Ensuring access to the medical equipment and related goods needed to fight COVID-19 was an immediate challenge during the first wave of the pandemic. Analysis revealed that no country was able to efficiently produce all the goods needed to fight the virus, highlighting the high degree of trade interdependencies between countries (OECD, 2020[1]). During the second wave, promising announcements by Pfizer-BioNTech, Moderna, and Astra-Zeneca/Oxford University on the efficacy of vaccines in development, and subsequent publications of clinical trial results and marketing authorisations for these products in several OECD countries, have provided a glimmer of light at the end of the tunnel. Here too, trade will play a key role in enabling mass production and distribution of vaccines across the globe (WTO, 2020[2]).

Vaccine manufacturing is a sophisticated process that requires access to specialised equipment and inputs, storage facilities, and highly skilled labour.

Trade data can provide useful insights into the supply and demand conditions that existed for vaccines prior to COVID-19, thereby helping to identify the production capacities and existing trade infrastructure that can be exploited for the distribution of new vaccines. Vaccines (for human use) are classified under a single Harmonised System (HS) code (300220).1 This facilitates the analysis of broad supply and demand conditions, albeit at the expense of more detailed information on which vaccines are traded by which countries.

The most recently available trade data reveal that while vaccines are imported by most countries around the globe, they are in relative terms exported by few countries (Figure 1).2 Vaccines are imported by 208 economies (relative to other products, vaccines are in the 6th percentile in terms of the total number of importing countries); whereas they are exported by 90 economies (relative to other products, vaccines are in the 35th percentile in terms of total number of exporting countries). All countries need vaccines but not all are able to produce them.

There is significant concentration in the exports of vaccines. The top 10 exporters account for 93% of global export value (80% in terms of volume). Ireland is the top exporter by value, accounting for 28% of global exports, followed by Belgium (which is the top exporter by volume) representing 21%3 (Figure 2). Rankings of export volumes differ from value rankings, revealing significant heterogeneity in unit prices across suppliers. Imports are, in relative terms, less concentrated in both value and volume although the top 10 importers still represent 72% of global import values (69% in terms of volume). The United States is the top importer with 24% of global imports, followed by Belgium with 22% of global imports (Figure 2b).4

Developing economies depend on high-income countries for vaccines. The European Union (EU) is the main source of vaccine imports for all regions. In particular, South Asia and Sub-Saharan Africa import more than two-thirds of their vaccines from the European Union (Annex A). East Asia and South Asia are nevertheless increasingly becoming a source of vaccines for other developing regions.

Countries with higher per capita GDP export vaccines having higher unit values, suggesting that richer countries specialise in higher-end, more complex vaccine production (Annex A). However, in terms of imported vaccines there is less dispersion in unit values.5 This indicates strong specialisation patterns along comparative advantages: countries will specialise in the production of some types of vaccine but use imports to access others.6

The safe and timely delivery of vaccines depends on the efficiency of the supply chains that underlie their production and distribution. Although each vaccine will involve different components, the vaccine supply chain can be broken down into three, and sometimes four, key steps (depending on the vaccine) (Figure 3). The first is the drug discovery process, the second mass production, the third distribution and administration, and the last the reverse logistics (in the event that products such as cool boxes need to be returned). Different stages of this supply chain will be located in different countries. Indeed, while mass production might be geographically concentrated, many of the ingredients needed in production or for primary and secondary packaging will come from different sources. This means that trade will play an important role in enabling mass production, distribution, and administration of vaccines.

Vaccine production involves a complex range of steps that require not only significant up-front investment in R&D (WTO, 2020[2]), but also in selecting suppliers of key ingredients, setting up manufacturing processes7 and quality checks, and sourcing primary and secondary packaging. Each vaccine has specific active components (the antigen) that generate different immune responses. Some contain an inactivated form or component of the disease-causing organism; in the case of some of the novel COVID-19 vaccines, a blueprint enables the intercellular production of the antigen.8 The latter will determine the manufacturing process and the type of production facility that is needed.

Vaccine production requires more than the core ingredients, however. Vials and rubber stoppers are needed to store the vaccines, cold boxes to transport9 them, and dry ice to keep these at appropriate temperatures. Drawing on trade data and product codes identified by the Asian Development Bank (ADB),10 Figure 4 highlights the diverse origins of the ingredients and goods needed to produce, distribute and administer vaccines, from adjuvants to vials. As was the case with the goods needed to fight COVID-19 (OECD, 2020[1]), trade data reveal a high degree of trade interdependence in the goods needed to produce, distribute and administer vaccines.

The distribution of vaccines will also require the use of specialised warehousing, different modes of transport, and last-mile delivery. Once distributed, vaccines will require qualified personnel and a range of goods to store (freezers) and administer (syringes, needles and vials). Lastly, and particularly for vaccines that require a specialised cold supply chain, some of the secondary packaging will need to make its way back so that it can be re-used.

Leveraging existing manufacturing capacity to meet global COVID-19 vaccination goals will require moving goods into factories and transporting finished products to their final destination. Existing evidence on production capacity is scarce, especially in light of the uncertainty on which vaccine(s) will be administered the most extensively.

Survey results from the Coalition for Epidemic Preparedness Innovations (CEPI) highlight that potential manufacturing capacity is concentrated in a few high income and emerging economies, with the United States, the People’s Republic of China (hereafter “China”), and India being the largest potential producers. These are followed by several economies in the European Union, Australia, Brazil, Canada, the Russian Federation, and the United Kingdom (CEPI, 2020[3]).11

Visualising the location of potential COVID-19 vaccine manufacturers and distributors (Figure 5) confirms this, and highlights the strong degree of concentration of producers and distributors in high income and emerging economies (ADB, 2020[4]). Few firms are registered as vaccine distributors in South America or Southeast Asia, and no producer or distributor firms are registered in Africa and Central Asia12 (Figure 5).13

This geographical concentration underscores the importance of trade links for the production and supply of COVID-19 vaccines, and the logistical challenge of supplying vaccines globally. Vaccines will need to be shipped from relatively few locations to individuals across the entire globe. Ensuring their timely delivery and maintaining them at adequate temperatures would favour air freight as mode of delivery. However, belly cargo capacity continues to be constrained.14 Recent data proxy for cargo availability shows that for most trade lanes, air cargo capacity was between 2% and 50% lower in Q4 2020 as compared to the same period in 2019 (Figure 6) (IATA, 2021[5]).

Monitoring specific air cargo capacity available across main trade routes will be key to enabling the effective supply of vaccine ingredients to manufacturers and the distribution of finished vaccines and ancillary equipment. Many of the most impacted trade lanes are those that might be significant in distributing COVID-19 vaccines and related ingredients (e.g. Asia, Europe, and North America exporting to other regions such as Asia-Pacific, Middle East, Central and South America, and Sub-Saharan Africa) (IATA, 2021[5]). Constrained capacity directly relates to higher air freight costs, and prioritisation of COVID-19 vaccines is also likely to have displacing effects on other trade that travels via air.

Tariffs are unlikely to pose major challenges to the vaccine distribution efforts overall: the simple average world tariff on vaccines is 0.76% (Figure 7) – about one-tenth of the average tariff imposed on total trade (7.1%). Out of 183 countries, four-fifths apply zero duties.15 This still means that one-fifth of countries have positive duties on vaccines, with 8% having a duty equal to or greater than 5%. So while tariffs are less likely to pose major challenges, additional steps could be taken to ensure that vaccines meet zero duties in all countries.

Higher tariffs remain on vaccine-related inputs, increasing the final price. For instance, average world tariffs on vaccine ingredients such as preservatives, adjuvants, stabilisers, antibiotics range between 2.6% and 9.4%. Tariffs on materials to administer vaccines, such as syringes and needles, are in a similar range (4.4% and 4.5%). Tariffs for primary packaging (e.g. vials and stoppers) or distribution materials (such as cold boxes, freezers, or dry ice) can go up to 12.7%.

Pharmaceutical products and organic chemicals, which include vaccines as well as a number of their ingredients, are among the products that attract the highest number of non-tariff measures (NTMs). In OECD countries, these two sectors must comply with on average around 38 and 29 different NTMs respectively – mainly in the form of technical barriers to trade (TBT), sanitary and phytosanitary measures (SPS), price-control measures, and import licensing measures (Figure 8).16

While some of these standards and regulations can reduce information asymmetries and strengthen confidence in imported products (Cadot, Gourdon and van Tongeren, 2018[8]), they also translate into compliance costs and controls at the border. These regulations are undoubtedly important to protect the health and safety of citizens, but there may be areas where unnecessary duplication or cumbersome processes exist. Mapping the relevant regulatory requirements, processes, and approvals for access to different markets will therefore be key to enabling more efficient vaccine distribution and reducing unnecessary trade costs.

Trade facilitating measures introduced at the height of the COVID-19 pandemic have helped streamline border processes for pharmaceutical and medical goods (OECD, 2020[9]) (Evenett et al., 2020[10]). These can continue to be useful tools for expediting border clearance for vaccines and related ingredients, including the “green lanes” or “corridors” for fast clearance (e.g. those introduced at intra-EU borders), electronic submission of documents for pre-arrival processing, simplified import and export declaration forms, and extended business hours at specific border posts. They will be important not just to facilitate border clearance for vaccines, but also for the inputs needed to manufacture, distribute, and administer them.17

Co-operation and co-ordination between Customs and other relevant agencies need to be improved to streamline processes at the border. Continuing to invest in digital infrastructure to support the use of automated tools such as electronic pre-arrival processing and electronic data exchange between relevant border agencies can play an important role in improving co-operation mechanisms and risk management. This would allow border agencies to better respond to actors along the vaccine supply chain on the release status of goods through electronic channels within strictly defined time limits (Global Express Association, 2020[11]).

Logistics operators show different degrees of preparedness, highlighting the need for more co-operation with and amongst the private sector. For instance, ground handlers and airport operators feel they are less prepared than do forwarders and airlines (Pharma-Aero/TIACA, 2020[12]). Top concerns revolve around managing the necessary infrastructure (facilities, cold chain ground equipment, containers, etc.), supply chain transparency on shipment transport conditions, transportation time, and customs clearance. According to IATA, up to 20% of temperature-sensitive pharmaceutical products are already damaged at arrival because the cold chain was disrupted during transport (IATA, 2015[13]). The specificities of transporting vaccines – e.g. some types of refrigerants are classified as dangerous goods and the reverse logistics needed to return cold chain equipment – also require attention.

A wide range of uncertainties remain in manufacturing and distributing COVID-19 vaccines across the globe. These include: the variety of inputs needed; the manufacturing capacity and pace of production; the roll-out schedules for administering vaccines; the requirements for transport and storage; and the availability of cargo. These uncertainties affect the ability to make decisions and reduce the level of preparedness.

This note highlights the importance of trade in the effort to produce, distribute, and administer vaccines. As not all countries can produce these, trade enables access to vaccines and to their key ingredients, as well as to the goods needed for their distribution and administration.

In the face of existing uncertainties, trade needs to provide an environment that is conducive to broader vaccine distribution by:

  • Reducing remaining tariffs and streamlining non-tariff measures to trade in vaccines, key related ingredients in their production, and the goods needed to safely distribute and administer these.

  • Avoiding export restrictions to ensure the effective functioning of supply chains and the distribution of vaccines globally, in light of the concentration of input sourcing and vaccine manufacturing capacities.

  • Increasing co-operation within and between Customs and other relevant agencies with a view to expediting processes at the border, ensuring better co-ordination of logistical processes, and relaxing, where possible and without prejudice to safety, trade-related regulatory burdens. The continued implementation of the WTO Trade Facilitation Agreement (TFA) is essential to streamlining border processes, while specific logistics and border challenges could be addressed through public-private consultation structures such as National Trade Facilitation Committees. This would include investing in the adoption of digital infrastructures and processes.

  • Improving transparency and information sharing across the entire value chain to enable the different actors to find each other and enable more efficient production and distribution via trade channels. This could be achieved through the use and promotion of online information hubs, such as those undertaken by the Asian Development Bank (ADB).

References

[17] Abrahamsen, M. et al. (2011), “The Belgian Pharmaceutical Cluster”, Institute for strategy and competitiveness - Harvard Business School, https://www.isc.hbs.edu/Documents/resources/courses/moc-course-at-harvard/pdf/student-projects/Belgium_Pharmaceuticals_2011.pdf.

[4] ADB (2020), ADB Mapping on Supply Chains for Pandemic-fighting Products, https://www.adb.org/multimedia/scf/#/.

[8] Cadot, O., J. Gourdon and F. van Tongeren (2018), Estimating ad-valorem equivalents of non-tariff measures, https://doi.org/10.1787/f3cd5bdc-en.

[3] CEPI (2020), Survey of global drug substances and drug product landscape, https://cepi.net/wp-content/uploads/2020/08/CEPI_Survey-of-global-drug-substance-and-drug-product-landscape-June-2020_RELEASED-1.pdf.

[10] Evenett, S. et al. (2020), Trade policy responses to the COVID-19 pandemic: Evidence from a new dataset, https://voxeu.org/article/trade-policy-responses-covid-19-pandemic-new-dataset.

[11] Global Express Association (2020), COVID-19 Vaccine Distribution: Getting Ready, https://global-express.org/assets/files/Whats%20new%20section/GEA_COVID-19%20VaccDistr_GETTING%20READY_FF.pdf.

[5] IATA (2021), IATA Air Cargo Market Analysis - November 2020, https://www.iata.org/en/iata-repository/publications/economic-reports/air-freight-monthly-analysis---november-2020/.

[6] IATA (2020), IATA Air Cargo Market Analysis - October 2020, https://www.iata.org/en/iata-repository/publications/economic-reports/air-freight-monthly-analysis---october-2020/.

[14] IATA (2020), The time to prepare for COVID-19 vaccine transport is now, https://www.iata.org/en/pressroom/pr/2020-09-09-01/.

[13] IATA (2015), IATA CEIV Certification, https://www.iata.org/contentassets/494bc14afd934b0193735e9a47091d72/iata_ceiv-pharma_how20to20become20ceiv20pharma20certified.pdf.

[18] OECD (2021), Coronavirus (COVID-19) vaccines for developing countries: An equal shot at recovery, http://www.oecd.org/coronavirus/policy-responses/coronavirus-covid-19-vaccines-for-developing-countries-an-equal-shot-at-recovery-6b0771e6/.

[9] OECD (2020), Getting goods across borders in times of COVID-19, https://read.oecd-ilibrary.org/view/?ref=436_436393-3urd6d5n5i&title=Getting-goods-across-borders-in-times-of-COVID-19.

[1] OECD (2020), Trade interdependencies in COVID-19 goods, https://www.oecd.org/coronavirus/policy-responses/trade-interdependencies-in-covid-19-goods-79aaa1d6/.

[16] OECD Analytical Database on Individual Multinationals and Affiliates (2019), ADIMA Database, https://www.oecd.org/sdd/its/statistical-insights-the-adima-database-on-multinational-enterprises.htm.

[12] Pharma-Aero/TIACA (2020), Getting ready for COVID-19 vaccines logistics by air: Airfreight readiness survey results, https://tiaca.org/wp-content/uploads/2020/10/Sunrays-Airfreight-readiness-survey-results-Executive-Summary.pdf.

[7] UNCTAD (2020), UNCTAD Trains - The global database on non-tariff measures, https://trains.unctad.org/.

[2] WTO (2020), Developing and delivering COVID-19 vaccines around the world, https://www.wto.org/english/tratop_e/covid19_e/vaccine_report_e.pdf.

[15] WTO (2020), The TRIPS Agreement and COVID-19 - Information Note, https://www.wto.org/english/tratop_e/covid19_e/trips_report_e.pdf.

Contact

Andrea ANDRENELLI (✉ andrea.andrenelli@oecd.org )

Javier LOPEZ GONZALEZ (✉ javier.lopezgonzalez@oecd.org )

Silvia SORESCU (✉ silvia.sorescu@oecd.org )

Notes

← 1. This category includes all possible vaccines for human use.

← 2. Latest available CEPII BACI data for 2018 was used. Trade patterns for vaccines seem stable in recent years for which data are available; as such, 2018 data accurately reflect trade patterns prior to the COVID-19 outbreak.

← 3. Different vaccine producers locate across different markets. For instance, COVID-19 vaccine producers such as Astra-Zeneca, Pfizer, or Johnson & Johnson have affiliates established across the top vaccine exporters in Figure 2a (OECD Analytical Database on Individual Multinationals and Affiliates, 2019[16]).

← 4. Belgium is both a strong exporter and importer owing to its strong pharmaceutical cluster which includes not only production but also packaging of vaccines. Moreover, Belgium has a fast clinical trial approval process and is therefore one of the world’s prime locations for clinical trials in per capita terms (Abrahamsen et al., 2011[17]).

← 5. For example, in Ireland (28% of global exports in value, but 3% in volume) vaccines are exported at a unit value of around USD 10 000 per kg. By contrast, the export unit value of India (2% of global exports in value, but 8% in volume), is USD 230 per kg. In turn, the import unit value of the top importer (the United States, representing 24% of global imports in value and 11% in volume) is USD 3 800 per kg, while it is around USD 1 000 per kg in India (representing 1% of global imports in value and 10% in volume).

← 6. This is further supported by evidence of specialisation in manufacturing of the drug substances used in vaccines. Survey results show that for substances such as microbial or yeast expression systems, recombinant protein from suspension cells, recombinant protein from insect cells; and viruses, India has the largest production capacity followed by Europe and North America. Europe has the largest production capacity for DNA and RNA-based drug substance, followed by the United States (CEPI, 2020[3]).

← 7. For issues around Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement) and COVID-19, see (WTO, 2020[15]).

← 8. Vaccines also contain a range of common ingredients (https://www.who.int/emergencies/diseases/novel-coronavirus-2019/covid-19-vaccines/how-are-vaccines-developed): preservatives prevent contamination of the vaccine, which is especially important when these are stored in multi-dose vials; stabilisers prevent further chemical reactions from occurring, keeping the vaccine potency stable as it is being transported; surfactants ensure that ingredients remain blended, avoiding the clumping of elements that are in liquid form; adjuvants are sometimes used to enhance the immune response; other substances, including antibiotics to prevent contamination and diluents to temper the concentration of vaccines before use. In both the Moderna and Pfizer-BioNTech COVID-19 vaccines, the messenger ribonucleic acid (mRNA) is encapsulated in “lipid nanoparticles”, microscopic droplets of oily liquid that enclose and protect the fragile genetic instructions as they are manufactured, transported and finally administered.

← 9. For both mRNA COVID-19 vaccines, cold storage is needed to keep the nanoparticles in good shape and to prevent the mRNA from degrading. While Moderna’s vaccine is stable enough to survive storage for six months at -20°C (i.e. the temperature of a standard domestic or medical freezer), the Pfizer-BioNTech vaccine must be stored and transported at -70 °C. Pfizer and BioNTech have designed special “thermal shippers” that can maintain the product for up to 15 days at that temperature when regularly refilled with dry ice.

← 10. See ADB Mapping on Supply Chains for Pandemic-fighting Products, https://www.adb.org/multimedia/scf/#/. See also the World Customs Organisation HS classification reference for COVID-19 vaccines and related supplies and equipment (29 January 2021) for an extended list: http://www.wcoomd.org/-/media/wco/public/global/pdf/topics/facilitation/activities-and-programmes/natural-disaster/covid-19-list-for-vaccines/hs-classification-reference-vaccines-english.pdf?la=en .

← 11. Results reflect the response of 113 manufacturers as a snapshot of manufacturing capacity in June 2020. Respondents were asked to report on their available manufacturing capacity for Q4 2020 – Q4 2021.

← 12. According to data extracted on 1 December 2020. The online information-sharing repository set up by the Asian Development Bank gathers available information from various sources (WHO, ECRI, the Milken Institute and BioCentury) and then verifies this against Bureau van Djik, Open Corporates and GLEIF data. In light of the difficulties with identifying potential manufacturers and distributors of COVID-19 vaccines in some regions of the world, information sharing efforts such as those undertaken by the ADB should continue to be promoted.

← 13. Initiatives such as the COVID-19 Vaccines Global Access (or COVAX, co-led by the Global Alliance for Vaccines and Immunization, the World Health Organization, and the Coalition for Epidemic Preparedness Innovation) include a donor-funded Advance Market Commitment to support procurement of vaccines for 92 low-and middle-income economies. In addition to global initiatives, a number of regional initiatives have emerged, such as the COVID-19 African Vaccine Acquisition Task Team (AVATT) to support the roll out of the African Union’s Africa Vaccine Strategy or the Asia-Pacific Vaccine Access Facility (OECD, 2021[18]).

← 14. In addition, airlines have been increasingly using narrow-body passenger aircraft that cannot accommodate as much cargo as larger wide-body planes. This matters because there are limitations on these narrow-bodied aircrafts for cargo that require special handling like temperature control or unitised loading. While a wide-bodied aircraft can carry goods between 10-30 tonnes per flight depending on the aircraft type, the capacity of a narrow-bodied aircraft is only 2-6 tonnes per flight. Also, smaller aircrafts cannot fly for more than 4-5 hours at a stretch, so long-haul air cargo movement is hindered.

← 15. Vaccines (HS code 300220) are covered by the 1994 WTO Pharma Agreement, which eliminates tariffs and other duties and charges on many pharmaceutical products and substances used to produce them. Canada; the European Union; Japan; Macao, China; Norway; Switzerland; and the United States currently participate in this Agreement.

← 16. Examples of TBT measures applied to pharmaceutical and organic chemicals include: measures regulating the kind, colour and size of printing on packages and labels, and defining the information that should be provided to the consumer; or information disclosure requirements that make it possible to track a product through the stages of production, processing and distribution. Examples of SPS measures applied to these products are requirements that the establishments and equipment used during the manufacturing and processing stages of the products meet specified sanitary conditions.

← 17. Trade facilitation aspects for the streamlining of border processes of medical goods – including vaccines – are acknowledged as being key in various initiatives: for instance, the Ottawa Group proposal to the WTO on Trade and Health (WT/GC/223 COVID-19 and Beyond: Trade and Health, Communication from Australia, Brazil, Canada, Chile, the European Union, Japan, Kenya, Korea, Mexico, New Zealand, Norway, Singapore and Switzerland, 24 November 2020); the European Union Trade in Healthcare Products Concept Paper, 11 June 2020; or the New Zealand and Singapore initiative to ensure the free flow of essential goods.

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