% was closely aligned with the previous financial year (FY 2022: 60.7%) despite inflationary and logistical pressures, external supplier challenges and the negative impact of VBP in China. Continued cost of goods savings from insourcing production and a favourable sales mix have been key contributors.

Manufacturing

Notwithstanding the loss of COVID vaccine sales, revenue grew by 3% (CER -6%) also benefiting from exchange rate tailwinds. Manufacturing revenue in the second half of the financial year increased by 45% compared to the first half and ended flat in CER versus H2 2022 bolstered by the guided strong H2 performances from both the API and Heparin businesses.

Second half gross profit percentage of 15.7% (H1 2023: 5.2%) supported by increased contributions from both the API and Heparin businesses ensured a double-digit full year gross profit percentage of 11.4%. The receipt of grant funding from the Bill and Melinda Gates Foundation and Coalition for Epidemic Preparedness Innovations helped to partially offset sterile production costs related to the introduction of the Serum Institute of India vaccines.

PROSPECTS

The Group has achieved a solid set of results for the year ended 30 June 2023, well aligned to the guidance provided at the interim results announced in March 2023.

The Group has strong short to medium term prospects for both Commercial Pharmaceuticals and Manufacturing. Based upon current exchange rates, we anticipate Commercial Pharmaceuticals to achieve double-digit reported revenue growth in FY 2024 with a heavier H2 weighting driven by organic growth and the recently announced product portfolio additions in Latin America and South Africa. This targeted growth takes into account further VBP risk expected in China in FY 2024. To mitigate this VBP risk, potential acquisitive opportunities are being actively explored to diversify and de-risk the product portfolio in that country on a sustainable long-term basis.

Substantial progress has been achieved in the medium-term strategy to fill existing sterile manufacturing capacity which has a potential annual total contribution of at least R8 billion. We are focused on securing additional contracts to further enhance utilisation and related contributions. The short-term focus is on successfully executing on the existing agreements to achieve the guided contributions of R2 billion in calendar year 2024, increasing to R4 billion in calendar year 2025. Non-revenue generating technical transfer activities for the onboarding of the sterile manufacturing opportunities, including mRNA filling capabilities, ��planned for H1.

Anticipated FY 2024 reported results will receive an uplift should the currently weaker ZAR continue in the year ahead. Based upon current exchange rates, reported normalised EBITDA is expected to grow over the prior year.�� H1 reported normalised EBITDA is anticipated to be in line with the prior year comparative period impacted by the potential downside of VBP in China and the loss of grant funding of USD 20 million which benefited the prior year H1. H2 reported normalised EBITDA is expected to benefit from the new Commercial Pharmaceuticals portfolio additions, potential transaction related offsets to VBP in China and increased Manufacturing contract revenue flowing from the secured agreements. Finance charges will continue to be influenced by the interest rate cycle. Lower targeted Manufacturing inventory levels are expected to reduce working capital cash flow investment compared to FY 2023 and an operating cash conversion rate of greater than 100% is expected.

H2 2024 should represent a significant inflection point for the Group and should ��form the foundation for�� sustainable strong�� future earnings growth. Over the medium term the Group is anticipating ��accelerated growth. This will be underpinned by the annualised income streams covered above, flowing ��from new opportunities realised during H2 2024.

Any forecast information in the above-mentioned paragraphs has not been reviewed or reported on by the Group’s auditors and is the responsibility of the directors.

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��ֳ� reports a creditable and resilient performance under challenging trading conditions

Shauneen Beukes — Wed, 01 Mar 2023 13:22:59 +0000

Johannesburg – JSE-listed ��ֳ� Pharmacare Holdings Limited (APN), a global multinational specialty pharmaceutical company, has reported creditable unaudited interim Group financial results for the six months ended 31 December 2022.

Salient Highlights

Revenue decreased by 1% (-6% in constant exchange rate (“CER”)) to R19,2 billion (December 2021: R19,4 billion)
Normalised EBITDA decreased by 11% (-15% in CER) to R5,1 billion (December 2021: R5,7 billion)
Normalised headline earnings per share decreased by 17% (-21% in CER) to 679.6 cents (December 2021: 816.4 cents)
Headline earnings per share decreased by 15% (-20% in CER) to 660.6 cents (December 2021: 777.2 cents)
Earnings per share decreased by 18% (-23% in CER) to 602.0 cents (December 2021: 736.2 cents)
Improved Commercial Pharma gross profit margins helped deflect inflationary headwinds
Significant advances have been made in contract negotiations with multinational customers seeking to secure a portion of ��ֳ�’s sterile manufacturing capacities
The technical transfer project for manufacture of the finished dose form vaccines licensed from Serum Institute of India is well advanced

Stephen Saad, ��ֳ� Group Chief Executive said, “The Group’s performance under challenging trading conditions was anticipated and is aligned to guidance previously shared for the first half of the financial year. Consistent with our previous communications, we are optimistic that the results for the second half of this financial year will not only exceed those reported for the first half but will also exceed those of the second half of the prior year. We are pleased to report that we are at advanced stages of contract negotiations to fill a portion of�� the additional sterile manufacturing capacities we have developed. Once concluded, this new manufacturing business is anticipated to realise a contribution of R2 billion in the 2024 calendar year, increasing to R4 billion in calendar year 2025. During the second half of this financial year we also anticipate closing important product portfolio transactions which will further enhance the Commercial Pharmaceuticals businesses in Latin America and South Africa.”

GROUP HIGHLIGHTS

Key Financial Indicators¹

GROUP PERFORMANCE

��

The Group has delivered a creditable and resilient performance under challenging trading conditions. As previously guided, relative to the prior comparative period, this half was impacted by the Russian/Ukraine war, inflationary pressure, COVID lockdowns and volume-based procurement impacts in China as well as the loss of COVID vaccine sales. These headwinds had some offsets from improved margins in Commercial Pharmaceuticals.

��

Group revenue for the six months ended 31 December 2022 declined by 1% (-6% CER) to R19 150 million with Commercial Pharmaceuticals revenue growing 2% (-4% CER). Manufacturing revenue declined by 10% (-12% CER). Gross profit fell by 5% (-9% CER) as the reduction in Manufacturing gross profit margins from lost COVID vaccine contributions more than offset the improvement in Commercial Pharmaceuticals gross profit margins. Normalised EBITDA recorded negative growth of 11% (-15% CER) at R5 083 million. Lower net interest costs partly mitigated the increase in net financing costs arising from net foreign exchange losses of R234 million following the weakening of emerging market currencies. NHEPS declined by 17% (-21% CER) to 679,6 cents.

��

The Group’s leverage ratio remained comfortably below target levels with reported net borrowings of R18,8 billion.�� During this period of uncertainty, given the war in Ukraine and COVID related supply impacts, there was increased investment in inventory by the Manufacturing segment. We have sufficient confidence to substantially unwind this working capital investment in the second half of the financial year.

��

��ֳ� successfully concluded agreements with each of the Bill & Melinda Gates Foundation (“the Gates Foundation”) and the Coalition for Epidemic Preparedness Innovations (“CEPI”) to support African regional manufacturing capacity for an affordable supply of vaccines.

��

Important advances were also made in the negotiation of key manufacturing contracts.

��

SEGMENTAL PERFORMANCE (AT CER)

Commercial Pharmaceuticals

��

Commercial Pharmaceuticals revenue, comprising Regional Brands and Sterile Focus Brands, declined by 4% to R14 547 million. Revenue was negatively impacted, primarily by the divestment of certain products in South Africa in March 2022 as well as by the challenges documented earlier. The improved gross profit margin percentage resulted in a lower decline in gross profit of 2% to R8 728 million.

��

Regional Brands

��

Revenue from our largest segment, Regional Brands, increased by 2% to R9 355 million with 7% growth from each of Australasia and the Americas being the major contributors. Excluding the impact of the product divestment in South Africa (R294 million), Regional Brands revenue grew 6% with growth in Africa Middle East of 5% on a comparable product basis.

��

Gross profit percentage was up at 59,7% (H1 2022: 57,0%), driven by cost of goods savings and favourable sales mix.

��

Sterile Focus Brands

��

Revenue from Sterile Focus Brands decreased by 13% to R5 192 million due to the aforementioned challenges in both Russia and China.

��

Although the gross profit percentage of 60,5% was lower than the prior year comparable period (H1 2022: 61,4%), it is an improved margin compared to the second half of the previous financial year (H2 2022: 59,0%). The cost of goods savings from insourcing production has more than offset higher inflationary and logistic cost pressures.

��

Manufacturing

��

Manufacturing revenue decreased by 12% to R4��603 million attributable to the lower COVID vaccine sales. Heparin revenue was impacted by the prioritisation of technical transfer work related to new customers offset by increased pricing to counter the rising cost of raw heparin.

��

The Manufacturing business has a high fixed cost base and consequently gains and losses of contribution are extremely impactful on profit margins. Gross profit margins were significantly lower at 5,2% (H1 2022: 19,2%), largely impacted by the loss of contribution from the manufacture of the COVID vaccine. This was exacerbated by revenue foregone to facilitate non-revenue generating technical transfer costs needed for the on-boarding of new sterile manufacturing opportunities. The receipt of the grant funding from the Gates Foundation and CEPI helped to partially offset sterile production costs related to the introduction of the Serum Institute of India vaccines.

��

PROSPECTS

��

The challenging environment and prioritisation of transferring the manufacture of new sterile products to our facilities was as anticipated and guided for the half. We maintain our guidance that the results for the second half of this financial year will not only exceed those reported for the first half but will also exceed H2 of the prior year. We expect an improved revenue result in both Commercial Pharmaceuticals and Manufacturing in H2 compared to the performance in H2 2022.�� Manufacturing is anticipated to deliver particularly robust sales growth in the second half, driven by API and Heparin, more than overcoming the loss of the COVID vaccine.

��

We are also anticipating closure during H2 of important product portfolio enhancement transactions that will strengthen our Commercial Pharmaceutical offering in Latin America and South Africa.

��

A focus area for the Group has been to fill existing sterile manufacturing capacities. The operating leverage from doing so is significant and is needed to underscore the investment in our sterile platform and deliver the planned returns.�� We are pleased to announce that we have made significant advances in our contract negotiations for a portion of this capacity. This has given us the confidence to revise the value of the long-term potential contribution that can be achieved from filling available sterile manufacturing capacity upwards from R3 billion to at least R8 billion. We anticipate contribution of R2 billion utilising this capacity in calendar year 2024, increasing to R4 billion in calendar year 2025.��

��

Reported results will receive an uplift should the currently weaker ZAR persist for the balance of this financial year. Reported EBITDA for FY 2023 in line with that delivered in the prior year is being targeted by management. The higher gross profit percentage in Commercial Pharmaceuticals is expected to continue, supported by cost of goods savings. Finance charges will be influenced by the increasing interest rate cycle. Anticipated reduced working capital investment and an operating cash conversion rate of greater than 100% for the financial year should deliver strong cyclical cash flow.

��

Any forecast information in the abovementioned paragraphs has not been reviewed or reported on by the Group’s auditors and is the responsibility of the directors.

Disclaimer

We may make statements that are not historical facts and relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable. These are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “prospects”, “believe”, “anticipate”, “expect”, “intend”, “seek”, “will”, “plan”, “indicate”, “could”, “may”, “endeavour” and “project” and similar expressions are intended to identify such forward-looking statements, but are not the exclusive means of identifying such statements. By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that predictions, forecasts, projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove incorrect, actual results may be very different from those anticipated. The factors that could cause our actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements are discussed in each year’s annual report. Forward looking statements apply only as of the date on which they are made, and we do not undertake other than in terms of the Listings Requirements of the JSE Limited, any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. Any profit forecasts published in this report are unaudited and have not been reviewed or reported on by ��ֳ�’s external auditors.

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��ֳ� closes EUR 1,26 billion syndicated loan facilities

Shauneen Beukes — Tue, 08 Nov 2022 09:48:21 +0000

Durban, South Africa��–��JSE Limited listed ��ֳ� Pharmacare Holdings Limited (APN), a global multinational specialty pharmaceutical company,��has closed a multi-currency, syndicated term loan and revolving credit facilities agreement. These facilities, totalling circa EUR 1,26 billion equivalent, were put in place to refinance ��ֳ�’s .��

��

The facilities were structured across EUR, ZAR and AUD term and revolving credit facilities, with tenors of three to four years and additional extension options available. All facilities were consolidated into a single facility agreement, with lenders ranking pari-passu. Following primary syndication, the transaction was significantly oversubscribed thereby providing substantial scale-back to the lenders.

��

Stephen Saad, ��ֳ� Group Chief Executive said, “We are very pleased with the outcome of this syndication particularly noting the current global risk-off sentiment. It is encouraging to see that all invited lenders have supported the transaction which is testament to their confidence in the ��ֳ� Group.”

��

Citi, FirstRand Bank Limited, acting through its Rand Merchant Bank division (“RMB”), MUFG Bank (Europe) N.V. (“MUFG”), and Nedbank Limited, acting through its Nedbank Corporate and Investment Banking division (“Nedbank”) acted as Coordinators, Bookrunners and Initial Mandated Lead Arrangers for this transaction. MUFG acted as the Documentation Agent while ABSA Bank Limited acted as Facility Agent and RMB as the Publicity Agent.��

��

Coordinators, Initial Mandated Lead Arrangers and Bookrunners:

Citi
RMB
MUFG
Nedbank

��

Mandated Lead Arrangers:

ABSA Bank Limited
BNP Paribas
China Construction Bank Corporation, Johannesburg Branch
Intesa Sanpaolo Bank Luxembourg S.A.
Investec Bank Limited
JPMorgan Chase Bank, N.A., London Branch
Mizuho Bank Limited
National Australia Bank Limited
Sanlam Life Insurance (acting through its Sanlam Specialised Finance Division)
Standard Chartered Bank
Sumitomo Mitsui Banking Corporation Europe Limited
��The Standard Bank of South Africa Limited

��

Lead Arrangers:

AfrAsia Bank Limited
Bank of America��

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��ֳ� delivers double digit organic growth in normalised EBITDA, operating profit and earnings

Shauneen Beukes — Wed, 31 Aug 2022 13:28:51 +0000

Johannesburg – JSE-listed ��ֳ� Pharmacare Holdings Limited (APN), a global multinational specialty pharmaceutical company, is pleased to report reviewed provisional Group financial results for the year ended 30 June 2022.

��

SALIENT FEATURES

Revenue from continuing operations increased by 2% (+5% in constant exchange rate (“CER”)) to R38,6 billion (FY2021: R37,8 billion);
Normalised EBITDA from continuing operations increased by 11% (+13% in CER) to R11,0 billion (FY2021: R9,9 billion);
Normalised headline earnings per share from continuing operations increased by 24% (+26% in CER) to 1 627,6 cents (FY2021: 1 309,7 cents);
Headline earnings per share from total operations increased by 31% (+31% in CER) to 1 461,2 cents (FY2021: 1 119,1 cents);
Earnings per share from total operations increased by 36% (+36% in CER) to 1 432,3 cents (FY2021: 1 052,9 cents);
Dividend declared to shareholders increased by 24% to 326 cents per ordinary share (FY2021: 262 cents);
��ֳ� signs 10-year agreement with the world’s largest vaccine producer, Serum Institute of India.

��

Stephen Saad, ��ֳ� Group Chief Executive said, “The Group has achieved a robust set of results for the year ended 30 June 2022, supported by improved operating margins underpinned by a lower operating expense base and a strong balance sheet, all of which provide a solid foundation for future sustainable growth.”

��

“��ֳ� has concluded a 10-year collaboration agreement with Serum Institute of India Pvt. Ltd. (“the Serum Institute”) to manufacture, market and distribute four ��ֳ�-branded routine vaccines in Africa. In responding to the COVID-19 pandemic, investing billions to establish world class steriles manufacturing capability, ��ֳ� has demonstrated its ability to partner successfully to deliver millions of doses of vaccine to the highest standard. Through this agreement with the Serum Institute, the partners are responding to the African Union’s call for more African vaccine manufacturing on the continent. Enhancing access to medicines is at the forefront of ��ֳ�’s ESG strategy. ”

��

GROUP HIGHLIGHTS (CONTINUING OPERATIONS)

1 – The Group assesses its operational performance using constant exchange rate (“CER”) and all segmental performance-related commentary is made with reference to the underlying CER trends. The table above compares performance from continuing operations to the prior comparable period at reported exchange rates and at CER.

2 – The CER % change is based upon the performance for the year ended 30 June 2021 restated using the average exchange rates for the year ended 30 June 2022.

3 – Operating profit before depreciation and amortisation adjusted for specific non-trading items as set out in the normalised headline earnings reconciliation on page 8 of ��ֳ�’s Year End Results Booklet available at www.aspenpharma.com.

4 – Normalised headline earnings per share (“NHEPS”) represents headlines earnings per share (“HEPS”) adjusted for specific non-trading items as defined in the Group’s accounting policy.

5 – Dividend declared on 31 August 2022, to be paid on 26 September 2022 (2021: Declared on 1 September and paid 27 September 2021).

GROUP PERFORMANCE (CONTINUING OPERATIONS)

The Group has delivered a strong performance, with double digit organic growth in normalised EBITDA, operating profit and earnings. This performance is testimony to ��ֳ�’s resilience against the backdrop of a challenging trading environment and inflationary cost pressures.

��

Group revenue for the financial year ended 30 June 2022 grew 2% (+5% CER) to R38 606 million with Commercial Pharmaceuticals revenue declining 1% (+1% CER) and Manufacturing revenue increasing 11% (+18% CER). Gross profit growth of 3% (+5% CER) slightly exceeded revenue growth, with the underlying segmental gross margins all showing improvement. The increased contribution from the lower margin Manufacturing segment diluted the overall gross margin percentage. Normalised EBITDA rose 11% (+13% CER) to R11 012 million, largely due to the leverage provided by lower operating expenses. NHEPS increased 24% (+26% CER) to 1627.6 cents, bolstered by reduced net financing costs. The higher percentage growth in earnings per share, relative to HEPS, is attributable to the profit on the sale of a product portfolio divested in South Africa.

��

Net borrowings reduced to R16,1 billion, down from the R16,3 billion reported at 30 June 2021, ensuring that the Group’s leverage ratio remained comfortably below target levels. This provided the Group with an opportunity to fund a share buy-back of R1,8 billion (2.2% of issued shares) during the year. Operating cash flow was impacted as a consequence of increased inventory investment by the Manufacturing segment in key input materials to mitigate future supply constraint risks which may arise from continued global supply chain disruptions.

��

SEGMENTAL PERFORMANCE (CONTINUING OPERATIONS AT CER)

Commercial Pharmaceuticals

Commercial Pharmaceuticals, comprising of Regional Brands and Sterile Focus Brands, grew 1% to R27 658 million. Solid underlying volume growth of 4% was impacted, primarily, by the divestment of certain products in South Africa, challenges faced by our Chinese business, including volume-based procurement (“VBP”) and COVID-19 (“COVID”) related lockdowns, as well as the impact of the geopolitical situation in Russia and Ukraine on our businesses there. Gross profit increased 3% to R16,1 billion, supported by improved margins in both Regional and Sterile Focus Brands, despite the inflationary and freight cost headwinds experienced, particularly in the second half of the financial year.

��

Regional Brands

Regional Brands revenue increased by 3% to R17 405 million, with 13% growth from Australasia and 8% from the Americas, being the major contributors. Supply constraints and product portfolio divestments impacted the performance of Africa Middle East. Gross profit percentage was up at 56.5% (FY2021: 54.6%), driven by cost of goods savings and portfolio optimisation, combined with a favourable product mix.

��

Sterile Focus Brands

Revenue from Sterile Focus Brands decreased 2% to R10 253 million due to lower sales in Russia CIS during the second half of the financial year and the aforementioned challenges in China. A higher gross profit percentage of 60.7% (FY2021: 60.0%) benefitted from cost of goods savings partially offset by higher logistics costs.

��

Manufacturing

Manufacturing revenue increased 18% to R10 948 million with significant growth in finished dose form sales. This included R1,4 billion in revenue from the fill and finish production of the Johnson & Johnson COVID vaccine at our Gqeberha sterile manufacturing facility. This growth was partly diluted by the Chemicals business. Manufacturing in general was negatively impacted by supply related constraints imposed by COVID in the first half of the year and enjoyed a strong second half recovery, growing sales by 14% compared to the first half.

��

Gross profit at 20.6% was consistent with the prior year, even after dilution for the annualised impact of the supply agreements related to disposal transactions at low/no margin. Excluding the impact of these disposal transaction-related supply agreements, gross margin increased in all segments. These improvements were achieved despite numerous operational and supply chain related challenges, as well as notable inflationary increases in operating and supply chain costs.

��

PROSPECTS

The Group has achieved a robust set of results for the year ended 30 June 2022, supported by improved operating margins, underpinned by a lower operating expense base and a strong balance sheet, all of which provide a solid foundation for future sustainable growth.

��

��ֳ� has continued to invest in the expansion of its sterile manufacturing capacity in Gqeberha to be used for vaccines and other sterile biological products. The statement from the African Union, which called for support to achieve at least a 30% offtake of all vaccines from African manufacturers is a strong endorsement supporting this ongoing strategic capital investment. The signature of a long-term agreement with the Serum Institute of India Pvt Limited for ��ֳ� to manufacture, market and distribute four ��ֳ�-branded vaccines in Africa is an important milestone as ��ֳ� seeks to optimise its sterile manufacturing capacity in Gqeberha. Several other potential long-term opportunities are being explored with various multinational partners and ��ֳ�’s ambition is to secure these by the end of the 2023 financial year. The contribution from the manufacture of the Johnson & Johnson COVID vaccine enhanced operating performance in the current year, but declining demand from Johnson & Johnson will have an unfavourable impact on Manufacturing performance in the 2023 financial year, unless substituted by orders for ��ֳ�ovax. Due to the technology transfer timelines, other sustainable long-term contracts and commercial manufacturing opportunities will only be realised from financial year 2024 onwards.

��

In addition to the agreement with Serum, ��ֳ� also anticipates receiving grant funding from each of the Bill & Melinda Gates Foundation and the Coalition for Epidemic Preparedness Innovations (“CEPI”) to support African regional manufacturing capacity for an affordable supply of vaccines to, among others, African countries and Gavi/UNICEF, as well as contributing to pandemic preparedness, through a share of ��ֳ�’s vaccine manufacturing capacity over a period of ten years. These are both important endorsements of ��ֳ�’s sterile manufacturing capabilities and seeking to achieve enhanced access to medicines which is at the forefront of ��ֳ�’s ESG strategy.

��

��ֳ� expects to deliver organic CER revenue growth of between 3% and 7%, (excluding potential ��ֳ�ovax orders), in the year ahead, notwithstanding the challenging trading conditions. Sales will be heavily weighted towards the second half of the year. Despite the benefit of ongoing cost of goods savings initiatives, potential lower contribution from vaccines and ongoing inflationary pressures are expected to dilute the gross margin percentage. Operating expenses are expected to continue tracking below the percentage growth in revenue. The current upward trajectory in global interest rates is, however, expected to weigh on financing costs in the 2023 financial year. Strong cash flow generation and an operating cash conversion rate above the Group target of 100% is anticipated, provided that the global supply chain landscape returns to normalised levels.

��

Any forecast information in the abovementioned paragraph has not been reviewed or reported on by the Group’s auditors and is the responsibility of the directors

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��ֳ�’s response to Monkeypox being declared a Public Health Emergency of International Concern by WHO

bpc — Thu, 28 Jul 2022 10:06:17 +0000

Stephen Saad, ��ֳ� Group Chief Executive

Durban – JSE listed company ��ֳ� Pharmacare Holdings Limited (��ֳ�), a global multinational specialty pharmaceutical company, is positively positioned to respond as a third party for capacity fill opportunities following the (WHO) declaration of monkeypox being a This declaration is the first since that announced by WHO for COVID-19 in January 2020.

At the onset of the COVID 19 pandemic, ��ֳ� was able to swiftly respond by making its extensive sterile formulation, fill and finish capabilities available in response to immediate surging demands. It would be in a position to step in and replicate this for Monkeypox should global circumstances and demands require this.

Monkeypox was declared a PHEIC by WHO director-general Tedros Adhanom Ghebreyesus at a press conference on 23 July 2022. The announcement was made given the rapid spread of the virus which has increased from 3 040 cases in 47 countries in June 2022 to more than 16 000 reported cases from 75 countries and territories, with five deaths reported.

Stephen Saad, ��ֳ� Group Chief Executive said, “��ֳ� has always been at the forefront of providing healthcare solutions for global pandemics, as we did with the launch of one of the first generic antiretrovirals for the treatment of HIV/Aids in August 2003. We also responded swiftly and decisively to the COVID-19 pandemic in 2020, initially through global contributions which we made with both our anaesthetics portfolio and dexamethasone supply. This action complemented our initiatives to build capacity and expertise to support global efforts and, in particular, address vaccine access inequality. This was achieved through partnership and licensing arrangements culminating in the potential to manufacture and supply the first and only locally finished COVID-19 vaccine, , in Africa for Africa.”

“��ֳ� once again stands ready to support the global effort needed to contain the latest threat which monkeypox represents, and we are available to do so through collaborations that would utilise our world class sterile and vaccine manufacturing facilities.”

��ֳ� has invested significantly in its sterile manufacturing site in Gqeberha, this being the single largest investment in the pharmaceutical industry in South Africa. The sterile facility, which was in March 2021, contains high-technology, state-of-the-art pharmaceutical equipment and systems to manufacture advanced sterile medicines, including vaccines.

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��ֳ� delivers double digit organic revenue grown in constant exchange rates

Shauneen Beukes — Wed, 09 Mar 2022 12:20:59 +0000

Johannesburg – JSE Limited listed ��ֳ� Pharmacare Holdings Limited (APN), a global multinational specialty pharmaceutical company, has announced unaudited interim financial results for the six months ended 31 December 2021.

SALIENT RESULTS

��ֳ� reported the following salient results:

Revenue from continuing operations increased by 4% (+10% in constant exchange rate (“CER”) to R19,4 billion (December 2020: R18,6 billion);

Normalised EBITDA from continuing operations increased by 10% (+15% in CER) to R5,7 billion (December 2020: R5,2 billion);

Normalised headline earnings per share from continuing operations increased by 21% (+26% in CER) to 816.4 cents (December 2020:676,2 cents);

Headline earnings per share from total operations increased by 37% (+43% in CER) to 777,2 cents (December 2020: 566,2 cents); and

Earnings per share from total operations increased by 32% (+37% in CER) to 736,2 cents (December 2020: 558,4 cents); and

��ֳ� secures right to branded COVID-19 vaccine ��ֳ�ovax[1].

Stephen Saad, ��ֳ� Group Chief Executive said, “We are proud to announce the arrival of ��ֳ�ovax with these results. ��ֳ�ovax is testament to the skills and capabilities within ��ֳ� and their ability to deliver at the very highest level globally. ��ֳ� shares this proud moment with all of Africa. These results reflect both the strong operating performance within ��ֳ� and a sound balance sheet. The progress being made to margins has been through the operationalisation of the significant historic investments. Our highlight has been the delivery of 180m vaccines to Johnson & Johnson, almost all for Africa. The business has faced and continues to face unprecedented supply chain challenges as a result of COVID-19 related impacts, exacerbated by the conflict within Ukraine. We have built great momentum in the first half and providing the geopolitical challenges do not cause further deterioration, we are hopeful to repeat this performance into the second half. Our performance and capacities within our sterile manufacturing platform has created many more opportunities. We believe this demonstration of competence will be the enabler for the enhancement of future growth. “

[1] ��ֳ� SA Operations has undertaken the required process to assess the acceptability of the ��ֳ�ovax name with the South African Health Products Regulatory Authority.

COMMENTARY

GROUP HIGHLIGHTS (CONTINUING OPERATIONS)

The Group has delivered double digit organic revenue growth in constant exchange rate (“CER”) and even stronger normalised EBITDA and earnings outcomes against the backdrop of challenging trading conditions. Headwinds from the COVID-19 pandemic disrupted procurement, supply, logistics, employee productivity and customer demand.

Consistent supply of the COVID -19 vaccines manufactured at our Gqeberha site in South Africa further illustrated ��ֳ�’s capability and commitment to providing access to high quality medicine to patients.

The recent conclusion of an agreement with Johnson & Johnson for an ��ֳ� branded COVID-19 vaccine, ��ֳ�ovax, will enable ��ֳ� to make a meaningful contribution to improving equitable COVID-19 vaccine access for Africa. This has been made possible by Johnson & Johnson’s unstinting support in enabling ��ֳ� to pursue its vision for a COVID vaccine brand for Africa, the proven capabilities of our manufacturing team in Gqeberha and the strong encouragement of a number of influential African leaders.

The Group assesses its operational performance using CER and all segmental performance-related commentary is made with reference to the underlying CER trends. The table below compares performance from continuing operations to the prior comparable period at reported exchange rates and at CER. The strengthening of the ZAR (relative to the rates in the comparable prior period) against the majority of the other currencies in which ��ֳ� trades, has diluted all reported profit and earnings metrics.

[table “38” not found /]

The CER % change is based upon the performance for the six months ended 31 December 2020 restated using the average exchange rates for the six months ended 31 December 2021.
¹ Operating profit before depreciation and amortisation adjusted for specific non-trading items as defined in the Group’s accounting policy.
² NHEPS is HEPS adjusted for specific non-trading items as defined in the Group’s accounting policy.

Group revenue for the six months ended 31 December 2021 grew 4% (+10% CER) to R19,4 billion with Commercial Pharmaceuticals remaining flat (+5% CER) and Manufacturing up 19% (+30% CER). Normalised EBITDA rose 10% (+15% CER) to R5,7 billion. This growth exceeded that of revenue due to an improved normalised EBITDA margin and the leverage provided by lower operating expenses. Normalised headline earnings per share (“NHEPS”) increased 21% (+26% CER) to R8,16, helped by reduced net financing costs.

Net borrowings increased to R19,3 billion from R16,3 billion at 30 June 2021, driven primarily by deferred consideration payments relating to prior year business transactions, a dividend paid to shareholders and the weaker ZAR closing rate relative to 30 June 2021. Operating cash flow was in line with expectations and included increased inventory investment by Manufacturing in key input materials to mitigate future supply constraint risk arising from COVID-19 disruption to global supply chains and logistics.

On 1 March 2022, the Group successfully concluded an agreement with Acino Pharma AG for the sale of a portfolio of products in South Africa for a consideration of R1,8 billion, plus the cost of inventory, which consideration has been received.

SEGMENTAL PERFORMANCE (CONTINUING OPERATIONS AT CER)

Commercial Pharmaceuticals

Commercial Pharmaceuticals, comprising ��ֳ�’s Regional Brands and Sterile Focus Brands, grew 5% to R14,3 billion. Gross profit increased 6% to R8,3 billion supported by improved margins in both Regional and Sterile Focus Brands.

Regional Brands

Regional Brands revenue increased by 4% to R8,7 billion, with 18% growth from Australasia being the major contributor. Supply constraints severely impacted the performance of ��ֳ�’s major Regional Brand region, Africa Middle East.

Gross profit percentage was up for the period at 56.9% (H1 2021 : 56.0%), driven by cost of goods savings and favourable product mix.

Sterile Focus Brands

Revenue from Sterile Focus Brands increased 5% to R5,5 billion led by strong growth in Asia (+11%). This growth was against the backdrop of the prior period benefitting from strong COVID-19 related sales.

A higher gross profit percentage of 61.0% (H1 2021 : 60.1%) benefitted from a favourable Anaesthetic product mix and cost of goods savings partly offset by lower Thrombosis portfolio margins.

Manufacturing

Manufacturing revenue increased 30% to R5,1 billion with significant growth in finished dose form sales partly diluted by negative revenue growth in the Chemicals business (-11%). Manufacturing was particularly negatively impacted by the constraints imposed by COVID-19. Finished dose form sales were augmented by sales of the COVID-19 vaccine to Johnson & Johnson of R0,8 billion.

Gross profit increased by 16% but at a reduced gross margin percentage as a result of the dilutive effects of ongoing supply agreements related to recent disposal transactions at low/no margin. Excluding the disposal transaction related supply, gross margin improved in all segments despite the challenges arising from inefficiencies and incremental operating and supply chain costs as a result of the pandemic.

PROSPECTS

The results achieved in the six months to 31 December 2021 demonstrate the Group is well on track in achieving all of its medium-term performance targets, which were publicly disclosed in December 2020. The base business has proven the capability to deliver solid organic growth despite the challenges encountered due to the COVID-19 pandemic. The investment in sterile manufacturing capacity has started to deliver benefits to financial results with strong potential to be an influential growth driver as capacities created become more fully utilised over the next few years. ��ֳ�ovax represents an exciting upside opportunity in addition to the robust base business, driven by the imperative to address the COVID-19 vaccine deficit in Africa. ��ֳ�’s invaluable supply of medicines and vaccines used in combatting COVID-19 and our role in seeking more equitable access to medicines, has raised our global profile as a sterile manufacturer of the highest quality, attracting further interest in the Group as a supplier and creating potential partnering opportunities in commercialisation of sterile products, including vaccines. The strong balance sheet provides stability for capital allocation decisions including ongoing investments in the business and other potential strategic options that are value accretive.

In addition to the well documented challenges arising from the COVID-19 pandemic, headwinds in the second half of this financial year include the direct and indirect influence on the business in the forthcoming months of the Russian / Ukrainian conflict. ��ֳ� has annual revenue of R1 billion in these countries which is at risk while inflationary pressures are being accelerated by the consequences of the conflict. A strong recovery from Manufacturing is anticipated in the second half as this segment implements mitigation plans to address the pressures experienced in the first six months. Strong cyclical second half cash flows are expected to deliver an operating cash conversion rate above the Group target of 100% for the financial year.

Reported results will be influenced by the relative movements of the exchange rates of the main currencies in which the Group trades. We are targeting to deliver CER normalised headline earnings in the second half which are in line with the first half results, provided the current geopolitical conflicts do not have a material impact on our performance.

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�������ֳ� delivers double digit organic growth in normalised EBITDA, operating profit and earnings

2 – The CER % change is based upon the performance for the year ended 30 June 2021 restated using the average exchange rates for the year ended 30 June 2022.

3 – Operating profit before depreciation and amortisation adjusted for specific non-trading items as set out in the normalised headline earnings reconciliation on page 8 of �������ֳ�’s Year End Results Booklet available at www.aspenpharma.com.

4 – Normalised headline earnings per share (“NHEPS”) represents headlines earnings per share (“HEPS”) adjusted for specific non-trading items as defined in the Group’s accounting policy.

5 – Dividend declared on 31 August 2022, to be paid on 26 September 2022 (2021: Declared on 1 September and paid 27 September 2021).

�������ֳ�’s response to Monkeypox being declared a Public Health Emergency of International Concern by WHO

�������ֳ� delivers double digit organic revenue grown in constant exchange rates

Financial Archives | ��ֳ� Pharmacare

��ֳ� delivers strong results and advances its strategic ambitions

��ֳ� to participate in the Investec CEO conference in London

��ֳ�’s revenue increases 10% underpinned by a strong second half performance

��ֳ� building momentum with revenue up 10% to R21,1��billion

��ֳ� revenue exceeds R40 billion with accelerated medium-term growth anticipated

��ֳ� reports a creditable and resilient performance under challenging trading conditions

��ֳ� closes EUR 1,26 billion syndicated loan facilities

��ֳ� delivers double digit organic growth in normalised EBITDA, operating profit and earnings

3 – Operating profit before depreciation and amortisation adjusted for specific non-trading items as set out in the normalised headline earnings reconciliation on page 8 of ��ֳ�’s Year End Results Booklet available at www.aspenpharma.com.

��ֳ�’s response to Monkeypox being declared a Public Health Emergency of International Concern by WHO

��ֳ� delivers double digit organic revenue grown in constant exchange rates