(Bloomberg Opinion) – We have already seen the cost of supply chain failure during the Covid-19 pandemic: Delays in the production of simple nasal swabs passed tests by months, even as the pandemic exploded in the US. The world is now seriously awaiting a vaccine, and will need billions of doses as soon as possible. If the vaccine chain fails, the economic and human costs of Covid-19 will be extended.
The multilinked fax production chain will take months to set up, which means start now. Some parts are already looking for investment – glass manufacturers, for example, are increasing the production of bottles. But the supply of less obvious inputs previously needed in the chain is uncertain.
Fax supply chains contain some unusual linkages, including horse head crab blood, shark liver oil and an enzyme that is one of the most expensive products in the world. Other links rely on new manufacturing processes that have not yet been implemented to scale. Every switch in the chain must be stress tested and reinforced. For the potential weak spots, alternative production processes must be considered and prepared.
Vaccination production requires a long series of biological processes, and the prevention of contamination is crucial. Endotoxins, which are dangerous molecules that are killed by bacteria, are one source of contamination. To detect them, each batch of vaccine, along with its vials and stoppers, is tested with a substance called Limulus amebocyte lysate. The only known natural source of LAL is hobby crab blood – which means that the supply varies from year to year, and we must be careful not to destroy the crab population. Fortunately, a synthetic version of LAL has recently been developed and approved by the U.S. Food and Drug Administration and the European Ministry of Health. But companies need time to validate production and prepare to be ready for a Covid-19 vaccine.
Shark deliveries are another surprising switch in the supply chain for some faxes. The shark liver oil squalene, which is most commonly used in cosmetics and sunscreens, is part of a vaccine adjuvant – a factor that accompanies a vaccine and enhances its effects by providing extra stimulation to the immune system. We could repay squalene from the cosmetic market to help with vaccine production, but it might be even better to use synthetic squalene. That can be produced under very controlled conditions, but again, we have to prepare the production processes now. We do not want fax delivery to fail because we do not have enough shark liver oil.
Traditional vaccines work by exposing the body’s immune system to a virus that has been weakened or killed; then, if the vaccinated immune system meets the dangerous version of the virus, it is trained to fight back. Recently, completely new types of vaccines have been developed that use DNA and mRNA. These vaccines copy pieces of the genetic material of the virus and then program the body’s own cells to produce the immune’s antigens. This approach is faster and more standardized than traditional vaccines, and it has the potential to be particularly safe, as it does not address issues related to the virus.
DNA and mRNA faxing technologies have shown promising results, and two of the leading contaminants for vaccines, from Pfizer Inc. and Moderna Inc., using mRNA technology. But mRNA has never been used to produce a commercial vaccine for humans, only on a scale. And scaling these technologies can not be easy. In particular, degradeart mRNA rap. To prevent this, it must be “capped” by a very rare substance called vaccinia capping enzyme.
Just over 10 pounds of this VCE is enough to produce hundreds of millions of doses of an mRNA vaccine – but current production processes for VCE require so much bioreactor capacity that making 10 pounds would cost about $ 1.4 billion. More importantly, global bioreactor capacity cannot support production at that level, while also producing other vaccines and anti-cancer drugs.
If we work hard now, we may be able to find more efficient means of producing VCE. Expanding bioreactor production and redesigning bioreactors from existing large-scale industrial applications will also help reduce the pressure on supply chains for multiple types of faxes.
Even delivering faxes can be complicated. Faxes made using mRNA technology have to be stored at very cold temperatures, which can be especially difficult in developing countries. DNA faxes do not require cold storage, but they do require new methods of delivery, such as gene cannons that shoot golden “bullets”. We need to develop and test different delivery methods now.
We do not yet know which candidates for vaccine will be successful. It could be the traditional vaccines, like the newer DNA and mRNA approach, or possibly something else. We may want more than one vaccine for use in different populations – for example, the elderly may respond better to one version than another. Meanwhile, some faxes will be more suitable for use in developing countries than others.
Because we do not know which candidates will work – and because building production capacity takes time – we need to upgrade the supply chain for all these different types of faxes at once. The world economy is losing in the order of $ 500 billion a month because of Covid-19, so even if building supply chains costs billions, it is a wise investment.
Of course, we might think that private companies would have incentives to coordinate supply chains themselves – and they do in some cases. But many have promised to keep their vaccine prices close to cost, both out of altruism and because they may fear public backlash (or legal action) if they are perceived as “prize-winning” in the midst of a pandemic. And if companies do not stand to benefit greatly from Covid-19 faxes, then they do not have much incentive to invest in increasing capacity. In short: if prices cannot rise, then the only way to encourage companies to invest more in production is to reduce their costs – and that means we need public investment.
Investments in supply chain improvements such as refining the VCE manufacturing process benefit aspects of an audience, as they will benefit many pharmaceutical companies at the same time. Public investment in such R&D is justified in normal times – and even more so in the extraordinary moment of today.
Supply chains failed when the pandemic started, and we can not do that again with faxes. No one should die because poor preparation keeps us from being able to deploy lifesaving technology. We need to be ready to produce billions of doses as soon as a vaccine is approved – and that means we need to invest now.
This column does not necessarily reflect the opinion of the editors or Bloomberg LP and its owners.
Scott Duke Kominers is the MBA Class of 1960 Associate Professor of Business Administration at Harvard Business School, and a faculty affiliate of the Harvard Department of Economics. Previously, he was a junior fellow at the Harvard Society of Fellows and the inaugural research scientist at the Becker Friedman Institute for Research in Economics at the University of Chicago.
Alex Tabarrok is the Bartley J. Madden Chair in Economics at the Mercatus Center at George Mason University.
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