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Emerging market vaccine delivery needs India, airfreight, medical cooperation

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Emerging market vaccine delivery needs India, airfreight, medical cooperation

The EU, Japan and 11 countries (the Ottawa Group) have launched an initiative to minimize protectionist trade measures relating to medical supplies. The move, set to be submitted to the WTO this week, would "withdraw or end any trade-restrictive measures introduced in response to COVID-19 as quickly as possible." Without a sign-up by the U.S. and China, there is unlikely to be widespread adoption of the recommendations, however.

The action is much needed given the widespread use of medical protectionism in relation to export restrictions, including those imposed by the EU early in the pandemic, as discussed in Panjiva's July 17 research. The resurgence of cases ahead of widespread vaccine distribution could easily result in a return to protectionist tendencies, particularly given regional initiatives such as the U.S.' "Project Warp Speed" and despite collaborative arrangements such as Covax.

The supply chains for delivering COVID-19 vaccines may prove challenging. The Pfizer Inc.-BioNTech SE vaccine requires deep freezing, though manufacturing for the U.S. and EU will be carried out in-region, potentially utilizing existing frozen product supply chains.

Moderna Inc.'s product has less stringent requirements and will also be produced locally for the U.S. and EU markets by Lonza Group Ltd. (Switzerland), Catalent Inc. (U.S. as well as working with seven other developers) and Laboratorios Farmaceuticos Rovi SA (Spain), according to S&P Global Market Intelligence.

AstraZeneca PLC/Oxford Therapeutics, meanwhile, is also working with Catalent as well as SK Bioscience Co. Ltd. for South Korea and Cobra Biologics Ltd. (Europe), as well as others. Among other major vaccines, Russia's Sputnik V will be produced by Parana Technology Institute (Brazil) and Dr. Reddy's Laboratories Ltd. (India).

Panjiva's data shows global trade in vaccines reached $29.9 billion in 2019, with exports dominated by the EU at 75.2% of global trade and 63.5% if excluding intra-EU trade. The U.K. was second with 11.4%/16.9% and the U.S. third with 6.8%/10.0%. In the emerging markets, therehas been a rapid expansion in exports from India, though it still only represented 2.6% of global trade in 2019.

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Even regional supplies of vaccines can require rapid transportation, however. Panjiva's data shows that the U.S. accounted for just 11.3% of Mexican vaccine imports in the 12 months to Sept. 30, with 74.8% having traveled by air.

Similarly, shipments from Europe, which accounted for 55.4% of the total, relied mostly on air transport with 72.0% of shipments linked to Sanofi and Pfizer traveling by that mode. More recently, Indian suppliers led by Serum Institute of India Pvt. Ltd. have come to lead Mexican imports with air travel being the only vector.

For emerging economies more generally, supplies from India will be vital. India's exports were worth $772 million in 2019 with leading destinations including Nigeria, Bangladesh and Brazil. Indeed, exports to Europe or the U.S. were minimal.

The leading exporters from India in the 12 months to Aug. 31 were Serum Institute with $141 million of exports after year over year growth of 42.2%, followed by Bharat Biotech Ltd. with $60 million of shipments and growth of 120.3%.

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Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.