When the COVID-19 pandemic kicked off, everyone expected India to supply the bulk of the vaccines to poorer countries – in keeping with its image as ‘the pharmacy of the world’. India also appeared to accept this challenge quite willingly. However, the Indian government soon seemed to be treating the task of vaccinating almost 1.4 billion Indians like an elephant in the room.
The dramatic turnaround in India’s approach that soon followed – from flaunting its credentials as ‘saviour’ of the world to ‘stopping exports’ against legal agreements – triggered alarm. When and how this situation will be resolved is unclear at the moment.
On the other side of the world, mRNA vaccine manufacturers Moderna Therapeutics and Pfizer/BioNTech are galloping ahead with plans to manufacture more than 3 billion doses between them this year, and an expansion on the cards for 2022. US President Joe Biden, in his first address to the joint session of the US Congress, said that the US will become an “arsenal of vaccines for other countries”.
Does this mean the US will replace India’s as the world’s pharmacy vis-à-vis COVID-19 vaccines? And what should or can India do in these circumstances to prevent this from happening and retain the title?
The world’s pharmacy – beginnings
The Indian Patents Act 1970 recognised only process patents, not product patents. Indian pharmaceutical companies used this provision to reverse-engineer new drugs developed by multinational pharmaceutical companies and sold the resulting formulations – called generics – at a fraction of the original’s price. (India later recognised product patents in the Patents Act 2005.)
The generics movement, in a manner of speaking, began in the late 1980s and early 1990s, and accelerated during the HIV/AIDS epidemic. In 2001, when the US refused to save Africans suffering from HIV/AIDS and the annual cost of drugs made by Big Pharma was as high as $12,000 (Rs 8.8 lakh today), an Indian company called Cipla stepped up and offered medicines at $350 to $600 per patient per year. The rest is history.
In the last two decades, millions of patients have benefited, and not just in the developing world. The US has saved billions of dollars by prescribing Indian generics instead of ‘made in USA’ brands.
The vaccine narrative has followed a different path.
By 1991, vaccine manufacturers in India supplied the vaccines for the Indian government’s universal immunisation program – except for the oral polio vaccine, which was indigenised later.
In 1990, UNICEF, the WHO and the Pan-American Health Organisation jointly procured just under a billion vaccine doses for use in poorer countries. UNICEF had been scouting for low-cost suppliers of paediatric vaccines for its expanded immunisation programme, since the major players in developed nations weren’t inclined to reduce prices.
Indian manufacturers entered the picture: they partnered with international bodies to develop vaccines, increased capacity over time, and supplied large quantities to UNICEF programmes, often at less than $1 a dose.
UNICEF delivered 2.5 billion doses to children younger than five years in 2016, covering almost half of the children in the world under this age group. By 2019, India was meeting about 60% of UNICEF’s requirement. Serum Institute of India, which manufactured well over a billion doses a year, became celebrated as the world’s largest vaccine-maker by volume.
Big Pharma’s reluctance to compromise on their profits presented Indian industry with an opportunity, which it grabbed with both hands. It produced affordable medicines and vaccines, and rendered India as ‘the pharmacy of the world’. This was a commendable achievement.
The large pharma companies in the developed world continued to produce paediatric and seasonal influenza vaccines (flu shot) for their populations, and continued to fix their prices based on value to patient instead of cost plus profit.
What changed with COVID-19?
Vaccine development is typically a sequential and lengthy process with high failure rates. So investments in vaccine development are hard to come by.
But with COVID-19, many companies jumped on the chance to develop vaccines: within a few months of the novel coronavirus’s genome being published, more than a hundred vaccine candidates were in the fray.
This change of tack was the result of astute demand/supply calculations in the pandemic market.
Demand was estimated at 14+ billion doses. Companies also anticipated that the shots would become an annual affair, like the flu shot currently is, in western countries. It was a great recipe for commercial success. The returns on investment would also be quick since companies expected to launch the vaccine in a compressed time-frame instead of the customary 5-10 years.
Thanks to decades of scientific work, often undertaken using public money, in building new technology platforms (e.g. mRNA) for vaccines and the experience of developing vaccines for SARS, MERS and Ebola, vaccine candidates could move quickly from development to clinical trials.
Regulatory authorities were also under pressure to avail vaccines quickly, and agreed to adopt a ‘pandemic paradigm’ of development. In this paradigm, companies could initiate many stages of development in parallel, without waiting to learn the outcomes of the previous step.
Moderna’s mRNA vaccine is a good example. It used technology that had been developed by researchers funded by the US National Institutes of Health and the University of Texas, Austin, among others. Moderna announced the start of phase 1 trials on March 16, 2020 – only ten weeks after the virus’s genome was published.
Of course, a parallel development process implied greater financial risk without higher chances of success. To fix this problem governments stepped up with grants and payments against the promise of future supply. The US government and the European Union also agreed to not hold companies liable for adverse effects due to the vaccines.
The US government launched Operation Warp Speed, a public-private partnership, committing almost $10 billion to allow companies to develop, make and supply vaccines. By September 2020, it had promised to buy 800 million doses with options for another 1.6 billion. And in case a vaccine candidate didn’t pan out, the government bought doses from all companies whose candidates were in phase 3 trials at the time.
Other rich countries followed the US, releasing orders for multiple vaccine candidates. This way, between them, these countries cornered 4 billion doses by then, leaving little for other countries.
The principal incentive for large pharma companies was obviously the profit. In December 2018, the companies had trashed the Coalition of Epidemic Preparedness Initiatives (CEPI)’s efforts to enable equitable vaccine access around the world. CEPI is a public-public partnership established in 2017. CEPI’s original policy was pegged on the assumption that companies would agree to forego large profits and wouldn’t insist on retaining proprietary rights to vaccines that they had developed and produced along with CEPI. However, the companies pushed back and CEPI revised its policy in December 2018.
When a pandemic actually struck the world, these companies moved quickly to set expectations. In July 2020, Pfizer CEO Albert Bourla categorised calls for not-for-profit pricing as “fanatic and radical”. Moderna, Merck and Pfizer told a US congressional committee they wouldn’t limit the price of their vaccines. AstraZeneca and Johnson & Johnson were the only two big companies that said they would sell for no profits while the pandemic lasted.
However, the companies also took a pragmatic approach to address safety concerns – the result of the accelerated pace of development and the fact that the Moderna, Pfizer/BioNTech, AstraZeneca and Johnson & Johnson vaccines used (unproven) advanced technologies. For example, Pfizer and Moderna shared the protocols of their phase 3 trials even as they were in progress, a departure from usual practice.
Despite intense political pressure from the Trump government, the CEOs of nine companies, including AstraZeneca, Pfizer, and Moderna, also committed to not seek government approval without adequate safety and efficacy data. On their part, US and European regulators granted ’emergency use’ approvals to vaccines in a transparent manner, based on publicly available guidelines.
Vaccine-makers in other countries, including China, Russia and India, developed vaccines in similar fashion as well.
Regulators in many countries have granted many vaccines ’emergency use’ approvals. As of May 9, 1.32 billion doses had been administered worldwide. The approved shots include two mRNA-based vaccines from Pfizer and Moderna, three adenovirus-vector vaccines, one each from AstraZeneca/Oxford University, Johnson & Johnson and Russia’s Gamaleya Institute. China has approved four vaccines and India, three.
India is using Covishield, the Indian version of the AstraZeneca vaccine, manufactured by Serum Institute, and Bharat Biotech’s Covaxin, developed along with the Indian Council of Medical Research. The Gamaleya Institute’s Sputnik V vaccine was okayed for ’emergency use’ in mid-April.
Almost all vaccines have demonstrated very high efficacy at preventing severe disease, and efficacy higher than 50% at preventing mild to moderate disease. They have all been found to be safe as well, notwithstanding extremely rare side-effects in certain subgroups of recipients of the adenovirus-vector vaccines. One effect of this has been that the mRNA vaccines have been in greater demand.
Pfizer/BioNTech have ramped up production at multiple manufacturing facilities, as has Moderna. Pfizer expects a revenue of $26 billion from vaccine sales in 2021; Moderna expects $19.2 billion.
In effect, the large companies gained from decades of scientific work, aspired big and planned for it, maintained quality while refusing to compromise on profits in some cases, and quickly increased production. Governments funded the research in some cases and ordered the products in all cases.
People in many of these countries are getting vaccinated and already looking forward to better days – but most of the world isn’t. mRNA vaccines are costly and accessible only to the rich. North America and Europe have fewer than 20% of the world’s people but have administered almost 43% of all doses thus far. Only 21 million vaccine doses have been administered across Africa, home to over a billion. The only affordable vaccines have come under a pall of doubt – over cherry-picked data, quality control problems and the rare side-effects.
India didn’t meet expectations
A flurry of activity later, a couple of indigenous vaccines had commenced trials by September 2020 in India. A few Indian companies had also signed agreements with foreign companies to manufacture their vaccines in India for use in India and other countries.
However, Serum Institute was still expected to deliver the bulk of doses for use in India. Serum in turn had agreements – with AstraZeneca to produce a billion doses, half to be used in India and half to be exported to 68 countries at $3 per dose, and to produce a billion doses of the Novavax vaccine to supply to 92 countries. This quantity was later doubled.
The details of these agreements and the terms under which its personnel received access to the vaccine technologies are not in the public domain. We also don’t know if the Indian government was privy to these discussions.
And when Serum announced these agreements, it didn’t share details of how it planned to produce such large volumes when its capacity was only for 60-70 million doses per month. Its capacity is expected to increase to 100 million doses a month only by July 2021. CEO Adar Poonawalla also mentioned in September last year that companies weren’t expanding capacities and that it would take until the end of 2024 to vaccinate everyone on the planet.
The Indian government also adopted a lackadaisical approach and overestimated the country’s capacity to produce COVID-19 vaccines – even when information to the contrary was readily available. It neither invested in capacity expansion nor pre-booked doses. Experts raised some concerns about the quantity that would be available to Indians, considering the company’s export commitments, but the government was sanguine. It didn’t endeavour to bring foreign vaccines into India either.
In fact, the government made a grand show of its Vaccine Maitri1 initiative instead. It granted about ten million doses to a number of countries and promised more to other countries.
When India’s second COVID-19 wave came home to roost, the country’s vaccine shortage became acute, and undeniably visible. At this point, the Indian government stopped exports – eliciting a strong response from international institutions.
The WHO called the delay in supplies from India to the African continent “quite devastating for everybody”. AstraZeneca sent a legal notice to Serum Institute over supply delays to countries against orders placed by the Covax alliance.
A puzzling thing here is the extent to which the WHO and Covax banked on India to deliver. The WHO has been aware of India’s limited influenza vaccine-making capacities since at least 2006. So when Covax resolved to buy two billion vaccine doses in 2021, they couldn’t – and shouldn’t – have been from India alone.
Maybe Covax didn’t have the requisite funds earlier to place orders from many suppliers. It is doing so now. It recently struck a deal with Moderna for 500 million doses – 34 million in the last quarter of 2021 and 466 million in 2022.
The WHO has also approved one Chinese vaccine, developed by Sinopharm, while another Chinese vaccine, named Sinovac, and Gamaleya’s Sputnik V are being considered for the Covax initiative.
Nevertheless, the Government of India must accept the lion’s share of the responsibility for the backlash that India now faces for not supplying promised quantities of the vaccine. In its misplaced enthusiasm to be different from the rest of the world, the government erred by setting unrealistic expectations – a classic case of over-promising and under-delivering. To make things worse, it either didn’t realise that the capacity to meet these expectations didn’t exist; or even if it know of the gap, it didn’t take any action to remedy the situation.
India earned its reputation as the world’s pharmacy by reliably supplying affordable medicines in large quantities for over two decades. The Narendra Modi government squandered just these laurels vis-à-vis COVID-19 vaccines.
What should India do now?
While this is a significant setback, it’s also clear that India has to prioritise its own population today, given the severity of the second wave and apprehensions about another one.
In the short term, India should take multiple steps to reduce the vaccine shortage for its own use: help existing manufacturers to enhance production, utilise all idle vaccine manufacturing facilities, import available vaccines from other countries, monitor and expedite production of other vaccines in the country, rationalise prices and set reasonable expectations of vaccine supply and administration. It should also safeguard existing supply lines for paediatric vaccines (for itself and other countries).
Aside from Covishield, soon to be complimented by Sputnik V and the Johnson & Johnson vaccine, and Covaxin, which is held back by Bharat Biotech’s relatively low production capacity, India can look forward to some more vaccines – all of which it should produce and rollout on a war-footing.
One of them is an mRNA vaccine being developed by Pune-based Gennova Biopharma, along with HDT Bio, Seattle. Its phase 1/2 trials began earlier this month. Gennova’s current capacity is 200 million doses a year, which it plans to increase to a billion.
India should also explore other options. For example, in addition to expanding capacities in US and Europe for their mRNA vaccine, Pfizer/BioNTech are planning to increase their production in the eastern hemisphere as well. BioNTech shared plans to build a manufacturing site in Singapore by 2023, though it didn’t mention its capacity, and a joint venture with Fosun Pharma to make and sell up to a billion doses of its mRNA vaccine in China.
Surely, India – where Pfizer already has a significant presence in pharmaceuticals – should be able to partner with the company to manufacture and sell the vaccine in the country.
The government should offer the right (but also not unreasonable) incentives to companies and investors to bring in new technologies, enhance capacities and set up production infrastructure.
While it would be laudable to try and build a whole ecosystem that supports drug R&D, this project will need decades. In the middle term, Indian companies must build partnerships to bring new technologies and vaccines into India, and participate in the ongoing discussions on intellectual property rights to this end.
The ‘world’s pharmacy’ status is also inimical to India’s lousy track record at reviewing clinical trials and managing adverse events. This needs to change to get in line with best practices followed by regulators in other countries. A transparent and robust investigation mechanism and decisions resting on science are essential. Otherwise, ‘made in India’ vaccines aren’t likely to find wider acceptance.
Another barrier to acceptance is the price. India once supplied vaccines at $1 a dose, or less, but one of its government’s more recent U-turns allowed Serum Institute and Bharat Biotech to attach exorbitant price tags to their vaccines to be sold to state governments. These demands have placed a question mark over India’s commitment to availing affordable vaccines to the world. The government should address this concern; it isn’t clear if the world will rush to buy expensive Indian vaccines.
And even with all these measures, we shouldn’t expect to be rewarded immediately – but only around 2023.
Will there still be demand at this time º the demand that other Big Pharma institutions estimated properly in 2020 to get in on, and profit from, vaccine development?
The IQVIA Institute for Human Data Science has projected that the global sales of COVID-19 vaccine through 2025 will amount to $157 billion, i.e. demand will remain high. This is a product of the moderate pace of vaccination, the need for two doses per vaccine and, of course, potential new vaccines to counter new strains of the virus.
The average vaccine price per year is also expected to fall significantly: from $22 in 2021 to $19 in 2022, $9 in 2023, $7 by 2024 and $5 by 2025. When this happens, larger pharma companies may become disinclined to keep up their supply, providing a potential opportunity for Indian manufacturers to fill the gap.
For this, India will need to move fast – to expand capacity, acquire a diverse portfolio of affordable vaccines and adopt rational manufacturing and pricing policies.
Then again, exactly these things are also a tall order today – so perhaps we will be better served if we make peace with India not being the world’s pharmacy during the pandemic.
Note: This article first mistakenly said the Indian Patents Act 1970 recognised “product patents, not process patents”. It was corrected to say “process patents, not product patents” at 7:18 am on May 15, 2021.
Neeta Sanghi has over three decades’ experience in managing pharmaceutical supply chains. She is currently working on a book about the industry. She has no affiliations at the moment with, nor has she worked in the past for, any of the companies named in this article. All statements about vaccines in this article are based on current information in the public domain, to the best of her knowledge.
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