Johannesburg - Adcock Ingram, South Africa’s largest supplier of hospital products, posted a first-half loss as it wrote off expenses related to its failed takeover by CFR Pharmaceuticals and margins remained under pressure.
The loss of 37.9 million rand in the six months through March compares with a restated profit of 323.4 million rand a year earlier, the Johannesburg-based company said in a statement today.
Sales climbed to 2.43 billion rand from 2.36 billion rand.
“The poor operational performance for the reporting period under review is regrettable and unfortunate,” the company said.
The “drawn out and exacting” CFR bid “preoccupied certain key management and they, together with the board of directors, became embroiled by the demands of these events and actions.”
CFR, Chile’s biggest drug maker, called off its 12.8-billion rand cash and stock offer to buy Adcock on February 7 after Bidvest built a blocking stake.
The CFR deal valued each share at 74.50 rand to 75.78 rand and was supported by Adcock’s board.
Bidvest chief executive Brian Joffe became Adcock’s new chairman following a 10-month fight for control of the company, with Kevin Wakeford becoming chief executive in April.
Sales were also affected by “a sharp slow-down in the over the counter and prescription generics portfolios in Southern Africa,” it said.
Costs related to CFR’s dropped bid were 91 million rand in the six months, Adcock said today.
The stock has slumped 16 percent this year, compared with a 4.2 percent gain for Aspen Pharmacare, Africa’s largest generic-drugs maker.
Adcock’s new management “now have a sound understanding of the immediate market, the staffing and regulatory environment,” it said.
The weaker rand against the dollar raised the cost of imported ingredients and sales recovery and margin pressure remains a concern in the short term, Adcock said.
The Department of Health’s approval of a 5.8 percent increase in the single exit price is “insufficient” to offset the impact of the weak rand on ingredient prices and wage and utilities inflation, it said. - Bloomberg News