Questions about the global vaccine shortage

Vaccine shortages in rich as well as poor countries are forcing people to re-examine modern manufacturing practices, supply chain theory, and the limits of neoliberal economics. Influential voices across the globe are raising questions about not just the responses to the Covid crisis but even the suitability of current orthodoxies in the post-pandemic world.

These questions will need to be debated extensively and are important to flag off because policymaking in the future will need to take these into account.

The vaccine shortage has hit most countries. These include rich countries — Canada and those in the European Union — who had all ordered excess vaccines well in advance and in excess of their population’s needs as well as poor ones that depend on the Covax alliance. And even India, which has long boasted of being a low-cost vaccine supplier to the world.

Poor planning by the Union government has ensured that India is not just short of doses but also that the shortage will remain for quite some time. Typically, the Union government has now passed the buck to the states and private players.

Only three major nations are sitting in a surprisingly comfortable position — the US, the UK and China. Some smaller countries are well placed but they are rich, with small population and tiny geographies.

In all the three, the government played a big role in financing, expanding and monitoring production. The US, despite then President Donald Trump’s scepticism about Covid, chose to keep a close eye on promising vaccine candidates and ordered from four different firms, paying enough to get priority even before any of them had finished full clinical testing.  It also prepared and took control of contract manufacturing facilities. It implemented the Defence Production Act to ensure that raw material suppliers prioritised domestic demand.

The UK government did not go to this extent but it worked closely with AstraZeneca, which was developing the vaccine with the Oxford Research Group, to ensure that it got top priority.

China always controlled the vaccine manufacturers, monitoring its domestic vaccine development and supplies, spreading the risk over four companies all based within their borders. Though they have been slower in their rollout than the US, part of that is because they have controlled Covid through other measures. They have the ability to quickly scale up too.

Canada and the EU find themselves in the doldrums for different reasons. Despite placing orders for four times as many vaccines as it needed, and paying in advance last year, Canada is short of vaccines. Part of the problem is that it has let its domestic, publicly-funded firms producing vaccines wither over the years. It is entirely dependent on global suppliers.

The EU has capacities but made some wrong bets on vaccines that did not work out. It also placed orders as a bloc rather late and needs to wait until orders for the US, the UK and Canada are fulfilled in some cases. It has also been criticised for being too slow, negotiating too hard, and acting as a difficult customer and not partner, unlike the US and the UK. Some members have done better because they took things in their own hands.

The EU’s reaction to the vaccine shortage has been somewhat like the Indian government’s response. They are also trying to block vaccine firms from supplying global customers before the domestic requirements are addressed.

India’s sorry tale doesn’t need recounting. The government made three fatal mistakes. First, it put all its eggs in two baskets while nations with smaller populations were spreading their risks with multiple suppliers. The bigger sin was in not checking whether the two firms had the capacity to supply enough. The third error lay in not placing firm orders for the total requirement.

 It was a penny-wise, pound-foolish approach and this is going to cost the country massively in terms of human suffering and economic losses.

Meanwhile, our vaccine manufacturers also miscalculated, placing all their raw material requirements in just one or two baskets within the US. None of these raw materials are particularly difficult to make. Early in 2020, it had become known to all manufacturers that the old supply chain dogma of depending on a single or at best two suppliers play havoc in a pandemic but our firms did nothing to diversify their bets. Not just vaccine firms, even Indian drug manufacturers are facing difficulties as much of their Active Pharmaceutical Ingredients (APIs) still come from China.

The questions now being debated are as follows. Have many countries, including India, gone the other extreme in reducing the role of publicly-funded enterprises in manufacturing, specifically in critical areas such as drugs and vaccines? Does the old theory of depending on one or two suppliers or countries for inputs make sense anymore? Three, what are the limits of free markets and globalisation when there are only a handful of global suppliers who exert excessive dominance.

There are no easy answers.

The writer is former editor of Business Today and Businessworld and founder and editor of Prosaicview, an editorial consultancy