Aspen Pharmacare has warned investors that the company’s core business faces challenges in the year ahead as the government-enforced reduction on AIDS drug prices takes effect.

Aspen will also be affected by the South African Government’s decision to freeze prices on medicines.

The government told pharmaceutical companies that they cannot increase the prices of private-sector drugs this year. This is the second blow it has dealt to Aspen, after the government negotiated lower prices for its two-year AIDS drug contract, of which Aspen hold 41%.

The pharmaceutical firm will also face increased competition from generic versions of Truvada, a key product its portfolio.

Aspen also lost a key infant milk formula distribution contract from Wyeth, following the company’s takeover by Pfizer.

Aspen CEO Stephen Saad added that the increased cost of business in South Africa would need to be offset by strong volume growth.