| Onderstepoort Biological Products © | November 22, 2010
Jan 18, 2018
| Onderstepoort Biological Products © | November 22, 2010
Presentation Layout o Introduction to OBP Ltd:
o A Historical Perspective.
o Mandate.
o Vision.
Funding – Impact ofo Vaccine Banko Recapitalisation of OBP
o Operational capital expenditureo Facility upgrade
o Procurement of vaccines from OBP – National and provincial governmentso RT 12 CONTRACT
o Competitive Landscape:o Global Animal Health Market.o South African Animal Health Market.o Livestock sector trends.
o Strategic Plan (2009 – 2013):o Strategic Objectives.o Objectives-Measurements-Target -Programs-Budgets
| Onderstepoort Biological Products © | November 22, 2010
Historical Perspective
1908: Establishment of the Onderstepoort Veterinary
Research Institute.
1968: Dedicated vaccine facility established.
1992: OBP separated from OVI (ARC).
2000: OBP incorporated as a SOE.
2001: OBP receives funding of R9 million (last grant received to date)
2007: Achieved ISO 9001 certification.
2010: Reached a revenue milestone – R100m.
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Mandate
OBP exists to prevent and control animal diseases that impact
food security & public health
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Vision
To be a global biotech manufacturer and provider of animal
health products underpinned by a skilled, innovative and
passionate team.
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Funding: Impact of vaccine bank and procurement by the state from OBP Global marketo $19.2 billion (IFAH, 2009). Biologics
market: $4.7 billion (25%). Gross profit margins: >60%.
o New product development investment:o >10% of turnover.
35% of these is used in defensive o R&D strategies.
o Development times: 5-7 years.
o Development costs: ~ $50 million.
o Top 9 players control over 80% of the market:o Biologics, anti-infectives, parasiticides.o Merger & Acquisition activity still high
(Intervet/Merial -2011: 35%)o Focus on vaccine portfolio consolidation > new
markets.
OBP LTD
($14.5 million) (54% in 2010) New product development investment:
(<3%) No deliberate or focused spend on defensive R&D
strategies
R20 million per annum for the vaccine bank required
Potential of up to 30% saving in costs passed over to customers – terms and conditions apply
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Funding: Impact – vaccine bank, direct procurement from OBP by the State and recap – capital expenditure
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o GDP contribution (2008) –
o Poultry - R20.4 billion (42%).
o Cattle - R12.6 billion (26%).
o Sheep and goats - R2.3 billion (5%).
o Pigs - R2.2 billion (4%).
o Net importer of meat and livestock: drive to commercialise small scale rural
farmers.
o Livestock – key to rural economic development and food security programmes
(DAFF & DRDLR). <drive is to have the emerging sector fill the import gap>
o Income generation, poverty alleviation and household food security.
Competitive Landscape – Global markets
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o Livestock sector: 58%
o Biologics market: 25%
o MEA’s market: ~ $0.58 billion (R4.4 billion).
o Biologics market: ~ $0.15 billion (R1.1 billion).
Funding: Impact- recapitalisation (capital expenditure and facility upgrade) – SA MARKET
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o Market: R1.6 billion (SAAHA 2009, under reporting).
o Biologics market: R0.44 billion (33%).
o Growth – 2009:
o Total market - 17%,
o Vaccines – 7% (largest growth).
o Competitive landscape:
o Multinationals –technology leadership (in-house and in-licensing).
o M&A as a growth and consolidation (product & market) strategy.
o Markets: Global presence, global markets. Justifies R&D investments (strong business case which
drives their innovation).
o Manufacturing: using economies of scale as a competitive edge.
o Smaller operations: duplicate OBP portfolio.
Funding: Impact – recapitalisation – facility upgrade
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o The global livestock sector is expected to grow at a faster rate than any other
sector by 2020 –
o Population growth, urbanisation, increase in disposable income.
o Growth will be located in the developing world –
o Agricultural land and importance of the sector in GDP and employment.
o Vaccines recognised as the most effective means of disease prevention (mass
slaughter becoming unacceptable as a control strategy).
o Prevent high cost of diseases – production losses.
o Food security.
Strategic Plan: 2009 – 2013
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Strategic Focus
3 Key Strategic Focus Areas –
Area 1: Human Capital Development and Performance culture
Area 2: Build a profitable, sustainable and socially responsible
biomanufacturing company.
Area 3: Focus on core competencies in know-how, unique strains and
products to drive future growth.
| Onderstepoort Biological Products © | November 22, 2010
Area 2: Build a profitable, sustainable and socially responsible biomanufacturing company
o Profitability:
o Increased revenue.
o Cost reduction.
o Increased gross profit (GP) margins.
o Return on Investment (ROI).
o Positive cash generation.
o Sustainability:
o Plant recapitalisation to maintain strategic manufacturing capabilities.
o cGMP Plant Upgrade for commercial viability and sustainability.
o Vaccine bank for regional emergency response and commercially non-viable vaccines.
| Onderstepoort Biological Products © | November 22, 2010
Manufacturing Plant RecapitalisationDepartment: Production Motivation TOTAL 2010/11 2011/12 2012/13
Packaging:Filling and capping machines for freeze drying
Current equipment in need of replacement as discussed on numerous forums. Tenders were evaluated and motivation is almost ready for submission to EXCO and BOD. The balance will be budgeted for in 2011/12. Lead time of 9-10 months. Delivery in 2011 if
order is placed in 2010 R13.5 m R4.0 m R9.0 m R0 mVial washer/sterilisation tunnel
To be used with new filling line for freeze dried products. Will be phased in once the new filling line is operational. Will be budgeted for in 2011/12. Lead time of 9-10 months. To
achieve that the specification and tender process must be started in 2010. Delivery will only be possible in 2012. R11.0 m R0 m R3.3 m R7.7 m
100 ml filling machine Replacement for 100ml King filling machine. Current machine is more than 25 years old and is not reliable and accurate anymore. Can be budgeted for in 2011/12. Lead time of 9-10 months. For delivery late in 2011 the order must be placed early in 2011. To achieve that
the specification and tender process must be started in 2010. Delivery will only be possible in 2012. R3.8 m R0 m R3.8 m R0 m
500ml filling machine Replacement for 500ml manual filling process. Manual process is unsafe for the product and inaccurate. Can be budgeted for in 2011/12. Lead time of 9-10 months. For delivery
late in 2011 the order must be placed early in 2011. To achieve that the specification and tender process must be started in 2010 else delivery will only be possible in 2012. R3.8 m R0 m R3.8 m R0 m
10 ml labelling machine Additional labelling machine to reduce pressure on existing machine (bottleneck) Can be budgeted for in 2011/12. For delivery in 2011 the order can be placed in 2011. To achieve
that the specification and tender process must be started late in 2010. Delivery lead time 3-4 months. Local suppliers.
R0.5 m R0 m R0.5 m R0 m100ml labelling machine
R0.5 m R0 m R0.5 m R0 mFreeze-drier software upgrade R3.5 m R3.5 m R0 m R0 mFilling rooms upgrade: cGMP R3.4 m R0 m R3.4 m R0 m
Bacterial vaccine production:Replace analogue fermentor plant
Plant is 20 years old and the analogue components is no longer supported by the original supplier. The option to upgrade the plant is not possible after thorough investigation.
Replacement needed. Delivery time ± 24 months. For delivery in 2013 specifications and tender process must start in 2010. R30.0 m
R0 m R10.0 m R20.0 m
R70.0 m R7.5 m R34.8 m R27.7 m | Onderstepoort Biological Products © | November 22, 2010
GMP Plant Upgrade: Pilot facility
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Department: R&D Item Motivation TOTAL 2011/12 2012/13 2013/14 Comments
cGMP pilot plant (Mammalian manufacturing platform/s)
Current manufacturing processes applied in production are old, not optimised and not validated/not validatable. This is
evident through low GP margins on a large number of products currently realised in the competitive animal health market. To be able to make a convincing business case for the commercial scale cGMP facility, viable and competitive products and processes (current and/or new) have to be taken back through the development value-chain, most
importantly to develop new manufacturing processes on new technology platforms, optimisation, up-scaling to pilot scale and validation. This approach is low risk, increases the cGMP
project timelines but its would ensure that OBP Ltd will be able to afford the cGMP upgrade, maintain and sustain running the new facility without asking for shareholder
bailouts in the future.
R25. m R5.0 m R7.5 m R12.5 m Includes: Services of an
experienced cGMP Consulting Project Manager;
Consulting Engineers, Facility Construction, Clean-
rooms installation, Equipments (Upstream,
Downstream and formulation and freeze-drying processes) and
Validation. cGMP pilot plant (Bacterial
manufacturing platform) R25.0 m R5.0 m R7.5 m R12.5 m
R50.0 m R10.0 m R15.0 m R25.0 m
Conclusiono OBP is required to deliver on its mandate of preventing and controlling animal diseases that impact food
security and public health.
o To be able to effectively and efficiently carry out this mandate:
o The equipment and facilities bought in 1968 when the facility was established must be replaced – recapitalise
OBP
o Sort out the procurement processes within state departments
o Products contained or listed in the RT12 contract which are produced at OBP must be excluded from the
contract and procured directly from OBP
o Results
o Better response to animal disease outbreaks – we can ill-afford to have the same results as we had earlier this
year from the RVF outbreak;
o Food security and public health : positive contribution to Millennium Development Goal – eradication of extreme
poverty and hunger
o South Africa remains globally competitive by - skills retention and technologically advanced;
o South African will not only be an exporter of agricultural products, but will be a net exporter of livestock products
o Positive contribution to the country’s balance of payment
| Onderstepoort Biological Products © | November 22, 2010