Decline of Public Sector Vaccine Manufacturing in India

Electronic copy available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4055411 Decline of Public Sector Vaccine Manufacturing in India Sudip ChaudhuriΩ March, 2022 Abstract: For Covid 19 vaccination, India has primarily relied on two private firms. During the second wave of the pandemic, when shortages were reported in some parts of the country, when desperate attempts were made to scale up production, when exports were suspended, the absence of the public sector was strongly felt. An obvious question that came up was why India with a long traditional of public sector vaccine manufacturing had to rely on only two private firms. While private vaccine manufacturers in India have made commendable progress in the last few decades, the public sector has lost its dominance and has now become a marginal player. This is not because of any inherent deficiencies of the public sector vaccine sector or lack of capabilities to deliver. The basic problem has been underinvestment and neglect by government. Particularly in situations where mass vaccination is required, it is critically important to ensure uninterrupted supplies of vaccines at affordable prices. To minimize the uncertainty associated with private sector investments, production and pricing, presence of a strong public sector is crucial. The government has aided the growth of the private sector in India. Similarly with proper investments and support and a re-orientation of official policies and attitudes, it is possible to revive and make the public sector a significant player. Key words: Vaccines, Covid-19, public sector, private sector, India, GMP, universal immunization, R&D, technology. Ω Professor (Retd), Indian Institute of Management Calcutta. Email: sudip1953@gmail.com. Page 1 of 16 Introduction For Covid 19 vaccination, India has primarily relied on two vaccines - Covishield and Covaxin manufactured by two private firms, Serum Institute of India and Bharat Biotech respectively. During the second wave of the pandemic, when shortages were reported in some parts of the country, when desperate attempts were made to scale up production, when exports were suspended, the absence of the public sector was strongly felt. An obvious question that came up was why India with a long traditional of public sector vaccine manufacturing had to rely on only two private firms. The situation has improved since then. Production capacities of Covishield and Covaxin have expanded, production has increased, exports have resumed and permission has been granted for manufacturing and importing of other Covid-19 vaccines. But it is not yet clear how long the Covid-19 pandemic will continue and this may not be the last pandemic. In situations where mass vaccination is required, it is critically important to ensure uninterrupted supplies of vaccines at affordable prices. The private sector has contributed significantly to Covid-19 vaccination. And it should be encouraged and supported to do so. But ultimately what the private firms do is influenced by profit considerations. To minimize the uncertainty associated with private sector investments, production and pricing, presence of a strong public sector is crucial. While private vaccine manufacturers in India have made commendable progress in the last few decades, the public sector has lost its dominance and has now become a marginal player. The focus of the paper is not as such on COVID-19 vaccines. The basic objective of this paper is to understand the reasons for the rise of the private sector and the decline of the public sector in vaccine manufacturing in general. We will see that the decline is not because of any inherent deficiencies of the public sector vaccine sector or lack of capabilities to deliver. The basic problem has been underinvestment and neglect by government. The latter has aided the growth of the private sector. Similarly with proper investments and support and a re-orientation of official policies and attitudes, it is possible to revive and make the public sector a significant player. Structure of vaccine industry in India In India, 21 firms – 14 in the private sector and 7 in the public sector have got licences from the drug regulatory authority to manufacture human vaccines.1 Out of the 7 units in the public sector, 4 were set up as departmental government units and the remaining 3 as corporate entities owned by the government. The former includes the Central Research Institute, Kasauli 1 “List of Licensed Human Vaccine Manufacturing Facilities in India,” Central Drugs Standard Control Organisation (https://cdsco.gov.in/opencms/export/sites/CDSCO_WEB/Pdfdocuments/biologicals/facilitiesLIST.pdf). Page 2 of 16 (established in 1905), Pasteur Institute of Southern India, Coonoor (1907) (later renamed as Pasteur Institute of India), BCG Vaccine Laboratory, Guindy, (1948), and the Haffkine Institute set up by the provincial government in Bombay in 1899. Haffkine Institute was originally known as the Plague Institute where Dr Haffkine developed the plague vaccine (Lahariya 2014). The three public sector undertakings were set up much later. Bharat Immunologicals and Biologicals Corporation Limited (BIBCOL) was established in 1989, Human Biological Institute, as a division of Indian Immunologicals Ltd in 1998 and HLL Biotech Limited as a wholly owned subsidiary company of HLL Lifecare Ltd in 2012. The private sector comprises mainly of Indian firms and a few MNCs - GSK Asia, Sanofi Pasteur and Shantha Biotechnics (set up in 1993 as an Indian company but acquired by Sanofi in 2009). The MNCs - GSK and Sanofi primarily import vaccines and repackage these for sales in India (Ghosh 2019, pp 7-8). The major private firms are Biological E, Serum Institute of India (SSI), Bharat Biotech and Panacea Biotec. Biological E was the first private firm to start vaccine manufacturing in India. It was established in 1953 and started vaccine manufacturing in 1962. SSI was set up in 1966, Panacea Biotec in 1984 and Bharat Biotech in 1996. Universal immunization market The domestic market is classified between the vaccines procured for the Universal Immunization Programme (80% of the market) and the retail market (20%) (Confederation of Indian Industry n.d., p. 14). India launched the Expanded Programme of Immunization in 1978 with four vaccines – BCG (tuberculosis), Oral polio vaccine (OPV), Diphtheria, Pertussis and Tetanus (DPT) and Typhoid-paratyphoid vaccines. Tetanus toxoid replaced Typhoidparatyphoid vaccine in the early 1980s. Measles vaccine was added and the programme was expanded and renamed as the Universal Immunization Programme (UIP) in 1985 (Lahariya 2014). Currently UIP provides free vaccination for twelve vaccine preventable diseases Diphtheria, Pertussis, Tetanus, Polio, Measles, Rubella, childhood Tuberculosis, Rotavirus diarrhoea, Hepatitis-B and Meningitis & Pneumonia caused by H. Influenza Type-B, Pneumococcal Pneumonia and Japanese Encephalitis (the last two only in endemic districts). These vaccines were added to the UIP in stages. Among the new vaccines added in the recent past are: Rotavirus vaccine (2016), Measles Rubella vaccine (2017) and Pneumococcal Conjugate Vaccine (PCV) (2017) (Ministry of Health and Family Welfare 2021, pp. 60-61). Unlike the retail market where several products are patent protected, the UIP market is essentially a generic market with hardly any patent barrier to entry. When UIP was introduced in the mid-1980s, India was self- sufficient in the basic vaccines of BCG, DPT and Tetanus toxoid and depended on the public sector for supplies (Madhavi 2005; Lahariya 2014). But there has been a progressive decline in the role played by the public sector and today it is a marginal player. The public sector did not manufacture in 2018-19, 13 out of the 17 vaccines listed in Table 1. Out of the remaining 4 vaccines, its share is negligible in two Page 3 of 16 vaccines. It is dominant in only anti-rabies vaccine (78.3% market share) and has some presence in DPT (29.2%). Retail market The structure of the retail market is radically different. It is a smaller but higher priced segment dominated by the MNCs (Ghosh 2019, p. 16). According to the AIOCD-AWACS data base (based on sales to stockists), MNCs accounted for 64% of total vaccine sales of Rs 21880 million in 2019. GSK is the largest (33.2% market share) followed by Sanofi India (18.5%), Pfizer (7.1%), MSD (3.9%) and Abbott India (1.5%). Vaccine products with single doses costing more than Rs 2000 (in March, 2019) accounted for 37% of the sales and those costing between Rs 1000 and Rs 2000, 38% of the sales in 2018-19. The share of products costing less than Rs 500 was only 20%. Among the high-priced products sold widely are Meningococcal vaccine sold by Sanofi India (Rs 4950 per single dose), Pneumonia vaccine sold by Pfizer (Rs 3801) and Human Papillomavirus Bivalent vaccine sold by MSD (Rs 3250). As mentioned above, the high priced MNC products are primarily imported. While India is a major exporter of vaccines, India has also emerged as a big market for imported vaccines. In the late 1990s and early 2000s, annual average imports of human vaccines in India were about USD 25 million. Since then, imports have increased to USD 110 million in 2010, USD 304 million in 2015 and USD 340 million in 2020 (UNCOMTRADE database). Where domestic supply is inadequate, India imports UIP vaccines from developing countries, for example polio vaccines and Japanese encephalitis. Indonesia is a major source of Polio vaccines imports and China that of Japanese encephalitis. In 2020, Indonesia accounted for 15% of India’s total imports and China (including Hong Kong) about 7%. But almost 80% of imports in 2020 were from developed countries such as Belgium, France, the Netherlands. These are mainly for newer vaccines the production and sales of which are dominated by few MNCs world-wide. They use patent and other barriers to prevent entry of generic firms and inhibit competition to charge high prices. India re-introduced product patent protection in medical products in 2005 and hence patented vaccines cannot be manufactured by local firms unless specifically permitted to do so. Not surprisingly, there has been a sharp rise in imports since then. Market for private sector The government procurement of vaccines under UIP provided the main market initially for the private sector. Subsequently the international market became much more significant. The efforts of international organizations such as UNICEF and GAVI to immunize children around the world led to a huge increase in demand for vaccines. These vaccines are procured through a competitive bidding process restricted to manufacturers with vaccines pre-qualified by the World Health Organization. To be prequalified by WHO, manufacturers need to set up plants and follow manufacturing processes to satisfy the standards of safety and efficacy prescribed by WHO. The Indian firms realized the demand and profit prospects and undertook the necessary investments to satisfy the prequalification process. Till 2021, 111 products - different Page 4 of 16 doses of 28 types of vaccines manufactured in India - have been prequalified. The WHO Prequalification (WHOPQ) vaccines manufactured in India cover both older types such as DPT, Measles, Rabies, Tetanus Toxoid and newer ones such as Hepatitis B, Haemophilus influenzae type b, Influenza, Pandemic (H1N1) and Meningococcal A Conjugate. SSI was the first Indian company to get WHOPQ for Measles vaccine in 1993. By 2006, when other companies started getting WHOPQ, SII already had WHOPQ for 9 more vaccines including for Diphtheria Tetanus (DT), Tetanus Toxoid (TT), Measles, Mumps and Rubella, Hepatitis B. By 2021 SSI had the largest number of WHOPQ vaccines (22) followed by other Indian private firms Biological E (8), Bharat Biotech (4), Panacea Biotec (2) and Cadila Health Care (1). Haffkine Bio Pharmaceutical Corporation is the only public sector firm with WHOPQ for 3 types of polio vaccines. The MNC, Sanofi Healthcare has WHOPQ for 4 vaccines.2 As the largest supplier to international procurement agencies, India has emerged as a leading manufacturer of vaccines in the world. It exports vaccines to about 170 countries and exports account for more than two thirds of the total volume of vaccines manufactured in the country. India’s share in global vaccine market is currently about one-third.3 So far as the domestic market is concerned, the private sector started with the basic vaccines where the public sector dominated. The suspension of manufacturing licences of the three government vaccine units in 2008 provided a huge opportunity and market for the private sector. But even prior to that the private sector has been investing in creating capacities not only in the older vaccines but also in the newer ones where the public sector did not enter. Currently even in the older vaccines – BCG, DPT and TT - where the public sector once dominated, the installed capacities in the private sector are much more than that in the public sector. For example, BCG vaccine used to be solely supplied by the public sector till the mid2000s. But by 2019, more than two-thirds of the installed capacity is in the private sector (Table 1). Sourcing of technology by private sector The government in India and the international agencies provided the market. But from where did they get the technology? Here too, through formal and informal channels, the government helped the growth of the private sector. Consider SSI, which is the largest vaccine manufacturer in the world alone accounting for 28% of the global volume (the next largest being GSK with 2 Computed from “Prequalified (https://extranet.who.int/pqweb/vaccines/prequalified-vaccines). Vaccines”, WHO 3 “Indian Vaccine Industry: A Brief Overview”, November, 11, 2020 (http://ivma.in/the-indian-vaccineindustry-a-brief-overview/). Page 5 of 16 11% share). Even in value terms SSI is the fourth largest manufacturer with 4% share.4 The Poonawalla family, the founder of SSI used to be in the business of horse breeding and racing and owned the largest stud farm in the country. They had no background in vaccine manufacturing and naturally lacked technological knowledge to set up and run a vaccine plant. But they used to donate retired horses to Haffkine Institute which required blood of horses to manufacture serum and vaccines. And that provided the link. As narrated by the Executive Director of SSI, it was the delay in getting anti-venom serum from the Haffkine Institute to save the life of a horse bitten by a snake that gave Poonawallas the idea why not start serum manufacturing themselves. They also realized the business opportunity. With the help of technical staff recruited from Haffkine Institute, they started manufacturing of serums against tetanus and snake bites and then diversified to vaccines.5 Three of the people recruited from Haffkine Institute are currently board members of the company.6 It is to the credit of SSI that it has been able to develop in house capability over the years to emerge as such a major player in this technology intensive sector. Not only at SSI. The government contributed to the development of the other private firms as well. An important technical functionary of Bharat Biotech, for example was an employee of Pasteur Institute of India with years of experience there in development and production of vaccines.7 In fact, as the Javid Chowdhury Committee (2010) observed: “The private sector manufacturers of vaccines/sera in the country are relatively recent entrants and the experience they draw upon is largely through the technical staff of public sector units who are either retirees, or have been poached from public sector units” (p. 23). The private sector also benefitted from the government through more formal channels. Technologies for manufacturing a number of vaccines marketed by private firms were provided by or jointly developed by government laboratories. Notable examples include the country’s first r-DNA Hepatitis B vaccine and the Covid-19 vaccine, Covaxin. To develop the former, Shantha Biotechnics worked closely with the government laboratory, the Centre for Cellular and Molecular Biology (CCMB) and other Indian research institutes. Covaxin has been 4 Global Vaccine Market Report, 2020 source/immunization/mi4a/2020_global-vaccine-marketreport.pdf?sfvrsn=48a58ada_1&download=true). (https://cdn.who.int/media/docs/default- 5 Lauren Frayer, “The World's Largest Vaccine Maker Took a Multimillion Dollar Pandemic Gamble”, March 18, 2021 (https://www.npr.org/sections/goatsandsoda/2021/03/18/978065736/indias-role-incovid-19-vaccine-production-is-getting-even-bigger). 6 Yash Bharati, “How Adar Poonawalla's Family Started Serum Institute of India & Turned it Into a $12.8 Billion Business: The secret lies in the horses”, 18 January, 2021 (https://www.gqindia.com/getsmart/content/how-adar-poonawallas-family-started-serum-institute-of-india-and-turned-it-into-adollar128-billion-business). 7 “Managing Committee”, Indian Vaccine Manufacturers Association (http://ivma.in/managingcommittee/). Page 6 of 16 developed by Bharat Biotech in collaboration with the Indian Council of Medical Research (ICMR) and the National Institute of Virology, Pune (NIV). Among the other vaccine technologies developed at government laboratories and transferred to private firms are: Leprosy vaccine (National Institute of Immunology, New Delhi and Cadila Pharmaceuticals); Hepatitis A candidates (NIV and Bharat Biotech); Rotavirus (ICMR and Bharat Biotech); Cholera vaccine (Institute of Microbial Technology, Chandigarh/ National Institute of Cholera and Enteric Diseases, Kolkata/ Indian Institute of chemical Biology, Kolkata and Shantha Biotech (Madhavi 2008a, Table 2). Underutilization of potential of public sector Two of the government vaccines units - Central Research Institute, Kasauli (CRI) and Pasteur Institute of India, Coonoor (PII) are more than a century old and the third one, BCG Vaccine Laboratory, Guindy (BCGVL) about 70 years old. The technical knowledge built up over the years in these units is quite unique among developing countries. These units not only laid the foundations of the industry and met the vaccine needs of the country over the years. They have also demonstrated their ability to innovate new processes and products despite the constraints under which they worked (Madhavi 2008b). CRI established in 1905 started with snake bite and Typhoid vaccines. But over the years it developed and produced different types of antirabies vaccines, Japanese encephalitis and yellow fever vaccines apart from DPT group of vaccines.8 BCGVL has continued to focus on BCG vaccines since its inception in 1948 but has introduced several innovations including switchover of production from liquid to freeze dried form and commencement of BCG vaccine for cancer therapy.9 Similarly, PII has maintained its emphasis on Anti-rabies vaccine but has developed several improved products to make treatment more affordable and convenient in addition to diversifying to DPT group of vaccines. It was also the first one to develop and produce Trivalent (Sabin) Oral Polio Vaccine (Pasteur Institute of India 2020, p. 17). It is not only that the government vaccine units had in house manufacturing and innovation capabilities. India also has huge expertise in government R&D laboratories and academic institutes. There are 25 research-based Institutes and laboratories involved in vaccine development in the country10 and the private sector has used the services of some of these institutions as we have mentioned above. 8 “Milestones of CRI, Kasauli,” website of CRI Kasauli (https://crikasauli.nic.in/Milestones). 9 “Achievements,” website of BCG Vaccine Laboratory (https://dirbcglab.gov.in/achievements.html). 10 “Institutes/Labs involved in Vaccine Development”, website of India Science, Technology & Innovation (https://www.indiascienceandtechnology.gov.in/covid-19-vaccine/institutes-labs-involvedvaccine-development). Page 7 of 16 The tremendous technological resources of the public sector could have been used for expanding capacities and upgrading technology not only in the existing lines of manufacturing. but also, for diversifying to newer vaccines. The public sector could have continued to be dominant in vaccine manufacturing. But this did not happen. While the government started some projects, it was the private sector which took the main initiative to grow not only in the older vaccines but also in the new vaccines often taking help from government laboratories. While the private sector upgraded technology not only to satisfy local regulatory requirements but also WHOPQ requirements, the public sector units failed to do so. Suspension of manufacturing licences Manufacturing licences of the three government units - CRI, PII and BCGVL were suspended in January, 2008 on the ground that these units are not GMP compliant. Good Manufacturing Practice (GMP) comprises of a set of safeguards and procedures at each stage of the production process to ensure that the product manufactured is effective and safe. Based on the GMP prescribed by WHO, different countries have formulated their own GMP standards. India revised Schedule M of the Drugs and Cosmetics Act, 1940 to implement GMP on 11 December, 2001. Existing units were given time till 1 July, 2005 to implement these GMP standards. GMP covers all aspects of the production process including starting materials, premises, equipment and training of workers. Even in the mid-2000s, these units were the predominant sources of vaccine supplies for the UIP. For the 4 vaccines produced by these units for UIP, the share these government units were 100% in BCG, 78% in DT, 64.3% in TT and 59.1% in DPT during 2004-05 to 2007-08 (Javid Chowdhury Committee 2010, Annexure G). But with the suspension of the licences, as these units stopped production, the entire market for the public sector was eliminated. The immediate effect was that shortages were faced in some states (Javid Chowdhury Committee 2010, para 5.3). While the shortages were taken care of by relying on the private sector, the cost went up significantly. The prices were stable during 2004-05 to 2007-08 when the government units were major suppliers. But the prices more than doubled in 2008-09 and 2009-10 when the private sector were the sole suppliers (Parliamentary Standing Committee 2009b, pp. 9-10). At the time of ordering the closure of the government units in 2008, the government announced that a new integrated vaccine complex will be set up at Chengalpattu, Tamil Nadu. Under public pressure, the government also revoked in 2010 the suspension of the licences and decided to revive the units. But as we will discuss below, the Chengalpattu complex is not yet operational with an uncertain future and the process of making the government units GMP complaint has taken a long time. If we go into the reasons why technology was not upgraded and the government units were forced to stop production in the first place and why it has taken a long time to revive these units, we will find that the basic problem has been underinvestment and neglect of the units by the government. Page 8 of 16 Ultimately the growth of an enterprise depends on the objectives of the people who own and control it. CRI and BCGVL function as “subordinate offices” under the Directorate General of Health Services of the Ministry of Health and Family Welfare. They are required to seek approval of DGHS even for minor matters. PII was also set up as a departmental unit but its status was changed to a registered society in 1977 and since then is managed by a governing body under the Ministry of Health and Family Welfare. But PII too does not enjoy financial autonomy. The scientists and technical persons in these units did not have the necessary freedom to take major decisions and did not have access to funds. The growth of the units depended on what those in the Ministry did or did not do. It is here that the main difference between the private and public sectors lies. The promoters of the private firms wanted the firms to grow and implemented projects and programmes with necessary funding. The strategic intent to expand and diversify which is so evident in the private sector has been absent in the public sector. The government units were left to themselves to survive without support, funding and decision autonomy. Underinvestment and neglect of public sector CRI and BCGVL and the Central Drugs Standard Control Organization (CDSCO) which is the National Regulatory Authority in India, function under DGHS. It is obvious that century old buildings and traditional ways of manufacturing would not conform to GMP. GMP was not suddenly implemented. It was known to DGHS even before 2001 when GMP was being deliberated upon and after 2001 when it was implemented, that these units do not conform to GMP. Compliance with Schedule M/GMP involves additional costs including fixed costs for constructing and re-designing factory building and premises. In view of the lack of financial and decision-making autonomy in the government units, it was the responsibility of DGHS to initiate the process. But as the two Parliamentary Standing Committees (2009a and 2009b) pointed out, hardly any funds were allocated to these two government units for the purpose and practically no initiatives were taken to change the century old building structures and introduce other changes to make these units conform to GMP. And even at CRI where an attempt was made, the commitment was missing. A private firm was appointed by the Ministry to implement a plan to upgrade the facilities. The project was dropped after spending Rs 118.60 million after nine years in December 2006 after the private firm informed the Ministry that it lacks the technical competence to complete it. Awarding the contract to a technically incompetent firm and then realizing it after nine years reveals the cavalier attitude of the Ministry (Parliamentary Standing Committee 2009a, pp. 3, 9). When the manufacturing licences were suspended in 2008, it appears that the initial plan was not to revive manufacturing but to convert these units to testing laboratories or training units Page 9 of 16 (Parliamentary Standing Committee 2009a, p. 11). However, in the light of a public interest litigation filed in the Supreme Court and critical observations by the two Parliamentary Standing Committees and a committed appointed by the Ministry of Health chaired by the former Health Secretary (Javid Chowdhury Committee 2010), the suspension was revoked in February, 2010 and a decision was taken to revive these units and make these GMP compliant. But the progress has been extremely slow. The construction of the new GMP facilities at BCGVL was approved in November 2011. But it was in 2020-21 that supplies of vaccines manufactured in the new plant started.11 Immediately after the revocation of suspension of manufacturing, renovation of GMP compliant facilities was approved in 2010 at CRI. The construction was completed in 2012-13 but it was only in 2019-20 that commercial manufacturing and supply of DPT vaccines for UIP began.12 Similarly, even trial runs at the new DPT facility at PII began as late as in in 2020-21 (Ministry of Health and Family Welfare 2020, p. 287). The decision makers in the Ministry of Health were more concerned about the perceived impact on the private sector than on vaccine security in the country. The Secretary of the Ministry of Health informed the Parliamentary Standing Committee 2009b: “If the National Regulatory Authority, who is Drug Controller General of India, adopts dual standard of imposing certain GMP norms on private sector but having completely non-compliant public sector, he would stand being derecognized by the World Health Organisation (WHO) which is the main agency for getting the country’s exports to the other countries” (p. 11). While interacting with Parliamentary Standing Committees 2009a and 2009b and the Javid Chowdhury Committee 2010, ministry officials repeatedly emphasized this aspect that if the NRA is derecognized, the private manufacturers will not be eligible for WHO pre-qualification. But as the Javid Chowdhury Committee pointed out, there were no basis for such apprehensions. WHO can of course determine the criteria for WHOPQ. So far as national regulatory authorities are concerned, WHO can and does provide guidelines for GMP. But de-recognizing NRAs is beyond the jurisdiction of WHO. In any case, the team including WHO nominated experts which inspected the government units for GMP compliance in 2007-08 did not recommend suspension of production. It only pointed out some deficiencies for corrective action (Javid Chowdhury Committee 2010). The promptness with which the government suspended the manufacturing licences, the initial reluctance to revive the units and the lack of urgency to make these GMP compliant suggest that the government did not consider public sector to be of critical importance. It is a shortsighted policy to solely rely on the private sector. To reduce the uncertainty of supplies and to 11 “From Director’s Desk”, website (https://dirbcglab.gov.in/director_disk.html). 12 of BCG vaccine Laboratory “Milestones of CRI, Kasauli,” website of CRI Kasauli (https://crikasauli.nic.in/Milestones). Page 10 of 16 control the prices of vaccines, a strong public sector is crucial. The government needs to be actively involved in running public sector units and facilitating their growth. Chengalpattu vaccine complex The work for the integrated vaccine complex at Chengalpattu was supposed to start in January, 2010 and to be completed by December, 2012 (Parliamentary Standing Committee 2009b, p. 3). It was meant to compensate for the loss of production in the government units. But it was not before April 2012 that the government actually approved the project at a cost of Rs 5940 million to produce 585 million doses of pentavalent combination (DPT plus Hep B plus Hib), BCG, Measles, Hep. B, Human Rabies, Hib. and Japanese Encephalitis vaccine.13 The construction of the plant was completed in 2016 and marginal investments need to be made to make the plant operational. But the government has not spent the additional amount. The government has decided in 2017 to hive off the project as a separate SPV and sell the 100% government equity through the auction process (Ministry of Health and Family Welfare 2020, p. 313). Tenders have been floated seeking expression of interest from vaccine manufacturers to use the plant. No bids have been received despite extension of the due date. The government has also not yet responded to the proposal of the chief minister of Tamil Nādu to hand over the complex on lease to manufacture vaccines.14 The government has provided financial aid to private firms - SII and Bharat Biotech – in different ways (Mani 2021, Annexure 3). But the government is not willing to incur some additional amount and make the huge complex operational. This reflects the attitude of the current government towards its own public sector. This must change. It is important for the government to take the responsibility to ensure that the project is completed and is run properly. With this the government will have a sizable presence in the vaccine sector and can directly influence supplies to satisfy public health needs. Other public sector vaccine units The focus of our discussion in this paper has been on the three government units under the Ministry of Health. There are four other public sector vaccine units in the country. Haffkine Institute has a long history but currently the only vaccine manufactured by Haffkine 13 Answer to Unstarred Question No 3104, Lok Sabha, 15 March, (http://164.100.47.194/Loksabha/Questions/QResult15.aspx?qref=138002&lsno=15). 2013 14 Akshaya Nath, “DMK Mounts Pressure on Centre to Make Chengalpet Integrated Vaccine Complex Operational,” July 21, 2021 (https://www.indiatoday.in/india/story/dmk-mounts-pressure-on-centre-to-make-chengalpetintegrated-vaccine-complex-operational-1830906-2021-07-21). Page 11 of 16 Biopharmaceutical Corporation, a government of Maharashtra undertaking is Oral polio vaccine (OPV).15 This is the only public sector unit with WHOPQ for the product. Similarly, Bharat Immunologicals and Biologicals Corporation Limited (BIBCOL), set up by the Department of Biotechnology of the government of India in 1989 is involved in manufacturing OPV. It was set up to manufacture OPV on the basis of technology imported from erstwhile USSR. Commercial production was started in 1996 and the company has been supplying OPV for the UIP. But it has not been able to make a major impact. Unlike as planned, OPV could not be manufactured from basic stages and manufacturing is based on bulk imports. It has been under financial stress for a long time (Madhavi 2005; Ghosh 2019). Perpetual dependence on imports and on a single product have been major concerns (BIBCOL, Thirty Second Annual Report, 2020-21). While some recent attempts have been made to diversify production to Cholera vaccine and the Covid-19 vaccine, Covaxin,16 any major plan of action to initiate production from basic stages and make the unit viable in OPV is conspicuous by its absence. Another unit set up by DBT was Indian Vaccine Corporation Ltd. (IVCOL). It was set in 1989 at Gurgaon for the production of Measles vaccine with technology transferred from a French public sector company. But with a private firm taking over the former, the technical collaboration never materialised and the project did not take off (Madhavi 2005). Serum Institute of India was able to manufacture and supply Measles vaccine. But the government closed down IVCOL. No effective steps were taken to develop the technology through collaboration with government laboratories or other means. Thus, the record of the Department of Biotechnology in managing the vaccine units under its administrative control has been no better than that of the Ministry of Health. These units were also victims of under-investments and neglect by the government. HLL Biotech was set up to implement the Chengalpattu project. With the project not yet in operation, it markets some vaccines manufactured by the private company, Biological E on the basis of a (loan) licence received by it from drug control administration.17 Currently the only public sector unit with some presence in the vaccine sector is Human Biological Institute (HBI). It is part of Indian Immunologicals which was set up by the National Dairy Development Board (NDDB) in 1982 to manufacture veterinary vaccines. It is a very 15 Haffkine Institute was bifurcated in 1975 into Haffkine Institute for Training, Research and Testing and the manufacturing unit, Haffkine Bio-Pharmaceutical Corporation Ltd. 16 “Upcoming Products”, website of BIBCOL (https://www.bibcol.com/upcooming_products.php). 17 “Products”, website of HLL Biotech Ltd (http://www.hllbiotech.com/business/products). Page 12 of 16 successful veterinary vaccine manufacturer having one of the largest plants in the world for vet vaccines.18 HBI started manufacturing human vaccines in 1998 and currently it manufactures DPT, TT and Hep B vaccines for UIP apart from anti-rabies vaccine. It is the largest manufacturer of anti-rabies vaccine and also has a substantial market share in DPT (Table 1). Being a part of a successful public enterprise has contributed to the superior performance of HBI. Similarly with proper strategic intervention, support and funding there is no reason why the units under the Departments of Health and Biotechnology cannot be viable and why these cannot be major players in the vaccine sector. Lately, in the light of the criticism as to why technology for manufacturing Covaxin was transferred to only one private firm, viz, Bharat Biotech, the government has decided to include Haffkine Biopharmaceutical, BIBCOL and HBI in the plan to expand manufacturing of Covaxin. Concluding remarks Two disquieting aspects of the vaccine sector in India which the discussion above reveals are the crowding out of the public sector by the private sector in generic manufacturing and the dependence on high priced patent protected imported vaccines in the retail market. The indifference displayed by the government towards the public sector units leading to its decline coincided with the rise of the private sector. The commendable progress of the private sector may have prompted the government not to take an active interest in the growth of the public sector. This needs to change. For public health considerations, particularly in pandemic situations a strong public sector is crucial. The growth of the private sector need not be and should not be at the cost of the public sector. The government also needs to intervene to reduce the dependence on high priced imported vaccines. In line with the TRIPS agreement of WTO, India has re-introduced product patent protection in 2005. But the TRIPS agreement also provides some flexibilities for the countries to take appropriate action to make products more affordable. Through creative use of these flexibilities together with necessary innovation and industrial policies, both the local private and public sectors need to be supported to enable them to play a more significant role in the patent protected markets. 18 “Overview, website of Indian Immunologicals Ltd (https://www.indimmune.com/aboutus/overview). Page 13 of 16 Table 1: Share of Public Sector in Installed Capacity and Production of Vaccines in India, 2019 Total installed capacity, as on 31 March, 2019 (Million doses) Total Production, 2018-19 (Million doses) Share of public sector in total installed capacity (%) Share of public sector in total Production (%) Vaccine Tissue culture based anti-rabies vaccine (TCARV) 49.40 15.94 36.4 Diphtheria, Tetanus, Pertussis (DTP) 555.80 63.45 33.2 Tetanus Toxoid (TT) 1329.70 395.39 33.9 Hepatitis-B 531.00 86.09 11.3 BCG 280.00 183.62 28.6 Measles 430.00 155.00 7.0 Tetanus and Diphtheria (Td) 200.00 120.00 0.0 Japanese Encephalitis vaccine (JEV) 17.40 0.50 0.0 Typhoid (Vi-Poly) 43.30 2.30 0.0 Typhoid (AKD) 94.00 1.90 0.0 Quadrivalent Meningococcal Meningitis Vaccine (QMMV) 4.00 1.80 0.0 Haemophilis (Hib) Influenzae Vaccine 128.75 5.28 0.0 Quadruple Vaccine 200.00 4.26 0.0 Tetravalent Vaccine 201.50 0.44 0.0 Pentavalent Vaccine 687.57 253.35 0.0 Measles, Mumps and Rubella (MMR) 500.00 51.35 0.0 Measles and Rubella (MR) 65.00 40.00 0.0 Source: Computed from Central Bureau of Health Intelligence 2020, Table 6.2.12 (pp. 44145). 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