Pharma PSUs: Can India’s Unwanted Children Salvage Vaccine Plan?

Public Sector Undertakings have seen their fortunes rise and fall but that cycle hasn’t been uniform in recent years. While ONGC, OIL, SAIL and similar PSUs have become dominant players in their respective sectors, pharma PSUs seem to have withered away and the most recent one has been still-born.

We are all told about the steel plants built in Rourkela, Bhilai and Durgapur in 1961 and in Bokaro in 1965, but little is written about the pharmaceutical companies and science laboratories that were established at the same time and many thereafter all over India.

National Institute of Virology was established at Pune in 1952 as Virus Research Centre under the auspices of the Indian Council for Medical Research. Both the NIV and the ICMR have played a key role in the development of Covaxin, currently the only indigenous vaccine for Covid.

There were also many other science laboratories and pharma manufacturers which were established at a time when the private sector was unable to make large investments, especially in vaccines which weren’t seen as profitable products. The only purchaser of vaccines was, and still is, the central government which distributes them free and as a result vaccines couldn’t be sold in large quantities at “free market” prices.

These pharma PSUs included:

• Hindustan Antibiotics Limited (1954);

• Indian Drugs and Pharmaceuticals Limited (1961);

• Hindustan Lifecare Limited (1967);

• Kerala State Drugs & Pharmaceuticals Limited (1974);

• Bengal Chemicals (taken over by UOI in 1977);

• Haffkine (established 1899 with manufacturing subsidiary established in 1977);

• Pasteur Institute, Conoor (established 1907, under control of central government since 1977);

• Rajasthan Drugs & Pharmaceuticals Limited (1978);

• Karnataka Antibiotics & Pharmaceuticals Limited (1984);

• Bengal Immunity Limited (nationalized in 1984)1, was the first to manufacture Serum commercially in the Indian market;

• Bharat Immunologicals and Biologicals Corporation Limited (1989), which has only now been permitted by the central government to manufacture Covaxin;

• Indian Immunologicals Ltd. (established 1982, human vaccines since 1998);

• Human Biological Institute (1998)

Neglect, Lack of Investments, Sale 

Most of these institutions were neglected with very little investment from government. The central government would, at best, procure some drugs and vaccines from these PSUs. Union Cabinet in its meeting on 30.10.2013 approved Pharmaceuticals Purchase Policy (PPP) in respect of 103 medicines manufactured by pharma CPSEs and their subsidiaries. The government now procures some low cost products from these companies. Without investment to upgrade technology, incentive to develop new products and crippled with low prices from government, there was little hope for some of these entities to survive.

Having neglected some of these companies, it was decided that they didn’t have a future, unable to compete with the private sector. Rather than find a role for them in pubic healthcare and think of health as an essential feature of the security of the nation, the Union Cabinet in its meetings dated December 21, 2016 and November 1, 2017 approved sale of the assets of certain pharma PSUs. Contrast this with the attention that the oil and steel companies consistently received for decades.

Pandemic Response That Faltered 

There are two key policy initiatives that are relevant to the current COVID pandemic. The first is National Disaster Management Guidelines—Management of Biological Disasters issued in July 2008, a handbook for India to prepare for an influenza pandemic. The report surveyed India’s preparedness for a flu pandemic and highlighted the gaps that needed to be addressed.

One of these was the establishment of BSL3 and BSL4 facilities. Thankfully, this recommendation was implemented and India has over a dozen such facilities, even in the public sector. Another recommendation was “Stockpile of Drugs, Vaccines, Disinfectants and PPE kits” and real time tracking preparedness for the production of these essential items. Sadly the government ignored this recommendation and as a result, India was found wanting in all these essential weapons to fight the first wave of Covid.

The third was to lay down a clear vaccination policy, have a stockpile of vaccines, identify and train the vaccinators and have cold chain management. Fourthly, “Capacity will be developed in the pharmaceutical sector for creating a viable high-tech infrastructure for vaccine research and production”.

With the NIV and the National Centre for Disease Control, the infrastructure and science network exists for vaccine research, but vaccine production seems to have been ignored.

The second significant policy initiative was the National Vaccine Policy, 2011 which focused on Universal vaccination. Its key features are:

• “Encouraging technology transfer from multinational companies to develop products and gaining access to technologies and know-how.

• Indian patent law may have provisions to permit compulsory licensing in special situations like the H1N1 pandemic or in situations, where a technology/intermediate is needed for vaccine development.

• The country should develop/use expertise to study the flexibilities enshrined in the Trade Related Aspects of Intellectual Property rights (TRIPS) agreement to reduce the negative impact of the patents. The arrangements like ‘Bolar provision’ which permits the manufacturers of generic pharmaceuticals to begin product development, while the patent is still in force. This could be particularly helpful in reducing the lead-time to obtain regulatory clearances during vaccine development.

• Collective management of IPR and open access agreements should be resorted to improve innovation and access. Innovations in ways to deal with IPR of new vaccines need to emerge through innovative funding of R&D.

• It is suggested that a body is created to acquire and hold IPR for technologies beneficial for use in public health. This body could then license the technology to emerging manufacturers on Acceptable terms for development of vaccines and related Products.”

Despite the vaccine policy, the public sector infrastructure for research and production of the vaccine and the handbook to deal effectively with the pandemic, India is still at the mercy of the pandemic.

An “Integrated Vaccine Complex” established over 100 acres, near Chennai and declared as Project of national importance was begun in 2012 with HLL Biotech Limited building a vaccine manufacturing facility with 6 production lines to manufacture 585m doses per annum at a cost of Rs 900 cr. Sadly it has been neglected since it was set up and hasn’t produced anything since then. If only it hadn’t been neglected and other vaccine manufacturing facilities were upgraded last year to make COVID vaccines, would we have a vaccine scarcity? Couldn’t India have vaccinated most of its population by now?

If the pharma PSUs were nurtured and able to manufacture essential medicines, could we have saved many more lives?

One can only imagine Pandit Nehru reminding us of what he said in 1961 – “the drug industry must be in the public sector….. I think an industry of the nature of the drug industry should not be in the private sector anyhow. There are for too much exploitation of the public in this industry.”

He would probably be thinking, but would be too much of a statesman to quote Lord Byron to us:

Of all the horrid, hideous notes of woe, Sadder than owl-songs or the midnight blast; Is that portentous phrase, "I told you so."

(Murali Neelakantan, is a lawyer specializing in healthcare issues. He was formerly global general counsel at Cipla and Executive Director and Global General Counsel at Glenmark.)