Will the Serum Institute of India continue dominating global vaccine production?

One industry set to gain globally from the COVID-19 pandemic will be India’s 40 billion USD pharmaceutical sector, particularly the Serum Institute of India which is the world’s largest vaccine manufacturer. The company produces more than 1.5 billion vaccines annually for over 170 countries, and according to the New York Times, it is estimated that half of the world’s children have been vaccinated by their products. Yet, as the Serum Institute expands to meet the demand for its COVID-19 vaccines, it will face some financial challenges.


The Serum Institute has seen its annual revenues rise to 850 million USD annually according to the Financial Times. The company’s importance in global vaccine production was founded when it was licensed to produce 1 billion doses of Oxford/AstraZeneca’s vaccine for low- and middle-income countries. Oxford and AstraZeneca have labelled their vaccine as ‘the vaccine for the world’ as it can be transported at temperatures between 2-8°C compared to the more expensive Pfizer and Moderna vaccines which has to be kept at -70°C. The Oxford/AstraZeneca vaccine, which is capped at 3 USD a shot, will play a significant role in vaccinating the developing world. The Serum Institute has agreed to supply potentially over 1 billion doses of the vaccine to COVAX, a global initiative being coordinated by GAVI, the Vaccine Alliance and the World Health Organisation which aim to ensure rapid and equitable access to the COVID-19 vaccine.


The Serum Institute’s production of the Oxford/AstraZeneca vaccine started before its widespread approval. According to the Telegraph, the company had stockpiled 50 million doses of the vaccine before it was approved for emergency use in the UK in late December. The company was able to take such risks due to its financial structure: it is a family-run business without shareholders to answer to, unlike most other big vaccine producers. However, this comes with a financial sacrifice. Serum Institute’s CEO, Adar Poonawalla, has stated the company has invested close to 200 million USD in production at ‘personal risk’. The Serum Institute continues to increase the production of COVID-19 vaccines, with the company expanding capacity to 100 million doses a month from March, according to the BBC. The expansion in capacity has also resulted in the company agreeing to deals with Novavax to produce 1 billion doses of its vaccine, which is 89% effective against new variants of the virus, which will be used in 92 low- and middle-income countries, retailing at 16 USD per shot. The Serum Institute is therefore looking to place itself as an active participant in combatting vaccine poverty.


The Serum Institute still has big hurdles to overcome, however, as it increases its production. Cashflow issues have the potential to become an imminent problem. The company has estimated it is spending 450 million USD to mass-produce the Oxford/AstraZeneca vaccine. This has been in part offset by 150 million USD in funding from GAVI and the Bill and Melinda Gates Foundation, yet it is still searching for additional funding, worth up to $1 billion, to aid its mass production of the vaccine. S&P Global have reported that the Serum Institute is in discussions with private equity firms KKR and Blackstone to source the additional funding, yet both firms have declined to comment. The company has even considered the prospect of floating a special purpose vehicle for its vaccine candidates that could be valued at 12-13 billion USD according to Reuters.


Further, complications could arise due to uncertainty over the efficacy of the Oxford/AstraZeneca vaccine, particularly against the South African variant of the virus. Despite it being approved by the European Medicines Agency, Germany, France and Austria are only offering the vaccine to 16-64-year-olds and South Africa has paused rollouts while is investigates the vaccine further. This could have implications for its rollout in the developing world and may pave the way for other vaccine candidates to be used in vaccination programmes, particularly for the Johnson & Johnson one-shot vaccine which is proven to be 66% effective. The firm has already agreed in principle to provide 500 million doses to the COVAX programme. This may limit the Serum Institute’s future growth prospects and worsen the aforementioned ‘personal risk’.


Ultimately, the Serum Institute of India is very likely to continue its dominance in the production of the COVID-19 vaccines. Despite concerns regarding the effectiveness of the Oxford/AstraZeneca jab, there is discussion of a booster jab to increase its effectiveness. Equally, any cashflow problems that the Serum Institute may experience will likely be solved due to the company’s importance in the world’s fight against the pandemic and its current negotiations with investors that could result in a special purpose vehicle housing the company’s vaccines. Therefore, the Serum Institute will likely very much be one of the COVID-19 pandemic’s and India’s pharmaceutical industry biggest winners.


By Ainle McGuinn

Sector Head: Jared Gibson