Adcock Ingram arguably suffers from investor concerns about its size and market perception. Aspen Pharmacare, as the larger and more internationally recognised player, has greater liquidity in its shares and is seen as more of an institutional stock, which naturally commands a slight premium. In addition, Aspen’s strategic repositioning towards complex manufacturing and away from commoditised products — though it is still a work in progress — is perceived as positioning the company for better long-term profitability, even if the current execution has been uneven.
Of course, of the two, Adcock boasts the far longer history. Founded in 1891 as a modest pharmacy in Krugersdorp, it grew steadily into one of South Africa’s leading pharmaceutical players, producing branded and generic medicines, over-the-counter products and hospital and critical-care solutions for the private and public sectors.
Its first major milestone came in 1950, with a listing on the JSE. It quickly earned blue-chip status and became a fixture of the country’s industrial landscape. In 2000 majority shareholder Tiger Brands bought out the remaining minorities, took Adcock private and folded it into its consumer goods empire. For a few years Adcock operated inside Tiger’s sprawling conglomerate, but the promised synergies never fully materialised.
In 2008 Adcock Ingram was relisted as an independent company when Tiger Brands unbundled it to shareholders, allowing the business to refocus on its pharmaceutical roots. The group wasted little time in flaunting its newfound freedom, pitching a takeover bid for smaller rival Cipla Medpro in 2009. The bid was withdrawn, though in the next few years Adcock bolted on several smaller businesses.
But independence from Tiger Brands brought its own turbulence. In 2013 a fierce battle for control erupted between local powerhouse Bidvest Group and Chilean multinational CFR Pharmaceuticals. After months of boardroom drama, Bidvest ultimately gained the upper hand, stabilising Adcock’s ownership and restoring operational focus.
That battle for control of Adcock, interestingly, was waged at markedly higher share prices. Bidvest initially pitched a R65 a share offer, and later CFR emerged with a bid that ranged between R73.51 and R75 a share. CFR’s offer was worth $1.6bn — then equivalent to R12.6bn — compared with Adcock Ingram’s market value of just under R8bn today.
It might be worth recalling that the Adcock tie-up with CFR was envisaged to create a formidable emerging-markets pharmaceuticals company with listings in Santiago and Joburg, targeting a market of more than 2-billion patients across Latin America, Africa, Southeast Asia and India.
Bidvest, notwithstanding an increased offer price from CFR, eventually won out in 2014. In April that year Adcock CEO Jonathan Louw unsurprisingly stepped down.
The role of Bidvest also shapes the investment case. It is Adcock’s largest shareholder, with a 64.8% stake, but the conglomerate’s strategic intentions remain a point of debate. For now, Bidvest appears content to treat Adcock as a stable, cash-generative investment rather than as a platform for aggressive expansion. Adcock’s disciplined dividend policy and cautious acquisition strategy mirror Bidvest’s broader focus on cash flow and capital return. In response to investor questions at the February 2025 results presentation, Adcock CEO Andy Hall confirmed that “there’s nothing on the table” in terms of major acquisitions, underscoring a measured, organic growth approach.
Bidvest typically prefers full ownership of its subsidiaries and tends to avoid having listed entities within the group, which makes Adcock something of an outlier
— Richard Cheesman
Bidvest’s deep operational resources and appetite for bolt-on acquisitions could become far more relevant if market conditions improve or if Adcock identifies attractive assets outside the price-regulated space, such as personal care, pharmacy front-shop products or adjacent consumer health-care categories. In an environment of rising regulatory pressure and shrinking margins, scale could become a decisive advantage — and Bidvest’s patient capital and strategic firepower would be an obvious asset if consolidation opportunities emerge.
Urquhart Partners founder Richard Cheesman believes Adcock has been somewhat constrained under Bidvest’s ownership, given that the parent company is not a pharma specialist. “Bidvest typically prefers full ownership of its subsidiaries and tends to avoid having listed entities in the group, which makes Adcock something of an outlier. The path forward is unclear, but a few scenarios, such as a buyout of minority shareholders, a joint venture with an international pharma player or even a sale of the business, would all be strategically logical.”
Rowan Williams, chief investment officer at Nitrogen Fund Managers, agrees that Bidvest is a neutral holder of Adcock, and would consider selling its stake if it got a compelling offer. But given Adcock’s exposure to the health-care space, Williams does not believe that Bidvest would consider buying out minorities and delisting the company, as it does not fit easily into the broader Bidvest portfolio and focus on business services.
Sean Culverwell, equity analyst at Anchor Capital, points out that Bidvest remains adamant that it will not pay a premium for Adcock. “Adcock is a nice strategic [asset] for Bidvest’s portfolio, given its defensive earnings base, and it diversifies Bidvest’s local earnings stream,” he says. “It seems Bidvest’s capital allocation priority is to bulk up its offshore services footprint with a view to listing that business separately — like it did Bidcorp. I expect any discretionary capital will be directed there in the medium term. I don’t expect Bidvest to deploy the R3bn or more required to buy out minority shareholders in the near term.”
Culverwell says that if an offshore suitor puts forward an offer, Bidvest will consider it in the context of its current portfolio restructuring. “However, until then, Adcock remains a reliable source of cash.”
Cheesman highlights the presence of India-based Natco Pharma on the Adcock share register. “Natco Pharma may hold only a small stake in Adcock, but with a strong cash position and global ambitions, it’s not a player to dismiss outright. For now, we watch with interest to see what unfolds.”
Culverwell agrees that Natco Pharma’s presence on the share register is intriguing, especially as Hall has confirmed there is no commercial relationship between the companies. “However, given Natco’s current struggles — including a 42% drop in share price following revenue declines — I don’t see its involvement leading to any material developments in the short term.”
Williams, though, reckons Natco Pharma’s small shareholding does seem to indicate that there are potential foreign buyers of Adcock, as Natco will also realise that Bidvest may consider disposing of its holding. “If we see an uptick in growth in South Africa, then Adcock will become a more attractive takeover target for an international player looking to gain exposure to the South African market.”
Titanium Capital founder Charles Boles says Adcock needs to focus on growing its non-single exit price (SEP) business, with 59% of the group’s operations still subject to that margin-limiting arrangement. “With a government determined to reduce the cost of health care, you are on the wrong side of the river if you are predominantly plying your trade in the SEP categories.”
Boles points out that Adcock’s overseas peers have in many instances spun out their consumer health businesses, like Johnson & Johnson did with Kenvue in mid-2023 and GSK did with Haleon a year earlier. “When pharma companies spin off their consumer health arms, these businesses get rosy ratings — sometimes between 25 and 30 times earnings.”
Boles says the problem for Adcock is that its market rating is about eight or nine times earnings, and to grow its consumer health business it will have to make acquisitions. “Very seldom do quality branded businesses come onto market … and if they do, they don’t come with price tags of eight or nine times earnings. As much as Adcock might want to grow, there aren’t many great investment opportunities around at the moment.”
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