By Krzysztof Iwanek
Make in India…
SII is a an instance of a relatively small Indian family business growing to become not just a major company, but also a global player. The Poonawalla family represents the country’s small, shrinking, but overall wealthy and well-educated Parsi minority. They hail from Maharashtra, one of India’s most important states in terms of business, and, as their name signals, from the city of Pune, not far from the country’s financial heart of Mumbai. The family started in a more traditional, “old school” business (horse breeding and racing) but moved to a modern and globally important one: producing vaccines.
Also typically for Indian elites, the SII was established by an India-educated father (Cyrus S. Poonawalla) who sent his son (Adar Poonawalla) through a Western education, and later made him the company’s CEO. Adar Poonawalla has, in fact, been exposed to Western education even more than a “regular” representative of Indian elites, as he not only graduated from a Western university (Westminster University) but as a child, from the age of ten on, had been a student in a Western school (St. Edmund’s School, Canterbury).
To achieve its success, the firm combined comparative domestic advantages – chief among which were lower production costs; a clear strategy to focus on products which offered low selling margins but were in extremely high demand, such as affordable vaccines for poorer populations; and an international outlook by investing a lot in research, acquiring foreign technologies, and building international partnerships (not from the very start but particularly in the last three decades). The SII climbed the ladder of opportunities with patience, step by step, starting from the domestic market, moving on to markets of other poorer countries but eventually eyeing the most lucrative markets in the United States and Europe. Thus, even before the COVID-19 pandemic, the SII had become the world’s largest vaccine producer by volume and by the number of sold doses. Sixty-five percent of the world’s children are estimated to have had an injection of at least one SII-made vaccine, and the Poonawalla’s firm is running the world’s largest vaccine manufacturing facility (opened in 2019, mere months before the outbreak of the pandemic).
The company’s focus on global developments and global opportunities played a significant part, if not the most significant, in its growth. Focus on affordable vaccines for poorer countries meant an opportunity to partner with international organizations. Breakthroughs on this front came in the 1990s, when the company was accredited by the WHO and started to provide vaccines for UNICEF. To put things in a global perspective, this marketing strategy meant that the company became dominant on the level of production capacities, not financial acumen. “We may be the largest manufacturer of vaccines in terms of dosage but in terms of revenues, ours are a tenth of our next competitor Sanofi,” Adar Poonawalla admitted in an interview for the Forbes in 2016. But gradually the revenues from India and the globe’s poorer countries gave the company a springboard to enter the markets of developed countries as well. In what would be a dream-come-true scenario for many other Indian firms, the Serum Institute of India not only partnered with the Bill & Melinda Gates Foundation but also acquired companies in Europe: the Dutch company, Bilthoven Biologicals in 2012, and the Czech unit of the American company Nanotherapeutics in 2017.
Let us be frank about it, however: Serum Institute of India’s success is not only a telling example of the capabilities of the Indian economy and talents of Indian people but also, in more than one way, an instance of failures of the Indian state on certain fronts. One of the reasons why the SII moved to foreign markets was precisely because it was dissatisfied with its cumbersome collaboration with authorities in its own country.ADVERTISEMENT
One factor was that, in the past, Indian governments had at times been reportedly late to pay for the vaccines purchased from SII. Indian bureaucracy is also notoriously slow. As late as in 2014, Adar Poonawalla admitted in an interview with the Economic Times that “[m]any of our new vaccines are stuck at the clinical trials stage. Today, it’s faster to do a clinical trial in Europe than in India.” Moreover, while the firm remains primarily committed to manufacturing affordable vaccines, its current CEO is still critical of India’s price limits for vaccines. “[T]he price control authority has very illogically and irrationally put certain caps without looking into the costing,” Poonawalla complained in a 2018 interview. Thus, the SII was not only attracted to foreign markets, it was pushed to them by its mixed experience dealing with Indian governments. Gradually, foreign markets became its main source of revenue. Before the pandemic, 85 percent of the money earned by the company already originated from outside of India.
The COVID-19 Factor
It needs to be equally frankly admitted that while before the current pandemic the SII won markets with its own products, the case of the COVID-19 vaccine is different. The made in India COVID-19 vaccine which has so many takers around the globe is, as we know, the vaccine invented by AstraZeneca in conjunction with the University of Oxford. Its production has been licensed to the SII. It has thus neither been developed by an Indian firm nor has the Indian government played a role in the process. In addition to this, the country is producing its own domestically developed vaccine – Covaxin, the fruit of collaboration between a private Indian company (Bharat Biotech) and a state institution (National Institute of Virology) – but it is admittedly evoking much less interest from foreign clients. This, of course, is where things stand now and the situation may change, as SII is working on its own COVID-19 vaccine, too.
The case of AstraZeneca’s cooperation with SII may be extrapolated to other initiatives. It may be termed a success of the Make in India campaign, but not the spirit of the Self-Reliant India Initiative (and I would stress I mean the spirit of self-reliance, not the policy practice). When it comes to vaccine manufacturing, the role of the Indian government in the Make in India campaign was in cutting red tape, a fact publicly recognized by Adar Poonawalla. But SII’s model in general is a reverse of tendencies for self-reliance (both on own resources as well as own technologies). Moreover, the essence of this particular achievement — collaboration with AstraZeneca — was a combination of a Western technology-based, quickly developed product with low costs, tremendous manufacturing capabilities, and international standards of an Indian company.
This does not mean that the Indian government should quit its plans to develop indigenous technologies in certain fields. Every larger or stronger country has a natural tendency to do so, for obvious reasons. In areas such as security, reducing dependence on foreign suppliers is essential. But in general, the world will not become as “de-globalized” as some seem to think it will. With regard to some fields, the case of the SII may have proven that it makes sense for New Delhi to allow not just more investment but more foreign technologies as well. And this is what the Indian government is already trying to do in some areas, such as coal exploitation where it wants to attract foreign investment to modernize the existing facilities. Moreover, the instance of the SII shows that the state should let Indian companies grow by allowing them more flexibility on domestic markets and in international partnerships, instead of the government trying to micromanage such projects. Moreover, the case of the SII proves that the way forward for many Indian companies (not only those of the Indian pharmaceutical sector) may be to combine Western expertise with low production costs to first gain revenue from the markets of less developed countries, and then gradually move to richer and most expensive markets.
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