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Door for global vaccines opens but pricing strategy could be key to entry

The NDA government is learnt to have negotiated the cost of Covishield — Serum Institute of India’s (SII) version of the AstraZeneca-University of Oxford vaccine — to Rs 150 plus GST, or around $2.02, per dose.

THE Centre may have opened the regulatory door to a set of vaccines from overseas but how it works its pricing and procurement strategy could be key to their entry and rollout.

For most nations, the vaccine rollout adheres to one simple maxim: countries that invested “at risk” before the products cleared regulatory scrutiny ended up extracting a better pricing deal from manufacturers in the end. So far, India, with the world’s biggest vaccine manufacturing base, seems to be the only exception.

The NDA government is learnt to have negotiated the cost of Covishield — Serum Institute of India’s (SII) version of the AstraZeneca-University of Oxford vaccine — to Rs 150 plus GST, or around $2.02, per dose. This is lower than the $2.15 at which AZ is supplying to the European Union, which invested $399 million “at risk” in AstraZeneca way back in August 2020, in return for 400 million doses of its vaccine.

The UK, which had a smaller investment commitment to AZ, was expected to pay about $3 per dose and the US has been offered the vaccine at $4 per dose, according to data compiled by British Medical Journal. Others such as South Africa had initially been paying upwards of $5 per dose before the government decided to discontinue its use over poor performance against a dominant mutant strain in the country.

For the Pfizer vaccine, too, similar forces were at play. The EU financially supported its development and secured a lower price per dose of $14.70 than the $19.50 in the US. The Pfizer vaccine is the only major global vaccine that did not receive funding under Washington’s Operation Warpspeed.

On the other hand, the Moderna vaccine’s development was subsidised by the US government and so it will cost the US about $15 a dose, while the EU is paying $18 per dose, according to BMJ data.

From all available accounts, India did not invest “at-risk” in SII and its first commercial agreement on vaccine offtake only came in mid-January 2021. And thepricing of Covishield is a factor in SII’s struggles to keep up with demand as the private, unlisted firm has committed to deliveries under AZ’s deals and through multilateral arrangements such as COVAX.

SII has now sought “roughly” Rs 3,000 crore from the government to expand its “very stressed” capacity, SII CEO Adar Poonawalla told NDTV. “The globe needs this vaccine and we are prioritizing the needs of India…we’re still short of being able to supply to every Indian that needs it,” he said.

“At the moment, the price (Rs 150 per dose) that is set is profitable. However, it is not profitable enough to re-invest substantially in building capacity, innovating new vaccines — including the new variants that we may need to develop and make and go into clinical trials and other things,” he added.

Bharat Biotech’s Covaxin, where the government has a participation through the Indian Council of Medical Research (ICMR), has been faltering in scaling up supplies, despite ironically being allowed to price the vaccine higher than Covishield when the government first procured around 16.5 million doses for healthcare and frontline workers in January.

The Hyderabad-based company announced in January that it was aiming to achieve an annual production capacity of around 700 million doses across four facilities–three in Hyderabad and one in Bengaluru–this year.

Unlike SII, Bharat Biotech had not manufactured high volumes of its vaccine at-risk before its restricted emergency approvals and, therefore, had around 20 million doses in stock for the Indian market to start with.

By March, the company managed an annual capacity of around 150 million doses, according to a report tabled in the Rajya Sabha. It has now reportedly sought Rs 150 crore in funds from the government to scale up production in Hyderabad and begin production at Bengaluru amid increasing demand.

Some industry executives earlier raised issues related to the lack of risk-sharing from the government “in a substantial way” and little clarity about how many doses of vaccines companies manufacturing at risk could expect to supply to the country.

“There is an issue when it comes to at-risk manufacturing. Normally, you wouldn’t make the vaccine until it is licenced, but in this case, everybody agrees that you need to make it early enough so that as soon as you get licenced, you have the capacity to deliver the product,” an executive of a vaccine manufacturing company told The Indian Express.

If the government had said it would “definitely” buy a certain number of doses, manufacturers would be “very comfortable” in making investment decisions to do at-risk manufacturing, the person had said.

Even as Budget FY22 allocated Rs 35,000 crore to vaccination, there is no clarity on what vaccine makers would bet from this corpus in lieu of “below cost” supplies. Around Rs 900 crore had been allocated last year by the Centre but towards accelerating the development of five to six Covid vaccine candidates. Of this, Rs 180 crore was released to the Biotechnology Industry Research Assistance Council (BIRAC), as per a Rajya Sabha report but its details are not available.

Not all “at risk” investments yielded results, like the EU’s funding support of Sanofi since the vaccine did not materialise. The Johnson & Johnson vaccine costs the EU $8.50, with each dose going twice as far as the other brands, since it is a single-shot vaccine.

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