Since 2012, Adar Poonawalla has headed the Serum Institute of India, the company his father founded in 1966 and which has grown into the world’s largest manufacturer of vaccines. The company produces roughly 1.5 billion doses a year, most of which go to immunize children in low- and middle-income countries through programs administered by organizations like Unicef and GAVI, the Vaccine Alliance.
The company is known for its low-cost production and enormous scale, and few global health experts were surprised earlier this year when the Serum Institute emerged as a key player in the COVID-19 vaccine race—signing on to manufacture a couple of the leading candidates, while developing a few of its own candidates internally. The company’s strong track record in this vitally important field earned it a slot on Fortune’s 2020 Change the World list.
Adar Poonawalla spoke with Fortune about that work and the company in late August. The interview has been edited lightly for clarity and length.
Fortune: It’s a busy time for you. How did you get involved in the COVID efforts?
Adar Poonawalla: If we rewind to March or April, when the [World Health Organization] announced to the world that this is something that will spread and go to every country and it’s a pandemic, that was a wake-up call. I called a meeting with my scientists. We started talking: How can we play a role in this? Ultimately, a vaccine is going to be the solution to the pandemic, and being one of the largest manufacturers in the world, I felt as a CEO that it was almost our responsibility to take action and do something and have a major role in trying to protect humanity from this terrible disease. That’s when it started. I took two strategies on board: One was to develop our own vaccine platforms, which is going to take about another year and a half to complete Phase III trials.
Then, I was hearing about Oxford [University] and Novavax, and all these great institutions and companies that already had a vaccine in the clinic. I knew these guys from past partnerships, so I decided to partner with them. If a vaccine is ready, the next biggest challenge is to manufacture it. And the third challenge is to distribute it to every corner in every part of the world. For the second challenge of manufacturing, I didn’t hear many other companies coming forward to sacrifice their lucrative products and manufacture a COVID vaccine come December. When I didn’t hear that, I almost felt it was a responsibility for me to take that plunge and invest hundreds of millions of dollars—now the figure is somewhere around $450 million—in building capacity and buying all the raw materials to gear up and be ready. We’ve already gone into production at risk, betting on these vaccines to succeed come December. That’s where we are at right now. And that’s why the world has taken a lot of interest in what I’ve been doing here in India.
You’re under a spotlight right now, What’s that like? What’s the dynamic like with other pharma companies?
Everyone is being very friendly and helpful and collaborative. We’ve got partnerships with a couple of large pharmaceutical companies like AstraZeneca. I don’t know what they must be thinking but from my angle, we were always very low key. I don’t think anyone in the United States had even heard about us, because we’re a privately listed company, not a publicly traded company. When all this international talk about us came, it kind of hit me and encouraged me further—I’m really on the spot now, and I need to perform. People are counting on me to succeed and hoping that I succeed. Those good wishes and positive encouragement, and a kind of sense of almost scary responsibility that I kind of feel I’m carrying on my shoulders, that is driving me every day to do things quicker. And every day, I’m thinking, Am I missing something? Can I do something better or faster? Because we’re racing against the clock. Initially, it was very stressful to be in that position because I wasn’t used to that, quite frankly, and now I’m very used to it. In fact, it has helped and motivated me.
How does your COVID vaccine manufacturing affect production of the other vaccines you produce?
Initially, there was a lot of rejigging and stress because we didn’t want to default on supplies of existing vaccines. Now everything is in order where we’re able to manage shifts. We’ve increased to three or four shifts in a day. That way we can manage everything without compromise. It’s equally important that kids get all the other vaccines. Most of them [protect against] bigger killers than COVID, like pneumonia. Rotavirus kills more children and will kill more children if they’re not vaccinated than COVID.
How did the Serum Institute become the main supplier of vaccines to so many countries around the world?
My father [Cyrus Poonawalla], who founded the company in the ’60s, was always wanting to do something for humanity in a very philanthropic and ethically priced manner. That’s how we made an entry into all these GAVI markets over the past 10 years. The Bill & Melinda Gates Foundation found us strategically positioned to cater to the gap that was there, and that was the affordability of these vaccines that were just not available to the masses in the 160-odd countries that we’re in today. As time went on, and as I sort of took over the business, I kept adding a lot of capacity ahead of demand.
As a result, even today, I could make 2 billion doses in my facility. I only make 1.4 billion. I kept building the excess capacity, which not only made me the biggest supplier of vaccines to Unicef and GAVI in the past 10 years but also gave us this excess capacity that we can really now use in the COVID crisis.
Many of the vaccines you produce are purchased by organizations like GAVI and Unicef. How did that work start?
About 10 or 15 years before I joined the business, I was still in school in those days, my father and his team at that time received the WHO prequalification which [means your product meets] a kind of universal good quality standard. When they inspect you and certify you to say that you make GMP—good manufacturing practices—vaccines, the world becomes open to you, and countries can buy your product and feel safe buying your product. It was at that point in the ’80s and ’90s I’d say that happened. We slowly entered more countries. When I joined the business, we were only in about 20 or 30 countries. I wanted to make Serum Institute a truly global player, which is when I went out to the world to really register the products in all these other countries and further engaged with Unicef and GAVI to get my products out there. We already had that relationship at that time, and then I just engaged further.
The Serum Institute of India has been recognized over the years for its partnerships to produce new, low-cost vaccines like MenAfriVac for meningitis A. Can you tell me about that work?
Africa needed this product, and nobody wanted to make it at 30 to 40 cents a dose. We launched it, I think, at something like 25 to 30 cents in those days, and now it’s maybe 50 cents a dose. It wasn’t really worthwhile for any pharmaceutical company to make a product, especially a vaccine at less than $1. After that, we got rotavirus vaccines, pneumococcal vaccines, again, at very, very low prices. It was only natural that Unicef and GAVI, you know, encouraged and worked with us to offer the product to all these other countries who didn’t know how to get access to lower-cost vaccines.
How is that you can produce and sell vaccines at such a low cost?
I was just talking to someone else, and they were asking me, “Why do you leave money on the table when you could charge far higher prices?” I said, “Look, I’m well-to-do. I’m fairly wealthy. I don’t need extra profits. I believe in profit making but not profiteering.” I don’t want to speak against the larger pharmaceutical companies. They have shareholders, and they need to grow. I’m happy with a lower growth rate and a lower profit margin, as long as I can do what I need to do in terms of expanding, reinvesting in capacity and technology, and making a healthy profit. I’m not greedy beyond the point, and I’m quite satisfied. That’s why I’m able to do what I’m able to do. Of course, the other factor is operating at my scale with costs in India. Certainly the costs are low, but I have a company in Europe, a 40-acre campus where I make polio vaccines, so I know the costs of producing in Europe. They are maybe 30% to 40% higher. It doesn’t justify that I charge five or six times the price, just because my costs are maybe 30% to 40% higher. It all depends on your management style and what you’re happy with and how greedy you really want to be. That’s the way I look at it. And that’s the way I’ve run the company for the past nine years.
You mentioned your father’s humanitarian vision and his belief in ethical pricing. Is your vision for the company consistent with that?
Very much. It’s something that has been always very close to our heart. I have started one or two small new businesses, but this is my pride and joy and passion, because I know that doing this saves lives, babies’ lives, children’s lives. What could be more satisfying and important than that? I was always drawn to this because of the end result. You know, other companies provide a service. They make a profit, but ultimately, what do you really do? I always said that if I do a business, it has to help make someone’s life better. It was a natural progression for me when I came back from university to get right into this and expand it and come out with new vaccines.
Right now, we’re on the cusp of developing the world’s best malaria vaccine, which is already proving to show great results in partnership with Oxford University in Africa. At the moment, it’s in a Phase II study. These are the kind of things that I’m really passionate about.
What have been the big turning points for the Serum Institute’s business?
I think in the past 10 years when we demonstrated [we could] make our own vaccines, like the pneumonia vaccine. That was a turning point where we evolved from just a pure manufacturer to also an inventor and developer of new vaccines. That was very important. And of course, when we acquired in 2012, the company in Holland. We’re now seen as a global manufacturer, not just an Indian one. And then we acquired another company in the Czech Republic in 2017. So we make vaccines across two continents and multiple countries and multiple plants. We have three different plants in India.
Those turning points all must have required a lot of upfront investment?
You know, the Czech Republic facility, we’ve already sold off to Novavax in the COVID crisis to get a bit of cash. We sold it for $167 million just three months ago because I wanted more capital to invest here in India and for these COVID vaccines. And Novavax wanted that plant to make their COVID vaccine, so it worked out really nicely. We still have a 40-acre campus where we make a lot of vaccines in the Netherlands, so I’m focusing now all my European and U.S. strategies out of that area.
You’ve got a lot going on in the short term. What do you imagine Serum Institute will look like in 10 years?
It’s tough to say. I think there’s going be a lot of new players. I do see a lot of new vaccine manufacturers coming about, but it’s a highly specialized and difficult process. That is why there are probably only five or six large players in the world. It’s not so easy as just normal pharmaceuticals. But I think that’s going to change, and I will have to be more aggressive if I’m still to stay relevant. I will have to develop and launch a lot of vaccines to still be a dominant player. I see that change coming about in the next decade.
Do you expect the competition will come mostly from India?
It’s not only going to be India. It’s going to be all these big countries which have capabilities but have kind of ignored vaccines all this time. And for national security, every major country will probably want to have its own vaccine plant, a nationalized vaccine plant, right? Because never again do they want to be in a crisis like this where they have to depend on companies from India, China, Brazil, and God knows where, instead of being just able to do this themselves. So let’s see how seriously they take it now.
Do you think the status of vaccines will change because of this moment?
I think a lot of people now will believe in the power and significance of vaccines. There’s been a lot of vaccine hesitancy. It’s very evident and clear now, that instead of being hospitalized or dying, or getting serious disease, you just take a vaccine shot, and that’s going to protect you. A lot of skeptics now have sort of quieted down. I see that changing.
But no matter whether the vaccine comes out this year or the next year, this is not going to be a silver bullet to rid us of the coronavirus. I think everyone needs to understand that. Because these vaccines will be 50%, maybe 70%, maybe even 80% effective. I don’t know. But that still means a lot of people who take the vaccine can still get infected and infect others. It will certainly reduce transmission and cases because of the herd immunity that’s going to build up through everyone being vaccinated, but this is not the end. I want to put that out there. Because people think once the vaccine comes, it’s all over. That’s very dangerous, because you don’t want people taking vaccines and running around carelessly, not taking precautions, thinking that they are invincible. That is going to cause more harm than good. I think that’s important to put in perspective as we’re talking and getting excited about all these vaccines coming in the next one or two quarters.
There are many companies working on COVID vaccines. Would you partner with another one if they approached you?
Right now, we’re kind of filled up to the brim because I’ve got five vaccines. I don’t think anyone’s doing five vaccines, most are doing one, maybe two. I don’t want to bite off more than I can chew. Novavax and AstraZeneca, they’re all in Phase III now, so we could look at a launch in November. December.
I probably would not look at any Chinese or Russian candidates, only because of the transparency of data. You really don’t know what you’re going to get in those products, so I’m not confident ethically in making them. Maybe when we see more data from those companies, we could look at it, but right now, I would not. I’m not open right now to any more partnerships.
Can you tell us about the COVID vaccines you’re developing?
Those are live attenuated vaccines. That means that it’s the virus which has been attenuated, which means the harmful properties have been removed, but it’s the whole virus. Live attenuated vaccines for measles and others have traditionally always been the most powerful and effective vaccines, also in their ability to protect you for the long term, which is a very important factor. You don’t want to take a vaccine and then find out in two years you’re vulnerable to COVID, right? Then it’s like an annual flu shot, and that’s expensive and impractical. That’s why for my candidates I want to take my time, take two years even to make the vaccine. I want to make a vaccine that’s going to be so powerful it is going to be like the measles vaccine, which gives you long-term immunity and a very powerful protection level, you know, 90% to 95%. That’s why I’m taking my time and I’m not rushing. But because the world needs something quickly, and everyone was putting pressure on that, I took the decision of partnering, early on, with these other guys who were ahead.
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