GSK seeks 16% stake in Aspen to grow market

By Tiisetso Motsoeneng  |   2009-5-13  |     NEWSPAPER EDITION

GLAXOSMITHKLINE will take a 16-percent stake in Africa's biggest generic drug maker, Aspen Pharmacare, to expand its emerging market footprint in a deal worth 3.47 billion rand (US$418 million).

The deal, based on a transfer of assets rather than cash, cements an existing relationship between the companies and underlines Glaxo's commitment to growing in emerging markets as part of a strategy to diversify its business.

The companies said yesterday Aspen would issue 68.5 million new shares to Glaxo in exchange for Glaxo's manufacturing plant in Bad Oldesloe, Germany, and eight specialist medicines.

Aspen will also distribute Glaxo products in South Africa - which generated sales of about 45 million pounds (US$68.3 million) last year - and the companies will team up to market and sell prescription drugs in the rest of Africa, where revenue totaled about 65 million pounds in 2008. The world's second-largest seller of prescription drugs will get a seat on Aspen's board.

"Extending our strategic relationship with Aspen supports GSK's strategy to accelerate sales growth in emerging markets," Abbas Hussain, Glaxo's head of emerging markets, said in a statement.

Based on Aspen's closing share price on Monday, the deal is worth 3.47 billion rand.

"Strategically it looks very good for Aspen," said Andrew Joannou, a portfolio manager at Cape Town-based Afena Capital.