Aspen’s share price plummeted by 30% after it warned shareholders that its earnings could significantly decline due to a material contractual dispute.

Aspen, based in uMhlanga, South Africa, is a global speciality and branded pharmaceutical company with a presence in emerging and developed markets.

It was founded in 1997 by Stephen Saad and Gus Attridge as a small business in an old Victorian house in Durban. Since then, it has grown tremendously.

Today, Aspen is the largest manufacturer of generic medicines in the southern hemisphere, supplying generic medicines to over 150 countries.

It is the first company on the continent to launch a generic anti-retroviral for the treatment of HIV and AIDS patients, thus becoming the largest supplier.

Its share price increased by over 10,000% between 2000 and 2015, making it one of the best-performing shares on the Johannesburg Stock Exchange (JSE).

However, the company’s share price has not performed well since then. It is down significantly from its highs, and recent news saw its share price decline further.

On Tuesday, 4 April 2025, after the market closed, it informed shareholders that “risks have recently arisen relating to Aspen’s Manufacturing business”.

These risks include a material contractual dispute related to a manufacturing and technology agreement with a contract manufacturing customer for mRNA products.

It could not provide further information, as the dispute details are subject to contractual confidentiality. However, it warned that the impact is material.

Aspen alerted shareholders that normalised EBITDA from the Manufacturing business for the 2025 financial year in constant exchange rate could be R2 billion lower than last guided.

Depending on the outcome of the dispute, the manufacturing business’s EBITDA for the 2025 financial year could be less than 50% of that reported in the 2024 financial year.

In addition to these effects, an impairment of R770 million regarding related technology could also arise in the 2025 financial year.  

Due to possible variable outcomes, Aspen said it was too early to estimate the full financial effects on the 2026 financial year and future years.

The company will undertake mitigating activities and continue to address the dispute. “Shareholders will be updated on any related developments as and when appropriate,” it said.

Aspen affected by the United States’ trading changes

Aspen said the pharmaceutical industry has been, and will continue to be, affected by the current turbulent and unpredictable world trading environment.

“Those who sell products in the United States are likely to source them from manufacturing sites within the country,” it said.

Other countries and continents have also been impacted as health security and independence have become a greater priority.

This shifting landscape provides both risk and opportunity for Aspen’s contract manufacturing business.

“Aspen has valuable and needed manufacturing capacities and skills to assist in filling voids that have become evident in the changing global pharma landscape,” it said.

“We will work to reposition Aspen for the new opportunities which present themselves in this fluid environment.”

In a live webcast on 23 April 2025, Aspen CEO Stephen Saad said the pharmaceutical industry is highly exposed to the risk in the current global environment.

“We expect to be exposed to tariffs imposed by the United States and the retaliatory tariffs imposed by other countries,” he said.

He said the threat of tariffs has already significantly impacted the industry, and countries will need to consider health independence.

Although the confidentiality clause prevented him from discussing the contractual dispute in detail, he said it was unexpected.

“This development is a bitter disappointment, exacerbated by the value of the investment we made to access the mRNA technology,” Saad said.

Aspen has two mRNA facilities – one in France and another in South Africa. This dispute will impact both facilities.

He added that although it will take time, Aspen will replace any business that it may lose due to this contractual dispute.