Blog - IDEATE
How health and nutrition industry has fared amid COVID-19 crisis
As with any other industry, COVID-19 has had a major impact on the global supplements and health ingredients sector. But while other businesses have seen a sharp drop in demand for their products and services in light of the pandemic, there has been a rise in demand for health ingredients in 2020.
Still, disruptions to supply chains as a result of the ongoing crisis have posed several challenges to companies in the industry. To uphold the importance of the supply chain and prevent a shortage of supplies amid increased demand, the public and private sector in Asia has had to cooperate even more closely.
Cooperation in SEA
The ASEAN Alliance of Health Supplement Associations (AAHSA), for instance, has been working with local associations in its member countries — Singapore, Malaysia, Indonesia, Thailand, Vietnam, Brunei and the Philippines — to obtain “essential” status for health ingredients. With the support of the International Alliance of Dietary / Food Supplement Associations (IADSA), the AAHSA has had varying degrees of success in the aforementioned countries.
AAHSA chairman Daniel Quek recently revealed that the alliance had been successful in Malaysia, Indonesia, Vietnam and the Philippines, indicating a sense of trust between government bodies and industry associations in these countries, as well as a general recognition of the benefits of health supplements and ingredients, especially during a pandemic.
In Malaysia, for example, health ingredients were granted “essential” status a mere two weeks into its nationwide lockdown. In Singapore, however, the AAHSA has been less successful in its efforts, due to strict regulations ensuring that retail sales were only allowed to resume in the final re-opening phase.
Health and nutrition giant thriving despite crisis
While regulatory restrictions in Asia may make it difficult for many in the nutrition, supplements and health ingredients sectors to go about business as usual during the pandemic, MNCs like Abbott have been thriving.
In fact, the pandemic has led to growth in Abbott’s business, with its shares having increased by over 25%. Its Q3 results saw a US$8.9 billion revenue (up 9.6% from Q3 2019), as well as a net income of US$1.2 billion
Abbott’s nutrition sales increased by 2.6% in Q3 to US$1.9 billion, thanks largely to greater demand for Ensure adult nutrition products. Its Pedialyte and PediaSure paediatric nutrition products were also responsible for strong growth in Q3.
Staying afloat with sustainability
Royal DSM is also soldiering on by focusing on sustainability, having signed its largest renewable energy agreements in April to cover approximately 25% of its total annual electricity consumption.
The two power purchase agreements with major wind energy producer EDPR in Europe and with global solar firm Origis Energy in the US have placed DSM on track to source 75% of its energy from renewable sources by 2030, up from 50% in 2019.
Disruption from the pandemic has led DSM to focus on green recovery by integrating sustainable production, which the company has managed to do with little difficulty as its operations — particularly those involving health, food and nutrition — are considered essential by governments.
Still, it is determined to improve its supply chain resilience, especially in the APAC region, where around 96% of enterprises are SMEs; DSM is now looking at ways to collaborate with partners to improve their sustainability and innovation processes.
Heightened health consciousness in light of COVID-19 has also led the company to distribute millions of immunity-boosting products containing essential vitamins and minerals to its 23,000 employees and their families, and to conduct educational webinars on healthier lifestyle choices to maximize immunity.
In addition, DSM has partnered with Singapore-based innovation catalyst Padang & Co to establish the Bright Science & Technology Innovation Hub. This collaborative workspace aims to link tech start-ups and other partners keen to take on nutritional, health and sustainability challenges in Asia, and provide them with access to DSM’s network, technical expertise, and laboratories.
Big players not immune to crisis impact
Despite positive outcomes for large MNCs like Abbott and DSM, however, not all major industry players have had it easy.
For instance, BASF announced in September that it would cut 2,000 jobs from its newly established business services unit in order reduce its costs. This announcement followed a Q2 net loss of almost US$1.06 billion during the COVID-19 lockdowns.
The unit, set up in January, consists of 8,400 employees who support other divisions with services that include health, safety and communications. According to BASF, cutting 2,000 jobs would save the company US$234 million yearly by 2023, and contribute to its overall efficiency.
BASF booked a second-quarter net loss of nearly 900 million euros this year, partly because of a slump in demand from the auto industry, its most important customer, during the coronavirus lockdowns.