Aspen gets a J&J vaccine boost

FIFI PETERS: Yesterday Aspen announced that it had secured the rights from Johnson & Johnson to manufacture its own Covid-19 vaccine under the name Aspenovax. This afternoon the company reported its financial results for the six months ended December, which have shown a 37% jump in total headline earnings per share. We are going to diagnose the numbers right now with the CEO of Aspen, Mr Stephen Saad.

Stephen, thanks so much for your time. A lot happened in the last six months of 2021. I’m just interested in what that period was like for you. How would you describe that period for the group?

STEPHEN SAAD: When you just see numbers and the numbers look so good and it all looks fantastic and it is that great, and then we announce ……53.5 it’s all exciting. But I must tell you, the six months were – and I’ve been here for a couple of decades so more – [some] of the most challenging that we have ever faced around the supply chain, particularly if you’ve got factories. So we had all the Covid delays and Covid issues and also being in vaccines, just trying to give glass……1:16 and things like that that everyone else was trying to get the same materials for sterile factories.

Then of course people were ill, and then when somebody’s ill on a shift, you close the whole shift. So very, very challenging to run our facility. So the results are really fantastic, but I think they’re even better when you consider the challenges, Fifi.

FIFI PETERS: No, for sure. You just talked about the challenges around the supply chain. I think in that period we were just coming from the Delta variant, but shortly after that we had the riots that didn’t make matters very easy in terms of doing business in South Africa, coupled with that a bit of load shedding in that period. Then we had Omicron that probably made supply headaches a lot worse for manufacturers like yourself.

But nonetheless, let’s talk about the breaking news, as it were, in the form of the done deal with J&J around Aspenovax., I’m sorry if I’m getting the pronunciation wrong Stephen, you will correct me there, but what are the plans for it?

STEPHEN SAAD: So probably one of the most, if not the most, exciting transactional product that we’ve been involved with with Aspen from inception. It really is momentous for us, because it’s not just for Aspen, it’s for all of Africa. What it showed was the real capability that we have in our facilities at Gqeberha that they were able to, they took on ……2:36 we live in other manufacturers for J&J, but that team in Gqeberha took on the vaccine the quickest and produced the most. They’ve been fantastic and as a result J&J have said, well, you are people we could trust with the licence.

So that’s really exciting because now we have our own licence. Africa is hugely under-vaccinated. It has only got a 12% vaccination rate, so there’s the pretty large market up there, and it’s a major commercial difference for us because instead of just being a third-party manufacturer, getting 50 or 50-odd US cents a dose, your selling price per dose may be two …….3:15 times that. So you’re in a very different situation, so a very exciting opportunity for us, of course. Now we only closed the licence yesterday, as you mentioned, so it’s an opportunity for us now to go and deal with the multi-lateral organisations who are buyers in the continent. So a very positive price. It is very exciting.

FIFI PETERS: Sure. Stephen, just repeat the expected price range again. Sorry, we lost you there a bit.

STEPHEN SAAD: The price ranges of these vaccines into multi-lateral organisations is somewhere between $5 [and] $10. That’s the sort of price per dose.

FIFI PETERS: Okay. You say this is three times less or significantly less than elsewhere?

STEPHEN SAAD: No, it is a lot less than other places because of the markets that they service. So it might be about a third of the price of [that in] the US and Europe.

FIFI PETERS: So here’s the thing, though. On the ground, right, what we are experiencing – I don’t know about your circles – but a lot of COVIDfatigue and I’ll even extend that to vaccine fatigue, right? Last week I saw a report. I read a story that 100 000 ……4:21 years doses of the Pfizer vaccine were on the verge of expiring, just as a result of people not queueing up to jab any more as a result of that fatigue. So I’m wondering whether you are seeing that fatigue translate through your order pipeline. If you look at what the order pipeline for vaccines, not only here in South Africa, but across the continent is looking like now compared to six months ago, is there a slowdown in momentum?

STEPHEN SAAD: I think South Africa has had the slowdown in momentum. I think it’s well documented. Remember that the vaccines, particularly the Pfizer vaccine, has a very short shelf life. So it expires quite quickly, and that has an impact. That is what’s expiring in South Africa.

But when you look at Africa, Africa didn’t get supply. They’ve had wave after wave of Covid, the rest of Africa. If you get Covid, it’s like having a vaccine, if you want. If you survive Covid, that’s like saying I’ve had a vaccine.

FIFI PETERS: Sure.

STEPHEN SAAD: So a lot of Covid has gone through the population, but there’s been very little, it’s hard to get people psyched up to go and get vaccinated [if] can’t get them [the] supply. So that’s unfortunately what’s happened to Africa, and that’s the sad truth of it.

The reality is the world is really committed now because Africa’s really the only place that’s unvaccinated. It committed to Africa, one, because of the gross inequity, but two, let’s be candid about it. Where are you going to get your variants from? We all want to move out of this phase of masks and all the rest, but if a very bad variant comes, it’s a problem. Where do those variants come [from]? They come from the unvaccinated, and they come from those that are immunocompromised – and Africa has the most in both.

So really, for the world’s safety, you need to vaccinate Africa. Where you’ll get to 70% I don’t know, and I don’t think so if I look at South Africa where yes, older folk are getting closer to those ranges, but I think the ages are less than 40 or least than 30. We are really battling in this country to get people to take it seriously. It’s quite sad because if you just half-smart and you go into a hospital and you have a look and see what’s going on in those hospitals, Fifi, you’ll see that the people that are sitting in the hospitals are not ……6:44.

FIFI PETERS: For sure. But just on the issue of variants and other variants that may be forthcoming, based on the experience of Omicron it would seem that as new variants do unfold the harm or the extent of the harm of those new variants [is] minimised. I don’t know if we can use Omicron as a case of how things will be like going forward. Yeah.

STEPHEN SAAD: What [Omicron] showed us is that you can have something that’s more infectious, so you get it more easily. But actually the hospitalisation rates were much lower and the death rates were much lower relative to the number of infections. So that is positive and most people hope that that is the way a virus goes. But what Covid has shown us is that we’ve had experts tell us a lot of things a lot of times, and they haven’t been right most of the times.

So I do subscribe that, as you’ve said, it’s likely to become less severe, and that’s my personal opinion – but there’s no saying it will.

FIFI PETERS: Yeah.

STEPHEN SAAD: So I think we should just be cautious until that date. The only thing that we know for sure works is getting a vaccine.

FIFI PETERS: Sure.

STEPHEN SAAD: That’s indisputable evidence if you [go and] speak to any of the people in hospitals and life insurers, they will tell you, they will give it to you, and they’ve got money riding on it. So I think [they’re] the best people to ask.

FIFI PETERS: Sure. Stephen, of course your business is involved in a whole lot more than manufacturing Covid-19 vaccines. You do a whole lot of stuff across the pharmaceutical value chain. So perhaps just talk to us about what your investors, your shareholders, can look forward to in the six months ahead in terms of the contribution from the broader Aspen group.

STEPHEN SAAD: We’ve had a really great first half. All our margins have improved, [the] unwinding, the unlocking of the debt and all of that has meant we’ve had very big growth in all the earnings ratios, which is very positive. We hope to replicate that half, sort of the same type of half, and if we do that, it would be a record year for Aspen, for us, and we are trying hard there.

We’ve got a lot of momentum and that’s positive, but there are risks to the business itself, mostly related to inflationary risks that have come out of Covid. So you’re starting to see places like Europe, which had almost zero inflation, talking about being between 6% [and] 8% – a massive fuel price increase. Then all of that’s been exacerbated by what’s happening now in Russia and Ukraine.

So I think, look, it’s not an Aspen issue, only it’s a global issue, but you’re seeing a lot of commodity prices rise. That’s when you get very high inflation, risks of inflation, that tends to affect world growth and world outlook. So for me, this is something we [are] monitoring pretty closely.

FIFI PETERS: Stephen, thanks so much for that. Yeah, we’ll be looking out for that record year that you are forecasting potentially, notwithstanding the headwinds that could get in your way. But we’ll leave it there for now. Mr Stephen Saad [is] the CEO at Aspen.