The Blog of Dato' Dr Anuar – Page 12 – Insights of breakthrough innovations

December 8, 2018

Plant-based Meat: Taste like Real Meat

Introduction

Beyond Meat Inc., a company producing plant-based meat has submitted an application for an initial public offering (IPO) in the US. We have reviewed its prospectus and noted what makes Beyond Meat burger unique.

Plant-based burger produced by Beyond Meat Inc.

Overview

Beyond Meat is one the fastest growing food companies in the US, offering a portfolio of revolutionary plant-based meat. It builds meat directly from plant, an innovation that enables consumers to experience the taste, texture and other sensory attributes of popular animal-based products while enjoying the nutritional benefits of eating plant-based meat products.

Its products are designed to appeal to a broad range of customers, including those who typically eat animal-based meat, which is worth US$1.4 trillion globally. According to the company, it had developed three plant-based product platforms that align with the largest meat categories: beef, pork and poultry. It creates plant-based products using proprietary scientific processes that determine the architecture of the animal-based meat the company seeks to replicate and then assemble it using plant-derived amino acids, lipids, trace minerals and water. The company is focusing to improve its products so that they are, to the human sensory system, indistinguishable from their animal-based counterparts.

Its flagship product is The Beyond Burger, the world’s first 100 per cent plant –based burger merchandised in the meat case of US grocery stores. The Beyond Burger is designed to look, cook and taste like traditional ground beef. The products are currently available is about 28,000 points of distribution primarily in the US as well as several other countries.

Unique Approach to market its Products

Instead of marketing and merchandising The Beyond Burger to vegans and vegetarians (who represent less than 5 per cent of the US population), it requests that its products to be sold in the meat case at grocery stores where meat-loving customers are accustomed to shopping for their proteins. The marketing approach has helped drive greater brand awareness with its customers.

The Beyond Burger is now carried by approximately 11,000 grocery stores in the US. Its products are also now carried by 11,000 restaurants.

The Market for Meat

The company notes that the meat industry is large and global. This meat industry is comprised of fresh and packaged animal-based meat for human consumption. According to data from Fitch Solution Macro Research, the meat industry is the largest category in food and in 2017 generated estimated sales across retail and foodservice channels of about US$270 billion in the US and about US$1,400 million globally.

The company believes that consumer awareness of the perceived negative health, environmental and animal-welfare impacts of animal-based consumption has resulted in a surge in demand for viable plant-based protein alternatives. In the US, the current size of the non-dairy milk category is equivalent to approximately 13 per cent of the size of the milk category. According to Mintel report, the non-dairy milk category in the US was estimated to be US$2.0 million in 2017. The success of the plant-based dairy industry was based on a strategy of creating plant-based dairy products that tasted better than previous non-dairy substitutes, packaged and merchandised adjacent to their dairy equivalent.

The company is applying the same strategy to the plant-based meat category. It expects to grow to be at least the same proportion of the approximately US$ 270 billion meat category in the US, which over time would represent a category size of US$35 billion in the US.

Financials

The company reported that it had experienced net losses since its inception in 2009. In the years ended December 31^st, 2016 and 2017, it incurred net losses of US$25.1 million and US$30.4 million, respectively. In the same period, the company recorded revenue of US$16.18 million in 2016 and US$32.58 million, respectively.

The company would be raising additional capital through an IPO.

Conclusion

We support the efforts of the company to develop plant-based meat that tastes better than the meat from animals. The new wealthy consumers in Malaysia, China and Indonesia (with the exception of India) are consuming more meat steaks and burgers, which are imported from Australia, Brazil and the US. This need to supply more animal meat is putting pressure on existing pastures and grasslands for rearing of cattle. Scientists have reported that the raising of cattle for meat and milk would lead to emission of methane to the atmosphere.

We hope in the near future, patrons in high-end restaurants in Asia would be eating plant-based meat without realizing it.

Quick Data on Cattle Inventory

Based on data published by http://beef2live.com, according to the FAO, the world has 1,468 million head of cattle. Brazil has the largest cattle inventory at 211. 76 million, followed by India with 189 million, China with 113.5 million, the US with 89.3 million, Ethiopia at 54 million, Argentina with 51.1 million and Sudan with 41.9 million. About 104 countries have a cattle inventory in excess of 1 million heads.

November 24, 2018

Mining the Deep Sea Bed to Drive the Electric Car Revolution

Patania II, owned by Dede of Belgium

Introduction

Today we noted two contrasting developments, 1) the price of Brent crude oil had fallen below US$60 per barrel, and 2) a company will start deep sea mining of precious metals.

In the 1980’s I worked as a refining planning engineer in ESSO’s refining unit in Port Dickson, Malaysia. During that time, as a refining planning engineer, I was tasked on production planning to refine Tapis crude, which was pumped from oil platforms located offshore in South China Sea.

Like crude oil before, precious metals used to make batteries for electric vehicles will also be mined from sea beds. According to a report in The Times London, Patania II, a 25-tonne robot tractor, will spearhead the latest push to mine precious metals from the ocean floor. Patania II would be lowered 4,500 metres to the Pacific Ocean sea bed between Mexico and Hawaii in April 2019. It will gather nodules of rock on the ocean floor that contain high concentrations of metals used in electric car batteries and renewable energy systems. The companies which are racing to mine the ocean floors are hoping to recover manganese, molybdenum, cobalt, nickel and vanadium. The companies contend that their deep sea mining operations would cause less environmental damage than producing the same mount on land by drilling and blasting millions of tonnes of rocks.

Britain is one of several countries sponsoring sea-bed mining companies that have obtained licenses from the International Seabed Authority (ISA), based in Jamaica, to explore the Clarion Clipperton Zone, an area in the Pacific Ocean covering about six million sq km. This area is thought to hold more of the metals being targeted than all terrestrial metal reserves (see our earlier blog). Access to its mineral reserves is controlled by the ISA because it is beyond the jurisdiction of any nation.

Chris Williams, the managing director of UK Sea Bed Resources, owned by Lockheed Martin of the US, said that his company planned to mine about 9,000 sq km of the zone. “Sea bed mining will form an essential path to the future supply of precious metals for electric vehicles,” he said.

The ISA, however, needs to agree a mining code with environmental safeguards before extraction can begin. A draft has been produced to be agreed in 2020 but some of the ISA’s 168 members have a vested interest in delaying progress to protect their land-based mines from cheaper sea-bed minerals.

Environmental Concerns of Sea-Bed Mining

The mining companies need to complete environmental impact assessments before starting extraction. The pilot operation of the Patania II, owned by Global Sea Mineral Resources (GSR), a subsidiary of the Belgian dredging company Dede, will leave nodules on the sea bed. A research vessel with 50 scientists on board, funded by EU, will study the impact. It is estimated that each nodule typically weighs about 1 kg and contains several different metals, meaning one sea-bed mine could deliver as many commodities as two or three land-based mines.

Polymetallic nodules containing several metals

The industry argues that sea-bed mining would reduce reliance on countries such as DRC, which produces most of the world’s cobalt for batteries.

Michael Lodge, the ISA’s British secretary-general, said that commercial extraction could start in 2023 but that depended on whether investors considered it as commercially viable. He added that some damage is inevitable but sea-bed mining was “the most highly regulated activity that’s never taken place”.

Watch out DRC on future development of sea-bed mining!

Please click below on polymetallic nodules published by the ISA.

Polymetallic nodules

November 19, 2018November 26, 2018

Free eBook for Entrepreneurs: Increase Your Chance of Securing Fund from Investors

In 2010, we published a book, Securing Private Equity in Malaysia, as a guide for entrepreneurs on how to raise money from investors. We believe the book is still relevant today as it was in 2010.

In line with the forthcoming giving season, we want to make the ebook of the publication free to visitors of our website until December 31st, 2018.

Download the ebook by clicking below.

ebook Securing private equity in Malaysia

Yours sincerely,

Dato’ Dr Anuar Md Nor,

Founder/President, Bison Consulting

November 15, 2018November 15, 2018

Move over Saudi Arabia, Russia and Venezuela: New Energy Giants are going to be Australia, Chile and DRC

Background

We noted an interesting article by Roger Boyes in the London Times on November 14^th, 2018. He predicted that the push to produce electric cars worldwide would alter the dynamic of the existing energy-producing countries. The International Energy Agency has forecast that oil use by cars will peak in seven years because of the increasing number of drivers in emerging markets and Asia mega-cities. Then, electric vehicles will start to make a significant impact:300 million electric cars on the road by 2040. This will alter the energy value chain. The source of energy will shift from fossil fuel (crude oil) to mineral-based, namely lithium and cobalt to make powerful rechargeable batteries.

The Applications of Lithium

According to US Geological Survey, Mineral Commodity Summaries, January 2018 (The Report), global end-use markets of lithium are estimated as follow :

Batteries, 46 per cent
Ceramics and glass, 27 per cent,
Lubricating greases, 7 per cent,
Polymer production, 5 per cent,
Continuous casting mould flux powders, 4 per cent,
Air treatment, 2 per cent, and
Other uses, 9 per cent.

Prices of Lithium

The Report noted that spot lithium carbonate in China ranged from US$15,000 to US$24,000 per ton throughout 2017 owing to tight supply of spodumene from Australia. The rest of the world experienced more modest price increases owing to supplies available from more diversified sources of lithium. Spodumene is a pyroxene mineral consisting of lithium aluminium inosilicate, LiAl(SiO₃)₂, and is a source of lithium. It occurs as colourless to yellowish, purplish, or lilac kunzite, yellowish-green or emerald-green hiddenite, prismatic crystals, often of great size.

Three spodumene operations in Australia and two brine operations each in Argentina and Chile accounted for the majority of world lithium production. The table below shows mine production and reserves of lithium.

Countries	Mine production in 2017 (Tons)	Estimated reserves (Tons)
US	–	35,000
Argentina	5,500	2,000,000
Australia	18,700	2,700,000
Brazil	200	48,000
Chile	14,100	7,500,000
China	3,000	3,200,000
Portugal	400	60,000
Zimbabwe	1,000	23,000
World total (excluding US)	43,000	16,000,000

Source: The Report

Australia, the main supplier of spodumene

Chile, a major supplier of lithium from brine operations

Owing to continuing exploration, lithium resources have increased substantially worldwide and total more than 53 million tons.

Substitutes

Substitution for lithium compounds is possible in batteries, ceramics, greases, and manufactured glass.

The Applications of Cobalt

According to The Report, Democratic Republic of Congo (DRC) is the leading source of mineral cobalt, supplying more than one-half of world cobalt mine production. With the exception of production in Morocco and artisanally mined cobalt in DRC, most cobalt is mined as a by-product of copper or nickel. In 2017, average annual cobalt prices more than doubled, owing to strong demand from consumers, limited availability of cobalt on the spot market, and an increase in metal purchases by investors.

China is the world’s leading producer of refined cobalt. Much of China’s production was from ore and partially-refined cobalt imported from DRC. China is the world’s leading consumer of cobalt, with nearly 80 per cent of its consumption being used by the rechargeable battery industry.

The table below shows mine production and reserves of cobalt.

Countries	Mine production in 2017 (Tons)	Estimated reserve (Tons)
US	650	23,000
Australia	5,000	1,200,000
Canada	4,300	250,000
DRC	64,000	3,500,000
Cuba	4,200	500,000
Madagascar	3,800	150,000
New Caledonia	2,800	–
Papua New Guinea	3,200	51,000
Philippines	4,000	280,000
Russia	5,600	250,000
South Africa	2,500	29,000
Zambia	2,900	270,000
Other countries	5,900	560,000
World total	110,000	7,100,000

Source: The Report

DRC is the biggest producer of cobalt and having the biggest reserves

The Report noted that terrestrial cobalt resources are about 25 million tons. In addition, more than 125 million tons of cobalt resources have been identified in manganese nodules and crusts on the floor of the Atlantic, Indian and Pacific Oceans.

Substitutes

In some applications, substitution for cobalt would result in a loss in product performance.

Conclusion

The electric car revolution would increase the consumption of cobalt and lithium, and the reduction in the consumption of petrol from crude oil. These mean countries such as Australia, Argentina, Chile and DRC would be the new energy giants in the next decades. What would the existing energy giants such as Saudi Arabia, Russia and Venezuela do with their plentiful reserves of crude oil?

November 10, 2018November 13, 2018

Robots Making Robots

Factory Runs By Robots to Make Robots

Swiss robotics company ABB has revealed that it’s spending US$150 million to build an advanced robotics factory in Shanghai — one that will use robots to build robots. The company will rely on its YuMi single-arm robots, which it once used to conduct an orchestra, for small parts assembly. It also plans to make extensive use”of its SafeMove2 software in the facility, which it says will allow its YuMi models and other automated machines to safely work in close proximity with human employees.

ABB says its goal is to make the Shanghai facility the most advanced robotics factory in the world. It will even feature a Research and Development center to accelerate the firm’s work in artificial intelligence. In addition, it will widen the types and variants of robots the company can build for Chinese companies, including automakers and electronics manufacturers. China is ABB’s second biggest market after the United States, and the new factory could greatly expand its presence in the market. The company expects to open the 75,000-square-foot facility by late 2020.

The Status of World’s Robots Population

According to the International Federation of Robotics (IFR) 2018 Report, there are three types of robots;

Industrial Robots
Professional service robots, and
Personal/domestic services robots

The IFR 2018 reports noted key drivers for robots, and they include:

Shift to high mix/low volume production
Global competitiveness
Digitalization of manufacturing-Industry 4.0.
Growing consumer market
Energy efficiency-driven technology shift
Regionalized production

Industrial Robots

In 2017, China was the biggest supplier of industrial robots with 138,00 units followed by Japan at 46,000 units. The main customers of industrial robots are the automotive industry and the electrical and electronic industry. However, China was lower in the ranking in the number of installed robots per 10,000 employees in the manufacturing industry in 2017, as shown below:

	Country	Installed robots
1	Korea	710
2	Singapore	658
3	Germany	322
4	Japan	308
5	Sweden	240
6	Denmark	230
7	US	200
8	Taiwan	197
9	Belgium	192
10	Italy	190
11	Netherlands	172
12	Austria	167
13	Canada	161
14	Spain	157
15	Slovakia	151
16	Slovenia	144
17	Finland	139
18	France	137
19	Switzerland	129
20	Czech Republic	119
21	China	97

In 2017, there were 2,098,00 industrial robots in world’s factories as compared to 1,632,000 in 2015.

Professional Services Robots

According to IFR 2018 Report, there were sales of US$6.6 billion of professional service robots in 2017, representing 109,500 units. The main applications were in the logistics, medical, field and defence sectors. AGVs were used in factories, warehouses, logistics centres and hospitals. Medical robots are most valuable with 2,900 units representing sales of US$1.9 billion in 2017. Field robots are mainly milking robots.

Personal/Domestic Service Robots

Vacuuming and floor cleaning robots are mostly established personal/domestic robots. In 2017, there were 1,200,000 household robots and 400,000 entertainment and leisure robots.

Please find a snapshot of the robotic industry in the report below.

WR_Presentation_Industry_and_Service_Robots_18_Oct_2018

October 26, 2018

Vehicle-to-Grid: Electric Vehicles Supply Power to the Grid

Introduction

Every month, a meter reader, wearing light blue shirt, will be entering our house compound to read the electricity meter at our house. Then, he will drop the electric bill into our mailbox. This October’s bill reads RM294.

We dream of a day that we will receive a cheque from the meter reader instead of the monthly electricity bill. That day will be coming soon. On October 23rd, 2018, it was reported that an electric car Nissan Leaf, manufactured by Nissan, became the first electric vehicle (EV) to secure regulatory approval as an energy backstop for Germany’s electricity grid.

So-called vehicle-to-grid (V2G) technology is a connection between the EV and the electricity grid through which power (electricity) can flow from the grid to the vehicle and vice versa. That potentially enables car owners to sell electricity to the electricity network supplier. In addition, electricity network supplier companies could use EVs as a backstop if electricity demand rises.

The International Energy Agency estimates that there would be 280 million EVs by 2040 compared with more than 3 million in 2017.

Nissan is relying on the CHAdeMO charging standard, which had been jointly developed by several Japanese companies as a competitor to Tesla’s supercharger system and the European-backed combined charging system (CCS). That places Nissan at odds with European carmakers such as BMW and Volkswagen, which are promoting to have the CCS, which is capable of V2G services.

Nissan is ahead of its other competing technologies although Tesla’s supercharger can theoretically offer V2G services according to an industry expert.

Nissan has so far sold about 370,000 EVs and, along with top shareholder Renault, has been very active in exploring how car batteries can be integrated into the electricity supply system.

How Does V2G Technology Benefit Us?

According to ovoenergy.com, we are moving towards a situation where “two-way” chargers can enable homeowners with EVs to sell their power (electricity) back to the electricity network. It is a smart idea when over 90 per cent of cars are parked at any one time—which is a lot of energy just sitting there doing nothing.

Battery Degradation

Batteries have a finite number of charging cycles, as well as a shelf-life. Therefore, using an EV as grid storage can impact battery longevity. However, studies have shown that battery capacity is a complex function of factors, such as battery chemistry, charging and discharging rate, temperature, state of charge and age.

Most studies with slower discharge rates show only a few per cent of additional degradation.

Conclusion

We believe, with rapid progress in EV and V2G technology, our wish to have the meter reader drops a cheque into my mailbox for supplying power to the national electricity grid would be realized soon. First, we need to book a Nissan Leaf from our local Nissan dealer.

October 17, 2018

World Trade Report 2018: The Future of World Trade: How digital technologies are transforming global commerce

Introduction

The World Trade Report 2018 (The Report), published by World Trade Organization, examines how digital technologies are transforming global commerce. The Report describes four digital technologies, namely artificial intelligence, the Internet of Things , additive manufacturing (3D printing) and blockchain, which have been achievable by the exponential rise in computing power, bandwidth and digital information.

The key findings of The Report are:

Digital technologies are reshaping consumer habits by shifting purchases online through the widespread use of internet-enabled devices which provide consumers with direct access to online markets.
It is estimated that, in 2016, the value of e-commerce transactions totaled US$27.7 trillion, of which US$23.9 trillion was business-to-business e-commerce transactions.
Digital technologies allow for easier entry and increased product diversity, making it easier for firms to produce, promote and distribute their products at a lower cost.
Digital technologies give rise to opportunities and challenges that may require the consideration of governments and international community in areas as diverse as investment in digital infrastructure, human capital, trade policy and regulation.

The Report also highlights that new technologies are likely to change established trade patterns as the importance of traditional sources of comparative advantages changes and new sources emerge.

Internet of Things where all devices are connected

Digital economies are likely to reinforce the importance of skills and capital endowment, as they are capital-intensive and skill-intensive. Artificial intelligence, 3D printing and advanced robotics could reduce the role of labour as sources of comparative advantages.

Artificial intelligence where robots would replace workers in repetitive jobs

In contrast, physical infrastructure, border processes and geographical factors might become less relevant, which would benefit remote or landlocked economies, as well as economies with less-developed physical infrastructure and custom procedures.

Energy infrastructure will also become an important factor in defining comparative advantage in digital-intensive sectors, because the services that support digital technologies depend on storage devices, power supplies and cooling systems that consume vast amounts of energy.

3D printing would change manufacturing methods

Another factor that could become more important for trade patterns in the digital age is market size. Digital technologies benefit from access to large amounts of information, which may be advantageous to large developing countries like India, Indonesia and Nigeria.

With regard to institutions, the digitalization of trade may magnify their importance for comparative advantage, given that data privacy and intellectual property rights regulation rely on credible enforcement. However, new technologies may reduce the role of institutions for comparative advantage.

Blockchain will enable building of trust among participants

In addition, to these traditional sources of comparative advantage, new services will arise for trade digital-intensive products. The regulation of intellectual property rights, data flows and privacy are likely to be of particular importance, as well as the quality of digital infrastructure, since reliable and fast network access is becoming a necessity for conducting businesses.

Advantages and Opportunities

The advantages of digital technologies bring about opportunities and challenges for developing and developed countries alike. For instance, as digitalization increases the complexity of tasks performed by workers, developed economies may strengthen their competitive advantage in skill-intensive sectors. However, as new technologies diminish the importance of physical infrastructure, developing countries may also gain competitive advantage in the sectors most affected by the shift from physical to digitalization of trade.

Malaysian assembly workers would lose their relevance in 3D pervasive environment

For a country like Malaysia, which depends on labour-intensive export manufacturing sectors, 3D printing, in the long run, may substitute for traditional manufacturing methods, such as assembly of products. It would reduce the need for outsourced production and assembly, the number of production steps, and the need for inventory, warehousing, distribution, retail centres and packaging.

Value chain in a world of pervasive 3D printing may not only become shorter—with the emergence of production centres near every large customer base or near centre of innovation—but they might also look very different, being mostly based on cross-border exchange of data, in the forms of designs, blueprints and software, rather than on exchange of cross-border of materials services.

The Report is a must-read for business leaders and officials of government. The Report is enclosed below.

World Trade Report 2018

October 13, 2018

Niklas Zennstrom and Janus Friis: Thanking You for Skype that Makes Parents Less Stressful

Making Overseas Call Then

In early 2000, my son was accepted to study at Rhode Island School of Design (RISD) in the US. Being my wife’s boy, she wanted to talk to him regularly on the phone. We would call the local telephone operator and she got him connected to us. Then the magic word, do you accept reverse call? My wife’s conversation was short as it was expensive to have long distance call conversation. Telephone companies were making huge profits from long-distance calls.

Later, with the internet, making long distance call was a bit less expensive. However, we needed to go to a telecommunication shop called “wartel” to use internet telephony to make long-distance calls. The “wartel” was always full with Indonesians, Filipinos, Bangladeshis and locals who would talk to their friends for hours for a fixed hourly charge. Gradually, the “wartel” closed down for lack of business due to the introduction of Skype. People could make long distance call on their computers and notebooks for free.

My wife was one of the happiest mothers as she could talk regularly and freely with our daughter, who was studying at the Australian National University in Canberra, Australia.

Thank You Niklas Zennstrom and Janus Friis for Skype

Swedish Niklas Zenntrom and co-founder Dane Janus Friis are now billionaires who sold Skype to eBay Inc. for US$2.6 billion in 2005. Skype is a telecommunications application software product that specializes in providing video chat and voice calls between computers, tablets, mobile devices and others via the internet. Skype implements a freemium business model. Much of the service is free. Now Skype, part of Microsoft Corporation, has millions of users. Skype was first released in August 2003.

Quotes by Niklas Zennstrom:

“The telephone is a 100-year-old technology. It’s time for a change. Charging for phone calls is something you did last century

If you could utilize the resources of the end users’ computers, you could do things much more efficiently.”

In an interview with The Times of London on September 30^th, 2018, Niklas Zennstrom outlined his current activities. Skype was considered as one of the most successful technology businesses that emerged from Europe. Since starting Skype in 2003, Niklas Zennstrom has been in a mission to prove world –beating technologies can be started in Europe.

In 2017, his venture fund, Atomico (atomico.com), raised a US$765 million technology fund. The technology fund’s successful investments include Rovio, the creator of the Angry Birds games franchise from Finland, Clash of Clans Supercell and The Climate Corporation.

We hope Niklas Zennstrom will invest in new technologies that would have similar benefits and simplify the lives of parents like Skype did for us.

October 5, 2018October 5, 2018

Advisory and Consulting Services in Distributed Ledger Technology (DLT)

Our consulting company, bison consulting, are entering into a partnership with Blockon Group, blockon.biz, a global Blockchain services company, to offer:

Advisory, consulting and compliance for blockchain
Initial coin offerings (ICOs)
Cryptocurrencies
Blockchain
Token
Training in DLT (Distributed Ledger Technology) and its applications in organizations
Certification in DLT (MBA focusing in DLT) with Asia e University

Please call us at 6016 3220 952 or mail us at datodranuar@gmail.com if you are interested for a briefing on applications of DLT in your organization.

Book your place in our DLT class in November 2018, to be held at Asia e University, Subang Jaya, Selangor, Malaysia.

October 1, 2018

The Business of Cochlear Implantation

Cochlear implants for hearing loss in infants

Introduction

Previously, we wrote an article on the development of cochlear implant. This article will cover the business of cochlear implantation.

Market research company, Grand View Research, estimated that the cochlear implantation market was worth US$1.1 billion in 2015. As a medical device, with cochlear implant, a person can achieve better sentence understanding as compared to hearing aids. At present, cochlear implants are the only effective means of allowing the social interactions of individuals suffering from hearing loss. The first cochlear implant was approved by FDA of the US in 1984, which was made by 3M Corporation, the then market leader.

Increasing incidence of neonates (new born child) born with hearing defects is driving the market for cochlear implant systems. According to World Health Organization (WHO) hearing loss statistics, each year, approximately, 134 million children are born, out of which approximately 1 to 3 newly- born per 1,000 are with learning loss, which is treatable only with cochlear implant. Thus, there is a need for a minimum of 134,000 cochlear implants annually. The number of cochlear implants is likely to increase to approximately 160,000 per year if the hearing loss is considered for both ears.

Apart from the rising number of patients suffering from hearing loss, technological advancements, strategic initiatives by industry players, and favourable government regulations are driving the growth of the global cochlear implant systems market in 2016. For instance, in 1979, the University of Melbourne and Nucleus Limited got approval from the Australian Department of Productivity to manufacture and market 22 cochlear implants. In another event, the National Institutes of Health (NIH) of the US, funded the first consensus conference to speed up the acceptance of multi-electrode cochlear implants. Market players are focused on the development of devices with reduced noise, quickly chargeable, long battery life, and waterproof. According to the World Health Organization (WHO), the current production of hearing loss aids is only 10 per cent of the actual need. Thus, there is a lucrative opportunity for new companies to enter the global cochlear implant systems market.

The global cochlear implant systems market has been segmented based on type of fitting, end-user, and region. Based on type of fitting, the market is segmented into unilateral implantation and bilateral implantation. The unilateral implantation segment dominates the global cochlear implant systems market owing to low cost. Unilateral implantation is common in adults. The bilateral implantation segment is expected to expand at a fast growth in future owing to rising demand for cochlear implants by pediatric patients suffering from hearing loss. Moreover, several countries are offering reimbursement only for bilateral implantation contributing to the growth of the segment. In terms of end-user, the market is segmented into hospitals, ENT clinics, and other end-users. The ENT clinics segment dominates the global cochlear implant systems market in 2016, owing to increasing patient population suffering from hearing loss, and growing patient preference towards treatment in ENT clinics in emerging countries. According to WHO estimates in 2012, out of the total worldwide population with hearing impairment, 91 per cent were adults and 9 per cent were children.

Geographically, the global cochlear implant systems market is distributed over North America, Europe, Latin America, Asia Pacific, and Middle East and Africa. Asia Pacific region is expected to dominate the global cochlear implant systems market owing to the high prevalence of hearing defects in the region. Middle East and Africa region is expected to account for the second largest share in 2016. This is attributable to the highest incidence of otitis media, ear infections owing to lack of proper hygiene practices, and increasing pregnancy and genetic complications leading to hearing loss in neonates. Europe is the next largest market for cochlear implants owing to increasing geriatric population.

Competitive Market Share

Cochlear implant systems industry is consolidated with presence of few players such as Cochlear Limited (Nucleus), Sonova, William Demant and MED-EL. According to market research company, Global Market Insights, Inc., the manufacturers are engaged in rigorous research and development activities aimed at improving hearing outcomes and expanding indications for these solutions. The industry participants employ strategies such as collaboration, acquisition, new product development and expansion of manufacturing capacity for increasing their market presence.

Cochlear Limited, the market leader

Early pioneer in implants

A key participant in cochlear implants

Business Performance of Key Participants

We have analysed the annual report of Cochlear Limited, which is the global leader in implantable hearing solutions with products including cochlear implant, bone conduction implants and acoustic implants. Cochlear Limited commenced its operation in 1981 as the Nucleus Group and in 1995 listed on the Australian Stock Exchange (ASX). It is based on the campus of Macquarie University in Melbourne, Australia. The company estimates that more than 450,000 recipients have been implanted with one of its implants.

The company invested more than A$150 million each year in research and development activities and currently participated in more than 100 collaborative research activities. Its 2017 financial performance is highlighted below:

Cochlear implants	32,552
Sales revenue	A$ million
Cochlear implants	767.781
Services (sound processor, upgrades and accessories)	305.589
Acoustics (bone conduction and acoustic implants)	166.363
Total	1,239.733