ONDERSTEPOORT%20BIOLOGICAL%20PRODUCTS%20LTD

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ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD
PRESENTATION TO THE PORTFOLIO COMMITTEE 1 JULY
2009
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PRESENTATION OUTLINE

• Introduction Adv. D. Mitchell
• Operations Strategic Thrusts Dr. M.M. Dyasi
• Financial Budget for 2009/10 Mr.
  A. Ntsho
• Conclusion Adv. D. Mitchell

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Board of Directors OBP Ltd
Advocate D J Mitchell Acting Chairperson
Mr M Shezi Remco RD Committees
Ms N Jaxa Audit Risk Management
Dr B Ntshabele RD Audit Committees
Ms N Qata Remco Risk Management
Dr MM Dyasi Managing Director
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GOVERNANCE OF OBP

• National government business enterprise under
  PFMA
• Public company under Companies Act (registered
  taxpayer)
• Own OBP Incorporation Act
• Corporate governance codes protocols
• Declared national key point
• Ramathe Fivaz as external auditors
  (Auditor-General approval)
• ISO standards business specific regulatory
  authorities

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OPERATIONS STRATEGIC THRUST

• Presented by
• DR M.M. DYASI

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HISTORY OF ONDERSTEPOORT

• 1908 Establishment of the Onderstepoort
  Veterinary Research Institute
• 1968 Dedicated vaccine facility established
• 1992 OBP separated from OVI (ARC)
• 2000 OBP corporatized as a Government- owned
  commercial company

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ONDERSTEPOORT COMPLEX

• Veterinary Faculty
• Veterinary Training
• ARC Onderstepoort Veterinary Institute
• Services Diagnostics, Production (Foot Mouth
  Disease)
• Research
• OBP Onderstepoort Biological Products Ltd
• Vaccines
• Biological reagents

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OBP ACT no 19, 1999

• To provide for the establishment of a company to
  manage the institution known as Onderstepoort
  Biological Products, the appointment of
  directors, the holding and disposal of shares in
  the company, the transfer of personnel to the
  company and the transfer of funds and assets to
  the company and to provide for matters connected
  therewith.

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MANDATE OF OBP

• The mandate of OBP Ltd is to play a pivotal role
  in the management and prevention of animal
  diseases in South Africa, SADC and the rest of
  Africa

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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.
• MISSION
• To translate science into biological products,
  knowledge and technology resulting in improved
  animal health, food security and safety for all
  stakeholders.

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PRODUCT MIX

• Current product range
• 28 Bacterial vaccines
• 14 Viral vaccines
• 4 Blood vaccines
• 6 Diagnostic reagents
• Production capacity
• Up to 170 million doses a year

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PRODUCT MIX

• Species covered
• Cattle
• Sheep
• Goat
• Equine
• Poultry
• Bulk vaccine antigen production

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VETERINARY VACCINOLOGY EXPERTISE

• Immunology (host-pathogen interaction)
• Antigen research bacteriology, virology,
  molecular biology
• Vaccine delivery vaccine adjuvant research
• Production processes Bio-reactor technology,
  freeze-drying technology, cell culture, etc.
• Quality control experimental animals
• Product development according to set protocols

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VETERINARY VACCINOLOGY

• Bulk antigen production Morocco, South
  America
• Vaccine bank EU, RSA
• Custom-made vaccine Bluetongue for Europe
• Quality control ISO 90012008

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KEY VACCINES

• Vaccines against TADs
• CBPP (Contagious Bovine Pleura Pneumonia)
• RVF (live attenuated inactivated)
• Lumpy Skin Disease (LSD)
• Rinderpest
• Bluetongue
• 3 Day Stiff Sickness
• Newcastle Disease
• Vaccines against parasitic diseases
• Anaplasmosis
• Heartwater
• Babesiosis

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KEY VACCINES UNIQUE TO OBP

• Bluetongue against 16 serotypes
• African Horsesickness
• New Castle Disease Komarov strain
• Rift Valley Fever inactivated
• A number of autogenous vaccines
• Flexibility for custom-made vaccines
• Antigen/vaccine bank (storage)
• Appropriate combinations

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REVENUE GENERATED (Rm)
Year Local Export  Total
2004/05 33,5 43,4 76,9
2005/06 42,2 31,2 73,4
2006/07 51,0 12,7 63,7
2007/08 49,9 19,6 69,5
2008/09 63,9 18,8 82,8
       
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REVENUE GENERATED
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STRATEGIC THRUST

• OBP PLANT UPGRADE
• VACCINE BANK
• DEVELOPMENT OF NEW PRODUCTS
• CONTRIBUTION TO RURAL DEVELOPMENT
• MARKET GROWTH
• RESEARCH DEVELOPMENT
• HUMAN CAPITAL DEVELOPMENT

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STRATEGIC THRUSTOBP PLANT UPGRADE

• GMP compliance
• OBP sustainability
• Future capacity improvement
• National international regulatory compliance
• Current plant equipment from 1968
• New production equipment in non compatible
  environment
• Validation requirements
• Green building

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STRATEGIC THRUST VACCINE BANK

• SA Vaccine Bank (contingency vaccines)
• Resurgence of diseases
• Outbreak impacts on all livestock especially
  rural farmers
• Ensure product availability
• Rapid response

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STRATEGIC THRUST DEVELOPMENT OF NEW PRODUCTS

• Tri-party alliance (OBP,OVI, FVS)
• International co-operation
• In-house RD development
• Universities
• Intellectual property development
• Multivalent /combination vaccines
• New generation vaccines (Plant extracts)

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STRATEGIC THRUST RURAL DEVELOPMENT

• Strategic availability of vaccines
• Economically viable vaccines
• Empowerment with knowledge of disease and animal
  management
• Product distribution challenges (heat stable)
• Support commodity groups (NAFU, NERPO, NWGA)

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STRATEGIC THRUST MARKET GROWTH

• Declining numbers of animals in market
• Export market development
• SADC market growth
• Collaboration with international institutes
• National provincial animal health strategies
• Customer relation management
• Strategic partnership
• Animal health and product training

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STRATEGIC THRUST HUMAN CAPITAL DEVELOPMENT

• Employment equity
• Labour relations
• Education, training development
• Health AIDS prevention and education
• Intellectual property management development

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CHALLENGES

• Funding for upgrade
• Research / innovation backlog
• Ageing company (physical human )
• Maintenance cost
• International competition
• GMP (Cost of compliance)
• Distribution to rural clients
• Technical information
• Trade secrets and no patents

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ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD

• 2009 2012 BUDGET
• Presented by
• Mr A Ntsho

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ASSUMPTIONS

• REVENUE
• Review product prices twice a year
• Royalty revenue from the collaboration excluded
• Revenue from new products is not included
• Discount policy reviewed based on costing
  exercise
• Increased sales to government

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ASSUMPTIONS

• 2. COST OF SALES
• An efficiency saving is assumed based on
• Benefits of the product costing exercise
• Implementation of purchases based on Economic
  Order Quantity principle
• Appointment of the COO expected new
  initiatives
• Economic and efficient use of production
  resources drive from the MDs office to apply
  concept of QUALITY in everything we do

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ASSUMPTIONS

• 3. STAFF COSTS
• An average 10 increase is estimated
• Positions of COO, BDO, Legal officer will be
  filled
• 4. OTHER SIGNIFICANT ACCOUNTS
• An average of 8 increase is assumed
• Travel claim and out-of-town allowance revision

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ASSUMPTIONS

• 5. CAPITAL EXPENDITURE (INCLUDING FACILITY
  UPGRADE)
• Shareholder will approve funding for the upgrade
  of the facilities
• R15 million of capital expenditure is budgeted
  for this financial year
• Additional capex will be needed for the following
  years

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ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD INCOME
STATEMENT
  2009/10 2010/11 2011/12
  R'm R'm R'm
 
REVENUE 91 98 106
COST OF SALES 52 55 59
 
GROSS PROFIT 39 43 47
LESS EXPENSES 50 53 57
 
OPERATING PROFIT / (LOSS) (11) (10) (10)
OTHER INCOME 9 9 9
NET PROFIT / (LOSS) (2) (1) (1)
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ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD BALANCE
SHEET AS AT 31 MARCH
  2010 2011 2012
  R'm R'm R'm
ASSETS
Non-current Assets 65 57 50
 
Current Assets 107 111 116
TOTAL ASSETS 172 168 166
 
EQUITY AND LIABILITIES
Equity 161 158 156
 
Non-current Liabilities - - -
 
Current Liabilities 11 10 10
TOTAL EQUITY AND LIABILITES 172 168 166
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ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD

• CONCLUSION
• Presented by
• Adv. D Mitchell

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THANK YOU