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By Caroline Copley, Andreas Rinke and Allison Martell
DESSAU, Germany, March 12 (Reuters) - In the German town of
Dessau, one of the sites of the Bauhaus art school, an institute
was set up in 1921 to mass-produce vaccines that later helped
strengthen the German Democratic Republic. Exactly 100 years
later, the site is gearing up to be a one-stop shop to produce
COVID-19 vaccines for Germany's pandemic response.
It's just one example of a rash of efforts by governments
across the globe to access fragmented vaccine production, after
manufacturing setbacks deprived European Union members of drugs
made on their own soil this year. From Australia to Thailand,
states planning home-based vaccine plants are starting to
reshape the industry.
The German venture has the backing of the regional
government, as part of a national effort to secure supplies and
add vaccines to Germany's exports. Saxony-Anhalt premier Reiner
Haseloff said he believes Germany could become a swing producer
of vaccines, in the same way that power companies maintain
capacity for times of strong demand.
"Ultimately, this is comparable to the energy industry,
where the state also pays to keep power plants in reserve,"
Haseloff told Reuters.
Unlike the United States, where the government's Operation
Warp Speed began funding the expansion and retrofit of
pharmaceutical manufacturing sites early in the pandemic, few
countries globally have the option to commandeer factories. The
German plan is one of more than half a dozen by governments
around the world to avert shortages by supporting drug
companies' local production.
Some - including Australia, Brazil, Japan and Thailand - are
setting up manufacturing partnerships with Swedish drugmaker
AstraZeneca PLC. Elsewhere, Italy has pledged state
backing for a public-private vaccine production centre, while
Austria, Denmark and Israel plan a joint research and
development fund and will explore whether to produce their own
next-generation vaccines.
India plays a significant role in vaccine production
globally, and the United States, Japan and Australia also plan
to help finance vaccine production capacity there, a senior U.S.
administration official told Reuters.
The moves aim to address a global shortage of doses. With
vaccines key to restart economies, some countries have
pre-purchase agreements to secure their supply.
2 BILLION DOSES
The vaccine crunch in Europe has shown that states that
depend on deliveries from multinationals can be vulnerable. In
January, AstraZeneca cut supplies to the bloc by more than half
for the first and second quarters, and told Brussels it was not
able to divert Belgian-made drugs that were earmarked for the
United Kingdom. The cut heightened tensions between London and
Brussels and prompted European leaders to set curbs on exports
of vaccines made in the EU - starting this month, when Italy
blocked exports of AstraZeneca's shot.
Germany is a net importer of all vaccines, with a $720
million trade deficit in this area. Berlin plans to change that,
and Germany's former "Bacterial Institute of the Anhalt
Counties" in Dessau will help. Now a family-owned firm called
IDT Biologika, it and AstraZeneca plan to invest more than 100
million euros ($120 million) to expand the plant into a factory
for complete vaccines.
The company says it aims to make between 30 million and 40
million doses a month from the end of 2022, producing the bulk
vaccine and also dispensing it into vials, which Chief Executive
Juergen Betzing told Reuters would make it one of Europe's
biggest manufacturers and add capacity for at least 360 million
doses a year from within the EU.
Germany has not yet reserved the right to purchase any of
these vaccines, but the government wants to come up with a plan
on measures to support and incentivise long-term vaccine
production capacity by May 1, according to a document seen by
Reuters. A government source said drug company representatives
have told Berlin long-term purchase guarantees would be more
important to their investment decisions than aid.
The IDT plant will also be able to produce vaccines for
other companies and, together with a cluster of firms in
Saxony-Anhalt, form the heart of a government strategy to make
Germany a new centre for vaccine production in Europe.
Berlin is targeting an annual capacity of 2 billion COVID
vaccine doses from IDT and other facilities, a person familiar
with the matter told Reuters. For comparison, AstraZeneca has
stated its ambitions to produce up to 3 billion doses of its
vaccine by the end of this year, which would make it the largest
COVID-19 vaccine producer globally.
Berlin's target could prove to be far in excess of the EU's
needs for its 450 million people, but it isn't yet clear how
often vaccinations will be needed to bolster immunity.
The COVID pandemic is an unprecedented challenge to
inoculate billions. While the drugs are badly needed in the near
term, such piecemeal plans reflect the lack of any coherent
global strategy to cover vaccination in a pandemic, which the
world needs, according to Robert Van Exan, a consultant and
former Sanofi executive.
"It takes time to build that infrastructure properly, and
some thought has to go into it," Van Exan said.
LESSONS LEARNED
Previous vaccine disputes between allies have served as a
prelude to the COVID-era fight for supplies.
In a flu scare in 1976, the United States blocked vaccine
exports, derailing a vaccination plan in Canada. Ottawa learned
a lesson: During the H1N1 flu pandemic of 2009, it bought drugs
from a local producer, and waited until its outbreak was largely
over before then donating extra doses to the World Health
Organization.
And then, in the years after the 2009 pandemic, Washington
paid hundreds of millions to several companies to build or
expand private facilities that could be used to make and package
a pandemic vaccine on short notice within the country's borders.
When COVID-19 hit, at least two of those sites became part
of Operation Warp Speed, producing vaccines for Johnson &
Johnson, AstraZeneca and Moderna Inc. Federal
officials used the Defense Production Act to put participating
companies first in line for supplies made by other U.S.
companies, and the U.S. Army Corps of Engineers directly oversaw
some construction projects. When companies struggled to hire
enough qualified staff, 16 Department of Defense employees were
sent to work in quality control at two manufacturing sites,
according to a recent federal report.
RUBIK'S CUBE
Globally, vaccines are manufactured across drug firms'
existing networks and often need to pass through several
countries - and even between continents - before they are ready
to inject into arms. Within the EU alone, more than 30 plants
from Sweden to Spain are involved in the production of COVID-19
vaccines. AstraZeneca says it has manufacturing capacity in 25
sites across 15 countries, in a chain of partnerships that one
company executive likens to a Rubik's Cube puzzle.
It's a similar picture for others, including vaccines made
by Russia and China, and hitches are common when trying to
accelerate production across multiple sites and borders.
Switzerland-based Lonza Group AG makes the ingredients
for Moderna's vaccine which then go to Spain to be put into
vials. J&J's shot is made in the Netherlands and sent to the
United States for bottling. Pfizer-BioNTech has contracted
factories across a network of 13 sites to meet production needs
this year - their supplies to Europe also briefly fell short
when a plant had to be re-engineered.
But friction between AstraZeneca and the EU in Brussels has
continued to chafe since a supplier to the drugmaker in Seneffe,
Belgium ran into difficulty in January.
AstraZeneca's vaccine production starts with living cells
being infected with a modified form of the virus. The cells are
grown in tanks, or bioreactors, harvested and purified over
about two months. Once the active ingredient is created, water
and proteins are added and the liquid is bottled - a stage known
as 'fill and finish.' Sometimes, different stages happen at
different sites.
Problems at the Belgian plant, combined with AstraZeneca's
contractual commitments to supply the United Kingdom, meant that
even though the product involved was made a short drive from
Brussels, EU citizens were left wanting.
The German company IDT Biologika now plans to cover all
stages of the cycle. Other German vaccine developers BioNTech SE
and CureVac NV, which are at the forefront of
new vaccine technology and have both received government
funding, will also be part of Germany's cluster. BioNTech
recently brought a new German plant online to produce up to 750
million doses per year and pharma giant Bayer AG will
help make CureVac's shot.
The developers of the Russian vaccine, Sputnik V, have also
made inquiries about producing it in the region, Saxony-Anhalt
premier Haseloff said. Russia's sovereign wealth fund Russia's
Direct Investment Fund (RDIF), which is promoting Sputnik V
internationally, declined to comment.
AstraZeneca's arrangement with IDT is similar to other deals
the company has reached, for instance in Japan and Australia.
Arrangements like this also help reduce the risk for companies.
AstraZeneca declined to comment on the deals it has reached,
but one of its executives has said in the past the company tried
hard to create independent supply chains to enable full access
to the vaccine around the world.
MAKING MONEY
Building up vaccine production capacity makes sense given
the need to vaccinate the world, potentially repeatedly, against
COVID-19, as well as the threat of future pandemics.
But large manufacturing sites are the most efficient and at
some point, extra capacity spread across many countries may not
be economical.
Prashant Yadav, a senior fellow at the U.S.-based Center for
Global Development, said the advantages of scale kick in once
you can produce at least 100 million doses per year.
He believes four or five countries could likely scale up
without raising costs, but if many build small operations, "I
think we get to a point where everybody will end up paying a
higher price."
In Canada, the federal government is building a
publicly-owned facility in Montreal that would make about 2
million vaccine doses per month beginning next year, leaving it
well below that 100 million annual dose threshold.
Asked if the small size will raise costs, Canada's National
Research Council said it is not meant to compete with the
private sector: "The objective of the facility is to respond
quickly to future health emergencies."
(Caroline Copley reported from Berlin, Andreas Rinke from
Dessau and Allison Martell from Ottawa; Additional reporting by
Ludwig Burger in Frankfurt, Douglas Busvine in Berlin and Polina
Nikolskaya in Moscow; Edited by Sara Ledwith and Josephine Mason
)
