According to a panel of experts that convened at the recent Future Food Asia 2024 conference, short of obtaining fully independent financing or immediate scale up, in the near future this is the most obvious way forward due to the industry’s reliance on external investors.
The panel was comprised of Fermbox Bio Founder Subramani Ramachandrappa, All G Foods CEO and Founder Jan Pacas, Cauldron Head of Operations Saurabh Das and Novonesis Head of Technical Services SEA Dr Yit Yang Voon. The session was chaired by GFIC Innovation Lead Viola Chen.
Much of the discussion was centred on the topic of how various parties from the investors to the biomanufacturing firms, such as those involved in cultivated and precision fermentation, are looking to minimise the amount of risk taken on amidst the journey towards creating this sector of the alternative protein industry,
“To be realistic, the biomanufacturing industry is likely to need around at least five to 10 years more before it can hit the price points required to make a real impact in terms of reaching the masses as a protein product source – and in the meantime, there is the issue of financing and investments and all of that [to keep afloat],” Pacas told the floor.
“Everyone talks about how Elon Musk built this hugely successful brand in this amount of time – but rarely do they discuss how he burned some US$4bn along the way to this success.
“The biggest challenge and risk is of course building infrastructure as this would need a good percentage of ROI to be viable, and for any company it is the first three years that are the most key in terms of stabilising manufacturing and production and getting yields out – and it is in this time that financing is the most key too.
“Securing this financing comes with its own set of challenges as well, because we could go to Woolworths and have a great discussion and they say okay we want you to make 10 million litres of cultivated dairy milk so we can supply our stores, show us that you have the facilities etc – but we go to the financers with this to build the plant, and they say show us the contract with the retailer before we agree to finance you to build this.
“So there is a lot of focus on de-risking on each side, which is definitely a hurdle and the reason we need to find ways to make a turnover in the interim towards scale-up such as the production of premium, high-value products.”
All G Foods was initially established as a cultivated dairy and cheese company, but more recently announced it would be focusing on the production of lactoferrin initially instead.
Dr Voon concurred that this is the most obvious route at present as the challenge of obtaining investment has become even tougher in recent years.
“Investors want results so there is a need to really achieve and show that viable output as well as the hard evidence of yields – but in a process such as purification this can be long and costly so results may not always be available as quickly as hoped,” she said.
Collaboration the way forward
Das however believes that a collaborative approach may be able to reduce the need for biomanufacturing firms to pivot away from their original strategies, and that there is a lot of room for governments to step in to help the industry.
“We know that the funds that were available to the market in 2023 are no longer that flexible and available in 2024, so the important thing here is for companies to be much more capital efficient,” he added.
“This could also be seen as a sort of opportunity, as this environment forces the industry towards efficiency and even better application of the knowledge that is currently available so that progress is accelerated.
“At the same time, one thing that definitely needs more improvement is in terms of government support – even if the financial support provided here is more transient and in smaller amounts, it is the positioning that is the most important.”
Ramachandrappa further pushed for collaboration to be more unified in the sector, and for firms to move away from individual bits of progress.
“Right now what is happening is that biomanufacturing plants are being built in silos, so different challenges are being solved separately and it’s all basically different people trying to stitch the sector together from different parts,” he said.
“This is not a cohesive or efficient way to work, and in fact if more of us can work together, it would be much better derisking for investors.”
That said, Pacas believes that the solution is not quite so simple.
“The biggest challenge in terms of commercialisation is transitioning into pricing a product – and here there can be no doubt that there will be a lot of selfish motivations to work with when it comes to money,” he said.
“So if we put two different proteins on the table – one common one which can get X profit, and another high value one which can get 2X profit – the reality will hit when deciding which choice is the better one for the company.
“We know that lactoferrin is a better seller even though it ostensibly does zero for the planet, but to decide to insist on making the mainstream product, even if producing at large volumes, the risk from a financial perspective is larger too.
“As such from a finance angle, it still makes more sense to choose the option that can make the profits first, based on the reality we are in, and any investor will choose to say that based on the risk involved as well.”
