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11/04/2025by EOS Intelligence EOS Intelligence No Comments

Feeding the Future: How Plant-Based Pet Food Is Shaping a Greener Bowl

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Over the past few years, the plant-based pet food market has been witnessing rapid growth due to pet humanization. As the market becomes increasingly competitive with many new brands and larger players, companies compete using innovative differentiation strategies to secure market share. By leveraging novel protein sources and innovative product formulations, brands look to enhance their product quality to gain an edge. Some brands focus on eco-friendly and sustainable practices to align their products with ethically-driven consumers. Others strive to optimize production processes to reduce costs and stay price-competitive.

According to Future Market Insights, the global plant-based pet food market was US$27 billion in 2024, with a growth forecast of a CAGR of 7.5% from 2024 to 2034. Vegan dog foods are some of the most common plant-based pet foods.

American and British companies overwhelmingly dominate the market. The leading players in this segment include Petaluma (USA), V-Dog (USA), Wild Earth (USA), PawCo Foods (USA), Omni (UK), The Pack (UK), and Benevo (UK). Other large players include Halo (USA), Nestlé Purina (USA), Mars Petcare (USA), and Hill’s Pet Nutrition (USA).

Plant-based dog food brands innovate with new protein sources

Creating products from protein-rich plants

One of the most critical components of a dog’s diet is protein. To compete with traditional animal-based dog foods, many vegan dog food brands focus on creating protein-rich formulas that match the nutritional profile of meat proteins. These products compete by combining and utilizing various plant proteins from sources such as peas, potatoes, lentils, and chickpeas.

Addressing the taurine deficiency in legume proteins

However, these plant proteins are often legume-based and deficient in taurine, an essential amino acid that dogs need in their diet. Some research studies claim that taurine deficiency increases the risk of dilated cardiomyopathy (DCM), a heart disease in dogs.

As more companies enter the vegan dog food market, brands try to differentiate their offerings by introducing more non-legume protein sources to offer a complete amino acid profile and address DCM issues in dogs. More and more vegan dog food formulations use ingredients such as quinoa, chia seeds, yeast, algae, and hemp. For example, US-based Wild Earth uses yeast-based plant proteins in its products such as Wild Earth Maintenance Formula and Performance Formula to create a more balanced dog diet.

However, incorporating these specialized ingredients raises costs due to complex production processes, and this results in products’ high-end prices. For instance, an 18-pound (about 8.2kg) bag of Wild Earth’s performance formula food costs the consumer US$99, about US$5.50 per pound. On the other hand, a 20-pound (about 9.1 kg) bag of US-based Open Farm’s Kind Earth formula, which does not use a special protein source, costs only US$72.99, about US$3.65 per pound.

Feeding the Future: How Plant-Based Pet Food Is Shaping a Greener Bowl by EOS Intelligence

Innovation beyond protein sources also drives competition

Along with high-protein formulation, players compete through various advancements, including product formulation, ingredient sourcing, and catering to specific dietary needs.

Formulating nutritionally complete products

To ensure nutritionally complete offerings, companies are enhancing their plant-based dog foods with high-quality proteins, vitamins, minerals, and fatty acids. For example, the American company Natural Balance utilizes brown rice, oats, barley, peas, and potatoes as the primary sources of protein and carbohydrates in its Vegetarian Formula. The product is enriched with taurine and l-carnitine amino acids, along with antioxidants from spinach, cranberries, and dried kelp.

Innovating in more appealing flavors and textures

In an attempt to make their products stand out, many plant-based pet food companies incorporate enriching flavors such as peanut butter, carrots, berries, and quinoa to make their products appealing to dogs. For instance, Open Farm’s Kind Earth plant-based kibble includes ingredients such as barley and fava beans, aiming to provide a nutrient-dense and palatable meal.

Apart from diverse flavors, texture innovation is an important competitive factor. Companies attempt to develop products with a meaty and fibrous texture that carnivore pets prefer. For instance, US-based Petaluma introduced Sweet Potato Jerky treats, a plant-based alternative to traditional meat jerky, made from sweet potatoes.

Addressing specific health concerns

Many vegan dog food brands also incorporate more functional ingredients to target specific health issues in dogs. Some vegan dog food brands offer grain-free and gluten-free options for dogs with allergies or grain sensitivity. An example of this is the British Benevo Adult Dog Food brand that offers wheat-free products catering to dogs with grain sensitivity.

Some companies provide formulas rich in probiotics and fiber to support healthy digestion. For instance, American Halo Holistic enriches its plant-based dog foods with prebiotics, probiotics, and postbiotics for complete digestive health and immune function.

To address dogs’ health concerns and enhance the competitiveness of their products, some companies enrich their foods with targeted ingredients. A case in point is another British brand, Omni, which formulates its vegan dog food with glucosamine, curcumin, and turmeric – ingredients that support joint structure and mobility in dogs.

Some brands also try to add calming ingredients to address stress and anxiety issues in dogs. For instance, Petaluma uses chamomile and lavender to reduce agitation in dogs.

Brands that prioritize pet health distinguish themselves by aligning with owners’ unwavering focus: ensuring their pets’ lifelong well-being. This strategy delivers a measurable competitive edge — reducing long-term veterinary expenses, building durable trust through proactive care, and fostering customer loyalty. Collectively, these outcomes create a self-sustaining advantage, positioning brands as partners in pet care while raising barriers for competitors lacking similar commitment.

Developing hybrid diets for flexitarian consumers’ pets

Recognizing the flexitarian trend among pet owners, companies are exploring hybrid diets that combine plant-based and traditional meat-based foods. This approach caters to consumers seeking to reduce meat consumption without fully committing to a vegan diet for their pets. ProVeg International, a food awareness organization, recommends designing products suitable for flexitarian feeding practices, as a way to attract a broader customer base and increase sales by pet food companies.

Brands differentiate by focusing on fresh, instead of processed, foods

Kibble and canned food are the most prevalent forms of dog food. Currently, most vegan dog brands offer dry foods in the form of kibbles and treats. However, the process of producing kibble involves extruding ingredients at high temperatures, which might destroy essential nutrients in a dog’s diet. These foods can also contain excessive preservatives to extend shelf life and fillers to bulk up to the product, compromising their nutritional value and making them less suitable for a dog’s long-term health.

As awareness of this grows, players are strategically expanding their focus to adopt gentle production methods, offering minimally processed meals from fresh (and sometimes organic) ingredients. For instance, UK-based Bramble and US-based start-up PawCo Foods offer oven-baked fresh meals. The oven-baked slow-cooking process allows easy digestion with better nutrient availability for the dog’s optimal health. A few brands also use organic ingredients in their product formulations to attract consumers. For instance, Petaluma uses about 50% organic ingredients in its dog food.

Plant-based fresh meal options are still not common, thus providing these companies with a competitive advantage in this highly competitive industry.

However, fresh, unprocessed meals and organic ingredients can be considerably more expensive than conventional kibbles and other vegan pet foods. Furthermore, fresh vegan meals are less available in comparison to popular kibbles. Due to the high prices and limited distribution, many consumers may struggle to maintain these pet meals over the long term. Consequently, players pursuing this strategy may face strong competition from other vegan dog food brands that might offer better distribution and price their products more affordably.

Companies use sustainability to attract ethically driven consumers

Several vegan dog brands emphasize their environmental commitment to attract pet owners with ethical and sustainability values. These companies advertise practices such as eco-friendly packaging, ethical sourcing, advanced production processes, and lower carbon footprint.

For instance, Petaluma promotes itself as a green vegan dog food brand, catering to pet parents who prioritize sustainability. The company regularly publishes the products’ lab results and sustainability practices on its website. In addition, it offers its products in attractive compostable packaging with graphics that illustrate dogs and humans working together to achieve a better planet.

While emerging companies and smaller brands use the sustainability approach to gain customers’ attention, more prominent brands might struggle to justify their eco-friendly claims. These popular brands have a broader range of traditional (and cheaper) products that they produce using less sustainable processes. When these companies promote their plant-based pet food products, environmentally conscious pet owners might perceive them as capitalizing on the growing demand without genuine environmental commitment. Consequently, pet owners may view these larger brand products as examples of greenwashing and dismiss their sustainability claims.

Plant-based food brands use diverse strategies for price competitiveness

Plant-based pet foods are mostly pricey due to several factors. These products are still niche and produced primarily by smaller companies with limited sourcing and production capabilities, factors that increase costs.

Additionally, these foods use high-quality, complex plant ingredients, involving extensive research, development, and testing, to ensure nutritional completeness. The high prices may prevent customers from buying these products.

Offering subscription models to make products more affordable

Currently, many companies provide subscription-based purchases associated with discounts to offer more affordable options to customers. These options allow the companies to lock customers for a long time, creating recurring revenue streams.

Using direct-to-consumer models to build trust and loyalty

Vegan dog foods are not mainstream yet. Companies in this space, especially smaller firms, use e-commerce sites and online pet retail platforms to increase their brand visibility and reach. However, over recent years, they have increased the use of direct-to-consumer models where companies sell directly to customers through their websites.

Unlike online retail platforms, this model allows companies to gain more control over product pricing and achieve better profit margins without having any middlemen involved. Several companies offer customized vegan meal plans that they tailor to the dog’s age, health conditions, and dietary preferences. This model allows companies to foster a direct consumer relationship, thus building trust and loyalty.

Introducing process optimization to reduce production costs

There is also an increasing instance of smaller brands collaborating with larger companies to lower production and distribution costs. A few companies have started exploring innovative technologies to increase efficiency and lower production expenses. For instance, PawCo is leveraging AI to test its products’ palatability and to streamline simulation and production processes.

While smaller companies undertake various internal efforts to reduce product costs through process optimization, these companies might still struggle to compete with larger brands to provide affordable plant-based pet foods. Large companies offer vegan pet foods at affordable prices due to their strong brand presence, financial resources, and versatile distribution networks.

Read our related Perspective:

Pet and Animal Health M&A: What’s the Scoop on the Industry’s Latest Shake-ups?

Plant-based food for cats poses greater challenges

While plant-based dog food is becoming more common, developing vegan cat foods is more challenging. Cats are obligate carnivores, meaning their nutrition relies primarily on animal-based meat. Cat owners have been skeptical about the nutritional profile of vegan diets. This makes them less willing to embrace such options for cats compared to dogs.

This creates an opportunity for players to innovate and compete in targeting cat owners. Some companies have been exploring solutions such as cultivated meat as an alternative to plant-based meat foods. For instance, Meatly, a UK-based start-up, has been exploring meat cultivation for cat food using cells from chicken eggs. While costly in R&D, this innovation could tap into a large market segment, offering cat owners more choices.

EOS Perspective

Health and sustainability will drive market growth in the West

While North America currently leads the market, Europe is not far behind and will likely experience significant growth in the coming years. Pet owners in the USA and Europe have been actively looking for plant-based pet foods that offer improved health benefits including oral, skin, joint, digestive and immune health.

Furthermore, there has been a growing demand for sustainable pet food products in these regions. Many pet owners are willing to pay high prices for vegan pet foods that promise minimal environmental impact and improved pet health.

Players in the Western plant-based pet food markets who are most likely to succeed will be those who effectively combine innovation, customization, sustainability, and consumer trust.

Asia-Pacific will be a rising frontier for players with localized strategies

Although the Asia-Pacific region lags behind North America and Europe in demand and availability of such products, it is poised for steady market growth. Key drivers mirroring Western trends, such as heightened pet health awareness, rising disposable incomes, and the growing appeal of veganism, are gaining traction across Asia.

The Asia-Pacific region’s diverse dietary and cultural preferences present both challenges and opportunities.

In recent years, some international plant-based pet food companies have entered Asia-Pacific, often forming partnerships with local retailers and pet food companies. For instance, in 2020, American V-dog launched its first plant-based pet food through Whole Foods, a major wholesale distributor in Japan. Such collaboration with Whole Foods, a reputable distributor, likely provided V-dog with strong market visibility and credibility. This entrance can serve as a strategic blueprint for other players aiming to expand into the region.

The region’s diverse diets and ingredients demand that companies tailor products to local preferences, such as incorporating sweet potatoes and seaweed in Japan. By aligning with these preferences, players can effectively navigate varied consumer demands. Those who can achieve that are better positioned to build relatability and trust with consumers, ensuring sustained long-term growth. A one-size-fits-all approach, or directly transplanting Western products into the regional markets, is unlikely to succeed.

The surge in online shopping across Asia-Pacific offers a significant opportunity to bypass traditional retail markups and reduce costs for consumers. Online platforms offer good growth avenues for brands that know how to strategically leverage e-commerce channels.

Asia’s price sensitivity will require careful threading

Price sensitivity will remain a critical factor and a barrier in this region, especially in developing economies such as India and China, where affordability often outweighs premium positioning. Here, players must adopt localized pricing strategies that cater to local economic conditions.

This can include offering smaller, budget-friendly packaging that can make plant-based pet food accessible for middle-income households. Hybrid products (combining plant-based and traditional ingredients) can serve as a cost-effective entry point for price-conscious consumers.

Subscription models, bulk discounts, and tiered pricing are good strategies for keeping product pricing accessible and relevant across diverse income levels. Tiered pricing, in particular, works well in markets with wide income disparities: simple formulations and no-frill products for budget-conscious consumers, enhanced formulations for middle-income buyers, and advanced formulations with premium ingredients for the high-income pet owners.

The regional markets also require investments in promotional campaigns, loyalty programs, and value-added offers that can further improve affordability and perceived value.

Brands that strike a balance between quality and affordability will likely appeal to a broader consumer base, ensuring deeper market penetration and success in the region.

27/02/2025by EOS Intelligence EOS Intelligence 1 Comment

Pet and Animal Health M&A: What’s the Scoop on the Industry’s Latest Shake-ups?

The pet and animal health market has seen a recent surge in M&A, signaling shifting dynamics within the industry. While rising pet ownership and increasing pet care awareness are creating positive momentum for the sector, broader trends are pushing major players to venture into the industry.

Many European players are focusing on cross-border acquisitions

M&A activity is particularly robust in Western markets

A significant number of mergers and acquisitions observed recently in the industry indicate a desire for major players to consolidate their positions and expand geographically in a bid to build their global presence and diversify revenue sources. Many companies pursuing geographic diversification are targeting Western markets with well-established pet care, mainly due to high disposable incomes, advanced veterinary services, and a cultural tendency to indulge pets.

An example of such a move is the 2023 acquisition of UK-based Kin Vet Community by Perwyn Capital, a European private equity (PE) investor, to gain entry into the UK veterinary services market. This acquisition aims to capitalize on the UK veterinary services market’s significant growth, which has risen from US$6.4 billion in 2021 to almost US$8 billion in 2023.

The UK-based veterinary sales and service provider, Animalcare Group acquired Australia-based Randlab in 2024 to strengthen its presence in the equine veterinary market. With this acquisition, Animalcare Group will be able to bolster its existing product portfolio and expand from the UK and Europe into Australia and New Zealand.

Similarly, Sweden-based investment company EQT Partners acquired VetPartners, a veterinary care network spread in Australia and New Zealand, in 2023. This move will not only help EQT enter the Australian and New Zealand veterinary markets but also help gain a strategic position in the veterinary industry with a network of 267 clinics and hospitals.

Experts believe that all these recent acquisitions indicate a desire of players to solidify their industry presence and widen their customer base, especially in the lucrative Western markets.

Central Europe is also experiencing a notable uptick

While M&A activity is the strongest in Western markets, some companies are also looking to Central Europe to search for their acquisition targets. An example is the 2024 acquisition of Bratislava-based VetCare Group by AniCura, a Swedish veterinary care provider owned by US-based Mars. This acquisition will add ten clinics to AniCura’s portfolio, three in the Czech Republic and seven in Slovakia. This strategic move also marks AniCura’s entry into the Czech and Slovak markets, significantly expanding its footprint in Central and Eastern Europe and complementing AniCura’s existing presence in Poland.

The developing markets are also grabbing players’ attention

A few players are also showing interest in developing markets such as Asia and Africa, where pet ownership is increasing, but veterinary and pet healthcare infrastructure remains underdeveloped.

Strategic acquisitions are increasing in Africa

Africa is a particularly lucrative investment zone with a favorable market situation for able players interested in investing in the continent’s animal health sector. This is due to barriers in local drug manufacturing, lack of local vets in private practice, and shortage of veterinary drugs.

A recent example of such an investment is Dutch-based animal nutrition company Nutreco’s 2024 acquisition of AECI Animal Health in South Africa. With this acquisition, Nutreco intends to utilize AECI’s expertise in animal nutrition to bolster its operations in South Africa. This move is also expected to allow Nutreco to tap into AECI’s distribution network and manufacturing facility in Burgersdorp, expanding its footprint in Africa’s crucial markets.

Similarly, in 2022, Ireland-based Bimeda acquired Afrivet, an animal health product distributor based in South Africa. This acquisition facilitated Bimeda’s entry into the African animal health products industry.

Foreign players are targeting the growing Asia-Pacific market

The Asia-Pacific (APAC) animal health market is also seeing similar interest from many competitive players. The pet care market in Asia, though still developing in several areas, is experiencing rapid growth. Countries such as China, India, and Japan are seeing a rise in pet ownership and heightened awareness regarding pet health. This makes it a great place for players looking to concentrate on various growth strategies, including collaborations, partnerships, agreements, and M&A, to strengthen their market presence.

An example of a recent strategic acquisition in the Asian market was France-based animal health company Virbac’s purchase of Japanese ORIX Corporation’s animal health subsidiary, Sasaeah, in 2024. The acquisition will help position Virbac as a leader in Japan’s farm animal vaccine market, particularly in the cattle sector. Sasaeah already has a strong presence in Japan and develops a wide range of veterinary products for both farm and companion animals. With this acquisition, Virbac will also gain Sasaeah’s local manufacturing facilities in Japan and Vietnam and its R&D capabilities. It will also strengthen Virbac’s status as a major player in the Japanese animal health market and offer opportunities for further expansion throughout Asia.

Virbac also acquired in 2023 a majority stake in Globion, a poultry vaccines company located in India, as part of its strategy to enter the avian vaccines market in the region and expand its geographic reach.

Similarly, in 2022, Germany-based Symrise AG, the parent company of Diana Pet Foods, which provides palatants for the pet food industry, acquired Wing Pet Food, a leader in pet food palatability in China. This acquisition gave Symrise access to the APAC markets.

Though the acquisition efforts are much lower in the developing markets, with favorable conditions such as increasing pet ownership and rising demands for efficient veterinary care, interested players can expect an overall improvement in market conditions and attractiveness in the future.

Major players are vying for smaller companies in a bid to grow product portfolios

Beyond increasing the geographical reach, the M&A activities aimed at expanding and strengthening companies’ product portfolios are also a significant trend observed in the animal health industry. Many big players are eyeing smaller firms to build comprehensive portfolios that can compete more effectively against other industry giants.

An example is the 2024 acquisition of Boston-based Invetx, which specializes in protein-based animal therapeutics and monoclonal antibody (mAb) development, by UK-based Dechra Pharmaceuticals. This acquisition enhanced Dechra’s specialty therapeutics portfolio for pets and provided access to the growing mAbs market. It will also introduce new technological capabilities, strengthen Dechra’s pipeline, and create significant future growth opportunities for the company.

Similarly, in 2024, the NJ-based Merck Animal Health acquired Indiana-based Elanco Animal Health’s aqua business to enhance Merck’s position in the aquaculture sector. This includes medicines, vaccines, supplements, and nutritional products for aquatic species, as well as two manufacturing facilities located in Vietnam and Canada and a research center in Chile. With this acquisition, Merck aims to strengthen its extensive portfolio, including warm and cold water products, vaccines, anti-parasitic treatments, and nutritional supplements.

Many other acquisitions materialized in 2024 in a similar vein. This includes Animalcare Group’s acquisition of Randlab to enter the equine care market and Australia and New Zealand’s animal health market. Also, South Korea-based Easy Bio acquired US-based Devenish Nutrition to bolster its feed additive and premix operations in North America.

Players are focusing on consolidation to bolster their veterinary service offering

The veterinary services segment is also seeing robust consolidation. Several corporate buyers acquired independent clinics and businesses to strengthen their market position and access the robust customer base of the target companies. Significant consolidation has been visible in the USA and globally for the past three decades.

A recent example is Norway-based veterinary dental care provider EMPET acquiring Smadyrklinikken, a Norway-based provider of veterinary services, including surgery and emergency care, in 2023. EMPET also acquired a Norway-based horse treatment clinic, Hesteklinikken Bergen, in 2024, further expanding its veterinary treatment scope.

Similarly, in 2024, Miami-based at-home veterinary care provider The Vets merged with Boston-based BetterVet, a mobile veterinary service provider, to combine the strengths of both companies and enhance their pet healthcare services across the USA.

Another acquisition along the same line in 2024 was that by Pavo, part of the Netherlands-based ForFarmers‘ global equine organization, which acquired Thunderbrook Equestrian, operating primarily in the UK and Ireland. Thunderbrook offers a diverse range of products, including conventional and organic horse feed, supplements, and herbs, supported by a strong distribution network and online presence. Experts expect this acquisition to enhance Pavo’s distribution capabilities.

Private equity firms are also targeting pet health firms

It is not only businesses within the veterinary or pet sector that are acquiring clinics and animal health businesses, but also companies from other industries and PE firms.

One example is the 2024 acquisition of Ireland-based veterinary products manufacturer Chanelle Pharma by Exponent Private Equity, a UK-based PE firm. Chanelle specializes in R&D and has a prominent position in the market as a producer of generic pharmaceuticals for both human and veterinary use. This acquisition offers Exponent many opportunities for investments in product development and R&D.

Similarly, UK-based PE firm Apax Partners, in 2023, acquired stakes in US-based pet care software service provider Petvisor to focus on accelerating innovation and to position itself as a market leader in the pet software segment.

This trend will continue since the pet care market is expanding remarkably. According to Fortune Business Insights, an India-based market research firm, the global pet care market valued at US$246.7 billion in 2023 is expected to reach US$427.8 billion by 2032. Experts anticipate that this significant growth fueled by the increasing trend of pet ownership will prompt more PE firms to invest in the pet care market.

Pharmaceutical and vaccine segment is seeing acquisitions with rising pet diseases

The growing demand for specialized pet treatments is driving M&A in the pharmaceutical and vaccine segments of the pet health industry. The rising cases of pet and livestock infections and increasing zoonotic diseases are creating a strong demand for improved treatments, conveniently available medicines, and vaccines. This has prompted many players to divert their attention toward acquiring companies in the veterinary pharma segment to gain market access.

An example is the 2024 acquisition of Iowa-based animal pharmaceuticals and vaccines manufacturer Diamond Animal Health by Minnesota-based animal compounding pharmacy, Veterinary Pharmaceutical Solutions. Experts see this acquisition as the first step in VPS’s plans to grow its capabilities, market presence, product offerings, and research capabilities.

Another example is the 2023 acquisition of PetMedix, a UK-based firm developing species-specific therapeutic antibodies for pets, by US-based Zoetis, a global animal health firm. With this acquisition, Zoetis has gained access to PetMedix’s portfolio of antibody drug candidates targeting unmet clinical needs in dogs and cats with chronic and terminal diseases, including oncology and inflammatory diseases.

Similarly, the US-based Better Choice Company‘s acquisition of Canada-based Aimia Pet Healthco in 2024. This move will allow Better Choice to lead internal clinical trials focused on addressing the increased demands for treating obesity-related issues in cats and dogs.

In 2023, Zoetis acquired Germany-based veterinary care company Adivo, which focuses on creating animal therapeutic antibodies. This acquisition will allow Zoetis to leverage Adivo’s existing libraries of species-specific antibodies, facilitating the creation of a diverse array of new veterinary products.

The vaccine market in emerging economies such as Asia-Pacific is also seeing some scattered M&A activity. Virbac’s 2023 acquisition of a majority stake in India-based poultry vaccines company Globion to venture into the growing avian vaccines market can be seen as an instance of this budding trend.

Preventive care and wellness players are becoming attractive targets

A 2023 survey published by the American Veterinary Medical Association indicated that 76% of pet owners consider their pet’s safety and health a top priority. This disposition has also started influencing how pet owners choose food for companion animals, prompting them to opt for organic and healthy treats. All these have made diagnostics, preventive care, and sustainable health a hot topic among interested players, leading to some major acquisitions.

Wellness and preventive care players are attractive acquisition targets

Many acquisitions in the animal health industry are also focused on wellness and preventive care businesses. The factors driving this trend are the rising awareness among pet owners about the advantages of preventive healthcare, early disease detection, and overall wellness of the pets in the long term.

An example is the 2024 acquisition of US-based treat and pet care company Riley’s Organics by Skane-based Swedencare‘s subsidiary business, Pet MD Brands, marking its entry into the organic dog treat market in the U.S. The acquisition will give Pet MD access to Riley’s premium organic dog treats and nutritional supplements targeting coat and skin health, liver support, ear care, etc.

Similarly, Antelope, a US-based company that offers premium pet care products and services, has acquired My Perfect Pet, a US-based brand known for its ‘gently cooked’ dog and cat food. With this acquisition, Antelope can strengthen its portfolio with My Perfect Pet’s nutritionally balanced pet food without preservatives.

Veterinary diagnostics surge as acquisitions drive segment growth

The veterinary diagnostics sector has also seen some recent acquisitions. Mars, currently a leading name in the pet health segment, acquired Cerba HealthCare’s stake in the French veterinary diagnostics firms Cerba Vet and Antagene. Mars made a similar decision in 2023 when it acquired US-based Heska, a veterinary diagnostic and specialized solutions provider. All these acquisitions can help Mars position itself as a major competitor in the pet diagnostics sector.

Similarly, in 2024, US-based Ollie, a subscription service for fresh dog food, acquired Dig Labs, a diagnostic company that delivers real-time health screenings for pets, including stool analysis and weight management. This acquisition also aims at helping pet owners monitor their pet’s food intake and get personalized food intake recommendations to prevent health issues.

We expect the veterinary diagnostics segment to grow significantly, and M&A activity will continue accelerating in the coming years.

EOS Perspective

The flurry of M&A activity in the animal health sector highlights the industry’s significant potential. Along with the existing trends, experts believe there are many more segments interested and able players looking to consolidate their position in the industry can focus on.

Online and mobile pet care is a promising area for businesses considering investment or acquisition within the pet health sector. Companies that can effectively navigate this space will likely capitalize on the increasing demand for online services, likely through acquiring businesses with an established customer base to strengthen their portfolio. It will also help firms enhance their competitive edge through a digital-first approach. The 2024 acquisition of The PharmPet Co by Pharmacy2U, both UK-based firms, can be seen as one of the early steps in this direction. This merger will allow Pharmacy2U to offer pet medicines online to customers.

A nascent trend that could offer opportunities in the future is pet owners’ increasing interest in their pets’ gut and microbiome health. Experts believe this inclination of pet owners will increase in the coming years, creating a massive market for pet foods and supplements, especially those containing probiotics and gut-supporting formulas. This will make profitable businesses in the pet supplement segment a lucrative option for able and interested players to focus on.

Read our related Perspective:
 Poop to Pills: Is FMT the Future of Veterinary Medicine?

Sustainable and eco-friendly products are another segment with growing attractiveness thanks to the ever-increasing environmental awareness. As in many other markets, pet owners will seek products that consider environmental impact. With consumers aligning their choices with eco-friendly solutions, we can expect major brands to merge or acquire companies making eco-friendly pet products. The 2024 merger of Chr. Hansen and Novozymes, both Denmark-based firms, to create Novonesis is an example. With this merger, the new company aims to develop microbial solutions and enzymes while focusing on minimizing chemical use and advancing climate-neutral practices.

12/11/2024by EOS Intelligence EOS Intelligence No Comments

Continuous Glucose Monitoring Devices: Overcoming Barriers in LMICs

The rising prevalence of diabetes in low- and middle-income countries (LMICs) underscores the need for advanced diabetes management solutions. Continuous glucose monitoring (CGM) systems are highly valuable but face limited adoption in LMICs due to high costs, infrastructure inadequacies, issues with accessibility, affordability, and limited insurance coverage. On the other hand, these countries offer opportunities to develop scalable CGM solutions tailored to the needs of LMICs and to penetrate these markets.

Over the past decade, the global prevalence of diabetes has surged, with a notable concentration in LMICs, particularly across India, China, the Middle East, and Southeast Asia. The LMICs now host the majority of nearly 540 million people living with diabetes.

Read our related Perspective:
The Future of Diabetes Care: Key Innovations in Continuous Glucose Monitoring

Effectively managing diabetes in LMICs is crucial and requires advanced solutions for precise and consistent monitoring of blood glucose levels. However, the CGM adoption rate remains low in developing and underdeveloped countries. As LMICs seek to incorporate these advanced solutions into their healthcare systems, they face numerous challenges.

Why is CGM adoption and acceptance lagging in emerging economies?

CGM systems are a revolutionary diabetes management tool. Despite the critical role it plays in advancing diabetes care, the high cost, uneven distribution, and inadequate infrastructure severely restrict their access, particularly in LMICs.

High costs hinder CGM adoption

A substantial barrier to adopting CGM systems in LMICs is their prohibitive cost. The average cost of CGM systems can be between US$120 and US$300 per month, placing them predominantly within the realm of those who can pay out of pocket.

For instance, the Dexcom G6 system, which includes sensors and transmitters, costs approximately US$300-US$350 per month. This price makes it out of reach for most individuals in LMICs, where average incomes are significantly lower.

As highlighted by a 2023 report by FIND, while an estimated 55,000 individuals live with type 1 diabetes in Kenya and South Africa, only about 10% are currently utilizing CGM systems. Many LMICs do not have subsidized healthcare or insurance coverage systems, which makes the situation worse. Consequently, the high cost of these devices creates a significant affordability gap, further entrenching healthcare inequalities.

In countries such as Iran, Lebanon, and Pakistan, the absence of governmental support and the unavailability of CGM technology highlight a broader issue. In many of these countries, private sector’s efforts are underway to bring diabetes-related innovations to the market, but the high costs associated with these technologies are a major obstacle.

Continuous Glucose Monitoring Devices Overcoming Barriers in LMICs by EOS Intelligence

Limited availability of CGM systems impedes diabetes management

In addition to high costs, the availability of CGM systems is another pressing issue. In many LMICs, including countries such as Turkey, Uganda, and Malawi, CGM solutions are either scarce or completely unavailable. This lack of availability limits access to advanced diabetes management technologies, crucial to improving health outcomes.

Similarly, In Egypt, where diabetes prevalence is notably high at 18.4% of the total adult population, the situation is equally challenging. The country lacks access to the latest innovations, while healthcare professionals need training in using CGM.

In LMICs, inadequate infrastructure poses a significant barrier to the widespread adoption of CGM devices. These tools rely on consistent power and internet connectivity to function optimally. However, frequent power outages, a common issue in many LMICs, can disrupt the continuous monitoring process, leading to data gaps and potential risks for patients who depend on CGM alerts for their health management.

Moreover, limited internet access, especially in rural areas, can severely impact the real-time data-sharing capabilities of CGM systems. This is particularly evident in African nations such as Niger, Nigeria, Chad, and South Africa, where infrastructure challenges are more pronounced.

For instance, South Sudan, with one of the lowest Infrastructure Index ratings in the region, faces critical limitations in accessing reliable power and internet services. These infrastructural deficits highlight the urgent need for targeted investments and solutions to bridge the infrastructure gap and enhance diabetes care in these regions.

Insurance coverage gaps stifle CGM access

The accessibility of diabetes management technologies, particularly CGM systems, is significantly hindered by inadequate insurance coverage and reimbursement policies.

This gap is especially noticeable in Asian LMICs such as the Philippines, where the healthcare system often does not include comprehensive coverage for these critical tools, placing a substantial financial burden on patients. In Vietnam, the National Health Insurance (NHI) scheme covers essential treatments such as oral antidiabetic medicines and insulin. However, it does not extend to glucose monitoring products. This lack of coverage forces patients to pay out-of-pocket for CGM, making it challenging for many to access.

What lies ahead for CGM in LMICs?

As diabetes increasingly poses a global health challenge, LMICs are ramping up efforts to enhance diabetes care. Progressive government policies, innovative programs, and manufacturers expanding reach across LMICs support this shift.

Government policies facilitating CGM integration with diabetes management

In many LMICs, government agencies and organizations are slowly working towards integrating advanced diabetes management solutions into healthcare infrastructure. This is visible through various initiatives undertaken that highlight the growing importance of CGM technologies.

For instance, the Chinese government demonstrated its commitment to standardizing CGM practices by issuing the Chinese Clinical Guidelines for CGM in 2009, with subsequent updates in 2012 and 2017. These guidelines establish clear protocols for device operation, data interpretation, and patient management. The guidelines also support training of healthcare professionals, improving quality assurance, and facilitating CGM integration into the national healthcare system. In several Chinese hospitals, the implantation, operation, and daily management of CGM systems are already handled by trained nurses and head nurses within the endocrinology departments.

India has also made significant strides, particularly in 2021, with the establishment of guidelines for optimizing diabetes management through CGM. The Indian government has introduced several initiatives to foster digital health advancements, including the National Digital Health Mission.

Advancing diabetes care, the ‘Access to CGMs for Equity in Diabetes Management’ initiative, a collaboration between the International Diabetes Federation and FIND, aims to integrate CGM solutions into African healthcare systems. This initiative seeks to double the number of CGM users in Kenya and South Africa by 2025, potentially impacting 21.5 million individuals with type 2 diabetes and 213,000 individuals with type 1 diabetes in Southern and Eastern Africa.

Government support for such initiatives is pivotal, as it can significantly enhance market access and ensure that CGM technologies reach underserved populations. These collaborative efforts and governmental actions are likely to drive extensive market reach and foster a more effective response to the global diabetes epidemic.

Manufacturers driving adoption by introducing affordable CGM solutions

Customizing CGM to meet the needs of LMICs offers manufacturers an opportunity to expand device access and adoption within these markets.

Medtronic is taking the lead by customizing its CGM solutions to reduce production and distribution costs specifically for LMIC markets. By optimizing its technology to be more cost-effective, Medtronic aims to increase the accessibility of its CGM systems in regions where diabetes management tools are often limited.

Similarly, emerging startups such as Diabetes Cloud (Aidex) and Meiqi are making strides in expanding CGM availability in South Africa. These companies are introducing more affordable CGM devices designed to meet the needs of local populations, thereby broadening access to critical diabetes management tools.

Manufacturers’ strategic initiatives accelerating CGM access

Manufacturers recognize the urgent need for effective diabetes care solutions in LMICs and the significant growth potential in the underpenetrated CGM market. To capitalize on this opportunity, they are focusing on expanding their product portfolios in these regions.

Additionally, Dexcom is planning to introduce the Dexcom ONE+ across the Middle East and Africa in the near future. This advanced CGM system can be worn in three locations on the body, enhancing comfort and usability. By accommodating individual preferences and needs, Dexcom aims to improve user experience. This strategic launch underscores Dexcom’s commitment to broadening its market presence and advancing its footprint in emerging regions.

Manufacturers are also supporting research initiatives across Africa. For instance, Abbott has donated its FreeStyle Libre Pro CGM devices for research in Uganda. The research’s favorable reviews and positive outcomes reflect a notable interest in and demand for sophisticated diabetes management technologies in these regions.

Moreover, strategic partnerships amongst manufacturers highlight a broader commitment to enhance the accessibility of CGM systems by leveraging combined expertise and innovative technologies. In January 2024, Trinity Biotech and Bayer partnered to introduce a CGM biosensor device in China and India. The collaboration is poised to leverage Bayer’s expertise and Trinity Biotech’s technological advancements to enhance diabetes care in these rapidly growing markets.

These strategic initiatives will likely impact the CGM market positively in emerging economies. Increased availability of CGM systems in LMICs will to drive higher adoption of glucose monitoring technologies and stimulate further investment in diabetes care.

EOS Perspective

Despite the challenges, the CGM market in LMICs presents a compelling growth opportunity for manufacturers. With diabetes cases on the rise, there is an increasing demand for CGM systems that offer real-time glucose data to improve patient outcomes. This demand, combined with progressive government initiatives and heightened awareness of diabetes care, creates a fertile ground for market development.

Manufacturers have a significant opportunity to capitalize on this emerging market by addressing the distinct regional needs. One of the primary challenges is the high cost of CGM systems, which limits their adoption. Hence, there’s a need to develop more affordable, scalable solutions tailored to the economic realities of LMICs. By focusing on local manufacturing and distribution strategies, healthcare companies can provide cost-effective solutions that meet the needs of underserved populations.

The shortage of trained healthcare professionals further complicates the widespread use of CGM. Manufacturers can address this by implementing comprehensive training programs for healthcare providers, equipping them with the skills needed to support patients in using CGM systems effectively.

This investment could foster greater acceptance of the technology. Non-profit organizations such as Medtronic LABS have made significant contributions, impacting over 1 million individuals with diabetes and training more than 3,000 healthcare workers across Kenya, Tanzania, Rwanda, Ghana, Sierra Leone, and India since 2013. The organization educates on diabetes management, equipping healthcare workers with skills to utilize CGM systems effectively. By enhancing the knowledge and capabilities of these health workers, Medtronic LABS ensures that communities receive better support in managing diabetes, ultimately leading to improved patient outcomes and CGM adoption.

Strategic partnerships with local entities, governments, NGOs, and international organizations can further enhance market reach. Collaborations can help manufacturers navigate the complexities of the market, overcome logistical challenges, and strengthen distribution networks. Partnering with organizations with established connections and regional expertise can facilitate more effective market entry and expansion.

For instance, organizations such as FIND, the International Diabetes Federation, and the Helmsley Charitable Trust are working to create business opportunities for CGM manufacturers. They specifically target manufacturers whose CGM products are unavailable in markets such as Kenya and South Africa to improve access in these regions.

Further, programs such as the Access to CGMs for Equity in Diabetes Management and national health guidelines in countries such as China and India are laying the groundwork for improved diabetes care. By integrating CGM solutions into national healthcare plans and providing necessary training to healthcare professionals, these initiatives aim to establish a sustainable model for diabetes management. Other developing regions should replicate this approach.

In the future, sustained emphasis on innovation, affordability, and strategic collaborations are poised to transform the CGM landscape in LMICs, ensuring that these advancements are more accessible to all. As this gains traction, access to advanced diabetes management technologies is expected to improve, offering a promising outlook for millions of individuals living with diabetes.

22/08/2024by EOS Intelligence EOS Intelligence No Comments

What’s Fueling Asia’s Drive to Develop Wholesale CBDCs?

The emergence of Central Bank Digital Currencies (CBDCs) has become a central focus in the global financial space, as it offers the potential for revolutionary shifts in how the world conducts and manages monetary transactions. While much of the spotlight has been on retail CBDCs, wholesale CBDCs are gaining momentum globally. Asia is leading the pack in developing wholesale CBDCs that offer opportunities that may significantly impact the global financial landscape.

Asia is outpacing developed countries in the drive toward wholesale CBDCs

Wholesale CBDCs are digital forms of a country’s fiat currency. Unlike retail CBDCs, only a limited number of entities can access wholesale CBDCs, which are designed for undertaking interbank transactions and settlements. The concept of wholesale CBDCs is similar to currently available digital assets used for the settlement of interbank transactions, with the key differentiation being the use of technologies such as distributed ledger technology (DLT) and tokenization.

Wholesale CBDCs have garnered global interest with central banks. Facebook’s (albeit failed) attempt to launch its Libra cryptocurrency in 2019 was a breaking point for blockchain technology’s use in global finance, eventually spurring the development of wholesale CBDCs. Initially launched as a measure to counter private cryptocurrencies, wholesale CBDCs are fast emerging as a potential disruptor in the fintech space.

Currently, more than 30 countries are researching the use of wholesale CBDCs. Interestingly, about half of these countries are from Asia. The development of wholesale CBDCs in Asian countries has outpaced the efforts of financially strong economies such as the USA and the UK, as these CBDCs offer more tangible benefits to developing economies in Asia than their more developed counterparts.

Several Asian countries have engaged in pilot programs, and proof-of-concept runs to explore the use of wholesale CBDCs to improve the efficiency of domestic large-value transactions and cross-border transfers.

China has been at the forefront of the development and widespread testing of wholesale CBDCs. Several Southeast Asia and the Middle East countries, including India, the UAE, Thailand, and Singapore, have launched pilot programs to explore the viability of wholesale CBDCs and test interoperability for cross-border transactions.

Achieving faster and cheaper cross-border transactions is key to Asian central banks

Growth in global trade has resulted in exponential growth in cross-border transaction volumes. However, these cross-border transactions are faced with challenges. There may be involvement of potential intermediaries, varying time zones, and regulatory frictions that may cause slower settlement. Financial systems such as SWIFT have a stranglehold on the cross-border transaction ecosystem, with many of these transactions using SWIFT messaging to settle payments.

Potential intermediary fees and forex-related charges also lead to increased transaction costs. According to World Bank’s estimates, transaction costs for cross-border transactions may range up to 6% of the transfer value, a significant surcharge.

Removing friction associated with cross-border transactions is a key goal behind Asian countries’ push toward exploring wholesale CBDCs.

A growing interest in wholesale CBDCs is attracting investments in building large-value payment infrastructures in Asia, allowing for faster and more efficient cross-border transfers. Wholesale CBDCs enable central banks to transact directly with each other, removing the involvement of multiple intermediaries and resulting in quicker transaction settlement. This also results in the elimination of intermediary fees to help lower transaction costs.

Technology also adds elements of security and traceability to these digital transactions. It also offers the potential to program them by automating or restricting payments if certain conditions are met.

Challenging US dollar dominance in cross-border settlements offers additional motivation

Several Asian countries are also looking to reduce their reliance on financial settlement systems that involve US dollar reserves. Currently, most cross-border transactions involve the use of the US dollar. Countries with limited forex reserves also face the challenge of outgoing reserves, resulting in potential currency inflation and adding to the already high transaction costs.

Wholesale CBDCs offer several Asian countries, particularly those with limited US dollar reserves, an opportunity to directly transfer the amount in their local digital currencies and eliminate the need for US dollars in bilateral transactions.

Developing Asian economies, such as China and India, with significant cross-border transactions, are looking to promote their CBDCs as a potential reserve currency in the Asian region that would allow cross-border settlement directly in the digital currency. It is also in the interests of countries such as China to develop its CBDC (e-CNY) as a potential alternative to the US Dollar in cross-border trade to mitigate any potential currency-related challenges posed by economic sanctions from the USA and EU.

What’s Fueling Asia’s Drive to Develop Wholesale CBDCs by EOS Intelligence

Tandem development and collaborations offer tailwinds to CBDC projects in Asia

Central banks of several Asian countries are undertaking information sharing and tandem development of CBDC infrastructures to mitigate some challenges associated with CBDC.

Recent pilot projects such as mBridge, launched by central banks of China, the UAE, Thailand, and Hong Kong, have been testing the use of a common ledger platform for real-time peer-to-peer transactions. The launch of several other projects, such as Project Mandala (involving Singapore, South Korea, and Malaysia) and Project Aber (involving Saudi Arabia and the UAE), is laying the groundwork for the widespread implementation of wholesale CBDCs.

Another potential avenue for collaboration includes forming partnerships with central banks to maintain reserves of digital cash to facilitate direct settlement. China, in particular, plans to develop e-CNY as a potential reserve currency alternative to the US dollar.

Interoperability and ownership are key challenges to CBDC implementation

While the use of wholesale CBDCs certainly comes forward as a boon, there are challenges in using these technology-driven digital currencies. CBDCs may have varying protocols, and interoperability between different CBDC frameworks remains a key challenge for implementing wholesale CBDCs for cross-border transactions.

Establishing common technical and operational standards is essential to ensure CBDC interoperability. Currently, most pilot programs involve CBDCs with common or similar technological frameworks and rules, which limit the application of wholesale CBDCs to a certain number of compatible entities.

Recent research projects are laying the groundwork for CBDCs’ compatibility with various ledgers and technical frameworks. However, significant testing will be required before compatibility can be established across the Asian region.

Ownership, governance, and regulatory oversight of wholesale CBDC technologies are other key concerns. Doubts exist over who will oversee the transactions and ledger entries, especially for any multi-party cross-border transaction.

Systems must also to adhere to anti-money laundering and counter-terrorism financing regulations. Varying financial laws may also hamper the seamless implementation of these anti-money laundering and counter-threat funding regulations across the region.

Lastly, like any digital asset, CBDCs are also susceptible to cyberattacks.

EOS Perspective

Wholesale CBDCs can potentially change the nature of cross-border transactions across Asia and globally.

We are likely to witness significant growth in test runs and pilot programs by several Asian countries to provide proof of concept for the applicability of wholesale CBDCs in countering the challenges associated with cross-border transactions. We can expect a spurt in CBDC alliances and treaties among countries with significant bilateral and intra-regional trade. Simultaneously, it may result in slightly reduced transaction volumes going through existing cross-border financial systems such as SWIFT.

The next stage of CBDC evolution is likely to coincide with the emergence of pilot programs involving multiple CBDCs with different technological frameworks, creating possibilities for easier and seamless cross-border transactions among banks or countries without any existing bilateral or regional partnerships.

These developments are likely to be aided by the development of enabling technologies such as RegTech (regulatory technologies) and SupTech (supervisory technologies), which could provide the sandbox environment for widespread testing of the CBDC systems, as well as lay the groundwork for potential regulatory systems to manage these infrastructures.

With the bulk of cross-border transactions still being conducted in the US dollar, wholesale CBDCs do not pose any imminent threat to its dominance. The US dollar’s future prospects in this role will depend on whether digital currencies such as e-CNY take off as a reserve currency, which is unlikely, at least in the short- to medium-term.

The overall success of wholesale CBDCs will depend on the level of cooperation that countries across Asia can develop over the next few years.

25/07/2024by EOS Intelligence EOS Intelligence No Comments

Lessons for Africa: To-do’s from India’s Successful Vaccine Journey

India, still a developing country, has achieved tremendous success as the world’s largest vaccine producer. This accomplishment leads to many lessons that India can offer to other low- to middle-income economies across the globe, such as Africa, looking to ramp up their vaccine industry. The African continent should capitalize on this opportunity and seek guidance from India, considering that India’s pharma and vaccine sectors are four to five decades ahead of the African continent.

How did it all begin for the Indian pharma and vaccine sectors?

The Indian pharma industry is more than a century old, with the first pharmaceutical company founded in 1901 and started operations in Calcutta. Till 1970, the Indian pharmaceutical industry comprised foreign players with very few local companies. However, driven by the purpose of the Swadeshi (meaning ‘of one’s own nation’) movement during the pre-independence era, some pharmaceutical manufacturing firms were founded in India. Established in 1935 in Bombay, Cipla was one such company, which is now a multinational pharmaceutical firm.

Apart from pharma companies, the presence of the Bombay-based Haffkine Institute (founded in 1899) and Coonoor-based Pasteur Institute of India (founded in 1907) solidified the country’s vaccine industry foundation. These institutes manufactured anti-plague, anti-rabies, smallpox, influenza, and cholera vaccines, among others. Nevertheless, the British colonial government in India withdrew the funds during World War II, which led to the subsidence of a few of these institutes.

The Indian pharma industry’s dynamics began to change, with recognition given to process patents instead of product patents. This created an opportunity for local pharma companies to reverse-engineer branded drugs’ formulations. It also allowed the creation of low-cost medicines since the producers did not have to pay royalties to original patent holders. It fueled the generics market growth in India, along with improving the capabilities of the manufacturers to produce high volume at low cost, thereby increasing the cost-effectiveness of the products. This was followed by the exit of foreign pharma players from the country with the removal of the Indian Patents and Design Act of 1911 and the implementation of the Government’s Patents Act of 1970.

This article is part of EOS' Perspectives series on vaccines landscape in Africa. 
Read our other Perspectives in the series:

Vaccines in Africa: Pursuit of Reducing Over-Dependence on Imports

Why Can India’s Vaccine Success Story Be a Sure Shot Template for Africa?

The structural change in the Indian pharma industry was evident from the drastic increase in the number of domestic companies from 2,000 in 1970 to 24,000 in 1995, leapfrogging 12-fold in a span of 25 years.

Additionally, driven by public sector investment and the central government’s prioritization of localized vaccine and drug production, India had over 19 public sector institutes and enterprises by 1971 that produced vaccines and generic drugs. These public sector institutes included Gurgaon-based Indian Drugs and Pharmaceuticals Limited and Pune-based Hindustan Antibiotics Limited.

Some pharma companies entered the export market owing to the 1991 liberalization of the Indian economy, the experience gained from producing cost-effective generic drugs, and global expansion. With this step, the Indian vaccine industry forayed into the international market between 1995 and 2005.

The reintroduction of the product patent system encouraged foreign pharma firms to return to India as the 2005 Patents (Amendment) Act prevented domestic pharma companies from reverse engineering formulations of branded medicines protected by patents to produce generic drugs.

In the pursuit of staying competitive with their foreign peers, Indian pharmaceutical companies focused on improving R&D thereby increasing investments in this space from 2005 to 2018.

What did India do right in vaccine manufacturing?

From investing in education and R&D to making necessary policy changes conducive to the growth of a sustainable and resilient vaccine sector, the Indian government has always been at the forefront of reducing overall pharmaceutical costs and nurturing the pharma industry.

Experience, expertise, and conducive policies enabled India to achieve cost-effectiveness

Indian government’s concrete action in strategy and policy-making has empowered the pharma industry to grow in a conducive environment. These conditions enabled the sector to become cost-effective by producing low-cost generic medicines and vaccines at high volumes.

This is evident from the fact that Invest India, the country’s investment promotion agency, states that producing pharmaceuticals in India is 33% cheaper than in Western markets due to labor costs being 50-55% lower. The cost of conducting clinical trials in India is also much lower, approximately 40%-80% cheaper when compared to Western markets, according to a 2010 article by the International Journal of Pharmacy and Pharmaceutical Sciences.

Indian pharma firms sometimes reverse-engineer medicines produced by companies making branded drugs and sell the formulation at a much-reduced price. The unique selling proposition of the Indian pharma industry has always been high volume coupled with low costs to make its products more affordable and accessible to patients across low- to middle-income strata of society.

Investments towards a robust scientific workforce helped reduce API import dependencies

Backed by the central government’s prioritization of domestic vaccine and drug production, some pharma companies in India started manufacturing raw materials or key starting materials to minimize the dependencies on API imports.

Other initiatives to strengthen the foothold of the Indian vaccine sector were directed towards building a solid talent pool of professionals who could develop drugs and vaccines independently rather than copy the processes from branded medicines. A result of this approach was the Lucknow-based Central Drug Research Institute (CDRI), which was founded in 1951 and continues to be one of the leading scientific institutes in India.

With the creation of the Department of Biotechnology (DBT) in 1986, India took another massive step towards progressing its pharma industry. Since then, DBT has been at the forefront of providing financial and logistical support for vaccine development and production using new and advanced technologies. The organization is also involved in creating biotech training programs for universities and institutes across India.

Lessons for Africa To-do’s from India’s Successful Vaccine Journey by EOS Intelligence

What can Africa learn from India’s experience?

It would be too ambitious to anticipate Africa replicating the Indian vaccine sector’s strategies and mechanisms in every way and detail. Although the two regions share enough similarities regarding disease profiles, geographies, climates, economies, etc., differences in competition, technology, and market dynamics cannot be ignored.

These differences could benefit and challenge the vaccine sector in Africa. The region must prioritize the creation of a resilient, sustainable, and robust life sciences ecosystem that will support the pharma, medical technologies, and vaccine sectors in the long run.

Development of a strong life sciences ecosystem that nurtures the overall vaccine sector

Africa needs to form close ties with multiple supporting networks, similar to how the Indian vaccine producers networked with the local biosciences ecosystem. These supporting networks must be associated with the production of multiple pharmaceutical products for a region, building a strong scientific labor force alongside reinforcing its regulatory system.

Higher level of autonomy for the leadership teams of government-led vaccine facilities

One of the key learnings from the pitfalls of India’s vaccine sector is that the executive/leadership teams of government-owned vaccine facilities should receive a higher level of autonomy. Interferences from government agencies should be avoided to the maximum extent possible. A classic example from the Indian market is the 2020-2021 downfall of HLL Biotech Limited which could not produce any COVID-19 vaccine owing to government interferences in the technology upgrade and production-related decisions.

EOS Perspective

For the African vaccine development and production industry to embark on a path of growth, it is imperative to learn from the valuable lessons available. However, with limited financial resources and insufficient infrastructure, it is crucial to prioritize the actions taken to ensure maximum progress.

To start building a favorable environment, it might be beneficial for the African markets to develop policies emphasizing process patents more than product patents, at least in the initial few years. This could be akin to regulations in the Indian pharma sector of 1970-1995, which proved quite effective and could fuel the growth of the generics market in Africa. Creating such an environment would waive off patent protection of branded drug manufacturers initially so that the local pharma companies can produce medicines at a low cost without paying royalties for copying the drug formulations of the branded drugs. Therefore, Africa can focus on building their generics market first and utilize the profits from there to reinforce the vaccine industry.

Secondly, African governments should initiate expanding the number of technology transfer hubs across the continent that focus not only on mRNA-based vaccines but also on newer DNA-based vaccines that are more suited for the African climate. Partnerships and collaborations with research institutes that are already working towards this goal can be a good first step.

One crucial step, which should not be delayed, is building a robust, skilled workforce to drive the sector development. Unfortunately, most African countries’ current education curricula are not in sync with the continent’s needs for vaccine manufacturing. Therefore, Africa urgently needs investment in education from various sources to develop the backbone of the vaccine industry so that the new education system can produce employable graduates in this field. It is important to note that the African governments should take a significant portion of this responsibility.

To begin with, new graduates can be something other than tertiary-educated, highly specialized professionals, such as PhDs. Rather than that, some form of vocational training in vaccine manufacturing or bachelor’s programs in relevant subjects, such as pharmacy, chemistry, etc., would help produce sufficiently skilled labor. This manpower can work and train further on the job under the guidance and supervision of foreign high-level talent and local high-level scientists who are present in the continent relatively sparsely.

These vocational programs should be designed in a collaborative effort between educational institutions and the existing and new vaccine manufacturing facilities in Africa. This would increase the chances of the African manufacturing facilities absorbing the graduating trainees.

India’s education evolution demonstrates the significance of having domestically bred relevant talent to augment and strengthen its own pharma and vaccine sector. This can empower Africa to curb the costs associated with foreign talent hunting and be more resilient to situations such as staff shortages, foreign staff availability fluctuations, etc.

Moreover, it is the responsibility of African governments to support the creation of jobs in vaccine manufacturing and R&D to attract the newly-trained workforce. A proven approach to this is to offer incentives for employing local talent to foreign and domestic investors who intend to set up vaccine facilities in the region. The incentives could range from tax rebates, exemptions, or credits, to offering employee training grants, subsidies for insurance coverage, etc. If this can encourage the creation of jobs in the sectors, young Africans will likely be keen on enrolling in related vocational programs.

Looking at the long-term objectives for the continent’s vaccine industry path, Africa’s primary aim should be to meet its own domestic vaccine needs in terms of both volume and disease spectrum.

Africa can learn critical lessons from India’s strengths and weaknesses in the vaccine sector. The weight of kick-starting the industry development inevitably lies on the African governments’ shoulders, and the sector will not develop on its own. It is high time for stakeholders, such as state governments, regulatory bodies, institutes, pan-African organizations, and local pharma companies, to speed up the process of absorbing and implementing these lessons. It is the only way to achieve the goal of 60% domestic vaccine production by 2040.

18/07/2024by EOS Intelligence EOS Intelligence No Comments

Why Can India’s Vaccine Success Story Be a Sure Shot Template for Africa?

Africa is currently facing significant challenges related to limited accessibility to vaccines as well as ongoing vaccine hesitancy. African CDC has identified these problems and is taking concrete steps to achieve its 2040 target of 60% of vaccines available on the continent to originate from domestic production. India is one of the key countries invested in the growth of Africa’s healthcare sector both financially and logistically. Due to similar geographies, climates, disease prevalence, and economies, Africa could take guidance, collaborate, or replicate Indian vaccine manufacturers’ strategies and mechanisms to scale up its vaccine sector.

Africa has one of the lowest average vaccine administration rates globally

Unbalanced access to vaccines in Africa compared to other regions became quite vivid during the COVID-19 pandemic. Africa’s average number of coronavirus vaccine doses administered per 100 people was 54.37 as of March 15, 2023. Seychelles administered the highest number of vaccine doses at 205.37 and Burundi the lowest at 0.27.

In contrast, the world average stood at 173, with high-income countries such as the USA and Canada administering 191 and 258 vaccine doses per 100 people, respectively. Interestingly, Cuba, despite being an upper middle-income economy, administered 385, a higher number of doses per 100 people than some high-income countries.

Even some low-income economies such as Vietnam (276), Bhutan (264), Bangladesh (218), Nepal (213), and Sri Lanka (184), among others, administered a higher number of coronavirus vaccine doses than the world average (173), and far more than Africa’s average.

These stark variations in the vaccine administration rates across countries could be attributed to the lack of easy accessibility, especially in Africa, apart from other factors such as vaccine hesitancy.

Africans’ vaccine hesitancy slows down the uptake of vaccination

Vaccine hesitancy is caused by several factors such as personal beliefs, misinformation or myths, healthcare infrastructure and access, religious and cultural beliefs, and vaccine safety concerns. These are typically the main reasons for vaccine hesitancy according to an October 2023 article published by ThinkGlobalHealth, and several of these reasons are likely to apply to the African continent.

In addition to these, another critical factor that cannot be ignored is people’s lack of trust in the health ministries, a relevant aspect in some African countries such as South Africa. This was largely due to the ministries’ involvement in procurement corruption of COVID-related aid according to an article published by GlobalData in November 2023.

Africa’s low vaccine administration rate is driven by limited accessibility

One major reason for the vaccine’s low administration rate in Africa is the limited accessibility to vaccines. This has been an ongoing issue on the continent and was not just limited to pandemics such as COVID-19 and Ebola.

The African continent is overdependent on vaccine imports, with 99% of its vaccine needs being satisfied from abroad. With a total of 13 operational production facilities across the continent, the current vaccine manufacturing industry is in its infancy in Africa and produces 1% of the continent’s vaccine supplies.

African countries have recognized this issue and begun working towards its goal of meeting 60% of the continent’s vaccine needs domestically by 2040, with interim targets of 10% by 2025 and 30% by 2030.

This article is part of EOS' Perspectives series on vaccines landscape in Africa. 
Read our other Perspectives in the series:

Vaccines in Africa: Pursuit of Reducing Over-Dependence on Imports

With some local talent available, Africa needs the right development template

While the local vaccine industry is underdeveloped, to say the least, the continent is not entirely without the talent required to produce home-grown vaccines and other pharmaceutical products such as test kits. For instance, Senegal-based Pasteur Institute developed a US$1 finger-prick at-home antigen test for COVID-19 in partnership with Mologic, a UK-based biotech company. Although the funding came partially from the UK, local talent was predominantly utilized.

To establish a sustainable vaccine sector, Africa does not need to reinvent the wheel. It could utilize lessons and success stories of other countries that have built this industry and share similarities with the African continent.

India is one such country with a vast size, diverse cultures, geography, and administrative structures under one roof, and has a tropical climate and disease profile similar to those in Africa. Additionally, India’s symbiotic relationship with the African healthcare sector would also play a significant role in empowering Africa to leverage the expertise of the Indian vaccine sector. This could be a step in the right direction for the African continent to achieve vaccine sovereignty.

Why Can India’s Vaccine Success Story Be a Sure Shot Template for Africa by EOS Intelligence

Africa’s partnership with India in healthcare is not new

Africa has a long-standing healthcare partnership with India, as the latter has been the largest supplier of generic medicines to Africa. Additionally, some US$3.4 billion worth of pharma products, i.e. close to 20% of India’s total pharma exports, went to African countries as of 2018. In 2020-2021, India’s pharma exports to Africa amounted to US$4.3 billion as per the Pharmaceuticals Export Promotion Council of India (Pharmexcil).

Between 2010 and 2019, India was also the third-largest contributor to Africa’s healthcare investment landscape, after the UK and the USA. During this period, India invested around US$210 million out of a total of US$1.1 billion in global investments into Africa’s healthcare sector, accounting for a 19% share.

In the past, African pharma companies have relied on Indian organizations to pivot and streamline their business in difficult times. For instance, South Africa-based Aspen Pharmacare could not sell a single dose of its COVID-19 vector vaccine owing to multiple factors, such as the rising popularity of mRNA vaccines. Ultimately, the company partnered with the Serum Institute of India (SII) in August 2022 to produce its vaccines to minimize business loss and idle production capacity. This is just one example showcasing opportunities where African vaccine producers collaborated with Indian vaccine makers. This kind of collaboration can also become a source of guidance and knowledge on how to create own sustainable ecosystem for vaccine production.

Collaborations between Africa and India have also extended beyond adverse situations. One example of this is a partnered research to produce a DNA-based dengue vaccine. Scientists from Bangalore and Goa in India and Nairobi and Cameroon in Africa have been working together in a partnership called the India-Africa Health Sciences Collaborative Platform (IAHSP), set up in 2019. The partnership results from a collaboration between India’s ICMR (Indian Council of Medical Research) and the African Union to create this DNA-based dengue vaccine, among other research work involving antimicrobial resistance, per a January 2022 Springer Nature article.

Furthermore, in December 2020, the Indian Healthcare Federation (NATHEALTH) and the African Health Federation (AHF) partnered to foster investment in healthcare and thus promote business opportunities in healthcare between India and Africa.

India’s pharma industry has merits to learn from

The Indian vaccine production sector is rapidly gaining steam in the global market and outpacing multinational players in this industry. A few prominent Indian vaccine producers, such as SII, Bharat Biotech (BBIL), and Biological E, have captured a considerable market share globally.

Interestingly, over 60% of the global vaccine needs in terms of volume are being satisfied by only five producers globally. Three of these five producers are based in India: Pune-based SII, Hyderabad-based BBIL, and Mumbai-based Haffkine. SII tops the list of these five global producers with a 28% volume share globally, and BBIL (9%) shares the third spot with Sanofi, followed by Haffkine (7%), as of 2019.

For many years, India has been supplying cost-effective and high-quality generic medicines and vaccines, which has earned the country the title of ‘pharmacy to the world’. The title is not exaggerated, as India alone accounts for 62% of global vaccines and 20% of global generic drugs’ production by volume as of 2023. The Indian pharma sector holds the third rank by production volume and tenth by value globally.

With an 18% share of pharmaceutical exports and vast needs, Africa is the second-largest importer of pharmaceutical products from India as of 2019.

Indian vaccines’ success in Africa proves that Indian producers understand African needs

In its quest to develop its own vaccine production sector, Africa can learn a host of aspects of vaccine production from India. This includes but is not limited to the cost-effectiveness of vaccines against diseases such as COVID-19, rabies, diphtheria, pertussis, tetanus (DPT), human papillomavirus (HPV), malaria, Ebola, and meningitis. India is four to five decades ahead of Africa in vaccine manufacturing and has already done its homework on how to do it right. That’s a useful source of knowledge for Africa’s budding industry, especially since Indian-made pharma products tend to align well with the needs of the African continent.

Serum Institute of India’s (SII) foothold in Africa

SII is now the largest vaccine producer by the number of doses manufactured and sold worldwide (over 1.6 billion doses across 170 countries in 2020), including for polio, diphtheria, tetanus, pertussis, haemophilus influenzae type b (Hib), BCG, r-Hepatitis B, measles, mumps, rubella, as well as pneumococcal and COVID-19 vaccines. According to estimates, nearly 65% of children across the globe receive at least one vaccine produced by SII.

SII has a strong foothold in Africa, with several of its vaccine products being extensively used or developed specifically for the continent’s needs.

MenAfriVac, manufactured by SII, is a vaccine to prevent meningitis and was rolled out in Africa in 2010. The vaccine was developed specifically to curb the spread of meningitis in Africa to cater to the vaccine needs of its population. The price of the vaccine is less than US$0.50 per dose, with an efficacy of 52% among 12–23-month-old children and 70% among older children and adults. Thanks to the vaccine, over 152 million people were inoculated by MenAfriVac by the end of 2013, enabling the elimination of meningitis epidemics in 26 African countries.

Another example of an India-made vaccine to particularly reduce Africa’s disease burden of malaria and cater to its people’s vaccine needs is R21/Matrix-M. SII, along with Oxford University, has produced this malaria vaccine using the technology of Novavax, a US-based biotech company. The vaccine has been approved for use by some African countries’ regulatory authorities, such as Ghana, Nigeria, and Burkina Faso, as of December 2023. According to a January 2024 press release by SII, the vaccine showed efficacy of around 78% in the age group between five- and seventeen-months children in Burkina Faso, Kenya, Mali, and Tanzania over the first year. The company is planning to roll out the 25 million vaccines produced in the coming four to five months.

In December 2022, SII acted rapidly on the Sudan Ebolavirus outbreak in Uganda by sending over 40,000 doses of the investigational ChAdOx1 SUDV vaccine in a record time of 80 days after WHO declared the epidemic.

These are some examples showcasing the fact that SII, along with other Indian producers, understands Africa’s vaccine needs, which is evident from the success of these vaccines in Africa. Consequently, it makes logical and economic sense for Africa to learn from Indian vaccine manufacturers to develop low-cost, effective vaccines.

Apart from successfully selling its vaccines in Africa, SII also actively contributes to the knowledge transfer into the continent. In January 2024, SII partnered with the Coalition for Epidemic Preparedness Innovations (CEPI) to foster low-cost vaccine production in Global South countries, including Africa (also comprising Latin America and the Caribbean, Asia (excluding Israel, Japan, and South Korea), and Oceania (excluding Australia and New Zealand)) to curb the outbreak of life-threatening diseases. CEPI is a global organization formed as a result of an international collaboration between public, private, philanthropic institutions and NGOs.

CEPI has three other members apart from SII: South Africa-based Aspen Pharmacare, Senegal-based Institut Pasteur de Dakar, and Indonesia-based Bio Farma. With this partnership, CEPI intends to capitalize on SII’s expertise in making affordable, cost-effective vaccines in record time. In this pursuit, CEPI is investing US$30 million so that vaccine developers who are already partners of CEPI can expedite technology transfers to SII within days or weeks of any outbreak. This will enable SII to produce vaccines against the impending disease.

Bharat Biotech’s (BBIL) foothold in Africa

With over 145 global patents and a portfolio comprising over 16 vaccines, BBIL has sent over 6 billion doses of vaccines to 125 countries worldwide. BBIL has produced vaccines against influenza H1N1, rotavirus, Japanese encephalitis (JENVAC), rabies, chikungunya, zika virus, and cholera. The company is also the creator of the world’s first tetanus toxoid conjugated vaccine for typhoid. In addition to these, BBIL has manufactured WHO pre-qualified vaccines, such as BIOPOLIO, ROTAVAC, ROTAVAC 5D, and Typbar TCV against polio, rotavirus, and typhoid infections, respectively.

BBIL has also been offering its products to Africa. In one of the recent examples, the company delivered its rotavirus oral vaccine, ROTAVAC, to Nigeria to immunize the country’s children in August 2022. The vaccine is expected to minimize the occurrence of the disease and death due to rotavirus among Nigerian children below the age of five years by at least 40%, according to research by the Johns Hopkins Bloomberg School of Public Health.

Another example of a vaccine made by BBIL that is aligned with the needs of the African population is MTBVAC. In March 2022, the company announced its partnership with Spain-based biopharmaceutical company Biofabri to develop, produce, and distribute MTBVAC, a novel TB vaccine. Phase 3 trial is currently underway in TB-affected regions of Sub-Saharan Africa such as South Africa, Madagascar, and Senegal. With 25% each, Sub-Saharan Africa and India account for the highest TB burden across the globe. The vaccine is being developed to target TB in these susceptible regions to eradicate the disease.

Several other Indian manufacturers have rolled out successful vaccines against various diseases in Africa that have significantly reduced the disease burden in the region.

EOS Perspective

Achieving 60% local vaccine production within 15 years will be possible only if Africa chooses a robust role model to learn from. India stands out as possibly the only near-perfect choice for that. To foster the development of a seamless and sustainable vaccine ecosystem, Africa should replicate, take guidance, and collaborate with Indian manufacturers as much as possible.

The world has evolved and many steps taken by India in the past cannot be directly transplanted into the current African scenario. However, India’s approach to building self-reliance in pharmaceutical production can undoubtedly offer valuable lessons. Direct know-how and technology transfer, collaborations, approach to talent training, production facilities management, procurement handling, supply chain management, licensing, and IP protection are critical aspects in which Africa could utilize India’s expertise and experience in vaccine making.

By choosing India as a role model and emulating its focus on nurturing a competitive pharma manufacturing industry, Africa could take a significant step towards achieving the goal of self-sufficient vaccine production.

01/03/2024by EOS Intelligence EOS Intelligence No Comments

Lithium Discovery in Iran: A Geopolitical Tool to Enhance Economic Prospects?

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Iran possesses significant mineral reserves, but its mining industry grapples with issues, including machinery shortages and international sanctions. The recent lithium discovery in Iran holds the potential to boost its mining sector and economy, depending on the viability of lithium extraction and processing, as well as geopolitical factors. It can serve as a bargaining chip to lift sanctions imposed by the Western world. China is poised to benefit the most from Iran’s lithium discovery due to its strategic partnership and expertise in lithium refining and extraction technologies. However, despite Iran’s strong mining potential, high infrastructure costs, technological limitations, and sanctions hinder its mining industry development.

Lithium discovery to help drive mining industry and economic upliftment in Iran

Iran is home to more than 7% of the world’s total mineral reserves and is rich in minerals, including zinc, copper, iron ore, coal, and gypsum. However, Iran’s mining industry is still nascent and barely contributes to economic growth due to a lack of necessary machinery and equipment as well as international sanctions.

In the past, Iran exported various minerals, such as iron ore, zinc, and copper, to Western countries. However, prolonged international sanctions, initially imposed in 2006 to restrain Iran’s nuclear development program, resulted in insufficient investment in the mining sector.

Lithium Discovery in Iran, a Geopolitical Tool to Enhance Economic Prospects by EOS Intelligence

Announced in March 2023, the discovery of lithium deposits holding up to 8.5 million tons of lithium in Iran, if proven accurate, is expected to strengthen the country’s mining sector and overall economic growth. Iran is the first country in the Middle East to discover lithium deposits.

Lithium is a crucial component of lithium-ion batteries used in smartphones and electric vehicles. The increasing adoption of electric vehicles is fueling the demand for lithium at a significant rate globally. There is a great need to scale up lithium mining and processing to meet the demand, particularly for the manufacturing of electric vehicles.

International Energy Agency (IEA), in its global EV outlook for 2022, indicated that about 50 new average-sized mines need to be built to fulfill the rising lithium demand for electric vehicles and meet international carbon emission goals. There are already signs of lithium shortage as demand for lithium increases globally. The lithium reserve found in Iran holds the potential to reverse the lithium supply shortage into surplus in the coming years.

Read our related Perspective:
Electric Vehicle Industry Jittery over Looming Lithium Supply Shortage

Hope for the lifting of sanctions and reestablishment of diplomatic relations

The lithium discovery in Iran is expected to redirect focus toward mining activities in the Middle East. Iran can leverage this discovery to persuade Western nations, such as the USA and the EU countries, to lift sanctions imposed for its nuclear program, support for terrorism, and human rights violations. These sanctions include restrictions on Iran’s access to the global financial system, travel bans on targeted individuals and entities involved in concerning activities, and limitations on trade in certain goods and technologies.

In August 2023, Iran and the USA reached an agreement wherein Iran intended to release detained Americans in exchange for the release of several imprisoned Iranians and access to frozen financial assets. Fulfillment of commitments demonstrates mutual trust among the countries, which could pave the way for improved relations, reduced tensions, and future diplomatic initiatives. The US government also permitted Iran to enrich uranium up to 60%. This can be interpreted as allowing Iran to meet their nuclear aspirations, which could encourage Iran to comply with the agreement signed with the USA. As cooperation and trust between the nations strengthen, this agreement could ease sanctions. Moreover, if relations continue to improve, Iran could potentially seek assistance from the USA for its lithium venture.

Also, in March 2023, Saudi Arabia and Iran, with the help of China, reached an agreement to resume their diplomatic relations, re-open embassies, and implement agreements covering economy, investment, trade, and security. With the reestablishment of cordial relations, Saudi Arabia is likely to engage in joint ventures within Iran’s mining sector, providing mutual benefits for both nations.

It can also be expected that India will seek to strengthen its ties with Iran by building strong collaborations to ensure a regular lithium supply, considering that India is one of the largest importers of lithium-ion batteries. Iran and India share strong and multifaceted relations across various areas, such as trade, energy, connectivity, culture, and strategic cooperation. As India strives to transition to renewable energy sources and reduce its carbon footprint, access to lithium reserves from Iran could facilitate the development and deployment of energy storage solutions, such as grid-scale batteries and off-grid systems.

Potential to disrupt the global lithium race and geopolitical relations

The announcement of lithium deposits in Iran is likely to impact the global competition for lithium resources significantly. It holds the power to disrupt the existing power dynamics in the global lithium race, as it is estimated to be the second-largest lithium reserve in the world after Chile.

Many countries compete to control lithium supply chains due to its strategic importance, particularly in the EV industry. A few countries dominate the global lithium production, including Australia, Chile, and China. The emergence of Iran as a significant lithium producer could diversify the global supply chain. China, the largest importer and processor of lithium and manufacturer of lithium batteries, holds a substantial share of the lithium market. China is particularly reliant on foreign lithium suppliers, including Australia, Brazil, Canada, and Zimbabwe, accounting for around 70% of its total lithium imports.

With China’s well-established economic and political relations with Iran, there is potential for collaborative ventures in the clean energy transition supply chain. In addition, China’s expertise in technological advancements in lithium-related technologies, particularly lithium-ion battery manufacturing, purification and refinement of lithium, battery management systems, and development of battery materials, will likely play a crucial role in gaining access to Iranian lithium. Increased access to lithium will reduce its dependence on the current lithium suppliers and gain dominance in the lithium supply, impacting the trade balance and economic growth of countries supplying lithium to China.

At the same time, Australia, which stands out as China’s current primary source of lithium, exporting around 90% of its lithium to China, might encounter political and economic challenges. Australia, being a close ally of the USA, is likely to face pressure to curb its lithium exports to China, aiming to limit China’s access to sources of lithium. Chile, also being the key supplier of lithium to China, may face similar pressure from the USA. The USA is likely to exert such pressures, as China’s strong position could undermine the USA’s technological competitiveness and leadership in the EV market, accelerating the existing tensions and disrupting power dynamics in the global lithium race.

Major influencing countries such as the USA, Canada, France, Japan, Australia, the UK, and Germany also formed the Sustainable Critical Minerals Alliance in 2022. The alliance aims to secure supply chains of critical minerals, including lithium, nickel, and cobalt, from countries with more robust environmental and labor standards to reduce dependency on China. Such initiatives are expected to impact China’s dominant global lithium supply chain position.

Inevitably, Iran’s lithium discovery and China’s potential involvement in securing access to the resource can influence international relations, particularly between China and the USA, and China and Australia.

China to deepen ties with Iran

China and Iran have established an extensive partnership focused on China’s energy needs and Iran’s abundant resources. China has remained Iran’s primary trading partner for more than a decade. Their relationship grew stronger, specifically after the USA pulled out of the nuclear agreement and reintroduced sanctions on Tehran in 2018. Both China and Iran are confronted with sanctions from the USA, which is expected to strengthen collaboration between the two to mitigate the impact of sanctions and to counterbalance US influence in the Middle East and Asia.

In March 2021, China and Iran signed a 25-year strategic collaborative agreement to reinforce the countries’ economic and political alliance, particularly focusing on investment in Iran’s energy and infrastructure industry and assuring regular oil and gas supply to China. This is expected to further strengthen the relations between Iran and China.

China, the most trusted strategic ally of Iran and a significant lithium producer will likely act as a critical partner in building up Iran’s lithium industry. As the global leader in electric vehicle adoption (in absolute terms), the demand for lithium in China has increased dramatically in recent years. Also, China stands out as the only trade partner capable of accessing and refining lithium on a large scale. This will strengthen the Iran-China relations further.

High infrastructure costs and lack of FDI to challenge the Iranian mining sector

Despite the presence of a vast mining potential in the country, certain factors such as inadequate access to essential machinery and equipment, lack of exploration facilities, lack of sufficient infrastructure and investment, absence of advanced technologies, and shortage of financial resources limit the growth of the mining sector in Iran.

Lack of access to new cutting-edge production technologies, exacerbated by international sanctions, results in inefficient utilization of resources, particularly water, fuel, and electricity in mining operations. In addition, high production costs, mandatory pricing, and lack of skilled labor further pose obstacles in mining operations. This, together with the fact that the lithium extraction process is generally expensive and time-consuming, has led to various small and medium-sized mines opting to cease their operations.

The absence of foreign investment due to international sanctions poses challenges in conducting mining operations in the country. The government seeks to attract foreign investment in the mining sector, a difficult task amid structural challenges, human rights abuse accusations, and international sanctions.

Exploitation of lithium reserves discovered in the country will be difficult due to the lack of advanced technologies required for extraction, processing, and refining. The assessment of lithium grade and its economic feasibility will play a crucial role in determining whether to exploit the reserve.

EOS Perspective

The scale of lithium reserves discovered in Iran is significant, but the exploitation of the mineral is not likely to happen in the near future. Its viability, economic feasibility, actual quantity, and grade are yet to be ascertained. Also, the country does not have access to the necessary technologies required to process and refine lithium, so it has to rely on foreign investors.

Foreign investment in Iran is hindered by the sanctions imposed by the USA and the EU against Iran’s nuclear development program. Back in 2015, Iran agreed to scale down its nuclear program and allow broader access to international inspections to its facilities in return for billions of dollars in sanctions relief. But that ended in 2018 when the USA withdrew from the deal. With the recent agreement signed in 2023, there is hope that it could pave the way for the relaxation of sanctions on Iran.

Additionally, considering lithium’s pivotal role in multiple industries and concerns about China’s dominant power in the lithium supply chain, the US government might consider easing sanctions. EU is not likely to ease or lift sanctions and invest in Iran immediately due to uncertainties about the viability of the reserve, its impact on the environment during extraction, and lack of energy investments in the country. However, the EU may consider easing sanctions in the future if the USA moves in that direction.

Russia and China, having economic and diplomatic ties with Iran, are more likely to show interest in Iran’s lithium discovery. Russia is focusing on expanding its presence in the lithium market to meet the increasing demand for lithium in vehicles and energy storage systems. As a step in this direction, in December 2023, Rosatom, a Russian state corporation, signed a deal to invest US$450 million in Bolivia to construct a pilot lithium plant. Russia is also likely to explore investment opportunities in Iran’s lithium sector.

China is expected to benefit the most from the lithium discovery in Iran, considering its longstanding relations with Iran. At the same time, Iran is also more likely to be eager to collaborate with China, considering China’s strength in the lithium industry and international sanctions.

However, Iran should not solely rely on China, considering China’s track record of engaging in debt-trap diplomacy to exert influence and dependence, particularly over low-income countries. For instance, in 2013, China launched its infamous Belt and Road Initiative (BRI), under which it started funding and executing several infrastructure projects in developing and underdeveloped countries across the globe. However, over the years, the BRI initiative has been criticized for resulting in an increased dependence and trapping of the partner countries in heavy debt through expansive projects, non-payment of which may lead to a significant economic and political burden on them. A collaborative agreement spanning 25 years was also signed by China with Iran, primarily focusing on investing in Iran’s energy and infrastructure sectors, facilitating Iran’s involvement in the BRI. Iran could also fall into a similar debt trap, having no viable alternative partner, a fact that China can take advantage of.

Read our related Perspective:
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Many countries are likely to be interested in investing and building strong collaboration with Iran if the reserves’ viability is confirmed and the grade and quality of lithium are suitable for use. This could change the entire dynamics of the lithium supply chain and also lead to a decrease in lithium prices, which have been skyrocketing due to a significant surge in global lithium demand.

21/02/2024by EOS Intelligence EOS Intelligence No Comments

Vaccines in Africa: Pursuit of Reducing Over-Dependence on Imports

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Pandemics such as COVID-19, Ebola, and the 2009 influenza instilled the need for a well-equipped domestic vaccine manufacturing industry in the minds of African leaders. Currently, due to insufficient local production, the continent depends heavily on imports from other countries, with the imports satisfying about 99% of vaccine demand in the continent. However, thanks to recent significant FDI, the vaccine industry in Africa had a market potential of around US$1.3 billion as of 2021 and is expected to range between US$2.3 billion and US$5.4 billion by 2030, as per McKinsey estimates.

Vaccine sovereignty is the need of the hour for the African continent

One of the most important lessons the COVID-19 pandemic has given to Africa is the pressing need to ramp up vaccine production locally. Biotech firms, such as Moderna and Pfizer, developed COVID-19 vaccines faster than any other producers. However, these vaccines were not easily accessible to most African countries.

Africans, in general, lack access to affordable and quality healthcare. Preventable diseases, such as pneumonia, malaria, and typhoid fever, have high fatality rates across the continent. This calls for localized production of pharmaceuticals and vaccines to lower the economic burden of these diseases and facilitate better access to affordable healthcare.

Currently, Africa relies heavily on other countries, such as China and India, for its pharmaceutical needs. The paucity of localized pharma production aggravates healthcare and vaccine inequity across the continent. To substantiate this, the COVID-19 vaccination rate at the beginning of 2022 in 16 African countries was less than 5% on average.

Currently, Africa consumes around 25% of the global vaccine production, whereas it produces less than 1% of its vaccine needs locally, as per the African Union (AU). Therefore, a lot remains to be done to materialize the goal of achieving 60% of vaccine needs to be satisfied locally by 2040, the vision of the Partnerships for African Vaccine Manufacturing (PAVM) under Africa CDC.

Increasing the vaccine production capacity from 1% to 60% in 15-16 years is not an easy task. Considering this, PAVM designed a continental plan for creating a vaccine production ecosystem capable of achieving the 60% target. This plan, called the PAVM Framework for Action (PAVM FFA), assessed that the African vaccine manufacturing industry would be expected to have increased the number of their vaccine production factories from 13 in 2023 to 23 (11 form, fill, finish, or F&F factories and 12 end-to-end factories) by 2040 providing a total of 22 priority products by 2040. It will require dedicated efforts from all involved stakeholders, such as producers, biopharma companies, industry associations, regulatory bodies, and academia.

Vaccines in Africa Pursuit of Reducing Over-Dependence on Imports by EOS Intelligence

Significant FDI will aid in driving localized vaccine production in Africa

The continent is attracting considerable FDI from the USA and Europe for vaccine development. Several foreign biotechnology firms are partnering with African governments to venture into localized vaccine production.

In March 2023, US-based biotechnology company Moderna partnered with the Kenyan government to set up a production facility for making messenger RNA (mRNA). The proposed annual capacity of Moderna’s first-ever facility in Africa is around 500 million doses of vaccines. The facility is expected to produce drug substances or active pharmaceutical ingredients and the final product for the entire continent.

In another example, a Germany-based biotechnology company, BioNTech, is contemplating commencing production of mRNA-based vaccines in its Rwanda facility in 2025. The construction of the facility began in 2022. With an investment of around US$150 million, this is Africa’s first mRNA manufacturing facility built by a foreign company. The proposed annual capacity of BioNTech’s mRNA facility is about 50 million vaccine doses. BioNTech also plans to set up mRNA factories in other African countries, such as South Africa and Senegal, and plans to produce vaccines for malaria, tuberculosis, HSV-2, and HIV in the future.

In September 2023, the South African government partnered with the KfW Development Bank of Germany. As per the agreement, South Africa will receive €20 million from Germany’s KfW Development Bank over five years for developing and manufacturing mRNA vaccines. The fund will be utilized for equipment procurement and API certification for vaccine production in South Africa.

A consortium of the Global Alliance for Vaccines and Immunizations (GAVI), AU, and Africa CDC established the African Vaccine Manufacturing Accelerator (AVMA) with the intent of fostering a sustainable vaccine industry. The formation of AVMA involved donors, partners, industry stakeholders, and non-governmental and not-for-profit organizations. GAVI planned to expand its supplier base, mainly in Africa, in 2021. Furthermore, the global alliance announced the commencement of around 30 vaccine manufacturing projects across 14 African countries.

Moreover, as of December 2023, over US$1.8 billion is planned for investment by a collaboration between the French government, Africa CDC, and other European and international investors to streamline the development and production of vaccines across the continent.

Desire to ensure vaccine effectiveness is seen as a biased vaccine preference

African governments are not only proactively putting in dedicated efforts to attract considerable FDI to build and strengthen the continent’s vaccine manufacturing industry, but they also focus on good quality, effective vaccine types. However, some perceive this as a lack of interest from the African governments to buy non-mRNA vaccines made by local companies.

For example, Aspen Pharmacare, a South Africa-based biotechnology company, put significant investments in ramping up the capacity of its manufacturing facility to produce viral vector vaccines against COVID-19. The company announced in November 2020 that it would be formulating, filling, and packaging the COVID-19 vector vaccine made by J&J. It also received €1.56 million investment from Belgian investors, BIO, the Belgian Investment Company for Developing Countries, which is a JV between the European Investment Bank (EIB) and several European DFIs.

However, millions of J&J COVID-19 vaccine doses made in South Africa were exported to Europe by J&J without the knowledge of the South African government, to support Europe’s domestic vaccine demand in August 2021, not complying with the initial agreement of vaccine distribution within the African continent. This created a political impasse between European and African governments over the distribution of the vaccines, which, in turn, delayed their production as the standoff resulted in a long waiting time for Aspen Pharmacare to produce the COVID-19 vaccine.

Ultimately, by September 2021, the European countries agreed to return 90% of the J&J vaccines to Africa. In March 2022, J&J gave Aspen Pharmacare the license to manufacture and distribute the vaccine under its brand name, Aspenovax. The expected production capacity of Aspenovax was around 400 million doses. However, not a single order came from African governments.

According to Health Policy Watch News, the reason for this was the rising production of Pfizer and Moderna’s mRNA COVID-19 vaccine distributed by COVAX that was being opted for by most African governments. Thus, in August 2022, Aspen Pharmacare had to close its production line, stating non-existent demand in Africa, partly due to the subsidence of the pandemic and partly due to African governments’ lack of interest in non-mRNA vaccines. The company could not sell a single dose of the vaccine, owing to multiple factors, starting from what was perceived as the lack of government’s intent to purchase home-grown vaccines to delayed production due to the Europe-Africa political clash and the rising inclination of the world towards mRNA vaccines.

It is interesting to note that of the total Covid-19 vaccines Africa administered to its residents, 36% were J&J vector vaccines, shipped directly from the USA.

Technology transfer hub and know-how development initiatives are set

To strengthen vaccine production capacity in low- and middle-income countries (LMICs), the WHO declared the establishment of a technology transfer hub in Cape Town, South Africa, in June 2021. In February 2022, WHO said that Nigeria, Kenya, Senegal, Tunisia, and South Africa will be among the first African countries to get the necessary technical expertise and training from the technology transfer hub to make mRNA vaccines in Africa.

Afrigen Biologics, a South Africa-based biotech firm, is leading this initiative. As Moderna did not enforce patents on its mRNA COVID-19 vaccine, Afrigen Biologics could successfully reproduce the former company’s vaccine, capitalizing on the data available in the public domain. As per an article published in October 2023, Afrigen Biologics reached a stage where its vaccine production capabilities are appropriate for “phase 1/2 clinical trial material production”. Additionally, in collaboration with a Denmark-based biotech firm, Evaxion, Afrigen is developing a new mRNA gonorrhea vaccine.

Besides setting up a technology transfer hub in South Africa, academic institutions are partnering with non-profits as well as companies to reinforce the development of necessary technical know-how and training required for vaccine manufacturing. One such example is the development of vaccines in Africa under the partnership of Dakar, Senegal-based Pasteur Institute (IPD), and Mastercard Foundation. Approved in June 2023, the goal of MADIBA (Manufacturing in Africa for Disease Immunization and Building Autonomy) includes improving biomanufacturing in the continent by training a dedicated staff for MADIBA and other vaccine producers from Africa, partnering with African universities, and fostering science education amongst African students.

Read our related Perspective:
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Although significant initiatives are underway, challenges exist

With 13 vaccine manufacturing companies and academic organizations across eight African countries, the continent’s vaccine industry is in its infancy. However, the current vaccine manufacturing landscape includes a mix of facilities with capabilities in F&F (10 facilities), R&D (3 facilities), and drug substance (DS) or active pharmaceutical ingredients (API) development (5 facilities).

One of the challenges African vaccine producers face is not being able to become profitable in the long run. In 2023, a global consulting firm, BCG, in collaboration with BioVac, a South Africa-based biopharmaceutical company, and Wellcome, a UK-based charitable trust that focuses on research in the healthcare sector, conducted a detailed survey exploring stakeholder perspectives on challenges and feasible solutions. The respondent pool consisted of a diverse set of stakeholders spanning across Africa (43%), LMICs (11%), and global (46%). A total of 63 respondents from various backgrounds, such as manufacturers, industry associations, health organizations, regulators, and academic organizations, were interviewed across the regions above. According to this research, most vaccine producers in Africa who were interviewed said that profitability is one of their key concerns. This leads to a lack of foreign investments required for scaling up, which in turn creates insufficient production capacity, thereby increasing the prices of vaccines. Therefore, these producers are unable to meet considerable demand for their products, and their business model becomes unsustainable.

Continued commitment and support from all stakeholders are necessary for achieving a sustainable business model for vaccine producers in Africa and, consequently, for the industry at large. However, it has been observed that the support from global, continental, and national levels of governments and other non-government stakeholders, such as investors, donors, partners, etc., tend to diminish with the declining rampage caused by epidemics in Africa. Therefore, this poses a severe challenge to strengthening the vaccine production industry in Africa.

In another 2023 study, by a collaboration between the African CDC, the Clinton Health Access Initiative (CHAI), a global non-profit health organization, and PATH, formerly known as the Program for Appropriate Technology in Health, involving 19 vaccine manufacturers in Africa, it was suggested that the current vaccine production capacity including current orders to form/fill/ finish using imported antigens is nearly 2 billion doses. In contrast, the current average vaccine demand is 1.3 billion doses annually. In addition, there is a proposed F&F capacity of over 2 billion doses. Thus, if Africa can materialize both current and proposed plans of producing F&F capacity vaccines from imported antigens, the study concludes that the continent will reach a capacity of more than double the forecasted vaccine demand in 2030. Overcapacity will lead to losses due to wastage. Thus, not all vaccine producers will be profitable in the long term. This may challenge the African vaccine manufacturing industry to be profitable.

Moreover, Africa’s current domestic antigen production capacity is lower than what is required to meet PAVM’s vaccine production target of 60% by 2040. In addition, a large part of the existing antigen capacity is being utilized to make non-vaccine products. Although antigen production plans are underway, these will not suffice to narrow the gap between demand and production of antigens domestically in Africa.

EOS Perspective

To create a local, financially sustainable vaccine manufacturing industry with output adequate to support the continent’s needs, it is necessary to create an environment in which producers can achieve profitability.

Initiatives such as technology transfers and funding will only be fruitful when their on-the-ground implementation is successful. This will require the involvement of all stakeholders, from the state governments to bodies that approve the market entry of vaccines. All stakeholders need to be steadfast in their actions to achieve the ambitious target of 60% of vaccine needs to be met from local production by 2040 without compromising on the accuracy and quality of the vaccines.

One of the most vital aspects of the necessary planning is for stakeholders to ensure that even after the pandemic and its aftermath are entirely gone, the effort towards establishing facilities, creating know-how, and training a workforce skilled in vaccine development and production does not stop.

The focus should extend beyond COVID-19, as there are many other preventable diseases in Africa, such as malaria, pneumonia, tuberculosis, and STDs, against which vaccines are not yet produced locally. These areas provide a great opportunity for vaccine producers and associated stakeholders to continue being interested and involved in vaccine production and development in Africa.

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EOS Perspective

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EOS Perspective

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Technology transfer hub and know-how development initiatives are set

Although significant initiatives are underway, challenges exist

EOS Perspective

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The Future of Diabetes Care: Key Innovations in Continuous Glucose Monitoring