This series of four blog posts focus on the entrepreneurial story of how the University of Oxford invented a COVID-19 vaccine and entered into a partnership with AstraZeneca to distribute 3 billion doses globally. This year’s ELO Oxford Entrepreneurial Leaders Programme will include a case study of the development and roll-out of the Oxford AstraZeneca Vaccine and the lessons on innovation and entrepreneurship to be learned for global business leaders. The ELO Oxford cohort will get first-hand insights into how to go from idea to opportunity to then impacting the world. This is one of the most important stories of the COVID pandemic. We will be at the epicentre of this success story.
ELO operates the “Entrepreneurial Leaders Programme” in collaboration with Wycliffe Hall, University of Oxford. This is a one-week intensive executive education offering each August for Christian marketplace and entrepreneurial leaders from around the world. ELO believes there is no better place in the world for this type of offering. Oxford offers an amazing combination of culture and history along with one of the leading universities in the world. The current COVID-19 pandemic and the race to find a vaccine has raised the profile of the University even higher.
The four blog posts will successively answer these questions:
Part I - How to go from an idea to an opportunity?
Part II - How to solve a global problem?
Part III - What’s the deal?
Who gets what? Despite the lofty rhetoric, there is the economic reality that research facilities and highly-trained people all cost money. The people footing the bill need some return on investment, economic or reputational. The inventors of the Vaccine, Profs Gilbert and Hill, expect to benefit from their ownership in Vaccitech. The Jenner Institute and its various backers need to be acknowledged. OSI (Oxford Sciences Innovation) has investors who require a return. The University itself, though publicly funded, needs to generate an economic return so that it can continue to attract outside talent to thrive. Putting together a “deal” and determining how to divide the pie among stakeholders is important to seize the potential opportunity. At the same time, trying to get a deal done is often the graveyard of the entrepreneurial process.
How did the University proceed? The University’s leadership acknowledged the importance of profiting from its scientific achievements. Its high-minded ideals had in the past made it appear commercially inept. Prof. Bell cautioned that if the University did not safeguard its stake in the Vaccine, people are going to come back and say another British university invented something worth a ton of money and they gave it away for free. While the focus is not on making money, the University believed that it needed to be fairly compensated. Prof Bell noted, “The University didn’t enter this discussion [with pharmaceutical companies] with the idea of making a ton of money. Let’s say [the Vaccine] becomes a seasonal coronavirus vaccine, and it sells a billion dollars a year [of doses]. For us [University of Oxford] to be sitting there and making no money looks pretty dumb.” In particular, University leaders also didn’t want to give away all of the financial upsides to a pharmaceutical company. Last century, Oxford pioneered the use of penicillin in humans. A well-worn university tale recounts how Oxford ceded control, letting the drug companies make all the money. Instead, the University could have generated funds to further its own research agenda—but didn’t. It has had many years to regret that decision.
The biggest challenge with vaccines is that they’re not very profitable. In 2019 only four companies were making vaccines for the U.S. market, down from more than 20 in the 1970s. In addition, they require a lot of government subsidies to get launched. Vaccines are often given only once or twice. In many parts of the world, established vaccines cost only a few dollars per dose or less. This particular vaccine may be different, but that is not yet known. In any event, the business model preferred by pharmaceutical companies are expensive medicines that must be taken repeatedly. These will generate revenue for years or decades.
What was Oxford to do? The University was able to generate interest within the pharmaceutical industry given the scope of the need for a vaccine. The University decided that the best approach to global distribution was to enter into an exclusive arrangement with a single large pharmaceutical company. They were urged on in this direction by the very influential Bill & Melinda Gates Foundation (as noted earlier, they are one of the founders of The Jenner Institute). The University, through Oxford Biomedica, signed an exclusive vaccine deal with AstraZeneca that gave the pharmaceutical giant sole rights to the Vaccine.
After the University announced its exclusive AstraZeneca deal, the company said it would sell vaccines at no profit and no royalties would be payable to the University—but only during the pandemic. AstraZeneca, for its part, would set a “reasonable” post-pandemic price and be “committed to ensuring equitable access, globally.” One of AstraZeneca’s first deals within India. The company has signed deals with the Serum Institute of India to bring more than a billion doses to low- and middle-income countries.
Since the financial information is kept confidential, it is not possible to confirm at what price the Vaccines are truly being sold at cost. AstraZeneca did not need to guarantee specified low prices. In any event, if vaccine immunity is only temporary and endemic coronavirus strains require regular shots for years, the University and AstraZeneca will still be able to generate profit for years to come.
Oxford stands to make over US$100 million from developing a successful COVID-19 vaccine. The University has landed a 6% stake in profits from its partnership with AstraZeneca, according to reports in the Wall Street Journal. The University has said that any profits will be reinvested into medical research, including the University’s new “Pandemic Preparedness and Vaccine Research Centre.” The centre is being developed along with AstraZeneca.
Should the University have any qualms about generating royalties? Pharmaceutical industry experts point out that only decades of costly industry research could have made it even possible to produce a coronavirus vaccine at the present speed. Further, the ability to create and secure intellectual property, or exclusive patents, is a fundamental part of the industry. If intellectual property is not protected, then there is no incentive for anybody to innovate.
The lesson from penicillin a century ago was injected into the institutional memory of the University. Now it has been able to apply the lesson learned. The University will over time generate royalties, and possibly very substantial ones, as well it should. It is also committed amid the present pandemic to distributing the Vaccine at cost, without royalties, around the globe. The ivory tower has become more at home in a sprawling science-industrial park.