One of South Africa’s richest men lost R1.7 billion in a day

Aspen Pharmacare CEO Stephen Saad lost an estimated R1.68 billion on Tuesday when his company’s share price tanked due to its latest results and missing targets.

Aspen is the biggest pharmaceutical company in South Africa. It was co-founded by Saad and Gus Attridge in 1997. Today, it has a market cap of R91 billion and 70 established business operations in 55 countries. 

On Tuesday, 3 September 2024, Aspen released its results for the year through June 2024. While the company’s revenue grew by 10%, its profit dropped by 16% to R4.40 billion.

Aspen attributed this to its Commercial Pharmaceuticals business, which suffered from the sharp price decreases in China under its national volume-based procurement (VBP) programme. 

China’s national VBP programme is a government initiative to lower the prices of essential drugs and medical devices through centralised procurement. 

It involves tendering the market volume of these products to manufacturers at the lowest price, which can lead to significant price reductions.

These price reductions significantly impacted Aspen’s sales and caused the company to fall short of its profit and earnings targets. 

In its latest results, Aspen explained that China’s VBP programme and its European operations impacted its sales by approximately R2 billion.

In its 2024 financial year, Aspen achieved a record second-half normalised EBITDA of R6.06 billion – up 17% from the first half of the year. 

However, the higher-than-anticipated negative impact of VBP resulted in Aspen falling short of its targeted mid-single-digit growth in EBITDA. 

These results sent Aspen’s share price plunging, with the company slumping by more than 13% on Tuesday. 

As its founder and CEO, Saad has a significant stake in Aspen, meaning his shares lost significant value when the share price slumped on Tuesday.

In its 2023 financial statements, Aspen reported that Saad owned 12.8% of the company’s shares, the same stake he held in 2022.

This means Saad owns over 57.12 million Aspen shares worth more than R13.56 billion at market open on Tuesday, 3 September.

However, after the significant share price fall on Tuesday, Saad’s shares ended the day with a value of R11.88 billion.

Therefore, Saad lost an estimated R1.68 billion following the release of this company’s results.

Stephen Saad

Due to his stake in Aspen, Saad is one of the richest men in South Africa. He founded Aspen alongside Attridge in 1997, when it began as a small business in Durban, South Africa. 

The two recognised a market for affordable, high-quality medicines, and the company quickly grew through strategic acquisitions and innovative business practices.

“It was so obvious that there was a market out there that was hungry for high quality but affordable products and that needed representation,” Saad told Forbes Africa. 

“Although this knowledge had been acquired through the little sphere of doctors that I serviced, I was convinced it could be applied on a bigger platform – even globally.”

A pivotal moment for the company came in 2000 with the hostile takeover of South African Druggist (SAD). 

Despite challenges, including opposition from SAD management and the inability to conduct due diligence, Aspen successfully acquired the company with financial backing from property entrepreneur Jonathan Beare and Investec’s Stephen Koseff. 

This acquisition expanded Aspen’s operations and shifted its focus to pharmaceutical development and marketing.

Under Saad’s leadership, Aspen experienced rapid growth, becoming a global leader in generic medicines. Aspen has made significant contributions to healthcare, particularly in Africa. 

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

This initiative has helped to improve access to life-saving medications for millions of people in need.