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  1. Virtual Healthcare – Relevance Post the Pandemic

    The pandemic brought fore the need for and importance of virtual care. Apart from eliminating

      to read | words

    published on May 12, 2023

    The pandemic brought fore the need for and importance of virtual care. Apart from eliminating distance, virtual health can support in-person care as part of an integrated healthcare strategy. It addresses underserved and under resourced patient populations. By enhancing accessibility, convenience, and the experience of receiving and providing treatment, it has the potential to be advantageous for both patients and doctors. But will it continue to see robust growth post the pandemic?

    As technology continues to advance, the healthcare industry is also leveraging the potential of virtual health to increase accessibility to healthcare services. Virtual health, also known as telehealth or telemedicine, refers to the use of digital technologies, such as video conferencing, remote monitoring, mobile health apps and virtual reality, to deliver healthcare services remotely.

    Virtual health has the potential to transform the healthcare industry by improving patient outcomes, increasing access to healthcare services, reducing costs, and enhancing patient experience. The global virtual healthcare market was estimated to be USD2.34 billion in 2021. It is expected to expand at a CAGR of almost 50% to USD17.51 billion during 2022–26.

    The virtual healthcare market has accelerated due to factors such as rising healthcare expenses, increased smartphone adoption, and integrated business models. In addition, this market enables resource efficiency and lowers the frequency of in-person consultations for minor medical issues. Its rising emphasis on creating virtual assistance solutions is also creating opportunities for expansion.

    Benefits

    1. Accessibility: The key benefit of virtual health is increased access to healthcare services, particularly in remote and underserved areas. Virtual health enables patients to receive healthcare services from the comfort of their homes, reducing the need for travel, thereby allowing healthcare providers to reach a larger patient population.
    2. Patient outcome: Virtual health can improve patient outcomes as caregivers can conduct remote monitoring and get real-time updates on patient’s health. For instance, remote monitoring devices can track vital signs, such as blood pressure and glucose levels, and alert healthcare providers if there are sudden changes. This can help prevent hospitalizations and critical health issues.
    3. Patient experience: Virtual health enhances patient experience by providing more convenient and personalized healthcare services. Patients can schedule appointments and receive care at their convenience. There is reduced wait time and access to expert opinion. Healthcare providers can also personalize care based on patient data and preferences, improving patient satisfaction and engagement.

    Challenges

    Despite the benefits of virtual health, there are still several barriers to adoption. One of the main barriers is the lack of reimbursement for virtual health services. Many healthcare providers are hesitant to adopt virtual health services due to the uncertainty surrounding reimbursement policies, which vary by state and payer. Moreover, there are concerns around the quality of virtual healthcare services and the potential for misdiagnosis or delayed diagnosis. However, the biggest hurdle seems to be the lack of human touch.

    The human touch

    Patients often expect a certain level of human interaction and personal connection when seeking medical care. Virtual care may fall short in this aspect, as the absence of physical presence and in-person communication can create a sense of distance between the patient and the clinician. This could lead to a lack of trust and confidence in the clinician, resulting in dissatisfaction with the virtual care experience.

    Establishing a good rapport with patients is crucial for this model to be successful. Clinicians and doctors need to be skilled in building relationships with patients virtually, through effective communication, active listening, and empathy.

    Another reason for the need for human touch is that workflow and operations are more streamlined in traditional in-person visits that have established processes, with clear guidelines on how to perform physical exams, take vitals, and conduct comprehensive assessments. These processes can be more challenging to replicate in virtual visits, as there may be technical issues or limitations in conducting certain assessments remotely.

    Lastly, the clinical considerations for virtual visits are more nuanced, and some clinical decision-making is tougher. Physicians need to rely heavily on the patient's self-reported symptoms and observations, which can be unreliable or incomplete. This could lead to misdiagnosis or delayed treatment, potentially compromising patient outcomes. Healthcare providers can integrate virtual health services with in-person care to provide a more comprehensive and connected healthcare experience. For instance, virtual health services can be used to provide follow-up care after an in-person visit or to provide remote consultations for patients with chronic conditions.

    Increasing adoption of virtual care

    Virtual care offers many benefits such as increased access to care, improved patient outcomes, and cost savings. While virtual care cannot fully replace in-person care; it can complement it by providing convenient and accessible care options. Yet, its high cost of implementation, and relatively longer period before generating return on investment act as growth barriers.

    Providers should carefully consider the benefits and challenges of virtual care and develop strategies to address them while also incorporating the human touch where possible. As technology continues to advance, virtual care is likely to play an increasingly important role in healthcare. Therefore, it is crucial to explore and improve upon its capabilities to provide the best possible care for patients.




  2. Business Models for Cloud Kitchens

    Cloud kitchens, or virtual/ghost kitchens, are eateries that operate only on the delivery model

      to read | words

    published on Nov 11, 2020

    Cloud kitchens, or virtual/ghost kitchens, are eateries that operate only on the delivery model and do not have a dining area. With the expansion of e-commerce and the preference to have everything, including food delivered to your doorsteps, this concept in now catching up. Multiple benefits and flexible business models are attracting an increasing number of food entrepreneurs and startups to this sector, which is poised to grow exponentially.

    With the rise in digital natives, there is a surge in e-commerce. This has paved the way for use of technology across products and services, including cooked food. With the increase in preference for hot meals served right at the doorstep, the concept of cloud kitchens has picked up. The recent pandemic is another factor that acted as a catalyst as restaurants shut down and online food delivery increased. The shift in dining behavior is reflected in the market size of this sector. In 2019, the global cloud kitchen market was estimated at around USD 43 billion. It is expected to touch USD 71 billion by 2027.

    Technically speaking, cloud kitchens are commercial facilities designed to produce food specifically for delivery. The reasons for rapid growth in this sector are:

    • Low overhead cost – The most attractive facet of cloud kitchen for a food entrepreneur is that it needs much less investment than an actual restaurant or shop. There is no real estate cost of renting a large space to create a dining area, no servers, and no frills. Cloud kitchens only need a small space with cooking facilities.
    • Expansion opportunities – With cloud kitchen, it is easy to expand to new localities and menus since it needs minimal investment.
    • Technological advantage – Cloud kitchens make maximum use of technology. Since food is only ordered through phone apps, they gain crucial customer data which helps them improve their offerings and customize orders according to preference.
    • Competitive pricing – Cloud kitchens can offer a much more competitive pricing to customers due to low overheads.

    Business models of well-known brands
    There are various business models for cloud kitchens:

    • Independent cloud kitchen – This is the original model, wherein one brand operates a single kitchen and has no storefront or seated dining anywhere else. This concept became popular as demand for online food grew. Usually, such kitchens specialize in just one cuisine. Orders are received from an online platform and food is sent through a delivery system.
    • Hybrid cloud kitchen – This model is a combination of a cloud kitchen and a takeaway restaurant, as it has a physical storefront. Therefore, while the model has all the advantages of a cloud kitchen, there is also a way to connect with customers.
    • Multi-brand cloud kitchen – Rebel Foods came up with this new business model in 2011. It is a little more complex and uses data intelligence to design business strategies. Based on data such as area-wise demographics, most selling cuisines in that locality and hyperlocal demand-supply, the kitchen designs a menu. Therefore, it caters to demand for which current supply is relatively insufficient. Separate cuisines are cooked and served under various brand names but the kitchen is same; hence, operational costs are low.
    • Delivery app-owned stacked cloud kitchen – Zomato offers upcoming food entrepreneurs kitchen space as well as facilities like built-in kitchen equipment and comprehensive processes. Its ordering app and delivery system are part of the package. This model also has a storefront option that allows interaction with customers.
    • Delivery app-owned “shell” cloud kitchen – This concept was introduced by aggregator Swiggy. Also known as “shell”, Swiggy provides empty kitchen space with the bare minimum infrastructure such gas pipelines, drainage, and ventilation systems to food entrepreneurs, who can rent this kitchen space and start their cloud kitchen. They have the support of Swiggy’s delivery fleet, online app and menu designing capabilities. The entrepreneur needs to get his equipment, cooking staff, raw materials, and recipes.
    • Fully outsourced cloud kitchen – A novel concept, this model was introduced by food delivery aggregator Kitopi. Major part of the preparation is outsourced and gets delivered to the kitchen; the chef only provides the final touch. Delivery is handled by Kitopi.

    Cloud kitchens are disrupting the food industry as food lovers increasingly go online. While restaurants will always hold their sway due to the dine-in experience offered, cloud kitchens are emerging as strong competitors owing to the convenience and variety they provide. With social distancing becoming the norm, cloud kitchen is here to stay and has piqued the interest of investors.



  3. Can Blockchain Revolutionize the Procurement Process?

    Technology continues to change the way businesses operate, bringing in efficiency, improving productivity, and reducing

      to read | words

    published on Nov 03, 2020

    Technology continues to change the way businesses operate, bringing in efficiency, improving productivity, and reducing errors. Among several technologies, blockchain has seen acceptance in various aspects of a business, including the procurement process. Due to its many advantages, organizations across the world are now adopting blockchain to streamline their supply chain. Blockchain has many benefits, such as creation of smart contracts and removal of middlemen, due to which it can add immense value to the procurement process.

    As technological advancements continue to transform the corporate world, organizations that embrace technology in their processes reap the benefits. Blockchain is one such technology that is revolutionizing the procurement process across companies globally. Organizations that have adopted blockchain have a more dynamic and interconnected supply chain and are establishing a digital future for procurement.

    As per its definition, “Blockchain is a technology that creates a digital and decentralized record of all transactions in a network. The participants who have access to the network can authenticate transactions independently of a third-party intermediary. Through cryptography and advanced security, blockchain creates a “secure digital ledger” of transactions without the need for a central trust authority.”

    Advantages of blockchain

    • Smart contracts – Blockchain can increase the efficiency of the procurement process via electronic tamper-proof smart contracts executed automatically with a predefined set of conditions. Smart contracts can be designed to include multiple parties across the entire supply chain, with the value and terms incorporated from end to end. Moreover, in smart contracts, the execution of the conditions at each stage is recorded against the contract and is visible to the next link in the chain. These electronic contracts can also conduct a performance check of the given contract and self-execute by releasing payments to the appropriate party.
    • Automation of standard processes – Blockchain can facilitate manual processes such as order placement and payment processing. As these are multi-step operations that require considerable documentation, blockchain can make these processes systematic and efficient. Steps such as approval, invoice processing, multi-way matching, and the entire request-to-receipt process could be completely automated, thus reducing chances of human errors.
    • Removal of intermediaries – All data and transactions are synchronized across the network and stakeholders have access to shared ledgers. Hence, the need for middlemen in the procurement process is eliminated.
    • Visibility and traceability – Empowered through blockchain, buyers can now ensure authenticity and traceability of all goods throughout the purchasing cycle. A verifiable audit trail of a supplier’s goods will be established in the system. Moreover, crucial supplier credentials, certificates, and qualifications cannot be forged or compromised in the system.
    • Trustworthy business relationships – Due diligence is essential before onboarding new suppliers, and it lays the foundation of a strong business relationship. Due diligence is repetitive and often time-consuming. However, blockchain can expedite the entire process. Blockchain provides access to transaction logs of all parties present on the network, basis which the parties can analyze pertinent facts. Buyers can rate the quality of the goods and services, as well as the vendor’s overall performance.
    • Data confidentiality – Blockchain can provide high levels of security, as an entry cannot be changed. Instead of expensive cloud storage, companies can opt for shared ledgers.

    Practical applications of blockchain
    Some companies have successfully incorporated blockchain within their supply chain to enhance the procurement process. A well-known diamond giant is using blockchain to track the stones from the moment they are mined to the point they are sold. This gives assurance to the end customers that they are buying genuine products. A coffee brand in Ireland has adopted blockchain-based technology to reorganize its supply chain. Blockchain is helping the brand increase productivity and transparency while providing fair deals to growers. Apart from these companies, prestigious brands including Unilever, Walmart, and Ford are currently adopting this technology to streamline their supply chain.

    Limitations
    Blockchain has certain limitations, which should be considered while implementing the technology:

    • Format – Information in blockchain is stored only in the form of a flat file. Therefore, it cannot be stored in the form of other file extensions. Coupling blockchain with other technologies, such as data lakes or the Internet of Things, could remove this barrier.
    • Smart contracts – Due to the distributed nature of blockchain, issues such as conflicting laws, jurisdiction, and dispute resolution, may arise in smart contracts. Mitigation of such issues would need careful navigation by specialist advisors.
    • Data authenticity – Blockchain is limited by the quality of its data. Criminals can hack blockchain-based technologies if there are errors in coding or bugs, or the smart contracts are badly designed. Hence, experts should be employed for developing such technologies.

    Currently, businesses are exploring solutions that improve productivity and are cost-effective. The wide adoption of blockchain in supply chain can reduce the need for intermediaries, minimize human errors, and automate mundane tasks while building security and traceability. Blockchain can also contribute toward realizing the era of paperless transactions. The procurement community is slowly but surely embracing both the concept and the technology, and it is leveraging many tangible benefits of blockchain across the supply chain.



  4. Need for Digital Innovations in the Infrastructure Industry

    Innovative technologies are disrupting every industry including infrastructure. Digitization would soon change the style of

      to read | words

    published on Nov 02, 2020

    Innovative technologies are disrupting every industry including infrastructure. Digitization would soon change the style of development and operation of infrastructure. Such innovations would ensure that labor-intensive activities involved in the construction of infrastructure become increasingly mechanized, facilitating the reduction in both cost and time taken to have these essential structures up and running.

    Digital technologies have resulted in disruptions across industries, including the infrastructure sector. The introduction of technological enablers is facilitating the acceleration of construction activities, leading to cost savings and efficiency improvement.

    Few technologies adopted in the infrastructure sector include:

    • Building Information Modelling (BIM) – Helps in sharing essential components of project planning in 3D format; can be overlaid with 4D detail for scheduling and cost controls, making project planning simple and systematic
    • Augmented and Virtual Reality – Enable seamless interactions between offices and sites
    • Drones – Allow project teams to track progress safely and efficiently, as well as collect accurate data
    • Big Data and Data Analytics – Predict and prevent problems as they arise, thus averting project delays that might escalate costs

    Benefits of digital innovations

    • Evolving expectations – New-age consumers are used to receiving customized products and real-time updates. They now expect these during the construction of their residential areas, commercial and retail spaces, as well as other infrastructure. To plan and build customized infrastructure, the client’s needs must be understood. Data analytics can facilitate in understanding and delivering infrastructure aligned to client requirements and convenience.
    • Cost efficiency – A diverse range of technologies is available today, including drones, robots, AI-enabled tools, and virtual and augmented reality, which can easily make construction swifter and cheaper. Their first-time implementation may be costly, but as they are more efficient, they decrease the overall construction cost.
    • Digital natives – The younger generation is tech-savvy and open to change. Furthermore, educational institutions have adopted a technology-enriched curriculum, thus preparing them for emerging tech-related jobs. These young professionals would increase the adoption rate of new tools and processes for new-age interactive infrastructure.
    • Increased safety – Innovations such as wearable devices, alarms on clothing, and mobile reporting have reduced the risks for workers. Other innovations, such as drones, also help in obtaining timely data, and can be used for inspection. Autonomous vehicles (e.g., dozers, load-carriers, and haul trucks) can undertake work in hazardous areas and difficult terrains, reducing the fatalities and injury rates witnessed in the sector.

    Challenges
    The wide-scale adoption of digital technologies can prove to be a challenge in the infrastructure industry due to the following reasons:

    • Fragmented industry – Infrastructure construction projects have extended the value chain, with specialists in each discipline. Moreover, multiple contractors and subcontractors are involved, especially in large-scale projects. Therefore, implementing digital processes across a project needs immense coordination across organizations and teams.
    • Transience – Since infrastructure projects require a higher gestation period at times, teams handling the project are often changed. Constant turnover and transition can pose challenges for companies, who have to update the new team about the technological capabilities within the project and resolve any resistance. Moreover, the new team should possess the required skills to work with latest technologies.
    • Lack of replication – While infrastructure construction projects usually have the same basic structure, specific requirements dictate the design and delivery approach. Therefore, the approach and technological needs for different projects may vary. Hence, a new set of processes and technological needs are essential for separate projects, which can be time- and cost-intensive.

    Globally, more advanced infrastructure projects are being commissioned to upgrade lifestyles, improve user convenience, and cater to evolving populations. With increasing urbanization, the demand for new infrastructure is already witnessing an upward trajectory. Therefore, the benefits of embracing digital innovations would far outweigh the challenges faced by infrastructure companies. Technological innovations can help such companies reach a new level of sophistication in their designs as well as executions, and enable them in starting the journey toward a better tomorrow.



  5. Social Enterprises: A Business Model for Change

    As the world slowly starts to emerge from the shadow of the pandemic, it needs

      to read | words

    published on Aug 31, 2020

    As the world slowly starts to emerge from the shadow of the pandemic, it needs to change its ways. As businesses move on, they realize they cannot work with the sole objective of ‘maximum profit’. They also need to contribute to society and the environment they thrive in. Hence, the concept of social enterprises will gain prominence as more incumbents and new businesses adopt this model and design strategies around it.

    The concept of a social enterprise can be defined as an approach by entrepreneurs wishing to find solutions for social, cultural, or environmental issues. The main objective of such enterprises is not just profit, but the well-being of the society at large. The long-term plan of such businesses involves ideas to drive social change and bring about transformational benefits that have the power to improve people’s lives. This model is still in the nascent stages, but is quickly finding rapid adoption among businesses.

    Many companies have already started to enhance the link between their purpose and work—this concept will gain more popularity. Social enterprises allow the alignment of people’s efforts with their values. Hence, one can make profit while also tackling a social or environmental issue. Other reasons attracting entrepreneurs to this model are:

    • Making a difference – A social enterprise works to bring about a positive change within the society or the environment. While profit may or may not be a part of this process, the enterprise wants to make a worthwhile difference. An example here is Willie Smits, a Dutch social entrepreneur, a name to reckon with in the wildlife sphere. Willie has worked tirelessly to save Orangutans from extinction. He runs the Masarang Foundation, which also works towards reforestation, sustainable farming, and monitoring of forests in Indonesia.
    • Meeting customers’ needs – Social enterprises tend to customer’s spoken needs as well as causes they support. Customers appreciate businesses that are not only profit-centric but also show concern for the environment and society. Shoemaker TOMS has managed this well. Blake Mycoskie, the Founder of TOMS, developed a business model they call ‘One for One’. For every pair of TOMS shoes a consumer purchases, a free pair is given to a poor child in a developing country.
    • Gaining recognition – By virtue of the way they operate, social enterprises earn goodwill and the respect of the communities they work in. Social entrepreneurs are recognized for their efforts. Muhammad Yunus from Bangladesh won the Nobel Peace Prize in 2006 for founding ‘Grameen Bank’. He pioneered the concept of microfinance and microcredit, helping many underprivileged people develop their own businesses.
    • Operating a responsible business – Unlike traditional business setups, this model solves social problems while exploring new market opportunities. The enterprise looks at how its products or services can benefit others. For example, Marc Koska invented the first non-reusable K1 auto-disable syringe to help limit diseases spread through used syringes. He also advised several safety mechanisms in needles and syringes to ensure the well-being of healthcare workers.

    Over the past few decades, the global environment and society at large have been impacted by the operations of some large corporations. Several organizations have been accused of destroying natural resources and flouting safety norms for corporate gain. However, now is the time to retrospect, revive, and rebuild. COVID-19 brings to the fore our collective need to promote sustainable organizations that not only make profit but also factor in society’s needs and employee safety.

    Social innovation and entrepreneurship will emerge as the way forward in these turbulent and uncertain times. The need to support the less fortunate sections of society, and to also provide services such as healthcare, sanitation, and education, has gained importance rapidly. Changes are already underway and examples of social enterprises taking a lead are now emerging from all corners of the world.

    Organizations have adapted operations as per the need of the hour and started production as per the community’s needs. Many alcohol distilleries in the US altered production to make hand sanitizers. Auto company Ford donated 1.5 million masks in Michigan. These are some examples of how companies changed their priorities and addressed the need of the hour.

    Many other organizations are taking up causes to attract the goodwill of customers by making a positive impact on the lives of individuals and communities. As we step into a post-pandemic world, investing in ‘social good’ may easily become the best strategy for small and large businesses alike.



  6. Data Monetization - A Potential Revenue Stream

    Due to technological advancements and IoT-connected enterprises, organizations have access to massive amounts of data

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    published on Aug 07, 2020

    Due to technological advancements and IoT-connected enterprises, organizations have access to massive amounts of data generated on a daily basis. While companies primarily use data internally to improve their products, services, and processes, data can also become a potential revenue stream. Many companies have already recognized data as an invaluable asset, and they are devising strategies to use data for commercial purposes. However, successful implementation of such strategies requires cultivation of “data culture”.

    Organizations currently have access to vast amounts of data. Due to technological advancements and IoT connectivity, they are able to gather data about their customers’ demographics, purchasing patterns, preferences, and buying behavior. With the evolution of big data analytics, companies can not only organize and analyze data for informed decision making, but also monetize the obtained data.

    Data monetization is a fairly new concept, and it provides a framework that identifies data sources, recognizes the most reliable data, presents applicable business model options, and explores commercialization opportunities. Many companies are learning to explore the full potential of this new strategy.

    Background
    Till date, organizations have perceived data purely as a source of information. If analyzed properly, data can become a repository of insights that would help a company better understand its customers and accordingly customize its products or services.

    Data can be used:

    • To effectively identify and target the correct customer by analyzing purchasing patterns
    • To detect potential frauds
    • To effectively plan marketing strategies
    • To establish long-term objectives and short-term business plans

    A strategic asset
    Data has gained the status of a strategic asset. However, using data as a revenue generating source poses challenges. The main hurdle is to bring about the shift that creates an environment where companies can learn to utilize the ever-evolving data.

    This requires a data monetization strategy which has:

    • The main objective and vision for the end use of data, be it business needs, new market opportunities, or both
    • A strict data governance structure that ensures authenticity and quality of data
    • Analytics or processing capabilities that should be devised based on the end use of the data
    • A robust technical infrastructure that can support all data-related activities

    Such a strategy ensures that ‘data culture’ is created and efficiently introduced within an organization. Furthermore, a dedicated team should be responsible for data strategy, governance, control, and development.

    New business models
    Once the enterprise is ready to commercialize its data, a reliable business model is needed. Some of the business models that have emerged are described below:

    1. Fee-based model – Through this model, an enterprise sells its data to end customers in an easily usable format for a fee. This model has been successfully implemented by sports wearable device manufacturers as well as telecommunication companies. It leads to incremental revenue generation for the company.
    2. Differentiator model – Similar to the above model, the company shares data with the end user, but at nil cost. The main objective of this strategy is to build brand loyalty or develop compelling value-added services that would be a strong retention tool. Hence, monetization is indirect, as it leads to an increase in profitability over a long term.
    3. Syndication model – This business model is typically followed by data-based enterprises. Such companies sell raw data or data in a pre-assembled report format to other organizations. The buying entity further analyzes and uses the data as per its requirements.

    With professional data scientists working on cloud computing and deploying analytics innovations, monetizing data assets has become simpler. Technological solutions allow insights from data analysis to be discovered, disseminated, and used by non-technical users. Therefore, those who are not trained in data analytics can also utilize data in driving their decision-making processes.

    Currently, organizations are using unique ways that broaden the opportunity to commercialize data and increase revenue. It has been rightly said “Data is the new oil”, which every company should try to harvest.



  7. Miracle Drugs - Promising Hope

    Advancements in medical research have led to the discovery of drugs that cure diseases earlier

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    published on Jun 26, 2020

    Advancements in medical research have led to the discovery of drugs that cure diseases earlier considered fatal, thereby increasing the lifespans of those suffering as well as improving their quality of life. Currently, pharmaceutical companies are racing to develop a vaccine for COVID-19, and going by previous track records, may soon be able to help the world win this battle as well.

    Technological advancements in the healthcare industry and the development of “miracle” drugs have increased the lifespans of people worldwide. Vaccines as well as effective treatments are easily available for diseases such as TB, malaria, and dengue, which were considered fatal until recently. Even cancer, one of the most dreaded diseases, is now proving to be curable if discovered in early stages.

    Over the years, medical researchers have used emerging technologies to better understand diseases and their treatments. Big data analysis of various diseases has provided insights that were previously unknown. The knowledge base continues to increase with the constant addition of data related to reactions and effects of various medicines. Rapid developments in genomics and stem cell therapies have made certain unthinkable treatments possible today.

    Some of the breakthrough discoveries of the past are:

    1. Drug for multiple sclerosis – This autoimmune disease, which still has a high fatality rate, attacks the fatty membrane around nerve fibers in the central nervous system. Research conducted by Tim Coetzee, Chief Research Officer of the National Multiple Sclerosis Society, has made disease-modifying treatment for multiple sclerosis at an early stage a possibility. Researchers and neurologists are continuously working toward further improving the available treatments.
    2. Cure for Ebola – The deadly Ebola virus, which emerged in Africa, has a high mortality rate. However, a drug called ZMapp is currently under trial as a treatment for the disease. It is a monoclonal antibody cocktail treatment based on the concept of reverse engineering.
    3. Cancer treatments – Cancer, a fatal disease, affects each individual differently. Due to its dynamic nature, finding a single cure has proved to be difficult. However, over the years, researchers have discovered the radiation therapy, chemotherapy, and hormone therapy, which have been successful in varying degrees. In fact, if discovered at an early stage, the disease can now be completely eliminated, with low chances of a relapse.
    4. Treatment of cystic fibrosis – Medical researchers discovered a way to target an important protein that transports chloride ions to and from the lungs. Vertex Pharmaceuticals has been able to successfully control symptoms and reduce complications in patients affected by cystic fibrosis using this method, thus offering affected individuals a new lease on life.
    5. Heart failure treatment – Serelaxin, the breakthrough drug discovered by Novarits, is used to treat acute heart failure, and has reportedly managed to cut down deaths due to heart failures.

    Apart from innovation in medicines, other technologies have also aided in improving the quality of healthcare. Some drugs have embedded ingestible microchips that help doctors to measure the dosages being administered. Devices that wirelessly inject drugs and send a patient’s electrocardiogram on the smart phone are being developed. Gamification of healthcare, based on principles of behavioral economics, is set to change the dynamics of the industry. Further advancements in biotechnology are also likely to yield numerous new vaccines and drugs, even for diseases considered chronic and degenerative. The human body is a complex machine that continuously adapts itself to the external environment. In the process, it contracts new diseases and illnesses over time. Therefore, medical research also needs to evolve continuously. The risky, uncertain environment makes it essential to find solutions using transformational research, therapies, and care delivery methodologies. Well-known pharmaceutical companies worldwide have been delivering sophisticated medicines through pivotal innovations made in R&D labs, bringing revolutionary changes in healthcare and treatment of various diseases. Eradication of diseases and innovations offer individuals a chance to live a full, high-quality life. Hope is what helps humans endure the most trying situations, and the medical industry promises just that—hope.



  8. New Category Creation: A Decisive Growth Strategy

    New category creation is a well-established and successful route to tap new markets. It refers

      to read | words

    published on Jun 19, 2020

    New category creation is a well-established and successful route to tap new markets. It refers to upgrading an existing class of product or service to a new level by modifying or adding features. While usually associated with disruptive technologies and innovations, it can also be a part of regular strategy to yield more benefits. However, despite the advantages, category creation is not as widely adopted as it should be.

    New category creation is an acknowledged formula for success. Organizations usually go for it when they are ready to take risk and think out-of-the-box. The new category typically is an improvement or upgrade to an existing product but offers much more and takes experience to another level, redefining existing standards.

    As industries stagger their way to normalcy and operations resume, strategies such as these may well become essential for companies looking to make the cut.

    Several companies have tried out the strategy successfully:

    1. Uber – Introduced the ride sharing concept that eventually became a way of life
    2. HubSpot – Created a revolutionary concept, where buyers seek sellers; recreated marketing ideologies and coined the term ‘Inbound Marketing’
    3. Microsoft – Designed Xbox Live gaming system, which combines a traditional video game with a subscription-based online service; offered new experience to gamers

    Despite the many advantages it offers, not many companies have attempted category creation. This could be due to several myths surrounding it:

    1. Costly initiative – Category creation is believed to be an expensive process, but it is not quite so. The key is to manage existing resources effectively and efficiently as per the requirement. Research is the most important step as it helps identify the gap that needs to be addressed. Airbnb is a classic example of this. The world’s largest hotel chain does not own even one property. The brand redefined the concept of vacation based on giving the experience of a home away from home.
    2. Mature market – Companies believe their markets are mature, with customers satisfied with existing offerings. While this could be true, the satisfaction may be largely due to customers not being aware of a better option. Even if they seem content with the current solution, a deeper understanding of psyche could reveal grievances and issues that, if addressed, would make life better. Banking, for instance, was a mature market with minimal customer addition until online bank Monzo stepped in. Online banking, a simpler and faster process, helped lure new customers, many making a switch from traditional banking.
    3. A startup approach – Many companies believe that new category creation is solely the forte of startups. This is a wrong notion. Established companies could be struggling with dearth of talent and absence of out-of-the-box thinking, factors that come in the way of development of new ideas. The issue can be addressed by setting up a ‘super team’ whose only purpose is to present new category creation thoughts periodically. It could have people from across departments to tap a broader spectrum. Apple, for instance, is known for reinventing its products and creating new categories in the electronic devices segment. Be it the touchscreen concept or iPads, it is constantly raising the bar to give customers a better experience.

    Process of category creation
    Category creation should be part of every company’s long-term plan:

    1. Customer need – The main objective behind category creation is to add customers. For this, it is important to understand their needs. McDonald’s, for instance, while popular for its nonvegetarian burgers, came up with a vegetarian alternative when it entered countries like India. Given the large vegetarian population in the country, the brand knew that it had to cater equally to both groups if it were keen on increasing customer base.
    2. Core team – A core team, well-versed in data analysis, product creation, marketing and strategizing, is required. It should have members from varied disciplines. The team should be able to work cohesively on new ideas and suggestions.
    3. Innovation – Sometimes category creation may require technological innovation to support it. For example, Uber had to invent an app, which could help a customer hail a cab directly from home. Furthermore, if the person wanted to share the ride to save on cost, with the help of the app, he could connect with others going in the same direction at the same time.
    4. Marketing – It is equally important to position and market the new category. Its upgraded features must be emphasized upon as much as the issues it is designed to address. Gatorade was reinvented as a nutritional supplement and positioned as a ‘performance hydration drink’ rather than simply being a thirst quencher.

    Category creation can improve a brand’s performance and customer loyalty. Be it Starbucks’ customizable espresso-based beverages or Bank of America’s ‘Keep the Change’ program, a new category not only helps in retaining customers but also adding more.

    Therefore, category creation should certainly be a part of companies’ blueprint as they look to recover from the COVID–19-induced crisis.



  9. Back to Work – What Will Be the New Normal at Workplaces After COVID–19?

    The pandemic led to months of lockdown, restrictions on movement, and sealing of borders, pushing

      to read | words

    published on Jun 01, 2020

    The pandemic led to months of lockdown, restrictions on movement, and sealing of borders, pushing the global economy to the verge of collapse. Now, workplaces and offices are reopening. However, safety rules and regulations will need to be incorporated to ensure there is no resurgence. What lies ahead is a ‘new normal’, which we must accept and adapt to.

    With the new decade, came COVID-19, a deadly virus originating in China. Highly contagious, it soon spread globally. With the disease claiming lives and taking one nation after another in its grip, governments resorted to country-wide lockdowns and sealed international borders in their bid to contain it. Offices were closed and companies switched to ‘work from home’ to ensure continuity of business.

    With almost the first half of 2020 behind us, recovery has started, and workplaces are reopening. However, the fear of the virus looms large, especially in the absence of a vaccine against it, compelling companies and people to be cautious. Moreover, with the economy coming to a near-standstill amid restrictions on movement of people and goods, several factories have shut down and companies have been forced to downsize employees. The fear of layoff has sent morale down to an all-time low. With recessionary conditions in markets, demand for goods and services is low, resulting in loss of revenues for companies.

    The coming months will be difficult for many companies as they struggle to survive and retain talent. They need to work on multiple fronts to tide over these tough times and move ahead. Companies will have to adapt to the new way of operating to survive and thrive.

    Safety Measures
    Given the significance of ensuring safety of health as workplaces resume operations, routine hygiene practices, such as social distancing, disinfecting premises and monitoring visitors, will need to be followed strictly.

    Office architecture may also undergo a change. For instance, automatic doors or voice-controlled elevator systems could be installed for minimizing contact.

    Health checkup of employees before they resume work is also recommended. While in the current scenario, this could help in containing the infection, in the long term, periodic health checkups may well become a norm, boding well for the overall workplace.

    Work Culture
    Companies may introduce cultural changes such as rotational work hours to limit the number of people on the premises. ‘Work from home’ may become a way for companies to operate, increasing demand for technologies enabling this. Apart from safety, it will also lower the cost of operations for companies.

    New Skillsets
    This is a good time to train employees in new skills and, thereby, encourage innovations. The pandemic has revealed the significance of digitalization for a company’s survival. Investing more in digital technologies to ensure that in future similar calamities do not hinder day-to-day operations is a tactical move. Choosing as well as implementing apt technologies requires certain skills and the time available now can be utilized to impart the right training to the workforce.

    ESG Investments
    The environment has benefitted from the ban on movement. With fewer vehicles plying, both noise and air pollution have come down. Measures taken to combat the pandemic show how reduction in industrial activities can reverse the damage done to the environment. Conscientious companies will make an effort to reduce their carbon footprints. ESG investments have picked up and may soon become a priority for companies.

    Innovate
    This is good time for companies to re-visit their strategies on all fronts, including innovation and introduction of new product lines. There are instances of automobile companies investing in face masks to meet demand. While this is a short-term impact, companies could learn from it. They can take a relook at their business strategies and diversify to ride over the low demand for certain goods across the globe. This will not only help the company survive the current downturn but may well become a profitable venture later.

    The pandemic has changed the world as we knew it irrevocably. The old rules of success may not apply in this new world. It is time to recover and realign ourselves to the new way of life. This is a time to reflect and make necessary modifications in our business plans to ensure that the lessons learned in the pandemic help us move forward in a systematic manner.



  10. Hotels: Can the Industry Ride Out the Downturn?

    COVID-19 has affected all industries, hospitality being the worst hit. The complete ban on travel

      to read | words

    published on May 12, 2020

    COVID-19 has affected all industries, hospitality being the worst hit. The complete ban on travel is costing the tourism sector billions of dollars. Challenges notwithstanding, the point is can hotels use this time effectively to prepare for the new reality likely to emerge in the post-pandemic period?

    As COVID-19 spread, wreaking havoc, it forced countries to go into complete lockdown. The ban on movement has dealt a major blow to almost all sectors, particularly hospitality.

    According to Mobility Market Outlook, the global travel and tourism sector is likely to witness an approximately 34.7% drop in revenue over the previous year to USD447.4 billion in 2020. The numbers could come down further, considering the cascading effect of the virus outbreak. Even if a vaccine is discovered in the near future, fear psychosis may keep travelers confined to their homes.

    The hospitality industry, which includes accommodation and catering (hotels, restaurants), transportation, travel agency and tour operator services, is struggling to survive. Vacant rooms are translating into severe losses in the accommodation business that comprises hotels (big and small), B&Bs, guesthouses and hostels. Despite the challenges, there is a glimmer of hope for the hotel industry—it can utilize this downtime in a productive manner.

    • Assistance to medical sector – Hotels worldwide are providing accommodation to medical staff engaged in taking care of patients. While this will keep the ground staff occupied and productive, it is, more importantly, a noble gesture that is bound to generate goodwill for the brand. Travelers will perceive favorably brands that offered help in difficult times.
    • Communication – Traveling may have come to a standstill, but this should not stop hotels from continuing to communicate with their loyal guests. Being in touch through social media, emails or messages is essential to ensure top-of-mind recall. Once travel and tourism pick up, keeping channels of communication open will only prove to be rewarding for the brand.
    • Maintenance – This is the right time for hotels to undertake maintenance. Damages could be repaired, menus redesigned, or policies and procedures upgraded. As revenues are constrained, it would be advisable to not go for any major overhaul or renovation but spend judiciously on fixing just those damages that would make the hotel ready for business once the outbreak subsides and recovery sets in.
    • Digital transformation – Among other things, the pandemic has highlighted the significance of technological resources. With several countries under lockdown, work from home is the only option for businesses to keep operations running. This has considerably enhanced the relevance of technologies facilitating remote working and continuity of business processes. Once tourism picks up, hotels may still need to comply with social distancing, for which, they would require technology, for instance, robotic cleaning machines, digital payment platform or mobile check-in options. They would do well to utilize the time available now in building up the infrastructure needed to implement these technologies.
    • Relief funds – Governments across the globe have announced relief funds to help businesses survive and restart activities. Hotels could avail of this to tide over tough times.

    Hotels need to strategize and prepare themselves in advance to cater to demand once tourism resumes. Certain steps could be taken to attract guests and build loyalty:

    1. Offering discounts & cancellation policies – Discounts and easy cancellation policies will lure customers. With a limited customer pool in the beginning, as traveling will increase only gradually, the target audience for most hotels would be the same. Therefore, brands offering maximum value for money stand to win and rake in maximum business.
    2. Maintaining hygiene – Even after the pandemic subsides, awareness about hygiene – one of its many aftereffects – will persist. Therefore, hotels must offer facilities such as mobile check-in and check-out, cashless payment, and contactless delivery of food to guests. Some other measures include selectively offering banqueting services and following distant seating practices in restaurants. Overall, they should follow policies for infection control and guarantee a safe stay to customers.
    3. Revisiting revenue management strategy – The approach toward revenue management in the pre-COVID period may not be relevant in future when revenues are likely to be constrained and costs higher. It would, therefore, be ideal to hire the services of financial experts and re-draft the strategy to suit the requirement.
    4. Preparing marketing plan – Hotels must plan marketing activities on a month-to-month basis, aiming to tap demand and maximize revenue. The focus should be on highlighting the hotel’s USPs and definitely commitment to hygiene and safety of customers.
    5. Doing contingency planning – To deal with unforeseen situations, it is important to have a contingency plan. For instance, hotels must be prepared for a second or third wave of the pandemic so that they are not caught unaware if the situation arises.

    Travelling cannot be contained for long. It is bound to resume, albeit gradually. Once this happens, hotels can return to operating and recover the revenue lost. Until then, the time available can be used productively to prepare for the surge in demand.



  11. COVID–19: Making Case for Digitalization in Procurement

    Procurement, a key process, if affected adversely could result in a huge loss for the

      to read | words

    published on Apr 28, 2020

    Procurement, a key process, if affected adversely could result in a huge loss for the organization, especially in manufacturing. The current pandemic has unveiled the threats facing supply chain and how vulnerable it can be rendered. However, digitalization in procurement could help organizations to be better prepared.

    COVID -19 has paralyzed industries and economies across the world. Due to lockdowns and sealing of international borders, the supply chain in various industries has been severely affected. Consequently, supply and productivity are likely to take a major hit. Moreover, dearth of human resources amid the outbreak has made it difficult to effectively manage the value chain. The pandemic, therefore, underscores the need to have a more robust supply chain management plan. Companies are strategizing on how to digitalize their procurement process to ensure efficiency even in times of crisis and emergencies.

    Digitalization can help in:

    1. Real-time risk monitoring – Fast access to information helps in efficiently handling sudden disruption in raw material supplies. While risk could emanate from a multitude of factors, digitalization can help in understanding the exact causes and finding an apt solution or making an effective alternative arrangement.
    2. Data integration – Supply chain performance can be optimized by integrating data from customers, distributors, and suppliers in real time. This reduces lead time as well as cost of managing data manually, besides enhancing customer experience.
    3. Supplier management – With the help of big data analytics, unlimited financial and external data can be processed and accurate predictions can be made, providing a holistic picture of supplier-market-customer dynamics. Also suppliers’ financial stability can be ascertained.
    4. Automation – Processes such as ordering, invoicing as well as payment can be automated, reducing the need for manual intervention.
    5. Insights – Using advanced analytics, better insights on industry and marketplace can be generated, which could help in accurately predicting future events. If we look at the current situation, manufacturers using advanced techniques fared better than those who did not employ these tools. The former were able to access data and news on the spread of COVID-19 and take steps accordingly in advance.

    The pandemic has made companies realize that eventually all will have to embrace digitalization. This will help them trim losses and ensure continuity of supply chain amid calamities.

    Digitalization has several advantages, such as:

    • Simplifying the process and making it error-free
    • Automating repetitive tasks, hence reducing manpower cost
    • Improving ROI due to increase in efficiency
    • Facilitating better decision making by providing access to updated information
    • Creating a flexible enterprise capable of quickly adapting to changes

    Digitalization will help in navigating through uncertainties. It minimizes risks through efficient monitoring. While epidemics may be unavoidable, with the help of advanced digital technologies and techniques, they can be dealt with effectively.



  12. Five Rules to Successfully Innovate During a Downturn

    Companies should focus on saving cost and treading cautiously amid downturns, right? Yes, but this

      to read | words

    published on Apr 08, 2020

    Companies should focus on saving cost and treading cautiously amid downturns, right? Yes, but this is also the time to re-strategize and re-invent. Innovations and investment in R&D (where possible) should become an important consideration during these tough times. This would help in being cost-effective, increase efficiency, and realize long-term benefits. Here are a few tips for companies in this regard.

    We are currently in the midst of the worst pandemic of the century, and by all accounts, could also be facing the greatest financial crisis since the late 1920s. Most CEOs and CXOs at this time are calibrating and recalibrating their strategies to deal with the negative impact of COVID-19 outbreak and the resultant shutdowns on their businesses. Going by Darwin, it will be “survival of the fittest” and companies will take necessary steps to survive. The most essential step is to become cost-effective and conserve capital. While cost-cutting is required, this is also the right time for businesses to take a step back; re-evaluate their business models, operations; and identify innovations or methods to bring in disruption not only to save costs but also boost revenue in the long term.

    What is common to Alibaba, Apple, Airbnb and Uber? Apart from being some of the biggest and most prestigious global brands, these companies either gained strong traction due to their specific innovations during times of crisis/financial crisis, or were established during challenging times. While Alibaba launched its online e-commerce platform during the SARS epidemic in 2003, Steve Jobs got his team to develop a prototype of the iPod amid the dotcom bubble burst in 2001. Airbnb and Uber adopted technology that was disruptive and changed the way the hospitality and cab industries operated for good. They enabled people who had spare rooms or a car to earn money by renting those out during times of economic hardship. These are just a few examples from recent times; history is replete with examples of companies that were either formed or grew during recessionary phases.

    Away from the startup and tech world, it is also interesting to note that in 2008, a survey done by consulting firm Booz & Company revealed that the top 1,000 public companies in terms of spending on research and development actually increased their R&D expenditure during the financial crisis, with healthcare companies at the forefront. In the current situation too, we can safely expect healthcare firms to lead the race. More than 90% of respondents in these companies identified innovation as a critical metric to ensure that they were prepared for the upturn in the market and stayed ahead of competitors. The performance of the top 20 companies by way of expenditure on R&D during this period (including Toyota, Roche, Pfizer, and Samsung) indicates that innovation during a downturn translates into success in the long term. Even if you do not have the funds for R&D, there are ways to re-evaluate operations and identify opportunities for automation, process improvements, investment in technology.

    While innovations are essential, certain guidelines must be followed to avoid a costly mistake:

    1. Identify your innovation strategy: There are two ways to look at innovation. A company can either focus on upgrading existing products/services or identify new product/market opportunities. The latter may require adoption of new business models as well. While the former is easier to go with and, if executed properly, would guarantee returns in the near term, the latter option is more complex with returns accruing only over the long term.
    2. Factor in customer requirements and gaps: Understanding customer requirements and gaps is essential at all times, but more so during challenging economic conditions. Customer preferences/spending habits may shift during downturns and last even after recovery. Innovation strategy should be built around needs. If purchasing power is going to be limited, identify means for cost-cutting (for example, substituting a raw material with a lower cost alternative without impacting quality). The organization must be flexible to modify existing business plans and strategies, and prioritize investments to service new requirements.
    3. Modify existing processes: Doing more with less should be the new game plan. Process innovation is an important element of dealing with downturns. Recognize areas where reductions can be made in operating costs, and enhance efficiencies with the use of requisite technologies, SOPs etc. Recessions are often the best times to implement innovative projects to reduce costs, both for internal operations as well as for customers. Not all innovation efforts need to be solely focused on developing new business models or revenue growth.
    4. Accelerate adoption of technology/digitalization: If your business for some reason has not already embraced digitization and technology, do it right away. Social distancing may be the new norm and the way we work could be transformed forever. Businesses and companies that were averse to even exploring remote working options have been forced to do so and may have to continue with this for a while. Besides, companies should identify technology tools that will help them improve processes, increase productivity and minimize cost, giving repeat or long-term benefits. Now is the time to invest in these technologies or run the risk of being left behind in an increasingly digitalized world.
    5. Keep a track of ROI: While innovation efforts may provide returns over the long term, it is important to keep a track of the return on innovation. Unless you are an Apple, with no restriction on funds, the fact remains that during an economic downturn, costs have to be controlled, leaving less margin for error. While the idea obviously is to succeed, if one does fail then follow the age old saying and ‘fail cheaply’. Identify that the idea is not working and cut off the cashflow at the earliest.

    While other aspects need to be considered while designing an innovation strategy, such as business type, geography, financial health of the company, the factors mentioned above apply across scenarios. Though the current situation is grim and the near-term business forecast is bleak, companies that make the early moves to reinvent themselves, processes or business models will be the ones we will speak highly of in a few years from now. Several companies in China are already working on coming up with innovative solutions across sectors, such as remote education and working. This would soon prompt others the world over to follow suit. Companies that emerge winners will be the ones who got it right. Time will tell.



  1. ESG: Insurance Industry’s Move Towards Sustainability

    The insurance industry is increasingly incorporating Environmental, Social, and Governance (ESG) criteria into underwriting and investment decisions. This

      to read | words

    published on Sep 13, 2024

    The insurance industry is increasingly incorporating Environmental, Social, and Governance (ESG) criteria into underwriting and investment decisions. This shift is driven by the growing awareness of climate change, social equity issues, and the need for robust corporate governance. Insurers are focusing on climate risk assessment, sustainable business practices, labor practices, human rights, diversity, and effective corporate governance. By aligning with ESG factors, insurers enhance risk management, compliance, and competitive advantage, while supporting global sustainability goals. ESG integration positions the industry for long-term success by addressing emerging risks and opportunities in a complex risk environment.

    In recent years, ESG criteria have gained significant traction across sectors, with the insurance industry being no exception. ESG criteria—focusing on environmental sustainability, social responsibility, and effective governance practices—are increasingly being incorporated into insurance underwriting and investment decisions. This shift is driven by the rising awareness of climate change, social equity issues, and the need for robust corporate governance, alongside evolving regulatory frameworks and stakeholder demands. This approach enhances risk management, compliance, and competitive advantage, aligning insurers with global sustainability goals for long-term success.

    The Evolution of ESG in Insurance:

    Historically, insurance underwriting has primarily concentrated on evaluating financial risks, often with minimal consideration for non-financial factors. This landscape, however, is changing as ESG factors are increasingly being recognized as material risks that can influence financial outcomes. The evolution of ESG in insurance underwriting can be traced through several key trends:

    • Growing Awareness of Climate Risks: Insurers are increasingly focusing on climate change due to its effect on natural disasters like hurricanes and floods. They use climate risk models and scenario analysis to predict and manage potential losses, adjusting underwriting policies to better manage environmental risks.
    • Regulatory Developments: New regulations, such as the European Union’s Sustainable Finance Disclosure Regulations (SFDR) and Task Force on Climate-Related Financial Disclosure (TCFD) guidelines, require insurers to disclose ESG integration in decision-making. These regulations drive insurers to adopt ESG criteria to comply with legal standards, enhance transparency, and align with best practices.
    • Stakeholder Expectations: Increased demand for transparency in ESG practices from investors and consumers is compelling insurers to integrate ESG criteria into their underwriting. By aligning with these expectations, insurers can enhance their reputation, build customer trust, and demonstrate their commitment to responsible practices.
    • Technological Advancements: Advances in data analytics and modeling tools enable insurers to better assess and integrate ESG risks. Modern platforms process large volumes of ESG data, providing real-time insights and allowing for more accuracy in underwriting policies.

    Incorporation of the ESG Criteria in Underwriting

    Environmental Criteria

    • Climate Risk Assessment: Insurers integrate climate risk assessments into underwriting, analyzing the impact of climate change on assets. By using risk models to evaluate extreme weather scenarios, insurers adjust policies and premiums based on potential financial impact. This helps develop strategies for managing climate-related risks.
    • Sustainable Business Practices: Insurers prioritize environmental sustainability in underwriting, favoring clients with strong practices like energy efficiency and waste management. Companies with robust sustainability performance may receive better terms, while those with poor practices might face higher premiums or exclusions, promoting broader environmental goals.
    • Carbon Footprint Analysis: Insurers focus on carbon footprint analysis, limiting coverage for high-carbon industries, and encouraging low-carbon practices. By aligning underwriting with carbon reduction goals, insurers support climate change mitigation and the transition to a low-carbon economy.

    For instance, Aviva, a UK-based multinational insurance company discontinued its insurance offerings for standalone fossil fuel-based power generation assets in 2019, replacing it with insurance products for companies involved in renewable energy businesses. Further, given the growing impetus on reducing overall carbon emissions, in 2021, Aviva’s renewable energy insurance business reached 150% of its fossil fuel power generation insurance business that it discontinued in 2019.

    Social Criteria

    • Labor Practices and Human Rights: Insurers are increasingly evaluating clients based on labor practices and human rights records, considering factors like fair wages and safe working conditions. Companies with strong labor and human rights practices are viewed favorably in underwriting, aligning insurance with social responsibility and ethical business practices.
    • Community Impact: Insurers factor in the impact a company has made on local communities, assessing contributions to development and social responsibility. Companies that actively support local economies and community well-being are seen as lower-risk clients, aligning underwriting with broad social impact goals.
    • Diversity and Inclusion: Insurers prioritize diversity and inclusion in underwriting by evaluating companies on their leadership diversity and inclusive workplace practices. Companies with strong commitments to equity and inclusion are favored in underwriting decisions, promoting social responsibility, and supporting workplace diversity.

    For instance, Zurich Insurance Group, a Switzerland-based insurance company analyzes the corporate governance and human rights practices of the prospective clients, in addition to the financial and business risks associated, before selling policies.

    Governance Criteria

    • Corporate Governance Practices: Insurers are increasingly emphasizing governance practices in underwriting, assessing factors like board diversity, executive compensation, and anti-corruption measures. Companies with strong, transparent governance frameworks are viewed favorably, ensuring that insurance coverage supports ethical standards and aligns with best practices.
    • Transparency and Reporting: Transparency in ESG reporting is a key governance criterion. Insurers evaluate the clarity and comprehensiveness of a company's ESG disclosures. Companies with transparent and verifiable ESG reporting are rated positively, aiding insurers in making informed decisions.
    • Risk Management: Effective risk management, especially ESG-related risks, is crucial in underwriting evaluations. Insurers favor companies with robust processes for managing and integrating ESG risks into their overall strategies. This ensures that insurance coverage aligns with proactive and responsible risk management practices.

    For instance, Chubb, a US-based insurance company assesses a potential client’s culture, its regulatory and legal compliance records, and the risk management policies and procedures, among others, before issuing insurance policies.

    Benefits of incorporating ESG factors in underwriting

    • Enhanced Risk Assessment: Incorporating ESG factors into underwriting improves risk evaluations, allowing insurers to identify vulnerabilities and develop robust risk management strategies.
    • Competitive Advantage: Offering ESG-focused insurance products and highlighting a commitment to sustainability can differentiate insurers, attracting environmentally and socially conscious customers, thus boosting market share.
    • Portfolio Resilience: ESG integration in investments enhances portfolio stability by mitigating ESG-related risks, resulting in resilient investments that withstand market and environmental disruptions.
    • Increased Capital Inflow: Sustainable investment strategies and commitment to ESG can attract capital from socially responsible investors, opening growth opportunities.
    • Regulatory Compliance: Adhering to ESG reporting and disclosure requirements ensures compliance with regulations, strengthens credibility, and builds trust with stakeholders, aligning practices with regulatory expectations.

    In conclusion, integrating ESG criteria into insurance underwriting and investments marks a significant industry shift. Driven by the recognition of ESG factors as material risks, regulatory requirements, and rising stakeholder expectations, this approach enhances risk assessment, customer engagement, and competitive advantage. Adopting ESG aligns insurers with global sustainability trends, positioning them for long-term success by addressing emerging risks and opportunities. As the industry evolves, ESG's role in shaping the sector and contributing to a sustainable economy will grow, helping insurers navigate a complex risk environment.






  2. PE Investment: A Catalyst for Growth in the Renewable Energy Sector

    Over the past ten years, the renewable energy sector experienced significant growth, driven by growing demand for clean

      to read | words

    published on Sep 13, 2024

    Over the past ten years, the renewable energy sector experienced significant growth, driven by growing demand for clean energy and supportive government policies. The shift toward sustainable energy is evident, with wind power and solar photovoltaics (PV) accounting for 23.9% of world’s total installed power generation capacity in 2022. This transformation is further supported by a rise in private equity-backed renewable energy deals, which surged from USD 24 Bn in 2019 to USD 60 Bn in 2023. As the world progresses toward a greener energy future, private equity firms play a vital role in funding and driving this transition. This article explores the trend of private equity firms investing in renewable energy projects and technologies, analyzing the factors driving this shift, the strategies employed by these firms, and the broader implications for the sector.

    Introduction

    The global energy landscape is experiencing an alteration driven by the critical need to address climate change, decrease dependence on fossil fuels, and combat global warming. Fossil fuels—coal, oil, and gas—are the largest contributors to climate change, accountable for over 75 percent of global greenhouse gas emissions and nearly 90 percent of all carbon dioxide emissions. To keep global warming below 1.5 degrees as called for in the Paris Agreement, emissions need to be reduced by 45% percent by 2030 and reach net-zero by 2050. Achieving these targets necessitates a significant shift away from fossil fuels and a concerted investment in clean, accessible, affordable, sustainable, and reliable alternative energy sources. Renewable energy sources including solar, wind, and hydropower, have emerged as economically viable and sustainable alternatives to traditional energy sources. Consequently, private equity (PE) firms have increasingly recognized the potential of renewable energy, directing substantial capital into the sector to capitalize on its growth prospects.

    Number of PE-led Investment Deals in Renewable Energy Space: 2019–23 

    Key Deals in Renewable Energy Space: 2024

    Drivers of PE Investments in Renewable Energy

    • Supportive Policy Environment: Governments worldwide have implemented policies and incentives to promote renewable energy. These policies include investment tax credits, subsidies, feed-in tariffs, and renewable portfolio standards, creating a supportive environment for PE investments. Such policy frameworks reduce investment risks and enhance the attractiveness of renewable energy projects for PE firms.
    • Growing Demand for Clean Energy: The global push toward sustainability has led to a significant increase in the demand for clean energy. Renewable electricity capacity has surged to 340 gigawatts (GW), now representing 30% of global electricity generation—up from 19% in 2000. PE firms are capitalizing on this growing demand by investing in renewable energy projects that offer long-term revenue streams and growth potential.
    • Shifting Investor Preferences: Investors are increasingly prioritizing sustainable and socially responsible investments. PE firms are adopting their strategies to align with these trends, aiming for strong returns and a positive environmental impact. By investing in renewable energy projects, PE firms can attract capital from environmentally conscious investors and enhance their reputation as responsible investors.

    Investment Strategies of PE Firms in Renewable Energy

    Direct Investments in Renewable Energy Projects: PE firms actively invest in renewable energy projects, including solar farms, wind farms, and hydropower plants. These investments involve acquiring or developing renewable energy assets, managing project financing, and optimizing operational performance. Direct investments provide PE firms with control over project management, allowing them to focus on value creation and improve returns.

    In January 2024, BlackRock invested USD 500 million in Recurrent Energy, a subsidiary of Canadian Solar to support the solar project development pipeline and its transition into a developer, long-term owner, and operator of solar and energy storage assets in US and European markets.

    Platform Investments and Scaling: PE firms often use a platform investment approach by acquiring multiple renewable energy assets and building project portfolios. This strategy enables firms to achieve economies of scale, leverage operational synergies, and optimize asset management. By scaling their renewable energy investments, PE firms can enhance cost efficiencies, negotiate favorable contracts, and achieve higher returns on investment.

    Gaw Capital Partners partnered with Maoneng Group’s Australian business with a focus on developing six major projects in Victoria, New South Wales, and South Australia with a combined total of 1.9 GW in battery storage and solar power generation. They are further exploring new renewable energy opportunities.

    Investment in Technology or Concepts: PE firms are increasingly investing in early-stage companies developing innovative technologies within the renewable energy sector. These investments focus on startups working on advanced solar technologies, energy storage solutions, smart grid systems, and other sustainable innovations.

    Havfram, a Norway based offshore wind services company secured USD 500 Mn in equity funding through a partnership with Sandbrook Capital and Public Sector Pension Investments (PSP) in Nov 2022. The funding would be used to develop a fleet of offshore wind vessels, designed to install turbines exceeding 300 meters in tip height and foundations weighing up to 3,000 tons in water depths of up to 70 meters

    Public-Private Partnerships and Co-Investments: PE firms collaborate with governments, utilities, and other institutional investors through public-private partnerships and co-investments. These partnerships allow PE firms to leverage additional capital, share risks, and access expertise in project development and operations. Collaborative investments enhance the viability of large-scale renewable energy projects and facilitate the transition to sustainable energy systems.

    In 2024, the U.S. Department of Energy (DOE) invested USD 71 Mn to expand the network of domestic manufacturers within the U.S. solar energy supply chain. The selected projects such as Re:Build Manufacturing (USD 1.9 Mn), Silfab Solar Cells (USD 5 Mn), Ubiquity Solar (USD 11.2 Mn), and GAF Energy (USD 1.6 Mn) would address gaps in the domestic solar manufacturing capacity across the supply chain including equipment, silicon ingots and wafers, and silicon and thin-film solar cell production.

    Outlook and Opportunities

    The future of private equity (PE) investment in the renewable energy sector presents significant potential, as the rising demand for clean energy and continued technological advancements drive innovation. Several emerging trends and opportunities are poised to shape the trajectory of PE involvement in this growing industry

    Energy Storage and Grid Integration: In 2022, investments in Battery Energy Storage Systems-BESS surged to over USD 5 Bn, nearly tripling the previous year's amount. This growth highlights the expanding role of PE in advanced energy storage technologies, which are essential for boosting the reliability and efficiency of renewable energy systems. By investing in grid integration solutions, smart grids, and digital platforms, firms can enhance energy distribution, improve grid resilience, and facilitate the smooth integration of renewable sources.

    Offshore Wind and Floating Solar: PE firms can support development by investing in offshore wind and floating solar initiatives and driving growth and commercialization in these expanding markets. 

    Recently, Spain regulated the coverage and water quality for floating solar projects, and Portugal auctioned floating solar development. Additionally, Greece licensed 13 floating solar projects with a combined capacity of 839 MW on artificial lakes and reservoirs.

    Decentralized Energy Systems and Microgrids: The transition towards decentralized energy systems and microgrids is gaining momentum, offering opportunities for PE investment. Decentralized energy systems enable localized energy generation and consumption, enhancing energy resilience and reducing transmission losses. Microgrids provide self-sufficient energy solutions for remote communities and industrial sites. PE firms can invest in decentralized energy projects, supporting the deployment of renewable energy technologies and enabling access to sustainable energy.

    Conclusion

    PE firms play a pivotal role in the renewable energy boom, driving capital, innovation, and expertise into the sector. The involvement of PE in renewable energy projects and sustainable technologies is reshaping the energy landscape, accelerating the shift to a low-carbon economy, supporting global initiatives to combat climate change. As the demand for clean energy increases, PE firms can drive sustainable development, achieve attractive financial returns, and positively impact the environment. By leveraging their capital, expertise, and strategic partnerships, PE firms can continue to lead the way in renewable energy change and outline a sustainable future.





  3. Tracking the Surge in Generative AI Investments

    Generative AI is revolutionizing industries and attracting significant funding, with investments reaching $25.2 billion in 2023. The market is transitioning

      to read | words

    published on Sep 11, 2024

    Generative AI is revolutionizing industries and attracting significant funding, with investments reaching $25.2 billion in 2023. The market is transitioning from rapid expansion to stabilization, focusing on commercialization and regulatory compliance. Key factors driving the funding surge include advancements in AI technology, growing demand for AI solutions, and competitive investor interest. North America leads in investment, while Europe and Asia are emerging as significant players. The sector's evolution emphasizes ethical use, sustainable growth, and strategic partnerships.

    Generative AI has rapidly become one of the most transformative technologies of the 21st century, transforming various industries from healthcare to entertainment, and driving significant advancements in automation, creativity, and problem-solving. The surge in generative AI funding reflects the growing recognition of its potential, with investors increasingly pouring resources into startups and research that push the boundaries of what AI can achieve. 

    Evolution of Generative AI Market

    The generative AI market is shifting from rapid expansion to stability, with companies focusing on commercialization and adopting cautious investment strategies. Regulatory considerations are increasing, as governments begin to set guidelines for ethical AI use, particularly on data privacy, bias, and transparency.

    • Focus on Commercialization: Companies are shifting their focus to commercialization, even as they continue to release open-source models. Leading developers are now pairing open-source releases with specialized tools or commercial models. For instance, Stability AI plans to introduce a developer platform and revising model licensing, while Mistral offers small, large, and optimized commercial models. This pivot toward commercialization is driven by the increasing costs of model training and need to ensure the long-term sustainability of their research efforts.
    • Regulatory Considerations: As generative AI is being widely adopted, regulatory considerations play an important role in the market's evolution. Governments and regulatory bodies are establishing guidelines and frameworks for the ethical and responsible use of AI, particularly in areas such as data privacy, bias, and transparency.

    Surge in Generative AI Funding

    Generative AI funding has surged unprecedently in the past few years, driven by the explosive growth of applications in various sectors and the promise of substantial returns on investment.

    According to Artificial Intelligence Index Report 2024, private investments in generative AI reached a record $25.2 billion in 2023, a significant increase from $2.8 billion in 2022. This growth trend has continued in 2024, with significant investments being made.

    This sharp rise in funding is indicative of the immense interest in technologies such as large language models, AI-driven content creation tools, and synthetic data generation.

    • Increasing Valuations: The surge in funding has also led to skyrocketing valuations of generative AI companies. For instance, OpenAI, the creator of GPT-4, secured a $10 billion investment from Microsoft in early 2023, valuing the company at nearly $29 billion. This reflects the confidence investors have in the long-term potential of generative AI to disrupt traditional industries and create new market opportunities.
    • Expansion of Use Cases: The broadening of generative AI applications has fueled the funding surge. From creating realistic virtual environments in gaming and simulations to automating content generation in media and advertising, generative AI is finding applications across various industries. This has attracted diverse investors, from traditional venture capital firms to tech giants and corporate venture arms, all eager to capitalize on the technology's potential.
    • Government and Institutional Funding: In addition to private investment, government and institutional funding for generative AI research has increased. Governments in regions such as North America, Europe, and Asia recognize the strategic importance of AI and invest in research initiatives to maintain competitive advantages. For example, the European Union allocated $1.6 billion to AI research in 2018–2020. Additionally, under the EU's 2021–2027 Digital Europe Program, an additional $2.7 billion was dedicated to helping businesses and public administrations adopt AI.

    Key Drivers of Funding Surge

    Several factors have contributed to the surge in generative AI funding, including technological advancements, increasing demand for AI-driven solutions, and competitive landscape among investors.

    • Advancements in AI Technology: The rapid advancements in AI technology, particularly deep learning and neural networks, have significantly enhanced the capabilities of generative AI. Innovations such as transformer architectures, diffusion models, and generative adversarial networks (GANs) have enabled the creation of highly sophisticated models that can generate realistic text, images, and even music. 
    • Growing Demand for AI-Driven Solutions: The growing demand for AI-driven solutions across industries has also fueled the surge in funding. Businesses are increasingly looking to leverage generative AI to automate content creation, enhance customer experiences, and develop new products and services. This demand has led to a proliferation of startups focused on generative AI, attracting significant investment from venture capitalists eager to capitalize on the market's growth potential.
    • Competition Among Investors: The competitive landscape among investors has also played a role in the funding surge. With the success of early generative AI ventures, such as OpenAI and Stability AI, investors are eager to find the next big opportunity in the space. This has led to a rush to invest in promising startups and research initiatives, driving up funding levels and valuations.

    Regional Investments in Generative AI

    North America: Leading the Charge

    North America remains the epicenter of generative AI funding, with the United States leading the way. In 2023, over 80% of the global generative AI funding was concentrated in North America, driven by the region's robust technology ecosystem, access to capital, and concentration of leading AI research institutions.

    • Silicon Valley as a Hub: Silicon Valley continues to be the leading hub for generative AI startups, attracting significant venture capital investment. Companies such as OpenAI, Cohere, and Anthropic have raised billions in funding from prominent Silicon Valley investors. This concentration of capital and talent has established the region as a global leader in AI innovation.
    • Government Support: The US government played a crucial role in supporting generative AI research and development. Initiatives such as the National AI Initiative Act of 2020 include funding for AI research and development, bolstering the region's position as a leader in the field.
    • Collaborations with Academia: Collaboration between startups, tech giants, and leading academic institutions such as Arizona State University, University of South Florida, and UC Berkeley has been a significant driver of innovation in generative AI. These collaborations have led to groundbreaking research and the development of cutting-edge AI models, attracting substantial investment from venture capitalists.

    Europe: A Growing Contender

    Europe is rapidly emerging as a significant player in the generative AI space, with increasing investment in AI research and startups. While still trailing behind North America, Europe is closing the gap as governments, investors, and institutions ramp up their efforts to foster AI innovation.

    • AI Research and Innovation Programs: The European Union launched the Horizon Europe framework, which allocates significant funding to AI projects, including generative AI. These programs aim to enhance Europe's AI capabilities.
    • Emerging AI Hubs: Cities such as London, Paris, and Berlin are emerging as key AI hubs, attracting startups, investors, and talent. For example, London-based AI startup DeepMind, acquired by Google in 2015, has been at the forefront of AI research, contributing to advancements in generative AI. The growth of these hubs is helping position Europe as a leading region for AI innovation.

    Asia: Rapid Growth and Strategic Investments

    Asia is recording rapid growth in generative AI funding, with countries such as China, Japan, and South Korea making significant strides in AI research and development. The region's strong government support, large markets, and growing technology ecosystems are driving this growth.

    • China's Ambitious AI Goals: China has set ambitious goals to become a global leader in AI by 2030, and generative AI is a key focus area. Chinese tech giants such as Baidu, Tencent, and Alibaba are heavily investing in generative AI research and development.
    • China's Ambitious AI Goals: China has set ambitious goals to become a global leader in AI by 2030, and generative AI is a key focus area. Chinese tech giants such as Baidu, Tencent, and Alibaba are heavily investing in generative AI research and development.
    • Japan and South Korea: Japan and South Korea are also making significant investments in generative AI. Japanese conglomerates such as SoftBank plans to invest $960 million by 2025 to boost its computing power and develop generative AI technologies. South Korea's government announced plans to invest $1.2 trillion in developing a next-generation AI ecosystem and artificial general intelligence in 2025. These efforts are positioning Asia as a key region for generative AI innovation.

    Other Regions: Emerging Players

    While North America, Europe, and Asia dominate generative AI funding, other regions are also emerging. The Middle East, led by the UAE and Saudi Arabia, is investing in AI as part of economic diversification. The UAE's AI Strategy 2031, for example, aims to position the country as a global leader in AI by focusing on areas such as transportation, health, and education. 

    Conclusion

    The shifting dynamics in generative AI funding reflect a rapidly evolving market, with a surge in investment, changing investor focus, and move toward maturity and stabilization. As generative AI continues to advance, the focus is shifting to AI-enabling techniques, ethical considerations, and sustainable business models that can support long-term growth.

    The global nature of generative AI funding, with significant investments in North America, Europe, and Asia, highlights the widespread recognition of the technology's potential to transform industries and create new opportunities. As the market matures, strategic partnerships, regulatory considerations, and focus on sustainable growth will play a critical role in shaping the future of generative AI.




  4. Peer-to-Peer Insurance Explained

    Peer-to-peer (P2P) insurance offers a modern alternative to traditional insurance by allowing individuals to pool resources and

      to read | words

    published on Sep 10, 2024

    Peer-to-peer (P2P) insurance offers a modern alternative to traditional insurance by allowing individuals to pool resources and share risks within a community. With a current market value of USD 63 billion in 2023, P2P insurance is expected to grow rapidly, driven by consumer demand for transparency, lower premiums, and digital convenience. Rooted in mutual aid societies, P2P insurance has evolved through blockchain, AI, and smart contracts. While it offers benefits such as cost savings, personalized coverage, and community engagement, challenges like regulatory issues and risk pooling remain. Major players like Lemonade and Friendsurance exemplify the model’s potential for industry disruption and growth.

    Peer-to-Peer (P2P) insurance redefines traditional insurance by enabling groups of individuals to pool resources and share risks directly, bypassing large, centralized insurers. Members with similar risk profiles contribute to a common fund, which is used to cover claims, fostering a sense of community and transparency. Facilitated by digital platforms, P2P insurance emphasizes mutual support and shared responsibility, offering a collaborative and tech-driven approach to coverage.

    The global peer-to-peer (P2P) insurance market, valued at USD 63 billion in 2023, represents less than 1% of the global insurance industry that accounts for USD 7.2 Tn. However, it is poised for significant growth projected to exceed 30% until 2027, driven by an expanding consumer base, the convenience of P2P insurance offerings, low premiums, and enhanced transparency. Most P2P insurance demands are met through online platforms, which are projected to experience substantial growth. These products are predominantly used in the consumer segment, which includes car, homeowner, and health insurance, among others.

    History of Peer-to-Peer Insurance:

    P2P insurance traces its roots to Mutual Aid Societies, early forms of collective risk-sharing where individuals pooled resources to support each other in times of need. In the 18th and 19th centuries, friendly societies emerged, offering structured financial assistance for illness and unemployment, further developing mutual support and risk-sharing principles. The early 20th century saw a shift toward commercial insurance, but the essence of mutual aid endured. The late 20th and early 21st centuries marked a digital transformation, with internet and mobile technology enabling the modern P2P insurance model, making it accessible and scalable.

    Innovations in Peer-to-Peer Insurance:

    The rise of digital platforms has revolutionized P2P insurance by simplifying group formation, contribution management, claims processing, and member communication. Key innovations in the P2P ecosystem includes:

    • Blockchain Technology: Blockchain has enhanced security and transparency by using decentralized ledgers, effectively reducing fraud. Smart contract have further automated policy enforcement, reducing administrative costs for P2P platform development and operations.
    • Artificial Intelligence and Data Analytics: AI and data analytics have improved risk assessment and enabled personalized coverage, resulting in efficient and tailored insurance solutions.
    • Community Engagement: Digital platforms have incorporated tools to foster community-building, enhancing member engagement and satisfaction. Regulatory bodies have also adapted to support transparency and consumer protection within this new model.
    • Scalability and Expansion: Technological advancements have enabled the scalability and global expansion of P2P insurance, allowing the model to adapt to diverse regulatory and cultural environments across different regions.

    Benefits of Peer-to-Peer (P2P) Insurance

    For Policyholders:

    • Cost Savings: P2P insurance reduces premiums by eliminating insurer profit margins and lowering administrative costs. It passes on the savings directly to the members, resulting in affordable coverage.
    • Personalized Coverage: P2P insurance allows for customized plans tailored to the specific needs of a group, ensuring relevant and adaptable coverage based on members' risk profiles.
    • Increased Transparency: Members gain insight into how funds are managed, and claims are processed, fostering trust through transparency and straightforward procedures.
    • Increased Transparency: Members gain insight into how funds are managed, and claims are processed, fostering trust through transparency and straightforward procedures.
    • Incentives for Safe Practices: Members are rewarded for engaging in safe behavior, such as lower premiums for safe driving, promoting a healthier and safer community.

    For Insurers:

    • Reduced Costs: P2P insurance cuts overhead by eliminating large administrative teams and marketing budgets and using digital platforms and automation to keep premiums low for members.
    • Increased Efficiency: Automation and digital tools streamline claims processing and member management, reducing administrative burdens and speeding up service delivery with accurate risk assessments.
    • Improved Risk Management: P2P insurance stabilizes financial outcomes by spreading risk across a larger group, making the insurance pool resilient and reducing volatility.
    • Enhanced Member Engagement: Direct interaction and community involvement foster strong relationships, improving member satisfaction and retention through a personalized experience.
    • Competitive Advantage: P2P insurance attracts consumers with its community-oriented and cost-effective approach, offering a market edge and appealing to tech-savvy, cost-conscious individuals.

    Challenges of Peer-to-Peer (P2P) Insurance

    For policyholders

    • Limited Coverage Options: P2P insurance may offer few and inflexible coverage options, catering to specific groups or niches, which can be a drawback for those seeking comprehensive or specialized insurance.
    • Potential for Inadequate Risk Pooling: Small or insufficiently diverse P2P groups may struggle to cover large or unexpected claims, leading to financial shortfalls and inadequate coverage for members.
    • Regulatory Uncertainty: P2P models may face challenges due to unclear or misaligned legal framework, resulting in compliance issues and affecting the stability of the insurance coverage.
    • Dependence on Group Dynamics: The success of P2P insurance relies on active participation from its members; any lack of engagement or financial commitment can compromise the group's ability to cover claims.
    • Complex Claims Process: Despite efforts to simplify claims, P2P insurance can face complexities, especially during disputes or when digital platforms are involved. This may create challenges for policyholders.

    For Insurers:

    • Risk of Insufficient Data: Limited access to comprehensive data can hinder accurate risk assessment and pricing, making effective risk management and decision-making challenging.
    • Operational Complexity: Managing group dynamics and disputes, and ensuring internal compliance in P2P insurance requires specialized, resource-intensive systems and processes.
    • Regulatory Compliance: Navigating traditional insurance regulations can be difficult for P2P models, as their decentralized nature may not align with existing legal standards.
    • Member Retention and Engagement: Maintaining member engagement is essential for P2P insurers to prevent attrition and ensure the stability of their risk pools. To remain competitive, traditional insurers are increasingly introducing personalized products, strategically designed to attract customers who might otherwise be drawn to P2P insurance models.
    • Financial Stability: Ensuring the financial health of the risk pool is vital, as an insufficiently large or diverse pool may struggle to cover claims while keeping premiums competitive.

    Future Trends and Developments

    • Integration with Blockchain Technology: Blockchain technology could enhance transparency and security in P2P insurance. Smart contracts and decentralized ledgers can automate and verify transactions aimed at reducing fraud and imparting trust. Teambrella Inc., a Russia based P2P insurer, is one of the first insurers to use blockchain.
    • Expansion into New Markets: P2P insurance platforms are expanding into new markets globally, providing opportunities for growth and diversification. Emerging markets with underserved populations represent significant potential for P2P insurance owing to higher demand for alternative financing solutions.
    • Increased Use of AI and Data Analytics: AI and data analytics continues to play a crucial role in the evolution of P2P insurance. Enhanced algorithms for risk assessment, and customer profiling will improve the accuracy and efficiency of insurance decisions. Lemonade Inc, a US-listed P2P insurer, leverages AI and data analytics to offer personalized products with an effective pricing strategy.
    • Partnerships with Traditional Financial Institutions: Collaboration between P2P insurers and traditional financial institutions may become more prevalent. Partnerships can combine the strengths of both models, such as leveraging the technological innovations of P2P insurance with the financial stability and resources of traditional banks.

    Major P2P Insurance Providers

    • Lemonade Inc.: Lemonade, an American insurance company, adopted the P2P insurance model in 2015. The company’s P2P model, which pools premiums and uses leftover funds for charity, helped increase customer satisfaction and retention, leading to attracting the large customer base while reducing administrative costs. In 2020, Lemonade reported a revenue of USD 94.4 million, a 40% year-over-year increase, attributed to its innovative P2P insurance approach.
    • Friendsurance: Friendsurance, a Germany based company, implemented the P2P insurance model in 2010, allowing policyholders to pool their premiums and refund the unused portion, which incentivized customers to avoid claims and encouraged mutual responsibility. By 2017, Friendsurance reported that its P2P model had reduced claims frequency by 50%, leading to savings of over USD 12 million for the company. This helped Friendsurance expand its customer base to over 100,000 policyholders.
    • TongJuBao: TongJuBao, a Chinese platform, adopted the P2P model in 2014. The company allowed its users to form risk-sharing communities. This model significantly reduced the costs associated with traditional insurance, allowing TongJuBao to offer affordable coverage. By 2019, TongJuBao had successfully provided over one million customers with insurance products, resulting in a 30% reduction in premiums and an overall profit increase of 15%, equating to USD 25 million in net revenue.

    Conclusion

    P2P insurance is reshaping the insurance industry by emphasizing collective risk-sharing and community engagement through digital platforms. This reduces costs, enhances transparency, and personalizes coverage, benefiting policyholders and insurers. Innovations like blockchain and AI further streamline operations and improve risk management. Despite regulatory complexities and data limitations, P2P insurance holds significant promise for affordable and community-driven coverage. As technology evolves and regulatory frameworks adapt, P2P insurance will likely become an increasingly viable and attractive option in the insurance landscape.



  5. Financing a Sustainable Future with Green Bonds

    Green bonds emerged as a pivotal financial instrument in pursuit of sustainable development and have witnessed a remarkable

      to read | words

    published on Sep 06, 2024

    Green bonds emerged as a pivotal financial instrument in pursuit of sustainable development and have witnessed a remarkable growth of 21.8% between 2019 and 2023. Cumulative issuances of green bonds surpassed USD 3 trillion in 2024 driven by geographical spread, diverse issuer base, investor demand, regulatory support, and corporate responsibility. While the market faces challenges related to standardization, transparency, greenwashing, and economic conditions, the outlook remains positive. 

    Sustainable bond issuance is expected to reach USD 1 trillion by the end of the year driven by increased sovereign issuance, a focus on transition bonds, and technological advancements that enhance transparency and traceability. The rise reflects a commitment to combating climate change and promoting environmental sustainability through the essential mobilization of capital for green projects.

    The global shift towards sustainability has led to the rapid growth of green bonds designed to finance projects with positive social and environmental impact. They play a vital role in financing the shift to a low-carbon sustainable economy. As a result, green bonds have emerged as a pivotal financial instrument in the quest for sustainable development led by an increased focus on climate action. 

    Green bonds are fixed-income securities issued to raise capital for projects focused on renewable energy, sustainable agriculture, energy efficiency, clean transportation, and water conservation. The Green Bond Principles (GBP), established by the International Capital Market Association (ICMA), provide a framework that ensures accountability and transparency when issuers use the proceeds.

    Green Bonds: Growth and Current Trends

    According to the Climate Bonds Initiative (CBI), the cumulative issuance of green bonds surpassed USD 3 trillion by early 2024, with a record USD 195.9 billion issued in the first quarter of 2024 alone, marking a 59% increase from the first quarter of 2023.

    The following factors have contributed to the quick expansion of the green bond market:

    • Geographical Spread: The green bond market has evolved with the worldwide participation of issuers and investors. Europe remains the leader in green bond issuance followed by Asia-Pacific and North America.
    • Diverse Issuer Base: The issuer base for green bonds has also diversified significantly. While governments and multilateral institutions were the early pioneers, the corporate sector has become increasingly active in recent years. Non-financial corporates accounted for the largest share of green bonds with USD 71 billion of issuance in Q1 accounting for 36% of the volumes in 2024, led by Pattern Energy, a low-carbon energy company based in the U.S.
    • Investor Demand: Institutional investors, including insurance companies, pension funds, and asset managers, are increasingly fusing environmental, social, and governance (ESG) criteria into their investment strategies. Green bonds offer these investors a way to align their portfolios with their sustainability objectives while still achieving competitive financial returns.
    • Regulatory Support: Governments worldwide promote green finance through various initiatives, including tax incentives and guidelines for sustainable investment. For instance, the European Union's Green Deal and the U.S. Inflation Reduction Act have created favorable conditions for green bond issuance.
    • Corporate Responsibility: Companies recognize the importance of sustainability in their operations and are using green bonds to finance their environmental initiatives. This trend is evident in sectors such as energy, transportation, and real estate.
    • Variety of Instruments: The market has expanded beyond traditional green bonds to include sustainability-linked bonds (SLBs) and transition bonds. These instruments offer flexibility in financing and are increasingly popular among issuers looking to align their financing with sustainability goals.

    Notable Green Bonds

    The following high-profile green bond issuances illustrate the diversity and impact of this market:

    Challenges Facing the Green Bond Market

    Despite the impressive growth, the green bond market faces challenges:

    • Standardization and Transparency: A key challenge in the sustainable finance market is the lack of standardization and transparency. While frameworks such as the Green Bond Principles and the EU Green Bond Standard have helped establish guidelines, there is still variability in the definition and measurement of sustainability across instruments and regions. This lack of standardization creates uncertainty for investors and issuers, making it difficult to compare and evaluate sustainable finance products.
    • Greenwashing: Greenwashing, the practice of making misleading claims about the environmental benefits of a product or service, is another challenge. As demand has grown, so too has the risk of greenwashing, with issuers overstating the environmental impact of their projects. This can undermine investor confidence and hinder the credibility of the sustainable finance market.
    • Economic Conditions: The broader economic environment, including interest rates and inflation, can impact the attractiveness of green bonds. Higher interest rates may deter issuers from entering the market, while economic uncertainty can lead to reduced investor appetite.

    Outlook for Green Bonds

    The outlook for the green bond market remains positive, with expectations of continued growth. According to S&P Global Ratings, sustainable bond issuance is projected to approach USD 1 trillion in 2024, driven by increased participation from sovereign issuers and a diverse range of bond types. 

    Key trends in the green bond landscape include:

    • Increased Sovereign Issuance: As governments recognize the importance of financing climate initiatives, sovereign green bond issuance is expected to grow. Countries like Japan and Germany have committed to significant volumes of green bonds in 2024.
    • Focus on Transition Bonds: Transition bonds, which support companies in their shift towards sustainable practices, are likely to gain traction. These bonds can play a crucial role in financing the transition of high-emission sectors, such as fossil fuels and heavy industry.
    • Technological Advancements: Innovations in technology, such as blockchain, may enhance traceability and transparency in the green bond market. This could address concerns about greenwashing and improve investor confidence.

    Conclusion

    Green bonds have become a cornerstone of sustainable finance, providing essential funding for projects that address climate change and promote environmental sustainability. The market's rapid growth, driven by increasing investor demand, regulatory support, and corporate responsibility, reflects a broader shift towards a sustainable economy. While challenges remain, the future of green bonds appears promising, with opportunities for innovation and expansion across sectors and regions. As the world debates the need for climate action, green bonds will play a vital role in mobilizing the capital necessary to achieve a sustainable future.




  6. Construction Waste Recycling for a Sustainable Future

    Construction and Demolition (C&D) waste is a significant byproduct of urbanization and industrialization. As cities expand and

      to read | words

    published on Aug 14, 2024

    Construction and Demolition (C&D) waste is a significant byproduct of urbanization and industrialization. As cities expand and infrastructure projects increase, the volume of C&D waste grows. This waste includes materials like concrete, wood, metals, bricks, and plastics, which are often disposed of in landfills. However, with growing environmental concerns and the depletion of natural resources, recycling C&D waste has become a crucial aspect of sustainable development.

    Recycling construction waste has numerous benefits, both environmental and economic. Primarily, it helps reduce the burden on landfills, which are becoming increasingly scarce. Landfills not only occupy valuable land but also pose environmental hazards, such as soil and water contamination. By recycling C&D waste, the landfill space can be conserved, and the referred negative environmental impacts can be minimized.

    Moreover, recycling materials like concrete and metals reduces the need for virgin resources. The extraction and processing of natural resources require significant energy and contribute to greenhouse gas emissions. Recycling reduces the demand for these resources, thereby lowering the carbon footprint of construction projects. Additionally, recycled materials often tend to be cheaper than new ones, which can reduce construction costs and making projects more economically viable. 

    Recycling also supports the creation of new industries and jobs. The process of collecting, sorting, and processing waste materials requires a specialized workforce, providing employment opportunities. Furthermore, as the construction industry increasingly embraces green building practices, the demand for recycled materials is likely to grow, driving innovation and investment in recycling technologies.

    The State of C&D Waste Recycling in India

    India is estimated to generate around 48 million metric tonnes (Mn MT) of solid waste annually, with C&D waste accounting for around 25%, or approximately 10–14 Mn MT. However, some reports suggest that due to a lack of systematic data collection, the actual amount of C&D waste could be much higher, potentially reaching 530 Mn MT annually. Despite this significant volume, only about 1% of C&D waste is currently reused or recycled, with the remainder being landfilled.

    India's approach to C&D waste management is still in its infancy, with limited organized recycling infrastructure. Currently, the only operational C&D waste recycling plant is in Delhi. This plant processes around 1,200 metric tonnes of waste per day, equivalent to approximately 0.43 Mn MT annually. The lack of organized recycling facilities presents a significant opportunity for private investment and innovation in this sector.

    The Indian government has recognized the importance of addressing C&D waste and has taken steps to encourage recycling. The Ministry of Urban Development has advised state governments to establish C&D waste recycling plants in all cities with populations exceeding one million. This policy direction is crucial as the country experiences rapid urbanization and major redevelopment projects, particularly in metropolitan areas and rapidly growing states, like Gujarat. These projects generate substantial amounts of C&D waste, highlighting the need for efficient waste management solutions.

    Challenges and Opportunities

    The recycling of C&D waste in India faces several challenges. One major issue is the lack of awareness and knowledge about the benefits of using recycled materials in construction. Many stakeholders in the construction industry, including builders, developers, and consumers, remain hesitant to adopt recycled materials, often due to concerns about quality and performance.

    Another challenge is the limited infrastructure for collecting and processing C&D waste. Most recycling activities are informal and unorganized, lacking the scale and efficiency needed to handle the vast amounts of waste generated. This gap creates an opportunity for private investment and the development of organized recycling facilities, which can process waste more efficiently and produce high-quality recycled materials.

    The Way Forward: A Focus on India

    India's construction sector is poised for significant growth, driven by urbanization, industrialization, and infrastructure development. This growth presents both challenges and opportunities for C&D waste management. On one hand, increased construction activity will lead to more waste, putting pressure on existing waste management systems. On the other hand, the demand for sustainable building practices and materials is likely to rise, creating a market for recycled C&D waste products.

    To capitalize on these opportunities, India must invest in research and development in the recycling sector. This includes developing new technologies and processes for recycling materials, improving the quality and performance of recycled products, and expanding the market for these products. Education and awareness campaigns are also crucial to changing perceptions and encouraging the adoption of recycled materials in construction projects.

    The government can play a pivotal role by implementing policies and regulations that support recycling. This includes setting targets for C&D waste recycling, providing incentives for using recycled materials, and enforcing regulations on waste disposal. Public–private partnerships can also be instrumental in building the necessary infrastructure and scaling up recycling operations.

    In conclusion, managing C&D waste through recycling is not only an environmental imperative but also an economic opportunity. As India continues to urbanize and develop, the construction industry must adopt more sustainable practices. By investing in recycling infrastructure, promoting the use of recycled materials, and supporting research and innovation, India can revamp its C&D waste challenge into a resource for building a sustainable future.




  7. Why Foodtech Investments Are Declining

    Foodtech initially attracted significant investment, with global venture capital (VC) funding peaking in 2021. However, investor interest waned in 2023.

      to read | words

    published on Jul 22, 2024

    Foodtech initially attracted significant investment, with global venture capital (VC) funding peaking in 2021. However, investor interest waned in 2023. This decline is due to challenging market conditions, including high inflation, rising interest rates, and limited exit options. Despite this downturn, certain segments like e-commerce and alternative proteins show promise. As startups adapt and improve their products, there is potential for renewed investor interest.

    Foodtech, a sector once showing high potential, is posting a significant downturn in VC investments. According to a recent Pitchbook report, the global VC funding for foodtech dropped to $9.2 billion in 2023, down from $22.5 billion in 2022, and significantly lower than the peak of $39 billion in 2021. The number of deals also declined, with only 1,393 transactions in 2023 compared to 2,052 the previous year. So, what is driving this decline?

    Foodtech, a sector once showing high potential, is posting a significant downturn in VC investments. According to a recent Pitchbook report, the global VC funding for foodtech dropped to $9.2 billion in 2023, down from $22.5 billion in 2022, and significantly lower than the peak of $39 billion in 2021. The number of deals also declined, with only 1,393 transactions in 2023 compared to 2,052 the previous year. So, what is driving this decline?

    A challenging market environment is a primary factor behind the fall in foodtech investments.

    • Inflation - High inflation rates have been a major hurdle for foodtech investments. The higher cost of raw materials, production, and distribution, squeezes margins and makes it harder for startups to achieve profitability. 
    • High Interest Rates - Rising interest rates add another layer of complexity to the investment landscape. Higher interest rates increase the cost of borrowing, which can be particularly burdensome for startups that rely on loans to finance their operations and growth. 
    • Limited Exit Options - The ability to exit investments through acquisitions or initial public offerings (IPOs) is a crucial factor for venture capitalists. However, the current market conditions have made these exit strategies less viable. A slowdown in Mergers & Acquisition activity and cooling IPO market mean that foodtech startups have few opportunities to provide returns to their investors.
    • Funding Shifts - New entrants in the foodtech space are facing tough conditions, as a greater proportion of deals are occurring at the late and venture-growth stages. This shift indicates that investors are becoming cautious, preferring to back established companies rather than taking risks on new ventures.

    Despite the overall downturn, the e-commerce segment within foodtech is resilient. Companies in this sector attracted $478 million in investments during the fourth quarter of 2023 alone. A standout performer was Marc Lore's delivery and ghost kitchen startup, Wonder, which secured $100 million from Nestlé in November. However, many other ghost kitchen startups either failed or are struggling to stay afloat.

    Promising Trends

    While traditional plant-based protein companies’ sales stagnated due to health concerns and taste issues, the Pitchbook report highlights several promising trends. Fermented foods, alternative proteins, and products made from algae are gaining traction. The demand for these innovative food products is expected to grow, especially as their quality improves. For example, the US Army recently started offering Impossible Foods plant-based products in its dining facilities, signaling a potential shift in consumer acceptance.

    In the last quarter, alternative protein companies, particularly those focused on plant-based and fermentation innovations, and online grocery platforms accounted for the largest deals. Notable investments included a $73.3 million Series A round for plant-based dairy producer, Oatside, $50 million in Series C funding for fermented protein manufacturer, Meati, $26 million in seed funding raised by plant-based seafood brand, Konscious Foods, and $35 million round for cultivated meat company, Meatable. Key market exits in the third quarter involved the Target Research Group’s acquisition of Spoonshot, a food intelligence and development company, and plant-based protein developer Shore Seaweed’s acquisition by Scotland-based Aquascot.

    While the current trend in foodtech investments posts a significant decline, there are indications that this may not be a permanent state. Market conditions, such as inflation and high interest rates, are challenging, but they are cyclical and could improve over time. Moreover, the continued interest in innovative segments, like e-commerce and alternative proteins, suggests that there is potential for growth and recovery in the sector. As startups adapt to the new financial landscape and improve their product offerings, investor confidence may return. The foodtech industry, with its capacity for innovation and resilience, could very well see a resurgence in the near future.





      


  8. Warehouses of the Future: Powered by AI

    Artificial intelligence (AI) is revolutionizing warehouses, bringing smarter inventory, robotic workers, and real-time control. This leads to improved

      to read | words

    published on Jun 19, 2024

    Artificial intelligence (AI) is revolutionizing warehouses, bringing smarter inventory, robotic workers, and real-time control. This leads to improved efficiency, cost savings, and a future filled with collaborative robots and self-learning systems. Retail giants like Alibaba and Amazon are already on board, and GXO's partnership with Dexterity Robotics showcases the potential for human-like robots. This article explores how AI is poised to transform warehouses into intelligent ecosystems, boosting logistics across the board.

    The logistics and supply chain industries, long reliant on manual processes, are experiencing a revolution driven by AI. The warehouse, once a realm of forklifts and manual processes, is at the forefront of this transformation fueled by AI. Let us dive deep into AI’s transformative power in warehouse management and explore how it is reshaping the industry landscape.

    Optimizing Warehouse Ecosystem

    AI's impact on warehousing is multifaceted, and some key areas of impact are as follows:

    • Smart Inventory Management: AI algorithms analyze historical sales data, market trends, and other factors to predict demand with greater accuracy. This enables businesses to optimize inventory levels, reducing the risk of stockouts and overstocking.
    • Warehouse Layout and Design: AI can analyze product dimensions, demand patterns, and access frequency to suggest optimal storage configurations. This maximizes space utilization and facilitates faster picking and retrieval of goods.
    • Automated Picking and Packing: Demand for automated guided vehicles (AGVs) and autonomous mobile robots (AMRs) is growing for picking and packing. This diminishes reliance on manual labor, improves picking accuracy, and frees up human workers for higher value tasks.
      • By 2027, the AGV and AMR markets are expected to grow 24% and 43%, respectively.
      • This growth is driven by the need for smarter warehouse space utilization.
      • Companies deploy these robots to streamline distribution and fulfilment.
    • Predictive Maintenance: AI analyzes sensor data from warehouse equipment to predict potential failures before they occur. This facilitates preventive maintenance, minimizing downtime and ensuring smooth operations.
    • Real-time Visibility and Control: AI-powered sensors provide real-time data on everything from inventory levels to environmental conditions. This allows for better decision-making, faster response times, and improved control over the entire warehousing process.

    Benefits of AI-powered Warehousing

    The adoption of AI in warehousing offers a multitude of benefits including the following:

    • Increased Efficiency: AI automates repetitive tasks, streamlines workflows, and optimizes space utilization, leading to significant productivity gains.
    • Reduced Costs: Lower labor costs, minimized errors, and optimized inventory management result in huge cost savings.
    • Enhanced Safety: AMRs and AI-powered systems can operate in hazardous areas, reducing risks for human workers.
    • Scalability and Agility: AI-powered systems can adapt to changing demand patterns and business needs, allowing for greater scalability and agility.

    Future of AI in Warehousing

    As AI continues to evolve, we can expect even more transformative applications in warehousing. Here is a glimpse into the future.

    • Collaborative Robotics: AI would further enhance the collaboration between humans and robots, with robots managing the heavy lifting and humans focusing on decision-making and complex tasks.
    • Self-learning Warehouses: Warehouses would become more intelligent, with AI systems continuously learning and adapting to optimize operations in real-time.
    • Hyper-personalization: AI would be used to personalize order fulfillment based on individual customer preferences and needs.

    AI in Practice: Data-backed Case Studies


    Conclusion

    AI is rapidly transforming warehousing from a labor-intensive operation into a data-driven and intelligent ecosystem. By embracing AI, businesses can achieve significant gains in efficiency, cost savings, and customer satisfaction. As AI technology continues to develop, the future of warehousing promises to be even more intelligent, automated, and responsive.




  9. Building Green - Sustainable Sourcing in Cement and Steel Industries

    The transition towards sustainability in cement and steel industries is gaining momentum due to stricter environmental regulations and

      to read | words

    published on Jun 03, 2024

    The transition towards sustainability in cement and steel industries is gaining momentum due to stricter environmental regulations and increasing consumer demand. Companies are embracing innovative strategies such as green procurement, alternative material sourcing, and renewable energy integration to reduce carbon emissions. However, several challenges persist, such as the inherent chemical processes and financial barriers that challenge the adoption of low-carbon technologies. Despite such challenges, initiatives like IDDI's Green Public Procurement Pledge and SteelZero drive industry-wide changes. Standardized emission benchmarks are essential for collaboration and to maximize impact.

    Manufacturing companies increasingly prioritize decarbonization in their practices and in the sourcing of raw materials for several reasons: stricter environmental laws, growing demand from consumers and investors, and achieving cost efficiencies through optimization of energy consumption, among others. While decarbonization efforts in the transportation and power sectors have gained momentum, significant hurdles impede similar progress in cement and steel production, making it a critical but lagging area for achieving climate safety goals.


    Over the past 4-5 years, cement and steel industries everywhere have evolved significantly in terms of implementing various measures to reduce their environmental footprint. Green purchasing is a powerful policy tool to stimulate early demand for low-carbon cement, concrete, and steel. This, combined with supportive policies, can significantly accelerate progress towards net-zero emissions in these industries.

    There are four primary areas of focus in the cement and steel industries.

    1. Sustainable Material Sourcing

    The cement sector is progressively moving towards adopting alternative materials (ARMs) in lieu of clinker, the primary source of carbon dioxide (CO2) emissions in cement production. ARMs, such as electric arc furnace (EAF) slag, blast furnace slag, fly ash, natural pozzolans, and calcined clay, offer significant potential to reduce CO2 emissions associated with cement production.

    The steel industry is also not far behind and has multiple green-material procurement initiatives such as sustainable sourcing of raw materials from suppliers who adhere to responsible mining practices, prioritization of worker safety, and minimizing of environmental degradation; increasing the use of recycled material in steel production reduces the demand for virgin raw material and consequently minimizes waste.

    2. Renewable Energy Integration

    Cement and steel plants have integrated renewable energy (RE) sources such as biomass, solar, and wind to power operations. This setup includes installing solar panels on site, investing in wind farms, or utilizing biomass boilers to generate heat. Also, cement and steel production involves high-temperature processes that give off significant amounts of waste heat. The industries have integrated waste-heat-recovery systems that capture the waste heat and convert it into electricity or utilize it for other industrial processes, thus reducing the need for fossil fuel.

    3. Green Process / Technology Adoption

    There is increasing emphasis on incorporating carbon capture, utilisation and storage (CCUS) technology into cement and concrete manufacturing. Captured CO2 can be utilized in several ways within the cement industry. It can be used in concrete production through carbonation processes, where CO2 is mineralized into carbonate minerals, effectively sequestering the carbon and improving the properties of concrete.

    The steel industry has replaced blast furnace/basic oxygen furnace setups with EAF technology. EAFs are regarded as more ecologically sound than conventional blast furnaces due to their considerably reduced emission of greenhouse gases (GHGs) and pollutants like nitrous oxide (NOx) and sulfur oxide (SOx). With tightening environmental regulations worldwide, steel manufacturers are increasingly opting for EAFs to meet emission standard goals and to lessen their environmental impact.

    4. Regulatory Push for Green Procurement

    Several regional governments have adopted standards and policies for green procurement, aiming to promote sustainable practices and reduce the environmental impact of purchasing activities.

    IDDI's Green Public Procurement (GPP) Pledge, initiated by the United Nations Industrial Development Organization in 2022, targets Canada, Germany, the UK, and the US. The program aims for 30% green procurement by 2025 and 100% by 2050. ConcreteZero, launched in the same year by WorldGBC and the World Business Council for Sustainable Development (WBCSD), operates globally and aims for 30% low-carbon procurement by 2025, 50% by 2030, and net zero emission procurement by 2050. The Federal Buy Clean Initiative, introduced by the General Services Administration (GSA) in 2021 in the US, sets a goal of 100% green procurement by 2050. The First Movers' Coalition (FMC), initiated by the World Economic Forum in 2021 and operational across the UK, India, Canada, Germany, Japan, the UAE, Saudi Arabia, Sweden, the US, and Brazil, aims for a 10% green procurement share by 2030. SteelZero, launched by ResponsibleSteel in 2020 on a global scale, targets 50% low-emission procurement by 2030 and net zero emission procurement by 2050.

    These initiatives collectively strive to accelerate the transition to a more sustainable economy by setting ambitious targets for green procurement across various regions.

    Challenges in the Market

    Decarbonizing steel and cement production poses unique challenges compared with other industries. Some of the several reasons are listed here.

    • Inherent chemical processes: CO2 emissions are a natural byproduct of chemical reactions integral to steel and cement manufacturing.
    • Established practices and aging infrastructure: The industry’s reliance on long-standing production methods and the gradual replacement of outdated equipment hinder the pace of adaptation of sustainable practices.
    • Financial barriers to low-carbon alternative technologies: The initial investment required for the adoption of low-carbon technologies (e.g., CCUS, alternative fuel, EAF) surpasses that needed for conventional methods.

    Conclusion

    Green procurement is transforming the cement and steel industries, pushing for sustainable practices across the value chain. Suppliers and producers face growing pressure to adopt eco-friendly methods like sustainable sourcing, lower-emission production, and recycled material use. Governments and businesses prioritizing low-carbon options drive innovation and investment in these areas. This shift will significantly enhance industry sustainability, contributing to a greener economy.

    Governments can leverage their buying power to promote low-carbon materials to accelerate industrial decarbonization. Standardized emissions benchmarks are crucial. This ensures consistent measurement across initiatives, streamlining collaboration and maximizing environmental impact.





  10. India's New EV Policy: Attracting Foreign Players, Boosting Manufacturing

    India unveils a new EV policy to attract foreign EV companies like Tesla and boost domestic manufacturing with

      to read | words

    published on Mar 20, 2024

    India unveils a new EV policy to attract foreign EV companies like Tesla and boost domestic manufacturing with tax breaks and local sourcing requirements. This aims to make India a major EV manufacturing hub and accelerate EV adoption.

    Given India’s target of a 30% EV adoption rate by 2030 to minimize GHG emissions and dependence on imported non-renewable fuels, the government has implemented a new EV policy. The goal of the initiative is to position India as the next EV manufacturing powerhouse.

    Currently, the EV passenger car segment is dominated by Indian giants such as Tata Motors and Mahindra as well as some foreign players including MG, Kia, Hyundai, and BYD. The new policy will pave the way for more foreign players like Tesla, Nio, and VinFast to enter and expand in the Indian market systematically and contribute to the ‘Make in India’ scheme.

    Under the new policy, the Government has announced the following key initiatives to encourage foreign EV players:

    • Reduction in customs duty: OEMs would be levied a reduced customs duty of 15% on vehicles of minimum CIF value of $35,000 and above for five years subject to them investing at least $500 million to set up manufacturing facilities in India within three years. 
    •  Domestic value addition: OEMs would be required to achieve 25% localization by the third year of manufacturing in India and increase it to 50% by the fifth year. This move would help create a strong EV ecosystem in the country.

    This policy is expected to foster healthy competition in the Indian EV market and would be a significant step towards accelerating the adoption of advanced technologies and boosting innovation in India’s automotive industry. The localization norm would not only enable domestic EV component companies to thrive but also entice foreign companies to establish manufacturing bases in the country.



  11. Role of Technology in Building Resilient Companies of the Future

    In a volatile world, with economic recessions, technological disruptions, and global crises like COVID-19, many businesses falter, unable

      to read | words

    published on Mar 07, 2024

    In a volatile world, with economic recessions, technological disruptions, and global crises like COVID-19, many businesses falter, unable to adapt. Resilience emerges as the cornerstone of corporate strategy, distinguishing between mere survival and thriving. It's about bouncing forward, integrating resilience into a company's DNA. Anticipating threats, withstanding shocks, and adapting are key. Technology plays a pivotal role in bolstering adaptability, streamline operations, and foster innovation. In essence, resilience coupled with advanced technology defines the blueprint for thriving amidst uncertainty.

    In a world grappling with constant volatility, businesses face challenges ranging from economic recessions and technological disruptions to global crises such as the COVID pandemic. These uncertainties have pushed even the most established organizations to their limits, with some crumbling under pressure, unable to adapt and respond accordingly in the face of such trials. Only some businesses are prepared to withstand the advent of sudden and widespread changes that characterize our modern era.

    Against this backdrop, resilience has emerged as the most essential component of corporate strategy. The harsh lessons of recent times have spotlighted resilience as a critical determinant of whether a company merely survives or thrives. It is no longer about bouncing back but bouncing forward, as businesses that integrate resilience into their DNA emerge stronger, more agile, and more innovative after a crisis. The crux of resilience lies in its multifaceted approach—the anticipation of potential threats, the ability to withstand acute shocks, and the agility to adapt and evolve when the dust settles. In this context, a strong technological framework becomes the bedrock upon which resilient companies build their future. Leveraging advanced technologies like artificial intelligence (AI), blockchain, workflow automation, and the Internet of Things (IoT), these businesses enhance their adaptability, streamline their operations, and open new avenues for customer engagement, even in the most turbulent times. These technologies serve as the linchpin for businesses seeking to not only adapt to immediate disruptions but also to anticipate and capitalize on technological trends for long-term success.

    AI-Driven Resilience for Business Continuity and Adaptability

    AI is pivotal for business resilience, enabling informed decision-making, optimizing operations, and ensuring real-time adaptability. It automates monitoring and evaluation, which is vital for continuity and to gain a competitive advantage in volatile markets. A recent study reports that 90% of leaders use AI for operational resilience, especially in finance and supply chains, showcasing its strategic value. AI-driven data analysis supports proactive strategy adjustments, enhancing foresight and preparedness. In supply chain management, AI's real-time analytics and scenario planning proved invaluable during crises such as COVID, improving visibility and resilience. Moreover, in risk management and predictive maintenance, AI predicts failures, reducing downtime and costs for operational resilience in asset-heavy industries. AI's role in streamlining operations and fortifying against disruptions underlines its importance in building a resilient, forward-looking business model.

    Application

    Industry

    Use Case

    Predictive Maintenance

    Mining (Petrosea, Freeport-McMoRan)

    Leveraged AI for equipment health monitoring, predicting failures before they occur, leading to cost savings and increased operational efficiency. Petrosea significantly reduced unplanned downtime and operational costs, while Freeport-McMoRan optimized processing rates by 10%, enhancing production efficiency.

    Blockchain for Enhanced Security and Efficiency Across Industries

    Blockchain technology is revolutionizing business resilience by offering a secure, decentralized, and efficient framework crucial for addressing industry challenges. It strengthens operational continuity by mitigating cyber threats through advanced encryption, particularly in the financial sector, where transaction security is of paramount importance. In supply chain management, blockchain's immutable ledger enhances traceability and transparency, which is vital for tackling counterfeits and meeting compliance demands. Furthermore, smart contracts automate logistics, minimizing manual errors and operational costs; studies estimate a potential 40% cost savings, bolstering financial resilience. This transformative technology, as seen by practical applications across sectors, not only future-proofs businesses against disruptions but, when integrated with AI and IoT, amplifies data analytics and real-time monitoring, empowering organizations to address potential challenges proactively.

    Application

    Industry

    Use Case

    Customer Onboarding

    Finance (Fidelity)

    Streamlined customer onboarding processes using automation, improving customer experience by reducing waiting times and errors, and increasing customer satisfaction and loyalty.

    IoT for Unparalleled Efficiency in Asset Management and Supply Chain Operations

    The IoT stands at the forefront of advancing business resilience, offering the dual capabilities of optimizing operations and maintaining continuity amid disruptions. Its real-time data collection and analysis provide businesses a strategic edge, allowing for the anticipation and mitigation of risks, thereby safeguarding operational efficiency and sustainability. IoT's role in monitoring critical infrastructure and machinery is crucial, facilitating preemptive maintenance and timely issue resolution, which, in turn, bolsters asset management and supply chain efficiency. Moreover, IoT-driven optimization of energy use not only achieves cost reductions but also supports environmental sustainability, aligning with broader global objectives. The evolution toward artificial IoT and the Internet of Behavior heralds a new era of organizational resilience, merging operational and consumer behavior insights with predictive maintenance to foster adaptable, efficient, and sustainable business ecosystems.

    Application

    Industry

    Use Case

    Supply Chain Optimization

    Manufacturing & Technology (Audi, Cisco)

    Implemented IoT to create a smarter, more flexible manufacturing environment, enabling quick adjustments in production in response to supply chain disruptions and maintaining operational continuity.

    Digital Twin for Simulation, Prediction, and Real-Time Management

    Digital twin technology is a transformative leap forward in enhancing business resilience across sectors, offering simulation, prediction, and real-time management capabilities. Creating virtual models of physical systems, processes, or services optimizes operations, predicts outcomes, and enables informed decisions with precision. In infrastructure and environmental resilience, digital twins aid in dynamic simulation of projects, identifying vulnerabilities and supporting sustainable urban planning. They revolutionize manufacturing and supply chains by improving inventory management, enabling swift adaptation to disruptions, and fostering supply chain agility and collaboration. Moreover, digital twins provide a digital mirror of the supply chain, enabling real-time monitoring and automated response to disruptions, ensuring continuity under adverse conditions. Effective management and simulation of business outcomes through digital twins drive continuous improvement across functions, ensuring uninterrupted access to critical data and insights.

    Application

    Industry

    Use Case

    Logistics Efficiency

    Logistics (Siemens)

    Utilized digital twins for comprehensive simulation and optimization of logistics center operations, demonstrating significant flexibility, throughput, and sustainability improvements.

    Technology-Driven Resilience in Business

    As we delve into the dynamic realm of resilience strategies, it is interesting to witness how diverse business functions leverage cutting-edge technologies to enhance their adaptability and fortitude. From revolutionizing supply chain transparency to crafting personalized customer experiences, explore how these innovative tools empower organizations to thrive in adversity.


    Creating a resilient business in today's environment requires a careful mix of adopting new technologies and strategic planning. This process involves modernizing legacy systems, automating manual processes, and improving cybersecurity measures. Organizations can self-fund their transformation efforts by initiating small-scale, efficiency-oriented projects, gradually moving toward a more flexible and asset-light business model in collaboration with resilient ecosystem partners.

    Resilient organizations are not merely reactive in the face of adversity; they are proactive, adaptive entities that seize the opportunity to “bounce forward.” They leverage the power of technology not just to survive disruptions but to emerge stronger, more agile, and ready to lead in a transformed marketplace. In navigating the unpredictable waves of change, how will your organization harness technology to not just weather the storm but chart a course toward unprecedented growth and resilience? Embrace the challenge and let innovation be your compass.




  12. Navigating Supply Chain Shifts in Fastener Industry

    Fasteners traverse a large and interconnected global supply chain due to their applicability across industries. The rise of

      to read | words

    published on Feb 15, 2024

    Fasteners traverse a large and interconnected global supply chain due to their applicability across industries. The rise of supply hubs worldwide has significantly impacted the dynamics of fastener supply. The global strategy is leaning toward offshoring to Asia-Pacific (APAC) countries such as India and Taiwan, specifically as alternatives to China (China Plus One), for realizing cost advantages and enhancing supply chain resilience. Nearshoring, however, is gaining traction in North America and Europe for addressing supply chain downtime concerns and logistics inefficiency.

    India is emerging as a close competitor of China in the offshoring model, which is preferred for building supply chain resiliency and supporting the China Plus One strategy.

    Different regions have developed specialized capabilities in fastener production based on their industrial strengths and expertise. For instance, Asia, with a focus on China, Taiwan, and India in particular, has become a major hub for mass production of standard fasteners (such as square and hex bolts, screws, nuts, studs, and rivets) due to cost-effective manufacturing. On the other hand, Europe focuses on high-precision and specialized fasteners for critical applications in the aerospace and defense industry. This is reflected in the regional production costs as manufacturers adhere to higher quality standards, which may incur additional costs and thus impact the overall price of the fasteners.

    The availability and cost of raw materials play a significant role in influencing fastener prices. For instance, regions with access to abundant raw materials, such as steel and aluminum, can produce fasteners more competitively. Moreover, supply hubs with proximity to raw material sources have a cost advantage over those relying on extensive transportation.  

    Labor costs and skill levels in a particular region impact the overall cost of production. For instance, APAC countries with lower labor costs may have a competitive edge in mass production. In contrast, regions with high labor costs due to highly skilled labor may excel in precision and complex fastener manufacturing. This creates a diverse landscape of supply hubs catering to different market segments. 

    Typically, for fastener production, the cost of raw material is the largest component, accounting for 40-60% of the total costs. This is followed by labor cost at 10-30%, depending on the geography. The cost of other expenses toward utilities, coatings, testing, packaging, etc., accounts for the rest. 

    In the APAC region, China, Taiwan, and India are the largest supply hubs for fasteners with a total regional base of 500+ suppliers. With abundant domestic raw material supply and cheap labor costs, the APAC market offers an attractive prospect to source low-cost fasteners globally. While China and Taiwan have been traditional hubs for global fastener exports, India has emerged as a fierce competitor in terms of quality and costs. Despite China offering steel that costs 10–20% less, India’s competitive labor costs across APAC make it a suitable alternative for buyers opting for China Plus One strategy.

    Preference for nearshoring from North America and Eastern Europe to increase logistics efficiency

    The cost of transporting fasteners from manufacturing hubs to end-users significantly contributes to price differences. Prices of fasteners are highly competitive in regions with effective logistics networks and proximity to major markets, due to reduced logistics costs. Thus, preference is given to nearshoring from North America and Europe, to reduce supply chain downtime.

    In North America, the US and Canada account for 100–120 suppliers in the fastener supply market. Mexico has fewer fastener suppliers, despite its large automotive industry. However, American raw material and labor costs are higher than APAC’s. Hence, the overall fastener production costs in America are typically higher by 50-100% compared to those in APAC. 

    In Europe, key fastener supply hubs are split between Western Europe (Germany, France, Italy, and the UK) and Eastern Europe (Hungary, Poland, Czech Republic, and Turkey). Fasteners are typically expensive in Western Europe, 100–150% higher than APAC prices. Hence, East European suppliers are more cost-effective for the region, with prices 35–75% higher than APAC prices. However, the overall fastener production in Europe is lower compared to its Asian and American counterparts, primarily due to the high production costs. Hence, leading buyers prefer sourcing from APAC markets to cater to their requirements. 

    In conclusion, fastener prices are primarily controlled by the regional variation in their raw material prices and other factors such as labor, ESG, logistics, and packaging costs. India is well positioned to compete with China’s low-cost market leadership in the fastener supply chain offshoring model, with European and American buyers either relying on APAC-based imports to optimize their spending on fastener sourcing or nearshoring from suppliers based in Mexico and Eastern Europe.




  13. Mexico's Nearshoring Promise to Supply Chain Adversities

    As the world navigates a series of supply chain disruptions, staying ahead of the curve is crucial. Exploring

      to read | words

    published on Feb 15, 2024

    As the world navigates a series of supply chain disruptions, staying ahead of the curve is crucial. Exploring nearshoring opportunities becomes increasingly important to mitigate risks and build resilience. Mexico is emerging as a promising nearshoring destination to global companies (especially in North America) due to inherent benefits such as logistical proximity, reduced lead times, cost efficiency, and strategic trade relations. Procurement organizations have actively embraced Mexico, making regular investments, expanding capacities, and fostering supplier partnerships to reap the benefits of nearshoring. Are you prepared for nearshoring to build a resilient supply chain strategy?

    In today’s dynamic landscape of global business, supply chains are increasingly facing disruptions due to geopolitical and economic situations, such as the Russia-Ukraine war, the Israeli–Palestinian conflict, US-China trade tensions, and rising inflation. Amid these complexities, operational hurdles such as supply-demand imbalances and labor shortages have intensified and led to increased costs of production due to rising material, energy, and labor costs.

    Despite challenges, Mexico is emerging as a crucial trade ally of North America. Its increasing prominence as a preferred supply source, replacing China, is reinforced by shared advantages, positioning it as a favored nearshoring destination. The USMCA agreement accelerates this shift, redefining cross-border trade and unlocking transformative opportunities across industries.

    Surge in Nearshoring to Mexico: Trade Unveiling Clear Evidence 

    Over the last decade, nearshoring in Mexico has been on a consistent uptrend driven by various factors. Primarily, the persistent trade conflicts between the US and China have injected a sense of uncertainty into the realms of production costs, IP concerns, lead times, and delivery.

    Nearshoring in Mexico irons out the supply chain concerns related to uncertainties, costs, and delivery for most of the US-based manufacturers.

    Mexico's role as a primary nearshoring ally to North America is unmistakably evident through the increasing exports to the US and Canada. In 2022, Mexico's exports to North America accounted for over 80% of the country's global exports, a figure that rose to over 85% during January to September 2023. Export growth, which exhibited a 6–7% CAGR during 2018–22, experienced a significant acceleration to a 17% CAGR following the implementation of the USMCA agreement in 2020.

    In fact, as per the U.S. Census Bureau 2023 data, Mexico is now the top export partner to the US (USD 476 billion in 2023) surpassing China (20% export decline to the US in 2023). The shift occurs as companies seek to diversify their supply chain sources to Mexico amid fluctuating US-China relations.

    Benefits of Nearshoring in Mexico

    Nearshoring in Mexico strategically empowers supply chains with cost efficiency, resilience to external shocks, and flexibility to scale requirements. Key benefits of nearshoring in Mexico include:

    • Proximity and Time Zone Advantage: Ensures shorter supply chains and faster response times for companies, leveraging geographical proximity.
    • Cost Efficiency: Opportunity to leverage optimal labor costs, utility costs, and operational expenses resulting in a substantial overall cost efficiency gain.
    • Quality Production and Expertise: Access into Mexico's strong manufacturing expertise, and skilled resource pool, particularly across the sub-tier value chain of industries.
    • Strategic Trade Agreements: USMCA fosters favorable trade conditions, eliminating or reducing tariffs and trade barriers, allowing wider supply chain access.
    • Resilience: Greater flexibility for companies to adapt to market changes and demand fluctuations, allowing for swift adjustments.

    Rising Investment Confidence for Nearshoring 

    Mexico has emerged as a preferred destination for nearshoring projects among US-based companies. Mexico's FDI inflows reached USD 33 billion in the first nine months of 2023, marking a strong 30% increase compared to the year-ago period. More than 40% of the investments originated from the North American region; notably, the manufacturing sector's share of FDI in the country doubled, reaching 53%.

    Multinationals across industries are active in responding to supply chain disruptions and building resilience by nearshoring in Mexico. Here are some key examples of industries that have been leveraging Mexico’s nearshoring opportunities through direct investments:

    • Automotive: FDI inflows in automotive reached USD 7.7 billion during 9M2023 (USD 4.3 billion in 2022), registering 25% growth since 2020. Auto exports also witnessed a whopping 15% y-o-y growth in 2023.
    • CPG Industry: The CPG industry in Mexico marked a record FDI of USD 3.0 billion during 9M2023, displaying >30% growth since 2020. Personal care, Cosmetics and Grooming have been emerging as the top categories, with exports crossing USD 2.5 billion in 2023.
    • Metal & Industrials: The combined FDI for the industries crossed USD 5 billion during 9M2023, recording a robust 5x growth over 2020.
    • Other Industries: Sectors such as Chemicals, Plastic, and Rubber have also been registering steady growth, wherein FDI neared USD 2 billion during 9M2023, registering 27% y-o-y growth.

    Conclusion 

    Robust expansion of the economy and exports, a burgeoning manufacturing sector, a favorable trade agreement (USMCA), and a promising investment climate positions Mexico as a compelling and dependable sourcing option for procurement organizations. As global dynamics shift due to supply chain disruptions, Mexico is poised to evolve as an attractive nearshoring destination, primarily for companies based in North America/the US.

    Embracing Mexico as a nearshoring partner is expected to empower procurement organizations to not only build a resilient supply chain but also provide a competitive edge in terms of market position.





  14. Lithium Price Drop – Accelerating EV Affordability

    The lithium market has seen a recent surge in demand as electrification initiatives have accelerated. Electric vehicle (EV)

      to read | words

    published on Feb 08, 2024

    The lithium market has seen a recent surge in demand as electrification initiatives have accelerated. Electric vehicle (EV) makers, such as Tesla, have been actively seeking resources due to the fast expansion of EVs and scarcity of lithium. As a result, lithium carbonate prices have shot up by over six times within the past few years. In 2022, lithium prices plummeted significantly, undoing several years of previous increases. In November the same year, lithium carbonate prices in China reached an all-time high before plunging to a new low of 35–40% in March 2023. This decline was triggered by a series of adverse events that ended the longest bull run in the history of lithium.

    Lithium prices drop to all-time low due to Chinese EV market slowdown

    The unexpected slowdown in electric vehicle (EV) demand in the pivotal Chinese sector has become a focal point for the markets. In January 2023, the China Passenger Car Association reported a 6.3% drop in the sales of new electric cars, both pure battery EVs and plug-in hybrids. This starkly contrasts with the remarkable rise of 90% seen in 2022. Furthermore, as of January 1, 2023, Beijing would no longer provide subsidies to individuals purchasing EVs, ending 13 years of government incentives to achieve price parity between EVs and internal combustion engine vehicles.

    The markets have reacted negatively to the recent announcement that China's CATL, the largest producer of lithium-ion batteries for EVs, has begun providing discounts on their batteries. CATL has initiated the practice of providing price reductions to some Chinese automakers it serves with the expectation that lithium carbonate costs would decrease by 50%. CATL, whose major customers include Volkswagen AG, Tesla, and NIO Inc., is also reported to be offering specific discounts.

    Concurrently, lithium miners are cutting costs and scaling down their plans to boost output due to weak demand for EVs in China, which largely influenced the price of the battery metal. As per industry experts, the price of lithium plummeted by almost 80% in 2022 to $13,200 per tonne. This marks its lowest decline since 2020 as an overwhelming supply flooded the market. The softening in demand for electric cars has resulted in miners, mostly those in Australia (which account for 40% of the global production), reducing their output. As a result, partially processed materials accumulated across the supply chain.

    Lowering lithium prices in long term likely to equalize EV and ICE vehicle prices

    The prices of lithium prices could drop significantly further. The global lithium deficit was projected to decrease from 76,000 tonnes of lithium carbonate equivalent in 2022 to 20,000–30,000 tonnes in 2023. Market experts anticipate a 33% annual rise in lithium carbonate supply, surpassing the 25% annual growth in demand. This disparity is set to increase the downward pressure on lithium carbonate prices, with projections indicating a fall to $34,000 per tonne over the next 12 months. This contrasts with the present rate of approximately $53,000 per tonne, suggesting an additional 36% drop.

    Fortunately, industry experts view this sluggishness in the lithium and EV sectors as a temporary setback. Major lithium producer Albemarle Corp. attributes the dip in vehicle sales in China to a transient slowdown linked to the early Lunar New Year.

    Battery cell prices are expected to rise 22% between 2023 and 2026, reaching a maximum of $138 per kilowatt-hour. This reverses the previous pattern, in which battery pack and EV costs have steadily fallen over several years. Numerous experts have forecast that the cost of electric cars would equal that of ICE vehicles once battery prices decrease to around $100 per kilowatt-hour. This milestone is expected to be accomplished within a few years and would represent a significant achievement for the worldwide transition to clean energy.

    In hindsight, the declining costs of lithium carbonate are particularly advantageous for EV enthusiasts since it accelerates the EV revolution. The cost of batteries is the most financially burdensome element of an EV, and the anticipated decrease in lithium carbonate pricing would alleviate a major cost constraint for manufacturers.




  15. Exploring Factors Affecting the Global Shipping Price Rise

    In early 2024, global shipping faced challenges due to attacks on key routes, like the Red Sea and Suez

      to read | words

    published on Feb 06, 2024

    In early 2024, global shipping faced challenges due to attacks on key routes, like the Red Sea and Suez Canal, causing delays and raising costs. New environmental regulations added further complexity and expenses. Short-term solutions helped, but long-term resilience requires collaboration on security, compliance, technology, and finance.

    The first quarter of 2024 is difficult for the global shipping industry, as it faced a surge in costs and delays. According to industry sources, the average freight rates increased 55%–70% compared with those in Q1 2023, putting pressure on shippers and customers alike. The attacks on container ships in the Red Sea and Suez Canal by Houthi rebels and new environmental regulations that came into effect in January 2024 were the main causes of this crisis. However, the industry expects the situation to improve in the coming months, as the freight rates are projected to stabilize to 5%–10% above the 2023 levels for 2024.

    The Baltic Index rose sharply in January 2024 for several routes. The Asia–US West Coast route posted a 60% increase to USD 2,713/FEU, and the Asia–US East Coast route rose 58%. The Asia–North Europe route recorded a staggering 176% increase to USD 4,391/FEU, and the Asia–Mediterranean route went up 115%. 

    Factors leading to short term shipping rate increase include the following:

    Houthi Rebel Attacks:

    The Red Sea and Suez Canal have become perilous routes for container ships due to attacks by Houthi rebels, prompting significant rerouting and adding 15–20 days to transit times. This intensified existing supply chain disruptions, exacerbated by the diversion of USD 200 billion in trade away from the region, leading to soaring shipping costs and delays. Ocean freight rates have doubled or more on various routes, impacting consumers as companies adjust prices. To address these challenges, ocean carriers are expanding land-freight services, particularly for West Coast ports, to offer opportunities for railroad and trucking companies.

    To mitigate the impact, ocean carriers are expanding land-freight services, particularly for West Coast ports, creating opportunities for railroad and trucking companies. Despite these measures, the situation remains fluid, with forecasts suggesting increased activity as the Chinese Lunar New Year in Q1 2024, traditionally a peak season for shipping.


    Factors leading to long term shipping rate increase include the following:

    Environment Regulations:

    Environment regulations introduced in 2024 will create additional complications in the container shipping market as ships are set to receive their first grades through the carbon intensity indicator scheme, marking a pivotal moment in environmental accountability for the maritime sector. This initiative evaluates vessels based on their carbon emissions relative to their transport work, offering transparency and incentivizing the adoption of cleaner technologies. It is a significant step toward reducing the industry's carbon footprint and aligning with global climate goals, which would add fuel to the price increase. Some major environmental regulations applicable from Q1 2024 are AFS Convention Amendments (Convention for the Control of Harmful Anti-Fouling Systems on Ships), inclusion of shipping in the EU ETS (Emission Trading System) etc. Logistics companies will have to adopt cleaner technologies to adhere to these regulations, which is expensive. This cost will be passed on to the end customer, increasing the shipping rates.

    Addressing the difficulties of the global shipping sector in early 2024, such as increased costs and disruptions, requires a comprehensive approach. Expertise spanning market dynamics, supply chain management, maritime security, environmental compliance, financial analysis, and technology integration is vital. Collaborative efforts among professionals from diverse fields are necessary to devise effective strategies to tackle immediate challenges and foster long-term resilience and prosperity in the industry.




  16. Transforming Banking Operations: The Rise of Hyperautomation

    Hyperautomation is significantly transforming the global banking sector through advanced technologies such as artificial intelligence (AI), machine learning

      to read | words

    published on Jan 25, 2024

    Hyperautomation is significantly transforming the global banking sector through advanced technologies such as artificial intelligence (AI), machine learning (ML), and robotic process automation (RPA). Major banks are leveraging hyperautomation to optimize operations, enhance efficiency, and introduce innovative services. Hyperautomation use cases in financial services range from customer onboarding and loan processing to AML compliance and personalized marketing. Successful implementations by top banks – such as Lloyds, Mashreq, and Axis – underscore hyperautomation's role in reshaping financial services, providing efficiency gains, and ensuring competitive adaptation in the digital landscape.

    Rapid technological advancements are reshaping the banking sector globally. Integrating hyperautomation within the banking sector has revolutionized operational methods for banks and financial institutions. This integration brings about instant enhancements to optimize operational processes, enhance efficiency, and provide better services to customers. Hyperautomation involves the incorporation of advanced technologies, such as AI, ML, RPA, and other digital tools, to automate complex business processes.

    The role of hyperautomation in banking is to accelerate the pace at which banks can process payments, manage accounts, and automate the mortgaging lending process, including loan initiation, document processing, financial comparisons, and certain back-office functions such as risk management and credit scoring. Many banks and financial companies, such as JPMorgan, Bank of America, DBS Bank, and Standard Chartered, use hyperautomation in their services to offer digital banking, contactless payments, and QR scanning ability to their customers.

    According to Bloomberg, the global hyperautomation market is anticipated to reach USD 118.66 billion by 2030. The growth is supported by rapid digitalization, increased demand for automation in banking processes, lower operational costs, and improved efficiency.

    What is Hyperautomation?

    Hyperautomation is a digital transformation strategy that involves the use of AI, ML, RPA, business process management, Integration Platform as a Service, and several other tools and technologies to boost efficiency by quickly identifying and automating various tasks.

    Benefits of Hyperautomation for Banks

    The use of AI and RPA is taking many sectors by storm, especially the financial services sector. By 2024, banking is estimated to be one of the top industries spending on AI. Hyperautomation enables financial institutions to address challenges including a growing consumer preference for digital banking channels and the heightened competition posed by fintech startups.

    1. Task Automation – Automation of tasks in the financial services industry is crucial due to the numerous intricate transactions, processes, customer interactions, and regulatory demands. Implementing robotics empowers banks to minimize manual efforts while maintaining the effectiveness of their solutions. The integration of AI and ML is also advantageous in automating the extraction of structured data from unorganized data sources. For instance, when handling customer refunds, hyperautomation plays a vital role in ensuring error-free data validation, thereby enhancing reliability, and expediting the process.
    2. Customer Experience – Banks can improve customer experiences using data and automation, such as RPA bots, to streamline tasks such as document verification and risk assessment, making the onboarding process smoother and faster. RPA bots respond accurately to customers 24/7 with pre-written responses.
    3. Real-time data analytics – RPA tools provide predictive insights that improve how banks serve customers. Using AI and ML, banks analyze data to monitor transactions, detect potential fraud, and enhance risk management, enabling a better understanding of business trends and overall analysis improvements.

    In the global market for RPA and hyperautomation in banking, North America remains the most dominant player, showcasing its leadership in adopting advanced automation technologies. The key players offering hyperautomation solutions to banks and financial institutions include UiPath, Blue Prism, IBM, Microsoft, SAP, Capgemini, and Infosys.

    Use Cases of Hyperautomation in Financial Services

    1. Customer Onboarding and Know Your Customer (KYC) – Hyperautomation employs AI, RPA, and biometrics to streamline KYC and customer onboarding in banks. It automates data extraction, document verification, and risk assessment for compliance. AI algorithms can verify the authenticity of documents and cross-reference them with databases to check for discrepancies or fraud. Hyperautomation automates workflow by automatically assigning tasks to relevant departments or personnel for review and approval.
    2. Loan Processing – Hyperautomation accelerates loan processing by automating the collection and analysis of applicant information, such as credit scores and financial records, not only making loan approvals faster but also making risk assessments more accurate, thereby reducing the chances of approving risky loans.
    3. Anti-Money Laundering (AML) and Transaction Monitoring – Hyperautomation plays a critical role in AML compliance by automatically identifying transactions that appear suspicious, using predefined criteria and rules. These flagged transactions undergo a detailed investigation to ascertain if they potentially involve illicit activities such as money laundering.
    4. Regulatory Reporting – Hyperautomation in banking automates regulatory reporting processes by collecting, validating, and transforming data from various sources. It generates standardized reports, performs real-time monitoring, and ensures compliance with evolving regulations.
    5. Personalized Marketing – Banks leverage hyperautomation to analyze customer data, enabling the creation of tailored marketing campaigns and product suggestions. This personalized approach boosts customer engagement and opens opportunities for cross-selling, leading to more effective and profitable interactions.

    Examples and Impact of Successful Hyperautomation Implementations

    Partnerships

    Use Case

    Impact

    Axis Bank and Work Fusion

    		 Customer Onboarding and KYC Processing
    • Errors reduced by up to 70%
    • Labor cost declined by 30%

    Mashreq Bank and Blue Prism

    Regulatory Reporting
    • Digitally originated and processed 97% of financial transactions 
    • Executed 80% of non-financial transactions through robotic processes

    Lloyds Banking Group and ServiceNow

    		Transaction Monitoring
    • Issued 82% of direct debit refunds in less than 30 seconds
    • Automatically resolved over 90% of batch payment exceptions, with more than 70% of payment error processes being automated

    J.P. Morgan Chase & Co. and Cleareye.ai

    		Anti-Money Laundering Monitoring
    • Reduced process time by up to 80% and identified potential fraud and sanctions risks in trade documents

    Bank of America and Erica

    		Personalized Marketing
    • Achieved over 1 billion interactions with clients, answering over 95% of customer queries

    Challenges/Risks Associated

    While hyperautomation presents numerous opportunities for enhancing efficiency and processes in the banking sector, it also comes with certain challenges and risks. Hyperautomation introduces the risk of heightened data security and privacy concerns, potential cybersecurity vulnerabilities, complex integration challenges with existing systems, and operational disruptions due to technology dependencies. Mishandling customer data and experiencing data breaches, ransomware attacks, and other cyber threats may lead to legal consequences and damage the bank’s reputation.

    Conclusion

    In an era of rapid digital transformation, hyperautomation has emerged as a transformative force in the banking and financial sector. Its multifaceted role encompasses efficiency gains, enhanced customer experience, risk mitigation, and regulatory compliance. By automating routine tasks and harnessing the power of data and AI, hyperautomation empowers financial institutions to operate more effectively and competitively in today's rapidly evolving digital landscape.

    Moreover, hyperautomation provides banks with the flexibility required to respond to shifting market dynamics and the emergence of new technologies. It enables them to make data-driven decisions, personalize services, and offer seamless onboarding experiences to customers.



  17. Integrating ESG in Real Estate

    Environmental, Social, and Corporate Governance (ESG) is slowly gaining prominence across industries. Real estate has been a late

      to read | words

    published on Jan 10, 2024

    Environmental, Social, and Corporate Governance (ESG) is slowly gaining prominence across industries. Real estate has been a late adopter of this concept, but global warming concerns and net zero commitments have accelerated its acceptance within the industry. Real estate companies across regions are embedding ESG practices within their processes. Investors and financial firms also consider it important. ESG is set to become an essential requirement and become an integral part of Real Estate processes.

    ESG is a set of principles and standards that guide companies to operate responsibly and sustainably. It focuses on reducing emissions, improving energy efficiency, and creating a healthy environment for everyone. ESG covers a broad range of themes, from determining and assessing a company's carbon footprint to its internal rules and culture covering human resource management, business ethics, and diversity. ESG in real estate is becoming increasingly important to reduce the negative impact of construction on the environment.

    Why ESG

    ESG is needed in real estate to ensure that buildings are constructed with sustainable materials, use renewable energy sources, have net zero emissions, and are built with the highest standards of energy efficiency and safety in mind. By following these principles, real estate developers can help create a sustainable future for everyone.

    ESG also supports business practices that encourage workplace health, inclusion, diversity, and wellness, and corporations are broadening their perspective on social responsibility. It suggests considering community's influence when deciding on future developments.

    In real estate, the ESG principles focus on the following:

    Environmental

    • Procurement of materials and resources
    • Energy sources and efficiency
    • Waste management
    • Air quality

    Social

    • Occupier and community relations
    • Health and well-being of workers and residents
    • Safety and accessibility

    Governance

    • Company culture
    • Diversity
    • Reputation
    • Conduct

    Global adoption of ESG in Real Estate

    • US – The real estate industry in the US has increasingly adopted ESG practices. Companies are adopting energy-efficient technologies to reduce air pollution during construction and promoting sustainable measures. For instance, a realty trust company with presence in New York, Chicago, and San Francisco has nearly 23 million square feet of LEED-certified buildings under management, and in 2019 it was given the Sustained Excellence Energy Star Partner of the Year Award.
    • Europe – The European real estate companies have been at the forefront of adoption of ESG practices. The investors in this region are favoring companies that have ESG principles as part of its processes. Following are some examples of European companies:
      • A German real estate company, headquartered in Bochum, North Rhine-Westphaliais, focusing on sustainability and social responsibility by undertaking initiatives to reduce carbon footprints and enhance the quality of life for its tenants.
      • A Paris-based real estate company, is committed to sustainability and has set targets to reduce its carbon footprints and increase the use of renewable energy.
    • Asia – Asian countries have also recorded a surge in adoption of ESG practices. With sustainability as the main objective, real estate companies are integrating the ESG thought process within their framework. Some examples are listed below:
      • A Singapore-based real estate company made sustainability a key part of its business strategy. It has implemented green initiatives across its properties, including energy-efficient building designs, water conservation measures, and renewable energy installations.
      • A Hong Kong-based real estate company adopted various ESG practices, including implementing energy-efficient building designs, using renewable energy, and reducing waste. The company also invested in other green buildings and sustainable development projects.

    Benefits

    • Investment opportunities – Investments in real estate are being increasingly influenced by sustainability. Organizations like the European Association for Investors in Non-Listed Real Estate Vehicles (INREV) provide a platform for investors to exchange ideas and collaborate on ESG-focused real estate investment strategies. Additionally, frameworks like the Global Real Estate Sustainability Benchmark (GRESB) are helping listed real estate companies measure and report their ESG performance, providing investors with greater transparency and accountability.
    • Social impact - ESG considerations can create positive social impact by promoting social equity, diversity, and community engagement. For example, real estate companies can incorporate affordable housing units into their developments or invest in community programs that benefit residents.
    • Infrastructure development - For developing nations, putting in place an effective ESG-focused infrastructure system is essential because it gives the local population access to necessities like energy and water. Furthermore, it might support developed nations in addressing issues like the growing urban population and environmental worries. ESG criteria are shown to be important in infrastructure closures.

    ESG considerations have become increasingly important in the real estate industry worldwide as countries are adopting policies to encourage sustainable and responsible practices in the sector. The benefits of implementing ESG principles in real estate are clear and varied, including low costs, improved asset value, reduced risks, and enhanced reputation. Investors and other stakeholders are increasingly demanding ESG framework making it a key driver of value creation and long-term success in the industry. As a result, real estate companies that embrace ESG principles and integrate them into their operations are likely to be better equipped to handle the future challenges and generate sustainable returns than the ones that do not.
  18. Price Corrections in Global Caustic Soda Market

    The global caustic soda market observed substantial price corrections in 2023 following the elevated energy costs in 2022. APAC, commanding 55–65% o

      to read | words

    published on Dec 27, 2023

    The global caustic soda market observed substantial price corrections in 2023 following the elevated energy costs in 2022. APAC, commanding 55–65% of chlor-alkali capacity, saw a 19% drop, led by China. In contrast, North American suppliers were resilient to declines, maintaining a strong market stance. After Russia-Ukraine challenges, Europe faced surging prices and reduced utilization rates. Nevertheless, the caustic soda market shows promise, driven by stable demand in traditional applications and emerging Li-ion battery opportunities. The outlook foresees price recovery in APAC and Europe, with North American suppliers expected to concede to lower prices for better plant utilization.

    The global caustic soda market saw substantial price corrections, following the increased production costs driven by elevated energy prices in 2022. In 2023, average caustic soda prices stood at $570 per ton for APAC, $1,220 per ton for Europe, and $1,315 per ton for the US, following a 19%, 51%, and 3% decline compared to 2022 levels. While APAC and European suppliers accepted the price corrections, those in North America continued to resist the downward momentum of caustic soda prices despite weak demand across global and regional markets. The prices are expected to continue to follow this downtrend in H1 2024 to further close the gap with 2021 prices.


    With electricity constituting 40–50% of the manufacturing cost of caustic soda, energy prices have historically dictated the price movements of chlor-alkali products. 

    APAC

    Despite a fragmented supplier landscape, APAC suppliers hold 55–65% of the global chlor-alkali capacity. China dominates 45% of the global supply while India, Japan, Taiwan, and South Korea own significant regional capacities. Formosa (Taiwan), Wanhua (China), AGC Chemicals (Japan), and Adani Enterprise (India) are the leading regional suppliers of chlor-alkali products.

    Amid healthy demand from APAC and European markets, current regional capacity utilizations are well over 75%, further pushing suppliers to ramp up production capacities. In response, suppliers such as Xinjiang Zhongtai Chemical (China), Aditya Birla Chemicals (India), AGC Glass (Thailand), and Hanwha Chemicals (South Korea) have announced combined capacity additions of ~2 million tons.

    Overall, APAC remains the largest supply market for caustic soda. With planned expansions in the region, it is expected to continue leading the global supply market. Furthermore, caustic soda prices in APAC ($570/ton in 2023) are at the lowest compared to Europe and the Americas, which could continue to attract buyers from these regions despite the logistics challenges.

    Americas

    The market holds 18–22% of the global capacity, with regional supply controlled by US-based suppliers such as Olin, Westlake, and OXY Chem. Since limited legacy companies dominate the market, they can control prices despite the global price movements.

    Although demand for caustic soda remained at a stable level, suppliers' capacity utilization continued to be low between 60% and 65%. Furthermore, the suppliers actively resist the price decline as they look to secure higher value sales, in contrast to their APAC counterparts.

    The Americas, primarily the US, remains a complex market for caustic soda, as the significant regional supplier consolidation takes the negotiation power away from customers. With caustic soda priced at $1,250/ton in Q3 2023, the suppliers have continued to resist the downward price movement despite weak demand from key consuming industries.

    Europe

    The European caustic soda market is largely consolidated with 8–10% of the global capacity, primarily held locally by INEOS and Dow. Demand is mostly driven by chemical industries, pulp & paper, and water treatment applications.

    Europe was severely affected by the Russia-Ukraine war, with prices surging by 3x between 2021 and 2022. Though suppliers had limited control over the increased cost of production, EU-based buyers turned to imports of caustic soda from Asia, which further decreased utilization rates. While the suppliers reportedly operate at over 65% capacity in 2023, they continue to face pressure to reduce prices further.

    The 2022–23 period has been difficult for European caustic soda suppliers due to the unprecedented rise in the manufacturing cost of caustic soda. The average caustic soda prices were ~$1,220/ton in 2023, but the suppliers could bring down the prices further to attract the buyers they lost to APAC-based suppliers.

    Conclusion

    Although Li-ion battery manufacturing has emerged as a new application of caustic soda in the last couple of years, its demand is concentrated only in a few countries such as China, Taiwan, and South Korea. Demand from traditional applications including alumina, chemicals, pulp & paper, and water treatment is expected to grow at a steady pace of 3–5%.

    The road ahead for the global caustic soda market looks promising, with price recovery expected from APAC and Europe. Although North American suppliers have continued to resist the price decline, they are expected to accept the lower prices to increase plant utilization rates.





  19. The Rise and Challenges of Direct-to-Consumer Model

    In recent years, the Direct-to-Consumer (D2C) model has captured the attention of consumers and businesses alike, promising

      to read | words

    published on Dec 15, 2023

    In recent years, the Direct-to-Consumer (D2C) model has captured the attention of consumers and businesses alike, promising a more personalized and convenient shopping experience. With the advent of COVID-19, D2C brands received an unexpected boost as traditional retail channels faced closures and disruptions. However, recent figures suggest that the once-thriving D2C sector may not be performing as well as initially anticipated. This is an overview of the evolution of D2C model, the pandemic's impact on its growth, and the challenges faced by D2C brands in the current market.

    The pandemic created an unprecedented shift in consumer behavior, forcing people to embrace online shopping and seek out alternative purchasing channels. D2C brands, which were already in the market, were in a prime position to capitalize on this shift. They offered easy to use digital platforms and direct engagement with consumers. With lockdowns enforced across countries, customers went online for all their shopping requirements, leading to a surge in demand for D2C products.

    Furthermore, D2C companies provided a personalized experience through targeted marketing, product customization, and direct communication, thereby developing connection and loyalty among customers.

    The Post-Pandemic Era

    While the pandemic provided a golden opportunity for D2C brands to establish a strong foothold in the market, recent data suggests that their success might not be as enduring as anticipated.  

    The main challenges are:

    Competition: D2C brands are facing intense competition in their space. With numerous startups and established brands launching D2C channels, the market has oversaturated, making differentiation a challenge. 

    Cost: D2C brands often struggle with customer acquisition costs. The cost of customer acquisition through online advertising has surged, leading to reduced profitability and increased pressure on these brands to achieve scale. Moreover, customer acquisition costs continue to rise, making it difficult for D2C companies to achieve sustainable growth and profitability.

    This has led to a series of difficulties for D2C brands:

    • D2C initial public offerings (IPOs) have experienced a significant failure in generating substantial shareholder value. Among the notable brands affected by this downward trend are Oisix, Hims and Hers.
    • The majority of D2C M&As and internal build initiatives undertaken by prominent brands have proven to be largely ineffective in generating substantial value. The are various reasons for these failures, including insufficient understanding of customers, underestimation of future customer acquisition cost (CAC), brand growth model not transferrable to offline, and low-quality products. The failures of build initiatives were mostly due to a lack of saleable USP, a lack of significant addressable market and unattractive unit economies.

    Major Failures in D2C Industry

    Brandless: Brandless is one of the biggest brand failures that used the D2C business model. Despite receiving funding of almost USD 240 million from Softbank vision fund, the company was unable to sustain itself. The brand was unable to establish a seamless and symbiotic business model that effectively integrated its marketing strategies with its operational endeavors. The company’s product quality was also criticized. 

    Outdoor Voices: A Direct-to-Consumer (D2C) brand focused on athleisure-wear became a sensation when it was launched in 2014. Founded by Ty Haney, the company received funding of USD 60-70 million over the years. However, the company is facing new headwinds, and the brand is losing money over customer acquisition. 

    Casper: Prominent mattress company Casper, which had a valuation of over USD 1 billion, incurred significant financial losses due to its large advertising budget. When the company launched its IPO, these losses were made public, leading to a decline in its overvalued status.

    The Path to Reinvention

    Despite the challenges, the D2C model is far from obsolete. To overcome the obstacles the D2C brands currently face, they must adapt and innovate. One potential strategy is to invest in a seamless operational process. Currently, brands are failing to manage their costs in an effective manner, and this could be due to a lack of clear strategies.

    D2C brands should focus on product quality. Poor product quality that does not match customer expectations could also be a major reason for brand failure.

    Conclusion

    While COVID-19 provided a substantial boost to the D2C model, recent financial indicators suggest that the initial hype might have been premature. The D2C sector is grappling with challenges such as oversaturation, high customer acquisition costs, and a lack of differentiation. However, with adaptability and innovation, D2C brands have the potential to reinvent themselves and secure their place in the evolving retail landscape. 




  20. Overcoming Limited Global Starch Supplies through Effective Contracting Strategy

    The price cushioning initiative by leading starch producers, coupled with market and climate conditions driven feedstock supplies constraints,

      to read | words

    published on Dec 05, 2023

    The price cushioning initiative by leading starch producers, coupled with market and climate conditions driven feedstock supplies constraints, would lead to a decline in starch supplies in the next 1-2 years. Amid such supply market situations, it becomes necessary for industrial starch buyers to better utilize global and regional starch suppliers to build resilience in their starch supply chain.

    Global starch consumption was ~62 million tons in 2023 and is expected to grow at a CAGR of ~5% over 2024-25F, owing to an increase in consumption from food and industrial applications. While the rate of consumption of starch is increasing, its supplies are expected to remain in deficit of demand. This is due to price cushioning initiatives planned by starch producers and feedstock supply shortage because of certain uncontrollable market and climatic conditions.

    Starch producer led price cushioning initiatives:

    Low-capacity utilization of starch manufacturers: To support the market prices amid low feedstock inter-region trade, starch manufacturers are not expected to utilize the capacity by more than 75% during the 2024-25F period.

    Low new capacity additions for industrial starches: In the next 1-2 years the overall starch capacity addition is expected to remain low for industrial applications. Although starch producers, such as Agrana, Ingredion, ADM and Cargill, have planned new capacities, however they are majorly for food starches.

    Ability of a producer to manufacture edging by-products: Major starch producers usually divert ~40% of the starch slurry, an intermediate product, to produce sweeteners. Thus, marketing a starch-competing by-product portfolio to food and pharmaceutical industries. Hence, in case of declining demand of starch, producers divert more slurry towards sweetener production to support starch prices and to sustain their overall margins.

    Market and climate conditions-based feedstock supply shortage:

    Low inter-regional trade of feedstocks: Most of the starches are derived from corn, wheat, cassava and potato crops, which are mostly cultivated in specific regions — corn crops are majorly cultivated in the US region; cassava roots in African region; and wheat and potato in Asia. Amid government intervention for staple food security and growing regional food industry, exports of feedstocks from key crop growing regions to other high demand regions are usually low, leading to a high dependency of starch producers on regional supplies of feedstocks.

    Emergence of bioethanol industry: The gasoline blending mandate, coupled with stricter marketing norms, has substantially increased the demand for bioethanol as a transportation fuel in major economies such as the US, China, India, and Brazil. While producing crops for bioethanol production appears more lucrative to farmers than producing for food and industrial applications, due to incentives and subsidies provided by governments, farmers are expected to divert a larger portion of their crop produced for bioethanol production.

    Uncertain climatic conditions: Increasing earth temperature, unpredictable rain and drought patterns in key crop growing regions has severely impacted the corn, wheat, and potato production in the last few years. Although corn farmers in the US and wheat farmers in India and China are adopting short height crops and early plantation, respectively, to reduce the supply risk, such initiatives would not be adequate to mitigate increasing climatic condition setbacks.

    Recommendations:

    As starch supplies are not expected to improve in the next couple of years, it becomes vital for industrial starch buyers to delve into their contracting strategies and strive for better supply and price stability. While overall starch production can face severe challenges due to uncertain climate conditions in different regions, it is advisable to an industrial buyer of starch to forge long-term contracts with the global suppliers with production locations worldwide. This ensures that the buyer can receive the supplies from other locations of the supplier amid any disruption. Forging contracts with global suppliers are also advisable as the feedstock exports would remain low in the next few years, possessing significant feedstock supply challenge to a regional starch supplier that is dependent on feedstock imports to run the production capacity.

    While contracting with global suppliers is advisable to mitigate the market and climate challenges, industrial buyers should adopt a ‘one-plus-one’ supplier strategy by appointing a small or mid-sized regional supplier as well, with low volume allocation. Since small or mid-sized regional suppliers across regions have a lower propensity to produce by-product and sweeteners, they possess a lower bargaining power. This could eventually aid the buyer to get preferential prices in case the starch demand declines.

    In case the current contracting strategy of the starch buyer is indifferent from the above recommendations, then the buyer should hold their current contracting position.




  21. PFAS Sourcing Challenges – Alternatives on the Rise

    Per- and polyfluoroalkyl substances (PFAS), widely used for their unique properties, face heightened scrutiny due to health and

      to read | words

    published on Nov 23, 2023

    Per- and polyfluoroalkyl substances (PFAS), widely used for their unique properties, face heightened scrutiny due to health and environmental concerns. Their persistence in the environment and links to adverse health effects have led to regulatory actions globally. Industries such as food packaging, coatings and paints, chemicals, cosmetics and personal care, and electronics using PFAS are recommended to adopt safer alternatives, stay up to date on regulations, and follow responsible management practices. Proactive measures can mitigate the environmental impact, safeguard public health, and ensure business sustainability amid increasing PFAS challenges.

    PFAS, often referred to as “forever chemicals,” are a diverse group of synthetic chemicals that have been integrated into consumer products worldwide since the 1950s. PFAS molecules consist of linked carbon and fluorine atoms, forming a chain known for its stability. However, this property, attributed to the robust carbon-fluorine bond, makes PFAS resistant to environmental degradation.

    Environmental Impact

    The durable nature of PFAS poses environmental threats as they collect in the soil, water, and air. This persistence is attributed to their slow degradation owing to the strong carbon-fluorine bonds. Certain PFAS, such as PFOA and PFOS, do not decompose in the environment, can accumulate in living things, and adversely impact human health and the environment.

    Human Exposure and Health Concerns

    Human exposure to PFAS is widespread and varies by geography and occupation. PFAS, used in a range of industries such as aerospace, automotive, construction, and electronics, can leak into the environment, leading to potential exposure through contaminated water, food, and air.

    Regulatory Measures

    Regulatory measures worldwide are aimed to manage PFAS contamination.

    • Drinking Water Standards: Setting of maximum allowable levels for specific PFAS compounds in drinking water
    • Product Regulations: Restrictions on PFAS used in consumer products like food packaging
    • Cleanup Efforts: Initiatives to remediate contaminated sites and prevent further environmental harm
    • Research and Monitoring: Ongoing efforts to understand PFAS toxicity and prevalence in environment

    How Companies are Responding

    To address PFAS-related challenges, companies are undertaking some of the following measures:

    • Phasing out PFAS use and seeking alternatives in products and processes.
    • Transparently labeling products as "PFAS-free" to inform consumers.
    • Ensuring PFAS-free raw materials and components through strict procurement guidelines.
    • Investing in research for PFAS-free alternatives and technologies.
    • Responsibly disposing PFAS-containing waste to prevent further environmental contamination.
    • Actively monitoring and addressing PFAS contamination in facilities and surrounding areas.
    • Adhering to evolving regulations related to PFAS use and reporting.

    Recent Developments and Financial Implications

    Recent legal settlements, such as the USD 12.5 billion agreement reached by 3M, underscore the significant financial repercussions for PFAS manufacturers. In June, Chemours, DuPont de Nemours Inc, and Corteva collectively made a USD 1.19 billion settlement with numerous US public water systems affected by PFAS contamination. Another substantial settlement in June involved DuPont, Chemours, and Corteva, totaling USD 1.1 billion. However, despite these sizable amounts, they represent only a fraction of the estimated USD 400 billion required for the comprehensive cleaning and protection of drinking water. For instance, Orange County, California, anticipates spending USD 1 billion solely on cleaning its water system. Some utilities such as the Cape Fear Public Utility Authority (CFPUA) near Wilmington, North Carolina, are independently addressing the issue. Situated about 75 miles downstream from a Chemours PFAS manufacturing plant, CFPUA invested approximately USD 46 million in developing a granular activated carbon system to eliminate PFAS, with an additional estimated annual operational cost of USD 5 million. As utilities face heavy cleanup expense, there is a growing need for excise tax on PFAS. Ongoing research highlights the intricate nature of managing challenges associated with PFAS.

    PFAS Alternatives: Toward Sustainable Solutions

    Alternatives to PFAS can be broadly categorized into two groups: functional and chemical. Functional alternatives rely on technical or engineering solutions, avoiding chemical methods. On the other hand, chemical alternatives replace fluorinated compounds with non-fluorinated alternatives, maintaining similar functionalities. The objective is to eliminate PFAS across sectors, leveraging sustainable chemistry principles and adopting an essential use concept for rapid and effective management or phase out of products containing PFAS.

    Some of the critical sectors and PFSA alternatives are outlined in the table below:

    Industry

    PFSA Applications

    Alternative Availability

    (Low/Medium/High)

    Key Alternatives

    Food Packaging and Contact Materials

    • Coatings in non-stick cookware and other non-stick uses
    • O-rings and gaskets used in food processing equipment
    • Processing aids in producing conventional non-fluorinated polymers
    • Grease-proofing agents used on food contact paper and paperboard

    Medium


    • Ceramics
    • Polyl(actic acid)
    • Silicone polymers
    • Aluminum
    • Elephant grass
    • Palm leaves
    • Bamboo
    • Clay 
    • Wheat straw

    Coatings, Paints, and Varnishes

    • Wires and cables
    • Solar panels
    • Household paints and varnishes

    Medium

    • Soft waxes
    • Sulfosuccinate chemicals

    Chemical Industry (Fluoropolymer Production)

    • Emulsification

    Medium


    • Acrylate
    • Siloxane 
    • Polymeric glycol-based chemistries

    Electroplating

    • Chrome electroplating

    Medium


    • Chromium (III)

    Pesticides

    • Anti-foaming agents
    • Insecticidal agents
    • Dispersing agents
    • Inert additives

    Medium


    • Steel drums
    • Non-PFAS coated HDPE containers

    Cosmetics and Personal Care Products

    • Moisturizers
    • Body lotions
    • Nail polish and enamel
    • Cleansers
    • Hair products
    • Make-up products

    Low




    -






    Electronics

    • Flat panel displays
    • Cooling fluids
    • Cleaning solutions
    • Lubricants
    • Etching solutions

    Low


    -

    Semiconductor


    • Photolithography Process
    • Immersion lithography

    Low

    -

    Machinery and Equipment Manufacturing

    • Functional fluid

    Low

    -

    Rubber and Plastic Production


    • Mold release agents
    • Polymer processing aids
    • Anti-blocking agents for rubber
    • Curatives

    Low


    -

    Cleaning Products

    • Dish soap
    • Laundry detergent
    • Floor polish
    • Car wash
    • Carpet spot cleane

    Low


    -

    Textiles

    • Carpets
    • Rugs
    • Clothing
    • Protective apparel
    • Shoes
    • Upholstery

    Low


    -

    Pharmaceuticals and Medical Devices

    • Non-prescription drug products
    • Implantable devices
    • Dental floss

    Low


    -

    Key Takeaways for Industries

    • Regulatory Compliance: PFAS is increasingly under global regulatory scrutiny, prompting various jurisdictions to impose restrictions or bans. Businesses must keep pace with these developments and comply with applicable regulations.
    • Alternative Exploration: Industries utilizing PFAS in their products should actively seek safer alternatives. This involves R&D and supplier collaboration to identify sustainable substitutes.
    • Phase-out Planning: Companies must develop comprehensive phase-out plans to gradually eliminate PFAS from manufacturing processes and products. They should identify essential applications, explore substitutes, and implement risk mitigation measures to reduce environmental exposure.
    • Collaboration for Solutions: Industries must engage in collaborative efforts with other industries and stakeholders to share best practices, encourage innovation, and advocate effective regulatory policies addressing PFAS contamination while promoting sustainability.
    • Proper Disposal Practices: Responsible disposal of PFAS-containing waste would prevent environmental contamination. This may require specialized treatment facilities and strict adherence to waste management guidelines.
    • Supplier Assessment: Companies are recommended to thoroughly assess suppliers to verify they are using PFAS-free or compliant materials and adopting responsible PFAS management practices. This helps mitigate risks across the supply chain.

    By incorporating these strategies, industries can play a pivotal role in diminishing the environmental impact of PFAS, safeguarding human health, and ensuring the long-term sustainability and competitiveness of their businesses.



  22. Redefining Comfort: Exploring the Evolving Trends in the Mattress Market

    As technology and consumer preferences evolve, the mattress market is undergoing a transformation that extends beyond traditional notions

      to read | words

    published on Nov 01, 2023

    As technology and consumer preferences evolve, the mattress market is undergoing a transformation that extends beyond traditional notions of comfort. From personalized sleep solutions to sustainable materials, this article delves into the dynamic landscape of mattress trends. These changes, driven by evolving customer needs or the adoption of different business models such as direct-to-consumer, highlight a shift toward customized and eco-conscious sleeping experiences. Here, we uncover how brands redefine comfort to align with modern lifestyles and desires and aim to build relations with customers.

    As we explore the changing trends in the mattress market, it becomes clear that comfort now is more than the feel of a soft mattress. It encompasses personalization, sustainable materials, innovative designs, and a seamless shopping experience.

    Rise of Healthy, Eco-Friendly, and Sustainable Mattresses

    Consumers today, especially the younger generation with higher disposable income, health-conscious buyers, and those suffering from respiratory issues, tend to opt for a healthy but luxurious and eco-friendly mattress. Bedding that is free from harmful chemicals, such as pesticides and flame retardants is a healthier option and creates minimal impact on the planet. As a result, mattress manufacturers are focusing on using organic, natural materials, such as cotton, wool, and latex, as well as exploring innovative recycling techniques to reduce waste. These buyers tend to rely on industry certifications to ensure authenticity and sustainability that gave rise to international certifications, such as Global Organic Textile Standard (GOTS) and International Association for Research and Testing in the Field of Textile and Leather Ecology (OEKO-TEX), which confirm that the mattresses are eco-friendly and sustainable in nature.

    Several mattress companies, especially in Europe, are embracing a circular economy as part of their sustainability initiatives to meet customer preferences. They are exploring ways to recycle and upcycle old mattresses to reduce waste and minimize environmental impact. These initiatives aim to create a closed-loop system, wherein used mattresses are transformed into new materials or products, reducing the burden on landfills.

    Emphasis on Sleep Technology and Smart Mattresses

    Advancements in sleep technology have been a game-changer in the mattress industry. Smart mattresses, equipped with sensors and integrated with smartphone apps, have much to offer but might not be the right choice for everyone. Customers who tend to get the best results from smart mattresses include digital natives, those looking for temperature control features, are data-driven and want detailed sleep tracking, or luxury shoppers. Customers who are budget shoppers, late adopters of new technology, and people who prefer the simplicity of traditional mattresses are the ones who are not well suited for this product.

    Several innovative features were introduced in recent years. These include the following: 

    • Smart mattresses: The introduction of smart mattresses has transformed the mattress industry as sleep tracking, biometric sensors, and smartphone integration features are embedded to help users monitor and optimize their sleep patterns.
    • Adjustable Firmness: Some mattress companies offer mattresses with adjustable layers, allowing customers to change the firmness or feel of the mattress by rearranging or swapping out layers. This caters to varying comfort preferences for couples or individuals.
    • Dual Zone Mattress: A dual-zone mattress features two distinct zones or sections with varying levels of support or firmness. These zones are typically designed to accommodate different preferences or needs of two individuals sharing the same mattress.
    • Textile-Based Pressure Sensing Matrix: Some players have introduced fabric for mattresses that contain sensors to detect pressure points and adjust the mattress accordingly. For instance, ReST's smart mattress technology is intended to provide personalized comfort and support throughout the night via its response.
    • Cooling Technology: In mattresses it refers to the incorporation of various materials, designs, and features that help regulate body temperature and dissipate heat, resulting in a cooler and more comfortable sleep environment. Serta iComfort mattresses tend to incorporate cooling technology and smart features to provide a comfortable sleep experience.

    Direct-to-Consumer (D2C) Business Models

    D2C sales channel has disrupted the traditional mattress industry. By eliminating the middleman and selling directly to customers online, mattress companies can offer competitive prices, improve customer experiences, and post an increase in margins. This trend fostered an environment where innovative startups can thrive, challenging established brands. The high impetus on the D2C business model has resulted in the following:

    • Cost Efficiency: By evading retailers and wholesalers, D2C mattress companies can eliminate the markups associated with traditional distribution channels. This often results in cost savings that can be passed on to consumers, making mattresses more affordable. One such company is Tuft & Needle, which sells directly to consumers online, they could reduce costs associated with traditional retail models and offer competitive prices.
    • Convenience: Customers can easily shop for mattresses online from the comfort of their homes, eliminating the need to visit physical stores. Many D2C mattress companies also offer hassle-free trial periods and easy return policies. For instance, mattress manufacturer, Eight, went for the popular “bed in a box” business model whereby the mattress is delivered by mail along with a 100-night trial to ensure the customer’s comfort over the long term.
    • Brand Control: D2C brands have greater control over their brand image, messaging, and overall customer experience due to their direct sales approach. They can directly engage with customers and gather feedback to improve their products and services

    Conclusion

    The mattress market is a dynamic and evolving industry, shaped by changing consumer preferences and technological advancements. From eco-friendly initiatives to sleep technology integration, the market caters to consumers seeking comfort, customization, and better sleep. As we move forward, sustainability, innovation, and customer-centric approaches will undoubtedly remain key drivers of growth in this market.




  23. Agile Procurement – Need of the Hour

    With intensifying competitive dynamics, businesses need to be able to adapt quickly and efficiently to changing customer demands,

      to read | words

    published on Sep 13, 2023

    With intensifying competitive dynamics, businesses need to be able to adapt quickly and efficiently to changing customer demands, technological advancements, and environmental and geopolitical factors. Traditional procurement methods, which are often rigid, bureaucratic, and slow, may hinder the ability of organizations to ensure a smooth flow of supply chain operations. Agile practices can help companies achieve better procurement outcomes.

    Agile procurement is an approach to purchasing goods and services that aligns with the principles of agile methodology. The approach helps transform traditional procurement practices into a process that 1) encourages flexibility to changing requirements; 2) fosters collaboration among stakeholders; and 3) enhances responsiveness to geopolitical or macroeconomic risks. Thus, agile procurement aims to deliver value faster, reduce risks, improve quality, and foster innovation.

    Agile Over Traditional

    Traditional procurement methods involve lengthy processes of planning, budgeting, tendering, contracting, and monitoring. These also tend to focus on minimizing costs and risks rather than maximizing value and innovation. This approach may work well for stable and predictable projects, but complex projects with dynamic requirements need to be handled differently. This is where agile procurement outshines through the following aspects:

    Iterative and Incremental Approach: This entails the systematic breakdown of a procurement process into smaller, manageable phases. The approach helps foster an environment for ongoing feedback, refinement, and adjustments as needed.

    Cross-functional Collaboration: Collaborative partnerships among diverse stakeholders are key for driving efficient procurement strategies. The agile approach involves active discussions and engagements among procurement teams, end-users, and suppliers. These collaborative teams maintain close connections throughout the procurement journey, ensuring a comprehensive understanding of requisites and swift resolution of challenges.

    Prioritization and Adaptability: Business demands change frequently for most organizations. The agile methodology focuses on achieving high-value outcomes by meticulously prioritizing requirements depending on stakeholder interactions and adapting to evolving needs and circumstances. This approach allows for strategic modifications based on responsive feedback.

    Transparency and Communication: The agile methodology essentially involves collaboration with multiple stakeholders. Hence, it is important for procurement professionals to ensure transparency and effective communication. Routine gatherings, updates on progress, and feedback sessions play a pivotal role in maintaining alignment and promoting well-informed decision-making.

    Leveraging Data and Analytics: Procurement professionals have access to abundant data, available from within their organizations or from external sources. Big data analytics tools help procurement professionals rigorously analyze data to make informed decisions amid changing requirements.

    Agile for All?

    The agile procurement methodology offers numerous benefits. However, it is not a one-size-fits-all solution and needs to be adopted on a case-by-case basis.

    Here are some best practices and tips on how to implement agile procurement successfully:

    • Define the problem and desired outcome clearly, and align these with procurement goals.
    • Establish a cross-functional team of representatives across departments, functions, and levels. Empower them to make decisions and solve problems autonomously.
    • Use agile tools and methods such as user stories, backlog management, sprint planning, and daily stand-ups to plan, execute, monitor, and improve the procurement process.
    • Embrace change and uncertainty as opportunities rather than threats. Establish protocols to be flexible and responsive to changing procurement requirements and feedback.

    Success Stories – Agile Implementation

    Agile procurement practices have already been embraced by many companies across the globe.

    Cisco: The global leader in digital communications adopted the Scaled Agile Framework (SAFe) and implemented three agile release trains within the Subscription Billing Platform (SBP) – one each for enhancing capabilities, addressing defects and fixes, and managing projects. The primary goal was to foster collaboration in the development and testing of compact features within a single Software-as-a-Service (SaaS) component and subsequently deliver these to the system integration and testing teams.

    Cisco successfully launched the latest SBP release without the need for any overtime. 

    Key Results 

    • Improved time to market by 20%
    • Reduced critical and major defects by 40%
    • Dropped Defect Rejected Ratio (DRR) by 16% 

    Procter & Gamble: The consumer giant partnered with Trimble to revolutionize transportation procurement through agile practices. Trimble will develop an agile transportation procurement collaboration platform to help enhance Procter & Gamble’s existing supply chain solutions. 

    Key Objectives

    • The platform will foster closer shipper-carrier relationships, expedite contracting, and increase the pace of business transactions while promoting cost-effective freight movement.
    • This collaboration capitalizes on P&G's industry expertise and Trimble's transportation technology experience, aiming to reshape and connect the North American transportation industry through efficient, smart solutions.

    Philips: The global health-tech company’s agile procurement strategies help it innovate and transform its products and solutions to address various health challenges and improve people's lives. Philips has a culture of co-creation and experimentation, where it involves its customers, suppliers, and partners in the design and development of its offerings. Philips also uses agile methods and tools to cut procurement cycle time, reduce supply risks and costs, and enhance customer satisfaction.

    Agile Recommendations

    Several other multinational corporations, such as Toyota, Ford, Unilever, IBM, Ericsson, Mitsubishi, and Siemens, have successfully adopted and experienced positive outcomes from the agile methodology. Hence, it is recommended to initiate the shift from a conventional setup to an agile one by engaging a technology provider that best suits your needs, and to accompany this with a dedicated implementation support team for overseeing and managing the entire process along the value chain. 

    The key areas to focus on are: 

    • Business process outsourcing
    • Shared service centers
    • Leveraging existing and disruptive technologies
    • Acquiring requisite procurement suites
    • Speed-to-market and margin improvement through supplier collaboration
    • Supplier lifecycle management and innovation
    • Mapping procurement capabilities against evolving business and market requirements
    • Reducing third-party spend across indirect and direct materials categories through strategic sourcing, contract rationalization, and working capital optimization
    • Measuring and improving total landed cost and social/environmental impact across geographies and product/supplier life cycle

    Agile procurement is a transformative approach to vendor management and acquisition. By prioritizing collaboration and iterative progress, agile procurement fosters dynamic partnerships between buyers and suppliers. As organizations continue to seek ways to navigate increasingly complex and dynamic marketplaces, agile procurement will facilitate flexibility and adaptability to enhance value creation. However, challenges may arise in implementing agile practices, particularly in legacy set-ups that are accustomed to rigid processes. Effective change management and a commitment to cultural shifts will be key in maximizing the benefits of agile procurement.



  24. Towards a Greener Future: The Rise of Eco-Friendly Disposable Hygiene Products

    Disposable absorbent hygiene products are becoming more popular among people of all ages and socioeconomic groups. Campaigns for

      to read | words

    published on Sep 11, 2023

    Disposable absorbent hygiene products are becoming more popular among people of all ages and socioeconomic groups. Campaigns for public education, wider availability of the goods, and enhanced marketing initiatives have contributed to normalizing the use of these products and lowering the stigma attached to them. There is a rise in the need for absorbent hygiene products, notably those for adult incontinence, as many nations' populations are getting older. The need for disposable absorbent hygiene products has been influenced by contemporary lifestyles, which include busy schedules, lengthy workdays, and substantial travel.

    The global market for superabsorbent polymers is being driven by the growth in demand for disposable absorbent hygiene products, including diapers, feminine hygiene, and adult incontinence products. The market is anticipated to rise at a CAGR of 3.9% from $7.56 billion in 2020 to $10.58 billion in 2027.

    Growing health-related issues are a major cause of increased demand for disposable absorbent hygiene products:

    1. CAUTI and IAD: Age-related health problems, such as Catheter-Associated Urinary Tract Infection (CAUTI) and Incontinence-Associated Dermatitis (IAD) are becoming major global concerns. The most frequent condition connected with healthcare, CAUTI, is directly related to the infection brought on by chronic catheter usage. Skin erosion and inflammation brought on by regular contact with urine and feces are symptoms of the disorder known as IAD. Each year, more than 560,000 people get CAUTI, which increases hospital stays, medical expenses, patient morbidity, and mortality. Over the course of the forecast period, these factors are anticipated to boost demand for adult wipes.
    2. Menstrual Disorders: Women with heavy or prolonged menstrual bleeding often require extra protection during their menstrual cycles. This can lead to an increased demand for sanitary napkins, tampons, or menstrual cups, which are disposable or need regular replacement.
      However, poor menstrual hygiene can lead to major health problems, including urinary and reproductive tract infections, which can cause infertility in the future and complicate childbirth. Infections like hepatitis B and thrush can spread if hands are not washed after changing menstruation products.
    3. Postpartum Bleeding: After giving birth, women experience postpartum bleeding known as lochia. This bleeding can last for several weeks and requires the use of disposable absorbent hygiene products like maternity pads to manage the flow. The demand for these disposable absorbent hygiene products typically increases during the postpartum period

    Key environmental concerns are as follows:

    1. Waste Generation: Disposable absorbent hygiene products, such as diapers, adult pads, and sanitary napkins, significantly contribute to waste generation. Their single-use nature leads to a substantial volume of waste ending up in landfills or incineration facilities.
    2. Non-Biodegradability: Most disposable absorbent hygiene products are made from synthetic materials like plastics and superabsorbent polymers, which are not readily biodegrade. This means that they persist in the environment for a long time, contributing to the accumulation of non-biodegradable waste. Products made from a combination of biodegradable and non-biodegradable elements may not decompose in landfills. In addition, these goods include human waste when used (about 60% pee and feces by mass), raising questions regarding the possibility of infections.
    3. Lack of Recycling Infrastructure: While some components of disposable hygiene products can be recycled, such as plastic components, the lack of adequate recycling infrastructure poses a challenge. Limited facilities and specialized processes make it difficult to recycle these products effectively.

    Need for sustainability!

    Disposable hygiene absorbent products, while providing convenience and comfort, pose health- and environment-related concerns.

    Following are common health concerns:

    1. Allergies and Sensitivities: Many individuals experience allergies or sensitivities to the chemicals, fragrances, and synthetic materials commonly found in conventional hygiene products. Sustainable alternatives, often made from natural and organic materials, are perceived safe and gentle on the skin, reducing the risk of irritation or allergic reactions.
    2. Hormonal Disruption: Some conventional hygiene products, particularly those containing plastics or synthetic materials, may release chemicals that can disrupt hormone balance. Sustainable alternatives, free from such chemicals, are preferred by individuals seeking to reduce their exposure to endocrine disruptors.

    Sustainable hygiene products have the potential to address the above challenges; hence, leading companies are focusing their innovation efforts with sustainability as a key goal. There is a growing focus on developing sustainable alternatives, such as reusable cloth diapers, biodegradable or compostable materials, and improved recycling systems.

    Wave of sustainability driving innovations in the AHP industry

    Which area of "sustainability" is the target? The broad concept of sustainability encompasses a wide range of needs, each of which may call for quite diverse technological answers.

    1. 3Rs to drive the sustainability narrative:
      • Reduce basis weight of nonwovens and films: One of the biggest trends today is ultra-thin AHP with reduced fluff. On average, modern disposable diapers weigh as little as 45 grams: about the weight of an egg. Through innovation in materials, design, and manufacturing, disposable diapers weigh 40% less than they did in 1987.
      • Recycling: It is technically possible to take a sanitary pad or diaper apart and recover some components, and companies, like Padcare in India, are experimenting to make this recovery economically feasible. Ontex in Belgium, NappyCycle in the UK, and Unicharm in Japan are other companies actively working on this.
        For instance, an inventive recycling method for post-consumer AHP waste has been created and patented by FaterSMART, a division of Fater Spa, an Italian joint venture between Procter & Gamble and the Angelini group. This method produces secondary raw materials for high-value applications.
      • Redesign: Businesses are implementing product designs that make more use of natural materials (such as bamboo, cotton, or other cellulose-based fibers) or goods made of bio-based polymers. The development of superabsorbent polymers/hydrogels (SAP) because of the rising demand in the hygiene sector is one instance of recent advancements.
        For example, BioSAP is creating a new opportunity for eco-friendly AHP. Biodegradable superabsorbent polymers are biocompatible and degradable. Moreover, many companies are replacing traditional plastic-based packaging with recyclable paper-based packaging for diapers and feminine care articles. Furthermore, Lola offers a range of organic cotton feminine hygiene products, including tampons, pads, liners, and period cups. Lola's products are made with 100% organic cotton, free from synthetic materials Since before the pandemic, there have been a lot more claim-related SKUs on e-commerce platforms for clean claims in retail disposable hygiene, such as hypoallergenic, natural, no alcohol, and no parabens. As an illustration, wipes greatly influenced the absolute increase in clean claims from 2019 to 2020 such as no alcohol and natural.
    2. Use of Bio-Based Adhesive:
      Low-density polyolefin technology can be used to use less glue while providing equivalent coverage to conventional adhesive chemistries, which can help reduce material weight. Adhesives must be created with exact rheological control to prevent burn-through or bleed-through contamination on the line, which will permit the use of lower basis-weight substrates. For example, Kimberly-Clark developed a bio-based adhesive called Bio-Based PE Foam Adhesive, which is used in the construction of their Huggies diapers. This adhesive is made from a blend of renewable materials, such as plant-based feedstocks, which reduces the reliance on fossil fuel-based adhesives. The Bio-Based PE Foam Adhesive serves as a bonding agent in the construction of the diaper, providing secure adhesion between various layers.

    The Way Forward:

    The best way to encourage a cleaner and greener future is to strike a balance between personal cleanliness and environmental responsibility, as well as to use disposable hygiene products that are sustainable and organic. With the rise in awareness levels of consumers, the disposable AHP industry is set to witness an interesting time ahead.

    Brands are likely to come up with sustainable products that address the health and environmental challenges, they will come at a premium. To what extent will that be accepted by consumers is a question to which we look forward.



  25. Canned Cocktails: A Rising Trend

    The traditional practice of enjoying cocktails at bars or lounges limited their accessibility to special occasions and exclusive

      to read | words

    published on Sep 06, 2023

    The traditional practice of enjoying cocktails at bars or lounges limited their accessibility to special occasions and exclusive venues. The art of mixing cocktails required expertise and practice, making them less readily available everywhere. However, a new trend has emerged in recent years that has revolutionized the cocktail industry – canned cocktails. While Europe and the US had canned cocktails available since 2000, COVID-19 gave a boost to this segment in other regions as well. The product is slowly gaining popularity in Asia as well and is estimated to have a strong growth trend.

    The concept of canned cocktails first emerged in the 2000s in the US and Europe when a few innovative companies experimented with pre-mixed cocktails in portable and convenient cans. However, the initial reception was less than enthusiastic. Consumers were hesitant to embrace the idea of a ready-to-drink cocktail experience that deviated from the traditional methods. However, COVID-19 played a significant role in boosting this trend, especially in Asian markets. Many alcohol brands entered this segment in the last few years, offering a variety of ready-to-drink cocktails in cans.

    Premixed cocktails, including spirits-based ready-to-drink (RTD) beverages, have become a star product in the beverage alcohol category. In 2021, supplier revenue from premixed cocktails reached USD769 million and sales over January–October 2022 totaled approximately USD922 million, showing a sales trend of about 68% compared with the previous year. In Asia, alcoholic beverage brands, such as Pernod Ricard, Brown-Forman, Bacardi, Radico Khaitan, and Diageo, have launched their own range of RTD cocktails, catering to the changing drinking behavior of consumers due to the pandemic. With lockdowns and movement restrictions prompting a shift towards in-home drinking, canned cocktails provided a convenient option for consumers seeking premium ingredients, flavors, and textures similar to high-end cocktails.

    Several startups have made their mark in this segment, introducing innovative canned cocktails:

    • Haus: Launched in 2019, in California, Haus offers a range of low-alcohol aperitifs in interesting bottles. It is made with real fruits, herbs, and botanicals, prioritizing natural ingredients and transparency in its production process.
    • Singapore Distillery: Launched in 2020, Singapore Distillery is a craft distillery based in Singapore that produces a variety of alcoholic beverages, including canned cocktails. It offers unique flavor combinations and is known for its focus on local and regional ingredients, capturing the essence of Southeast Asian flavors.
    • Flying Embers: Launched in 2016 and known for its alcoholic kombucha, Flying Embers expanded into the canned cocktail market with offerings, including Classic Lime Margarita.
    • Bravazzi Hard Italian Soda: In 2017 Bravazzi introduced Italian soda-inspired canned cocktails, featuring flavors such as Blood Orange, Limonata, and Grapefruit.
    • Post Meridiem Spirits: Present since 2019, this startup focuses on premium canned cocktails with a twist, offering options, for instance, Espresso Martini and Modern Classic Cosmopolitan.

    An Emerging Trend – Craft Canned Cocktails

    Trends in the canned cocktail market reveal the rise of "craft canned cocktails" as one of the most prominent developments. This trend stems from the popularity of craft cocktails, known for their emphasis on premium ingredients, artisanal craftsmanship, and attention to detail. The main characteristics of craft canned cocktails are as follows:

    • Craft canned cocktails prioritize high-quality spirits, natural sweeteners, and fresh fruit juices to deliver an authentic and enjoyable drinking experience.
    • These cocktails often feature unique and exotic flavor combinations, showcasing the creativity of mixologists and appealing to consumers seeking novel taste experiences.
    • Some canned cocktail brands adopt a limited-batch strategy such as craft breweries, releasing seasonal or limited editions. This fosters a sense of exclusivity and encourages consumers to try new products before they disappear from the market.
    • Craft canned cocktail brands often focus on their brand story, highlighting their journey, sourcing practices, and commitment to sustainability. This narrative-driven marketing strategy establishes a personal connection with consumers, making them feel part of the brand's journey. Interesting and slick packaging that is social media friendly holds a special appeal for GenZ consumers, who are digital natives and want to share their fun experiences online.

    While there is a general belief that alcohol consumption is declining among young generations due to the growing health and wellness trend, the RTD category has emerged as a popular product. Primarily targeted at the young market, RTD has experienced a resurgence with diverse new product developments and carefully styled packaging. It has been the fastest-growing category in the beverage business, largely due to brands investing in campaigns that position canned cocktails as a premium offering, dispelling the stigma of being low-grade or solely for partying.

    The evolution of canned cocktails from basic, mass-produced drinks to premium, artisanal creations has transformed the beverage landscape. The rise of craft canned cocktails, along with vibrant and creative packaging that appeals to social media-savvy millennials, has increased their popularity. As the industry continues to innovate, consumers can expect even more exciting flavors and combinations, solidifying canned cocktails as a staple in their drinking repertoire.




  26. Exploring Financial Performance Trends of Leading Japanese Corporations

    The Nikkei 225 functions as the principal index in Japan. It is constituted of prominent corporations within the nation,

      to read | words

    published on Aug 29, 2023

    The Nikkei 225 functions as the principal index in Japan. It is constituted of prominent corporations within the nation, which collectively generated JPY 596 trillion in revenue during the fiscal year 2023. These companies have demonstrated exceptional financial performance last year, and indeed, over the past five years. The article highlights some interesting insights on their performance over the last fiscal year and preceding five-year period.

    Japan’s economy exhibited strong signs of recovery, with GDP posting third straight quarter of expansion, as per data released by the government in mid-August 2023. Healthy export activity contributed to GDP growing 6% on an annualized basis (1.5% QoQ), surpassing analyst expectations. The economic headwinds have also been reflected in the performance of the Nikkei 225, its benchmark index, which reached its 30-year mark in June 2023.

    The constituents of the Nikkei 225 include some of the largest Japanese companies from major sectors, including giants such as Ajinomoto, Softbank, Toyota, Mitsubishi, and Sumitomo. For FY’23, the revenues of the constituents of the Nikkei 225 accounted for 62% of the revenues of all the companies listed in the Japanese stock exchange. The combined revenues of the index constituents in FY’23 were JPY 596 trillion.

    91% of Nikkei 225 constituents show positive revenue growth in FY’23

    An analysis of the one-year performance of the constituents of the Nikkei 225 for FY’23 showed that 91% of the companies exhibited positive revenue growth, with 174 companies (77% of the index) growing by more than 5%.

    Companies in the index fall under 36 industries, 34 of which demonstrated positive growth rates in FY’23.

    The top 15 companies in the index in terms of revenue growth for FY’23 are shown below.

    Company

    Sector

    FY’23 (JPY Bn)

    FY’22 (JPY Bn)

    Growth

    Japan Airlines Co., Ltd.

    Air Transport

    1,376

    		705 95.0%

    Inpex Corporation

    Mining

    2,234

    1,244

    86.8%

    Oriental Land Co., Ltd.

    Services

    483

    276

    75.2%

    ANA Holdings Inc.

    Air Transport

    1,707

    1,020

    67.3%

    Tokyo Gas Co., Ltd.

    Gas

    3,290

    2,145

    53.3%

    Renesas Electronics Corporation

    Electric Machinery

    1,501

    994

    50.9%

    Central Japan Railway Company

    Railway & Bus

    1,400

    935

    49.7%

    Chubu Electric Power Company, Incorporated

    Electric Power

    3,987

    2,705

    47.4%

    Tokyo Electric Power Company Holdings, Inc

    Electric Power

    7,799

    5,310

    46.9%

    Osaka Gas Co., Ltd.

    Gas

    2,275

    1,587

    43.4%

    JGC Holdings Corporation

    Construction

    607

    428

    41.7%

    Idemitsu Kosan Co., Ltd.

    Petroleum

    9,456

    6,687

    41.4%

    The Kansai Electric Power Company, Incorporated

    Electric Power

    3,952

    2,852

    38.6%

    Subaru Corporation

    Automobiles & auto parts

    3,774

    2,745

    37.5%

    ENEOS Holdings, Inc.

    Petroleum

    15,017

    10,922

    37.5%


    Combined net income of Nikkei 225 constituents in FY’23 reach JPY 35 trillion, with average annual growth of 4.7%

    From a profitability perspective, the results are more modest, with 60% of the companies showing an increase in net income in FY’23 compared to the previous year. Sectors that recorded exhibited significant growth in net income include retail and railways & bus, whereas companies in the insurance and pulp & paper sectors witnessed a decline in net income.

    The top 15 companies in the index in terms of net income growth for FY’23 are shown below.

    Company

    Sector

    FY’23 (JPY Bn)

    FY’22 (JPY Bn)

    Growth

    Resonac Holdings Corp

    Chemicals

    31

    3

    		 1059.4%

    Oriental Land Co., Ltd.

    Services

    81

    8

    900.8%

    Keisei Electric Railway Co., Ltd.

    Railway & Bus

    -4

    27

    835.2%

    Central Japan Railway Company

    Railway & Bus

    -50

    219

    542.1%

    Takashimaya Company, Limited

    Retail

    28

    5

    419.4%

    Odakyu Electric Railway Co., Ltd

    Railway & Bus

    41

    12

    236.2%

    J. Front Retailing Co., Ltd.

    Retail

    14

    4

    229.5%

    Tokyo Gas Co., Ltd.

    Gas

    281

    89

    216.5%

    East Japan Railway Company

    Railway & Bus

    99

    -95

    205.0%

    Tokyu Corporation

    Railway & Bus

    26

    9

    196.0%

    Chubu Electric Power Company, Incorporated

    Electric Power

    38

    -40

    195.2%

    JGC Holdings Corporation

    Construction

    31

    -35

    186.4%

    Subaru Corporation

    Automobiles & auto parts

    200

    70

    186.3%

    West Japan Railway Company

    Railway & Bus

    89

    -111

    179.9%

    Mitsubishi Heavy Industries, Ltd.

    Machinery

    114

    41

    179.4%


    Five-year average revenue growth of index at 4.7%; 87% of companies record positive revenue growth

    If we extend our analysis further into the past to assess the performance of the constituents of the Nikkei 225, it becomes evident that 195 companies, accounting for 87% of the index's companies, have exhibited positive revenue growth over the preceding five years when measured in CAGR. The only sector that struggled over the analysis period is railway & bus, with all companies in the sector showing a decline in revenue during this period.

    Companies that demonstrated the highest revenue growth in the last five years cover a diverse set of sectors.

    The top 15 companies in the index in terms of revenue growth over the last five years are shown below.

    Company

    Sector

    FY’23 (JPY Bn)

    FY’19 (JPY Bn)

    CAGR

    Inpex Corporation

    Mining

    2,235

    934

    25.6%

    Chugai Pharmaceutical Co., Ltd.

    Pharmaceuticals

    1,260

    580

    21.4%

    Idemitsu Kosan Co., Ltd.

    Petroleum

    9,456

    4,425

    20.9%

    Mitsui & Co., Ltd.

    Trading Company

    14,306

    6,958

    19.7%

    M3, Inc.

    Services

    231

    113

    19.5%

    Renesas Electronics Corporation

    Electric Machinery

    1,501

    757

    18.7%

    Advantest Corporation

    Electric Machinery

    560

    282

    18.7%

    Takeda Pharmaceutical Company Limited

    Pharmaceuticals

    4,027

    2,097

    17.7%

    Shin-Etsu Chemical Co., Ltd.

    Chemicals

    2,809

    1,594

    15.2%

    Z Holdings Corporation

    Services

    1,672

    955

    15.0%

    Rakuten Group, Inc.

    Services

    1,928

    1,101

    15.0%

    Seven & i Holdings Co., Ltd.

    Retail

    11,811

    6,791

    14.8%

    Tokyo Electron Limited

    Electric Machinery

    2,209

    1,278

    14.7%

    Dowa Holdings Co., Ltd.

    Nonferrous Metals

    780

    453

    14.6%

    CyberAgent, Inc.

    Services

    711

    420

    14.1%


    Average net income CAGR of 5.5%; 77% of companies in positive territory

    From a net income perspective, notably, a large number of companies (77% of the index constituents) have posted growth in net incomes in CAGR terms over the five-year period (compared to 60% over the last one year). Sectors in which companies performed strongly include food, nonferrous metals, and retail.

    The top 15 companies in the index in terms of net income growth over the last five years are shown below.

    Company

    Sector

    FY’23 (JPY Bn)

    FY’19 (JPY Bn)

    CAGR

    Mitsui O.S.K. Lines, Ltd.

    Marine Transport

    796

    27

    133.3%

    Fujikura Ltd.

    Nonferrous Metals

    41

    1

    130.3%

    Olympus Corporation

    Precision Instruments

    143

    8

    104.8%

    Mitsubishi Materials Corporation

    Nonferrous Metals

    20

    1

    98.9%

    Inpex Corporation

    Mining

    438

    40

    81.5%

    CyberAgent, Inc.

    Services

    39

    5

    68.8%

    Mizuho Financial Group, Inc.

    Banking

    556

    97

    54.9%

    Renesas Electronics Corporation

    Electric Machinery

    257

    51

    49.8%

    Chugai Pharmaceutical Co., Ltd.

    Pharmaceuticals

    374

    92

    41.8%

    Aeon Co., Ltd.

    Retail

    84

    24

    37.5%

    Tokyo Gas Co., Ltd.

    Gas

    281

    85

    35.0%

    Screen Holdings Co., Ltd.

    Electric Machinery

    57

    18

    33.6%

    Ajinomoto Co., Inc.

    Foods

    94

    30

    33.4%

    Idemitsu Kosan Co.,Ltd.

    Petroleum

    254

    81

    32.8%

    Hitachi, Ltd.

    Electric Machinery

    649

    223

    30.7%


    Considering the importance and contribution of the constituents of the Nikkei 225 to the overall Japanese economy, it would be interesting to see whether they can sustain the level of performance exhibited over last year.




  27. Mass Production to Mass Customization: Pharma Production at Crossroads

    The pharmaceutical industry, traditionally based on mass production to meet global medication demands, is now experiencing a transformation

      to read | words

    published on Aug 03, 2023

    The pharmaceutical industry, traditionally based on mass production to meet global medication demands, is now experiencing a transformation due to technological advancements, changing consumer preferences, and the rise of personalized medicine. This shift is challenging the traditional mass production model as the industry moves towards mass customization, aiming to provide tailored drugs for individual patients' requirements.

    Traditionally, the pharmaceutical industry relied on mass production to make medications cost-effective and widely available. While this approach has its benefits, including affordability for generic drugs, it also brings challenges such as wastage, limited product variation, and supply chain vulnerabilities. As the industry evolves, advancements in technology like 3D printing and personalized medicine are enabling a more balanced approach that combines the advantages of mass production with customization, offering the potential for more precise and effective treatments and improved patient outcomes.

    Mass Customization: A Shift in Pharma Production

    The integration of mass customization in the pharmaceutical industry marks a groundbreaking shift towards personalized medicine. This approach offers tailored medications to meet individual patient needs, maximizing efficacy while minimizing adverse reactions and addressing the limitations of mass production. Treatments are precisely calibrated to an individual's genetic profile, medical history, and lifestyle, thereby maximizing therapeutic efficacy while minimizing adverse reactions. Moreover, the flexibility in dosage forms and the ability to swiftly adapt to emerging health trends provide a competitive edge and enable more efficient resource utilization.

    Personalized medicine has gained significant traction in oncology, with a surge in therapies tailored to meet individual patient needs. Pharmaceutical companies are focusing on developing targeted treatments that address specific genetic mutations or biomarkers found in a patient's tumor. These therapies have demonstrated impressive success in treating certain cancer types, providing patients with more effective and better-tolerated treatment options.

    Personalized medicine has gained significant traction in oncology, with a surge in therapies tailored to meet individual patient needs. Pharmaceutical companies are focusing on developing targeted treatments that address specific genetic mutations or biomarkers found in a patient's tumor. These therapies have demonstrated impressive success in treating certain cancer types, providing patients with more effective and better-tolerated treatment options.

    Furthermore, the shift towards mass customization has been facilitated by remarkable advancements in manufacturing technologies, which now offer increased flexibility and agility in production, allowing for efficient manufacturing of small batches and personalized medications. One of the transformative technologies driving this change is 3D printing in pharmaceuticals, making significant strides in drug production. Through 3D printing, medications can be fabricated layer-by-layer, enabling precise dosage adjustments and the incorporation of multiple drugs into a single dosage form. This approach revolutionizes the production of personalized medications, catering to the specific needs of individual patients. For instance, Spritam, an FDA-approved antiepileptic drug developed by Aprecia Pharmaceuticals in collaboration with Cycle Pharmaceuticals, represents the first 3D-printed drug to receive marketing approval.

    Companies are also exploring innovative dosage forms that facilitate mass customization. Tailored dosage forms, such as controlled-release tablets, transdermal patches, and oral films, allow for precise drug delivery and individualized dosing, further enhancing patient-centric treatments.

    Moreover, in pediatrics, companies are focusing on developing personalized medications that are easier to administer and more palatable for children. For example, flavored oral films or dissolvable tablets can be customized with precise dosages, ensuring children receive the correct medication in a form they are more likely to accept. The Children's Hospital of Philadelphia (CHOP) Precision Medicine Program is a prominent example, specializing in personalized medicine for pediatric patients by offering individualized therapies for rare genetic disorders and cancer. The program employs genetic testing, molecular analysis, and data-driven methods to tailor treatments, catering to the unique needs of each child. These advancements in manufacturing and personalized medication exemplify the pharmaceutical industry's commitment to enhancing patient care through innovative approaches.

    Mass customization in pharmaceutical production utilizes data-driven approaches, leveraging patient data and genetic information to tailor medications to individual patients, optimizing treatment efficacy, and reducing adverse effects.

    Pharmaceutical companies are increasingly using biomarker data to identify patient populations most likely to respond to a particular drug. This targeted approach allows for more efficient and focused clinical trials, ensuring that the drug is administered only to patients who are likely to benefit from it. This not only reduces the risk of trial failures but also minimizes unnecessary treatments for patients who may not benefit from the drug.

    An excellent example of the effective utilization of mass customization in pharmaceuticals is seen in the development of targeted therapies for non-small cell lung cancer (NSCLC). With advancements in genetic testing, the identification of specific biomarkers, such as the Epidermal Growth Factor Receptor (EGFR) mutation, has become possible. This allows for the use of targeted therapies like Erlotinib, Gefitinib, and Osimertinib, which block abnormal EGFR signaling, effectively halting cancer growth and significantly improving patient outcomes. In the past, NSCLC patients often received conventional chemotherapy with associated side effects. However, the shift to personalized medicine based on genetic testing has revolutionized the treatment landscape for NSCLC, leading to more precise and effective therapies tailored to individual patients.

    Challenges and Regulatory considerations

    Mass customization in pharmaceuticals presents several regulatory challenges that need to be addressed to ensure patient safety and access to personalized treatments. Ensuring consistent quality control and manufacturing standards for each customized product is crucial, requiring regulatory guidelines to match the safety and efficacy standards of traditional mass-produced drugs. With constantly changing formulations and dosages in personalized medications, new approaches for validation and stability testing are necessary to guarantee reliability over time.

    Companion diagnostics and biomarker-driven approaches play a pivotal role in personalized medications, but concerns arise about their accuracy and standardization. Rigorous validation and harmonization of companion diagnostics are essential for their clinical utility and consistency. Additionally, data privacy and security become paramount as mass customization relies heavily on patient data. Stringent regulations are needed to safeguard patient information and prevent unauthorized access. Reimbursement and affordability present challenges for personalized medications, necessitating consideration of cost-effectiveness and long-term sustainability to ensure equitable access for patients.

    Moreover, effective data interpretation and clinical decision-making are vital as healthcare professionals handle increasing amounts of patient-specific data. Well-trained physicians with access to reliable resources for data interpretation are critical for successful implementation. Robust post-market surveillance is essential to continuously monitor the safety and effectiveness of personalized medications. Lastly, ethical considerations surrounding unequal access, responsible use of patient data, and potential marketing-driven practices need careful thought and regulatory guidance for a balanced approach in mass customization.

    The pharmaceutical industry is undergoing a transformative shift from mass production to mass customization, driven by the rise of personalized medicine and advancements in genomics and data analytics. Embracing this trend allows pharmaceutical companies to tailor treatments for individual patients, but challenges such as quality control, regulatory compliance, and patient data privacy must be carefully managed to ensure safe and accessible personalized medicine for all patients.




  28. Applications of Nanotechnology in Diagnostic Testing

    Nanotechnology, the manipulation of matter on an atomic and molecular scale, has emerged as a revolutionary field with

      to read | words

    published on Aug 03, 2023

    Nanotechnology, the manipulation of matter on an atomic and molecular scale, has emerged as a revolutionary field with diverse applications across various industries, including healthcare. In the realm of diagnostics, nanotechnology offers promising advancements, from early disease detection to point-of-care testing and personalized therapeutics, that hold the potential to radically transform how diseases are detected and monitored.

    Introduction to Nanotechnology in Diagnostics

    Diagnostic testing is a critical aspect of modern medicine, enabling the early detection and monitoring of diseases. Traditional diagnostic methods have limitations in terms of sensitivity, specificity, and the ability to detect diseases at their earliest stages. Nanotechnology's unique properties, such as high surface-to-volume ratios, surface reactivity, and size-dependent properties, have opened up new opportunities for enhancing diagnostic accuracy and efficiency.

    Nanoparticles as Diagnostic Probes

    Nanoparticles, owing to their size and tunable surface properties, have become versatile diagnostic probes. They can be functionalized with ligands, antibodies, or aptamers to specifically bind to target biomarkers associated with diseases. Functionalized nanoparticles serve as highly sensitive and specific diagnostic agents, enabling the detection of biomarkers even at low concentrations.

    Point-of-Care Diagnostics

    Nanotechnology has played a pivotal role in the development of point-of-care diagnostics, bringing sophisticated diagnostic capabilities closer to the patient. Nanoscale sensors, integrated into handheld devices, enable rapid and on-the-spot diagnosis, allowing for immediate treatment decisions and improved patient outcomes. 

    Nanopore Sequencing

    Nanopore sequencing, an emerging technology in genomics, uses nanoscale pores to directly sequence DNA or RNA molecules. This technique offers advantages of high speed, cost-effectiveness, and portability, making it a promising tool for diagnostic applications, such as infectious disease detection and personalized medicine.

    Early Disease Detection and Monitoring

    Early Cancer Detection

    Nanotechnology has brought about a revolutionary transformation in cancer diagnosis, enabling early detection and monitoring. Nanoparticles now act as contrast agents in various imaging modalities, greatly enhancing sensitivity and allowing for the detection of small tumors or metastases with unprecedented precision. Moreover, nanoscale biosensors are making waves by detecting cancer-specific biomarkers present in bodily fluids, making non-invasive and highly sensitive cancer screening a reality.

    A prominent illustration of this cutting-edge technology is NanoString Technologies' NanoString nCounter® system. Leveraging nanotechnology, this platform proves to be a game-changer in measuring and analyzing gene expression in cancer cells. Employing specific molecular probes, it is adept at detecting gene signatures associated with various types of cancer, offering valuable insights for early cancer detection and personalized treatment options. As a potent tool in cancer research and diagnostics, it enables high-throughput analysis of gene expression, contributes to a deeper understanding of tumor heterogeneity, and fosters the development of targeted therapies tailored to the needs of individual patients.

    Infectious Disease Detection

    Ensuring swift and accurate detection of infectious agents is paramount in controlling outbreaks and facilitating timely treatment. Nanotechnology-based assays, like nanobiosensors and nanoprobes, have emerged as powerful tools, offering heightened sensitivity and specificity in identifying pathogens, enabling rapid and targeted interventions. A prominent exemplar of this cutting-edge technology is Nanosphere's Verigene platform, a rapid and highly sensitive diagnostic test capable of detecting various infectious diseases, including bacterial meningitis, HIV, Streptococcus pneumoniae, and Chlamydia trachomatis.

    The Verigene test operates by utilizing specific antibodies tailored to target particular pathogens. These antibodies are affixed to nanoparticles, which are then introduced into the patient's body. Upon binding to pathogens, these nanoparticles can be identified through imaging techniques like flow cytometry. Here, a blood sample is passed through a laser, measuring the light scattered by the nanoparticles. By detecting changes in the scattered light, the presence of pathogens can be discerned, allowing for timely and accurate diagnosis.

    Nanotechnology for Personalized Medicine

    Targeted Drug Delivery

    Nanotechnology is transforming the drug delivery landscape, offering a breakthrough in targeted and controlled release of therapeutics. Engineered nanoparticles can effectively encapsulate drugs and navigate the body's biological barriers, precisely delivering medications to specific disease sites. This targeted drug delivery approach significantly enhances therapeutic efficacy while minimizing potential side effects on healthy tissues. An exemplary instance of this advancement is the Healios system, an innovative nano-emulsion drug delivery system developed by Avita Medical to treat diabetic macular edema (DME).

    The Healios system stands as the first and only FDA-approved nano-emulsion drug delivery technology capable of delivering the drug ranibizumab directly to the retina. With marketing authorization received in October 2021, it is now commercially available in the US. This revolutionary system comprises tiny oil droplets suspended in water, effectively bypassing the blood-retinal barrier, and precisely reaching the retina to provide targeted drug delivery. Notably, the Healios system has demonstrated superior effectiveness in reducing vision loss compared to conventional treatments, with a reduced risk of side effects like intraocular bleeding. Moreover, the system eliminates the need for surgical intervention since it is administered as a simple injection directly at the point of care. The Healios system exemplifies the remarkable potential of nanotechnology in revolutionizing drug delivery for improved patient outcomes.

    Personalized Cancer Therapy

    Nanotechnology assumes a crucial role in personalized cancer therapy, enabling the creation of individualized treatment strategies. Specifically engineered nanoparticles, equipped with targeted ligands, effectively deliver chemotherapeutic agents to cancer cells expressing specific receptors. This targeted drug delivery enhances drug efficacy while minimizing harmful effects on healthy tissues. AptImmune presents a notable example of this technology through their development of aptamer-based nanoparticles—short RNA/DNA strands—that selectively bind to proteins expressed on the surface of cancer cells. These nanoparticles facilitate drug release within the tumor, inhibiting further cell proliferation and limiting cancer spread. AptImmune's innovative nanoparticle drug delivery approach is currently undergoing clinical trials, showcasing the remarkable potential of nanotechnology in advancing personalized cancer treatments.

    Future Directions and Challenges

    Nanotechnology in diagnostic testing holds significant potential, but it also faces several critical challenges that need addressing. Regulatory agencies must develop guidelines to ensure the safety, efficacy, and validation of nanotechnology-based diagnostics. Standardization is crucial to achieve consistent and reproducible results across various laboratories. Additionally, the transition from research to large-scale manufacturing demands careful consideration of quality control, reproducibility, and cost-effectiveness. Safety concerns surrounding the potential toxicity of nanoparticles require thorough toxicity studies to safeguard patient well-being. Tackling these challenges will pave the way for the successful integration of nanotechnology in diagnostic testing, revolutionizing healthcare practices.

    Nanotechnology's transformative potential in diagnostic testing holds promise for revolutionizing disease detection, monitoring, and treatment. By providing greater sensitivity, specificity, and portability, nanotechnology-based diagnostics have the potential to improve patient outcomes, support personalized medicine, and contribute to early disease detection and prevention. As research advances and challenges are addressed, nanotechnology is poised to play an increasingly significant role in shaping the future of diagnostic testing in healthcare.



  29. The Cost of Inaction: How Climate Change Impacts Farmer Livelihoods

    Climate change has caused severe environmental degradation and altered global weather patterns. This has resulted in significant impact

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    published on Aug 01, 2023

    Climate change has caused severe environmental degradation and altered global weather patterns. This has resulted in significant impact on food production, affecting farmers worldwide. In India, agriculture is a critical economic sector, with small and marginal farmers forming a major part of it. Climate change affects various aspects of agricultural production, including rainfall, pest proliferation, soil quality, cropping patterns, and harvest unpredictability, leading to decreased yields and increased costs. The government's initiatives to support farmers in coping with climate change have faced challenges, necessitating sustainable farming practices and increased support to ensure food production.

    Climate change has caused an existential crisis for our planet, with massive environmental degradation leading to an extreme shift in weather patterns across the globe. The rising sea levels due to ice caps melting are resulting in natural disasters and large-scale destruction. The negative impact of climate change is present in almost all spheres of our lives, including food production. It has severely affected crop yields across the globe. It has also disturbed the types of crops that can be grown in certain regions by altering their soil, water, and pest populations. Therefore, the lives and livelihoods of farmers are irreversibly affected, and they have to take measures and transform their methods and processes.

    Agriculture is one of India's largest and most significant economic sectors. In 2022–23, the contribution of agriculture to India's GDP was approximately 18%. In addition, this sector employs 42% of the Indian population. Small and marginal farmers comprise the bulk of the Indian agricultural economy, contributing 51% of the total farm production, 46% of the operational land holdings, and 70% of the high-value crops.

    Climate change impacts multiple factors related to agricultural production. Some of them are as follows:

    • Rainfall: Most Indian farmers, especially small and marginal, depend on natural rainfall for irrigation. Lack of the correct amount of rain can lead to crop failure for them. In addition, unpredictable precipitation patterns reduce the time crops must mature, resulting in a decrease in yield over time. Farmers are forced to invest in costly irrigational facilities, hampering their overall profit.
    • Pesticides: Rising temperatures and unpredictable weather patterns have created the ideal conditions for the proliferation of pests and disease-carrying insects, which threaten crop yield and quality. As a result, farmers are forced to rely more heavily on chemical treatments to protect their crops. Insecticide and pesticide not only increase their costs but also have potential environmental and health impact.
    • Soil quality: The changing climate has affected the quality of soil, which is a vital factor in farming. With the increase in temperature, soil moisture reduces, and this, coupled with the lack of rainfall, leads to soil degradation. The soil loses fertility, making it difficult for farmers to grow crops. To compensate, farmers increase their fertilizer and water use, degrading soil quality and depleting groundwater reserves while spending significantly more to produce the same amount — or less — on the same acreage. Furthermore, increased frequency and extremity of weather events such as floods, cyclones, and landslides damage the soil, making it unsuitable for agriculture.
    • Cropping patterns: The shift in weather patterns has altered the cropping patterns of farmers. The traditional cropping pattern is no longer feasible, and farmers are forced to switch to crops more suitable for the current weather conditions. However, these crops are not always marketable, and farmers cannot sell them at a reasonable price. This affects their income and livelihood, as they cannot profit from their produce.
    • Harvest: The harvest season has become unpredictable, making it difficult for farmers to plan their activities. Hence, they are often unable to get their crops to the market in time. Additionally, the distance from the market or lack of proper storage or transport further delays getting the produce to the market. As a solution, farmers have to depend on intermediaries and sell at a much lower cost.
    • Migration: Diminishing crop yield and increasing cost of agriculture have compelled many farmers to migrate to big cities in search of another vocation. This has led to an increased urban population, which is often not equipped with the necessary resources or infrastructure to sustain the influx of people. These farmers are forced to live in derelict conditions and are unable to find well-paying jobs. Overcrowding and poverty have resulted in rising crime rates in many cities.

    Crop Yield in 2022

    In the first nine months of 2022, 88% of the days were marked by heatwaves and unexpected rainfall, affecting 1.8 million hectares of India's cropland. Since 50% of India's net cultivated area is rainfed and accounts for more than 40% of the total food production, this crisis also affects consumers and the Indian economy.

    Government Initiatives

    The government has taken various steps to help farmers fight climate change. One of the most prominent initiatives is the National Adaptation Fund for Climate Change (NAFCC) 2015, which provides financial assistance to farmers for developing strategies to cope with climate change. It has a budget allocation of USD43 million. This fund will enable them to take proactive measures such as crop diversification and water conservation to better adapt to changing climatic conditions.

    However, research shows that since 2017, the grants released from the NAFCC have dropped significantly. The government spent around USD14 million between 2017 and 2018. More recently, between 2021 and 2022, only USD3.40 million was spent from this fund. Government inaction has only exacerbated the problem and left many farmers struggling to cope with changing weather patterns and increasingly unpredictable harvests.

    Conclusion

    Climate change has significantly impacted farmers' livelihoods in India. The lack of good rainfall and soil degradation have affected their productivity, while the shift in weather patterns has made it difficult for them to get their crops to the market in time. To address these issues, there is a need for sustainable farming practices that are resilient to climate change. Additionally, the government must provide farmers adequate support to adapt to the changing climate and market conditions. Technological interventions can be employed to help increase crop yields despite unfavorable conditions. Such efforts must be prioritized so that farmers can continue to produce food for their communities despite the effects of climate change.




  30. Mexico – A Promising Sourcing Destination for US Procurement Organizations

    With the global supply chain disruptions, countries are looking to develop strong supply base near to them. For

      to read | words

    published on Jul 26, 2023

    With the global supply chain disruptions, countries are looking to develop strong supply base near to them. For the US, Mexico has emerged as a strong contender. Many drivers contribute to the country being a preferred option. The number of collaborations and trading transactions between the two countries rose in the past year, and this will only increase further. In this article, we discuss why sourcing from Mexico is an attractive option for large US organizations to procure key categories such as metal & electronics components, automotive parts, and other manufacturing products.

    The pandemic coupled with Russia-Ukraine war, as well as other major geopolitical challenges led to significant disruptions in the global supply chains. Supply–demand gaps, labor shortages, and other operational factors have created bottlenecks leading to high order backlogs. Organizations worldwide are facing the impact, as the cost of raw materials, energy, and other operational costs substantially increased over the last 2–3 years.

    Therefore, in these uncertain conditions, procurement organizations are looking for stable and predictable supply chain and sourcing options. To streamline the supply chains, many organizations are now choosing to localize manufacturing capacity in nearby locations with partners who are reliable, safe, and secure. The US has identified Mexico as a great destination for nearshoring.

    Strong economic growth, large contribution of the manufacturing sector, high FDI inflows, established infrastructure and telecom network, and easy border connectivity with the US are few main drivers enabling the US companies to consider Mexico. Further, key regulatory initiatives, such as USMCA Act (revised version in 2023), are focused on building resilient, secure, and integrated supply chains in North America enabling Mexico a promising sourcing destination for the US procurement organizations.

    Why Mexico?

    Strong Economic Growth with Rising Contribution from Manufacturing Sector


    According to World Economics Data, the Mexican economy, which grew for the sixth quarter in a row in Q1 2023, is currently the 14th largest economy with a gross domestic product (GDP) of USD 1.41 trillion in 2022, which is expected to grow 3–5% in 2023. Key drivers, including growing manufacturing activity, tourism, and inflows of foreign investment and remittances, pushed Mexico’s GDP 3.9% in annual terms in Q1 2023.

    The manufacturing sector currently represents >18% of Mexico’s economy with well-established industries such as electronics and automotive. This growth is supported by increasing manufacturing of IT hardware and new opportunities related to the electric vehicle supply chain and other green technologies. 

    This strong manufacturing landscape has pushed the intention of more than 400 US companies to relocate from Asia to Mexico in 2022. In 2023, the Mexican Association of Private Industrial Parks (AMPIP) expects that ~450+ global organizations shall move to Mexico by 2024–25. This nearshoring activity by US companies has potential to boost the growth of Mexican manufacturing exports to the US from USD 455 billion today to an estimated USD 609 billion in the next five years. 

    Additionally, Mexico’s Business Confidence Index recently posted an upshift from 99.3 in 2020 to 101.1 in 2023, signaling a shift from pessimistic outlook to an increased confidence in near future business performance – indicating a strong positive investment sentiment of companies to consider it as an alternative for sourcing.

    The overall strong contribution of the manufacturing sector to GDP followed by improved ranking on the business confidence, has allowed US companies to think of Mexico as a great opportunity for sourcing.

    Strong FDI Inflows Led by the US


    Foreign direct investment (FDI) inflows into Mexico substantially increased since the pandemic to the highest level in a decade, distributed across various states and sectors of the economy. Greenfield FDI into Mexico rose to a record of more than USD 40 billion in 2022. Manufacturing projects alone grabbed USD 23.8 billion last year. Automotive companies had the largest share of these investments with a focus on increasing manufacturing capacity in the region. Other sectors, such as electrical equipment and computers, are witnessing considerable growth in FDI.

    Mexico has become a favorable destination for nearshoring projects for US companies that contributed around 50% of the total FDIs in recent times. Key investment announcements by international organizations such as Tesla’s Gigafactory (USD 5 billion) in Nuevo León and BMW’s Lithium Battery Assembly plant (EUR 800 million) in San Luis Potosí further demonstrated the optimistic mindset toward the Mexican economy. In addition to the US investments, Chinese companies are making substantial investments and setting-up plants in Latin America, including Mexico, allowing them to get duty-free access to the US as well as benefitting the Mexican economy. 

    Strong Trade with the US


    Manufactured products account for 80–85% of total Mexico’s exports, followed by oil and oil products 5–10%, while the agricultural sector accounts for 3–4%. The US is the main trading partner of Mexico accounting for 70–75% of total exports and 35–40% of total imports. Others include China, Japan, Germany, etc. In 2022, trade between Mexico and the US increased to USD 718 billion giving Mexico a trade surplus of USD 187 billion.

    In the first four months of 2023, trade between Mexico and the US reached USD 263 billion, establishing Mexico as the primary trading partner for the US. This milestone has reflected a real transformation in the sourcing dynamics of the global economy — away from sourcing from low-cost countries, such as China, with greater efficiency but having fragile supply chains to something more subtle ones.

    Strong growth in economy and exports, growing manufacturing sector, business confidence index, favorable demographics, and supportive regulatory initiatives, such as the USMCA act and other multiple free trade agreements, make Mexico an attractive and reliable sourcing alternative for the US organizations. With China’s downfall as a global supplier, the country is expected to become a large turnkey manufacturing and sourcing destination in the next 5–10 years.




  31. Keeping an Eye on the Road: The Surge in Driver Monitoring System (DMS)

    With a significant number of road accidents attributed to distracted driving, the adoption of “Driver Monitoring System” (DMS) gai

      to read | words

    published on Jul 19, 2023

    With a significant number of road accidents attributed to distracted driving, the adoption of “Driver Monitoring System” (DMS) gained traction in the automotive industry. Governments worldwide are considering legislation to make DMS mandatory, while car manufacturers are embracing this technology to enhance the safety of their vehicles. Will DMS become a safety norm across the globe in the coming years?

    As per the World Health Organization (WHO), a staggering 1.3 million lives are claimed by road accidents annually. Out of total fatal road accidents, 25–30% are caused due to distracted driving. The distraction could be due to sleep deprivation, anxiety, or personal/professional pressures. To eliminate this as a cause for accidents, OEMs introduced a new safety feature called “Driver Monitoring System” (DMS).

    DMS is a technology that uses cameras and sensors to monitor a driver’s face, eyes, and body movements to detect distraction or abnormality. It prevents accidents by alerting drivers if they find signs of distraction.

    Lexus took this pioneering step in 2006 by introducing DMS in a passenger vehicle. Toyota and Volvo swiftly followed suit. Ford, Cadillac, BMW, and other European manufacturers have also embraced DMS in select models.

    A trend has been observed that all the safety-related features introduced by OEMs eventually were made mandatory by many countries, like seat belts, airbags, etc. There are also regulations underway to make DMS compulsory in vehicles in the US, EU, and China. This will drive the growth of DMS.

    Current Regulatory Environment

    In 2018, Jiangsu became the first province in China to enforce regulations mandating DMS for long-distance trucks and vehicles carrying hazardous goods.

    In 2019, the European Union (EU) introduced a comprehensive safety regulation that mandates the inclusion of advanced safety features like DMS in all newly produced automobiles in the region. While currently restricted to vehicles with a certain degree of automated driving capability, the regulation is set to encompass all newly manufactured cars across Europe by 2026. To attain a coveted five-star safety rating from the esteemed Euro NCAP (European New Car Assessment Program), new cars are now mandated to incorporate driver monitoring capabilities.

    In April 2021, a new law called the “Stay Aware For Everyone (SAFE)” Act of 2021 was proposed in the US Senate. Once approved, DMS would become mandatory for vehicles equipped with semi-autonomous driving systems. If the legislation passes, all new cars would be required to have some form of DMS technology installed by 2027.

    Prevalent Technologies

    In DMS, currently, eye recognition and steering wheel torque recognition technology are prevalent in the market. Eye recognition technology uses a camera to monitor the driver’s facial position as well as eye movements, and it sends an alert, either a beep sound or flashlight, if the driver is distracted or inattentive. Monitoring a driver’s face at night or in the dark or if the driver is wearing dark sunglasses can be difficult. To tackle this, driver-facing cameras are equipped with infrared light-emitting diodes. Steering wheel torque recognition technology uses a sensor to alert when the driver is not actively holding a steering wheel for a certain period (say 30 seconds).

    As the adoption of DMS is growing, technology firms are expanding their focus beyond detecting driver drowsiness. These advanced systems are now capable of monitoring driver health and comfort, including heart rate and breathing patterns. In the future, these systems will even detect symptoms of a heart attack and alert the driver's doctor or guide them to a hospital.

    Harman, a company specializing in connected car technology, unveiled an advanced DMS. This system can measure a driver's heart and breath rate levels to understand their well-being. Harman claims that this technology can also detect if a child is left unattended.

    Auto OEMs and Sensor Manufacturers Readiness

    All OEMs are gearing up for the rise of DMS adoption alongside the increasing focus on electric vehicles and autonomous driving. With a technology roadmap toward autonomous driving, nearly all OEMs are expected to incorporate DMS in their vehicles. DMS penetration is projected to reach 50% within the next five years and close to 100% within a decade at least in the US and EU.

    According to industry experts, DMS will be introduced in high-end models initially, resulting in a price hike of approximately 5%, before gradually expanding to low-end models with a price increase of around 2%.

    DMS will boost the sensor market on the back of the requirement of infrared sensors, radar sensors, laser sensors, and sensors in the steering wheel, etc., with camera-based sensors leading the growth.

    Conclusion

    DMS is expected to become compulsory in the US, Europe, and China in the near future. These are the key markets for almost all automobile manufacturers. All automotive OEMs will try to differentiate themselves from peers by introducing unique DMS features. This will be achieved by effective collaboration between automotive OEMs and technology companies specializing in camera systems, sensors, artificial intelligence, and data analysis. These collaborations will lead to new synergies. By embracing DMS and leveraging its benefits, OEM will be able to strengthen their business and adapt to the evolving automotive landscape.



  32. Cell and Gene Therapy – The Next Frontier in Lifesciences

    In this era of rapid scientific and technological advancements, we are at the precipice of a healthcare revolution.

      to read | words

    published on Jul 18, 2023

    In this era of rapid scientific and technological advancements, we are at the precipice of a healthcare revolution. Cell and Gene therapy (CGT), pioneering treatments that leverage our own biology, are poised to challenge traditional healthcare frameworks. CGT has been witnessing an expanding total addressable market and is expected to grow exponentially. However, the potential gains are not merely financial. Investments in this growing field also help propel the momentum of scientific and medical progress, funding vital research that brings us closer to a more efficient, personalized, and holistic healthcare future. This article attempts to present the current and future landscape of CGT, with a focus on the clinical pipeline evolution, strategic collaborations, and financing and investment environment globally.

    How has cell and gene therapy been evolving globally over the years?

    Cell and gene therapies (CGTs) hold the promise of transforming the healthcare sector, with radical shifts in not only patient outcomes but also the financial dynamics of the industry. CGT applies to diverse, challenging conditions including advanced, late-stage cancer; rare, inherited genetic disorders; and neurodegenerative disorders, thereby increasing the extent of personalization and providing unprecedented cures for diseases once thought incurable.

    Over the last two decades, the CGT space has seen remarkable advancements. The two key approvals of Zolgensma (Novartis – Spinal muscular atrophy) in 2019 and Breyanzi (Bristol-Myers-Squibb – Lymphoma) in early 2021 have been a cornerstone for next-gen innovation.

    There has been significant progress in vector selection, design, and management of immune responses, thereby improving efficacy and minimizing side effects. Although the FDA approved only 27 CGTS in 2022 (representing ~8% of 340 approved biologics), when viewed through the lens of innovative drugs, CGTs continue to make up a large proportion of total approvals.

    What does the clinical trial landscape for cell and gene therapy hold for the future?

    As per a 2022 FDA report, CGT developers submitted more than 650 applications for clinical trials in the past two years, with over half of the trials focusing on oncology (sponsored equally by industry, academic participants, and governments).

    In cell therapy, efforts are being made toward enhancing autologous therapy manufacturing, reducing costs and shortening vein-to-vein time. The aim is to achieve breakthrough efficacy in solid tumors while improving the overall patient/customer experience. Meanwhile, in gene therapy, interventions aim to address current vector limitations such as transgene size, tropism, and immune response triggers. These platforms facilitate nonviral delivery methods, lower manufacturing costs, and expand capacity.

    Promising clinical results boost the pace of CGT advancement. Illustrative examples include positive preliminary results for Pfizer and Sangamo's for SB525 (hemophilia A) and Amicus's AAV-CLN6 (in 7 Batten disease patients). Success rates for CGT products surpass those of small molecule products, possibly due to focused targeting of specific disease drivers instead of broader targets.

    Considering the number of clinical trials in various stages, the US FDA expects to receive more than 200 investigational new drug applications every year through 2025. Additionally, it estimates the approval of up to ~20 CGT products a year by 2025.

    To what extent are strategic collaborations prevalent and how significant are these initiatives within this domain?

    Pharmaceutical and biotechnology companies are showing a growing interest in CGT assets, as evidenced by a rise in acquisitions and licensing agreements. They utilize spin-offs and acquisitions to realign their portfolios, embrace new growth strategies, and strengthen their commercial pipelines.

    Notable examples include the acquisition of Novasep's viral vector manufacturing business by ThermoFisher; Bayer's complete acquisition of allogeneic stem cell therapy company BlueRock Therapeutics for ~USD 600 million, and the acquisition of Semma Therapeutics (stem cell-derived human islets for diabetes) by Vertex for ~USD 950 million. The trend of acquisitions and collaborations is likely to continue, where small biotechnology companies would serve as an innovation hubs providing niche capabilities and competencies to large pharma companies.

    Despite the peak in M&A activity in 2022, partnerships remained the dominant form of transactions, comprising over 80% of the total. Biopharma firms predominantly choose partnerships as a means to invest in CGT, particularly those that offer access to all assets within a specific modality. They prioritize access to cutting-edge technology irrespective of the indication or therapeutic area, enabling the development of technologies that provide the most clinical benefit.

    What is the level of financing and investment activity in this field?

    Despite having a limited number of approved drugs, CGT companies continue to attract an increasing amount and proportion of private and public investment.

    Over USD 3.9 billion had been raised through IPOs by September 2021, a remarkable 110% increase from the USD 1.8 billion raised in 2018. CGT tool providers have also gained investor attention, raising nearly USD 1.6 billion through IPOs in 2021.

    With programs progressing rapidly from clinical to commercial stages and targeting larger patient populations, investors are now placing greater emphasis on manufacturing, which constitutes ~50% of the CGT development and commercialization process. A notable example of this trend is AGC Biologics' acquisition of a commercial manufacturing facility previously owned by Novartis Gene Therapies.

    Private equity (PE) and venture capital (VC) investment has experienced significant growth, with average growth rates of ~ 59% for gene therapy and ~63% for cell therapy from 2010 to 2021, surpassing the overall life sciences domain growth rate of ~18%. This increase has provided crucial support to emerging companies.

    • Biopharma companies forge partnerships with VC firms or biotech originators for innovation and market expansion. Collaborations with academic institutions allow licensing of new technologies, enabling early-stage investments and fostering rapid innovation. PE firms are also increasingly investing not only in emerging specialty companies (predominantly those with EBITDA of USD 10 million or lower) but also in companies focusing on the plasmid DNA and viral vector space.
    • Century Therapeutics with USD 250 million in venture financing – July 1
    • Astellas Pharma signs a USD 80 million upfront agreement with Frequency Therapeutics to develop and commercialize therapy for hearing loss – July 17

    How is the regulatory and reimbursement landscape evolving within the CGT space?

    A rise in filing of applications is expected, particularly for breakthrough and regenerative medicine advanced therapy designations, which would be supported by robust documentation. The FDA's Bespoke Gene Therapy Consortium under the NIH Accelerating Medicines Partnership Program streamlines small-batch gene therapy research, addressing barriers and providing guidance on research, manufacturing, and regulations. It serves as a central hub for these therapies. Moreover, the FDA has launched a gene therapy pilot program that would enable real-time input for sponsors during clinical development, speeding up the development cycle and review process through frequent interactions with regulators.

    Globally, there have been significant innovations in pricing and reimbursement. Some of the key developments include the issuance of final national coverage determination of CAR-T therapies for Medicare beneficiaries by The Centers for Medicare & Medicaid Services and launch of the Embarc Benefit Protection plan by Cigna for employers, Health Maintenance Organizations, and other insurers to fully cover the costs of Luxturna and Zolgensma initially, which could then be extended to other therapies.

    In summary, global CGT is rapidly advancing, offering revolutionary approaches to treat diseases at their root cause. It has potential to transform healthcare by providing targeted and personalized treatments, along with ongoing R&D efforts focusing on harnessing the full potential of these therapies to benefit patients globally.




  33. Megatrends in 3D Printing - Sustainable Materials

    The 3D printing industry is embracing several strategies to make itself more sustainable. Manufacturers are providing plant-based materials,

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    published on Jul 12, 2023

    The 3D printing industry is embracing several strategies to make itself more sustainable. Manufacturers are providing plant-based materials, biodegradable materials, recycled materials, and innovative formulas. Adopting a circular economy model, choosing environmentally friendly materials, and reducing the environmental impact of materials are key strategies focusing on sustainability.

    Currently, non-biodegradable materials, such as ABS (acrylonitrile butadiene styrene), are prevalent in 3D printing, but manufacturers are now offering a range of sustainable material solutions, including plant-based materials, biodegradable materials, recycled materials, and novel formulations. These solutions can be categorized into three approaches: 

    • Embracing a circular economy model
    • Opting for environmentally conscious materials
    • Mitigating the environmental impact of materials

    Embracing a circular economy model

    One approach to sustainability in 3D printing is the utilization of recycled materials. The filament extrusion 3D printing process relies on thermoplastics, which may not align with optimal environmental sustainability practices. However, 3D printing offers a promising avenue for the recycling of these materials. Materials from other industries can be converted into 3D printing filament, as well as materials from printing failures, support structures, or obsolete 3D printed parts. By shredding and extruding the material, a new spool can be produced with equivalent performance capabilities. Some sustainable options within FDM include R-PET, R-PLA, recycled tire filament, recycled TPU, and recycled high-impact polystyrene.

    Opting for environmentally conscious materials

    Another approach to sustainability involves the utilization of renewable resources and the development of biodegradable materials. Various bio-based materials can be used across different 3D printing processes, offering an eco-friendly option that can be broken down by bacteria present in industrial composting facilities. Some sustainable options include composites made from PLA and PHB, PA11, BioPETG, and biodegradable ABS.

    Mitigating the environmental impact of materials

    The adoption of filled filaments and bio-composites is another approach to mitigate the environmental impact of materials. By integrating waste materials into new products, 3D printing offers new avenues for sustainability. A PLA matrix filled with various waste materials can be utilized, producing a final material that is entirely bio-based and biodegradable. However, these materials generally possess suboptimal mechanical properties, limiting their application to accessories, decorative objects, design, artistic pieces, and sculptures. Filled filaments are available in filament form for FDM technologies, but larger nozzles than usual are necessary due to the size of the fibers or particles with which the plastic is filled. This results in lower resolution but faster printing cycles. Some examples of filled filaments include modified polyester and oyster shell powder, hemp PLA, algae PLA, wood PLA, mineral-filled PLA.


    To conclude, overall sustainable materials are gaining momentum in the 3D printing industry as a viable business strategy that aligns with consumer concerns and demand for environmentally conscious practices. By embracing sustainable materials, industries and manufacturers can cater to a growing market of consumers who prioritize sustainability in their purchasing decisions. Furthermore, sustainable materials present an opportunity for additive manufacturing start-ups to differentiate themselves from traditional manufacturing practices and enhance environmental sustainability in the future.



  34. Non-Conventional Caffeinated Drinks: Innovative Alternatives for Caffeine Fix

    In today's fast-paced world, coffee and tea continue to be staple beverages for people worldwide. However, with growing

      to read | words

    published on Jul 11, 2023

    In today's fast-paced world, coffee and tea continue to be staple beverages for people worldwide. However, with growing innovation in production, beverage manufactures are offering caffeinated alternatives such as ready-to-drink tea/coffee and energy drinks in varied flavors, functional blends and low caffeine which has altered consumer preferences.

    Tea and coffee are considered the most consumed beverages in the world after water. Caffeine is a stimulant known to cause instant spike in energy levels and mindfulness. Hence, it is consumed by billions of people daily.

    The Global Caffeinated Drinks Market is expected to reach USD 310 Billion by 2025 with a growth rate of 6.8% from 2022 to2025. The main reason is high awareness of the fact that caffeine increases strength and metabolism if consumed in adequate amounts. Another reason for rising demand is growing income levels and standard of living in developing countries is presumed to boost demand for caffeinated drinks. Although, currently tea and coffee are the most popular beverages, innovative caffeinated beverages that are healthy, have unique flavors, are chemically caffeinated or plant-based and served either hot or cold depending upon the consumer liking are emerging.

    Traditional Caffeinated Beverages

    Here are some traditional caffeinated drinks with caffeine content per 240 ml (1 cup) as defined below:

    • Coffee (102–200 mg)
    • Black/Milk Tea (40–120 mg)
    • Energy Drinks (50–160 mg)
    • Ready-to-Drink (RTD) Tea & Coffee (40–60 mg)
    • Decaf (3–12 mg)
    • Soft Drinks (2–7 mg)

    New Variants of Caffeinated Beverages

    Hectic lifestyles and rising urbanization have led to consumers preferring caffeinated beverages that require minimal to no preparation. As a result, beverage manufacturers have been launching innovative, flavored, and functional beverages, mentioned below, to meet the consumer’s desires of health and wellness.

    • Tea:
      • Single-estate pure leaf teas and functional botanical blends are the two RTD teas in high demand. Consumers perceive tea as a healthy beverage and connect with transparency, authenticity, and history of the drink.
      • Flavored/iced tea is another RTD trend that is gaining popularity as added flavor in the beverage gives consumers the feeling of sweetness. Honey green tea, berry hibiscus herbal tea, original green tea, Moroccan mint tea, and peach oolong tea are some trending flavors in the RTD tea market.
      • Demand for probiotic tea induced with adaptogenic blends herbs using maca, ashwagandha, moringa, and mushrooms is rising.
      • Matcha tea is a type of green tea made from Camellia sinensis and is widely popular in China and Japan. It is a labor-intensive beverage which involves tarping and shading the tea fields. While Matcha tea has more caffeine (75–180 mg) than conventional green tea (30 – 40mg), it provides many health benefits such as low heart-disease risk, relaxation, weight loss, and alertness.
      • Demand for niche teas such as Kombucha (fermented drink made with tea, yeast, and bacteria, 15 mg caffeine) and Yerba Mate (made from dried yerba mate leaves, 2–7 mg caffeine) as they are supposed to be beneficial in improving gut health, digestion, stress relief, blood pressure management, and immunity.
    • Coffee:
      • Sealed bottled or canned cold brew that can be picked up on the go is a rising trend in the caffeine beverage industry. Innovation in packaging technology and convenience of consumption of packaged foods has been driving the growth. Key trends, such as higher protein, lower sugar content, localized flavors, and fortifications with minerals, vitamins, and good fats like Omega-3 fatty acids, have been on high demand for RTD coffees. Large corporations, such as Starbucks and Nestle, teamed up to introduce iconic Starbucks Frappuccino and Starbucks double shots in RTD format.
      • Consumers have also shown interest in indulgently flavored RTD coffees that would include regional flavors, seasonal/tropical fruits, and blends with spices such as turmeric and spirulina.
      • Sparkling coffees are gaining traction in the market, especially amongst the millennials as they seek healthy alternatives to soft drinks and other sweetened carbonated beverages without compromising on flavor and texture of carbonation. Sparkling espresso tonics with bright and tart fruit flavors, such as grapefruit, blood orange, and cranberry, are popular in this segment.
      • An interesting find, mushroom coffee is made by combining coffee beans with medicinal mushrooms. While retaining the taste of regular coffee, this drink has less caffeine. It is available in a powdered form and contains enhanced flavors such as cinnamon, sea salt, cacao, turmeric, or Medium-chain triglycerides (MCT) oil. These mushrooms are linked to several benefits such as promoting immunity, brain health, and heart health.
    • Energy drinks:
      • Beverages that contain high levels of caffeine combined with stimulant properties namely taurine, guarana, and herbal substances. Its market is currently valued at USD 23 Bn and is projected to grow exponentially to reach 33 Bn by 2028. The growth is driven by innovation through distinctive flavors and targeted functionalities – stress relief, enhanced cognitive function, or boosted immunity and color graphics.
      • The flavor industry has introduced innovative technologies like enhancers and flavor modifiers, targeted at amplifying taste characteristics. Red bull in March 2023 launched cranberry-, lime- and blueberry-flavored energy drinks to cater to growing demand for more natural sweeteners.
      • Plant-based energy drinks contain superfoods ingredients and healthy adaptogenic herbs that provide natural boost of energy as opposed to regular energy drinks that rely on synthetic caffeine, artificial ingredients and added sugar which can create jitters and even a heavy crash. Moreover, the urge to consume natural and clean label products led to producers focusing on making high-fiber and gluten-free drinks using plant-based ingredients.
      • Energy drink brands have expanded their product portfolio through the launch of low- or zero-sugar options to tap the sports drink market. These results in the development of natural energy drinks that not only minimize sugar content but also taste delicious.

    Conclusion

    The caffeinated beverage market is abuzz with innovation as more people are gradually opting for drinks with moderate amounts of caffeine for a healthy lifestyle. Some options that contain less sugar, while still providing a caffeine kick, help consumers enjoy the benefits of increased energy without compromising their health. Furthermore, the introduction of various flavors and functional benefits contributed to the growing appeal of these beverages. As a result, the market for non-conventional caffeinated drinks is poised for significant growth in the coming years, as more people embrace their convenience, taste, and other attributes.



  35. Forging a Sustainable Future: A Look at Steel Companies' ESG Initiatives

    In 2022, worldwide production of crude steel totaled 1,885.02 million metric tons (mmt), and demand for steel is anticipated to

      to read | words

    published on Jul 11, 2023

    In 2022, worldwide production of crude steel totaled 1,885.02 million metric tons (mmt), and demand for steel is anticipated to increase significantly to meet future requirements. However, the steel industry is a major contributor to global greenhouse gas (GHG) emissions due to its reliance on fossil fuels and energy-intensive production processes. Currently, the industry accounts for approximately 8% of the global final energy demand and 7% of the energy sector’s CO2 emissions. Hence, there is pressure on the industry to reduce its carbon footprint. Consequently, it has been exploring various strategies, such as using renewable energy sources, adopting more efficient production methods, and implementing carbon capture and storage technologies to mitigate the environmental impact.

    In recent years, there has been increasing pressure on various industries to take environmental, social, and governance (ESG) issues seriously, and the steel industry is no exception. In recent times, major steel companies have undertaken ESG initiatives as part of their core business strategy, recognizing that it can have a positive impact on their financial performance and reputation. Some of the companies improving their ESG practices are:

    • ArcelorMittal: ArcelorMittal, a global steel company, has recognized the importance of ESG issues. The company has set ambitious targets to reduce GHG emissions intensity by 30% by 2030 and achieve net-zero carbon emissions by 2050. In line with these, ArcelorMittal has invested in modern technologies like Electric Arc Furnaces (EAF), hydrogen-based steelmaking, and Carbon Capture and Storage (CCUS). At the social front, the company has established programs to support employees' physical and mental health, provide training and development opportunities, and promote diversity and inclusion, among other initiatives. It has also strengthened its governance structure, reinforcing its commitment to ethical conduct and regulatory compliance, with policies and procedures for risk management, internal controls, and compliance with industry rules.
    • Nippon Steel: A leading Japanese steelmaker, Nippon Steel, has pledged to achieve carbon neutrality by 2050 and reduce CO2 emissions by 30% by 2030. The group plans to mass produce high-grade steel in EAFs to realize hydrogen steelmaking with a multi-aspect approach, including CCUS and other carbon offset measures. Nippon Steel’s social initiatives include supporting employee’s well-being and development via training & development programs, health and safety measures, and other employee engagement programs. The company also has disaster relief efforts and environmental conservation projects. The group has implemented various governance initiatives such as strengthening corporate governance framework, enhancing transparency in business operations, and promoting compliance and ethics throughout the group.
    • Tata Steel: Tata Steel, a global steel company, made ESG issues a priority in its business operations. The company has set targets to reduce carbon emissions intensity by 50% by 2030 and reach net-zero emissions by 2050. Its long-term plan includes the adoption of HIsarna technology and new smelting technologies, CCU dovetailing with existing processes, and integrating hydrogen across the steel value chain. Some of its specific social initiatives include setting up schools, providing vocational training, supporting women's self-help groups, and implementing green energy projects. Tata Steel has also undertaken various governance initiatives, including strong ethical and compliance policies, developing accountability, adopting international standards for sustainability reporting, and establishing a strict code of conduct for suppliers.
    • POSCO: POSCO, a South Korean steelmaker, has pledged to reduce CO2 by 20% in the short term (by 2030) and 50% in the mid-term (by 2040) and achieve carbon neutrality by 2050. Through innovative technologies, such as CCUS and hydrogen-based steelmaking, POSCO aims to equip itself with ‘low carbon competitiveness’. Additionally, POSCO has undertaken various social initiatives, including the establishment of the TJ Park Foundation to support social welfare and cultural activities. The company has also created the Steel Village project to improve living conditions in underdeveloped regions. POSCO has also implemented several governance initiatives, such as establishing a code of ethics and conducting regular audits to ensure compliance. They have put a whistleblower system in place to encourage transparency and accountability.
    • Hyundai Steel: Hyundai Steel, a South Korea-based steel company, aims to reduce carbon emissions by 20% by 2030 and achieve carbon neutrality by 2050. The company introduced ‘Hy-Cube’, a new low-carbon steel manufacturing system to develop low carbonization of products using EAFs. Hyundai Steel has undertaken various social initiatives, including the establishment of the ‘Hyundai Steel Love Foundation’ to support education and cultural activities. It has also implemented the "Green Car School" project to promote environmental education among children. In terms of governance, Hyundai Steel has established a compliance committee to oversee amenability with laws and regulations, implementing a whistleblower system to encourage employees to report any illegal or unethical activities and conducting regular audits to ensure compliance with internal policies and external regulations.

    Notes:

    • Bloomberg’s ESG score has been determined on the following metrics:
      • Environmental includes Energy Management, GHG Emissions Management, Air Quality, Water Management, Waste Management, Climate Exposure, and Environmental Supply Chain Management
      • Social includes Occupational Health & Safety Management and Social Supply Chain Management
      • Governance includes Board Composition, Executive Compensation & Shareholder Rights. The above ESG ratings are measured on a scale of 1–10
    • MSCI ESG Ratings aim to measure a company’s management of financially relevant ESG risks. Ratings range from leader (AAA, AA), average (A, BBB, BB) to laggard (B, CCC)
    • S&P Global ESG Scores (‘ESG Scores’) measure companies’ exposure to and performance on key ESG risks and opportunities, the quality and completeness of their public disclosures, and their awareness of emerging but underreported ESG issues. ESG Scores are measured on a scale of 0–100, where 100 represents the maximum score
    • Total GHG emissions/Revenue are measured in metric tonnes of CO2 (Scope 1+2+3) equivalent/to US$M of revenue
    • Arcelor Mittal includes 60% AM/NS India; Nippon Steel includes Nippon Steel Stainless Steel Corporation, Sanyo Special Steel, Ovako, 40% AM/NS India and 31.4% USIMINAS; 

    While several steel companies have taken initiatives in recent years, their number is limited. Although their efforts are commendable, they need to be scaled up and adopted more widely across the industry. Reduction of GHG, handling social issues, and filling governance gaps require a collective effort from all stakeholders, including management, policymakers, and investors. As such, it is crucial that other steel companies prioritize ESG initiatives and take action to mitigate their environmental impact and improve social and governance practices. Only through concerted action can the industry achieve sustainable growth and ensure a better future. Yet, some companies continue to prioritize profits over sustainability and engage in practices that harm the environment and local communities. As consumers and investors become more aware of ESG issues, steel companies will be compelled to improve their practices in these areas.

    Way forward:

    The steel industry has historically been associated with significant environmental impact. However, in recent years, many companies in this sector have been taking steps to improve their ESG performance. Several steel companies are implementing sustainable practices in their operations, such as reducing carbon emissions and water usage, and increasing the use of recycled materials, renewable energy sources, and optimizing resource utilization.

    Additionally, some companies are developing new products and solutions that are more sustainable, such as lightweight steel that can reduce fuel consumption in automobiles, and using steel for renewable energy infrastructure like wind turbines.

    To increase transparency and accountability, many steel companies are publishing ESG reports and engaging with stakeholders, including investors, customers, and local communities. By reporting ESG data with standardized reporting frameworks, they have enabled comparison and benchmarking across the industry.

    Finally, companies can implement green practices throughout their supply chain, from sourcing raw materials to recycling products at the end of their lifecycle. By undertaking these steps, the steel industry can become more environmentally conscious and socially responsible while creating long-term value for all stakeholders and contributing to a more sustainable future.



  36. Bioplastics - A Sustainable Alternative to Conventional Plastics

    Conventional plastics are a major cause of marine pollution. Bioplastics, made from renewable sources, are emerging as a

      to read | words

    published on Jul 06, 2023

    Conventional plastics are a major cause of marine pollution. Bioplastics, made from renewable sources, are emerging as a popular alternative. The ban on single-use plastics and increasing demand from industries drive their adoption. However, challenges like economies of scale and limited composting facilities exist. Stronger legislation and incentives are needed for widespread use. Bioplastics offer a sustainable solution to reduce plastic waste.

    Marine pollution is a significant global issue and conventional plastics are the leading cause. In response, governments, companies, and consumers are exploring sustainable alternatives, and bioplastics are emerging as a popular option. Bioplastics are materials made from renewable sources such as sugarcane, vegetables, fruits, used cooking oils, corn, and coffee waste. They offer significant advantages over conventional plastics, including biodegradability and low carbon footprint.

    The ban on single-use plastics is one of the key growth drivers behind the adoption of bioplastics. Many countries have implemented such bans, including Canada, China, India, Bangladesh, the Philippines, Cameroon, Kenya, and several states in the US. Plastic bag taxes are implemented by several Western European countries as well. This trend is expected to continue in the future, and bioplastics is poised to become an increasingly important part of the solution.

    Several industries use bioplastics– some of the prominent applications are packaging, automotive, textiles, electronics, and in the consumer products segment. The adoption of bioplastics in the packaging sector is much higher with the trend expected to continue. Almost all types of conventional plastic materials have alternatives in the form of bioplastics.

    Despite their many advantages, bioplastics currently represent less than 1% of total annual plastic production. However, the market for bioplastics has continuously grown, and global bioplastics production capacity is set to increase robustly by 2026.

    The increasing demand for bioplastics, coupled with the development of advanced applications and products, is driving their adoption. In the future, the market is expected to be propelled by brands embracing bioplastics for sustainability. Companies like Coca-Cola, Ford, Danone, Puma, IKEA, Heinz, and Toyota introduced large-scale products that incorporate bioplastics.

    However, a few challenges limit the present adoption of bioplastics. The key challenge faced by the industry is the economies of scale, limiting the fast transition from conventional plastics to bioplastics. In addition, bioplastics can biodegrade when exposed to microorganisms and can completely decompose under carefully controlled, high-temperature conditions in industrial composting facilities. Since the number of industrial composting facilities is low, most of the bioplastics can end up in landfills, releasing methane gas, a potent greenhouse gas that can lead to global warming.

    Stronger legislation is required to encourage the use of bioplastics and acknowledge their importance. Governments can provide subsidies or tax breaks for investing in bioplastics to encourage investments and have more companies set up their plants. Providing better incentives for industrial composting facilities would also help increase the number of facilities; therefore, a larger volume of bioplastics would be decomposed.

    In conclusion, bioplastics represent a sustainable alternative to conventional plastics. While there are some challenges to overcome, the adoption of bioplastics is expected to grow, driven by rising demand for sustainable alternatives and the emergence of more sophisticated applications and products. With the right incentives and support from governments, bioplastics could play a crucial role in reducing the environmental impact of plastic waste.



  37. Green Hydrogen in Circular Economy

    The urgent need to reduce greenhouse gas emissions has prompted countries worldwide to commit to net-zero targets, driving

      to read | words

    published on Jun 27, 2023

    The urgent need to reduce greenhouse gas emissions has prompted countries worldwide to commit to net-zero targets, driving the rapid adoption of low-carbon and renewable energy sources. Green hydrogen, generated from solar and wind power, has immense potential in sectors that are difficult to decarbonize. However, challenges related to costs, infrastructure, and policy intervention hinder its progress. Improving process efficiency, achieving cost efficiency through technological advancements and scale, transforming infrastructure, and implementing supportive policies are crucial for the widespread adoption of green hydrogen as a clean energy solution in the transition to a circular economy.

    Climate change is a reality, and hence the reduction in greenhouse gas emissions has become increasingly urgent to counter climate change. Countries across the globe have committed to reducing their carbon footprint and target net-zero emissions. To achieve this goal, rapid adoption of low-carbon and renewable sources of energy has become necessary.

    Green hydrogen— generated from renewable energy sources has immense potential in meeting future energy demands, especially in sectors such as transportation and heavy industries that are hard to decarbonize. However, the challenge lies in managing the variables, mainly the underlying costs and availability of renewable energy sources that impacts the adoption of green hydrogen.

    With growing awareness towards achieving a circular economy, green hydrogen could play a significant role. Green hydrogen and its downstream derivatives such as ammonia, methanol, fuels, etc. can replace higher-carbon fuels. However, certain challenges are hindering the progress of the hydrogen economy, key among them includes: 

    1. Process efficiency – At present, hydrogen produced globally is largely grey or brown, derived from fossil fuels which increases carbon emissions. Green hydrogen, produced through the electrolysis of water fueled by renewable energy sources, offers to be a promising fuel for a low-carbon future. However, technological advancement and improvements in the efficiency of green hydrogen production will be needed for the rapid adoption of this clean energy technology.
    2. Cost efficiency – The cost of green hydrogen is almost three times higher as compared to brown and grey hydrogen and may continue to be high, in the absence of subsidies and other policy support. However, with investments in the right technologies and large-scale production, companies can achieve economies of scale. Investments focused on improving the technology for commercial-scale manufacturing and new ways of producing zero-carbon electricity will further aid in achieving cost efficiency. 
    3. Infrastructure transformation – The existing infrastructure cannot handle bulk hydrogen transportation and storage. This has necessitated the need for large-scale investment in the distribution, and storage networks, and zero-carbon power generation. Hydrogen infrastructure initiatives like building decentralized fuel cell technologies, and establishing Hydrogen Highways, and Hydrogen refueling stations (HRS), etc. are expected to gather momentum. 
    4. Policy push – A considerable difference between the price for green hydrogen and brown/grey hydrogen calls for active policy intervention. This includes subsidies for zero-carbon electricity or incentives for the use of low-carbon hydrogen. Countries across the world need to have a formal road map and market-aligning policies for hydrogen production, distribution, consumption, and growth. This approach can assist in scaling and adopting green hydrogen globally. 

    Thus, with depleting conventional resources, there has been an increase in interest in alternatives, economical, and safer energy sources. Upscaling the existing green hydrogen production technologies will enable this low-carbon alternative to compete with conventional fossil fuels. However, it will also need the necessary backing of policy frameworks, and rapid investment in the infrastructure to accomplish a large-scale adoption of green hydrogen in the run-up to a circular economy.



  38. Sustainability Trends in Agrochemicals

    The global population surpassing eight billion has created a pressing need to enhance food production on existing arable

      to read | words

    published on Jun 27, 2023

    The global population surpassing eight billion has created a pressing need to enhance food production on existing arable land. This has resulted in increased use of agrochemicals to reduce crop loss and improve yields. However, excessive agrochemical usage has led to adverse effects such as soil fertility depletion, water stress, and pesticide resistance. To address these concerns, the industry is focusing on sustainable alternatives like Integrated Pest Management (IPM), biologicals, and genetic engineering. Thus, to promote ecological balance, the agricultural sector must adapt to sustainability trends and develop new chemistries while ensuring productivity enhancement.

    With the global population crossing eight billion and increasing year on year, it has become imperative to boost food production on the existing arable land. This has necessitated the use of agrochemicals to decrease crop loss and increase production levels. Thus, strong agricultural market trends, rise in crop commodity prices, and favorable farm economics are driving up the demand for agrochemicals globally.

    However disproportionate usage of agrochemicals has also led to: 

    • Reduced soil fertility and loss of arable land
    • Frequent irrigation and severe stress on ground and surface waters 
    • Increase in pesticide resistance among several crop pests.

    This has compelled the industry to look towards economically viable and environmentally sustainable alternatives to boost farm productivity to feed the growing population.

    To address this concern, leading agrochemical companies are focusing on the development of sustainable delivery mechanisms for agrochemicals through practices of Integrated Pest Management (IPM), the use of biologicals as plant growth promoters, and applying genetic engineering technologies. Mentioned below are the advantages and challenges of implementing the same – 

    Trends

    Strengths & Opportunities

    Advantages

    Challenges

    Biologicals

    • Biostimulants, biopesticides, and biofertilizers provide an alternative thus reducing the dependence on synthetic chemicals.
    • Helps boost productivity and agricultural yields.
    • Increases nutritional content and life expectancy.
    • They are less likely to pollute surface water and groundwater resources
    • Biodegradable
    • Decomposes Rapidly
    • Low R&D Costs
    • Minimum Application Restriction
    • Slower efficiency rate as compared to traditional chemical insecticides.
    • Shorter environmental persistence

    Integrated Pest Management (IPM)

    • IPM offers an effective and environment-friendly approach to pest management.
    • It focuses on optimal usage of pesticides, nutrients, and an efficient cropping cycle.
    • Going ahead, agrochemical formulations are expected to facilitate IPM and broaden the spectrum of applications
    • Conserves the ecosystem. 
    • Helps to reduce expenditure on pesticides
    • Lack of training for IPM 

    Genetically Modified Crops

    • Promoting Genetically Modified (GM) plants for biofuel is expected to increase the demand for GM seeds.
    • Agrochemical companies can focus on the untapped potential in GM seeds segments to further their impact on the value chain
    • Higher crop yields
    • Reduce the use of synthetic pesticides and insecticides
    • Disrupt the natural process of gene flow.
    • Increase the cost of cultivation 

    Thus, the sustainability trends in agricultural practice, to increase crop productivity and reduce the negative impact on the environment will lead to a shift in the consumption pattern for agrochemicals globally. The use of biologicals and rational use of agrochemicals through effective farming techniques will continue to drive the development of new chemistries with a focus on enhancing productivity and maintaining ecological balance. Thus, agrochemical companies must adapt to this shift in market dynamics going ahead. 



  39. Beyond Plastic: Embracing Sustainable Packaging Alternatives

    There is a major global shift away from plastic packaging toward other sustainable alternatives. This is driven by

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    published on Jun 20, 2023

    There is a major global shift away from plastic packaging toward other sustainable alternatives. This is driven by increasing environmental concerns and growing recognition of the detrimental impact of plastic waste on the ecosystem. There is a need and demand for more sustainable solutions.

    The Enormous Scope of Plastic Packaging

    As with many other significant plastics uses its application in flexible packaging has been under intense criticism recently as sustainability concerns increase globally. Compared with paper/board-based flexible packaging, which makes up around 5% of overall consumption, plastic-based, value-added, flexible packaging, contributes to roughly 93% of total use.

    Navigating the Environmental and Sustainability Dilemmas

    1. The functionality of alternative materials: Meeting barrier features, including oxygen and moisture transmission rates, general material strength, clarity, sealing capabilities and integrity, and impact of temperature exposure —high and low— are among the issues with the usefulness of alternative materials.
    2. Infrastructure and waste management: To collect, sift, and recycle waste materials, a large investment in infrastructure is necessary. There are many biodegradable and compostable products on the market, but fewer collection facilities; thus, these products will wind up in landfills or burning due to the lack of infrastructure for collecting them. Consequently, they either descend farther in the waste hierarchy pyramid or pollute other waste streams.
    3. Recyclability of PET packaging: Colorants and additives used in manufacturing PET packaging typically prevent it from being recycled. Black PET packaging and other dark colors can be difficult to recycle because most automatic sorting machines do not identify it as plastic at all. 

    Due to these challenges, the push for sustainability in packaging is intensifying at the legislative level.

    Government Ambitions for 2025 and 2030

    Many countries have taken concrete steps. Some examples include:

    1. On 3rd July 2021, the EU issued a ban on single-use plastic products. Along with cups and food and drink containers, the prohibited products list includes plastic straws, stirrers, plates, cutlery, and poles for balloons. In addition, the Europe Commission is targeting 100% recyclability by 2030, where every plastic packaging put on the market in the EU will either be reprocessed or reused economically. 
    2. By 2025, the Chinese government wants to outlaw the use of single-use plastics.
    3. Participants in the Dutch Plastic Pact, including food and plastics manufacturers, will see a 20% decrease in the amount of plastic packaging per kilogram of product by 2025 (when compared to the base year of 2017)

    F&B Brand Commitments Toward Sustainable Packaging:

    • Unilever: To reduce 50% of virgin plastic in its products by 2025.
    • PepsiCo: Aims to have all packs made entirely of recycled or renewable plastic by 2030.
    • Nestle: Is stepping up efforts to completely recycle or reuse all its packaging by 2025 and meanwhile decrease its use of virgin plastics in half.
    • Coco-Cola Company: Plans include for all packaging to be recyclable by 2025 and for 50% of materials to be recycled by 2030.
    • Danone: Wants every piece of packaging, from yoghurt cups to bottle caps, to be reusable, recyclable, or compostable by the year 2025.

    Five Avenues That Leading Brands Are Exploring To Achieve Their Sustainable Packaging Goals

    1. Light weighting: Revamping packaging to utilize less plastic will help reduce the overall quantity of material required to make packaging. For example, Tesco adopted lightweight pouches with barrier properties for its grated cheese, which are fully recyclable.
    2. More recycled plastic in packaging: Plastic that has been made from recycled resources. For instance, the recycled plastic bottles that we use at home go through sorting, cleaning, melting, and being turned back into bottles or other products
      For example, Dragibus candy, Germany: Switched to recyclable mono-layer PE doy pack, which can be recycled into agricultural tarpaulins and trash bags.
    3. Use of mono-material: Compared with other items consisting of various polymers or a mixture of materials, mono-material packaging is constructed of a single substance or fiber and can be recycled quickly and easily.
      For example, in Turkey, Unilever began using recyclable polypropylene (PP) mono-material for Knorr dry soup powder, which is made at Mondi's flexible packaging facility there.
    4. Change in substrates: Paper-based packaging: Paper packaging is a highly efficient and cost-saving alternative form of packaging. Manufacturers have widely used paper packaging due to its environmental sustainability credentials.
      For example, Heinz partnered with “Pulpex,” a packaging technology company, to create the first paper ketchup bottle, a recyclable container manufactured entirely from wood pulp that is supplied responsibly. Moreover, Ferrero is piloting a new paper-based exterior packaging for its Kinder bakery collection in Italy, which includes Kinder Délice and Kinder Brioss. In the new packaging, Kinder Bakery items are creatively wrapped using paper film that can be recycled in the nation's paper stream.
      • Use of dispersion-coated paper: Dispersion coating is a barrier coating that provides barrier properties to fiber-based products like paperboard, paper, and liners barrier characteristics. For example, Mars Wrigley, UK: Replaced the conventional candy box (with PE liner) with dispersion-coated barrier board that is expected to reduce plastic consumption by 82 tons.
      • Metallized Paper: A product that has a layer of aluminum coating applied to it, either in a matte or glossy finish, giving it protective characteristics.
      • Bio-based barrier coatings for packaging: Strong oxygen and oil barriers built of organically renewable biopolymers have the potential to replace the synthetic paper and paperboard coatings currently used.
        For example, Spanish startup ADBio Composites develops BlockPLA, a proprietary technology, intended to enhance flexibility, thermoforming capabilities, oxygen resistance, biodegradability, and compostability of PLA resins for various packaging use cases.
    5. Change in substrates: Use of emerging materials (Bioplastic, Agri waste-based, plant-based, etc.)
      Made from naturally renewable materials derived from plants/unwanted or unsalable materials produced wholly from agricultural operations or natural resources such as vegetable oils and starches. For example, Mars Wrigley, US: Introduced compostable packaging for “Skittles” using Nodax PHA bioplastic as raw material.

    The Way Forward:

    Change is sparked by consumer awareness of packaging waste in the seas and landfills. The improvement of current packaging increases the amount of recycled content used in less delicate applications while considering alternative plastic types that can enhance the product's sustainability profile.

    Additionally, packaging should be designed for ease of use and recycling (e.g., by making it clear to customers how packaging should be gathered and sorted at recycling sites). Accelerating the development of more sustainable flexible packaging solutions requires cooperation among brands, resin suppliers, recycling businesses, and converters.



  40. The Fresh Bakeries Trend: Meeting Consumer Demand through Quality and Differentiation

    The bakery industry has witnessed a remarkable shift in consumer behavior, leading to the rise of fresh bakeries

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    published on Jun 14, 2023

    The bakery industry has witnessed a remarkable shift in consumer behavior, leading to the rise of fresh bakeries as a thriving trend. Today's consumers are increasingly seeking fresh, high-quality bakery products offering unique and memorable experiences. With a focus on quality, differentiation, and being updated on customer demand, fresh bakeries have carved a niche for them in the market. However, whether it is a short-term phenomenon, or a long-term trend is yet to be seen.

    Consumer preferences have undergone significant transformations in the bakery product segment, with them now placing greater emphasis on health benefits, freshness, quality, and unique offerings when choosing bakery products. Therefore, fresh bakeries have the opportunity to meet the evolving requirements of consumers by providing artisanal baked goods, healthy snacks, and fresh products made with premium ingredients.

    Shift in Consumer Behavior

    A recent survey shows the influence of fresh bakery has a major influence on the consumer’s store choice. Approximately 28% of buyers select a grocery store based on the options available in in-store bakery.

    Customer satisfaction with the in-store bakery experience is high, with 88% of respondents in the survey rating it as excellent or very good. While fresh bakery purchases are still more commonly associated with special occasions, there is a growing trend of anytime treats and comfort purchases, with 31% of respondents buying more of these treats now than before the pandemic. Another factor in favor of in-store bakery products is affordability. Cost-conscious consumers are turning to bakery breads and rolls to save money and avoid buying breakfast from restaurants. The main segments in baked products are as follows:

    • Healthy baked products – A major trend in this segment is increasing demand for healthier bakery items. Customers prefer products with clean labels and high-quality ingredients.
    • Premium bakery – Personal indulgence and special celebrations call for premium baked products.
    • Snacks – Smaller portions and affordable indulgences such as cookies, cake slices, and morning sweets are growing in popularity, encouraging trial, personal enjoyment, sharing, and exploration.

    While most shoppers browse the bakery section during grocery visits, impulse purchases do not always follow. Only 65% of shoppers indicate that browsing leads to impulse buys, with dietary reasons being the primary factor for resisting impulse purchases.

    So how can a baked product company increase its market share?

    Differentiation is the Key

    According to the Food Institute, differentiation is crucial for the success of fresh bakeries in an increasingly competitive market. Bakeries must establish a unique brand identity to create top-of-mind recall. This can be achieved through the introduction of specialty items, innovative recipes, and use of locally sourced ingredients, among others. By effectively differentiating themselves, fresh bakeries can attract a loyal customer base and drive sustainable growth.

    The Role of Innovation and Creativity

    Apart from quality and differentiation, innovation and creativity are instrumental to the success of fresh bakeries. By exploring new flavors, experimenting with unique combinations, and staying ahead of trends, bakeries can captivate customers with exciting and delightful offerings. Incorporating seasonal ingredients, introducing limited-time specials, and embracing cultural influences are strategies that fresh bakeries can employ to keep their menus fresh and enticing.

    Case Study: The French Gourmet Bakery's Recipe for Success

    Examining the success of the French Gourmet Bakery provides valuable insights into how fresh bakeries can thrive. This local bakery has made a name for itself by prioritizing freshness and quality. Its commitment to using natural ingredients, baking from scratch daily, and offering a diverse range of French-inspired pastries has resonated with customers seeking an authentic experience. The French Gourmet Bakery's focus on freshness has not only attracted customers but has also generated positive word-of-mouth recommendations.

    The Future of Fresh Bakeries: Developing Relationships and Embracing Technology

    As the bakery landscape continues to evolve, fresh bakeries must adapt to emerging trends and consumer expectations. Building strong relationships with customers through excellent service, personalized interactions, and community involvement remains a cornerstone of success. Additionally, leveraging technology to streamline ordering processes, enable online platforms, and facilitate convenient pickup or delivery options can enhance customer satisfaction and drive growth. There is high importance of health-conscious options, convenience, and sustainability in attracting young demographics. Fresh bakeries can align with these trends by incorporating gluten-free, organic, and plant-based options, while also offering convenient online ordering and ecofriendly packaging.



  41. Private Label Retail in F&B – A New Paradigm in Consumer Choice

    Private label retail, also known as store brand or own brand, posted remarkable growth in recent years globally.

      to read | words

    published on Jun 14, 2023

    Private label retail, also known as store brand or own brand, posted remarkable growth in recent years globally. Retail giants, such as Walmart and Target, played a significant role in driving this surge, revolutionizing the way consumers perceive and engage with private label products, especially in the Food and Beverage(F&B) segment. While it can help increase the profit margin of retail stores, it comes with a set of challenges.

    Private label retail refers to exclusively manufactured products sold by a particular retailer under its own brand name. These products are developed to offer alternatives to national or international brands, providing consumers with a range of options across various product categories. Private label products can be found across a broad spectrum, including food and beverage, household goods, and personal care items.

    The F&B segment

    The global market for private label food and beverage is poised for substantial growth in the foreseeable future, primarily driven by the proliferation of competitive private label players within the healthy snacks and ready-to-eat meals industry segments. According to data compiled by the Private Label Manufacturers Association (PLMA) and market research firm IRI, Inc. based in Chicago, the sales of private label products across retail outlets in the US recorded a noteworthy surge, surpassing 11% and reaching a total of $229 billion in 2022. Concurrently, dollar sales for national brand products registered a 6.1% increase, amounting to $981 billion. Collectively, these figures propelled the overall sales within the grocery industry to an impressive $1.2 trillion.

    Walmart and Target, two of the largest retailers in the US, have significantly contributed to the expansion of private label retail for F&B segment. Both companies heavily invested in developing and promoting their own brand offerings, leveraging their extensive retail networks and consumer trust.

    Walmart has successfully established a diverse portfolio of private label brands, including Great Value, Equate, and Mainstays. These brands span multiple categories and have gained popularity due to their competitive pricing, quality assurance, and extensive availability in Walmart's vast store network. Another major player, Target, developed popular private label brands, such as Archer Farms, Up & Up, and Market Pantry, known for their unique product offerings and trendy designs.

    Global Perspective

    The rise of private label retail is not limited to the US; it has gained traction globally. For instance, Europe has long embraced private label retail in the F&B segment. Retail giants like Aldi and Lidl made significant inroads with their private label offerings, often surpassing national brand sales. Aldi's private label brands, such as Choceur chocolates and Millville cereals, gained popularity across European markets.

    The Asia-Pacific region is also witnessing major retailers in Australia, Japan, and China expanding their private label portfolios. For example, Woolworths, one of Australia's leading supermarket chains, introduced private label products, including Macro Wholefoods and Woolworths Select, catering to health-conscious consumers.

    The Middle East and Africa region also have a growing presence of private label retail in the F&B segment. Retailers like Carrefour and Spar have successfully launched private label brands across multiple countries. Carrefour's Carrefour Quality Line and Spar's Spar Brand offer a wide array of F&B products, including pantry staples, dairy, and frozen goods.

    Benefits

    Private label retail offers numerous benefits for both retailers and consumers.

    For retailers, it provides an opportunity to differentiate themselves from competitors, build customer loyalty, and improve profit margins. By having control over the entire supply chain, retailers can develop unique product offerings, maintain quality control, and respond quickly to changing market trends.

    Consumers, however, benefit from private label retail through increased choice, affordability, and quality assurance. Private label products often offer comparable quality to national brands at a lower price point, making them an attractive option for price-conscious consumers. Additionally, private label brands frequently introduce innovative and niche products, catering to specific consumer preferences and dietary needs.

    Challenges

    While private label retail posted remarkable success, it also faces certain challenges.

    1. Brand Recognition and Trust: One of the major challenges faced by private label retail is establishing brand recognition and gaining consumer trust. National brands often have well-established reputations and loyal customer bases, making it difficult for private label brands to compete in terms of perceived quality and reliability.
    2. Differentiation and Innovation: Private label retailers face the challenge of differentiating their products from national brands and offering unique value propositions to consumers. Developing innovative and distinctive offerings that stand out in the market is crucial to attract customers and create a loyal customer base.
    3. Supply Chain Management: Managing the supply chain can be a complex task for private label retailers. They need to guarantee reliable supply of high-quality products, maintain relationships with manufacturers, and effectively manage inventory levels. Overcoming logistical challenges and maintaining supply chain efficiency is essential for meeting customer demand and minimizing disruptions.
    4. Marketing and Promotion: Private label retail often requires significant investments to increase brand awareness and drive sales. Creating effective marketing campaigns and effectively communicating the value and benefits of private label products to consumers is crucial, especially in a market dominated by established national brands with larger marketing budgets.
    5. Perceptions of Quality and Value: Overcoming the perception that private label products are of lower quality or inferior to national brands can be a significant challenge. Private label retailers need to consistently deliver products that meet or exceed customer expectations in terms of quality, value, and taste. This requires ongoing quality control measures, product testing, and a focus on maintaining high standards throughout the production process.

    Private label retail in the F&B segment is poised for remarkable growth and expansion in the foreseeable future. As evidenced by the increasing market share and consumer acceptance, private label brands have successfully entered the F&B industry, offering consumers a broader range of choices and competitive alternatives to established national brands.

    Going forward, it is evident that the private label retail market in the F&B segment will flourish. As consumers increasingly prioritize value for money, personalized experiences, and a wider range of choices, private label brands are well-positioned to meet these demands. With ongoing innovation, effective marketing strategies, and a focus on maintaining product quality and consumer trust, private label retail is poised to grow and thrive, offering consumers a compelling alternative within the F&B industry.



  42. Methane Processing Techniques: A Promising Paradigm for Decarbonizing Natural Gas

    Methane processing technique is being evaluated as a potential decarbonization process by various industries. Compared to commercially available

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    published on Jun 14, 2023

    Methane processing technique is being evaluated as a potential decarbonization process by various industries. Compared to commercially available CCS/CCU technique, this technique exhibits negligible cost of handling carbon content. Solid carbon forms derived from this technique are much easier to handle. Once implemented on a portion of natural gas stream, methane processing technique has a potential to form a feasible business case for companies adopting it as the solid carbon and hydrogen produced can be traded in various other end-use industries, including tire industry.

    An effective way to decarbonize the natural gas stream in the pre-combustion stage is to process the methane content. During the process, methane is decomposed into hydrogen and solid carbon products, along with exhibiting 70–100% sequestration of the carbon content of the natural gas.

    This technique is adopted by certain companies to decarbonize a portion of the natural gas stream. The hydrogen formed is re-titrated to the stream that reduces carbon emissions in the combustion stage, while keeping the net heating content of the energy feed same. Production of hydrogen also forms a business case for the companies as net sellers of hydrogen, as they can earn from the arbitrage of natural gas and hydrogen prices. Hence, companies can increase their natural gas input, and sequester a portion of that stream to hydrogen and achieve higher profitability. Currently, the per kg cost of natural gas is ~$0.65 whereas that of hydrogen is ~$2.0. The output of this technique is carbon dioxide in solid form; therefore, cost of capturing, storing, and handling carbon dioxide in gaseous form is eliminated, that is incurred in CCS/CCU method. The solid carbon is derived in forms of carbon black, graphite, or graphene, having high demand in tire, construction, steel, concrete industries, thereby generating alternate source of revenue to the companies.

    Methane Processing Landscape:

    Methane processing is broadly classified in three major techniques of decomposing the methane i.e., through plasma, through thermal breakdown or in presence of a catalyst. Among the three techniques, plasma is the most widely available technique and technology providers adopting it are in advanced stages of commercialization, while technologies based on thermal and catalytic processes are still in development or pilot stages.

    Current Availability of Different Methane Processing Techniques:


    Although methane pyrolysis process is broadly categorized based on plasma, thermal and catalytic-based methane reduction techniques. However, technology providers exhibit a high level of process innovation toward the technology working principle to maximize the CO2 sequestration, alter the grade and purity of carbon products and H2. Following are few of the developed methane pyrolysis techniques:

    Pulsed Methane Pyrolysis (PMP): PMP pyrolysis uses thermal energy to break the methane molecules into solid carbon product and H2. The process does not use any green electricity and the energy requirement is met by combusting a portion of natural gas in the presence of O2.

    Plasmolysis: This process relies on breaking methane molecules through plasma, generation of which is based on electrolysis concept, that uses a cathode and an anode connected to electricity source.

    Thermal Plasma Electrolysis (TPE): TPE is based on breaking methane molecules through plasma, that is generated from the natural gas itself. While passing natural gas through the plasma torch, methane and H2 are formed, that is fed into the main reactor for the initiation of methane cracking.

    Microwave Energy Heating (MEH): MEH is based on conventional microwave heating of natural gas to form solid carbon products and H2. In the process natural gas is passed over a fluidized bed reactor over which microwave heat is introduced.

    Microwave Plasma (MP): MP is one of the most common methane pyrolysis, where microwaves are generated through plasma and is guided to the reactor containing natural gas for methane cracking.

    Catalytic Pyrolysis (CP): CP is one of the emerging methane processing techniques where the methane is decomposed to solid form of carbon and H2 in the presence of a catalyst. The process has low temperature requirement compared with other processes.

    Level of Carbon Sequestration Achieved Through Different Methane Processing Techniques

    Limitations

    Currently, methane processing technique is not widely adopted by companies on their complete natural gas stream as through this technique overall new energy source i.e., hydrogen is formed. In case the plant equipment, such as boilers, furnaces, or other machinery are incompatible to run on hydrogen or hydrogen titrated natural gas, certain major modifications would be required in the existing equipment setup.

    In addition to this, methane processing technique forms 1 part of hydrogen against 4 parts of natural gas (solid carbon forms the balance 3 parts). Thus, there is a stepdown in energy availability to run the power systems, making titration of hydrogen back to natural gas stream vital to compensate the feed losses. Alternatively, companies can form a business case as hydrogen seller for additional costs incurred by marginal increase in natural gas inputs. However, switching over to low energy consuming systems can aid in minimizing the incremental natural gas input.

    Current Adoption of Methane Processing Technologies

    Current adoption of methane processing technique is majorly localized within European and North American region, that have strict decarbonization targets for the industries. Apart from this few of the APAC countries such as Japan, South Korea, and Australia that has significant reserves of natural gas and subsequent decarbonization targets are emerging as a potential market for methane processing techniques.



    In the current state, methane processing techniques are being piloted by various commodity, automotive, utility, mining companies such as Birla Carbon, Cabot, Jaguar Land Rover, Fluor, Centrica, Egas, etc. In addition, existing hydrogen suppliers are also evaluating methane processing techniques, to replace existing high carbon emitting steam methane reforming technique of hydrogen production.

    Conclusion:

    Although not proven to be used on the entire natural gas stream, utilization of methane processing technique on a portion of natural gas stream can aid in narrowing the gap between decarbonization target and efforts. The potential of attaining 70–100% sequestration of carbon content highly impacts the net carbon emissions of the companies that are reliant on natural gas for their energy needs. Moreover, the derivative products i.e., hydrogen and solid carbon (carbon black, graphene, graphite, etc.), have high demand in various end-use applications. Thus, the technique has the potential to incubate new business verticals for the companies adopting it.





  43. Decarbonization of Natural Gas at Pre-Combustion Stage

    Decarbonization is becoming increasingly urgent because of the rise in global warming. Given the substantial utilization of natural

      to read | words

    published on Jun 14, 2023

    Decarbonization is becoming increasingly urgent because of the rise in global warming. Given the substantial utilization of natural gas by corporations in the US and Europe, this need has become notably more significant. Currently, the adoption of renewable energy sources stands out as the most relevant method for mitigating carbon emissions. However, limited availability of renewable energy supplies and declining levelized cost of energy (LCOE), has increased per unit cost of green energy, thereby compelling companies to sustain considerate consumption of natural gas. Companies can adopt other techniques for decarbonization, such as carbon capture storage/utilization (CCS/CCUS), as a feasible option to eliminate carbon dioxide content of natural gas. However, due to high costs associated with carbon capture and storage, evaluating certain other future ready techniques, such as methane processing, to decarbonize the balance usage of natural gas is necessary.

    The extensive use of natural gas in the pre-combustion stage by companies in the US and Europe significantly contributed to their energy requirements and economic growth. However, considering the pressing global concern over climate change and the imperative to reduce greenhouse gas (GHG) emissions, exploring sustainable solutions for decarbonizing natural gas is crucial.

    Currently, a company’s emissions are monitored under Scope 1, 2, and 3 GHG emission targets. These emission targets were introduced by “The Greenhouse Gas Protocol” in 2001 and are laid to differentiate between direct and indirect emissions and monitor the emissions levels that can impact the global temperature rise. Hence, to sustain manufacturing activity, companies are compelled to abide by the Scope 1, 2, and 3 GHG emission targets.

    Scope 1,2 and 3 targets to control emissions

    Scope 1 and 2 targets, which govern emissions controlled by a company, are framed to limit global temperature rise to 1.5°C over pre-industrial levels. While Scope 3 targets, which govern emissions caused by different activities by a company, are linked with the level of decarbonization required to keep the increase in global temperatures well below 2°C over pre-industrial level.

    Since the contribution of scope 3 emissions, majorly coming from energy usage are higher in the entire value chain, it becomes vital for companies to take necessary measures to prioritize within different sources of energy sources available.

    Renewable sources of energy and its limitations

    Renewable sources of energy are a few of the most viable decarbonization options. Yet, a complete transition towards it is difficult due to limited availability. One of the main reasons for this constraint is declining LCOE of renewable energy due to phasing out (retire) of existing infrastructure.

    Although renewable sources of energy would be considered as a promising option to decarbonize the energy streams in future, there is still dependence on fossil fuels (natural gas) for manufacturing processes. Therefore, companies would require feasible solutions to decarbonize the balance portion of natural gas in their energy stream.

    Carbon Capture Storage (CCS)

    CCS is being adopted by companies to generate a low-carbon economy by minimizing carbon dioxide emissions. Major CCS processes include capturing of carbon dioxide in the pre-combustion stage by introducing hydrogen in the stream, the mix of which can further be used to generate electricity and capturing carbon dioxide through absorptive solvents in the post combustion stage.

    Carbon dioxide captured using CCS system is usually transported in gaseous form through pipelines to geological storage site, or in liquid form, using high pressure tanks, to end user sites. Alternatively, carbon dioxide is permanently removed from the atmosphere by storing it in geographical foundations such as gas and oil reservoirs, deep saline formulations, coal beds, shale basins, and basalt formulations.

    Limitations of Carbon Capture and Storage (CCS) – High Cost

    Many of the geological storage techniques for carbon dioxide (CO2) is prohibited under international conventions and regional agreements. Further, there are no major technological developments made toward long-term storage of CO2, due to which challenges, such as leakage from geological storage sites are yet to be addressed.

    Long-term storage of CO2 is associated with higher costs (usually 2–8 USD/Ton, depending on the region). The major issue in transporting liquid CO2 is requirement of a pressurized and semi refrigerated carrier, which adds to the cost. 

    Methane Processing: Alternate Way to Decarbonize Natural Gas

    Although the availability of alternate decarbonization techniques is low, methane processing (sometimes referred to as methane pyrolysis) in the pre-combustion stage of natural gas is gaining popularity as an alternative to decarbonization the balance portion of the natural gas usage.

    For instance, Monolith, a chemical and energy company, developed a methane processing process in which the natural gas is converted directly into hydrogen and solid carbon using renewable electricity. This is one of the cleanest technologies that claims to have zero CO2 emissions, low electricity consumption, and less land and water requirements. Additionally, gives solid carbon as an output which can generate an alternate revenue stream.

    Conclusion:

    Amid extensive Scope 3 targets for the manufacturing industry toward decarbonizing energy sources and constraints in securing renewable energy supplies for complete transition, methane processing technique can prove to be a viable option for decarbonization of natural gas stream.




  44. Boron Revolution 2030 – Quest for Resilience Amidst Supply–Demand Disparity

    The decarbonization-led future with applications of e-mobility, wind energy, and solar energy is expected to drive an unprecedented

      to read | words

    published on Jun 08, 2023

    The decarbonization-led future with applications of e-mobility, wind energy, and solar energy is expected to drive an unprecedented rise in demand for boron and its derivatives. However, with no major supply expansions in the immediate pipeline, the supply–demand disparity is anticipated to widen, leading to a 25–40% projected price upsurge in the next 4–5 years. Therefore, reassessing supply chains and developing resilience to maintain competitiveness is crucial for companies in industries such as glass/composites, industrial manufacturing, automotive components, ceramics, and chemicals. It is imperative for procurement heads to secure future supplies by outlining forward-aligned sourcing strategies.

    In the era of technological revolution, wherein future-facing applications are at the forefront of demand growth, supply chain disruptions and uncertainties abound. Rare earth elements, alternatively referred to as supercritical materials, particularly boron-based derivatives, play a pivotal role as key inputs in new-age technologies and sustainable energy solutions. The rising demand from future applications combined with controlled supply and limited growth in new capacities, is expected to widen the supply–demand gap for boron.

    Widening Supply–Demand Dichotomy


    The demand for boron-based derivatives, specifically borates, is expected to grow 1.5–2.5 times during 2025–30. In this period, the deficit situation is expected to widen steeply due to no proportionate increase in supply. This widening deficit is primarily attributed to the potentially increased demand expected from decarbonization-led applications, in contrast to the limited supply capacity expansions, as detailed below.

    1. Decarbonization-Led Applications Driving the Demand Shift
      • Decarbonization-related applications are projected to account for 65–75% of the overall demand for boron-based derivatives by 2030, from the current share of 20–30%.
      • Future-facing application industries, such as e-mobility (~20% CAGR), wind energy (~25% CAGR), and solar energy (~18% CAGR), among others will be the focal points of growth.
      • The rising use cases across these new-age applications, encompassing fiberglass, composites, magnets, and other high-strength requirements, are expected to drive demand.
      • The Asia-Pacific region, led by China, is expected to be the primary contributor to the increased demand, followed by the US and Europe.
    2. Constrained Supply Worsening the Disparity
      • No new short-term supply: Upcoming supplier plans are unlikely to rationalize the supply–demand disparity in the short- to mid-term period (until 2025).
      • Tightly controlled supply: Shifting Turkey's focus toward local boron processing and the dwindling supply from the top-producing countries are expected to keep the supply tight.
      • Regulatory issues: Environmental concerns and regulatory hurdles have resulted in project cancellations and revokes, as seen in the case of Rio Tinto in Serbia.
      • Other operational issues: Sanctions on Russia (the second-largest holder of boron reserves) leading to supply restrictions and limited recyclability of the material, are other critical concerns.

    Thus, limited growth in the new capacities and tighter control of Turkey on the existing supply, in conjunction with the rising demand from de-carbonization-led applications such as e-mobility, wind, and solar energy, are expected to widen the current supply–demand gap of 15–20% up to 40% by 2030.

    Exponential Price Rise – The Disparity Repercussion

    The aftermath of the supply–demand disparity is expected to drive the prices of boron-based derivatives, particularly boric acid and borax.

    Boric acid prices having witnessed a sharp increase of 115–125% post–2020 are expected to elevate further by 30–40% in the next 4–5 years as the demand is expected to be primarily driven by the future-facing applications. Similarly, the prices of Borax increased 25–40% since 2020 and are expected to elevate 20–25% during the forecast period on account of sustained demand from traditional applications (detergents, fireproofing materials, food security, etc.)

    Therefore, the widening supply–demand disparity for boron will lead to a surge in future prices, which calls for urgent attention from sourcing heads across key organizations.

    Recommendations

    The boron revolution is imminent. Therefore, it is imperative for global procurement leads/category managers across glass/composites, industrial/energy, auto components, ceramics industries, and other traditional industries, such as food security, chemicals, and pharmaceuticals, to build resilience by revisiting their supply chains and securing future supplies. Following are some select strategies:

    • Leverage multiple suppliers (existing +1 strategy) to maintain a balanced mix and mitigate future supply risks
    • Explore strategic partnerships, establish long-term contracts, and sign Letters of Intent (LOIs)
    • Outline a forward-aligned pricing approach by considering advances/pre-payments and incorporating special clauses to hedge price risks

    Procurement research can advise companies in future-proofing their end-to-end supply chains.




  45. Nurturing Sustainability Across the Supply Chain

    It has become increasingly imperative for companies to embed sustainability throughout the supply chain. Companies are recognizing the

      to read | words

    published on Jun 08, 2023

    It has become increasingly imperative for companies to embed sustainability throughout the supply chain. Companies are recognizing the need to connect with their tier-1 and tier-2 suppliers, adopting measures such as decarbonization initiatives and incorporating green packaging materials. By doing so, they aim to reduce their environmental impact and create a more sustainable value chain. Through collaborative approaches and the involvement of experts, organizations are better positioned to navigate the complexities of sustainability and make meaningful progress in embedding sustainability across their entire supply chain.

    In the pursuit of sustainability, mere intentions fall short of true impact. The imperative lies in formulating a meticulously structured and actionable strategy, yielding tangible outcomes throughout the value chain. Commencing with judicious and sustainable investment choices in the raw material supply chain, and culminating in the implementation of sustainable product innovations, organizations must steadfastly prioritize the holistic sustainability of their product value chains.

    The primary reason for the buzz around sustainability is the pressure from different nations’ government regulators on the corporate sector. Most countries have definite targets for a net zero-carbon economy. To fulfil those targets, multinational corporations (MNCs) must be the frontrunners paving the way, explicitly focusing on the circular economy.

    Another compelling rationale is the recognition that sustainable practices hold greater value in the eyes of consumers, rendering them instrumental in enhancing brand reputation among key stakeholders. Consequently, MNCs proactively engage and empower the local communities of farmers and small-scale raw material suppliers, directing their efforts towards embracing sustainability across manufacturing processes and the final product offerings. 

    Creating Sustainable Supply Chain

    The focus of MNCs’ sustainability strategies is on their manufacturing processes and products. Most organizations engage their tier-1 raw material suppliers in these initiatives, but rarely involve lower-tier suppliers (tiers 2 and 3). However, to embed sustainability norms across the value chain, they need to broaden their horizons and include the supplier’s supplier in the game plan. 

    1. Sustainability Across Lower-Tier Suppliers: It is challenging for companies to actively manage their lower-tier suppliers. While MNCs generally involve tier-1 suppliers in their sustainability plans, data suggest that 70% of the ESG violations happen by lower-tier suppliers, which invariably affects the company’s overall strategy. Hence, it is imperative that MNCs actively include lower-tier suppliers in their sustainable supply-chain strategies. Some companies such as Apple, Unilever, and Nike, among many others, have started implementing sustainability measures across lower-tier suppliers through the following routes:
      • Direct engagement: Some companies directly engage with lower-tier suppliers for their sustainability programs and periodically monitor adherence. While it is ideal on paper, it is practically impossible to implement completely. Lower-tier suppliers are from countries with lax sustainability norms and policies. It is also difficult to track suppliers as they do not disclose their accurate information to the leader MNC. Furthermore, at times, there are differences in the protocols that a tier-2 supplier may need to follow for different clients. For instance, a paint and coating company with certain sustainability standards may want to manage its tier-2 and tier-3 suppliers as per those norms. However, the same tier-2 supplier may have already been adhering to an FMCG customer’s norms different from those of the paint and coating company.
      • Indirect engagement: Due to the caveats in the direct route, most MNCs prefer engaging with lower-tier suppliers passively through their tier-1 suppliers. Primary suppliers have better control over lower-level suppliers and can train and sensitize them correctly. MNCs may monitor the effectiveness of the sustainability measures in the lower tiers if required by conducting periodic surveys.
    2. Raw Material Sustainability: Most MNCs primarily focus on “key raw material upgradation to more sustainable alternatives” as one of the essential measures to increase sustainability in the initial stage of the value chain. These alternatives must be cost-viable and have sufficient supply to make the shift effective in the long run. 
      For example, global companies in FMCG, packaging, and other manufacturing verticals have consciously shifted to low-carbon and bio-based raw materials such as green steel, bioplastics, green chemicals, and recycled metals. The focus should be on establishing a cost-effective and robust supply network for these sustainable alternatives to avoid a future supply deficit.
    3. Decarbonization Strategy: The increasing focus on reducing CO2 emissions within industrial processes has spurred MNCs to undertake ambitious decarbonization initiatives and address the evolving demands of the market. Both governments and corporations, spanning industrialized and developing nations alike, are actively constructing carbon capture and utilization (CCU) and carbon capture, utilization, and storage (CCUS) plants to effectively diminish their carbon footprint. This paradigm shift has also generated significant market potential, fostering robust demand for sustainable energy alternatives such as energy storage systems, green hydrogen, and biomass, to meet the sustainability requirements of industrial processes.
    4. Sustainable Packaging: Product packaging is one major route for companies to share their sustainability vision with the world. Companies strategically and creatively use this by introducing cost-effective variants that are 100% sustainable. There are multiple ways to increase the (Post consumer recycled) PCR content of packaging. One main method is to use bio-based packaging.
      Bio-based packaging is made of bio-based materials generated from biological sources rather than petroleum (fossil fuel) sources. The following are some examples of bio-based packaging and significant raw materials:
      • Natural fiber-based: packaging materials made of paper and cardboard, bamboo, coconut fibers, or banana leaves, as well as agricultural waste.
      • Bio-based plastic: corn, sugar cane or sugar beets, bagasse, PLA, bio-PE, bio-PET, PBA, PEF, cellophane, and natural rubber

    Apart from bio-based materials, recyclable mono-materials, including recycled metals, plastics (HDPE, LDPE and PET), glass, and ceramics, are also widely used in packaging alternatives. These packaging options have reduced the usage of plastics and other materials that have harmful effects on the environment.

    The significance of sustainability initiatives for a company will be realized if every stage of its supply chain has been replaced with environment-friendly choices. These alternatives must be constantly evaluated based on their commercial and market availability parameters. With continually evolving technologies, MNCs need to constantly find the best sustainable alternatives. The role of a procurement intelligence consultant is highly relevant in evaluating sustainable options for product packaging suppliers, raw material alternatives, and their other suppliers for businesses. A company must consult experts to build sustainable strategies for its supply chain.





  46. The Dual Effect of Private Equity

    Private equity (PE) investments help and support companies with promising prospects, which have several positive impacts on society

      to read | words

    published on Jun 05, 2023

    Private equity (PE) investments help and support companies with promising prospects, which have several positive impacts on society as they help create jobs and build successful businesses. PE firms provide capital for companies, encouraging them to grow and become more competitive. However, critics argue that these investments typically force small companies out of business and can be detrimental to them in some respects. Overall, PE has both positive and negative implications and can be a boon to society, but a threat to startups in certain situations.

    Private equity (PE) firms play an important role in the financial system by providing much-needed capital to companies. PE firms usually invest in companies and hold them for an extended period, during which they work to improve the company's performance. These firms can exit their investment after a few years by selling the company to another investor or taking it public.

    Over the past five years, global PE investments have increased significantly from USD1,617 billion in 2017 to USD2,350 billion in 2022. As of June 30, 2022, the overall private market AUM stood at USD11.7 trillion.

    Positive impacts of PE investments on society include the following:

    • Job Creation – PE firms offer the requisite capital and expertise that companies need to expand and grow, leading to the creation of new jobs. Research shows that PE-backed companies create an average of 1.5% more jobs per year than non-PE-backed companies.
    • Expert Handholding – PE firms are sophisticated investors with knowledge and expertise in managing a diversified portfolio of investments, and their involvement can largely benefit the target companies. They also have access to capital that may not be available to other shareholders. In addition, PE firms are typically more active in corporate management, which could help improve performance and lower agency costs.
    • Impact Investing and ESG – A growing number of PE firms are focused on investments that have a positive impact on society and the environment. These firms are known as environmental, social, and governance (ESG) investors. They believe companies that operate sustainably and responsibly are more likely to be successful in the long term.
    • Readiness to Face Downturn – PE investors carefully monitor economic activity to identify potential investment opportunities. This allows them to make informed decisions that profit their portfolio companies in the long term. PE investors are also better equipped to meet economic downturns due to their resources and expertise.PE has weathered two significant recessions since 2000: the dot-com crash and the Great Recession. Though majority of companies were affected by the economic decline, iCapital reports that less than 3% of PE funds posted catastrophic losses, whereas 40% of public stocks saw such losses. A study conducted by Kellogg School of Management found that PE-backed companies weathered the Great Recession better than comparable companies that were not backed by PE.
    • Resilience – PE investments can help businesses succeed by providing the necessary resources to compete in their respective markets. PE firms provide capital, strategic guidance, and operational support to help companies improve their products and services, expand their customer base, and boost profitability.According to the Cambridge Associates LLC US Private Equity Index, which tracks the performance of ~2000 companies, PE-backed companies have outperformed public markets over the long term. From January 2000 to March 31, 2022, PE investments generated an average annual compounded return of 18.3%. In comparison, Russell 2500 companies had an average return of 9.2% during the same period.
      PE-supported companies tend to be more innovative and agile as PE firms encourage companies to take risks and invest in new technologies and markets. As a result, these companies are more likely to succeed eventually.

    While PE can provide capital and opportunities for companies to scale, transform, and succeed, the significant debt load and short-term focus associated with the model have raised concerns about the target companies' long-term sustainability and well-being.

    1. High debt burden:
      • PE firms are said to exploit healthy companies by loading them with debt and stripping their assets.
      • A PE-based business model relies heavily on debt and focuses on enhancing the value of the target companies and ultimately exiting. However, the high levels of debt can sometimes burden the companies, leading to challenges such as high-interest payments that restrict their ability to invest and remain competitive.
      • Additional loans may have to be taken to pay dividends to PE investors, further increasing the financial obligations of the companies.
    2. Short-term goals:
      • Critics argue that PE's main focus is on generating short-term returns and making money quickly rather than ensuring the long-term health of the target companies.
    3. Loss of management control:
      • When partnering with a PE firm, there are potential downsides beyond financial considerations. One major concern is loss of control over important aspects of the business, including strategic decision-making, employee management, and choosing the management team. The PE firm's increased stake in the business often amplifies this loss of control, particularly regarding its exit strategy, which may involve selling the business against the owner's intentions.

    Conclusion

    Therefore, PE has both a positive and negative impact on companies. Each company operates in a unique context with its own set of challenges and opportunities. While some businesses may benefit significantly from the injection of capital and expertise provided by PE, others may find their long-term goals better served through alternative financing options or organic growth strategies.

    Ultimately, companies must critically assess their strategic objectives, financial position, and risk tolerance before deciding to pursue a PE partnership. A thorough evaluation of potential benefits and risks, coupled with a clear understanding of the company's vision, would help ensure a well-informed decision that aligns with the organization's long-term interests.





  47. Shifting Tides: The Silent Rise of De-Dollarization

    The US dollar has been the world's dominant reserve currency for decades, with countries around the globe holding

      to read | words

    published on May 31, 2023

    The US dollar has been the world's dominant reserve currency for decades, with countries around the globe holding large amounts of it to facilitate international trade and investments. However, the trend toward de-dollarization has been growing recently, as countries seek to curtail their dependence on the US dollar and diversify their reserve holdings. Will the dollar be replaced as the global currency?

    The US dollar has been hailed as the global currency for decades now. However, its dominance seems to be under threat, and there has been instances of de-dollarization across the globe. De-dollarization refers to the process by which countries minimize their dependence on the greenback and seek alternative reserve currencies. This shift is a harbinger of a major transformation with implications for future international trade, investments, and monetary policy.

    Rise of the dollar

    Countries all over the world hold reserve currencies. These are foreign currencies held by a country's central bank and other monetary authorities to stabilize exchange rates, facilitate international transactions, and encourage financial confidence. In 1944, post-World War II, the Bretton Woods Agreement was signed by 44 countries, establishing a collective international currency exchange regime pegged to the US dollar, which was based on the price of gold. This gave the dollar more power.

    Despite the dollar's historical dominance, several factors have emerged in recent times, sparking the wave of de-dollarization.

    Factors driving de-dollarization

    Geopolitical, economic, and strategic considerations have led several nations to initiate de-dollarization of late. Some of these factors are mentioned below:

    • US sanctions – Nations such as China and Russia have sought to reduce the dollar's influence to counter perceived American supremacy and mitigate the effects of US sanctions.
    • Currency war – Other nations, particularly those in the Eurozone, are actively pursuing de-dollarization. The main objective is to establish the dominance of their currency, the euro. If successful, it would help improve their global economic standing and achieve greater financial independence.
    • BRICS – The BRICS nations (Brazil, Russia, India, China, and South Africa) have been slowly moving away from a global financial system dominated by the US by choosing to trade in their national currencies; the bloc has already taken the first step toward establishing a new currency.
    • Persistent trade deficits – The US has long been a net importer, resulting in a substantial trade deficit. As the dollar is the global reserve currency, countries still trade in it despite the deficit. However, exporting nations including China hold a significant US dollar surplus and plan to invest in other currencies and assets. This might lead to a rise in the use of the Chinese yuan as a substitute for the US dollar.
    • Stability factor – Concerns over the dollar's long-term stability have arisen from high national debt, prompting countries to diversify their reserve currencies. In December 2022, US government debt represented approximately 123.4% of nominal GDP compared to 123.6% in the previous quarter.

    The beginning of the end

    Since 2014, when the US imposed economic restrictions on Russia and obstructed its trade in dollars, various countries have considered alternatives to the greenback. The introduction of the euro also assisted nations in breaking the dollar's monopoly. Over the past eight years, many nations have executed bilateral agreements to avoid a scenario similar to Russia's. The global trade of the dollar was estimated to decline by more than 20% in the last four years. As per IMF estimates, the dollar's share in the central bank's foreign exchange reserves was reduced to 59% in 2022, as opposed to 70% in 1999. Other countries are expected to follow suit and push for de-dollarization in the coming year. 

    A few countries have taken steps toward de-dollarization:

    1. In July 2022, the Reserve Bank of India announced a plan to allow international trade to be settled in rupees.
      • Reuters reported that the UAE and India would formalize a plan to trade non-oil commodities in rupees as an alternative to the dollar.
      • India has connected with Malaysia and recently announced they would begin settling specific trades with the Indian rupee.
    2. Indonesia has started promoting the use of local currency to settle international trades in order to replace the dollar.
      • The Chinese yuan is anticipated to be a front-runner for replacing the dollar. In March 2023, Russians bought yuan worth 41.9 billion rubles (USD538 million), exceeding the previous purchase of 11.6 billion rubles in February 2023.
      • The yuan is gaining popularity in Brazil, as Brazilian bank Banco BOCOM BBM — owned by
      • Bangladesh decided to pay Russia the equivalent of USD318 million in yuan for constructing a nuclear plant there.
      • China has settled a test transaction for natural gas with France in yuan.
    3. Brazil and Argentina are in the process of creating a single currency for the two major countries.
    4. For the first time, Saudi Arabia has announced that the country is agreeable to trading in currencies other than the US dollar.

    Benefits and challenges

    Internationalizing other currencies would increase their use in cross-border transactions, investments, and reserve assets, which has many potential advantages. First, a more diverse reserve currency system can contribute to greater global financial stability by reducing the sensitivity to shocks emanating from a single dominant currency. Second, the internationalization of currencies can improve the financial independence of issuing nations, granting them greater policy flexibility and economic independence from external forces.

    However, there are various challenges that de-dollarization represents:

    • As nations lower their reliance on the US dollar, alterations in the composition of global reserve assets may result in fluctuations in capital flows and asset prices. Hence, policy coordination and risk management are imperative to control financial instability in emerging markets and countries with huge dollar-denominated debt.
    • An alternative reserve currency must be supported by a strong economy, strategic monetary, and fiscal policy framework to achieve the necessary liquidity, stability, and acceptability levels. Apart from the dollar, no single currency currently meets these criteria.
    • The US maintains the most flexible financial markets, with transparent corporate governance and almost no discrimination between domestic residents and foreigners, which allows the dollar to be widely used in international trade. To compete with the US dollar, other nations, such as China, must provide the same benefits to foreigners.
    • De-dollarization may increase the volatility of currency exchange rates, particularly during the transition's initial phases. As market participants adapt to a shifting environment and re-evaluate their currency preferences, exchange rate fluctuations may become more pronounced. This, in turn, could influence trade, investment, and capital flows, especially in financially weak countries. There is a need to develop a deep and liquid domestic economy in a bid to adapt to de-dollarization, which could be a formidable obstacle for nations with less developed financial systems.
    • The US dollar is considered a haven or "store of value." Nearly 60% of foreign reserves (i.e., currencies held by central banks to help manage their nation's monetary system and exchange rate) consist of the US dollar, mainly due to its relative stability vis-à-vis other currencies.

    So, what does the future hold for the US dollar? While it is unlikely that the US dollar will lose its status anytime soon, the trend toward de-dollarization is likely to continue. As more countries seek to diminish their dependence on the greenback, we may see the emergence of alternative reserve currencies such as the euro, yuan, or even digital currencies such as Bitcoin. This could have grave implications for the global financial system and impact the standing of the US dollar.




  48. Sugar Alternatives – The Sweet Success Story

    Sugar alternatives are an emerging ingredient category gaining popularity due to the consumer shift toward health and fitness.

      to read | words

    published on May 29, 2023

    Sugar alternatives are an emerging ingredient category gaining popularity due to the consumer shift toward health and fitness. Various factors drive its growth, with certain regions recording higher demand than others. With various options available, the sugar alternative industry is poised to grow as it is an exciting sector with unexplored opportunities and potential.

    In today's health-conscious world, consumers are increasingly aware of their dietary intake. They prefer food and drinks with less calories, organic ingredients, and no sugar. Yet, they do not want any compromise in taste or quality. As a result, there has been a rise in the demand for sugar alternatives in the market.

    Sugar alternatives or substitutes are plant-based or artificial sweeteners that have the taste, texture, and flavor of conventional sugar but lack calories and harmful effects. The global market size for sugar alternatives is estimated to post a CAGR of 7.2% from USD7.9 billion in 2022 to USD12.8 billion in 2029. The global pandemic acted as an incentive for its growth, and various other factors are expected to contribute to this increase.

    Growth Drivers

    The different growth drivers for the sugar alternative market are as follows:

    • Health awareness – The market for sugar alternatives is growing rapidly as more people become aware of the harmful effects of refined sugar. It is known to cause obesity, which, in turn, leads to diabetes and cardiovascular diseases. Hence, there is an opportunity in the market to provide healthy sweetening options.
    • Environmental degradation - Modern consumers prefer products that are sustainable and environment-friendly. Sugar mills are major polluters as they produce wastewater, emissions, and solid waste. They wash away plant matter and sludge in freshwater bodies, which absorb the available oxygen and lead to death of fishes and other aqua creatures. In addition, mills release soot, ash, flue gases, ammonia, and other polluting substances. Therefore, refined sugar is losing customers as they become aware of its harmful impact on the environment. Sugar alternative manufacturing has less negative impact on the environment.
    • Government policies – With an increase in consumers’ inclination toward health and fitness, some countries are enforcing regulations to support this. Government regulations in France and the UK, such as selective taxation and reformulation in the sugar industry, are being implemented to tackle the rising rates of obesity, diabetes, and other health issues linked to the overconsumption of sugar. Selective taxation is intended to discourage consumers from purchasing sugary products and encourage food manufacturers to reformulate their products with less sugar. Sugar tax was introduced in France 2012 and in the UK in 2018. These taxes motivate food manufacturers to explore alternative sweeteners and reformulate their products with less sugar.

    Distribution by region

    While there is global demand for sugar alternatives, the following regions record higher demand than others:

    • North America – One of the main reasons for the growing demand in this region is the rising awareness of the need for low-calorie food consumption. Food trends in the US have shifted due to socio-economic and demographic changes. The young generation is ready to experiment with new products if it has health benefits. To keep diet-related diseases in check, the government also encourages the sugar alternative industry with supportive regulations. For instance, sugar alternatives, such as stevia and monk fruit, have been granted the Generally Recognized as Safe (GRAS) status by the US Food and Drug Administration (FDA). This means they are considered safe for consumption and can be used as food ingredients without pre-market approval.
    • Asia-Pacific –The demand for nutritious and low-calorie food is increasing in this region. Sugar alternatives are now being used in beverages, ice-creams, jellies, and other refined food products.
    • Europe – Sugar alternatives such as stevia, sucralose, and sugar alcohol have gained popularity among consumers. Manufacturers are developing innovative low-calorie products with sugar alternatives such as sweeteners. 

    Even other countries such as the US, Canada, Germany, the UK, and Japan are witnessing increasing demand for sugar alternatives.

    Here are some popular sugar alternatives

    1. Natural sweeteners: These are derived from plants and include the following:
      • Stevia: A calorie-free sweetener extracted from the leaves of the stevia plant.
      • Monk fruit: A calorie-free sweetener made from the monk fruit.
      • Honey: A natural sweetener made by bees from flower nectar.
      • Maple syrup: A natural sweetener made from the sap of maple trees.
      • Agave nectar: A sweetener made from the agave plant.
    2. Artificial sweeteners: These are synthetic sugar substitutes that are typically calorie-free and do not raise blood sugar levels. They include the following:
      • Aspartame: Used in low-calorie soft drinks and chewing gum.
      • Sucralose: Used in diet soft drinks and sugar-free products.
      • Saccharin: Used in diet soft drinks and other low-calorie products.
      • Acesulfame potassium (Ace-K): Used in low-calorie products.
    3. Sugar alcohol: This includes carbohydrates that occur naturally in certain fruits and vegetables and can also be manufactured. They include the following:
      • Xylitol: Sugar alcohol derived from birch bark.
      • Erythritol: Sugar alcohol found naturally in fruits and vegetables.
      • Mannitol: Sugar alcohol found naturally in fruits and vegetables.

    The market for sugar substitutes is expected to grow significantly in the coming years, creating opportunities for entrepreneurs to enter the market with innovative and healthy products. Following are some potential business opportunities in the sugar alternative sector:

    • Manufacturing and selling natural sweeteners such as stevia and monk fruit.
    • Developing and marketing new sugar alternative products such as sugar-free baking mixes and snack bars.
    • Distributing and marketing sugar alternative products to health food stores and supermarkets.
    • Providing consulting services to food and beverage companies looking to reduce sugar in their products.
    • Developing and marketing low-sugar and sugar-free versions of popular food and beverages.

    Conclusion

    A school of thought is that sugar alternatives have a negative impact on health. They are generally considered safe when consumed in moderation and are definitely not “worse” than sugar. Different sugar substitutes have varying effects on the body, and some may be better or worse than others depending on individual health conditions. For example, some sugar substitutes such as aspartame and saccharin have been linked to potential negative health effects such as headaches and digestive problems in some people. Natural sweeteners like stevia and monk fruit have been shown to have minimal to no negative health effects.

    Consequently, opportunities in the sugar alternative sector are also on the rise, with companies investing in research and development to create new and improved products. Food for thought: will sugar alternatives be able to replace sugar completely?



  49. India's Newly Discovered Lithium Reserves – A Boon for the Domestic EV Industry

    India's domestic lithium battery manufacturing sector is in its infancy and mostly reliant on the imports of Li-ion

      to read | words

    published on May 23, 2023

    India's domestic lithium battery manufacturing sector is in its infancy and mostly reliant on the imports of Li-ion cells, which are only assembled into lithium-ion batteries in India. In the next five to six years, demand for Li-ion batteries is anticipated to increase due to the government's goal of achieving widespread EV adoption by 2030. The recently discovered lithium reserve in J&K and Rajasthan is projected to reduce India's reliance on raw material imports and propel the domestic Li-ion battery manufacturing industry, which would ultimately have a beneficial impact on EV adoption.

    Demand for EVs is growing as vehicle buyers in India are choosing it over ICE vehicles. In 2022, 442,901 EVs were sold, an ~80% increase from the previous year. The government expects EV share to reach 30% in private vehicles (PVs), 70% in commercial vehicles (CVs) and 80% in 2- and 3-wheelers by 2030.

    However, to meet this target, India’s EV adoption rate will have to increase substantially from just over 4% in 2022. Apart from a current underdeveloped charging infrastructure, higher cost of EVs compared with ICE counterparts is a critical restraining factor for the low penetration.

    The high cost of EVs is attributed to the batteries, which are the most expensive components, accounting for around 40% of the vehicle cost. As India currently does not have domestic battery production facilities, EV manufacturers import Li-ion batteries or Li-ion cells primarily from China and Taiwan (approx. 70%).

    Although there are just over 1.3 million EVs on roads, the government aims to achieve mass adoption of EVs by 2030. To meet this target, overall demand of Li-ion batteries must grow from 72 GWh in 2022 to 576 GWh by 2030.

    To make India future-ready and have domestic EV battery manufacturing capabilities, government undertook several initiatives:

    • Production-linked incentive (PLI) scheme by the government supports the development of advance chemistry cell (ACC) battery domestic manufacturing.
    • Exemption of customs duty on import of capital goods and machinery for Li-ion cell manufacturing for EV batteries.
    • Subsidizing EVs under the faster adoption and manufacturing of hybrid and electric vehicles (FAME) Phase-II scheme.
    • Investing USD 5 billion to set up mega factories for Li-ion cell and battery manufacturing with capacities up to 50 GWh.

    Currently, India sources around 54% of its lithium requirement from China. During 2020–21, approximately $730 million worth of lithium was sourced, of which lithium totaling around $426 million was imported from China.

    The recent discovery of 5.9 million tons of lithium reserves in J&K (Reasi district) and the latest find in Rajasthan (Degana municipality in Nagaur district) are a boon for the country and offer a much-needed impetus to the Li-ion cell and battery manufacturing industry.

    The reserve in J&K, if completely converted to battery grade lithium, can support up to 6 TWh of cell production and would address the issue of insufficient raw material availability. Moreover, the newest reserve found in Rajasthan is considered to have even higher capacity than that of J&K’s, which is expected to meet around 80% of the country’s lithium demand.

    To scale up and expedite domestic manufacturing, it is critical to initially focus on the following:

    • Increasing battery cell component (active anode and cathode materials) manufacturing. India can leverage the vast experience of its chemical industry for meeting domestic as well as export needs.
    • Developing unique chemistries of Li-ion cells using minerals that have no geographical constraints to avoid supply-chain risk and increase domestic value capture.
    • Choice of battery chemistry to balance raw material cost as the prices of materials like iron, phosphate, manganese, nickel, and cobalt used in Li-ion cell production are anticipated to increase further during this decade.
    • Li-ion battery recycling, as this will aid raw material procurement and support the new Li-ion battery manufacturing industry.

    Hence, to achieve the desired mass adoption level of EVs, India needs to strengthen its domestic Li-ion cell & battery manufacturing infrastructure and start exploring lithium reserves in J&K. However, before that, India needs technological expertise and additional infrastructure to be able to extract, process, and refine its lithium reserves, which is mixed with rocks and other minerals.

    Australia has similar reserve where lithium is mixed with bauxite. Technology tie ups with other nations having expertise in this field seems to be the way forward to expedite the development of India’s domestic lithium battery manufacturing industry.



  50. ONDC – Revolutionizing Indian E-commerce

    Open network for digital commerce (ONDC) is a set of protocols built on open network systems. It seeks

      to read | words

    published on May 18, 2023

    Open network for digital commerce (ONDC) is a set of protocols built on open network systems. It seeks to give Micro, Small & Medium Enterprises (MSMEs) equitable possibilities to participate in digital commerce. This will lead to increased digital transactions and separate the supply chain and credit markets. Through ONDC, democratization of the e-commerce ecosystem and thwarting monopolies of established platforms can be done. A recent communication shared by ONDC proves that it initiated control to help customers and level the playing field for small retailers.

    Introduction

    E-commerce is one of the fastest-growing modes in the retail sector and has witnessed double-digit growth during and after the pandemic. The Indian e-commerce industry in 2023 has ~210 million online shoppers and ~65 million sellers registered with ~19,000 B2C and B2B e-commerce platforms.

    While multiple competing e-commerce platforms increase the options for buyers, it means the sellers have to register at each of the platforms to drive the maximum benefits of e-commerce. This became a major challenge for the MSME businesses trying to digitize.

    To ensure the accessibility of online commerce to all businesses and connect them over a common platform, the Government of India introduced the ONDC initiative and conducted beta testing with small retailers in Bengaluru before launching it nationwide.

    Why ONDC

    The key objective of ONDC is to open online trading avenues for MSME businesses, traders, and retailers and offer a hyper-local e-commerce network to consumers. It also aspires to remove digital monopolies by tackling the walled garden paradigm of platform architecture, which concentrates the power with a select few large entities and domains.

    Following are some of the key characteristics of the ONDC framework:

    • Open and decentralized framework: ONDC protocols are not tied to a captive ecosystem and are product/service agnostic expected to cover a wide variety including food, apparel, electronics, mobility etc. The open protocol allows easier onboarding of traditional retailers and cataloguing products and services after approval from ONDC. The ONDC open network also standardizes the connection protocols, adherence to which shall make these sellers visible to buyers from any e-commerce platform on to the network.
    • Protecting Customer Data: For data collection and analysis, many e-commerce platforms rely on third party vendors who may store data outside India which can be a security concern. To ensure adherence to changing international data privacy rules, ONDC shall store data within India.
    • Transaction Security: The ONDC protocols will leverage open standards and network protocols, with an option for consumers to choose a payment method, such as UPI, credit cards, or cash on delivery (COD). These transactions shall be tracked and validated using Blockchain technology to reduce fraud.

    The benefits of ONDC for sellers, buyers, and platforms include the following:

    A. For Sellers

    • Access to Online Platform: MSME sellers can easily launch their online stores and offer goods and services on the ONDC platform. Additionally, they have the option to select a category, subcategory, and product name (e.g. "Electronics," "Mobile Phone," and "iPhone X”). This will avoid the additional cost of website creation.
    • Easy Onboarding and Wider Reach: Once onboarded by ONDC, the sellers shall gain a wider presence on ONDC and other linked partner networks. This saves additional cost and time of registration at individual platforms.
    • Level Playing Ground: Some platforms can charge a premium due to their captive sellers set. With ONDC, all sellers offering the products can compete over the online platforms, thus breaking the dominance and premium pricing of a few platforms/sellers.

    B. For Buyers

    • One-Stop Shop with Potential Cost Saving: Compared to the current marketplaces that cater to a product/service basket, ONDC shall offer a wider range of commodities with reduced middleman costs, thereby providing buyers with a single platform with multiple sellers from different e-commerce platforms at competitive pricing.
    • Enhanced Buyer Experience: ONDC enables consumers to select a product and share contact details after seeing the product's details. The sellers can then get in touch with them to complete the transaction. To make the platform more user-friendly, it will have a live chat option and a 24-hour customer care helpline and various payment options.

    While the ONDC protocols bring these advantages for the sellers and buyers, a few concerns around the system need to be addressed in due course:

    Robust Authentication: One of the reasons for the high popularity of larger e-commerce platforms is the presence of verified sellers having authentic products and low fraud. To achieve this, these large platforms spend a sizable amount on supplier verification/re-verification and periodic checks. While ONDC plans to verify the retailers registering with it and permit only genuine sellers, the robustness of its processes will have to pass a series of evaluations to maintain supplier quality and prevent possible fraud.

    User Experience: Over the years, the larger e-commerce platforms have developed their proprietary processes that provide sellers and buyers with the best experience in order management, tracking, fulfilment, complaint, and grievance redressal. The ONDC protocols would streamline and regulate operations like inventory management, cataloguing, order fulfilment and order management, but the user experience would take time to refine and be seamless to attract more buyers/sellers onboard.

    Recent Developments

    Although ONDC protocols are in the trial phase currently has a network of 43 buyer/seller-affiliated platforms with another 3,000+ under the development/integration phase. It is also developing a support ecosystem consisting of technology partners, reconciliation and dispute resolution partners, and bank account providers to enhance the services.

    In a recent development, ONDC has capped the incentives for subsidizing delivery costs for buyers with effect from 9th May 2023. The move was based on orders peaking at 25,000 for food and groceries on the platforms and is expected to lower the delivery charges by some restaurants and grocery outlets.

    Furthermore, ONDC has also given an incentive of Rs 50 to buyer-side apps to offer discounts to consumers for orders above Rs 100, which was recently capped at 2,000 orders per day. ONDC offers multiple other rewards and benefits to encourage buyer-side demand and increase merchant onboarding. These will gradually be phased out as the network reaches a certain scale. Nevertheless, the prices of food items on ONDC are likely to be considerably low, as other seller apps are charging high commissions from the restaurants. This step will encourage small restaurants and food businesses to go online with ONDC and have a wider reach.

    Conclusion 

    ONDC is in nascent stages and its success will largely depend upon its acceptance by the Indian retail sector. While it is not here to compete with the big e-commerce platforms, it will impact their business. The protocols will have to continue to evolve and stay updated in the technological sphere for ONDC to be a preferred choice in the industry. Only time will tell if ONDC will be a formidable threat to established e-commerce platforms.




  51. Millets – The New Super Crop

    Millets, often referred to as "food grains of the poor," are grown and consumed worldwide. Currently, there is

      to read | words

    published on May 18, 2023

    Millets, often referred to as "food grains of the poor," are grown and consumed worldwide. Currently, there is a renewed interest in millets due to their numerous health benefits, low environmental impact, and adaptability to diverse growing conditions. In fact, the United Nations declared 2023 as the “International Year of Millets”, highlighting the importance of these crops for food security and sustainable development. This is expected to increase the demand for millets globally and create new opportunities for farmers and entrepreneurs in the millet value chain.

    Millets are a group of small-seeded grasses that are highly nutritious and gluten-free. They are rich in dietary fiber, protein, vitamins, and minerals, and low in glycemic index, making them an ideal food. With a low carbon footprint and minimal water and fertilizer requirements, millets are environmentally sustainable crops.

    India – The no.1 millet producer

    India is the largest producer and processor of millets in the world, with a long history of cultivation and consumption of these grains. Millets are widely grown in different regions of the country, including pearl millet in Rajasthan and Gujarat, finger millet in Karnataka and Tamil Nadu, and foxtail millet in Andhra Pradesh and Telangana. Furthermore, millets are used as livestock feed and for industrial purposes such as biofuels and building materials.

    The Indian government has been promoting the cultivation and consumption of millets through various initiatives, such as the Millets Mission, which aims to increase the production and processing of millets in the country. For farmers to get fair prices for their produce, the government has set a minimum support price for millets.

    Millet export

    The government undertook various initiatives to increase millet exports. An action plan was prepared by apex agricultural export promotion body, Agricultural and Processed Food Products Export Development Authority (APEDA) to concentrate efforts and increase export of millet and its value-added products. Following are some activities in this plan:

    • Facilitating exporters, farmers’ and traders’ participation in various international trade expos and buyer–seller meets (BSMs).
    • Connecting with Indian missions to undertake branding and promotion of Indian millets, identification of foreign chefs for tie-ups, and identification of potential customers, such as department shops, supermarkets, and hypermarkets, to arrange B2B meetings and direct collaborations.
    • Various millet-based goods, including ready-to-eat (RTE) millet goods will be showcased to ambassadors and potential importers of the targeted nations' embassies in India to facilitate B2B interactions.
    • APEDA intends to arrange millet promotion events in Dubai, Japan, South Korea, South Africa, Indonesia, Belgium, Saudi Arabia, Sydney, the UK, the US, and Germany.
    • APEDA will ensure participation in various global events and presence on platforms to promote millets.
    • The government is incentivizing entrepreneurs to promote the export of value-added products that are RTE and ready-to-serve (RTS) such as pasta, breakfast cereal mix, noodles, biscuits, snacks, cookies, and candies.
    • The Lulu Group, Walmart, Al Jazira, Carrefour, Al Maya, and other large international retail supermarkets would also be enlisted to build a millet corner for its branding and promotion in accordance with the government’s millet promotion strategy.

    These regulations and policies have helped in promoting millet production and consumption in India.

    PLI scheme

    The Ministry of Food Processing Industries (MoFPI) implemented the Production Linked Incentive (PLI) scheme for food products since 2021–22. In the current fiscal year, an outlay of Rs. 800 crore was set aside to encourage millets in the ready-to-cook/ready-to-eat (RTC/RTE) segment. There will also be efforts to incentivize these products. This category approved 30 applications in total, including 22 SMEs and 8 large enterprises. Packaging and branded RTC/RTE food goods with more than 15% millets by weight/volume in the product composition are eligible for these incentives.

    Many major brands such as Britannia, Hindustan Unilever, ITC, Tata Soulfull, and Nestle are now experimenting with adding millets such as jowar, bajra, and ragi in their food products.

    For instance, Britannia, has introduced millet bread with no additional maida. It is loaded with nutrients like ragi, jowar, bajra, and oats, as well as fiber and minerals that give consumers an easy method to include millet-based foods in their diets.

    Challenges

    Although millets are produced in roughly 21 states in India, the widespread promotion of highly productive wheat and rice varieties slowed its production over time.

    • Some of the key issues with millets are limited cultivation, short shelf life, and the lack of good quality seeds, technologies and equipment for processing, market connections, and common standards and grades.
    • Millets' development has also been hampered by insufficient funding for research aimed at enhancing millets production, reduced profitability, and lack of commercialization, which resulted in millets being less lucrative crops due to lower yields.
    • Millets have a lower national productivity than wheat, rice, and maize. They are grown on marginal soils using rain-fed farming, and they have not adopted improved cultivars.
    • The intricate nature of processing small millets makes it difficult to grow, and the slow rate of millets production is exacerbated by the scarcity of processing equipment and the diversification of millets-specific processing technologies.
    • There are issues with millet crops' ability to withstand pests and diseases. Sorghum, pearl millet, and finger millet frequently suffer considerable losses due to pests and diseases such as shoot flies, stem borer, and grain mold.
    • Lack of product-specific cultivars and seed hubs prevents the breeding and manufacture of high-yield millet seeds, which would otherwise aid in building millet production that is driven by demand. 

    Considering these difficulties, India's request to the Food and Agriculture Organization for the designation of 2023 as the "International Year of Millets" being well received is encouraging and will undoubtedly result in millets becoming widely used.

    However, it is essential to develop a robust millet value-chain with complete millet demand generation solutions.

    Conclusion

    The rising demand for millets presents a plethora of opportunities for various stakeholders in the agriculture and food industries. Government regulations can play a crucial role in promoting the cultivation and consumption of millets. With all the support and cooperation millets are gaining, can they become the most consumed grains worldwide?



  52. Industrial Bio-Oils Take Center Stage in Sustainable Shift from Synthetic Oils

    Organizational time-bound sustainability targets and attempt to build resilience by finding ways to minimize the impact of market

      to read | words

    published on May 15, 2023

    Organizational time-bound sustainability targets and attempt to build resilience by finding ways to minimize the impact of market/price volatility have been pushing companies to realign their business practices. It is time for chemicals, paints & coatings, CPG, and packaging companies to revisit their raw material sourcing spectrum by considering sustainable alternates - Industrial bio-oils! Global companies across industries have been actively transitioning from synthetic oils to bio-oils considering their performance is superior or comparable at the minimum. In lieu of the growing demand, the supply is poised to grow robustly with rising investments from prominent suppliers. Therefore, to drive sustainability across the sourcing value chain, it is imperative for procurement heads to leverage the expanding supply and gain a competitive position in the market.

    Amid the ongoing supply chain issues with synthetic oils, feedstock prices are highly volatile and companies are actively attempting to drive sustainability across the raw material value chain. Organizations are increasingly moving away from traditional synthetic oils to consider industrial bio-oils as sustainable alternates.

    Hence, it is imperative to understand the rationale for the transition, potential best-fit sustainable substitutes, supply-demand situation, and inherent price stability.

    Ongoing Issues with Synthetic Oils

    Since synthetic oils are petroleum-derived, their availability is highly reliant on crude oil output; therefore, they are vulnerable to supply shocks and a high degree of price volatility. Industries dependent on synthetic oils as feedstock are susceptible to supply chain disruptions passed down by the upstream value chain. 

    The energy crisis that emerged across the oil, gas, and electricity markets last year (the worst in the last five decades) has not settled, and global economies are certainly not out of the woods yet. The crude oil prices after settling down 4% in March’23, upsurged since April’23 by rising to USD 79 per bbl. While the volatility is expected to stay, companies have been evaluating best-fit sustainable substitutes in the market.

    Industrial Bio-Oils – The Sustainable Choice

    To deepen sustainability roots throughout the value chain, companies are constantly on the lookout for sustainable substitutes across their raw material sourcing spectrum. Industrial bio-oils, extracted from natural sources such as soybean, linseed, castor beans, and other fatty acids, provide comparable/superior performance vis-à-vis synthetic oils. Their features include the following:

    • High viscosity index maintaining lubricating properties over a wider range of temperatures
    • Equivalent, if not better adhesion due to natural polar compounds
    • Although engineered, bio-oils exhibit comparable film-forming properties
    • Comparable drying time range, excellent biodegradability, non-toxicity, etc.

    Accelerating Demand Driving Increased Adoption

    As an excellent substitute for synthetic oils, industrial bio-oils are a versatile fit for lubricants, coolants, coatings, and other industrial formulations for companies. Organizations have been actively exploring various industrial bio-oils, with the intent to drive sustainability in the sub-tier value chain, and meet long-term sustainability targets, wherein bio-oils with less market/price volatility are the best alternates.

    Industrial bio-oils, especially drying oils, have recorded an active shift in demand. For e.g., soybean oil demand of 60 million MT is poised to grow at 3–4% CAGR, whereas the demand for other bio-oils (linseed oil, dehydrated castor oil– DCO, tung oil, safflower oil, and fatty acids) of 2 million MT is estimated to realize 4–5% growth for the next 2–3 years.

    Specialty applications such as renewables (biodiesel/bioethanol)- 7–8% CAGR, alongside personal care & cosmetics- 6–7% CAGR, and polymer & resins- 5–6% CAGR, are expected to be the driving force for industrial bio-oils in the future. Furthermore, traditional applications, such as construction, lubricants, oilfield, and soaps & detergents, would continue to drive sustained demand.

    Supply Market Gearing Up for Future Demand

    With increasing cultivation area, rising yield, and adequate feedstock inventory, the supply market is characterized by sufficiency. Major supply markets, such as the Americas (the US, Brazil, Mexico), Asia (China, India), and Europe (Belgium, Finland, France) are gearing up for increased production of major bio-oils such as soybean, linseed, and DCO, safflower, and tung oil. Leading manufacturers, such as Cargill, ADM, Bungee, LDC, Vandeputte, and Amaggi, are actively investing in augmenting their capacities in line with the growing demand.

    The shift in adoption is further pushed by government initiatives that support the use of bio-based materials. For instance, the soybean oil supply in the US posted considerable growth with the government offering tax credits (USD 1 per gallon) for biodiesel manufacturers.

    Price Stability – A Catalyst to Industrial Bio-Oils Adoption

    The impact of supply chain disruptions on industrial bio-oils prices in 2022 was no different. High demand, rising input costs, geopolitical issues, and the cost of inflation skyrocketed the prices; however, they are now recording gradual correction and are expected to stabilize further.

    From a sourcing perspective, key industrial bio-oil alternates that exhibit lower/attractive price points include soybean, linseed, and safflower oil ranging USD 1,500–1,850/MT, and some of the high price point bio-oil alternates include DCO and tung oil ranging USD 2,000–3,000/MT. Further, the prices of these industrial bio-oils are estimated to decline 3–5% in 2024.

    Thus, high performance-fit and price stability of major bio-oils is expected to accelerate their adoption over synthetic oils in the future.

    Conclusion

    It is time for global procurement leads/category managers across organizations to explore suitable industrial bio-oils across their applications to drive a sustainable yet competitive position in the market.

    Responsible sourcing by considering bio-based oils would help procurement heads drive sustainability across the raw material value chain, and thereby inch closer to their long-term internal targets. Procurement research can advise companies in informed decision-making toward sustainability.




  53. Can ChatGPT Disrupt Financial Services?

    Generative artificial intelligence (AI) tools, including ChatGPT, have led to increased adoption of AI in financial advisory and

      to read | words

    published on May 12, 2023

    Generative artificial intelligence (AI) tools, including ChatGPT, have led to increased adoption of AI in financial advisory and risk management. These tools have the potential to address issues related to operational inefficiencies, fraudulent activities, and the need for personalized services. However, it is important to recognize that ChatGPT has limitations, and human intelligence and judgment will continue to be crucial for decision-making.

    ChatGPT, the generative AI tool launched in 2022 became a hot discussion topic and swiftly attracted over 100 million active users within two months, surpassing the popular social media platforms like TikTok and Instagram. ChatGPT distinguishes itself from other AI models on account of its inherent functionality and capabilities. Powered by sophisticated algorithms, ChatGPT is programmed to analyze substantial amounts of data to respond in a natural and engaging manner.

    ChatGPT can be leveraged across various business functions and perform tasks, such as language translation, complex data analysis, text summarization, and conversation generation, within few seconds. Similar to how the internet revolutionized various industries in the 90s, ChatGPT holds the potential to transform numerous business functions across industries mainly by automating key processes that typically require human intervention.

    Utilization of AI in financial services sector

    AI services generate USD ~20 billion in revenue globally with financial services accounting for 67% of total revenue. This is expected to grow 20–30% annually through 2032, driven by the rising consumer demand for digitization of banking services, increasing scope and capabilities of FinTech, and growing impetus of BFSI firms to improve customer experience.

    Currently, the financial services industry relies heavily on AI to provide customer service (chatbots, virtual assistants, etc.) and manage back-office operations (credit and risk underwriting, asset management, etc.). However, the advent of generative AI is expected to drive adoption of AI in financial advisory and risk management. Currently, 25–30% of the revenue generated by AI services comes from the financial services sector.

    The financial sector plays a crucial role in the global economy, facilitating the flow of capital and providing vital services such as lending, investing, and insurance. Like others, the financial services sector is also not immune to challenges that can have far-reaching consequences for individuals, businesses, and the broader economy. From regulatory compliance and cybersecurity threats to financial misconduct and systemic risks, the financial services sector persistently faces new challenges that require innovative solutions and effective management. Understanding these issues and their implications is vital for adequate functioning of the financial sector and global economy.

    Key Issues Currently Faced by Financial Services Sector

    • High operational inefficiencies: Presently, numerous tasks, typically resolving customer queries, cross-checking and processing documents, monitoring ongoing transactions, and data entry, in the financial services industry are performed manually. These manual processes often result in high costs and build inefficiencies in decision-making. Additionally, certain tasks such as analyzing and summarizing complex financial statements, press releases, earnings reports, and corporate announcements are time-consuming. This can impact the functioning of investment firms, such as Private Equity and Venture Capital firms, as inefficiencies and delay in delivery of synthesized data can result in missed investment opportunities. 
    • High risk of fraudulent activities: The expansion of the financial services industry is closely linked to the proliferation of financial instruments, such as banking transactions (loan approval and disbursement, deposits, and withdrawals) and issuance of insurance policies. This upsurge has resulted in large volumes of data being generated daily, which require increased capabilities to process the data. Manual processing of high-volume data is more prone to overlooking fraudulent activities and non-compliance with regulatory requirements.
    • Personalization of services: Financial services is a highly competitive market necessitating service providers to evolve and develop a personal connect with customers through customized offerings to fulfil their unique financial needs and retain customers. Furthermore, customer profiles evolve rapidly, requiring companies to swiftly develop tailored financial products that reflect real-time changes in the customer's profile, such as credit history, income, and transaction patterns.

    How ChatGPT can overcome the issues 

    The major use cases of ChatGPT-like generative AI in the financial services sector can be classified into two categories:


    Financial service providers are placing significant bets on the implementation of ChatGPT or other similar generative AI tools due to their diverse range of applications. Below are a few examples of how generative AI is used in real-world scenarios within the financial services industry.


    Impact of ChatGPT on the Financial Services Sector

    • Shift of entry-level job profiles to more value-add tasks: While generative AI provides information, the decision-making would still be reliant on human intelligence and judgment. On average, 40–50% of a US bank workforce engages in administrative services. With the increased adoption of generative AI tools like ChatGPT, a considerable amount of this workforce is expected to be released for more value-adding jobs like financial analysis, business development, up-selling, and cross-selling, among others.
    • Efficient fraud detection: The ability to forecast aberrations in data patterns can enhance the efficacy of fraud detection, leading to reduced expenses associated with loan fraud and subsequently lower non-performing assets (NPAs). Insurance companies, akin to banks and financial service firms, can harness data analysis capabilities to identify fraudulent claims.
    • High reliance on information technology (IT): Deployment of ChatGPT-like systems would result in the increased usage of IT in the financial services sector, consequently increasing tech-based jobs in the sector, as there would be additional avenues related to updating and maintaining the IT infrastructure for generative AI and the allied systems.
    • Rapid personalization: Dynamic and more exclusive personalization of offerings to a particular customer/set of customers would aid in increased customer satisfaction, in a cost-efficient manner.

    Limitations of ChatGPT

    While ChatGPT can provide valuable insights and assist with certain tasks, it is important to note that there are limitations to its capabilities.

    • Accuracy: ChatGPT's responses are generated through machine learning algorithms, which may produce incomplete or biased outputs based on the quality of the data used to train the model. Additionally, ChatGPT’s lack of transparency regarding its sources and methodology can also contribute to raise concerns; it may be challenging to evaluate the quality and reliability of its responses without this information.
    • Privacy concerns: ChatGPT generates recommendations by analyzing data it collects from users, including personal information like demographic data, search history, and spending patterns. As a result, concerns regarding the privacy of user data can present a significant obstacle to increase adoption in heavily regulated industries like financial services, where adherence to data privacy regulations is a key requirement.
    • Data Bias: ChatGPT and other generative AI tools learn from the data on which they are trained. This means that if the training data is biased or inaccurate, it may be reflected in the tool’s responses. As a result, it is critical to be aware of these potential biases and limitations when using generative AI tools.

    Conclusion

    ChatGPT has the potential to revolutionize the financial services sector, helping businesses make informed decisions and improve customer experiences. However, appropriate measures are required to counter bias and inaccuracy. The users are advised to evaluate data privacy regulations and verify the output from alternative sources.




  54. Exploring the Factors Behind Volatility in the Silicon Market

    The high volatility of silicon metal prices impacted multiple end-use industries over 2021–22. Prices spiked multi-fold in 2021 compared with 2020, b

      to read | words

    published on Apr 28, 2023

    The high volatility of silicon metal prices impacted multiple end-use industries over 2021–22. Prices spiked multi-fold in 2021 compared with 2020, but declined by 60–70% in 4Q22, primarily driven by supply-demand dynamics and varying cost of production. 

    Prices of silicon metal, the key raw material for semiconductor, solar, silicone and aluminium alloy industries, have been highly volatile in the past couple of years. During 2021–22, prices of silicon metal surged by 3–4x compared with 2020, majorly driven by limited supply and increased demand. As the production of silicon metal is an energy-intensive process, the energy rationing in China and surging energy costs in Europe had a negative impact on global supplies. Furthermore, rising demand of silicon metal for multiple applications, including solar cells, contributed to the price rise. However, prices started declining from 4Q22 and reduced substantially by 60–70% in the past two quarters owing to improved supply and weak demand, but partially offset by demand from the solar industry.


    Scenario over 2021–22

    Prices of metallurgical grade silicon increased by 3x to USD6,000–9,000/MT (metric tonne) in 2022 from USD2,000–3,000/MT in 2021. This escalation was majorly attributed to the increase in supply deficit to more than 1 million MT, impacted by the electricity regulations imposed in China (leading silicon metal producing and exporting country across the globe) and high energy cost in Europe. Moreover, a double-digit growth in demand over this period was contributed by silicone, semiconductor, solar cell, and lithium-ion rechargeable battery industries, which fuelled price hikes.

    Prices of silicon metal grew robustly in 2021-22, primarily impacting end-use industries such as aluminium alloy, silicone, solar, and semiconductor.

    Major Price Drivers

    Restricted Supply

    Annual production of metallurgical grade silicon metal across the globe was ~3 million MT as of 2020-21, with China accounting for the majority share at ~80%, followed by Europe and the Americas. In 2021, Chinese provincial authorities implemented carbon emission reduction measures by imposing energy consumption controls on plants dependent on fossil fuels, such as coal. As a result, manufacturing plants primarily dependent on coal reduced production output by 80–90%. Limited supply, environmental inspections, and production cuts in the Chinese provinces of Yunnan, Sichuan, and Xinjiang reduced the total supply of silicon metal by end-2021.

    Due to the ongoing energy crisis in Europe, energy has been diverted toward households and critical item industries, resulting in curtailed production and shutdown of facilities across the silicon metal industry. For instance, Norway-based silicon metal manufacturer Elkem cut production due to the potential power crisis in Brazil, where the company has manufacturing facilities.

    Higher cost of energy resulted in operating costs rising 20–30% to USD2,000–2,200/MT in 2021-22 from USD1,500–1,800/MT in 2020. Electricity contributes 40% to the total production cost. Hence, the price rise impacted major production areas in China and Europe, resulting in high utilities cost. In addition, prices of petroleum coke in China grew 30–35% to USD482/MT in 2021.

    Increase in Demand from Various Industries

    Annual demand for silicon metal was 3.5–3.75 million MT as of 2021-22, with ~45% of total demand from aluminium alloy, ~35% from silicone, ~15% from solar panel, and ~5% from semiconductor industry. However, demand for silicon metal from the solar panel industry is expected to increase by 10–15% in 2023 vis-à-vis other industries, as silicon-based solar cells feature high efficiency, low cost, and extended lifetime. Surging demand for renewable sources of energy worldwide would further fuel demand for silicon metal. For instance, the US solar industry aims to supply 30% of domestic energy by 2030.

    Rise in demand and restricted supply increased the deficit of silicon metal across the globe to ~1 million MT.

    Impact on End-use Industries

    Due to the rise in prices of silicon metal, end-use companies raised the prices of end-products. For instance, Wacker Chemie AG, a leading silicone manufacturer, increased the prices of end-products (fluids, emulsions, resins, elastomers, sealants, silanes, silane-terminated polymers, and pyrogenic silica) by 20─30% from mid-2021. Shin-Etsu increased prices of silicones by 10% from May 2022. In addition, many end-use companies are collaborating with silicon manufacturers to secure long-term supply to mitigate supply challenges. However, the scenario changed during 2022–23 due to the decline in prices of silicon metal.

    Scenario over 2022–23

    Prices of silicon metal sharply declined from end-2022. Prices reduced by 60–70% over 4Q22–1Q23, averaging at USD2,000–3,000/MT across the globe. The considerable price drop was primarily attributed to sluggish market demand and reduced cost of production.

    Major Price Inhibitors

    Weak Demand

    Market demand for silicon metal was low, with only a few purchase requests received. Downstream industries were also constantly changing their production rhythms due to lower demand and limited raw material supply. In China, although demand increased after factories resumed production post the removal of pandemic-led restrictions, silicon metal prices remained on the lower end of the scale. 

    Reduced Cost of Production

    Reduced prices of raw materials, such as coke, and stable energy prices helped cut production costs, which further contributed to the decline in prices of silicon metal. 

    Increase in Supply

    Suppliers are planning to increase the production capacity for silicon metal worldwide. Globally, 0.5–1 million MT of capacity is expected to come online by 2025, of which China is forecast to contribute over 50%, followed by Europe, the US, and others. 

    Planned capacity expansion during 2022–23: 

    • UK-based Ferroglobe restarted the second furnace at its Selma facility in Alabama, the US, with total annual production capacity of 22,000 MT.
    • Chinese polysilicon producer Daqo New Energy plans to add 180,000–220,000MT/year of polysilicon capacity by end-2023.
    • TBEA Co plans to increase output of polysilicon to 240,000–250,000 MT in 2023 from 110,000–120,000 MT in 2022. 

    Planned capacity expansion by 2025:

    • GCL Technology, a major producer of raw materials for solar panels in China, in collaboration with TCL, plans to set up a production base in Hohhot, Inner Mongolia, to manufacture 10,000 MT of polysilicon and 100,000 MT of granular silicon in the next few years.
    • Wacker Chemie AG is planning to expand production capacity in Norway, scheduled for completion by 2025.
    • UAE-based Emirates Global Aluminium (EGA) announced the commencement of a project to manufacture silicon metal in the UAE. Currently, the UAE has no domestic silicon metal production capacity and EGA is one of the largest importers of this material with ~60,000 MT of annual demand.

    Conclusion

    Prices of silicon metal were highly volatile in the past two years, rising by 3–4x over 2021–22, but sharply declining from end-2022. The supply-demand dynamics of various end-use industries is majorly impacting the prices of silicon metal globally. Furthermore, the increase in the production capacity of silicon metal by 0.5–1 million MT in the next couple of years will limit any rise in prices. Prices are expected to average at USD2,000–3,000 /MT across the globe over 2023–24. 




  55. Innovation and Sustainability: Setting New Standards for Tailings Management

    Though metals and minerals are essential for human progress, the process of mining them is harmful to the

      to read | words

    published on Apr 26, 2023

    Though metals and minerals are essential for human progress, the process of mining them is harmful to the environment. The byproduct of mining – tailings – are toxic and their disposal must be managed correctly. Conventional tailings storage and management methods are risky and inadequate for their safe disposal. However, modern methods of tailings management can overcome the shortcomings of the current process and prove more feasible.

    Metals and minerals have played a crucial role in human civilization. However, mining, processing, and using them have a severe effect on the environment and human health. Apart from large-scale excavation and release of toxic chemicals into the air, water, and soil, mining leaves behind a toxic byproduct known as tailings. The aftermath of their improper management could be fatal.

    What are tailings?

    The materials left behind after separating an ore's valuable fraction from the unprofitable fraction (gangue) are called tailings, which are in the form of very fine mud or powder. A ton of processed ore typically yields only a few ounces of metals or minerals. Hence, the quantity of tailings produced globally is quite large. The annual production of tailings worldwide was estimated to exceed 14 billion metric tons in 2022. Mining companies, governments, and environmental organizations must collaborate to find a smart solution to manage tailings.

    Tailings management so far

    The traditional method of disposing tailings is impoundment, which involves storing these in a diluted form in a built dam. Such storage is risky and an environmental hazard, especially if there is spillage. The tragic collapse of the Brumadinho tailings dam in Brazil in January 2019, which resulted in 270 fatalities and catastrophic environmental damage, is an example of tailings spillage. Furthermore, dams have limited storage capacity and require a huge amount of space and water, making tailings management an expensive undertaking.

    While using this method, companies have to take numerous preventative measures to reduce risk, such as worker safety, preventing leakage into nearby ecosystems and waterways, and should be prepared for the possibility of a dam collapse.

    The following are some efficient new-age technologies for tailings management:

    • Sensory, Surveillance, and Filtration Technology (Storage and Recycling): Mining companies can set up a facility based on factors such as the composition of the tailings being stored, geotechnical concerns, precipitation and climate, seismic activity, community choice, and environmental safety. Some of the conditions are specific to every region, and the storage facility must be designed keeping those in mind. These modern facilities can be equipped with robust surveillance technology. Companies can employ thickening, filtration, pumping, conveying, and dry stacking techniques to process tailings. They can then process the produced water, metals, and minerals to facilitate recycling and reuse. The recycled metals, minerals, and water can be used by many other industries.
      In addition to robust surveillance technology, new-age facilities have regular staff inspections and annual audits to assess tailings facility performance, third-party audits, internal controls and governance audits, and an established independent tailings review board.

      • Columbia’s AuVert collaborated with CDE Group to deploy the latter’s dewatering and tailings management solution, which enabled AuVert to extract precious metals from tailings and 93% of the mercury from tailings land used by the local populace. Additionally, the water management system helped the company use only 23% of the water required compared to the traditional method. Of this, 90% of the water used by the system was recovered and ready for reuse.
      • At an Italian quarry, MB Crusher developed a method for fully utilizing waste and transforming it into a resource. On the quarry site in Lazio, one of MB Crusher's MB-S23 screening buckets was mounted to a Hitachi Zaxis 460 LCH to separate the waste material into two parts. The 0–100 mm fine material was sold for the construction of embankments. Excess rock aggregates larger than 100 mm were dumped into a dumper and fed into the processing cycle to be transformed into granulates for the construction industry.
    • IoT, Automation, and AI: 
      About 19 storage failures could occur between 2018 to 2027 if industry practices and technologies do not evolve. There are several causes of tailings dam failure, but the most common one is overfilling or overtopping. Mining operators can use mobile IoT-enabled devices, networked sensors, satellite data, big data, and video feed from automated drones or fixed sites to continuously monitor a global network of tailings storage facilities. These data-driven insights improve a mining company's preventive maintenance procedures to control safety hazards and enable running an appropriate education and transparency campaign. This move would eventually eliminate human interference, saving money and time.  

      For instance, a trona ore mine faced issues with the effectiveness of its pumps and environmental compliance. Manual checks were the only way to check if the pumps were functional. The data received was also inaccurate sometimes. To overcome these problems, IWT Wireless deployed IWT Envko, a solution-oriented technology for environmental big data transmission and monitoring in inaccessible regions. It meshes radio nodes together to create a wireless network of connectivity that can transmit when line-of-sight networks cannot due to topography, vegetation, or other factors. The nodes determine the optimal path for data transmission without the use of infrastructure cabling. The solution enabled round-the-clock data monitoring, reduced costs and delays, and improved environmental compliance.
    • Digitization:
      Digital solutions have enabled companies in the mining sector to tackle emission and waste management problems at scale. For example, Shell and IBM collaborated and launched a digital platform, Oren Solutions, which is an open platform that allows collaboration with different digital solutions in an end-to-end integrated manner. This solution was created after interviewing and gaining insights from 350 prominent mining players.

      Customers can use this solution to obtain data from sensors and other equipment, assess its quality, aggregate it, and carry out calculations. The mining business can leverage this knowledge to streamline processes, switch to renewable energy sources, and upgrade machinery with high carbon production.

      The tailings left behind after extracting and sorting precious elements from mines can be digitally managed using the tailings management tool.
    • Geopolymer Technology: 
      Geopolymers are non-crystalline (amorphous), long-range covalently linked inorganic materials, usually ceramic. Tailings can be used as a precursor for polymerization to create geopolymers owing to their innate reactive silicon and aluminum content. Geopolymers made from tailings decrease volumes in storage facilities, eliminate associated risks, lower dam construction and monitoring costs, and facilitate a sustainable circular economy. Furthermore, these generate additional revenue for mine operators. For instance, Kiran Geopolymer produces geocement with the help of a geobinder made from fly ash, blast furnace slag, tailings, etc.

    Way forward…

    There is no single solution to the tailings management problem, but rather a combination of approaches. With the global trend skewed toward sustainability, investors are inclined to invest in green mining and tailings management technologies. Overall, the adoption of modern technologies for tailings management is a positive step toward responsible resource extraction. Companies must continue to prioritize these practices and try to reduce their environmental impact in order to build a more sustainable future.




  56. Soil Conservation – A Critical Need

    Soil is a critical resource needed for our very survival as it ensures food production and security for

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    published on Apr 24, 2023

    Soil is a critical resource needed for our very survival as it ensures food production and security for countries. Yet, unchecked pollution is leading to irreversible soil damage. Apart from natural disasters and industrial activities, modern soil enhancers are causing soil erosion and degradation. This unprecedented damage can pose major challenges in the future. Fortunately, there are organic ways to mitigate this damage, which can help conserve healthy fertile soil for reuse.

    Optimal soil conservation is becoming a global challenge. The loss of fertile soil must be minimized to ensure ample food production, sufficiency, and security. Food production must keep pace with the rise in population to ensure healthy communities. Though agriculture remains the mainstay of many economies, production cannot match the demand of a growing population. Furthermore, forest fires, tsunami, and earthquakes are occurring with alarming regularity, resulting in soil erosion. Chemical pollution caused by industrial activities, modern fertilizers, and pesticides also add to the damage. The agricultural industry is responsible for two-thirds of the moderately to highly degraded land that makes up a third of the planet. The UN has warned that if soil deterioration continues at its current rate, farming will only be possible for the next 60 years.

    Healthy soil is essential for environmental sustainability. According to the Climate Change and Land report by the Intergovernmental Panel on Climate Change, soil absorbs one-third of the carbon dioxide emitted by fossil fuels and industrial operations. Hence, sustainable farming practices are vital for soil conservation and preserving our planet's resources.

    Natural methods of soil conservation

    Conservation tillage – This method minimizes soil disturbance by covering land with vegetation and leaving crop residues on the surface after harvest. It reduces water and wind erosion while providing an environment for beneficial organisms to thrive. No-till farming is another technique that limits soil disturbance and allows crops to grow unhindered. By lessening disturbance, this method reduces runoff and disruption of nearby ecosystems.

    Contour farming – As the name suggests, contour farming means planting crops along the contours of sloped land to help minimize soil erosion due to water currents. This technique also helps to retain more moisture in the soil, enhancing its productivity and crop growth. Additionally, contour farming helps to improve water infiltration into the ground and increase crop yields by reducing runoff and preserving the nutrients in soil.

    Windbreaks – Rows of trees or bushes planted in strategic locations to reduce the power of winds and their disruptive effect on soil are known as windbreaks. They also provide shelter from snow and other harmful weather conditions that can damage crops. Moreover, they can help retain moisture in the soil and improve air circulation around plants.

    Crop rotation – This method encourages growing a variety of crops rather than the same species over the course of several seasons. Crop rotation improves the soil's structure using different root systems, decreases pest infestation, and adds nitrogen to soil via legumes, which are nitrogen-fixing plants. Farmers reap long-term benefits through this method of soil conservation. For each agricultural operation, a set of crops should be rotated, and this decision is heavily influenced by past weather and productivity data.

    Cover crops – One method of preventing barren soils is planting cover crops or secondary species. This refers to growing cash crops for moisture retention, livestock fodder production, and weed control, among other things.

    Initiatives undertaken by some countries

    Countries and governments are advised to take definite steps to improve soil quality in their regions. They should allocate agricultural subsidies to environment-friendly farming practices in order to invest in healthy, living soil. If done properly, agriculture can preserve a variety of species found in soil, thus preventing desertification and land degradation. Some of the countries that have taken measures to ensure food security and mitigate climate change are as follows:

    1. Ethiopia – Land degradation is estimated to cost USD4.3 billion yearly; thus, there is good motivation for the country to act promptly. Ethiopia has adopted agroforestry where crops are grown alongside trees. This practice has lessened erosion and boosted crop yields while supplying fuel, feed for livestock, and other sources of income.
    2. Italy – Italy spends an estimated EUR900 million each year on costs related to soil degradation brought on by landslides, floods, and soil erosion, among others. Italy wants to prevent the degradation of croplands, grasslands, and forests by recovering soil, fostering sustainable agriculture, etc.
    3. Indonesia – The government plans to establish approximately 39 high-priority watershed zones to avert forest and land degradation over a 25-year period. The Program for the Rehabilitation of Damaged Forests and Critical Lands seeks to restore 1.9 million hectares of damaged forests and 4.9 million hectares of degraded land.
    4. US – The US government has taken various initiatives, such as establishing the Natural Resources Conservation Service (NRCS), a federal agency that works with farmers, ranchers, and private landowners to promote soil conservation and sustainable land use practices. The NRCS offers technical and financial assistance to help landowners implement conservation practices such as crop rotation, cover cropping, and reduced tillage. The government has also initiated the Conservation Reserve Program, where farmers are paid to remove environmentally sensitive land from agricultural production and plant species that would improve the health and quality of the environment. The CRP helps reduce soil erosion, improve water quality, and provide a habitat for wildlife.
    5. India – India launched the Soil Health Card Scheme in 2015 to assess the soil’s nutrient status and provide recommendations to farmers on appropriate nutrient management practices. Under this scheme, soil samples are collected and analyzed from every farm in the country once in three years. The government also launched Rastriya Krishi Vikas Yojana (RKVY), a centrally sponsored scheme, in 2007 to promote agriculture development and enhance productivity through the adoption of sustainable land use practices. The scheme provides financial assistance to states for implementing agriculture-related projects and activities.

    It is encouraging to see various governments taking initiatives to promote sustainable farming practices through financial incentives, education, and research support. Its benefits are not only limited to soil conservation but also extend to improved crop yields, enhanced biodiversity, and better water quality. As individuals, we can also promote environment-friendly agriculture by choosing locally grown organic produce and supporting farmers who practice sustainable farming. It is time for us to recognize the importance of soil conservation and take action to support a healthier and more sustainable food system.




  57. Will Telematics-Based Auto Insurance be a Game Changer?

    The complex nature of auto insurance pricing compels carriers to offer competitive quotes that effectively balance risk and

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    published on Apr 14, 2023

    The complex nature of auto insurance pricing compels carriers to offer competitive quotes that effectively balance risk and profit potential. However, the evolution of telematics has led to simplified pricing, and the introduction of more personalized and transparent insurance policies based on how an individual drives. Telematics-based insurance is usage-based coverage that derives premiums based on in-car monitoring devices that capture data of policyholders' mileage and driving habits.

    According to Bloomberg NEF, 1.2 billion cars were in operation in 2022, and this number is expected to reach 1.5 billion by 2039. Swiss Re estimates the increase in vehicles would boost revenue of the auto insurance sector, which is projected to nearly double from about USD765 billion in 2020 to USD1.4 trillion by 2040. The growth is supported by stringent government policies worldwide that mandate insurance coverage, along with strict monitoring and penalty systems to drive the penetration of auto insurance.

    Traditionally, auto insurance carriers focused on parameters such as motor vehicle reports, location, and driver and vehicle age to determine the risk and premiums. On the contrary, telematics allows carriers to evaluate a driver's driving habits to effectively estimate risks and price policies. Over the years, auto insurance carriers have observed that telematics-based insurance programs have gained traction.

    North America is the largest market for telematics-based insurance, with around 22 million policies in force by leading players such as Allstate, Progressive, and Liberty Mutual.


    What is Telematics Insurance? 

    • Telematics or usage-based insurance (UBI) combines telecommunications and informatics, which is the science of data processing for storage and retrieval.
    • The insurer installs a tracking device in the vehicle, which receives, sends, and stores telemetry data pertaining to the vehicle's onboard diagnostics, thus facilitating communication through a wireless network.
    • The device collects vehicle-specific data such as speed, location, idle time, harsh braking, and fuel consumption. This data is provided in real-time to insurance carriers and vehicle owners through smartphone-based applications or other monitoring devices.
    • Telematics offers multiple benefits such as follows:
      • The insureds can decrease premium expense by adopting safe driving habits.
      • Insurance carriers can effectively evaluate the risk of accidents and predict future claims.
      • Carriers can offer value-added services and rewards based on safe driving, thereby increasing customer loyalty, retention, and customer satisfaction.

    These benefits would drive the adoption of telematics insurance, which is poised to more than double in Europe and North America.




    Carriers offer savings to consumers in the form of enrolment and renewal discounts for usage-based insurance.

    On average, usage-based policy costs 15–20% less than that without a usage-based discount.



    Each insurer has a UBI program that tracks several driving patterns and offers discounts accordingly, as seen below for some of the leading insurance carriers.


    While usage-based insurance programs offer numerous benefits, privacy-related issues are a major headwind inhibiting the adoption of usage-based insurance. Devices typically track the precise location and distance covered and shares information on the whereabouts of the user and vehicle. Consequently, in Europe, the General Data Protection Regulation norms require companies to raise awareness and notify consumers about the collection, use, and consequences of processing personal data by insurers. Similarly, the Consumer Federation of America acknowledges that usage-based insurance would have a positive impact on drivers; however, there are several pitfalls, such as consumer privacy protection and potential for unfair discrimination, that could make consumers hesitant to accept these solutions.

    To conclude, telematics, which is effectively used in well-established industries such as fleet management and logistics, has significant potential to accelerate the evolution of auto insurance. Despite privacy concerns, telematics insurance offers customers a transparent way to value their premiums and insurers a more precise method to estimate risk. Telematics is predicted to keep evolving and would gradually be accepted as a global standard to price auto insurance policies. Furthermore, the continued push by insurance companies in the post-COVID era toward digitalization, personalized insurance offerings, and improved customer experience are likely to propel the adoption of technology products such as telematics in the long term.



  58. Logistics 5.0: Difference with a Human Touch

    The logistics industry is in the midst of a transformation with the integration of technologies and digital innovations

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    published on Mar 13, 2023

    The logistics industry is in the midst of a transformation with the integration of technologies and digital innovations in processes, which paves the way for Logistics 5.0, an extension of Industry 5.0. The goal is to digitalize the entire logistics process, making it simple and error-free, and thus creating a collaborative relationship between humans and machines. Will we now see a more productive and efficient logistics process?

    Rapidly evolving information technology and the trend of digitalization have been transforming the global logistics industry. Thus, emerged Logistics 5.0, the logistics sector’s response to Industry 5.0, which could bring about a revolution.

    Logistics 5.0 aims to realign systems – right from procurement of raw materials to last-mile delivery – by integrating digital innovations such as AI, the Internet of Things (IoT), robotics, and big data brought about by Industry 4.0 into the logistics value stream. These technologies are now a part of Logistics 5.0, and their effective use will bring about radical, positive changes in industry.

    Pandemic Spurs an Industrial Change

    During the COVID-19 outbreak, issues such as container shortages, staff renewals, additional security measures, and delays brought into the spotlight the need for improved logistics operations. This industry revamp needs to be cost-effective, resilient, and sustainable to fit into the current global context.

    The pandemic and its aftermath prompted worldwide industry to rapidly embrace logistics 4.0. Businesses were compelled to invest in technology and innovation to become more competitive and develop the knowledge necessary for greater resilience in future.

    The pandemic has (almost) ended; thus, the production system must change to simultaneously support sustainability and digitalization. This is where Logistics 5.0 plays a crucial role – by embracing digitalization, sustainability, and knowledge.

    Reshaping Logistics with Logistics 5.0

    Logistics 5.0 places a similar emphasis on knowledge and sustainability as Industry 5.0. All digital ecosystems are merged with human power in the 5.0 version.

    The concept of Logistics 5.0 assigns top priority to the environment while also keeping pace with technological advancements. To implement this idea, the logistics sector must consider three aspects:

    • Human factor
    • Resilience
    • Sustainability

    This may be seen in how robots and humans operate together in warehouses. Where robotization was important in 4.0, collaboration with the human component is essential in 5.0. Workers are an ongoing investment, and their health and education are crucial. Logistics 5.0 takes it a step further, and technology is being modified to meet the requirements of workers.

    Case study: A leading e-commerce company has robots assist employees at their fulfillment centers. Bringing products to human pickers so they can package and label items for shipping is the sole purpose of these robots. They accomplish this by shifting entire shelf units and are programmed to always watch out for human traffic to prevent collisions and accidents.

    The Game-Changing Impact of Logistics 5.0

    Creating an AI-assisted supply chain and reducing supply-chain risk and waste will be possible based on real-time, up-to-date data with Logistics 5.0. Moreover, it will now be possible to automate third-party logistics (3PL) operations, develop supply-chain integration for more strategic partnerships, and connect these more seamlessly than ever with Logistics 5.0, offering a collaborative working system between humans and machines. By enabling machines to undertake jobs that would be too complex, time-consuming, or dangerous for humans, the new business method aims to enhance productivity.

    This system envisages greater flexibility in terms of tailoring products to customers’ demands by enabling an impactful, synergetic environment between humans and machines. This can be done by integrating IoT, AI, and big data analytics into business processes. Industry 5.0’s utilization of high-tech products will soon impart companies a high ability to produce custom-built items.

    In supply-chain production systems, Industry 5.0 will have the ability to deliver bulk customizations. Although the provision of a demanding tailored service may appear to necessitate human intervention, these will require more mental strength than physical.

    The Logistics 5.0 era will necessitate digital transformation. This transition is unavoidable for suppliers, manufacturers, logisticians, vendors, distributors, and even customers. Many businesses are getting ready for the new era by fulfilling their software requirements inside this framework.

    Companies must therefore plan for a time when they will function significantly differently from now. The degree to which businesses are receptive to innovation will determine whether they use Logistics 5.0 or get left behind.

    Small and medium-sized businesses can efficiently use various technologies, including the cloud, because the cost of technology has significantly come down from what it once was. These investments will spare companies from having to build hardware and invest in data centers in future.

    A better, more sustainable logistics industry will be ushered in by Logistics 5.0, resulting in a notable decrease in cost, errors, and time. It will mark the advent of a new era.




  59. Impact of Biosimilars on Treatment Landscape in US and EU

    Rising healthcare costs vis-à-vis the expanding population and lifestyle-related diseases are some of the key areas of

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    published on Feb 16, 2023

    Rising healthcare costs vis-à-vis the expanding population and lifestyle-related diseases are some of the key areas of concern across the globe. Governments and the healthcare industry, in particular, have been exploring avenues to address these challenges while offering affordable healthcare services. Digital health users opted for online prescriptions and virtual consulting during the pandemic for faster transformation of the health care delivery. However, advances such as development of biosimilars are a key step toward addressing the concerns of the escalating cost of healthcare and patients' access to critical medicines.

    In simple terms, biosimilar medicines are obtained from a biological source such as living cells or organisms, unlike generic drugs that are produced from chemical synthesis. Biosimilars are like other biological medications available in the market and therefore interchangeable as per the regulatory laws of each country.

    Inflexion point for biosimilars

    Biosimilars are considered as safe and effective as the original biologics. However, their manufacturing does not enable exact reproduction of molecules due to natural biological variability. Hence, the manufacturing process is strictly controlled to keep variabilities within limits with the same high standards of quality, safety, and efficacy as any other medicine.

    Globally, biosimilars have seen a strong growth momentum over the last couple of years. By 2025, the global biosimilars market is estimated to reach USD30 billion. Key factors driving the growth include a favorable regulatory environment and acceptance in markets such as the US and EU, which are pioneers of biosimilars adoption for creating a sustainable healthcare environment. Since 2015, when the first-ever biosimilar was approved in the US, the country’s healthcare market has seen the cost of care decrease without any compromise on the quality of medicine. According to a report by Cardinal Health, biosimilars are expected to reduce drug expenditure by USD133 billion by 2025.

    In Europe, increased usage and approval of biosimilars have shown a positive impact on drug prices, which have seen a minor reduction. Adoption of biosimilars by volume is at around 46% across molecules in the region. While market penetration and price discounting vary throughout EU nations, biosimilars have enabled better medicine access among patients in markets such as France, Germany, Italy, Spain, and the UK.

    In 2022, the European Medicines Agency (EMA) and the Heads of Medicines Agencies (HMA) gave the nod to the biosimilar medicines approved in the EU to be interchangeable with their reference medicines or equivalents. This allowed patients better access to biological medicines throughout Europe. The share of biosimilars increased from 0.4% of the total healthcare spending in 2015 to 1.5% in 2018. Since 2006, the EU has approved around 86 biosimilar medicines. In 2022, six biosimilars were centrally approved and currently biosimilar drugs are worth approximately EUR9 billion annually across the region.

    Similarly, the US FDA has approved biosimilar medications for conditions such as cancer, diabetes, Crohn's disease, rheumatoid arthritis, colitis, and psoriasis. Under the US regulations, an interchangeable biosimilar can be substituted with another just as generic drugs are substituted with other brand name drugs.

    In October 2022, FDA announced it would pilot a regulatory science program to develop interchangeable products and improve the efficacy of biosimilar medicines. It also recently approved multiple biosimilars for launch in therapy areas such as oncology. Within a year, these biosimilars penetrated almost 50% of the market.

    The interchangeability of biosimilars remains an exception and not a rule. The interchangeability status allotment to biosimilars has increased significantly by the regulatory authorities in the US and EU. Countries such as Japan do not have a separate process for the approval of biosimilar interchangeability; hence, they are automatically approved. Therefore, the impact of the interchangeability of biosimilars would need time before felt it across the value chain in terms of products, innovation, and cost.

    Improve access and affordability

    Biosimilars have the potential to change the healthcare landscape, as they provide access to more affordable, equally effective, and broader treatment options for patients. It is especially true for groups with unequal access to healthcare services. These groups include the elderly; low-income individuals; rural population; and Black, indigenous, and people of color.

    The FDA and EMA's approval of additional and interchangeable biosimilar medicines provides impetus to push biosimilar medications into the prescription product market. In addition, biosimilars have stimulated competition, innovation, and deep analysis in the medicines market. An increasing number of companies, authorities, and nations are looking at collaborative efforts to ensure the more biosimilars are developed in the near future which would have a positive impact on healthcare treatment.

    Summary

    Healthcare expense is skyrocketing even as governments struggle to restrict it. Biosimilars are vital to generate savings and encourage healthy competition while maintaining the highest quality standards and clinical effectiveness. The healthcare industry would focus more on biological medicines than chemicals in the near future due to their easy accessibility and interchangeability, making treatments seamless, easy, and more affordable to patients. 



  60. National Health Stack - A Feasible Reality or Distant Dream?

    The Government of India has designed healthcare initiatives under Ayushman Bharat Yojna to help the low-income households get

      to read | words

    published on Feb 01, 2023

    The Government of India has designed healthcare initiatives under Ayushman Bharat Yojna to help the low-income households get medical treatments at nominal cost. National Health Stack (NHS) has been designed to support these initiatives and aid implementation of digital health infrastructure. While NHS had many benefits, its enactment involves certain challenges. It is essential to overcome hurdles and ensure that this plan is correctly implemented nationwide.

    The Government of India laid the foundation for the Ayushman Bharat Yojana in its annual budget for FY018–19. The program aims to provide healthcare services to the needy and weaker sections of society by setting up Health and Wellness Centers for comprehensive primary healthcare. The plan will cover over 10 crore vulnerable and low-income families, providing coverage up to INR 500 thousand per family every year for secondary and tertiary care hospitalization under the Pradhan Mantri-Rashtriya Swasthya Suraksha (PM-RSS) Mission.

    If successfully delivered, these health sector initiatives under the Ayushman Bharat Program will ensure enhanced productivity and well-being and arrest impoverishment.

    The Government of India is stepping up financial commitment toward public healthcare through Ayushman Bharat Yojana. Although, financing of the scheme holds great importance on the demand side, constructing a robust national digital health infrastructure pivotal to ensure readiness on the supply side is equally important. The PM-RSS Mission provides a great launch pad to construct an infrastructure of such magnitude.

    Through the PM-RSS Mission, the government aims to congregate innumerable health schemes implemented by different states into a single umbrella scheme over time. To achieve Universal Health Coverage and Portability, convergence of various schemes is crucial. This means creating an environment where all people can obtain health services anywhere in the country, whether in private or government hospitals, without suffering financial hardship or high indirect costs.

    What is National Health Stack (NHS)?

    NHS is conceived as a set of building blocks essential to implement the digital health infrastructure and avoid duplication of efforts to successfully achieve convergence. NHS is the foundation on which the National Health Digital Mission (NHDM) will function.

    The Prime Minister launched the NHDM in September 2021 to provide a unique 14-digit Health ID issued by the Ministry of Health and Family Welfare to every citizen. This ID contains an individual's complete medical history—including test reports and prescriptions—and will be accessible to the patient and players across the healthcare chain, including hospitals, labs, insurance companies, etc.

    NHS - Components

    NHS comprises five components:

    • An electronic database/registry acting as the single source of all data related to health, also known as an electronic national health registry.
    • An electronic facility/exchange for settling claims and coverage.
    • Federated/amalgamated health records of individuals that can be accessed by the individual and all agencies involved in the medical chain.
    • An advanced analytics platform to be used for an advanced policy meeting.
    • Other components, such as unique digital health ID, supply chain management for drugs, health directories, and payment gateways, that can be shared across health-related programs.

    Challenges

    The government has launched several ambitious schemes in the past to deliver quality healthcare services to the masses that could not be implemented effectively due to following challenges:

    1. Low enrolment of entitled beneficiaries: As per National Sample Survey (NSS) 71st round (2014), only 11.3% of the bottom 40% of the population had any insurance coverage.
    2. Low participation by service providers: Many hospitals and nursing homes declined participation or refused to offer services post-empanelment, citing reasons such as low package rates compared with that of the market, long payment times, and lack of transparency in the claims process.
    3. Difficulty in detecting frauds: Identifying frauds related to insurance claims becomes difficult due to less effective systems. This leads to long claims cycle time, funds leakage, and increased rejected claims as insurance providers adopt a conservative approach.
    4. Lack of reliable and timely data & analytics: The absence of reliable and timely data impacts patients who do not receive quality care and policymakers who cannot identify the pain areas.

    Benefits envisaged through NHS

    With the implementation of this digital health platform, the government aims to achieve the following:

    1. Providing a gamut of healthcare services to a significant portion of the population as NHS enables the availability of information and facilitates interoperability and coherence of health schemes.
    2. Endeavoring to reduce future health protection costs by focusing on wellness from illness.
    3. Ensuring protection for the poor through cashless care.
    4. Addressing the issue of delayed payments to service providers. 
    5. Plugging the leakage of funds by implementing a robust framework of fraud detection.
    6. Improved and effective policy making.
    7. Implementing proper audit trails to improve trust and fix accountability. 

    Final Thoughts

    Through the NHS, the Government of India aims to make a significant achievement in providing “Health for All.” However, to do so, it must overcome existing challenges and address the new ones that can crop up during implementation.

    These obstacles can be attributed to procedural challenges, wherein all users must be incentivized to adopt a standard operating procedure. Moreover, it must be a well-thought-out process about what to document, when, and by whom.

    The other major and significant challenge would be regarding data security and privacy because sensitive data leakage can impact individuals and pose a national security risk. Foreign agencies could use this data to target high-value targets.

    Thus, NHS seems to be a tough ask due to the peculiarities of India's health sector, but given the success of AADHAR, India can achieve this dream.

     



  61. Friendshoring: Strategy to Reduce Supply Chain Dependency on China

    Supply chains globally have barely recovered from the unprecedented challenges posed by the pandemic. The Russia–Ukraine war h

      to read | words

    published on Jan 23, 2023

    Supply chains globally have barely recovered from the unprecedented challenges posed by the pandemic. The Russia–Ukraine war has added to the woes of already fragile supply chains. The only silver lining is that companies realize the perils of relying on a select few countries for manufacturing, raw materials, and components. For decades, companies have followed strategies such as offshoring, nearshoring, and outsourcing business operations to low-cost countries. However, recent events accelerated the movement to safeguard supply chains and move away from depending entirely on countries like China. One such concept that could be a game-changer for global trade order is “Friendshoring".

    What is Friendshoring?

    Friendshoring is a concept that recently started making waves in global trade rooms. It implies relocating supply chains from countries with high political risks or deemed to be hostile to those considered allies with shared values and low political risks.

    Benefits of Friendshoring

    Friendshoring enables countries to lower supply chain risks, thereby reducing dependence on select countries for vital raw materials, finished goods, and components. By relocating supply chains to ally nations (who have the necessary capabilities), countries can future-proof their supply chains and ensure a continuous supply of critical inputs.

    Consequences of Friendshoring

    Friendshoring, in theory, looks promising. Developing countries like India, Vietnam, Malaysia, Indonesia, the Philippines, and others could benefit significantly from corporates in the west, moving manufacturing facilities, production, and jobs away from countries like China to the aforementioned friendly nations. It would increase employment opportunities and foreign investments; develop infrastructure, upskill workers, and raise the standard of living in these countries. In turn, it would help developed countries secure their supply chains and prevent disastrous consequences like those witnessed due to the COVID-19 pandemic and Russia–Ukraine war.

    China controls 43.1% of world export for furniture and bedding, 26.5% of electrical machinery and equipment, and 22% of mechanical appliances. Countries like the US, the UK, Germany, and Japan heavily rely on China for these items, which are crucial for producing multiple consumer durables. These countries would source a reduced volume of goods from China if they pursue friendshoring. The share of the overall trade would go to other nations considered allies with low political risks and the capability to provide these goods.

    However, many believe friendshoring could severely affect businesses and world economies. World trade based on friendship could create a divide between nations wherein allies only trade with each other creating trading blocs, which in turn, would be regressive for the global economy, especially the developing nations. It could also create geopolitical instability leading to an all-out trade war by countries like China and Russia.

    Further, even if a small percentage of countries were to shift their production to countries like Vietnam and Indonesia, it would maximize their human resource capacity considering they are extremely small when compared to China. This would lead to higher prices, making it difficult to manufacture products at competitive prices.

    Some believe that friendshoring can lead to developing countries bearing the consequences of the new world trade order as developed nations, such as the US, could look at doing business with only its strongest allies. The high cost of goods and services would then be passed on to the consumers creating further political risks domestically. Furthermore, it has been realized from recent events, like Brexit, that the idea of friendship in politics is dynamic. The world order keeps changing, and friends do not necessarily stay allies. New disagreements may arise as new leaders emerge, and the political scenarios change. Considering this, can global supply chains indeed be secure? 

    Conclusion

    The jury is still out on friendshoring. However, the consequences of the COVID-19 pandemic and the Russia–Ukraine war on supply chains have made it evident that relying on one or two countries for critical inputs is highly risky. While friendshoring may be a buzzword right now, there are signs that economies are seriously considering deploying this strategy. A future where most products move away from “Made in China” to “Made in India” or “Made in Vietnam” may become a reality.

     



  62. Nutraceuticals - Going Beyond Contemporary Therapeutics

    Nutraceuticals are isolated from foods and sold in medicinal form. They provide physiological benefits and protection against chronic

      to read | words

    published on Jan 18, 2023

    Nutraceuticals are isolated from foods and sold in medicinal form. They provide physiological benefits and protection against chronic diseases. With the rise in health awareness and focus on fitness, concepts like nutraceuticals are gaining prominence. Research aims to make nutraceuticals more accessible.

    The growing trend among people to adopt a positive and holistic approach toward health, diet, fitness, and disease prevention has led to the rise of nutraceuticals. It aims to merge “traditional” wisdom on healthy diets with the scientific exploration of nutrition.

    The modern generation wants to take control of their health and are open to ideas such as using of functional nutrients as supplements to an individual’s diet.

    Additionally, nutraceuticals can help reduce expensive disease treatments currently prevalent in modern medicine.

    What are Nutraceuticals?

    The term "nutraceuticals" is a portmanteau of "nutrition" and "pharmaceuticals." This term was coined in 1989 by Stephen DeFelice, who set up the "Foundation of Innovation in Medicine."

    In simple terms, nutraceutical is a substance that is food or part of food and provides medical or health benefits, including aiding in prevention and possible treatment of diseases.

    It comprises the following three segments.

    • Functional foods: These provide the required amounts of vitamins, fats, proteins, carbohydrates, etc., to promote good health.
    • Dietary supplements: Intended to supplement elements of the regular diet. One can consume these foods in pill, capsule, powder, or liquid forms.
    • Herbal/natural products: Include ingredients sourced from plant and animal origin. 

    Within this space, the product categories include:

    • Isolated nutrients
    • Dietary supplements (vitamins, amino acids, minerals, etc.)
    • Special diets
    • Genetically engineered special-purpose (designer) foods
    • Phytochemicals (flavonoids, polyphenols, tannins, etc.)

    Benefits of Nutraceuticals

    According to the WHO, there is substantial evidence showing a strong linkage between an individual’s dietary habits and chronic ailments such as cardiovascular diseases, diabetes, neurodegenerative diseases like Alzheimer’s and Parkinson’s, obesity, cancer, etc.

    Incorporation of nutraceuticals may help promote better physical health, reduce the incidence of chronic illness, increase life expectancy, and delay ageing.

    Researchers found that nutraceuticals have an edge over pharmaceuticals in certain areas. In addition to several therapeutic effects that improve a person’s overall medical condition, they involve little or no harmful side effects and are more affordable and readily available. 

    Areas of Application

    The growing number of applications of nutraceuticals as alternatives to conventional modern medicine include the following:

    • Cardiovascular Disease Management : According to a report by the American Heart Association, cardiovascular diseases account for 30% of global mortalities. Poor lifestyles, environmental factors, and unhealthy diets are reported as primary causes. With the addition of nutraceuticals in the diet, chances of cardiovascular diseases are reduced, and their progression can be monitored.
    • Neurodegenerative Disease Management : Current pharmacological formulations for neurodegenerative diseases, such as Alzheimer’s and Parkinson’s, are plagued with side effects, including sleepiness, mood swings, and confusion. Nutraceuticals may provide a safe and easy alternative to help manage these conditions better. Furthermore, in preliminary studies, nutraceuticals showed great promise in regulating brain physiology. It regulates signaling pathways and reduces neuroinflammation and vascular dementia. The treatment could include essential oils from aromatic plants, such as lavender, sandalwood, and eucalyptus, that act as mood enhancers and antidepressants.
    • Cancer Management : Environmental factors, oxidative stress, and redox signaling lead to genesis and metastasis of cancer. Oxidative damage causes permanent DNA changes, leading to oncogenic transformation. Nutraceuticals, mainly phytochemicals, have proven effective in treating animal cancer. They regulate signaling pathways and molecules that control tumorigenicity. Additionally, the use of nutraceuticals helps avoid severe side effects of chemotherapy and radiotherapy commonly used in cancer treatment. Nutraceuticals rich in antioxidants have anticarcinogenic properties and slow down cell proliferation.

    Technological Advancements

    Artificial Intelligence (AI) and data analytics are being used to personalize nutrition in the diet based on an individual’s specific needs. Sports tech and nutritional science are coming together to discover new business opportunities through the development of nutritional supplements for performance enhancement.

    Research is progressing in other areas, including technologies for bioavailability enhancement (increasing the absorption of the active therapeutic ingredient when taken orally) and nano and liquid encapsulation.

    The future of nutraceuticals is expected to be powered by the following.

    • Synthetic biology: Science that involves redesigning organisms for valuable purposes by engineering them to have new abilities.
    • 3D printing: The construction of a 3D object from a computer-aided design or digital 3D model.
    • Nutrigenetics: Science of the effect of genetic variation on dietary response and the role of nutrients and bioactive food compounds in gene expression 

    Final Thoughts

    Nutraceuticals hold immense potential in their nutritional and therapeutic effects. Ginseng, echinacea, green tea, glucosamine, omega-3, lutein, cod liver oil, and folic acid are some well-known nutraceuticals. Most of these have multiple preventive and therapeutic effects.

    Research aims to find accessible and practically viable ways of integrating nutraceuticals into our daily diets to benefit from their prophylactic and curative benefits for better human health.




  63. How Big Data Analytics Will Facilitate Procurement 4.0

    Procurement activities generate considerable amounts of data from systems, operations, and geographies. In the era of digitalization and

      to read | words

    published on Jan 06, 2023

    Procurement activities generate considerable amounts of data from systems, operations, and geographies. In the era of digitalization and Industry 4.0, big data analytics would be a boon to procurement professionals, helping derive insights across stages. With several potential use-cases, the synergy between procurement and big data analytics will help shape Procurement 4.0. Aligning business goals to choose suitable analytics tools will be the key toward realizing this transformation.

    Procurement 4.0 – The Big Transition

    Procurement tasks typically involve reducing costs via negotiation tactics and competitive contracting, which help optimize inventory and eliminate rogue spending. Thus, organizations view procurement as a core strategy to gain a competitive edge. Currently, procurement operations are being increasingly digitalized and automated. This leaves free time for businesses to focus on strategic aspects.

    Seamless alignment of technologies with business objectives is the key goal of Industry 4.0. Accordingly, Procurement 4.0 should center around the capabilities offered by Industry 4.0. These include AI, process automation, and in particular, big data analytics.

    Procurement Data – The Big Use-cases

    Digitalization has enabled data to grow rapidly in size, variety, and speed. The in-depth evaluation of complex procurement data helps filter valuable information, reduce costs, and prevent fraud. That said, competition forces practitioners to act fast without drawing premature insights or improper conclusions. Hence, big data analytics will help procurement professionals gain clear, reliable, and valuable insights.

    Big data analytics aids procurement performance via three key use-cases.

    Spend Analytics

    • Ensures transparency in expenditure
    • Highlights supply-chain exposure and risks associated with relying on a single source or region over an optimal supplier mix
    • Creates a holistic view by combining supply chain and cost data with external data, such as alternative supply sources and financial statistics across geographies 

    Category Analytics

    • Aids in conducting a deep dive into product categories to understand aspects that influence the demand for a product line
    • Typically involves competitor and user experience assessments to understand a brand’s distinct features and positioning in the marketplace
    • Helps professionals gain insights on retail behaviors, demand and pricing profiles, consumer sentiment, and competitor activity

    Supplier Analytics

    • Accelerates supplier on-boarding via upfront legal and financial validation of vendors 
    • Provides clean and accurate third-party data on all tiers of suppliers, including cost structures, supply availability, lead times, and financial and operational risks 
    • Creates transparent and comprehensive insights on supplier services, product quality and compliance metrics

    Procurement Dilemma – The Big Vendor Selection

    Big data analytics has considerably progressed recently in terms of innovations. Moreover, its use-cases would help procurement professionals reduce material costs, minimize risks related to emissions and sustainable sourcing, and boost profit margins.

    However, organizations need to incur huge investments to incorporate analytics tools and skilled personnel for handling big data and generating actionable insights. Hence, choosing the appropriate vendor to provide big data analytics solutions will be beneficial in the long term for developing optimized procurement strategies.

    The following actions are key toward assigning a vendor for implementing big data analytics:

    1. Define procurement analytics tool requirements as per business challenges and targets
    2. Select vendors based on industry experience, financial performance, product quality, and transparency in pricing
    3. Choose vendors who build tools based on industry-wide data standards
    4. Check if vendors meet data security requirements and offer aftersales services (e.g., bug fixes)
    5. Appoint vendors who would work as partners to help maintain and grow insights from big data 
    6. Conduct independent assessments of the vendor’s tool for performance and user-friendliness

    Procurement Analytics – The Big Adoption

    The pandemic instigated widespread digitalization initiatives – big data analytics included – across industries and corporations globally.

    • Amazon is the most successful adopter of big data analytics in procurement tasks. The tech giant has leveraged analytics tools to 1) track the inventory of manufacturers to ensure efficient order fulfilment, and 2) reduce shipping costs by 30–40% by optimizing warehouse selection depending on the proximity of customers. 
    • Halliburton plans to accelerate the digital transformation of its supply chain capabilities with the help of Accenture’s technologies. The company aims to launch a global hub-and-spoke platform with the help of Accenture’s tools, which will aid in creating real-time supply chain visibility and actionable insights using big data analytics and expediting the deployment of new, scalable technologies to automate procurement processes.
    • ConcoPhillips, a leading crude oil producer, has adopted big data analytics to help lower the cost of supply and improve procurement operations. 

    Big data analytics would help procurement professionals combine historical data, real-time information, and customer insights to proactively optimize the supply chain and address disruptions brought on by geopolitical tensions and pandemics. Moreover, digitalization initiatives would help grow the global big data analytics market for procurement over the next decade. Furthermore, innovations such as the metaverse, blockchain, and AI are reimagining procurement scenarios and use-cases.

    Despite the many benefits of big data analytics in procurement, professionals still lack access to robust implementation strategies. Hence, most organizations, especially manufacturers, do not have a long-term plan to adopt big analytics tools for procurement tasks. The progress of Procurement 4.0 will depend on the pace of integrating big data analytics capabilities into existing processes.

     



  64. The Rise of Vertical Farming and Hydroponics

    Increasing demand for food, coupled with decreasing farmlands and fertile soils, has led to the emergence of alternative

      to read | words

    published on Dec 20, 2022

    Increasing demand for food, coupled with decreasing farmlands and fertile soils, has led to the emergence of alternative forms of farming, such as vertical farming, to boost food production. Countries that have long struggled with domestic production and supply constraints due to the lack of natural resources and favorable climatic conditions are implementing these technologies to achieve food self-sufficiency.

    Paucity of farming land, scarcity of good quality soil, and rising demand for food have led to the evolution of new techniques such as vertical farming, which is slowly gaining acceptance across countries. Vertical farming entails growing food in stacks or layers to optimize space. Its advantages include reliable year-round crop production unaffected by weather conditions, better use of space, and minimal water and pesticide usage.

    Vertical farming can be adopted in various types of growing environments: Indoor farming is growing plants and crops indoors via hydroponics and artificial light. In comparison to traditional farming, this method uses less water, prevents pests and diseases, and enables organic food production. Greenhouse farming entails growing crops in a sheltered space to provide favorable growing conditions and protect crops from severe weather and pests. Container farming is an innovative method of indoor farming that uses shipping containers as a substitute for traditional farmlands. The benefits of placing a farm within a container are that it is transportable and can be squeezed into existing spaces.

    Vertical farming can be carried out using three soil-free techniques.

    1. Hydroponics uses mineral nutrient solutions instead of soil.

    2. Aeroponics uses air as a carrier and mist or nutrient solutions instead of water.

    3. Aquaponics relies on a symbiotic relationship between fish and plants to grow crops.

    Hydroponic farming involves the cultivation of crops in nutrient-rich water with or without the support of other media such as sand or gravel. Depending on the crop, water is enriched with nutrients such as phosphorus, nitrogen, calcium, and potassium. The hydroponics farming market is projected to expand at a CAGR of 11.3% from USD9.5 billion to USD17.9 billion in 2026.

    Vertical farming can be used to grow crops such as follows:

    • Lettuce – These crops have consistent demand worldwide and are available in different varieties.
    • Chard and collard green – These crops can be harvested multiple times a year and are therefore profitable.
    • Strawberries – Though strawberries are seasonal, with the aid of sheltered and climate-controlled farming, they can be grown at any time of the year.
    • Herbs – Many vertical farmers choose easy-to-harvest herbs, such as chives and mint, as they are low maintenance and can be harvested multiple times. Basil can also be grown with vertical farming. Since it has global demand, it is a profitable crop as well.

    Other benefits of hydroponics and vertical farming are as follows:

    • Optimal space utilization – Hydroponics combined with vertical farming can use 99% less land than traditional farming techniques, mainly because the roots do not spread far to search for nutrients and water.
    • Water conservation – Due to concentrated use of water, hydroponics uses comparatively less water than land farming. Moreover, the plants use only 0.1% of the water in which they are placed, and the rest goes back to the environment through evapotranspiration. Traditional farming is one of the largest consumers of water worldwide, and most of it is wasted due to poor irrigation, evaporation, and water mismanagement. Vertical farming enables efficient use of water, i.e., up to 95% less water compared to traditional farming methods.
    • Increased yields – These technologies require an insulated environment and greenhouse structures. This allows to create a microclimate and temperature-controlled facilities. The crops are shielded from insects or pests and untimely rain or frost. Furthermore, as an optimal climate is created, any crop can be grown at any time of the year. This leads to higher crop yield.
    • Less labor – These farming techniques are carried out in fully equipped greenhouses and require much less labor compared to field farming.
    • Supply chain reduction – Since these farming systems can be set up anywhere, the supply chain is largely reduced. This cuts down on transport and warehouse cost. Furthermore, customers can get access to fresher produce.

    UAE – A pioneer in adoption

    Vertical farming and hydroponics might be the only solution for water-stressed and arid regions such as the UAE. Currently, the Emirates imports 90% of the food it consumes. However, it started hydroponic vertical farms in 2020 and is working toward becoming self-sufficient and growing its own food, as part of the Food Security Strategy 2051. Through this strategy, the UAE aims to rank among the top countries in the Global Food Security Index by 2051. The initiative would also help create a robust national system that employs modern technologies for sustainable food production.

    COVID helped promote vertical farming and hydroponics initiatives in the UAE. Imports were impacted due to the pandemic, which highlighted the risk of buying all food items from other countries. With the government encouraging agritech solutions, there is considerable support for such initiatives. Some of the startups in this sector are as follows:

    • Badia Farms – The company supplies high-quality microgreens and herbs to Dubai's top restaurants.
    • Red Sea Farms – It is an agriculture technology company that uses salt water for commercial farming.
    • EDAMA Organic Solutions – A sustainable option, the company recycles organic waste into innovative agricultural products.
    • Smart Acres – It is an indoor vertical hydroponics farm in Abu Dhabi that grows 13 cycles of lettuce in a year.

    Other regions

    Singapore is also focusing on domestic food production, and the city-state's sovereign fund Temasek has invested nearly USD5 billion to back startups in alt-proteins, ag biotech, and vertical farming. The country is harnessing technologies including hydroponics and vertical farming to overcome land and water constraints as well as combat climate change.

    Other countries that have successfully increased their per annum yield via hydroponic farming are Japan, India, the US, and UK.

    Challenges

    While there are many benefits of agritech solutions such as vertical farming and hydroponics, there are also challenges limiting their adoption:

    • The biggest issue in establishing these initiatives are the high initial cost and long payback period.
    • Since all plants have the same nutrient reservoir in hydroponics, diseases and pests can spread rapidly.
    • Electricity cost is high as plants are grown in a temperature-controlled environment. Backup power is needed in case of outages.
    • Certain large and tall crops are not suitable for indoor farming.

    Outlook

    The food ecosystem is evolving as new technologies and ideas make an impact on the industry. Though demand for food is growing, consumers also prefer environmentally friendly, sustainable processes. Moreover, the pandemic has exposed supply chain vulnerabilities, emphasizing the necessity of a more compact and integrated supply chain.

    Hydroponics and vertical farming technologies can be a feasible solution and fulfill the above-mentioned requirements. Companies such as CambridgeHOK provide fully automated vertical farming solutions that advise on climate control, engineering, automation, and efficient energy provision. Canadian startup Inno-3B provides fully automated, scalable, controlled, and monitored robotic growing systems. It also offers real-time support and can help grow organic produce, herbs, and berries locally. Many other companies are also investing in vertical farming solutions due to their vast potential.

    However, the industry is still at a nascent stage and needs more acceptance for wide-scale adoption.


     


  65. Global Market Opportunity for Bio-Based Resins

    Bio-based resin is being increasingly adopted across industries as the need for sustainability has risen. Bio-based resins, made

      to read | words

    published on Sep 27, 2022

    Bio-based resin is being increasingly adopted across industries as the need for sustainability has risen. Bio-based resins, made from partially or wholly plant-derived monomers, offer a sustainable and carbon-positive approach for consumers and manufacturers shifting to a bioeconomy model from highly-priced and depleting fossil fuel ingredients. Government regulations have also boosted their application. Successful commercialization is leading to the growth of bio-based resin throughout the world.

    Climate change has become a global phenomenon; hence, sustainable processes and practices are required to combat it. The need for cost-effective, durable, and commercially viable counterparts of petroleum-derived components has led to the development of bio-based resin. A resin that has some or all of its constituent monomers derived from biological sources is called a bio-based resin. These sources are plant-based such as corn or soybean byproducts from bio-diesel fuel refinement. Other options are sugar cane, sugar beets, potatoes, lignocellulose, whey, and algae.

    Market Overview and Increasing Adoption

    The global bio-based resins market size was estimated at ~USD14 billion in 2021 and is expected to record a CAGR of 10% and reach ~USD20 billion by 2025.

    The adoption of bio-based resin across industries is growing due to high demand from the packaging industry, followed by the paint, automobiles, and pharmaceutical sectors. Packaging accounts for ~35% and paints & coating ~25%. Automobile and pharmaceuticals constitute ~15% each, while the remaining 10% comes from other segments such as composites and electronics.

    With an emphasis on environmentally conscious processes, the packaging industry has witnessed wide-scale adoption of bioplastics (made from bio-resins) for manufacturing rigid yet lightweight, easily mailable, and cost-effective packaging. Demand for bioplastics in the packaging industry is anticipated to rise at a CAGR of 9.5% from 2022 to 2027. The global packaging resins market shows that almost 46.1% of the market is occupied by food and beverage packaging, followed by consumer goods, and healthcare.

    Paint is the other industry that largely employs bio-resin. Its global share of bio-resin was as less as 5% in 2021, but it has a huge potential. Resins specific to the paint market are alkyd, epoxy, and acrylic resins.

    The pharmaceutical industry generates high demand for chromatography resin. Its market is expected to reach USD3.76 billion in 2028.

    Lastly, its technical application in automobiles is also gaining prominence. Volumes are expected to increase from around 155,000 tons to 166,000 tons over the next five years.

    Geographical Analysis

    Geographically, Europe and North America hold the largest share of the bio-based resins market, together accounting for ~70%. EU has released policies favoring their usage. Bio-based resin is a key enabler in ramping up the industry’s contribution to the region’s GDP. Moreover, high demand in foreign exports and ecommerce boost the growth of bio-based resins.

    In the US, government regulations to curb carbon emissions have led to increased application of bio-based resins. North America, in particular, dominated the global bio-based epoxy resins market in 2021, driven by the wide range of applications that epoxy resins now have. These resins are utilized in most industries and are a major substitute for traditional plastic. In the US, the rising number of infrastructure projects, growth in the construction industry, and high demand for coatings in the region have fueled the bio-based epoxy resins market.

    Contrary to Europe and North America, demand growth in Asia-Pacific is driven by remarkable success of other complementary industries, such as e-retail and manufacturing, and higher adoption of flexible packaging. Bio-based resins have also resolved Asia-Pacific’s considerable concerns about disposing petroleum-based, non-biodegradable materials. India, Japan, China, and South Korea are increasingly adopting bio-resins for automotive production, thus boosting their growth. The South Korean construction market is also witnessing a boom in activities, which has augmented demand for epoxy resins. Asia-Pacific accounts for one-fourth of the global market.

    Way Ahead

    The importance of bio-based polymers and their derived materials is evident from the fact that today there is a wide availability of renewable feedstock and a growing need for environmental-friendly materials. Current achievements in polymer chemistry and infusion of biotechnology have further accelerated the progress of multifunctional bio-based polymers.

    Bio-based resins quote a premium price, which is a major challenge. The premium charge is directly proportional to the customer’s expectation of performance benefits with minimal hazards and value delivery in the long term. However, experts believe that with substantial R&D investment, organizations can significantly reduce the cost of production and extraction of bio-based resins over time. In addition, the rising cost of petroleum products have led to a sizable depletion petroleum reserves, which would support the expansion of bio-based products in the coming years.





  66. Pet Shelter Segment on a Growth Trajectory

    The pet care industry is witnessing rapid growth due to the rise in pet adoption across the globe.

      to read | words

    published on Sep 02, 2022

    The pet care industry is witnessing rapid growth due to the rise in pet adoption across the globe. With cats and dogs being the most popular pets, there is a need for good care facilities where they can be left by working or traveling parents. Key players compete against each other by offering various services for pets as well as convenience for owners. The pet shelter segment is flourishing worldwide, and its momentum would continue to grow.

    Pets have become an integral part of their owners’ lives, but pet parenthood comes with its set of responsibilities. In addition to a healthy diet and hygienic care, owners must provide a safe environment for their pets, especially cats and dogs. However, this poses a problem for working parents or those who need to travel regularly. Such individuals need the services of a good care facility while they are away, boosting growth in the pet daycare and boarding segment.

    Also known as pet sitting, this segment is poised for significant growth in the coming years. In 2019, the global pet sitting market size stood at USD 2.6 billion and is expected to expand at a CAGR of 8.7% from 2020 to 2027. The pet shelter market is segmented based on pet types and services offered. The following services are offered:

    1. Pet daycare – This service is provided to cat/dog owners who need to leave behind their furry friends for long periods of time during the day. These daycare centers ensure pets have play and nap time, a roaming area, on-time medication, and a clean environment. Some centers also offer spa treatments, walks in the park, vet visits, and even pickup and drop facilities for customers with mobility issues. While pet training and obedience is a different segment, a few facilities also provide this service with a certified trainer on board.
    2. Pet lodging – If owners need to leave their pets while traveling, they can opt for pet lodging services. The pets are checked in for a certain number of days at such facilities where they receive proper care and attention. As most pets experience separation anxiety, these facilities advise leaving them for a few hours every day before the actual stay so they get used to the new place. This also helps animals socialize with other pets and have playmates during their stay.
    3. House sitting - House sitting is another option, wherein a sitter visits the owner’s home to take care of pets. As pets remain in familiar surroundings, they are more at ease and their daily routine is not disrupted. 

    Cost Factor

    Pet daycare and lodging services are expensive. The average cost to take care of a dog in the US ranges from USD 12 to USD 38 per day. The rates depend on the breed, age, services availed, and general demeanor of the dog.

    A good daycare facility should meet the following criteria:

    1. Proximity – The daycare center should ideally be situated near the owners’ workplace, which allows them to rush back in case of emergency as well as avoid late charges on long days.
    2. Cleanliness – The daycare or lodging facility should maintain the highest level of cleanliness and hygiene. As these places take care of several animals, chances of infection are high. Hence, it is essential to check whether the center is regularly cleaned and animals are kept in a hygienic surrounding. Furthermore, many pet lodging and boarding facilities these days carefully choose germ-resistant vinyl floors, a concealed drainage system to reduce water-borne diseases, and air purification and odor management systems.
    3. Well-trained staff - The daycare center must have trained employees who can handle animals with expertise and care. When pets, especially dogs, feel threatened, they may retaliate and hurt the staff. Hence, they should be adept at handling situations when pets suffer from behavioral changes, depression, and anxiety.
    4. Value-added services - A daycare/lodging center provides basic services such as walking and administering medicines, ensuring owners all their pets’ requirements are met. In addition, 24x7 CCTV vigilance, a dedicated play area for breed-specific games, an in-house grooming facility, on-call vets, personal attention, and enclosures are some value-added services.

    Leading Service Providers

    A few companies dominate the pet shelter industry due to the top-notch and varied services they provide. Some of the well-known players are mentioned below.

    1. Preppy Pet – The company offers services such as private suites as per pet size as well as cageless stay and play services with a sitter.
    2. Best Friends Pet Care – This US-based company provides a host of services that include day camp, boarding, training, and grooming for dogs and cats.
    3. Camp Bow Wow – The company distinguishes itself from competitors through its unique services such as care for newborn pups as well as elderly or infirmed dogs and cats.
    4. PetSmart Inc – The company has presence in all pet care segments, including pet store, boarding, grooming, and pet hotels.

    Startups 

    1. Rover – An app-based pet sitting marketplace, Rover connects dog owners with verified dog sitters. Owners can also book services such as dog walking and grooming via the app. The startup was launched in 2011 and has received a funding of USD 284 million.
    2. DogHero – This is a mobile-based platform that allows owners to select from its range of pet care services. Professionals can list their services on the app. Launched in 2014, it has received USD 16 million in funding.
    3. DogVacay – With footprints in the US and Canada since 2012, this platform not only allows owners to find sitters or boarders in their locality but also guarantees emergency vet care, concierge customer service, and photo updates of dogs’ vacation. DogVacay has received a funding of USD 47 million.

    Other platforms that have attracted investor interest include Mad Paws and Pawshake. Although the pet shelter industry is at a nascent stage, it is expected to welcome many more players.

    While pets are a great source of comfort and joy, they also need intensive care. Dogs especially do not like being left alone or separated from their owners for a prolonged duration. The probability of them slipping into depression or suffering from abandonment issues is quite high. Hence, it is imperative that owners find a good care facility that gives quality care to pets in their absence. In conclusion, a pet care facility is a smart business idea, provided it can cater to the varied needs of its customers (both human and animals) and keep them satisfied.





  67. Heat Wave: A Challenge for Power Sector

    Heat Waves as an impact of climate change have created an existential crisis and countries across the world

      to read | words

    published on Aug 10, 2022

    Heat Waves as an impact of climate change have created an existential crisis and countries across the world are struggling against it. It has led to increasing demand for electricity and the need for alternative energy sources. Heat waves are also affecting the power generation capacity of renewable energy sources as well as thermal power plants. How can countries work together to decelerate global warming and develop new technologies to overcome issues caused by climate change?

    Climate change has affected countries across the world as temperatures have risen, leading to chronic heat waves. Countries like India and Pakistan were majorly impacted by heat waves and temperatures in few regions reached an unbearable 50oC. While Asian countries usually have hot and humid weather, heat waves have been recorded in parts of Southern and Western Europe, which are usually cooler. Temperatures in many cities in Europe crossed 40oC. In addition, several parts of the US recorded heat waves recently, with temperatures crossing 40oC (110oF). The rise in temperature has led to a significant jump in demand for electricity to power cooling systems in these regions/countries.  

    Additionally, the increase in solar radiation due to heat waves has boosted the solar energy output in many countries, with Germany recording the highest solar power output. However, this is a temporary advantage, as in the long-term, high temperatures will impact the overall performance of solar panels. Other thermal power sources have also been affected by the temperature rise.

    Impact on Solar Power

    Solar panels are designed to function optimally at 25°C (77°F). Most solar panels can operate at their peak efficiency at a temperature between 15°C and 35°C. Higher temperatures can impact the efficiency of solar panels especially if it is exposed to such elevated temperature for a longer duration. The electricity output efficiency of a solar panel can reduce by 10 to 25% due to high temperatures.

    A solar panel absorbs photons to energize electrons, causing them to flow and create electricity. In case of high temperature, the panel heats up faster and becomes hotter. As the electrons are already affected due to absorbed sunlight, the efficiency and the voltage output of a panel are impacted negatively.

    Impact on Other Power Sources

    High temperatures have affected other power-generating sources including nuclear, coal, and gas-fired power plants as well. These power plants require a high volume of water as a cooling agent. The temperature of water in the water bodies, especially in water reservoirs located inland, has significantly risen due to heat waves, impacting the water’s cooling efficiency. This would eventually hamper the plants’ power generation efficiency.

    Aranca View

    The rising frequency of heat waves as well as the subsequent increase in the average temperature is affecting countries globally. Rising temperatures in the US, Europe, and Asia have led to an increase in power consumption as the demand for ACs and coolers has gone up. To meet this growing power requirement, countries are trying to maximize their power generation capacity. Global warming alone is expected to raise the demand for power by 10–12% over the next 20–25 years.

    The rising mercury has hampered power production. Continued extreme solar radiation could have a severe impact on power production globally.

    To overcome these challenges in the future, governments and companies across the world must reduce greenhouse gas emission, which is predominantly responsible for the increase in temperature. In addition, there is an urgent need to develop power generation technology, especially for solar panels, that can withstand higher temperatures. Being the major source of renewable energy, advancements in solar panel technology with regard to high temperatures will be a key to the growth of renewable energy in the future.




  68. Virtual Power Plants: The Way Forward

    Growth of distributed energy sources (renewable energy) and fluctuations in demand for electricity has led to the development

      to read | words

    published on Aug 03, 2022

    Growth of distributed energy sources (renewable energy) and fluctuations in demand for electricity has led to the development of Virtual Power Plant (VPP) systems. A VPP is a cloud-based system that uses software and algorithms to integrate and manage distributed energy resources. Currently, most VPPs are being established in developed countries such as the US, the UK, Germany, and France. Over the past year or so, VPP’s growth has been fueled by COVID-19 and Russia’s invasion of Ukraine.

    One of the essential requirements in the world today is electricity, generated from conventional as well as renewable sources. Conventional power (coal and gas) plants and nuclear power plants are centralized, while renewable power sources are scattered across different locations. Due to diminishing fossil fuels’ reserves and rising environmental concerns, renewable sources of energy are gaining prominence. However, the transmission of electricity from distributed renewable energy sources to the grid is a costly and lengthy process. Additionally, the power generation from renewable energy sources such as wind and solar is dependent on climatic conditions, making it difficult to predict power generation from these sources. 

    To overcome the challenges posed by distributed energy sources, the Virtual Power Plant (VPP) was conceptualized. This system not only connects the distributed energy resources but also helps in managing them efficiently.

    VPP is a cloud-based system that uses software to integrate and manage distributed energy resources such as solar, wind, combined heat & power units, and storage systems. It helps in managing consumers’ varying power requirements and acts as a centralized system. The power generated from individual units is traded through the centralized power unit.


    In VPP, there is a centralized remote monitoring system that monitors each individual unit to optimize power generation based on demand. In addition, it uses an algorithm, software, and weather forecast system to predict the generation of power from solar and wind.

    Market Scenario

    VPP is a relatively new concept and there are only few projects operational, mostly in developed countries such as the US, the UK, Germany, and Australia. There are many proposed and ongoing pilot projects in other countries which are being encouraged by the respective governments.

    The global VPP market is expected to register robust growth in the next few years. The US is the largest market, followed by Europe. The other major VPP markets include Australia, China, Japan and Canada

    In the US, the market is driven by optimization of energy distribution networks and growth in distributed power generation. According to the US Department of Energy, the electricity grid in the country is complex and it is difficult to incorporate advanced technology in it. Integration of VPPs with grid could help in managing the power fluctuations from the distributed energy sources.

    In Canada, the growth is driven by government support to promote renewable energy sources which are distributed across the country.

    Europe is another major market for VPPs and is expected to record more than 30% growth over the next five years. In Europe, Germany, the UK, and France are the major markets; other countries are also recording significant growth. The main market driver is rising adoption of renewable energy which requires a system that can provide flexibility by combining different types of energy sources together and integrating them with the grid as a single power source, which VPP can do.

    Countries in the Asia-Pacific region, especially China, Japan, and Australia, are also witnessing the adoption of this technology. In China, government initiatives and investments by companies are expected to drive the implementation of VPPs. In Australia, a few pilot VPPs are currently operational and based on the success of these plants, more would be commissioned. Various companies in Japan are planning to launch VPPs and new pilots at the end of 2022 and/or early 2023.

    The adoption of VPPs in other countries is also expected to rise in the coming years, driven by the growth in renewable energy sources and the need to manage distributed renewable energy resources efficiently.

    Impact of COVID-19

    COVID-19 significantly impacted industries across the world, leading to intense fluctuations in power demand; this in turn affected the power-producing companies. To mitigate such fluctuations in power demand, governments across countries are looking to leverage the VPP as a tool to optimize power generation based on demand. The focus will be on using renewable energy sources, as these enable continuous power generation with limited input cost, and shutting down conventional power plants, which require uninterrupted fossil fuel supply for operation. 

    Impact of Russia’s Invasion of Ukraine

    European countries are highly dependent on Russia to meet their energy requirements. More than 40% of natural gas in Europe is sourced from Russia. The US and Europe imposed sanctions on Russia following the country’s invasion of Ukraine. Subsequently, most European countries either stopped or reduced the quantity of gas they were sourcing from Russia. The limited availability of gas has fueled the need to grow renewable energy sources and intensified the focus on energy efficiency.

    Aranca’s View 

    Aranca expects the adoption of VPPs in developed nations, especially in Europe, to grow significantly. The rise in adoption will be driven by the need for energy efficiency and growth in distributed energy sources such as renewable sources and energy storage systems. Additionally, government initiatives to promote VPP in their respective countries to encourage renewable energy sources will also play a key role in the growth.

    An increase in the adoption of VPPs will make its technology more reliable and cost-effective; this, in turn, would make it more affordable for developing countries in the future.




  69. Veterinary Medicine – An Emerging Segment

    The global veterinary market is benefitting from the growing trend of pet adoption and is witnessing increased demand.

      to read | words

    published on Jul 19, 2022

    The global veterinary market is benefitting from the growing trend of pet adoption and is witnessing increased demand. Some interesting trends are changing this industry and key players in this space must be aware of these factors. These trends will change the face of veterinary medicine and bring about advancement in animal healthcare.

    In 2020, the global pandemic increased pet adoptions driven by forced lockdowns and the resultant loneliness. The pet care industry, which grew steadily until 2020, suddenly saw a huge spike in this period.

    Pet healthcare is a key aspect of pet adoptions. Like humans, pets are susceptible to diseases caused by parasites, viruses, bacteria, and fungi. Veterinary (vet) medicine helps agricultural animals and pets live longer, healthier lives. Pets need vaccines and general check-ups, much like human beings. Pet owners thus need to ensure that their furry friends receive the best care possible. 

    Zoonotic and chronic diseases are common among animals and at times can be fatal. In fact, there have been increased instances of chronic diseases among pets. Some common conditions are cancer, diabetes, liver problems, and endocrine disorders such as Cushing’s Disease. Obesity in pets is also a serious health concern and requires professional healthcare.

    In 2021, the global veterinary medicine market was estimated at USD 29.4 billion. From 2022 to 2030, the industry is expected to expand at a compounded annual growth rate (CAGR) of 7.3%. This has led to major R&D investment in the veterinary industry, which would help in the further discovery of innovative products and associated opportunities. As an example, in June 2021, a non-steroidal anti-inflammatory drug (NSAID) ‘Thermonorm’ was introduced by the Biotestlab business, with the active substance acetylsalicylic acid and which was used for poultry, pigs, and calves.

    The U.S. is the biggest market worldwide for pet care products, with an estimated 383 million pets across the country. The U.S. animal healthcare market is estimated to be one-third of the global market. Furthermore, 2% of the US pharmaceutical market comprises the animal healthcare market. This includes flea and tick medications and biologics. The U.S. animal healthcare market generates around USD 10 billion in annual sales.

    There are some interesting trends shaping the global pet veterinary market:

    1. Nanotechnology : One of the emerging technologies revolutionizing the animal healthcare space is nanotechnology. Veterinary healthcare is deploying nanoparticles as an alternative antimicrobial agent that can improve the recognition of pathogenic bacteria. Nanoparticles are also being used as drug delivery agents for new vaccines and drugs.  The use of this technology in veterinary medicine can help improve diagnosis, treatment, and animal growth.
    2. Easy-to-administer drugs : Pet owners prefer drugs that are easy to administer to pets. Oral medicines are non-invasive as well as easy to give. These can be mixed with food or given separately via a dropper. Another option to administer medicine to pets is in the form of chewable tablets available in flavors and are like a treat. With the growing humanization of pets, owners want to ensure their pets have a healthy lifestyle and do not have to be force-fed medicines or endure painful injections.
    3. Pet health insurance market : A novel concept, pet health insurance helps pay for medical needs of pets. The insurance acts as a cover and provides financial support to pet parents in the case of accidents or illnesses of the protected entity. Thus, pet owners spare no expense to ensure the best possible care for their furry friends. This has helped growth in the vet medicine segment.
    4. Human medical facilities : The diagnosis and treatment of animals has undergone an evolution in the past decade. Diagnostic technologies such as magnetic resonance imaging (MRI), ultrasound scans, and laparoscopy are being used to treat pets and even non-domestic animals. Other technologies – such as wearables, 3D printing, and minimally invasive surgical procedures – are also being deployed in the pet care space now.
      There are certain diagnostic instruments specifically designed to check animal health. These include diagnostic instruments, immunodiagnostic test kits, and app-based monitoring systems.
    5. Technology to track diet : Diabetes mellitus is a condition common among cats and dogs. Just as in humans, the shortage of insulin in the body causes diabetes in cats and dogs. The condition becomes critical, making it imperative to track and monitor their eating habits as well as help them maintain a healthy, balanced diet. Now pet parents can download an app to help them track their pets’ meals, insulin injections as well as prescription refills. It helps the owners impart proper care to their diabetic pet.
    6. Dietary supplements : Pet owners are increasingly moving to dietary supplements to ensure their pets get the right nutrition. This is especially helpful for older pets who may be suffering from chronic diseases. These supplements not only help maintain the health of the animals, but also reduce their age-related aches and pains.

    The global vet medicine market is undergoing a transformation. Some key players have adopted strategies designed to gain lion’s share of the market. A few prominent names among these are Zoetis, Inc., Merck & Co., Inc., and Elanco Animal Health. Pet food market leaders such as Mars and Nestlé have also entered the veterinary business. Mars owns corporate vet practices such as Banfield Pet Hospitals, bluepearl, Linnaeus, and petpartners. Nestlé has made investments in the vet practice market through Independent Vetcare Group International.

    Lack of veterinary infrastructure in emerging countries and stringent regulations associated with medicated feed additives in some regions are restricting growth in this industry. However, increased pet adoption as well as awareness of animal healthcare requirements offer lucrative opportunities for players in the veterinary medicine market.





  70. Semiconductor Shortage – A Roadblock to Auto OEMs’ EV Launch Plan

    Semiconductor shortage was caused by the cascading effect of the pandemic and is expected to continue for the

      to read | words

    published on Jul 05, 2022

    Semiconductor shortage was caused by the cascading effect of the pandemic and is expected to continue for the next few years. This global shortage has negatively affected the auto industry. Therefore, the industry has undertaken certain steps to overcome this crisis and get back on track.

    Semiconductors are the main components in advanced vehicles of today. Their utility ranges from enhancing the battery power of electric vehicles (EVs) to powering a vehicle’s infotainment, touch screen, LED lights and air conditioning. Airbags, navigation displays, anti-lock braking system, digital speedometers, seat belt tensioners and any electric component in a vehicle cannot function without a semiconductor chip. In autonomous vehicles (AVs), the type of semiconductor required depends on the automation level.

    Advanced semiconductor chips made of gallium nitride and silicon carbide have helped reduce EV costs. As semiconductor chips are a critical component of EVs and AVs, malfunctioning can lead to poor performance and compromise safety.

    In the past few months, the auto industry has been facing semiconductor shortage that was triggered by various causes, creating a huge shortfall in the industry.

    Semiconductor Shortage

    1. Pandemic effect – Due to COVID-19, many underlying inefficiencies of various industries came to light. The auto industry was already suffering from lower global vehicle demand and the semiconductor shortage has made it more difficult for OEMs to meet this demand. Various domains such as computers, mobile phones and servers, which also use these tiny instruments, were witnessing exponential growth. Hence, semiconductor supply was diverted away from auto OEMs.
      Demand for semiconductors surged 5–9% above the growth forecast. By the time the auto industry recovered and bounced back in 2021, it lost its share of the stock.
    2. Geopolitical issues – Due to the growing geopolitical tensions, some consumer electronics manufacturers started amassing semiconductor chips. This led to a surge in demand and added pressure on capacity utilisation. Asia is the largest manufacturer of consumer electronics. However, due to sanctions levied on East Asian countries, their supply was limited. Chinese companies also started hoarding the chips, thus jeopardising the future of the global auto industry.
    3. Just-in-time procurement – The auto industry has always adopted the just-in-time stock-keeping model. Therefore, the unexpected shortage in the past two years has put an additional burden on the already low semiconductor inventory levels.
    4. Supply shortfall – Semiconductor chip makers were not able to manufacture enough to meet increasing demand and hence had to limit their supply.

    Impact on Auto OEMs

    All the factors mentioned above have had an adverse impact on the auto industry.

    The manufacturing lead time for already designed semiconductor chips can exceed four months. Companies typically do not switch their chip makers as it can take more than a year to source the chips from new suppliers. Hence, auto OEMs were left with no other option but to queue up.

    The incorrect demand forecast alone could have cost the auto industry heavily, but the pandemic amplified the effect. As a result, unmet demand for cars stood at approximately three million units globally, which was primarily caused by the shortfall of smart chips. 

    Additionally, many car makers suffering from significant losses were forced to take drastic measures. For instance, Nissan skipped installing the navigation system for thousands of cars while Renault stopped providing a large display screen behind the steering wheel of its Arkana SUV.

    Effect on EV Penetration Mandates and New Model Launches

    By 2021, the waiting period for EVs globally had increased to a minimum of 6–8 months. Although EV sales in India gradually climbed to 15.7%, the current geopolitical scenario and COVID-19 resurgence, along with the semiconductor shortage, have adversely affected the forecast.

    To aid the auto industry, the Indian government announced a INR76,000 crore production linked incentive plan in December 2021, which would encourage microchip manufacturers to set up their units. This scheme includes chip design, packaging and testing for the next six years. Furthermore, the government plans to establish 20 semiconductor manufacturing units in the next two years.

    The global EV industry is expected to face severe EV shortfall in the next two years. China alone has experiencing supply shortage of over one million. 

    With the manufacturing world crumbling down, OEMs have started adopting some countermeasures.

    OEMs Drive into Action

    As semiconductor shortage threatens to cripple the Auto industry, Auto OEMs have opted to manufacture the chips themselves. OEMs rely on chip makers as the manufacturing process is a tedious, time-consuming and capital-intensive exercise. However, they are now being compelled to set up fabrication units that cost USD3–4 billion and have a complex registration procedure. The top 10 OEMs may start making microchips by 2025.

    Some OEMs are signing annual contracts with chip fabricators to safeguard future supply. These bonds guarantee a steady supply of microchips, which can save manufacturers from dire circumstances.

    Leading OEMs have created separate teams to ensure smooth communication between their supply and demand teams so that there is seamless interaction in these “war rooms.” 

    These measures are expected to help the industry tide over the current crisis.

    When Will This Crisis End?

    The chip shortage incurred a substantial revenue loss of USD210 billion for the global auto industry in 2021. However, most industry veterans expect the global chip drought to ease by the second half of 2022.

    Some IC chip makers believe they would soon see a significant increase in manufacturing capacity that would minimise the shortfall.

    The global auto industry is expected to emerge from this crisis soon and regain its lost glory.





  71. 5G–MEC: Where Is the Opportunity and Who Will Rule This Space?

    Integration of cloud-native 5G networks with multi-access edge computing (MEC) is expected to significantly benefit telcos and hyperscalers,

      to read | words

    published on Jul 04, 2022

    Integration of cloud-native 5G networks with multi-access edge computing (MEC) is expected to significantly benefit telcos and hyperscalers, with the latter steadily making inroads into the telecommunications industry. With growth in enterprise-wide adoption of 5G–MEC use cases, competition among telcos and hyperscalers is expected to intensify. A sound business strategy will depend on identifying the high-opportunity use cases and leveraging one's strengths to develop an effective go-to-market strategy. This article highlights some of the key aspects that telcos and hyperscalers will need to consider within this space. 

    Why 5G–MEC, Which Entities Are Involved, and Where Is the Spending Happening? 

    Deployment of cloud-native 5G networks is gaining traction globally. Compared to 4G networks, 5G networks are more versatile and flexible, can support considerable device density, offer millisecond response time, and create dedicated network slices that can be optimized for a wide range of enterprise use cases. Being cloud-native enhances operational efficiency while reducing time to market for 5G-based services. The software-hardware decoupling also enables faster and more automated upgrades. This technological evolution has enabled hyperscalers such as AWS, Microsoft, and Google to make inroads into the telecommunications ecosystem, setting up the stage for a complex, competitive environment with telcos (implications of this will be discussed later in this article).

    As 5G deployment gathers pace, it has become evident that multi-access edge computing (MEC) will play a critical role in enabling the ultra-reliable low latency communications (URLLC) 5G use cases. MEC comprises multiple devices with computing and storage capabilities deployed close to end users at the network's edge. This architecture reduces latency, provides contextual information and real-time awareness of the local environment, allows cloud offloading, and reduces traffic congestion. However, it must be noted that it is neither technically nor financially feasible to replace cloud with MEC completely as they complement each another.  

    Global enterprise spending on MEC will mirror 5G spending and will be driven by investments in on-premises machine learning and low-latency connectivity. The spending is expected to increase from USD8–10 billion currently to USD22–24 billion over the next five years, at a CAGR of around 20%. Specific use cases are expected to dominate enterprise MEC spending, as illustrated below. However, considering the complex deployment scenarios and evolving regulatory landscape, commercialization of these use cases will proceed at varying paces.


    Global Enterprise Spending on MEC and High-Opportunity Use Cases


    Source - BCG, Aranca Analysis


    Timeline for MEC Use Case Deployment 

    Source - Aranca Analysis


    High-Potential 5G–MEC Use Cases

    The top three use cases – connected transport, remote monitoring and maintenance, and augmented and virtual reality (AR/VR) – are expected to account for ~65% of MEC spending by 2027. Most emerging 5G–MEC transport/automotive use cases involve cellular-vehicle-to-everything (C-V2X) technology and are mainly related to ensuring occupant and pedestrian safety, advanced driving assistance, and occupant convenience. Remote monitoring and maintenance will comprise Industry 4.0 applications such as anomaly detection and alert management, and machine health indexing. Within the AR/VR space, 5G–MEC would enable remote troubleshooting, remote quality assurance inspection, guided assembly, and training and knowledge transfer.

    Commercialization of these use cases is likely to be staggered. Some of the initial use cases will involve industry verticals/applications governed by "light-touch regulations." Enterprises could leverage the benefits of deploying such use case deployments to build a business case for investments in advanced use cases such as remote monitoring and maintenance. Simultaneously, solution vendors could benefit from the learnings/insights gained from these initial deployments. Complex use cases such as connected transport related to highly complicated and dynamic operating environments and heavily regulated industry verticals are expected to be commercialized over the long term once challenges pertaining to industry standards, interoperability, and safety are overcome.   

    Who Will Win: Telcos or Hyperscalers?

    Telcos are keen on moving beyond connectivity offerings by expanding into the platform and application space, while hyperscalers are keen on capitalizing on their cloud computing expertise. Rakuten Mobile's acquisitions of Altiostar and Innoeye, and Microsoft's acquisitions of Affirmed and Metaswitch highlight the growing 5G–MEC ambitions of telcos and hyperscalers.

    The ecosystem dynamics are complicated since telcos and hyperscalers have their respective strengths. Telcos' existing site infrastructure can be used to house edge servers (these can also belong to hyperscalers) and associated equipment (e.g., racks and cabinets) needed to make MEC work. Telcos are also experienced in managing vast networks. On the other hand, hyperscalers have access to capital, are innovative and agile, possess expertise in cloud and software, and have deep ties with the application developer communities. As telcos and hyperscalers’ capabilities are complementary, they could consider partnering and playing to their strengths; this would enable them to deliver the best possible value to the end user. Moreover, 5G's service-based core architecture, with interworking based on RESTful APIs, facilitates telco–hyperscaler collaboration and co-creation of 5G services on a common MEC platform. The growing number of such partnerships (e.g., Verizon's partnership with AWS, Google, and Microsoft; AT&T's partnership with Microsoft, IBM, and Google) is a testament to the business case behind such partnerships.

    However, a competitive spirit should be retained while collaborating. Enterprise customers wish to avoid vendor concentration; hence, they prefer to have a range of choices, compare prices and features, and then choose packages meeting their needs.




  72. Carbon Fiber as Construction Material

    Construction materials have evolved significantly over the past decades. Due to technological advances, new and resilient materials such

      to read | words

    published on Jun 20, 2022

    Construction materials have evolved significantly over the past decades. Due to technological advances, new and resilient materials such as carbon fiber are replacing traditional ones. This innovative material is gaining traction in the construction industry due to its strength, durability, and flexibility to be molded into the desired design and structure. Moreover, as the material has a low density and high strength-to-weight ratio, it is being increasingly used in building cars and aircrafts.

    Trends in the construction materials industry indicate the growing preference for the innovative carbon fiber in building materials across applications. Carbon fiber is a polymer made of long, fine strands of carbon atoms attached in a crystal formation. For a given cross-section, this material is five times as strong as steel, much lighter, and twice as stiff.

    Manufacturers twist the carbon fiber strands together to weave them into fabric or mold them into varied shapes. This can then be used in myriad applications including construction, bicycle frames, aircraft structures, automotive parts, sports goods, and radar domes.

    As per an industry report, the size of the composite market globally is expected to expand at a CAGR of 8.8% to USD112.8 billion in 2025 from USD74 billion in 2020, and carbon fiber would be among the frontrunners in this market.

    Carbon Fiber in Construction

    Adoption of carbon fiber as a construction material is gaining more acceptance. One of its versions, pultruded carbon fiber (made by drawing resin-coated glass fibers through a heated die) has several characteristics that make it suitable for use in the construction of residential and commercial buildings for the following reasons:

    • It is a strong and durable material.
    • As the structure is lightweight, it requires less manpower for material handling.
    • It is well suited for constructing windows, door systems, exterior trim, decks, columns, fences, and pergolas.
    • Fatigue resistance and flexibility properties make it more crack-resistant than traditional materials such as steel and concrete, especially when exposed to repeated load-bearing weight.
    • It has greater compression strength and can withstand higher pressure.
    • Due to its higher resistance to humidity, rain, radiation, and chemicals, structures coated with carbon fiber work efficiently under all environmental conditions.

    Applications of Carbon Fiber in Construction Industry

    The favorable properties of carbon fiber have led to its widespread use in the construction industry. Typical applications include:

    • Precast Concrete Construction: Traditionally, steel mesh reinforcement is used in the outer and inner sections of precast concrete structures. These steel elements are increasingly being substituted with carbon fiber sheets and grids.
      A welded steel grid, commonly used in construction of concrete slabs, can be replaced with a carbon fiber grid to reduce weight and achieve the desired chemical inertness. In the case of sandwich wall panels, carbon fiber can be used as a shear grid or truss.
      In fiber-reinforced concrete, carbon fiber is a suitable replacement for steel as the fiber is made from polyacrylonitrile. Moreover, replacing asbestos with carbon fiber in the preparation of fiber cement improves air quality.
    • Reinforcements: Carbon fiber is increasingly used for the external strengthening of structures, e.g., in concrete columns. This eliminates the need for additional anchoring and associated installations, thus saving time and cost.
    • Bridge Construction: Carbon fiber is widely employed in the construction of bridge load-bearing structures, carbon fiber cables, decks, and supports.
      Typically, steel is used for reinforcing and pretensioning concrete for bridges. However, a number of applications are using carbon fiber instead as the material is resistant to corrosion, has a longer life span, and is more resistant to temperature variation, moisture, and chemical action.
    • Repairing Stressed Structures: Structures made from reinforced or prestressed concrete are generally repaired using fiber-reinforced polymer (FRP) laminates. The FRP laminate is bonded to the structure to be repaired with a resin. This technique improves the shear and flexural capacity of beams and slabs, and also enhances confinement in columns and requires minimal additional weight.

    Disadvantages of Carbon Fiber in Construction

    Carbon fiber is more expensive than other materials. However, while steel and aluminum are less expensive, they require more workforce for material handling.

    Carbon Fiber and Sustainability

    Carbon fiber has gained wide-scale acceptability in the construction industry due to its strength, light weight, and cost-effectiveness. However, this has raised concerns over its sustainability.

    There are various kinds of carbon fibers, and though they are usually environment friendly (i.e., biodegradable and recyclable), not all high-carbon fibers impact the carbon footprint as the underlying science is rather nuanced.

    Lignin-based carbon fiber is normally green as it is a natural resource extracted from plant cell walls. It has a carbon content of 50–71% and possesses all the general characteristics of carbon fiber. This type of fiber is used for low-cost applications and is easily recyclable.

    Carbon fiber that is meant to retain its strength and shape is difficult to recycle and non-biodegradable. However, the resins used to bind the fiber are decomposable. The process of recycling the resin is called pyrolysis, where the resin is burnt off the fiber at high temperatures.

    Manufacturing carbon fiber is an energy-intensive process, especially for oxidation and carbonization. To increase overall sustainability and reduce the carbon footprint, many manufacturers use green energy (wind/solar). Undoubtedly, as with any material involving a long and energy-intense manufacturing process, producing carbon fiber potentially endangers the environment. However, this impact can be mitigated by responsible manufacturing through the use of green energy to power the process.

    Case Studies of Carbon Fiber Usage in Construction

    A well-known application of carbon fiber in the construction industry is Apple’s floating carbon-fiber roof that is designed to consume lower energy and be environmentally sustainable.

    Another example of a first-of-its-kind application of fiber-reinforced plastic is found on the campus of Dresden University of Technology, Germany. The university’s building, Carbonhaus, is the first in the world to be reinforced using carbon fiber in order to replace more traditional materials such as concrete and steel.

    Conclusion

    The prospects for large-scale use of carbon fiber in construction hold substantial promise. Carbon fiber aids builders in meeting close tolerance requirements, enables easy and quick installation, and helps reduce maintenance costs. Considering the varied advantages it has to offer, carbon fiber is clearly the material of the future. The pace of its wider adoption in newer applications would mostly depend on the capacity of existing manufacturing facilities. Hence, manufacturers need to commit to scaling up capacity and making efforts to drive its adoption.




  73. Trends in Pet Grooming Industry

    Pet grooming refers to cleaning, checking the hygiene, and improving the appearance of your cats and dogs. This

      to read | words

    published on Jun 08, 2022

    Pet grooming refers to cleaning, checking the hygiene, and improving the appearance of your cats and dogs. This segment of the pet care industry has also witnessed growth as the industry has been on an upward trajectory. Certain trends are driving the industry and revolutionizing the type of products and services being offered for pet parents of cats and dogs.

    The pet industry had been witnessing substantial growth until 2020 and the onset of the pandemic has further accelerated its pace. With an increase in pet adoption seen during COVID-19, various segments of the pet care industry – pet food, grooming, and toys – saw a considerable surge in demand. While dogs and cats remain the most popular choice of pets, other animals such as fish, birds, and reptiles have also been finding new homes. Investors have shown interest in the pet industry for some years now and the pandemic has only intensified its appeal. The industry comprises other segments including pet food, pet medication, and even pet insurance. With increase in pet adoption, the industry is poised to observe unprecedented growth.

    The global pet grooming market is estimated at USD1.3 billion by year end and will advance at a CAGR of 6.2% to reach approximately USD2.5 billion by 2032, driven by high pet care spending by millennials and upper-income households.

    Grooming is an essential aspect of pet care as it improves skin, prevents infections, and cleans the fur coat. The mouth, eyes, and ears of pets are vulnerable areas that are prone to infection; hence, keeping them clean can help in preventing ailments.

    The pet grooming industry includes products such as pet shampoos, conditioners, combs, grooming shavers or razors, and nail clippers.

    Some of the key trends influencing the industry are as follows:

    • Humanization of pet – There is a growing trend of pet humanization. While pet owners have generally treated their pets as family members, they now want the benefits of grooming and health options that they can avail of for their pets as well. This has accelerated growth in the pet grooming industry, leading to a surge in the sale of pet shampoo, conditioners, and other pet personal care products.
    • Pet spas – The concept of pet spas has gained immense popularity and is a boon for owners who face a time crunch. The spas offer grooming sessions that include shampoo and conditioning for furry animals, ear and eye cleaning, flea and tick cleaning, and paw massages. The concept of mobile grooming for pets have also taken off, especially in the US, as it is very convenient for owners with mobility issues. Moreover, portable vans function as service stations and pets can get scheduled for a session right in front of their house.
    • Ticks and flea products and treatments – Furry animals such as cats and dogs suffer from ticks and fleas, which can cause infection and affect their skin. There are special shampoos and soaps that can help to control such infections and keep their fur healthy and shiny.
    • Organic products – Pet owners are looking for sustainable, healthier, and organic options for their pets. They are becoming more aware of the harmful effects of ingredients and chemicals used in pet shampoos and conditioners, resulting in increased demand for organic and sustainable pet grooming products. Demand for products containing CBD oil has also spiked, as it offers many health benefits for pets.
    • Luxury products – Desiring luxury products for cats and dogs is an offshoot of humanization of pets. Pet parents are buying Chanel and Gucci drapes, collars, and jewels for their furry friends. There is also a rise in demand for pet perfumes, especially dog cologne. Social media is further pushing this trend of luxury products, as pet parents are vying to make their pets an online sensation.
    • Fashion trends – Pet groomers today offer an array of fashion options for dogs and cats, including vibrant highlights, dreadlocks, stenciled design, and nail polish. Most of the highlights used for animals are non-toxic and created keeping their sensitive skin in mind.

    The aforementioned trends bode well for the pet grooming industry as seen by the growing popularity of many products such as pet perfumes, which did not have many takers earlier. Furthermore, these trends provide an impetus to entrepreneurs to launch innovative products and services such as mobile grooming spas that are attracting pet parents. This segment has unexplored potential and is forecast to continue on its growth trajectory for the coming years.




  74. Green Steel: How one of the world’s most emission intensive industry plans to decarbonize

    Steel is the backbone of societies, buildings, equipment and infrastructure across the globe. It is used in the

      to read | words

    published on Jun 07, 2022

    Steel is the backbone of societies, buildings, equipment and infrastructure across the globe. It is used in the manufacturing of a range of products, from cars and machines to construction materials for our offices and homes, thereby forming a critical element of contemporary life. However, the innumerable benefits come at a cost as the steel industry is one of the leading contributors to carbon emissions globally. With the steel industry's future at the forefront of climate change discussions, we are in a race against time to clean one of the world's most carbon-intensive industries. As the efforts to meet climate change goals speed up, can innovative technologies enabling the transition towards green steel be the answer to the challenges posed by traditional steelmaking?

    Traditional steelmaking, which accounts for approximately 61% of the world's steel production, utilizes coking coal as a fuel and reducing agent in carbon-intensive blast furnaces to produce steel. Steelmaking is one of the most polluting processes globally. It releases 1.5–3 tons of carbon dioxide per ton of steel, accounting for 8–9% of global carbon emissions. To put this into perspective, steelmaking releases more carbon than all cars and airplanes combined. This puts massive pressure on the global efforts to tackle climate change.

    The silver lining is that steel is 100% recyclable, making it one of the most sustainable materials in the world. Recycling steel is the apparent strategy to decarbonize the steel industry. However, recycled steel scrap available currently cannot satisfy the growing demand for steel globally, mainly due to issues related to quality and sorting, and contamination. The primary raw material used in the manufacture of steel is iron ore. Globally, only 32% of recycled scrap is used as an input in steelmaking, despite improvements in recycling technology. Thus, new technologies and innovations are the need of the hour to tackle one of the world's largest concerns. One such innovation that has caught the eye of governments and prominent steelmakers worldwide is green steel.

    What Is Green Steel? 

    Green steel is also known as “carbon-free” steel as it is produced without using coking coal as an input. Currently, using hydrogen as an input instead of coking coal is one of the more advanced options for making green steel. The most notable aspect is that hydrogen can be produced using renewable energy sources such as solar and wind. Furthermore, as hydrogen is used as an input, clean by-products such as water, rather than carbon dioxide, are produced. The manufacture of green steel is essentially carbon-free as it produces less than 0.1 ton of carbon dioxide per ton of steel.  

    Benefits

    Green steel has the potential to disrupt the steel industry and drive an industry-wide transformation. It significantly reduces emissions and can utilize a constant source of renewable energy. Moreover, green steel does not affect the quality of end products. Thus, green steel has the potential to replace traditional steel across applications. Green steel provides steelmakers with the ultimate competitive advantage as governments and customers around the globe are becoming exceedingly environment-conscious. The emission reduction potential of green steel can also aid the global efforts to meet Net Zero Emissions by 2050.  

    Challenges

    Currently, the cost of production of green steel is higher than that of traditional steel, mainly due to high investment and electricity costs. Acquiring cheap labor, finance, and advanced technology is crucial to reducing the production cost and accelerating commercialization of green steel. Also, in the absence of cheap, carbon-free power, giant strides are required to make the technology commercially viable. The technology is relatively nascent – full-scale commercialization is expected to start only in 2026. Thus, there is still a lack of full-scale policy commitments.

    Conclusion

    Green steel can be a game changer for the steel industry. The industry is just one investment cycle away from deciding its fate. The next few years are crucial as some hard decisions will have to be made by steelmakers across the world to clean the industry. Green steel can be the steel industry's response to all the negative attention it has garnered in the recent past. The road ahead is bumpy but full of opportunities. Forward-looking companies and some of the world's largest steel producers have already started investing in this technology. Moreover, seven of the world's largest steel-producing countries have initiated at least one green steel project. Coordinated policies, investments in research and development, and harmonized international collaboration are required to drive the demand for this technology while meeting the decarbonization goals. It is evident that the technology has the potential to determine the future of our planet, but how quickly can we make it a reality remains to be seen. 




  75. How are Logistics Companies Redefining their Procurement Processes with AI?

    Artificial Intelligence (AI) is leveraged by various sectors and companies to automate and streamline their procurement processes. The

      to read | words

    published on May 16, 2022

    Artificial Intelligence (AI) is leveraged by various sectors and companies to automate and streamline their procurement processes. The logistics sector, in particular, has adopted this technology on a massive scale, with some major companies using it to optimize their solutions. While the initial adoption cost and need for skill set upgrades may seem high, the advantages and cost-saving potential of this technology compensate for them.

    AI is adopted on a wide scale across sectors. In particular, logistics companies employ this technology to their advantage to create seamless processes. By automating repetitive and mundane tasks in managing the supply chain, these companies have reduced human intervention and increased the available manhours for more complex jobs.

    The following companies successfully deployed AI in their procurement processes:

    • Echo Global Logistics – Transportation management company, Echo Global, leverages AI technology to bring in efficiency in its services. It uses AI for drawn-out processes such as rate negotiation; shipment execution and tracking; procurement of transportation; carrier management, selection, reporting, and compliance; and others.
    • Uptake – The logistics solution company, Uptake, uses AI and machine learning to analyze large data sets and predict failure in vehicles or machinery, such as cars, trucks, planes, and railcars. This helps the company reduce downtime and have contingency plans to ensure maximum efficiency.
    • HAVI – A provider of multiple logistics solutions, HAVI uses AI’s predictive analysis feature in its procurement processes. Through this technology, HAVI plans, optimizes, sources, and manages the data of its supply chain processes. It is also dedicated to creating green supply chains and sustainable solutions.
    • Coyote Logistics – Now a part of UPS, Coyote uses AI along with predictive analytics and machine learning to combine customer shipment information with outside data such as real-time traffic and weather conditions. This help shippers visualize possible delays and have alternative plans in place.
    • Zebra Technologies – Zebra Technologies provides AI solutions for the supply chain. It integrates hardware, software, and data analytics to provide real-time visibility of loading processes and increase efficiency. The company also leverages the technology to ensure accurate space utilization, reduced operating costs, quick and more efficient processing of parcels, reduction of parcel damage and loss, and overall improvement in worker safety. 
    • AspenTech - AspenTech integrated AI in its processes to ensure smart procurement, production, distribution, and inventory plans. Its product “Aspen Supply Chain Planner” uses data and derives insights that showcase various hypothetical scenarios that can affect inventory management. This allows the company to plan strategies to minimize transportation costs and balance supply and demand.
    • DataArt – The supply chain company, DataArt, uses AI and machine learning to predict shopping behavior, thereby improving customer experience and operational efficiency. Using supply chain data, the company gives access to real-time analysis and helps create systematic logistics processes.

    Therefore, logistics companies use AI to simplify complex global supply chain issues and become cost-efficient. While various other sectors implement AI in their procurement processes, logistics companies are frontrunners. With AI’s ability to quickly analyze a huge amount of data, understand connections between variables, and ensure smart decision-making, logistics companies recognize it can be a game changer. Its successful implementation and further advancement will need skill upgrades and capital investment but will be a necessity for future global companies.



  76. Latest Trends in Pet Food

    The last couple of decades have seen an evolution in the pet food market. Scientific advancements have enabled

      to read | words

    published on May 11, 2022

    The last couple of decades have seen an evolution in the pet food market. Scientific advancements have enabled the development of better pet food products with healthy ingredients. Manufacturers are now focusing on meeting the basic needs of pets while enhancing their overall well-being. New types of pet foods are being launched, triggering the creation of new categories and niche markets. The pandemic has impacted this segment, creating new requirements. Nonetheless, the segment is poised for further growth.

    Pets form an intrinsic part of their owners’ lives and are treated as family members. Therefore, pet owners do not spare any expense to ensure their pets remain well-groomed and eat healthy. The pet world is dominated by dogs, followed by cats. Other common pets are fish, turtles, birds, and hamsters. Also, people adopt exotic animals such as hedgehogs and frogs as pets, although rarely.

    The pet food segment has grown significantly in the past few years and continues to be on an upward trajectory. The segment is valued at USD 115.50 billion in 2022 and is expected to reach USD 163.70 billion by 2029, at a CAGR of 5.11%. Pet food holds the major share in the pet care industry.

    Some important trends impacting the industry are as follows:

    1. Functional food – Since the outbreak of the pandemic, consumers have been increasingly adopting dietary options that help them maintain good health, which has brought about lifestyle changes. Consumers are also keen on ensuring their pets eat healthy. This has led to an increase in the usage of “functional ingredients,” or ingredients that provide optimal health benefits over and above basic nutrition, in pet food. Taking note of this trend, manufacturers are formulating functional foods based on the type, lifecycle, breed, and age of the animal.
    2. Tailored nutrition – Every pet requires natural antioxidants, vitamins, fiber, prebiotics, and minerals that are essential for its health. Dogs and cats suffer from various lifestyle-related issues such as obesity, diabetes, and chronic kidney diseases, which can be controlled through a tailored nutritional diet. Royal Canin launched several tailor-made nutritional products in 2019. The company develops various nutritional and animal-specific optimized solutions based on veterinary expertise.
    3. More variety – Apart from the required meat proteins, wholesome nutrients, and added vitamins, pet owners are seeking a more varied diet comprising multiple types of foods for their pets to improve their pets’ stamina, endurance, and health. They are looking for variations in type, flavor, shape, and size. Snacks and treats are also emerging as popular segments. These products are highly sought after for their taste and quality. For instance, JerHigh has introduced chicken snacks for dogs that meet human food standards in terms of taste and nutrition.
    4. Innovations in pet supplements – The market for pet supplements is growing significantly. During the pandemic, demand for products that increase pet immunity, reduce anxiety, and improve overall wellness surged. With COVID-19 creating a health scare, companies started introducing supplements with novel ingredients such as cannabidiol (CBD), hemp oil, krill oil, and silver. Moreover, they are launching interesting product forms such as nutrition bars and meal toppers in popular flavors, including peanut butter and banana. Going forward, pet owners are expected to seek a parallel between the nutritional value of their food and that of their pets.
    5. Niche pet food – With consumer needs evolving, new types of pet foods are being launched, triggering the creation of new segments and niche markets. For instance, frozen dried dog food has emerged as a popular, niche category. Another similar category is raw dog food. With start-ups entering the market, numerous new categories and innovations are expected to emerge.

    Moreover, the demand for organic and vegan products is surging, with the modern consumer seeking products that are sustainable and environment-friendly. This has led to the use of insect, microbial, and cell (lab-grown or cultured) proteins as ingredients. To capitalize on this demand, Nestle Purnia launched its new range of pet food prepared with alternative proteins to make better use of the planet’s resources. Apart from insect protein, the product contains plant proteins derived from fava beans and millet.

    There has been a phenomenal increase in pet adoption, especially in emerging nations, which has acted as the primary growth driver of the pet food segment. Furthermore, the trend of humanizing pets and treating them as a family has led to a change in the pet care industry, especially food. This has created opportunities for pet food manufacturers to introduce new and diverse offerings with more health benefits. For instance, Royal Canin plans to invest USD 200 million to expand its manufacturing capabilities in Lebanon. Another key player Nestle Purina intends to invest USD 500 million to expand its pet food factory in Georgia. Rising income has also led to increased spending in this segment, with consumers opting for organic and nutritional food products for pet animals.

    The trends mentioned above are expected to continue to shape the pet food segment in the near future.



  77. AI in Procurement – Industry Applications

    Industries across the globe are adopting emerging technologies to streamline complex processes such as procurement. However, the nature

      to read | words

    published on Apr 12, 2022

    Industries across the globe are adopting emerging technologies to streamline complex processes such as procurement. However, the nature of business determines the level of adoption. For instance, the automobile and logistics sectors have widely implemented artificial intelligence (AI), an emerging technology, but other sectors are still seeking ways to implement it. Will procurement become an AI-enabled function across industries in the near future?

    Disruptive innovations and emerging technologies are transforming industries worldwide. Companies have been ramping up their digital capabilities, especially after the pandemic, to ensure business continuity and profitable outcomes. Integration of technologies such as AI can make some of the most tedious and complex processes like procurement seamless. Several industries have recognized this fact and are increasing the pace of adoption of these technologies; however, some are being cautious, given the cost of adoption and upskilling required.

    Industries in the forefront

    Amid the pandemic, the automobile industry initiated large-scale adoption of technology for efficient inventory management. Companies such as Audi, OTTO Motors, and Hyundai have implemented AI in manufacturing as well as supply chain management.

    The main functions of procurement that benefit from AI include analytics-based spend analysis, evaluation of supplier performance scorecard, analysis of purchasing patterns, and contract management.

    The chemical industry is also getting on the digital bandwagon and has started implementing AI in various processes. Incorporation of AI in procurement can help in price forecast, creation and maintenance of master data, end-to-end collaboration with suppliers, clean sheeting, and more. Companies such as BASF, Dow, and Royal Dutch Shell use AI in various processes, including procurement.

    Adoption of AI-driven specialized procurement solutions can significantly benefit oil and gas (O&G) organizations. For instance, the organizations can use these solutions for creating interconnected digital supply networks. AI algorithms enable fast and efficient decision-making through quick analysis of complex and large data sets. Furthermore, AI facilitates analysis of spend categories, identification of supply chain bottlenecks, purchase-to-pay automation, and provides suppliers with visibility into planned and actual figures. O&G giants such as ExxonMobil, Baker Hughes, and BP are investing heavily in integrating AI into various processes.

    Logistics companies are also adopting AI to optimize the supply chain. In logistics, it facilitates operational procurement using simplified data and chatbots, warehouse management, and supply chain planning. AI also enables quick and accurate shipping and informed supplier selection by delivering real-time data. Some of the logistics companies leveraging AI for procurement include Echo Global Logistics, Zebra Technologies, and Uptake.

    Various other industries have also started incorporating AI in processes, following in the footsteps of those mentioned above.

     Industries yet to digitalize processes

    The pace of digitalization in more traditional industries such as agriculture, construction, and metals and mining is much slower. This could be attributed to the fragmentated nature of these industries. AI may be present in some form but is yet to make a major impact.

    The global pandemic has shown that the future is uncertain and technological transformation is imperative for companies and industries. Furthermore, the generation of digital natives and professionals with new skills are bound to influence these industries to adopt new technologies as well.

    Procurement is one of the most important processes for any company as it directly impacts profitability. Hence, streamlining procurement will help companies grow and become more efficient. Although the initial investment for implementing AI in procurement may be slightly high, it is definitely a smart move to make in the long run.





  78. AI in Procurement – Expanding Horizons

    Emerging technology such as artificial intelligence (AI) is slowly gaining momentum across industries and processes. Companies worldwide are

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    published on Apr 06, 2022

    Emerging technology such as artificial intelligence (AI) is slowly gaining momentum across industries and processes. Companies worldwide are embracing this technology to realize efficiency and increase productivity in their procurement processes. AI algorithms can assist in analysis, prediction, and automation, thus helping to streamline the entire procurement process. However, organizations must understand the best use cases of implementing AI. In addition, the adoption of this technology across geographies remains uneven, where developed countries are moving ahead, while the developing ones are still taking cautious steps.

    As the post-pandemic era finally emerges, the development of technological capabilities and digitalization of processes are here to stay. Among the new-age technologies that are changing the world, AI is making waves across industries. The technology is mainly based on advanced usage of statistics, algorithms, and fast computer processing; hence, it has the potential to bring about sectoral transformation.

    AI finds application in procurement as it can make the process data-driven and systematic. It can be built into software solutions to streamline and automate processes, as an AI system runs on algorithms that are programmed to perform analysis, automate repetitive tasks, and detect anomalies. 

    The key use cases of AI in procurement are:

    1. Spend analytics – Embedding AI in procurement can help track an organization’s spend. It can provide insights on what purchases are being made, who is making these purchases, and identify cost-saving opportunities. Having up-to-date, reliable data can help in developing effective sourcing and spend management strategies. AI algorithms can be designed to extract and analyze external industry data as well to give a full overview of company financials.
    2. Sourcing – With the help of AI, organizations can evaluate a large set of global suppliers and existing vendors. They can have information about where to source a specific product from, its cost effectiveness and associated risks. AI aids in contract negotiation by providing detailed historical data, along with vendor compliance and performance. By allowing businesses to identify new sources of supply, AI helps in creating a transparent supply chain and ensuring optimal utilization of available resources.
    3. Anomaly detection – Issues of fraud, non-compliance, and sudden price hikes by suppliers can be captured using AI-enabled procurement software. The software can help structure the contract, create invoice, and purchase order data to highlight non-compliance, if any. Manual checks such as monitoring expense receipts to ensure compliance with policy or auditing vendor invoice against the terms and conditions of the contract can be automated to save time and effort.
    4. Contract management – AI-empowered tools can manage contracts from various vendors, customers, and other third parties. NLP can help in scanning and understanding long and technical legal documents, while ML can automate the auditing process. These technologies can ensure the contract is in line with company requirements and make the vendor-supplier relationship more efficient.
    5. Invoice data extraction – AI-enabled tools can extract details of relevant invoices.  These tools can track any instances of fraud and shorten manual processing times. Furthermore, if spend data has been detailed and digitalized, the tools can process historic invoices and analyze them to get a picture of the organization’s spend patterns.

    Geographical Presence of AI

    While technological advancements are generally more evident in the Western world, AI has made significant inroads in Asia as well. According to Oxford Insights, Singapore tops the list for being most willing to implement large-scale AI applications.

    AI is expected to provide a 10–18% boost to GDP across Southeast Asia by 2030; this would be equivalent to USD1 trillion. Of the various processes that AI could be applied to, procurement would have a significant share, with a potential value-add of 20–25%.

    Future

    AI is transforming processes and industries and bringing about a technological revolution. Within procurement, it can be used for inventory and parts optimization, resulting in a 21–30% reduction in stockouts. Developed countries are already implementing AI across value chain and simplifying procurement processes through this technology. Meanwhile, developing countries are also building infrastructure and processes to adopt AI as it can help streamline the procurement process and increase efficiencies.




  79. AI in Procurement – An Overview

    The rapid pace of technological innovations has helped transform processes and techniques in various industries. The need for

      to read | words

    published on Mar 08, 2022

    The rapid pace of technological innovations has helped transform processes and techniques in various industries. The need for digital capabilities was further highlighted when the global pandemic hit. Many industries are still facing its cascading effect and struggling with raw material shortage, lack of electronic material, and logistics issues. Can building AI streamline the procurement processes of industries and ensure a smooth supply chain management in the future?

    Industries realized the need to modernize their supply chain after the pandemic and its negative impact. They were paralyzed due to the disruptions caused by COVID-19, which led to limited raw material and labor shortage.

    AI to the Rescue
    During the pandemic, industry leaders were led to accept the vulnerabilities in their supply chain and understand the need to reinvent it using a strong technological base. Among the many emerging technologies, artificial intelligence (AI) can help create a robust procurement framework. With its ability to predict and automate regular processes, it can help make operations fast, error-free, and highly cost-effective.

    How can AI Help?

    Prediction
    AI can help a company correctly forecast several dynamic factors and help it remain prepared for any disruptions. It can assist in the following areas:

    • Predicting future demand based on patterns in previous demand
    • Likelihood of supply chain failure by using historical data
    • Transportation slowdown by analyzing real-time data affecting logistics
    • Foreseeing chances of disruption due to global turmoil and geopolitical tension by evaluating current events

    Automation
    AI can automate manual tasks and make them highly efficient and cost-effective. The supply chain team can automate the following:

    • Structuring contracts, invoices, and purchase orders
    • Determining non-compliance in rates or duplication of invoices
    • Supporting contract lifecycle management by contract generation, contract negotiation, and identification of risk in contract language

    Transparency
    AI-enabled tools can help manage the large volumes of data generated by procurement processes. This data can be used to obtain deep insights and make informed decision-making. The data can provide the following details:

    • Spend classification within the company
    • First- and second-level suppliers and their performance
    • Raw material position at supplier level
    • Sourcing strategies and gaps

    Problem-Solving
    AI has made it easy to coordinate an order, track delivery, and sort paperwork. With future-focused intelligent platforms, every step of the supply chain can be optimized. Options such as auto routing and direct dispatch expediate the entire delivery process. Issues related to traffic, weather delays, and travel are forecast, and a contingency plan is put in place. This way, AI makes problem-solving easy for organizations.

    Final Thoughts
    Emerging technologies such as AI create a profound impact on organizational procedures. Recognizing the importance of AI and its many benefits is the first step in bringing about an organizational change. AI can help improve the key facets of the supply chain and aid companies in evolving by providing key inputs through data analysis, streamlining processes, and optimizing performance. AI-supported supply chain management can propel industries toward a more resilient future.



  80. Revamping Strategies to Thrive in a Disruptive Environment

    To survive in today’s challenging times, an organization must look beyond profit and capital infusion. It should b

      to read | words

    published on Jan 28, 2022

    To survive in today’s challenging times, an organization must look beyond profit and capital infusion. It should be ready to face market uncertainty and be agile enough to change depending on the situation. Therefore, the agenda of organizations should keep evolving. To this end, leaders must embed three main strategies in their long-term plans. Can these strategies be the hidden formula for success in future?

    Companies are operating in uncertain times, having to face the upheaval caused by the global pandemic, operational changes due to carbon emission directives, and rapidly evolving technologies. All companies, regardless of their size or the industry in which they are active, have been affected by these issues that are currently plaguing the globe. However, the way each organization tackles such challenges depends on the industry they operate in and the resources they have available.

    In order to not just survive but also thrive amid such difficult times, companies will have to rethink their core strategies and change their approach, which can guide them during disruption and ensure business continuity. They must not look only at profit margins but also how they are perceived by the society.

    New strategies that can help organizations evolve are as follows:

    1. Virtual is the new reality – The pandemic clearly showed how important it is for every company to embrace digital transformation. Apart from being disruption-proof, it can help an organization improve efficiency, lower cost, and expand offerings. However, digital transformation is not just about buying the latest technologies. A company needs to see which operations and processes will benefit the most from technological intervention and select the best option.

      The technological needs of a company differ and depend on:

      • The region it is present in
      • The industry it operates in
      • Its financial strength
      • Skill set of its employees

      For instance, it is essential for a retail company to have presence on a digital platform that is user-friendly and popular. On the other hand, a manufacturing unit can consider deploying robots to carry out mundane, regular tasks that do not require human intervention.

      Example: Thomson Reuters Corp., has always been a digitally progressive company, but the pandemic caused a shift in customer attitudes and behaviors, accelerating its digital business model strategy. It witnessed large-scale acceptance of cloud-based, real-time, digitally delivered business information services. Not only has Thomson digitalized itself completely but it has also helped traditional companies transform technologically and get on the digital platform.

    2. Green is the new black – The whole world is facing an existential crisis due to the unprecedented rate of climate change. Currently, every company and country is working at achieving net zero emission, which requires the establishment of complex interconnected systems at a global level. This is a daunting, yet necessary task. Companies should shift from the conventional way of doing business and be willing to adopt new operational processes in order to lower their emission of carbon and if possible, reuse it. Firms that facilitate carbon capture, utilization, and storage are coming up, and industry leaders must keep this emerging opportunity in mind while mapping out future plans. While it is a large-scale change for industries such as manufacturing or oil & gas, which emit huge amounts of carbon, small-sized companies can contribute greatly in bringing about a change. For instance, a marketing company can decide to go paperless and minimize the use of plastic in everyday items.

      Example: US coal power company Duke Energy targets to achieve zero carbon emission through electric generation by 2050. It has already made significant progress and reduced carbon emissions by 31% since 2005 (from 153 million metric tons in 2005 to 105 million tons of CO2 in 2018). The company has shifted to renewable energy sources such as solar energy and more efficient natural gas units.

    3. Staying relevant, staying strong – Resilience means to thrive in a disruptive environment and ensure business continuity. Resilience in an organization implies the management has the ability to reinvent part or all of its business strategy to survive. To develop this ability, companies must invest in resilient strategies from the outset. From encouraging cross-functional collaboration to improving collective agility and responsive decision-making, it involves developing a strong ecosystem within the company. Creating resilience is a multidisciplinary approach. Companies have to combine new digital tools and technologies, revamp managerial practices, gain market insights, and develop agility. This is more relevant in the context of the pandemic, which has weakened many aspects of the economy.

      To become resilient, an organization must:

      • Have a positive attitude
      • Be agile and ready to change
      • Plan for the future
      • Research its industry, market, and other factors regularly

      Example: Berkshire Hathaway is a great example of a resilient company. The firm managed to consistently outperform the diversified financials industry despite the dismal quarters the industry had to face.

      Unless companies have these core strategies, it will be difficult for them to survive. The global pandemic forced a vast majority of companies to shut down. Many are still struggling to stay afloat. Moreover, because of the net zero emission targets, companies had to change their mode of operation and introduce major technological changes in their manufacturing units. In order to emerge from such turbulent times unscathed, an organization should have a rock-solid foundation and smart strategies in place.



  81. Decarbonization – A Global Initiative

    Decarbonization is emerging as a key strategy the world over as nations and countries look to limit carbon

      to read | words

    published on Jan 18, 2022

    Decarbonization is emerging as a key strategy the world over as nations and countries look to limit carbon emission and address climate change. While developed countries are leading the way, emerging economies too are focusing on establishing the requisite infrastructure for developing sustainable processes and techniques. Major organizations globally have also taken up the cudgels to build a sustainable environment by targeting net zero emissions in the medium to long term. Will this suffice to achieve the objective set by the Paris Agreement?

    Over the last few years, the adverse impact of climate change has increased in intensity and number globally. Rising temperatures, forest fires and other natural disasters have forced leaders worldwide to take a note of the rising pollution levels. Under the Paris Agreement of 2015, many countries committed to net zero emission between 2030 and 2050. However, to achieve this, sectors need to decarbonize, implying implementation of the decarbonization strategy by governments and the corporate sector.

    Decarbonization essentially refers to the elimination or curtailment of carbon emissions to reach net zero. It also includes replacing traditional fossil fuels with alternative and renewable energy sources such as solar and wind power.

    Decarbonization by countries

    While developed countries may be leading the race to decarbonize, several emerging economies too are implementing ‘green solutions’ to reach net zero emission.

    The UK government has set the target to decarbonize its power sector by 2035. To this end, the country is working towards generating electricity from low carbon hydrogen and phasing out fossil fuels from vehicles and home heating as well as from various industries. The government is implementing low-carbon measures, such as switching to offshore wind, pursuing carbon capture, producing low-carbon hydrogen, promoting electric cars, increasing energy efficiency, installing heat pumps, and planting trees in phases.

    The US is transitioning to clean energy by promoting solar and wind technologies, prioritizing clean fuels, cutting down the wastage of energy, and reducing methane and other non-CO2 emissions.

    At the COP26 Climate Change Conference, India, as part of its efforts to make a positive impact, committed to increase its non-fossil fuel energy capacity to 500 GW. The country will take steps to meet 50% of its energy requirements from renewable energy. It also aims to cut down carbon emissions by one billion tons, bringing down the country’s carbon intensity below 45%, by 2030.

    Brazil, in line with its ambitious net-zero target, is taking steps to prevent deforestation and further degradation of land by 2030.

    Developed versus emerging economies

    While the road to energy transition is more or less the same for both developed and emerging economies, in terms of application of technologies and adoption of renewable energy, the difference lies in the scale of progress made and the rate of change. Developed economies already have the infrastructure required, with several innovative technologies under development. Emerging economies, on the other hand, are still building up on these, a key reason being limited resources at disposal. Since emerging countries do not have the requisite resources to develop or implement the regulatory mechanism, implementation is not as effective; plus, there are loopholes in dispute resolution.

    Being at a relatively advantageous position, developed economies have progressed faster in implementing green energy solutions. However, if both developed and emerging economies come together, the transition to decarbonization would be faster and more effective.

    A step in this direction is the Clean Energy Ministerial’s Industrial Deep Decarbonization Initiative (IDDI) launched in June 2021. It is an international coalition of governments and companies, co-led by the UK and India. The objective is to develop low-carbon sustainable alternatives for industrial materials, such as for steel and cement, that are currently the most carbon-intensive commodities. The coalition is working to bring together least 10 countries to commit to purchasing the low-carbon substitutes of these essential materials. The other members of this initiative are Canada, Germany, and the UAE, with more countries expected to join soon.

    Companies bringing about a change

    Around 53 companies across sectors and countries have pledged to achieving net-zero carbon emissions by 2040. They are signatories to The Climate Pledge, an initiative to decarbonize processes.

    Some of these companies are Colis Prive, ACCIONA, FREE NOW, Cranswick plc, Daabon, Generation Investment Management, and Green Britain Group.

    The signatories are required to:

    • Regularly measure and report their greenhouse gas emissions
    • Design and implement innovative decarbonization strategies as per the Paris Agreement across processes
    • Ensure neutralization of any remaining emissions in a way which is socially beneficial
    • Achieve net-zero annual carbon emissions by 2040, 10 years before the 2050 deadline set by the Paris Agreement

    These companies are working to develop sustainable solutions that would have impact across a broad spectrum.

    For example, Colis Prive, a last mile delivery firm, has implemented ISO 50001 energy standards that would contribute to building a sustainable energy management system.

    Another well-known brand Cranswick plc, one of the largest food producers, has switched to 100% renewable grid-supplied electricity, removed tonnes of plastic from its operations, and reduced edible food waste down to 0.4% of total production.

    US-based company Duke Energy added renewable energy sources such as 4 GW of solar power and replaced coal units with natural gas units. This helped it to reduce its carbon emissions by 31% since 2005.

    Travel company FREE NOW, which provides logistics solutions, is committed to make 50% of its vehicles across Europe emission-free by 2025. It plans to achieve this by investing in electric vehicles.

    Other companies incorporating sustainability in their corporate strategies are Unilever, which has aligned its core business with sustainability; Finland’s Neste, which has become the world’s biggest producer of renewable diesel; and Denmark’s Ørsted, which used the carbon challenge to build the offshore wind market.

    Outlook

    A zero-carbon future could be the answer to the looming threat from climate change. However, to transition to a carbon-free economy, governments and the corporate sector need to work hand in hand. Favorable policy frameworks can go a long way in supporting this initiative. Companies, on the other hand, will do well to strategize prudently based on thorough due diligence (covering processes as well as availability of low-cost electricity, biomass, hydrogen, and carbon-storage capacity) and ensure effective implementation. Collaboration for investing or research is a good way forward. It is time we woke up to the reality and faced it head-on.



  82. Supplier Diversity & Inclusion in the US – A Shift from Need-based to Value-based Approach

    In recent years, organizations have been driving a ‘real positive' shift in supplier diversity & inclusion (D&I) across t

      to read | words

    published on Dec 13, 2021

    In recent years, organizations have been driving a ‘real positive' shift in supplier diversity & inclusion (D&I) across the supply chain. Large organizations have been prudently raising their supply diversity targets owing to the inherent value of such initiatives, not out of mere mandatory social compliance. Leading organizations are leaning toward the industry benchmark of 5–13% share of spend on supplier D&I, by primarily targeting the indirect categories. Companies are considering the value-based model over the classical need-based model, primarily due to the long-term benefits such as high ROI (>3.5x), broader network synergies, new business perspectives, and eligibility for tax incentives. They are now taking the adoption of supplier D&I to newer heights by setting aggressive targets.

    Diversity of suppliers is key to ensuring sustainability of the supply chain. A procurement business strategy centering on supplier diversity minimizes disruptions in procurement of goods and services and broadens overall network synergies; moreover, it is in line with an organization’s commitment to economic development. Amid increasing benefits and higher ROIs, companies are gravitating toward a value-based approach from need-based while pursuing supplier diversity.

    Evolution of Supplier D&I in the US
    Supplier Diversity & Inclusion (D&I) has traditionally been a part of social responsibility. It was considered a means to help companies contribute to the society, driven by a push from the government for economic development and focus on CSR activities. Interestingly, the concept has undergone a sea change in recent years.

    Companies are realizing the significance of supplier diversity for smooth business operations. After doing an ‘outside-in’ assessment, they are gradually shifting from need-based to value-based model. The benefits are manifold such as high ROI (>3.5x), broader network synergies, eligibility for tax incentives, etc. Considering the effectiveness of the model, large companies now draft formal programs, define goals, implement these, and track progress. Several companies are using supply diversity programs to give effect to social reforms that would have a positive impact. Companies estimate their D&I spend target to increase by >50% by 2025, with an average annual spend target of ~13% dedicated to suppliers across a range of under-represented/minority-owned diversity groups.

    This indicates that higher alignment of the supply chain around the value-based approach is bound to yield high returns in the long term.


    Preeminent industries and categories for supplier D&I
    From an implementation perspective, organizations are actively working toward supplier D&I across industries. However, the scale of procurement spend on diverse businesses serves as the differentiating factor.

    Telecommunication and healthcare have been the early adopters, with an overall share of 9–13% of total spend on diverse suppliers. This is primarily due to economies of scale and US federal contractual requirements. The diverse spend is high in telecom as these companies service an infrastructure that spans the length and breadth of the country, allowing them to partner with a broader range of businesses. Healthcare/pharmaceuticals is the second leading segment, as their biggest customer is the federal government, which define contractual requirements requiring working with diverse suppliers. In manufacturing and industrials, spend on supplier D&I is rising and currently stands at 7–10%; it is primarily driven by the automotive and engineering industries which are pioneering supplier diversity initiatives. Consumer, financial services, and energy with 5–9% share of spend are the next in line.

    Now that we know the leading industries, it is imperative to deep dive into the categories which are driving supplier D&I adoption. There exist umpteen categories across which the companies generally spread their overall sourcing spend, however the diverse supplier based spend is currently limited to specific categories. Comprehensive analysis of industry spend reveals that the expenditure on diversity is primarily focused on the indirect categories vis-à-vis direct categories. Contract manufacturing, contingent labor, consulting, legal, construction & facility management, supply chain, and R&D & engineering services are the prime D&I spend categories for organizations. Third-party/contractual services such as marketing, equipment/technology, logistics, staffing, and IT services are the emerging categories. In contrast, other categories such as training & development, utility, travel & accommodation, hospitality, subscription & membership-based services are still at a nascent stage with low, yet steady share of spend on diversity.

    An organization should, therefore, lean toward the industry benchmark of 5–13% share of expenditure on supplier D&I, by primarily targeting indirect categories.

    Best practices for supplier D&I
    Leading D&I companies in the US design formal supplier diversity programs, set targets, and explore supplier network synergies. Companies are increasingly focusing on multi-tier diversity reporting in their bid to integrate D&I throughout the supply chain.

    Here are some industry-wide best practices which can be followed to get closer to the benchmark spend:

    1. Design formal programs: Streamline dedicated resources for formal programs to upskill/reskill people for building diverse supplier relationships, and committing to social initiatives
    2. Define targets: Set definite goals, define concrete targets (for spend, supplier count, etc.), and encourage responsibility and accountability to make the diversity program a success
    3. Partner with certifying bodies: Join hands with prominent diverse supplier certifying agencies such as WBENC (for woman-owned), NMSDC (for minority-owned), DOBE (for disability-owned), and LGBTE (for LGTBQ-owned) to leverage the benefits of a deeper supplier integration
    4. Expand network: Expand company’s diverse-owned supplier network by means of external platforms, existing industry network, and associations
    5. Implement multi-tier reporting: Push sub-tier suppliers to engage with diverse suppliers for facilitating multi-tier diversity reporting and unified commitment across the supply chain
    6. Shout out 'the commitment': Publish the organization’s commitment toward supplier D&I, and communicate the progress through press releases/newsroom/sustainability reports


    Benefits of committing to supplier D&I
    Besides the classical benefits, large organizations are exploring the network for newer synergies, perspectives, and dimensions.

    Some key benefits of supplier D&I are:

    1. Increased returns: Formal supplier diversity programs are bound to yield high ROI of >3.5x for every dollar spent on procurement and operating cost.
    2. New business dimensions: Broadening the diverse supplier spectrum opens-up new channels for opportunities/resources, thereby paving the way for new synergies and perspectives.
    3. Advancements in innovation: Partnering with diverse-owned businesses brings new dimensions; this drives innovation and creativity; generates opportunities; and increases visibility.
    4. Dedicated social commitment: Engaging with diverse suppliers helps an organization direct its effort toward economic improvement, job creation, inclusion and making a positive impact.
    5. Entitlement for tax incentives: Pursuing a supplier diversity program helps in availing of federal/ state incentives, for example, tax breaks on partnering with minority/women-owned diverse businesses, and reduction in tax liability while working on projects that are funded by federal/state grants.


    Strategic implications
    The evolution of D&I in recent years shows that supplier diversity is the next mandate in supply chain sustainability. Companies that adopt it stand to benefit from new opportunities, while those ignoring the trend risk falling behind.

    Leading organizations are increasingly formalizing D&I programs, diversifying their supply chain across major spend categories, tracking progress and openly communicating their achievements. This is proving beneficial to them.

    However, the buck does not stop here. Companies must continue to broaden their horizon in terms of achieving supplier diversity by setting aggressive targets. If they wish to stay in the race, this is the time to shift gears in supplier D&I from adopting a need-based approach to pursuing a value-based model.



  83. Sustainability in Procurement – Need of the Hour

    Sustainability is currently one of the corporate goals for organizations across the world. With governments announcing stringent rules,

      to read | words

    published on Nov 16, 2021

    Sustainability is currently one of the corporate goals for organizations across the world. With governments announcing stringent rules, companies are moving downstream in their value chain to ensure control and management. The focus is on not only becoming more environment-friendly but also offering high-quality products and services to the end customer at the best possible prices. To do so, companies are trying to make changes right at the root. Despite the existing challenges, enterprises need to think out of the box and cross the hurdles.

    Sustainability and “going green” are no more just fashionable goals but an urgent requirement for companies across the world. As climate change is slowly becoming a reality, corporates as well as individuals are making a conscious effort to reduce their carbon footprint. An increasing number of consumers prefer environment-friendly brands and products. To achieve this, corporates need to build sustainability across the value chain and in their processes. One of the main areas to focus on is procurement.

    Sustainable procurement involves buying products and services with the lowest environmental impact and positive social results. The company must look beyond economic parameters and determine if the raw materials being sourced are bio-degradable, renewable, and functional. Its also necessary to see if it causes carbon emissions or any other excessive pollution. Social aspects such as deplorable labour conditions, human rights violations, and inequal pay should not be tolerated at the supply side.

    Revolution in supply chain management
    As companies become more environment-conscious, many have vowed to work only with suppliers adhering to a set environment and social standards. While first-tier suppliers are in immediate contact with them and can therefore be directed to ensure sustainability in processes, tier 2 and 3 suppliers are not in their control. Hence, through tier 1 suppliers, companies ensure that sustainability is practiced across the value chain. While it is ideal in theory, it is hard to put it in practice. Many companies such as Apple and Dell faced condemnation when it was found that their tier 1 suppliers were selling electronics that made employees work in hazardous conditions.

    Suppliers are unable to maintain environmental practices due to the following challenges:

    • Tight deadlines – Many MNCs give high volume orders with extremely short deadlines, due to which suppliers increase employees overtime or make them work in harmful conditions.
    • High turnover – Suppliers in third-world countries face an extremely high turnover of employees, making it difficult to create or maintain viable health or safety measures.
    • Government regulations – The low-tier suppliers are often found in emerging countries where environmental regulations are lax or non-existent.
    • No control – MNCs have no control over low-tier suppliers and cannot monitor their processes and practices.

    Why is it needed?

    • Environmental degradation – Industries and corporates have been one of the main polluters of the environment. It is time for them to take responsibility of their operations and ensure no harm to the delicate ecological balance.
    • Social responsibility – Corporates must be aware of the conditions of workers at the lowest level of the supply chain. Any supplier mistreating or exploiting labour should be removed from the supplier base.
    • Brand enhancement – Customers are becoming more involved in their purchase process. They check the ingredients, packaging and, if possible, processing of products to ensure they support “green” companies. Negative news regarding a brand’s malpractices that harmed the environment or were socially unacceptable can quickly dent its popularity. Hence, a viable brand with a sustainable supply chain is essential to build a loyal customer base.
    • Cost – While moving to a sustainable supply chain might be an expensive action in the beginning, it will help achieve cost-effectiveness over time. As products and packaging will be recyclable, it will help attain efficiency.

    Achieving supply chain sustainability
    Many corporates are unaware of the lowest rung of their supply chain. While they may prescribe certain guidelines for tier 1 suppliers, whether these will flow to tier 2 and 3 suppliers is not under their purview. Hence, corporates must try to establish direct contact with all the levels of suppliers working with them and map their supply chain.

    It is important to ensure communication and a code of conduct that specifies environmental and social expectations of suppliers. This should be communicated to all suppliers across the value chain and strict adherence to it must be expected. Once the compliance standards are set, it is essential to conduct a baselines assessment of suppliers to understand the starting point. Corporates must invest in training and developing the needed skill sets of suppliers to achieve sustainability.

    It is important to create a metric and conduct onsite audits to check performance. Achieving sustainability needs time and constant measure. Preparing corrective action plans that obstruct the route to complete sustainability should be a part of this audit program.

    As a business, sustainability is not an option anymore. It needs to be embedded within the DNA of the company. Introducing it in the supply chain offers benefits such as a transparent business model for suppliers, better working conditions for indirect employees, and seamless integration of corporate objectives within operations. It helps a corporate demonstrate its commitment to sustainability. It not only helps maintain a loyal customer base but also attracts the new environment-conscious customer.



  84. Rise in Prices of Global Commodities

    Prices of commodities are increasing unprecedentedly, fuelled by the combined effect of economic recovery following COVID-19, logistical issues,

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    published on Nov 08, 2021

    Prices of commodities are increasing unprecedentedly, fuelled by the combined effect of economic recovery following COVID-19, logistical issues, and expectations from the US stimulus package. The impact of this spike will have to be borne by industries and end customers. What are the remedial measures to control this cost spiral?

    Global supply chains have been facing constant challenges since the outbreak of the global pandemic. The shortage of critical materials has led to spiralling cost of commodities, which is a huge concern for many industries. Prices of industrial commodities such as steel, copper, nickel, aluminium, and lead as well as precious metals such as silver and gold have surged sharply in the international market. Energy costs have also spiked as European gas and power costs increased. Higher costs threaten faster inflation, rising cost for consumers, and pressure on companies.

    The commodities market has always been dynamic but has become more volatile now. Economic recovery, coupled with factors such as shortage of shipping containers, are considered the main reasons for the scarcity of these materials and resultant surge in prices.

    The above events are the after-effects of the black swan event of 2020 – COVID-19. Some other cascading effects of the global pandemic resulting in the price surge of commodities are as follows:

    1. Increasing demand from China – Since the start of economic recovery, the demand from China has had an upward trajectory. With rise in manufacturing activities in Asian countries, especially China, the demand for raw materials has also increased.
    2. Supply disruptions – Global supply chains are yet to retain their equilibrium. Certain countries are still being forced to impose short-term lockdowns due to the second or third wave of pandemic, resulting in production delay. Furthermore, the logistics issue born out of shortage of shipping containers continues. Hence, the entire supply chain is disrupted and faces limitations.
    3. US stimulus package – The US declared a USD 900 billion COVID-19 stimulus package, leading to an increase in consumer demand on positive sentiment. Furthermore, the US Federal Reserve and other global central banks pumped significant liquidity into the markets over a period to counter the economic impact caused by COVID-19. This boosted precious metal prices.
    4. Investment demand – Until October 2020, hedge funds invested over USD 4 billion in the commodities market. Fund managers and analysts recommend investment in commodities, resulting in a sharp rise in returns from commodities fund this year.
    5. Energy highs – As the winter season starts, Europe’s gas stockpiles have hit record lows of this decade. Due to this, the cost of producing electricity has skyrocketed. The continent is trying to meet the demand by boosting supplies from various regions, but the supply remains constrained.

    Conclusion
    It is recommended that companies monitor this ongoing rate increase and accordingly redesign their strategies and plans to combat this situation. It is important for companies to hedge their commodity risk, especially if they operate in industries focused on raw material. This is more relevant for the agricultural space where price volatility can upset the profit margins of companies.

    The increasing prices of commodities has initiated a super cycle, which is expected to continue. The commodities sector may continue to record rise in prices and there may be a complete rate change for some commodities soon.



  85. Vegan Beauty Products – A Rising Trend

    The concept of a vegan cosmetics is gradually gaining popularity and followers, as it advocates no cruelty toward

      to read | words

    published on Nov 08, 2021

    The concept of a vegan cosmetics is gradually gaining popularity and followers, as it advocates no cruelty toward animals. Not only has the growing potential of the market attracted many new entrants, established brands are also launching their range of vegan cosmetics. The interesting trends developing in this market could well change the dynamics of the beauty industry.

    The concept of veganism has met with exponential popularity in the last decade. Growing concerns regarding environmental degradation and awareness of cruelty toward animals are major drivers of growth of veganism. Celebrities such as Hollywood actor Joaquin Phoenix and retired professional boxer Mike Tyson have also jumped on the bandwagon. The concept of veganism is not limited to food only; it encompasses all lifestyle choices, including apparel and beauty products. A shift in customer demand for plant-based personal care products is also helping in market expansion. The demand for clean, vegan, and cruelty-free beauty has led to innovative formulations in skincare, personal care, fragrance, and makeup. Vegan cosmetic launches increased 175% globally between 2014 and 2019.

    The global market for vegan cosmetics was approximately USD 15.1 billion in 2020 and was projected to advance at a CAGR of 5.1% to USD 21.4 billion by 2027. The skincare segment is witnessing the maximum demand and is poised to expand at a CAGR of 5.6%. The numbers clearly indicate that while currently this a niche segment, it is gaining mass acceptance.

    The segment is witnessing maximum growth in the US, Canada, and Mexico, followed by European countries such as Spain, the UK, and Germany. Asian markets such as China, Japan, and India also have an upward growth trajectory in the demand for vegan cosmetics.

    Benefits of vegan beauty products
    Veganism is increasingly being chosen as a way of life by new-age consumers. As the vegan population avoids animal-based ingredients in daily use products, vegan cosmetics are gaining a stronghold in the market. The following benefits of these products are now making them a preferred choice for non-vegan customers as well:

    • Animal cruelty - The pandemic has led to concerns regarding animal suffering and animal-tested products. Vegan cosmetics do not use animal by-products and alternatives to animal experimentation that are free of any cruelty have been developed. Brands are acknowledging this growing trend and taking steps to get ahead of competition. For instance, international brand Garnier has been certified cruelty-free by Cruelty Free International – an organization working toward ending animal experiments.
    • Eco-friendly - Vegan cosmetics use only natural plant and vegetable-based substitutes for active ingredients and eliminate animal products, including beeswax. Furthermore, vegan cosmetics are packaged using recycled materials to ensure minimum damage to the environment.
    • More nutrients – Vegan beauty products are made of plants and have vitamins, minerals, antioxidants, and other essential nutrients. They help keep the skin vibrant and youthful.

    Key trends
    Some key trends in the vegan beauty product market are as follows:

    • The vegan cosmetics market has seen many new entrants in the last few years. The existing brands have also chosen to launch a range of vegan products. Hence, customers now have a wide variety of brands to choose from.
    • The vegan cosmetics segment in the US is expanding; it is expected to reach approximately USD 3.16 billion by 2025, as manufacturers and suppliers of vegan cosmetics in the country continue to increase.
    • Competition in the vegan cosmetics market is intensifying due to the presence of established brands and international companies offering varied product portfolios.
    • Vegan products have benefitted from e-commerce, which is estimated to register significant growth due to convenience in product selection, availability of diverse brands, and interesting promotional offers online.
    • Many celebrities have joined the growing vegan community and given their names to cosmetic brands. Well-known rapper Pharrell William launched a vegan skincare range with Sephora called “Humanrace.”
    • China recently eliminated mandatory animal testing requirements for imported “general” cosmetics.
    • Innovation fuels the industry with young and new start-ups creating products using aloe vera, argan oil, matcha tea, and avocado. They provide recyclable packaging, complete supply chain transparency, and personalized messaging via online mediums, thus ensuring instant connect with customers.
    • Key companies ruling the market include Zuzu Luxe, Bare Blossom, Ecco Bella, Emma Jean Cosmetics, Urban Decay, Arbonne, Modern Mineral Makeup, Pacifica, and Nature’s Gate.

    The modern consumer wants cruelty-free products that are environment-friendly yet effective and deliver the promised benefits. Such demands from discerning customers are fulfilled by the vegan cosmetic industry through sustainable and satisfying solutions. They give heed to customers, use these insights to innovate rapidly, and monitor the ever-evolving market preference. With the impact of climate change already upon us, the demand for sustainable living is only expected to rise. Veganism is gradually becoming a conscientious lifestyle choice and will soon become a mainstream phenomenon.



  86. Global Shortage of Shipping Containers

    Global trade has come to a standstill due to misplacement of shipping containers. While Asia is facing a

      to read | words

    published on Sep 21, 2021

    Global trade has come to a standstill due to misplacement of shipping containers. While Asia is facing a major shortage and is unable to transport goods, these containers are being piled up in the US and other European countries. Asian nations are considering various solutions to streamline container requirements and resolve supply chain disruption. However, the repercussions of this shortage could be felt until 2022.

    Global trade is facing an unusual predicament brought on by the COVID-19 outbreak in 2020–shortage of shipping containers. These metal corrugated boxes are the life force of the shipping industry, as they are used to carry precious cargo from one port to another safely and offer maximum security. Asia is witnessing a significant short supply of these boxes, which has led to supply chain disruption and consequently has had a cascading effect on businesses across the world.

    The Cause
    In 2020, the pandemic outbreak forced China and many other nations into lockdowns. Cargo ships that were en route out of Asia dropped off goods in containers across the US but were unable to load them back with new products and return to Asia owing to lockdown restrictions. Some of these containers are piled up in inland depots or cargo ports in the Americas while many are in transit on transpacific lines.

    The loaded containers were sent inland for downloading but are now stuck inland and are causing congestion on rail networks. Due to the pandemic-led shortage of truck chassis, drivers, and warehouse workers, there is a huge backlog at cargo facilities.

    To add to the global trade turmoil, in March 2021, the Suez Canal – the connecting route for many nations – was blocked by a 20,000-container cargo ship for six days. This incident aggravated the shortfall of containers as 369 ships queued up due to the blockage.

    Another reason for the shortage is the rebound in economic activities in Asian countries. As the US and Europe started opening toward the end of 2020, demand for Asian products increased exponentially, leading to an uneven trade flow. Chinese manufacturers rushed to fulfil these orders even if they had to pay higher freight rates. Consequently, shipping liners and container owners shifted their containers to China to serve inter-Pacific routes, creating a huge deficit between containers for intra-Asian trades and other trade routes.

    Lastly, production of new containers, which had dropped in 2019, further plummeted in 2020 due to lockdown as well as weak demand owing to limited trade.

    The Current Scenario
    The container shortfall has caused shipping costs to skyrocket by almost 300% on some routes, especially those from Asia. Companies are desperately waiting for weeks for the arrival of containers and are ready to pay a heavy premium to export their goods.

    As international flight volumes declined due to travel restrictions, air freight capacity was limited and is being diverted to sea trade. High-value items usually delivered by air would now have to be sent in containers via sea routes, thereby exacerbating the shortfall.

    Measures Taken by Asian Countries
    While there is no easy solution to the freight shortage, various steps are being taken to address this issue. Most of the container factories are concentrated in China. They are estimated to manufacture 5.4 million 20-foot-equivalent container units this year to try and fill the shortage.

    To unclog global trade arteries, several countries are undertaking initiatives that could smoothen the snarl caused by the shortfall. For instance, the Indian Railways has allowed shippers to move empty boxes to inland depots, such as Delhi, from seaports for free. Moreover, South Korea has deployed an additional nine ships on the trans-Pacific route to assist local manufacturers. China’s state-owned shipyard Cosco Shipping Heavy Industry has converted at least one newly built paper-and-pulp carrier to transport containers.

    Private companies are also taking action. China-based Cainiao, Alibaba’s logistics arm, has introduced a container booking service in response to the global shortage in 200 ports across 50 countries in an attempt to streamline the trade flow.

    Measures Taken by European Countries
    To bring the containers back in circulation, Western nations are trying to get them out of their ports. Eurasian Rail Alliance reduced tariffs for transporting empty containers via the Europe-China link. The company – jointly formed by the state railways of Russia, Kazakhstan, and Belarus – said this would help avert the shortage of containers for loading in China.

    Conclusion
    The shipping industry believes that eventually the problem of container shortage would sort itself out. As buying patterns normalize, bottlenecks would ease. Moreover, measures taken by countries around the world would increase the number of containers and ships, thus balancing global trade and reducing supply chain disruption.



  87. Sustainability in Procurement – Textile Industry

    Sustainability is the need of the hour and industries across the world are embedding this concept in their

      to read | words

    published on Aug 18, 2021

    Sustainability is the need of the hour and industries across the world are embedding this concept in their strategic plans. The textile industry, which forms the backbone of the fashion trade, is introducing changes in its processes and gradually implementing them. However, textile, apparel, and fashion companies face certain challenges in the complete adoption of sustainability. Can they overcome these obstacles and move ahead?

    Leading global fashion labels are committing to the inclusion of sustainability in all their processes. The more evolved and aware new-age customers prefer brands that promise responsible sourcing and sustainable production. This has brought about a massive shift in purchase trends. While the top brands were always more in line with the need to integrate sustainability with the supply chain, other players are also realizing its importance. Moreover, various textile trading countries have implemented regulations to follow green sourcing, which helps control cost and boost production capacity.
    However, the conversion to sustainable sourcing is a long-term process. Organizations looking to make this change will have to begin at the grassroots level and initiate it gradually.

    • Sourcing materials – Fast fashion brands prefer cheap and easily available non-biodegradable material. However, this material soon ends up choking landfills and affecting marine lives. Thus, it is essential to increase the share of organic and sustainable material being used in this segment.
    • Ensuring transparency and traceability – Increasing awareness among consumers drives the need to have a more transparent supply. It will soon be imperative for companies to communicate the details of their suppliers from the point of origin to the point of purchase.
    • Creating strategic partnerships – Fashion and apparel brands will have to form a strategic alliance with suppliers who proactively invest in environmental sustainability and employee well-being. For green practices to be embraced across the value chain, collaboration with key suppliers is essential.
    • Reinventing purchase practices – The entire process of purchase practices, from planning and negotiation to order placement, will have to be revolutionized to introduce sustainability.

    What is sustainable sourcing?
    Sustainable or green sourcing refers to the process of procuring cost-effective material that generates benefits and minimizes damage to the environment across the supply chain. It requires strategic planning and must be implemented from the beginning of the supply chain.

    In the textile industry, several types of recycled material such as cotton, cashmere, nylon, wool, polyester, and even plastic could be used.

    Growth of sustainable fashion
    The need to adopt environment-friendly practices in the textile industry is propelled by many factors, the leading being rising consumer interest in sustainable fashion. It is becoming a critical factor for the competitive success of fashion brands. The modern consumer is ready to pay a premium for green fashion and base his/her decision on not just the product but its entire production cycle.

    Strict government regulations across the world also provide an impetus for organic processes in the textile industry. The UN Sustainable Development Goals adopted in 2015 now form the core framework for implementing sustainability strategies. Furthermore, in 2015, the G7 Leaders Declaration agreed to “promulgate industry-wide due diligence standards in the textile and ready-made garment sector.” This resulted in OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector. In 2019, G7 summit introduced Fashion Pact, with 32 major apparel companies sharing a common objective for environmental sustainability.

    Countries also implement individual rules and regulations to drive growth in green fashion. While China effected tight environmental policies in its 13th Five Year Plan in 2016, France introduced a circular economy law prohibiting clothing companies from destroying overstock. In Turkey, a zero-waste campaign was developed in 2019. Such initiatives are being undertaken in other countries as well.

    Challenges
    Achieving sustainability in textile industry is fraught with various challenges. The foremost is the lack of any defined standards for organic practices in the industry. While attempts such as employing the Sustainable Apparel Coalition’s Higg Index have been made, it still does not clearly define what is expected from the companies to be deemed “green.” Sustainability is a wide term that can encompass a variety of initiatives from using organic fabric to creating capsule collections. Hence, it is difficult to determine if the company is in the sustainability bracket in view of the initiatives it undertakes.
    Keeping the customer informed about the company’s value chain is easier said than done, because it is difficult to communicate the entire breadth and complexity of green solutions to customers. At best, companies can share their raw material purchase criteria or the standards maintained at their production facilities.

    Therefore, while there is growing consumer and regulatory focus on sustainability, adopting and implementing it is not easy. It requires process changes across supply chain, right to the grassroots level, which is neither easy nor inexpensive. However, the point of concern is that while fashion and apparel companies have started making the first move toward this initiative, will the entire industry successfully embrace sustainability?



  88. Recycling Construction Waste – Toward a Sustainable Future

    Increased awareness regarding the environment has brought to fore the need to adopt sustainable and environment-friendly practices by

      to read | words

    published on Aug 12, 2021

    Increased awareness regarding the environment has brought to fore the need to adopt sustainable and environment-friendly practices by various industry verticals, including construction. By the nature of its activity, the construction sector accounts for a significant share in construction and demolition waste. Instead of ending up in landfills, this waste can be more productively used to create sustainable by-products. With new government regulations and LEED certification requirements, construction waste management has gained prominence. There are numerous methods for construction companies to reuse waste. This practice not only has a positive impact on the environment but is also cost-effective for companies and boosts their brand image.

    Environmental degradation poses an enormous threat to the planet, with the construction industry producing a large amount of waste, otherwise known as construction and demolition (C&D) waste generated when new buildings and structures are built or when an existing structure is renovated or demolished. It is hence essential to create and implement a well-planned strategy to minimize construction waste and reduce its negative impact on the environment.

    Types of construction waste are as follows:

    • Material such as concrete, bricks, asphalt, stones, and soil are known as inert waste. They are neither biologically nor chemically reactive and do not decompose.
    • Material such as plastic, glass, and metal are another set of waste that gets added to landfills.
    • Hazardous waste items such as asbestos and chemicals require specialized handling and can be harmful to health.

    Process

    • The objective of construction waste management is to minimize the waste created during construction. This can be done by redirecting recyclable resources back to the manufacturing process and reusing them to increase their lifecycle through source reduction, one of the most economic ways of construction waste management. This is implemented by procuring green material and avoiding harmful material such as that containing asbestos and chemically treated timber. Non-toxic alternatives for such material are preferred even if they are slightly more expensive.
    • Minimization of waste – Ideally, waste should be minimized during the construction process. An example is to ensure that the construction material is sent with minimal packaging. Furthermore, recyclable material should be considered against material that can be used only once.
    • Efficient waste segregation – It is imperative to appropriately segregate waste at the construction site. This can be done by ensuring the following:
      • Training on-site workers in appropriate segregation procedures and ensuring it is correctly implemented
      • Deploying an expert team on-site to monitor and manage waste material
      • Creating on-site waste storage area with bulk bags and wheelie bins as well as areas for different types of waste
    • Reuse of material – At the time of deconstruction or demolition, building material that is in good condition should be used. For example, a window structure in reusable condition can be used in another project.
    • Deconstruction vs. demolition – If a structure needs to be removed, the most inexpensive method is demolition. However, it results in heavy pollution and waste generation. Instead, deconstruction is more sustainable, allows extensive recovery of usable material, and creates employment opportunities. In some situations, complete deconstruction is not feasible, but partial deconstruction and demolition can be implemented. Buildings that have wooden frames or high-quality bricks can be deconstructed easily and carry high reuse value.

    Benefits of construction waste reduction

    • Environmental responsibility – Industries and companies across the world are accepting their responsibility toward implementing sustainable and environment-friendly processes. Construction waste management can help achieve this goal and reduce the waste that gets deposited in landfills and oceans.
    • Workers’ safety – Careful waste storage minimizes the risks of accidents and other hazards that may harm workers.
    • Compliance – Many countries such as the UK and the US have stringent regulations regarding construction waste management. Implementing these processes will help construction companies comply with regulations.
    • Cost-effectiveness – Reusing construction material can help companies reduce their cost and ensure more profits. Recycling material is more inexpensive than buying new material.

    Government regulations
    Developed countries such as the US and the UK have clear regulations regarding construction waste management, according to which they must follow a process and recycle a certain part of the building material. For instance, under the Waste (England and Wales) Regulations 2011, it is mandatory for businesses to limit their waste. This applies to all businesses across the spectrum, regardless of whether they import or export, produce, keep or store, treat, carry or transport, or dispose of waste.

    Emerging countries such as India still do not have strict laws regarding C&D waste management. As the issue of pollution due to waste increases, the Ministry of Urban Development in India has advised state governments to set up C&D waste recycling plants for all cities with a population of more than 1 million.

    If a building seeks LEED certification, it must recycle or salvage at least 50–75% of non-hazardous C&D and packaging debris. One of the requirements of LEED is that the project must have a strategic construction waste management plan that identifies and quantifies the material generated during construction. Following this, it has a systematic process to recycle or divert this material from disposal and determine if it can be sorted on-site or comingled.

    Conclusion
    With the development of countries and resultant increase in infrastructure facilities, construction activities have surged. Thus, it is essential to design a solution for the considerable construction waste being generated. This issue can be addressed by recycling construction waste as a sustainable measure that should be included in the main design plan to ensure implementation at the building stage. To implement recycling, project waste must be recognized as a part of material management and the entire team should be on board regarding material flow. While recycling construction waste is slightly complex, it can help make the entire process of construction more environment-friendly.



  89. Sustainability In Procurement – Packaging Industry

    The objective of achieving sustainability has cascaded to all industries and raw material, including packaging. One of the

      to read | words

    published on Jul 13, 2021

    The objective of achieving sustainability has cascaded to all industries and raw material, including packaging. One of the main components of the packaging industry is plastic, which is known to have a harmful effect on the environment. The industry is now looking at other options to lessen the use of plastic, thus majorly impacting procurement in the packaging industry.

    Plastic has been branded as the main villain in the climate change story. It has immense longevity due to its non-biodegradable nature, thus choking landfills and marine life. One of the main users of plastic is the packaging industry. Due to its durability, light weight, and cost-effectiveness, it has had a dominant position in the packaging industry until now. Sectors such as food and beverage, chemical, cosmetics, personal care, and pharmaceuticals are its main customers.

    With increasing awareness regarding environmental degradation and climate change issues, the packaging industry now seeks alternatives for its main component.

    This has led to growth in the sustainable packaging market. It is estimated that the market will have a spend growth of nearly USD 90 billion with a spend momentum of over 6% CAGR between 2019 and 2024. Increasing stringency of environment-related regulations across the globe is one of the main drivers of growth in this market.

    Some initiatives are taken by key players in the packaging industry to reduce their carbon footprint and turn to alternatives such as the following:

    Plastic alternatives:

    • Reusable packaging - This packaging is designed to be used multiple times (usually for years). It is used to transport commodities, raw materials, or spare parts to manufacturing units or warehouses, and ship finished goods to wholesale or retail outlets. This sort of packaging is mainly used in business-to-business applications. However, with the growth in e-commerce and increase in home deliveries, this packaging can prove effective. The main benefit of this type of packaging is that the raw material used for creating this packaging is limited, and the number of times the packaging must be disposed reduces significantly.
    • Bioplastic – Plastic made from biomass sources, such as corn starch, straw, vegetable fat and oil, and woodchips instead of fossil fuels in known as bioplastic and can reduce the impact of plastic on the environment. Bioplastic is compostable but needs special temperature and close management. This is preferred for all packaging that may end up in landfill or litter. It is especially advisable for food product packaging.

    Paper packaging:

    • Corrugated boxes – Another solution for sustainable packaging is corrugated boxes. They are environment-friendly and degrade within one to two months of being disposed. Some corrugated boxes are also made of wastepaper, thus ensuring that the raw material is cheap and easily available. Up-cycled corrugated cardboard can also be used as bubble wrap. Rather than being disposed, it can be used as a cushioning material. Their lifecycle as well as carbon footprint are much lower compared with plastic.
    • Paper bags – Paper packaging products are also gaining popularity. It is an option wherein low or no barrier is needed. However, it negatively impacts the environment as it depletes trees that are the main raw material for manufacturing this product and needs considerable amount of water for production. However, if it is integrated with pulp production and predominantly uses biofuel, it can generate comparatively low CO2 footprint. As the main raw material is renewable, the net CO2 contribution from the inherent carbon is zero.
    • Moulded pulp - Moulded pulp is a packaging material made from recycled paperboard and/or newsprint. It is used for protective packaging and is preferred for food service trays or beverage carriers. It is fully compostable and recyclable. Due to its flexibility, it can be used in different kinds of packaging and can also be customized. The addition of eco-friendly or renewable fibre further enhances its properties.

    Metal packaging:

    • Stainless steel – Created by fusing a variety of basic chemical elements, stainless steel is a powerful alloy. It has a long lifecycle and can be used to replace plastic bottles and jars in many kitchens.
    • Recycled aluminium – Beverage companies favor recycled aluminium for their product packaging. The recycling allows scrap aluminium to be reused after its initial production. Recycling aluminium is cheaper and less energy-intensive than creating new aluminium. Used by many beverage companies, a key benefit of this material is that it can be fully recycled and reused an infinite number of times.

    Packaging companies also seek to create sustainable options for other packaging material such as wax, ink, and adhesive.

    Many online retailers explore the option of sending products with no packaging at all. This resolves the issue of extra and needless packaging ending up in landfills.

    While sustainable packaging is on the rise, companies need to ensure the following during the procurement process:

    • Certified sources – Suppliers should share verification that responsible sourcing has been done. For example, while sourcing fibre, companies can check forest certification, chain-of-custody certification, controlled wood, and certified sourcing to confirm origin, provenance, and environmental profile of the material.
    • Transparency –Ideally, the buyer and supplier should report environmental performance data of their value chain. This enhances accountability, builds trust, and helps benchmark efficiency gains within production flow. The reporting mechanism must have a purchasing framework that considers water use, life-cycle impact, end-of-life options, human health and safety, certified forest management, and other performance indicators.
    • End-of-life strategy – The new packaging options being designed must have secondary use and reduce emissions in landfills. The effective recovery re-use provides resources for the next generation of packaging material. A systematic approach to recovery can not only improve the supply of reusable materials but also bring order and coherence to material flow.
    • Investment in sustainability – It is essential for companies to invest in conservation efforts. There are companies with which pay-for-performance partnerships can be established. The companies can commit to purchasing specific environmental outcomes and pay for these mitigation projects only after the promised outcomes are verified.

    The packaging industry must embrace responsible sourcing where the company looks beyond the traditional aspects of cost, quality, and delivery time. It checks the supply chain’s impact on social and environmental issues and bases its decision on all parameters. Packaging companies must aim to reduce their carbon footprints yet maintain quality.



  90. Do Legal Firms Need Market Research?

    Like any other organization, legal firms need to conduct market research to develop a strategic blueprint for their

      to read | words

    published on Jul 08, 2021

    Like any other organization, legal firms need to conduct market research to develop a strategic blueprint for their long-term growth plans. Market research allows a legal firm to gain access to data regarding their customers, markets, competition, and the overall external business environment. This allows a legal firm to effectively compete with its peers, as well as retain customers.

    Legal firms pioneer in litigations, defending their clients against legal charges; they are experts in conducting in-house legal research. Nonetheless, intelligence on target markets, competitors, and clients provide legal firms the building blocks to succeed. While market intelligence helps these firms to create effective sales pitch for potential clients, competitor intelligence would allow firms to benchmark and strategize their marketing campaigns and define their position. Market research also allows legal firms to be cognizant of opportunities and threats present in the business environment.

    Legal firms often struggle with limited bandwidth to conduct market or competitor research, as the team of counsellors, partners, lawyers, and attorneys primarily emphasize on the legal side of a business. As a result, several legal firms seek to outsource a wide range of market research activities to third-party advisors that provide customized solutions to legal firms, while they focus on their core business activities.

    Intelligence provided by market research and advisory companies allow legal firms to gather insights to answer many strategic questions, including a few explained below:

    • How to grow a legal practice?
      Business development or customer acquisition is critical for growing all types of businesses, and law firms are no different. Legal firms spend a considerable amount of time to gather insights on their potential clients, including information on business activities, clients, and key decision makers. Legal firms can benefit from outsourcing these activities to third-party firms that offer quick turnaround and custom research solutions.

      Some of the offerings legal firms can procure from advisory firms include:

      • Preparing custom pitch decks and RFP documents to synergize a firm’s legal offerings with a client’s business activities
      • Conducting quick review of a client’s business activities
      • Quick search on key diligence questions
      • Developing custom industry research reports across sectors and geographies

    • How to retain existing clients?
      Customer retention is equally important for legal firms. As a client’s business activities and operating environment continue to evolve, legal firms need to be wary of the dynamic environment to enhance customer experience and identify opportunities to cross-sell. With lawyers and partners working with multiple clients, tracking several businesses that operate with varied drivers and challengers would be tiresome. Additionally, each business is regulated by a set of guidelines and government-imposed limitations, which are subject to change. Thus, all legal firms need to track regulatory changes to safeguard their clients against possible litigations. Advisory firms allow legal firms to:

      • Regularly track business activities of clients
      • Monitor regulatory changes specific to a client’s business environment
      • Track and notify clients of any potential legal impact on business activity
      • Develop value-added reports on a client and its peers for internal consumption or client distribution
      • Provide sector expertise to understand various components of a client’s industry
    • How to beat the competition?
      The legal industry is very competitive, with many firms targeting a similar range of corporate clients. While strategy planning sets the tone of activities undertaken by legal firms, it is imperative for market players to assess their competition. Competitive intelligence allows legal firms to benchmark against industry best practices and learn from competition to avoid costly errors and gain a competitive edge.

      Despite being important, global legal firms usually work with an in-house market research team of 1–2 resources that cater to the demand of over 200 lawyers. The bandwidth constraints, therefore, lead to sub-standard, high-level, and incomplete assessments, which add limited value to the firm. On the contrary, third-party firms offer expertise and utilize a wide range of commercial databases to provide detailed assessments, allowing legal firms to access restricted information on their direct competitors. Third-party market research and advisory firms provide legal firms the following services:

      • Detailed reports including an assessment of strategic business development and marketing activities
      • Detailed analysis of a competitor’s client portfolio and evaluation of its market position
      • Evaluation of services offered and identification of offerings that are key contributors
      • Benchmarking business against industry best practices
      • Identification of direct and indirect/potential competitors that could impede the growth of the legal practice

    • How to increase online presence?
      In addition to providing quality legal advice, legal firms focus on their online presence through well-designed corporate websites. Legal firms spend a lot of time and effort to develop content for their websites, client outreach programs, or internal training. Knowledge management entails identification, analysis, development, and publication of content to maintain client traction and build credibility. Third-party market research and advisory firms provide an extended team that resonates thoughts and ideologies of partners and management to develop a range of content including:

      • Thought leadership articles and whitepapers
      • High-level industry overview for websites or client outreach programs
      • Client satisfaction surveys and reports to bolster customer loyalty and experience
      • Regulatory newsletters
      • Insights on technical patent research and custom research on specific product patents

    Third-party research and advisory firms use a range of research methodologies, including primary discussions with lawyers or partners, focus-group discussions, and online market surveys. They also use secondary research tools, such as commercial databases, industry reports, publications by associations, press releases, or company websites. Additionally, the in-house team of lawyers spend a considerable amount of effort on legal research to identify and support legal decision-making. Legal research is largely conducted using paid commercial databases, including Westlaw, and Lexis Nexis, or free legal websites, such as FastLaw or FastCase.

    Any form of research, especially market research, is essential to attract and retain customers and expand legal practice. Third-party research firms provide an independent, unbiased view on external factors that may influence the legal practice, allowing legal firms to strategically plan and convert contingencies into growth opportunities. Also, these firms bring in the experience of analyzing several end-markets to deliver best quality, in-depth, timely, and custom research solutions for all types of legal firms.



  91. Emerging Trends in Beauty Industry in 2021

    The COVID-19 pandemic has changed the world and the way we live. Likewise, the beauty industry is adapting

      to read | words

    published on Jun 14, 2021

    The COVID-19 pandemic has changed the world and the way we live. Likewise, the beauty industry is adapting to the new normal. The beauty market, which was growing steadily, saw an initial drop when the pandemic hit, but remained resilient and has now bounced back. New ideas and initiatives are being introduced by big beauty brands to ensure continued consumer interest and loyalty. The beauty industry is now evolving and embracing the new trends brought by the pandemic.

    The global pandemic that hit the world in 2020 negatively impacted various sectors and industries, including the beauty industry. In 2019, the global beauty market was generating approximately USD500 billion, and was poised for further growth. However, the pandemic hit the sector and its growth prospects. Lockdowns worldwide resulted in the closure of premium beauty product outlets. Approximately 30% of the beauty market was shut down, and some brands never reopened. A leading international makeup brand, Becca, could not cope with the sales decline due to the pandemic-induced lockdown and uncertain future; hence, it had to down its shutters permanently. However, the industry has shown resilience, and is slowly getting back on its feet. The beauty industry, which includes skincare, haircare, fragrances, and cosmetics, is still estimated to record an annual growth rate of 5% each year from 2020 to 2023. China, the US, Japan, India, and Brazil would remain the top beauty markets of the world.

    Emerging trends continue to shape the industry, as it evolves to become more relevant in the new world. Some of these trends are described below.

    • Organic products – The demand for organic products is on the rise. New-age consumers are becoming health conscious and want to be aware of the ingredients present in their personal care products. Such consumers are increasingly shifting toward brands using natural ingredients, following ethical manufacturing processes, and offering vegan or cruelty-free products. Cosmetic brands that are on the stand for testing on animals are seeing a decline in their growth, forcing them to introduce product lines that are cruelty-free to prevent the loss of market share. Organic and ethical products, though more expensive and with shorter shelf life, are gaining over traditional chemical-based branded products.
    • Sustainable products – New-age consumers are concerned about the environment, and demand products that are sustainable and bio-degradable. Beauty brands have already understood this change in perception. In 2020, many brands invested significant resources to launch eco-initiatives. One such initiative was launched by cosmetic giant, Unilever, who introduced in-store refill trials at an Asda store in the UK in 2020. The company also introduced Love Beauty and Planet, comprising 100% sustainable and environment-friendly products. Procter & Gamble is also planning to launch its shampoo refill scheme in 2021 to incorporate circular economy. In Euromonitor’s Voice of the Industry Sustainability Survey, almost 60% of beauty and personal care companies have said that they would give importance to health, social, and environmental issues in the future. Strict regulations are in place globally to ensure that companies take their ethical and moral responsibilities seriously.
    • Do-it-yourself (DIY) and selfcare products – With the shutdown of salons, DIY packages for hair, nails (stick on nails), and skin have witnessed an increase in demand. As per a report by Nielson, in the US, the sales of hair clippers and hair dye grew by 166% and 23%, respectively, in the first week of April 2020, compared with year ago. The UK registered double-digit growth in the online sales of nail polish every week since the lockdown began in March 2020. As lockdowns continue in many countries, DIY and selfcare trends would continue in future.
      At-home peel-off, digital LED masks, and other skincare routines are becoming increasingly popular. Hence, many brands are seeing this as an opportunity to launch personal skincare gadgets that would help customers conduct beauty regimes at home comfortably.
    • Rise of digitalization – Lockdowns due to the COVID-19 pandemic led to an increase in e-commerce. Beauty brands also took advantage of this change. Sephora, a leading beauty brand, reported 30% increase in its online sales in the US in 1Q20, as opposed to 1Q19. Amazon’s beauty product sales also increased during this period. A market research report mentions that online revenues for beauty industry players in China rose by 20–30% during the outbreak.
    • Advanced blue light protection – Due to the pandemic, most people are connected to the world virtually through laptops and smartphones. Such devices are known to emit ‘blue light,’ which may damage the skin. Companies are exploring innovative ingredients to develop products with advanced blue-light protection. Renewed interest is observed in natural ingredients, such as sea plasma, astaxanthin, marine collagen, and certain forms of algae, to combat skin ageing due to blue-light radiation. Beauty brand, Goodhabit, has launched a skincare product with ingredients such as rubiginosa, licochalcone A, turmeric, and algae to fight the ill-effects of blue light. Another major brand, Cult Beauty, also unveiled a dedicated category, Blue Light Radiation Protection, on its online platform.

    • Scalp and eye care – Hair, scalp, and eye care have been identified as major beauty trends in 2021. With masks concealing the lower half of the face, the focus has shifted to eyes and hair. Sales of eye products have doubled during the pandemic, while sales of lip products declined due to increased use of masks. Leading makeup brands are currently focusing on promoting and launching new products for eyecare. Sales of Kohls’ eyeshadows and fake lashes are set to grow in the next few years.

      Scalp care is the new skincare, with LED hair masks, scalp scrubs, serums, and essential oil treatments flooding the market. The market has huge potential, with treatment and beauty brands now planning to integrate wellness formats and ingredients in scalp care products.

    The beauty industry is not only regaining balance, but also gearing to catch up to its earlier growth potential. Key players are noting the trends in consumer preferences and designing their products and services accordingly. Technology is also playing a key role in changing the industry’s dynamics, as more digital beauty products get launched in the market. The beauty industry is shifting and adjusting to the new era. While industry trends would continue to alter with time, some of them, such as preference for sustainable and ecological products, will likely continue in the long term.



  92. Sustainability in Procurement – Chemical Industry

    The chemical industry has always been in the red zone and accused of being the major contributor to

      to read | words

    published on Jun 08, 2021

    The chemical industry has always been in the red zone and accused of being the major contributor to environmental degradation. However, rising concerns about sustainability have prompted this industry to make changes in procurement and other processes and thereby contribute its bit to help the world meet its sustainability targets. The industry is, therefore, looking at renewable raw materials to create bio-based plastics, pesticides, and surfactants. One of the main participants of ‘bio-economy’, the chemical industry is evolving to become more environment-friendly.

    Sustainability is the new buzzword across sectors and industries. Growing awareness regarding environmental degradation is prompting governments the world over to implement stringent rules across sectors to check pollution levels. The chemical industry has always been under the scanner and considered the main culprit behind the increasing air, soil, and water pollution.

    Pressure is escalating on the chemical industry to reduce greenhouse gas (GHG) emissions, which are very harmful to the environment. Chemical companies need to make operational changes and adopt low-carbon processes. This will help the industry embrace a circular economy.

    The industry, in an effort to ensure sustainability, is in the process of introducing Renewable Raw Material (RRM) across the spectrum. The scope to increase the use of bio-based products and manufacture bio-based plastics, pesticides, and surfactants is immense. Most bio-based chemical products are now sourced from plant- or animal- derived raw materials, including sugar, oils and fats, and organic waste. Since the carbon in these materials is recently absorbed from the atmosphere, it is considered a renewable source.

    Bio-based chemical products needed by other industries:

    • Bio-based plastic – Plastic, a growing menace, is choking the environment. However, it remains the most preferred packaging material. The answer to this dilemma is bio-based plastic or bioplastic that is environment-friendly. Made from plant or other biological materials that are renewable instead of crude oil, these have the same properties as regular plastic but degrade much faster.
    • Bio-based lubricants – Lubricants can be derived from plant oils. These bio-lubricants can be utilized as hydraulic fluids, grease, two-stroke engine oil, metal working fluids, and fuel additives. Therefore, they are as useful as those made from non-renewable raw materials. In fact, it is advisable to use bio-lubricants for machinery and equipment used in activities that have a direct impact on the environment, such as agriculture and forestry.
    • Bio-based fuels – Biofuels are becoming a popular choice in the manufacturing industry. One example is sugar cane. It is abundantly available, growing readily in tropical climates. It contains soluble carbohydrate (sucrose), which is ready to use and does not require any further processing. Finally, sugarcane contributes to maintaining the energy balance and has a very low carbon footprint. A popular green crude, sugar cane can provide the carbon needed by the market at competitive prices and help meet the demand for sustainability.
    • Bio-based pesticides – Biopesticides are derived from nature, such as animals, plants, bacteria, and certain minerals. For example, baking soda and canola oil can be used as pesticides and are considered biopesticides. Being bio-degradable, they are much less toxic than conventional pesticides and effective even in very small quantities. As these decompose quickly, they reduce pollution.
    • Bio-based surfactants – Derived from biomass/plant oils or through fermentation using sugar/yeast, these can be used for both niche segments and large-scale commercial applications.

    These are only a few examples of the wide spectrum of offerings from bio-economy in the chemical industry. Chemicals plays a vital role in the production of various goods and services. One of the largest industries globally, building sustainability in the core of the chemical industry is essential to transition toward a sustainable society.



  93. Air Purification Devices – A Growing Business

    Amid the growing threat of air pollution, demand for air purification devices has increased. While these devices have

      to read | words

    published on Jun 08, 2021

    Amid the growing threat of air pollution, demand for air purification devices has increased. While these devices have been around for some time, new technologies and innovations in this sector have facilitated their upgrade for higher efficiency and effectiveness. The outlook for the sector is positive in the light of its growth potential.

    Environmental degradation and climate change are a menace and pose a threat globally. Rising air, water and land pollution is a key contributor to global warming, making way for natural disasters. Nations are increasingly recognizing climate change as a global challenge and coming together to address it.

    Air pollution has increased rapidly over the past few decades and is a major hazard to public health. Data provided by the World Health Organisation (WHO) at the 2018 UN Climate Change Conference shows that 9 out of 10 people in the world breathe air which is highly polluted and that air pollution is accountable for approximately 7 million deaths occur annually.

    Regulations across the globe
    Various laws have been introduced in countries to control air pollution. Governing bodies internationally have formulated stringent rules for industries as well as individuals.

    The Paris agreement on global climate change, signed in 2015, addresses all types of environmental pollution and has set targets for various countries to reign in pollution levels. The core objective of the agreement is to reduce global greenhouse gas emissions significantly to limit the rise in temperature globally which is proving to be catastrophic.

    Need for air purification devices
    Millions of people die prematurely due to diseases from household air pollution caused by the use solid fuels and kerosene for cooking purposes. The second contributor to air pollution is the use of fossil fuels for power, transport or heating which adds to outdoor air pollution.

    Governments across nations are working to curb air pollution by introducing and implementing stringent regulations for industries and automobiles. Standards for indoor air quality have also been set. Plus, air pollution control campaigns are undertaken globally to improve the quality of air in public places and residential areas. These initiatives have led to growth in the air purifier industry.

    Air purification devices
    Air purification devices are designed to purify indoor air by removing particulates and pollutants and, consequently, improve the air quality. The global market, estimated at USD10.67 billion in 2020, is expected to expand at a CAGR of 10% from 2021 to 2028. Air purifiers are required almost everywhere: at home, in manufacturing facilities/at industrial setups, healthcare facilities, restaurants, and other commercial and retail spaces.

    As airborne diseases increase and pollution levels rise in urban areas, the need for these devices is growing. Increasing awareness regarding environment protection and sustainability, growing health consciousness, and rising disposable income are the factors driving growth in this market. Demand for devices is alike in developed countries as well as in emerging economies.

    Advantages of air purification devices

    1. Clean the air – The most obvious benefit of using an air purification device is that it improves the air quality indoors. It cleanses the air of pollutants harmful to health.
    2. Lessen dirt – As an air purification device traps most pollutants, it also keeps the indoor area clean and germ-free. This reduces the need to do dusting.
    3. Ensure wellbeing – A clean environment alleviates stress and is conducive to overall wellbeing.
    4. Eliminate odors – Some air purification devices also eliminate stenches and odors.

    Technologies in the market
    Air purification technologies fall under two main categories:

    • Fitted with filters – Prefilters, high efficiency particulate air (HEPA), activated carbon, washable filters
    • Filterless – Air ionisers, ozone generators, electrostatic precipitators, ultraviolet germicidal irradiation, photocalytic oxidisation (PCO) and thermodynamic sterilization

    Currently, HEPA purifiers dominate the global air purifier market, accounting for almost 40% of revenues. However, HEPA filters also have certain disadvantages. They cannot successfully trap gases, fumes, chemicals and odors. Furthermore, they are costly to buy as well as to maintain. Despite this, these are estimated to remain a significant contributor to the market.

    Technologies such as activated carbon and ozone-based purifiers are gaining traction as an alternative to address the shortcomings of HEPA filters. Other advanced technologies generating interest are PCO and ultraviolet germicidal purifiers.

    The major players in the global air purifier market are:

    • Daikin Industries
    • Panasonic
    • Gree Electric Appliances
    • Samsung Electronics
    • LG Electronics
    • Samsung

    Future trends
    The air purification devices industry is growing and prospects seem good. Growth in smart homes, rise in government regulations to monitor indoor air quality, and increase in healthcare awareness would boost the air purifier market. This has prompted almost all leading brands in the air purifier market to increase R&D activities. Various innovations are underway, such as wearable air purifiers, plant-based air purifiers, aesthetically designed purifiers, built-in purifiers and nanofibers. Growing awareness among consumers regarding air purification due to the pandemic is an added opportunity for air purifier companies to create more sophisticated products that would rake in higher revenues.



  94. How Can Gig Economy Become Sustainable?

    The growth in gig economy notwithstanding, there are several hurdles to its largescale adoption. Lack of regulation, zero

      to read | words

    published on Jun 03, 2021

    The growth in gig economy notwithstanding, there are several hurdles to its largescale adoption. Lack of regulation, zero benefits and absence of job security are some of the major challenges confronting this model. Other issues are payment delays and uncertainty about payment creating mental distress. For gig economy to become sustainable and get integrated with a country’s economy, it needs to be more structured.

    Gig economy has gained popularity in the past few years as youngsters and job seekers gravitate toward it, lured by the flexibility it offers. It also serves as a second source of income for many. Another factor that has contributed to its growth is the development and wide-scale adoption of supporting technological infrastructure. While the model is widely accepted in developed countries, emerging nations too are beginning to embrace it, reflected in the inclination of a large section of their population. Since COVID-19, gig has provided succor to many from unemployment, serving as a source of income. According to a research report, around 200 million people across the globe are a part of the gig economy workforce today.

    The immense growth in gig economy is attributed to the benefits it offers for both employers and employees. For employers, it provides access to cheap labor; for employees, the flexibility to choose projects, plan their schedules and be answerable only to themselves.

    The sustainability of the model, however, is questionable. Its integration with the main economy looks difficult due to the challenges it faces. Some of the main allegations against gig economy are:

    1. Exploitation of labor – Gig economy workers do not get the benefits a full-time employee is entitled to. Therefore, there are no health benefits, paid leaves, or pension. The company gets work done without incurring any extra cost on the workers. It can get away with paying the worker only a fraction of what it would have to otherwise pay to a full-time employee.
    2. Job security – Gig workers are temporary and hired as per the project. There is no guarantee of getting regular work or assurance that they will be hired regularly. The workers are under constant pressure to look for projects and new work to receive regular pay.
    3. Payment issue – Many gig workers face the problem of not being paid on time or at all. The payment structures are not well-defined for many of them, paving the way for exploitation by employers.
    4. Regulatory framework – Many countries still lack a strict regulatory framework for monitoring the wellbeing of gig workers. There are no defined guidelines for companies. In certain industries, dangerous work is outsourced to gig workers, saving companies the cost of medical or life insurance.
    5. Emotional state – Gig economy workers need personal discipline and resilience to get through. As jobs are temporary, the uncertainty can be harrowing. Furthermore, working independently or from remote locations can be a source of loneliness and push some to even depression. Lack of organizational support can also play havoc in the employee’s mind, affecting the quality of output.

    Gig economy is ideal for young professionals who are still deciding which career to pursue and can, therefore, afford to try out different gigs.

    Data shows gig jobs are on the rise globally. However, for gig economy to be sustainable, it needs to be given a structure by employers and law makers alike. Rules guaranteeing social protection to independent workers are required. Benefits such as medical insurance, safety at work, defined payment structure and job security, even if for a limited period, will go a long way in addressing the uncertainties associated with temporary employment. Only if the interests of gig economy workers are protected, will the model sustain and grow.



  95. Online Retail – Massive Shift Due to COVID-19

    The COVID-19 pandemic has accelerated expansion in online shopping, which was already on a steady growth trajectory. E-commerce

      to read | words

    published on May 17, 2021

    The COVID-19 pandemic has accelerated expansion in online shopping, which was already on a steady growth trajectory. E-commerce has become the only retail option for several consumers and even the technically shy customers are gravitating toward it. The boost has given an impetus to the Direct-to-Consumer business model and various FMCG brands are quickly adopting this model to evolve. Is this shift to online retail permanent or will customers prefer physical retail once the pandemic ends? It remains to be seen.

    Online shopping started as early as 1995 with the advent of Amazon and eBay. However, it gained popularity only after the emergence of faster Internet connectivity and smartphones. Online retail has been growing at a rapid pace; in 2019, global retail e-commerce sales were estimated to be USD 3.53 trillion. The outbreak of COVID-19 has proven to be a boon for online retail and has accelerated growth in this sector exponentially.

    Growth in retail is proving to be perennial. As per Euromonitor International, during 2020–25, 50% of absolute value growth (approximately USD 1.4 trillion) in the global retail sector will be through e-commerce platforms. As China and the US are the largest e-commerce markets, they will account for 55% of this value growth.

    Customers redefined the popular categories last year. Fashion and accessories ruled the roost earlier; currently, groceries and home improvement materials are in the lead. The biggest change brought about by the global pandemic includes pushing the consumers who were wary of shopping online toward e-commerce platforms.

    The massive behavioral shift was evident in the holiday season of November–December 2020. As per Digital Commerce 360, online retail generated an additional USD 41.54 billion globally in digital revenue during November–December 2020. Large format retailers such as Walmart, Kroger’s, and Target closed their low-performing stores and invested in digital capabilities, moving toward an omni-channel strategy. In 2020, 82.1% of Target Corporation's sales came from physical stores and the remaining 17.9% came via the online channel, which had just started developing. Walmart’s e-commerce sales grew 79% in the third quarter of 2020 due to the various online initiatives implemented by the company.

    Scope for Technology
    E-commerce enables customers to experience augmented reality (AR) and virtual reality (VR). Makeup companies are successfully applying AR and VR, where shoppers can check virtually how a certain lipstick shade looks on them. Moreover, furniture companies are allowing customers to see how a certain piece of furniture will appear in their homes.

    Cosmetic giant L'Oreal has been successfully using these technologies to increase sales. Its “Genius” app allows customers to click their pictures and apply L'Oreal products (such as nail polish and lipstick) virtually to see if the products would suit them. Similarly, IKEA has launched a catalogue app that allows customers to select items from the catalogue and place them in their rooms in real time.

    Such initiatives make shopping easier for customers, thereby redefining their e-commerce experience.

    Direct to Customer (DTC)
    Under the DTC model, a company can sell its products directly to consumers without involving any third-party retailers, wholesalers, or middlemen. Several FMCG companies are now exploring this channel aggressively; e-commerce and digital platforms could support this initiative.

    Companies are increasingly implementing the DTC e-commerce strategy. After adopting the strategy, FMCG company Nestle witnessed a spike in online sales, which stood at USD 8 billion (9% of total revenue in 2019); in only the first quarter of 2020, the company’s revenue from e-commerce stood at USD 5 billion (12% of total turnover). Similarly, Unilever posted a 2% jump in its revenue from e-commerce. This shift is not limited to FMCG companies. Sporting giant Adidas has announced a four-year plan to shift to the DTC model; the company aims to achieve 50% of its net sales from this model by 2025.

    Shopify, which helps small brands create online stores, saw a 62% increase in the launch of new online retail stores on its platform during March–April 2020. Several new retailers have adopted the DTC business model which enables them to create end-to-end customer journey. The brands are gathering insights on consumer behavior using smart technologies and using the real-time data for decision-making.

    Nonetheless, brands that have adopted the DTC model are facing a new set of challenges:

    • Operational difficulties – Brands need to optimize customers’ entire online buying journey which includes inventory management, timely delivery and return options, and customer communications. A glitch in any of these processes could lead to customer loss.
    • Increase in demand – Due to the surge in online shopping, brands have to constantly monitor their logistics to ensure that they can meet the increasing demand.
    • Growth – Once brands start to grow, they need to scale up and carry out the appropriate retail operations in all its markets. Developing functions such as logistics and shipping across several channels and locations, and real-time customer-facing support would require investing time, space, and money.

    Despite all these challenges, DTC is becoming the preferred business model as increasingly more brands are jumping on this bandwagon. However, companies with superior DTC models will be the ones to get the formula right. It is important to have a consumer-focused strategy, a smart and stable infrastructure, and agility to gain market share and become the new market leaders.

    Headwinds and Tailwinds for the E-commerce Industry

    Tailwinds

    • Technological evolution that has led to sophistication in the e-commerce infrastructure including smarter and secure digital payment solutions
    • Demographic changes that have supported e-commerce such as Internet penetration and increasing number of digital natives
    • Swifter delivery and improved logistics

    Headwinds

    • Various regulatory constraints in areas such as safety, quality, labelling, and transportation, to name a few
    • Customization of products for e-commerce sales such as packaging and SKUs

    Are Brands Ready for E-commerce Evolution?
    E-commerce was slowly making its way to become the preferred choice for many shoppers; COVID-19 accelerated the process.

    Surge in online shopping has immensely benefitted retailers such as Amazon. It is estimated that in 2020, Amazon’s share in the e-commerce market grew approximately 39%. Other players such as Target and Best Buy also witnessed considerable growth of more than 100% in e-commerce sales in 2020; growth was attributed to their robust curbside delivery options and effective local targeting.

    Big brands such as Walmart and Home Depot are already set to witness changes and have adopted the omnichannel (both online and offline) strategy.

    We will have to wait to see whether e-commerce will be the preferred choice even in the post-pandemic era. However, with the threat of the third wave looming, e-commerce is likely to continue to grow. Many brands and companies are changing their advertising strategies in line with consumer demands. Retailers also need to ramp up their online presence and ease-of-shopping features to retain customers, who are shifting to the online mode of shopping.



  96. Sustainability in Procurement – Paints and Coating Industry

    Sustainability has become a key goal of companies across industries. The paint and coating industry is also taking

      to read | words

    published on May 13, 2021

    Sustainability has become a key goal of companies across industries. The paint and coating industry is also taking measures to embed sustainability within its value chain. Companies in this industry are adopting bio-degradable and renewable sources of raw materials to restrict carbon footprint. However, they should be consistent in their efforts to make a reasonably positive impact.

    Sustainability initiatives are being adopted across industries due to strict government regulations, coupled with increasing consumer awareness regarding environmental degradation. The paint and coating (P&C) industry, which accounts for a high share of air pollution, is also adopting sustainability measures in its various functions, including procurement.

    P&C manufacturing operations can increase air and water pollution. Chemicals used in paints are the main contributors of smog, which can cause respiratory issues. Furthermore, pigment grinding and milling create dust, which contains toxic air pollutants. While regulations exist to limit emissions from P&C manufacturing operations, non-compliant companies can be responsible for increasing air and water pollution.

    The industry can reduce its carbon footprint by following sustainable procurement practices and becoming increasingly environment conscious.

    Alternative raw materials
    Many non-degradable materials are used in coating mixtures. These can be replaced with non-hazardous materials. In fact, the adoption of bio-based monomers and polymers has grown recently, owing to increasing customer consciousness. Moreover, companies are putting efforts to reformulate and primarily produce environment-friendly solid coatings, powder coatings, waterborne coatings, and even ultraviolet light-cured coatings.

    The main raw materials used in the coating industry are sourced from petrochemical, plastics, and chemical industries. Suppliers of these materials recently started applying novel chemistry to improve sustainability. Some examples are:

    • An innovative additive specifically designed for internal decorative wood coatings that blocks the release of formaldehyde through a chemical reaction
    • Replacing acrylic grafting with alkyd grafting to modify the morphology of coatings and avoid the need of both solvents and surfactants
    • Partial replacements for titanium dioxide, such as precomposition polymer technologies and calcium carbonate

    Bio-renewable technologies entered the market years ago, but received prominence recently, as sustainability objectives became a part of the overall goals in the P&C industry. Many prestigious companies in this industry are committing to procure more renewable raw materials. Bio-renewables not only aid in reducing the carbon footprint of downstream products, but also widen the diversity of supply sources. Therefore, bio-renewable alternatives of oil and its downstream products are commercially viable.

    Research suggests that some bio-renewables have the potential to improve the properties of paints and coatings, as these have more complex structures and are better-suited for certain manufacturing processes.

    The new world
    Changes in the P&C industry are evident from the fact that currently, an array of certified environmentally preferable paints and coatings are available, which have much lower levels of toxicity. Moreover, these products have recyclable content and are price competitive.

    In developed countries, the use of sustainable paints and coatings is gaining popularity, owing to their many benefits:

    • Low-toxicity paints and coatings reduce pollution and are healthy for everyone.
    • The increase in demand for certified environment-friendly paints and coatings has encouraged the industry to develop such products. Latex paints and primers have been the biggest gainers in this respect.
    • Various third-party certifications are currently available to ensure high quality, along with public health and worker safety.
    • With the help of technology, recycled-content paints can be developed in diverse shades, and can also be customized.
    • Some of these paints are not only environmentally friendly, but also more cost-effective than conventional paints.
    • With the increase in the purchase of locally sourced recycled paints, municipalities can lower their paint disposal costs, as well as create new jobs in the region.
    • Environment-friendly paints can help new buildings get “green” building credits from the Leadership in Energy and Environmental Design (LEED).

    Way forward
    The P&C industry can follow multiple routes to increase their sustainability quotient.

    • Companies can promote raw material technology development by partnering with downstream vendors.
    • The industry can focus its efforts toward exploring renewable sources of raw materials. Apart from being sustainable, these materials have the potential to enhance the properties of coatings.
    • Companies can monitor the environmental impact of coated products, as well as suggest formulations at regular intervals.
    • Companies should establish and maintain an in-house mechanism for driving sustainable development among vendors across the globe.

    Companies in the P&C industry need to discover practical ways of tracking sustainable processes and developments across their value chain. They also need to apply existing measures rigorously to ensure the complete adoption of sustainable practices. While incorporating sustainability is a long-drawn process, every step counts. The industry has already started treading in the right path and needs to continue to promote sustainability.



  97. Gig Economy – An Emerging Concept

    Gig economy refers to a new work environment adopted by young professionals. While the concept has many takers

      to read | words

    published on May 10, 2021

    Gig economy refers to a new work environment adopted by young professionals. While the concept has many takers in developed countries, it is being encouraged in emerging economies as they look to improve their employment rate and economic value. Certain preconditions need to be met to ensure the success of gigs as a source of income. However, the outlook for this business model is positive and it is soon expected to be a big contributor to the global economy.

    Gig economy, an emerging concept, has taken the world by storm and is redefining self-employment across the globe. It is called ‘gig’, which typically means undertaking small projects for a short period of time and being paid accordingly. Millions of people across the globe are a part of the gig economy workforce today. Gig economy has also caught the fancy of youngsters in emerging economies, and many are leaving the confines of traditional organizational setups to work independently. Technological platforms such as Uber, Swiggy and Zomato are only facilitating this surge.

    Types of professions
    Gig economy covers:

    • Lower income jobs – Deliveries, ridesharing, microtasks, care and wellness
    • Mid-income jobs – Freelancers, independent contractors
    • High-income jobs – Consultants, professionals such as doctors or lawyers

    Countries across the globe are encouraging this economy, soon becoming a norm in many sectors.

    Developed economies
    Developed economies saw the writing on the wall much earlier and have accordingly supported it. Here, there are more roles in the high-income group as compared to emerging economies due to the basic demographic difference. The US and the UK top the list of individuals partaking in gig economy. It is still evolving in Europe, where people are taking time to get accustomed to this form of working due to hurdles such as lack of job security associated with it.

    Emerging economies
    According to a recent report by a research agency, developing countries such as the Philippines, Pakistan, India and Bangladesh account for more than half of the global gig economy. It is finding fertile ground in these countries as gig-based economy has the potential to create incremental economic value and more opportunities for livelihood. There are many other advantages as well:

    • Laborers can continue to get employment without being an added cost to the employer.
    • If the employer is not keen to have full-time workers, this does not any major effect on employment or economic recovery, which can continue.
    • The scope for participation in workforce and employment opportunities expand to include women and students looking for extra income.
    • Efficiency and productiveness increase as there is a reduction in idle hours.

    Enablers of gig economy
    There are certain preconditions for gig economy to do well. They are:

    • Technological infrastructure – Technological platforms have helped in the rapid growth of gig economy and continue to be the top-most criterion for it to thrive. Other underlying factors such as fast net connectivity, cloud computing, and GPS networks are also important facilitators.
    • Digital legibility – This refers to whether the services can be offered online. While some tasks have high digital legibility, others may be challenging. Hence, this is a key factor that determines if the suggested business can become a gig.
    • Social aspects – Largescale availability of smartphones and internet connectivity are a must. This is because both work and payment are online.
    • Existing markets – The current market should be favorable for gig economy. Customers are more open and responsive to online services and equally well-versed in technology to avail of these.

    Some global facts about gig economy

    • As per a business publication, in 2018, freelancers in the US contributed USD1.28 trillion to its economy. The current rate of growth suggests that by 2027, more than half of the US’s workforce would be a part of the gig economy.
    • A UK publication reports that in 2019, the UK had 4.7 million workers participating in the gig economy.
    • According to an Indian business publication, the gig economy could generate 90 million jobs and add up to 1.25% to India's GDP in the next 8–10 years.
    • A Malaysian publication cited that by 2018, about 4 million people of the workforce in Malaysia were freelancers, and the number continues to grow.

    Outlook
    Gig as a source of income is growing massively across the globe. More and more employees are looking for flexible work options than those in a conventional organizational setup. The lack of job security and absence of additional perks such as medical benefits notwithstanding, having more than one profession is enticing for new-age workers. Amid the ongoing pandemic, gig economy is proving to be a savior for many out-of-work employees and, therefore, helping in keeping the unemployment rate low. With the business model growing, more regulations are coming up to regulate the workforce, while unions are also being established. Growth brings change, and the rise of gig as a means of livelihood will help in the evolution of the professional life for many. Gig economy is a boon for both workers and corporations and may soon change the course of the conventional work environment.



  98. Sustainability in Procurement – Consumer Goods Industry

    Consumer goods – especially FMCG – is a growing market due to the booming population. Unfortunately, their manufacture, packaging, and dis

      to read | words

    published on May 05, 2021

    Consumer goods – especially FMCG – is a growing market due to the booming population. Unfortunately, their manufacture, packaging, and disposability are significant contributors to environmental degradation. As consumer awareness of environment protection increases, consumer goods companies now find it imperative to build in sustainability in their value chain and procurement practices. Many companies have already started moving in this direction while others will have to soon follow.

    The fast-moving consumer goods (FMCG) industry mainly includes makers of foods, beverages, and personal care products. FMCG remains one of the fastest growing markets worldwide; according to a recent McKinsey report, 1.8 billion people are expected to join the global consuming class by 2025. However, the industry is also accused of being a major polluter, right from its manufacturing processes to its packaging.

    With growing consumer awareness about environmental conservation, companies must now not only focus on product and service quality but also achieve sustainability goals. Based on the recent massive change in consumer behavior, any brand that follows sustainable practices and processes can now command a premium. This would be the incentive FMCG companies need to expend more efforts to create a less polluting, eco-friendly supply chain.

    Consumer goods companies would need to revamp their entire supply chain, starting from the bottom. Companies would have to rethink raw material options, replacing synthetics with natural materials. They would also have to employ renewable resources and slow down on or stop using non-renewable resources or fossil fuels. The packaging of products would also change. All plastic packaging and non-degradable materials should be replaced with recycled, recyclable, or biodegradable material.

    Brands such as Unilever have already started altering their value chain to ensure responsible, sustainable sourcing practices. Unilever has committed to become “carbon-positive” by 2030; it intends to eliminate the use of fossil fuels from operations and generate more renewable energy.

    Another FMCG giant, Nestlé, is also moving towards responsible sourcing, doing its bit to save the planet. The company revisited and improved its operating models, implemented sustainable sourcing practices, and ensured these practices are embedded across its supplier ecosystem.

    Creating a responsible supply chain requires efforts, starting at the top management level. There are many obstacles that companies face in this attempt:

    • Pricing difference between sustainable and non-sustainable options
    • Commercial-scale availability of chosen options
    • Vendors who can supply these alternatives
    • Steps adopted by competitors to reach this goal of sustainability

    Issues in developing a responsible supply chain can be effectively resolved if the company has access to an expert resource that can extract the relevant information about it. Research can uncover insights and details that can help companies understand the complexity of their supply chain and make the necessary changes to bring in sustainability. Research can also provide data on the competition’s moves to embrace environment-friendly practices. Last, research can also highlight the changes taking place in government regulations worldwide, which can affect a company’s supply chain. Hence, if the company acquires timely, accurate data, it can make the right decisions and the required adjustments to build a strong, sustainable supply chain.



  99. Value-based Healthcare: Redefining Access and Reimbursement

    Healthcare is becoming increasingly expensive and complex across the globe, with the development of new-age therapies, treatments, and

      to read | words

    published on May 04, 2021

    Healthcare is becoming increasingly expensive and complex across the globe, with the development of new-age therapies, treatments, and drugs. Among the emerging models of healthcare, value-based healthcare is gradually gaining acceptance worldwide. A proactive, efficient, and preventive health model, it is based on an integrated approach of managing wellness instead of just disease and illness. It also includes use of available technologies and data to enhance the treatment for patients. Value-based healthcare models are beneficial for both caregivers and patients.

    The healthcare system is undergoing a transformation as emerging innovations such as cell and gene therapies play an increasing role in curing rare diseases. Furthermore, the industry is witnessing a paradigm shift as drug development becomes increasingly patient-centric and adoption of new technologies like digital therapeutics and artificial intelligence (AI) is growing. While the business model for healthcare reimbursement has always been volume-based, it is now shifting to a more value-based structure. By definition, value-based healthcare is a medical care system in which caregivers (hospitals, medical centres and physicians) are compensated based on the patient’s recovery and health outcomes. Therefore, the reimbursement is made as per the health outcome as opposed to the current system of paying for the services.

    While the concept is fast gaining acceptance, its adoption is limited as of now. Developed economies like Sweden and the UK are the frontrunners in adopting this model, but other countries are still working in this direction. Among emerging countries, Turkey and Columbia are working toward aligning their healthcare systems in line with this model.

    It would be beneficial for countries to adopt this model swiftly. First and foremost, it will help them control the spiralling cost of healthcare. Second, as value-based healthcare is preventive in nature, the overall health of the society will become better. Both these factors will help governments reduce their budgets for healthcare.

    Business models:

    Healthcare systems

    1. Bundled payments – Under this business model, the patient pays a single amount for the entire set of services collectively, including all expenses. The payer is aware of the final amount before the treatment begins. There is a chance of loss at the provider’s end if complications occur later in a case, but overall, it is a smarter, more hassle-free mode of payment.
    2. Capitation mode – Under it, a specific cost is fixed per patient for a pre-defined set of medical services. Payment is usually per month. It is an ideal scenario for providers if the cost of service provided is lower than the capped rate. However, in case of chronic or high-risk diseases, providers may end up bearing extra cost.
    3. Pay for performance – In this model, a financial incentive is attached to the performance. Hence, if a provider does well and exceeds a set target, he is rewarded; if he misses, he is penalised.
    4. Patient-centred medical homes – This model has been designed for patients with chronic diseases to save them from multiple visits and hospital readmissions. It is a primary care center with a team of professional doctors, medical assistants, technicians and pharmacists. Providers usually charge fees per member, per month.
    5. Shared risk – In this system, payers and providers agree on a budget. Providers can either have the advantage of sharing cost savings or the risk of sharing the excess costs of care delivery. Third-party insurers can be involved to share the risk.
    6. Shared savings – Under this model, an agreement is drawn between payer and provider that includes estimated medical costs, patient attribution, and service provision. Bills submitted are analysed and reviewed by the payer and provider and savings if any are identified. If the bills are less than the target set by the payer, the provider also gains a percentage of the savings.

    Pharmaceuticals
    The value-based care model is applicable for pharmaceuticals as well. The two upcoming business models are:

    Outcome-based contracting – Under it, pharmaceutical manufacturers and payers sign a risk-sharing agreement in which outcomes in actual patient populations define drug reimbursement. Patient data is analysed to determine whether cost negotiation is necessary. If the outcomes of the drug have been largely unfavourable, the pharmaceutical manufacturer must refund the buyer. For high-quality specific medicines, the product can be present in hospitals for usage but payment is done only once it exhibits the expected results. The product could be sold at an MRP and a premium can be received once outcomes data proves efficacy. Outcome-based contracting is beneficial in case of experimental drugs as it helps save costs. For example, Cigna and Aetna Inc. signed an agreement with Novartis for a performance-based price for its heart failure drug, Entresto. UPMC Health Plan and AstraZeneca have launched a value-based pharmaceutical contract for Brillinta.

    Indication-based management – This model is ideal for specialty treatments like oncology. Instead of negotiating for a single drug, the entire series of medicines to be given is finalised based on the indication for which it is used. This can help patients in getting more precise medicines. Moreover, competition from similar drugs helps in stabilizing the cost.

    The increasing role of real-world evidence in drug pricing and health technology assessments will ensure that drugs are priced as per the value they give to the patient pool, and pave the way for personalised care.

    Advantages of value-based healthcare for stakeholders

    Insurance companies

    • Limited risk – All business models of value-based care are beneficial for medical insurance companies as the risk is reduced and limited. This can help them design better premium policies and plans for customers.

    Patients

    • Less spending – This business model centers on quick recovery and preventive measures. Hence, the number of visits to doctors, medical tests, and procedures is limited. Expenditure on prescription medicine is also far less.
    • Better efficiency – The quality of care given as well as patient engagement increases when the focus of healthcare is on value rather than volume.
    • Healthy society – As value-based care in acute settings helps in preventing chronic diseases, it bodes well for the health of the society at large. This also helps the government reduce the allocation for public healthcare.

    Caregivers

    • Coordinated care – Value-based care facilitates focused attention and better treatment. The business model entails providing incentives and use of improved technologies that enable providers to coordinate care.

    Society

    • Cost control and reduced risk – As the risk is spread across a larger patient population, it is reduced. Since there are fewer claims in a healthy population, the drain of payers’ premium and investments is low. Bundling payments helps in covering the complete care cycle and increases efficiency.

    Outlook

    There are a few hurdles to largescale adoption of value-based healthcare, such as definition of value, data to get accurate measure of value, change in mindset toward patient-centric approach and lack of leadership to drive the initiative. Due to the rapid pace of innovation in healthcare and introduction of modalities like gene therapy and digital therapeutics, the cost has spiralled up. This is the right time to adopt value-based care model. With this model in place, reimbursements will be directly linked to health outcomes rather than treatment volumes. This will act as an incentive for hospitals, caregivers, and pharmaceutical companies to improve patient or health system outcomes with the treatments they develop. Value-based healthcare will also include engaging more often in supporting patients and health systems to improve outcomes.



  100. Sustainable Procurement – Moving Toward A Cleaner Future

    Years of environmental degradation and pollution have finally brought about the dreaded climate change, the effects of which

      to read | words

    published on Apr 26, 2021

    Years of environmental degradation and pollution have finally brought about the dreaded climate change, the effects of which are evident in the rising global temperature. Is there a way to maintain the delicate ecological balance and stop further harm to our planet?

    The industrial revolution was an important chapter in global history. While it brought about greater employment opportunities and better lifestyles, it also marked the beginning of rapid environmental degradation. Industries soon became the main polluters on the planet. Air, water, and land pollution rose exponentially due to waste disposal, carbon emissions, and the rampant usage of chemicals.

    Today, most products we use contain harmful chemicals and they come packaged in plastic too. Thus, marine life suffers, air pollution increases exponentially, and landfills choke on mountains of non-degradable waste. Individuals and companies are now waking up to the looming environmental crisis and are adopting sustainability measures. Governments worldwide have also enacted stricter environmental laws to ensure a ‘green’ way of living, going forward.

    For corporations, this environmental awareness means changing the way they have been operating. They would need to revamp every process from the source right up to the finished product. To this end, they need to build in sustainability measures across their value chain and processes. One such main area of focus is procurement.

    Sustainable procurement involves buying products, raw materials, and services that have the lowest environmental impact and positive social results. The company must look beyond economic parameters and consider factors such as the following:

    • The quality, availability, and functionality of the materials they procure
    • The lifecycle of their products
    • Environmental aspects such as carbon emissions, plastic pollution, or excessive water consumption involved in the use of such a product
    • Social aspects such as inequality in the distribution of resources, labor conditions involved in its production, and the exploitation, if any, of human rights
    • The recyclability factor of the material/product

    Raw material sourcing
    Manufacturing industries need raw materials to begin their process. Companies that have embraced sustainable procurement are now seeking renewable or natural alternatives to meet their requirements. An example of this consciousness can be seen in the packaging industry, which until now was using plastic derived from crude oil, but has recently adopted environment-friendly materials. Not only should ingredients be derived from renewable sources, but the end-product itself should not add to overall pollution. Many companies in the packaging industry are currently exploring innovative solutions such as bio-plastic.

    Prestigious brands such as Unilever have successfully integrated sustainability in their procurement process. They ensure their raw materials are sourced thus that these do not pressure the land, the resource is renewable, and all of it – from base materials to the end product – is recyclable.

    The trend of building sustainability into the procurement process is gaining acceptance and rapid adoption. However, the journey to achieving this goal completely is a long one.

    Companies need to consider factors such as:

    • The pricing differential between sustainable and non-sustainable options
    • Commercial-scale availability of the chosen options
    • Vendors who can supply these alternatives
    • Steps adopted by competitors to reach this goal of sustainability

    Companies must do their due diligence and research while strategizing how to embed sustainability in their procurement process. Information on the factors mentioned can help them take the right decisions and steps. It is always ideal to have an expert undertake research on such aspects. The expert can uncover insights that may be missed by someone less experienced; they could thus help companies reach the best decision for their mode of operations.



  101. Can an Export Promotion Council Become a Catalyst for the Economy?

    An export promotion council (EPC) is established with the objective of boosting a country’s presence in foreign m

      to read | words

    published on Apr 22, 2021

    An export promotion council (EPC) is established with the objective of boosting a country’s presence in foreign markets and consequently strengthening its economy. EPCs of some emerging countries are unable to meet these expectations due to various reasons. While there is no dearth of local wares that would find a foreign market, certain inefficiencies hold them back. Can EPCs across the globe play a pivotal role in enhancing a country’s exports?

    EPCs are government agencies designated to help countries establish a strong export market. While countries such as the US and the UK have powerful EPCs, those in emerging countries are struggling with various obstacles, including:

    • Insufficient foreign market research that leads to the wrong target audience being invited to certain trade fairs and exhibitions, resulting in wastage of time, efforts, and investments
    • Exporters with diverse offerings being forced to sign up with multiples EPCs in some countries, thus increasing their costs
    • Strict eligibility criteria in certain countries for onboarding micro and small enterprises, thereby depriving them of government support to increase their market share
    • Low membership in some countries owing to enterprises being unaware of the existence of EPCs in their region or industry

    EPCs primarily face financial hurdles, as they lack external funding. Due to this, they are unable to take up many initiatives that could help increase the presence of exporters. Their main source of income is membership fees. However, this can only support their administrative functioning and undertaking of small initiatives. While EPCs receive grants for exhibitions or trade fairs, they do not receive government support in many countries. Therefore, in small countries, export remains an area with abundant unexplored potential.

    EPCs have the potential to become a catalyst to increase exports, but this prospect has not been explored yet. EPCs can contribute in the following ways:

    1. Industry research – EPCs can seek expert guidance for getting information on market dynamics and assisting in identifying opportunity areas for their members/commodities in question. Industry experts can share pertinent information on unexplored markets, which can help exporters tailor the products as per requirements. Furthermore, EPCs can avail the services of a research agency to understand the best technologies that can help their exporters and liaison with governments to procure these technologies for the exporter base. Information on various relevant trade exhibitions would also be of huge help to exporters.
    2. Understanding needs of members – EPCs can understand the needs and demands of their members by conducting satisfaction surveys. With the help of the scores from the surveys, EPCs can understand the services desired by exporters to help them increase their presence in foreign markets, and accordingly serve them better. Surveys can also help EPCs get an idea on the hurdles faced by exporters, along with areas where they need support.

    EPCs can provide strong assistance to their members, and hence, they need to act proactively. EPCs cannot remain passive, especially in developing countries. Instead, they must actively participate in helping members understand foreign markets, find new opportunities, and help them diversify their offerings. Through the initiatives detailed above, EPCs can become catalysts for economies to grow and expand their export base.



  102. Alternative Investment Funds in India - A Comparison with the West

    India’s alternative investment space is an expanding domain, where investors are investing significantly for ownership and leveraging a

      to read | words

    published on Feb 19, 2021

    India’s alternative investment space is an expanding domain, where investors are investing significantly for ownership and leveraging a higher risk/reward potential. The Securities Exchange Board of India (SEBI) introduced alternative investment funds (AIFs) in 2012, primarily to boost asset classes such as venture capital, private equity, angel, and real estate funds. These funds are mainly intended for investments from HNIs and institutional investors. This article ponders upon the current AIF scenario in India and draws a comparison between the AIF industry in India and in the West (the US and Europe), and how the latter has benefitted from retail participation in the AIF sector.

    Alternative investments are financial assets that differ from traditional investment categories such as equities and debt. Alternative investment funds (AIFs) are privately pooled investment vehicles that raise funds through private placements. The collected funds are then invested as per the defined investment policies. Investment avenues include venture capital, private equity, and real estate, among others.

    Unlike generic mutual funds (MFs), AIFs are not allowed to invest in equity and debt. Moreover, AIFs in India pool investments only from private, sophisticated investors that can invest large sums.

    AIFs Industry Size in India
    Investments raised by AIFs reached around USD 27.0 Bn by September 2020, posting a 74.4% CAGR between 2014-20. During this period, commitments for investments reached USD 55.5 Bn (65.5% CAGR) and investments by AIFs in alternative assets reached USD 22.7 Bn (75.2% CAGR).

    Cumulative Investment Figures (Figures in USD Bn)

    *data till September 2020
    Source: SEBI

    A cyclic distress of equity and bonds during economic slowdowns has led investors to find new assets to invest in such as alternative classes resulting in increased uptake of alternative investments.

    However, AIFs in India are not allowed to make any invitations to public to subscribe to their securities. They are held as privately pooled investment vehicles and must raise funds through private placements only. Although they can launch several schemes under one fund, the scheme must have a minimum corpus (total asset under management) of USD 2.7 Mn; for angel funds the corpus is USD 1.4 Mn.

    Minimum Investment Value for investors who want to invest in AIFs is USD 140,000 (USD 34,000 in angel funds) and maximum 1,000 investors can invest in one fund.

    AIFs Industry Size in the US
    AIF market reached USD 10.3 Tn in 2019 in the US (vis-à-vis USD 23.5 Bn in India). The market is further anticipated to reach USD 14.0 Tn by mid-2023, expanding at a CAGR of 8.0%. The key factor driving the market in the US is increased digitalization which has facilitated private networks to help investors and fund managers to seamlessly monitor their portfolio.

    Sector-wise, private equity funds in the US are likely to overtake hedge funds and become the largest alternative asset class in the country.

    US allows offering of AIFs as alternative mutual funds which are regulated by SEC and can pool funds publicly. This enables retail participation in the sector which drives large volumes of investments. Also, these mutual funds have higher transparency and are easily accessible due to comparatively low minimum investment amounts.

    AIFs Industry Size in Europe
    AIF investments were valued at USD 7.0 Tn in the beginning of 2019. The market grew 11% from the previous year, mainly following the launch of new AIFs in 2018. In Europe, professional investors own most of the share of AIFs, despite that retail investors’ share is significant at 16%. The AIFs in Europe predominantly invest in the European Economic Area (EEA) and across a broad range of asset classes.

    Sector-wise, fund-of-funds account for maximum share followed by real estate funds, hedge funds, and private equity funds.

    Europe’s AIF industry gained traction as it offers lower transaction costs (compared to traditional funds), market volatility mitigation, and the ability to provide high incomes. Also, retail participation along with institutional investors help bring up the volume of AUM.

    Comparison Between AIFs Industry in India vs. the West

    Suggested Reforms and Conclusion

    1. Increasing retail participation
      SEBI can consider reducing the minimum investment amount in accordance with other investment vehicles such as mutual funds to increase retail participation and increase investment in AIF industry.

      AIFs have historically given higher returns than traditional equity in the US. Increasing retail participation could generate additional avenue for retailers to earn higher-than-equity returns.

    2. Increasing Maximum Number of investors
      SEBI can also ease the limit on maximum number of investors that can participate in a scheme. This will help in generation of higher AUMs under each scheme, resulting in greater investment amounts in diverse sectors such as private equity, venture capital, and real estate.

    3. Increasing transparency
      The SEBI shall introduce regulations to increase the transparency of operations of AIFs, especially on asset classes and areas that can help attract investors. This would assist investors to make better decisions regarding their money and may gain the confidence of both institutional and individual investors.

    4. Providing Tax Advantages
      The SEBI could provide tax advantages or tax deductions to investors in a bid to scale up investment in AIFs. This would aid in diversifying investments in multiple asset classes and bolstering multiple financial areas.

    In conclusion, India’s AIF industry has a huge potential as it has grown exponentially over the past few years, higher than the traditional investment industry. However, growth is stunted due to due to limited investor participation (only HNWIs and institutional investors) and other limiting factors. Therefore, SEBI shall make provisions to encourage retail participation and help the AIF industry generate volume.



  103. The Green Era and Sustainable Fashion

    Fast fashion debuted on the world scene barely two decades ago, but soon made inroads into wardrobes everywhere.

      to read | words

    published on Feb 15, 2021

    Fast fashion debuted on the world scene barely two decades ago, but soon made inroads into wardrobes everywhere. With various brands jumping on the bandwagon, the trend caught on quickly. However, its negative impact on the environment and spiraling labor exploitation issues have tarnished its shine. Brands are now looking at sustainable, ethical practices to remain the top choice of new-age, environmentally aware consumers.

    Entry of fast fashion
    Simply put, fast fashion is economical clothing produced swiftly by mass-market retailers to keep up with the latest trends. Fast-fashion brands have swamped the style bastion over the past few decades, registering voluminous sales. This accelerated fashion business model offers new brands and everything from party wear to work wear at extremely affordable rates. It soon caught the fancy of fashion consumers. According to the publication Vox, an international survey suggests that almost all retail consumers globally will have at least one fast-fashion item in their closet. Among these, Zara and H&M have emerged the most preferred brands. In fact, Zara, recognized as the first successful fast-fashion business model worldwide, has a design-to-retail cycle of merely 5 weeks and launches over 20 collections annually.

    The rise of fast fashion could also be attributed to a shift in consumer behavior. Growing consumerism and rising interest in new fashion trends encouraged the emergence of ‘fast fashion’. It is estimated that clothing production has doubled globally over the past 15 years.

    Negative effects come to light...
    Fast fashion mooted the trend of ‘use and throw’ among consumers, which consulting firm McKinsey named the ‘throwaway culture’. As fast-fashion items are cheap, users use these only once or twice before discarding them. Globally, the average number of times an item of clothing is worn before being discarded decreased by 36% in the past 15 years. Online retail is even speedier as it allows for the launch of trendy designs and new capsule collections almost weekly.

    The trend has led to throwaway garments becoming one of the largest polluters on the planet. In 2015, textile production contributed 1.2 billion tons of greenhouse gas emissions (GHGs). This was more than the combined emissions of international flights and maritime shipping that year. If clothes continue to be produced this rapidly, the fashion industry will be responsible for 25% of the world’s carbon budget by 2050.

    Another downside to fast fashion is the difficulty in reprocessing synthetic, viscose, or animal-product items (such as leather accessories), which are favored materials for fast fashion. This is why barely 1% of the material used for clothing globally can be recycled into new clothes, thus resulting in massive wastage.

    Clothing production utilizes huge amounts of water, thus causing its shortage as well as increasing pollution. Emerging economies such as India, China, and Pakistan – which have huge clothing industries – are likely to face severe water scarcity soon. Furthermore, an estimated 700,000 fibers of synthetic material are released in a single wash of some clothes, which results in 0.5 million tons of microfibers reaching the ocean every year.

    Fast fashion is also a consistent factor in the exploitation of labor. Countries such as the Philippines, China, and Vietnam have clothing factories that employ laborers to work in deplorable conditions. These countries have also faced increased allegations of forced labor and child labor. Less than 2% of these factory workers are paid a minimum wage, but are also compelled to work long hours. In Bangladesh, clothing workers earn barely USD 96 per month, which is three times less than the amount specified by the government’s wage board to enable a modest lifestyle.

    ...kickstarting a revolution
    The need for change is critical and the solution to the problems mentioned is a switch to sustainable, ethically created fashion. Ethical fashion – an approach to sourcing, manufacturing, and designing clothes that benefit the fashion industry as well as society – has a minimal impact on the environment. This revolution is now being supported by consumers as well as fashion brands.

    External revolution: Converted consumers
    The consumer of today is conscious about environmental repercussions, especially in light of the recent global pandemic. A survey conducted in 2015 by research firm Nielsen states that 66% of consumers worldwide are willing to pay a premium for sustainable products or services from companies that advocate and follow through on social and environmental responsibility.

    Customers are thus making efforts to reduce their carbon footprint in all products they use. This is true for clothing as well. While fast fashion is still growing, a study conducted in 2018 also revealed that the number of consumers purchasing clothing once a month has reduced while that of those doing so over a longer time (every alternate month or less) has risen.

    Internal revolution: Responsible textile industry, fashion brands
    Clothing companies and fashion brands busy in the fast-fashion race did not take their environmental obligations seriously until a few years ago. Luxury brands such as Louis Vuitton and Urban Outfitters have been known to burn tons of unsold inventory, which pollutes the air and is an immense waste of the resources that went into producing the products.

    Leading fashion brands have now realized the need to become more accountable for their actions and their impact on the environment. An example of this new consciousness would be H&M; the brand has become more aware of the origin of the materials it uses. It also deploys renewable power at its outlets and has expanded its clothing recycling program, all in a bid to reduce pollution. Similarly, fashion brand Zara’s parent company, Inditex, has pledged to use only sustainable, organic, or recycled material in all its clothing by 2025. As frontrunners of the fast-fashion industry worldwide, these companies are taking these steps to limit the damage they cause the environment.

    Environment-friendly initiatives like recycling clothes are now gaining popularity; brands like Primark, M&S, and H&M have launched drives to buy back their clothing items from consumers. Governments are also encouraging such moves. Governments in Europe have introduced extended producer-responsibility schemes for household and commercial textiles and clothing; these steps hold companies accountable for their waste and make them cover the expenses incurred on recovery and recycling.

    Secondhand clothing: An innovative solution
    According to a TredUp 2020 Resale report, the global secondhand clothing market is soaring and is estimated to triple in value over the next decade, from USD 28 billion in 2019 to USD 80 billion in 2029. In 2019, the US secondhand clothing market grew 21 times faster than the conventional apparel retail market.

    In fact, experts predict that while fast fashion would continue to grow at a 20% rate in the next decade, secondhand fashion could skyrocket to 185% during the period. Trading sites such as Depop and Thredup, which are frequented by youngsters, are already popularizing the trends of resold and upcycled clothing. Other digital platforms such as Tradesy and Poshmark facilitate the exchange of everyday clothing between like-minded people.

    Secondhand clothing has, until now, been perceived as worn-out, tainted goods, mainly the choice of bargain hunters. This perspective has undergone a sea change as consumers now consider secondhand clothing as good as new and, at times, even better than new clothing – but available at affordable prices. The luxury clothing segment is also exploring the potential of this market, with retailers such as The RealReal or Vestiaire Collective creating a digital marketplace for true luxury brands. People can buy and sell designer labels such as Chanel, Louis Vuitton, and Hermès on these online platforms.

    Secondhand clothing extends the lifecycle of clothing and increases the number of its owners. Moreover, branded clothing is usually high-quality, unlike its less-expensive fast-fashion counterparts. Hence, it is a win-win situation for consumers as well as the environment.

    Outlook
    It is now essential that every industry develops and adopts sustainable solutions to reduce its environmental impact. Consumers also support brands that adopt environment-friendly practices and are ethical in their dealings. Brands such as Next, Ted Baker, and Asos are now committed to reducing wastage at their facilities. They are seeking solutions to mitigate issues like clothes clogging landfills, wastage of water, and the expanding carbon footprint. While sustainable fashion trends are gaining pace in developed countries, emerging markets still require time to adapt to the new wave.

    Luxury brands as well as well-established fashion houses are attempting to not only inculcate more ethical, sustainable practices, but are also popularizing the concept of secondhand clothing. Hence, the global fashion industry would have to pitch in and become more responsible, environmentally as well as socially.



  104. Healthy Fast Food: Will This be a Sustainable Trend?

    Fast food has always been associated with terms such as “unhealthy”, “fat-laden”, and “cholesterol booster”. Recently, these concepts are falling

      to read | words

    published on Feb 01, 2021

    Fast food has always been associated with terms such as “unhealthy”, “fat-laden”, and “cholesterol booster”. Recently, these concepts are fallings away as a new trend of healthy fast food emerges, catching the fancy of millennials and Gen Z. Rising awareness about consuming healthy meals and promoting an environment-friendly lifestyle are factors prompting a change in consumer preferences. The demand for vegetarian, organic, and vegan options is on the rise; the global pandemic also played a key role in popularizing healthy consumption habits. The fast-food industry is now ready to cash in on this emerging trend.

    Fast food is defined as food that is ready to eat and can be served to customers within minutes. A popular concept in the US, this usually includes options such as burgers, sandwiches, pizzas, pasta, and some other Asian and Latin foods. According to an Allied Market Research report, in 2019, the global fast-food market was estimated to be worth USD 647 billion. This market is expected to expand at a CAGR of over 4.5% to USD 931 billion by 2027. The platforms serving fast food to clients include quick service restaurants (QSRs), street vendors, and online food delivery services.

    As per Statista, fast food has a large market in the US; it generated revenue of about USD 240 billion in 2020. Fast food gained popularity as it was a quick option for working individuals pressed for time. It also caught on quickly among teens and tweens, who sought taste first, nutrition later.

    The unhealthy side of fast food
    In the US, fast food is considered a leading reason for the high levels of obesity seen among youngsters. Obesity levels rose from 19.4% in 1997 to 31.3% in 2018. This was prevalent especially among adults aged 20 and over, which is a troubling pattern.

    Fast food is heavily processed, high in calories, but low in nutrients. Also called “junk food”, it usually contains high levels of added sugar and salt and the star dietary villain, saturated or trans-fat. Evidence suggests that such food is quite addictive when regularly consumed. The long-term consumption of junk food can cause irreversible damage to the human body. Several studies suggest that regular consumption of fast food could result in digestive issues, emotional distress, heart disease and stroke, type 2 diabetes, and even cancer. Yet, its popularity continued unthreatened until now.

    Recently, people worldwide have become more conscious about healthy consumption, thus prompting significant changes in customer preferences. As per an industry report, over 2015 to 2020, the US fast-food market declined at an average annual rate of 0.1%. New-generation customers are particular about what they eat and seek healthier, sustainable, organic options. Moreover, veganism is gaining traction globally and is fast becoming the new super diet.

    Popular brands
    The massive change in consumers’ thought processes has forced key fast-food players to redesign menus. Furthermore, the US Food and Drug Administration (FDA) issued a directive mandating all large fast-food chains to display the calorie count of the dishes on their menu.

    Fast-food stalwarts like McDonald’s and Taco Bell are altering menus to entice the health conscious. While McDonald’s now has dieticians on board to design its menus, Taco Bell introduced low-calorie options featuring fewer artificial ingredients.

    Due to the growing recognition of the concept of healthy fast food, many chains have revamped menus to resemble what the home cook would create, if they had the time. The new menus now comprise healthy salads, nutritious soups, and an array of whole-grain-based foods. They are also re-examining their practices, thus turning to healthy fats and preparations, exhibiting the nutritional information of their food, maintaining a healthy sodium count, and even using organic produce to the extent feasible.

    Leading fast-food chain, Panera Bread, with over 1,000 locations across the US, came up with healthy, fun options such as grilled organic cheese on white whole-grain bread and squeezable organic yogurt. Another well-known brand, Jason’s Deli, increased its offerings of fresh food and ensured that a fifth of the ingredients used in its preparations is organic. It expanded the menu to include healthy, yet tasty, salads, thus incorporating more of healthy greens. It also introduced a creative alternative for portion control and nutritious sandwiches, which is highlighted on the menu.

    Apart from the health-conscious consumer, the healthy fast-food industry is attracting investors and start-ups. Some examples of this trend are as follows:

    • Veggie Grill, a new entrant that uses pea protein as its main ingredient, claims that its burger is tastier than the Big Mac. In 2016, it received USD 22 million in funding, which will help with its expansion plans.
    • Since its launch in 2016, the start-up Salad and Go has now six locations in Arizona, and is still expanding into new territories.
    • Everytable, a chain focused on bringing healthy meals to the table, recently raised USD 16 million in a series B funding round.

    The positive impact of COVID-19
    The global pandemic affected all industries in one way or another. While restaurants and cafés shut down, brands that already had an online ordering and delivery system saw a surge in customer traffic. With people spending more time at home, there were vast changes seen in buying behavior. The pandemic boosted the healthy fast-food industry as consumers preferred healthier options. Thus, QSRs tried to ensure the survival of their business by making changes and adjusting to new norms, such as:

    1. Online ordering and deliveries – These surged during the lockdown phase due to need, but have turned into a pleasant habit. The convenience of having food delivered to the doorstep is a feature that ensures customers continue with this trend.
    2. Competition from home cooks – The lockdown brought forth the home chef who challenged fast food with their healthier, home-made offerings. QSRs thus needed options on the menu that could rival the fresh food containing organic ingredients and fewer calories, especially on the days the home chefs wanted a break.
    3. Wellness – COVID-19 turned the spotlight on the need for a healthy diet once again. Focus shifted to foods that are immunity boosters and rich in vitamins. There is also high interest in foods that can control obesity and mitigate the effects of bad eating habits to ensure overall wellness.
    4. Meal kits – There has been a rise in the orders for wholesome meal kits that can serve an entire family. The kits contain several options for diners.
    5. Value proposition – COVID-19 brought in lean times and consumers always veer toward smart purchases. They want value for money.

    Outlook
    While the buzz around healthy fast food has been rising over the past few years, COVID-19 only accelerated the adoption of this trend. People became proactive about their immunity and health more than ever before. With the idea of a healthy immune system foremost on people’s minds, health-oriented foods are now anticipated to be drivers of the fast-food industry.

    Despite the new trend of eating healthy among people in the US, the chains serving burgers, pizzas, and fried chicken are still dishing up large portions laden with unhealthy amounts of sodium as the demand for such foods still abounds. This is more pronounced when the offer seems a good bargain – more food for a relatively small amount of money. Therefore, players like McDonald’s and others that are working on healthier menus on one end, still serve their usual fare and with increased quantity. However, the industry dynamics are changing gradually. Soon, healthy fast food could become THE favored option for most customers.



  105. Digital Therapeutics: Transforming Medical Treatment Experience

    Digital therapeutics (DTx), an emerging segment of the digital health industry, comprise software- and evidence-based therapeutic interventions; these

      to read | words

    published on Jan 18, 2021

    Digital therapeutics (DTx), an emerging segment of the digital health industry, comprise software- and evidence-based therapeutic interventions; these interventions can prevent, manage, and treat medical disorders such as chronic diseases. DTx enhance drug efficacy using advanced technologies such as artificial intelligence, thereby enabling the transformation of medical treatment experience. The way forward for industry stakeholders is to facilitate the adoption of DTx. The solution providers must identify the current gaps in medical treatment, pharma companies should find the right technology partners with experience in DTx, and insurance companies must provide coverage for DTx products.

    Introduction
    The digital health wave is characterized by various revolutionary technologies such as telehealth platforms and m-health applications. These technologies are being applied in a range of areas, including diagnosis, real-time patient monitoring, and treatment. The increasing health consciousness, changing lifestyles, increasing burden of non-communicable diseases NCDs, and impact of COVID-19 have driven the adoption of these technologies. An emerging segment of digital health that is capable of transforming the medical treatment experience is Digital Therapeutics (DTx).

    DTx use software for the prevention, management, and treatment of medical disorders, especially chronic diseases. DTx products are used independently or in conjunction with medications, devices, or other therapies. For example, Nightware is a digital therapeutic device intended for patients suffering from nightmare disorder or for those having nightmares from post-traumatic stress disorder. The device is integrated with Apple Watch whose sensor technology monitors the patient’s heart rate and body movement during sleep. The device analyzes the heartbeat data. On detecting nightmare, the device sends vibrations through Apple Watch which helps the patient improve the sleep pattern. This device is used in conjunction with prescribed medications; it is available only by prescription and is intended for use at home. Unlike other digital health tools, DTx products require clinical evidence, real-world outcomes monitoring, and approval from regulatory bodies. The global DTx market was valued at USD 2.7Bn in 2019 and is expected to register a CAGR of 20% during 2019–26.


    Moving Toward Personalized Care
    Pharmaceutical and MedTech companies are devoting considerable efforts to develop promising digital solutions to improve the current therapies and introduce new ones to ultimately bring value to patients. The combination of AI and sensor technologies has the potential to augment existing therapies and thus to transform personalized patient care. This creates opportunities across different therapy areas including diabetes, obesity, cardiovascular, respiratory, smoking cessation, and central nervous system (CNS), among others, enabling the transformation of traditional medicine-based treatment.

    Some of the companies that have developed or are developing DTx products are mentioned below.

    Company Name

    Therapy Area

    Product Name

    Description

    Akili Interactive

    CNS

    Endeavor

    Uses the adaptive sensory stimulus software for attention-deficit/hyperactivity disorder treatment, delivered through an engaging video game experience

    Big Health

    CNS

    Sleepio

    Provides digital sleep improvement programs featuring cognitive behavioral therapy techniques

    Dario Health

    Diabetes

    Dario Engage

    A digital platform to monitor and manage diabetes populations

    Propeller Health

    Respiratory

    Propeller

    Helps patients suffering from asthma and chronic obstructive pulmonary disease monitor the usage of medications and provides insights on disease management

    WellDoc

    Diabetes

    BlueStar

    A digital health tool enabling individuals with type 2 diabetes to improve self-management and health outcomes through real-time actionable insights


    Pharmaceutical companies are building such capabilities by collaborating with IT companies; this facilitates the development of a new business model beyond traditional medical treatment. For instance, Voluntis and Bristol-Myers Squibb have collaborated to develop DTx solutions for cancer patients. DTx also significantly benefit healthcare providers. DTx solutions provide clinically proven therapies and enhanced clinical decision-making capabilities based on real-time data; moreover, DTx help to monitor patients’ health outcomes. Overall, DTx provide better access to healthcare and significantly reduce the cost. Meanwhile, the tech companies can use this as an opportunity for gathering large volumes of data, which could be used to conduct population-based studies and improve the healthcare infrastructure. Apple and Amazon are exploring healthcare in detail.

    Digital health companies have helped the US Food and Drug Administration (FDA) to understand the positive impact of advanced technologies on healthcare. In 2017, the FDA published a Digital Health Innovation Action Plan, declaring that it is planning to remodify the regulatory policies and processes to meet the needs of digital health technology. Subsequently, in the same year, it approved the first software-based therapy for addiction developed by Pear Therapeutics and Sandoz, a division of Novartis. Later, the FDA launched a pre-certification pilot to address the regulatory challenges for software-based medical devices.

    Way Forward
    The road ahead for pharmaceutical companies, healthcare providers, and other industry stakeholders such as insurance companies is to facilitate the adoption of DTx. Major areas of focus should include:

    • Proving the efficacy of DTx solutions for the treatment of chronic diseases which is heavily dependent on the collection of real-world data
    • Ensuring DTx products are economically sustainable in the long run than traditional medicinal treatment
    • Inclusion of DTx products for reimbursement as it would boost the adoption of DTx

    Additionally, for the successful adoption of DTx, DTx solution providers should identify the indications where traditional treatment methods have been ineffective (low drug efficacy or side effects). The ability of digital therapies to manage diseases independently or in conjunction with medications increases drug efficacy, besides reducing costs; this results in better patient outcomes. To enable DTx-driven transformation, pharma companies should identify the right technology partner. The partner must have technical experience in delivering DTx products and must understand patients' journey and the regulatory processes. The companies must form a collective vision to optimize health outcomes and deliver health goals while maximizing profits.



  106. Construction Technology Trend – Prefabrication

    The construction industry is in the throes of a massive shift as it embraces innovative technologies to improve

      to read | words

    published on Dec 18, 2020

    The construction industry is in the throes of a massive shift as it embraces innovative technologies to improve productivity, reduce lead times, and ensure the safety of its workforce. One such new trend – prefabrication – is rapidly gaining popularity. Prefabrication allows the optimal utilization of resources, enables smooth operations, and ensures high-quality construction work.

    Technological advancements have made processes and activities more seamless, systematic and efficient across industries. The construction industry has also benefitted from these developments, with one such trend, prefabrication (prefab), gaining rapid traction.

    Technically, in prefab construction, building components are pre-made at certain locations (factory or manufacturing site) and then transported to the final site for assembly and installation. The global prefab segment is expected to reach USD 153 billion by 2023. There is a negative perception about prefab construction as it is considered a mass production and therefore, low-quality. However, prefab construction actually improves quality and can be applied to a variety of budgets.

    There are various advantages associated with prefab construction. Some of these are:

    • Sustainable option – Prefab is energy-efficient and eco-friendly. While traditional construction usually creates waste, prefab assemblies are constructed in a factory and any extra material is usually recycled. Therefore, wasteful consumption of construction material, which would then end up at landfills, will be greatly reduced. Furthermore, the need for less equipment and material at construction sites reduces noise and air pollution levels.
    • Financial savings – Modular construction would be an affordable option for all budgets. Most prefab manufacturers receive bulk discounts from material suppliers, which allows them to reduce their construction costs. Since this also eliminates unnecessary expenses associated with unreliable contractors, material wastage, and the number of on-site laborers, it further boosts savings. Prefab reduces construction time significantly, and thus also cost.
    • Greater, consistent quality – Construction in a controlled environment makes for fewer errors and greater efficiency. As such construction follows specific standards, each section and sub-assembly is uniform. Furthermore, multiple quality checks at various points in the process ensures precision. Any code of conduct mandated is strictly adhered to, thus increasing safety and quality.
    • Workforce safety – With changing ground conditions, complex processes, unsuitable weather, and equipment mishaps, construction sites can be hazardous to people working on one. In prefab construction projects, on-site work is limited and, consequently, chances of an accident. Although there could be accidents in a factory, the chances of it are far fewer.
    • Flexibility – Prefab allows for flexibility in construction as units can be disassembled and relocated. Modular construction also offers flexibility in the design of a structure so that it can blend in with its natural surroundings.

    Outlined here are some factors that favor the growth of prefab construction in the current times.

    • Recessionary period – The world economy at this time has crashed due to the global pandemic. Companies are facing cash crunch and seeking cost-effective solutions for construction projects. As prefab construction can work even within restrained budgets, it is viewed as a viable option.
    • Saturated industry – The construction industry, as such, is quite fragmented and intensely competitive. Players are constantly on the look-out for ways to get ahead in the race. With prefab construction, builders can offer customized products and thus become a favorite.

    Outlook
    Prefab construction offers several advantages that make it cost-effective, efficient, and streamlined. With the integration of technologies such as artificial intelligence and robotics, factory processes are becoming smarter and more precise.

    In the US and Europe, prefab construction is widely adopted and accepted. It helps mitigate house shortages in the US within highly populated cities such as San Francisco and New York. With the spiraling cost of labor, permits, and land, customers prefer prefab. Though the global pandemic has disrupted the worldwide construction industry, the prefab sector was less impacted. And as off-site construction of medical infrastructure and diagnostic centers continued to grow during this period, the global prefab construction segment did well.

    Thus, the global prefabrication industry is poised to take off on an upward growth trajectory.



  107. GCC Infrastructure & Construction: Impact of COVID–19

    Amongst the GCC nations, Saudi Arabia and the UAE account for nearly 2/3rd of the construction & infrastructure projects

      to read | words

    published on Dec 16, 2020

    Amongst the GCC nations, Saudi Arabia and the UAE account for nearly 2/3rd of the construction & infrastructure projects planned in the GCC region. With some of the mega infrastructure projects mainly driven by government, the unprecedented decline in oil prices due to COVID-19 will make a huge dent in government’s revenue streams indirectly cutting back spends on infrastructure projects. While construction sector in the GCC witnessed a slowdown in 2020, the strong pipeline of projects across the region and the governments’ focus on diversification towards non-oil sectors will drive the revival in construction post 2020.

    COVID-19 and declining oil prices impact construction expenditure in GCC
    Infrastructure development is a key prerequisite for sustainable economic growth of a nation. The COVID–19 outbreak has rendered the future of infrastructure and construction projects globally highly uncertain. Given their long gestation period, the economic benefits expected to accrue have now been delayed, raising red flags on nations’ long-term growth prospects.

    For GCC nations, revenue from oil & gas is the key source of government expenditure. The current pandemic could lead the governments to realign their priorities, which would impact both ongoing and planned infrastructure and construction projects through 2020 and beyond.

    The sector had witnessed a revival in 2019 after the below-par performance during 2015–18 brought about by the decline in oil prices from late 2014 to 2017. The revival in oil prices in 2018 and 2019 had prompted growth in infrastructure projects in the region. However, the current scenario, with the economic downturn and low oil prices, is dragging the construction sector back to pre-2019 levels.

    Revival of construction sector post 2018
    Production cuts by oil producing nations from early 2017 pushed oil prices up to more than USD60 per barrel in early January 2018 (from USD29.59 per barrel in February 2016). Accordingly, stakeholders in the construction industry expected a revival in the sector after 2018, which did not happen completely due to the lead time required for sanctioning of budgets and actual spending on the projects. Project activity did gain traction in 2019, backed by governments’ resolve to diversify their respective economies to non-oil sector. As of 2019, projects worth more than USD140 billion were awarded across the GCC region, with the UAE and Saudi Arabia jointly accounting for 62% of this.

    In line with its Vision 2030 program, Saudi Arabia’s strategic roadmap to reduce dependence on oil, construction activities in transport, infrastructure and housing in the country gained momentum. Construction in Qatar and the UAE also picked up as these countries prepare to host prestigious events such as the 2022 FIFA World Cup and the World Expo 2020 (now postponed to October 2021).

    The improved performance of the construction sector in 2019 vis-a-vis previous years convinced the stakeholders and market participants that 2020 would herald a new decade of sustainable growth in the construction sector in the GCC region. Structural changes aimed at increasing the participation of private entities and facilitating higher spending by the government on key non-oil sectors only strengthened the belief.

    The GCC construction sector was expected to record a CAGR of more than 8% during 2019–23, considering the strong pipeline of projects across sectors including:

    • The futuristic mega city NEOM in North West Saudi Arabia, with an estimated cost of USD500 billion; the first phase is expected to be completed by 2025
    • Qatar Rail network program and Doha Metro, with an estimated cost of USD80 billion; it is expected to be completed by 2026
    • The Saudi Arabia Ministry of Housing’s program to build 500,000 houses
    • Abu Dhabi National Oil Co’s new refinery project in the industrial hub of Ruwais, UAE, by 2025; the project cost is estimated at USD45 billion

    COVID–19 impact
    The Kingdom of Saudi Arabia and the UAE account for more than 65% of the projects planned in the GCC region. Some of the high budget infrastructure projects planned in Saudi Arabia are part of its Vision 2030 framework aimed at diversifying the economy. The fall in oil revenues due to COVID–19 will affect the government’s cash flows. In addition, the USD32 billion stimulus package announced by the Saudi Arabian government to provide the necessary economic support during the COVID–19 crisis would impact the funds earmarked for infrastructure and construction projects. With the government realigning its priorities in the short term, the completion of projects underway would be delayed.

    Outlook
    Due to the pandemic, economic activities have declined, directly impacting the revenues of oil producing nations. This is bound to affect the GCC countries’ expenditure on construction. In addition, disruptions in supply chain and repatriation of labor to their home countries would impact construction projects underway in the GCC region over the short to medium term. For projects in the planning stage, finalization of contracts would get delayed.

    The repercussions of COVID–19 would be felt on the construction sector for the next few years. However, considering the strong pipeline of projects in GCC nations and governments’ focus on diversifying their respective economies to non-oil sectors, the construction sector should witness sustained growth in the long term.



  108. Growth of Organic Skincare Products

    Organic skincare has caught the fancy of new-age consumers exploring natural and sustainable products in all categories. Its

      to read | words

    published on Dec 16, 2020

    Organic skincare has caught the fancy of new-age consumers exploring natural and sustainable products in all categories. Its steady growth across the globe took a moderate hit due to the COVID-19 pandemic, but the market is now set to recover and continue its upward trajectory. The segment has its set of challenges, despite which the sector would grow, as gauged by the increase in interest from investors, along with positive estimates.

    Organic skincare products can be defined as beauty products (body lotions, sunscreens, and face creams) that contain only certified natural ingredients, with medicinal benefits and no harmful side-effects. Due to rising awareness for healthy and chemical-free products, the organic skincare market has steadily grown in the past few years. The segment is expanding at a CAGR of 9.5% since 2015 and is expected to reach USD25 billion by 2025.

    North America is the largest market, accounting for 32% of the global share. The Asia-Pacific market is catching up and is expected to expand at 25% CAGR during 2016–22, owing to the escalating population of millennials and working women, as well as rising disposable income. Led by China, followed by Japan, the region would soon be an important market for organic skincare products.

    The COVID-19 pandemic indeed hit this segment financially. Despite the downward slide recorded by the entire beauty and personal care industry, the impact was minor compared with other industries. Although discretionary spending reduced during the pandemic, a behavioral shift was observed toward safe and contamination-free products. Brands in this category that have a strong presence in e-commerce channels are currently benefitting from this trend.

    The following trends are driving the organic skincare market globally:

    • Health and beauty all the same – Products that use harmful chemicals with harsh side-effects are being shunned by new-age consumers who demand beauty products containing more natural ingredients and having medicinal benefits.
    • Traditional beauty – Concepts such as Ayurveda and Traditional Chinese Medicines are gaining prominence. Moreover, consumers want to try skincare products made using natural and fresh ingredients.
    • Online is global – The widening distribution network of organic skincare products has eased their availability in supermarkets, malls, and drug stores. Presence in various online platforms has also helped boost their demand. With the emergence of social media, marketeers can easily target and advertise such products to a defined set of customers.
    • Pass on plastic – Consumer purchasing decisions are much more evolved now than they were a decade back. Increasing awareness regarding eco-friendly and sustainable packaging is a nascent trend that consumers dig into.
    • Animal-friendly lifestyle – Veganism is a lifestyle that people are adopting increasingly, and it is extending to the skincare market as well. Companies such as Blue Heron Botanicals and Blendily Botanical Wellness have introduced vegan products that are not tested on animals.

    Organic beauty market, including the exploding indie brand market, is displaying strong growth...

    Rising popularity of organic skincare products has led to the emergence of several independently owned and operated brands, known as indie brands. A flurry of indie brands offering organic and natural cosmetics have emerged globally. These companies thrive on problem-solving through innovations and enhanced consumer connectivity.

    The target segment for these companies is the health-conscious population from metros, who appreciate and willingly shell out a premium for ethical, natural, and handcrafted creations.

    Internet penetration has contributed to the immense success of these brands, as they use social media and their own websites to conduct direct-to-customer marketing for selling their products. For instance, Mama Earth, a popular Indian indie brand, does heavy marketing through Instagram influencers to capture consumer base.

    The segment has encouraged innovative entrepreneurs to enter the market and entice customers. Few of these start-ups are SkinKraft (customized skincare for Indian women), Nature’s Tattva (a DIY brand), Vilvah Store (pioneer of goatmilk skincare products), and Tribe Concepts (uses Ayurvedic forest-based ingredients). Luxury brand Kama Ayurveda offers 100% natural and vegan products made of Ayurvedic formulae. The brand has won several international awards for its products.

    Many known and elite brands, including Forest Essentials, have presence in over 85 countries. In fact, a New York-based leading cosmetics brand, Estee Lauder, acquired 20% stake in Forest Essentials and is planning to manufacture its skincare products in India.

    Estee Lauder made its biggest ever acquisition worth USD1.5 billion by taking over Too Faced Cosmetics, a US-based cosmetics company. Similarly, L’Oreal acquired IT cosmetics for a whopping USD1.2 billion.

    ...with a flurry of brands being launched, few owned by celebrities...

    This segment is highly fragmented, with a plethora of players, incumbents, and start-ups jumping in the fray. Major players in this market include Starflower Essentials, Johnson & Johnson, L’Oreal, Jergens, The Body Shop International PLC, Kao Corporation, Royal Labs Natural Cosmetics Inc., Colorado Quality Products, MANA Products Inc., Procter & Gamble, Gordon Labs Inc., The Estee Lauder Companies Inc., and Avon Products Inc.

    Brands constantly need to distinguish themselves. This has led to innovative brand positioning, with celebrities introducing their own line of organic skincare products to take a lead in the market.

    American actress Gwyneth Paltrow had introduced her organic skincare line, called Goop by Juice Beauty, in 2016. The product line, which included an eye cream, moisturizer, and face cleanser, has a clear brand message of being all-natural and chemical-free.

    REN Skincare is another respected brand that showcases itself as a provider of environment-friendly and sustainable products. This has allowed them to stand up for various ethical causes and build a loyal fan following. Herbivore Botanicals follows brand values that support the production of synthetic-free, certified vegan, and cruelty-free products.

    As shown above, brand positioning of organic skincare products is built on being environment-friendly, sustainable, and natural.

    ...thereby leading to a series of acquisitions of smaller and quality brands by corporate giants

    Although the organic skincare market is still emerging, it has allured investors. Many major M&A deals were closed in recent years, with corporate giants gobbling smaller yet promising companies:

    1. One of the leading suppliers of fragrances, Givaudan, a Swiss brand, acquired 98% stake of Naturex, a French botanical company worth USD1.6 billion. With this acquisition, Givaudan is currently developing a strong portfolio of natural ingredients and plant extracts across sectors including nutrition and health, food and beverage, and personal care.
    2. French cosmetic giant L’Oréal has launched its own organic brand, ‘La Provençale Bio,’ through which it offers face creams, serums, and moisturizers. Moreover, the company acquired Germany-based Logocos Naturkosmetik, which offers a range of natural cosmetics and skincare products.
    3. US-based Goop by Juice Beauty received USD50 million in Series C funding.

    However, the race is yet to be won as there are few hurdles along the way

    • Greenwashing – Many products are greenwashed or contain labelling to claim that they are sustainable. However, this is only a clever use of language and labelling, and the products do not meet the exacting standards set by regulatory bodies.
    • Poor shelf life – The biggest challenge faced by companies offering organic skincare products is to enhance their shelf life. Natural ingredients can develop microbial growth and get contaminated. Moreover, effective preservatives do not fit in the list of natural ingredients. Therefore, developing long-lasting beauty products is challenging.
    • Slow action – The effect of organic skincare products may be slow. Although all ingredients are natural and nourishing, the actual results may take longer time to show up compared with synthetic beauty products. Due to this, brands may lose customers.
    • Stringent regulations – Organic skincare products must meet stringent regulations set by regulatory committees, such as The European Union Cosmetics Directive, The U.S. Federal Food, Drug & Cosmetic Act, and The U.S. Department of Agriculture's National Organic Program. Furthermore, a regulatory standard is established by the Soil Association, which defines 'made with organic' and 'organic' ingredients and limits the quantity of synthetic preservatives and ingredients employed in product manufacturing. Only post meeting these regulations (as per the country the brand operates in) can a product be labeled organic.

    Conclusion
    Evolving customer preferences has increased the need for eco-friendly products that are natural, healthy, and cruelty-free. All the factors mentioned above aid in boosting the demand for organic skincare products across the globe. Despite several challenges faced by the organic skincare market, its progress would be imminent. With key players entering the segment and investors showing increased interest, the organic skincare industry is poised to flourish.



  109. Challenges from Changing Biocides Regulatory Environment

    Biocides, often used as disinfectants and preservatives in paints and coatings, water treatment, personal care and home care

      to read | words

    published on Nov 12, 2020

    Biocides, often used as disinfectants and preservatives in paints and coatings, water treatment, personal care and home care products, have increasingly been subjected to a stringent regulatory environment. This has resulted in significant cost increases for companies due to compliance requirements. Due to this many small and mid-sized players are pushed out of the market as they are unable to undertake such extensive capital outlays on market authorizations. Product formulators are striving to develop suitable environment-friendly alternatives to high risk biocides, as an increasing number of countries are implementing regulatory controls on their usage.

    According to Article 2 (1) of the Directive 98/8/EC (Biocidal Products Directive – BPD), biocidal products are defined as: “Active substances and preparations containing one or more active substances, put up in the form in which they are supplied to the user, intended to destroy, deter, render harmless, prevent the action of, or otherwise exert a controlling effect on any harmful organism by chemical or biological means”. Most of the biocidal active substances are formulated chemical compounds that are toxic to human health and the natural environment. Biocidal products often contain substances with allergic, ecotoxic, carcinogenic, developmental neurotoxic or endocrine disrupting properties. Few of the major biocides and related health and environmental consequences include: pentachlorophenol (PCP), an active substance that causes carcinogenic and endocrine disruptions; dimethylfumarate (DMF), used to kill moulds, induces severe allergic reactions; tributyltin (TBT), an antifouling agent, impacts marine environment; and diuron, a herbicide, which poses severe water contamination issues.

    Yet, biocides market is estimated to reach 1.4 million tonnes by 2024 from about 1.1 million tonnes at present, growing at a CAGR of 4.5%. Primary end-use markets include water treatment, paints & coatings, wood preservation, and personal care and home care products. The rapid increase observed in the consumption of biocides for water treatment and preservative applications across industries has led to unintended consequences on human health and the environment

    Therefore, to protect the environment and safeguard human health, regulations on the usage of biocides in consumer centric products are becoming excessively stringent across the world. In Europe, the biocidal products regulation (BPR) was implemented to regulate and monitor the applications of biocides. Other legislative measures have also been promulgated to ensure appropriate classification and labelling and to reduce the maximum permissible content of certain active substances. Some of these measures include:

    • Reduction in European Union (EU) limits for methylisothiazolinone (MIT) content in paint and detergent applications from 1000 ppm under H317 label and 100 ppm under EUH208 label (previous limit: 15 ppm and 1.5 ppm, respectively).
    • Restriction in the use of octhilinone (OIT) as a material preservative in paints by the Health Canada Pest Management Regulatory Agency (PMRA).
    • EU Biocidal Product Committee (BPC)’s directive to restrict the use of Carbendazim in textile sector for product type 9 that includes fibers, leather, rubber, polymerized materials and preservatives.
    • EU’s directive to exclude silver compounds (silver copper zeolite, silver sodium hydrogen zirconium phosphate, and silver zeolite) from use in biocidal products.
    • Ban on cybutryne — a biocide used in antifouling coatings — by the International Maritime Organization (IMO)

    Impact on product formulators
    This has led biocides to become one of the tightest regulated family of chemicals and each initiative to produce safe disinfectants, preservatives, and pest control chemicals has a simultaneous reparation on product manufacturers and chemical formulators.

    It is estimated that in last five years, chemical formulators in the EU have invested, on an average, 2.5% of their annual revenue to comply with biocides legislations. In absolute terms, the average cost for product legalization under the BPR is thrice of what it was under preceding law, viz., the Biocidal Products Directive (BPD). For a new substance, formulators are required to invest millions of dollars, majority of which is used for generating scientific data mandated by the BPR. The additional costs have trickled down the supply chain to consumer goods producers and ultimately the consumers. The trend has also resulted in wiping off majority of small and medium size suppliers from the market, as they were incapable of coping with such a monetarily extensive approvals exercise. Thus, biocides customers are now facing an increased risk as supply markets are consolidated into the hands of limited number of large suppliers. Along with supply risk constraints, biocides users also need to adhere to marketing and labelling requirements in their products, adding to the cost of compliance.

    For instance, as mentioned earlier due to implementation of regulation by EU in May 2020, to reduce MIT content in paints and detergents, manufacturers are facing a major labelling challenge. Typical MIT content in paints and cleaning formulation is between 50 to 200 ppm. MIT is now classified as a highly potent category 1A skin sensitizer and it will no longer be used for do-it-yourself paints as it is restricted for professional users only.

    It has become quiet challenging for formulators to cope with the changing regulatory environment. Increased R&D investments to develop and promote the use of suitable environment-friendly alternatives has gained significant momentum. For instance, Lanxess has added several products to their portfolio which the company can claim to be much more environment friendly, such as Preventol range and Biochek 722 (that is Isothiazolinones free and does not require H317 label). Companies have also had to ensure supply guarantees and move from a market-oriented price-competitive supply market to a more tightly monitored partnership model with their biocide active substance suppliers.

    Regulatory considerations will continue to impact product development efforts over the next few years as more and more countries implement proposed regulations on biocides usage.



  110. Increase in Industrial-Grade Ethanol Prices: The COVID-19 Impact

    The COVID-19 outbreak led to a surge in the demand for industrial ethanol for sanitizer applications in 1H20.

      to read | words

    published on Nov 03, 2020

    The COVID-19 outbreak led to a surge in the demand for industrial ethanol for sanitizer applications in 1H20. However, the supply chain disruptions caused by the worldwide lockdowns resulted in shortage of ethanol in Europe and the US. This supply and demand gap spiked the prices of ethanol in various regions of the world.

    The global demand for industrial-grade ethanol is expected to grow 20–25% over 2019–20. This surge can be attributed to the rising demand for hand sanitizers and disinfectants during the pandemic. Pre-COVID-19, the global demand for industrial ethanol was the highest in the chemicals, and cosmetics & personal care industries, with a strong market share of 55% and 30%, respectively. Other industries such as paints & coatings and pharmaceuticals accounted for the remaining shares. The growth trajectory of the industrial ethanol market has changed drastically since January 2020. Demand for ethanol in large European economies such as Germany, Italy, and France surged around 10x times during 1H20.

    Substantial decline in supply across Europe and Asia

    Overall, industrial ethanol accounts for 7% of the global ethanol market, while fuel-grade ethanol accounts for the remaining share. Globally, Brazil and the US dominate the overall supply of fuel-grade ethanol and account for 75−80% of the global ethanol supply. The global production of industrial-grade ethanol is estimated to be 11,000 million liters in 2020, with China contributing the maximum share (30−35%), followed by Europe (15−20%), Brazil (8−10%), and South Asia (5−10%).

    During 1H20, factors such as low operating rates, production shutdowns, unavailability of raw materials, and logistic delays pushed the demand-supply gap and subsequently impacted prices. Countries such as Italy, which depend on imported feedstock, faced shortages due to logistical constraints. Lack of storage space at ports led to limited stockpiling in the UK and US. Furthermore, not all fuel ethanol plants in the US produce industrial-grade ethanol, which further led to its production shortage.

    Demand-supply gap leads to all-time price hikes

    The prices of industrial ethanol surged significantly at the end of 1H20 and continued to hover at high levels from July to September 2020.

    Europe
    Before the outbreak of the pandemic, industrial ethanol was priced at USD70−90 per hundred liters in Europe. Post the outbreak, the prices shot up to more than USD100 per hundred liters due to supply issues caused by surge in demand, insufficient local production capacity, and low operating rates. Shortages in domestic markets were mainly fulfilled through industrial ethanol imports. Nearly 7,000 tons of denatured ethanol was imported from Brazil in April and May. Europe imports denatured ethanol primarily from Brazil, followed by Peru and Pakistan, while fuel ethanol is mainly imported from the US.

    Industrial ethanol prices in Europe remained relatively unchanged during 2019; they rose significantly in 1H20 and are expected to remain high during 4Q20 and 1Q21 compared with the pre-COVID scenario. Prices also rose significantly in France, followed by Italy, the UK, and Germany.

    Prices in USD/’00 Liter (Ethanol Industrial 99% FD)

    The prices in Europe continued to increase until September 2020 but were expected to drop marginally due to a foreseeable increase in ethanol supplies reinforced by the recent European sugar beet harvest, which is a primary feedstock used in EU ethanol production. The arrival of 30−40 million liters of denatured ethanol from the US and Brazil at the start of October and the expected additional 20 million liters of imports by the end of 2020 would hopefully help to control the rise in prices.

    Americas
    The pre-COVID-19 rate of industrial ethanol was USD73 per hundred liters in the US, which increased to over USD99 per hundred liters during the pandemic. Industrial ethanol sales reached an all-time high with the increase in demand for hand sanitizers and cleaning products. Sales of hand sanitizers increased threefold from a year ago. Brazil witnessed similar market trends in industrial ethanol sales, despite its production of industrial-grade ethanol being less than that of the US. Shortage of supply led to over 35% increase in prices in March and April and a further 20% surge in June and July.

    Prices in USD/’00 liter (US: Ethanol Industrial 200 Proof FOB USG; Brazil: Hydrous Ethanol Index (other uses) – São Paulo State)

    Industrial ethanol prices in the US are likely to remain stable, as more and more biorefineries have started producing denatured ethanol. Significant investments to enhance operations are set to increase the overall supply in the domestic market and control the incremental price rise.

    In Brazil, prices are mainly driven by demand from fuel usage. Therefore, in March and April 2020, the reduced use of vehicles caused prices to decline. The prices in Brazil are expected to plummet against the landscape of robust production capacities.

    Asia
    Sufficient production of industrial ethanol in Asia allowed the prices to increase only marginally in the region during the pandemic. China was the first country to be termed as a COVID-19 hotspot in South Asia; ethanol prices were not much affected in the region, as production and trading activities were not impacted significantly, and demand changed only marginally. In some parts of South Asia, end-user companies were substituting industrial-grade ethanol with fuel-grade ethanol for hand sanitization.

    Prices in USD/’00 liter (Bangkok Ethanol Reference Price)

    In South Asia, most downstream producers switched from using isopropanol (IPA) to fuel or industrial-grade ethanol in the production of disinfectants and hand sanitizers to cope with the growing demand. In the coming months, the prices are likely to decline, as producers have equipped themselves with increased capacities and robust inventories.

    Conclusion
    The increase in supply of industrial ethanol as well as the growing adoption of alternatives to cater to the growing demand for hand sanitizers, cosmetics, and personal care products are expected to stabilize prices in 4Q20 and 2021. IPA as well as n-butanol, isobutanol, n-propanol, and chlorine compounds can be used as substitutes of industrial ethanol in some applications. However, the prices may shoot again in case a second wave of COVID-19 hits the world.



  111. Evolution of the Bio-based Chemicals Market: Growth and Commercialization Strategies

    The bio-based chemicals and polymers market is growing exponentially owing to the increasing need for environmentally sustainable solutions.

      to read | words

    published on Oct 26, 2020

    The bio-based chemicals and polymers market is growing exponentially owing to the increasing need for environmentally sustainable solutions. Key players have introduced innovative products and processes and are also collaborating with back-end players in the value chain to further fuel the growth of this market. Backed by government incentives and the growing awareness of the need to control climate change, the bio-based chemicals and polymers market is expected to flourish in the coming decade.

    Governments worldwide have been promoting environment-friendly practices; this has increased the need for the production and supply of bio-based chemicals and polymers. In response to this need, many petrochemical and bio-based chemicals manufacturers have expanded their portfolios by including new sustainable/bio-based products. Other notable factors such as fluctuating crude oil prices, increasing preference for sustainable products, need to control atmospheric greenhouse gases (GHG) emissions, and decreased use of fossil fuels have also contributed to the rise in demand for bio-based chemicals.

    The bio-chemicals and polymers industry held less than 10% share of the global chemicals and polymer market during 2019−20. Prominent in-demand examples of bio-based offerings (key building blocks) include fermentation products such as ethanol, lysine, citric acid, sorbitol, glycerol, and fatty acids. These building blocks are converted into polymers/plastics as well as different fine and specialty chemicals suitable for various functions and attributes.

    Cost of many bio-based products exceeds that of traditional petrochemical products which limits its adoption. However, significant initiatives are being taken by chemical manufacturers and bio-based feedstock producers owing to the development of new value chains of bio-based feedstock. The share of the bio-based chemicals industry is expected to increase to approximately 25% of the total bio-based chemicals and polymers market by 2025, backed by the use of improved technologies and methods.

    Diverse value chains

    Source: IEA Bioenergy, MDPI, Biomass Research and Development Institute, Company Reports, Aranca Analysis

    Chemicals manufacturers have initiated the redesigning of materials, processes, and products to create renewable, restorative, and regenerative chemistry. These innovative responsible solutions are designed on the principles of biotechnology. Feedstock, technology, platform, and product companies across a value chain now offer cost-competitive products that considerably help in reducing the impact on the environment.

    Increasing availability of feedstock

    Source: IEA Bioenergy, MDPI, Biomass Research and Development Institutes, Company Reports, Aranca Analysis

    Bio-active compounds are produced from both plant- and microorganism-based sources. However, biorefineries primarily use feedstock such as sugar crops (e.g., beet and cane), lignocellulosic crops (e.g., managed forest, short rotation coppice, switchgrass), starch crops (e.g., wheat and maize), perennial grasses and legumes (e.g., ryegrass and alfalfa), aquatic biomass (e.g., algae and seaweed), lignocellulosic residues (e.g., forest residues, stover, and straw), oil crops (e.g., palm and oilseed rape), and organic residues (e.g., industrial, commercial, and postconsumer waste).

    Advanced biorefinery platforms for chemicals production

    Advanced technologies and novel systems are being applied in bioprocessing to manufacture bio-based chemicals, biofuels, and value-added bio-products from renewable sources; this helps scale up production and commercialization. These technologies enable higher yields, returns, quality, enhanced performance, greater durability, and greater precision at lower prices.

    Global overview of the most relevant biorefinery platforms for chemicals production:

    Source: IEA Bioenergy, MDPI, Biomass Research and Development Institute, Company Reports, Aranca Analysis

    Commercial and near-market products

    Global overview of the different chemicals produced at commercial level as well in pipeline stage:

    Available on Commercial Scale

    Chemical

    Capacity (KT)

    Key Suppliers

    C1

    Methane

    -

    PlanET Biogas, Clarke Energy, Engie, EnviTec Biogas amongst others

    Methanol

    43

    OCI (BioMCN), Sodra, Carbon Recycling International, W2C

    Syngas

    760

    Clarke Energy, ETIP Bioenergy

    C2

    Ethylene

    200

    Braskem

    Ethanol

    80,800

    Tereos and others

    Ethylene Oxide

    40

    Croda, Biokim

    Ethylene Glycol (MEG)

    175

    India Glycols, Haldor Topsoe, UPM, Avantium, ENI/Versalis

    Acetic Acid

    24.5

    SEKAB, Wacker, Godovari Biorefineries, ZeaChem

    C3

    Propane

    40

    Neste/SHV

    Propylene Glycol (1,2- Propanediol)

    120

    ADM, Oleon, Avantium

    Acetone

    -

    Green Biologics, Celtic Renewables

    1,3-Propanediol

    77

    DuPont/Tate & Lyle, Glory Biomaterial, Shenghong Group

    Glycerol

    1,500

    Thai Glycerine, ADM, Kao Corporation, and others

    Epichlorohydrin

    540

    Kerry Group, Jiangsu Yangnong Chemical, Advance Biochemical Thailand

    Lactic Acid

    >600

    Corbion, NatureWorks, Galactic, Henan Jindan Lactic Acid Technology, BBCA

    C4

    Succinic Acid

    34

    Myriant Corporation, Succinity (BASF /Corbion), Reverdia (Roquette)

    Iso-Butanol

    -

    Butamax, Gevo

    1,4-Butanediol

    -

    Genomatica, Novamont, Dupont/Tate & Lyle, Godovari Biorefineries

    C5

    1,5- Pentanediamine

    50

    Cathay Industrial Biotech, CJ CheilJedang

    Xylitol

    190

    Danisco/Lenzing, Fortress

    Furfural

    360

    TransFurans Chemicals, Pennakem, Silvateam amongst others

    Itaconic Acid

    90

    Qingdao Kehai, Zhejiang Guoguang, Jinan Huaming Biochemistry

    Levulinic Acid

    -

    Avantium, GFBiochemicals, Circa Group

    Methyl vinyl Glycolate

    -

    Haldor Topsoe

    C6

    Lysine

    1,100

    Global Biotech, Evonik/RusBiotech, BBCA, Ajinomoto

    Sorbitol

    1,800

    Roquette, Cargill, ADM, Ingredion

    Isosorbide

    20

    Roquette

    Citric Acid

    2,000

    Cargill, DSM, BBCA, Ensign, TTCA, RZBC

    Others

    C7 - Pentamethylene Diisocyanate (PDI)

    -

    Covestro (70% biobased content), Mitsubishi Chemical

    C9 - Pelargonic Acid

    25

    Matrica (Novamont/Versalis JV)

    C9 – Azelaic Acid

    25

    Matrica (Novamont/Versalis JV), Emery Oleochemicals

    C10 – Sebacic Acid

    200

    A.o. Arkema (Casda Biomaterials)

    C11 – UDDA (Undecanedioic Acid)

    24

    Arkema

    C12 – 12-Aminododecanoic Acid

    25

    Evonik

    Development and Pipeline Stage

    Chemical (C1)

    Key Suppliers

    C1

    Formaldehyde

    BASF

    Formic Acid

    Avantium

    C2

    Glycolic Acid

    Metabolic Explorer (Metex)

    Oxalic Acid

    Avantium

    C3

    Propylene

    Braskem/Toyota Tsusho, Mitsubishi Chemical, Mitsui Chemicals

    n-Propanol

    Braskem

    Isopropanol

    Genomatica, Mitsui Chemicals

    Acrylic Acid

    Cargill/Novozymes, ADM/LC Chemicals, Perstorp, Arkema

    3-Hydroxy Propionic Acid

    Cargill/Novozymes

    Malonic Acid

    Sirrus, Lygos

    C4

    n-Butanol

    Green Biologics, Celtic Renewables

    Iso-Butene

    Global Bioenergies

    2, 3-Butanediol

    Global Bio-Chem Technology Group, Tokyo Chemical Industry, LanzaTech

    Ethyl Acetate

    Sekab (JRC), ZeaChem, Greenyug

    Butyric Acid

    Metex, Kemin, Blue Marble Biomaterials

    C5

    Isoprene/Farnesene

    Goodyear/ Genencor, GlycosBio, Amyris

    Methyl Methacrylate

    Lucite/Mitsubishi Chemicals, Evonik, Arkema

    Ethyl Lactate

    Corbion, Vertec BioSolvents

    C6

    Caprolactam

    Genomatica/Aquafil

    Aniline

    Covestro

    Adipic Acid

    Genomatica

    Cyrene

    Circa Group

    FDCA

    Avantium, ADM/Dupont, Corbion, Stora-Enso, Annikki

    Others

    p-Xylene

    Annellotech, Origin Materials, BioBTX, Tesoro

    Terephthalic Acid

    UOP, Annellotech

    DDDA (Dodecane-dioic Acid)

    Cathay Industrial Biotech

    Source: IEA Bioenergy, MDPI, Biomass Research and Development Institute, Company Reports, Aranca Analysis

    Initiatives by key players

    Key producers have undertaken several initiatives to drive the market for sustainable products.

    Launch of bio-based products (2019−20)
    Dow

    • Launched PRIMAL™, a bio-based acrylic emulsion produced from carbon obtained from plants; formulated bio-based paints that are USDA-certified

    BASF

    • Launched Betatene, a naturally sourced beta-carotene derived from algae for applications in dietary supplements and functional F&B products

    DSM

    • Partnered with SABIC and UPM Biofuels to create biobased Dyneema, a high-performance fiber product, to reduce carbon footprints

    Arkema

    • Launched high-performance Rilsan® polyamide 11, derived from castor oil

    Recent partnerships
    Significant initial investment is required for the manufacturing of biopolymer products, which poses a major challenge. Key market players are trying to combat this challenge by establishing joint ventures with agricultural companies to develop symbiotic relationships for further growth.

    • In September 2020, Cargill and Virent, Inc. collaborated to study the use of Cargill’s corn dextrose as feedstock in Virent’s BioForming process to create low-carbon biofuels and biochemicals.
    • In May 2020, Cargill and P&G partnered to transform lactic acid into bio-based acrylic acid for use in applications such as superabsorbent polymers (SAPs) in hygiene products and as thickeners in household paints.
    • In January 2020, ADM and LG Chem partnered to explore routes for the creation of biobased acrylic acid for SAPs used in a range of hygiene products such as diapers.

    Recent investments

    • In August 2020, Cargill invested USD15 million in a new bio-industrial plant in India that has the capacity to annually manufacture 35,000 tons of bypass fats and specialty waxes.
    • In April 2020, Sumitomo Chemical invested USD30 million in Conagen, a US biotechnology company, to develop innovative high-functional products and processes through synthetic biology.
    • In January 2020, UPM invested in a biorefinery at Leuna, Germany, which has the capacity to produce 220,000 metric tons of bio-based chemicals from wood per year.

    Conclusion

    Chemicals manufacturers are researching alternative bio-feedstock to lower the cost of manufacturing. They are collaborating to fund and support the development of bio-based chemicals.

    To fuel the adoption of bio-based products, governments worldwide are strongly supporting related R&D and the commercialization of innovative bio-based products. Governments are extending grants and loans for the construction of bio-refineries, strong bio-based market programs, and tax incentives to pioneer commercial production.

    Chemical manufacturers are making efforts to develop and commercialize bio-based solutions covering all chemical sectors; they are open to attempt cooperation models with consumers to make products economically and environmentally sustainable. Suppliers such as BASF and DOW are working on overcoming technical challenges and building partnerships; this could lead to significant growth of the global bio-based chemicals market by 2030.

    In today’s hyper-competitive market, procurement, R&D, and innovation teams continuously focus on developing innovative products to meet customers’ expectations of high performance, cost-effectiveness, and environmentally compliant materials. However, supply-side uncertainties hinder innovation. Using a systematic and methodological approach, Aranca can help you understand the supply market and supply chain risks arising from the use of new raw materials.



  112. Privatization of India’s Power Sector – A New Opportunity

    The Indian government recently proposed the Electricity (Amendment) Bill 2020, which could help re-energize the country’s power sector a

      to read | words

    published on Oct 16, 2020

    The Indian government recently proposed the Electricity (Amendment) Bill 2020, which could help re-energize the country’s power sector and attract foreign investment. The advent of the pandemic worsened the situation for a beleaguered industry already battling operational and financial inefficiencies. The reforms proposed could well be the solution to revive the sector. The bill proposing privatization of electricity distribution is currently with state governments for approval. If passed, it will open the doors to this sector for private domestic players as well as international entities seeking to explore its potential.

    With a view to privatize power distribution in India, the central government circulated the Electricity (Amendment) Bill 2020. The bill proposes to strengthen the power distribution aspect by allowing participation of private and international players. While all the three segments of the power sector – generation, transmission, and distribution – are essential, distribution companies (discoms) are perceived to be the critical link in this value chain. Currently, this segment is dominated by state discoms, with little to no private participation. The government hopes to soon unveil the much-awaited Atal Distribution Transformation Yojana (ADITYA). This would mark a huge step toward incentivizing states to involve the private sector in improving the efficiency of their discoms. While the state governments are yet to approve the bill, it would be a huge opportunity for private as well as international players to enter the Indian power sector.

    Most developed countries have privatized their electricity distribution businesses to enhance efficiency. Several have established regulators for the sector to protect the interests of consumers and act as legal and enforcement bodies to ensure a balance between private-sector participation and government control. India could follow this model to revive its power sector.

    Impact of COVID-19
    With the arrival of the pandemic and the subsequent lockdowns, India’s power distribution sector has been pushed into turbulence. It is dealing with liquidity issues caused by limited cash flows, unpaid dues for generators, uncertainty in revenue forecasts and the still prevailing low demand for power.

    Power generation, transmission and distribution services are public utilities classified as essential services, which ensures their uninterrupted operation during the lockdown. However, the closure of several industrial and commercial units impacted the demand for power, which resulted in low industry revenue over the past few months.

    Discoms faced other challenges including shortfall in revenue collection from higher tariff commercial and industrial (C&I) consumers, higher aggregates, technical and commercial losses, and an increase in the number of subsidized consumers paying lower tariff. Most discoms continue with the traditional practice of manual metering and billing, which requires them to deploy people on the field. During the lockdown, when movement was highly restricted, manual meter readings were abandoned. Revenue collection thus proved to be a problem. Also, shortage of household cash reserves exacerbated the problem of revenue collection from residential consumers.

    The Ministry of Power announced a liquidity support package of USD 12.31 bn for discoms. It even reduced late-payment penalties levied on generating companies and transmission licensees for unpaid dues. However, continued illiquidity affected overall capacity addition plans in the sector.

    Advantages of Privatization
    The private sector has been perceived to be more efficient and productive than the public sector. Though the main motive is profit, the private sector incentivizes all quality output. Some key advantages to be gained from privatizing India’s power sector are mentioned here.

    • Implementation delays – Power projects in the public sector face delayed implementation due to complex, intensive paperwork. The private sector would expediate the entire process.
    • Technological advancements – Private-sector companies will invest in technology to create the best processes. This could bring about optimal solutions and cost-effective measures.
    • Increased investment – With the entry of foreign participants, the economy stands to benefit greatly from foreign direct investment (FDI).
    • More participation – As there are few companies in the sector, there is a huge power-supply deficit across regions, which could be successfully eliminated with more players.
    • Fewer entry barriers – Private-sector participation could lower entry barriers to this segment.

    Finally, privatization of power distribution could help reduce the problems of rampant power theft as well as political interference in this sector.

    Challenges
    There are some hurdles in the route of privatization and the passage of the Bill may not be swift and smooth. State governments have already argued that privatization could foster monopolistic practices by the companies that win the bid. They are largely deterred by the perception that participants would be entirely profit-driven and would forsake all public interest. Without any government control, the sector could face large-scale disruption in the value chain.

    Despite the challenges in privatizing the Indian power sector, the positives far outweigh the negatives. The central government could weigh alternatives such as quasi-privatization or the franchisee model to ensure it retains some regulatory control over private participants, thus allaying fears of an out-of-control monopoly.

    Power forms a huge segment of India’s overall energy sector but is constantly plagued by issues of poor performance, lack of innovation, and low investment. Some of these problems can be mitigated by the private and public sector facilitating each other in achieving the common goal of ensuring uninterrupted, and streamlined power supply.



  113. Green Chemistry: Promoting Sustainability in the Paints and Coating Industry

    Rising concerns such as chemicals leaching into the environment, occupational health hazards faced by workers, etc., have led

      to read | words

    published on Oct 09, 2020

    Rising concerns such as chemicals leaching into the environment, occupational health hazards faced by workers, etc., have led several companies to proactively adopt “green chemistry” or sustainable chemistry, which promotes the development of sustainable products as well as efficient processes and systems.

    Concerns related to impact on environment and human health have driven the need for greater adoption of green chemistry in paints and coatings. However, the switch to green chemistry is fraught with several challenges related to achieving better functionality, regulatory compliance, and low costs. These issues are hindering progress towards commercial adoption. Going forward, increasing public awareness and stricter implementation of regulations is likely to augur well for wider adoption of green chemistry in paints and coatings.

    The traditional chemical industry focused on developing products that adequately fulfil the performance needs of the end user. It lacked a holistic approach to prevent or mitigate the detrimental effects of these products and their manufacturing processes on human health and the environment. Due to this negligence, we are confronting issues such as leaching of chemicals into the environment during their usage or end-of-life disposal, occupational health hazards faced by workers in chemical manufacturing units, and carbon emissions resulting in global warming.

    These rising concerns have led several companies to proactively adopt “green chemistry” or sustainable chemistry, which promotes the development of sustainable products as well as efficient processes and systems.

    Green chemistry in the paints and coatings industry currently focuses on process efficiency and resource conservation....

    Green chemistry plays an important role in the paints and coatings industry that serves a large base of both industrial and consumer end segments such as automotive, construction, electronics, aviation, marine, consumer products, and residential and commercial buildings. The concept of green chemistry in paints and coatings has evolved over the years; currently, it not only focuses on reducing the use of volatile organic compounds (VOCs) but also enables process efficiency enhancements, waste minimization, use of renewable feedstock, and so on.

    The following are the recent developments in green chemistry in the paints and coatings domain:

    • In 2020, Pittsburgh Plate Glass (PPG) launched its “compact paints system,” which eliminates the need for a primer layer, thus reducing the number of steps required to paint a vehicle. This has generated savings in capital and operational costs for the automotive painting segment, and led to a smaller paint shop footprint and reduced material and energy consumption, thereby increasing the overall efficiency of the coating process.
    • In 2015, Jotun introduced “green building solutions,” coating systems that are low in volatile organic content, to help its customers obtain “green building” certifications. The certifications extend benefits such as reduced operating costs and increased asset value.

    ...While the next wave of green chemistry is expected to focus on replacing fossil fuels and non-renewable sources with bio-based renewable feedstock

    Currently, fossil resources are highly used; however, in the next decade, a gradual shift to the usage of renewable sources as an alternative feedstock is expected. Currently, share of bio-based feedstock in the paints and coatings industry is estimated to be less than 5%.

    Types of Feedstock Used in Paints and Coatings Industry


    Companies have started using “smart drop-ins” in the form of bio-based reagents in their traditional processes. These smart drop-ins are typically added to increase the renewable content in the final product, which makes for better marketability as well as sustainable environmental-friendly products.

    Prospects of shifting to renewable sources as alternatives to fossil resources seem attractive...

    Unlike fossil fuel resources, products made from renewable resources cause less pollution, have less impact on human health and the environment, and emit less CO2 in the atmosphere.

    • Asian Paints launched its decorative coatings system (comprising paint, primer, basecoat, and pigment) made of natural components such as castor seeds, calcium carbonate, and neem oil. The product integrates the anti-fungal properties of neem oil, and has low volatile organic content and low odor.
    • AkzoNobel’s Makrofol EC polycarbonate film includes more than 50% of carbon content sourced from plant-based biomass; this reduces the product’s carbon footprint by approximately 20%. This product has properties such as improved chemical and weather resistance, high abrasion and surface resistance, and good optical properties, and is used for applications such as electrical insulation and thermoformed packaging.

    ...however, there are major hindrances in the commercial adoption of renewable sources

    Although adopting green products seems attractive, there are challenges, especially in commercial adoption.

    1. High complexity of green products-based molecules
      Given the high complexity of green reagents, their inherent properties cannot be modified to suit a particular application, which limits their application base. In contrast, fossil-based resources are highly customizable, which increases their scope of applications.
    2. Time-consuming and expensive certification process
      A new synthesis route requires re-certification of process from regulatory authorities, especially in the Americas and Europe. This process is expensive and time-consuming.
    3. High production cost and capital expenditure
      High production cost and capital expenditure hinder wide adoption. Green products are generally costlier than fossil-based products due to the limited availability of feedstock; moreover, processes and equipment to set up new synthesis routes require high capital expenditure.

    Commercial adoption of green chemistry can be promoted by implementing tighter regulations on use of fossil resources and increasing public awareness about the benefits of bio-based resources

    The paints and coating industry is required to comply with government and environmental regulations. The adoption of green chemistry highly depends on these regulations; therefore, the industry requires supportive government regulations that would promote the adoption.

    Consumer awareness about the detrimental effects of fossil-based resources and their environment-friendly alternatives would stimulate the demand for green products.

    Manufacturers and suppliers of paints and coatings need to be well-informed about the level of public awareness regarding usage of green chemistry paints and coatings, as it is a leading indicator of future demand. This demand would differ geographically; Europe is expected to lead in the usage of green products for paints and coatings primarily owing to high consumer awareness and strict government regulations, whereas countries in Asia would continue using fossil sources primarily due to their lower prices. Therefore, high consumer awareness and stringent regulations are anticipated to drive the adoption of green chemistry in the paints and coatings industry.



  114. The Future of Commercial Real Estate

    Since the onset of the COVID-19 outbreak, commercial spaces across the globe have remained shut, but have now

      to read | words

    published on Oct 06, 2020

    Since the onset of the COVID-19 outbreak, commercial spaces across the globe have remained shut, but have now started opening gradually. Currently, offices and commercial spaces are functioning at limited capacity, and companies are implementing stringent safety measures to ensure the health of their employees. The rental earnings of many commercial spaces have been impacted, as most industries are suffering from the financial fallout due to the pandemic. Companies are reconsidering the commercial real estate spaces they own, and they are planning to downsize or invoke WFH strategies as part of their operational guidelines. What will be the future of commercial real estate in these uncertain times?

    Commercial real estate has been evolving for decades. The advent of several innovations has led to paperless offices and flexible workstations, as most employees can now work on their laptops or tablets. The COVID-19 pandemic forced offices and workplaces to quickly adapt to the new normal. While “Work from Home” (WFH) and “Work from Anywhere” (WFA) were cultures already being practiced by few enterprises earlier, it has currently become an integral part of the new normal. Technology and security support have been quickly upgraded to meet these requirements. With the race for developing the viable vaccine still underway, the date for companies to start operating offices regularly and at full capacity remains undecided.

    Will WFH be the new normal?
    WFH has been practiced by organizations only on a need or case-to-case basis. It was not actively encouraged, as some enterprises faced difficulties in tracking productivity, while physical presence is essential in few other enterprises. However, these unprecedented times forced businesses to adopt the WFH model and develop work-around solutions to address issues of security breaches and enable business continuity. While challenges existed in the initial stages of the WFH process, few companies managed to continue their operations, encouraging many other organizations to seriously mull over converting this arrangement into a long-time or permanent solution, considering the following economic benefits it appears to provide:

    • Companies save on the rent and maintenance expenses.
    • Investments made in building a robust technical infrastructure to make WFH a safe operation can be effectively utilized.
    • Employees save on travel time and associated expenses, and they can devote the travel hours saved to tackle additional office work.

    WFH has generally been shunned by enterprises till it became the only course of action. However, its transition to a permanent mode of working remains to be seen.

    WFA – An emerging concept
    WFA was popularized by startups. New-age entrepreneurs, being strapped for cash, decide against investing in office spaces right away, and instead, prefer to work using their laptops at their favorite coffee shops! The concept has been taken a step further by some creative professionals who work on holidays or in their favorite restaurants. WFA focuses on employees working without being constrained within four walls.

    The rise of flexible office space
    Another option that companies could explore would be to start office on a rotational basis and hire flexible office spaces, thus reducing fixed costs. These flexible work arrangements, also known as “flexispace,” are ready office setups equipped with desks, chairs, computers, and phones. It is a dynamic workspace that can be arranged as per the company’s requirements. Such spaces also have meeting rooms, boardrooms, and technical equipment to make presentations.

    Due to the need for social distancing, offices will function at reduced operational capacity, and hence, working in a flexible environment is a cost-effective solution.

    Safety procedures
    Some offices would revert to the traditional mode of functioning, but they must ensure the safety of their employees. Accordingly, it will be critical for organizations to have their safety measures and procedures in check. Some steps that companies may take are:

    • Designing new setups to implement social distancing guidelines
    • Introducing basic safety measures, such as touchless mechanisms, at the premises
    • Temperature screening at all entry and exit points
    • Deploying wearables and smart PPE kits across many operations to enforce social distancing among employees

    Some companies have already taken technological initiatives to maintain high safety standards at their workplace in this COVID-19 era. For instance, a leading Indian diversified entity has adopted various digital measures to ensure safe and sanitized work environment in its manufacturing establishments and mine locations. The technology allows tracking and enforces “Quick Response Squad” guidelines. Furthermore, it disallows crowd gathering or social distancing violations at its factory premises via security camera monitoring.

    Similarly, a leading software company launched a General Data Protection Regulation (GDPR)-compliant return-to-work app, which recommends detailed reports, visualization, and superior analytics on the work environment to take important day-to-day decisions. Some of the important features of the app are work shift rotation, incident reporting, high-risk profiling, seat allocation, alerts on accidental congregation, and contact tracing.

    With uncertainty around the availability of a vaccine in the near future, COVID-19 looks like a reality we would eventually have to live with. Therefore, workplaces globally would also shift and evolve to align with the new normal. The commercial real estate landscape is changing and needs to synchronize with this emerging reality.



  115. Organic Food - A Growing Trend Amid the Pandemic

    Health, fitness, and organic have been buzzwords on the global food scene for some years now. The recent

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    published on Oct 06, 2020

    Health, fitness, and organic have been buzzwords on the global food scene for some years now. The recent pandemic has further accorded prominence to the concept of healthy living via food choices. This trend has spurred an increase in the demand for health supplements, fitness programs, and organic food. Data shows that demand for organic foods, which was already on a steady rise over the past few years, has suddenly spiked in the backdrop of the pandemic. So, is this a short-term trend or a long-term effect that would outlast the pandemic?

    Market Characteristics
    The demand for organic food has surged over the past few years. With people’s increasing interest in healthy lifestyles, sustainable products, and natural ingredients, the sales of organic products, especially in the food category, have increased vastly. Although conventionally produced foods yet hold the lion’s share of the market, the trend is slowly changing to accommodate more products that buck the trend.

    Global Organic Retail Sales

    Source: FiBL Survey 2020 | ROW = Oceania, Africa, and Latam Regions

    As per the recent FiBL survey results, the demand for organic food from emerging nations is higher than that from developed nations. Growth has been particularly high in Asian markets. Several countries in Asia were hit by multiple food scandals – such as the finding of melamine traces in dairy and infant formula, rotten meat, and sewage oil in food – which prompted many consumers to become more conscious of their eating habits.

    Organic Packaged F&B Consumption Forecast

    Source: Global Organic Trade

    Apart from those mentioned, factors such as increasing retail distribution, rising consumer awareness of organic production methods, and news of popular food companies entering the segment have contributed to the high demand emerging from developing nations. Developed countries are also putting up a steady demand for organic foods. In 2018, retail organic product sales in Europe were valued at EUR40.7 billion. In fact, the EU is the world’s second-largest single market for organic products, after the US. The sheer surge in the number of processors and importers in developed nations indicates a healthy adoption of organic food by consumers. Europe alone has over 400,000 organic food producers and 71,000 processors. In terms of per capita expenditure on organic food, developed countries are much ahead of the others, with Danish and Swiss consumers spending EUR312 annually, about six times more than the average European.

    Factors Boosting Demand for Organic Food
    The new-age consumer is more conscious of what they consume. Health, nutrition, and superfoods are highly popular terms among the fitness-conscious crowd.

    The characteristics that appeal to this demographic are pushing up the demand for organic foods. Some of these characteristics are as follows.

    • Organic food avoids additives that have been previously linked to health problems such as heart disease, osteoporosis, asthma, food allergies, or hyperactivity.
    • Organic standards prohibit the use of genetically modified (GM) organisms or crops as food.
    • Tests of conventional foods have frequently shown increasingly high levels of pesticides. Meanwhile, organic food is farmed with natural resources, without using chemical fertilizers or pesticides.
    • Organic farming is an environment-friendly, sustainable option.
    • No animals are harmed while growing or processing organic food.
    • Organic food is believed to be more nutritious and healthier than conventionally grown food.

    Due to the many benefits its offers, organic food is fast becoming a regular feature in many kitchens worldwide. This trend received a further boost when the global pandemic hit countries.

    COVID-19 and Organic Food Market
    It has been historically proven that epidemics/pandemics become the tipping points for consumers to seek a healthy lifestyle and thus better food options versus regular products. Informed customers in a post-COVID-19 era are reading up food labels to find the most nutritious options. As ‘farm fresh’, ‘environment-friendly’ options are deemed more wholesome, organic food products are flying off the shelves.

    Several food retailers witnessed a surge in the demand for organic foods and clocked unprecedented volume sales during the initial months of the pandemic. Whole Foods Market, world’s largest natural foods retailer, had to curb its online order taking due to the overwhelming demand. In the UK, Abel and Cole, a popular organic foods retailer, registered a 25% increase in its sales orders. In France, some organic foods retailers reported sales growth of over 40% since COVID-19 hit their shores.

    In India, organic food retailers had a stellar performance as consumers clearly opted for healthier food. Pan-India retailer, Naturally Yours, witnessed a 70–80% growth in the demand for organic foods. Other retailers – such as Suryan Organic, I Say Organic, Healthy Buddha, Nourish Organics and Natureland Organics – also registered strong growth in their sales.

    In the US, organic produce clocked a 50% increase in sales within the first quarter of this year. Demand for various organic food products surged, including that for organic packaged and frozen foods. This boost was seen after 2019, which was already being called the “banner year” for organic food due to high sales volumes.

    Challenges in Organic Foods Market

    • Shorter shelf life – Ironically, the very lack of chemicals that make the produce completely organic also works against it. Chemicals and preservatives help keep food fresh during transit and while on the shelf. However, organic produce spoils fast as decay is a natural process for all food as soon as it is harvested. Therefore, organic products generally have a shorter shelf life than conventionally grown or sourced foods. At times, retail merchandisers take on huge losses by having to trim their stock of organic produce and avoiding huge inventories. The transportation and distribution of organic food products is also difficult as it requires the involvement of multiple teams at different levels of the value chain.
    • Price competitiveness – Organic farmers usually run small businesses; it is difficult for them to achieve economies of scale in transportation, distribution, and cold chain efforts. Additionally, organic farming is a time-intensive process with obstacles such as higher operating costs, a labor-intensive process, and devastating pest attacks playing villain to their heroic efforts. Due to these challenges, organic farming takes up barely 70 million hectares out of an estimated 4.8 billion hectares of global cultivable. These factors drive up the price of the end-product, thereby reducing any negotiating power of buyers.
    • Fake products – The organic food industry also battles fake products. With the help of incorrect labelling, non-organic foods are often touted as organic. Manufacturers and distributors have now implemented measures to reduce the risk of fake organic claims, but it is a long battle and needs regulatory intervention at various stages.

    Will Organic Foods Rule the Market?
    The onset of the pandemic drove a change in consumer behavior, tilting its towards the ‘health halo’ effect that organic foods carry. Technically, the term ‘health halo’ implies an overestimation of the benefits of an item based on a single claim. In the backdrop of epidemics or pandemics, consumer buying behavior skews towards accessing the most nutritious, wholesome foods available at the time.

    Though organic food is a sustainable option, it is not necessarily the most nutritious choice. The many organic food brands that have mushroomed recently may cleverly use words to portray their product as a repository of health benefits. The fact remains that the key benefit of all organic food is the lack of chemicals – it may or may not be the most nutritious option. Meanwhile, the trend of eating organic ('healthy' by implication) is still gaining traction due to its natural ingredients and the fresh-from-the-farm tag.

    In the current period, the extraordinary spike in demand for organic food could be well credited to the pandemic but it is highly likely that, post this surge, the demand will stabilize and this segment will regain its normal growth rate.



  116. The Need for Sustainable Building Material

    The demand for sustainable building materials has been slowly rising over the past few years. Apart from the

      to read | words

    published on Sep 28, 2020

    The demand for sustainable building materials has been slowly rising over the past few years. Apart from the eco-friendly factor, there are several other advantages of using these materials; yet their adoption rate remains limited. There is an imminent need to increase awareness about these materials and the benefits they accord as this would further encourage the construction industry to deploy sustainable material on a large scale.

    'Going Green' and 'sustainability' have become new buzzwords in most industries over the past decade. The need for environment friendliness was reinforced when the global pandemic seized the planet and forced lockdowns across countries. The consequent dissipation of air and noise pollution showed us a cleaner environment. It also nudged the global construction industry into revisiting the use of eco-friendly material to help reduce the negative impact on the planet.

    'Green buildings' (made from sustainable materials) have been present for some time now, but only recently gained wide recognition. Green constructions are known to maximize resource conservation and minimize the negative effect on the environment. Also, these materials do not compromise on safety, quality, and other basic requirements of robust constructions.

    Some organic and innovative materials being increasingly deployed in modern constructions are mentioned here.

    • Hempcrete – Made from the woody fibers of the hemp plant, hempcrete is a strong, yet light, concrete-like material. As it is lightweight, it requires less energy for transportation. It also imparts a classy, unique look to the final output.
    • Bamboo – Considered the perfect building material, bamboo’s light weight, tensile strength, and fast-growing renewable nature make it an ideal choice for frames. It can easily replace more expensive options such as concrete and rebar. As it is available in most regions worldwide, bamboo can be procured locally, thus reducing the overall cost of construction.
    • Ferrock – Made of recycled material, ferrock has emerged as a popular sustainable material. Created from waste such as steel dust and ground-up glass, it is both strong and flexible. The biggest advantage it offers is its ability to absorb more carbon dioxide than it creates when it hardens.
    • Green charcoal bio-bricks – Made from charcoal, soil, organic luffa fiber, and air, the green charcoal bio-brick is the new material on the block. It is known to help cool the ambient temperature and also cleans air.
    • Recycled plastic – Overuse of plastic over the decades have clogged landfills and polluted oceans. The need to reuse plastic, helped along by innovative thinking, has birthed a type of concrete made of ground-up recycled plastic that also helps curb greenhouse gas emissions.

    These are only a few examples of green building materials. The list includes mycelium, wood, ashcrete, and timbercrete, among others.

    Benefits of 'going green'

    • Sustainability – The first and biggest advantage of green construction materials are that they are environment-friendly. The materials are either made from recycled content or use renewal energy, therefore allowing for the efficient use of resources. Most of these materials are recyclable and do not add to waste. They are also more durable than manufactured material.
    • Indoor environment – Due to usage of low or non-toxic material in green buildings, the quality of air indoors is much higher than in building using other material. It has been proven that green building products emit few or no carcinogens, irritants, or reproductive toxicants. The materials are moisture-resistant, thus needing much less maintenance.
    • Energy efficiency – The use of sustainable material helps reduce energy consumption in buildings and facilities.
    • Durability – Sustainable buildings are known to last longer and require less maintenance, thus saving on costs in the long term.
    • Cost – Sustainable materials are usually locally available, which saves cost of transportation. As they are also energy efficient, they help reduce the overall cost of construction.

    Due to the many advantages, the demand for green materials is growing rapidly. Yet, wide-scale adoption has not been possible. This could be due to some critical challenges.

    • Lack of awareness – Awareness of the availability and functions of many of these new-age green products is fairly low. Information about their availability, cost, and function is limited, leading to misconceptions about viability and long-term cost savings.
    • Skill gap - Designing with green material requires an understanding of the material’s characteristics. The design must factor in the material’s capabilities, yet be aesthetic. This requires a special skill set, which is currently limited.
    • High capital cost – Ironically, many builders believe green buildings are expensive to put up, while the opposite might be true. Though some of these materials may cost a bit more initially, their usage brings down the cost of construction; their durability makes the end construction require less maintenance.
    • Technical issues – Building with sustainable material is a comparatively complex process. There needs to be clear communication between the construction supervisor and project managers to deliver a desired outcome.

    Sustainable buildings arising from organic material help reduce the carbon footprint. The impact of climate change and increasing pollution levels are felt by all. Sustainable buildings thus aid the cause of maintaining environment stability. Moreover, they are more durable, cost-effective, and encourage creativity. The global construction industry must therefore recognize the myriad benefits that sustainable building materials offer and support their wide-scale adoption.



  117. Inside of the Rare Disease - Tyrosinemia

    Historically, rare diseases are neglected primarily because of lack of disease awareness and diagnosis, limited patient population, and

      to read | words

    published on Sep 28, 2020

    Historically, rare diseases are neglected primarily because of lack of disease awareness and diagnosis, limited patient population, and sparse epidemiological data. However, in recent past, rare diseases are witnessing intense R&D activity as companies are leveraging drugs for rare diseases due to less regulatory hurdles, shorter time-to-market, exorbitant cost of drugs developed, and extended market exclusivity. In this article, we provide insights on unmet medical needs, patient journey, treatment algorithm, and future outlook for tyrosinemia - a rare disease affecting 1 in 100,000 people.

    The market for tyrosinemia is currently valued at USD 99 Mn, having recorded a compound annual growth rate (CAGR) of ~1% from 2013 to 2018. The subdued growth can be attributed to low rate of diagnosis of the disease and limited options for treatment.

    Until recently, Nitisinone [(2-(2-nitro-4-trifluoromethylbenzoyl) cyclohexane 1-, 3-dione, NTBC)] was the only available therapeutic treatment option for those afflicted by tyrosinemia. Prior to this, low protein (tyrosine and phenylalanine) diet was the single recourse available to halt its progress. Two drugs in the market, both with Nitisinone as an active pharmaceutical ingredient (API), were Orfadin (capsule/suspension) by Swedish Orphan Biovitrum International AB and Nityr (tablet) from Cycle Pharmaceuticals.

    In May 1995, the Office for Orphan Product Development gave NTBC the Orphan Drug Designation. In January 2002, NTBC received the US Food and Drug Administration (FDA)’s approval. In 2005, European Medicine Agency (EMA) approved Nitisinone under exceptional circumstances.

    FDA evaluated NTBC in an open-label study involving around 180 pediatric patients from around 25 countries at 87 sites. The study revealed a four-year survival rate of around 88% with children less than two years old. Nitisinone is generally prescribed at 1.0 mg/kg/day, although individual requirements may vary. Dosage should be adjusted to maintain Nitisinone levels in the blood at 40–60 µmol/L.

    In 2017, FDA approved Nityr (Nitisinone tablets) for the treatment of hereditary tyrosinemia type I (HT1), following the expiry of SOBI’s Orfadin. Nityr tablets are the bioequivalent of Orfadin (Nitisinone) capsules. The tablets can be administered with or without food and are available in strengths of 2 mg, 5 mg, and 10 mg. However, Nityr tablets do not need refrigeration and can easily disintegrate in water; therefore, they can be easily administered to pediatric patients.

    Disanit, manufactured by Italy-based Dipharma, is an improved generic version of Orfadin. The drug is currently being evaluated for marketing authorization in Europe for the treatment of HT1. Apart from this single generic drug, there are no other new drugs in the pipeline.

    What is the pathophysiology of tyrosinemia?
     The fumarylacetoacetate hydrolase (FAH) gene produces the FAH enzyme. Deficiency of FAH leads to an increase in fumarylacetoacetate and tyrosine and their metabolites in the kidneys, liver, and central nervous system (CNS). A defect in FAH gene results in tyrosinemia, a rare disease.

    There are three forms: tyrosinemia type I (HT1), type II (HT2), and type III (HT3). HT1 affects both genders equally, whereas types II and III are comparatively less common.

    HT1 is an autosomal recessive genetic disorder that leads to the deficiency of the FAH enzyme, thereby affecting the tyrosine breakdown. The various symptoms associated with tyrosinemia include failure to gain weight, developmental abnormality, fever, diarrhea, vomiting, hepatomegaly (an abnormally large liver), and jaundice-like symptoms (yellowing of the skin and eyes).

    The disorder, if left untreated, can lead to further complications such as liver disease, renal tubular dysfunction, cirrhosis, and hepatocarcinoma. The risk of hepatocellular carcinoma (HCC) is estimated to be 18–37% in untreated tyrosinemia patients.

    Notably, around 10% of newborns have temporarily elevated levels of tyrosine (transient tyrosinemia). This is not a genetic condition and usually occurs due to deficiency of vitamin C or liver enzymes dysfunction primarily on account of premature birth.

    How prevalent is tyrosinemia?
    Given the inconsistency in clinical presentation, it is estimated that less than 50% of afflicted individuals get diagnosed with tyrosinemia.

    Around 1 individual in 100,000 people is affected with HT1 worldwide. It is estimated that 70,000 children across the globe are affected with tyrosinemia.

    The highest number of cases is registered in Norway, Sweden, Finland, and Quebec in Canada, mainly owing to the high rate of diagnosis in these countries.

    How is the disease diagnosed?
    The symptoms of tyrosinemia in infants are low physical growth and hepatomegaly (an enlarged liver). Presence of tyrosine metabolites and succinylacetone in the urine confirms tyrosinemia. Diminished FAH activity in liver tissue or cultured fibroblasts is also an indicator; however, the test is not available easily.

    Tandem mass spectroscopy is one of the ways employed to measure succinylacetone in newborn blood spot screening. DNA analysis is recommended to detect tyrosinemia for families where specific gene-causing mutation has been identified.

    Next-generation DNA sequencing techniques such as exome sequencing and whole genome sequencing (WGS) assist in detecting mutations responsible for the disease.

    Baseline tests such as blood/plasma, blood gases, liver function tests (bilirubin, aspartate and alanine aminotransferase), glucose and ammonia, full blood count, α-fetoprotein (AFP); ultrasound of liver and kidney; and MRI for nodules are the other investigations to confirm tyrosinemia.

    Prenatal diagnosis, entailing evaluation of succinylacetone and DNA analysis in amniotic fluid, can be performed as well. Molecular genetic testing for FAH gene mutations is a confirmatory test for tyrosinemia diagnosis.

    What are the unmet medical needs?
     If untreated, HT1 may lead to chronic liver failure and hepatic cancer. Infants suffering from this fatal disease will not survive beyond two years in the absence of timely treatment.

    The main issues with HT1 are that it gets rarely detected and options for treatment are few. Moreover, upon diagnosis, treatment should start immediately involving administering of Nitisinone and a strict diet. While the diet is difficult to follow, it is essential to improve the patient’s condition.

    Exhibit I – Unmet Medical Needs


    What is the patient journey and treatment algorithm of tyrosinemia?
    Patients (newborns) with tyrosinemia experience hepatomegaly, splenomegaly, cirrhosis, liver failure, tubulopathy, nephromegaly, Franconia syndrome, seizures, and low growth rate.

    Typical age of patients at the clinical onset of tyrosinemia is around 9 months. The mean age of diagnosis is reported to be ~16.3 months. Patients receiving supportive care or nutritional treatment have a three-year survival rate of 10%. Patients undergoing liver transplantation have a six-year survival rate of 60%.

    The leading causes of death among these patients are fulminant liver failure, porphyria-like neurologic crisis, and metastatic hepatocellular carcinoma.

    Exhibit II – Patient Journey and Treatment Algorithm – Tyrosinemia Type I


    What are the available treatment options?
    As mentioned earlier, Nitisinone was the only approved and available treatment for HT1. It was discovered incidentally, and is a byproduct of agrochemistry. Orfadin, a synthetic reversible inhibitor of 4 hydroxyphenylpyruvate dioxygenase, is prescribed, along with dietary restrictions of tyrosine and phenylalanine.

    Treatment with Nitisinone and a low-tyrosine diet should commence on priority after diagnosis. Initiation of Nitisinone therapy in the initial period is warranted to prevent HCC, liver and kidney dysfunction, rickets, and neurological disorders.

    To prevent tyrosine levels from shooting up, a low-protein diet, along with amino acid mixtures devoid of tyrosine and phenylalanine, is recommended. The plasma tyrosine levels should be kept below 400 µM. Nitisinone does not have major side-effects; eye symptoms may appear but are reversible.

    Liver transplantation is the last resort to tackle tyrosinemia. It is recommended for children who have end-stage liver failure at initial diagnosis and are unresponsive to Nitisinone therapy, or who have documented evidence of malignant changes in hepatic tissue.

    Transplant recipients require long-term immunosuppression. Mortality associated with liver transplantation in young children is approximately 10%. Transplant recipients can also benefit from low-dose (0.1mg/kg/day) Nitisinone therapy to prevent ongoing renal tubular and glomerular dysfunction resulting from high levels of succinylacetone in the plasma and urine.

    Physicians experienced in treating HT1 are deemed legitimate to prescribe these medicines as the dosage should be decided based on the patient’s weight and biochemical tests. Nutritionist play a key role in managing children with inborn errors of metabolism who require a low-protein diet. To ensure the right dose for the patient is maintained, blood test should be performed routinely.

    What is the outlook for tyrosinemia management?

    • The market for tyrosinemia is expected to remain stagnant, declining marginally to USD 98 Mn by 2021 primarily due to:

      • Low disease diagnosis rate
      • Limited patient pool
      • Single treatment option
      • Expensive treatment [the cost of Nitisinone per person per year (PPPY) is estimated at USD 51,493 ]
    • To improve the quality of life for patients, newborn screening programs, in combination with administration of orphan drugs, proper monitoring, genetic counselling, and following clinical practice guidelines, are indispensable. In the light of the present scenario, there is significant scope for evaluating and commercializing better treatment options for curing tyrosinemia.



  118. Sustainability Measures and Government Regulations to Bolster Aluminium Recycling

    Better recyclability and lower energy consumption have driven the adoption of recycled aluminum over past decade. However practical

      to read | words

    published on Sep 16, 2020

    Better recyclability and lower energy consumption have driven the adoption of recycled aluminum over past decade. However practical challenges with the collection mechanism, coupled with resistance from primary aluminum producers have relatively slowed down the rate of growth in demand. Going ahead, a favorable regulatory environment and on-going work on developing closed loop ecosystems are expected to help the recycled aluminum industry tide over the challenges.

    Higher energy savings, better recyclability make aluminum preferred metal for reuse
    According to the American Iron and Steel Institute (AISI), steel, aluminum, copper, silver, brass, and gold are the most recycled metals. However, aluminum trumps the others as it can be re-melted several times, without any significant loss in quality, due to its physical and chemical properties.

    The recycling of aluminum, or secondary aluminum production, is encouraged as it offers benefits such as preservation of natural resources (bauxite ore), energy savings of over 90%, and limited greenhouse gas (GHG) emissions (5–8%), compared to primary aluminum production. Owing to its high recyclability, aluminum is therefore considered an ideal material for the circular economy.

    Metal

    Gross Energy Required (MJ/Kg)

    Global Warming Potential (Kg CO2)

    Energy Saved Via Recycling (%)

    Aluminum

    190–230

    22.4

    90–97

    Copper

    30–90

    3.3–6.2

    84–88

    Iron

    20–25

    2.3

    60–75

    Lead

    25–50

    2.1–3.2

    55–65

    Source: Innoval Technology

    Over time, the share of recycled aluminum in overall aluminum production has grown steadily, currently accounting for 20–25% of the global production. Countries like Switzerland, Norway, Finland, and Germany recycle over 90% of their aluminum beverage cans. Besides beverage containers, aluminum from automobiles, construction material, airplanes, and other industrial products can also be recycled.

    Chart 1: Global Aluminum Production
    (‘000 Metric Tonnes)

    Chart 2: Share of Primary and Recycled
    Aluminum (%)

    Source: International Aluminum Institute, Aranca Analysis

    Growing end-use demand and the paucity of primary aluminum production have urged countries to maximize their collection of aluminum scrap and develop resource-efficient scrap treatment and melting processes. The mature markets of Europe, North America, and Japan show a high rate of adoption of recycled aluminum due to their robust recycling networks, which ensure effective scrap collection and secondary production. The use of recycled aluminum is also supported by an established market that offers favorable prices for it and develops applications from this secondary production such as automobile parts, building materials, and food & beverage cans.

    Increasing adoption across key end-use sectors drives demand for recycled aluminum
    Construction: With the adoption of green building standards on the rise, builders and architects are encouraged to deploy materials that leave minimal impact on the environment. This initiative has spurred the demand for recycled aluminum in the construction industry. Castings from recycled aluminum are thus primarily used in window frames, roofing, siding, staircases, curtain walling, catches for windows, air-conditioning systems, door handles, and heating elements.

    Automotive: As OEMs attempt to improve the fuel efficiency of their vehicles through automotive light weighting, aluminum helps by enabling weight savings of up to 50% versus other materials. In addition to automotive light weighting, several companies are working to minimize their carbon footprint by including closed-loop recycling in their production cycles. Thus, recycled aluminum largely finds application in castings for cylinder heads, engine blocks, gearboxes, etc. Furthermore, megatrends in the automotive industry such as e-mobility and additive manufacturing are expected to spur the demand for recycled aluminum.

    Foods and Beverages: Recycled aluminum is used to manufacture cans for foods and beverages. The cans are collected from bins along with other metals, re-treated, and processed to produce new aluminum cans. The practice is also common in the food packaging industry, for example, in applications like food-wrapping foil.

    Challenges persist in rapid/complete move to secondary aluminum
    Cost-effective collection and sorting: The automating and optimizing of pre-sorting, shredding, and separation technologies and making these processes broadly available remain key challenges in the recycling industry. Although there have been developments in sorting technology for the industrial separation of aluminum alloys, a cost-effective solution to process the various grades and alloys of aluminum scrap remains a challenge for the recycling industry.

    Difficulties in implementing regulations: The secondary aluminum industry is mainly hindered by resistance from the primary aluminum producers’ lobby as imports of cheap, secondary aluminum impacts the sales and margins of the domestic primary aluminum players. Meanwhile, secondary aluminum producers are urging governments to rationalize import tariffs as higher duty would raise their cost of production. Thus, steps need to be taken by the government to beat the differences in the duties levied.

    Increased focus on sustainability, support from government regulations expected to accelerate adoption of recycled aluminum in long run
    Although the issues of sustainability may take a backseat in the short term due to the pandemic, with the recovery of the global economy, these would resurface and influence consumer expectations and preferences in the long term. The first among industries to be affected would be packaging. A surge in the anti-plastic trend would drive up the demand for aluminum packaging.

    As packaging companies, especially in the developed markets of Europe and North America, continue with closed-loop recycling, the demand for recycled aluminum is expected to increase rapidly. Global brands such as Coca Cola and PepsiCo have shown their intent to cut down on plastic waste, with plans underway to introduce new aluminum packaging as an alternative. Technology company Apple plans to launch upcoming iPads and Apple watches made of 100% recycled aluminum. Moreover, as the global economy recovers from the pandemic, end-use applications, especially the automotive and construction industries, are expected to add to the overall demand for recycled aluminum.

    Moving ahead, these developments in aluminum recycling should be well supported by government regulations such as container-deposit legislation and others to encourage and ensure effective scrap collection. Additionally, technological advancements in sorting the grades of aluminum scrap and developing energy-efficient furnaces would maximize the efficiency of the aluminum recycling industry.



  119. Solutions in Medical Devices – A Rising Trend

    Technological transformations in the field of healthcare have brought forth several brilliant lifesaving innovations in medical devices. From

      to read | words

    published on Sep 14, 2020

    Technological transformations in the field of healthcare have brought forth several brilliant lifesaving innovations in medical devices. From helping individuals monitor their health regularly to acting as life support, these devices are present across the value chain. Thanks to technological advancements, many new smart devices have now entered the market, enabling healthcare providers to offer the best treatment possible.

    Disruptive technologies in healthcare and life sciences are imperative as they enable longer life spans and a healthier individual. Recently, there have been many innovations in medical devices that have been beneficial for those living with chronic diseases. These allow healthcare services to be available out of the confines of hospital walls and integrated with user-friendly, accessible devices. This is a major business opportunity for medical equipment businesses to engineer a shift in the industry landscape.

    Over the past few years, there have been some brilliant innovations in the medical devices space by well-known companies.

    1. Glaukos – The company introduced the Glaukos’ iStent inject. This is an eye implant designed for use in cataract surgery to reduce intraocular pressure in adults. It eases the procedure for patients with glaucoma.
    2. Impulse Dynamics – The company innovated a cardiac contractility modulation (CCM) therapy for heart failure. This implantable device treats severe congestive heart failure (CHF) in a minimally invasive manner.
    3. Lynch Biologics – In 2019, Lynch Biologics launched a recombinant human-platelet-derived growth factor-BB (rhPDGF-BB). It stimulates the growth of mesenchymal stem cells and helps in mitogenesis, blood vessel growth from existing blood vessel tissue, and blood vessel formation.
    4. Endomagmetics – The Magtrace and Sentimag magnetic localization system was introduced in 2019 for cancer patients. The system involves an injectable magnetic tracer and a magnetic sensing probe and base unit to help in biopsies of sentinel lymph nodes.
    5. Boston Scientific – The company developed a sentinel cerebral protection system for aortic valve replacement procedures. It captures and removes thrombus/debris during the process.

    These are just some of the breakthroughs in technology that are transforming the healthcare space. Medical device companies have seen the immense potential in this area and are investing in the development of technologies that are important and adjacent to actual medical care. They are creating solutions that are:

    • Closest to the core offering and a part of the overall procedure
    • Agnostic or standalone processes
    • Meant for the use of surgeons or doctors
    • Targeted at end-users or patients

    Creating a product is just the first step in the journey. Medical-device manufacturers must define the right business models and go-to-market strategies for their innovations. They must have answers to questions such as the following:

    • Who is the target customer? – Doctor, technician, or end customer
    • What are their main concerns? – Price, quality, or convenience
    • What are the skills needed to operate the new innovation? Is this skill set present in the market or will it call for training?
    • Which regions should the company target to launch its products?
    • What is the value addition for the customer?
    • Will customers be able to afford the solution offered?
    • How will the maker scale and commercialize the solution to earn profits?

    These questions need deep research on market trends and industry dynamics. Through data collection, analysis and understanding of patterns, and evaluation of available information, these questions can be answered satisfactorily, thus allowing companies to make critical decisions.

    Technological advancement is fast and could outlast the lifespan of a recent innovation. At times, an entire product line becomes obsolete if a more sophisticated solution emerges. Therefore, companies need to be up to speed about disruptive technologies and continuously upgrade themselves. Innovation should be accompanied by a precise go-to-market strategy to achieve profitable results.



  120. Has COVID-19 Impacted the Growth Prospects for Wide Bandgap Materials?

    The COVID-19 outbreak abruptly paused the supply chain for wide-band gap materials, however reoccurrence of demand green shoots

      to read | words

    published on Sep 01, 2020

    The COVID-19 outbreak abruptly paused the supply chain for wide-band gap materials, however reoccurrence of demand green shoots in 2Q 2020, is likely to reset the market from a proverbial pause mode to an active fast forward stage as wafer suppliers mitigate the existing supply chain conundrum and plan for a longer haul in the semiconductor material market.

    Power electronics devices such as diodes, thyristors, and transistors (MOSFET and IGBT) are steadily being adopted across various end-use sectors, boosted by key megatrends including climate change, government subventions, artificial intelligence, and recent technology developments. Consequently, steady penetration of silicon carbide and gallium nitride was anticipated in the market, for which key suppliers had increased their capacities to meet the growing demand. However, the abrupt slowdown of the global economy due to the COVID-19 pandemic impacted the overall growth trajectory of silicon carbide as well as gallium nitride, raising vital questions among suppliers – Will the pandemic have short- or long-term effects? How will suppliers respond to the supply chain challenges posed by this global pandemic?

    Limitations of the conventional semiconductor material, i.e. silicon, led to a rapid rise of “wide bandgap” semiconductor materials, especially silicon carbide and gallium nitride. Both materials allow for greater power efficiency, smaller size (drive miniaturization), and lighter weight (volume reduction). These attributes enable the reduction in life-cycle costs across a wide range of applications, and permit wide bandgap material-based devices to operate at much higher temperatures, voltages, and frequencies compared with their conventional silicon-based counterparts.

    However, the COVID-19 pandemic continues to severely affect the overall market. Lockdown measures imposed due to the pandemic have negatively impacted the overall growth potential of wide bandgap semiconductor materials, owing to supply restrictions as well as slump in adoption by end-use industries.

    Demand for silicon carbide materials remains resilient supported by revival in automotive sector....
    The biggest impact of the COVID-19 pandemic was on the demand for silicon carbide (SiC) semiconductor material, as all the major automotive OEMs had to halt their production temporarily (first in China, followed by other key regions such as Europe and North America). Demand was further impacted due to trade restrictions levied on inter-country imports and exports of SiC. Revenue generated from automotive power semiconductors applications plummeted to around USD250 million in 2020 from USD300 million in 2019.

    Green shoots of demand growth were observed in 2Q20, with OEMs in China as well as a few regions in Europe resuming production. However, pain points related to component shortage and reduced workforce at production facilities are expected to persist for another two quarters, before production at OEM facilities reach full capacity.

    On the supply side, the COVID-19 crisis had minimal impact on the production of SiC wafers, due to automation at production facilities and minimal workforce requirements. Manufacturers of SiC wafers have been facing the challenge of supply chain disruption. Wafer suppliers are primarily concentrated in the US and European regions. However, trade tensions between the US and China have affected the demand of end consumers located in China. This impact was further aggravated by the COVID-19 pandemic, which resulted in China accelerating its efforts to develop the SiC wafer industry.

    To overcome this supply chain conundrum and ensure that cash flows can be maintained for the business, key SiC wafer manufacturers in the market are strategically focusing on local customers as well as alternative end-use segments.

    .... While long term growth prospects for gallium nitride materials remain unaffected driven by demand from consumer electronics sector
    Impact of the COVID-19 pandemic on gallium nitride (GaN) has been minimal, compared with SiC. Demand for GaN slightly dipped in 1Q20, primarily due to budget restrictions of end consumers, especially smartphone OEMs (as GaN-based devices are expensive). Consumer electronics account for more than 80% of the overall GaN semiconductor device market, i.e., around USD55 million. Furthermore, reduced consumer spending along with temporary closures of factories led to the decline in smartphone production by 20–30%.

    The market witnessed growth from 2Q20, driven by uptick in the production of consumer electronics, especially smartphones. Furthermore, as China’s economy is closer to recovery compared with that of Europe and the US, major China-based OEMs such as Xiaomi, Huawei, and Vivo are steadily increasing their production utilization rates for GaN-based fast chargers.

    Although demand for GaN faced certain production challenges due to lockdowns imposed worldwide, the supply side saw minimal impact on production due to automation at production facilities. However, similar to SiC, trade tensions between the US and China as well as the COVID-19 pandemic have gravely impacted the consumer electronics market in China. To mitigate the impact of trade restrictions, GaN semiconductor suppliers are strategically focusing on the domestic market by collaborating with local customers through long-term contracts.

    Following a minor bump in demand due to COVID-19 pandemic, adoption of wide band gap will be expected to stay on track in the long term....
    Although the emerging wide bandgap semiconductor market witnessed a steep fall in demand during 1–2Q20, it is anticipated to recuperate from the impact of the COVID-19 pandemic. Moreover, it will continue to increase at a CAGR of around 18–20% from USD370 million to USD900 million by 2025. Furthermore, rebound in sales of automotive and consumer electronics is envisioned by end users of wide bandgap semiconductor materials by early 2021 (based on countries’ ability to avoid the second wave of the COVID-19 outbreak through the development of vaccines and other treatments).

    Road Map of SiC-based Devices
    (Values in Million)

    Road Map of GaN-based Devices
    (Values in Million)


    Hence, suppliers must plan strategically to develop capabilities to target growing end-use applications in the future. Based on our observations, the following tactical and strategic maneuvers can be undertaken by wide bandgap semiconductor material suppliers:

    • Short term – Material suppliers should continue to focus on consumer electronics and telecommunication sectors (till the end of 3Q20), which witnessed minimal impact from the COVID-19 pandemic.
    • Long term – SiC and GaN material suppliers should enhance their capacities and develop mass production facilities (especially for GaN) to cater to the growing power electronics sector in the future. Furthermore, these suppliers should collaborate with power semiconductor device manufacturers to develop newer application segments.



  121. ISO 20022: The Future of Payments

    ISO 20022 is an upcoming standard that would considerably improve the efficiency of payments and establish checks, enabling companies

      to read | words

    published on Sep 01, 2020

    ISO 20022 is an upcoming standard that would considerably improve the efficiency of payments and establish checks, enabling companies to transfer payments seamlessly. It is the global language for electronic payments, which would help systems worldwide to communicate and transmit significantly more data through payments. This standard would not only streamline international cross-border payments, but also drastically mitigate the reconciliation issue.

    Financial institutions exchange information among themselves and with customers to conduct business. Currently, we rely on computers to process information; hence, it is important for the sender and receiver of a message to understand decoding such information.

    The growth of internet usage over the years, as well as other technological advancements, led to a rise in disparate message formats. This posed challenges for systems to decode information, thereby causing the whole process to be time consuming. Thus, a standardized language for payments messaging had to be created, which paved the way for ISO 20022.

    International Organization for Standardization (ISO), in 2004, published the ISO 20022 global standard for payments messaging by creating a common language for messages related to payments across the globe. This enabled common understanding and interpretation, faster processing, and improved reconciliation. Majority of the countries plan to implement and complete the migration to the ISO 20022 standard over the next two years.

    ISO 20022 organizes financial messages in business areas recognized in the industry by using a unique identifier of 4-character codes, called business area codes. The catalogue of ISO 20022 covers 20 business areas, with over 400 messages covering business areas such as ATM card transactions (CATP), Payment Initiation (PAIN), Securities Trade (SETR), Securities Settlement (SESE), and Foreign Exchange Trade (FXTR).

    PAIN is the most common message used for transactions such as credit transfers, salaries, and cheque payments. For instance, if person A in India wants to make a payment of USD 1,000 to a person B in China, then A’s bank would send pain.001.001.10 (denotes business area.message identifier.variant.version) to B’s bank, with details on the currency, amount, and B’s account number, among other information, to initiate the payment.

    The four parts are explained below:

    1. Message type: This refers to the business domain of the message. For instance, in the example mentioned above, “pain” refers to Payments Initiation.
    2. Message sub-type: This is a code allocated to the message pertaining to a specific business domain. As seen in the example mentioned above, “001” refers to an instruction for Customer Credit Transfer Initiation.
    3. Variant: It is a simplified version of a message, including a subset of the attributes within the message; in the example mentioned above, the variant is “001”.
    4. Version: This refers to any element of a message that is added, deleted, or modified; in the example mentioned above, it is denoted as “10”.

    ISO 20022 is based on a three-layer concept:

    • Top layer – Provides the key business information for the activity to take place
    • Middle layer – Provides logical messages or information needed to perform a specific business activity, independent of syntax
    • Bottom layer – Deals with the syntax, i.e., the structure of statements in a computer language

    Key approaches used by banks to integrate ISO 20022:

    • One-step migration or Big Bang migration: In this method, all the participants go live simultaneously. The participants need to be ready to go live on the specific day, with compatibility implementations being made. Example: Eurozone
    • Multi-step migration or Like-for-Like migration: In a phased manner, data fields and messages are gradually moved. After the initial preparation period, existing data fields can be migrated to the new format in a “like-for-like” approach. Example: The UK, The US, etc.

    Planned implementation across different regions of the world:


    Impact of ISO 20022:
    This payments standard will significantly impact the overall business process of organizations. However, for easy understanding, we can categorize these as under:

    • Operations: This standard will have a direct impact on a bank’s payments architecture and IT systems, thereby changing the payments process of the bank. It will also have an indirect impact on business processes, including liquidity management, accounting, and reconciliation, as new data components will be implemented.
    • Infrastructure: ISO 20022 will contain almost 2–3-fold more data than the current legacy formats. Hence, banks will have to undertake a detailed assessment of their systems and databases to ensure that they are properly equipped to process large data volumes at higher speeds for real-time payments, compliance checks, intraday liquidity management, and fraud prevention and detection to gain maximum benefits from implementing this standard.
    • Customers: Failure to undergo a smooth transitioning process can have a severe impact on the customers’ payment transactions, thereby negatively affecting the banks.

    Benefits and challenges of ISO 20022:

    Benefits

    • Increase in efficiency due to standardization of data formats and faster processing of transactions
    • Potential cost savings post implementation on payment processing, data analytics, investigations, reporting, etc.
    • Easy digital compliance due to data automation
    • Improved customer services, thereby increasing customer satisfaction

    Challenges

    • Data loss amid transitioning from the co-existence period
    • Significant one-time cost on building IT infrastructure to implement this standard
    • Lack of expertise to handle the transitioning process

    Outlook after implementation:

    • The ISO 20022 framework will encourage banks to build payment transaction data and use common vocabulary and a common set of syntaxes under a uniform approach.
    • The framework would help facilitate end-to-end automation from invoicing to liquidity management for corporate banks owing to the standardized formats and processes.
    • Financial institutions can aim to create value by leveraging the benefits provided by ISO 20022, such as using the data generated to create new analytical models and crafting personalized offers for customers.
    • Thus, the onus is on banks and financial institutions to benefit from this opportunity or risk being left out in the future.



  122. Five Benefits Insurers Can Reap From Blockchain

    Till date, the insurance sector has been weighed down by conventional, outdated, and labor-intensive operating models. However, as

      to read | words

    published on Sep 01, 2020

    Till date, the insurance sector has been weighed down by conventional, outdated, and labor-intensive operating models. However, as the industry progresses with the recent technological advancements, innovative Blockchain-based solutions could provide opportunities for insurance companies to expand as well as increase profitability. Blockchain could be the solution to various challenges encountered by global insurers.

    Insurance providers have followed the conventional human-centric business model that concentrates on customers, agents, brokers, underwriters, adjusters (investigates and settles claims), and re-insurers. However, technological advancements such as data analytics, business intelligence, cloud computing, and Blockchain could lead to the evolution of the sector. Most of these technologies have steadily penetrated the insurance sector, except Blockchain, which lingers in the proof-of-concept stage. Several elements such as low awareness, perceived views on security, or limited understanding of the concept itself have hindered the adoption of the technology across insurance businesses.

    Blockchain is defined as a combination of a Block (form of digital information) and a Chain (public database), i.e., a piece of digital information saved on a public yet secured database. Key features of Blockchain technology are described below:


    The insurance sector continues to be restricted by longstanding challenges that have hindered the growth and lowered the profitability of insurers. Blockchain presents numerous advantages and business-use for insurers across all product lines – life, auto, marine, property, health, and other non-life insurance.

    Managing operating costs
    Insurance companies always struggle to manage business operating costs ascribed to massive amounts of paperwork, manual intervention, and additional regulatory compliance, such as Know Your Customer (KYC) and Anti Money Laundering (AML). Despite heavy investments, insurers’ operating capacities can get stretched in case of natural disasters or pandemics such as the COVID-19 outbreak. Blockchain allows insurers to build efficiencies across multiple business operations of selling, re-selling, and managing insurance policies, thereby achieving a reduction in operational costs.

    • Blockchain-based Smart Contracts are executed automatically if the underlying conditions are met, allowing insurers to save time and cost of processing the claim. It also safeguards policyholders from the trouble of filling numerous claim forms.
      For instance, smart contracts are executed automatically on flight delays, and the claims are processed post auto-validation of the information received from public databases, all of which are encrypted.
    • Blockchain assists in removing duplication of effort. Policyholders usually engage with multiple insurers that perform the same tasks (KYC/AML), leading to duplication of work and client records. With Blockchain, insurers can collate resources to build a central repository that is economical and secured to store and access client information.

    Reducing processing time
    Long processing time for purchasing a policy or getting claims reimbursed can be frustrating. Purchasing a policy entails a lot of paperwork, creating a tiring, long-winded process that worsens when policyholders put in their claims. Despite insurers maintaining a team of adjusters (individuals who validate and process the claims), the long processing time prevails. Claim processing requires an exchange of information and documentation that extends the timeline. For instance, in case of a road accident, the insurer must verify policy details, inspect the vehicle, and obtain information from the other insurance company and healthcare facilities. The integrated and centralized repository of Blockchain offers several benefits:

    • Central repository provides easy access to information for quick validation by all parties.
    • Insurers can avoid duplication of manual work on building records.
    • It allows providers to reduce the time lost in exchanging information.
    • Encryption aids in sharing sensitive information (e.g., health records and financial information).
    • It provides fast and transparent means to process claims.
    • It lowers operating costs, which can translate to reduced premium.
    • It boosts customer experience through quick turnaround at low costs.

    Maintaining data privacy
    Insurers collect large amounts of sensitive data from policyholders (e.g., health records, financial information, and personal details), which can be used for unlawful activities. Consequently, the loss of data can have serious implications on the insurers. Also, litigation and compliance costs could potentially leave a severe dent on the financial stability of insurance providers. Hence, a secured way of storing and sharing information is essential.

    For instance, health records are incomplete, reproduced, and outdated as policyholders consult various health professionals and visit multiple health facilities. Thus, insurers need to liaison with all stakeholders and personally collate information, which is time consuming and bumps the operating costs. The secured, encrypted, immutable, and centralized nature of Blockchain helps in meeting compliance and data privacy requirements that have hampered the development of the sector.

    Detecting fraud
    Insurance providers, a goldmine of sensitive personal and financial information, are prime targets to fraudsters that hit “blind spots”, which are difficult to identify using data sets of few insurance providers. Also, the competitive setup limits the sharing of information of these unlawful activities in the community. Currently, fraud detection is largely based on information available publicly or collated by private agencies, which is often incomplete.

    “Non-health insurance fraud in the US is estimated to be over USD 40 billion per year, which can translate into $400–700 per year in extra premiums”

    – Federal Bureau of Investigation

    Blockchain allows users to collate claim-related and other information from multiple insurers, providing a larger dataset to identify patterns. Additionally, cryptographic data can be shared easily by insurance providers without divulging personal information of the policyholder. Furthermore, being anonymous, these fraudulent activities can easily be discussed for the benefit of the insurance community. Few common fraudulent activities in the insurance sector include:

    • Duplicating processing of claims
    • Manipulating ownership of an insurance policy
    • Insurance products sold by unlicensed brokers

    Improving customer experience
    High operating costs, long processing timelines, frauds, and data breaches often impact policyholders in the form of high premiums and losses arising from identity thefts. The insurance industry is highly competitive, and insurers need to add considerable impetus on customer experience. Customer satisfaction and loyalty are largely driven by quality of aftersales service, claims processing turnaround, and most importantly, effective management, sharing, and interpretation of data.

    In a nutshell, Blockchain can resolve majority of these challenges and create a win-win situation.

    • Insurers benefit from reduced costs, loyal customers, repeat businesses, and improved profitability.
    • Policyholders enjoy speedy claims processing, reduction in claim denials, data privacy, restricted fraudulent activities, and possibly, even reduced premiums.

    Blockchain-based solutions
    The insurance sector witnessed a rise in multiple proof-of-concept stage offerings that could potentially disrupt the market, including:

    Company Name

    Blockchain Offering

    R3

    R3, an ecosystem of ~300 firms, builds Blockchain-based apps on the Corda platform, allowing insurers to securely automate back office operations and streamline claims management, data processing, underwriting, and information sharing.

    B3i

    B3i, a consortium of Swiss Re, AXA, Zurich, Munich Re, and Allianz, offers Blockchain-based applications to streamline claims management and lower costs and processing time. In July 2019, it launched Catastrophe Excess of Loss, a product on Corda, allowing brokers, insurers, and reinsurers to efficiently manage risks and remove repetitive manual activities.

    Insurwave

    Insurwave, a marine hull insurance platform launched in 2018, was developed in partnership with Ernst & Young, Guardtime, Maersk, Microsoft, and ACORD. The platform, built on R3’s Corda platform, offers real-time information on ships’ location, condition, and safety to both insurers and customers, and allows insurers to swiftly underwrite and price policies based on an immutable audit trail of ship movements. The commercialized platform is projected to manage risks of over 1,000 commercial vessels and automate over 500,000 transactions in its first year of operation.

    Etherisc

    Etherisc’s Blockchain-enabled smart contracts commenced testing in 2017. It is a cryptocurrency-based flight delay program allowing travelers to purchase flight insurance through cryptocurrency or fiat currency and receive pay-outs automatically. The company’s other products in the proof-of-concept stage include hurricane insurance, crypto wallet insurance, and crop insurance.

    MedRec

    MedRec is a decentralized content management system for medical records developed by MIT that indexes medical records on Blockchain, thereby enabling permitted audience to easily access information along with patient privacy and audit trail.

    Ryskex

    Ryskex, a German InsurTech founded in 2018, provides a Blockchain-based insurance platform to B2B insurers to swiftly transfer risks and be transparent.

    Fizzy (AXA)

    Fizzy is a Blockchain platform launched by AXA in 2017; it provides flight delay smart contracts. Fizzy was discontinued in 2019 due to limited traction from travelers and airline carriers.


    Some insurers have already deployed Blockchain to execute various processes and operations, which could provide support for the wider adoption of the technology across the value chain.

    Company Name

    Blockchain Offering

    Blue Cross

    The Hong Kong-based insurer started using Blockchain in April 2019 to rapidly process medical insurance claims and prevent fraud. The platform allows insurers to validate claims data, reduce fraud potential from duplicate claims filing, and reconcile claims data from insurers and medical service providers. Blue Cross’ Blockchain platform is built on Hyperledger.

    Tokio Marine

    The Japanese property and casualty insurer uses blockchain to validate marine cargo insurance certificates. Till date, it reported 85% decline in processing time.

    Allianz

    Allianz uses smart contracts to expedite the contract management process for bonds and cat swaps that are used for transferring specific risks, typically natural disaster risks, to investors from an insurer.

    Lemonade

    Lemonade uses Blockchain and Artificial Intelligence to offer insurance products to renters and homeowners using smart contracts.

    Teambrella

    The Russian company operates a centralized insurance platform that co-insures the claims. It uses smart contracts to execute insurance payments. The company currently has 4 groups dealing with bicycle damage and pet injuries in Peru, Argentina, Germany, and the Netherlands.


    In a nutshell, Blockchain could open a pandora’s box for the insurance sector and provide an opportunity to do away with conventional business models and improve customer experience and profitability. Additionally, with the tech-savvy future generation being dominated by the use smart devices and terabytes of data, Blockchain could revolutionize the insurance industry. However, we expect certain challenges, such as capital investment and lack of awareness, to hinder the adoption rate. In the long run, Blockchain would become an integral part of the insurance business as insurers strive to optimize costs and boost profitability.



  123. What will be the “New Normal” for Physical Retail?

    As the lockdowns ease and the world restarts, one of the worst-hit sectors, physical retail stores, have also

      to read | words

    published on Aug 19, 2020

    As the lockdowns ease and the world restarts, one of the worst-hit sectors, physical retail stores, have also opened their doors. While various countries are working on or introducing vaccines, the fear of COVID-19 will not be erased soon. To combat this, the retail sector will have to redesign the shopping experience and introduce new ideas to ensure that all safety regulations are met and business continuity is maintained.

    As the world slowly starts to reopen post lockdowns, many industries will be forced to change their working style. Foremost among them would be the crowd-accumulating retail sector. Due to forced lockdowns, except essential item stores and supermarkets, all outlets had to down their shutters. Though most countries have allowed the retail sector to restart, the fear of COVID-19 is far from over. Hence, shops, stores, supermarkets, and retail outlets should ensure that they could inspire confidence within shoppers with regards to all safety measures being taken to maintain a hygienic environment.

    The retail sector could introduce new rules, which will allow social distancing to continue while business runs as usual. Some of the concepts that retail may introduce are:

    1. Shopping appointment – Just like a doctor’s or spa appointment, consumers may have to book shopping appointments as well. Additionally, only after one set of customers make their purchases and leave, the next set will be allowed entry. This will help retailers limit the number of visitors entering an outlet at a given time. Moreover, consumers will be safe, as there will be no threat of crowded shopping areas.
    2. Leveraging physical space – Indeed, after months of lockdown, people yearn to go out. Why not make their shopping trips easy and user-friendly? Redesigning the shelves and products that make it easy for consumers to pick what they want while maintaining distances between two categories will be a good idea. Physical spaces should be smartly managed to make them appear adequate and not crowded or mismanaged.
    3. Redo sampling – Cosmetic and cloth brands need samples for customers to use/wear before they decide to purchase. However, in the post-pandemic world, this will not be a popular idea. Technologies such as Augmented Reality (AR) and Virtual Reality (VR) can be saviors for these segments. These technologies make it possible for an individual to see how they will look in a particular apparel or lipstick color without physically using the product. Technological upgradation in fashion stores may become a “must-have” in the future.
    4. Contactless experience – Retailers will have to limit contact among shoppers as much as possible. Electronic doors, foot-handles, and sanitized shopping carts will certainly renew confidence in customers. Shoppers should also have easy access to sanitizers at several points within the stores.
    5. Checkout facilities – Checkout counters typically tend to get congested. Physical payments by credit cards or currency can potentially increase chances of spreading infection. To mitigate this, retailers should create options for customers to pay virtually as they check out, similar to the ‘Amazon Go’ stores.

    Infrastructural changes
    While the conceptual changes mentioned above will help in making the retail experience stress-free, certain infrastructural upgrades may also be essential.

    • Community spaces – Facilities such as movie theatres, restaurants, and play areas may have to be redesigned to ensure 6-foot distance between patrons. This will reduce capacity, but ensure social distancing.
    • Surface coatings – New paints and coatings that repel virus and bacteria have been introduced, aiding in keeping the environment sanitized. Using such paints will be a smart idea, and will go a long way in making visitors feel secure.
    • Germ-free shelving – Shelves used in healthcare environments, including hospitals and doctors’ offices, are easy to sanitize, and they remain germ-free for a long period. Such shelves should be explored by retail spaces.
    • Aisles – Supermarkets and groceries can redesign their aisles to make one-way paths for avoiding bottlenecks and congestions.

    With the race to develop vaccines currently underway, we may soon overcome the current global pandemic. However, it has already instilled the habit of social distancing, and the need for sanitization will continue in the long term. Therefore, it will be a smart idea for retailers to invest in solutions mentioned above. Apart from creating a hygienic environment, some of these concepts can increase personalization and enhance customer experience. Retailers must participate in current initiatives to build a resilient future together.



  124. Alternative Funding Options for Start-ups During the Current Recessionary Times

    Due to the current recessionary times, investor sentiment is at an all-time low. This has hit start-ups seeking

      to read | words

    published on Aug 18, 2020

    Due to the current recessionary times, investor sentiment is at an all-time low. This has hit start-ups seeking funding from venture capitalists and the investor community. However, entrepreneurs can currently explore alternative funding options. Benefits of these options could increase their prominence in the future.

    The global pandemic not only claimed millions of lives, but also brought the entire economy to a standstill. Many companies reported bankruptcy, as they tried to deal with crumbling businesses, unemployment, and rising debt. Negative sentiments hit the investing community as well. Even though tech businesses emerged as the savior during the lockdowns imposed worldwide, venture capitalists (VCs) have not been keen to loosen their purse to risk funding new start-ups.

    However, there are other options that start-ups can explore for new ventures. Some of these are low-risk options for investors, and hence, they are more easily available.

    Crowdfunding
    This involves a large group of investors, each pooling small amounts of money to finance a new business venture. Crowdfunding is technology-driven, and it uses social media and online crowdfunding platforms to connect entrepreneurs with investors. Some of the popular crowdfunding platforms are Kickstarter and Indiegogo. Entrepreneurs present their ideas to potential investors on these online platforms. The investors then weigh pro and cons and invest in ideas they feel have the highest potential.

    Since the investment amount is less, crowdfunding projects are reward-based, rather than return-based. Investors may get to be a part of the launch of a new product or receive a gift for their investment. A popular investment opportunity on these platforms is video games – investors often receive copies of the game in advance as a reward.

    Key issues with crowdfunding for start-ups are choosing the right platform and building confidence and trust among investors. Security risks also exist, as theft of ideas can happen in such platforms. However, start-ups still prefer this route, as they can raise money without giving up control to VCs.

    Examples:

    • Oculus VR – One of the most successful companies, Oculus VR was an initial launch by Kickstarter. The campaign was a huge hit, as it raised USD2.4 million, surpassing its USD250,000 goal. Due to its soaring success, it was bought by Facebook during its prototype stage for USD2 billion. Since Kickstarter does not have an equity-based model, the investors did not get monetary benefits.
    • SkyBell – This was another successful launch, as SkyBell raised USD600,000 for its video doorbell technology. This innovative bell sends live video footage of a homeowner’s front door to their smartphone.

    Start-up funding by corporates
    Another funding option for start-ups is to collaborate with large corporates. Partnerships between incumbents and new entrants is mutually beneficial. While the start-up gains from the experience of a large corporate and gets easy access to funds, the corporate gets the opportunity to enter or create new markets.

    However, there are a few pitfalls in this set-up. The foremost being the loss of control for start-ups. They cannot operate as independent players and take certain calculated risks. Complications can also commonly arise from a clash of cultures – different work ethics and functioning systems.

    Successful partnerships are possible if each side is willing to understand the interests, expectations, incentives, and culture of the other. There are various types of adoption and collaboration models to choose from, such as incubation, acceleration, or partnership. Interested parties can decide the most suitable model based on their needs.

    Examples:

    • Walgreens – Understanding the need to become more agile, pharmaceutical giant Walgreens collaborated with New York-based tech start-up Pager. The start-up had developed a mobile platform that can match patients' needs with doctors and nurses available nearby. Pager helped Walgreens achieve healthcare on demand, driving its revenues and helping it retain its hold on the market.
    • Disney – Disney mentored Sphero, a manufacturer of state-of-the-art robotic toys. Sphero’s technology has impressive performance specs, which made a valuable addition to Disney’s line of products. Sphero was involved with Disney in commercializing the newest Star Wars droid, BB-8.

    Government grants
    As the name suggests, grants consist of a sum of money offered by the government to new businesses. Unlike loans, start-ups do not have to give collateral or pay back the money owned. However, grant money does come with limitations. Grants are extremely hard to get, and there is a caveat on how it can be used. The competition to get them is also quite fierce, as they are limited and have a strict criterion.

    Hence, start-ups exploring this option must submit strong applications, which is the first step. The start-up must clearly outline its goals, business plans, and a realistic budget. All the short-term as well as long-term objectives should be measurable. Furthermore, strict guidelines must be followed by start-ups after getting the grant.

    Examples:

    • CSIRO Kick-Start – Commonwealth Scientific and Industrial Research Organisation (CSIRO) Kick-Start of Australia offers grants to start-ups for research activities and business development. Started in 2017, it supports Australia’s local start-ups. It funded Molten-Labs, which created autonomous robots for demining landmines. CSIRO funding cannot be used for capital works, expenditure, or infrastructure costs.
    • Innovate UK – The UK has one of the biggest government grant schemes for businesses, known as Innovate UK. It is specifically catered to research and development (R&D) start-ups, and funds them at the product development stage. It funded the concept of Micro-Fresh, an antibacterial coating for use in everyday products.

    Conclusion
    Apart from the options mentioned above, start-ups can explore bank loans, venture debts, or angel investors. The global pandemic and enforced lockdowns have given rise to many innovative ideas and new entrepreneurs. However, not all are able to grab the interest of VCs who are treading cautiously. Occasionally, a good idea may not materialize due to the lack of funding. Funding depends largely on the nature and type of the business. However, with the current economic crisis, start-ups may have to consider previously unexplored funding options.



  125. New safety norms: Creating opportunities for the Facilities Management (FM) industry

    Facilities management consists of two important services: technical/hard and soft services. Over the years, the demand for

      to read | words

    published on Aug 14, 2020

    Facilities management consists of two important services: technical/hard and soft services. Over the years, the demand for outsourcing of technical services has been rising as these are deemed to be more complex. However, the COVID-19 pandemic has renewed industry focus on soft services. As governments worldwide slowly reopen and daily activities resume with the required safety protocols, the need for soft services within the facilities management market is expected to increase. The new normal, which includes cleaning, disinfecting, and sanitization, has created several opportunities for the global facilities management industry.

    COVID-19 has impacted almost all economies globally. The lockdown triggered by the pandemic has caused disruptions across sectors. The facilities management (FM) industry has also been hit as lockdowns subdued the demand for these services. However, as countries ease lockdowns and commercial spaces start to re-open, FM will be the need of the hour. New protocols like minimizing surface contamination, cleaning, disinfecting, and sanitizing will be ultra-critical functions, thus creating opportunities for the global FM industry.

    Tough Times
    During the initial period of the outbreak, the FM industry witnessed a slowdown in operations as large corporate offices downed shutters and started to work from home. Public spaces such as retail shops, restaurants, industrial, and commercial setups across the globe also closed their doors. Thus, even though the FM industry played a vital role in supporting sectors like healthcare and IT during the lockdown, it was still hit badly, facing massive layoffs, pay cuts, and job furloughs.

    The New Norm: A Ray of Hope for the Industry
    There is hope for a revival in the FM industry. The pandemic has changed the way people live and has accorded gravity to a new norm of ‘safety first’. As fear of the global pandemic gradually fades, industries and companies everywhere are gearing up to restart activities while also attempting to keep the virus at bay.
    Companies, retailers, restaurants, and residential complexes will have to adopt the new safety norms while managing their premises. This puts the spotlight on soft FM services such as cleaning, disinfecting, and sanitization. It also brings hope for the entire FM industry. While safety and sanitization were mere guidelines before, they have now become the leading priority for everyone, everywhere. Companies have increased their focus on sanitization and upkeep of hygiene standards and are planning to invest more in these.
    As per a leading FM company, firms are now spending up to 25% more on continuous disinfection of their facilities. Not just commercial and retail spaces, even schools and residentials complexes are seeking sanitization solutions. Demand is not only increasing for management and housekeeping staff, but also for innovative hygiene solutions.

    Bright Future for Soft Services
    To comply with government protocols on health and safety as well as clients’ safety, the FM industry is focusing on new services and solutions that could turn into new revenue streams.
    Here are some solutions/services recently launched by key FM companies worldwide.

    • Some FM providers are offering customized COVID-19 disinfecting service for customer segments including residential and corporate buildings, and public institutions such as schools.
      • A global facility management company launched the ‘Workplace Virus Disinfection Cleaning Service’ especially for corporate spaces.
      • Another global player launched the ‘Enhanced Clean Program’, a three-step cleaning and sanitation program that delivers healthy workspaces with a certified disinfection process backed by experts.
      • A UK-based FM company introduced a ‘Ready to Reopen’ plan to ensure a safe return of students to schools.
      • A Denmark-based global FM company launched a disinfection solution with an electrostatic spray system. The innovative technology uses an electric charge added to the cleaning agent during spraying. The electrostatic spray system completely covers surfaces with a disinfectant that kills viruses, fungi, bacteria, and other microbes.
      • A company in Chile developed disinfection equipment that deploys a biodegradable solution for automated dry gas misting. This solution can be used to disinfect central kitchens, restaurants, office spaces, and technical facilities in remote areas.
    • Some companies are launching innovative solutions to provide protection from the virus, maintain social distancing, and abide by safety guidelines issued by governments globally.
      • A US-based FM company with a focus on food catering opened its first autonomous convenience store to offer shoppers a safe, no-touch shopping experience. It achieved this by using computer-vision cameras and sensors that help create a fully automated, self-guided shopping experience.
      • Another FM company introduced a catering app for easy payments, hassle-free take-aways, and vending-machine solutions that allows users to practice social distancing at restaurants and canteens.
      • A UK- based FM company launched a cleaning product, made from citrus fruits extract, that claims to rid surfaces of COVID-19 contamination and keep it virus-free for six months. As part of the new specialist service, the company offers to clean, seal, and protect all touchpoint surfaces with the said cleaning product.
    • Large companies are utilizing technology to provide better services to clients.
      • A building cleaning service segment of a German-based FM company launched an e-commerce platform dedicated to cleaning services. The website requires customers to enter the surface measurement of the area to be cleaned. Based on those numbers, it offers a preconfigured cleaning package to customers, such as ‘basic’, ‘comfort’, and ‘premium’, and then a calculated deal.
      • A Netherlands-based FM company specializing in cleaning services launched a new online tool, which helps organizations prepare themselves to work in line with social-distancing norms implemented to avoid the risk of COVID-19 infection. The online tool analyzes the working environment of the office space, school, or retail outlet, and creates an advisory report based on the location. It takes the user through suitable approaches and protocols.
      • Another global provider of integrated FM service launched a digital solution to limit the risk of COVID-19 infection in everyday office life. The software allows users to scan a QR code to log on and off at the office premises, thus enabling contact chains to be quickly identified and informing other users about the potential risk of infection.

    As lockdowns ease and life gradually returns to normal, people have concerns about safety when returning to offices, malls, schools, and other public places. The FM industry will have a crucial role to play in alleviating these concerns, building confidence, and helping the world return to normal.

    The pandemic has created opportunities for FM companies worldwide to grow and build new services. The players that can offer new services and innovative technologies coupled with cost efficiency would have a distinct competitive edge.



  126. Plastic Circular Economy - A Hopeless Dream Post COVID-19?

    Plastic emerged as a savior during the pandemic; it is the core ingredient of most of the protective

      to read | words

    published on Aug 12, 2020

    Plastic emerged as a savior during the pandemic; it is the core ingredient of most of the protective gear, due to which its demand has increased. Fear of infection also led to a rise in the use of single-use plastic. Moreover, companies which had pledged to reduce their carbon footprint and recycle plastic are unable to follow through, as its expensive for those impacted by the current economic crisis. Hence, would the dream of a plastic circular economy be dashed to the ground?

    In addition to being both a humanitarian and economic crisis, the COVID-19 pandemic is proving to be detrimental for the environment. There has been a surge in the use of single-use plastic to manufacture protective gears for healthcare staff and frontline warriors. However, medical waste and disposed personal protective equipment are once again ending up in the ocean, polluting the waters. This could threaten to reverse the progress made till now toward environment-friendly practices and a greener planet.

    Plastic – The battle till date
    Plastic was labelled as one of the greatest inventions by mankind. This light-weight, durable material enabled the manufacture of life-saving devices, made space travel a reality, and reduced the weight of cars and jets. It is a core ingredient for helmets, incubators, and equipment for clean drinking water. However, it also ends up becoming a key pollutant of the environment. Among the types of plastic, the main culprit has been single-use plastic, which accounts for 40% of plastic produced every year. Most products made from single-use plastic, such as bags and food wrappers, are needed only for a few minutes, but persist for hundreds of years in the environment. Till date, almost 8 million tons of plastic waste have been disposed into the oceans every year.

    Understanding the threat it presents, several measures were taken to reduce the consumption of plastic a few years ago. By 2019, as many as 14 countries, including the UK, Taiwan, and New Zealand, had banned single-use plastic, and almost 127 countries were moderating the use of plastic within its borders. Many corporates had also undertaken plastic recycling initiatives as a part of their social responsibility.

    However, a gap exists between regulations and actual implementation. Countries have the rules in place without penal action or strong steps for non-compliance. Even for the industries, many countries have imposed the law that a certain percentage of recycled plastic has to be used by companies for their manufacturing operations, but it lacks strict reinforcement. Therefore, even though regulations are present, the results are not reflected.

    Plastic recycling – How the countries have fared till now?
    In matured economies of Japan and Western Europe, recycling initiatives have shown positive results. However, countries such as the US and Australia and those in the Balkan region are still in the transition phase. Emerging economies such as China and Brazil have the lowest plastic recycling rate.

    Country

    Plastic recycling rate

    Initiative

    Western Europe, Japan

    Approx. 25–30%

    • Source separation schemes
    • Sorting and processing plastic waste in units
    • Advanced waste management technologies

    USA, Australia, Balkan Region

    Approx. 10–15%

    • Few plastic source separation schemes
    • Traditional waste management
    • Low-financial-value plastic scrap sent to emerging economies

    China, Brazil, India

    Approx. 20–60%

    • Manual sorting of plastic
    • Improper handling of plastic at sorting/recycling facilities
    • Old recycling processes; low market value of recycled materials
    • Presence of unregulated landfills and/or dumpsites.
    • Receive low-value plastic scrap from developed economies

    Source - United Nations Basel convention report - February 2020

    Role of plastic during the COVID-19 pandemic
    In 2020, we were hit globally by the COVID-19 pandemic; ironically, plastic became a savior during the crisis. It has many uses in the current scenario, particularly for containing the spread of infection.

    • Polypropylene (a form of plastic) is being used for producing Personal Protective Equipment (PPE).
    • Special masks, gowns, and gloves, which contain plastic, are being designed to avoid infection from this highly contagious virus.
    • Plastic is being used to manufacture medical devices such as pulse oxygen sensors, blood mentoring equipment, syringes, blood, and fluid bags.
    • It is the main raw material for manufacturing ventilators, which is an essential medical device in the current times.
    • COVID-19 testing kits are primarily made of plastic.
    • All groceries, food, and medicine deliveries are being made using plastic as the outer layer to keep them safe from infection.
    • Hygiene products such as hand sanitizers, tissues, and wipes, the sale of which shot up in the past few months, come in plastic wrapping.

    Challenges ahead
    While plastic is essential in the current scenario, the exponential increase in its usage has led to tons of medical garbage being disposed into the ocean. As the fury of the pandemic continues, minimization of plastic manufacture and use is highly unlikely. The following challenges lie ahead for us:

    • There would be a rampant increase in the use of plastic across sectors.
    • Ban on single-use plastic across countries would be lifted due to the need of the hour. Cities such as New York and New Jersey have postponed bans that were slated to be effective this year. The UK has also delayed its ban on plastic. Fear of a second wave will ensure that the ban would be delayed for another year as well.
    • Recycling of medical plastic waste would be limited, as they could be contaminated.
    • Decrease in oil prices has made recycling an expensive process. Hence, organizations that are already suffering from the economic consequences of the pandemic have halted their recycling efforts and prefer to produce virgin plastic. Till the oil prices remain subdued, recycling of plastic will not be commercially attractive. Forecasts indicate that recycling will likely remain low for the foreseeable future, thereby threatening the domain.
    • Recycling facilities are worried about exposing their workers to used plastic that could be contaminated. The industry is also facing financial distress due to lockdowns and social distancing measures.
    • The informal sector comprising waste pickers has dwindled in number, as the fear of the virus prevents them from picking up waste and litter.

    Apart from the fresh issues resulting from the pandemic, the previous challenges still exist.

    At times, different types of plastic components are combined to make products, which makes recycling a problem. Similarly, in certain products, it is difficult to separate the plastic content to recycle. In certain cases, to make the garbage lightweight, companies have started making thinner plastic bottles. However, the use of less plastic reduces the economic viability of recycling.

    The road ahead
    A behavioral shift is needed to deal with this issue. First and foremost, the casual attitude toward plastic must be avoided. Awareness regarding the environmental hazards caused by plastic needs to be increased. Second, the handling of the material needs to be monitored. Accordingly, the lack of regulations, collection infrastructure, and recycling facilities needs to be addressed. Finally, plastic recycling is a responsibility that needs to be carried ahead by consumers, corporations, and governments together. Hence, it is time to join hands and develop an innovative solution for waste disposal. Let us ensure that this pandemic does not end up causing an irreparable damage to the planet.



  127. Has COVID-19 Disrupted the Future of the Belt and Road Initiative?

    While China is gradually reopening its economy after successfully containing the spread of COVID-19, it is facing multiple

      to read | words

    published on Jul 23, 2020

    While China is gradually reopening its economy after successfully containing the spread of COVID-19, it is facing multiple challenges on the economic and political fronts. The lockdowns disrupted China’s manufacturing industry, adversely impacting its economy; at the same time, its standing in the global community has been weakened due to its alleged mismanagement of the virus outbreak. The country has been criticized for originating the pandemic, delaying the response, and not disseminating timely accurate information to the World Health Organization. China worsened the situation by engaging in a violent conflict with Indian troops along its shared border region and exhibiting aggressive behavior in the South China Sea. These developments are expected to impede the progress of China’s golden project – The Belt and Road Initiative (BRI).

    Impact of COVID-19 on BRI:
    The BRI, a brainchild of President Xi Jinping, has run into challenges due to the outbreak of the COVID-19 pandemic. Launched by President Jinping in 2013, the BRI aims to enhance trade routes by linking China with countries in Southeast Asia, Central Asia, Africa, the Gulf region, and Europe through a network of infrastructure, including roads, railways, and pipelines.

    Unfortunately, the pandemic has halted almost all activities related to trade, industry, infrastructure projects, and connectivity – the key aspects of the BRI. COVID-19 has impacted almost all countries globally, including those having close economic relations with China or are part of the BRI. The Chinese economy contracted to a negative 6.8% Y-o-Y in Q1 2020. According to the Department of International Economic Affairs of the Foreign Ministry, the pandemic has significantly impacted around 40% of BRI projects and partially impacted further 30−40%. It has disrupted several other projects funded by China, including the China-Pakistan Economic Corridor (CPEC) and Sihanoukville Special Economic Zone in Cambodia. A USD1.5 billion rail project in Nigeria has been delayed, as Chinese workers who left to celebrate the Lunar New Year have been unable to return.

    These challenges could hamper the prospects of the BRI, as most of its projects are to be undertaken in developing countries where economic recovery after COVID-19 is likely to be slow. Moreover, several tourism-dependent economies, mostly in South Asia, will be adversely affected in the short to medium term. The pandemic-led recession is expected to intensify the debt situation in these countries, which would pressurize China to freeze or delay loan repayments, and in certain cases, write-off amounts.

    Surging anti-China sentiments fueled by COVID-19 outbreak
    With the entire world reeling under the health and economic impacts of the virus, many nations are holding China responsible for the spread of the pandemic. Allegations have been hurled − right from charges of the virus’ intentional leak at the Wuhan Institute of Virology to attributing its origin to the eating habits of a few natives. China has also been blamed for its inability to identify the new strain of virus and subsequent failure to control and contain the outbreak. President Xi Jinping has been held responsible for misleading the World Health Organization on the severity of the pandemic. Critics of the Chinese government, such as the US and Australia, have requested for an independent investigation to ascertain the origin of the pandemic.

    The criticism has also been significantly influenced by other geo-political factors. The ongoing trade war between the US and China, allegations that Chinese technology companies pose a threat to the national security of partner countries, diplomatic spat between the US, Canada, and China over the arrest of a Huawei executive and the subsequent apprehension of two Canadians in China, and tensions over the new security law being imposed on Hong Kong − all these issues seem to have instigated the backlash against China. Long-standing concerns over China’s hegemonic ambitions, its aggressive behavior in the South China Sea, and the recent skirmish along the disputed Indo-China border have further unified its neighbors.

    Was the Indo-China border skirmish aimed at securing the BRI?
    In mid-June 2020, following the orders of a senior Chinese General (as per the assessment conducted by the US intelligence), Chinese troops attacked Indian troops in the Galwan Valley at the India-China border. Several theories speculate why China violated border agreements and jeopardized relations with India, particularly when both nations are battling the pandemic. One of the reasons involves the security of its key project in Aksai Chin (a disputed area between India and China under China’s administration), which is part of the BRI.

    According to sources, the incident was triggered by the Indian Army’s newly constructed bridge over the Galwan nallah, which is around 7km from the Line of Actual Control (LAC) and connects with the Shyok-Daulat Beg Oldi road. China sees the bridge and road infrastructure as an opportunity for India to rapidly deploy its military force in the region, posing a threat to China’s control of Aksai Chin, which is considered integral to the One-China principle. China National Highway 219 passes through Aksai Chin and connects China’s autonomous regions of Tibet and Xinjiang. This is an extension of the CPEC under the BRI umbrella, connecting Xinjiang through Gilgit-Baltistan in Pakistan-occupied Kashmir to Gwadar Port in Pakistan. China therefore vehemently opposes any move by India that may strengthen its presence in these regions. The purpose of the recent encounter initiated by Chinese troops could have been to secure its position in Aksai Chin and ensure the safety of the CPEC project.

    Global leaders have been quite vocal in the condemnation of the Chinese aggression, which belies the country’s stated objectives of peaceful growth.

    Reinforcement of stakeholder confidence
    China’s Foreign Minister Wang Yi admitted that COVID-19 had severely hampered the progress of BRI projects. However, he believes that the impact is temporary. The country is working on policies to uplift the economy and is focusing on the “Health Silk Road” (HSR), a lesser known component of the BRI. The COVID-19 outbreak has provided China an opportunity to relaunch the HSR and emerge as a global health leader while maintaining the BRI’s relevance to the world. For instance, trimming BRI projects and related funding and aiding partner countries that need to invest significantly in healthcare through the HSR would help China earn goodwill, while the countries would benefit from the much-needed healthcare support.

    President Jinping promised to deliver medical supplies to Italy at the peak of the outbreak and initiated talks to build the HSR. Additionally, in June 2020, he announced plans to write off all interest-free loans advanced to African countries. China also claimed to have delayed loan repayment for around 77 low-income countries. However, critics believe that loans from Exim Bank of China and the China Development Bank (the banks that underwrite BRI-related loans) cannot be easily written off, and the loan restructuring exercise will extend the total repayment duration for the host country.

    Regardless of the initiatives taken by China, most analysts believe that the BRI will be hampered significantly by the economic slowdown, disruptions in supply chains, as well as the growing distrust in China as a strategic and reliable partner.



  128. Can Antimicrobial, Antiviral Surface Coatings Curb the Spread of COVID-19?

    An antimicrobial surface coating is widely used to control the growth of pathogens on surfaces and in building

      to read | words

    published on Jul 22, 2020

    An antimicrobial surface coating is widely used to control the growth of pathogens on surfaces and in building facilities. Currently, scientists and researchers are working closely with the paint and coatings industry players across the globe to develop antimicrobial, antiviral coating solutions that would prevent the spread of COVID-19 through surface contamination.

    The COVID-19 pandemic continues to disrupt everyday life worldwide. The number of confirmed cases is surging, and although countries are slowly opening up, there is a constant fear of a second wave. As on July 16, 2020, the virus had infected over 13.7 million people globally, with around 580,000+ reported fatalities. The transmission of this deadly virus occurs through direct contact with infected people and indirect contact with contaminated surfaces.

    According to the studies conducted by National Institutes of Health, UCLA, CDC, and Princeton University scientists, the coronavirus can survive on various surfaces for a long time. The survival span of the virus depends on several factors, such as the surface type, temperature, and the specific strain. For example, it can survive for 24 hours on cardboard and 48 hours on stainless steel and wood. On plastics and glass, it can last for 72 hours and 84 hours, respectively.

    It is critical to find a solution that can overcome or neutralize the virus present on surfaces. Researchers globally, are channelizing their resources to discover focused solutions that can address the need of the hour – that is to find a solution that would prevent the spread of COVID-19 through surfaces. Currently, the paint and coatings industry is focusing on developing an antiviral coating solutions that would neutralize bacteria and virus present on various types of surfaces.

    Usage of antimicrobial surface coating
    An antimicrobial / antiviral surface coating, when applied on walls, door handles, glass panels, as well as high-tech components such as HVAC vents and medical systems, constrains bacterial adhesion and subsequent biofilm formation. The coating thus reduces the risk of environmental infections.

    Race to develop antimicrobial, antiviral coating
    Scientists at the Ben-Gurion University in Israel are developing an anti-coronavirus surface coating using nanoparticles of safe metal ions and polymers such as copper, which can be sprayed or painted on surfaces and has antimicrobial as well as antiviral properties. This coating can eradicate the coronavirus particles that stick to a surface. Once finalized, it would be deployed in hospitals and public areas, such as schools, metro stations, airports, and bus stations, to neutralize the effects of viruses and bacteria.

    Nippon Paint, a Japan-based paint and coatings manufacturing company, and Corning, Inc., a multinational technology company, have introduced “Antivirus Kids Paint”. This innovative product has been created by incorporating Corning Guardiant Antimicrobial Particles, an emerging technology that safeguards against viruses. It has been specially developed to protect frontline healthcare workers from viruses that adhere to different surfaces in hospitals and healthcare facilities. Texas-based Microchem Laboratory tested the product in January 2020 and found that it can inactivate 99.9% of the Feline Calicivirus that causes upper respiratory infection. Additionally, the coating is able to destroy harmful bacteria such as Pseudomonas aeruginosa, E. coli (Escherichia coli), and Staphylococcus aureus. Nippon Paint and Corning, Inc. have donated Antivirus Kids Paint worth RMB 5 million (~ USD 715,450/-) to four Chinese hospitals in Hubei Province.

    Future of antimicrobial, antiviral surface coating
    The COVID-19 pandemic has triggered the growth in demand of antimicrobial, antiviral coatings in the medical and healthcare sector. Currently, temporary hospitals and healthcare facilities are being set up in many countries to treat the rising number of COVID-19 cases. To eliminate infectious viruses and bacteria from surfaces, antimicrobial, antiviral coatings are being applied on door handles, trails, beds, and medical instruments in these facilities.

    The demand for antimicrobial, antiviral coatings would continue to grow on account of increase in construction and renovation activities as well as growing demand for safe environments in the “new normal” circumstances. The paint and coatings industry is thus set to play a vital role in the war against the ongoing pandemic. In the current scenario, hopes are pinned on the effectiveness of antimicrobial, antiviral coatings to help curb the spread of the fatal COVID-19.



  129. Digital – the Future of Pharmacy in the US

    Technology has permeated every industry worldwide today, including healthcare. Within this space, the digitalization of pharmacies has surged

      to read | words

    published on Jul 21, 2020

    Technology has permeated every industry worldwide today, including healthcare. Within this space, the digitalization of pharmacies has surged over the past few years, especially in developed markets. In the US, many start-ups have entered the online pharmacy space and received robust venture capital support. Traditional brick-and-mortar shops have seen the light and moved online while e-commerce giants like Amazon are entering this space via partnerships. Will physical pharmacies eventually give way to digital-only presences in the US? This remains to be seen.

    Innovative technologies are revolutionizing the way we live and work. Technology has touched every industry today, changing them to varying degrees. The healthcare industry saw this change as early as the 1990s, with the advent of the Internet. In the US, small pharmacies and distributors set up web shops and carried out small-scale online sales. This online presence did not gain large-scale acceptance as manufacturers were reluctant to trust the fledgling e-commerce space. Order fulfillment was an expensive task and manufacturers and distributors preferred to focus on the traditional channel.

    As e-commerce grew and online platforms gained traction, the digitalization of pharmacy [prescription drugs and over-the-counter (OTC) medication] began in earnest. Today, millions worldwide buy medicines and well-being products online. Several top distributors have already adopted online channels for their products in the past few years, especially in the US.

    The e-commerce sector in the US has expanded over the past decade. As a share of total retail, online sales rose from 14.4% (USD 524 billion) in 2018 to about 16.0% (USD 602 billion) in 2019. This increasing shift from offline to online sales was also evident in the distribution of medical products and medicines. Additionally, the government’s business-friendly policies encouraged companies to either foray into online sales or expand their online presence.

    Business model
    Online pharmacies can be divided into independent Internet-only sites that could be start-ups, online branches of physical pharmacies, and big e-commerce players with online pharmacy stores via partnerships.

    Some pure-play pharmacies backed by venture capital (VC) funds are:

    • Capsule – This online pharmacy, founded by Eric Kinariwala, raised USD 200 million in funding in 2019 from TCV, Thrive Capital, and Glade Brook Capital. Capsule has the capability to deliver prescription drugs to local patients in the US within two hours of them ordering via the app. With its imminent expansion plans, the company is now applying for pharmacy licenses in more states in the US.
    • Blink Health – A start-up, Blink Health has more than USD 165 million in funding. The company provides patients with low-priced generic medication online and free home delivery or free local pick-up.

    The funding amounts mentioned clearly reflect the fact that the online pharmacy model is on the radar of VCs and expected to grow in future. But does this spell doom for traditional pharmacies?

    One of the biggest pharmacy chains in the US, Walgreens, invested in its online platform as early as 2012 to ensure it did not lose customers. It plans to spend USD 1 billion on new technologies to ensure a robust online presence. CVS Health also earmarked USD 2 billion to embrace innovative technologies to support its online presence. Walmart, which already operates several pharmacy stores, recently purchased CareZone’s prescription-management technology and related patents to make its online channel more competitive.

    Another example of traditional stores adapting to an online presence is Nimble, which was a brick-and-mortal pharmacy. It changed track to go online and raised about USD 60 million in financing from Y Combinator, Sequoia Capital, DAG Ventures, First Round Capital, and Khosla Ventures. It focused on developing a delivery service that could partner with independent physical pharmacies.

    E-commerce giants like Amazon are eyeing the growing pharmacy market. Amazon acquired the start-up PillPack in 2018. It is now stepping up efforts in the prescription management and drug delivery space. Amazon’s move has other e-commerce players assessing opportunities in this market.

    Online pharmacies offer better pricing, increased access, and convenience to consumers. Those with limited mobility or in remote areas can avail of rapid doorstep delivery. With these advantages, online pharmacies are gaining wide acceptance from consumers. Adapting novel technologies to fulfill rising demand and staying ahead of the competition will be the need of the hour for online pharmacies. They will continue to grow as the digital medium becomes more important. However, it remains to be seen if the online pharmacy format can overshadow others with the passing of time.



  130. Way Towards a Smarter Power Network

    Smart Grid is a power network that uses advance technology to monitor, communicate and control the flow of

      to read | words

    published on Jul 15, 2020

    Smart Grid is a power network that uses advance technology to monitor, communicate and control the flow of electricity in the network. It improves the efficiency of the power network, helps reduce the overall cost of operation and enables consumers to monitor their power usage. Digitisation of the power sector is an ongoing process, and in the coming years, the sector will embrace transformational technologies to develop and thrive.

    Power consumption has surged considerably in the last decade due to the rapid pace of industrialisation and expanding population. To fulfil the growing power requirements, there has been addition of new power generation sources, both conventional as well as renewable. In addition, there has also been an increased focus on efficient use of power to facilitate reduction in the per unit power consumption.

    Efficiency can be achieved by adopting technology and implementing smart equipment or solutions to manage the power demand and supply network. These smart solutions not only improve the efficacy of the power network but also provide greater reliability, resiliency and flexibility to the power system. One of these smart solutions is the smart grid. The smart grid is the most important part of the smart power network system as it enables communication and coordination between different entities of the power system, thus enhancing overall productivity.

    Definition
    Smart Grid is a power network that manages and monitors the supply and distribution of power from different electricity generating sources to various power consumers using smart hardware such as sensors, smart meters and controllers as well as software and other advanced technologies. These technologies enable the smart grid to manage power generators, grid operators and the electricity market in the most optimal manner to minimise cost, maximise reliability and reduce the environmental impact.

    It relies on information and communication technologies to connect devices and entities involved in the network. Smart Grid allows bi-directional flow of power and real time information allowing higher participation of end-users in power demand management. As a result, customers can play an active role in their power demand and supply.

    Advantages of Smart Grid
    Smart Grid enables decentralisation of the power network, which decreases power loss in supply, thereby increasing effectiveness. A decentralised system also helps in increasing the role of renewable power by connecting sources located in remote areas to the grid. As renewable energy depends on natural resources such as sun, wind and water, the Smart Grid facilitates better planning of energy supply by integrating conventional and renewable sources based on weather forecast.

    It can play a vital role in managing the volatility of demand and supply during the uncertain times of COVID-19. Smart Grid can analyse fluctuation in power demand from various clients at different times in a day and, accordingly, manage the power requirement by tapping several power sources to minimise the cost of operation.

    Adoption of digital technology would help utility companies realise many benefits such as reduction in power outage, cost savings, better customer service, lower emissions and overall improvement in management of the power network. It would also boost their profitability by increasing revenue while decreasing capital as well as operation and maintenance costs.

    Smart Grid provides customers more control over their power usage. The customer can monitor their power consumption through several applications and track their usage. In case of fluctuation in power cost at different times, the customer can choose to decrease their power usage when it is high (during peak hours) and increase when it is low.

    Consumers who are generally users of power have the option to become prosumers (consumers as well as power sellers) as they can sell power generated from rooftop solar installations to the smart grid.

    Adoption of Smart Grid
    Investment in the electricity grid has declined continuously over the last three years, while that in digital technologies, such as smart meters, utility automation and EV charging, has risen. The US and Europe have recorded a considerable increase in investment to digitise their grid system.

    To develop a smart grid system, utilities are investing in hardware such as digital sub-stations, smart meters and other power equipment solutions. However, investment in software is still very limited, and mostly done by the US and European utility companies. A few utilities have also started using digital technologies (Digital Twins, Artificial Intelligence, etc.) to monitor their operations.

    As per IoT Analytics, in 2019, smart meter penetration surpassed 14% of the total electricity meters installed globally. North America and Europe are moderately mature markets with smart meter penetration of 30–40%, while Asia Pacific is the largest growing smart meter market. Shipment of smart meters in Asia accounted for 60% of the global shipment in 2018. Other markets such as Africa, the Middle East and Latin America are in the initial phase of smart meter adoption.

    Road Ahead
    The usage of smart technology for power management is projected to rise in the coming years, particularly in the US, Europe and Asia Pacific. Increase in Smart Grid penetration would be driven by advancement in technology and reduction in the cost of digital technology and related equipment.

    In the next 5–6 years, the market for smart grid-related hardware and software is forecasted to triple in size, fuelled by greater adoption and government initiatives to boost power efficiency.



  131. Facility Management: Increasing Efficiency Through Adoption of Emerging Technologies

    Facility management is widely regarded as an essential service that helps maintain the health and safety of people

      to read | words

    published on Jul 15, 2020

    Facility management is widely regarded as an essential service that helps maintain the health and safety of people as well as increase the lifespan of buildings and the assets within. Emerging technologies have been assisting facility managers to achieve these objectives. The industry’s reliance on technologies is expected to grow and play a crucial role in containing the spread of the ongoing COVID-19 pandemic.

    Increasing role of technologies in facility management
    Facility management, a service-oriented industry, faces multiple challenges such as shortage of skills, inefficiencies in operations, quality adherence, and meeting customer expectations. The rapid increase in demand for facility management services over time has further compounded these challenges, as service providers try to balance their need to gain more customers while keeping operational costs in check.

    Information technology is believed to be an effective means to meet the service providers’ dual needs. Emerging technologies such as work order management, building information management (BIM), autonomous systems and smart sensors, internet of things (IoT), and robotics help streamline service delivery processes and improve efficiency and utilization of resources, thereby enhancing overall customer experiences.

    Facility management companies generally lack in-house technological expertise and work with technology partners to implement these new technologies. The responsibilities of technology partners often go beyond just implementation and include training of the facility management service providers’ in-house technology team and users, maintenance and upkeep of software, and providing quick responses to address any issues being faced in regular activities. In effect, technology partners serve as an extension of the service providers’ technology team.

    Due to this reason, in the past few years, several facility management companies have acquired technology providers that develop core IT solutions for the facility management industry. For example, a leading engineering company that provides consulting, design and construction, and facility management services to the industrial sector, acquired several companies in the past five years to improve its competencies in digital transformation, data management and analytics, and cyber security, among others.

    Achieving facility management objectives amid the COVID-19 pandemic
    Amid the lockdowns enforced globally during the ongoing COVID-19 pandemic, facility management services have been classified as essential by most governments, highlighting the role of these services in maintaining public health. The demand for these services has declined in most commercial and retail spaces, given the low physical turnout of employees and customers due to the lockdowns, while their demand in other essential industries (such as healthcare, pharmaceuticals, utilities, and manufacturing of essential goods) has spiked considerably. Facility managers perform a range of tasks in these industries, from cleaning and disinfecting to ensuring proper workforce management and adherence to social distancing norms.

    Once the lockdown measures are lifted and all organizations begin a systematic return to work, the responsibilities of facility managers are bound to increase. They will include additional tasks related to health and safety measures such as preparing and enforcing social distancing guidelines, managing the workforce, preparing flexible work strategies, frequent sanitization and disinfecting of workplaces and buildings, and monitoring of the environment quality. Adoption of relevant technologies can help facility managers achieve these objectives; for example, mobile applications can be used to create and monitor scheduled cleaning activities.

    Similarly, IoT, through smart sensors and devices, could assist facility managers in ensuring social distancing between employees as well as monitoring (and maintaining) temperature and air quality within the premises. Robotics, one of the latest innovative technologies, is ideal for carrying out repetitive tasks, such as sweeping and washing of floors, and hazardous activities, such as HVAC duct cleaning; however, this technology is yet to gain popularity.

    Facility managers have experienced that adoption of technologies such as IoT, automation, artificial intelligence, and connectivity helps develop smart solutions and provide quick responses to challenges. It also enables efficient utilization of facility management personnel while reducing the risk of injury as well as infection.

    The “post lockdown” future may spur technology providers to develop innovative solutions to address the new challenges faced by facility managers, leading to increased adoption of such technologies by facility management companies.



  132. Can UV-C lighting Help Reopen the World?

    COVID-19 cases are still increasing in some countries. However, the huge downturn suffered by the global economy has

      to read | words

    published on Jul 06, 2020

    COVID-19 cases are still increasing in some countries. However, the huge downturn suffered by the global economy has forced industries across the world to open while effective solutions to deal with the deadly virus are underway. This has brought UV lighting in focus. UV lighting has been incorporated in medical tools for the past 40 years. Currently, lighting companies are exploring its efficacy during the pandemic. The concept has strong potential in the present scenario, and innovative solutions are being studied by lighting companies for its applications in various industries.

    As the fear of the global pandemic gradually mitigates, industries and companies across the globe gear up to restart. The current situation demands the adoption of innovative solutions and technological developments to reduce cost, increase productivity and ensure growth while maintaining safety and taking precautions against COVID-19.

    The USD 159 billion lighting industry is currently exploring new applications, particularly the potential of UV lighting. UV light is an electromagnetic radiation comprising three sets of wavelengths:

    Type

    Wavelength

    UV -A

    • Closest to visible light (315–400 nm)

    UV -B

    • Moderately beyond visible light (280–315 nm)

    UV -C

    • Far beyond visible light (200–280 nm)


    Among these three, UV-B has been used in the medical field; it has been proved effective against bacteria but not against viruses. UV-C light has already been used for sterilization in the healthcare sector, as well as for purification of water and surfaces. It is also known to be resistant to viruses in general. However, its degree of containment against COVID-19 was relatively unknown until recently.

    UV-C as an effective solution to tackle COVID-19
    UV-C is present in sunlight, but it is filtered by the ozone layer before reaching the Earth’s surface. UV-C is typically capable of destroying the genetic material (DNA or RNA) of viruses as well as bacteria, thereby preventing them from multiplying. This has prompted leading lighting manufacturers, such as Signify and Osram, to research and develop UV-C-based lighting solutions that can successfully decrease the transmission of COVID-19 in indoor spaces such as hospitals, malls and offices.

    According to a latest study by researchers at Boston University, in a lab environment, UV-C lights manufactured by Signify are capable of eradicating around 96% of COVID-19 within just 3 seconds of exposure. Eradication increased up to 99% under exposure for more than 6 seconds. Similarly, Osram China Lighting Ltd claimed that it’s AirZing model 5040 lamp had killed around 99.8–99.9% of a virus similar to COVID-19 in a series of six ‘virus elimination tests’ in March 2020. Chinese hospitals in Beijing and Wuhan have already installed around 2,000 AirZing tube lamps for precaution, and demand for these lamps has increased globally.

    Challenges faced in implementing UV-C lighting
    Certain limitations might impede the commercial utilization of UV-C lights. UV-C light impacts genetic material, particularly causing damage to the human skin and eyes. Few wavelengths of UV-C have also been associated with cancer as well as cataract. Currently, UV-C lights can only be used for sanitising enclosed areas in the absence of humans. Also, companies require trained technical staff to operate UV-C lights, which might additionally hamper their commercial application. Furthermore, UV-C lights are only available in the form of mercury discharge lamps, which are more energy consuming and expensive compared with LED lights.

    LED and far UV-C lighting — Defining the future of the lighting industry
    Despite the challenges mentioned above, the utilization of UV-C lighting products is expected to grow in the short term as a temporary application for the sanitisation of commercial offices, healthcare and hospitality industries when the premises are not in use. However, long-term growth potential of these products will depend on research and innovations, such as introduction of far UV-C and LED-based UV-C lights.

    Far UV-C radiation falls within the wavelengths that are absorbed by the outer non-living layers of eyes and skin. This is relatively safer and can be adopted in residential homes as well, thereby improving hygiene standards. LED-based light manufacturing companies, such as OSRAM, are already working on making their UV-C lights cheaper and feasible for large-scale commercial utilization.

    As the world limps back towards normalcy, any innovation that can act as a tool to control the spread of COVID-19 is welcome and needed. If the industry can discover solutions to address the concerns regarding the safety as well as costs related to UV-C lighting, it could possibly be a gamechanger and help reopen the global economy.



  133. Vaccines under clinical and pre-clinical development to combat COVID -19 pandemic

    SARS-CoV-2 (COVID-19) is an enveloped, positive, single-strand RNA virus. Currently, there are no approved vaccines to safeguard people

      to read | words

    published on Jun 02, 2020

    SARS-CoV-2 (COVID-19) is an enveloped, positive, single-strand RNA virus. Currently, there are no approved vaccines to safeguard people from this virus. More than 100 projects worldwide are centred on developing a potential vaccine for the coronavirus. Vaccines under clinical development vary in type and platforms used; the types of vaccines that are mainly developed are DNA, RNA, VLP, inactivated, live attenuated, and protein subunit vaccines. The list provides details on the vaccines under clinical trial and is a ready reference for all trials in clinical and pre-clinical phases.

    COVID-19 Vaccines under Clinical Development      

    COVID-19 Vaccines under Pre-Clinical Development



  134. COVID-19 Vaccines Under Clinical Development

    Last Updated : 27 May, 2020 Candidate Platform Company/University Collaborator Primary Endpoint Primary Comp. Date Comments Vaccines Listed under WHO

      to read | words

    published on Jun 02, 2020

    Last Updated : 27 May, 2020

    Candidate

    Platform

    Company/University

    Collaborator

    Primary Endpoint

    Primary Comp. Date

    Comments

    Vaccines Listed under WHO (as of 11th May, 2020)

    Ad5-nCoV (Recombinant Novel Coronavirus Vaccine - Adenovirus Type 5 Vector)

    Phase - II

    Non- Replicating Viral Vector

    CanSino Biologics Inc.

    Hubei, China

    Insitute of Biotechnology, Academy of Military Medical Sciences, PLA of China

    1. Adverse reactions
      (Time frame: 0-14 days post vaccination)
    2. Anti-S antibody IgG titer
      (Time frame: on day 28 post vaccination)
    3. Anti-SARS-CoV-2 neutralizing antibody titer
      (Time frame: on day 28 post vaccination)

    December 30, 2020

    • On March 17, 2020, China approved the first clinical trial of the recombinant novel coronavirus vaccine jointly developed by Cansino and the Institute of Biotechnology; the trial will enroll 108 subjects at Tongji Hospital in Wuhan, China
    • Ad5-nCov is a genetically engineered vaccine candidate with the replication-defective adenovirus type 5 as the vector to express SARS-CoV-2 spike protein; used Sartorius' Biostat STR single-use bioreactor system for the upstream preparation of the recombinant vaccine
    • Occurrence of adverse reactions
      (Time frame: 0-14 days post vaccination)
    • Anti SARS-CoV-2 S antibody response(ELISA)
      (Time frame: 28 days post vaccination)
    • Neutralizing antibody response to SARS-CoV-2
      (Time frame: 28 days post vaccination)

    January 31, 2021

    ChAdOx1 nCoV-19

    Phase - II

    Non- Replicating Viral Vector

    University of Oxford

    Hampshire, United Kingdom

    -NA-

    1. Assess efficacy of the candidate ChAdOx1 nCoV-19 against COVID-19 -
      • Number of virologically confirmed (PCR positive) symptomatic cases (6 months)
    2. Assess the safety of the candidate vaccine ChAdOx1 nCoV -
      • Occurrence of serious adverse events (SAEs) (6 months)

    May 2021

    -NA-

    mRNA-1273

    Phase - II (IND Accepted)

    LNP-encapsulated mRNA

    National Institute of Allergy and Infectious Diseases (NIAID)

    United States

    Moderna

    1. Frequency of:
      • solicited local reactogenicity adverse events (AEs) (Through 7 days post-vaccination)
      • any medically-attended adverse events (MAAEs) (Day 1 to Day 394)
      • new-onset chronic medical conditions (NOCMCs) (Day 1 to Day 394)

    June 1, 2021

    • As of April 17, BARDA's commitment of up to $483M would enable the company to ramp their supply if the vaccine candidate is successful in the clinic

    INO-4800

    Phase - I

    DNA plasmid vaccine with electroporation

    Inovio Pharmaceuticals

    United States

    Coalition for Epidemic Preparedness Innovations (CEPI)

    1. Percentage of Participants with
      • Adverse Events (AEs) (Baseline up to Week 52)
      • Administration (Injection) Site Reactions (Day 0 up to Week 52)
      • Adverse Events of Special Interest (AESIs) (Baseline up to Week 52)
    2. Change from Baseline in -
      • Antigen-Specific Binding Antibody Titers ((Baseline up to Week 52)
      • Antigen-Specific Interferon-Gamma (IFN-γ) Cellular Immune Response (Baseline up to Week 52)

    April 2021

    • As of April 16, the International Vaccine Institute said the Coalition for Epidemic Preparedness Innovations granted $6.9M to Inovio to work with the IVI and the Korea National Institute of Health in a phase I/II trial of INO-4800 in South Korea

    BNT162a1
    (BNT162a1, BNT162b1, BNT162b2, BNT162c2)

    Phase - II

    mRNA

    Biontech SE

    Pfizer

    1. Percentage of participants reporting local reactions [ Time Frame: For 7 days after dose 1 and dose 2 ]
      • Pain at the injection site, redness, and swelling as self-reported on electronic diaries.
    2. Percentage of participants reporting systemic events (Time Frame: For 7 days after dose 1 and dose 2)
      • Fever, fatigue, headache, chills, vomiting, diarrhea, new or worsened muscle pain, and new or worsened joint pain as self-reported on electronic diaries.

    January 27, 2023

    • Pfizer confirmed lead compound shows antiviral activity; as of April 9, clinical study could start in third quarter; as of April 23, Biontech announced German regulator approved phase I/II program
    • The company will test four different candidates, two of which have nucleoside modified mRNA, one with a uridine containing mRNA and another with a self-amplifying mRNA construct
    • All are lipid nanoparticle formulations and as of April 29, they completed dosing of 12 patients in first cohort of the COVID-19 prophylaxis study in Germany
    • As of May 5, first participants dosed in phase I/II trial in U.S. Study is designed to determine safety, immunogenicity and optimal dose of four candidates; estimated enrollment is 7,600

    Inactivated vaccine

    Phase - I/II

    Inactivated

    Wuhan Institute of Biological Products

    Hubei, China

    Sinopharm

    Incidence of adverse reactions/events
    (Time Frame: 0-7 days after each dose of vaccination)

    November 2021

    -NA-

    Inactivated vaccine

    Phase - I/II

    Inactivated

    Beijing Institute of Biological Products

    Hubei, China

    Sinopharm

    Incidence of adverse reactions/events
    (Time Frame: 0-7 days after each dose of vaccination)

    November 2021

    -NA-

    Inactivated SARS-CoV-2 vaccine

    Phase - I/II

    Inactivated + alum

    Sinovac Research and Development

    Hubei, China

    -NA-

    A. Clinical Trial Identifier - NCT04383574 -

    1. Safety index-incidence of adverse reactions (Day 0-28 after each dose vaccination)
      • Incidence of adverse reactions after each dose vaccination
    2. Immunogenicity index-seroconversion rates of neutralizing antibody (30th day after the second dose vaccination)
      • Neutralizing antibody assay will be performed using the micro-neutralization method. Seroconversion will be defined as a change from seronegative (<1:8) to seropositive (≥1:8), or ≥4 fold increase from baseline.

    July 20, 2020

    -NA-

    B. Clinical Trial Identifier - NCT04352608

    1. Safety indexes of adverse reactions (beginning of the vaccination to 28 days after the whole schedule vaccination)
      • Occurence of adverse reactions post vaccination
    2. Immunogenicity indexes of neutralizing-antibody seroconversion rates for the emergency vaccination schedule (14th day after two doses of vaccination)
      • The seroconversion rates of neutralizing antibodies against 2019 novel coronavirus tested by micro-neutralization assay in serum
    3. Immunogenicity indexes of neutralizing-antibody seroconversion rates for the routine vaccination schedule (28th day after two doses of vaccination)
      • The seroconversion rates of neutralizing antibodies against 2019 novel coronavirus tested by micro-neutralization assay in serum

    August 13, 2020

    -NA-

    Other Vaccines under Development

    Pathogen-specific aAPC Vaccine

    Phase - I

    -NA-

    Shenzhen Geno-Immune Medical Institute

    Guangdong, China

    Shenzhen Third People's Hospital; Shenzhen Second People's Hospital

    1. Frequency of vaccine events
      (Time frame: Measured from Day 0 through Day 28)
    2. Frequency of serious vaccine events
      (Time frame: Measured from Day 0 through Day 28)
    3. Proportion of subjects with positive T cell response
      (Time frame: 14 and 28 days after randomization)

    July 31, 2023

    -NA-

    Lentiviral Minigene Vaccine (LV-SMENP)

    Phase - II

    -NA-

    Shenzhen Geno-Immune Medical Institute

    Guangdong, China

    Shenzhen Third People's Hospital; Shenzhen Second People's Hospital

    1. Clinical improvement based on the 7-point scale
      (Time frame: 28 days after randomization)
    2. Lower Murray lung injury score
      (Time frame: 7 days after randomization)

    July 31, 2023

      • A decline of 2 points on the 7-point scale from admission means better outcome. The 7-category ordinal scale that ranges from 1 (discharged with normal activity) to 7 (death)
      • Murray lung injury score decrease more than one point means better outcome. The Murray scoring system range from 0 to 4 according to the severity of the condition."

    BCG Vaccine (Intradermal)

    Phase - III

    -NA-

    Ain Shams University

    Cairo, Non-US, Egypt

    -NA-

    1. Estimate the incidence of confirmed COVID-19 among the healthcare workers in isolation hospitals
      (Time frame: 9 months)
    2. Evaluate the effectiveness of BCG vaccine in protecting the healthcare workers in isolation hospitals against the risk of COVID-19 infection
      (Time frame: 9 months)

    October 1, 2020

    -NA-

    BCG Vaccine

    Phase - III

    -NA-

    UMC Utrecht

    Netherlands

    Radboud University

    Health Care Workers absenteeism (Maximum of 180 days)

    October 25, 2020

    -NA

    Inactivated SARS-CoV-2 vaccine

    Inactivated + alum

    Sinovac Research and Development Co., Ltd.

    Measles-Mumps-Rubella Vaccine (MV-COVID19)

    Phase - III

    -NA-

    Kasr El Aini Hospital

    Cairo, Egypt

    -NA-

    Number of participants with asymptomatic or mild COVID-19 disease defined as fever, plus at least one sign or symptom of respiratory disease including cough, runny/blocked nose, plus positive SARS-Cov-2 test (Time frame: Measured over the 6 months following randomization)

    October 1, 2020

    -NA-

    BCG Vaccine

    Phase - III

    -NA-

    Universidad de Antioquia

    Antioquia, Colombia

    -NA-

    Incidence of COVID-19 cases confirmed or probable in the study population (From date of randomization to 360 day of the study)

    June 2021

    -NA-

    BCG Vaccine

    Phase - III

    -NA-

    Murdoch Childrens Research Institute

    Australia

    Royal Children's Hospital

    1. Number of participants with COVID-19 disease defined as (Measured over the 6 months following randomisation) -
      • fever (using self-reported questionnaire), plus
      • at least one sign or symptom of respiratory disease including cough, shortness of breath, respiratory distress/failure, runny/blocked nose (using self-reported questionnaire), plus
      • positive SARS-Cov-2 test (PCR or serology)
    2. Severe COVID-19 disease incidence -
      • Number of participants who were admitted to hospital or died (Time frame: Measured over the 6 months following randomisation)

    October 30, 2020

    -NA-

    BCG Vaccine

    Phase - IV

    NA

    Texas A&M University

    United States

    Baylor College of Medicine; M.D. Anderson Cancer Center; Cedars-Sinai Medical Center; Harvard University

    1. Incidence of COVID 19 Infection
      (Time frame: 6 months)

    May 2022

    -NA-

    CAR-NK Cells

    Phase - II

    -NA-

    Chongqing Public Health Medical Center

    Chongqing, China

    Chongqing Sidemu Biotechnology Technology Co.,Ltd.

    1. Clinical response
      • Efficacy of NKG2D-ACE2 CAR-NK cells in treating severe and critical 2019 new coronavirus (COVID-19) pneumonia
    2. Side effects in the treatment group
      • Safety and tolerability of NKG2D-ACE2 CAR-NK cells in patients with severe and critical 2019 new coronavirus (COVID-19) pneumonia

    May 31, 2020

    -NA-

    Source: ClinicalTrials.gov, Chinese Clinical Trail Registry, EU Clinical Trials Register, World Health Organization, Company Websites, News Articles



  135. COVID-19 Vaccines Under Pre-Clinical Development

    Last Updated : 27 May, 2020 Sr. No. Platform/Candidate Name Type of candidate vaccine Developer DNA Vaccines 1 DNA Vaccine DNA

      to read | words

    published on Jun 02, 2020

    Last Updated : 27 May, 2020

    Sr. No.

    Platform/Candidate Name

    Type of candidate vaccine

    Developer

    DNA Vaccines

    1

    DNA Vaccine

    DNA with electroporation

    Karolinska Institute / Cobra Biologics

    2

    DNA Vaccine

    DNA plasmid vaccine

    Osaka University/ AnGes/ Takara Bio

    3

    DNA Vaccine

    DNA

    Takis/Applied DNA Sciences/Evvivax

    4

    DNA vaccine (Nucleic acid based)

    Plasmid DNA, Needle-Free Delivery; Immunomic’s UNITE platform, EpiVax’s in silico T cell epitope prediction tool, and PharmaJet’s Tropis® Needle-free Injection System

    Immunomic Therapeutics, Inc./EpiVax, Inc./PharmaJet

    5

    DNA vaccine

    DNA plasmid vaccine

    Zydus Cadila

    6

    DNA vaccine (Antibody response induced)

    DNA vaccine

    BioNet Asia

    7

    DNA Vaccine

    DNA vaccine though nasal spray

    University of Waterloo

    8

    bacTRL-Spike (DNA vaccine)

    Orally administered, DNA Plasmid vaccine

    Symvivo Corporation

    9

    DNA Vaccine

    DNA vaccine

    Entos Pharmaceuticals

    10

    DNA Vaccine (Linear DNA vaccine)

    LineaRx's polymerase chain reaction (PCR)-based production platform

    Linearx Inc.; Takis Biotech

    Inactivated Vaccines

    1

    Inactivated

    Inactivated

    Institute of Medical Biology, Chinese Academy of Medical Sciences

    2

    Inactivated

    Inactivated

    Beijing Minhai Biotechnology

    3

    Inactivated

    TBD

    Osaka University/ BIKEN/ NIBIOHN

    4

    Inactivated

    Inactivated + CpG 1018

    Sinovac/Dynavax

    5

    Inactivated

    Inactivated + CpG 1018

    Valneva/Dynavax

    6

    Inactivated

    Inactivated

    Research Institute for Biological Safety Problems, Rep of Kazakhstan

    Live Attenuated Vaccines

    1

    Live Attenuated Virus

    Codon deoptimized live attenuated vaccines

    Codagenix/Serum Institute of India

    2

    Live Attenuated Virus

    Codon deoptimized live attenuated vaccines

    Indian Immunologicals Ltd/Griffith University

    Non-Replicating Vector Vaccines

    1

    Non-Replicating Viral Vector

    MVA encoded VLP - GV-MVA-VLP vaccine platform

    GeoVax/BravoVax

    2

    Non-Replicating Viral Vector

    Adenovirus 26 (Ad26)

    Janssen Pharmaceutical Companies

    3

    Non-Replicating Viral Vector

    Replication defective Simian Adenovirus (GRAd) encoding SARS-CoV2 S

    ReiThera/LEUKOCARE/Univercells

    4

    Non-Replicating Viral Vector

    MVA-S encoded

    DZIF – German Center for Infection Research

    5

    AdCOVID (Non-Replicating Viral Vector)

    Adenovirus-based NasoVAX expressing
    SARS2-CoV spike protein

    Altimmune

    6

    Non-Replicating Viral Vector

    Ad5 S (GreVac Plug-And-Play technology)

    Greffex

    7

    OraPro-COVID-19 (Non-Replicating Viral Vector)

    Oral Ad5 S

    Stabilitech Biopharma Ltd

    8

    Non-Replicating Viral Vector

    Adenovirus-based + HLA-matched peptides (PeptiCRAd technology)

    Valo Therapeutics Ltd

    9

    Non-Replicating Viral Vector

    VAAST Oral Vaccine platform

    Vaxart

    10

    Non-Replicating Viral Vector

    MVA expressing structural proteins

    Centro Nacional Biotecnología (CNB-CSIC), Spain

    11

    Non-Replicating Viral Vector

    Dendritic cell-based vaccine

    University of Manitoba

    12

    Non-Replicating Viral Vector

    parainfluenza virus 5 (PIV5)-based vaccine expressing the spike protein

    University of Georgia/University of Iowa

    13

    Non-Replicating Viral Vector

    Recombinant deactivated rabies virus containing S1

    Bharat Biotech/Thomas Jefferson University

    Protein subunit - based Vaccines

    1

    Protein Subunit

    Capsid-like Particle

    AdaptVac (PREVENT-nCoV consortium)

    2

    Protein Subunit

    Drosophila S2 insect cell expression system VLPs

    ExpreS2ion

    3

    DPX-COVID-19 (Protein Subunit)

    Peptide antigens formulated in LNP

    IMV Inc; University Laval

    4

    Protein Subunit

    S protein

    WRAIR/USAMRIID

    5

    Protein Subunit

    S protein +Adjuvant

    National Institute of Infectious Disease, Japan

    6

    Protein Subunit

    VLP-recombinant protein + Adjuvant

    Osaka University/ BIKEN/ National Institutes of Biomedical Innovation, Japan

    7

    Protein Subunit

    Native like Trimeric subunit Spike Protein vaccine using CpG 1018 adjuvant

    Clover Biopharmaceuticals Inc./GSK/Dynavax

    8

    Protein Subunit

    Microneedle arrays S1 subunit

    University of Pittsburgh

    9

    Protein Subunit

    Peptide Vaccine (signal peptide technology) - VaxHit bioinformatics platform

    Vaxil Bio

    10

    Protein Subunit

    Adjuvanted protein subunit (RBD)

    Biological E Ltd
    11

    Flowvax (Protein Subunit)

    Peptide - Size Exclusion Antigen Presentation Control technology

    Flow Pharma Inc.

    12

    Protein Subunit

    S protein

    AJ Vaccines

    13

    Protein Subunit

    Ii-Key peptide vaccine

    Generex/EpiVax

    14

    EPV-CoV19 (Protein Subunit)

    S protein

    EpiVax/Univ. of Georgia

    15

    Adjuvanted recombinant subunit vaccine (Protein Subunit)

    S protein(baculovirus production) - recombinant spike protein antigen and its baculovirus expression system

    Sanofi Pasteur/GSK

    16

    Protein Subunit

    Immune-activating gp-96 platform

    Heat Biologics/Univ. Of Miami

    17

    Protein Subunit

    Molecular clamp stabilized Spike protein (Glaxosmithkline plc and Seqirus GmbH)
    Toll-like receptor 9 (TLR9) agonist adjuvant, CpG 1018 (Dynavax Technologies Corp. and University)

    University of Queensland/GSK/Dynavax/Seqirus GmbH

    18

    Protein Subunit

    Peptide vaccine

    FBRI SRC VB VECTOR, Rospotrebnadzor, Koltsovo

    19

    Protein Subunit

    Subunit vaccine

    FBRI SRC VB VECTOR, Rospotrebnadzor, Koltsovo

    20

    Protein Subunit

    S1 or RBD protein

    Baylor College of Medicine

    21

    SARS-CoV-2 Virus-Like Particle (Protein Subunit)

    Subunit protein, plant produced (FastPharming)

    iBio/CC-Pharming

    22

    Protein Subunit

    Recombinant protein, nanoparticles (based on S-protein and other epitopes)

    Saint-Petersburg scientific research institute of vaccines and serums

    23

    COVID-19 XWG-03 (Protein Subunit)

    Recombinant protein-based coronavirus vaccinebased on series of truncated S (spike) proteins

    Innovax/Xiamen Univ./GSK

    24

    Protein Subunit

    Adjuvanted microsphere peptide

    VIDO-InterVac, University of Saskatchewan

    25

    Protein Subunit

    Synthetic Long Peptide Vaccine candidate for S and M proteins

    OncoGen

    26

    Protein Subunit

    Oral E. coli-based protein expression system of S and N proteins

    MIGAL Gaililee Research Institute

    27

    Protein Subunit

    Nanoparticle vaccine

    LakePharma, Inc.

    28

    Protein Subunit

    Recombinant spike protein with Advax™ adjuvant

    Vaxine Pty Ltd.

    29

    Protein Subunit

    OMV-based vaccine

    Quadram Institute Biosciences

    30

    Protein Subunit

    OMV-based vaccine

    BioMVis Srl/ University of Trento

    29

    TNX-1810, TNX-1820 and TNX-1830 (Protein Subunit)

    Spike-based

    Univeristy of Alberta/Tonix Pharmaceuticals Holding Corp

    31

    Protein Subunit

    Structurally modified spherical particles of the tobacco mosaic virus (TMV)

    Lomonosov Moscow State University

    32

    TNX-1810, TNX-1820 and TNX-1830 (Protein Subunit)

    Spike-based

    Univeristy of Alberta

    33

    Protein Subunit

    Recombinant S1-Fc fusion protein

    AnyGo Technology

    34

    Protein Subunit

    Recombinant protein

    Yisheng Biopharma

    35

    Protein Subunit

    Recombinant S protein in IC-BEVS

    Vabiotech

    36

    Protein Subunit

    Orally delivered, heat stable subunit

    Applied Biotechnology Institute, Inc.

    37

    Protein Subunit

    S-2P protein + CpG 1018

    Medigen Vaccine Biologics Corporation/NIAID/Dynavax

    38

    Protein Subunit

    Peptides derived from Spike protein

    Axon Neuroscience SE

    39

    Protein Subunit

    Adjuvanted recombinant protein (RBD-Dimer)

    Anhui Zhifei Longcom Biopharmaceutical/ Institute of Microbiology, Chinese Academy of Sciences

    40

    Protein Subunit

    RBD-based

    Neovii/Tel Aviv University

    41

    Protein Subunit

    RBD-based

    Kentucky Biprocessing

    42

    Protein Subunit

    Outer Membrane Vesicle (OMV)peptide

    Intravacc/Epivax

    Replicating Viral Vector Vaccines

    1

    Replicating Viral Vector

    YF17D Vector

    KU Leuven

    2

    Replicating Viral Vector

    Measles Vector - development of a live attenuated recombinant measles virus vectored vaccine against COVID-19

    Zydus Cadila

    3

    Replicating Viral Vector

    Measles Vector - engineering of measles live-attenuated vaccine to express other antigens

    Institute Pasteur/Themis/Univ. of Pittsburg Center for Vaccine Research

    4

    Replicating Viral Vector

    Measles Vector

    FBRI SRC VB VECTOR, Rospotrebnadzor, Koltsovo

    5

    Live attenuated virus

    Measles Virus (S, N targets) - Developing a live-attenuated virus using measles virus technology

    DZIF – German Center for Infection Research

    6

    TNX-1800 (Replicating Viral Vector)

    Horsepox vector expressing S protein - a live modified horsepox virus vaccine for percutaneous administration, for the potential prevention of COVID-19

    Tonix Pharma/Southern Research

    7

    Replicating Viral Vector

    Live viral vectored vaccine based on attenuated influenza virus backbone (intranasal)

    BiOCAD and IEM

    8

    Replicating Viral Vector

    Recombinant vaccine based on Influenza A virus, for the prevention of COVID-19 (intranasal)

    FBRI SRC VB VECTOR, Rospotrebnadzor, Koltsovo

    9

    Replicating Viral Vector

    Attenuated Influenza expressing an antigenic portion of the Spike protein

    Fundação Oswaldo Cruz and Instituto Buntantan

    10

    Replicating Viral Vector

    Influenza vector expressing RBD - Developing a replicating viral vector vaccine

    University of Hong Kong

    11

    Replicating Viral Vector

    Replication-competent VSV chimeric virus technology (VSVΔG) delivering the SARS-CoV-2 Spike (S) glycoprotein. Replicating viral vector that expresses the S protein

    International AIDS Vaccine Initiative (IAVI) /Batavia

    12

    Replicating Viral Vector

    VSV-S

    University of Western Ontario

    13

    Replicating Viral Vector

    VSV vector

    FBRI SRC VB VECTOR, Rospotrebnadzor, Koltsovo

    14

    Coroflu (Replicating Viral Vector)

    M2-deficient single replication (M2SR) influenza vector; It is designed to build on the backbone of Flugen’s flu vaccine candidate, M2SR, with research inserting gene sequences from SARS-CoV-2, the novel coronavirus that causes COVID-19, into M2SR so that the new vaccine will also induce immunity against the coronavirus

    UW–Madison/FluGen/Bharat Biotech

    15

    Replicating Viral Vector

    Newcastle disease virus vector (NDVSARS-CoV-2/Spike)

    Intravacc/ Wageningen Bioveterinary Research/Utrecht Univ.

    16

    Replicating Viral Vector

    Avian paramyxovirus vector (APMV)

    The Lancaster University, UK

    RNA Vaccines

    1

    RNA

    LNP-mRNA; mRNA based vaccine for Covid-19; Translate Bio mRNA platform

    Translate Bio/Sanofi Pasteur

    2

    RNA

    LNP-mRNA; mRNA based vaccine for Covid-19; Translate Bio mRNA platform

    CanSino Biologics/Precision NanoSystems

    3

    RNA

    LNP-encapsulated mRNA cocktail encoding VLP; Developing a COVID-19 mRNA vaccine candidate using mRNA to express the receptor-binding domain of the spike protein of COVID-19 and developing mRNAs that can instruct the host to produce virus-like particles similar to SARS-CoV-2

    Fudan University/ Shanghai JiaoTong University/RNACure Biopharma

    4

    RNA

    LNP-encapsulated mRNA encoding RBD; Developing a COVID-19 mRNA vaccine candidate using mRNA to express the receptor-binding domain of the spike protein of COVID-19 and developing mRNAs that can instruct the host to produce virus-like particles similar to SARS-CoV-2

    Fudan University/ Shanghai JiaoTong University/RNACure Biopharma

    5

    RNA

    Replicating Defective SARS-CoV-2 derived RNAs

    Centro Nacional Biotecnología (CNB-CSIC), Spain

    6

    RNA

    LNP-encapsulated mRNA

    University of Tokyo/ Daiichi-Sankyo

    7

    RNA

    Liposome-encapsulated mRNA

    BIOCAD

    8

    RNA

    Several mRNA candidates

    RNAimmune, Inc.

    9

    RNA

    mRNA

    FBRI SRC VB VECTOR, Rospotrebnadzor, Koltsovo

    10

    mRNA Vaccine (RNA)

    mRNA

    China CDC/Tongji University/Stermina

    11

    LUNAR-COV19 (RNA)

    mRNA; Developing a COVID-19 mRNA vaccine, LUNAR-COV19, based on the Arcturus' STARR technology and will take advantage of Duke's rapid screening of vaccines

    Arcturus/Duke-NUS

    12

    RNA

    saRNA

    Imperial College London

    13

    SARS-CoV-2 mRNA vaccine (RNA)

    mRNA; mRNA vaccine for prevention of COVID-19

    Curevac

    14

    RNA

    mRNA in an intranasal delivery system; targeting conserved epitopes from the whole CoV-2 genome; integrates 3 different technologies such as eTheRNA's proprietary Trimix technology

    eTheRNA

    15

    mRNA Vaccine (RNA)

    mRNA

    Greenlight Biosciences

    VLP Vaccines

    1

    VLP

    Virus-like particle, based on RBD displayed on virus-like particles

    Saiba GmbH

    2

    Virus-like particle vaccine (VLP)

    Plant-derived VLP; Company produced a virus-like particle (VLP) of the coronavirus 20 days after obtaining the SARS-CoV-2 gene

    Medicago Inc.

    3

    VLP

    ADDomerTM multiepitope display; Developing preclinically a virus-like particle vaccine using its ADDomer multiepitope display for COVID-19

    Imophoron Ltd and Bristol University’s Max Planck Centre

    4

    VLP

    Unknown

    Doherty Institute

    5

    VLP

    VLP

    OSIVAX

    6

    VLP

    eVLP

    ARTES Biotechnology

    Others

    1

    Unknown

    Unknown; vaccine for SARS-CoV-2 virus

    ImmunoPrecise

    2

    Unknown

    Unknown

    Tulane University

    3

    MAPS vaccine

    Multiple Antigen Presenting System (MAPS) vaccine platform is designed to enable the high-affinity binding of protective polysaccharides and proteins in a single vaccine

    Affinivax Inc.

    Source: World Health Organizations, Company Websites, Secondary Search



  136. COVID-19 Impact on Global Oil Industry

    The oil industry is experiencing a dual supply and demand shock due to COVID-19-led lockdown measures across

      to read | words

    published on May 08, 2020

    The oil industry is experiencing a dual supply and demand shock due to COVID-19-led lockdown measures across the world. In 2020, global oil demand is expected to decline by 9.3 mbd compared to last year, posing severe economic threats in oil producing countries.

    With over 180 countries reeling under the impact of COVID-19, the global oil industry is in the midst of unprecedented circumstances. Since early 2020, the sector has witnessed drastically lower demand, oil price war, plummeting oil prices, and reduced consumption of chemicals and refined products.

    Global oil crisis: In February 2020, China, the world’s second largest oil consumer, saw a dramatic drop in oil demand due to COVID-19 lockdown. By mid-March, WHO declared COVID-19 a global pandemic, and most countries started implementing partial or complete lockdowns to deal with this crisis. This led to a substantial decline in oil demand worldwide. Brent crude that was trading at ~USD 70 per barrel at the start of the year plunged to USD 21 by March end, the lowest price in two decades. To counterbalance dwindling demand, Saudi Arabia and Russia tried to negotiate a production cut but the discussion failed, starting a mistimed price war between the two countries.

    On April 9, 2020, OPEC+ (of which Saudi Arabia and Russia are key members) finally came to an agreement to reduce oil production; however, the measure was considered too little, too late. Oil prices had fallen by 60% between February and April.

    On April 20, US oil prices – West Texas Intermediate (WTI) – reached below zero, implying that, in order to avoid storage costs, producers were willing to pay traders to take deliveries. By April 27, WTI was trading at USD 15.72 per barrel and Brent crude at USD 21.11 per barrel.

    OPEC+ production cuts to offset declining demand: As part of the OPEC+ agreement, member countries have agreed to slash production by 9.7 mbd in a bid to offset the reduction in demand. According to the International Energy Agency (IEA), global oil demand is expected to fall by 9.3 million barrels per day (mbd) Y-o-Y in 2020. For April, demand was estimated to be 29 mbd less than last year, whereas for May, it is projected to be drop by 26 mbd Y-o-Y. A slight recovery is anticipated by June; however, demand will still be 15 mbd below last year’s level. Since production in April was high, the effective production cut in May 2020 will be 10.7 mbd.

    As per IEA, the available global storage capacity for oil may run out by mid-year. Chartering costs for very large crude carriers have skyrocketed and increased more than 2x since February; meanwhile, the cost of floating storage has also increased. Production cut initiatives by OPEC+ are expected to provide some relief from the oil glut that has burdened the oil & gas logistics industry.

    Economic impact: While lower oil prices are unlikely to help the common people who are confined to their homes, several countries such as China, India, and South Korea have taken advantage of the historically low prices to stockpile their strategic reserves.

    While oil consuming countries have capitalized on the falling prices, oil producing countries are facing economic threats. In Iraq, oil accounts for ~90% of government revenue. In the current situation, the government is struggling to pay salaries and pensions as well as fulfil its other obligations.

    Countries such as Mexico, Venezuela, and Ecuador that also depend on oil income are in a vulnerable position. Nigeria, Africa’s largest oil producer, has requested for a USD 6.9 billion emergency fund from IMF, World Bank, and African Development Bank to combat coronavirus.

    In countries such as Saudi Arabia, Russia, and the USA, the fiscal breakeven price for oil is USD 82.6, USD 49.2, and USD 40–55, respectively. Given that oil prices are nosediving, even these nations will inevitably face the economic repercussions. For example, Whiting Petroleum (a US oil exploration and production company) and Diamond Offshore Drilling (a US contract drilling service provider) have already filed for bankruptcy in April, 2020. IEA projects that global capital expenditure by exploration and production companies would be down 32% in 2020 from last year’s level.

    It is difficult to forecast when the oil prices will stabilize; therefore, until then, oil companies will have to endure the strain of the industry slowdown. However, they can consider the following measures in the short and long terms:

    • Follow an employee first policy and maintain safety for employees working during lockdown
    • Evaluate the company’s spending, upcoming investments, etc., and postpone or discontinue non-essential spending
    • Consider M&A opportunities, especially for non-core assets
    • Diversify from oil to newer/cleaner sources of energy



  137. Solar Power Sector: Would the COVID-19 Pandemic Restrict Growth?

    Prior to the spread of the COVID-19 pandemic, the solar energy sector had been witnessing an upward trend

      to read | words

    published on May 07, 2020

    Prior to the spread of the COVID-19 pandemic, the solar energy sector had been witnessing an upward trend and growth across various geographies owing to project launches and increase in capacities. However, the pandemic has drastically changed the scenario; companies are currently witnessing decline in demand and disruptions in supply chains and will have to bear the long-term effect even after the risk of the pandemic is mitigated. How will the solar power sector respond to this impending threat?

    Strong pre-COVID-19 solar growth
    Solar power capacity increased 20% year-on-year to 586.4 GW in 2019 with more than 60% capacity additions located in Asia. Solar power accounted for over half of the investments in the global renewable energy sector during the past decade.

    Factors such as grid-connected solar auctions, subsidies (for rooftop solar systems, etc.), and technology improvements (increased solar efficiency, solar energy storage, etc.) increased the industry’s attractiveness among investors, including oil and gas players. Moreover, the adoption rate of solar power in the primary energy mix increased. These trends clearly indicated a worldwide shift toward solar energy and provided opportunities for solar developers to expand their portfolios across various regional markets.

    However, following a decade of significant growth, the solar power industry is now faced with a nemesis in the form of COVID-19.

    Impact of COVID-19 on demand
    Asia accounted for over half of the solar capacity additions in 2019. However, in early 2020, with the spread of the COVID -19 pandemic and its repercussions on China’s raw material market, challenges emerged due to delays in delivery of modules and components. Disrupted supply chains resulted in project overruns, the cascading effect of which is expected to be long term. Developers would be required to substitute this shortage of supplies through local brands, which, being more expensive than Chinese products, would affect profit margins.

    Countries such as Taiwan and India announced plans to increase local production of solar power to meet demand in March 2020. However, the COVID-19 outbreak spread rapidly to Asia, Europe, and the Americas. As the number of infected cases increased across the globe and the death toll surged in Europe and the US, many countries adopted stricter lockdown measures in early April 2020, that can subsequently delay action plans for increasing local production in the short term.

    More than 100 countries have implemented stringent containment rules to enforce lockdown of several economic sectors. The affected countries are now diverting resources to implement lockdown guidelines, track the COVID-19 spread, and address safety concerns. This would delay or hamper investments aimed at achieving renewable energy targets over the next year. Furthermore, drop in electricity demand due to shutdown of commercial and industrial (C&I) areas is impacting revenue generated from electricity sales by renewable energy companies.

    Governments have temporarily diverted their focus away from the renewable sector. C&I companies are also expected to revise their FY 2020−21 budget and plan operations post-lockdown, which would reduce rooftop solar demand in 2020. Due to the decline in sales of PV units, demand for services such as assistance in self-assessment, shortlisting of installers, and handling of warranty claims, is expected to increase, as these services can be administered online even during lockdown.

    COVID-19 impact on supply of solar modules
    China accounts for 80% of the global PV module production capacity; therefore, factory shutdowns across the country during Q1 2020 disrupted supply chains across all target markets. Although some factories resumed production of solar wafers toward the end of the first quarter, factors such as delays in transportation of raw material, manpower crunch, and cancellations of corporate meetings are affecting business transactions across the country and are expected to impact module pricing in the short term.

    These trends are, in turn, impacting downstream sectors in Asian countries such as India, Taiwan, and Malaysia, which depend on component and material supplies from China for local production and exports. Moreover, lockdown in these countries are adding to the supply chain bottlenecks.

    Possibility of consolidation as a result of COVID-19
    COVID-19 has created a seismic shift in the entire industry landscape, and manufacturers, developers, as well as end users are strategizing on how to deal with it. China, the leading supplier of solar panels, has witnessed a decline in domestic solar PV demand over the past three years, making solar PV cell manufacturers highly reliant on exports. Due to the COVID-19 outbreak, PV panel exports from China declined 12% year-on-year in Q1 2020. Chinese manufacturers increased panel production in March 2020 to address order backlogs. However, the country is expected to witness an increase in inventory build-up due to lockdown in various target markets such as Europe, the Americas, and the rest of Asia Pacific.

    The midstream and downstream of the solar power sector are expected to witness consolidation if stringent lockdown continue toward late 2020. Large and experienced solar energy developers (in terms of the MW capacity installed) that are financially stable would be able to manage expenses such as salaries and allowances during the low turnover period. Small and medium-sized companies will be the worst hit, as they would struggle to find new customers. This may result in consolidation through mergers and acquisitions in the near future.

    Short to mid-term outlook
    The solar power industry, along with all other sectors, is experiencing an unprecedented situation. The industry may also face ripple effects from industrial sectors, such as potential decline in petroleum prices and strengthening of the US dollar, which could further postpone the development of solar projects to 2021. However, the COVID-19 outbreak could offer opportunities to local manufacturers, provided the governments of the respective countries enable a favorable business environment through incentives, fast-track establishment of manufacturing facilities, and efficient transportation infrastructure.

    The future of solar energy is bright. Governments across the globe are committed to significantly increasing the share of renewable energy in their energy mix. While the renewable energy sector would be impacted in the short to medium term, it is expected to ride through these tough times and eventually sustain growth in the long term. The resilience and business continuity of organizations in the face of the current adverse scenario would help attain these goals.



  138. Branchless Banking: Clicks to Replace Bricks

    The fear of contracting COVID-19 and the associated quarantine measures have been keeping customers away from bank branches,

      to read | words

    published on May 05, 2020

    The fear of contracting COVID-19 and the associated quarantine measures have been keeping customers away from bank branches, and this trend is expected to continue for the foreseeable future. The lockdown scenario worldwide is pushing customers more towards online banking and to becoming net savvy. As customers become more comfortable in managing finances digitally, are bank branches doomed to become altogether redundant when the pandemic ends? Will bank branches be a thing of the past?
    We think YES!

    Early Entry, But Staggered Evolution
    The concept of branchless banking started way back in 1989, with First Direct, a UK bank, which launched the concept of ‘telephone banking’. However, after this innovation, the evolution of branchless banking was quite slow for a couple of decades; traditional banking continued to dominate this space. In the 2010s, the face of banking changed with the introduction of financial technology (Fintech) companies and digital financial products. Online banking progressed rapidly. The greater penetration rate of Internet coverage and smartphones aided this growth and the demand for online banking products thus increased. Some banks explored the option of going completely digital and thus closed down their branches. The outbreak of COVID-19 at the start of 2020 has now led to a surge in the demand for digital banking and presented an opportunity for banks to go branchless.

    Pandemic Boosts Alternatives to Traditional Banking
    As COVID-19 cases increase across the globe, alternatives to in-person banking and physical exchanges are becoming a necessity. The World Health Organization (WHO) recommends contactless payments and avoid banknotes in one of its directives to decelerate the spread of the pandemic. The US Centers for Disease Control and Prevention (CDC) recommends that individuals stay six feet away from each other to maintain social distancing.

    As pandemic affects more countries, banks worldwide are encouraging the use of alternatives to in-person banking and branch visits. New digital products are being launched to aid this initiative and ensure uninterrupted banking services for customers. For instance, Singapore’s DBS created a template for branchless banking after it had to evacuate 300 employees when one of them tested positive for the Coronavirus. The bank has now digitized 11 financing processes, such as instant interbank fund transfers for business accounts. Another example involves India’s ICICI Bank launching ICICIStack, a set of nearly 500 digital banking services and APIs.

    To maintain social distancing, customers too demand alternatives to in-person banking. Jason Blick, CEO of EQIBank (a branchless bank headquartered in Dominica), says the bank has seen a tremendous surge in new account openings during the quarantine period. In the US, the use of mobile banking has increased by 50% since the start of the pandemic. Customer demands have fueled the entirely digital, 24/7 banking system, which is set to drive the demand for branchless banking.

    So, What Attracts Customers to Branchless Banking?
    Branchless banks appeal largely to the tech-savvy, young, or unbanked population. These banks identify gaps, problems, or pain points of traditional bank offerings and engineer a product or service that plugs this gap, thus attracting customers.

    In addition to the convenience of banking from any place, any time, customers have access to a suite of digital products and services.

    • Branchless banks provide an attractive savings account rate. In the US, they offer a rate of 1.50% on savings account, compared to the 0.01–0.07% offered by traditional banks. Other key features that attract customers to branchless banking are the zero maintenance fees and mass customization of bill payments. In the latter feature, customers can select from a range of billers on the app instead of a fixed set of billers that the traditional bank would support.
    • By automating processes, branchless banks offer quick services to customers. People can open accounts or apply for mortgages through quick sign-up forms and automated credit checks. There is no tedious paperwork involved or long queues for application. Additionally, chatbots deployed in branchless banks can offer a range of advisory services, which can be availed 24/7, thus eliminating the need to wait for banking hours in the traditional format.

    Customers thus get a variety of services at their fingertips that they can avail at their convenience.

    How Can Banks Become Branchless?
    The main requirements to offer branchless banking services are a banking license, technology partners, and digital offerings.

    Banking License
    Banks or start-ups use one of the following three business models:

    • Start-ups procure an independent banking license and initiate services.
    • They can seek to partner with an existing bank and operate as its subsidiary.
    • Traditional banks can expand their digital footprint and slowly reduce the number of branches.

    Technology Partners
    Technology and digitization are the basis of branchless banking. Banks or financial services start-ups should leverage Fintech services and banking technology by partnering with multiple specialized vendors. Banks can thus focus on core banking activities such as customer acquisition and leave the back-end technology to experts in the field. An example of this is Monzo. The bank integrated the capabilities of Stripe to process online payments; Heroku and Amazon Web Services for their cloud platforms; and TransferWise for international payments; while its core team focused on customer acquisition.

    Targeted Products
    Branchless banks offer a select set of products initially, instead of an entire suite. This is primarily due to the costs associated with maintaining each product. A popular product that has attracted customers worldwide is the basic savings account that offers a better rate than the traditional banks. Branchless banks can leverage this product to develop customer base. Some other well-received offerings from branchless banks are loans and overdrafts, insurance, trading products, and savings accounts for businesses.

    As an example, Monzo initially offered only savings accounts and a few other services, such as requesting money from other users and splitting bills. It later moved on to offer overdrafts and international bank transfers as products, while simultaneously increasing the suite of services to include instant freezing of Monzo cards through its app. The bank went on to add more products eventually as its customer base increased.

    Branchless Banking: Is it the Future of Banking Industry?

    Yes it is!

    Going branchless would benefit banks in multiple ways. They could save approximately 50% in costs such as lease, salaries, and overheads. Also, branchless banks are known to have a better efficiency ratio of about 30% compared to 50–80% of traditional banks.

    We expect 40% of the banks worldwide to go branchless in the next five years (the current rate is less than 10%). Of this transformation, 30% would be due to existing traditional banks migrating to the branchless model; the rest would be from new and existing branchless banks.

    While developed countries will be at the forefront of promoting branchless banking, we expect a significant shift in emerging markets such as India, countries in sub-Saharan Africa, Eastern Europe, and Latin America. We also expect banks globally to start promoting less-used digital products, such as account opening, lending, and electronic check deposits, going forward, while the more widely used banking products, such as money transfers and bill payments, will continue to grow.

    Branchless banking is the future of global banking. There will be many more digital-only banks and conventional banks will shut branches to save costs. Meanwhile, fintech and banking technology vendors will be big beneficiaries of this entire change.



  139. Has COVID-19 Hit Growth of Renewable Energy Sector?

    COVID-19 has impacted almost all the economies globally. Industries worldwide are adversely affected and racing to dodge the

      to read | words

    published on May 04, 2020

    COVID-19 has impacted almost all the economies globally. Industries worldwide are adversely affected and racing to dodge the impending recession. The power generation industry, including the renewable energy sector, is also facing the fallout of the pandemic. Though the effects on the sector are vague now, these will become prominent in the upcoming months. In fact, the repercussions could be so vast that the renewable energy sector may take few years to regain normalcy.

    Before the outbreak of COVID-19, the global renewable energy sector was rapidly ramping up capacity. Due to the reduced cost of electricity generation from renewable sources such as wind and solar power, the sector gained much traction over the past few years. In 2019, around 176 gigawatts (GW) of generating capacity from renewable sources was added globally. The forecast for this sector was also promising, with many new projects planned or announced.

    Since the pandemic hit, growth of this sector has almost stagnated. With stringent government restrictions in place, many ongoing renewable projects worldwide have come to a standstill. This setback will adversely affect the targeted annual renewable energy capacity addition. As per Rystad Energy’s estimate, before the pandemic struck, an estimated 140 GW of solar photovoltaic (PV) capacity and 75 GW of wind capacity were to be added in 2020.

    The pandemic has caused fluctuations in currency exchange rates, with most countries recording a downgrade in their currency value versus the US dollar. This trend might continue into 2021 as well due to the ripple effect of the current crisis. Thus, the estimated cost of renewable energy projects would also increase as most project-related transactions take place in US dollars.

    Impact by Country/Region
    Europe faced the highest number of casualties of COVID-19. The repercussions were also felt by the renewable energy sector in the region. Many projects have been delayed; there is no clarity on completion dates. The steady downslide of the euro against the US dollar is ramping up the cost of ongoing projects, which would further hit the renewable energy sector.

    In Latin America, the steep fall in currency value against the US dollar has escalated the cost of ongoing renewable energy projects. Many projects have thus been halted and plans for new ones are delayed indefinitely.

    Although China and the US are not facing major currency fluctuations, the projects had been paused in these countries as well due to lockdown which has restricted the movement of workers.

    Other countries in Asia and the Middle East are similarly impacted and have halted their renewable energy projects.

    Demand-Supply Scenario
    As ongoing renewable projects in most countries have been put on hold, the worldwide demand for renewable energy equipment has also gone down. The few countries which are continuing with renewable projects have now to deal with the increased cost factor due to currency fluctuation.

    Given the current scenario, the demand for renewable energy generation equipment will not only be affected during the current pandemic, but also after the crisis is resolved as countries’ priorities will change considering the impending recession they might face. It is expected that the demand for renewable energy equipment will take more than a year to reach the pre-pandemic levels.

    Government restrictions have led to limited or no manufacturing of renewable equipment in countries where it is manufactured. Consequently, the supply of renewable energy equipment in the market would also reduce. For example, the supply of wind-turbine-related equipment is impacted as Europe, where most of this manufacturing takes place, has been severely hit by the pandemic. The supply of solar PV equipment, however, is slowly returning to normal as China, the major supplier of PV equipment worldwide, restarted production.

    Future of Renewable Energy
    The renewable energy sector would require at least a year to regain normalcy. One of the main factors influencing the sector is currency fluctuation. The effect of this will be felt by both government and private players, specially in developing countries, even after the impact of the pandemic reduces.

    The market anticipates an oversupply of equipment and low demand after the pandemic, which could cause massive price drops. This can create entry opportunities for few players planning to invest in the sector as investments would be scarce.

    Recommended Strategies
    The impact of COVID-19 on the global renewable energy sector differs by country. The key influencers are currency fluctuation, labor availability, equipment availability, and financial support. Companies must strategize and plan for the post-pandemic phase to mitigate its impact.

    Some of the key strategies that companies can take up, considering the current and upcoming circumstances:

    • Strategic acquisition of companies which are facing financial crunch caused by the pandemic.
    • Enter into long-term contracts with equipment suppliers to provide a hedging tool for currency fluctuations and a secure supply for future projects.
    • Develop a roadmap of projects for at least five years to achieve the set targets.



  140. The Chemicals Industry: Resilient During the COVID – 19 Pandemic

    The COVID-19 outbreak has significantly impacted the global economy thereby altering the growth trajectories of most key sectors.

      to read | words

    published on May 04, 2020

    The COVID-19 outbreak has significantly impacted the global economy thereby altering the growth trajectories of most key sectors. However, the chemicals sector seems to have remained largely unscathed and is in fact poised to benefit from new opportunities that this pandemic has presented.

    Overview of COVID-19 Impact on the Chemicals Industry
    The coronavirus crisis, which initially emerged in China in November 2019, has snowballed into a global pandemic, with the virus infecting over 3.0 million and causing over 200,000 causalities. Lockdowns, which remain the only way to slow the spread, are leading to disruptions in businesses and demand, pushing major economies to the edge.

    The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), declined for the second straight month in March 2020, registering an 8.9% fall from its peak. A fall of 3% or more and continuing decline for three consecutive months are generally believed to be leading indicators of impending recession. Decline in global chemicals production was, however, already noticeable in February 2020, when North America, Europe, and Asia Pacific registered a year-on-year degrowth of 1.5−3%.

    Table 1: Global Chemicals Production by Segment (% Change)

    Previous Month
    Jan 20/Dec 19

    Current Month
    Feb 20/Jan 20

    Year/Year
    Feb 20/Feb 19

    Year-to-Date
    YTD 20/YTD 19

    Global Total

    -0.8

    -2.4

    -1.5

    -0.2

    Agricultural Chemicals

    0.1

    -1.3

    -3.7

    -3.3

    Consumer Products

    -1.1

    -1.5

    -2.0

    -1.1

    Basic Chemicals

    -0.3

    -1.5

    -0.4

    0.8

        Inorganic Chemicals

    -0.5

    -2.2

    -4.5

    -3.0

        Organic Chemicals

    0.1

    -0.7

    -0.3

    0.4

        Plastic Resins

    0.4

    -0.8

    1.4

    2.5

        Synthetic Rubber

    -4.7

    -7.3

    -1.0

    1.8

        Manufactured Fibers

    -3.3

    -5.1

    -1.4

    2.1

    Specialty Chemicals

    -2.4

    -5.0

    -3.0

    -1.3

        Coatings

    -4.9

    -9.4

    -4.6

    -2.6

        Other Specialty Chemicals

    0.4

    -1.8

    0.1

    0.1

    Source: American Chemistry Council
    Note: Seasonally adjusted, three-month moving average

    Production of industrial coatings, inorganic chemicals, and agricultural chemicals has been the worst hit, primarily on account of shutdowns witnessed across China during early 2020. This loss of production is also reflected in low global capacity utilization, which, for the first time since August 2009, slipped below 80% to nearly 79%.

    While the pandemic continues to rile global markets, China seems to be slowly emerging from its shutdown. Lockdowns across key production centers have been lifted and employees are returning to work. These developments have kindled hope of recovery across the chemicals industry globally. However, demand-supply dynamics in a post-COVID-19 world might undergo fundamental changes across most end-use sectors and thereby alter market fundamentals across different segments of chemicals.

    Basic Chemicals/Petrochemicals
    China dominates the global petrochemicals market, accounting for over 40% of total global production. Its share in the global supply of basic petrochemicals such as benzene (33%), propylene (33%), and paraxylene (60%) has almost doubled since 2010. Therefore, any impact on supply dynamics in China would have widespread repercussions on global petrochemicals markets.

    At the beginning of the outbreak, petrochemicals production in China did take a hit. However, production was never significantly impacted for long owing to the quick rebound in economic activity, which caused a negligible impact on supply. Furthermore, as export markets are currently grinding to a halt, China is already witnessing a huge pile-up of petrochemicals inventory. Moreover, as cracker expansions are expected to proceed as planned, supply would continue to increase, thereby creating a surplus that would lead to a plunge in the prices of petrochemicals.

    The global supply of petrochemicals is therefore not expected to be impacted by the COVID-19 pandemic.

    Chart 1: China’s Polyolefin Capacity

    Chart 2: China’s BD Capacity Outlook

    Chart 3: China’s Fiber Feedstock Capacity

    Source: News Articles, ChemOrbis, Chemweek, Aranca Analysis


    However, the petrochemicals market is experiencing a rapid deterioration on the demand side. Most of the industry’s key end-use sectors have been highly impacted by the reduction in demand in domestic as well as international markets.

    Table 2: Impact on End-Use Sectors Over 2020−21

    Source: Aranca Analysis

    Chart 4: Key Applications for Petrochemicals

    Source: Aranca Analysis

    The slowdown in demand is expected to be more pronounced for applications related to the automotive, textiles, and construction sectors. Demand for packaging is closely linked with economic growth and the level of industrial activity. However, part of this decline is being offset by customers stockpiling packaging products, which is causing a temporary spike in demand. At the same time, segments such as packaging for food and pharmaceutical industries and applications such as medical devices continue to witness robust demand.

    In the base-case scenario, if the outbreak is contained within two quarters, demand for petrochemicals is likely to rebound, albeit gradually. Applications across the packaging and healthcare sectors are expected to be the biggest beneficiaries of this rebound. On the other hand, demand erosion across the automotive and construction sectors is likely to continue, consequently lowering the demand for petrochemicals.

    Table 3: COVID-19 Impact on Basic Chemicals/Petrochemicals

    Impact on Demand

    Impact on Supply

    Overall Impact of COVID-19

    High

    Low

    Moderate

    Low demand from key applications, such as the automotive and construction sectors, to continue

    No threat of disruption; supply expected to increase over 2020−21

    No major impact on the industry


    Specialty Chemicals/Intermediates
    Supply chains of specialty chemicals are closely intertwined, and production majorly depends on Asian manufacturers. During the past decade, increasing regulatory oversights had forced many western chemicals manufacturers to outsource production to Asian countries. However, given the disruption caused to their supply chains on account of the coronavirus outbreak, there has been a conscious effort to reorganize manufacturing strategies and shift production back home or to a lesser risk-prone geography. These forced changes have curtailed the expansion plans of many specialty chemicals manufacturers, which would consequently disrupt the supply landscape. Some sub-segments of specialty chemicals, such as coatings and pharma intermediates, were already experiencing the impact of regulatory measures in markets such as China. The ongoing pandemic is expected to further accentuate the pressures, which would reflect in low production growth across these segments in 2020.

    On the demand side, the specialty chemicals segment is not expected to be much impacted by the COVID-19 outbreak. Given that specialty chemicals are leveraged in applications across a range of end-use sectors, demand slowdown across some end markets is expected to be off-set by an increase in demand from other markets. Applications in sectors such as food and feed, home and personal care products, and packaging are likely to increase, mainly driven by increased consumer spending on these products during the pandemic.

    Table 4: COVID-19 Impact on End-Use Sectors

    Source: Aranca Analysis

    Furthermore, compared with basic chemicals/petrochemicals, demand for specialty chemicals is geographically well-diversified, which reduces the impact of the COVID-19 outbreak on the segment. Therefore, a slowdown in demand from some developed markets across Europe and the US is expected to be balanced by continued demand from emerging markets in Asia.

    Table 5: COVID-19 Impact on Specialty Chemicals/Intermediates

    Impact on Demand

    Impact on Supply

    Overall Impact of COVID-19

    Moderate

    Moderate

    Low

    Low demand from some applications likely to be off-set by increase in demand from others

    Supply chains expected to be re-organized with production shifting from China, thereby impacting supply volumes in the medium term

    No major impact on the industry; production continues as usual with insulated demand


    Agri-Chemicals
    Up to the last quarter of 2019, the global USD 60 billion agri-chemicals market had been growing steadily at around 3−4% year-on-year, mainly driven by increased demand in key markets such as India and Brazil coupled with implementation of reforms related to product mix in China. Furthermore, increased exports from Eastern Europe, mainly Russia and Ukraine, had been driving growth of the agrochemicals market in Latin America and EMEA. At the macroeconomic level, factors such as population growth as well as rising urbanization, growing demand for food and protein production, and decreasing per capita arable land had led to greater emphasis on agricultural output improvements through increased efficacy of crop protection products.

    Typically, an active chemical ingredient is produced by the contract manufacturer and the end product is formulated closer to the point of consumption. In anticipation of the 2020 crop season, much of the agri-chemicals had already been formulated and shipped, thereby creating an inventory buffer that would shield the market from any supply-side disruptions in Q2. On the supply side, many agri-chemicals producers were highly dependent on production outsourced to Asia. Over the past decade, China and India have emerged as key destinations for production of advanced intermediates and herbicides.

    Due to this dependence on India and China, concerns of agri-chemicals manufacturers in Europe and US are increasing in the current COVID-19 pandemic scenario. While there is no immediate risk of supply disruption, agri-chemicals companies in western markets expect an impact in Q3 and Q4 if the pandemic is not contained by then. Global lockdowns have also severely impaired logistics networks, thereby limiting the ability of agri-chemicals manufacturers to respond to any supply disruptions. Given the essential nature of agricultural activities, governments worldwide are prioritizing aid to the sector. Phased relaxation from trade curbs and lockdowns is likely to aid agri-chemicals manufacturers in building inventory for the next phase of demand.

    Hence, while the coronavirus outbreak does not pose an immediate threat of disruption to this segment, market participants are maintaining a cautious stance and closely monitoring developments.

    Table 6: COVID-19 Impact on Agri-Chemicals

    Impact on Demand

    Impact on Supply

    Overall Impact of COVID-19

    Low

    Low

    Low

    Agricultural activity across key markets remains robust, thereby maintaining steady demand

    Supply chains expected to be re-organized with production shifting away from China, thereby impacting supply volumes in the medium term

    No major impact on the industry; production continues as usual with insulated demand


    In summary, while demand concerns might re-emerge if the crisis prolongs, for now, the chemicals industry remains insulated from any significant slowdown. Over the medium term, the industry will witness transformations, as manufacturers seek to reorganize their supply chains and customers work toward reducing their dependence on China. However, this reorganization is not expected to have any significant impact on the supply side.

    Overall, the industry seems to have weathered the COVID-19 outbreak relatively better than most other industries and is set to benefit from the rebound – as and when it occurs.



  141. How has COVID-19 Impacted the GCC Auto Sector

    Historically low oil prices and decreased demand in the aftermath of COVID-19 – a double whammy for the GCC e

      to read | words

    published on Apr 30, 2020

    Historically low oil prices and decreased demand in the aftermath of COVID-19 – a double whammy for the GCC economy – have severely impacted all sectors in the region, including auto industry. Along with low unit sales, traffic on roads has decreased amid the crisis. However, certain growth opportunities are emerging even during the tough times. Additionally, some countermeasures can be taken to help the sector ride out the challenging environment.

    COVID–19 has not spared the GCC economy. Lockdowns, travel restrictions, slump in oil prices, and interruption in supply chain, among other factors, have drastically affected demand-supply dynamics and slowed growth across industries, including the auto sector.

    The Saudi auto industry, which showed signs of revival (29% Y-o-Y growth in 2019) amid optimistic consumer sentiment and addition of women drivers as a new customer segment, has been hit by the crisis. Auto sales nose-dived 35–40% in March 2020. Growth in the UAE’s auto industry has also plummeted as shutdowns and crashing oil prices led to a 45–50% fall in car sales in March 2020. Moreover, with consumers in the region deferring vehicle purchases, new car sales are expected to decline 25% or more in 2020.

    Decrease in traffic (~30–45% in major cities in KSA and the UAE), coupled with delayed periodic maintenance, is negatively impacting the auto aftermarket industry. In March 2020 alone, the GCC region recorded ~70% decline in periodic maintenance, while sales of auto parts fell a whopping 50% during the same month. The UAE, which is the key export hub in the GCC region, and caters to several countries in the Middle East, has registered more than 50% decline in auto/ auto -components exports since the outbreak of COVID-19. KSA, the largest market in terms of automotive spare parts and services in the GCC region, is expected to contract 15% to US$ 6.8 billion in 2020.

    Auto sectors in major GCC economies, such as Saudi Arabia and the UAE, depend heavily on imports, with countries such as Japan, China, the US, South Korea and Germany accounting for 60–70% share in the auto and auto parts market. Production cuts and shutdowns in these countries have not affected auto dealers/distributors in the GCC region until now due to decreased consumer demand and the fact that most of them are sitting on idle inventory. However, after COVID-19 subsides, when production in these global auto hotspots resumes, there will be intense competition among different markets to procure auto components, spare & wear parts and vehicles. This will hamper supply to GCC countries. Furthermore, dealers and distributors in the region will face rising pricing pressure from OEMs, who themselves must deal with increasing CAPEX requirements and declining profit levels.

    On a positive note, all is not lost for the region’s auto industry. As witnessed across the globe, public transport usage has diminished significantly and is expected to remain relatively less utilized due to social distancing even after the infection has been brought under control. Even in the GCC region, the use of public transport dropped by over 75% in March 2020. The changing consumer behavior will open new avenues for growth. For example, shared modes of transportation can be used for point-to-point delivery of essential services as well as for e-commerce. Maintenance and repair service providers can offer advanced services such as servicing at home, vehicle pick-up and delivery for maintenance, and complete vehicle disinfection. Aftermarket service providers must adapt and tap the new revenue streams to offset the losses sustained due to COVID-19.

    Although this is an unprecedented situation, all stakeholders in the GCC automotive ecosystem (dealers, distributors, spare parts retailers, IAMs, etc.) will need to evolve and adapt to the ‘new normal’ in order to safeguard their business.

    Some of the recommended countermeasures are:

    • Increasing Digital Presence – With people locked down in homes, the consumption of online content has increased. Hence, it is important that automotive stakeholders improve digital penetration in order to connect with e-commerce-friendly customers and derive online sales. Continuous contact with customers and employees through digital channels, updating them on business conditions, the company’s plans and new product launches, will not only boost confidence of employees in the organization but also reassure customers. This will ensure significant customer turn-around once normalcy is restored. Online campaigning (for example, advertising hygiene initiatives at one’s showrooms, workshops) and customer engagement initiatives (such as prizes for online quizzes and games for women customers) are a few steps that can be taken to drive growth.
    • Protecting Supply Chain – Various spare part suppliers for GCC nations, especially from countries affected severely by COVID-19, may not be able to cater to demands due to capacity shortage. Therefore, players in KSA should look to diversify their vendors and connect with new suppliers from other regions (for example, South East Asia – India, Thailand, Indonesia, etc.) where the impact of the crisis is comparatively low. This will mitigate the risk of interruption in supply during and after COVID-19.
    • Offering Value-added Services – Providing services not otherwise offered traditionally (such as home -delivery of cars purchased, advanced EMI options, etc.) at no cost will ensure higher customer footfall relative to the competition. Discounting strategies should be revisited, and targeted incentives should be provided to specific customer segments (for example, customized packages for fleet owners entailing free maintenance services for a longer duration than usual). This will indicate that dealers/distributors/retailers are always putting customers first.
    • Investing in Cutting-edge Technologies – Considering the current slowdown, it is imperative that investments and resources be diverted from traditional operations to newer technologies (for example, connected car technologies, predictive maintenance capabilities, advanced ERP for stock management) and related planned initiatives. This will also ensure quick and efficient resumption of operations once the situation improves.

    Yes, safety first is the need of the hour. However, optimized and thoughtful allocation of resources, and effective planning can minimize the impact for auto -businesses in the GCC region. Companies should not adopt a wait and watch policy. They must act! And ACT NOW!!



  142. How SHIELD Framework Can Help PE Firms Benefit From COVID-19 Downturn

    The global economy is heading toward the worst recession in recent decades, and it is well known that

      to read | words

    published on Apr 28, 2020

    The global economy is heading toward the worst recession in recent decades, and it is well known that inaction is the riskiest response in such a situation for businesses. However, random and unthoughtful action can be as damaging as inaction. PE firms are no different, and they need to act quickly to reduce the impact on their existing investments. Aranca’s comprehensive SHIELD framework can act as a catalyst for PE firms to take well-informed and effective action(s) minimizing the COVID-19 impact and even reaping benefits from this downturn.

    Recessions are a prominent part of the economic cycle and usually lead to crashes and bear markets. However, the current recession is different from the others to date as it is not confined to any single sector or geography. It has gripped the entire globe and affected all sectors. Ironically, recessions can be a lucrative investment opportunity for those who have the requisite foresight to act effectively.

    The underlying reason for private equity (PE) firms’ outperformance potential is the ability to plan and invest over the long term. Historically, they have shown an ability to outperform public equity firms during recessions. The main reasons for this are as follows:

    1. In uncertain times, cash is always king. PE firms employ this adage and help portfolio companies sustain during a grim period by injecting the required working capital. With this help, the companies are able to capture market share and manage to stay ahead of competition.
    2. The downturn represents a buying opportunity for PE firms with high dry powder. They have an edge over their competitors and, thus, can plan and deploy funds at attractive terms or valuations over the long term. Their ability to act fast and take a long-term view gives them some important advantages.

    Most PE firms are reacting to the ongoing crisis in a positive manner. However, are they taking comprehensive steps to minimize the negative impact and being proactive in capturing the upside in the current downtrend?

    Aranca has developed a proprietary framework called SHIELD – a six-point crisis management framework for PE firms.

    Aranca Shield Framework


    As the name implies, SHIELD was developed to protect PE firms from the ongoing economic crisis and help them leverage the situation to their advantage.

    1. Set up a War Room: PE firms must create a dedicated team to govern and execute the necessary initiatives. The team should be equipped to coordinate daily and take decisions on the go. It is also essential to establish a common crisis response structure for portfolio companies.
    2. Help Portfolio Companies Sustain: PE firms must conduct an operational risk assessment for portfolio companies to identify business disruption. They must review and revise the valuation model to assess the overall impact on the business and infuse funds, if required, for working capital.
    3. Introspect & Reassess Strategy: PE firms must undertake diagnostic analysis of the fund and, if required, revamp the fund investment strategy. They must also design strategies for business continuity of portfolio companies and aid them to proactively adapt to changing market and consumer dynamics.
    4. Engage with Customers & Stakeholders: PE firms must help companies map critical stakeholders and develop a communication plan to maintain trust and reputation. Immediate focus on regular two-way communication through formal and informal channels will help maximize clarity and transparency.
    5. Liquidity Control Measures: PE firms must prioritize actions that have a direct impact on cash flow. A review of the balance sheet of portfolio companies will assist them to take important decisions regarding cash flow in the business. They must monitor performance regularly and respond with urgency.
    6. Devise a Recovery Plan & Deploy Dry Powder: PE firms must devise mitigation plans for stabilizing businesses and preparing them for a rebound in the medium term. They must plan strategically to take advantage of the crisis. Moreover, they must carry out post-recovery exit assessment for companies closer to the end of the holding period.

    Aranca believes that time is of the essence and PE firms should find ways to make this crisis beneficial for them. We recommend that the PE community at large should consider adopting the SHIELD framework to help their portfolio companies effectively manage the ongoing economic crisis, and use the available dry powder to identify and invest in profitable companies or sectors trading at attractive valuations. Aranca, with its extensive experience of working with multinationals, startups, and investment firms across the globe, has developed a robust three-staged strategy that can help you capture the upside in the current downturn. Contact us to know more about the three pronged strategy.



  143. Social Distancing: Trigger to the new age Robotic Revolution?

    The COVID-19 pandemic has turned out to be like an apocalyptic movie, complete with the threat of large-scale,

      to read | words

    published on Apr 24, 2020

    The COVID-19 pandemic has turned out to be like an apocalyptic movie, complete with the threat of large-scale, global annihilation from the viral spread. It has nearly extinguished economic activity and confined scores of people to their homes. In this scenario, robotics/automation could come to our rescue, saving human lives by enabling continued social distancing. Can robots save the global economy from collapse and help improve productivity? Will robots become the new normal?

    We believe robots could be the new world norm – while the world practices social distancing, robots could take over the planet (at least operations that can be automated).

    COVID -19 has profoundly affected economies and societies worldwide. It has changed the way we function and brought in a massive cultural change – social distancing – the new normal. Behavioral changes adopted for survival during crises often persist, even after the threat fades. This global outbreak is transforming our lifestyle, a day at a time.

    Robots could be the catalyst to this transformation. While social distancing is effective in slowing the spread of the outbreak and saving human lives, it has slammed down on labor-intensive industries. Businesses have lost much revenue due to the economic shock from the lockdown enforced in almost every country. The crisis has made human resources expensive to retain. In this scenario, firms can explore the option of deploying robots to manage costs and the bottom line.

    The outbreak has hit the functioning of businesses worldwide. Several segments have thus fast-tracked their adoption of robots for tasks such as grocery delivery, patrolling of malls, and disinfecting of hospitals.

    Aranca believes many industries will turn to robots for all tasks that do not need human intervention.

    Here are some key segments that Aranca believes would benefit from deploying robots.

    1. Diagnostics and treatments: The ongoing pandemic has overwhelmed the global healthcare system with the exponential rise in cases. The number of healthcare professionals battling the outbreak is far less than the number of patients contracting the infection.

      As per a World Health Organization (WHO) estimate, there is less than 1 physician per 1,000 people worldwide. This number is even more disproportionate in highly populous nations such as India and China.

      Currently, cases are doubling every six days, a rate that is unsustainable for the healthcare arena, given the limited number of doctors and medical staff available. The shortage of trained staff as well as their safety are grave concerns to be addressed at the earliest.

      Robots can be of massive help in this space. They can be deployed for screening, diagnostics, and administration of treatment, which would reduce the burden on healthcare workers. For instance, tests have proved that a robot can conduct diagnostics without human intervention; it could efficiently conduct approximately 4,000 tests a day. Robots can also monitor patients’ health, administer the required medication and treatment, thus reducing the risk of contamination that medical caregivers face.

    2. Sterilization and sanitization: As per CDC estimates, even before the Coronavirus pandemic, the US reported over 99,000 deaths each year attributed to hospital-acquired infections.

      Automation for disinfecting spaces is a great opportunity for robots. Health workers can remotely, safely control robots from a distance; the robots emit an ultraviolet light over an area to sanitize it, thus eliminating the need for close human intervention. Robots can also be deployed to disinfect larger spaces such as cities, streets, and homes.

    3. Surveillance/security: Security robots are becoming a common sight at airports, malls, and offices. The use of robots for security and surveillance will further intensify with upcoming applications in espionage prevention, explosives detection, patrolling, and rescue operations. Robots in security can aid personnel by patrolling and providing mobile CCTVs. The corporate budget for commercial security spending is increasing and there is huge potential for robots in the security space. Aranca thus expects opportunities for robotics in the security space to rapidly scale up.

    4. Continuous production: Factories and businesses are currently at a standstill due to the worldwide lockdown. The supply chain in sectors such as FMCG and pharmaceuticals sectors has been badly hit. A survey undertaken by the American Chamber of Commerce, Shanghai revealed that nearly 50% of the companies surveyed in the province said getting workers to run production lines was their biggest challenge yet. Automation in this instance can ensure continuity and productivity, even if an entire country is in lockdown and there is a lack of personnel to run repetitive operations.

    5. Eldercare: As per the World Population Prospects 2019 (United Nations, 2019), 1 in 6 people worldwide will be age 65 or more by 2050, up from 1 in 11 in 2019. This increase in the geriatric population, specifically in developed countries, is expected to drive the global eldercare robotics market.

      The shift in demographics is tilting the scales in favor of robotics to provide eldercare. Robots can set medication reminders, conduct remote monitoring (robot nurse), be companions, etc. The possibilities in the eldercare space are many.

      As per World Health Organization- About 95% of COVID-19 deaths were of people older than 60 years; more than 50% of all deaths were of those aged 80 plus. These gruesome statistics suggest that the elderly require additional protection and care. Given the rising number of elders in most developed countries, robots maybe the best choice to serve this aging group. As of now, many elders living alone are facing challenges in the lockdown. Robots could be a great help at such times.

      Currently, Japan is funding the development of elder care robots to fill a projected shortfall of over three hundred thousand specialized workers by 2025.

    6. Groceries: Retail giants like Walmart and Amazon have already deployed automation to accelerate profitability and cut costs. Other stores will soon follow this trend. Additionally, ahead of the pandemic outbreak, As per ABI Research- it is estimated that around 4 million commercial robots will be deployed across 50,000 warehouses by 2025 due to the accelerating demands for delivery services from e-commerce channels.

      COVID-19 leaves behind a psychological remnant – people are now wary of proximity to others, especially at spots that were formerly popular hangouts, such as shopping spaces. Automation and robotics robots can calm this stress, thus accelerating the adoption of robots in this space.

      Amazon recently unveiled the Amazon GO convenience store, a robot-run supermarket deploying just three human workers. Walmart has similarly deployed robots at over 1,000 stores. These robots perform functions ranging from scrubbing floors to stocking shelves. As per a CNN Business report, Walmart has already deployed thousands of robots across 5,000 stores in the US. Along with in-store robots, these companies are also deploying drones for faster delivery of goods. Deploying robots across the retail value chain will reward companies with a sustained competitive advantage over those not using robotics.

    The turbulent start to the year could be an indication of the massive change in interactions for social and business purposes. As the pandemic leaves behind a psychological impact, we may fear being in the proximity of others. Robots could thus well become a part of our lives and the ‘new normal’.



  144. Impact of COVID-19 on global supply chains

    Supply chain is a highly competitive domain, where optimization is important to reduce costs and inventories. However, the

      to read | words

    published on Apr 16, 2020

    Supply chain is a highly competitive domain, where optimization is important to reduce costs and inventories. However, the flip side is that this has reduced the buffers and flexibility to accommodate delays and disruptions. Therefore, companies should work toward making their supply chains flexible and resilient in order to effectively offset risks.

    The spread of COVID-19 has created pressure on administrative bodies and healthcare agencies to come up with steps and measures to check the transmission of the virus. Lockdowns and closure of plants and transportation within and across countries would lead to an economic recession globally, resulting in loss of income worth trillions of dollars. As a result, supply chain operations across more than a dozen industries would be adversely affected.

    Shortage of materials or finished goods, limited availability of labor due to quarantine measures, reduction in sourcing activities and limitations pertaining to logistics are a few major supply chain challenges confronting companies, especially those with a limited supply base.

    Companies depending on China for most of their raw materials and parts are the worst hit. Although China seems to be recovering, with the epicenter of the epidemic shifting to Europe and America, it will take time before supply operations return to normalcy. Furthermore, the growing crisis in Europe and the US means another impending wave of challenges. It is estimated that these companies will be able to meet demand for the next two to five weeks with their current inventory; thereafter, if supply disruptions persist, manufacturing may come to a grinding halt.

    It is thus important for companies to prudently assess several parameters before making any kind of changes in their existing supply chain.

    1. Business impact – This entails evaluating the impact of COVID-19 on the demand of company-specific products and the company’s main supplier base. Understanding limitations at the source can help companies ascertain the extent of delay. Precise monitoring of COVID-19 hotspots in the supply chain would help assess the potential threat.
    2. Tier-‘n’ suppliers – Most suppliers have several tiers below them through which the material travels up the value chain. It is advisable to map these several tiers of suppliers for critical categories and understand functional disruptions that can arise, and the risk involved with each of them.
    3. Supplier’s business continuity plan – The pandemic has caused disruptions across industries and geographies. It is essential to trace the business continuity plan of key suppliers to get visibility on any potential supply disruption. If the supplier is unable to function or may take time to recover, the business should move to alternative sources.
    4. Alternate supply base – Identifying categories sourced from a single supplier or from only one location with no alternate suppliers helps in evaluating risks. Companies can accordingly consider alternate suppliers without of course compromising on the quality of the offering.
    5. Supplier’s financials – Understanding a supplier’s financial position should be a best practice followed prior to signing up. It gives the organization clarity on the financial soundness and risk-taking capability of the supplier. Understanding cash position, account receivables, short-term debts and liabilities helps in appropriately assessing risks associated with the supplier.

    The aftereffect of COVID-19 would be felt on supply chains for a prolonged period, even after the epidemic has been controlled. Hence, is it imperative to not take hasty decisions. The plan of action must be thoroughly analyzed before implementing.

    Supply chain is a highly competitive domain, where optimization is important to reduce costs and inventories. However, the flip side is that this has reduced the buffers and flexibility to accommodate delays and disruptions. Therefore, companies should work toward making their supply chains flexible and resilient in order to effectively offset risks



  145. 2020 Stimulus Plans and Their Impact – Will These Be Enough?

    The COVID-19 pandemic has disrupted supply chains globally and international trade, nearly shutting down the world economy. Looking

      to read | words

    published on Apr 09, 2020

    The COVID-19 pandemic has disrupted supply chains globally and international trade, nearly shutting down the world economy. Looking at the current scenario, many renowned economists have predicted zero economic growth for 2020. Federal governments across nations are announcing unprecedented stimulus packages to deal with the downturn. While this will have a positive impact, the question is will it be enough, considering that two crises – economic and health – have fused into one, compounding the magnitude.

    The pandemic, through its impact on people’s health, has affected the global economy. As you read this, likely in the comfort of your home, an increasing number of small businesses will be shutting shop, amid the debilitating effect on supply and demand. Countries across the globe are leaving no stones unturned in their fight against it.

    The recession will likely surpass the recessions of the last two decades in both scale and duration. Not confined to any single sector (the 2008 sub-prime crisis impacted the financial sector, while the 2000-01 dotcom bubble affected internet-based companies), it has taken most industries in its grip. Despite governments acting swiftly and injecting monetary and fiscal stimulus, recovery will be difficult until the pandemic is over.

    The table below depicts the measures taken by different countries to contain the outbreak and revive the economy.

    Stimulus plans as a percentage of GDP (Updated as of April 5th, 2020)

    Nations

    Total Amount($ Bn)

    Debt to GDP(%)

    Stimulus % of GDP

    US

    2,300

    105%

    10.3%

    Germany

    808

    61%

    20.3%

    UK

    406

    84%

    14.9%

    China

    394

    61%

    2.6%

    Spain

    220

    98%

    15.3%

    Australia

    189

    30%

    13.7%

    Canada

    57

    85%

    3.1%

    Italy

    49

    137%

    2.4%

    France

    49

    100%

    1.8%

    Denmark

    46

    28%

    12.8%

    Singapore

    42

    112%

    11.4%

    India

    23

    69%

    0.7%

    Japan

    4

    237%

    0.1%

    Source: IMF, EuroStat, News Releases (Quartz)

    The stimulus packages announced in 2020 dwarf the 2008 bailout ($700 billion by the US in 2008 versus $2.3 trillion in 2020). Some packages represent over 10% of the GDP for certain countries, which is significant. However, it would be difficult to draw a complete parallel as the 2008 bailout was aimed to save the corporate sector, big banks and financial institutions. It did not safeguard or aid taxpayers, who were also affected by the financial crisis.

    Objective of stimulus
    Prior to the COVID-19 outbreak, the IMF projected global growth at 2.5%; however, in the current situation, it is expected to drop to zero or negative.

    “It is way worse than the global financial crisis of 2008-09.”

    - Kristalina Georgieva, Managing Director of the IMF

    The key factor behind the low growth is the declining purchasing power of consumers due to mass layoffs as businesses and services shut down, resulting in unemployment. While policymakers have taken measures to control the pandemic, they also realize the need to sustain the confidence of businesses and consumers. Nations across the world have devised various strategies such as tax incentives, loan guarantees, and wage subsidies to protect the interests of citizens as well as enterprises.

    Measures taken by some of the nations are highlighted below:

    The US

    • Fiscal Tool: The Senate approved the largest economic stimulus package in recent times, the $2.3 trillion (around 11% of GDP) Coronavirus Aid, to provide assistance to individuals (including the unemployed), enterprises, and healthcare facilities.
    • Monetary Tool: The Federal Reserve lowered the fed rate by 150bps to 0–0.25% It also introduced facilities to support the flow of credit, in some cases aided by resources from the Exchange Stabilization Fund.

    Germany

    • Fiscal Tool: Germany agreed to a package of $808 billion. A part of this will be financed through new borrowing; this underlines Berlin’s commitment to employ all possible resources in the fight against coronavirus.
    • Monetary Tool: The ECB announced that it would purchase additional assets worth €120 billion ($130 billion) until the end of 2020 under the existing program.

    The UK

    • Fiscal Tool: The country unveiled an unprecedented £330 billion ($406 billion) loan scheme to support businesses through measures such as tax cuts, millions in grants and mortgage holidays.
    • Monetary Tool: The steps include reducing lending rate by 65bps to 0.1%; expanding the central bank’s holding of UK government bonds and non-financial corporate bonds; and introducing a new Term Funding Scheme to reinforce the transmission of the rate cut.

    China

    • Fiscal Tool: The country approved a $394-billion package. Key measures include increasing spending on epidemic prevention and control; production of medical equipment; distribution of unemployment insurance; and implementation of tax relief measures.
    • Monetary Tool: The government has injected liquidity in the banking system – ¥3 trillion ($0.42 trillion) in the first half of February and ¥20 billion ($2.83 billion) in end-March. In addition, the reverse repo has been lowered by 10–30bps.

    While the numbers look promising, will this yield the desired results? Several aspects need to be looked at:

    1. How would such huge bailouts impact fiscal deficit?
      Sourcing funding for the packages would lead to an increase in fiscal deficit and debt levels for each country. Some of these nations already have debt to GDP ratio as high as 100%. Additional burden by way of stimulus will send it even higher.
      The other way to look at it is that the funding is meant to support badly-hit sectors (such as airlines, travel & tourism) and the general public. The resultant increase in debt can be offset by recovering it from taxpayers when the economy returns to normal. If the country remains productive in the long-term and has healthy fiscal institutions, the taxes will not be a burden on people, and the federal government will not default on national debt either.
      Reducing oil prices provides some cushion to oil-importing economies, such as India, where the government can control the fiscal deficit to some extent by not passing on the reduction in crude prices to consumers.
      Overall, we feel a wider fiscal deficit would create problems largely for developing economies and countries with debt to GDP ratio above 100%; they may, therefore, take some time to recover. Separately, though, we think recovery will be much longer compared to that following the 2008-09 crisis.

    2. Are the packages enough for the $90-trillion world economy?
      If we go by stock market as the barometer to assess whether the packages are enough or not, the investor sentiment is still negative. Dow Jones recovered only by 3,900 points after the announcement of bailouts. This indicates that worse is not over yet. Looking at numbers, the coronavirus confirmed cases in the US grew three times to 3,36,673 (April 5th, 2020) from 85,435 (March 26th, 2020), since the announcement of the stimulus package of more than $2 trillion.

      G20 leaders have committed to do “whatever it takes” to minimize the social and economic impact of the coronavirus pandemic, in a largely unspecific and uncontroversial joint communique issued after a video conference call.

      The size and type of package announced will help the economy in the short term, but if the negativity continues then there will be a need of more infusion. Recognizing the gravity of the situation, countries have pledged to provide additional financial support, if required. In a recent example, Singapore announced its third stimulus package of $3.6 billion on April 6th, 2020, taking the total to $41.7 billion.

    Aranca View
    Yes, the stimulus packages are huge and historic, but so is the scale of the pandemic that is yet to show signs of abatement. With the global economy at a standstill and governments extending lockdowns by a couple of weeks or even months, we believe additional bailouts are likely.

    On the other hand, if countries manage to contain the spread of the virus in a couple of weeks (though it seems unlikely in the light of the increased number of confirmed cases and death) or an effective vaccine is discovered, the announced stimulus packages should be enough to take care of the economic downturn in the short term. However, this is a scenario we are hoping for; whether it will actually pan out the way we think, is highly doubtful.



  146. COVID-19: The Worst Time to be a B2B Salesperson. Or is there a Way Out?

    It was the best of times and then suddenly it was over. As coronavirus continues to dominate news

      to read | words

    published on Apr 06, 2020

    It was the best of times and then suddenly it was over. As coronavirus continues to dominate news and change priorities for virtually everyone, many of us in B2B Sales are likewise gasping in search of ideas that will bring back customers and revive demand for our products and services. What to do?

    Our clients, their peers, and other new prospects who would normally engage with us eagerly are now backing away, concerned about declining sales and budgets as their customers tighten spending. Although this widespread economic pause is temporary, odds are high that your B2B sales team can ill afford to execute its mission using the same approach that was working just three months ago. What to do?

    Essential Actions to Drive B2B Sales Success

    Full speed ahead: Stay motivated knowing your prospects have significant problems to solve and you can still play an important role in those solutions. They will need help driving revenue, lowering costs and/or improving productivity — and your solutions will make that happen. Make sure they know you are operational and available to help them, despite the COVID-19 distractions. Prioritize your activities, select the appropriate offerings to discuss, and develop your messaging accordingly so prospects will clearly understand your capacity and capability to serve.

    Prospect with the odds in your favor: Target those who already know you, including existing accounts, dormant/past accounts, and others who have heard your story and liked it; prioritize the decision-makers as much as possible. You are the familiar face and confidant who can quickly grasp their issues and define a way forward. Also identify firms in those markets where your capabilities shine brightest and are most competitive; apply your (significant) industry and functional expertise to help them. Don’t be bashful; reach out with enough frequency and relevance to (re)establish good rapport, and ask for referrals when appropriate.

    Update/Confirm your relevance: Consider your prospect’s near-term challenges and opportunities. Their daily priorities have changed as their attention is directed to rethinking their own plans and course of action. What new issues and decisions are confronting them as they seek to improve their business performance and serve their customers? How can you ease their pain and help them address new challenges, both tactical and strategic?

    Revisit your offering and solution portfolio: Make sure you have solutions that align with your prospect’s current and evolving situation. Their new challenges represent potential new products and services they might buy from you. Determine how your firm’s capabilities can be helpful and adapt your products and services accordingly (for example, how can you change your solution’s features, assurances, terms, user experience, etc. to be most relevant and valuable in today’s conversations)?

    No F2F? No Problem: In-person meetings and conferences are almost impossible to schedule and may remain so into the foreseeable future. Now more than ever your online marketing and communications results must carry the load. If your firm is under-invested in these processes and tools, today’s market environment demands additional resources – talent or financial – be applied. Yes, you need to refresh that out-of-date website content to reflect your firm’s current value and capabilities. And it’s time increase/improve your social media activity; don’t fly under the radar. Make a personal investment and become expert with online meeting and presentation tools to bridge and strengthen your outreach effectiveness.

    Get to work: Now the fun begins. Use your remarkable communication skills to have relevant, enjoyable, and productive conversations with your prospects. They’ll appreciate your understanding and sensitivity to their difficult situation, and delight in your explanation of how they can move forward. They’ll want you as a trusted partner – absolutely. And once again your success will be proof-positive this whole journey was never about you, and never will be.

    Keep the faith: As successful sales professionals we have our own methods that allow us to effectively navigate and serve a variety of client organizations, and likewise serve as agents of change within our own companies. We know what works for us individually and as a team. Indeed, we are the critical messengers of value to businesses across the globe who need our products and services – we are ready.



  147. Medtech companies to play larger role in emerging telemedicine space

    The current pandemic is a grim reminder of the significance of virtual healthcare advisory. While telemedicine has been

      to read | words

    published on Apr 03, 2020

    The current pandemic is a grim reminder of the significance of virtual healthcare advisory. While telemedicine has been in practice for decades, the COVID-19 outbreak has catapulted its adoption to a completely different scale. It is on the way to becoming mainstream as the urgency of meeting medical needs during this period of social isolation increases. Medtech companies are expected to play a big role in facilitating this by coming up with relevant solutions that will enable physicians and patients to connect in no time and irrespective of location.

    The crisis triggered by the pandemic has ushered in a massive shift in the way operations are conducted. With more than 1.5 bn of the global population functioning in social isolation, virtual connection has taken a new meaning.

    The outbreak will in effect lead to a surge in new technologies, telemedicine being one of them. Medtech devices have made it easy to track health independently. Most tests which were initially conducted first by doctors and labs are now becoming portable and personalized. With heart rate, sleep, pulse, BP monitored with the help of devices attached to wrist, access to personal health has been simplified. Also, this has increased awareness and encouraged a proactive health-conscious approach.

    What is Telemedicine?
    Telemedicine as a concept has been in existence for a while. However, it has largely been confined to addressing unmet medical needs either due to a lack of access to healthcare professionals in remote locations or in highly specialized cases, where the availability of qualified healthcare professionals is limited. Telemedicine has rendered both time and distance irrelevant by facilitating real-time connectivity between doctors and patients. This is highly beneficial during emergencies or when patients need immediate specialized care but are immobile.

    The growing popularity of telemedicine is reflected from its market size. Valued at USD 20.54 bn in 2016, it is projected to reach USD 61.99 bn by the end of 2024.

    The concept has evolved over the years. Smart devices, capable of high-quality video transmission, have enabled the delivery of healthcare remotely to patients in their homes, workplaces or assisted living facilities—the practice is gradually becoming mainstream. The pandemic has only aggravated the situation, leaving no choice but to speed up the adoption of telemedicine.

    In the US, in 2015, only 80,000 of physician consultations were virtual, representing less than 1% of total doctor visits (930 mn). According to a survey by American Well, 20% of consumers were willing to switch to telemedicine for primary care due to benefits such as convenience, and time and cost savings. Adoption, however, has been slow due to lack of planning around setting up the required infrastructure.

    Why has implementation of telemedicine fallen behind last few years?
    This could be attributed to multiple issues, although these are not complex and can be resolved:

    • Lack of the right technical infrastructure and huge set-up cost
    • Absence of defined rules, procedures, and protocols
    • Absence of organizational structure for systematic development
    • Lack of skilled healthcare staff to handle the needed equipment
    • Low internet connectivity in rural areas, mainly in developing countries
    • Requirement of informed consent prior to tele-consultation
    • Preference among patients for physical examination by doctors
    • Fear among caregivers regarding malpractice-related legal issues

    What are the drivers for telemedicine, going forward?
    The advantages of telemedicine surpass the challenges, considering the convenience and reduced burden for all healthcare stakeholders, including insurance companies, payers and government.

    Insurance companies/payers

    • Services in this domain gradually being covered by insurance
    • Lower cost of treatment, coupled with fewer necessary admissions, likely to cut a better deal for telemedicine consults
    • Ease of tracking patient progress and efficiency of treatment
    • Access to consolidated patient information on a network
    • Availability of quality care and specialized treatment
    • Enhanced patient experience – Increased engagement ensuring better adherence to prescribed treatment

    Doctors

    • Lower recurring infrastructure cost (rent, electricity, employees, etc.)
    • Flexibility of operation
    • Access to a wider pool of patients all over the globe
    • Irrelevance of time and distance barriers
    • Access to information on a network

    Government

    • Telehealth programs expected to help in expanding access to healthcare in most remote and vulnerable areas; connectivity to improve administration of public health systems

    Is telemedicine need of the hour?

    Telemedicine has emerged as one of the most viable options to effectively deal with the current disease outbreak. Travel has been restricted across the globe as countries look to contain the infection. Furthermore, given that the virus is highly contagious, the medical staff is at high risk. Virtual consultation, by eliminating physical visits and, therefore, the risk of exposure, can address a key challenge.

    In COVID-19, the initial symptoms are fever, cough and shortness of breath that can be reasonably examined remotely. Other vitals such as blood pressure, pulse rate, respiratory rate, oxygen saturation can also be monitored from a distance.

    What opportunities are opening up with increasing adoption of telemedicine?
    There is opportunity for collaboration between medtech companies and healthcare service providers such as physicians and hospitals. While devices can be used to track vitals, focused approach by medtech companies could be a gamechanger. Companies can innovate and come up with specific devices, as per the requirements of a telemedicine service provider, capable of capturing a wider and necessary set of health vitals for thorough and complete diagnosis. Wearable devices transmitting data to the physician in real time will facilitate right diagnosis at the right time, based on which necessary action can be taken.

    COVID–19 has already compelled most countries to adopt telemedicine. This could just be the much-needed trigger to propel more providers toward building the necessary infrastructure, the biggest barrier to adoption. Given its prospects, telemedicine is here to stay, even after the COVID-19 challenge has been met.



  148. Polyester 2020 - A Tough Road Ahead

    Polyester prices that continued to decline in 2019 as a result of falling prices of raw materials are expected

      to read | words

    published on Mar 04, 2020

    Polyester prices that continued to decline in 2019 as a result of falling prices of raw materials are expected to fall marginally in H1 2020. Continuous reduction in feedstock prices (PTA and MEG) as well as oversupply of polyester in the market are the other reasons for decreasing prices. Slowdown in the global economy, coupled with the ongoing US-China trade war, has further weakened the demand for polyester, negatively affecting its prices.

    Polyester is the third most popular synthetic polymer used worldwide after polypropylene (PP) and polyethylene (PE). It is a main component in the textile and packaging material industries. In textile applications, it is used to make filaments POY, DTY, FDY, A-PET film, thermoforming, non-woven and spun bond, BO-PET biaxial oriented film, etc. In packaging, it is an important component in flexible packaging, lidding, can laminations, metallized packaging, susceptors, etc. Polymer is a multipurpose material; it is strong, durable, and resistant to wrinkles, abrasion, chemicals, shrinking and stretching. Therefore, it has a wide variety of applications.

    Polyester prices declined by ~20% from $1,150/MT to $900/MT during January–December 2019 and are expected to further decrease marginally in H1 2020. Key factors impacting polyester prices are continuous decrease in feedstock prices, oversupply in China, weak demand, and rising demand for recycled polyester.

    Decline in feedstock prices due to increased capacity
    Falling prices of purified terephthalic acid (PTA) and monoethylene glycol (MEG) are negatively impacting polyester prices across international markets.

    PTA
    PTA prices declined by 13–15% from $850/MT to $715/MT during January–December 2019 due to excess capacity. The softening of overall feedstock prices amid high supply and inventory contributed further to this decline.

    PTA production in China increased by 4.7 million MT to 48.9 million MT 2019. In Q3 2019, Xin Fengming Group added capacity of 2.2 million MT/year, while Xinjiang Zhongtai Chemical added 1.2 million MT/year. Additionally, high operating rate of 85–86% resulted in oversupply and put pressure on prices.

    PTA capacity additions that are in the pipeline in China and India would further increase supply, denting prices in H1 2020. The key countries which are contributing into production are-

    • China
      • Hengli Petrochemicals, China (+2.5 million MT/year)
      • Yisheng Petrochemical, China (+3 million MT/year)
      • Zhongtai Kunyu, China (+1.2 million MT/year)
    • India
      • JBF industries, India (+1.25 million MT/year)

    and in 2019, paraxylene capacity additions (primary feedstock of PTA) in China led to oversupply in Asian markets and impacted its prices by 5–7% over January–December 2019. Main additions were made by Hengyi Petrochemicals (increased capacity by 1.5 million MT/year) and Sinopec Hainan (by 1 million MT/ year).

    Continued PTA and PX capacity additions in China would further decrease PTA prices in H1 2020.

    MEG
    MEG prices declined by 7–8% from $630/MT to $590/MT during January–December 2019 as supply exceeded global demand by ~10–15%. Capacity additions in Asia and the US, along with high operating rate (75–80%), contributed to the decline in prices last year.

    Upcoming expansion projects, including Pengerang Refining and Petrochemical's in Malaysia, Nan Ya Plastics project in the US, Zhejiang Petrochemical unit in China and Rong Xin Chemical Co. Ltd. plant in Mongolia, would create oversupply, resulting in lower prices.

    Although the projects lined up have been delayed by 6–8 months to prevent oversupply in 2020, the supply glut is expected to continue with even more capacity coming online in 2022 in the US, and coal-based MEG plants in the pipeline in China.

    Oversupply
    Huge capacity additions in China led to oversupply of polyester in 2019. In H1 2019, 8 polyester plants with a combined capacity of 1.24 million tons commenced operations, while an estimated 1.85 million tons of capacity were added in H2 2019.

    The major players in China that increased polyester filament capacity were Jiaxing Petrochemical Corporation, Xinfengming Zhongyue and Tongkun Hengbang (by 300,000 tons each), Tongkun Hengyou (by 600,000 tons) and 250,000 tons polyester chip unit in Zhejiang Province. Additionally, the higher operating rate, at 82–86% of total capacity, boosted supply.

    Oversupply in market has led to a decline in prices as well as rise in inventories. Yarn producers are holding 11–25 days of stocks, while fiber is stocked for almost 6–13 days. Total polyester and PET capacity is almost 56 million tons. Growth in production is expected to hit prices negatively in H1 2020.

    Low demand
    Slower global economic growth, coupled with the prolonged US-China trade war, weakened the demand for polyester and brought prices down in 2019. Uncertainties regarding the US-China geopolitical situation has affected growth in the global polyester market as well as trade across regions. The US imposed additional 10% tariff on textile and garments sourced from China in September 2019, including polyester fabrics, garment and yarns, among others. Overall, the slowing global economy also led to weaker-than-anticipated demand for polyester.

    Demand for recycled polyester picking up
    Demand for recycled polyester is growing, denting new polyester prices. Rising awareness regarding environmental stability, availability of recycling technologies and ban on landfills in Europe boosted demand for recycled polyester. The material is being adopted by organizations worldwide as a part of their sustainability initiative. The recycled polyester market is expected to expand at a CAGR of ~7–8% during 2019–22, driven by demand for industrial yarn. Recycled polyester is widely used in spinning, weaving and fiber fillings in furniture. Demand mainly comes from Asia-Pacific countries such as Japan, India and China.

    Overall, polyester prices are expected to continue to decline due to low raw material prices and is likely to reduce marginally in H1 2020.



  149. Are Electronics and Automotive Manufacturing companies shifting their base from China to Vietnam?

    Vietnam has emerged as a favorable alternative production destination for the electronics and automotive industries. This is due

      to read | words

    published on Mar 04, 2020

    Vietnam has emerged as a favorable alternative production destination for the electronics and automotive industries. This is due to several factors: the country’s robust economic growth (+6.8% YoY in 2019, driven by increasing FDI), increase in imports (+10.5%) and exports (+7.3%), multiple free trade agreements, rise in industrial production, low raw material costs, and high availability of raw materials and suppliers.

    Until now, China has been the production hub for electronics and automotive due to abundant availability of raw material and technological innovations. Other contributing factors are easy accessibility to skilled labor and business-friendly laws implemented by the government.

    Due to tensions created by the US-China trade war and increasing cost of labor, this scenario is changing. Many manufacturing companies have been forced to relocate their production hubs to other low-cost Asian countries such as India, Vietnam and Malaysia. The current outbreak of coronavirus has also hit the Chinese manufacturing industry.

    In 2019, more than 50 multinational companies decided to relocate their manufacturing operations (partially or fully) to Southeast Asia from China. The reasons varied from avoiding US tariffs to benefiting from low production costs to maintaining proximity with key markets. Many China-based manufacturers realized how this shift could be detrimental to them and opened transfer assembly lines in these countries. Hence, while core manufacturing operations are still concentrated in China, as some customers vouch for the superior technical skills of the Chinese, the assembly of parts is taking place in a sister facility outside.


    Key Manufacturers and Alternate Southeast Asian Production Hubs

    Vietnam
    • Intel Corp. shifted the production and assembly of platform controller hubs to Vietnam.
    • Intel's most advanced parts, the central processing units, are manufactured in the US and Israel. The manufacturing of secondary parts as well as assembly is primarily in China or Vietnam.
    • LG Electronics shifted its smartphone production to Vietnam.
    • Alphabet-owned Google is moving the production of its smartphone brand Pixel for the US market to Vietnam. Eventually, it may move the production of most of its hardware for the US market also to Vietnam.
    • Japan’s Nintendo is planning to shift a portion of its video game console production from China to Vietnam.
    • TCL is in the process of shifting its TV production to Vietnam.
    • Mitsubishi has opened its assembly plant in the southern province of Bình Dương, Vietnam. ZF (automotive manufacturer based in Germany) has also opened its plant in Vietnam.
    • A sportswear supplier to Nike and Lululemon Athletica, Eclat has exited China due to unfavorable conditions, and set up shop in Vietnam.
    • Taiwan’s Pegatron (Apple partner) partnered with Apple’s two other iPhone assemblers in Vietnam, Wistron and Hon Hai Precision Industry. Focus is on developing manufacturing capabilities as well as expanding capacity in Vietnam.

    India
    • Samsung has closed its last mobile phone factory in China, citing rising labor costs and economic slowdown. It has started production of mobiles in India and aims to double the capacity from 68 million units a year to 120 million units a year by FY2020.
    • Foxconn is shifting the mass production of iPhones from China to India as the labor cost in China is three times higher compared to that in India.
    • Suzuki is considering sourcing vehicle components from outside China.
    • Apple has previously produced low-cost iPhone models in India. Last year, it was reportedly considering shifting production of its more premium models to the country in order to avoid tariffs on imported smartphones from China.

    Thailand
    • Electronics company Sony shifted its smartphone production from Beijing, China, to Thailand.
    • Chinese tire maker Sailun Tire is shifting its manufacturing line to Thailand.

    Malaysia
    • The company behind the Roomba robot vacuum cleaner is planning to shift initial line of manufacturing to Malaysia.

    Philippines
    • Honda Motor's major car parts supplier Ftech is set to move its brake pedal production from virus-hit Wuhan, China, to the Philippines.

    Taiwan
    • Minnesota-based Fastenal is shifting fastener production from China to Taiwan.

    Vietnam: The Biggest Winner

    Increase in Imports from Vietnam
    US imports from China fell by 16%, or $87 billion, during 2019, driven by the increase in US tariffs that significantly disrupted trade between the two countries. However, overall imports to the US only dwindled by $42.6 billion, or 1.7%, as other countries quickly seized the business opportunity that Chinese companies lost.

    Vietnam has been the biggest winner with many US companies shifting to a reliable supply chain alternative for manufacturing. Imports to the US from Vietnam surged by 36%, or $17.5 billion, to more than $61 billion in 2019, followed by Taiwan (19%), France (10%), India (6%), the UK (4%), South Korea (4%), Italy (4%), Mexico (3%), Japan (1%) and Germany (1%).

    Increase in FDI
    Foreign direct investment (FDI) in Vietnam increased by 7.2% to $38 billion in 2019 YoY, with investments in processing and manufacturing accounting for almost half of this. Of the more than 100 countries investing in Vietnam, South Korea is the leader (invested $7.9 billion in 2019), followed by Hong Kong ($7.8 billion).

    Malaysia is another gainer of the protracted trade war—China’s investment in Malaysia’s manufacturing sector increased four times over the last five years.

    China topped the list of economies looking to invest in Thailand for the first time. Applications from China, valued at ฿262 billion ($8.5 billion), accounted for more than 50% of all FDI applications in the country, according to Thailand’s Board of Investment.

    Manufacturers Acquiring Stake in Vietnam-based Companies
    Several companies are investing and acquiring stake in companies based in Vietnam to increase their production base as well as avail the benefits of low tariff. For example, Japanese electrical equipment maker Meidensha Corp. acquired 41% equity stake in Vietstar Industry Corp., one of Vietnam's top switchboard producers; with this, it has set up its product manufacturing base in the country for markets globally.

    Favorable Government Regulations and Trade Practices
    The European Parliament's International Trade Committee approved the EU-Vietnam Free Trade and Investment Protection Agreement in early 2020. This bears testament to the fact that not just the US, but the EU is also strengthening and scaling its trade partnerships with Vietnam as an alternative to China. In absolute terms, Vietnamese exports of services and manufacturing goods to the EU would increase by €15 billion, while EU exports to Vietnam are expected to grow by €8.3 billion by 2035. Additionally, the free trade agreement (FTA) is expected to generate 116,200 jobs in the EU by 2035.

    Implementation of favorable policies by the government have contributed to Vietnam and India’s growth as manufacturing hubs compared to other countries such as China, Singapore and Malaysia. Moreover, Vietnam has signed a number of bilateral and multilateral international agreements, including FTA. In July 2019, for instance, the EU signed a landmark free trade deal with Vietnam, the EU-Vietnam Free Trade Agreement (EVFTA).

    High Availability of Labor and Low Wage Rates
    Manufacturing labor rates in Vietnam are approximately 50% less compared to China, making it a cost-effective destination for electronics and automotive manufacturing. In January 2020, minimum monthly wages increased by 5.5%, after rising 5.3% in 2019, and currently range between $130 and $190. Vietnam has ~57.5 million workers across several industries, including manufacturing, agriculture, textile and fishing. Agriculture and fishing have a higher pool of labor, followed by manufacturing and construction. Most manufacturing laborers are located in Southeast Vietnam (Ho Chi Minh City), Red River Delta and Mekong region.

    Availability of Infrastructure and Other Facilities
    Japan’s Mitsubishi Corporation and Nomura Real Estate have jointly invested in a housing development project developed by Vietnam’s biggest business conglomerate Vingroup.

    Besides lower cost, Vietnam’s geographic location, facilitating connectivity with other countries, makes it a suitable manufacturing hub. In the north, it is connected to China, which ensures seamless supply of raw material. It is also connected to North America through the South China Sea and Pacific Ocean. Vietnam does particularly well in liner shipping connectivity—it ranks 19th in the world. The country has 44 seaports dotting its 3,260 km (2,030 mi) coastline, including the key ports of Hai Phong (North), Da Nang (Central), and Saigon (South).

    Geographic location, low labor cost, availability of suppliers and raw material, favorable government regulations and free trade agreements have helped Vietnam to emerge as the perfect alternative manufacturing hub to China.



  150. Patient Experience Mapping - The Roadmap for Focused Pharma Strategies

    Customer experience is pivotal to the success of any business. Taking cues from other sectors, pharmaceuticals too is

      to read | words

    published on Feb 28, 2020

    Customer experience is pivotal to the success of any business. Taking cues from other sectors, pharmaceuticals too is turning its attention to patient experience-driven strategies. Understanding a patient’s journey, key unmet needs, personas from clinical data, claims data and primary research to include the insights in strategic plans has made the pharmaceutical business more cause-driven and empathetic. Connected health applications and advancements in AI platforms have facilitated access to and use of patients’ behavioral and attitudinal data. In this article, we discuss the importance of a greater patient-driven approach for improving experience, adding value to care and creating a differentiator for the company.

    Patient experience can be termed as the summation of interactions that influence patient perceptions across the continuum of care. Until now, pharmaceutical companies have largely operated as drug-centric businesses. However, over the last few years, the approach has become more comprehensive to include several patient engagement initiatives as companies target a broader audience. The next step would be to design strategies based on patient experience.

    Traditionally, patient experience was largely defined in terms of hospital settings where they sought treatment. The Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Surveys in healthcare delivery were the starting point for measuring patient experience. Patient satisfaction surveys captured self-reported patient assessments at multiple touchpoints during their medical care experience. Depending on what aspect of patient satisfaction was measured, examples included responsiveness of staff, clinician communication, technical skill, and hospital environment. Today, the concept of patient experience has evolved and moved beyond hospital settings. Pharmaceutical businesses have also understood the benefits of adopting a patient-centric approach.

    Bayer invested in a novel delivery system, BETACONNECT auto injector, for the delivery of Betaseron. This system uses Bluetooth or USB for adjustment of injection speed and/or needle depth and to upload delivery logs to an app for sharing with caregivers. The app also sends injection time reminders to patients, along with a record of injections. This not only helps in increasing adherence to therapy but also in evaluating key secondary endpoints such as anxiety, depression, and fatigue. Similarly, Novartis has launched SymTrac, an app for tracking and maintaining a recall of symptoms of multiple sclerosis, providing greater value to patients. The solution tracks symptoms such as pins and needles in a specific area of the body, or mood swings and energy drops. The recorded information aids in productive discussions with care providers. Many companies are now including patient reported outcomes of the disease as secondary endpoints in the clinical trials of their novel drugs.

    Pharma companies, both generic and innovators, can successfully deliver and differentiate on patient experience and demonstrate additional patient value. Several frameworks can be adopted to map patient experience.

    1. Patient journey and unmet need – Patient journey provides a key framework for pharma marketers to draw conclusions and design specific strategies for the patient segment their product is targeted at. It details the complete paradigm from manifestation of signs and symptoms of a disease to diagnosis, treatment and post treatment care. Throughout this journey, various decisions are made by the patients, care takers, insurance providers and HCPs to ensure a smooth treatment process. These decisions are influenced by factors such as patient personas/behavior, disease condition, treatment settings, technology, cost of therapy, social influence, etc. All these factors together are responsible for creating a unique patient experience. Identifying patient journey and understanding the key unmet needs are important for designing marketing strategies.

      For example, Pfizer’s app Quitter's Circle, which was designed using feedback and input from those trying to fight cigarette addiction, focuses on the positive engagement between the user and the software. While Pfizer does not generate income from the app, it has helped the company determine avenues to improve patient experience.

    2. Defining patient personas – The personas concept – accessing and analyzing extensive data on socioeconomic status, demography, ethnicity, etc., to guide product positioning – has been used in several industries for years. However, building personas in healthcare is comparatively more complicated. Healthcare analytics generally rely on only two sources: claims and clinical data. Although both sets of data are easy to access, they only provide a limited view on the characteristics of patients and members, and do not provide details of their actions or motivations. However, with the availability of data through various real time trackers, this will change soon.
      A recent study conducted by Aranca on patient journey across different socioeconomic groups revealed interesting insights about patient preferences and characteristics. This information could help marketers draw insights and design strategies to increase patient access.

    3. Design thinking –This entails creating innovative solutions by studying the needs/challenges of the target audience. This is vital for pharma companies in an increasingly competitive commercial landscape. Under the Purple Health Initiative, Dr. Reddy’s collaborated with IDEO - A California-based design and consulting firm – to redesign the packaging of some of its core brands, such as blister packs and syrup bottles, to make them more patient-friendly. While this increased the cost of packaging by ~20%, it added value for the patients.

    4. Digitizing data collection and measurement – Collecting patient-related data through digitized processes and systems, and analyzing it to gather insights on behavior, clinical, and socioeconomic dimensions should be a priority for any pharmaceutical company. As part of deriving learning on patient experience, this data should be used continuously to develop strategies and measure outcomes.

      The Patient Experience Feedback Loop below depicts the flow and structure of application of the framework mentioned above.

    Source: Deloitte

    Transitioning from a drug-centric model to patient-centric services will pose a huge challenge for pharma companies. To bring about a transformative organizational change, pharma companies need to have a patient value and outcomes-focused market strategy, rather than competing on volumes and pricing.

    Will pharma companies be more inclined to embrace the new approach? Perhaps, rising competition between branded products and generics is likely to usher in this change.



  151. AI - A Key Element in Bridging the Security Gap for IoT Devices

    Increasing vulnerability of IoT devices to cyberattacks and other security threats have led enterprises to implement Artificial Intelligence

      to read | words

    published on Feb 06, 2020

    Increasing vulnerability of IoT devices to cyberattacks and other security threats have led enterprises to implement Artificial Intelligence (AI) and Machine Learning (ML)-enabled solutions. As hacks become more sophisticated and advanced, traditional security measures are being rendered ineffective. Progressive technologies such as AI and ML have helped in improving security by reducing security breaches and increasing operational efficiency.

    Amid rising internet connectivity, the number of connected devices is expected to touch 20.4 billion by 2020; of these, 7.5 billion devices are expected to be used by enterprises. This validates the potential of Internet of Things (IoT) as an enabler for automation, intelligence, scale, and efficiencies across businesses. The possibilities and applications of IoT have been growing by leaps and bounds over the last few years as it facilitates connectivity and transfer of data between everyday devices. It has become an essential and ‘must have’ technology for businesses in the digital landscape. IoT is present across sectors, from communications, healthcare, hospitality and manufacturing to transportation, paving the way for smart life, smart city, smart mobility, and smart industries.

    The rapid adoption of IoT devices globally has made them vulnerable to significant risks. With the number of connected devices increasing, enormous IoT data is being generated that is transferred between physical and cloud-based network environments. The moot question at this point is, is data secure. According to a survey conducted by professionals participating in risk oversight activities of IoT devices, the proportion of organizations reporting data breach incident specifically due to unsecure IoT systems surged from 15% to 26% between 2017 and 2019. Furthermore, around 55% of the respondents considered the lack of ability to determine whether third-party safeguards and policies regarding IoT security are sufficient to prevent data breach as one of the main reasons for the rise in IoT risks.

    Recent attacks on IoT devices and sophisticated hacks by online attackers have aggravated the issue. A study covering over 3,000 organizations shows that more than 50% companies have implemented IoT devices, while about 84% have already experienced security breach related to IoT. The impact of data theft includes damage to organization’s reputation, customer data being compromised, financial losses, theft of personal identity, operational downtime, and risk of loss of intellectual properties.

    During the last few years, there were various IoT security failures, ranging from targeting devices relying on predictable passwords, to interrupting and breaching communications systems, and creating a new entry point to the network.

    Some of the recent IoT cyberattacks that had a largescale impact globally are:

    In 2016, Mirai botnet affected many IoT devices and used them as a channel to launch a DDoS attack on DNS provider Dyn. This attack affected the websites of major global companies such as Etsy, GitHub, Netflix, Shopify, SoundCloud, Spotify, and Twitter. The attack was successful as devices were operating on old versions of the Linux kernel and due to the habit of users to hardly change default usernames/passwords. The attack affected about 600,000 IoT devices. Approximately 14,000 internet domains stopped using Dyn as their DNS service provider, which is about 8% of Dyn’s customer base, negatively impacting the company’s bottom line.

    In 2017, BrickerBot (a malware attack) affected IoT devices and made them permanently non-operational. The malware entered low-secure devices and ran commands rendering them dysfunctional. This attack affected telecom companies such as Sierra Tel Network, Bharat Sanchar Nigam Limited (BSNL), and Mahanagar Telephone Nigam Limited. BSNL’s 60,000 modems lost connectivity, affecting 45% of its broadband connections.

    Needless to say, hackers have built a unique threat landscape and are implementing advanced methods to breach IoT devices. However, security to tackle such attacks is lagging in terms of adoption of technology. While manufacturers have developed IoT devices to facilitate essential functionalities, such as processing and transmitting personal data, not much attention was paid to security. Currently, IoT devices can only perform the basic security protocols and implement elementary security systems such as hardcoded default passwords, one-time authentication, and monitor system network traffic. These IoT devices have poor transportation of data and routing protocols, and lack of regular system updates. These traditional security measures often fail to detect sophisticated malware and threats to IoT devices. The inability of security solutions to track and monitor data has been one of the biggest challenges for IoT security providers. The major gap lies in identifying the attack areas that serve as entry points for malware. Improper authentication, authorization, and unencrypted mechanisms make it easy for hackers to access information on IoT devices. IoT security enablers have not been able to keep pace with the technological advancement due to lack of awareness, technical expertise and cost constraints related to protecting devices.

    To protect IoT devices, technology upgrades to security solutions based on AI and ML are required. As AI and ML involve minimum human intervention in identifying and investigating abnormal activities, this would reduce the downtime and improve operational efficiency. AI security solution analyzes patterns, detects abnormal behaviors and makes error-free predictions based on datasets. It can collect information from all endpoints in the organization and run a mathematical algorithm to analyze the data, facilitating informed decision-making.

    PatternEx uses a human-aided ML algorithm to conduct an outlier detection and train the system to be more accurate in real time. The training is done by a human (an analyst) who identifies a new attack and the system generates events indicating that potential attack. The analyst investigates the events and determines whether the system was precise in its assessment approach. Thus, the system continuously learns from experience and becomes capable of taking more accurate decisions. PatternEx, based on Machine Learning Anomaly Detection technology, offers contextual modelling and custom analytics that enable users to analyze insights based on raw data points.

    Early detection of threat, coupled with predictive analytics and accurate risk assessment, helps in averting security problems while they are still in the nascent stage. This is prompting cybersecurity solution providers to transition from traditional solutions to advanced security solutions based on AL and ML.

    ZingBox developed a solution based on deep learning mechanism that detects threats and protects IoT services and data. It works by building up knowledge based on the information gathered previously and avoids false alarms. The solution is comprehensive, providing end-to-end IoT lifecycle management, security, and optimization of IoT environment. It also offers risk assessment, threat detection, visibility into network behavior, and insights on IoT devices by generating an optimization intelligence and utilization report.

    Dojo-Labs’s solution collects data from endpoints and examines the behavior range of each device type to detect and prevent any malicious activity. The device connects the user’s Wi-Fi router and filters the traffic with the help of AI to detect and prevent malicious software entering the network. It continuously studies the behavior of the device and detects unusual activities.

    A few established players have also shifted focus to advanced security mechanisms. IBM (with Watson, MaaS360), Trend Micro (with Trend Micro Consumer Connect and XGen security), and Extreme Networks (with ExtremeAI Security) are aiming at securing IoT devices with their AI-based solutions.

    Innovations and investment in IoT security have opened significant opportunities for cybersecurity companies. Some of the key areas where IoT security enablers should be investing to stay ahead in the market are:

    Prevention over protection: Detection and real-time response to an incident should take precedence over traditional protection mechanisms. By introducing technologies such as AI and ML, organizations can effectively and efficiently prevent complex cyberattacks. Amid the switch to prevention, businesses will adopt comprehensive security framework factoring in elements such as risk and compliance, data security, and privacy management that are well supported with analytics.

    SentinelOne, a US-based security company, increased the capability of its endpoint protection platform to protect IoT devices. The solution SentinelOne Ranger uses AI to monitor and control access to IoT devices. Early prevention mechanism being the guiding principle, it autonomously protects and provides notification to the security team regarding vulnerabilities and abnormal behavior on the network. The technology fingerprints and creates a profile of the devices, providing complete visibility of the environment to detect malicious activities.

    Collaboration: Amid rapid technological advances, innovations and increased connectivity, IoT providers are exploring markets to expand their businesses. Next generation connectivity businesses are looking for solutions that can integrate with the network infrastructure of different players.

    Cybersecurity companies are partnering with AI-based technology providers and investing in R&D to design new solutions and tap business opportunities. The AI-driven IoT security market is highly fragmented with large global technology players and numerous AI- and IoT-focused startups. In the coming years, the market is expected to gradually consolidate as well-established global giants are actively acquiring and partnering with AI-based startups. About 21 startups were acquired in the first eight months of 2017 and 24 in 2016, up from 11 in 2015. Additionally, IoT security startups focusing on AI technologies have been the top recipients of venture capital and corporate investments—in the first eight months of 2017, startups raised US$705 million in venture capital funding.

    Global incumbents such as Microsoft (acquired Hexadite), Blackberry (acquired Cylance), Bullguard (acquired Dojo Labs), and NEC (partnered with Arm) have acquired/partnered with AI-based startups. pi Ventures invested in IIoT startup SwitchOn. Plus, VC firms such as Sequoia India, Blume Ventures, and Accel Ventures have expressed interest in funding IoT and AI-focused startups.

    IoT is no longer just a buzz word; it, rather, presents a plethora of opportunities. To secure IoT devices, companies are integrating IoT with AI and ML technologies as these facilitate real-time situational awareness, continuous monitoring and analyses, and accurate decision-making with least human interference. In the near future, IoT devices would be a game changer in digital transformation, compelling security providers to adopt advanced mechanisms to combat cyber threats. This has led many global players to invest in AI-driven IoT security and upgrade their legacy security solutions. The key factor for security providers will be their ability to innovate, adapt to market conditions, and provide secure solution without compromising on user experience. The ecosystem for innovating AI-based solutions for securing IoT devices is taking shape.

    So, what’s your status on this: are your security solutions equipped for cyberwarfare? If you want to win, make sure you wear the AI shield!



  152. Will ESG become the new norm for selecting investments?

    The phrase Environmental, Social and Governance (ESG) Investing, often used interchangeably with socially responsible, sustainable, and mission-related investing,

      to read | words

    published on Jan 10, 2020

    The phrase Environmental, Social and Governance (ESG) Investing, often used interchangeably with socially responsible, sustainable, and mission-related investing, was coined at the Who Cares Wins Conference in 2005. The conference was attended by asset managers, institutional investors, global consultants, research analysts, and government bodies and regulators to discuss the importance of ESG in longer-term investments as well as financial research.

    Besides its corporate goal, every company has an obligation toward the society. ESG, or Environmental, Social, and Governance, are the three critical parameters to measure the societal impact of investment in a company. These criteria influence the future financial performance of companies. Under ESG investment ranking, a set of standards are applied to evaluate a company’s operations and provide ratings on that basis. Investors use these ratings to identify and screen their investments and take decisions on whether or not they should invest in an enterprise.

    Market for ESG funds in nascent stage but gaining traction rapidly
    A Bloomberg Intelligence study shows that ESG assets grew by 37% in 2017, outpacing other assets under the MSCI World Index. Number of funds created for these nearly doubled in 2016 vis-à-vis 2013, the highest being in 2017. Despite the growth, there is scope for the ESG niche market to grow further.

    Initially, institutional investors were wary of the ESG investing concept, and argued that their main objective was to maximize shareholder value regardless of the ESG impact. However, lately, the financial implications of ESG have come to light. ESG integration is increasingly identified as a part of fiduciary duty in markets such as the US and EU. Today, investors are factoring in risks not considered earlier, such as climate change, rising temperatures, floods, rise in sea level, privacy theft, data security, demographic shifts, and regulatory pressures. With companies increasingly getting exposed to risks, modern investors are revaluating their approach to investment.

    ESG is evolving and occupying the center stage for asset management firms and institutional investors. ESG assets and funds have grown since 2015 amid rise in demand for such strategies.

    ESG Funds and Assets Under Management (AUM)

    Gaining traction
    Equity ESG funds have grown at a faster pace than other sub-categories.


    Positive impact of ESG investing on operations
    Confidence in incorporating ESG investment and risk-adjusted returns is increasing. Factors motivating investors to invest in ESG funds include improved long-term returns, better reputation and lower investment risk.

    The key question is does incorporating ESG activities help a company to improve its performance and, thereby, benefit shareholders. The answer lies in the fact that having an ESG profile reduces a company’s exposure to political, regulatory or reputational risks and lowers volatility in cash flows and profitability. Studies and ESG models show that companies ranking high on ESG parameters are more likely to have consistently lower future stock price volatility and higher average returns on total equity compared to those with low ranking.

    Performance of top ESG rated companies

    Company

    ESG Rating
    (As per MSCI ESG Research)

    1-year Returns

    3-year Returns

    5-year Returns

    Edwards Lifesciences

    AA

    55.75%

    138.62%

    264.71%

    Equinix

    AA

    65.38%

    57.93%

    166.65%

    Prologis

    AA

    54.12%

    65.20%

    105.26%

    Emcor Group

    AA

    44.77%

    23.87%

    106.01%

    Cadence Design Systems

    AA

    62.78%

    174.54%

    293.18%

    National Research

    AA

    75.42%

    244.33%

    410.70%

    NextEra Energy

    AAA

    39.29%

    102.55%

    126.78%

    Microsoft

    AAA

    55.62%

    152.42%

    247.47%

    Hasbro

    AA

    30.03%

    26.76%

    93.07%

    Owens Corning

    AA

    47.34%

    23.80%

    79.00%

    MSCI World ESG Leaders

    16.06%

    13.07%

    8.36%

    ESG issues can directly or indirectly impact a company’s profits and returns. Companies with higher valuations would be in a better position to invest in measures that improve their ESG profile, which in turn improves the ESG scores.

    • Dow Chemicals reported savings of USD 9.4 billion through energy efficiency improvements over a period of 16 years.
    • Recycling and reuse initiatives saved General Motors over USD 2.5 billion.

    Roadblocks in ESG market
    Several models provide ESG scores for companies. The parameters considered in each may vary, just as the methodology for calculating the scores varies. Popular rating models are:

    • MSCI ESG Rating: Offers a set of 200+ metrics for evaluation of funds on ESG risks, exposure to sustainable impact themes as well as value-oriented issues
    • Bloomberg ESG Rating: Tracks approximately 800 different metrics that cover all aspects of ESG
    • Sustainalytics: Covers close to 40 industry-specific indicators for ESG ratings
    • Refinitiv: Covers over 70% of global market cap and more than 400 different ESG metrics

    Each of these models may suffer from data discrepancies (for a company) due to lack of consistent reporting standards for ESG data. Companies in the same sector may report different data points. Furthermore, the same company could report different data points year-on-year. Investors are, therefore, spending huge funds toward the standardization and interpretation of unstructured data.

    Another challenge is that third-party generated scores reflect not only a company’s reported data, but also the view of the analyst generating the score. This is essentially the reason why scores can be differing for different ESG rating platforms. The solution to the inconsistency in ratings is that investment management firms should assign their own scores to public companies. These firms can use the ESG data reported by companies and weigh factors based on their values and beliefs.

    Consistent reporting framework a key requirement for ESG data
    ESG reporting is likely to become increasingly common across all industries, as investors continue to demand transparency and accountability from industry participants Growth in the industry depends on the ability to develop or agree on a standard data reporting framework



  153. Floating Offshore Wind Energy

    The need for environment-friendly resources and technology is rising. Renewable energy resources are gaining popularity, with wind energy

      to read | words

    published on Nov 18, 2019

    The need for environment-friendly resources and technology is rising. Renewable energy resources are gaining popularity, with wind energy being the second largest source. Though offshore wind is the fastest growing source, floating offshore wind source is also emerging as a powerful source of energy. Platforms and turbines are being developed to garner this energy. Though the resource faces challenges in implementation, it is a viable and economic option, and if a few measures are taken, it can easily become a main contributor of renewable energy.

    Need for Renewable Energy
    Renewable energy has been established as a mainstream contributor in the global electricity generation mix, and is viewed as a sustainable mechanism to address rising temperatures, climate changes, and environmental issues.

    Globally, renewable energy sources are being used for a variety of applications, which traditionally relied heavily on fossil fuels. Renewable energy recently accounted for two-thirds of global investment in power generation. Hydro, solar, photovoltaic, and wind energy dominates the renewable energy generating capacity worldwide. The economics of wind and solar power and its cost-efficient storage are paving the way for a sustainable future energy system.

    Wind is the second largest source of renewable energy after hydro, with a share of around 25% in the total renewable energy capacity globally. Onshore wind turbines dominate the global wind energy capacity, with more than 96% share in the overall installed wind capacity. However, over the last few years, the offshore wind capacity has witnessed significant growth, driven by reduction in installation costs and improvement in technology.

    Offshore Wind Energy: Fixed-Bottom versus Floating Offshore Wind Turbines
    Offshore wind is one of the fastest growing renewable energy sources, accounting for about 4% of the global cumulative installed wind capacity in 2018. Europe is a leader in offshore wind capacity installation, with the UK contributing more than 35% to the total installed offshore capacity worldwide, followed by Germany with roughly 27%. Offshore wind turbines are of two types: fixed bottom and floating. 

    Fixed-bottom offshore wind turbine technology is more mature than that of floating offshore wind (FOW) turbine, and currently dominates offshore wind energy installations. The former type is easy to install than FOW turbines. In addition, fixed-bottom offshore wind turbines can be installed in near-to-shore sites vis-a-vis FOW ones, which are more technically complex and installed deep in the sea.

    FOW farms are generally installed in complex seabed conditions with water depths of more than 40 m. Installation of wind turbines in deep sea poses many challenges, a major one being the development of a platform that can withstand turbulence in deep sea. Other difficulties include the laying of high-voltage electrical transmission lines as well as installation, operations, and maintenance of wind turbines in deep sea.

    Evolution of Floating Offshore Wind
    Wind speed is higher in deep sea compared to near the shore or onshore; therefore, FOW turbines access 80% more wind than its fixed-bottom counterparts. This allows higher capacity utilization of wind turbines compared to fixed-bottom offshore and onshore wind turbines.

    To utilize the higher wind speed in deep sea, FOW turbines were conceptualized between 2009 and 2016 in Japan, Spain, Norway, and Sweden, demonstrating six full-scale prototypes in total. Successful demonstrations of these prototypes accounted for over 20 MW of the installed capacity by 2016. Since prototypes provide a full-system simulator or a relevant part of the desired system, the pre-commercial phase of FOW turbines began in 2017 with the deployment of Hywind Scotland, the first fully operational FOW farm with a capacity of 6 MW.

    The FOW turbine installation and maintenance cost is significantly higher than the fixed-bottom offshore wind turbine. Hence, due to the higher cost of installation, most FOW turbines require significant government support to reach commercial readiness and realize the cost reduction potential in the near term, including R&D activities.

    Technology Advancement
    The two key components of FOW are platforms and turbines. Over the years, a number of companies worldwide have developed different types of platforms for FOW. Some of the most popular platform typologies are barges, spar buoys, semi-submersibles, tension leg platforms, multi-turbines/hybrid waves, and semi-spar. Most of these technology are developed based on the platforms used by oil and gas companies for drilling oil wells in deep sea. 

    Larger wind turbines with a capacity of more than 6 MW are a good fit for FOW due to high wind speeds. With advancement in wind turbine technologies, the development of high-capacity turbines can further lower the operational cost of FOW turbines. Turbine manufacturers recently expanded their wind turbine portfolio from 6 MW rated wind turbines to 12 MW ones that feature a 220-m rotor and 107-m blade, having a gross capacity factor of more than 60%. 

    Challenges to Floating Offshore Wind
    Despite the advantages of floating wind farms over fixed-bottom offshore wind farms, they face opposition from local residents. The energy source presents a danger to the marine ecosystem and would cause a possible reduction in fishing zones due to the electromagnetic field from high-voltage power lines. The lack of specialized vessels with expertise and delay in environmental impact assessment reports are other major challenges faced by project developers.

    Future Roadmap
    The Global Wind Energy Council (GWEC) estimates the global FOW capacity to be approximately 6 GW by 2030. The US Department of Energy's National Renewable Energy Laboratory (NREL) expects that multi-turbine arrays of 12–50 MW projects in the US, China, and Europe would be commercial by 2023. Furthermore, according to NREL, floating arrays of more than 400 MW are expected to be fully commercialized in the US by 2024.

    FOW has viable and economical attractiveness to expand the horizon of offshore wind energy, provided that cost reduction is achieved at a faster pace than currently expected.



  154. Mini-grids: Bridging the Gap in Electricity Access

    More than a billion people across the world do not have access to electricity; this includes Africa, where

      to read | words

    published on Aug 19, 2019

    More than a billion people across the world do not have access to electricity; this includes Africa, where a major share of the population lives without electricity. To increase electrification and link remote locations, more and more countries are looking to install mini-grids. Asia and Africa are recording higher growth in installation of mini-grids, and it is expected that by 2030, mini-grids will provide electricity to more than 500 million people globally.

    Low electrification rate in developing countries
    Electrification is a pressing concern for most of the developing countries. More than a billion people across these countries do not have access to electricity; for example, 48% of the population in Sub-Saharan Africa lives without electricity. In some Sub-Saharan countries, electrification rate is less than 15% and is confined to only key cities.

    Limitations of national/mainline grid system
    Over the years, focus on development of power generation facilities and expansion of national grids has improved in these countries. However, high cost and geographical constrains (rural areas, island topography, etc.) have prevented many of their regions from being connected to the national grid. In countries where connectivity with far-flung regions has been achieved, supply of electricity remains limited to just few hours a day.

    Role of mini-grids
    Mini-grids are increasingly being considered as the key to overcome these challenges and improve electrification. The main components of mini grids are a power generating unit, a small control system and distribution lines. Mini-grids are not required to be connected with the national grid for power generation or distribution. Instead, they generate electricity either from renewable or conventional power sources (diesel generators) or both. Mini-grids are usually operated by private players but in certain countries, they are owned by the government.

    One of the biggest advantages with mini grids is that they can be set up at any location, however remote; currently, most mini-grids generate electricity using solar panels and can be set up in any area that receives abundant sunshine. Most of the solar mini grids are equipped with generators or batteries in order to generate electricity in the evening when solar power is not available.

    Mini-grid system to boost electrification
    The World Bank estimates that there are more than 19,000 mini-grids in 134 countries across the globe, lighting up the homes of around 47 million people. Asia tops the charts in terms of number of mini-grids installed, while Africa leads in terms of the number of mini-grids planned.

    In Asia, countries with the highest number of mini-grids installed include Afghanistan, Myanmar, India, Nepal and China. Countries such as Philippines and Indonesia have recorded significant growth in adoption of mini-grids in recent years. In Africa, the adoption of mini-grids for connecting rural and isolated locations is higher in Senegal, Ghana, Tanzania and Kenya compared to other countries in the continent. Several countries in Latin America and Europe have also recorded significant growth in mini-grid installations in order to improve electrification.

    Inherent challenges of mini-grids
    Despite the benefits, the cost of installation and operation of mini-grids is high. This increases the cost of electricity generated from the mini –grids (sometimes the per unit cost is 3 to 4 times that of the electricity from national grid).

    Need for government support
    To reduce the cost of installation and operation, local governments in many countries are providing incentives/subsidies to ensure electricity from mini-grids is affordable for end-customers. To improve the electrification rate and promote the adoption of mini-grids in developing countries, many developed countries such as the US, the UK, Germany and France, along with global organizations such as World Bank and UNESCO, are providing financial and technical support. This has helped in lowering the per-unit cost of electricity generated from mini-grid systems to some extent.

    Road-map ahead
    Technological advancements and increased adoption of mini-grids globally are expected to reduce costs in the future.

    It is estimated that by 2030, around 210,000 mini-grid systems will be installed, connecting more than 500 million people globally. Driven by higher adoption of mini-grids in developing countries, electrification rate is expected to improve significantly.



  155. Gearing up for the Next Wave of AI in Pharmaceutical Industry – From Cost-based to Value-based models

    Artificial intelligence (AI) is reshaping business operations in the health industry. Amid the ever-evolving AI infrastructure, growth in

      to read | words

    published on Jun 11, 2019

    Artificial intelligence (AI) is reshaping business operations in the health industry. Amid the ever-evolving AI infrastructure, growth in tech-savvy patients and availability of big data, the industry is set to make a transition from using AI for controlling costs to utilizing it for improving patient care. The AI in healthcare market is estimated to reach $6.6Bn in 2021 from $600Mn in 2014, recording a CAGR of 40%; in the five years subsequent to 2021, the market is estimated to grow by more than 10 times. In this article, we provide insights on the applications of AI in patient-centric models for improving patient care, from diagnosis to post-treatment care.

    Over the last few years, initial applications of AI in the pharmaceutical business have been in the areas of drug discovery – predicting molecule-target bonding, identifying biomarkers, uncovering new drug indications, conducting clinical trials and improving manufacturing efficiencies. While the cost of developing a drug could reach ~$2.5 Bn and it could take 10–15 years to complete phase 3 clinical trial, the use of AI, it is estimated, is likely to reduce the cost by around 70%.  AI is increasingly gaining traction in other areas, including commercial operations, and collection, synthesis and use of data.

    Next Wave
    Given the efficiencies associated with AI, it is likely to be adopted at a large scale in the highly regulated pharmaceutical industry. It is expected to help the pharma sector solve the complex issue of adding value and improving the patient healthcare outcomes, cost effectively, through the upcoming years of patent cliffs and increasing generic competition. According to estimates, companies will spend $54Mn on an average on AI projects by 2020, which could generate savings of over $150Bn for the healthcare industry by 2025.

    Intensive use of big data in healthcare, coupled with the increasing AI skillset, would boost the adoption of AI for newer applications. Entry of IT giants in healthcare, increased adoption of AI technologies by big pharma companies, and collaborations of pharma companies with tech and IT startups would also contribute to this. Around $2.7Bn was raised in 206 deals between 2011 and 2017 by 121 health AI and machine learning companies.

    The next wave of AI in the pharmaceutical industry would be focused on patient-centric models for improving every aspect of patient care, from diagnosis to post-treatment. Learnings and insights drawn from advancements in the health tech and medical device industry are now being applied to real-time applications in the pharma industry to raise the quality of patient care.

    • Prevention

      Predictive medicine  is a growing trend in the healthcare domain. Using data from medical sensors and genomics, medical professionals are now able to draw conclusions about the risk factors of diseases.

      A case in point is Scripps Research Translational Institute and Nvidia, an AI company, collaborating to develop AI and deep learning solutions for deriving insights from genomics and health sensor data. The partnership will initially focus on developing deep learning tools to predict atrial fibrillation as well as analytics of whole genome sequences. Thereafter, the scope will be expanded to include other diseases and datasets.

      Machine learning can help in assessing the risk of getting a heart disease. Google and Verily have developed an algorithm, which analyzes the scans of the back of the eye to deduce a person’s age, his blood pressure, and smoking habit and, accordingly, predict the risk of a major cardiac event.

    • Early Diagnosis

      Data on Electronic Health Records (EHR), smartphones, smart watches and other tracking devices has been used to evaluate patients in real time and determine their health status. For example, the FDA has cleared Apple Watch ECG, which is helpful in diagnosing heartbeat abnormalities. The electrocardiogram app is available without a prescription for people aged 22 and above. Apple obtained a second FDA clearance for an app that identifies irregular heart rhythms that may indicate atrial fibrillation.

      The table below highlights a few more FDA approvals for AI platforms majorly used for early diagnosis:


      Company Approval Indication

      Apple

      September 2018

      Atrial fibrillation detection

      Aidoc

      August 2018

      CT brain bleed diagnosis

      iCAD

      August 2018

      Breast density via mammography

      Zebra Medical

      July 2018

      Coronary Calcium scoring

      Bay Labs

      June 2018

      Echocardiogram EF determination

      Neural Analytics

      May 2018

      Device for paramedic stroke diagnosis

      IDx

      April 2018

      Diabetic Retinopathy Diagnosis

      Icometrix

      April 2018

      MRI brain interpretation

      Imagen

      March 2018

      X-ray wrist fracture diagnosis

      Viz.ai

      February 2018

      CT stroke diagnosis

      Arterys

      February 2018

      Liver and Lung Cancer (MRI,CT) diagnosis

      MaxQ-AI

      January 2018

      CT brain bleed diagnosis

      Alivecor

      November 2017

      Atrial fibrillation detection via Apple Watch

      Arterys

      January 2017

      MRI heart interpretation

      Timely deployment of AI could prove beneficial in early diagnosis and treatment. Deep learning models developed to study metabolic changes in the brain could help in early detection of Alzheimer’s (at least six years before clinical diagnosis of the disease) and pave the way for prompt treatment. Also, work on a deep learning model, capable of diagnosing tumors at a success rate of 92%, is underway.

    • Treatment

      Robotics is widely used in healthcare, from doing surgeries to supporting self-management of patients with long-term conditions. AI-assisted robotic surgeries could result in five-fold reduction in surgical complications and a 21% decrease in patients’ length of stay in the hospital following a surgery.

      In the pharmaceutical industry, AI is being used to improve patient outcomes by evaluating patient data and prioritizing treatment urgency for patients in hospital settings. AI-empowered frameworks are being used to understand outcomes following treatment and recognize ideal medications depending on patients' profiles. Thus, efficient clinical decision-making will facilitate treatment customization.

    • Patient Care

      Application of AI in improving patient care will enable healthcare companies to understand patient requirements closely and design products accordingly. By collecting and analyzing aggregate anonymized patient level data (APLD) across a patient’s journey, pharma companies can gain deeper insights on the behavior, journey and unmet needs of patients.

      A case in point is improvement in drug compliance. Real-time patient data can be used to generate reminder for a missed dose.

      The National Institutes of Health (NIH) has developed the AiCure app, which helps patients in monitoring their medications. The webcam of a smartphone is integrated with AI to manage medicines for the patient. The application generates self-governing confirmation on whether a patient is regularly consuming the prescribed medications or not. Medication compliance is essential for the success of every treatment and AI can unquestionably provide a benefit there. A 28-patient study in the American Heart Association's journal Stroke shows that AiCure's AI platform led to a 50% improvement in adherence to oral anticoagulants.

    • Access

      Use of real world evidence (RWE) and patient-level data for confirming the clinical outcomes of drugs will aid in policy decision making and thus may improve access to essential drugs. For example, Novartis has used retrospective real world evidence studies to reconfirm the clinical outcomes of its drugs such as Cosentyx (Secukinumab) and Revolade (Eltrombopag) which were initially proved through clinical studies. This has helped the company gain a better understanding on the outcomes of treatments and, thus, help healthcare providers navigate treatment options more effectively.

      Health economics and outcomes research (HEOR) analysts can extensively use machine learning algorithms on patient data to arrive at better decisions on reimbursement needs and drug pricing which could help in greater patient access.

      With newer applications of AI on the horizon, the pharmaceutical industry could make a paradigm shift toward customized and cost-effective patient value models. On the flip side, the industry needs to watch out for the considerable threats AI could pose: privacy issues, ethics-related concerns, medical errors, and loss of human touch in patient care. Pharmaceutical industry will need to ensure quick adoption of upcoming applications and bring a change in the cost-based mindset. Industry skills need to be upgraded to overcome challenges such as those related to unstructured or inconsistent data and measurement of returns on investment in AI. AI has its pros and cons, depending on the perspective: while it can significantly enhance the quality of healthcare and alter the domain, it could result in severe job loss. Balancing the risks and rewards of AI in the pharmaceutical space will require collaborative effort from technology developers, regulators, medical fraternity, pharmaceutical companies and patients.



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