India eyes multi-billion COVID-19 vaccine market, related businesses

24, Dec. 2020

Workers pack the newly-manufactured syringes at Hindustan Syringes & Medical Devices factory in India. The company plans to expand manufacturing capacity to as much as one billion units in the second quarter in 2021 from the current 700 million units of auto-disable syringes. (Photo courtesy of  Hindustan Syringes & Medical Devices)
Workers pack the newly-manufactured syringes at Hindustan Syringes & Medical Devices factory in India. The company plans to expand manufacturing capacity to as much as one billion units in the second quarter in 2021 from the current 700 million units of auto-disable syringes. (Photo courtesy of Hindustan Syringes & Medical Devices)

By Atul Ranjan and Celine Chen

NEW DELHI, NNA - India, the world’s largest vaccine factory, looks set to mass produce at least eight COVID-19 vaccines as countries are embarking on vaccinations as they enter 2021 .

The government, which noted that there are roughly 260 vaccine candidates globally in different stages of trials, with some already in development, said India, with its enormous manufacturing facilities, is well-equipped to produce much more for the world as it contributes to international efforts to combat the coronavirus pandemic.

The health ministry said recently that at least five local pharmaceutical companies are engaged in vaccine development and production.

Based in Pune city in the western state of Maharashtra, the Serum Institute of India (SII) is the world's biggest vaccine producer. Already booked to produce the Oxford University-AstraZeneca vaccine and the American Novavax candidate, SII is boosting capacity to make one billion doses through 2021.

Quoting the UK government sources, The Daily Telegraph reported that India has already manufactured more than 50 million doses of the AstraZeneca vaccine.

Pharma giant Dr Reddy’s Laboratories will be manufacturing Russian vaccine, Sputnik V, in a India-Russia tie-up for use in both and other countries. Zydus Cadila, a leading Indian pharmaceutical company, is conducting stage-two trial of the indigenous DNA Vaccine.

The global COVID vaccine market is worth at least $10 billion across developed countries, according to Morgan Stanley, while Credit Suisse thinks it is much larger and that the US market alone is worth that eye-watering amount. Already, world governments have poured billions into vaccine investments.

Taking into account a global population of 7.8 billion, the World Health Organization has placed the herd immunity threshold at around 70 percent, which means about 11 billion doses of vaccine would be needed. So far, 9.5 billion doses have already been reserved by well-to-do nations such as the US, Canada and those in Europe.

British research firm Airfinity has estimated that global COVID-19 vaccine manufacturing capacity will reach more than 16 billion doses by end-2021, which will potentially bring bumper revenues for blockbuster vaccines proven to have high efficacy.

The world's top five vaccine makers by revenue all hail from the US and Europe. However, it is giant neighbors India and China which have the potential to create enough vaccine to supply the world because of their massive production capability, according to a study by the Coalition for Epidemic Preparedness Innovations (CEPI).

The CEPI survey of 113 vaccine manufacturers, carried out around the middle of this year, found a third of them were based in the US while India and China together account for about a quarter.

In terms of volume, India supplies about 60 percent of global vaccines yearly.

Hoping to woo more COVID-19 vaccine investments, India hosted foreign diplomats in a tour of world-class facilities at the Bharat Biotech and Biological E plants in the southern Indian city of Hyderabad on Dec. 9.

Home to over 800 life sciences companies, the city is also known as the 'Bulk Drug Capital of India' and 'Vaccine Capital of the World'.

Currently, locally produced COVID vaccines such as Covaxin and Covishield are in the most advanced stage of development in India.

Bharat Biotech has developed Covaxin in collaboration with the Indian Council of Medical Research (ICMR) and the National Institute of Virology (NIV).

Produced by SII, Covishield is the local name of the vaccine by Oxford University and AstraZeneca.

Bharat Biotech and SII are expecting emergency use approval for their vaccines from the Drugs Controller General of India any time soon.

The country’s finance minister, Nirmala Sitharaman, said last week that India has enough capacity to produce inoculations for its own needs and also for the other countries.

In the fiscal year ended March 2019 (FY 2018-19), India's pharma industry exported vaccines worth $661.93 million, or 3 percent of the total $19.13 billion for all pharmaceutical exports.

Analysts say that the huge opportunity to produce and export COVID-19 vaccines will boost the local pharmaceutical industry tremendously.

“Over the medium term, development and contract manufacturing opportunities for COVID-19 vaccines could support the pharmaceutical firms’ revenues,” said Tanvi Shah, associate director at Crisil Ratings.

Analysts at brokerage firm Kotak Institutional Equities estimate that SII, Bharat Biotech, Panacea Biotec, Hester Biosciences and Cadila Pharmaceuticals already have a collective capacity to produce 5.5 billion to 6 billion doses of a variety of vaccines, excluding those for oral polio.

Their facilities can be tweaked easily to manufacture COVID-19 vaccines, they said.

Meanwhile, India has made advance purchases amounting to 1.6 billion doses, which is more than any other country, according to a report by America's Duke Global Health Innovation Center.

Leveraging on its huge manufacturing prowess, India managed to acquire 500 million doses of the Oxford University-AstraZeneca vaccine in advance sales, one billion from Novavax and 100 million doses of Sputnik V from Russia's Gamaleya Research Institute, said the Duke report.

Even before any vaccines have been given the official green light by regulatory authorities, there are already confirmed purchases for 7.3 billion doses, with another 2.5 billion doses under negotiation.

"Countries with manufacturing capacity, such as India and Brazil, have been successful in negotiating large advance market commitments with leading vaccine candidates as part of the manufacturing agreements," said the Duke report, which was put together after governments across the world including India were asked to give inputs and explain any high procurement.

India's 1.6 billion doses would cover 800 million people, or 60 percent of its population.

On Sunday, health minister Harsh Vardhan said India will embark on an “expeditious” vaccination drive to immunize all priority groups estimated to number around 300 million in the next six to eight months.

He said the country may be in a position to administer the first jab soon in "any week of January".

Covishield is seen as the frontrunner of India’s nationwide vaccination program. Apart from its low price, it can be stored safely at normal refrigerator temperatures and has been tested safely on 1,600 Indians during trials.

“Covisheld is an extremely viable and vital vaccine for India and other low-and-middle-income countries. This vaccine in terms of affordability and composition makes it easier to transport and store for long periods at normal refrigerator temperatures,” said Poonawalla of SII.

In a note on Dec. 10, Kotak analysts said India will need to vaccinate at least 60 to 70 percent of the population in order to achieve herd immunity.

As vaccine export and distribution loom ahead, enormous business opportunities as well as challenges in logistics and supply chains have emerged.

The distribution of vaccines, which require proper storage, will be a key issue given the immense scale of vaccination.

While India runs the largest universal immunization program (UIP) in the world and administers around 500-600 million doses annually mainly to newborns and pregnant women, experts say the COVID-19 vaccination is a far more massive operation covering the entire population.

An analysis by BofA Securities, a unit of Bank of America Corp., shows that the exercise is likely to be 16 times the size of UIP. The country is expected to utilize its existing nationwide cold-chain network for UIP to help carry out the vaccination.

However, BofA Securities noted that not many cold storage facilities are pharma-compliant according to World Health Organization requirements. The ideal temperature for storage varies from vaccine to vaccine. Pfizer and BioNTech shots must be transported at ultra-cold minus 70 C for up to 10 days only, while Moderna vaccine must be stored at minus 20 C.

“India has a lot of storage for vaccines that need to be stored between (positive) 2-8 C. It has less storage capacity for minus 20 C and almost nothing for minus 70 C,” Adar Poonawalla, chief executive officer of SII, told reporters in November.

Fortunately, his company will not face any problems as its vaccines need only normal refrigerator temperatures of 2-8 C to be kept well.

Observers said the government would probably rely on cold facilities of other industries such as agricultural storage and food processing. Last week, the government announced that over 100,000 units of cold facilities, freezers and refrigerators are likely to be used for storing vaccines.

Pouncing on opportunities, private cold-chain companies and airline carriers are quick to offer logistics support.

According to BofA Securities, India's leading cold-chain logistics firm Snowman Logistics which has capacity to handle 100 million doses currently, is investing 700 million rupees to build two new facilities and expand existing ones.

“With expansion plus partnership, this could be scaled up to 300 million doses,” BofA Securities said, adding that other players such as Gati, TCI Express, Coldstar, ColdEX, Western Refrigeration and Mahindra Logistics might follow suit.

Luxembourg-based B Medical Systems, a global supplier of medical-grade refrigerators, freezers and transport boxes, is planning to set up a factory in India.

Airlines are also gearing up to offer support.

One of the country’s budget carriers, SpiceJet, recently announced it will provide end-to-end cold-chain solutions for vaccine delivery together with Om Logistics, one of the largest logistics companies in India.

Kinjal Shah, vice-president of ratings agency ICRA, said the move by airlines will generate additional revenues to help their recovery efforts after they were largely grounded during pandemic lockdowns around the world.

According to calculations of vaccine delivery costs by BofA Securities, COVID-19 vaccination in India is likely to generate 200-210 billion rupees for the logistics industry, assuming 350-400 million people are inoculated yearly.

Local syringe manufacturers are also ramping up production to meet domestic and global demand.

Vimal Khemka, general secretary of All India Syringes & Needle Manufacturers Association, told NNA that almost all their 22 member-producers are in the midst of increasing capacity.

Rajiv Nath, managing director of Hindustan Syringes & Medical Devices, the country’s biggest manufacturer of syringes, said his company is expanding capacity to 800 million units in the first quarter (Jan-March) and to one billion by the second quarter from its current 700 million units.

“The estimated demand in India would be around 900 million of different kinds of syringes for just one shot of vaccine, considering 60-70 percent of the country is being vaccinated. The number would amplify to 1.8 billion if the vaccine India chooses needs two shots,” Nath told NNA.

India has recorded the world’s second highest number of COVID-19 infections and crossed the 10 million mark over the weekend. Over 145,000 people have died. Worldwide, there are 77.3 million cases, with more than 1.7 million deaths.