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Investment in biotech, SA’s biggest opportunity

by Media Xpose

3Sixty Global Solutions Group has historically been known as a financial services company, but recently diversified into the fields of biotechnology and pharmaceuticals. SA BUSINESS INTEGRATOR spoke to Khandani Msibi, Group CEO at 3Sixty Global Solutions, to learn more.

What was the rationale for diversification into the fields of biotechnology and pharmaceuticals?

When I joined 3Sixty Global Solutions Group, its major business was provision of burial and cremation services through Doves Group as well as Independent Crematoriums South Africa (ICSA). We saw this business model as unscalable and extremely hard to market. Thus, we shifted our focus to the “life-enhancement” side of things instead of the “end of life” side of things. The immediate diversification was to get into life insurance with the acquisition of Union Life in 2009, which we later rebranded as 3Sixty Life.

Our strategic view about our clients was that it is more desirable to help them live longer, healthier lives and pay us a premium for longer, as opposed to relying on a business model which entails a once-off transaction, burial or cremation services. We classified death as an unfortunate event for which our clients must be covered to ensure a dignified send-off in its eventuality.

We expanded our business strategy to encompass business models which can help prolong life and active economic participation. The medical aid industry became very attractive as a means of fulfilling that strategy. As a result, a 10-year strategy was developed from 2010 to enter the healthcare industry.

The Group started at the bottom by establishing two healthcare advisory companies; NUMSA Financial Services and 3Sixty Client Solutions, and progressed to the acquisition of Sechaba Medical Solutions, which we have since rebranded as 3Sixty Health. 3Sixty Health administers both the Sizwe-Hosmed Medical Scheme and the South African Breweries Medical Aid Society.

Further analysis indicated that medical aid costs are driven by hospitalisation, pharmaceutical products, and specialist services. We attempted to enter the hospital industry with little success. Our view at that time was that the entry into pharmaceuticals was difficult and that South African pharmaceutical companies were primarily distributors of products from foreign companies.

As such our Group did not want to be in that type of business arrangement. We regarded specialists as the “Gods” of the industry that kept power to themselves and could not be disrupted.

It was not until I met Martin Magwaza, that the possibility of playing in the biotech space through innovation, as an equal amongst international innovation-based companies, became apparent.

We have, over the past five years, invested significantly in biotech to develop, reformat, and reformulate existing compounds, which have set us apart from existing South African pharmaceutical companies. We also created four start-up companies, which focus on well specified and well-chosen areas of biotechnology, namely:

  1. 3Sixty Biopharmaceuticals: In this subsidiary we invested in Covid therapeutics, Covid vaccines, and antimalarials. The Group successfully completed animal tests for a Virus-Like Particles vaccine grown off tobacco leaves, with the majority of our work having been internationally published in peer-reviewed journals. We are about to  conduct animal tests for our Covid therapeutics and malaria drugs. 3Sixty Biopharmaceuticals is currently expanding its anti-infectives portfolio to tackle multi-drug resistant infections through a new strategic partnership. Our company is also pursuing compounds that show potential for the treatment of Alzheimer’s.
  2. Sixty Biomedicine: Under 3Sixty Biomedicine, we have botanical extract-based women’s health products, the first migraine prophylaxis capsule and proprietary strains of rationally designed probiotics for gastric health and metabolic disorders.
  3. 3Sixty Nuclear Medicine: We are preparing to launch radioisotopes for cancer treatment, rheumatoid arthritis, and haemophilic synovitis.
  4. Cape Sativa: This is our cannabinoid business focused on using nanotechnology to produce finished dose formulations. This subsidiary is not in the business of growing cannabis nor doing primary processing. Our focus is to develop cannabinoid-based therapeutics for cancer, communicable diseases, metabolic and mental health disorders. The business is about to start animal trials for our cancer applications. Additionally, we have developed water-soluble cannabinoids for use in beverage and nutritional products.

What opportunities are there for South Africa in terms of pushing R&D, development and production of biotech and pharmaceutical products?

South Africa lost a culture of investment in innovations as the State has been discouraged from being entrepreneurial, with the gap left by the State not filled. You would remember that the Sasol coal-to-fuel Pebble Bed Modular Reactor, Rooivalk, and many other technologies we led the world with were part of the State’s investment in innovations.

Despite having vast technological innovation, South Africa fails to capitalise on these technologies, which are available from universities and state research agencies. Despite South Africa’s world-class research capability, it lacks entrepreneurship collaboration, so our scientists do research out of scientific curiosity rather than progressing technologies from conception to commercialisation.

Unlike Nasdaq in the USA, the Johannesburg Stock Exchange (JSE) does not have a culture of supporting new ventures. The requirements for listing are such that you need to have a track record of at least three years of revenue and profitability. Our retirement fund legislation is such that investment in unlisted assets is uncommon and venture capital funding is also limited.

Unless we unleash funding to entrepreneurs, value in the JSE will always be driven by the problem of “too much money” chasing “too few assets”, and the JSE appreciation will remain at variance with the performance of the economy for its citizens; red hot stocks in the mist of increasing unemployment.

As a 100% local company, how do you foresee investment in these fields enabling opportunities and promoting efficiencies for the benefit of various industries and the general public?

Investment in innovation is the only reason why the USA dominates the world economy. The rest of us are their clients and at times we copy what they have produced. Investment in innovation for South Africa will make us the industrial giant we should be; it’s the only way we can eliminate unemployment and poverty and solve some of our most complex problems.

As an African organisation with global aspirations, the diseases of the developing world like tuberculosis (TB) and malaria will receive serious attention from us. We need to ask ourselves how can TB remain as the number one killer in South Africa in this day and age? How can malaria be the number one killer in Africa, and both without Africans and South Africans making significant investment in research? That being the case, investment in such areas will be our contribution to society amongst other things.

Does SA have the capacity and resources to compete in the biotech sphere on a global scale?

Yes, South Africa has enormous research capability and capacity in State agencies and universities. These capabilities exist but they have remained unrecognised because we lost the culture of investing in innovations at the level of the State.

Our economy is too skewed towards financial services and mining. Banks employ engineers so that they can assess mining proposals, but they are in the dark about biotech. A country will only become successful in areas it focuses on and heavily invests in from a research and investment perspective.

Our competitive advantages include being the lowest cost research destination, not being new to manufacturing, having a skilled workforce that is unemployed and having the South African Health Products Regulatory Authority (SAHPRA), a globally recognised regulatory agency.

Although limited, South Africa has a few companies that specialise in clinical studies and the University of Cape Town’s Institute of Infectious Disease and Molecular Medicine has a Biosafety level three (high containment) accredited facility managing highly infectious disease agents required for basic research and diagnosis.

Our country has the skills to become a biotechnology powerhouse, a position we occupied before losing it to India. As an organisation we picked this opportunity and have spent the past five years gobbling up technologies, registering patents, developing and testing products. We have a pipeline of blockbusters which will delight our stakeholders once unveiled and launched.

What potential opportunities linked to the energy and telecommunications sectors is 3Sixty Global Solutions Group investigating?

We regard energy and telecommunications as the next frontier for us after biotech. The organisation has looked at Small Modular Reactors (SMRs) and the Open Base Transceiver Station (Open BTS). Our work on SMRs has led to contacts with companies from the USA, South Korea, and China.

Our telecommunications technology is a local innovation based on Open BTS, a USA open-source platform that enables calls into the Global System for Mobiles (GSM) at minimal cost. We placed the former on abeyance and some work continues on the latter, all due to the disruption of Covid and the 3Sixty Life curatorship.

What are some of the changes that the Group has implemented to mitigate and adapt to the challenges our country is facing?

Our investment is designed to address the challenges of rising healthcare costs caused by the burden of disease. For instance, our investments in weight loss technologies (three weight loss products will be available) will have a positive impact on diabetes and hypertension.

In conjunction with this investment, we are acquiring a company that specialises in treating diabetes and hypertension. They have a vision to expand services to include renal dialysis, pathology, and a whole lot of areas in which we can bring costs down whilst making a decent profit.

Considering the recent pandemic, load shedding, and our challenging economy, does 3Sixty Global Solutions’ vision of being a listed Pan African Group with significant global market presence by 2025 remain on track?

This objective remains on track, albeit in different shapes. We have broken the Group into two groups now, Doves Group Holdings (DGH) which offers funeral services and insurance, and 3Sixty Global Solutions Group (3Sixty GSG) which offers healthcare and biotechnology solutions.

What are the biggest challenges with reference to achieving the vision?

It’s all good problems and not bad problems! We are unlikely to list a unitary group but will most certainly list two groups: Doves Group Holdings and the Global Solutions Group (GSG) or some subsidiaries on their own.

For instance, our cannabis business, Cape Sativa, is incorporated in the USA. At the GSG, the breadth and depth of technologies we have has surpassed our imagination, and the board may have to reassess the appropriateness and timing of listing. But our view is that shareholders who invest in start-ups will never realise their value without listing, hence our commitment to that objective in whatever appropriate format.

What are the opportunities for the Group, despite the challenges?

Our investment in biotech remains the single biggest opportunity. We remain one of the few in South Africa who have invested so heavily in biotech research and development, especially considering our size.

We remain in an environment where we are exposed to an abundance of technology, so much so that we are like kids in a candy shop and have developed the discipline to choose high impact technologies.

How is the 3Sixty Global Solutions Group unique in its offerings?

Partnership symbiosis is one of our strengths as we are able to engage with local and international partners effectively, because we have a unique biotechnological innovative offering to put on the table.

Partnerships are transformative in that through complementing one another we are able to advance each other’s objectives much quicker and more cost effectively.

How do you see the growth of the Group unfolding?

Our growth will be driven by entry into global markets through partnerships as well as offering inward and outward innovative products. We will export South African Intellectual Property (IP) and integrate with the best global IP to advance mutual benefits with numerous partners.

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