World Bank Announces Deal to Fund Vaccines for South Africa

(Bloomberg) -- The World Bank and a trio of western government agencies announced a financing package for production of the Johnson & Johnson coronavirus vaccine in South Africa, part of an effort to scale global production and meet demand for billions of doses.

The 600 million euro ($712 million) deal, announced Wednesday, will support Aspen Pharmacare Holdings Ltd. in producing 500 million doses of the shots through 2022. Of that amount, 30 million will be produced for use in South Africa in 2021, out of a total of 250 million due by the end of the year.

The deal builds on an existing license between Aspen and J&J and includes no new intellectual property agreement, U.S. officials said, speaking on condition of anonymity to discuss the deal. It's aimed at building up production of vaccines outside a handful of countries as part of the overall effort to make billions of shots needed to quell the pandemic, they said.

Read how in March J&J said it would supply vaccines to African Union

J&J will provide the drug substance, which is the main ingredient, and Aspen -- which is based in the South African port city of Durban -- will conduct the fill-finish process, or the last stage in production, the officials said.

“Johnson & Johnson is creating a global manufacturing network that will include ten manufacturers to fulfill orders from all its customers for Covid-19 vaccines,” J&J said in a statement, adding that it has worked with Aspen on the vaccine since November. “We welcome the World Bank Group's announcement that it also will support Aspen's operations, including production capacity for Covid-19 vaccine manufacturing.”

The funding comes from the International Finance Corp., which is affiliated with the World Bank, and three development agencies: the U.S. International Development Finance Corp., or DFC, Germany's DEG and France's Proparco SA. The U.S. portion is 100 million euros and comes from the DFC's core budget.

IFC said in a statement that the financing will help Aspen “refinance existing debt and strengthen the company's balance sheet, supporting Aspen's operations including production of vaccines, and other therapies in African and emerging markets.”

“I think this is hugely important,” said Gayle Smith, who is coordinating the U.S. State Department's global vaccine strategy. “In the short term, it means greater availability of vaccine supply, produced in Africa for Africa. And I think in the medium-long term, it also means increased capacity for the continent to produce other types of vaccines.”

Production Expansion

The DFC had previously announced a deal to support the expansion of production at Biological E Ltd., an Indian vaccine manufacturer. Further announcements are in development beyond India and South Africa, one official said. The vast majority of the doses are expected to be provided to the African Vaccine Acquisition Trust and distributed from there, the officials said. The AVAT already has a deal with J&J to purchase as many as 400 million doses by the end of 2022.

“Aspen is actively seeking opportunities to further extend and capacitate Covid vaccine manufacturing,” Aspen said in a statement. The company is “seeking to play a meaningful role in contributing to the objective of delivering the majority of Africa's Covid-vaccine needs from production sites located in Africa.”

Aspen shares traded 1.5% higher at the close in Johannesburg.

U.S. President Joe Biden has shifted to exporting doses after the country gobbled up the first hundreds of millions of shots produced on its soil -- fueling an inequity between nations with major vaccine production and those without.

Biden has pledged to donate and ship 80 million doses by the end of next month, while ordering an additional 500 million Pfizer Inc. doses for shipment beginning in August and running through 2022. The administration has suggested further donations could be imminent. Manufacturers, including Pfizer and Moderna Inc., have also begun exporting from U.S. facilities directly, after initially using those plants solely for U.S. government orders.