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[e-drug] The Economist: Injecting competition into the polio vaccine market

E-DRUG: The Economist: Injecting competition into the polio vaccine market

Dear E-Drug members,

Please see below an interesting article (below) from the July 19 Economist 
how India's Serum Institute is planning to market injectable polio 
vaccine.  In short: higher volumes, lower prices.  But Serum is going 
out on a limb and lowering prices in advance of having the required 

I am interested in the reference in the article to a study done by 
Sanofi in Indonesia about the vaccine's stability in tropical climates. 
 If any E-Drug colleagues can share that 
report, I am sure other E-Drug members would also be interested.

Kind regards,

Libby Levison
International health consultant, pharmaceutical access
Boston, MA

Polio vaccines
Injecting competition
July 19, 2013
[copied as fair use]

Will the world eradicate polio? If it does, some of the credit may go to 
a 73-year-old billionaire horse-breeder from the Indian city of Pune: he 
wants to provide injectable polio vaccine at a loss—at least for some time.

The world has made much progress in the fight against polio, a dreaded 
disease which leaves infected children paralysed. India is a good 
example. In 1985 the country counted more than 150,000 cases. Next 
January, after three years without a new case, the Global Polio 
Eradication Initiative will formally declare India polio-free.

The effort to get there has been monumental. During India’s National 
Immunisation Day, for instance, more than 2.5m volunteers inoculate over 
170m children under the age of five. Since each child receives two drops 
of the vaccine, an astonishing 340m drops of oral polio vaccine (OPV), a 
vaccine developed in the 1950s by Albert Sabin, a Polish-American 
scientist, is needed.

Given such massive quantities, pharmaceutical companies such as 
GlaxoSmithKline and Sanofi Pasteur, have been able to keep the prices of 
the polio vaccine low. A two-drop dose of OPV costs between $0.10 and $0.13.

But the injectable polio vaccine (IPV) is a better way to inoculate 
children against the disease: it is safer because it does not carry the 
live virus. Unhappily, it is also more expensive. Still, nearly 140 
countries, including India, will be relying on the IPV in the coming 
years, says Apoorva Mallya of Bill & Melinda Gates Foundation. The shift 
to IPV is a key part of the endgame in the fight against polio.

This is where Cyrus Poonawalla, the billionaire horse-breeder, comes in. 
He is the founder and chief executive of the Serum Institute. Although 
it is lesser known than its European and American 
competitors—GlaxoSmithKline, Sanofi-Aventis, Merck and Novartis—the firm 
is the world’s number one producer of measles and DTP (diphtheria, 
tetanus and pertussis) vaccines. Globally, two of three children receive 
a Serum vaccine, according to some estimates.

Mr Poonawalla started Serum in 1966 with $12,000. The firm’s main 
business model is high-volume and low-cost—which attracted Mr Gates’s 
interest. Last year he and Mr Poonawalla met at a dinner. And their 
conversation led Mr Poonawalla to purchase a Dutch pharma company, 
Bilthoven Biologicals, a maker of IPV. This move allowed Serum to become 
a principal supplier of this type of vaccine.

Currently, Sanofi and GlaxoSmithKline are the primary producers of IPV. 
They sell it to UNICEF for more than $5 per dose, says Mr Poonawalla. 
But Serum will now offer it for nearly half that price. And Mr 
Poonawalla wants to “crash” the price further, to $1.60.

The steep drop is simply a matter of numbers, he explains. Once larger 
quantities are purchased (upwards of 5m doses—which is expected as more 
countries transition from OPV to IPV) it will become financially viable 
to sell the vaccine at this price.

In the short term slashing the price is a “gesture of philanthropy”: the 
company will be selling them at loss. But the move is not entirely 
altruistic. By knocking down the price, Mallya says, he will pave the 
way for a “rapid uptake” of the vaccine.

It also upsets the competition. Before heading to the Global Vaccine 
Summit, held this April in Abu Dhabi, Sanofi committed to provide a 
further 1.7 billion doses of the OPV over the next four years. Sanofi 
has already supplied UNICEF with 5 billion doses of OPV in the past two 

Serum’s plans will also push Sanofi and others to do more to help 
countries to transition from oral to injectable vaccines. Mike Watson, 
in charge of global vaccination policy at Sanofi, points out that his 
firm has supplied 1.5m doses of IPV to Indonesia at no cost. The 
donation was part of a study to see how the tropical climate might 
affect the vaccine. Sanofi also has plans to expand its IPV production 

Offering IPV at a deeply discounted price is likely to rattle big pharma 
companies. But for Mr Poonawalla this is what it takes to get the 
vaccine’s price down. “Unless a manufacturer from the developing world 
challenges the status quo,” he argues, “there will not be a cheaper option.”

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