In last night’s budget handed down by Australia’s federal government it was announced that funding has been allocated to create from scratch a capability to manufacture mRNA vaccines on Australian soil.
For those of us paying attention will know that IDT Australia had earlier made a bold pitch to the Australian government to manufacture vaccines, including mRNA vaccines, at it’s facility in Melbourne.
End-to-end
Tonight’s budget also stated that it is looking to build Australia’s vaccine capability “end-to-end”, meaning we will be manufacturing the key raw materials onshore.
Australia’s pharmacutical industry has been decimated in the last 2 decades by manufacturers in low-cost countries, such as India. IDT is the last remaining API manufacturer (Active Pharmacutical Ingredient) in Australia.
IDT, with well over 40 years experience in this field, appears to be in the prime position to capture a large cut of this new hunger for raw ingredients.
Two horse race?
The greatest prize in this race is the contract to manufacture the mRNA vaccine itself. Significant inflows of government cash will be required by the eventual winner.
At this stage it would appear to be a two horse race between the minnow, IDT, and the global goliath, CSL. There’s little doubt that CSL are favoured to win, however, nothing is certain.
It should be noted that a number of other Australian companies have pitched to the government to manufacture mRNA vaccines. These companies either have no manufacturing experience, or are start ups. It’s on this basis that these companies are unlikely to be looked at.
Outcomes?
As mentioned earlier, CSL, with it’s decade long history of delivering the goods, will be the most likely candidate to bring mRNA manufacturing to Austalia.
There is still a possibility that CSL will see mRNA as low margin/scale distraction to it’s high margin blood products business.
A government contract to manufacture mRNA vaccines for Australia would be company maker for IDT. Significant inflows of government cash would be required , likely more than the company’s current market capitalization.
Regardless of that contract, manufacuring of pharmacutical raw ingredients to support vaccine manufacture will be huge. This key area is IDT’s bread and butter. No company is better placed to take this slice of the pie.
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