Pune firm to offer polio shot at Rs 50

Cyrus Poonawalla?s Serum Institute of India to enter injectable polio vaccine market, undercut Glaxo

Billionaire Cyrus Poonawalla, founder of the world’s biggest maker of vaccines, will slash the price of polio immunisation and introduce shots for diarrhea and pneumonia, undercutting Pfizer and GlaxoSmithKline (GSK).

Poonawalla, who set up the Serum Institute of India Ltd in 1966, will use last year’s acquisition of a Dutch vaccine business to add the injectable form of polio inoculation to the oral drops the Pune-based company supplies to organisations such as the United Nations Children’s Fund, he said. The closely-held group also plans to sell a low-cost pneumococcal shot to compete with Pfizer’s $4-billion Prevnar pneumonia vaccine by 2016.

The plan by Serum Institute, which says it supplies vaccines used to immunise two out of three children worldwide, will “revolutionise” efforts to eradicate polio that affects nerves and results in paralysis, said Bruce Aylward, assistant director-general at the World Health Organisation. The Bill & Melinda Gates Foundation, a key funder of the effort to exterminate the malady, has backed the proposal as oral drops, made of live virus, carry the risk of infection.

HEALING TOUCH FROM A BILLIONAIRE

• Cyrus Poonawalla set up the Serum Institute of India Ltd in 1966
• It supplies to organisations such as the UN Children’s Fund
• Poonawalla bought Bilthoven Biologicals six months ago to gain technology, expertise and manufacturing facilities in the Netherlands
• Serum Institute will enter the injectable polio vaccine market with a shot costing as little as euro 0.7 (Rs 50) in multi-dose vials. That compares with the current price of about euro 2.5 (Rs 180) per shot

“On May 30, Gates came over for a private dinner at my house,” and asked that Serum Institute remain family-owned, Poonawalla, 71, who also rears thoroughbred racehorses, said in an interview at the company’s headquarters. “The obvious reason was that, as soon as we sell the company, ‘big pharma’ would immediately double the price of vaccines.”

Serum Institute will enter the injectable polio vaccine market with a shot costing as little as euro 0.7 (Rs 50) in multi-dose vials, he said. That compares with the current price of about euro 2.5 (Rs 180) per shot, Poonawalla said.

Poonawalla, who started Serum Institute by raising $12,000 (Rs 6.4 lakh) selling horses, has his own expansion plan. He bought Bilthoven Biologicals six months ago to gain technology, expertise and manufacturing facilities in the Netherlands.

The facility makes an injectable vaccine based on an inactive form of polio virus developed by Jonas Salk in the 1950s, and is one of four facilities in the world with the capability, according to Martin Friede, a scientist at the World Health Organisation in Geneva.

“We decided to go in for the acquisition of this plant with the encouragement of the Gates Foundation,” Poonawalla said.

“This plant would be scaled up for production, as we’ve done in all our other vaccines, to give 100 percent of the requirement to the rest of the world.”

London-based Glaxo and Paris-based Sanofi are the largest suppliers of injectable polio vaccine, which is used in most developed countries to protect children against crippling poliomyelitis.

Developing countries such as India use the oral formulation developed by Albert Sabin which contains live, weakened virus that’s easier and cheaper to administer.

India, the world’s second-most populated nation, hasn’t reported a polio infection since January 2011, according to government data, while Pakistan is close to eliminating a strain of the virus.

Occasionally, the Sabin vaccine virus mutates back to a virulent strain and sparks immunisation-derived polio outbreaks. That risk will deter governments and United Nations agencies from using the Sabin vaccine as the world comes closer to eradicating polio, requiring a switch to injected products based on inactivated polio virus, Poonawalla said.

The company “could really revolutionise the polio endgame,” said WHO’s Aylward. “They are potentially the most exciting game in town.”

The US Centre for Disease Control and Prevention has a contract with Sanofi ending in March to buy e-IPV, an enhanced-strength injectable polio vaccine, at $12.24 (Rs 658) a dose, the Atlanta-based agency says on its website.

The company’s strategy of not spending on advertisements and waiting for demand for the vaccines to increase has helped it control costs, Poonawalla said. Serum Institute typically enters vaccine markets about five years or longer after a new product has been released, demand is well established and patent protection has ended.

“We’re going to follow the Serum Institute’s philanthropic policy of just putting it at half the price,” said Poonawalla, who also runs two hotels in the UK and an airline charter service in India. “So we can’t see any competition coming our way.”

The price of injectable polio vaccine may be lowered further by the use of additives, called adjuvants, that boost potency, he said.

“Vaccine manufacturers in developing countries, like the Serum Institute of India, are critical to bringing down vaccine prices,” said Trevor Mundel, president of the global health programme at the Gates Foundation.

Sanofi Pasteur, the vaccine-making unit of France’s largest drug maker, is well positioned to face competition from Indian manufacturers with its Hyderabad-based unit, Shantha Biotechnics, said Olivier Charmeil, president and chief executive officer of the unit.

Shantha produces shots for hepatitis B for emerging markets, tetanus shots for Unicef, and cholera vaccine for Haiti and Africa. The company’s Shan6 inoculation will be an “affordable answer” to six diseases including polio, Charmeil said.

“Shantha allows us to manufacture vaccines with the right quality standards at affordable prices,” Charmeil said in an e- mail. Shantha, which is developing immunisations for diarrhea and cervical cancer, will fuel Sanofi Pasteur’s growth in emerging markets, he said.

Glaxo spokesman David Daley declined to comment on competition from low-cost manufacturers. The company’s shares fell 0.3 percent to 1,401 pence as of 9:21 am in London.

The GAVI Alliance, which buys vaccines for children in poor nations, and the Gates Foundation are encouraging the Serum Institute to supply the shots at a third to a quarter of the current cost, Poonawalla said.

“The Serum Institute has already demonstrated the impact its high quality, low cost vaccines can have on some of the world’s poorest communities,” said Seth Berkley, CEO of the GAVI Alliance. “GAVI welcomes all efforts by partners to drive down prices and increase access to high quality vaccines.”

The Geneva-based alliance was formed in 2000 after the Gates Foundation gave it a start-up grant of $750 million. The Serum Institute is a key supplier.

“The whole philosophy of Serum Institute right from the beginning has been very low cost,” said Poonawalla, whose strategy helped create a $3 billion business. His company supplies about a billion doses of vaccine annually, generating about $500 million in revenue. Sales this year will expand in the range of 35 per cent to 40 per cent, he said.

The Indian company plans to start selling a vaccine for diarrhea-causing rotavirus in 2015 in competition with Merck & Co’s RotaTeq and Glaxo’s Rotarix. Unicef had a contract to buy a single-strain rotavirus vaccine from Glaxo for euro 1.88 a dose and a five-strain formula from Merck for $5 a dose last year, according to data the organisation’s website.

It also plans to begin patient studies of human papillomavirus, the most common cause of cervical cancer next year, Poonawalla said. It will build a plant to manufacture about 35 million doses of the shot, he said.

Serum Institute will start selling a pneumococcal vaccine in 2016, initially protecting against 10 types of the pneumonia- causing bacterium before extending to 15 types, Poonawalla said.

Unicef had a contract to buy a 13-strain pneumococcal vaccine from Pfizer at $7 a dose last year, according to data on the organisation’s website. Glaxo also sold Unicef a version of the vaccine that protects against 10 strains of the bacterium.

“The day we launch it, it will be 100 million-plus capacity,” said Poonawalla, whose stud farm has bred horses that have won nine Indian Derbies. “We have promised to give the vaccine at $2 and still make a profit.”