Our sustainable business strategy
celebrating 20 years Our strategic business performance
A high level overview of our performance over the past year, the key opportunities, risks and challenges and the outlook is set out below. Further information on the application of our capitals, our sustainability objectives and performance against our KPIs is included in the “Creating value through our capitals” section.
To enhance access to high quality, affordable medicines
||IMS value of total product
pipeline for the next five
(2017: USD3,2 billion)
Number of product recalls
- Provided affordable critical medicines, with proven efficacy and safety, to patients in more than 150 countries.
- Implemented a more targeted approach to product development and licensing initiatives creating a product pipeline that is strategically aligned with the Group’s future growth plans.
- Launched a total of 45 products in 20 countries, broadening access to high quality, affordable medicines and products.
- Further developed structures in China and Japan to support expanding access to the global product portfolio.
- Concluded an exclusive licence agreement with Teva to launch two products (Enjuvia and Cenestin) in the United States which will leverage our synthetic conjugated estrogen API business and enhance our women's health product basket.
- Launched the new global infant milk formula brand, Alula, and initiated a strategy to access the Nutritionals sector in China.
- Managed disruptions experienced in the anaesthetics supply chain to minimise the impact of the unavailability of products.
- Increased the technical and compliance training of the sales and marketing teams, facilitated by the Aspen Learning Academy, to better serve customer requirements across all territories.
- Progressed with the integration of the new sales representatives in China into Aspen with reinforcement of our way of doing business.
- Maintained a strong quality culture achieving positive results from inspections undertaken by regulators and audits conducted by customers.
- No product recalls represented a high patient risk requiring the implementation of a full market recall procedure. Specific focus on understanding the root causes underlying the increase in the number of product batch recalls.
- Increasing complexity of regulatory requirements and
product regulations, requiring additional resources to
maintain and upgrade our intellectual property.
- Changing market and regulatory environments coupled
with the complexity and greater costs associated with the
development of differentiated products affecting the
realisation of expected returns on new product
- Timing of new product launches is dependent on the
speed of processing of the necessary registrations by the
regulatory authorities in each country.
- Inherent risk of batch rejection, product recall and/or
disruption to supply as a result of the highly technical,
complex and regulated nature of the manufacture and
supply of pharmaceutical products.
- Ensuring that geographically dispersed sales
representatives are aligned with our business ethos.
- Opportunities to extend the existing Anaesthetics portfolio
into new geographies, notably China, and to further
leverage the strategic fit with the Thrombosis portfolio.
- Pipeline opportunities in high potency niche products
(estrogens, conjugated estrogens, low dosage Estradiols
and HPC) for the United States and geographic expansion
of Orgaran, in the Thrombosis portfolio.
- Development and refinement of the product pipeline in line
with the Group’s targeted therapeutic categories for each
region will be pursued on an ongoing basis to leverage the
areas of expertise which we have developed.
- The evaluation of opportunities in new territories which
may justify the expansion of the Group's promotional footprint will be performed.
- Sales structures are assessed on an ongoing basis to
ensure that we are delivering the appropriate services to
meet the demands of healthcare providers.
To achieve strategic advantage through our integrated supply chain
||Normalised EBITDA margin
Return on total assets
- Acquired the remaining rights to the intellectual property and manufacturing know-how of the AstraZeneca Anaesthetics portfolio and completed the transition of the contractual relationship with third-party contract manufacturers from AstraZeneca to Aspen, increasing our control over the supply chain.
- Initiated capital projects in excess of R4 billion in value at the Port Elizabeth, Notre Dame de Bondeville and Bad Oldesloe sites in order to create increased capacity and capability for the transition of the manufacture from AstraZeneca sites over the next five years.
- Officially opened the high containment suite at our Port Elizabeth site that will produce niche high potency and hormonal products.
- Reintroduced the production of conjugated and esterified estrogens at Oss, offering opportunities aligned with our strategy for the women's health product portfolio.
- Progressed further product realignment projects increasing the production volumes in our own facilities, resulting in enhanced synergies.
- Achieved further manufacturing efficiencies through continuous improvement projects and procurement initiatives.
- Further strengthened our technical capability for complex pharmaceutical manufacturing, leveraging our Biochem and Steriles Centres of Excellence to achieve high technical standards across our facilities.
- Made further significant investments to increase the integration of regulatory, manufacturing and IT processes and systems, achieving increased efficiency and the ability to manage risks across the complex supply chain more effectively.
- The manufacturing of pharmaceutical products is highly
regulated and complex. Manufacturing facilities are
subject to regular inspections by various regulatory
authorities in order to maintain accreditation.
Manufacturing facilities which do not comply with all
regulated standards are required to take remedial action
and in extreme circumstances, risk closure until
remediation is complete.
- We continue to be engaged in multiple projects to
transfer production of certain pharmaceuticals to new
lines within existing Aspen-owned facilities, alternative
production facilities owned by Aspen and/or third-party
manufacturers. These technical transfers, and the
deployment of new technologies, frequently offer more
cost-efficient and reliable manufacturing, but can pose
- There is a key reliance on specialised raw materials, some
of which can only be sourced from a single supplier.
- There is a key reliance on certain third-party contract
manufacturers for the continued supply of products
within specification and required timeframes.
- Currency volatility impacts the cost of goods across the
- Product registration times are unpredictable, which
affects the supply chain readiness to launch products
rapidly following registration.
- Technical transfer of products that have been on the
market for long periods of time may require technical
upgrades before the transfer process can be completed.
- The consolidation of anaesthetics manufacturing into
Aspen sites will further increase our control over the
supply chain enhancing security of supply and thereby
allowing better access to these essential medicines.
- The successful execution of our plans to increase
production volumes by means of new product
introductions and the realignment of production currently
being outsourced to third-party manufacturers will increase
production efficiency and result in improved cost of goods.
- Our integrated supply chain matched with our global
distribution capabilities places us in a position to enter into
value creating partnerships.
- SAP implementations recently completed, in progress and
planned for the future are expected to increase overall
supply chain efficiency.
To provide a safe, challenging and rewarding environment for our employees
||Average staff turnover
Average training spend per employee
(2017: R4 987)
Disabling injury frequency ratio ("DIFR")
day frequency ratio (“LWDFR”)
- Launched a new global human resources strategy, which focuses on talent, skills development, succession planning and the retention of key skills, and endorsed a Group-wide talent management framework.
- Completed implementation of the global integrated human resources management system supporting effective human resource management processes across the Group.
- Established the Technical Training Academy at the Port Elizabeth site and a Commercial Academy in our South African commercial businesses.
- Strengthened the commercial leadership team and initiated further leadership re-alignment changes in certain business units.
- Initiated further efforts aimed at the targeted restructuring of the workforce in selected operations to achieve operational efficiency.
- Implemented a new three-year Employment Equity plan and established various forums to support diversity and inclusion initiatives.
- Improved the female representation in our Middle Management and Junior Management Development Programmes and re-launched a Finance Graduate Programme for our talent pipeline.
- Recognised the exceptional performance of selected employees across the Group through the Aspen employee recognition awards.
- Maintained positive employee relations with zero disruptions to our operations globally.
- Completed the multi-year plan to reduce the most significant safety, health and environment (“SHE”) risks at the Moleneind site in Oss, transferring the highest risk processes to alternate facilities.
- Maintained our historically high safety standards with zero incidents of occupational fatalities.
- The ability to attract, retain and develop the diverse talent
and specialist technical skills required to support the
rapid growth and increasing complexity of the Group
remains a focus area.
- The successful integration of employees from acquired
businesses into the Aspen culture and values remains a
critical success factor and receives ongoing attention
from senior leadership.
- The inherent safety risks relating to the pharmaceutical
and chemical industry will always be a key focus area for
the Group, with standardised SHE processes embedded
across all of our operations.
- The launch of the new global human resources strategy,
together with the new talent management framework, is
intended to improve leadership and overall talent bench
strength in the short to medium term.
- The drive to improve gender (female) representation at key
management levels remains a focus in the medium term.
- Continued investment in growing our own talent through
initiatives such as the Middle Management and Junior
Management Development Programmes creates
opportunities for our people to reach their potential while
creating a talent pipeline to support our future growth
- A bridging programme to fast track experienced employees
who lack formal qualifications is being launched.
- The consistent application of the Group SHE standards and
the phased approach to ISO certification will receive
To practise good corporate citizenship
Scope 1 emissions
(2017: 48 435tCO2e)
Scope 2 emissions
(2017: 160 237tCO2e)
663 557 Gigajoules
(2017: 692 449 Gigajoules)
1 584 Megalitres
(2017: 1 667** Megalitres)
80 973 tonnes
(2017: 76 577 tonnes)
Percentage of female employees
Percentage of females in top 100 positions in the Group*
Percentage of black employees in South Africa
Percentage of black employees in top 50 positions in South Africa*
Significant legislative infringements
FTSE/JSE Responsible Investment score
||New KPI therefore no comparative available
||Restated from prior year
- Continued participation in the UN Global Compact, the Carbon Disclosure Project and Water Disclosure Project.
- Further strengthened the Group Ethics Programme through targeted interventions to embed our values and Code of Conduct implemented through a Regional Ethics Officer structure across our business operations.
- Improved our ESG rating on the FTSE/JSE Responsible Investment Index.
- Completed an extensive project to ensure our tax reporting meets the increasing regulatory requirements required under the Base Erosion and Profit Shifting project that has been endorsed by the Organisation for Economic Cooperation and Development ("OECD") which has been implemented by tax authorities in most countries in which we operate.
- Increased the focus on achieving gender diversity across employment levels.
- Continued to focus on targeted transformation initiatives in the South African business and the achievement of BBBEE objectives.
- Supported more than 220 SED projects contributing to the well-being of the communities in which we do business.
- Advanced loans amounting to R55 million as part of our enterprise development and enterprise supplier development programmes.
- Effected an estimated 52% saving in our water consumption over 2016 levels at the FCC site in Cape Town in response to the "Day Zero" crisis and implemented further mitigations to protect the site from potential disruptions to water supply.
- Provided full cooperation to the European Commission and the United Kingdom’s Competition and Markets Authority regarding their respective investigations into certain pricing aspects.
- Reporting and disclosure requirements in respect of our
corporate citizenship and the application of international
best practice remain onerous and require management
focus and attention. We are committed to continue
meeting these reporting requirements in a balanced and
- Our operations span multiple territories, with complex
regulatory frameworks. Changes in legislation can impact
our operations or increase the risk of non-compliance.
- We are dependent on stable and consistent water and
energy supply and will be impacted by the future
availability of these scarce resources.
- A continued focus of the Group is to maintain a
consistent ethical culture across our geographically and
culturally diverse operations and offices.
- Ongoing emphasis will be placed on ensuring an ethical
and values driven culture throughout the Group, giving
credence to our motto of Healthcare. We Care.
- Continued investment in appropriate skills development
and enterprise development initiatives in line with the
increased targets and higher BBBEE recognition levels as a
result of the updated BBBEE Codes revised in May 2015.
- Our support of a number of SED projects in the countries in
which we do business will be continued.
- We are committed to complying with competition law
requirements in the countries in which we operate and will
continue our approach of full and constructive engagement
with the relevant authorities in this regard.
- Continued implementation of resource saving initiatives
and projects to reduce our exposure to water scarcity risks.
To create sustainable economic value for all our stakeholders
||Growth in revenue
Growth in NHEPS
Growth in normalised EBITDA
Return in ordinary shareholders’ equity
Operating cash flow per share
1 537,3 cents
(2017: 1 421,4 cents)
- Created R18 892 million in value, with R7 925 million being paid to employees, the generation of R1 533 million in revenue for governments, R24 466 million in payments to providers of goods and services and R17 million to support various SED initiatives.
- Growth in revenue of 3,4% (4,7% at CER) to R42 596 million through a combination of organic growth in the base business and further acquisitive growth contributed by the Anaesthetics portfolio and Thrombosis sales in China.
- Growth in NHEPS from 1 463,2 cents per share to 1 604,9 cents per share, achieved primarily through revenue growth at increased margins and reduced financing costs.
- Focused working capital management has contributed to an improvement in operating cash flow, notwithstanding required strategic stock builds to manage risks within the supply chain.
- Further delivery of an estimated R500 million in synergies through the value creation initiative projects.
- Successfully concluded the “amend and extend” restructuring exercise in respect of the Group's debt portfolio with its primary lenders.
- Initiated a strategic review of the Nutritionals business which was concluded with the announcement on 13 September 2018.
- Increased and sustained emphasis on managing rising
healthcare costs and intensive examination of the pricing
of pharmaceuticals by governments, health insurers and
consumers in most countries.
- Instances of extensive price cuts and changes in price
referencing mechanisms implemented by certain
- Evolving pharmaceutical regulations and application of
increasingly stringent quality standards has led to raised
costs of compliance across all territories. The high cost of
doing business in this complex regulatory environment
places pressure on achieving satisfactory returns on
- While the Group is exposed to currency volatility in
specific countries, trading in a diversified mix of
currencies diminishes the risk on a Group-wide basis.
- Competition in the global pharmaceutical market remains
fierce. Low-cost Asian pharmaceutical companies are
active in all major territories with many competing
generics being launched upon patent expiry of a
molecule. There is also the risk of the potential
introduction of biosimilars in certain territories.
- Volatile geopolitical and economic conditions in many
countries present a challenging trading environment,
constraining organic growth in those countries.
- The operationalisation of multi-site, multi-product and
multi-territory acquisitions is complex and can place
strain on the financial and human capital resources of the
Group. The integration of the acquired businesses into the
Aspen culture is a key success factor of these
- China is a complex and challenging territory in which to
do business with significant differences in culture,
regulatory frameworks and commercial practices.
- Strategic initiatives have been undertaken to diversify
market risks, currency risks and product risks supporting
sustainable growth prospects. Our globally competitive
production capabilities and economies of scale help to
mitigate pricing pressures.
- As the acquired Anaesthetic portfolios are further
integrated into our business, opportunities to leverage both
the existing hospital focused sales force and potentially, in
due course, our sterile manufacturing capabilities will be
- The considerable footprint created in China and the rest of
the Asian business through the acquired anaesthetic and
thrombosis products provides the critical mass to support
further product diversification in this significant
- We are targeting organic revenue growth of between
1% and 4% in the Commercial Pharmaceuticals business
for the 2019 financial year.
- Product launches from our focused product pipeline which
includes some unique opportunities in the United States, a
country where Aspen has not yet established a sales force.
- Our favourable relationships with many multinational
pharmaceutical companies positions us well to engage
with them regarding potential opportunities. We will also
remain alert to acquisition opportunities which present
- The conclusion of the agreement (conditions precedent) to
dispose of the Group’s Nutritionals business announced on
13 September 2018 will allow for the Asia Pacific, Latin
America and Sub-Saharan Africa business units to dedicate
their time and attention to their core pharmaceutical
portfolios. The transaction is expected to be completed
before April 2019. The net proceeds will be utilised to
reduce our gearing, creating greater headroom and