LAUNCH OF 'ASSURED ARTEMISININ SUPPLY SYSTEM (A2S2)' INITIATIVE
Woerden, the Netherlands - July 20, 2009 -- The past five years have shown an increasing demand for the supply of Artemisinin based Combination Therapies (ACTs), as the first line treatment for uncomplicated Malaria. It is forecast that this need will continue to expand in the future, especially as donors secure additional funding for ACTs. However, due to low artemisinin prices, competition from other crops and the international credit crisis, there has been a dramatic fall in the volume of plantings of Artemisia annua in 2008-2009 and a resultant drop in production of artemisinin. Unless this situation can be quickly reversed there is a very real threat of a shortfall in artemisinin supplies to meet the ACT needs for 2010 -2012.
Following the WHO/MMV Artemisinin Conference in Guilin, China in November 2008, extensive discussions and meetings have been held to investigate how best to prevent this artemisinin shortage. This has resulted in the launch of a collaborative initiative, A2S2, to address the forecasted shortages of artemisinin supply so as to meet ACT demand in 2010-2012 and to ensure the continuation of the fight against malaria. This initiative is funded by UNITAID and managed by i+solutions, Netherlands; FSC Development Services Ltd, UK; Artepal project (AEDES Foundation in collaboration with OTECI), France and Triodos Sustainable Trade Fund, Netherlands, with guidance from the World Health Organisation (WHO) and Roll Back Malaria Secretariat (RBM).
Assured Artemisinin Supply System - A2S2
Market forces alone will not encourage the expansion of the artemisinin supply needed to meet the ACT demand in 2010 - 2012. Therefore, to address the immediate supply problem this new innovative initiative A2S2 (Assured Artemisinin Supply System) is being introduced. The project provides a finance facility for artemisinin extractors, selected by eligible ACT suppliers, offering a pre-financing scheme to extractors and farmers. The facility is based on sales contracts of artemisinin agreed between the extractors and manufacturers to meet the increased projections of the ACT forecasts. The project also aims to secure realistic and fair pricing schemes to be agreed upon between the selected ACT producers and their extractor partners. By offering contract financing to extractors, farmers, being the start of the supply chain, will also benefit from this initiative.
The additional artemisinin cultivation to meet the 2010 – 2012 ACT needs will initially be sourced from three regions: Africa (including Madagascar), Asia and India, which will spread the risks associated with supply interruptions e.g. resulting from climate changes and possibly natural disasters. It also provides a spread of cultivation over the annual cultivation/ supply cycles, which will ensure regular supply. Contracts between extractors and manufacturers, supported by A2S2, will contribute to the additional artemisinin production required, on top of existing contracts, to secure the scale up of malaria supplies.
Pre-Finance Facility
The core innovative aspect of A2S2 is the Pre-Finance Facility designed as a tripartite agreement between the artemisinin extractor, the buyer (ACT manufacturer/API supplier) and the Triodos Sustainable Trade Fund. Trade finance loans are made directly to the extractors. The loans will support an advance payment between the extractor and the farmers so as to initiate Artemisia plantings i.e. seed supply/cultivation and a second payment following the Artemisia harvest and delivery. The loan amount is a maximum 60% of the value of the supplier’s sales contracts.
Market Intelligence
In addition to the Pre-Finance Facility, A2S2 will also provide improved market intelligence on the actual artemisinin supply situation, enhancing transparency and market-responsiveness. Through market analysis and accurate forecasting of annual artemisinin needs, the project will contribute to the realization of a stable artemisinin supply market at fair prices, whilst helping to provide a stable source of income for extractors and farmers. The initiative also aims to empower local (financial) institutions and to strengthen extractor-manufacturer relationships.
Partners
A2S2 is executed by a partnership of the four organizations as listed above and builds on the experience of Triodos Bank in the coffee, cotton and other agricultural commodity sectors. i+solutions will operate as the lead agency, Triodos Sustainable Trade Fund (“Triodos”) will manage the Pre-Finance Facility for the extractors, and FSC Development Services Ltd and AEDES Foundation plus OTECI, through Artepal, will provide the technical and industrial sector expertise.
i+solutions (represented by Henk den Besten) is a not-for-profit organization specializing in pharmaceutical supply chain management for low and middle income countries. i+solutions helps to meet the needs of countries in creating the knowledge, systems, and facilities to build local knowledge and to gain self sufficiency in pharmaceutical supply chain management. Key areas of expertise include:
- Procurement & Supply Services
- Consultancy services
- Training
Artepal (represented by Jacques Pilloy) is a project led by AEDES Foundation which promotes the use of Artemisinin based Combination Therapies (ACTs), with the technical support from OTECI. The main aim of the Artepal project is to help increase production of Artemisia, to give advice on extraction of artemisinin and its derivatives, and to inform all stakeholders about artemisinin supply and demand. In addition it helps API/ ACT manufacturers reach Good Manufacturing Practices (GMP) levels in order to meet WHO prequalification. www.artepal.org
Triodos Sustainable Trade Fund (represented by Koert Jansen) is one of the special purpose funds of Triodos Bank, Netherlands, the leading sustainable bank in Europe which has been active in the organic and fair trade sector for many years (largely in developing countries), providing effective financial solutions for producers, export organisations, wholesalers and retail companies. www.triodos.com
For additional information:
Henk den Besten (hdbesten@iplussolutions.org / +31 348 489 630)
www.iplussolutions.org
