India and Serum, engulfed in second wave, stumble over their Covid promises

Forget saving humanity, the unfolding tragedy has made it clear that India - even with the world's largest vaccine maker at its disposal - cannot save itself

Adar Poonawalla made big promises. The 40-year-old chief of the world’s largest vaccine maker pledged to take a leading role in the global effort to inoculate the poor against Covid-19. His India-based empire signed deals worth hundreds of millions of dollars to make and export doses to suffering countries.

Those promises have fallen apart. India, engulfed in a coronavirus second wave, is laying claim to his vaccines. Other countries and aid groups are now racing to find scarce doses elsewhere.

At home, politicians and the public have castigated Mr. Poonawalla and his company, the Serum Institute of India, for raising prices mid-pandemic. Serum has suffered production problems that have kept it from expanding output at a time when India needs every dose. He has come under criticism for departing to London amid the crisis, though he said it was only a quick trip. He told a British newspaper he had received threats from politicians and some of India’s “most powerful men,” demanding that he supply them with vaccines. When he returns to India, he will travel with government-assigned armed guards.

In an interview with The New York Times, Mr. Poonawalla defended his company and its ambitions. He had no choice but to hand over vaccines to the government, he said. He cited a lack of raw materials, which he has partially blamed on the United States. Making vaccines, he said, is a painstaking process that requires investment and major risks. He said he would return to India when he had finished his business in London. He shrugged off his earlier comments about threats, saying they were “nothing we can’t handle.”

But he also acknowledged that the Serum Institute alone doesn’t have the capacity to vaccinate India anytime soon, much less shoulder the burden of inoculating the world’s poor.

“The problem is nobody took the risk that I did early on,” he said. “I wish that others did.”

His position represents a dramatic turnabout for Serum and the Indian government. In January, when India launched its own vaccination program while also beginning exports, Prime Minister Narendra Modi pledged its vaccines would “save humanity.”

Instead, the unfolding tragedy has made it clear that India — even with the world’s largest vaccine maker at its disposal — cannot save itself.

India’s long-term vaccination prospects improved after the Biden administration on Wednesday backed waiving intellectual property protections for vaccines, which could make it easier for Indian factories to make them. Still, that won’t help India’s current crisis, which as of Friday had claimed more than 230,000 lives — a figure that likely represents a vast undercount.

Serum won Mr. Modi’s favor in part because it fit the government’s narrative of a self-reliant India that was ready to take its place among the world’s major powers. Now both Mr. Modi’s government and Serum have been humbled, and their ambitions are being called into question.

“Our capacity is extremely poor,” said Manoj Joshi, a fellow at the Observer Research Foundation in New Delhi, which focuses on Indian policymaking. “We are a poor country. I hope that we can build some humility into the system.”

Mr. Poonawalla took the reins of the Serum Institute a decade ago from his father, Cyrus, a horse breeder turned vaccine billionaire. Before the crisis, he was extolled in the Indian media as an example of a new class of young, worldly entrepreneurs. Photos of him and his wife, Natasha, were a staple of fashion spreads.

Last year, Serum struck a deal with AstraZeneca to produce a billion doses of its Oxford-AstraZeneca vaccine, called Covishield in India. Serum received a $300 million grant from the Gates Foundation to supply as many as 200 million doses of Covishield and another vaccine in development to the Gavi Alliance, the public-private partnership that is overseeing Covax, the program to donate vaccines to poor countries.

Serum pledged between January and March to sell about 1.1 billion vaccine doses in coming months, according to a review of purchase agreements supplied by UNICEF. By the time India largely stopped vaccine exports, Serum had exported only about 60 million doses, about half to Gavi. India had claimed more than 120 million.

Since then, AstraZeneca has served Serum a legal notice over delivery delays. Serum has just “temporarily deferred” its commitments, Mr. Poonawalla said, citing the Indian government’s halt of exports.

“This is something coming from India,” he said. “It’s not the supplier that is defaulting.”

The world is grappling with the ripple effect. A spokesman for Gavi said that India’s decision to prioritize “domestic needs” is having “a knock-on effect in other parts of the world that desperately need vaccines.” Still, in a sign of the lack of options for getting vaccines, Gavi on Thursday signed a purchase deal with an American vaccine company, called Novavax, involving doses to be made by Serum.

Nepal, India’s northern neighbor, changed its procurement law to pay Serum an 80 percent advance, or roughly $6.4 million, to purchase two million doses of Covishield. Serum delivered the first million doses but is offering Nepal its money back for the second million, said Nepal’s health department director, Dr. Dipendra Raman Singh. Nepal has refused, in hope of getting more doses as India’s catastrophe bleeds across their border.

Some of India’s needs are self-inflicted. It is manufacturing only two vaccines, Serum’s Covishield and one developed in India. A government deal to produce Russia’s Sputnik V in India has been tangled in red tape. If other manufacturers had started earlier, Mr. Poonawalla said, Serum might not face as much pressure.

Serum’s failure to deliver is also AstraZeneca’s, since it pledged with Oxford University that the vaccine would be made available to countries that couldn’t afford it.

“I felt very sad that we couldn’t continue helping them, but don’t forget my first priority comes to my nation first, which has given me everything,” Mr. Poonawalla said. “And after all, I am an Indian. I may be a global Indian company, but the fact is that we are in India. We need to take care of our own, like America has taken care of their own, Europe is taking care of their own.”

But Serum can’t meet India’s needs, either.

Serum’s plans were to split its doses 50-50 between India, either directly or through Covax, and the rest of the world. Now, Serum is contributing 90 percent of India’s supply and is still falling short. Less than 3 percent of the population has been fully inoculated. In some states, people are being turned away from vaccination centers that have run out of doses.

Serum has missed its expansion targets. Mr. Poonawalla said last fall that by early this year, Serum Institute would be pumping out 100 million doses per month, of which about four in 10 would go overseas.

But after a fire at a facility that was supposed to help the company ramp up vaccine production, Serum’s capacity has remained at about 72 million doses per month. A grant of more than $200 million from the Indian government should help the company reach its goal by summer, he said.

Mr. Poonawalla has also cited raw materials supplies. In April, he asked President Biden on Twitter to “lift the embargo” on raw material used to make Covid-19 vaccines. White House officials said Mr. Poonawalla mischaracterized his situation. Still, the United States said it would send raw materials to the Serum Institute to increase its vaccine production, though Mr. Poonawalla said they haven’t yet arrived.

Mr. Poonawalla has also come under scrutiny for charging different prices to the central government, to India’s states and to private hospitals. Two weeks ago, Serum said it would charge state governments about $5 per dose, about $3 more than what it charges Mr. Modi’s government.

Last week, following criticism, Mr. Poonawalla lowered the price to $4. Still, the critics point to an interview in which Mr. Poonawalla said that he was making a profit even at the central government’s price.

Mr. Poonawalla said that Serum could sell at a lower price to India’s central government because it was ordering larger volumes.

“People don’t understand,” Mr. Poonawalla told The New York Times. “They just take things in isolation and then they vilify you, not realizing that this commodity is sold at $20 a dose in the world and we’re providing it for $5 or $6 in India. There’s no end to the cribbing, the complaining, the criticizing.”

Mr. Poonawalla has said he has received more than complaints. His company last month asked the Indian government to provide security for him, citing threats that the company hasn’t publicly disclosed. The government two weeks ago assigned him a detail that includes four to five armed personnel.

In an interview with The Times of London newspaper published last week, he described receiving constant, aggressive calls demanding vaccines immediately. “‘Threats’ is an understatement,” he told the paper.

He played down the threats in his interview with The New York Times, and his office declined to disclose further specifics. Still, the comments caused an uproar in India. Some politicians demanded that he name names.

In a petition seeking extra security for Mr. Poonawalla in the Bombay High Court on Wednesday, Datta Mane, a Mumbai lawyer, said the vaccine tycoon had been threatened by chief ministers — India’s equivalent of governors — and business leaders. The company said it had no relationship with Mr. Mane and wasn’t involved with the petition.

The Times of London reported that the threats had become so ominous that Mr. Poonawalla had fled India for Britain, a claim Mr. Poonawalla disputed. Instead, he said he was there on a business trip and to see his children, who started school there last year.

His presence in London has only fueled his critics, who excoriated Serum’s price increases. Sunil Jain, the managing editor of The Financial Express newspaper, tweeted that Mr. Poonawalla’s departure to London was “shameful” and that he should reduce prices.

The Serum Institute is planning a major expansion in Britain, investing nearly $335 million for research and development, to fund clinical trials, to build out its sales office and to possibly construct a manufacturing plant, Mr. Poonawalla’s office said.

“Everyone is depending on us to be able to give this magic silver bullet in an almost infinite capacity,” Mr. Poonawalla said. “There’s this tremendous pressure from state governments, ministers, the public, friends, and they all want the vaccine. And I’m just trying to equitably distribute it as best I can.”

Selam Gebrekidan in London and Bhadra Sharma in Kathmandu, Nepal, contributed reporting.