Well before the Covid-19 pandemic, the ubiquitous hand sanitizer was a widely used essential hygiene product in healthcare facilities, offices, and schools - where they make up 80% of the market by volume. The remaining 20% were bought by individuals and households and used on an irregular basis. For a long time, the supply of hand sanitizers had been dominated by a handful of major domestic producers and importers - mainly because of the fairly stable demand and strict Therapeutic Goods Administration (TGA)'s approval standards.

The following is an edited extract from: https://www.industry.gov.au/news/hand-sanitiser- Australia

1st October 2020 At the outset of the COVID-19 pandemic, as demand for hand sanitizer grew, the government brought together Australia's domestic hand sanitizer manufacturing industry, including elements of the supply chain, to understand production capacity and capability. This work enabled a market-based response which saw supply expand to meet the growing demand for hand sanitizer. Before the COVID-19 pandemic, Australians used approximately 20 million liters (ML) of hand sanitizer each year, with supply approximately evenly divided between domestic and international manufacturers. COVID-19 resulted in a significant increase in demand for hand sanitizer. With international supply chains also disrupted, hand sanitizer and its four key ingredients (inputs) were temporarily in short supply. Soon the shortage of alcohol (the main ingredient - of at least 80% of volume) eased as supply was increased and redirected to producers of sanitizers. The supply of the other minor ingredients of hydrogen peroxide, thickener and water was less of a problem.

 

 

Existing producers were able to increase production while new entrants (for example, cosmetic manufacturers, distillers, paint manufacturers and packaging companies) were able to pivot operations and start producing hand sanitiser. Flexibility from Australia's Therapeutic Goods Administration (TGA) supported the increased supply of hand sanitiser by streamlining approvals processes. World Health Organisation (WHO) issued a hand sanitiser formulation with only four ingredients, which was exempted from TGA regulation (product formula and testing) from 28 March 2020 for the duration of COVID-19. Demand for hand sanitiser is expected to remain elevated over the next 12 months, at up to 77 ML per year. This increased demand is expected to be met through strong domestic production and the resumption of imports as global markets resume. It is also expected that some domestic producers will pivot back to their previous activities. COVID-19 revealed Australia's very strong domestic production capacity for hand sanitiser and demonstrated the agility of Australia's supply chain.

 

On a single Price-Quantity graph and using the above case information, draw a Demand curve (D1) & a Supply curve (S1) for hand sanitisers before Covid-19; and another Demand curve (D2) & Supply curve (S2) during the height of Covid-19 in 2020. Don't forget the angle or slope of the curves - to reflect Price Elasticity of Demand & Supply.

 

Answer rating: 100% (QA)

To draw the PriceQuantity graph well use the information provided and depict the demand and supply curves before and during the height of the COVID19 ... View the full answer