Creating value through our capitals

celebrating 20 years Manufactured
capital

   
   
   
Manufactured capital

The continued investment in our API facilities and FDF manufacturing capabilities aimed at delivering flexible and scalable manufacturing and enhanced operational synergies is a key enabler in supporting our mission to produce high quality, affordable medicines and products, enhancing access to healthcare in over 150 countries

   
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INPUTS

KEY INITIATIVES

OUTCOMES

 
       
  • Strategic FDF and API manufacturing operations worldwide
  • External supply contract manufacturing network
  • Pipeline of products
  • Global distribution network
  • Public infrastructure in the countries and territories in which we operate
  • Continuous improvement initiatives to sustain a cost competitive manufacturing base
  • Monitoring manufacturing quality standards, compliance with GMP and other applicable regulatory requirements
  • Investment in manufacturing capability, technology and capacity
  • Development and maintenance of external supply contract manufacturing network and consideration of options to outsource and insource
  • Vertical integration between strategic manufacturing facilities providing a synergistic competitive advantage
  • Distribution of manufactured product through public infrastructure and transport networks
  • Globally competitive, scalable, flexible and widely accredited manufacturing facilities that provide a sustainable competitive advantage
  • Manufacturing capabilities and suppliers aligned to commercial objectives
  • Economies of scale for key products
  • Provision of high quality, affordable medicines and products that improve quality of health of patients in more than 150 countries
Carrying value PPE

Aspen Notre Dame de Bondeville's first production of Mono-embolex in an enhanced prefilled syringe with an automatic device that prevents needle injuries to patients once the product is injected.

Sustaining a cost-competitive manufacturing base

Leveraging the Group's diverse and specialist production capabilities

Our strategic objective of supplying high quality, affordable medicines and products is underpinned by our own manufacturing capabilities and the vertical integration of certain aspects of our supply chain. Our 25 manufacturing facilities present a range of production capabilities and capacities aligned with our current and future commercial objectives. These include injectables, oral solid and semi-solid dose, liquids, steriles, biologicals, APIs and nutritionals manufacturing. An overview of the Group's strategic manufacturing capabilities is set out here.

During the last year, our strategic manufacturing projects continued to focus on the alignment of our facilities with our manufacturing and commercial strategies, enhancing technology and our quality and compliance standards, policies and procedures. Ongoing investment in the upgrading of our world-class manufacturing facilities as well as implementation of state of the art electronic systems ensures our ability to supply quality products, ensures ongoing compliance to GMP and creates increased manufacturing capacity to meet both current and future operational requirements. Capital expenditure on the replacement and expansion of property, plant and equipment amounted to R2 145 million (2017: R1 484 million) with a further R2 800 million planned for 2019.

PPE capex

(R'million)

Following the anaesthetic transactions with AstraZeneca and GSK, we have integrated the manufacturing sites responsible for the supply of these products into our supply chain network, which provides us with a strategic opportunity to pursue manufacturing synergies. Significant capital projects are planned for the Port Elizabeth, Notre Dame de Bondeville and Bad Oldesloe sites in order to transfer the manufacture from AstraZeneca, GSK and some external supply contract manufacturing sites over the next five years.

Oral solid dose manufacturing

We remain focused on increasing the complex manufacturing capability at the Port Elizabeth site. The Bad Oldesloe site's ability to provide specialised and flexible manufacturing and packing capabilities, as well as its favourable location within the European market, further bolsters our ability to deliver competitive and bespoke manufacturing solutions.

Capacity expansion and continuous improvement projects in respect of these sites are progressing according to plan, with key projects highlighted as follows:

Port Elizabeth, South Africa

  • Completed the qualification activities and validation batches for the production of Imuran. Commercial production commenced in the first quarter of 2019;
  • Commissioned new bottle and blister lines as well as a compression machine and introduced these into commercial production;
  • Initiated projects to implement a Manufacturing Execution System and a Laboratory Information System which will enable additional operational efficiencies to be achieved;
  • Increased focus on initiatives to enhance competence at all levels across the site to ensure sustainable performance in the long term. To this end the Port Elizabeth Training Academy has been launched; and
  • Introduced serialisation capability across the facilities to ensure compliance with the various serialisation requirements globally.

Bad Oldesloe, Germany

  • Enhanced efficiency in packaging lines through increased automation of manual processes which has included the installation of an automated round bottle labeller;
  • Installed a new roller compactor with improved controls and higher flexibility of the final blend container size;
  • Introduced serialisation and anti-tampering capability across the packaging lines to ensure compliance with EU regulations; and
  • Consolidated products onto a reduced number of packaging lines achieving efficiencies and reduced maintenance costs.

Sterile manufacturing

Our facilities at the Port Elizabeth and Notre Dame de Bondeville sites provide us with extensive sterile manufacturing capability. Integration and capacity expansion plans in respect of these sites have progressed well in the past year:

Port Elizabeth, South Africa

  • Successfully transferred the manufacture of Fraxiparine and Mono-embolex vials to this site;
  • Commenced activities to introduce the Anaesthetics portfolio, a significant step in the evolution of this site. The infrastructure build phase is nearing completion and equipment is in the process of being installed. The introduction of these new products will see the export volume move from 20% to more than 50% with more than 700 additional stock keeping units ("SKUs") being added to the existing portfolio.

Notre Dame de Bondeville, France

  • Initiated the construction of the new suite to manufacture anaesthetic dosage forms comprising polybag and poly ampoules;
  • Obtained approval and commenced the planning for further capacity expansion comprising the establishment of another high speed prefilled syringe filling line; and
  • Developed and implemented a new safety device for Arixtra and Mono-embolex. The new safety device ensures better removal of the needle shield, enhances manufacturing efficiency by 2%, results in the use of less plastic and achieves cost reduction.

API manufacturing

Our API network comprises six owned sites, three located in the Netherlands (two in Oss and one in Boxtel), one in the United States (Sioux City), one in France (Notre Dame de Bondeville) and one in South Africa (Cape Town). In addition, we have two API manufacturing blocks situated at Laurus Labs in India. These sites provide Aspen with specialised API capabilities in respect of both Aspen's own and third-party commercial opportunities. The combination of the Oss and Sioux City sites with the Notre Dame de Bondeville site and Port Elizabeth steriles facility provides a fully integrated biochemical supply chain to support some of our Thrombosis portfolio of products. Initiatives to enhance our capacity and improve sustainability at the API sites have continued to receive focus as follows:

Oss, the Netherlands

  • Completed the building and commissioning of a new multipurpose solvent recovery unit at the De Geer site and reduced the chemical activities at the Moleneind site, significantly lowering the associated safety and environmental risks;
  • Successfully reintroduced the production of conjugated and esterified estrogen APIs; and
  • Commenced the manufacture of fondaparinux crude and supplied the first batches to the Notre Dame de Bondeville site for purification.

Notre Dame de Bondeville, France

  • Completed the certoparin facility and commenced the production of validation batches that will be used for commercial batches after the required regulatory approval is obtained.

FCC Cape Town, South Africa

  • Initiated various projects to reduce water consumption across the site and secure alternate sources of water to enable retention of normal operations during times of highly constrained municipal water supply. More details are provided Natural capital.

External supply manufacturing network

Our manufacturing network also comprises supply from numerous contract manufacturing organisations situated globally. A number of the products manufactured in the external network have been earmarked for transfer to our own manufacturing sites over the next five years. This move will ensure ongoing supply sustainability. We have an internal team of supply chain and quality experts who ensure that all the requisite controls are in place to facilitate supply, on time and in full, and in compliance with our required quality standards.

Nutritionals manufacturing

We have three infant nutritional manufacturing sites globally, located in Johannesburg, South Africa; Vallejo, Mexico and Auckland, New Zealand. The Johannesburg and Vallejo sites are fully integrated infant nutritional manufacturing sites where raw ingredients (including milk powder) are converted into infant milk powder through a spray drying and blending process. The product is then packed into various formats for sale to consumers. The Johannesburg site also has an ultra-high temperature ("UHT") liquid facility for the manufacture of infant ready-to-feed products. The Auckland site is a blending and packaging site only and operates as a joint venture between Aspen and New Milk Holdings. The infant formula base powder is manufactured by strategic partners based in Australia and New Zealand and delivered to the Auckland site for final blending and packaging in various formats. The Auckland site is one of a few global infant nutritional manufacturing facilities that has CNCA approval, allowing it to manufacture brands for sale in China. The business also introduced capability to manufacture product in sachets (including 1g sachets) as well as a glue carton erector to improve quality and efficiencies in the packing process. A "high lid" applicator has also been installed for supply to the Chinese market.

Ongoing investment in assets

Our ongoing investment in acquired intangible assets and new manufacturing capacity, mostly related to the future insourcing of selected anaesthetics manufacturing, has contributed to a significant increase in total asset value. Since the contribution to earnings arising from these multi-year projects will only be fully realised when the assets become fully productive, we expect an improvement in the return on total assets in the medium term.

KPI: Return on total assets


Cost containment and increased efficiencies

We have a strong focus on continuous improvement initiatives and savings plans to enhance production efficiencies and optimise economies of scale across the Group. Comprehensive, detailed, multi-year savings plans, covering all aspects of the operations, are progressing to plan and the improvements to the Oss and Notre Dame de Bondeville sites are poised to deliver significant future cost savings to the Group. The progress made in achieving these plans is monitored on a regular basis.

By owning our strategically important manufacturing capital, we are able to better manage our product quality, production efficiencies and cost competitiveness to ensure responsive management of the supply chain. This, in turn, supports the maintenance of Group normalised EBITDA margins.

KPI: Normalised EBITDA margin


The Group normalised EBITDA margin has improved slightly, mainly as a result of the margin benefit of the residual rights to the AstraZeneca anaesthetics acquired with effect from 1 November 2017 and improvements in the cost of goods of the Thrombosis portfolio.



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