India’s vaccine industry, once celebrated for its affordability and efficiency, now stands at a crossroads. Adar Poonawalla, the CEO of the Serum Institute of India, recently raised a pressing concern during his conversation at the World Economic Forum 2025 in Davos. He highlighted an unsettling reality: vaccines that save millions of lives are often sold at prices lower than basic commodities, such as roadside shoes. This pricing model, though well-intentioned to ensure affordability, is now stifling innovation and threatening the sustainability of the vaccine manufacturing sector.

Poonawalla made a compelling case for re-evaluating the government’s pricing policies on vaccines. He emphasized that the current price caps, while ensuring affordability, leave little room for manufacturers to reinvest in research and development (R&D). “We’re not asking for price controls to be removed entirely,” he clarified. “What we need is a relaxation moderate price adjustments that still keep vaccines affordable but allow companies to generate sufficient profits for innovation.”

This plea for reform is not about corporate greed. Instead, it highlights the critical balance between public health accessibility and the financial viability of the vaccine industry. Poonawalla’s remarks shed light on a paradox: while vaccines save lives and drive public health progress, their manufacturing companies struggle to sustain themselves financially.

The vaccine industry, including major players like the Serum Institute, collectively earns profits that barely exceed $1 billion annually. To put this into perspective, global pharmaceutical giants such as Pfizer and GSK make billions of dollars each year, enabling them to independently fund research and accelerate vaccine development.

In India, however, the story is different. For instance, the development of the malaria vaccine, a significant breakthrough in global health, took five to six years and was entirely self-funded by the Serum Institute. Such prolonged timelines could have been significantly reduced with better financial resources. Poonawalla pointed out, “If the biotech industry in India had received the same policy support that the IT industry enjoyed 10-15 years ago, every biotech company here could generate billions in quarterly profits.”

The lack of capital not only delays vaccine innovation but also forces Indian manufacturers to rely on international partnerships for advanced research. While collaboration can be fruitful, the dependence highlights a glaring gap in India’s self-reliance in biotech.

Vaccines are not just another product; they are a lifeline for millions. However, their affordability cannot come at the cost of innovation. Poonawalla explained, “Vaccines priced at ?100 or ?200 provide protection for up to a decade. Yet, the margins are so slim that we’re unable to reinvest adequately in R&D.”

He contrasted this scenario with other sectors in India such as IT, automotive, and steel which flourish without the same level of price restrictions. While these industries enjoy growth and profitability, the vaccine sector remains shackled by policies that prioritize low costs over long-term sustainability.

Poonawalla’s argument revolves around finding a middle ground. He suggests modest price increases, rather than reductions, to ensure the industry’s growth. “We’re not asking for exorbitant prices,” he clarified. “Even a slight adjustment of 10-30% could make a significant difference, enabling us to innovate while still keeping vaccines affordable for the masses.”

This balanced approach could have far-reaching benefits. By allowing the vaccine industry to thrive, India can not only bolster its domestic production capabilities but also create more jobs and attract higher investments in biotech.

One of the most notable achievements of the Serum Institute is the development of the malaria vaccine. This lifesaving innovation has already started making waves in Africa, where malaria remains a leading cause of death. However, the rollout is limited by production capacity and funding constraints. Currently, the Serum Institute can produce 25-30 million doses annually, but Poonawalla aims to scale this up to 100 million doses.

The bottleneck, however, lies in the lack of financial support and programmatic readiness in many countries. Despite the high demand for the malaria vaccine, the slow pace of funding and preparedness hampers its widespread adoption. This situation underscores the need for a robust financial ecosystem to support vaccine manufacturing and distribution.

Poonawalla also announced that vaccines for dengue and monkeypox are set to launch within the next two years. However, their development required partnerships with international organizations, highlighting the challenges Indian manufacturers face in independently funding new projects.

These vaccines represent hope for millions, but their success will depend on how well the industry is supported by government policies. Without adequate reforms, the financial strain on manufacturers could jeopardize future breakthroughs.

Price controls in healthcare are a double-edged sword. On one hand, they ensure that essential medicines and vaccines remain accessible to all sections of society. On the other, they can discourage investment and innovation. The current system, as Poonawalla points out, leans heavily toward affordability, often at the expense of growth and self-reliance.

Relaxing price controls doesn’t mean making vaccines unaffordable. Instead, it’s about creating a sustainable ecosystem where manufacturers can reinvest in R&D, accelerate innovation, and maintain affordability in the long run. As Poonawalla put it, “A few hundred rupees for a vaccine that protects you for 10 years is a small price to pay for a healthier future.”

For India to retain its position as the “pharmacy of the world,” it must address the challenges facing its vaccine industry. Poonawalla’s suggestions offer a clear roadmap:

1.    Relax Price Controls: Implement moderate price adjustments to ensure financial sustainability while maintaining affordability.

2.    Encourage Domestic Innovation: Provide incentives for R&D in India to reduce dependence on international partnerships.

3.    Policy Support: Extend the same level of support to biotech that other flourishing industries, like IT, have received in the past.

4.    Scale Production: Invest in infrastructure to increase production capacity for vaccines like malaria, ensuring timely delivery to high-need regions.

5.    Public-Private Collaboration: Foster partnerships between the government and private manufacturers to share the burden of funding and accelerate innovation.

Vaccines are not just a product; they are a cornerstone of public health. Their affordability ensures accessibility, but their innovation determines their effectiveness. India, as a global leader in vaccine production, has a responsibility to balance these two aspects.

Adar Poonawalla’s call for policy reform is not just a business strategy it’s a vision for a healthier, self-reliant India. By rethinking pricing policies and creating an environment conducive to innovation, India can continue to save millions of lives while strengthening its position on the global stage