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Exclusive: Poonawalla family's Serum Institute looks to raise $1 billion for big-ticket COVID-19 vaccine project

Investment banks Goldman Sachs, Citi and Avendus Capital have been engaged as advisors for the process by the privately held vaccine manufacturer, say sources.

June 26, 2020 / 11:46 PM IST

Pune-headquartered Serum Institute of India, the world’s largest vaccine manufacturer and a frontrunner in India’s fight against COVID-19, plans to raise around $1 billion as it looks to mass-produce billions of doses of COVID-19 experimental vaccines on the back of tie-ups with various global firms, sources with knowledge of the matter told Moneycontrol. One of these arrangements includes a critical licence to mass-produce an experimental COVID -19 vaccine by University of Oxford and British drugmaker AstraZeneca, which has entered the final stage of clinical trials.

“This is a big project of national importance and Serum, a national vaccine champion, is trying to address a global pandemic. They are looking to rope in suitable investors/partners to fund this novel project and raise nearly billion dollars in lieu of a minority stake in the company,” said one of the individuals cited above.

Investment banks Goldman Sachs, Citi and Avendus Capital have been engaged as advisors for the process by the privately held Serum Institute, he added, saying the deal is at a preliminary stage and may or may not necessarily result in a transaction.

“R&D, especially for a project of this nature, is expensive along with investments in manufacturing plants and emerging technologies. There is a development risk attached as well. So it’s a prudent strategy to get in partners with the right background and capabilities,” said a second person.

“The bulge-bracket private equity players with the relevant expertise and additional gunpowder would be interested in a deal like this,” said a third person familiar with the transaction. A fourth individual also confirmed Serum’s plans to tap investors. “They are taking a closer look at the regulatory environment as well for such a project,” he said.

COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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“This is a global race to the finish and it all depends on the outcome of the clinical trials and the pace at which the requisite regulatory clearances are obtained,” said a fifth individual who tracks the pharma and healthcare sector.

All the five individuals spoke to Moneycontrol on condition of anonymity. In response to a Moneycontrol query, Goldman Sachs, Citi and Avendus Capital declined to comment. Moneycontrol is awaiting an email response from Serum Institute of India and has sent multiple reminders. This article will be updated as soon as we hear from them. In response to a text message from Moneycontrol on the proposed fundraising plans, Founder Chairman and MD of Serum Institute Cyrus Poonawalla said “no comment.”

This isn’t the first attempt by Serum Institute to raise capital by selling a minority stake in the company. According to reports, in 2015, Serum Institute was in discussions with funds to sell a 10 percent stake in the firm at a valuation of $12 billion but the talks were called off due to market volatilityBut that was an entirely different era compared to the ongoing phase, where the global outbreak of COVID-19 has led to a surge in the demand for pharma and healthcare products.

Earlier, Adar Poonawalla, CEO of Serum, had said the company had earmarked $100 million for the vaccine project and would look for support from international funding agencies as well.

On June 4, British drugmaker AstraZeneca said it had partnered with Serum Institute of India to supply 1 billion doses of University of Oxford's potential novel coronavirus, or COVID-19 vaccine to low-and-middle-income countries (LMICs). Serum will provide 400 million doses before the end of 2020 as part of the arrangement. Serum has also tied up with US biotech firm Codagenix and Austrian biotech company Themis Bioscience for other COVID-19 vaccine candidates. It is also working with American vaccine developer Novavax for developing a malaria vaccine.

A closer look at Serum, which has promoted affordable healthcare since its birth, reveals it is well-positioned for the road ahead.  It has the largest portfolio of World Health Organisation (WHO) pre-qualified vaccines and actually manufactures 60-70 percent of all vaccines sold globally. The firm also has deep pockets and invested Rs 4,000 crore to build the world's largest multi-functional product facility in Pune. It can produce up to 500 million doses of vaccines a year & clocked a revenue of around Rs 5,900 crore in FY19, according to Business Insider.

For more details on how the Serum Institute become the face of the Indian fight against COVID-19, read the following deep dive on Moneycontrol.

Cyrus Poonawalla jumped 57 places and was ranked 86 in the recently released Hurun Global Rich List Top 100.

“India could be playing a very impactful role in fighting coronavirus through Dr Cyrus Poonawalla-run Serum Institute of India. Since the last four months, Dr. Poonawalla has gained almost 25 percent to register a wealth of Rs 1,13,300 crore. Foreign investors’ belief in India’s telecom potential and leadership in biotech were displayed during the 4 months post-COVID-19,” said Anas Rahman Junaid, MD and Chief Researcher, Hurun India.

The firm is a global leader in vaccine manufacturing in terms of the number of doses produced and sold globally (more than 1.5 billion doses) which includes polio vaccine as well as diphtheria, tetanus, pertussis, r-Hepatitis B, measles, mumps and rubella vaccines, according to its website.  Vaccines manufactured by the Serum Institute are being used in around 170 countries across the globe in their national immunisation programmes, saving millions of lives throughout the world, the site says.

According to the website of the Ministry of Health and Family Welfare, as of June 26 morning, India had 4,90, 401 confirmed cases of COVID-19 with 1,89,463 active cases,  28,5,636 cases cured or discharged and 15,301 deaths.

( With inputs from Vishwanath Pilla)
Ashwin Mohan