No lessons learnt on vaccine procurement
Globally, all major countries have come to the conclusion that to secure vaccine supplies, they need to invest heavily, tie up with established vaccine firms to build production capacities within their own borders, and also closely monitor the vaccine supply chain and stand ready to intervene at the slightest sign of trouble.
They have decided that this is one area that cannot be left to the invisible hand of the markets. It needs the government to play an active role of a partner for businesses or sometimes to even directly get into manufacturing the vaccines.
In India, despite our long history of public sector enterprises, the Union government seems to want to play the role of only a customer even though it has not been able to even place orders for — forget actually secure — the number of doses required to vaccinate the entire adult population. It has unleashed chaos by allowing the only three suppliers of approved vaccines to follow differential pricing, asking the states and private hospitals to compete among themselves for scarce supplies.
The government has, either by design or accident, engineered a market with too many buyers and too few suppliers. This has led to private sector hospitals having plenty of doses that they are selling for high prices while the state governments are scrabbling to secure supplies from vaccine manufacturers who are clearly not interested in selling to them.
Despite claims made by multiple ministers that India will be able to vaccinate everyone by the end of the year, the sketchy details of procurement plans available so far aren’t encouraging. The government seems to be depending too much on Serum Institute and Bharat Biotech expanding their capacities exponentially, and also on half a dozen vaccine candidates that are still in early stages of clinical trials. It has given some grants for public sector vaccine units to prepare their capacities, but not on a big scale. It also has been strangely sluggish in negotiating with the producers of MRNA vaccines like Pfizer and Moderna that have so far shown better efficacy and safety.
Globally, the big western economies had all preordered doses of promising vaccines far in excess of the requirements of their population by Junejuly 2020. This was even before the regulatory approvals had come in. The calculation was that even if one or two vaccines failed to get approval, others would work out and therefore the programme would not be hampered by shortage of vaccines.
Most western economies — hit hard by the first wave in 2020 — had understood that it was far better to spend money on vaccines for everyone in order to get back to business as usual than to take a penny pinching approach to vaccine procurement. They had concluded early that the cost of vaccinating everyone to bring the pandemic under control was far, far lower than the cost to the economy of not vaccinating everyone.
There were two broad approaches followed in procurement and pre-ordering. Canada, the EU, Australia and a few others preferred to place big orders and pay advances but did not get involved in the nitty gritty of production planning or scaleups of production facilities. They had faith in the capabilities of global private sector vaccine companies. The US, on the other hand, not only placed advance orders but also took an operational stake, making sure that there was enough domestic capacity to serve its population needs. It monitored everything from raw material to contract manufacturing capacities carefully.
The Indian government did neither. Despite being a major global vaccine hub with enough expertise both in the private and public sector for vaccine production, the government did not even bother to calculate if vaccine capacities matched the population required to be vaccinated.
Because of production hiccups, Canada, the EU, and Australia all found that the supplies of vaccines they had ordered was slower than expected. Since then, all of them have moved quickly to invest in creating adequate domestic capacities in partnership with vaccine developers. Australia is investing heavily in building its own MRNA facilities while also offering incentives to Pfizer and others to set up production capacities in the country. Canada is investing $200 million to build an MRNA vaccine facility with Resilience Biotechnologies, aside from the $415 million support it is giving Sanofi. The EU is augmenting capacities in its member countries while also spending a billion dollars for creating vaccine facilities in Africa.
India, on the other hand, has been fairly tardy in either giving grants to private companies to scale up quickly in lieu of guaranteed early supplies or even preparing its many public sector vaccine facilities.
It has paid Serum Institute of India and Bharat Biotech some advance, but not a huge amount. It is primarily still acting as if it is just a commercial buyer in a market with excess supplies even though the situation is the exact opposite.
The Indian government had failed to take a cue from the western countries when the first round of vaccine procurement was taking place. It is showing no signs that it plans to take any tips from them even now. The country is likely to pay a heavy cost — both in human as well as economic terms — for its obstinacy.