J&J vaccine deal to boost Aspen’s global profile
The Covid-19 vaccine deal Aspen has secured with Johnson & Johnson may not yield new direct jobs but will position SA as amajor player in the international pharmaceutical industry and provide Aspen with a higher international profile to secure further deals.
“SA is not known to be a pharmaceutical destination. It is expected from Europe and Asia,” Stavros Nicolaou, group senior executive for strategic trade at Aspen Pharma Group, said this week.
“Nobody expected this type of capacity out of South Africa.” It was an opportunity that would place the country at the forefront of a solution to the global pandemic, he said.
“This will enhance the country’s image that has been battered to the extent it has.”
The deal with Johnson & Johnson will also be a boost for exports and create an inflow of foreign currency.
Nicolaou believes that building local competency in manufacturing will reduce the country’s reliance on pharmaceutical imports.
Aspen invested R3.4bn in a facility in Port Elizabeth for the creation of anaesthetic products.
It was built for future expansion, so using it to manufacture the Covid-19 vaccine will be an additional output and will not replace the production of any other products.
Aspen will be able to manufacture 300million doses of the Covid-19 vaccine a year.
As the sterile facility is almost fully automated and requires only about 18 staff, the deal to produce the vaccine will not create new direct jobs. But jobs would be created indirectly as the Port Elizabeth facility would use many local suppliers for items such as packaging materials, Nicolaou said.
The group has 23 manufacturing facilities at 15 sites on six continents and employs more than 9,800 people.
The three largest facilities are in Port Elizabeth, Notre-Damede-Bondeville in France and Bad
Oldesloe in Germany.
Depending on their location and capabilities, these facilities are able to manufacture a variety of pharmaceutical products such as vaccines, eye drops and pills.
Nicolaou said that to remain competitive, Aspen has had to shed some positions in other parts of the business.
The business will import what is known as the active pharmaceutical ingredient from Johnson & Johnson. This ingredient provides the therapeutic efficacy of the vaccine.
Nicolaou said the deal is a win for Aspen, which for the past three years has been actively working on its debt management plan. “There were some concerns [about] servicing and managing debt,” he said. Aspen’s debt-funded expansion strategy required debt to be brought down to a manageable level, a task the business has achieved.
In the financial results for the year ending June 30, the group reported that its net borrowings declined by R3.8bn to R35.2bn.
The leverage ratio, the financial ratio that reflects the level of the business’s debt in relation to its income and cash flow, is at 2.89, which is below the 3.5 times covenant ratio — the maximum debt-to-asset ratio.
This was achieved by selling non-core assets and operations in Japan for R4.6bn in March this year.
The department of health did not respond to requests for comment on whether SA has an agreement for the purchase of the vaccine from Johnson & Johnson or if the country has applied for support funding.