With Sputnik V, Russia takes on Western Big Pharma giants in fight for multi-billion-dollar global Covid-19 vaccine business
…by Ben Aris, editor-in-chief of business news publication bne IntelliNews…via Russia Today
[ Editor’s Note: I had of course been suspicious of the dearth of news in Western media on how the Russian vaccine testing was going, which included not seeing much in RT or Sputnik. I was in the ‘what’s up wid dat’ mode.
The lack of press on the Russian vaccine had the strong smell of Intel Agency psyops all over it. Why? There had never been any mention of the Russians wanting to dominate the market.
Nor was there any real rush involved, as proven by the mention below of their being in stage three testing process, when back in the good ole’ USA we are seeing emergency use permission.
This is nothing more than different strokes for different folks, with competitive pharmaceutical companies picking a development and marketing plan that they feel is best for them and their initial target markets.
Also, left out of the media buzz is that this competition is a win, win for all of us, and not just on which one in most effective. Why? Because different vaccines might be better for different people, age groups, and ethnicities.
And to make things even better, because next year where we will have multiple vaccines available with more safety data and even the ability to take two different ones that pushes our safety closer to 100%. That is the line I will be standing in.
The big difference now is the Pfizer vaccine has distribution issues based on its needing to be kept as below zero prior to use, a hurdle for the less developed countries and caring for people out in the boonies.
And then there is the issue of price. For financially stressed countries, which are now in worse shape than ever, a lower priced vaccine that works will help them a lot, and allow donations those countries could be getting from entities like the Gates Foundation cover more people more quickly.
And later in 2021 we might have a good low cost, home testing kit. That will be critical in the future, when new clusters are popping up so they can be discovered quickly and nipped in the bud.
Hopefully by then our horrible failure on contact tracing, mostly due to Trump not giving a crap, will be fixed. Next February 2021, we will be a year into this, and it looks like we will have a light at the end of the tunnel.
That means that the next virus economic package has to get us through the Spring where vaccine production will be up to full speed. That will fuel our opening up prospects, saving more business closures and mass bankruptcies crashing real estate markets … Jim W. Dean ]
First published … November 14, 2020
Russia was widely criticized when it became the first country in the world to register a coronavirus vaccine in August. It was accused of rushing through the approval of the ‘Sputnik V’ formula for political or propaganda gain.
Since then the whole development of the vaccine has been dogged by Schadenfreude as the press leapt on signs of impropriety in the data, and Russia has even been accused of stealing the technology.
But the markets jumped when US pharmaceutical giant Pfizer, together with the German research company BioNtech, announced that their offering has shown 90 percent efficacy in Phase III trials. Investment banks immediately upgraded their 2021 outlooks for a scenario in which some sort of normalcy returns.
In the meantime, Sputnik V’s clinical Phase III trials are halfway through and no major problems with the formula have come up yet. About half of the 40,000 volunteers in the research have been given both shots to no major ill effect. And the day after Pfizer’s announcement, the producers released preliminary results that suggests Sputnik V has 92 percent efficacy.
“Everyone is sick and tired of all the COVID news flow in recent months but there has already been a lot of progress already made in the vaccine – and I’m not talking about the US vaccine,” said Sofya Donets, Renaissance Capital’s Russia and Commonwealth of Independent States (CIS) economist said during the bank’s 25th anniversary investment summit last week.
“In Russia we already have two vaccines that are registered: one back in August and then again in October. They will be ready soon for large-scale production.”
Donets is already including a scenario in which mass vaccination takes place and the pandemic fades away in the first half of next year.
“40,000 volunteers were already vaccinated during the testing period. By the end of this year producers are ready to supply 5-6mn doses per month and by spring officials report that will go up to 15mn per month: enough to vaccinate all Russians over the age of 60 in two months,” says Donets.
Russia Inc goes up against Big Pharma
Put aside for a moment the political one-upmanship that has dogged the global search for medicine to deal with a killer illness. Once the hype ends, the business will begin. And this is going to be a very big business indeed.
Estimates of the value of the coronavirus vaccine market vary wildly with estimates from $25bn to $100bn being bandied about. But clearly it will be worth multiple billions of dollars. And whoever gets a working vaccine to market first will capture a large slice of that money.
Kirill Dmitriev, the CEO of the sovereign wealth fund called the Russian Direct Investment Fund (RDIF), which financed much of the Sputnik V research, says he thinks Russia will control about a third of the eventual three billion to five billion dose-market. If that is true, then coronavirus vaccine exports will earn Russia as much as it receives from exporting grain or arms – and Russia is a global leader in both of those export categories.
Russia Inc as a Big Pharma concern is not exactly an image that we are used to, but given its prowess in the other sciences, it certainly has the intellectual capital that could produce a working vaccine.
The problems Russia will face going forward will be business problems. Production is already proving to be a major headache. Donets’ estimate for 5-6 million doses a month is already down on earlier predictions that 10 million doses would be produced by Christmas, and the 15 million doses a month that could be produced in the first half of next year is half the earlier forecasts.
Last month, the RDIF said that it is currently investing in production facilities and will be able to produce 30 million doses by the end of this year and up to 200 million a year starting in 2021, but clearly it’s not going as fast as the sovereign wealth fund had hoped for.
In mid-October, Industry Minister Denis Manturov, in an interview with Bloomberg, called these promises “nonsense.”
“The main challenge now is to scale production,” he said. “It is impossible to produce 30mn doses by the end of the year.” The updated forecast of RDIF is 7-10 million doses of vaccine in December-January – and even this estimate is in doubt.
Nevertheless, millions of doses will be produced and the volume will rise rapidly as the problems are ironed out. With $10 billion of assets under management and the power of the Kremlin at its back, the RDIF is not short of money or resources.
But Russia is. It doesn’t have the well-developed and diversified pharmaceutical industry like that in the US that can be raided for resources and manpower.
However, Russia is doing a lot better on the distribution and marketing fronts. One of the big problems with the Pfizer vaccine is that it needs to be kept very cold.
Anthony Fauci, director of the US National Institute of Allergy and Infectious Diseases, said on November 11 that the distribution of Pfizer’s messenger RNA based technology in developing countries is going to be “difficult” because it needs to be kept at -70C (-94F).
“It does have cold-chain challenges as it were. In a country like the UK and the United States we can address them and it still would be challenging. But, probably much more challenging in countries in the developing world,” Fauci said at a Financial Times’ global pharmaceutical and biotechnology conference.
The Russian version has none of these problems as it can be kept at room temperature. The extreme cold storage will also make the Pfizer drug a lot more expensive.
Russian investment bank BCS Global Markets estimates that possible pricing of the vaccine for sales abroad could vary at about RUB300-1,000/dose ($4-14), which is a fraction of estimates by the Financial Times of planned vaccine prices by foreign pharma majors’ leading candidates: Moderna $25-30/dose and Pfizer/ BioNTtech, at $19.5.
Russia is also well ahead on the marketing and sales. In August, almost immediately after Sputnik V was registered, the producers signed a deal with Kazakhstan to supply several million doses as soon as the clinical trials are over.
Uzbekistan has also signed a deal with Russia for 30 million doses, as have several BRIC countries. In all, some 50 countries have reportedly signed some sort of deal with Russia to buy its vaccine. For countries like Kazakhstan and Uzbekistan, driving formula around their huge countries that have to be kept at -70C is a non-starter.
Plus, following its ‘Moscow consensus’ ideology, the Kremlin will package sales of vaccine doses together with other things like energy and politics to make up an offer that appeals to countries like these that a commercial entity like Pfizer can’t match.
In recent weeks, the RDIF has announced plans to sell 100 million doses to India, 50 million to Brazil, and 32 million to Mexico, as well as 25 million to Nepal and Egypt each. All states outside the post-Soviet world.
“We expect that Russia will move on domestic vaccine and will already start exporting the vaccine in the first half of 2021. 20 countries are in discussion with Russian producers,” says Donets. “The India potential contract is for 100mn doses as well as LatAm countries as well as Russia’s regional neighbours.”
Just these named deals add up to something around $950 million, which is a profitable start for a product many in the West may eventually regret underestimating, or completely dismissing.
Jim W. Dean Archives 2009-2014