Adam Schwab: At long last, we have a product market fit for vaccines
Adam Schwab says Australia seems to have finally found its product market fit with our challenged COVID-19 vaccine rollout.
One of the elements needed to be a successful founder is knowing when your business has reached product market fit (or conversely, where you don’t have it and need to ‘pivot’ to something different entirely). This is where a business is able to supply a product your customers want, with a large enough gross profit margin to not only cover your customer acquisition and fixed costs, but also have enough left to pay a return to shareholders.
Using the analogy in a slightly different sense: it’s taken far too long (and we certainly don’t have a capable CEO), but finally Australia seems to have found its product market fit with our challenged COVID-19 vaccine rollout.
Now we just need to be patient while the product is rolled out — which is somewhat more difficult when half of Australia is confined to their homes.
Problems of supply and demand
The search for vaccine product market fit in Australia has been hampered by two problems: a lack of supply and a lack of demand.
Supply problems were the result of bad luck and terrible execution (with a bit more luck no one would have noticed the latter). The bad luck didn’t start with the AstraZeneca clotting issues, but a problem with an entirely separate vaccine that was being developed by the University of Queensland (and was intended to be produced by CSL in Melbourne). The Morrison Government dumped the UQ vaccine in December 2020 after participants in a clinical trial reported false positive HIV results.
Any half-decent entrepreneur facing a peripheral challenge like a false positive would have tried to find a solution (especially since there were no apparent issues with the vaccine itself). But instead, the Morrison government quickly switched to betting everything on the locally produced Oxford AstraZeneca vaccine.
While this was happening, the federal government, caught up in an early bout of hubris due to Australia virtually eliminating COVID-19 and strong opinion polls, also thought it was a good idea to convince Australians that it “wasn’t a race” to get vaccinated. At one point, Morrison even took aim at the UK’s vaccine rollout, which is a bit like Myspace criticising Facebook. The government didn’t even bother amending laws that could have allowed the Therapeutic Goods Administration to provide ‘emergency’ approval for the vaccines (like what happened in the US and Europe).
This led to a cascading disaster. Not only was the rollout unnecessarily delayed, but when we ran into issues with AstraZeneca, far less of the population had been vaccinated. By contrast, by the time the UK and Canada encountered the same issues, they’d already given first doses to most of the at-risk 70+ cohort, so they could backfill with mRNA vaccines without losing cadence.
Australia had purchased a relatively small amount of Pfizer (10 million doses) and the highly credentialed Novavax vaccine wasn’t every arriving before November. So almost all its eggs were in the AZ basket.
The clotting issue would have been less catastrophic if the government not been undone by the scourge of many entrepreneurs: regulatory overreach. That was the decision of Australian Technical Advisory Group on Immunisation (ATAGI), which announced that AZ was not the preferred vaccine for those aged under 50 (later upped to 60). The recommendation now appears to have been clearly wrong (more people have died from COVID-19 in the last week alone, than have died from blood clots after almost six million AZ doses), but that’s not the point. Regulators don’t always get it right — it’s up to founders to quickly adjust.
To the government’s (small) belated credit, the supply issue has now finally been resolved. And we’re likely to see our monthly supply rapidly increase to 6 million doses in August, 8 million doses in September and 10 million by October. By Halloween, every Australian aged over 18 would have likely been offered a dose.
But supply is only half the challenge. Australia has also experienced demand weakness, which largely stemmed from our Clayton’s elimination of COVID last year. This bred an unfortunate complacency that has resulted in millions of ‘baby boomers’ who have been eligible for the AstraZeneca vaccine for months, choosing to wait for (what they believed was) a better vaccine. This is a bit like a someone drowning refusing to grab a lifebuoy because it’s the wrong shade of red.
Demand issues meant that only 75% of those in the high-risk 70+ age bracket have had their first dose, while a mere 60% of those aged between 60-70 have had a single dose. To be sure, this was purely a demand side issue; there are literally millions of doses of AstraZeneca sitting in fridges around the country.
It has taken the recent Victorian and New South Wales outbreaks to finally change the demand equation. There are currently 82 people in hospital in NSW, 24 of whom are in ICU. Only one has had one dose of AZ, while another five unvaccinated people have died in recent weeks.
So at long last, we have product market fit for vaccines, with supply increasing and most older, at-risk Australians realising if they don’t get jabbed, there’s a non-zero chance of them dying. But now we need to be patient — it will take three months to substantially finish the rollout and offer all adults a vaccination, but by early November when that’s been done, it will be time for a global release.
Adam Schwab is the founder of Luxury Escapes, angel investor, SmartCompany and Crikey contributor, and the author of Pigs at the Trough: Lessons from Australia’s Decade of Corporate Greed.
