Cape Town - Aspen shares fell sharply on Tuesday as the branded and generic pharmaceutical products group moved to water down allegations that it withheld life-saving drugs to drive up prices by 4 000 percent in some of its Spanish market.
Aspen shares fell 4.14 percent to close at R268.50 on the JSE, after reports in the UK surfaced about the pharmaceutical's internal memo, which indicated that the company considered destroying its own stockpiles of vital cancer treatment medication in order to raise prices.
On Tuesday, the company said in a terse statement that it would not respond on the merits of the allegations as the matter was sub judice.
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Pharmaceutical giant Aspen is alleged to have withheld stockpiles of vital cancer drugs to raise prices. Photo: Simphiwe Mbokazi
Aspen did shed some light on its position in the matter, saying it had a track record of supplying affordable and quality medication.
The supply of the oncology products in question is no exception, the multinational company said. Aspen's status as a responsible and committed provider of quality, affordable medicines is further validated by the role it has played in saving millions of lives across Africa, through pioneering and supplying generic antiretroviral medicine in Africa for the treatment of HIV/Aids.
Aspen operates with an established business presence in about 50 countries spanning six continents and employs more than 10000 people.
It operates 26 manufacturing facilities across 18 sites and has a market capitalisation of about $10 billion (R133 billion), making it the largest pharmaceutical company listed on the JSE.
According to internal e-mails by Aspen reported on by the Times of London, the company began withholding five cancer drugs from the market in Spain in May 2014, forcing patients to search elsewhere for replacement drugs.
The alleged withholding of the medication came after the Spanish health ministry did not agree to the substantial price hikes proposed by Aspen.
The company acquired the five cancer drugs from British firm GlaxoSmithKline (GSK) in 2009 as a part of a deal worth 273 million (R4.6 billion). As part of the transaction, GSK acquired 16percent of Aspen-GSK and agreed to divest eight of its specialist medications in Aspen.
The products divested by GSK in Aspen included chemotherapy drugs Alkeran and Purinethol Leukemia treatments Lanvis and Mcleran. Aspen said the oncology portfolio brought into question by The Times formed only a small part of its revenue.
The oncology portfolio in question generated revenue in the EU in Aspen's financial year ended June 30, 2016 of 60 million euros (R854 million).
"The majority of the revenue was from the sale of tablets which have an average price of about 2 per tablet, the company said.
The group posted total revenue of R35.6 billion in that time.
Asief Mohamed, chief investment officer at Aeon Investment Management, which holds Aspen stock, said it was disappointing that the company was accused of being involved in such behaviour.
We are disappointed that Aspen seems to have used its monopoly position to disadvantage terminally ill patients in the long run such behaviour would have a material negative impact on its share price, Mohamed said.
But Spain has not been the only European country targeting Aspen's price gouging on the continent, as the group has found itself in competition authorities crosshairs recently.
Last year, the Italian Competition Authority (ICA) imposed a $5.5 million fine on the company for infringing article 102a of the Treaty on the Functioning of the European Union.
According to the ICA, Aspen fixed unfair prices with increases up to 1500 percent for life-saving and irreplaceable drugs in the treatment of oncohematological patients, especially children and the elderly.