Why India should rely on its domestically produced vaccines

India is being recognized for its ability to manufacture vaccines at scale.
Keywords: Vaccine | Covid-19 | WTO | TRIPS | Geoeconomics | IPR | Virus | Covaxin | Covishield | ICMR | Pfizer | R&D | Manufacturing | Big pharma   
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Even though large-scale Wuhan virus vaccination is going on in many countries — India has reportedly vaccinated 36 million people in total till 17 March — a couple of recent events have brought geo-economics into it. The first is the question of Intellectual Property Rights: in the WTO, the US, the UK and the EU declined to provide concessional licensing terms (ie, a TRIPS waiver) to producers in the developing world. TRIPS stands for Trade Related Aspects of Intellectual Property Rights under the World Trade Organization (WTO).

The second event was the Quad Summit. The joint statement issued was emphatic in its support for the vaccine for Asia, with production in India, and technical, logistical and financial assistance from the others. In particular, there was an announcement that the US International Development Finance Corporation has a deal with Hyderabad-based Biological E to produce a billion doses, including doses of a Johnson & Johnson vaccine.  

These statements, taken together, seem to mean that India is being recognized for its ability to manufacture vaccines at scale, and that it suits everyone to use this capability. If it’s beneficial to India, we should go full steam ahead.

I have been a little concerned about various vaccines, but I accept that from a public health point of view, there is significant value in creating herd immunity with their use, never mind niggling doubts. The vaccines do protect most people against serious illness and hospitalization even though they are not tested for efficacy in mild infections or asymptomatic cases. 

There are broadly three kinds of vaccines: 1) mRNA vaccines (eg. Pfizer and Moderna), 2) vector-based vaccines (eg. Covishield, ie. AstaZeneca/Oxford), 3) traditional dead-virus vaccines (eg. Covaxin). That is in order of novelty (this is the very first time mRNA vaccines have ever been approved) and therefore risk (traditional vaccines have been around for centuries, originating with Bengali vaidyas circa 1700CE using cowpox pus to inoculate against the related, and far more lethal, smallpox). 

India is producing Covishield under license (Serum Institute of India, the largest vaccine maker in the world, took an early risk and invested in it; they have since ramped up their production). There have been some concerns about the AstraZeneca results, for instance the fact that the phase 3 trials were procedurally flawed (½ dose + full dose gave better results than two full doses; the trials were a mix of double blind and single blind, etc). 

I criticized these results in a podcast https://rajeevsrinivasan.substack.com/p/episode-11-lancet-paper-on-covishield, but I believe, all things considered, it still makes sense to go ahead and use the product. There are also lingering concerns in Europe, where several countries have halted the use of Astra Zeneca over blood clots, but these were not units produced by Serum Institute, and anyway Amit Thadani, a thoughtful doctor, has shown that there is nothing alarming about them. 

The final phase 3 trial results for the Indian-developed Covaxin (from ICMR and Bharat Biotech) have not been published yet, but interim results (81% efficacy) are hopeful. Personally, I think Covaxin is India’s best bet: the IPR is ours, and it’s likely to be the safest, most traditional, product. 

There is also confusion about compulsory licensing. It turns out that in a situation of national emergency or for other legal reasons, patents can be temporarily invalidated and local production of a product initiated, under the TRIPS umbrella. Taiwan did precisely this in the case of bird flu in 2005, when the drug Tamiflu was in short supply. 

In India, there was a similar, celebrated case in 2012, Bayer vs. Natco, India’s controller general of patents, P H Kurien, took a strong stance and supported giving Natco a compulsory license because Bayer’s product was unaffordable, and not widely available. After much litigation, that was approved by the Supreme Court.

That means that within the ambit of TRIPS, there is flexibility in times of national emergencies, of which the current Wuhan virus epidemic is surely one. Why can’t this mechanism be used? Of course, there is no patent on any vaccine, as they are all too new. I wonder if this means there’s nothing for countries to license (compulsorily or otherwise), which works nicely for Big Pharma. They can just enter into private deals with manufacturers.

The vaccine has become a bonanza for the pharma giants. Pfizer expects to make $15 billion this year. The fact that they benefited greatly from US taxpayer funding in the R&D stages via Operation Warp Speed seems to have fallen by the wayside, as Pfizer (and others) are making large (private) profits. No wonder they’re pressing India to also manufacture the product for them, even though they refuse to even do a bridge trial. Maybe export-only would be good.

There is a lesson in all this for India’s industrial policy and its hopes to emerge as a major alternative to China in supply chains. By focusing on process issues, the local pharma industry has become the world’s manufacturer of choice. With this under their belt, now Indian pharma companies could prioritize product R&D and create new drugs, vaccines etc. 

This is exactly what the Chinese did in general manufacturing: create capability and scale, and eventually upskill and create the IPR as well. David Teece of Berkeley suggested the opposite decades ago: lose your manufacturing and you’ll soon lose your design and R&D skills as well. Indian bureaucrats, politicians and tycoons should pay attention.

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Rajeev Srinivasan

Rajeev Srinivasan

Rajeev Srinivasan is a management consultant and columnist. He focuses on strategy and innovation and has taught at several IIMs. He is an alumnus of IIT Madras and the Stanford Business School.

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