JSE-listed Aspen’s immediate focus under Covid-19 has been to establish processes aimed at ensuring optimum production and the responsible allocation of essential drugs through a heightened focus on its production and supply chain activities.

Aspen is experiencing an elevated demand for certain of its sterile brands in Europe. These products are of critical importance in the clinical management of patients infected with Covid-19 and the company notes its support to the healthcare authorities in Europe and in other regions where it operates.

Aspen’s Commercial Pharmaceuticals business comprises sterile brands and regional brands. Certain products within both these segments have relevance in the management of Covid-19; however, the impact of the virus on the business has varied between regions for the ten months ended April 30.

Within the sterile brands business, elevated demand for anaesthetics in the Europe Commonwealth of Independent States (CIS) towards the latter part of the ten-month period has offset the expected decline in the Chinese business brought about by the postponement of elective surgeries and less frequent haemodialysis treatment of patients during the first four months of the calendar year 2020.

The Chinese business has shown signs of recovery since the easing of the restrictions in that country.

In Europe CIS, Aspen’s largest thrombosis region, the effect of Covid-19 on thrombosis demand has been largely neutral, with declines in elective surgical procedures being countered by increased hospitalisation rates of medically ill patients.

The restructuring of the thrombosis business in Europe CIS has supported the continuing recovery of this business segment.

Stockpiling of everyday healthcare products and advanced filling of prescriptions by consumers in response to the Covid-19 pandemic has had a positive impact on the regional brands business.

This has led to overstocking in supply channels and in households, which Aspen expects will result in decreased demand over the next few months as stock levels equalise.

Aspen’s manufacturing facilities have maintained operations at normal capacity, with enhanced safety measures introduced to protect employees.

Aspen’s active pharmaceutical ingredient (API) manufacturing business has been positively impacted on by the sale of heparin API to third parties, while the underlying API and finished dose form operations have also continued to perform well.

The strategic review and internal restructuring undertaken in respect of the Europe CIS business has been ongoing. Management continues to expect to finalise the outcomes of this strategic review and decide on an appropriate course of action by September.

Progress on strategic capital expenditure projects related to construction of manufacturing facilities for the anaesthetics products, as well as smaller projects, has been hampered by country specific Covid-19 restrictions and will resume as and when local regulations allow.

WORKING CAPITAL

Aspen’s maintenance of reasonable levels of safety stock through its value chain has, to date, stood it in good stead during the Covid-19 crisis, allowing the company to continue to supply essential medicines to patients in need around the world, it notes.

In Europe, which has been particularly hard-hit by Covid-19, Aspen said it has been well supported by its important manufacturing sites in France, Germany and the Netherlands and has managed to redirect inventory successfully to the locations most in need.

Aspen is also working hard with its contract manufacturers and suppliers to overcome logistics hurdles as these arise to ensure ongoing replenishment of finished products and raw materials.

Careful attention is being paid to collections of receivables and Aspen is ensuring that all of its creditors are paid to terms in this time of heightened financial pressure on many businesses, the company notes.

OUTLOOK

The group outlook for the 12 months ending June 30, as published on March 6, did not take into account the effect of the Covid-19 pandemic.

Aspen says the uncertainty surrounding the severity, impact and duration of Covid-19 prevents it from reliably assessing and quantifying the future impact of the virus on the business.

“The unusual demand patterns experienced during the first four months of the calendar year 2020 do not necessarily represent trends which will persist over the rest of the period of the Covid-19 pandemic,” the company highlights.

Aspen completed the disposal of its Japanese business at the end of January and applied the net proceeds received from it to repaying short dated euro-denominated debt. Aspen’s leverage ratio will be measured at year-end.

Aspen has reviewed and is comfortable with its liquidity position.

The group maintains its previous outlook for normalised headline earnings per share (HEPS) from continuing operations for the full year will be higher than last year's normalised HEPS from continuing operations of R13.50.

Owing to the high degree of uncertainty presently being encountered as a consequence of the pandemic, as more information becomes available, Aspen will update its outlook for the year if deemed necessary.

The company is scheduled to release its results for the 2020 financial year on September 9.