Germany’s va-Q-Tec stays cool as Covid vaccine demand heats up
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Keeping Covid-19 vaccines cold for transportation around the world has proved a technological challenge during the pandemic. But a small German company believes it has come up with the best solution.
Joachim Kuhn, chief executive of va-Q-Tec, says its super-insulated containers have been used to transport between a quarter and a half of the world’s coronavirus vaccine doses, generating a boom in orders that were already rising at 30 per cent a year.
Sitting in his office with a view of the terraced vineyards that surround va-Q-Tec’s headquarters in Würzburg (pictured above), north-west Bavaria, Kuhn says the pandemic has been a “game changer” for the company, prompting it to increase its factory workforce by 50 per cent, shift to nonstop production and expand into Asia. “We had to switch from five days a week to seven days a week, 24 hours,” he says. “It was a little challenging for our people here. We had to convince them to also come on Saturday and Sunday, even on night shifts.”
Thanks to their efforts, the company now has a factory piled high with rectangular silver panels of various sizes. They provide a form of vacuum insulation, and work much like the original Thermos flask that was itself patented by another German in 1904. The shiny panels are made by packing silica or similar substances into a multi-layered plastic film before baking it to remove water, then sucking out the air. When built into the walls of a container, such as the fridge-sized boxes va-Q-Tec makes to fit the cargo holds of aircraft, the panels keep the contents at a stable temperature for at least five days and up to two weeks without an external power source, even if they are opened.
Staff and visitors to its offices are offered suitably cold drinks from smaller versions of the boxes, which lie around many of its rooms. The company often shows off its technology by transporting blocks of ice to meetings with investors.
The requirement for coronavirus vaccines — such as those produced by BioNTech/Pfizer and Moderna — to be kept at temperatures of about -20C has underlined the need for technology such as that produced by va-Q-Tec. Cold storage and transport accounts for a large proportion of the cost of vaccination programmes and getting it right has proved difficult in the past. The global market for pharmaceutical cold-chain storage was valued at $13.3bn last year and was forecast to grow at 7 per cent annually even before the first Covid-19 vaccine was launched in late 2020, according to research group Imarc.
Kuhn clearly gets a kick when he sees vaccines being delivered in va-Q-Tec’s containers on television or on the internet. He brandishes his phone to show an email about such a delivery of vaccines from Japan to Brunei, adding that its boxes have been used by the US armed forces in the inoculation of troops at bases around the world.
As he expresses his delight at the company’s recent success, he reflects on how close it came to collapse only a few years after he and some fellow students of thermal insulation had founded it as a university spinout in 2001.
“We suffered everything you could have suffered,” he says, explaining that one of the three founders quit early on, then its first three customers collapsed, leaving it with few orders for its innovative insulation panels. “We were a little bit too early in the market,” Kuhn adds.
“There were situations where big orders we expected didn’t come — they were really tight situations,” he says, remembering how the company had only €2m of capital and was still located in a basement at ZAE Bayern (the Bavarian Centre for Applied Energy Research) in Würzburg. “And we were students, so we didn’t have a lot of money.” A lifeline came from Germany’s biotechnology industry, namely a deal with Boehringer Ingelheim. “They realised all of a sudden that this biotech product has to be shipped at very, very controlled temperatures,” Kuhn recalls. “Then we came in and started to play the game.”
A few years later, when the business had grown and needed to raise more funds, it turned not to German investors but to Zouk Capital, a UK cleantech fund. “There’s more vision in London,” Kuhn says. “That’s the main point, not the money.”
It soon became clear that many of va-Q-Tec’s customers would rather hire its containers than buy them. The company therefore changed its business model. Inspired by Swedish rival Envirotainer, which had long rented out what Kuhn calls “flying refrigerators” because they rely on battery power, va-Q-Tec started its own container rentals. It opened a UK office in Kent where a team manages its 8,000-strong fleet of containers and boxes. This “temperature chain as a service” generates about three-quarters of the company’s revenues, which are expected to total €100m this year.
The pharmaceutical sector has long been its main market, although its biggest customer is Dutch chipmaker ASML, which uses va-Q-Tec’s containers to transport the temperature-sensitive lenses used in its semiconductor-making machines.
When the pandemic hit last year, Kuhn says he did not see it as an opportunity, only as a source of problems. His “biggest headache” was how to keep production going while ensuring staff were safely distanced and tested. Orders for va-Q-Tec’s panels were hit as industrial customers closed their factories during lockdowns. Business with pharmaceutical groups also dropped initially as they cut back on other clinical trials to focus on Covid-19.
But, in April 2020, Kuhn received a call from his team in Seoul. It was good news. “A Korean company succeeded in making test kits on a large scale, and they needed to be shipped at -20C to lots of other countries,” he says. Va-Q-Tec won that order, as well as others for coronavirus test kits before they started to be made on a more local basis.
Demand for vaccine transportation started last October, as the jabs were stockpiled ahead of regulatory approval. In the first six months of this year, vaccine shipments soared, generating 13 per cent of va-Q-Tec’s revenues.
The company’s role in transporting coronavirus vaccines has raised its profile — Kuhn says he is sometimes asked about the company’s share price as he makes his way to the local bakery in Würzburg. The company now has four times as many shareholders as it did before the pandemic and its share price has trebled in less than two years, but Kuhn jokes that if it falls he may have to stop buying bread.
Roland Caps, co-founder of va-Q-Tec with Kuhn, recently retired as head of research and development, but his and Kuhn’s families still own 27 per cent of the company, which went public in 2016.
Kuhn predicts demand from pharmaceutical groups will continue to rise as they develop more drugs that are temperature-sensitive. In anticipation, va-Q-Tec is expanding rapidly, opening sites in China, India and Brazil and a new production hall at its site near the German city of Erfurt.
An even bigger opportunity could arise from efforts to tackle climate change, he predicts, requiring everything from buildings to cars to become more energy efficient.
Va-Q-Tec’s panels were chosen for the insulation of part of Frankfurt’s Grand Tower skyscraper that was completed last year and they are being used to boost the range of an electric car prototype.
“It has been fun,” Kuhn says, looking back on the past 20 years since the company was founded. “We are pleased to have done two things for mankind: by helping on both the climate and on healthcare. That makes us somehow proud.”
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