CSL has more upside..., page-369

With respect Fox, I don’t think anyone is dismissing the seriousness of Covid-19, even the Americans who were among the first to impose travel restrictions; they are now taking steps to deal with a likely pandemic situation. I guess there is a fine line between panicking the public and keeping them informed.

CSL operates manufacturing sites in Bern (Switzerland), Marburg (Germany), Kankakee (US) and Broadmeadows (Australia). They have Ruide in Wuhan (China) but this is comparatively small. The manufacturing facility in Wuhan has a processing capacity of roughly 400 tonnes compared to a total plasma collection volume of 7,120 tonnes in the China market and 31,100 tonnes in the US market. In 2017 there were 4 plasma collection centres (Dangyang, Luotian, Enshi Tianyuan and Chini Ruixiang) collecting roughly 127 tonnes.

CSL’s sales forecasts for the Ruide operation 5 years post acquisition was estimated at roughly US $100M, ⁴ so in terms of plasma production and revenues I don’t think it is material to CSL. According to the 2019 annual report the total revenues from China was US $625.8M compared to a total revenue for the group was US $8,538.6M The bulk of the China revenue stems from albumin imports which is the main product allowed in China from foreign companies. Personally, as result of the health crisis in China and now the rest of the world, I think there will be a higher demand for CSL’s therapies.

CSL’s production facilities had been operating under a “centre of excellence” model where each of the plants focused on their own product. However, this increases the risk that if one plant closes (for whatever reason) would impact the entire supply chain for that product. Consequently, many years ago CSL changed their manufacturing model to incorporate redundancy. ¹ For example PRIVIGEN is made in Bern and Broadmeadows, so, if Bern is unable to manufacture PRIVIGEN, Broadmeadow should be able to pick up production.

According to David Lamont (CSL’s numbers man) the supply chain is quite long, between the time a donor walks in the door at a plasma donation facility in the US and the time the product is available for sale is around 9 to 10 months. This isn’t because CSL isn’t efficient, just that there is quite a rigorous screening process to ensure the blood has not been contaminated with HIV, Hepatitis etc… ²Currently, these viruses are screened using a nucleic acid (looking at the RNA of the virus) test and I would imagine this is being used for Covid 19 ³

It should be noted CSL is very transparent in its product quality and safety, in the 2019 annual report it stated the following :

“During the reporting period, CSL initiated three voluntary safety-related product recalls.* No recalls were initiated by regulators. In August 2018, CSL Behring initiated a recall of three units of KYBERNIN® P in Switzerland due to units being distributed from a lot in quarantine during a requested emergency delivery. In February 2019, CSL Behring initiated a recall in Canada for albumin vials due to a gelatinous and opaque appearance of the product. In May 2019, CSL Behring voluntarily recalled five batches of ZEMAIRA vials, in the US market, as a precautionary measure due to a potential for inadequate aseptic technique during the filling process”. (Page 26)

In terms of plasma donations, US donors are paid, CSL tries to minimise the time spent at the centre via integrated donor management systems including electronic biometric identification and check in, streamlined floor layouts. ⁵

¹ CSL’s supply chain mapping a vital risk management tool
https://www.businessinsurance.com/article/00010101/NEWS06/304159972/CSLs-supply-chain-mapping-a-vital-risk-management-tool

² Review of Australia’s Plasma Fractionation Arrangements

³https://www.broadinstitute.org/files/publications/special/COVID-19%20detection%20(updated).pdf

⁴ AcquisitionChinese plasma fractionator 2017

⁵ 2019 Annual Report (page 24)

Review of Australia’s Plasma Fractionation Arrangements.pdf
Acquisition Chinese plasma fractionator 2017.pdf