The vaccine production plant solemnly inaugurated in Nicaragua two years ago, should begin operations in March 2019, after obtaining certification. The Director of the Institute of Vaccines and Serums (IICVSSP), Dr. Viktor Trukhin who oversees the organization of production in his interview with Kommersant correspondent Valéria Mishina spoke about the peculiarities of the production organization in Latin America, the reasons for the almost doubling of funding by Russia and cooperation with the Nicaraguan authorities.
- The plant was inaugurated in October 2016. At the same time, the Federal Medical-Biological Agency released a report that the full vaccine production cycle would be launched in March 2017 and it was planned to produce 15 million doses of influenza vaccines per year. Why hasn't the plant started working until now?
- The plant was opened immediately after the completion of construction, on October 22, 2016. On November 7, 2016 in Nicaragua, the presidential elections were held, which were won by the President we all know, Comandante Ortega. The option of opening the plant immediately after construction was suggested by Daniel Ortega, saying that we had already done everything possible and then we would have time to finish all the work. This provision is, in principle, reasonable, both from the point of view of the policy of the local authorities and from the point of view of a rational evaluation, but the opening as such did not mean that the plant would start operating immediately.
As for the entire vaccine production cycle, I must clarify this precisely. The plant was built as a platform for filling and packaging products; the complete cycle is another story. In addition, the cost of a full-cycle plant with the capacity to produce 30 million doses of vaccines per year ranges from $ 100 million to 200 million. This is clearly reflected in the so-called UNIDO White Paper, which is not our estimate. The period of implementation of such a project is estimated to be seven to ten years. In other words, creating full-cycle enterprises, especially in developing countries, is not common at the global level.
- However, there were concrete plans on the start-up of the plant?
- I would like to point out that setting up such a company is our first experience. And we did not have the possibility to foresee, for example, lengthy funding procedures.
The implementation of the” Road Map " depends, of course, on a large number of collaborating parties, since in Nicaragua everything depends on external suppliers. We also had to change the management of the plant, which, unfortunately, left great negative consequences and affected our relationships with contractors. Some of them suddenly, for no reason, began to fail to fulfill their obligations.
- Who were these contractors? What obligations did they violate?
- These were Indian companies with which contracts had been signed for the supply of equipment and the development of technological solutions. We had to spend a lot of time fixing the legal situation, in some cases until March 2017. We decided to accept all the conditions so as not to sue them, signed amicable agreements, renewed these contracts to get them executed.
- What losses did the project suffer?
- It's not about economic losses. The damage to our reputation outweighs the financial damage. We lost almost a year, so the evolutionary processes were extended by a year.
- How much did it finally cost to create the plant with all the equipment?
- At present, investments in construction and equipment amount to $ 33.5 million. The Nicaraguan share accounts for 34 per cent of this amount. Approximately $ 18 million cost the plant's equipment. If we refer to the same "White Paper", the volume of funds for projects such as Mechnikov is estimated at $ 46-98 million, and the implementation period is five to seven years.
- In November 2017, the Ministry of Health of the Russian Federation asked the Government for almost another $ 10 million, since the $ 14 million already allocated was not enough. Why were additional funds needed?
- The funds were needed because our tasks had become complicated. Once the construction was completed, it became clear, what amount of resources would be needed to complete all operations. This resource, of course, was agreed with the Nicaraguan partner. And the issue of the need for additional funds was presented for discussion with the Russian Government.
- How exactly did the tasks get complicated?
- Initially, construction documents at almost every point had asterisks-footnotes, which meant that the cost of each item was pinned down during the process. We were building a pharmaceutical plant, not a brick factory, and we had to have correction for every action. There are building standards, they are almost the same in both Russia and America. Our designer calculated a possible price, but the Nicaraguan contractor calculated a completely different price.
- Did you have any other options between the contractors?
- Initially, there were six contractors. All companies were sent proposals, design solutions. But since the Coniasa company participated in the competition, this is, in fact, the contractor recommended by the President of Nicaragua, everyone else, knowing what status the company had, withdrew from the competition. But Coniasa did the job.
-Were the Nicaraguan authorities informed of the need to increase the planned funding?
Of course. It was even previously agreed with the Nicaraguan side. Unfortunately, subsidies from the Russian side have not been completed, there is still $ 1.8 million outstanding. This is the last remaining part, which was scheduled for May 2018, and we are already in November, so at the moment there are no such funds. This, of course, creates some discomfort, I put it to the Nicaraguan partners, and they have shown understanding about this situation.
- In your opinion, to what extent did the change in the dates for the start-up of the plant and the change in the financing conditions affect Russian-Nicaraguan relations? Any complaints from the Nicaraguan side?
- No, by no means, there was total support from Comandante Daniel Ortega. He personally invited me, personally expressed everything to me, said that they would support the project in any situation, which was important to them. Special emphasis has been placed on training: about a hundred people will work at the plant. Both in Nicaragua and the external observers evaluate the situation differently, but they could not help but repair how the separation of cadres is carried out, what is the professional orientation in the schools, what we have begun to do according to our program, what is our work with the students. In schools, we organize special two-week camps, where we explain what the vaccine is for, show a film about our plant and organize a visit to the Mechnikov plant. Our student project, BioNica, takes place every three months: we are working to maximize the focus on future participation in our work, we are adapting young people to meet our requirements.
- What legal form does the plant have?
- The Mechnikov Company is organized as a company according to the laws of the state of Nicaragua, it is a Nicaraguan company, but with participation in the capital of a Russian company: the Institute of Vaccines and Serums directed by me.
- Nicaraguan authorities promised to hand over land for the construction of the plant for $ 1. But local media reported that there were problems with the formalization of the land on which the plant was built. Tell us about this situation.
- In Latin America, the principle of the inseparability of the object of the earth on which it is located governs. Possession of land emphasizes your right to own the object, and not the other way around. This function was implemented gradually: a part of this land that belonged to a third party, acquired our partner, the Nicaraguan Social Security Institute, which obtained the property right first in his name, and then passed the property rights in Mechnikov's name, this process lasted all year. By today, everything has been successfully completed. The land is on our property. Now we begin the process of formalizing another part of the earth, because we had to slightly expand the boundaries of our presence.
— Why do you need more land? And under what conditions is it, again for a dollar?
- No, they give it at no cost, not even a dollar has been ordered. Land is needed to locate engineering facilities and systems.
- What's going on at the factory now?
- At the end of October, the plant passed a control inspection by the Center for the State Control of Medicines, Equipment and Medical Devices (CECMED) of the Republic of Cuba; this is a qualifying evaluation, an inspection planned to evaluate the preparation of the company to obtain the GMP Certificate. According to the formal law, the results of the inspection are issued 45 days later. We are now working out the Plan to correct the observations.
- What were the observations?
- Fortunately, there were no critical remarks. These are usually some corrections in the documentation.
- Is the plant fully available now?
- I use the concept of integral disposition. Comprehensive provision means that a company can receive raw materials, perform all receiving operations, prepare these raw materials for additional technological operations, carry out technological operations and batch release control. Now we have all this. After receiving the Certificate GMP Mechnikov, you will register as a second production site for additional IICVSSP, which will allow us to make the filling and packaging of the vaccine in bulk produced in St. Petersburg (product that has undergone all stages of the technological process, except filling and packaging).
- At the inauguration of the plant, the Minister of Health of the Russian Federation said that in the future it is planned to produce not only flu vaccines. Haven't these plans changed?
- The flu vaccine market is, of course, very, very interesting for the region. This is one of the criteria by which we start especially with the flu. The second criterion is related to the fact that only one flu vaccine in the Russian Federation meets the requirements of international Pharmacopoeias, this is the IICVSSP vaccine. St. Petersburg has met all the qualifications of international organizations, has registered international certification, GMP Certificate.
The second product that the plant will produce would be erythropoietin (one of the renal hormones, “Kommersant”), produced by the State Institute for Scientific Research of Highly Purified Drugs. Production of this drug can be easily transferred.
The registration process on behalf of the Mechnikov Institute of Hepatitis A vaccine created in China has been completed, the technology transfer Agreement was signed right at the opening of the plant on October 22, 2016.
- Why China?
- Because we have that drug in Russia, but it is produced in quantities that do not allow to expand the sale. And also, unfortunately, I do not know the proper conditions of production and whether they are suitable for international certification. When the Chinese preparation has already been prequalified by the World Health Organization.
What other plans are there for drug production?
- We will offer Western companies to carry out the final stage of production of their semi-manufactured product in the facilities of the Mechnikov plant. These technological options are also quite complicated: receiving a semi-manufactured product, performing the necessary operations to obtain a final product, certifying it and launching it on the market.
- Do you have any agreements with the pharmaceutical companies yet?
- Not yet, I just work in general. We are currently in the process of certification, once we have the Certificate, the path will be more open.
- What will be the volume of flu vaccine batches produced in March? And what will be the cost of a dose?
- I can't talk about the price, this is a trade secret, but we'll coordinate the price with the local Ministry of Health. The volume shall be at least 1 million doses. The peak of the flu season in Latin America begins at the end of May, so in June-July we will be applying the vaccine.
- The company had claims from the Russian Accounts Chamber. When did the auditors conduct the inspection and what were the results?
- We learned that there was going to be an inspection of the Accounts Chamber regarding the compliance of all the conditions of financing of this project by the Russian Federation, in October of last year. The review began in November 2017, then the report was presented in the Accounts Chamber. The key questions were how the shares of the company are issued, how they are registered in the Russian registration system, the right to land and how it is formalized in the name of Mechnikov.
- What's wrong with the stock?
- In Nicaragua, actions are written, that is, on paper. In Russia, everything is electronic. Of course, after receiving these shares, we deliver them to St. Petersburg and send a request to the Federal Agency for Property Management. Then, when the Accounts Chamber indicated it, the Federal Property Management Agency carried out a series of special procedures so that the 66 shares of the Mechnikov company in Latin America would enter the balance of the Institute of Vaccines and Serums.
- As of today, the Accounts Chamber still has some complaints about the implementation of the project?
- In mid-September, we received a letter from the Accounts Chamber stating that the submission sent to us in April 2018 is considered complete and will not be further analyzed. In other words, the auditors are now satisfied.
- The St. Petersburg Institute of Vaccines and Serums has also been reviewed several times by the Prosecutor & apos; s Office in connection with the implementation of the project in Nicaragua.
- We've been checked three times for different reasons, different situations. Naturally, we prepare a response to each request, inform in detail all matters, presenting the necessary documentation. But these reasons, let us say, arose from the letters of certain citizens sent to the Security Council.
- Russian citizens or Nicaraguans?
- Probably Russians, yeah, I still don't know who started it. In fact, there are success stories that, for some reason, give no one peace. I've been running the Institute of Vaccines and Serums for six years. When I arrived in December 2011 and took office in 2012, I honestly said I was the head of the world's worst company for the production of influenza vaccine. Today in Russia it is the only company certified by international standards. And the questions of the Attorney General's Office related precisely to the beginning of the whole epic of controls, with the first appeal of a group of people before the Security Council, and then there were requests to clarify and detail the situation. In 2018 the General Prosecutor's Office concluded that there were no complaints on these issues against the St. Petersburg Institute of Vaccines and Serums.
- What place in the vaccine market do you intend to occupy in Latin America?
- It is difficult to get accurate estimates, because, in the first place, the market is competitive. Now we, the Institute of Vaccines and Serums, are constantly participating in the PAHO tender for the St. Petersburg vaccine, although not so successfully. We have a main competitor: the South Korean company Green Cross. In fact, they started their work on the flu vaccine just two years earlier, them in 2009, and us in 2011. But today Koreans are very successful in expanding to the Latin American region. Of course, first of all thanks to the coordinated work of a private company, which is Green Cross, but state support is also an important factor.
In 2010, the company received a government grant from South Korean authorities in the amount of $ 51 million for the development of the influenza vaccine division. They organized everything correctly, invited specialists, launched the technology, are actively working with the Registration Authority of South Korea, and vaccine registration takes place very quickly. Now we've just started working on a tetravalent vaccine, and they've been selling it for a year. But in fact we're going the same way.
The Pan American Health Organization (PAHO) functions as a regional office of WHO and brings together 52 countries and territories in Latin America and the Caribbean. In 1979, a Vaccine Supply Fund was established within PAHO, with a capital that now amounts to more than $ 120 million. Taking advantage of the conditions of a wholesale buyer, the Fund buys vaccines at reduced prices for 35 countries and six territories.
In some of them, such as Bolivia and Costa Rica, the legislation itself requires the purchase of vaccines through the PAHO Revolving Fund. Countries that received drugs paid about 95 per cent of their cost and could take advantage of a 60-day extension of payment. Shipping and operating costs are paid by PAHO members in the amount of 3.5% of the order.
- You said that in March you expect to produce 1 million doses of vaccine in Nicaragua. How will production continue to develop?
- Then the fight for the markets awaits us. And I think we can increase production to 10-15 million doses.
- How many doses are in demand in the Latin American market?
There, some of the products are purchased through the Pan American Health Organization, about 30 million doses, and some are purchased by the Ministries of Health of different countries on their own, totaling about 15 million doses. In total there are 45 million doses. That is what concerns over-the-counter markets. In Brazil, Mexico, Argentina, the market is completely different, it is much bigger, only Brazil consumes around 52 million doses. But it will be difficult to enter these countries with our product. Western companies that have made production there, like our Nicaraguan plant, have long-term contracts for the supply of their products with the local Health Ministries. This, of course, is already more political work, and I hope that our Foreign Ministry and our Trade Missions will help us, because the Vaccine Institute alone cannot solve such problems.
The population of Latin America includes more than 620 million people, and it is planned to increase the level of immunization of the population to 30 per cent by 2022. Even with existing production sites in Mexico and Brazil, there will be a shortage of influenza vaccines of up to 100 million doses per year in the region.
- Apart from Latin America, are there other sales possibilities?
- In the near future, we have scheduled a meeting with the Regulatory Authority of Canada. Previously we presented our Dossier for the study, we met with experts from Health Canada. Our Dossier, is accepted by the Russian Ministry of Health and fully complies with the State Pharmacopoeia established in the Russian Federation, but is not suitable for Canadian regulators. The Dossier adopted to the CTD format will be presented in Canada in 2019. By the way, the Canadian budget buys flu vaccines for $ 78 million, and the Canadian Regulatory Authority is one of the keys to the Latin American region and the most demanding.
Registering our vaccine in Canada will allow you to easily enter any market in Latin America, as well as supply the vaccine to the Pan American Health Organization. In addition, with PAHO support, Canadian regulator Health Canada will coordinate an inspection of our plant in Nicaragua next year.