My colleague and co-host Arijit Bhattacharya is right now in Davos covering the World Economic Forum annual meeting in 2025. In these four ice-cold days, Davos becomes a financial, commercial, policy, and investment blitzkrieg. Some of the most influential, wealthiest, and most powerful people, companies, and governments in the world fly to the snow-capped peaks of the Swiss Alps to hobnob, network, meet, drink, and sign deals worth billions and billions of dollars. For Arijit, a master networker and scoop-getter to boot, it's the world's biggest and most beautiful candy shop. So yesterday, day two of Davos, just as Arijit was about to share his 576th visiting card perhaps with a Nordic investment banker and invite him to India, he spotted Adar Poonawalla. Now, Adar Poonawalla, the chief of Serum Institute of India, has been in the news in the last five years not just for running the world's largest vaccine maker but also his investments in financial services, packaging, insurance, and most recently the Hindi film industry by agreeing to buy 50% of Karan Johar's company, Dharma Productions. So Poonawalla was invited to the ET Lounge. Welcome to the ET Lounge. What followed was a conversation that ranged from Donald Trump's WHO pullout to the prospects of AI in vaccine development to his interest in global hotel chains and green energy. Listen in to the first of a few conversations from ET at Davos. It's Friday, the 24th of January. I'm your host, Anirban Chaudhuri. This is The Morning Brief.
Adar, thank you very much. Welcome to the ET Lounge. Pleasure to be here and talk to you. We meet on a day when Mr. Trump has done what he said he would, which is pull out of the World Health Organization. What do you make of it? Does it in any way impact the overall global health sector and Serum in particular?
Well, you know, of course you can imagine there are alarm bells going off all over the world. Because you see, a multilateral organization like WHO plays a very critical role in transnational standards and health standards, not just for vaccines but for medicines and so many things. Look, whatever views the president has on WHO is of course his views, but certainly it could slow down a few things that are going on in the world. You know, my concerns, and I hope it doesn't happen, is that vaccine pre-qualifications and getting vaccines approved globally, that global standard that most countries go by, this doesn't result in delays in getting new vaccines approved. You know, like for example, we recently got our malaria vaccine for the African continent approved by the WHO, and as a result, a lot of these countries will be able to access this vaccine at a very low price and hopefully we'll save a lot of lives. But let's wait and see. It's early days. It's only been a few hours, so let's see what happens.
Talking about vaccines on a larger picture, I think it was in this very particular forum, which is the WEF forum in Davos, where you had placed demands for what you said, vaccine equity. That, you know, why should lower-middle or lower-income economies or countries face the kind of multiple regulatory clearances vis-a-vis patents? And what's the progress so far since you made those observations and remarks? What's been the progress on the ground?
Well, you know, again, something relating to the WHO, that they've been working on this thing called the Pandemic Accord, which goes towards bringing vaccine equity not just during a pandemic but perhaps during other times where registering and getting vaccines approved and other medicines approved across the board, so that companies don't have to go to every individual country to get that done. Because that takes time, that involves costs, various other things. So there has been progress on that. We have focused on pricing our vaccines very, very low to maximize the access to the poorest nations in the world. We continue to do that, and I don't see that slowing down. That's, in fact, doing quite well after COVID. And whether it's on testing, whether it's on surveillance, all of that, so we're in a far better place than we were during COVID. So there has been progress since then.
Okay, that's good. Now, Serum has made it very clear that you would primarily want to stay focused on vaccines. Yes. So if you could just talk us through what are the next big projects for the company in terms of next-generation vaccines?
Well, you know, ever since COVID, we've invested $2 billion in capex and research and clinical trials to get new vaccines. And as a result, we've built facilities and are on the verge of licensing a bunch of vaccines. For example, the HPV and malaria vaccines are already licensed. We're looking at chickenpox and monkeypox in a year and a half's time. We're looking at a dengue vaccine in about two and a half, maybe three years' time. A yellow fever vaccine as well. You know, most of our capital and our profits just go back into building capex in India. And now we've got two campuses in India, and our capacity is around 4 billion doses annually. Of course, that's not being utilized. We're only at a $2 billion dose capacity utilization. So let's see, with all these new vaccines coming about, that capacity will be used up. Because after COVID, there was a lot of empty capacity, so we just retrofitted those equipments and things and made some more investments. And the challenge still lies in getting clinical trials done quickly, because during COVID that was happening very fast, trials were getting done very quickly. But now we're back to the usual way where it does take time to get those results. So we have to be patient, and in the next three, four years, you'll see so many more vaccines being licensed.
Right. But this $2 billion capex, it's a significant sum that has already gone in. Does that mean the capex cycle is over, or you keep on incrementally?
You know, this has been over the last, I would say, five years, ever since 2020. Right. I would say now most of our funds will go towards funding the clinical trials of these vaccines, because you have to do trials in India, Africa, so many other areas. The capex cycle, I wouldn't say is over, but I would say 80% of that is done. And then maybe after another few years, we may have to again put in another big investment to build more facilities for new technologies and messenger RNA. And we're even looking at giving vaccines instead of needles through other devices, including patches. Now, that's going to take three or four years to develop. You just put the patch on, like you have with insulin or other things, and then that administers the vaccine. So these are some of the new technologies. And we're working on AI also, so we're investing there to be able to predict what kind of formulations or speed up clinical trials in a way that you save a lot of time and costs. So that'll be very good for the vaccine and pharmaceutical industry. And I've got some meetings here. The challenge there is that regulators around the world have to acknowledge and agree with what the AI simulations have predicted and said is correct and will result in an effective vaccine. Because if a regulator doesn't approve your vaccine based on an AI tool, then you have to still stick to completing all the traditional ways of completing your trials and research. So in research and clinical trials, I think AI has an important role in our industry.
So typically, I mean, just to understand, for these kind of initiatives, what kind of investments are required?
Well, it depends. It could be about $100 million to begin with, where you invest or co-invest with a partner to do that and develop a platform which can simulate these things. And it'll vary from vaccine to vaccine. So we haven't invested yet, but we have plans to do that over the coming years.
Okay. Right now, you were close to getting approval for your advanced BCG vaccine from the USFDA, if I'm not mistaken. What's the update? I mean, if you could share some details.
And I think that should happen in a few months. So that's on track. Again, now with the US policies, I don't know how the uptake of vaccines going from other countries to the US is going to happen. Again, very early days. They've just sort of taken charge. So we'll have some meetings in the US, and I think we can talk about it a bit later once I know a bit more.
Are you looking at the WHO pre-qualification for the HPV vaccine in particular? And any update on that?
Yeah, so we should be pre-qualified in 2026 by the WHO, everything goes well, and we're on track for that. Because after that, you can export these vaccines to other countries. This year and part of next year will be focused on trying to start supplying to the Indian government. We've already launched this vaccine to prevent cervical cancer in women, as you know, very important for young girls to take this in India in the private market. So we'll see how that rollout also takes place. The Indian government is very eager to get this out into girls.
But what's the update on that, the cervical cancer vaccine, for example? Because there were plans to sell it through the national immunization program.
Yes, so that will happen this year. This year. It's just being planned out, because when you roll out a new vaccine, the states have to be prepared to take it. So some states will start first, there'll be pilot areas or certain areas of the state which will start first. You don't roll out a vaccine completely nationwide like that. So you do it in phases. So by the end of this year, hopefully, we should have the national immunization program taking the vaccine and rolling it out. And the volumes will pick up beyond, say, 40, 50, 60 million doses in '26, as I mentioned. So we just have to wait.
Right, right. You gave a roadmap of the next few years in terms of the new vaccines which are at various stages of coming to the market. Predominantly India, or it's going to be India and the world, and like a 50/50 split?
No, no. You know, every vaccine strategy that we look at before getting into a vaccine, it has to have a global demand. Because if it doesn't, the volumes and economies of scale don't justify it. And then it's a chicken or the egg, so you can't then bring the prices down. If you make 20, 30 million doses of a vaccine, if some vaccines are required only for certain regions or a country or two, it's not economically viable or sustainable. So all of these vaccines, they always start off in India, and after protecting the national population and serving our nation's needs, then we go on to exporting it.
Right, right. Now, Serum also had a plan to make biosimilars of Keytruda with an alliance with an Australian company.
No, well, right now we're just focusing on vaccines. So that has been shelved for the moment.
Well, I mean, yeah, let's see. Let's see. Now, what's been or what is your M&A strategy in terms of what kind of technologies that make you interested? Are you looking at therapeutic vaccines, biologics, or you've also invested in the mRNA platform. So what?
No, so these are all the... we've got now a whole suite of different technologies and capabilities: viral vectors, subunit proteins, live attenuated vaccines, and now messenger RNA as well. So it all depends where the trend goes. If certain diseases can be tackled... you know, it depends. Not every disease, you can't make a vaccine for certain diseases using certain technologies, or it's not efficient. So we'll find the right one to do it. The bottom line is we have that capability across the board with all these different platforms. But in terms of M&A, we prefer partnering to share the risk and working with partners to co-develop or develop these vaccines and then make the process very efficient in terms of manufacturing, so that you can be world leaders. In terms of investments and M&As, we do that outside of Serum, whether it's in the financial services business or some of the other private equity investments we've made. And every five or six years, I like to churn that portfolio. And just now, we recently tied up with TPG for your packaging.
