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UPDATE 2-S.Africa's Aspen seeks licence for J&J COVID shot as EU shipments halted

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* Aspen says in talks to make J&J vaccine under licence

* Makes shot under contract, but J&J controls distribution

* Shipments of some Aspen-made shots had gone to Europe (Adds J&J comment)

By Promit Mukherjee and Maggie Fick

JOHANNESBURG, Sept 2 (Reuters) - Aspen Pharmacare said on Thursday it was in talks to make Johnson & Johnson's coronavirus shot under licence in South Africa, at what would be the continent's first major independent distribution base for a global vaccine against COVID-19.

News of the talks coincided with the suspension of heavily criticised shipments to Europe from Africa of the same shot, which is already being made under contract and packaged by Aspen but distributed by J&J.

World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus said last month he was "stunned" by that arrangement, since Europe has very high inoculation rates while less than 3% of Africa's adults have been vaccinated.

Aspen CEO Stephen Saad told Reuters it was now seeking a far bigger deal with J&J that would allow it to make, market and sell the vaccine under licence for the whole of Africa, along the lines of the model used by India's Serum Institute.

"At the moment we contract manufacture for J&J. So that's what we do. We take it, they release it," Saad said in an interview.

"...But a licence would be different. We would then sell to the end-customer. And then we have a brand. And then we also have control over where our product goes" and over pricing.

"...At the moment, J&J could take all the product we make because it's their product, and sell it ...wherever they choose to. We have no say in that."

J&J said in a statement that it was talking to Aspen "to evaluate the further expansion of capacity at Aspen's vaccine manufacturing facility to enable increased COVID-19 vaccine production, including a possible license for Africa".

RAMAPHOSA INTERVENTIONS

In an online briefing, African Union (AU) coronavirus envoy Strive Masiyiwa said the arrangement whereby J&J was sending shots finished in Africa to Europe was halted following interventions by South African President Cyril Ramaphosa and European Commission President Ursula von der Leyen.

The fewer than 20 million doses shipped so far would be returned. "All the vaccines produced at Aspen will stay in Africa and will be distributed to Africa," Masiyiwa said.

Africa aims to vaccinate 60% of its adult population by 2022.

But by August, just 10% of the doses that the COVAX vaccine-sharing programme, co-run by the WHO, had forecast it would ship there by that time had been delivered, according to the AU.

Masiyiwa said the talks between J&J and Aspen also came as a result of the South African president requesting that the arrangement between them be changed.

Aspen is looking to expand annual vaccine production capacity from around 300 million doses to about 450 million by February 2022.

Saad said it was too early to say whether some of that would be reserved for production under licence, though from October onwards, all of the J&J vaccine doses being packaged at its plant would go to African countries.

J&J has contracts to supply 31 million doses of vaccine to South Africa and at least 220 million to the rest of Africa.

The new arrangement would be "like (India's) Serum where they get the licenses to manufacture. It's not a foreign model," Saad said of the licensing talks. (Reporting by Promit Mukherjee in Johannesburg and Maggie Fick in Nairobi Additional reporting by Caroline Humer in New York Editing by Alexander Winning, John Stonestreet and Mark Potter)