ASPEN Pharmacare has issued a stark warning to investors. They are signalling a potential R2 billion plunge in core earnings for its 2025 financial year. This is due to the significant Aspen Pharmacare manufacturing dispute detailed this week.
In a regulatory filing on Tuesday, Aspen alerted shareholders to emerging risks. It highlighted a "material contractual dispute" with an unnamed contract manufacturing customer concerning mRNA products. While specifics remain under wraps pending an investor briefing, the company confirmed the disagreement relates to a manufacturing and technology transfer agreement.
This development follows a previous announcement regarding its sterile manufacturing capabilities. These are particularly for mRNA vaccines, which reportedly reached the commercialisation stage last year.
Financial Fallout from Aspen Pharmacare Manufacturing Dispute
The potential financial fallout is substantial. Aspen explicitly stated that normalised earnings before interest, taxes, depreciation, and amortisation (EBITDA) from the manufacturing business for the 2025 financial year could be R2 billion lower than previously guided. This calculation is made at a constant exchange rate.
Furthermore, the company anticipates a potential impairment charge of R700 million in the same financial year stemming from the Aspen Pharmacare manufacturing dispute. Aspen cautioned that estimating the full financial impact on the 2026 financial year and beyond is premature. This is due to "possible variable outcomes to the dispute and mitigating activities that will be undertaken."
Broader Industry Headwinds and Trade Tensions
Beyond the specific Aspen Pharmacare manufacturing dispute, Aspen acknowledged the turbulent global trading environment affecting the pharmaceutical sector. The company noted the potential impact of trade tensions, mainly initiated by the US, suggesting a trend towards localisation.
Aspen said that those who sell products in the US will likely look to source these products from manufacturing sites within the US. This shift towards health security and independence presents risks and opportunities for Aspen's extensive contract manufacturing operations.
Aspen's Manufacturing Strength
Despite the challenges posed by the Aspen Pharmacare manufacturing dispute, the company emphasised its robust manufacturing capabilities. The group operates 24 manufacturing facilities across 15 sites, producing a range of pharmaceutical products.
In its half-year results reported in March 2025, Aspen showcased a strong performance. Normalised EBITDA reached R5.83 billion, and manufacturing segment earnings more than doubled. Contributions from sterile contract manufacturing primarily drove this.
Aspen remains optimistic about its position, stating it possesses "valuable and needed manufacturing capacities and skills" to navigate the evolving global pharmaceutical landscape. The company affirmed its commitment to "work diligently to reposition Aspen for the new opportunities in this fluid environment".