Focus on raising vaccine output

The International Monetary Fund (IMF) has come out with a discussion paper that suggests spending $50 billion on pandemic containment can avert loss of hundreds of thousands of lives and $9 trillion in economic output. It calls for at-risk investment in vaccine manufacturing capacity by national governments. This appears to be eminently sensible. Asking private companies to take on the risk of either developing vaccines or vaccine ingredients or vaccine manufacturing capacity would build layers of risk premia into the cost of the final vaccine produced, even if private enterprise is willing to take on the risk.

The experience of Serum Institute of India is instructive. It took the bold decision to invest in additional capacity to produce the AstraZeneca-Oxford University vaccine, long before the vaccine got official approval, and the world should be thankful that it did. However, when the vaccine was approved, the company found the government of India forcing it to sell to the government at rock bottom prices and imposing an export ban. This does not help the cause of expanding vaccine production capacity.

The sensible course is for the government to offer grants to companies with proven pharmaceutical, if not vaccine-making, credentials to set up capacity and make upfront payments for large volumes for the domestic vaccination programme and donations abroad. The capacity for export can be financed by multilateral sources and the companies themselves.


The central government can make arrangements separately with state governments and insurance companies on sharing the cost of vaccines. In any case, the IMF also talks about concessional multilateral finance for the pandemic containment effort. Several state governments have announced suspension of vaccination for the age group 18-44 years. This rationing was inevitable when vaccine eligibility was expanded way beyond available production capacity. The only solution is to raise vaccine and vaccine-ingredient capacity, even as global efforts are on to lift intellectual property restrictions.