Market Update for RUTF and other LNS products. Evaluation of Procurement Objectives (RUTF tender 2015)

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Florence Hunter
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UNICEF Supply Division RUTF pre-tender industry consultation Copenhagen 11-13 June 2018 Market Update for RUTF and

1 UNICEF Supply Division RUTF pre-tender industry consultation Copenhagen June 2018 Market Update for RUTF and other LNS products Evaluation of Procurement Objectives (RUTF tender 2015) Jan Debyser Contracts Manager Nutrition Unit, MNC

2 RUTF Bidding Overview Year of issue ITB/RFP Reference Invitees Response Off-shore LTAs Established

3 Forecast Accuracy Rate 60,000 RFP ,000 Orders Forecast 40,000 30,000 20,000 10, Apr-18 Orders 8,129 20,690 27,154 29,110 33,635 30,577 34,158 32,952 52,850 40,677 Forecast 9,000 13,000 24,000 28,000 32,000 35,000 31,000 33,000 36,000 47,500

4 Procurement Objectives Long term: Ensure sustainable supply of affordable RUTF of assured quality that best meets the needs of countries Tender objectives: 1. Sustain a diverse supplier base with capacity to respond to the demand, including emergency response 2. Market competition in order to obtain best value for money 3. Assurance of quality in line with set international standards 4. Support OMP objective to source 50% of RUTF from manufacturers located in programme countries by 2017.

5 MT Objective 1: Diverse supplier base with sufficient capacity to respond to demand, incl. emergency response 60,000 50,000 40,000 RUTF paste RUSF LNS-MQ LNS-SQ 30,000 20,000 10, Apr18 LNS-SQ LNS-MQ 1, , , RUSF ,161 1, RUTF paste 2,577 4,552 10,741 8,128 20,854 27,156 29,110 33,635 30,577 34,158 32,952 52,850 13,559

6 Therapeutic Foods in MT Number of Countries Supplied Ready to Use Therapeutic Food: UNICEF demand 60, ,000 Forecast balance RUTF Biscuit RUTF Paste Country Recipients 60 40, , , , Apr-18 Forecast balance ,941 RUTF Biscuit RUTF Paste ,793 2,697 4,552 10,741 8,129 20,690 27,154 29,110 33,635 30,577 34,150 32,952 52,850 13,559 Country Recipients

7 MT RUTF paste: UNICEF procurement and CIK (USAID/FFP donation) 70,000 60,000 50,000 40,000 30,000 20,000 10, Apr-18 CIK 1,690 4,882 6,372 3,367 8,534 2,802 Procurement 2,577 4,552 10,741 8,128 20,854 27,156 29,110 33,635 30,577 34,158 32,952 52,850 13,559 Procurement CIK

Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar

8 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Unpredictable timing of demand Timing of (funded) demand is erratic: Limited government procurement (through PS) Emergency donor funding Unpredictable ad-hoc funding Short-term funding Multi-year grants/loans but without government continuation

9 SAM COVERAGE RUTF MT Number of children with SAM 16 million Demand evolution? 7,000,000 6,000,000 EXTRAPOLATION OF SAM TARGETS TO PROCUREMENT BASED ON AVERAGE RATIO OF 70% 70,000 60,000 5,000,000 4,000,000 3,000,000 2,000,000 50,000 40,000 30,000 20,000 1,000, MT 30,577 34,158 32,952 52,850 43,470 48,300 53,130 57,960 SAM coverage 3,200,000 3,600,000 4,100,000 4,000,000 4,500,000 5,000,000 5,500,000 6,000,000 TENTATIVE 10,000-6 million 1.0 million 1.9 million 2.6 million 2.9 million 3.2 million Number of SAM children accessing treatment

10 RUTF paste in MT 15 countries accounting for 80% of demand 9,000 8,000 7,000 6,000 5,000 4, Apr-18 3,000 2,000 1,000 -

11 RUTF: predominantly programme funded 100% 90% 80% 70% 60% 50% 40% 95% 92% 95% 93% 30% 20% 10% 0% Apr-18 Grand Total Programme Procurement Services

12 MT RUTF: SD and Country Office procurement 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Apr-18 Grand Total Supply Division procurement Country Office procurement

13 MT RUTF: emergency-approved orders 9,000 8,000 7,000 6,000 5, % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Apr-18 Grand Total 4,000 Non-emergency Emergency 3, Apr-18 2,000 1,000 -

14 Objective 1: Diverse supplier base with sufficient capacity to respond to demand, incl. emergency response Result: Number of companies capable to manufacture and supply RUTF for a global market has increased from 11 in 2013 to 13 in 2014/15, and maintained at that level in Before Africa Americas Asia Europe TOTAL

15 RUTF Long Term Arrangements - Supply Division Nuflower Foods, India Amul Dairy (Kaira), India Compact South-Africa Ismail Industries, Pakistan Meds for Kids, Haiti Samil Industry, Sudan Power Foods, Tanzania Hilina, Ethiopia STA, Niger Mana Nutritive Aid, USA Edesia, USA Nutrivita, India Societe JB, Madagascar Compact, Norway Compact, India Insta, Kenya Asia Asia Africa Asia Americas Africa Africa Africa Africa Americas Americas Asia Africa Europe Asia Africa Challenge, USA Americas Diva, South Africa Africa Tabatchnick, USA Americas Vitaset, DomRep Americas Nutriset, France Europe TOTAL

16 RUTF Long Term Arrangements Country Offices Result: An increasing number of companies have LTAs with the UNICEF Country Office. Some of them also supply for export STA, Niger X X X X X X X X X X X X X Hilina, Ethiopia X X X X X X X X X X X X PPB, Malawi X X X X X X X X X X Amwili, DRC X X X Valid Nutrition, Malawi X X X X X X X X X JAM, Mozambique X Societe JB, Madagascar X X X X X X X X X Power Foods, Tanzania X X PPB, Sierra Leone X X X X X X Samil Industry, Sudan X X X X X X X MFK, Haiti X X X X X X X InnoFaso, Burkina Faso X X X X X X DABS, Nigeria X TOTAL

17 Geographically well-spread supplier base with 20 UNICEF LTA and LLTA holders on 4 continents, 17 in programme countries. More potential new LTA and LLTA holders coming up

18 MT RUTF: procurement by vendor type 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Apr-18 Grand Total Originator Franchisee Independent

19 MT RUTF: vendor by location 60,000 50,000 40,000 30,000 20,000 10, Africa Americas Asia Europe

20 Objective 1: Diverse supplier base with sufficient capacity to respond to demand, incl. emergency response Result: Global manufacturing capacity increased to >200,000 MT (theoretically up to 250,000 MT for all LNS products combined). This largely covers combined demand for all RUTF, RUSF, LNS-MQ and LNS-SQ of all procurement agencies and governments, leaving sufficient capacity to support growth in demand to meet WHA targets UNICEF procurement 35,844 31,991 35,419 34,793 54,260 estimated WFP procurement 22,100 27,302 22,696 48,113 50,292 estim. USAID donation to UNICEF + WFP 2,230 8,198 8,967 9,147 11,021 total UNICEF+WFP+USAID 60,174 67,491 67,082 92, ,572 others (max 20%) 15,043 16,873 16,771 23,013 28,893 Grand total 75,217 84,364 83, , ,465 estmated production capacity 142, , , , ,820 % of capacity utilized 53% 59% 58% 62% 70%

21 RUTF: evolution manufacturing capacity 250,000 UNICEF RUTF procurement + CIK versus RUF/LNS global production capacity (MT) 250,000 Non-programme countries 200, ,000 Programme countries 150, , , ,000 50,000 50, Europe Africa Americas Asia UNICEF procurement FFP donation

22 RUTF: production capacity (2017) RUTF production capacity per vendor category RUTF production capacity per vendor location 250, , , , , , , ,000 50,000 50,000 0 Franchisee Generic Patent Grand Total 0 Africa America Asia Europe Grand Total Capacity Capacity offered UNICEF Capacity Capacity offered UNICEF Actual and current capacity can be higher or lower than declared during last tender (early 2016) : Manufacturers not responding to tender Expansion and upgrades Temporary boost in capacity (e.g. extra shifts) Down time for expansions, upgrades, cleaning, quality problems Same capacity also used for production of other LNS products

23 USD per MT Objective 2: Market competition in order to obtain best value for money Result: further reduction in price: WAP reduced with 4% in , with 16.6% compared to ,400 4,200 Weighted Average Price for RUTF procured by UNICEF 4,000 3,800 3,600 MT Cartons 3,400 3,200 3, Apr-18 Cartons MT 3,773 3,931 4,136 3,884 3,781 3,755 3,611 3,595 3,692 3,279 3,246 3,147 3,215

24 USD RUTF: WAP off-shore vs local procurement WAP SD per carton WAP local per carton WAP general Apr-18 WAP SD per carton WAP local per carton WAP general

25 USD per carton RUTF: WAP of producers in programme versus nonprogramme countries Result: gap between narrows thanks to producers in programme countries becoming more competitive Non-progr Country Programme Country All Apr-18 Non-progr Country Programme Country All

26 USD per carton RUTF: WAP per vendor category Franchisee Independent Originator Apr-18 Franchisee Independent Originator

27 USD per carton RUTF: WAP per vendor location Africa Americas Europe Asia Apr-18 Africa Americas Europe Asia

28 Pricedataoverviewforvaccines/Fulldashboard

30 Objective 3: Assurance of quality in line with set international standards

31 Objective 4: Support OMP objective to source 50% of RUTF from manufacturers located in programme countries by 2017 Result: objective reached and maintained 100% 90% 6% 10% 4% 27% 80% 39% 37% 38% 39% 39% 70% 53% 56% 55% 59% 60% 50% 40% 94% 90% 96% 73% 30% 61% 63% 62% 61% 61% 20% 47% 44% 45% 41% 10% 0% Apr-18 Non-progr Country Programme Country

32 UNICEF/SUDA2014-XX228/Noorani Thank You 32

Market Update for key Nutrition Commodities

Nutrition Supplier Meeting 14-16 June 2017, Copenhagen Market Update for key Nutrition Commodities Jan Debyser Contracts Manager Nutrition Medicines and Nutrition Center UNICEF Supply Division UNICEF/UN043566/Lister