UAE's Strata exploring biopharmaceuticals and EV-manufacturing joint ventures, CEO says

Aerospace unit of Mubadala seeking partnerships with established players to expand its manufacturing base

A technician cuts through a sheet of carbon fiber at Strata's plant in Al Ain. The company plans to add six new production lines this year. Reuters

Strata, Mubadala Investment Company’s aerospace unit, is expanding into biopharmaceuticals manufacturing and is also holding discussions with global electric vehicle makers to bring EV manufacturing to the UAE, its chief executive said.

The company, which is doubling down on its core business of aerospace manufacturing, is seeking to form joint venture partnerships with established companies as part of its long-term strategy to expand its advanced manufacturing capabilities and include more industrial segments.

“We have already started conversations with partners and the intention is to announce something before the end of the year,” Strata chief executive Ismail Abdulla told The National in Abu Dhabi.

“We have aggressive targets that we need to deliver on.”

The company is not interested in generic pharmaceutical products and is looking to only manufacture “certain drugs, therapeutics and vaccines”.

“We are going after monoclonal antibodies,” he said. “We believe that we will be able to address some of the autoimmune diseases, and this is why we want to be specialised.”

Monoclonal antibodies are made in laboratories to fight a particular infection, such as coronavirus.

Strata is looking for partners that are “hungry for growth, are willing to relocate and start new activities in this part of the world to serve the local market, the regional market and then the Russian market”, Mr Abdulla said.

He did not name Strata’s potential JV partners.

In March, Strata said it plans to focus on opportunities in a range of high-tech sectors such as biopharmaceuticals, digitisation, automation, artificial intelligence and manufacturing of advanced materials as it looks to diversify its business lines.

It pivoted to health care in May 2020 when it began to produce N95 masks in partnership with Honeywell after the onset of the Covid-19 pandemic, as part of the government’s push to promote local healthcare sector manufacturing.

Set up by Mubadala in Al Ain more than a decade ago to position the UAE in the global aerospace supply chain, Strata has billion-dollar contracts with Boeing, Airbus, Leonardo in Italy and Pilatus Aircraft in Switzerland.

The company, which formed an aerospace materials joint venture with Belgium’s chemicals producer Solvay in 2017 for Boeing's 777X project, plans to sign similar deals as it broadens its manufacturing base, Mr Abdulla said.

“We're going to use the same model and replicate it many times [going forward],” he said.

The company is working on developing several verticals simultaneously. On Tuesday, Strata announced a partnership agreement with German companies Hyperganic and EOS to develop the “world’s most energy efficient” residential air conditioning system in the UAE.

The partners aim to produce a system that will be 10 times more efficient than the standard alternatives available in the market, the companies said.

“We cannot wait to run things sequentially. So we are running a number of projects,” he said.

Strata is also holding discussions to potentially bring EV manufacturing to the UAE.

Setting up a conventional car manufacturing unit usually requires a large investment to achieve mass production. However, EVs have introduced the concept of a micro factory, which can justify an investment, he said.

EV making is an “interesting market” but “the jury's still out” if Strata would be establishing a factory here in the UAE, he said.

The company, however, will “continue to look at EV opportunities, whether it's manufacturing EV cars, buses, manufacturing battery units or some of the accessories”, he said.

Global sales of EVs more than doubled to 6.6 million in 2021, accounting for 9 per cent of overall car sales, data from the International Energy Agency show. The share of EV sales more than doubled last year from 4.1 per cent share in 2020, when three million units were sold, and more than tripled from 2019's 2.5 per cent share.

Demand for EVs is rising in the UAE as well. The willingness of consumers in the country to use EVs has been attracting fresh investments.

In March, M Glory Holding Group, a Dubai company that invests in technology, said it is setting up an EV manufacturing plant in the emirate.

The Dh1.5 billion ($408.4 million) facility at Dubai Industrial City, which will have a total land area of 93,000 square metres, will be one of the largest in the Middle East and aims to produce 55,000 EVs per year as demand for green mobility continues to rise.

Looking ahead, Strata will add six more production lines to its 24 lines dedicated to aerospace sector-related manufacturing by the end of this year, Mr Abdulla said.

“Aerospace is at the heart of what we do,” he said and added that the company is doubling down on expanding its capacity in its core focus area.

Strata’s balance sheet is well capitalised to undertake the expansion of new production lines and adding new manufacturing verticals as it diversifies its business.

“Funding is not an issue. The challenge is to bring the right sustainable ideas that can work actually,” he said.

Strata last year hit its target of $80m in revenue and expects to surpass the 2021 level as “we've seen some rebound in the market”, Mr Abdulla added.