In March, Europe’s vaccine procurement was the world’s laughingstock. The Europeans were far behind the Americans, the British, and the Israelis in obtaining vaccines and administering them to citizens. But now, the critics are falling silent. European countries are vaccinating in record numbers, all more or less at the same pace.
Europe is catching up fast because it has completely turned around the way it does business in the health sector. It used to be an open system where goods and services flowed in and out freely; it is now more controlled and more European. By setting up a real industrial policy, and investing in it, Europeans managed to guarantee a steady supply of vaccines. The idea that an industrial policy helps, long taboo in Europe, is now here to stay—and not just for vaccines.
When AstraZeneca announced in January that it could only deliver a third of its promised doses in the first quarter of 2021, the European Commission got all the flak. The commission, which was asked by the 27 member states to buy vaccines for all, had been too slow, critics said. The European Commission supposedly focused too much on the price of vaccines and too little on exclusive delivery. In the meantime, the United States, the United Kingdom, and Israel elbowed their way to those vaccines, leaving the Europeans in the cold. High time, many said, for Europe to flex its geopolitical muscle.
But Brussels soon discovered that the problem was not so much bad contracts or slow negotiating but the fact that no one in Europe had oversight over complex supply chains. It wasn’t that Europe lacked the production capacity to fulfill its own orders or that its share of production was being shipped elsewhere. The problem was the production process was breaking down within Europe. It was a problem that industrial policy was designed to solve—so long as industrial policy was something the European Union was capable of doing.
Often, even vaccines produced in Europe and destined for Europe must cross many borders before they are ready to use. Components are sourced all over the world. Assemblage is done in several countries. Often, vaccines are shipped abroad again for bottling. Until February, these complex chains were hardly monitored at all in Europe. It took a pandemic—when governments want to get vaccines at all costs—to show how vulnerable this system is.
In February, in response to the public outcry over AstraZenaca’s failure to deliver what it had promised, Thierry Breton, the European commissioner for the internal market, set up a vaccine procurement taskforce. The first thing he realized, he told the French podcast Le Nouvel Esprit Public, was that the EU had had “extraordinarily liberal and Anglo-Saxon policies” for decades.
The European single market, designed in the 1980s, centered on customers. The idea was that customers mechanically profit from free market forces and fierce competition, resulting in lower prices and better quality. The role of government was limited to ensuring and monitoring the level playing field. There had always been strong support in the commission for industrial policies that would protect Europe’s industry and make it more competitive. The problem was not so much the substance of such policies but the fear by member states of a multinational power grab by the commission. When it was really unavoidable, as it was for the steel industry, they accepted it—resulting in the Davignon plan, which protected and restructured European steel manufacturers heavily hit by an economic crisis in the 1970s.
It took a pandemic to accept that the scope of such policies must be wider. (The fact that this coincided with Britain’s departure from the EU, and the appointment of an internal market commissioner from France, is simply coincidence.) No one, it turned out, had previously had oversight over the production of the hundreds of millions of vaccines that the commission had ordered. U.S. policymakers were doing business with vaccine producers, researchers, and producers, working toward a good output. In Europe, there was very little coordination. All the parts of the chain were acting independently. Vaccine doses were flowing in and out of the internal market without anyone keeping track.
Breton started to visit factories, mapping bottlenecks. He soon found out that several supply chains were disrupted, with no one doing anything to fix the problems. He had to act fast. The commission had been assigned to do all vaccine procurement on behalf of member states. Last summer, when no one knew when which vaccines would be available, it had placed orders with six producers to spread risks—if one pharmaceutical company could not deliver in time, there were always five others in the field. Member states had asked the commission to do this for them. If all would buy their own vaccines, big countries with larger budgets (or factories on their territory) would get there first. Smaller and poorer countries would end up at the back of the line. This would disrupt the internal market and put internal relations under unbearable political strain. If all would get vaccines at the same time, for the same prices, disaster could be averted.
AstraZeneca produced one of the first vaccines in Europe. But the supply chain system could not cope with mass production under stress. Immediately, there were hitches. Supply was lower than the company had planned. Some governments started pushing it around, forcing it to move production to their territory or forbidding it to export to others. All companies were under similar strain. Israel, for instance, secured its vaccines by handing over personal data of citizens in exchange for guaranteed delivery of doses, at the expense of other countries.
Meanwhile, vaccines freely flowed in and out of Europe. This was not a problem as such. Today, like several months ago, Europe exports more than 40 percent of vaccines produced on its soil. The difference now is that supply has become so ample that even with exports totaling almost 50 percent of production, Europeans have more than enough for themselves. And they will have more than enough from now on. But Europe, a large exporter of vaccines, is not eager to join the vaccine patent waiver proposed by the United States. European leaders say sending finished doses to countries in need, as they do, is faster and more efficient than a patent waiver: A waiver just means developing countries get the right to reproduce vaccines, but they still don’t have the “recipe.”
Breton is a hands-on former industrialist, whose credo is that “if I run faster than others and they want to keep up with me, they all run in my direction.” He sleeps five hours a night and says he phones vaccine producers every day—starting with AstraZeneca’s CEO, a Frenchman living in Australia. The first thing Breton did after the AstraZeneca debacle was to create oversight over the entire vaccine production process. All exports, both of finished vaccines and components, had to be vetted by him—not to block them (he never did) but to get an overview: What went where? This is how he managed to avert a second disaster.
This time, it involved Johnson & Johnson vaccines. By insisting that all export requests must pass through his desk, Breton discovered that J&J vaccines, although produced in Europe (by Janssen, in the Dutch city of Leiden), had to be bottled in the United States before returning to Europe. But the U.S. Defence Production Act severely restricted exports. The chance J&J vaccines would make it back to Europe to be administered was small.
So the European Commission interfered. A German bottling plant for dengue vaccines was temporarily repurposed for J&J. Now the vaccines do not need a detour to the United States anymore. Better even, they are delivered faster.
The commission is also ramping up investments in vaccine development and production. With German and European money, the vaccine-maker BioNTech bought another factory in Germany, moving parts of the production process back to Europe. The company is now less vulnerable to hitches in the production chain. It is also more productive. In April, the commission secured extra BioNTech-Pfizer doses for the second quarter. It also ordered another 1.8 billion doses through 2023.
In March and April, scorn from all corners of Europe, and beyond, rained down on Brussels. Some called it a “mess,” and others wrote that the “vaccine disaster is the death rattle of the EU” or thought Commission President Ursula von der Leyen should resign over this “shambles.” The harshest commentary came from the U.K., which was, by mid-April, injecting twice as fast as Europe, proudly opening pubs again. But actually, at least half of the 40 million doses the U.K. had administered by then came straight from factories in Europe—mostly BioNTech. Vaccines produced in U.K. factories for use in the EU, though, were blocked because of the country’s export ban.
In the end, Europe developed a five-to-six-week delay in vaccinating citizens, compared with the United States, the U.K., and Israel. Europeans, eager to restart their lives and businesses, loathed those delays, putting their governments under pressure.
Although national governments bear responsibility for the lack of Europe’s industrial policy in the past, some put all the blame on Brussels and went out to buy vaccines themselves. Hungary, for example, bought Russian vaccines, although they have not been approved by the European Medicines Agency yet—and probably will not be for some time. Breton spoke with Hungarian Prime Minister Viktor Orban at length and visited Austrian Chancellor Sebastian Kurz, too. He asked Kurz what he and Danish Prime Minister Mette Frederiksen had done on a highly publicized “vaccine trip” to Israel. Kurz supposedly answered: “Not much.”
By now, criticism of EU vaccine procurement has almost stopped. Vaccination rates have accelerated everywhere. Apart from Hungary and Malta, which are ahead, and Croatia, Latvia, and Bulgaria, which lag behind, most participants are moving ahead at the same speed. This common pace was the idea behind common procurement.
Member states obtained 14 million doses in January, 28 million in February, 60 million in March, and 105 million in April. The commission expects 125 million doses in May and 200 million in June, putting the bloc on track to have an annual capacity of 3 billion to 4 billion doses. Even when new vaccines become available, Breton said, Europe doesn’t need them. There are now 53 manufacturing sites in Europe, up from barely a dozen in January. According to Breton, “We should be proud of Europe’s industrial capacity.” His boss, von der Leyen, said Europe has used this crisis to reinvent itself and become stronger, as happened repeatedly in the past. She called Europe, still exporting almost half of its vaccine output, “the pharmacy of the world.”
The commission sees the vaccine procurement saga as a test case. Last week, it proposed more EU protection for other sectors vulnerable to (geo)political weaponization and to make the single market more resilient to supply restrictions, border closures, or fragmentation in the future. Fierce discussions are expected with some of Europe’s strongest free market defenders, such as the Netherlands. But even The Hague has by now accepted that European “strategic autonomy” and industrialization policy have become key concepts to be developed in an increasingly mercantile world.
