Home Health Complex manufacturing, R&D, risks, losses — Bharat Biotech explains why Covaxin is...

Complex manufacturing, R&D, risks, losses — Bharat Biotech explains why Covaxin is expensive

Bharat Biotech also says Rs 150 per dose price for the government is 'non-competitive' and not sustainable in the long run.

Covaxin is manufactured by the Hyderabad-based Bharat Biotech | ANI Photo
Covaxin is manufactured by the Hyderabad-based Bharat Biotech | ANI Photo

New Delhi: Bharat Biotech, the manufacturer of made-in-India vaccine Covaxin, Tuesday said its vaccines for the private sector are priced “significantly higher” than that for governments and large procurement agencies “purely due to fundamental business reasons.”

It also said that the supply price of Covaxin to the Government of India at Rs 150 per dose is a “non-competitive price” and “clearly not sustainable in the long run.”

“Hence a higher price in private markets is required to offset part of the costs,” the Hyderabad-based vaccine manufacturer said in a press statement.

“This is purely due to fundamental business reasons, ranging from low procurement volumes, high distribution costs and retail margins among few others as explained above… (in the press release).”

The other reasons cited by it include complex manufacturing process, diversion of existing facilities (of other products) to Covaxin, risks and losses, and capital expenditure.

The company also said “private procurement is only discretionary” and “it gives a choice to citizens who are willing to pay for better convenience.”

Covaxin is priced at Rs 1,410 at a private facility (including the hospital’s administering charges and GST) — which is nearly double the price of Covishield, which is sold at Rs 780 per dose. Russia’s Sputnik V costs Rs 1,145 per dose in India.

While Covaxin uses one of the commonly used methods for vaccine manufacturing — the inactive virus method — it is among the costliest vaccine globally after the shot by China’s Sinopharm and the one by America’s Pfizer.

The company said the question of product pricing is only of extraneous interest to all concerned, “especially when the same vaccine is made available free of cost.”

Also read: Bharat Biotech promised shot cheaper than bottled water. But Covaxin is 3rd costliest in world

Maximum supplies to govt

The company further clarified that less than 10 per cent of the total production of Covaxin to date has been supplied to private hospitals, while most of the remaining quantity was supplied to the states and the central government.

“In such a scenario the weighted average price of Covaxin for all supplies realized by Bharat Biotech is less than Rs 250/dose. Going forward, around 75% of the capacity will be supplied to state and central governments with only 25 percent going to private hospitals.”

According to the vaccine maker, there are live examples of such pricing policies where Human Papillomavirus (HPV) vaccine is priced for GAVI supplies at around $ 4.5 per dose (around Rs 320) but is also available in the private market at around Rs 3,500 per dose.

“Rotavirus vaccines are supplied to the Govt of India at around Rs 60/ dose, but are also available in the private market at around Rs 1700 per dose. The prices for COVID-19 vaccines internationally have varied between around $10 to around $37 per dose, (around Rs 730 to around Rs 2700/ dose),” it said.

Bharat Biotech claimed that it has so far invested over Rs 500 crore at risk from “its own resources for product development, clinical trials and setting up of manufacturing facilities for Covaxin.”

“The support from the Indian Council of Medical Research (ICMR) was with respect to provision of the SARS CoV2 virus, animal studies, virus characterization, test kits and partial funding for clinical trial sites,” it said.

Low prices harm innovation, R&D

According to the company, low product price realisation dispirits domestic research and development (R&D). “It is distressing to see that a large country like India has a very basic level of innovation in vaccines and pharmaceutical products.”

“It should be noted that companies such as Bharat Biotech, which are innovators with specialized expertise in product development, and large scale manufacturing, should be allowed to maintain a differential pricing strategy for governments and private hospitals,” the statement said.

It further added that “it may well be argued that the low-price realization for home-grown innovators constraints innovation and product development in India.”

In the absence of a dual pricing system, it said, Indian vaccine and pharmaceutical companies risk being reduced to mere contract manufacturers with intellectual property licensed from other nations.

Also read: Covaxin works against Indian-origin variant, finds ICMR-Bharat Biotech in lab tests

On Covaxin pricing

Bharat Biotech said the pricing of vaccines and other pharmaceutical products heavily relies on a series of factors such as the cost of goods and raw materials, product failures, at-risk product development outlays, product overages, the entire capital expenditure for setting up sufficient manufacturing facilities, sales and distribution expenses, procurement volumes and commitments besides other regular business expenditures.

Starting from the technology of the vaccine — the whole-virion Inactivated Vero Cell vaccines — the company said, it is “highly complex to manufacture since the critical ingredient is based on live viruses which require highly sophisticated, multiple level containment and purification methods.”

It says that maintaining such high standards of purification lead to significant process losses and low yields save the outcome of a highly purified and safe vaccine.

“This is evident from the excellent safety contours of Covaxin with an impressive supply of more than 40 million doses to date,” the company said, while adding that it is the reason behind which it is not asking the government to indemnify.

Complex manufacturing

According to Bharat Biotech, every batch of Covaxin is subjected to more than 200 quality control tests before its release.

The company said that it is “exactly this complexity” that has kept other companies away from developing vaccines, especially whole virion inactivated vaccines.

The SARS-CoV-2 virus provided by ICMR-NIV is also equally available to other manufacturers who wish to develop and manufacture such a vaccine, it said while adding that the “companies would need access to cell lines, BSL3 manufacturing and quality control facilities, and several well trained technical teams, to manufacture Covaxin.”

It further claims that due to the highly contagious nature of the live SARS-CoV-2 virus, more stringent Biosafety Level-3 (BSL-3) containment facilities are required for the manufacturing of Covaxin.

“In fact, the sheer complexity of the Covaxin manufacturing process is manifested by the fact that it requires about 10,000 square meters of area to manufacture around 200 million doses (20 crore) of the vaccine annually. In comparison, the same quantity of live virus vaccines can be manufactured from mere 1,500 square meters.”

Serum Institute of India’s Covishield and Russia’s Sputnik V are live virus vaccines.

Bharat Biotech also said it will pay royalties to ICMR and the National Institute of Virology (NIV), based on product sales. Royalties are also payable to US-based Virovax LLC towards the licensure of IMDG agonist molecules — the adjuvant used in the vaccine to boost immunity generated by the vaccine.

The vaccine maker said it is investing in new facilities and repurposing existing ones across several states in India for enhancing the production of Covaxin, which has resulted in “reduced production of other vaccines at our facilities, leading to loss in revenues”.

“We have been extremely diligent in selecting manufacturing facilities and partners, with the required levels of containment, capabilities and expertise. Product development activities towards the development of vaccines against newer variants is also underway at our facilities,” it said.

Also read: Hyderabad’s Biological E wants Rs 1,500 cr advance from Modi govt for 30 cr Covid vaccines