Invest for success
A programme of continuous improvement and investment is paying off at Hersol Manufacturing Laboratories, one of South Africa's leading pharmaceutical contract manufacturing companies.
Writer Ian Armitage
Project manager Eddie Clinton
Hersol Manufacturing Laboratories is a fully licensed and registered pharmaceutical manufacturing company founded in 1980. The firm was established by Laurence Solomons and Sam Hertzkowitz and, thanks to a programme of continuous improvement and investment, is today one of South Africa's leading pharmaceutical contract manufacturing companies, specialising in the development and manufacture of complementary medicines, nutritional supplements and pharmaceuticals.
2012 was a good year for the Jeppestown, Johannesburg-based company, whose 70 year old manufacturing facility complies withthe Medicine Control Council (MCC) Code of Good Manufacturing Practice (cGMP) – making it standout in a highly competitive field.
Hersol has a full pharmaceutical manufacturing license, re-assessed regularly by the South African Medicine Control Council.
"In our sector of the pharmaceutical industry – complementary and alternative medicinal products (CAMS) – business has been excellent for 18 months," says Managing Director André Buhrlen.
Indeed it has. Volume rose by 38 percent last year and has remained "solid" so far this year.
Cash flow has improved dramatically too, allowing Hersol to bring forward upgrade plans and acquire additional equipment needed to cope with the volume increases.
However, despite the excellent performance, a significant challenge continues to loom over the company. That challenge is pharmaceutical regulations for CAMS products.
"It is an unknown factor," Buhrlen explains. "This means there are different standards of manufacturing and this creates uneven playing fields."
Hersol is "far more advanced" in terms of MCC requirements for cGMP (according to PIC/S standards, says Buhrlen) than any of its competitors and it invests continually in "raising" its game.
"South Africa represents a multi-million rand market for complementary and alternative medicines – but regulations for CAMS have not been promulgated as yet," Buhrlen explains. "There are no formal laws for the control and compliance of CAMS products, although expected regulations have been due for more than 20 years."
This restricts Hersol in terms of potential customers and represents a significant operational challenge.
"We took a decision a few years ago to upgrade the plant to MCC standards. We provide a full one-stop shop, from concept via R&D and eventually product launch to market. We guarantee our product quality, the integrity with which we manufacture every product and are a very ethical company. Personally, I do not tolerate slackness, and taking chances or cutting corners, and I believe this work ethos has spilled over into industry resulting in us receiving many enquiries from customers lately to manufacture their products?!"
Of course the type of work Hersol does and its adherence to incredibly high standards can be expensive. So it has made cost cutting one of several priorities.
"We have embarked on a major cost cutting. Actually, it is more of a continuous improvement strategy from the costing point of view," Buhrlen says. "We made significant savings on material purchases and signed SLA with our major raw material and packing material suppliers. This has reduced costs by more than 18 percent."
Hersol made more accurate reporting a priority, helping improve profit margins. The savings have enabled it to purchase new equipment and it recently acquired a new tubefilling line, which "could serve us well in the future", Buhrlen says.
"We also acquired various additional blending, granulating and a new high speed compression machine, so that higher volumes can be manufactured," he adds.
Hersol has almost completed an 1800m2 expansion of its manufacturing plant and it is set for a bright future.
The expansion is due for completion at the end of August.
"We will have to commission and validate all new equipment and be ready for additional volume work fromOctober onwards," Buhrlen says.
It is through investments like these that the firm is able to compete with some of the world's biggest drugs companies. But there are drawbacks. "We do not have full HVAC due to electricity," Buhrlen says. "However all the AHU – air-handling units – have been installed including the ducting/ diffusors/extraction etc."
To solve the problem, Hersol is investing in its own gas turbine power generation plant.
"That is a big investment and it will make us almost independent of City Power and Eskom. It is capital intensive, but with the erratic power supply to our plant, we saw little choice."
Hersol will "synchronise" the power generation to its three main buildings.
"One of the aims is to get the additional power to start running our AHU in the various production areas one by one, until fully compliant with cGMP and MCC regulatory requirements," Buhrlen says.
If he met a genie, what would his three wishes be? "I would wish for the capital to complete the full HVAC and upgrades to the facility and then to replace smaller current equipment with new/ additional high volume equipment throughout the factory.
"Due to business growth the past three years in particular many of our equipment were sized for the volumes we did then. Currently these equipment sizes hamper as to getting additional volumes through."
Buhrlen obviously wants full cGMP accreditation from the MCC.
It will help the firm take "the next step", he says.
"This is the key to attracting every possible customer in South Africa. Understand that we focus on CAMS, but get many enquiries from orthodox medicine companies that require cGMP accreditation.
"We are only a contract manufacturer; we do not own any brands. We literally manufacture only... distribution and sales and the like is outside our scope."
To learn more visit www.hersol.co.za.