STRATEGIC REPORT FOR THE YEAR ENDED 31 MARCH 2018

The directors present the Strategic Report of Porton Biopharma Limited (the “Company”) for the financial year ended 31 March 2018.

Turnover for the year was £50,484m, generating a post-tax profit of £13.125m (the full financial statements can be viewed on the Companies House website).

Business review

Porton Biopharma Limited (PBL) is responsible for the development and manufacture of biopharmaceutical products and was formed on the 1st of April 2015 as a limited liability company, wholly owned by the Secretary of State for Health and Social Care.

In its third year of operations, the company has continued to expand its manufacturing capabilities and has increased efficiencies in its manufacturing processes; this has yielded increased throughput in product volumes manufactured and supplied to the market.

The biopharma industry continues to be subject to increasing regulatory requirements, both in the UK and globally. Compliance with these requirements and our commitment to Good Manufacturing Practice (“GMP”) imposes financial burdens, and this is reflected in our increasing costs profile.

Our staff are the key to our success and we continue to invest significantly in our human resources; the company has implemented many policies and procedures to improve recruitment, performance management, training and development. We are committed to providing our staff with equal opportunities for learning and personal growth. We are partnering with universities to deliver management and leadership training and have embarked upon a cultural excellence programme for all staff to increase our efficiency and to deliver more of our life saving and protecting products to our customers. In addition, we are investing in the future of biological science by continuing to support a number of university placement students; apprentices; sponsoring higher degrees for our staff and attracting high value jobs to the Wiltshire area.

We continue to invest heavily in new facilities and equipment, and on 27 April 2018 we hosted the opening ceremony for the new pharmaceutical process facility, led by local MP and Minister John Glen. In addition we have refurbished facilities and invested in the building of a new dispensary.

PBL’s Development team continues to support the manufacture of our licensed biopharmaceutical products and have published and presented many peer reviewed articles and have successfully achieved funding awards. The team is building upon the long track record at Porton of developing new licensed products by establishing new programmes to increase the product pipe-line of PBL.

 

Principal risks and uncertainties

Exchange rates

We sell our products internationally, and our revenues are therefore subject to the fluctuations of foreign currency exchange rates. Given the multitude of markets into which we sell our products, it is difficult to accurately forecast the effects of currency exchange rates on revenues.

Product quality

Erwinase and Anthrax Vaccine are manufactured according to Good Manufacturing Practice, and regulated accordingly in the appropriate territories. The pharmaceutical industry strives for continuous improvement in the regulations that apply to its processes, systems and product characterisation to improve the quality and efficacy of pharmaceutical products. The Company must therefore ensure that it continues to meet these regulatory standards so that our products can continue to be manufactured and marketed. During the course of the year the company continued to experience certain supply chain issues, which had led to the receipt of a warning letter from the FDA, the US regulator of Erwinase, in January 2017. The company has developed a Corrective Action Plan to remedy this situation and address other deficiencies noted by the FDA. This plan is in the process of being implemented to ensure full compliance with regulatory requirements.

Experienced Staff

The manufacture of biopharma products requires significant expertise and experience. The company’s talent management strategy seeks to attract, develop, engage and retain individuals who will prove valuable to the organisation. The Company must ensure that it is able to attract and retain the required calibre of staff to develop and manufacture products to meet regulatory standards, continue to expand the company’s manufacturing capacity and deliver manufacturing efficiencies.

Financial key performance indicators

 Revenue in the year is driven by the volumes manufactured of both products (Erwinase and Anthrax Vaccine), the markets we supply and the prevailing prices for our products.

Our gross and net profits are KPls: we target maximising these as commercial objectives, as well as delivery of our products to meet patient and market needs.