11/05/2021

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Covid vaccines and lessons: India can benefit from a dose of globalisation

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The rapid development of Covid vaccines is a miracle of modern science and a triumph of human ingenuity. While typical vaccine development cycles last for four or more years, the global pharma industry has developed several safe and effective vaccines in less than a year.

Scott Lincicome of the Cato Institute has chronicled the development of the vaccines made by BioNtech-Pfizer and Moderna. Lincicome asserts that neither of these vaccines would be possible without our globalized economy that matches the best global talent with capital and resources.

Both the vaccines are based on the specialized messenger RNA (“mRNA”) technology used by BioNtech-Pfizer and Moderna. Katalin Kariko, a Hungarian immigrant in the United States developed this technology. Kariko is now a senior scientist at BioNtech, a company founded by the children of Turkish immigrants in Germany. During the early days of its Covid vaccine development process, BioNtech’s management realized that their company needed financial muscle and manufacturing prowess. BioNtech partnered with the US pharma giant

, which is led by Albert Boula, an immigrant from Morocco. Boston-based Moderna’s co-founders are from Lebanon and Canada, the Chief Executive Officer and Chief Scientific Officer are from France and Israel.

Pfizer is an NYSE listed company with access to low-cost capital from the US equity and debt markets. About $2 billion of that capital was used to see the vaccine through the trial and manufacturing process. Moderna, despite a modest record of financial performance, raised billions of dollars from venture capital investors and public market investor based on the potential of its technology. The capital secured by Moderna, along with financial support from the US National Institute of Health, helped the company develop, test and manufacture the vaccine at unprecedented speed. The private and public capital markets in the United States do a great job at pooling domestic and global savings that support risk taking and innovation.

Pfizer uses manufacturing facilities based in Belgium, Germany and the US. Moderna manufactures its vaccines in Spain, Switzerland and the US. Covid is a global problem that needed a global solution. Global human talent combined with global capital markets and global manufacturing expertise are helping solve the biggest global health crisis over the last 100 years.

Unfortunately, the arrival of Covid-19 has accelerated the long running political trends against globalization, especially in the western democracies. In the emerging world, including India, we seem to have forgotten that since the fall of the Berlin wall, globalization has helped improve millions of lives across the globe, particularly in China and India. India needs to nurture and retain its human talent, attract global capital, and integrate with global supply chains. Improvement in education and urbanization will help India ensure that its own best minds stay home. India should also welcome the entrepreneurs and scientists from overseas to live and work in the country.

India has improved its attractiveness as a destination for foreign capital. India’s stock market is one of the better regulated and open amongst its peers in emerging markets. The venture capital ecosystem continues to improve and is helping nurture the country’s young entrepreneurs. Most sectors are open to foreign investment. Yet, foreign investment in India is a fraction of what we need to support the country’s economic growth. The traditional culprits of bureaucratic red tape, policy unpredictability and poor infrastructure still exist. Our entrepreneurs sometimes don’t seem to like the fact that global competition often accompanies global capital. Entry of global players in India will improve the competitiveness of domestic businesses and we should welcome both financial and strategic capital. The ten million young men and women who enter India’s labor force every year don’t care who provides their paycheck–Honda or Bajaj, Indus Bank or Standard Chartered.

While the Biden administration has reversed some of the most harmful immigration and trade policies of the Trump era, the United States is unlikely to play the role of the global champion of free trade that it has in the past. India needs to help revive the moribund WTO and join every trade alliance, including RCEP and TPP. South East Asian countries are active participants in both forums and have been the prime beneficiaries of the global supply chain diversification away from China.

It will be impossible for India to complete its transition to an upper middle- income country without embracing global integration. This means opening its industry to global competition, not shielding our entrepreneurs. Global markets are not a one-way street, we can’t close our markets and expect others to welcome our products. We need more export optimism and a little less of import substitution.

Indian businesses have demonstrated that they can win on the global stage. India has produced global leaders across sectors including pharmaceuticals, IT services and motorcycles. Going back to Covid vaccines, the vaccines that are likely to save the most lives across the world are being manufactured at the Serum Institute in Pune. These ‘made in India vaccines’ were designed by American, British and Indian scientists, supported by global capital, will soon be in the arms of millions of people living in Europe, South America and Africa. India can benefit from globalization and contribute to the world. We need to add a sprinkling of ‘atmavishvas’ (self-confidence) to our spirit of ‘atmanirbharta’ (self-sufficiency).

The writer is Managing Partner, Zephyr Peacock India.

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