Adcock Ingram Holdings Limited (AIP) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Adcock Ingram Annual Results for the year ended June 2021. [Operator Instructions] Please note that this event is being recorded. I'd now like to hand the conference over to the CEO, Mr. Andy Hall. Sir?

Thanks very much, Judith. Good morning, ladies and gentlemen. Welcome to our results telecon for the year ended 30 June 2021. We appreciate all of you on the call, taking the time to join us. I'm going to take you through an overview of the company of what we consider to be a resilient performance for the year. As everyone knows, we've operated in unprecedented times over the last year in South Africa and in fact, across the globe. So that operating environment has been challenging. We still have the ongoing uncertainty and adverse impact of the pandemic, the relatively poor economic climate in South Africa that we're facing at the moment and have faced throughout the year. What we are seeing is really poor levels of employment within the country, real pressure on consumer discretionary spending. And then I guess what we'd call some swings and roundabouts in demand for our products, certain benefiting and certainly certain suffering during the pandemic. Before I proceed with that overview, I just want to share with you our company's COVID-19 status to give you an indication of what has happened in the company throughout the year. Once I'm finished with my overview, I'll hand over to Dorette Neethling, our CFO, who will take you through the detailed commentary on the financials, which were released this morning. On COVID-19, just to give you some perspective, we've got about 2,400 people at Adcock Ingram. And to date, since the start of the pandemic, we've had 637 confirmed cases of COVID-19. So around about 1/4 of our workforce that we know has tested positive for the virus. Fortunately, the vast majority of those employees have recovered over time, about -- not about, exactly 616 of them and have returned to work. In this third wave, we're currently managing 10 active cases. And as you would expect, most of those are now outside of Gauteng. And we deeply regret the passing of 11 employees at Adcock Ingram since the start of this pandemic. So the loss of our colleagues here has had a devastating impact on many of the 2,500 people at Adcock Ingram, and we extend our sympathies and condolences to those colleagues who've lost family members and loved ones. We have had stringent nonpharmaceutical interventions in the company and continue to make sure that those are adhered to on a very strict basis. So we have helped to keep our employees and our customers safe and adherence to these protocols remains a priority at the company. The national vaccination program gives us some hope that we will eventually overcome this threat. Our company has embarked on intensive vaccination awareness and education campaigns to help equip our employees with sufficient knowledge on the importance of vaccinating. In addition, since late July, we've contracted an external service provider to vaccinate our employees on-site so that people can receive injections with the minimal disruption to their personal lives. So far, it's proved relatively successful. So we have about 1/3 of our employees, just over 800, who have received at least one dose of a vaccine. And in fact, many of those have received the J&J vaccine. And bearing in mind, that was prior to vaccinations opening up for the 18 to 35-year age group, for our employees older than 60, which is encouraging, 80% of those employees have already received a vaccine. So we're making reasonable progress. And we'll continue to encourage all of our employees to register and be vaccinated. We will make every effort to assist them in this process, but we will also continue to respect the personal choice of everybody that works at Adcock Ingram. As a company, we recognize and salute South Africa's healthcare workers for their tireless efforts during this crisis. We ourselves play a part in delivering essential healthcare services. And I guess that makes us fortunate that we've been able to continue to operate throughout this pandemic regardless of levels of locked down and whatever restrictions have been enforced. We're very grateful to our employees. We have ensured that we continue to manufacture and distribute life-saving products, such as intravenous fluids, antiretrovirals as well as renal dialysis fluids. And we were also delighted that our hospital division was able to formulate, register and manufacture the sterile diluent that is required to administer the Pfizer vaccine in South Africa. Our company supply chain has obviously been impacted with temporary closure of factories and warehouses during the course of the year when we had infections amongst employees and as partner companies in both South Africa and India suffered with similar difficulties. Nonetheless, we are comfortable that all those challenges were successfully managed. So we've had business continuity throughout an uninterrupted supply of medicines. The recent incidence of civil unrest that took place in July, that affected parts of KwaZulu-Natal and Gauteng also obviously negatively impacted the operations here after year-end. Thankfully, though, we were able to make alternative arrangements to ensure the delivery of life saving renal products and intravenous fluids into KwaZulu-Natal. We were very, very fortunate that we had no employees whose lives were lost during this period. And we also had no significant disruption of company property despite the fact that neighbors of ours in the KZN region effectively had their buildings completely destroyed and looted. We're grateful to our shareholder, controlling shareholder Bidvest for the assistance from Bidvest Protea Coin, who helped us to secure our premises during that period, and Bidvest also donated food parcels to all of our employees in KwaZulu-Natal. In addition to that, Adcock Ingram and Bidvest each donated ZAR 1 million to the independent community pharmacy association fund, and that fund is being utilized to help rebuild pharmacies that were looted during the unrest. Moving on from COVID-19 and the civil unrest to the actual performance for the year. As I said, challenging, as everyone would have expected. So we were pleased with the increase of 6% in turnover to ZAR 7.8 billion. That was obviously helped by the addition of the Plush portfolio. We had that business for a month last year, and it's been in the full financial year this year. And we also onboarded a portfolio of renal products from Roche, a global multinational, in the second half of the financial year in our hospital business. Our gross margin was under pressure. You can see that's decreased 37% to 34%. Dorette will take you through some detail on the exchange rate impact there, which is really the major issue in that margin compression. We've had some difficulty with recoveries at the Clayville factory on the back of the decrease in demand for cough, cold and flu products with less throughput there. And then we've had quite a heavy proportion of antiretrovirals in the mix in this period, which also, as you know, is at thin margins, and most of those, in fact, on tender. We've had good operating expenditure control. Our OpEx, as you'll see, is lower than the prior year. That's despite the inclusion of Plush in this year. So if we remove the Plush expenditure, OpEx is, in fact, down 6% year-on-year on a like-for-like basis. This resulted in a trading profit decrease of 3% to ZAR 915 million. IQVIA is a company that reports on the market share data in the pharmaceutical industry and effectively covers round about 65% to 70% of the turnover at Adcock Ingram because not all of our products move through pharmacy. We were happy that we've grown our share of the total private market in the 12 months. And in fact, as at June, Adcock Ingram is growing according to that market report at 6.6% in a market showing growth of 5.1%. So outperforming the market in a general sense. On the regulatory front, the South African Health Products Regulatory Authority is still in the process of reviewing the scheduling status of codeine-containing medicines. Along with all the other applicants in South Africa, who distribute or sell and market these products, we've made submissions relating to the efficacy and safety of our codeine-containing medicines, and we will await further direction or guidance from the regulator as they go through that review process. We received in these numbers, a 3.68% single exit price adjustment that was implemented in March 2021, and that was lower than the 4.5% granted in the year prior to that. And obviously, these lower than inflationary price adjustments continue to put pressure on the margin. If we take a quick look at each of the business units, our consumer division competes in healthcare, personal care and home care segments, mainly through FMCG retailers. We have products primarily in analgesia, energy, dermatology, some vitamins, minerals and supplements and shoe care and home cleaning. That division delivered a strong performance during the year, reporting an increase in turnover of 44%, bearing in mind that, that includes a substantial contribution from Plush and Dorette will go through those exact numbers. And then we also moved Epi-max, one of our dermatology products into that division from the 1st of January, so effectively, Epi-max in those numbers for half of the year. If we look on a like-for-like basis, extracting those two products out of that business, their revenue still increased by 8% so giving you an indication that all of the core brands there are showing good growth. We saw a substantial shift, as you would have heard from most of the big pharmacy retailers to immune boosting products, and we certainly saw good demand for our products in that category being Gummy Vites and Viral Guard. In general, those two products offset the problem that we had in shoe care and sun care with less children not effectively being at school, less people in offices and limit -- much more limited outdoor activities. That division also launched some immune boosting products of its own under our Bioplus brands. So we now have a range called Bioplus Vit-ality in that division. And those products are being relatively well accepted in the market. And then all of the flagship brands outside -- with the -- I don't mean with the exception of Bioplus, excluding Bioplus because that has Vit-ality in it, all of the other flagship brands being Panado, Compral and ProbiFlora showed ex-factory growth so we were very, very pleased with the performance of that division. And effectively still on the lookout there for acquisitions in healthcare, personal care and baby care. In the OTC business, that's the biggest schedule I and schedule II business in South Africa, which specializes in pain, cough, colds and flu, digestive and allergy remedies that move through the pharmacy channel. That winter basket of products was the most negatively impacted portfolio at the company as a result of COVID-19. So Clicks and Dis-Chem, as you will have seen, have spoken about how these nonpharmaceutical interventions have resulted in a decline in demand for those types of products. And in essence, we really had no traditional cold and flu season in calendar '20/2020 or calendar 2021 in South Africa, although 2021 is marginally better than the prior year. Obviously aside from the reduction of profit because of those lost sales, it also reduces throughput at our Clayville factory, and that resulted in some under recoveries at that facility. What is pleasing though is that division has maintained its position as a market leader. We're in the segments in which it operates, in fact, in OTC overall. And it's actually grown its share over the course of the year. So there is still good evidence that our brands are being generally chosen above those of the competition. And we remain confident in the brands that we have in that division as well as the commercial teams. We've had to make sure that on-shelf presence has been maintained despite lack of throughput in the channel. They've implemented or continued to run their widely recognized sponsors of brave campaign, which has embarked on various activities to acknowledge frontline healthcare workers during the pandemic and continue to recognize healthcare professionals doing work in their communities. We, at the end of the year, signed an agreement with Mundipharma, a multinational company. And as of 1 July, 2021, we are now marketing the well-known Betadine and Teejel brands in that division in South Africa. So we're quite excited about that little bit of new product injection into that division. And at the prescription business, which is a branded and generics medicine business and also promotes a large number of brands on behalf of multinational companies, you will see that, that division's turnover increased by almost 10%, with nice volume growth of 5%, and that volume growth, as I mentioned earlier, mainly due to demand for ARVs from the States. So big sales into the State on the ARVs. Parts of the portfolio, particularly in acute medicine and surgical and instrumentation products were adversely affected during COVID-19 really as a result of fewer people visiting doctors, lower dispensary traffic in pharmacies and the sporadic suspension of elective surgery affecting products that would normally go into hospital like analgesia and surgical products. The sales mix, if we exclude the removal of Epi-max, contributed 3% to the top line there. And we launched two first-to-market biosimilars in South Africa in the year under review, one being infliximab, which is a product used to treat some autoimmune diseases as well as rituximab, which is also used for certain autoimmune conditions and types of cancer. And we've got a number of promising product launches in that business in the 2022 financial year. So quite a bit happening in that business at the moment, one of which we expect to be a new chemical entity in South Africa. The Hospital division is the leading manufacturer and supplier of critical care and hospital products in South Africa. Again, this business showed decent revenue improvement of 8%, obviously assisted by the onboarding of the Roche renal portfolio that I had mentioned earlier on. And then during COVID-19, when patients are unfortunately in ICU, the demand for acute renal dialysis products has increased, and that has been beneficial to this business. During the pandemic, this division has also partnered with Abbott diagnostics on a range of rapid diagnostic tests as well as with Ampath on assisting them with certain complications around making sure that testing for COVID-19 takes place in an efficient way. So we've now got what we would call a small pathology business in our Hospital division that's contributed around about ZAR 25 million or ZAR 30 million this year at the top line. Obviously, this COVID-19 pandemic negatively impacted demand for products used in elective surgeries in this division as well. And there were also low trauma and non-COVID-19 medical cases. So on the intravenous fluids side, particularly business a little bit volatile and not as consistent as one would have liked. Nonetheless, this division has produced what we consider a highly commendable result in probably the most complex operating environment of any of our business units. Just having a quick look at our manufacturing sites. The high-volume liquids facility at Clayville, I've mentioned there the effect of low demand for cough, cold and flu products. During the second half, though, it was a little bit better, the second half of the fiscal, as we started manufacturing some products there to treat other conditions to effectively improved supply of products like Citro Soda and the like, which we could move during the pandemic. We did have an inspection of that facility in November 2020. And again, the GMP status and license of that facility has been approved by SAHPRA. The ophthalmic facility that we've built there has not yet been approved by SAHPRA. That inspection was conducted in May 2021, so a couple of months ago, just about a month before year-end, and we are currently awaiting the report from SAHPRA in the hope that we will be able to commence commercial production in that facility as soon as that license arrives. At Wadeville, where we manufacture tablets and capsules and low-volume liquids as well as creams and ointments, we're still not at sustainable capacities at that factory, even though there has been some production of the triple combination antiretroviral portfolio. What will help this facility is the products that we have purchased from Aspen Pharmacare over -- in this fiscal year as well as just subsequent to year-end. Most of the production of those products will move into the Wadeville facility as we complete technology transfer from Aspen's facilities to our own. Our Aeroton facility has had good throughput throughout the year, so pretty much running there at full capacity. Also had a SAHPRA inspection during the year. Their GMP certificate was also renewed, but there's no question that there are numerous improvements required to maintain sterile compliance standards in that factory. And we have already commenced with some infrastructure upgrades there and they are likely to continue throughout the 2022 financial year. On the distribution side, I think we had mentioned about 1.5 years ago that we've now outsourced our outbound logistics to RTT, a specialized logistics company. The main areas of focus there remain on service levels, regulatory compliance and cost containment. Obviously, pressure from the pandemic in terms of just keeping operations going both in our distribution centers and for the RTT people on their trucks and the like, but average on-time delivery for the group is at an acceptable level for the year, and we are comfortable with that arrangement. And then finally, before I hand over to Dorette just to mention, our transformation remains a key strategic pillar at the company. We've worked really hard this year to keep our Level 3 BEE rating. And the ratings agency is, in fact, busy with that review as of the end of June at the moment. And we've made excellent progress on our supply and enterprise development programs. So we are optimistic that we will retain our Level 3 B. So that's a general overview. Dorette will now run through the financials, and then we'd be happy to take questions from anybody on the call.

Thank you, Andy, and good morning, everybody. Before I get into the details of the financial results, I would just like to mention that both the full annual financial statements for the year as well as the results, results booklet are available on our website, and the latter is also available on the same platform. Also, in June 2021, we acquired the remaining 51% stake in Novartis Ophthalmics for approximately ZAR 60 million. This entity was already consolidated into the group as we did exercise control over it already. So closely look at the income statement, for those of you who have downloaded the booklet, it is on Page 5, turnover of ZAR 7.8 billion increased by 5.9% compared with 2020, driven by an increase in mix of 3.8%, which includes the Plush acquisition for the full year and the onboarding of the Roche Renal portfolio in the hospital business. An average price increase of 4.6% was realized, showing that the strategy of increasing our non-price regulated basket of products is effective. Organic volumes declined by 2.5% due to the poor demand for cough, colds and flu medicine, the low levels of patients consulting doctors and the sporadic suspension of elective surgeries. Gross profit of ZAR 2.7 billion ended 2.1% lower than the prior year, and the margin decreased from 37.3% to 34.5%, mainly impacted by the weakening in the exchange rate on imported cost of goods, and as Andy mentioned, the lower factory recoveries at Clayville and a change in sales mix. With regards to the adverse impact of the weaker currency, I will run you through some of the foreign exchange details. During the year, we brought the following material foreign currencies, EUR 37.8 million at an average rate of ZAR 18.92, which was 11.9% weakening compared to the prior year, which was at ZAR 16.91. And we also bought USD 70.5 million at an average rate of ZAR 16.25, which represented a 7.8% weakening compared to the prior year, which was at ZAR 15.07. With approximately 61% of the FCs in U.S. dollar and 38% in euro, the weighted cost of our basket of all currencies increased by approximately 9.4% in 2021 compared to the prior year. At year-end, the business was carrying the following open FEC, EUR 19.5 million at ZAR 17.66, which is a 6.7% strengthening over the ZAR 18.92, which we achieved in the year. And the USD 21.9 million at ZAR 14.43, which is 11.2% strengthening over the ZAR 16.25 that we achieved in 2021. Operating expense discipline has been outstanding, ending 1.5% lower than the prior year despite the inclusion of Plush in the current year. As the cost savings initiatives, we implemented in the latter part of the prior financial year were realized. On a like-for-like basis, stripping out the impact of Plush, operating expenses were lowered by 5.6%. As a result, trading profit of ZAR 915 million is 3% below 2020. The non-trading expenses of ZAR 65 million includes retrenchment costs of ZAR 53 million, share-based expenses of ZAR 18 million, the partial impairment of the Vita-thion intangible of ZAR 13 million and some transaction costs of ZAR 1 million. Consequently, operating profit of ZAR 850 million ended 1.5% below the prior year. The net finance costs were ZAR 43.7 million during the year and it includes the IFRS 16 finance costs of ZAR 28.5 million. Equity accounted earnings from joint ventures for the year, which arises from National Renal Care, the JV with Netcare and the India JV with Meiji are ZAR 97 million, which is pretty much in line with the prior year. The JV in India, which makes up about 70% of that number delivered results, which are 9.1% ahead of last year, whilst NRC representing the 30% reported results declining by 15% after heavily impacted by the COVID-19 pandemic being a frontline service providers. Profit before tax for the year is ZAR 906 million, down 2.6%. The effective tax rate adjusted for equity-accounted earnings is 30.2% with nondeductible expenditure causing the increase over the statutory rate. The minorities in Novartis Ophthalmics prior to the acquisition of the remaining 51% stake by the group, and the minorities in Menarini amounted to just short of ZAR 5 million. Just to mention that during the year, a subsidiary in the group purchased a further 5.7 million Adcock Ingram shares in the open market at an average price of ZAR 42.19 and the price range between ZAR 39 and ZAR 49.4. The group now holds 14 million shares in treasury. Headline earnings for the year decreased by 5.4% to ZAR 671 million, and this translated into headline earnings per share of ZAR 404.7, a decrease of 3.1%, which is better than the headline earnings decline due to the share repurchases by the group. So if we turn to Page 7 of the booklet, looking at the balance sheet, and specifically the non-current assets. The depreciation charges for the year amounted to ZAR 186 million, and -- which is pretty much in line with the prior year, and it includes depreciation charges of ZAR 42 million on the separately disclosed right-of-use assets, which were capitalized in terms of IFRS 16. Intangible assets, including goodwill, have a carrying value of ZAR 1.1 billion and now represents 15% of total assets. It comprised of generic, consumer and OTC trademarks and license agreements and also includes the addition of the Aspen Pharmacare portfolio of products acquired in the current financial year for ZAR 148 million. Amortization amounted to ZAR 9.5 million in the current year. As reported in the subsequent event note, on 30 July 2021, we acquired an additional portfolio of 14 prescription OTC and hospital brands from Aspen Pharmacare for ZAR 180 million, with historic annual revenue of approximately ZAR 80 million. The terms included 2-year manufacturing and supply agreement for products manufactured by them to accommodate the technology transfer to our facilities. And moving to the current assets, inventory of ZAR 1.9 billion is stated at the lower of cost and net realizable value after provisions of ZAR 270 million. The days in inventory reduced to 123 days compared to the 157 days at June 2020, following a concerted effort to reduce inventory levels while giving consideration to strategic holdings of products affected by the global supply challenges. Trade accounts receivable of ZAR 1.6 billion are shown net of provisions of ZAR 38 million. The days in receivables of 60 days significantly lower than the 66 days reported in June 2020, thanks to the efforts of our credit controllers, and we had now bad debts written off during the year. The increase in the absolute figure is due to the average monthly sales in the last 2 months of this year being ZAR 150 million more than the average monthly sales in the last 2 months of 2020. Government debt makes up almost 19% of trade receivables, of which half is due within 60 days or days. Moving to the bottom part of the balance sheet. The issued share capital and share premium reduced by ZAR 256 million following the share buybacks by the group, and the group now has shareholder funds of ZAR 4.7 billion at the end of the year. The annual liabilities that you see on the balance sheet totaling ZAR 280 million relates to leases. If we turn further on to the segment information, which is on Page 10 and 11 of the booklet, I would like to point out that we have restated the prior year's figures by including the research and development activities of India in other shared services and we also included the results of Kenya into OTC segment as that division manages the territory. Furthermore, as Andy mentioned, the Epi-max brand has been moved from prescription at the start of the calendar year and is now managed and reported in the consumer segment, as the brand is better aligned with the customer set of consumer. So if we look at the consumer division, the turnover improved by 42% to just under ZAR 1.3 billion, substantially aided by the inclusion of Plush, which contributed ZAR 212 million more than it contributed in 2020. And the inclusion of Epi-max, which contributed just under ZAR 90 million in the second half of the year. On a like-for-like basis, sales improved 8.4% with strong performances, as Andy mentioned, from Panado, Compral and Bioplus and the significant demand for the immune boosting products, Viral Guard and Gummy Vites due to COVID-19. And Bioplus sales were aided by Vit-ality range of the vitamins and minerals. An average price increase of 9.9% was realized, but volumes decreased by 3.3%. The gross margin is 200 basis points below the prior year, impacted by the weaker rand and the inclusion of Plush, which is at a lower margin. As a result, trading profit ended on an impressive ZAR 235 million, 52% ahead of the prior year, which was at ZAR 155 million or 13.5% on a like-for-like basis. Moving to the OTC business, OTC sales of just over ZAR 1.7 billion ended ZAR 260 million below the prior year, adversely impacted by the absence of a cold and flu season in South Africa, resulting in the lower demand for our winter basket of products. Volumes declined by 8.3%, evidenced by the weak demand for cough and cold brands such as Alcophyllex and Corenza, both of which declined by more than 50% compared to the prior year. The repatriation of the Norgine products to Aspen in June 2020 resulted in a mix decline in OTC of 5.5%. Gross margin ended 370 basis points below the prior year, adversely impacted by the lower factory recoveries due to the decrease in production levels following the decline in demand compounded by the weakening of the rand. Operating expenses were 15% lower than the prior year, which mitigated some of this Aspen sales effect. As a result, trading profit decreased by 31% to ZAR 292 million. And this business now has the impact of the pandemic in its pace for the full year. In looking at prescription, the turnover improved by 9.5% to just over ZAR 3 billion, aided by price realization of 5% and volume growth of 5.4%, supported by the ARV portfolio growing 45% to almost ZAR 590 million, benefiting from the orders on the State tender. ARV has compensated for the decrease in volumes attributable to the COVID-19 outbreak, which resulted in lower levels of patients consulting doctors, lower dispensary traffic in pharmacies, the sporadic suspension of elective surgeries, which all impacted the pain, dermatology, urology, surgical and instrumentation and ophthalmology portfolios. Mix, excluding the impact of the move of Epi-max, contributed 2.7%, supported by the launch of the products, as Andy mentioned earlier. The impact of the movement of Epi-max adversely impacted their sales by 3.5%. The gross margin for prescription ended 450 basis points below the prior year, with an unfavorable sales mix with a higher proportion of ARV tender sales at lower margins coupled with the weakening of the rand. However, with excellent cost control and cost saving initiatives implemented in the latter part of the prior financial year being realized, trading profit of ZAR 224 million ended 2.8% ahead of the prior year, a pleasing performance in the current environment. And lastly, the Hospital division with sales of ZAR 1.7 billion ended 7.7% above the prior year. Mix contributed 6.2% due to the onboarding of the Roche renal portfolio and pathology partnerships. The organic volumes declined by 5.9% as a result of the decrease in demand for products used in elective surgeries, trauma and non-COVID medical cases during the pandemic. The gross margin ended 120 basis points below the prior year as a result of a weaker exchange rate and the inclusion of the Roche portfolio at lower margins. Operating expenses ended in line with the prior year, which resulted in trading profit of ZAR 161 million, ending an impressive 15% above the prior year. Thank you. And I will hand back to Andy now.

Thanks, Dorette. And Judith, thank you that's all we wanted to talk about today, but we're happy to take questions from anybody on the call.

[Operator Instructions] The first question comes from Jarred of All Weather Capital.

Can you hear me?

Got you perfect, Jerred.

All right. Just a quick one on the retrenchment costs. retrenchment costs. Would you just give us an indication of if that's something that is going to persist into next year? Or is that ZAR 32 million we can look at as a one source in this period?

Jarred, so just to make sure I understand your question properly, let me answer it in two different ways. We don't expect any more retrenchments in the business. So we've effectively cut now into sales and marketing. We've cut into distribution, and we've cut into the factories. So we certainly think that the current structure of the company is appropriate for what we're trying to achieve. And those are -- so that's effectively a one-off cost that you'll see in the non-trading.

[Operator Instructions] The next question comes from Hayden Smith of Investec Bank.

Just a question in terms of availability of APIs. I know it was a concern some time back. Can you just give us some color with regard to availability and so forth, if you're experiencing any supply chain bottlenecks or so forth in terms of securing supply?

Sure, Hayden. So in terms of overall supply of APIs, we're okay. We're not seeing any significant shortages in that area. There are only two things that are impacting us at the moment that are allied to that. The one is the cost of paracetamol has gone through the roof in the last 6 months. So raw paracetamol at the moment is costing, depending on who your supplier is anywhere between 40% and 60% more per kilogram than it costs a year ago. So that's going to impact margins with products like Panado and Compral to some extent, although our Indian joint venture absorbed some of that cost with us. So we don't take the full hit on that. And then the second area where we are struggling a bit is still to get finished goods through the Durban port after that civil unrest. The transmit is struggling with difficulties of its own. So we are investigating bringing containers into some of the other ports in South Africa, including Mozambique and Namibia, to try and alleviate that problem a little bit. But on the pure API availability, we're okay.

Hayden, does that conclude your questions?

Yes.

The next question comes from Letlotlo Lenake of Investec.

Can you guys hear me?

Can hear you, Letlotlo.

My question is just more around the Aspen products that you purchased in this portfolio -- that you purchased recently. Can you just give more detail in fact of what those products are? Because I think it's the first time that I hear that products so I just wanted to get a clarity on what those products are?

Yes. Look, I think the Aspen strategy has been well publicized of what Aspen is doing with its company. So we're not going to comment on that. But as part of the rolling out of their strategy and evaluation of their portfolios, there are certain products in there that are -- don't seem to serve that strategy too well in terms of creating manufacturing complexity in their organization because they are a quite low volume products and also they move to what, I think, is called more specialized therapies. So in general, these are generic products that fit mainly into our prescription division. They include antibiotics, they include antihypertensives, they even include some hospital products -- intravenous hospital products. And then there are a couple of products also that go into the OTC basket. So as they realign their portfolio, there are some products there that just have a better home at Adcock Ingram, we would suggest. And all of them are well-established brands in the market. Many of them have been around for years, some for decades that we effectively can bolt into our three divisions here because none of these have been consumer brands without increasing any of our sales and marketing infrastructure.

The next question comes from Karl Gernetzky of Business Day.

Yes. I just have two quick questions or perhaps the first question is quick. I know that the basket or the contribution from unregulated is now approaching close to 50%. But kind of what was it in 2019, if you don't mind? And then the other question I just wanted to ask briefly is that now we just over 2 years since the Bidvest controlling stake and just kind of how does this prove beneficial for you guys? I appreciate it.

Karl, unregulated basket, I can't remember the exact number in 2019. But over the last 24 months, that number has moved from just short of 70% of ACP regulated business to 52%. So it's moved from about 2/3 to around about 0.5 in terms of price regulated products. And then on the Bidvest issue, things -- I would say it's business as usual. They've got three directors on the board. We do get some benefit effectively from what Bidvest does for its group employees. They include Adcock in all of those matters, which we are grateful for. So they treat us as a subsidiary in terms of their human capital initiatives. But outside of the Board interactions, there's no real direct operational involvement from Bidvest in the business, which, I think, is common with their operating model that they prefer to have their business units run on an autonomous basis, on a sort of independent and entrepreneurial footing.

Karl, does that conclude your question?

Yes.

The next question comes from Grant Morris of Clucasgray.