Cyrus Poonawalla: Polio vaccines – Injecting competition


August 6, 2013

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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.

Published in The Economist


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 decades. 

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 capacity.

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.”

The reporting for this article was funded by the Pulitzer Centre on Crisis Reporting.