We've demonstrated our quality & capability to enter US, Europe: SII CEO

80-90% of our global capacity will be in India, says SII CEO Adar Poonawalla

Having played a crucial role in providing Covid vaccine to the world, Adar Poonawalla, chief executive officer (CEO) of Serum Institute of India, is busy charting plans for the future. In an interview with Sohini Das, Poonawalla speaks about his plans with new technology and on international footprint. Edited excerpts:

You are the only Indian vaccine maker to ship vaccines to the US. Does this open new doors?

Europe and the US are territories that we have not gone into earlier and we are now developing as export markets. For Covid-19, the Novavax product made at our facility is selling in the US and Europe. This happened for the first time ever that a vaccine made in India is selling in the US or Europe. Our facilities for vaccines are USFDA and EMA approved. Indian companies have not been able to penetrate those markets because of artificial barriers in those countries. But now, we have demonstrated that we have the quality and capability to do so. And, this has opened doors for new technologies and new products that we could not make initially over here. So, I think it is a major milestone for our industry.

Can you tell us about your pipeline?

We plan to launch a malaria vaccine next year, and we are launching an HPV vaccine this year, which is to prevent cervical cancer in women. We are hoping to roll out the malaria vaccine in millions of doses from the middle of next year, subject to necessary licenses and approvals from both India and WHO. It will save many lives. Medications and precautions like mosquito nets are still not enough when the season comes and there are malaria outbreaks, especially in Africa. This vaccine will make a huge difference there. It will go into production in the first or second quarter of next year because some approvals are due. We will start producing as soon as they come. We have a five-in-one meningitis vaccine as well to protect sub-Saharan Africa and travellers to the Haj areas. There are some other products, which will go to the US and Europe as well. These products would be for the international markets.

What are the new vaccine technologies that you are working on?

I have always dreamt of having alternative delivery systems to deliver our vaccines effectively. We have an oral vaccine for children for rotavirus. This helps to do away with needles and injections. We have a flu vaccine, which is a nasal. We are working on patch technologies — just put a patch on your arm and the vaccine can be absorbed by the body. This technology is in its early stages of clinical development because one has to show comparability that this technology works and gives the same immune response. Then there is technology with a high-powered jet that delivers the vaccine into the body. Not all vaccines can be used that way if you have gels and other components in the vaccine. It is an evolving process to work with various new technologies. Pre-filled syringes to deliver vaccines are just an alternative to administer a vaccine — it is ready to use and thus easier for a doctor or nurse. This product, however, would cost more.

How much have you invested in capex so far?

In all, Serum Institute has invested around Rs 25,000 crore in capex over the last few decades. Around Rs 10,000 crore of that was in the last five years, including during the Covid period. We could have grown much faster, had we been listed or taken private equity money. But my father and I always chose to maintain our flexibility and independence in decision making. So, we chose to grow organically. It took us time; but that time gave us the opportunity to have a solid reputation of reliability, quality and timely supply.

Give us an idea about how your revenues and profits grew during the pandemic?

We generally are talking of revenues of $800-900 million and grow it 5-10 per cent. During the pandemic, because of the risks I took, and because we were one of the major suppliers of the Indian programme, those revenues jumped four-five times, and so did the EBITDA. We traditionally have a 25-27 per cent net margin.

You are sitting on 200 million doses of Covishield that are about to expire…

Around 100 million doses will definitely be wasted. We are trying to salvage 50-100 million doses of Covishield out of the 200 million at the moment with the latest drive for booster doses. We were producing 250 million doses a month at the end of 2021, and suddenly, we had to stop because there was no demand even in the export markets. Starting August, around 20-30 million doses will expire every month, and all doses will expire by February-March next year. 

What are your plans about mRNA technology?

We have tied up with Greenlight (Biosciences), which is a company that can develop mRNA vaccines in a matter of three to four months. We are even looking at doing something on monkeypox with them. It is a technology that still needs some time. During the pandemic, we were in a rush, but going forward, immunisation programmes need something that can be stored in 2-8 degree Celsius temperatures and not minus 20 or minus 70 degrees. 

How are you planning to build an international manufacturing footprint?

I always imagine that 80-90 per cent of our global capacity will be in India. I have also built through contracts and in some cases ownership, some capacities in the Netherlands. We have a plant there and a campus that already makes injectable polio vaccines. We are expanding that to have other vaccines that we need in Europe. We have got contracts with UK companies where we have the rights to their facilities – Oxford Biomedica and Wockhardt do the fill-finish while the bulk is made here (Pune). In a month or two, I hope to tie up with some partners in the African continent to also build upto 200 milion doses annual capacity through contracts.

We have a 150 mn odd dose (annually) in the UK. Maybe not owning and running facilities, but through partnerships where we can send our bulk and get things done. Beyond that I won’t expand more to build global capacities because one needs economies of scale to bring prices down in vaccines. But, what we have learnt during the pandemic is that if one has one or two facilities in the African or European countries that help to respond faster during localized outbreaks.

Why were you adding capacities at a time when no vaccine maker was?

Twenty years ago, when I joined the company and we started exploring the export market, we were always short of supplying the demand that I was able to generate. That’s when I started spending more time at this campus. I started thinking about how we can build the Hadapsar campus, build more capacity, and address the bottlenecks so that we can service the ever-growing demand globally. In the countries where we were operating in, there was a large vacuum. Big pharma was dominating and as soon as we could show our quality and get WHO pre-qualified with our affordable prices, we had tremendous access to countries supplied by GAVI and UNICEF, among others. That’s how our exports and our whole story grew over the last 10 years. We have been building capacities before time, before the pandemic hit. Now, we have a capacity of 4 billion annual doses, which most would say is an over-capacity. Even that would get used up with our pipeline of products. 

Tell us about your other investments apart from vaccines?

Around 90 percent of our profits go back to building capacities or buying rights to technology. We only use 10-15 percent of our cash flows to diversify into areas like insurance, private investment company Rising Sun Investments that invests into early stage entrepreneurs who have demonstrated some scale and profitability. I don’t take that much stage of going into the VC stage, and very early stage firms because there are a lot of uncertainties.

I invest in two verticals – one is directly related to my space. For example Mylab is into diagnostics, testing of diseases like HPV, HIV etc. That is directly in our field and I saw tremendous scope in that. We are going to use them for early stage testing of HPV. I made an investment in Schott-Kaisha which is now Schott-Poonawalla, a 50:50 joint venture to make glass vials. I have been very bullish and made large investments of more than a billion dollars in these companies. Then there are financial services area and other new areas, I want to go slow and we have made smaller investments there and we want that to grow and take shape. We have made some investments in green energy too. We will tie up with one of the large players in that area to grow that area too.

We see your son joining you in events these days. How are you grooming him?

My elder son is very interested. Whenever he comes for his vacations he accompanies me like I used to do with my father – sitting in meetings etc. It is surprising how much they can absorb at that age. He is becoming a teenager now, and their mode of education is exposure as much as possible. I don’t remember what I learnt in school, but the bulk of what I learnt was from sitting in meetings, working in the field, going to different states, how to make the product, how to sell it, and so many dynamics of decision making. This is knowledge you need to have before you become a decision maker.