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Manufacturing

Aspen has widely accredited manufacturing facilities and global economies of scale positioning us to produce high quality, affordable medicines for a diverse customer base. We manufacture a wide variety of product types including steriles, oral solid dose, liquids, semi-solids, biologicals and APIs. Our strong track record and experience in manufacturing as well as increasing investments in sterile capacities and capabilities presents Aspen as a globally relevant player in the sterile manufacturing industry

2021
R’million
2020 (CER)
R’million
Change
%
Revenue
API 5 154 5 032 2
FDF 3 495 1 446 >100%
Total 9 892 7 661 29
Gross profit percentage 21,8% 30,6%

26%

of Group revenue

12%

of Group gross profit

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Performance

The Manufacturing segment grew 29% to R9 892 million, contributing 26% to Group revenue as compared to 22% in the prior year. This growth was driven predominantly by revenue from FDF supply agreements, arising from recent disposals to Mylan/Viatris and Sandoz and the initiation of the COVID-19 vaccine revenue stream in the last quarter of the financial year. Excluding these supply agreements, the Manufacturing segment revenue was up 7%.

Aspen’s manufacturing sites continued operations throughout the pandemic, ensuring continuity of supply of medicines to patients and customers around the world. Operating under COVID-19 conditions gave rise to additional operating and logistic costs, which negatively impacted gross profits. In addition, the revenue contribution from supply agreements arising from recent disposals to Mylan/Viatris and Sandoz, which are at low or no margin, also weighed on the gross profit. Gross profit percentage contracted to 21,8% for the year, as compared to 30,6% in the prior year.

Active pharmaceutical ingredients

API-related revenue contributed 65% to the Manufacturing segment revenue. The API Chemical business grew 2% to R5 154 million, having been negatively impacted by inefficiencies associated with keeping sites operational and ensuring COVID-19 protocol protected the safety of our employees. API Biochem revenue grew 5%.

Finished dose form

FDF contribution to the Manufacturing segment increased materially to 35% as compared to 19% in the prior year, and delivered the greatest contribution to revenue growth for the segment of 142%. The strong growth delivered was due to transaction-related supply to Mylan/Viatris and Sandoz and the circa R400 million contribution from revenue from the production of the Johnson & Johnson COVID-19 vaccine at the Gqeberha production site in South Africa.

Prospects

In the current financial year, Aspen achieved a key milestone, having initiated the manufacture of Johnson & Johnson COVID-19 vaccines at the state-of-the-art, sterile manufacturing facility in Gqeberha, South Africa. The production of vaccines in South Africa marks a significant step towards Aspen’s goal of improving access to medicines for patients. In the next financial year, Aspen expects the Manufacturing business to again record the largest gains in revenue growth percentages, supported by the inclusion of vaccine-related revenues for a full 12 months.

Further development is underway at the Gqeberha site, where existing vial capacity is being converted to include vaccine capabilities. This will increase capacity per annum from 300 million doses2 to approximately 450 million doses by February 2022, increasing to over 700 million doses by January 2023. This increased vaccine footprint is expected to be utilised for COVID-19 vaccines and other opportunities.

The Manufacturing business has made a number of important advances over the past year and is poised to play a material role in driving top-and-bottom line growth. Progress has been made in achieving our sterile capacity fill targets, with volume commitments having been signed and advanced talks underway with three potential customers for 80 million doses of prefilled syringes at Notre Dame de Bondeville in France. We anticipate commercialisation of these opportunities in calendar years 2022 and 2023.

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