AFT expects $5mln cash from selling hospital products range to Baxter Healthcare
By Sophie Boot
March 21 (BusinessDesk) - AFT Pharmaceuticals, which manufactures the Maxigesic painkiller, is selling its "non-core hospital products" to Fortune 500 company Baxter Healthcare in New Zealand and expects to do the same in Australia.
Baxter, which is listed on the New York Stock Exchange, bought Claris, who AFT had an agreement with, in 2017. Claris's website describes the company as a skin specialist and provides mole mapping and surgical treatments such as biopsies and mole removal. AFT said its deal with Claris in New Zealand and Australia expires in March 2020 and following Baxter's acquisition, there was no certainty of renewal.
The New Zealand sale will take place on March 29 and Australia will follow in May or June 2018, the company said.
"These products for divestment across Australia and New Zealand contribute around 7.5 percent of AFT’s operating revenue," AFT said, adding that revenue will be "more than replaced within the next financial year by the growing existing over-the-counter and new targeted hospital products." The company said it expects the sale to generate $5 million in cash which it will use for international expansion plans, and will make a positive contribution to earnings before interest, tax, depreciation and amortisation of "several million dollars" in the 2019 financial year.
In November, AFT reported it had narrowed its first-half loss in the six months to Sept. 30, 2017, to $6.9 million and said it is still on track to return to profitability this financial year or the next as it increases the number of markets where its products are sold.
Growth in Australia, which is 55 percent of the company's market, drove operating revenue up 23 percent to $36.6 million in the first half and AFT said it expects continued strong growth from Australia "particularly with the re-scheduling of codeine-based painkillers from over-the-counter to prescription only from Feb. 1, 2018," though it noted potential for a degree of patient stockpiling of codeine to delay the uptake of products such as Maxigesic.
New Zealand revenue grew 5 percent to $14.1 million in the first half and represented 39 percent of the group total, while its main market in Southeast Asia was Singapore. AFT also sells products in Italy, the United Arab Emirates, the UK and Israel, and has added smaller markets such as Malta and Brunei.
The shares dropped 0.8 percent to $2.58, and have fallen 8 percent in the past year.