COVID-19 pandemic is still sweeping through the world, though many countries are opening up commercial activities with caution after a lockdown period of several weeks. Testing, tracking, and tracing (TTT) strategy is being widely adopted across the world for restarting economic activities. Hence, the demand for COVID-19 testing is expected to go further up in the coming months.
Diagnostic companies are at the forefront in assisting governments to meet the rising demand for testing in their countries. The companies emerging as key suppliers of COVID-19 testing include many small in vitro diagnostic (IVD) companies based in the APAC region.
ADT Biotech, headquartered in Kuala Lumpur, Malaysia, is one of the key suppliers of PCR-based molecular diagnostic tests for COVID-19 in the Asia Pacific (APAC) region. We talked with Dr. Finn Zedler, Managing Director of ADT Biotech, about the emerging market trends in this field and how market players like ADT Biotech are planning to navigate through this uncertain terrain while offering active support to the governments in the region.
AcuBiz: Please give an overview of ADT Biotech’s activities in the IVD market
Dr. Finn Zedler: ADT Biotech was incorporated in 2010 in Malaysia with a focus on bringing innovative diagnostic tests and procedures to the healthcare markets in the APAC region. In Malaysia, we have received the coveted BioNexus status, which is conferred by the Malaysian Bioeconomy Development Corporation, an agency under the purview of the Ministry of Agriculture and Food Industries.
We established our subsidiary company in New Delhi, India in 2013. In 2017, we established ADT Korea in Seoul and SDT Molecular in Singapore. In addition to these key APAC markets, we are working through distributors and partners in many other markets in the region.
AcuBiz: What are the products ADT Biotech is offering for COVID-19 testing? Are you able to meet the demand?
Dr. Finn Zedler: We offer Real-Time PCR-based tests targeting E and RdRP genes of SARS-CoV-2. We follow WHO guidelines for a broader screening assay and a highly specific confirmation assay. Our LyteStar 2019-nCoV RT-PCR Kit targets the E-gene of SARS-related Coronaviruses for the screening assay and the RdRP-gene, which is SARS-CoV-2 specific, for the confirmation assay. We also offer the LyteStar SARS-CoV-2 RT-PCR Kit S separately as a screening assay targeting only the E gene. This offers flexible testing algorithms and allows the best utilization of reagents and resources for service providers.
We have been struggling to meet demand at the onset, due to various reasons including supply and logistics issues for raw materials. All critical components for our products are imported as Malaysia doesn’t currently have the capabilities. Suppliers in Europe, the US, and Korea have been overwhelmed by the sudden global increase in demand, and the cancellation of flights and shutting down borders had a strong impact on established supply chains, resulting in long delays and significantly increased cost.
We also had to adjust internally to meet demand and have recruited new staff and have automated large parts of our manufacturing process.
AcuBiz: What are the main trends you are observing in this emerging market segment?
Dr. Finn Zedler: I first came to Asia about a year before the SARS pandemic in 2002/2003 and spent most my time educating labs about molecular diagnostics (MDx) and the power of real-time PCR (qPCR). Most labs here had no concept of MDx and qPCR. The SARS pandemic 2003 was a real game-changer and a wake-up call for many, but not all countries in the region. In most countries, it was very rapidly understood that MDx is the only way to identify carriers rapidly and sensitively, which is a fundamental requirement to control the outbreak by isolating carriers and treating patients, in many cases even before they display symptoms.
After the value of MDx had been demonstrated and understood by the labs, the clinicians, and the policy makers, qPCR was established rapidly in most countries and capabilities and capacities built accordingly. At the same time the markets adopted the technology, the suppliers also saw MDx as a new high-value growth opportunity, and all large Life Science and Diagnostics companies developed or acquired a portfolio of MDx products. As a result not only countries like Singapore, Malaysia, China, Taiwan that were hit by SARS to various degrees in 2002/2003 but also markets like Korea, which was not affected by SARS, understood the importance of molecular tests and took action to develop capabilities. Their preparedness and capabilities for molecular testing – in terms of skilled manpower, infrastructure, and political will, are quite evident during this SARS-CoV-2 pandemic.
In line with this mega-trend of implementing MDx in the healthcare systems over the past about 20 years, I am observing now that those countries that have been slow to adopt MDx earlier and on a larger scale, maybe because they were spared by SARS in 2002/2003, are now realizing the need to develop MDx infrastructure and capabilities and we see new labs being planned and commissioned is some places. These countries are now going through the same learning curve their neighbors went through almost 2 decades ago.
But a more significant and recent development is the localization of MDx in the markets and the emergence of Asian companies on the global markets. The building of capabilities did not stop at the service level, i.e. the labs, but also fostered the growth of local industries, most obvious in China and Korea. As much as China already produced MDx products for its domestic market for many years and made market access very hard for any imported product, Korea developed national biotech champions that have successfully captured significant market share also outside Korea on the global markets. It seems to me both countries are also learning from each other and China over the past few years is aggressively targeting market access and market share outside China, while Korea has raised the regulatory barriers for market access in Korea, making a KFDA approval one of the most stringently regulated and most difficult to obtain market authorizations. As a result, both countries rely exclusively on their domestic products for COVID-19 tests and have built the capacity and sales channels to export their products globally. The exclusive reliance on home-grown capabilities doesn’t stop at these two examples. We see a very similar situation in Taiwan and Vietnam, and in India, we see the rise of many smaller local players aggressively competing for market share domestically. We may see some consolidation here in the future and a stronger player targeting the global markets too.
With regard to the demand for COVID-19 tests, most Southeast Asian countries seem to have reached a plateau, probably since these countries responded fast and organized early and are now ahead of the pandemic with relatively low new infection rates. It’s probably anybody’s guess how the gradual end of the lockdowns all over the world is going to affect the number of new cases, but I guess it’s fair to assume numbers will go up again to a certain extend. We currently see in Beijing that we never have 100% control over the situation. So, I anticipate the number of tests to remain stable for the foreseeable future in countries like Singapore, Malaysia, Thailand.
In India, on the other hand, the demand is expected to increase significantly in the coming months. More than 20 suppliers are already active in the Indian market. The country has become a major focus currently for many COVID-19 test suppliers since domestic supply in India is not able to meet the rising demand, although government tenders give preference to locally manufactured products. Large scale tenders are being called by the Indian Council of Medical Research (ICMR) for the central government as well as many additional tenders by the states. Even though India took early action and implemented stringent lockdown measures, organizing and implementing social distancing measures to the extent of Malaysia or Singapore is not possible for India due to a large population, socioeconomic factors, and infrastructure challenges. The same is true also for Pakistan and Bangladesh and at least partially for some SEA nations like the Philippines and Indonesia.
From a supply point of view, China and South Korea have emerged as the leading suppliers of COVID-19 tests. As mentioned above, local companies here capture the entire domestic markets respectively, and are among the main suppliers of tests in the remaining Asian markets. Back in March, we learned at that time 64 companies had applied for an Emergency Use authorization in South Korea. Companies in these countries have scaled up their supply and are able to get significant business from other countries after meeting their local demand.
In terms of demand, there has been a fast increase in molecular testing capacity in many APAC markets due to the COVID-19 pandemic. Existing labs are upgraded with new equipment and lab automation, and new labs capable of offering molecular diagnostics services are coming up, specifically in markets that have been slow to adopt MDx in the past.
AcuBiz: There is a growing demand in developed markets in Europe and North America for COVID-19 tests and many APAC companies are responding. Which are the countries you are focusing on currently and in the near future for your COVID-19 tests?
Dr. Finn Zedler: We took a decision to develop our own PCR tests for COVID-19 at a very early stage, in January 2020. At that time, China was the only country that was affected and seemingly there was no concern about the emergence of a global pandemic in Europe and ADT’s European principals had no plans to develop products in this space. This has changed dramatically and many European manufactures have responded to the need.
Our mission has always been to provide innovative diagnostic tests to the Asia Pacific markets. As such, also our strategy for COVID-19 tests is to focus on the APAC region and we have launched our tests first in our home country Malaysia in March this year. We play a key role in the Malaysian market and supply tests to the Ministry of Health (MOH), government, and university hospitals as well as the private sector here.
In terms of expansion, Europe is not an immediate priority but our immediate action plan is to focus on the markets where we already have a good presence – either directly or through distribution partners – and build on the new opportunity. Having said that, we need to carefully and realistically evaluate opportunities also in our existing markets and focus our activities. As mentioned earlier, markets like China, Korea, Vietnam have built their own capabilities and have sufficient capacity to meet the local demand and, furthermore, have more or less successfully managed the pandemic within their borders already, so it wouldn’t be wise to expect we could capture significant market share for our COVID-19 tests here.
With the rapidly rising infection rates in India that outpace local supplier’s capacity and our long direct presence here, India is naturally becoming a major focus for us. The competition is high in India though, since many suppliers from Korea, China, and Europe are also targeting the market in addition to a rising number of small and aggressive local players. About 20 companies are active in the Indian COVID-testing segment at present. The ICMR has already validated our tests, which are included in the ICMR list of validated and approved Real-Time PCR-based tests. We have also received an import license by the Central Drugs Standard Control Organisation (CDSCO) under D-G of Health Services, MoH & Family Welfare, in April 2020.
We have capabilities in other South Asian markets as well with established distribution partners in Pakistan, Bangladesh, and Sri Lanka. In the Middle East, we are exploring Iran, which is heavily hit by the pandemic.
AcuBiz: What are your views on the COVID-19 testing situation in Malaysia?
Dr. Finn Zedler: As I mentioned earlier, Malaysia was successful in controlling the pandemic by taking early actions. When we introduced our COVID-19 test to Bioeconomy Corporation and later to MOH in March this year, the response was very supportive and we were directed to the Institute for Medical Research (IMR) for evaluation of our product. IMR was very proactive and responded with urgency despite their already heavy workload and made time to validate our product within a few days. After a successful evaluation, we were invited by MOH for direct negotiation and were awarded a supply order. We used the South Korean policies adopting community-based COVID-19 screening as a positive case study and as a negative scenario predicted already the tremendous increase of cases in the US, mainly due to lack of tests, over-regulation by the US FDA (which rapidly changed its position after case numbers actually started to climb dramatically) and administrative complacency. Looking around the world, it is evident that Malaysia has done extremely well in controlling the pandemic within its borders. And we at ADT are happy we could contribute our part to this success story with a product that adds value to the front line.
The Malaysian government has recognized the importance of PCR tests already during the SARS pandemic in 2002/2003. This helped to take quick action by relying on PCR-based tests for confirmation of COVID-19 cases. There is a discussion in Malaysia and elsewhere on the introduction of so-called Rapid Tests for screening. The advantage of these tests is that results are typically available within 15 min and tests can be deployed in the field, whereas a PCR test takes about 4 hours to complete and is a laboratory-based test, as you need specific equipment to run the test, further delaying the time until results can be reported. However, Rapid Tests have significantly lower sensitivity and specificity than PCR tests with even the best Rapid Tests giving around 15% false-positive or false-negative results. So I am not sure how much these tests can help in managing the pandemic. Since COVID-19 is a respiratory disease and SARS-CoV-2, the virus causing the disease is transmitted very effectively from human to human and even asymptomatic carriers can effectively spread the infection, 15% of unidentified carriers make a critical difference and may render all measures taken on the basis of test results obtained from a Rapid Test useless or even counterproductive.
AcuBiz: What are your views about the demand for COVID-19 testing in the coming months in APAC?
Dr. Finn Zedler: Different countries are adopting different ways to manage the pandemic. Many countries have been able to control the pandemic through social distancing measures. I expect testing to continue for some time. We still know too little of this new virus but the opportunity has long been missed to contain it and eradicate it from the human population by stringent contact tracing and isolation like SARS in 2003. If at all this could have only been achieved during the first few days or maybe weeks of the ensuing pandemic while cases were still limited to Wuhan. My assumption is we will have to deal with it for some time and it may even stay with us like other, longer known human Coronaviruses or other respiratory viruses, similar to the recurring pandemics of Influenza for example.
Currently, there is a lot of talk about the development of vaccines, but realistically what is the promise? Even if we succeed to have a vaccine in 2021, what will be the effectiveness and what will we know about the protective immunity? There is no vaccine against HIV after more than 3 decades of focused and highly funded research because the virus mutates at very high rates, the vaccines against Influenza have in average about 70% effectiveness and need to be redeveloped for each new Flu season because the virus is reassorting and each Flu season a genetically different virus is emerging and circulating. The next question is once we have a vaccine with reasonable effectiveness, how long will a vaccinated person be protected? There are reports for MERS, another emerging Coronavirus, that protective immunity after having survived a MERS infection lasts only about 2 years.
We are still learning about SARS-CoV-2. It will probably stay with us for some time and annual or seasonal occurrences are possible, if not probable. So the testing demand is expected to grow and stay globally, including in the APAC region.