Solution for current times

“It is one of the biggest F&F vaccine facilities in Malaysia,” deputy group managing director Datuk Dr Mohd Nazlee Kamal tells StarBizWeek. According to him, the facility will be equipped with a production line that is able to produce up to three million vials of vaccine per month, which is equal to 36 million vials per year.

Solution Group Bhd looks like it is making some serious inroads in morphing itself into an entity serving current market needs.

The loss-making firm, which has been involved in engineering services, has been in the news for its venture into Covid-19 vaccine sales.

It is true that a string of listed companies have ventured into the vaccine arena and the jury is still out on how successful these companies will be. In the case of Solution though, its venture has a few advantages.

The main one is the fact that it is building its own fill and finish (F&F) facility here in Malaysia. A 20,000-square-foot facility is almost ready in Technology Park Malaysia, where Solution already has its current manufacturing base.

F&F is the process of filling vials with vaccine and finishing the process of packaging the medicine for distribution.

“It is one of the biggest F&F vaccine facilities in Malaysia,” deputy group managing director Datuk Dr Mohd Nazlee Kamal tells StarBizWeek. According to him, the facility will be equipped with a production line that is able to produce up to three million vials of vaccine per month, which is equal to 36 million vials per year.

The facility is now undergoing the validation process.

“We are arranging for the Good Manufacturing Practices (GMP) audit by the National Pharmaceutical Regulatory Agency this month and expect to be operational by next month,” says Nazlee, adding that once the GMP certification is obtained, it “can move full steam ahead in the production of the vaccines”.

A plus for the group is the fact that it has already inked an agreement to supply 3.5 million doses of Covid-19 vaccine to the Health Ministry (MoH).

That deal was signed in April for the vaccines to be delivered to the government by October this year.

Solution’s strategic diversification into this space took shape when it formed a subsidiary, Solution Biologics Sdn Bhd (SolBio), in August last year.

SolBio subsequently entered into a registration, manufacturing and commercilisation agreement with CanSino Biologics Inc to do the F&F for its Covid-19 vaccine in Malaysia.

Towards this end, SolBio’s main role will be to formulate, fill and finish, market and distribute.

Notably, the CanSino vaccine is a single-dose vaccine, thus making it more efficient to administer, especially in rural and difficult-to-reach areas.

This makes for huge savings in terms of logistics and other resources needed to be deployed for the nationwide vaccination programme, explains the group.

Considering this, a single-dose vaccine is pragmatic for the challenging geographic areas of Asean from the remote parts of Indonesia and Philippine to the far-flung upland of Myanmar and Laos.

Nazlee says Solution is planning to expand to Asean countries and is currently “in advance talks with the governments of Thailand and the Philippines for the vaccine supply”. It expects emergency use approval by this month and targets to supply five to 10 million doses to each country.

As to whether that can be met, he says the production capacity of its F&F facility “allows us to accept additional orders from the MoH, state governments, the private sector and from Asean countries”.

According to him, the group’s agreement with CanSino is not only limited to Covid-19 vaccine but other vaccines under it too.

CanSino currently has three approved vaccines, namely Convidecia Covid-19 (Ad5-nCov), Ebola virus disease (Ad5-EBOV) and Meninggococal (MCV2). In the product development pipeline are eight vaccine candidates.

Solution is optimistic its diversification and collaboration with CanSino will grow its earnings base.

“The bio-pharmaceutical industry in Malaysia is forecast to grow at a compounded annual growth rate of 18.5% between 2020 and 2022, to reach RM5.9bil in 2022.

“The manufacturing and marketing of vaccines and drugs to curb the Covid-19 had also led to increased demand for pneumonia-related medications to treat its symptoms,” he explains.

Driven by an ageing population, the country’s rising chronic disease burden will be also a key factor supporting pharmaceutical market growth over a multi-year horizon, he adds.

Financially, the collaboration with CanSino is expected to contribute positively to earnings for the financial year ending Dec 31, 2021.

“While the business landscape remains challenging, there have also been opportunities created. This is a new revenue stream for Solution where we are looking at a profit margin of 10% to 20%. In the second half of 2021, we expect a few hundred million in revenue to be captured,” Nazlee says.

Bio-pharmaceutical aside, Solution also plans to further develop its renewable energy business where it provides services for the design, supply and installation of solar power systems for industrial, commercial and residential users.

It sees opportunities in this space driven by rising populations, increasing environmental awareness and strong economic prospects.

On this front, Nazlee says the group has been working with China-listed Risen Energy Co Ltd – a pioneer in the solar industry and recognised for its research and development.

Leveraging Risen Energy’s expertise, Solution is confident that it would be able to secure more projects, which will contribute positively to earnings.

For the first quarter (Q1) ended March 31, 2021, the group’s core businesses recorded weaker operating results due to the challenging business environment as a result of Covid-19. Net loss stood at RM1.66mil versus a net loss of RM396,000 in Q1 of 2020.

On a brighter note, as more projects progressed, revenue in Q1 of 2021 came in higher at RM5.48mil as compared to RM3.45mil before.

It is likely that this diversification is just what the doctor ordered for the group to reverse its loss-making position in the last three years.

The ACE Market-listed stock closed at 85.5 sen yesterday, giving it a market capitalisation of RM364.1mil.

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