[UPDATE: On April 28, Serum Institute of India reduced the price of Covishield to ₹300 per dose for state governments.]

Adar Poonawala, CEO of the Pune-based Serum Institute of India (SII), faces a dilemma. His firm, the world’s largest vaccine maker by volume that is mass-producing Covishield under an agreement with AstraZeneca, stares at the huge social responsibility of supplying to the Indian market while a contractual demand for the export of vaccines hangs over him like the Sword of Damocles. India, currently reeling under a deadly second wave of the Covid-19 pandemic, can’t afford to let SII export vaccines now, especially with the government making everyone above the age of 18 to be eligible for vaccination from May 1.

Irked by the delay in the supply of Covid-19 vaccines, AstraZeneca has sent a legal notice to SII. The U.K.-headquartered pharmaceutical giant was reportedly upset after SII delayed shipments to the U.K. and failed to meet its obligations to other countries under the U.N.-backed Covax programme. Serum is examining all avenues to amicably resolve the legal dispute. It has informed AstraZeneca that the delay was primarily due to New Delhi’s move to halt vaccine exports and an instruction to prioritise domestic needs over the next couple of months.

The decision by India, known as the vaccine factory of the world, has come as a rude shock for the rest of the world. According to data released by the ministry of external affairs, India’s exports stood at 65 million doses as on April 14, 2021, with Bangladesh, Morocco, and the U.K. being the top recipients.

For the 40-year-old, risk-savvy Poonawalla, it is a long, winding road ahead. The son of Cyrus S. Poonawalla, known as the ‘vaccine king of India’ who founded SII in 1966, may have liked to expand the production of vaccines quickly as demand spiked. He had also been asked to ramp up production as India faced a severe shortage of vaccines.

A company official said SII was manufacturing 2.4 million doses a day, and was looking to improve the production by 30% soon. The government has now committed ₹3,000 crore to augment capacity, and relaxed regulations around the sale of the vaccine. SII says it will sell Covishield to state governments at ₹400 a dose and to private hospitals at ₹600 a dose.

With India opening the regulatory door for all vaccines already approved abroad, SII hopes to ramp up the production of another vaccine, Covovax, developed by a Nasdaq-listed vaccine research firm Novavax, and being upscaled by Serum. Its plan is to manufacture a billion doses of the vaccine, to serve India as well as exports under the Covax programme.

SII has also signed an agreement with Codagenix to initiate trials of Covi-Vac, a single-dose, intranasal vaccine, while trying to develop an indigenous one.

(This story originally appeared in Fortune India's May 2021 issue).

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