Review 2019: How unchecked ASF threat became apocalypse sow
Not often does an animal disease have such a devastating impact as African swine fever (ASF). While outbreaks began in 2018, it was only in the last year the animal health industry began to seriously react to the spread of ASF. Animal Pharm editor Joseph Harvey scrutinizes a year of dipping sales in China and research partnerships, as companies limber up for an R&D challenge of a lifetime.
It is not hyperbole to suggest ASF has become the biggest animal health problem of a generation.
The impact of the disease has brought the importance of animal health to a global audience due to its ability to have a direct macro-economic effect on global consumers and the wider agricultural sector.
While exact figures relaying the impact of ASF are hard to pin down, all statistics point to its clear devastation of China's pig meat sector. Rabobank estimates the disease has led to a 55% reduction in China's hog herd. This amounts to over 350 million pigs, which is more than the rest of the world produces.
Countries such as Brazil and the US have been upping their pig production to plug the gap in China's supply. In the latest quarter, the US pig herd came to 77.338 million head – up 3% year-on-year, according to the USDA.
However, while the number of regions and countries experiencing new outbreaks seemed to decline as 2019 wore on, the problems caused by ASF are not set to go away. Food prices are at a two-year high, as the need for protein is critically underlined.
The disease was confirmed for the first time in Vietnam, Cambodia, Hong Kong, North Korea, Laos, Myanmar, the Philippines, South Korea, Timor Leste and Indonesia during 2019, while Thailand is also braced for an ASF outbreak.
Slovakia and Serbia also witnessed their first incidences of the disease, while Germany is currently on high alert as ASF spreads in western Poland. Bulgaria claimed ASF could wipe out its entire pig population and suggested it could cost it over $1 billion in damages.
There have been varying reactions in relation to the spread of ASF. Denmark began building a wall along its border with Germany, while Australian farmers called on the country's government to carry out a cull of feral pigs.
An EU consultative body said the disease could lead to the collapse of the European pork market and a risk assessment from the European Food Safety Authority determined the serious potential for ASF to spread throughout south-eastern Europe.
Noel White – chief executive of Tyson Foods – stated: "This is an unusual, perhaps unprecedented, time for the protein industry. In my 39 years in the business, I've never seen an event that has the potential to change global protein production and consumption patterns as ASF does.
"I do think there is a distinct possibility it could come to the US. We need to be prepared for that. The situation is fluid and fast-moving but we are working with others in the industry, government agencies and producers to prepare in the event ASF spreads to North America."
Impact on revenues
Last year saw the drop in China's pig population start to hurt the top line of international animal health companies. Zoetis said ASF had an impact on its international livestock revenues and Boehringer Ingelheim Animal Health attributed flat first-half revenues to the ASF crisis.
Elanco's chief executive Jeff Simmons said ASF in Asia was the biggest headwind for the firm's sales in 2019.
"While we still believe there is opportunity for increased swine production from other markets and increased poultry and beef production to mitigate the swine loss in Asia, we do not believe there is a full offset in the near term for our business," he said. "The underlying demand for protein persists and we believe this bodes well for our longer-term recovery in China and across Asia, as well as the prospects for swine, poultry and to a lesser extent beef production globally."
ASF impacted Elanco's sales over the first nine months of the year, while the disease is predicted to reduce the company's full-year revenues by up to $35m. Around 3% of the company's turnover comes from China. Mr Simmons said the pressures from ASF will decline in the coming years.
The disease also hurt Phibro Animal Health's 2019 financials. The company expects the problem to get even worse in fiscal 2020 and forecasts a decline of around $40m in sales from its medicated feed additives business this fiscal year due to ASF in China.
As well as multinational companies, China's own animal health companies have felt the strain of ASF. The reduction in sales has been more acute for Chinese firms than their western counterparts – especially the businesses focused largely on the domestic pig market.
Development of a vaccine
Across 2019, Animal Pharm heard a varying amount of predictions for the gestation of an ASF vaccine. These ranged from a very optimistic one-year R&D timeline to a deeply conservative 30 years. The truth may lay at the more positive end of these two extremes, with consensus pointing to a timeline of around five years for a viable solution.
Phibro's chief executive Jack Bendheim suggested a commercial vaccine could still be more than five years away from fruition. Greg Ibach – UDSA undersecretary of marketing and regulatory programs – believes a reliable vaccine may take up to eight years to develop.
Many firms will be eyeing attenuated live, subunit or viral vector-based vaccines. However, Phibro is developing an epitope-based ASF vaccine "rather than following the more conventional path". The company believes this approach "would not only be an effective response to ASF but would result in a vaccine that presents no risk of further spreading the disease". Phibro will decide whether to carry on developing an ASF vaccine over the course of 2020.
Huvepharma became the latest business to licence technology from the USDA to aid development of an ASF vaccine. The USDA previously granted Zoetis an exclusive license to a pair of patents related to ASF vaccine development in 2018.
With ASF weighing heavy on China, it is no surprise domestic companies are scrambling for a preventative. Guangdong Highsun Group claimed it had an ASF vaccine ready for commercialization. No sooner had these comments been made, the Chinese government had refuted their veracity and a glimmer of hope had been extinguished.
This incident also highlighted the great emphasis some companies are placing on being the developer of the first commercial ASF vaccine. This could lead to many false claims before the actual market-first vaccine is realized.
Guggenheim Partners' David Westenberg stated: "We believe the world market has hit a point where pig producers' demand for a vaccine will be high enough that the producers of the vaccine will be able to charge a premium to all vaccines previously brought to market. Furthermore, given the devastation, we think regulators will be more accommodating to a vaccine."
Guggenheim estimated the market for an ASF vaccine could be spread between multiple companies and may be worth between $1bn and $2bn.
"Phibro has cited a higher estimate of $8bn for the Chinese market alone, based off of a $10 price on 800 million swine needing vaccinations in the country every year," Mr Westenberg noted. "We think this could be prohibitively expensive, not only for less developed countries but for the developed world as well. Given North America has never seen an ASF outbreak, it would be more of an insurance policy and a very expensive one at that, given an average pig carcass selling for ~$170 in the US."
Wherever the vaccine is sold and no matter the price, an ASF preventative will undoubtedly be a blockbuster product for more than one company.
Despite the many negative impacts of ASF, the disease has also had some positive bearing in the form of innovation.
Regarding development of an ASF vaccine, Zoetis' executive vice president and president of international operations Clint Lewis stated: "There's a saying that goes: 'If it was easy, it would already be done'. It's not easy, it's complicated. That timeframe is not going to be next year.
"With the challenge also comes positives. ASF has become the catalyst broadly for the industry, both in internal efforts and in external collaborations with academics and others to think about finding viable path forward."
There were numerous industry-led partnerships struck in 2019 with the aim of developing vaccines, diagnostics and other products in the fight against ASF.
While Boehringer began working with GNA Biosolutions to develop emergency veterinary diagnostics – a deal that includes a rapid ASF test – it was not just the sector's largest companies that were pairing up to accelerate ASF-related R&D.
Jeff Simmons: "Over the long run, this will likely improve animal husbandry practices in Asia and increase sophistication of farming practices – all of this is positive for the industry."
US firm Inovio Pharmaceuticals partnered with South Korea's Plumbline Life Sciences to develop an ASF vaccine. Spanish biotechnology firm Algenex and UK business Global DX signed a point-of-care diagnostics R&D agreement focused on ASF. Algenex is also working on an ASF vaccine.
Belgium's ViroVet harnessed the know-how of researchers at the UK's Pirbright Institute to start developing antiviral drugs against ASF.
ViroVet's chief executive and co-founder Erwin Blomsma told Animal Pharm: "We looked at ASF a few times about two or three years ago but there wasn't as much appetite then. Because of the immense outbreak we have seen in China, there was no way we could not resume the product. We currently have around seven or eight molecules that can block viral applications and stop transmission, thus stopping an outbreak from spreading."
Dr Blomsma anticipates a potential ASF vaccine to not be commercially ready for at least the next six to seven years. However, he did claim the company's antiviral against ASF could be on the market as an emergency product in 2020.
Neogen claimed its broad-spectrum disinfectant is effective against ASF, while Lanxess is evaluating the use of two of its livestock disinfectants against the disease. Notably, Indical Bioscience made a point-of-need ASF test available in Asia during 2019. Also last year, Chinese authorities approved Thermo Fisher Scientific's real-time PCR-based workflow to detect and monitor the spread of ASF.
Elsewhere, global governments and research centers have been stepping up their focus on ASF.
The US Department of Homeland Security's ASF Task Force highlighted its efforts to produce ASF vaccine candidates and potential diagnostic tests – claiming: "Our vaccine candidates are probably the most advanced in the world."
The USDA unveiled enhanced disease protection plans and issued a grant to establish a dialog with Asian countries tackling ASF, while the Foundation for Food and Agriculture Research and the National Pork Board awarded a grant to two US universities to study the ASF virus.
Also in the US, a study by Kansas State University noted contaminated feed may be a higher risk factor than previously thought in the transmission of ASF. Later on in 2019, K-State also suggested the ASF virus can survive for a long time in feed.
The Pirbright Institute is never far away from investigating animal health's greatest obstacles. In 2019, it unveiled the discovery of ASF virus proteins capable of triggering an immune response in pigs – something the organization believes could be used for the development of a vaccine.
Elsewhere in Europe, research from the VISAVET Centre at the University Complutense of Madrid claimed wild boars could be immunized against ASF through a new vaccine delivered in food.
Importantly, Chinese organizations also contributed to the latest ASF research. Researchers mapped the three-dimensional structure of the ASF virus – a move that could provide a foundation for the development of a vaccine.
Also in 2019, Vietnam's National University of Agriculture claimed it secured promising results in trials of an ASF vaccine.
Time to live with ASF
So, what of the future?
The latest Chinese government statistics suggest the country's pig sector is on the road to recovery. The Ministry of Agriculture and Rural Affairs said the nation's sow inventory rose 0.6% from September to October. However, the country's hog inventory levels were down 41.4% year-on-year in October 2019 – sow numbers declined 38.9% over the same period.
Rabobank forecast a rebound in Chinese production to occur at the start of 2021. However, it will take even longer for the country's pig sector to properly recover.
It could take between one-and-a-half and three-and-a-half years to rebuild the nation's pig herd, according to Piter Meyer of Brazilian pork exporter BRF. If the disease is quickly contained, he said the herd could recover within 18 months. However, if ASF is detected in grandparent stocks, recovery could take two-and-a-half years, or even three-and-a-half years if great-grandparent stocks are also affected.
China has a goal of returning pig production to 80% of normal levels by the end of 2020, which would be a remarkable turnaround if achieved.
Additionally, chicken meat production is rising rapidly in China to compensate for the loss of pig meat. New forecasts from the USDA's Foreign Agricultural Service suggest chicken meat production in China will increase by 18% in 2019 to reach 13.8 million tons. The country is also looking for alternative protein sources form the aquaculture market.
Elanco's Jeff Simmons remarked: "In the case of ASF, over the long run this will likely improve animal husbandry practices in Asia and increase sophistication of farming practices – all of this is positive for the industry and positive for Elanco."
As well as the search for an ASF vaccine, there have been other technological R&D benefits in the wake of ASF. Ian Lahiffe – commercial director at Antelliq – said livestock surveillance has now become even more crucial in China.
He noted: "ASF has made it difficult for companies to perform this kind of work with monitoring technology. While 50% of the world's pigs were in China and probably will be again in the future, it's only right China takes the lead in the smart pig farming space."
The Chinese government aims to help the country move away from backyard farming to production in large centralized facilities with over 1,000 pigs. Authorities have issued subsidies and loans to expand pig farms. Advances in technology can ensure less human interaction in the future and prevent the spread of diseases, with many new farms being built in China post-ASF "strongly considering" the adoption of digital monitoring systems.
Naturally, many lessons will need to be learned from the devastation of ASF. There is every chance a similar threat could be just around the corner, with the ability of animal diseases to result in severe repercussions continuously growing.
While human travel is increasing, the globalization of trade is prompting zoonotic hotspots to move and intensify. This means disease threats are being spread more frequently.
Ceva Santé Animale's Dr Michael Hemprich – the firm's senior director business development – said diseases on the scale of ASF not only require governmental co-operation but also the involvement of international bodies and a high level of public awareness.
He noted rabies is by far the animal disease with the biggest economic impact on the global economy. The last time the impact of rabies was calculated in 2013, the disease had cost the world approximately $124bn. He predicted ASF will eclipse this total cost and called on governments to reduce disease threat by funding companies and new ideas.
It is easy with hindsight to point out the flaws that led to the surge of ASF. However, it is important for the animal health industry to maintain the spirit of collaboration and innovation now being applied to the ASF crisis, and replicate it to target current diseases and any potential future threats.