Jamaalish - I haven't been on the board much longer than you, only since last fall.
My overall view is that wild caught omega oil supply is definitely sustainable for the next ten plus years. I don't consider it in short supply currently. Even in some future el nino years during the patent life, the price will adjust to meet heightened demand. Do I think 7.5 billion people have enough O-3 in their diets. No. So, in that sense I think there is a "shortage" in our diets because our O-3:O-6 ratios are so off. I also think the pace of ocean warming is accelerating and with it lots of changes for cold water species over some indeterminate epochal period.
If we only take the two countries where currently AMRN sources their anchovy/sardine oil from, in mt-
Year Peru + Chile Crude Oil Annual avail EPA estimate at 18%
2018 378,000 68,040
2017 218,000 39,240
2016 194,900 35,082
2015 206,200 37,116
2014 259,000 46,620
5 yr avg 251,220 45,220
You can compare your V patient # estimate for 2019 to the above and see that AMRN has a long way to go to use up these sources first before even tapping into other regions.
[# of Patients 2019] x 1460g = [(# of total grams demand) / 1,000,000 to convert to mt]
That said, there is only so much ultra refining capacity available for V - you can break this out like the below at 70% or use 65%, whatever, as refiners are probably always making incremental concentration gains. There are many ways to mix and match the various refining technologies as all the refining stages aren't usually carried out in one plant.
Distillate: >30-70%
Concentrate: 71-84%
Isolate: >85% (most limited refining capacity here at the top and V requires around 96+% purity and the ability to separate ALA, DPA & DHA from EPA since they stick together like birds of a feather)
Other than the GS analyst's low-ball, it seems most of the others have honed in on 8 to 10+ or so million peak patients per year as reasonable. That's supported by the amounts of crude fish oil from Peru and Chile alone. You could back calculate from their peak estimates to derive an inexact # for today's level of refining capacity. I'd expect that capacity to grow and maybe wall street analysts are using too conservative a % growth in capacity. Or maybe not, based on whatever their DD has turned up. I dunno!
Some of my other supply thoughts for when patient counts start soaring into the millions, 2021? and beyond (although some other Ihubbers disagree with me that there would ever be a scenario in which API prices would materially increase from AMRN's supply partners since they think any effects would be small...):
1) El nino years make things tricky from the volume contraction. Producers then gain more leverage to raise prices and push on other terms of sale. If the producers of the oil don't pay the fishermen enough then they will delay fishing or they will take their limited landings to a different plant who will pay more for the whole anchovies. El nino years can also push producers into bankruptcy which spurs more consolidation of the remaining survivors, which in turn, increases producer leverage with concentrating refiners. It also gives say Chile more power in negotiations if Peru is out of the equation.
2) Limited capacity or bottlenecks in manufacturing steps create leverage opportunities for suppliers in the supply chain. Suppliers and customers could actually have a more balanced relationship with neither dictating all the terms of sale, all of the time. To produce at the isolate level for pharma, well, V isn't a synthetic powdered drug where there may be hundreds of plants to choose from, because V is more niche and at least requires familiarity & equipment with natural liquid oils. I still think margin swings are possible in negotiations with key mid-concentrators or isolate refiners depending on prevailing market conditions once patient counts are in the millions. It's both a blessing and curse not owning their own plant. Mostly a blessing even with the extra challenges.
3) Direct customer involvement as a partner in the supply chain and increasing sales will allow for additional capacity investment. But, hard to peg how many months lead time for various capacity builds & the requisite audits, 16 months? Seems like AMRN has experience in this from back when they were prepping in 2012 for a 2013 launch.
That's my version of an AMRN supply view from a cruising altitude.
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