JSE-listed pharmaceutical company Ascendis Health on Tuesday announced a new strategic focus prioritising pharmaceutical and consumer healthcare.
The company, which also reported on its results for the financial year ended June 30, plans to divest its biosciences businesses.
Ascendis planned to drive geographic expansion and growth by strengthening its current foothold in Europe, the Middle East and Africa, CEO Thomas Thomsen noted in a presentation of the company’s results.
He stressed that, given the group’s current footprint, “the US is not a priority”.
He noted that the group’s core businesses would be supported by “solid” performing divisions, with a strong foothold in Southern Africa, namely, medical and animal health.
Additionally, the group would be divesting from biosciences, after a strategic review demonstrated that this segment serviced disparate clientele and would be better suited to an organisation with an agricultural focus.
Thomsen did not provide a timetable regarding the group’s divestment from biosciences, which comprises pesticides manufacturers Avima/Klub 5 and Efekto, pet product manufacturers Marltons and green plant growth stimulants producer Afrikelp, but did note that two of the divestments announced in June, Sports Nutrition South Africa and Direct Selling, had been completed.
Ascendis CFO Kieron Futter, meanwhile, pointed out that about 40% of the group’s products were manufactured “in-house” and, of that 40%, 60% of the manufacturing capability was located in Europe.
However, Thomsen noted that as a consequence of the new strategy, the group’s operating model would shift from the current geographic structure, focused on South Africa and Europe, to a global divisional model comprising Pharma, Consumer Healthcare, Medical and Animal Health.
As such, new governance and functions would be introduced on a “company-wide” basis, rather than having all the support functions (legal, marketing communications) based in South Africa.
Thomsen noted that strategic acquisitions would be considered based on predefined investment criteria, including strategic alignment and financial returns, but only once the 12-month period of consolidation had expired.
Futter noted that the new business model was targeted at driving sustainable value creation and the group’s objective was to generate a 7% to 10% organic revenue growth rate and a 22% to 25% earnings before interest, taxes, depreciation and amortisation (Ebitda) margin by the 2023 financial year.
FINANCIAL PERFORMANCE
For the financial year under review, the group’s normalised Ebitda increased by 18% to R1.3-billion, while headline earnings increased by 14% to R738-million, with normalised headline earnings a share 2% higher at 159.7c.
Revenue increased by 21% year-on-year to R7.7-billion.
International revenue increased by 35% to R3.7-billion and benefited from the acquisitions of Remedica, in Cyprus, and Sun Wave Pharma, in Romania.
International revenue now accounts for 48% (2017: 43%) of the group's total sales. Revenue generated in South Africa grew by 10%.
Comparable growth in Europe increased by 9%, while South African revenue growth remained flat, largely owing to low economic growth and decreased consumer spending.