Aspen must guard against overreaching

Stephen Saad was visibly excited this week after posting another solid set of results. The Aspen Pharmacare CEO has done a remarkable job in building a global drug business in a country that is hardly known for expertise in pharmaceutical research.

It is easy to say healthcare is a defensive business whose fortunes are rarely dependent on the good health of the economy, but Aspen's consistent performance says more about its strong and visionary management than it does about the nature of the pharmaceutical business. The group has been a mainstay on the JSE since it began its international expansion a few years ago.

Saad and his deputy, Gus Attridge, who are both accountants, founded Aspen in a suburban house in Durban in 1997 and realised quite early that generic drugs were the solution for countries battling with high healthcare costs and growing disease burdens. The group is now the fifth-biggest generic medicine company in the world, with sales to more than 150 countries. It has grown rapidly through acquisitions and partnerships with multinationals such as GlaxoSmithKline, but the big question now is: can it keep it up? After the many deals clinched over the past financial year Saad and his team may want to sit back and nurture their newly acquired assets, but investors will be expecting more. Opportunities still abound in emerging markets, but the trick for Saad will be avoiding biting off more than he can chew.

Dave Marrs: Company Comment, Business Day, 12 September 2014