Johannesburg - British pharmaceutical company Glaxo- SmithKline (GSK) will pay JSE-listed branded and generic pharmaceutical products group Aspen Pharmacare £45 million (R760.55 million) to end a so-called sub-Saharan Africa collaboration between the two companies.
“Pharmacare and GSK had agreed to cancel the rights of Pharmacare to collaborate in the sub-Saharan business of GSK and that GSK would pay Pharmacare £45 million as consideration for the cancellation of the (sub-Saharan Africa) collaboration,” Aspen said on Tuesday.
The move will lead to the cancellation of Aspen’s rights to collaborate in the sub-Saharan business of GSK.
Aspen first announced the cancellation of the collaboration in September last year.
Aspen, the largest pharmaceutical company listed on the JSE, acquired the rights as part of a basket of transactions with GSK in 2009. The collaboration generated approximately R2.6 billion of gross revenue in the 2016 financial year.
GSK and Aspen entered into a collaboration arrangement for the commercialisation of a portfolio of branded prescription pharmaceutical products in sub-Saharan Africa. The portfolio of products, supported by a strong distribution network, was meant to increase affordable healthcare in sub-Saharan Africa.
In a statement on Tuesday, GSK said the collaboration between the two drugs makers in South Africa remains in place. GSK said the transaction was in line with GSK’s strategy of simplification through focusing on core therapeutic areas. GSK has already divested its anaesthesia portfolio, consisting of Ultiva, Nimbex, Tracrium, Mivacron and Anectine to Aspen.
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Aspen supplies more than 650 branded medicines, specialising in generics and treatments for HIV/Aids and tuberculosis. The cancellation follows on the heels of GSK’s decision - also announced in September last year - to dispose of the remaining 6.2 percent interest in Aspen. The disposal translated to 28.2 million ordinary shares after GSK sold the shares to institutional investors for R300 a share or R8.47 billion.
GSK started divesting its stake in Aspen in November 2013 when it sold 28.2 million shares for about R7 billion. In 2015, the company sold the same number of shares through institutional investors for R372 a share, raising R10.5 billion.
Aspen chief executive, Stephen Saad, said GSK’s disposal of its Aspen shares would not affect the ongoing collaboration between the two companies in South Africa.
GSK’s chief strategy officer, David Redfern, is still a member of Aspen’s board of directors.
Saad said GSK’s disposal of the shares relieved Aspen shareholders of the uncertainty caused by GSK’s intention to dispose of its interests.
On the other hand, GSK chief financial officer Simon Dingemans said the disposal completed “a successful phased approach to realising that value which we can now deploy behind the group’s priorities".
Aspen’s shares on the JSE closed 0.53 percent down at R282.08.