Adcock says the group reported 20 percent increase in trading profit to R866m. Photo: Simphiwe Mbokazi/African News Agency (ANA)

DURBAN – Pharmaceutical firm Adcock Ingram lifted profit 20 percent despite consumers being under pressure.

South Africans suffering from allergies and flu piled into drugmaker Adcock Ingram’s over-the-counter (OTC) medicine, leading to some brands, such as Adco-Dol, Allergex, Alcophyllex and Napamol showing double-digit growth in the year to end June.

OTC drugs had seen a turnover improvement of 7.6 percent to R2bn.

Adcock said yesterday that the group reported 20 percent increase in trading profit to R866m while turnover increased by 10.2 percent to R6.54 billion. Headline earnings per share (Heps) from continuing operations increased by 26 percent to 387.7 cents a share.  

Chief executive Andy Hall said the positive results were achieved through continued investment in their well-established brands, improved factory efficiencies and a relentless focus on customer service and product quality.

Prescription turnover rose by 15.5 percent to R2.24bn, while hospital turnover improved by 7.2 percent to R1.35bn. 

Consumer turnover was almost flat at R686.7m. 

The group said it remained competitively positioned to defend and grow its brands and Adcock aimed to expand its product portfolio through partnership arrangements and acquisition.

Adcock competes with larger rival Aspen Pharmacare. 

Adcock acquired 100 percent of local medical instrument and pharmaceutical company Genop, for an undisclosed amount, in January. 

In the year to end June, Genop contributed R223.8 million towards revenue and reported a profit before income tax of R6.2m.

The board declared a dividend of 86c a share out of income reserves to take the total dividend for the year to 172c, an increase of 24 percent compared to last year.

But Hall said the operating environment remained challenging in South Africa, especially seen in the light of the recent disappointing single exit price increase of 1.26 percent and ongoing financial pressure on consumers.

Hall said in the past six to eight weeks it had started to see the impact of a sharp weakening of the rand this year. 

The rand has lost 16 percent against the dollar since the beginning of the year.  

South Africa introduced an single exit price in 2004, which is the price at which manufacturers must sell their products to ensure consumers can afford essential medication.  

“What we’re hoping for as an industry is that there will be some price relief in this second half of 2018 and effectively counter the devaluation of the rand," Hall said. – Additional reporting by Reuters

Follow Business Report on Instagram here