#3. Where do those COVID vaccines come from?

by Öner Tulum, William Lazonick, and Ken Jacobson                          

The success of the worldwide COVID-vaccine rollout depends on decisions regarding the utilization of available production capacity made both independently and in collaboration by the business firms that control this capacity. Let’s take a broad look at the types of companies upon which the mass production of vaccines relies and the types of collaborations with one another that they have been forming.

Within the global pharmaceutical industry, three distinctive types of business enterprises have been directly engaged in developing and producing COVID-19 vaccines:  1) long-established pharmaceutical companies—known as Big Pharma—among which Merck1 (USA), Pfizer (USA), GSK (UK), and Sanofi Pasteur (France) entered the COVID-pandemic era with significant legacies of vaccine production; 2) relatively young, R&D-intensive biopharmaceutical companies that, with a focus on innovative drug development, have not invested in capacity to mass produce vaccines; and 3) contract development and manufacturing organizations (CDMOs) that have invested in facilities that can be put to use for COVID-vaccine mass production. 

Data on COVID-vaccine projects indicate that, as of the end of March, 13 vaccines had been approved for limited or full use in a number of countries. In addition to the COVID vaccines already approved, 82 vaccine candidates were undergoing clinical trials, with 23 of them in the final stages. Big Pharma controls almost 90 percent of the global market for all types of vaccines. Yet young, R&D-intensive entities have been responsible for 12 of the 13 approved COVID vaccines. The exception is the Johnson & Johnson (J&J) vaccine, but even in that case the actual development work was done by Crucell, a  wholly owned Belgian subsidiary that J&J acquired in 2011 and has renamed Janssen Vaccines. The vaccine being distributed by AstraZeneca was developed by Oxford University in a small, publicly funded research lab. And it is young companies, not Big Pharma, that are developing the 23 COVID-vaccine candidates now in late-stage clinical trials.

Since the 1980s, young companies have been a major source of innovative drug products. As we have just documented, these companies’ centrality is evident in the development of COVID vaccines. The fact is that, for the past half-century, the established pharmaceutical companies have been abandoning their vaccine-development efforts, and during the current pandemic attempts by Merck and GSK/Sanofi to develop COVID vaccines have failed. The successes have come from small biotechnology firms or labs, such as BioNTech, Novavax, Moderna, Crucell, and Oxford. These research organizations were founded over the past two decades to address the global need for pandemic vaccines, including those for SARS, MERS, Ebola, and Zika.  Their labs have proven to be much more adept than Big Pharma in engaging in the organizational learning that is the essence of the drug-development process.

While these young companies have excelled in developing vaccines, they lack the internal manufacturing facilities to produce them on a significant scale once they are approved. Therefore, to produce their vaccines, such developers have had to contract with either a Big Pharma company or CDMO that has vaccine-manufacturing facilities.

BioNTech and Oxford University decided to partner with large pharmaceutical companies, Pfizer and AstraZeneca, respectively. Yet even with the substantial resources that Pfizer has committed to manufacturing the BioNTech vaccine, its internal capacity has been far from adequate. Hence, BioNTech has been seeking more partners to expand its vaccine-manufacturing capacity. AstraZeneca, which is not among the four Big Pharma companies that possessed in-house vaccine capacity prior to the COVID-19 pandemic, has had to subcontract with over two dozen CDMOs. The two largest of these are the Serum Institute of India, with which it contracted for one billion doses, and Emergent BioSolutions, a U.S. firm with which it contracted for 300 million doses. Emergent is manufacturing COVID vaccine for J&J as well.

There now exists a proliferation of collaborations among these three types of actors that is determining the scale and pace of COVID-vaccine production, as well as which countries and procurement coalitions have priority in accessing doses as they become available. Watch this space as, in forthcoming posts, CVP provides details of the relations between the developers and producers of COVID vaccines as they seek to bring manufacturing capacity to scale.

1The name “Merck” will refer throughout to the U.S. company “Merck & Co.”; outside the U.S., this firm is known as “Merck Sharp & Dohme Corp.” or “MSD.” The name “Merck Group” will refer throughout to a firm based in Germany that is totally separate from “Merck & Co.”; that company, known in most of the world as “Merck Group” or “Merck KGaA,” is known as “EMD Serono” or “EMD” in the U.S.