Artemisinin & Farming International Contributions to the debates within the artemisinin industry & AFI s 2009 fact sheet WHO MMV Conference Mumbai
Content of presentation AFI s contributions to the debate throughout the artemisinin industry 1. CNAP (high yield seeds) related issues and challenges 2. Artemisinin quality : Good Manufacturing Practices or not? 3. The Unitaid pre funding (A2S2) related issues and challenges 4. Volume forecasting and pricing monitoring 5. Artemisinin and Farming International : 2009 fact sheet this presentation may be down loaded at : www. artemisinin internl.com page 2
1. CNAP high yield seeds related issues and challenges CNAP strategy : Delivering ample seeds for production of good quality ACT s C. Productivity factors : the business impact of High yield plant high yield plants will permit lowering the farming costs per kilo of final artemisinin output cost of bio mass per unit of final artemisinin output could consequently mechanically lower very significantly, as for example, in Thailand, from US$ 65 to US$ 15 But such a decrease would not be appropriate as far as the farmers communities are concerned (see below) page 3
1. CNAP high yield seeds related issues and challenges (ctd) high yield plants will permit lowering the extraction costs per kilo of final artemisinin output extraction costs per unit of final artemisinin output could consequently mechanically lower very significantly, as for example, in Thailand, from US$ 100 to US$ 20. But such a decrease would not be appropriate as far as the margin left to the extractors (see below) page 4
1. CNAP high yield seeds related issues and challenges (ctd) the combined productivity effect of the high yield seeds is mechanically considerable : total potential savings at the farming level US $ 50 total potential savings at the extraction level US $ 80 combined savings (100 % potential) US $ 130 The next challenge is the assessment of the adequate allocation of these savings between the three stake holders : farmers, extractors and ACT pharma companies page 5
1. CNAP high yield seeds related issues and challenges (ctd) How should the corresponding productivity / savings be split among the three stakeholders? passing the productivity impact is a classic decision in the industry the interests of the stake holders are apparently antagonistic to pass 100 % of the savings to the ACT producers is not such a sensible decision What is a fair split? page 6
1. CNAP high yield seeds related issues and challenges (ctd) A. High yield plants and the lowering of farming surfaces Time line for the delivery of high yield seeds : source : Pr Ian Graham, CNAP (2008) page 7
1. CNAP high yield seeds related issues and challenges (ctd) Anticipating the lowering of Artemisia Annua surfaces upon the delivery of CNAP high yield seeds by 2010 by 2015 Pre CNAP Pure artemisinin needs for the year (tons) growing surfaces( ha needed) Post CNAP Coverage 50 % 100% 200 300 300 300 28 000 42 000 11 000 6 500 page 8
1. CNAP high yield seeds related issues and challenges (ctd) A major challenge for the growers / extractors towards the farmers communities : adjusting growing surfaces and maintaining a clear Social Corporate Responsibility attitude page 9
1. CNAP high yield seeds related issues and challenges (ctd) A. Distribution of the CNAP high yield seeds To whom? Concept of legitimate growers i How? Need for a proper governance within the CNAP seeds distribution program The access to the CNAP high yield seeds will be essential of any grower This access to the CNAP seeds should be consistent with the access to the A2S2 pre funding (see below) page 10
2. Artemisinin and Quality : Good Manufacturing Practices or not? A. The current paradigm : Artemisinin : a Starting Material Consequence : no GMP requirement B. The debate is hearting : GMP environment or not? The starting point : the European Union Guidelines Manufacture of Herbal Medicinal Plants (Sept 1, 2008) page 11
2. Artemisinin and Quality : Good Manufacturing Practices or not? (ctd) page 12
2. Artemisinin and Quality : Good Manufacturing Practices or not? (ctd) Stringent requirements * Good Agriculture & Collection Practices GACP European Medicines Agency 2006 www.emea.europa.eu/pdfs/human/hmpc/24681605en.pdf * WHO Monograph on GACP for Artemisia Annua www.who.int/medicines/publications/traditional/ ArtemisiaMonograph.pdf ii What about the true and current enforcements of these GACP requirements among the artemisia growers? page 13
2. Artemisinin and Quality : Good Manufacturing Practices or not? (ctd) Post harvesting operations, Extraction and Purification are defined as being within the scope of the EU GMP Guide (Part I and Part II) C. AFI s clear positioning : Artemisinin production should comply with the full stringent GACP and GMP EU requirements : no second class quality components for anti malarials to be used in poor countries page 14
3. The Unitaid pre funding (A2S2) related issues and challenges A. The A2S2 program is exactly what AFI was calling for in Guilin November 2008 Artemisinin : farmers and industrialists are left behind?? AMFm ACT manufacturers Co payment page 15
3. The Unitaid pre funding (A2S2) related issues and challenges (ctd) A. The initial funding US$ 9.3 millions over 2 years : sufficient or not? 60 % of the invoicing are indicated as being eligible to this pre funding We should pinpoint that the artemisinin producers do not operate with a 40 % margin : a significant $ amount of working capital will consequently still remain the growers / extractors financial duty i The Unitaid US$ 9.3 millions initial funding offers an interesting start, but will rapidly be insufficient [US$ 9.3 millions / 60 %] of activity covers US 15 millions worth of artemisinin business ; with selling price circa US$ 350 / kilo, this $ 9.3 millions / 60 % will cover over two years a mere 45 tons of artemisinin, when demand is estimated at 200 tons per year page 16
3. The Unitaid pre funding (A2S2) related issues and challenges (ctd) A. The need for a straight governance of the A2S2 program Who will be eligible? The selection criteria Starting phase : Limited funds (US$ 9.3 m) will be available during the starting period : which growers / extractors will be the happy early beneficiaries? Which area? Concentrating the first 2 year trial phase A2S2 funding with some limited beneficiaries may make sense (e.g. East African and Madagascar*) but should be commented, in order for the Asian artemisinin companies to better understand how to get eligible to A2S2 later on. (*) Artepal (July 2009) page 17
3. The Unitaid pre funding (A2S2) related issues and challenges (ctd) a. Development phase of the Unitaid A2S2 pre funding program Urgent need for a clear set of eligibility criteria, which should probably be consistent with the eligibility factors applicable to the CNAP high yield seeds distribution page 18
3. The Unitaid pre funding (A2S2) related issues and challenges (ctd) A fair access to the A2S2 pre funding will be in the future a essential development factor for any artemisinin producer Two set of parameters should be consequently, and urgently, discussed and agreed upon with the various interested parties : a) the governance applicable to the A2S2 project b) the detailed financial analysis : a classical loan officer approach may de facto exclude any newcomer in the artemisinin industry. Additionally, the consistency between access to A2S2 funding and access to CNAP high yield seeds could be positive, and should considered, even if it introduces some complexity. page 19
4. Volume forecasting and pricing monitoring A. The current price information on current transactions seems to be disruptive Why transaction information should be complete? Disclosing actual transaction prices without the corresponding volume information may be disruptive (current low demand from the ACT pharma companies) plus (aging artemisinin stored at suppliers short of cash) = very low transaction prices, disconnected from sound cost recovery page 20
4. Volume forecasting and pricing monitoring (ctd) The reliability of the current information about artemisinin prices has not improved during the last 18 months : is buzz taking over? once should assess the consequences and effectiveness of the price ceiling for artemisinin announced July 2008 selling prices were to be caped, and volatility was to disappear. another positive message is still being conveyed today :...(generic ACT producers) have secured artemisinin for their present forecasts page 21
4. Volume forecasting and pricing monitoring (ctd) Need for an independent review covering the quality control of the information circulating within the artemisinin world The artemisinin industry is a small world. Due to the limited number of information sources, the risk of erroneous information being conveyed throughout the artemisinin community is not immaterial : cross contamination within the artemisinin information network is consequently a major risk. An independent review of the information circulating within the artemisinin world will be a major quality factor. page 22
5. Artemisinin and Farming International : 2009 fact sheet A. Moving out of the Red River Basin (Northern Vietnam) Difficulties in controlling operating costs i Competition pressure from cash crops ii Access to land criteria not secured enough iv. Local funding of working capital not feasible on economical terms v. Implementation of a local extraction facility not properly secured page 23
5. Artemisinin and Farming International : 2009 fact sheet (ctd) A. Selecting a new farming area : the Chiang Mai Province, Thailand page 24
5. Artemisinin and Farming International : 2009 fact sheet (ctd) A. Accessing to land in the Chiang Mai Province (Thailand) : combination of three land profiles Teck plantation terrasses low lands page 25
5. Artemisinin and Farming International : 2009 fact sheet (ctd) A. Developing a limited trial phase for the 2009 2010 period ArteThai s conservative approach : no commercial development for ArteThai until the AMFm / A2S2 protocols are effectively operating i The first year limited growing surfaces (maximum 30 hectares) will permit the adequate controls from independent quality controllers and API / ACTprospects ii Thai partners (industrialists, scientists, financiers) will gain comfort with the preliminary results of the trial phase iv. The local farmers communities will rapidly gain the necessary technical expertise page 26
5. Artemisinin and Farming International : 2009 fact sheet (ctd) A. Next steps developments Potential growth of growing surfaces : 600 hectares are targeted by 2012 page 27