A couple of weeks back, the CEO of Serum Institute of India announced that the launch of a new Covid-19 vaccine Covovax developed jointly in association with Novavax is likely to be delayed to September in the country. This came against the backdrop of a US Ban on exports of key raw materials required to manufacture the vaccine. And if the export controls aren’t lifted soon enough, it could upend the global war on Covid altogether. So in today’s Finshots, we look at why this is such a massive problem and what are the complications involved.


The Story

Large-scale vaccine production is no walk in the park. If you’re manufacturing vaccines, you have to let cells replicate in a cell culture — Beefing them up each day in large sterile plastic bags. And while you could bypass the use of bags by resorting to a different production method, it can cause unnecessary delays in the process. For instance, Novavax (in association with Serum Institute of India) is hoping to produce the next billion vaccines using these very same methods. And an acute shortage of bioreactor bags is threatening to scuttle this global effort.

Also, once the cells have multiplied in numbers, you’ll have a soup that includes the actual vaccine and gunk that you don’t need. At this point, you have to carefully filter the good stuff in a sterile environment. Unfortunately, the filters (required to achieve this delicate objective) are also in short supply.

Bottom line —

The process requires adequate supplies of a wide variety of specialized inputs — everything from expensive pieces of capital equipment like bioreactors and filtration pumps to single-use bioreactor bags, adjuvants and lipids — from a range of suppliers. Bulk drug production often requires recruiting partners further along the chain to complete the final “fill and finish” step of adding other ingredients and putting the correct dosage into tiny containers suitable for shipping to health care workers. And, of course, the health care workers require syringes, needles, and personal protective equipment to administer the doses.

One missing input or piece of equipment could grind the entire supply chain to a halt — Excerpts from a report on the Peterson Institute for International Economics

And as such, when the US decided to ban the export of key raw materials, it was evident that the move was going to have a detrimental impact on the crusade against Covid.

But why is the US stooping down to such underhanded tactics?

Well, technically they're prioritizing their own self-interest. They’ll argue that they have to vaccinate ~300 million US citizens in the shortest period possible. And so it’s imperative they stock these key raw materials for domestic manufacturers. In fact, in a bid to achieve this objective the Biden government invoked the Defence Production Act for the umpteenth time recently. This law confers powers on the president who can then allocate “materials, services, and facilities” and award contracts that take priority over any other contract to “promote the national defense.” Meaning the president can allocate resources to aid this war effort against Covid. He can impose export control and prevent manufacturers from shipping key components to foreign destinations.

On most occasions, the free market decides the allocation of resources based on incentives. But in this particular case, the government dictates where resources have to be expended. And while it does help manufacturers scale their production capacity, it does have unintended consequences — Not just for the likes of Serum Institute of India, but even for US citizens.

For instance, as this article from NPR notes — "On Feb. 11, Pfizer sent a letter to hospitals alerting them of “short-term supply interruptions due to increased vaccine production” affecting cleocin phosphate, an antibiotic; Depo-Medrol, a steroid; as well as depo-testosterone and testosterone cypionate, which are used to treat certain hormonal problems and some breast cancers. “These temporary interruptions are solely a result of the prioritization of vaccine production and are not due to any manufacturing delays or issues,” the letter says."

But as we already noted, the most profound impact will likely be seen on the frontlines of vaccination efforts in countries like India. If SII cannot ramp up production, India and many other countries will have to suffer the consequences. And it won’t be a pleasant sight especially since we are already seeing the proliferation of the second wave. So hopefully, Indian and global authorities can intervene and nudge US administrators to relax restrictions.

Until then…

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