The growth strategies of a global pharmaceutical company : a case study of Aspen Pharmacare Holdings Limited.

Abstract

The evolution of Aspen Pharmacare Holdings Limited from its origins less than 20 years ago is a success story worthy of analysis. Aspen began trading in 1997 as a small pharmaceutical business managed out of a suburban house in Durban, South Africa and by 2004 had achieved revenues of R2,2 billion. Aspen has now grown to become a global company with offices in approximately 50 locations across the world and revenues of R29,5 billion in 2014. Given the rapid and sustained growth achieved by Aspen over the past 11 years (2004 – 2014), the main aim of this study was to identify and analyse the growth strategies adopted by Aspen over this time period. The research method used was a descriptive study through a single case study of Aspen by analysing secondary data in the form of publicly available company reports and presentations, as well as financial results, issued by Aspen between 2004 and 2014. Qualitative data was extracted and analysed to determine the growth strategies used by Aspen, whilst certain quantitative data was used for illustrative purposes. The study found that, guided by strategic and visionary leadership, Aspen adopted a number of growth strategies including (i) organic growth, as a key factor in creating incremental value for Aspen and its stakeholders, (ii) inorganic growth, in the form of carefully planned and well executed acquisitions aligned to the Group strategy, (iii) extending territorial coverage through global expansion, particularly into emerging pharmaceutical markets, and (iv) ongoing investment in production capabilities as a means of creating a strategic advantage. Despite the challenges of intense competition, restrictive legislation, pressure on medicine prices, currency volatility and market specific risks, Aspen has delivered double-digit earnings growth to its shareholders for 16 consecutive years. The study culminates in the development and proposal of a sustainable growth model which is intended to be a unique contribution to the academic writings on business growth. It may be used by companies (particularly South African pharmaceutical companies) as part of their strategic planning process for growth.