An Indian drug mogul says Americans will pay too much for the Covid vaccine—and wants to change thatJuly 19, 2020
Adar Poonawalla may be the most important figure in the global vaccine race who isn’t working in a laboratory: The Indian vaccine entrepreneur plans to save the world from coronavirus – and then radically remake the international pharma landscape.
Drug companies are sounding alarms.
The globe-trotting, deal-making son of Dr. Cyrus Poonawalla – an Indian billionaire who founded the Serum Institute of India on his horse farm 54 years ago – is one of the breakout figures of the Covid fight, strategizing from the Indian city of Pune to bring the same low-cost efficiency with which he makes 1.5 billion vaccine doses a year for the developing world into mass-producing a Covid-19 vaccine for the entire world.
Little known in the West until this year, the 39-year-old Poonawalla’s company is, by doses sold, the world’s biggest vaccine manufacturer, making 1.5 billion doses a year to protect against diseases including meningitis, measles and tetanus. Now, with rich and poor countries alike hungry for huge volumes of a vaccine to treat the novel coronavirus, he’s on a mad dash to work out deals with the most promising coronavirus vaccine developers to manufacture the immunizations on a global scale. But that also means achieving his long-sought goal of barreling past the patent protections and monopoly rights that have long blocked inexpensive copy-cat vaccines from the U.S. and European markets, protections jealously guarded by Big Pharma.
Poonawalla believes that the sheer urgency of the virus – and the fact that coronavirus anywhere is a threat to people everywhere – should prompt a reassessment of patent and intellectual property laws that limit access to immunizations in the developing world, while simultaneously jacking up their price in wealthier countries.
“That’s become very evident today in the Covid crisis,” Poonawalla said in a POLITICO interview. “If you don’t allow, for example, an Indian producer to sell in the U.S. because of some stupid rules and regulations, even though the product is identical to a U.S. product, you’re going to have a supply situation.”
“And guess what,” he continued. “When you’ve got low supply and high demand, what happens to the price? It skyrockets.”
Right now, Poonawalla is ramping up his cooperation with brand-name pharma companies, inking a deal with AstraZeneca to produce a billion doses of its experimental coronavirus vaccine, earmarked for developing countries. It’s one of five coronavirus immunizations the Indian company is working on to provide Covid protections on a global scale — three are partnerships to manufacture vaccines conceived by other companies, while two are in-house formulas.
The Serum Institute’s specialty is mass producing millions of doses of vaccines, often churning out medically comparable knock-offs of brand name products at a fraction of the cost, for sale in the world’s poorest countries. In the case of AstraZeneca, the deal is to use Poonawalla’s production facilities to manufacture coronavirus immunizations for use, if approved, in India and poorer nations. AstraZeneca, meanwhile, has signed agreements with the U.S., U.K. and EU countries to set aside hundreds of millions of doses for their citizens. For now, AstraZeneca is promising to sell the shots at cost, about $2 a dose. But after the pandemic is over, all bets are off. (The British-Swedish multinational did not respond to requests for an interview about the Serum Institute.)
But Poonawalla also wants to pressure companies and governments to start changing the landscape, using the moral example of Covid-19 – and the global need for inexpensive vaccines on a massive scale – to illustrate the flaws in the current system, which he believes hamper the availability of life-saving protections in the developing world and access to low-cost drugs in wealthier countries.
Poonawalla says he’s in talks with Washington about clearing the way to sell some of the company’s earlier vaccine products in the U.S. market as low-cost generics. In President Donald Trump, he sees an ally in dismantling regulatory blockades.
“I think that’ll be one of the good things that [Trump] might actually achieve if that goes well,” Poonawalla said.
In doing so, Poonawalla faces a big hurdle: The U.S. pharma industry, which has strong allies on both sides of the aisle in Congress, has successfully resisted most efforts to loosen patent and importation rules, and so far the Trump administration’s promises to allow cheaper drugs to be reimported from Canada have gone nowhere.
Poonawalla cites Bill Gates as his mentor, for his work helping bring affordable drugs to poor countries, and the Microsoft mogul’s charity has pumped cash into the Serum Institute, crediting the company with helping eliminate meningitis in hard-hit parts of Africa. But Gates, through his charity and Microsoft, has been a staunch defender of intellectual property rights, saying that charging higher prices in the Western world is the key to delivering low-cost protections in the developing world. (The Bill and Melinda Gates Foundation declined to discuss the Serum Institute beyond providing a list of their collaborations.)
“We fund research and we actually ourselves or our partners create intellectual property so that anything that is invented with our foundation money that goes to richer countries, we’re actually getting a return on that money,” Gates said in 2011. “By doing that we have more money to devote for research into neglected diseases and the diseases of the poor.”
The U.S. drug makers’ lobby is also adamant in opposing Poonawalla’s call for reforms to patent laws and protections for intellectual property, which give companies sole control over the scientific products they develop, in some cases for decades.
“Our IP system — including patents — promotes competition and is the foundation for new treatments, vaccines and cures for patients,” said a spokesman for PhRMA, the U.S. drug makers lobby, in a statement to POLITICO. “Many of the medicines being tested for Covid-19 exist today because of intellectual property and other incentives that drove their creation and development.”
The statement was blunt about what the big drug companies believe would happen if their protections lapsed: “Drastic and uncoordinated action by governments — like seizing patents — will further burden manufacturing infrastructure, divert resources and leave patients now and tomorrow worse off.”
Fighting health care inequality
Inequality of health care was the moral force behind the creation of the Serum Institute; it grew out of Poonawalla’s father’s conviction that poor children across India and Africa were dying in the millions of preventable diseases, mainly because the research advances of the West had yet to reach them.
It was the early 1960s and, in his early 20s, Cyrus Poonawalla determined that his family’s decades-old stud farm had “no future in the socialist India of the time,” according to a biography on his website.
He fiddled with trying to design a sports car, before opting to revert back to a more literal type of horsepower: The Poonawalla Stud Farms had been donating horses to a government-owned institute in Mumbai for serum. Creating what’s known as passive immunity, serum purified from horse blood can be used to give people the antibodies necessary to fight off some diseases.
The elder Poonawalla started making tetanus serums in-house. Eventually, he moved on to tetanus and measles vaccines, of which there were major shortages around India and Africa at the time, his son recounted.
Today, the Serum Institute sells about 1.5 billion doses of a wide array of vaccines a year to 170 countries. A good portion of that volume is thanks to Gavi, the Vaccine Alliance, the public-private partnership that Gates founded 20 years ago. It uses donor money to help buy vaccines in bulk for poor countries that likely couldn’t afford them even at a few dollars a dose.
When Gavi first launched, Big Pharma was dropping out of the vaccine business.
“It had become unprofitable because it was only the wealthy Western markets that were…willing to pay what they were worth,” said Dominic Hein, Gavi’s head of market shaping.
Today, the partnership helps poorer countries pay for immunizations that meet the World Health Organization’s quality standards. The Serum Institute is a stalwart supplier, pumping out four in 10 of the vaccines funded by Gavi. It was “the pioneer of low-cost, high quality vaccine-making,” Hein said.
The partnership with Gates has boosted the company’s position in the health care world – and helped it reach new levels of profitability — even if people still sometimes scratch their heads when they hear the name Serum Institute of India.
“We’ll have to change the name to describe exactly what we’re doing,” mused Adar Poonawalla, who took over in 2011 as CEO of the company, which is still privately listed. “Maybe in a year or two we’ll look at that.”
Living a globe-trotting lifestyle
For all their work on behalf of the masses, the Poonawallas are indisputably rich and like to show it off.
Cyrus Poonawalla, who remains chairman of the company at age 79, is No. 165 on Forbes’ billionaires ranking, with an estimated net worth of $11.5 billion. (A different ranking estimated the pandemic boosted his net worth by a quarter, pegging him as the world’s 86tht-richest man.) His personal website features pictures of him hobnobbing with Gates and posing with his sports cars and limousines.
Adar, who along with his glamorous, Bollywood-linked wife Natasha has become popular fodder for the sub-Continent’s tabloids, told GQ India that under normal circumstances he’d be in Cannes, on a yacht this summer. Instead, he’s near the company’s headquarters in Pune, where one of his offices is a refurbished A320 jet. Pune is the eighth-most populous city in India, and it happens to be in the midst of a serious coronavirus outbreak.
“In terms of public perception, we’ve been known more for our lifestyle; now people understand the work we do,” he acknowledged to the men’s glossy, which featured him on the cover of its June issue as the “Vaccine Vanguard.”
Indeed, the company estimates that 65 percent of the world’s children receive at least one vaccine made by the Serum Institute.
Some of its products were designed specifically for the needs of poor countries. For example, its oral rotavirus vaccine is heat-stable, so it doesn’t have to be kept cold as it’s distributed in countries without consistent electricity.
But others of its products are variants of breakthroughs that were achieved by the global drug giants collectively known as Big Pharma. These, Poonawalla said, could be sold for much less than what Americans and Europeans pay for them.
Cheaper production costs in India are part of what Poonawalla says is the Serum Institute’s advantage over big Western players like Sanofi and GlaxoSmithKline. Yet the Serum Institute has never created a first-of-a-kind vaccine — meaning its entire business model is based on having its scientists piggyback on the basic research of other companies to understand a disease and the body’s immune response.
Once the Serum Institute has produced a quality version of the same vaccine created by Big Pharma, it is able to manufacture huge numbers of doses quickly and inexpensively. The benefit to people around the world is a matter of “basic mathematics,” said Poonawalla. “Once you produce more than 100, 200 million doses of any product, you know the costs come down substantially.”
Yet regulations have made it hard for the Serum Institute to enter wealthy markets. This is not because the company can’t meet quality standards, he said, but because Western regulatory systems preserve patent protections for vaccines in complicated ways.
“As a result, the European [and American] people have been paying hundreds of dollars for a vaccine as opposed to $20 or $10 for a vaccine,” he said. “This is one of the things that President Trump actually has identified as a semi-fraud by Big Pharma, where they’ve gone overboard and exploited the public.”
Challenging the global patent system
Poonawalla’s claims strike at the crux of drug pricing debates in both the U.S. and EU, which center on whether patents and other incentives to fulfill unmet needs are being abused in pursuit of profits. The aim of medical patents is to reward companies for the risks and costs of research and development. The Coalition for Epidemic Preparedness Innovations estimated that — factoring for some failed efforts— getting a vaccine just to the later stages of clinical trials costs up to $1.1 billion.
So European and American laws give the original developers of a new medicine a period of monopoly, when no one else can sell their drug. While there are lots of mechanisms to extend this, usually within 15 years or so, cheaper generic versions are able to start competing.
For vaccines, which are part of a class of drugs derived from living cells called biologicals, there can be multiple layers of patents: for the active aspect of the formula, for the adjuvant that makes it work better, for the cell cultures used to grow the live parts, for the process for making the vaccine. This can indefinitely delay the introduction of lower-priced generic biologicals, known as biosimilars. The complicated — sometimes impossible — task of working around patented components makes it harder for would-be competitors to drive prices down.
Generic medicines can usually skip the clinical trials that the original drug had to go through, as long as they can prove they’re chemically identical and have the same biology. Biologics are much more complex drugs, and so for biosimilars, “you can’t guarantee that sameness to the same degree,” said Paul Fehlner, a former IP lawyer for Novartis. The Serum Institute’s versions of vaccines can’t be assumed to work in exactly the same way as the original manufacturers’, in part because they may have tweaked something to dodge a patented part of the process. That means they must face a costly slate of clinical trials.
In the U.S. and Europe, “the regulations build on and reinforce the patenting strategies,” Fehlner said. And if a product infringes on a patent in any way — even if it seems incidental — the product can’t be sold. Even Big Pharma firms are constantly suing each other in the U.S. over alleged patent infringements for biologicals, aiming to keep competition off the market as long as possible.
A straightforward way to overcome these obstacles is to buy commercial rights. Poonawalla said he’s tried — and it’s established practice for companies to sell these rights for vaccines to be sold in the developing world. But for wealthy markets, Big Pharma won’t sell for an affordable price — or they outright refuse, he said.
This is a consequence of the all-or-nothing nature of patent laws, according to Fehlner. Critics of Big Pharma’s patents and IP “act like this stuff is trivial,” said Fehlner. But, he added, “you’ve got PhD’s working . . .for months or even years” on things like purification and formulation processes. Those efforts are “patent worthy,” Felhner said.
Then again, he asked, “Should you block biosimilar versions of the vaccines because of that?”
Poonawalla is determined to find a way to enter Western markets, and he’s calling for governments to open them up by relaxing patent standards and protections for intellectual property. Already, the Serum Institute of India is producing vaccines on the ground in Europe, through his 2012 purchase from the Dutch government of Bilthoven Biologicals— making polio and tuberculosis shots that are sold in Africa — and Poonawalla told Indian media in 2019 he wants to sell the TDAP shot, a common childhood immunization, in Europe within three years.
And in his interview with POLITICO, Poonawalla predicted that the Serum Institute would have a vaccine licensed in the U.S. within a year.
While it’s been increasingly common practice for Big Pharma to share their intellectual property with high-volume producers like the Serum Institute to serve the developing world, Poonawalla said, the coronavirus may be prompting a new perspective in rich countries.
“Even if you have better [coronavirus] vaccines coming out in ’21, ’22, we might not, as people of this planet, get access to that, he said. “Because if you don’t have the manufacturing to do it, how the hell are you going to get it out?”
And for all his praise of Trump’s drug pricing ambitions, Poonawalla isn’t a fan of the U.S. government’s approach to tying up coronavirus vaccines.
“It shouldn’t be that the wealthiest nations who buy up all the IP and technology then restrict the other nations from being able to produce and have equitable access for vaccines,” he said. “Your survival shouldn’t be determined by where you live.”