How to Raise Vaccine Output

Context: There is a need to gear up not just to expand production but also to counter new virus variants.

Challenges in scaling up vaccine production

• Huge demand: Failure to timely invest in increasing vaccine production capacity, resulting in huge demand at hand (Requirement of 9 million doses a day from the current level of 2.3 million).
  • Government mis-interventions: Not funding expansion of capacity, low procurement rates and other controversies associated with vaccine pricing.
• Possibility of 3^rd wave and consequent mutation: A third wave is likely, and all virus mutate.
  • For e.g., decades of struggle to develop an HIV vaccine has not succeeded because of the shape-shifting tendency of that virus.
  • The British, the Brazilian and the South African ones — that the WHO has described as being of concern. Now, the Indian variant, too, has been labelled as a variant of concern.
  • The challenge, therefore, is to produce not just more vaccines but also new kinds of vaccines and new kinds of testing kits that both detect the virus accurately and do it fast.
• Risks in vaccine market: Capital intensive in developing and testing of vaccines, yet market is uncertain due to unpredictability associated with pandemics. E.g. as observed in original SARS and Ebola virus.
  • The rationale for granting vaccine innovators a chance to build hefty intellectual property margins into their vaccine prices is this risk.

Strategies to scale up vaccine production

• Calling the entrepreneurs: Indian biotechnologists slog away in labs around the world, some of them at the cutting edge of research. Vaccines must be reverse-engineered.
• Socialise Risk: Take the risk out of the vaccine companies and spread it out across society.
  • One way is for the government to fund the entire vaccine production process directly. This is what the US government did under Operation Warp Speed.
  • Another way is to use market methods of risk transfer: Government must be liberal with start-up funding and prepurchase commitments.
    • Issue risk-transfer bonds: Three- to five-year tenor bonds offering higher than normal yield, and when demand for vaccines remain low, bonds would offer a lower coupon and have their principal written off in part or full.