Business Segment

Performance in the Manufacturing segment was sustained as revenue increased 18% to R10 948 million, led by FDF growth of 64%. This included R1,4 billion in revenue from the fill and finish production of the Johnson & Johnson COVID-19 vaccine at the Gqeberha sterile manufacturing facility. This growth was partly diluted by the API business. Manufacturing in general was negatively impacted by supply-related constraints imposed by COVID-19 in the first half of the financial year and enjoyed a strong second half recovery, growing sales by 14% compared to the first half.

Gross profit at 20,6% was consistent with the prior year, even after dilution for the annualised impact of the supply agreements at low/no margin, related to disposal transactions. Excluding the impact of these disposal transaction-related supply agreements, gross margin increased in all segments. These improvements were achieved despite numerous operational and supply chain related challenges, as well as notable inflationary increases in operating and supply chain costs

vaccines from African manufacturers is a strong endorsement supporting this ongoing strategic capital investment. The signature of a long-term agreement with Serum Institute for Aspen to manufacture, market and distribute four Aspen-branded vaccines in Africa is an important milestone as Aspen seeks to optimise its sterile manufacturing capacity in Gqeberha.

Several other potential long-term opportunities are being explored with various multinational partners and Aspen’s ambition is to secure these by the end of the 2023 financial year. The contribution from the manufacture of the Johnson & Johnson COVID-19 vaccine enhanced operating performance in the current year, but declining demand from Johnson & Johnson will have an unfavourable impact on Manufacturing performance in the 2023 financial year, unless substituted by orders for Aspenovax. Due to the technology transfer timelines, other sustainable long-term contracts and commercial manufacturing opportunities will only be realised from financial year 2024 onwards.

Aspen has manufactured over 225 million doses of COVID-19 vaccine, predominantly for Africa. The decline in demand from Johnson & Johnson will have an unfavourable impact on Manufacturing performance in FY2023. We anticipate that any future COVID-19 doses in Africa will be pivoted to Aspenovax, in line with the regional procurement pronouncement and as committed by the African Union, COVAX and AVATT, but the extent of this demand is uncertain. Strong second half weighted revenue growth in FDF from our French facility is expected to more than compensate for the loss of revenue from the Johnson & Johnson COVID-19 vaccine and single-digit revenue growth is anticipated.

Aspen has continued to invest in the expansion of its sterile manufacturing capacity in Gqeberha to be used for vaccines and other steriles, including biological products. The commitment to an additional capital investment of R2 billion will be spread over financial years 2022 to 2024. The statement from the African Union, which called for support to achieve at least a 30% offtake of all

The four routine paediatric vaccines, Pneumococcal, Rotavirus, Polyvalent Meningococcal and Hexavalent vaccines, represent some of the most important vaccines to Africa and Gavi. Aspen will register its own marketing authorisation and Serum Institute will supply the drug substance to Aspen. It is anticipated that the registration process may be fast-tracked with transfers possibly from 12 to 24 months

In addition to the agreement with Serum Institute, Aspen also anticipates receiving grant funding from each of the Bill & Melinda Gates Foundation and CEPI to support African regional manufacturing capacity for an affordable supply of vaccines to, among others, African countries and Gavi/UNICEF, as well as contributing to pandemic preparedness, through a share of Aspen’s vaccine manufacturing capacity over a period of 10 years. These are both important endorsements of Aspen’s sterile manufacturing capabilities and efforts to achieve enhanced access to medicines which is at the forefront of Aspen’s ESG strategy