Aspen’s proposed commitments to address the European Commission’s preliminary assessment regarding pricing practices ASPEN PHARMACARE HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (“Aspen Holdings”) Registration number: 1985/002935/06 Share code: APN ISIN: ZAE000066692 LEI: 635400ZYSN1IRD5QWQ94 and its subsidiaries (collectively “Aspen” or “the Group”) ASPEN’S PROPOSED COMMITMENTS TO ADDRESS THE EUROPEAN COMMISSION’S PRELIMINARY ASSESSMENT REGARDING PRICING PRACTICES FOR CERTAIN PRODUCTS IN THE EUROPEAN ECONOMIC AREA In May 2017, the European Commission (“the Commission”) opened an investigation of Aspen Holdings and certain of its European subsidiaries (“Aspen”) under Articles 102(a) of the Treaty on the Functioning of the European Union (“TFEU”) and Article 54 of the European Economic Area Agreement (“EEAA”). The investigation was in respect of the molecules (i) Chlorambucil; (ii) Melphalan; (iii) Mercaptopurine; (iv) Tioguanine; and (v) Busulfan (“the Products”) sold in the European Economic Area(1) (excluding Italy) (“EEA”). The Commission has now adopted a preliminary assessment, following its investigation, setting out concerns that Aspen may have abused its dominant position by imposing unfair prices pursuant to Article 102(a) TFEU and Article 54 of the EEAA. The Products generated approximately EUR 28 million in revenue for the financial year ended 30 June 2020 in the EEA. Over 80% of the revenue is generated by solid dose form Products that are currently sold at an average price of less than EUR 2 per tablet and approximately EUR 3 per patient per day, this despite the Products’ low volumes (each Product treats, on average, around 200 patients per year per EEA Member State with one product having an average as low as 8 patients). The average prices of all of the Products are well below those of certain other post-patent originator oncology drugs that face generic competition in the EEA. In addition, in a number of Member States, certain of the Products faced higher priced generic equivalents. Consequently, Aspen disagrees with the Commission’s preliminary assessment. Notwithstanding this, in order to meet the Commission’s competition concerns, Aspen has proposed commitments pursuant to Article 9(2) of Regulation (EC) No 1/2003 (“the Proposed Commitments”). The Commission has responded positively to the Proposed Commitments which it intends to accept, subject to market testing. Market testing will allow interested third parties to submit their observations on the Proposed Commitments to the Commission within the next two months. If the result of the market testing is favourable the Proposed Commitments will become binding upon Aspen and the Commission will close its investigation without any finding against Aspen. The key elements of the Proposed Commitments are as follows: - Average price reductions per Product across the EEA of between 27% and 79% (overall average of 73%); - Aspen to maintain such reduced prices for ten years and guarantee supply for at least five years; - After five years, should Aspen wish to cease commercialising any of the Products it will make them available for sale to a third party, or absent an interested purchaser, maintain the marketing authorisations; and - Aspen will make a one-time payment to the relevant entities responsible for reimbursement of medicines and other beneficiaries as appropriate to bridge the implementation of the price reductions. Aspen is focused on ensuring supply and access to affordable pharmaceuticals for our patients and will continue to cooperate with the Commission to prioritise patient needs. This is consistent with Aspen’s vision of providing quality affordable medicines, an object achieved over many years and reflected in the role it has played in saving millions of lives across Africa through pioneering and supplying generic anti-retroviral medicine for the treatment of HIV/AIDS. The current COVID-19 crisis has further demonstrated the importance of governments and companies cooperating to prioritise access to pharmaceuticals. Aspen, as a leading supplier of Anaesthetics, Thrombosis treatments and most recently dexamethasone, has and will continue to work closely with authorities to ensure the supply of medically critical products throughout the world, including in the EEA. Aspen is pleased that the Commission has responded positively to the Proposed Commitments and is hopeful that the result of the market testing will also be supportive of the proposed resolution of this matter. Footnotes: (1)The European Economic Area comprises the EU Member States (including the United Kingdom) together with Iceland, Liechtenstein and Norway. (2)Article 9 enables companies under investigation by the Commission to offer commitments in order to meet the Commission's concern. If the market test indicates that the commitments are a satisfactory way of addressing the Commission's competition concerns, the Commission intends to adopt a decision making the commitments legally binding on Aspen. Such a decision would legally bind Aspen to respect the commitments it has offered and would result in no finding that there is an infringement of EU antitrust rules. Durban 14 July 2020 Sponsor Investec Bank Limited Date: 14-07-2020 11:58:00 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.