New Delhi: At a press conference last August, Dr Krishna Ella, the managing director of Hyderabad-based vaccine manufacturer Bharat Biotech, pointed at a bottle of water in front of him and said, “This water bottle costs five times more than our vaccine.”
Today, however, the made-in-India vaccine can cost you around Rs 1,410 at a private facility (including the hospital’s administering charges and GST) — nearly double the price of Covishield, which is sold at Rs 780 per dose. Russia’s Sputnik V will cost you Rs 1,145 per dose in India.
Covaxin is sold to private hospitals at Rs 1,200, Covishield at Rs 600 and Sputnik V at Rs 948. The government has set Rs 1,410 as the price ceiling for Covaxin, which means consumers can’t be charged more than this. The price ceiling for Covishield and Sputnik V is Rs 780 and Rs 1,145, respectively.
While Covaxin uses one of the commonly used methods for vaccine manufacturing — the inactive virus method — it is the third costliest vaccine globally after the shot by China’s Sinopharm and the one by America’s Pfizer, industry sources said.
Covaxin contains inactivated viruses that in their normal state cause Covid. Since inactivated, the virus, when injected into the body, cannot cause the disease, but is capable of helping the body’s immune system prepare a defence mechanism against the virus.
Covishield, meanwhile, uses the viral vector method that employs a chimpanzee’s adenovirus (the name of a particular virus) that is then modified to enable it to carry the spike protein of Covid-19 virus into human cells. Sputnik V is also based on the adenoviral vector method.
Experts are divided on whether Bharat Biotech is profiteering or is charging a higher price because it has been unable to recover the cost of its investments.
Vaccine and health experts believe the company is charging “obscenely” high prices, despite having been helped by the government in “all possible ways”, whereas business analysts say the firm has probably incurred high manufacturing costs and is trying to recover its investments.
Vaccine experts estimated the actual cost of the vaccine to be anywhere between Rs 60 and Rs 100 per dose. With the enormous volume of sales, they said, Bharat Biotech would possibly be earning “decent” profits even at the cost of Rs 150 per dose, which is what the company is charging under government contracts.
ThePrint reached Bharat Biotech through an email with queries on the pricing. In its reply, the company said it is in the process of drafting a response but won’t be able to immediately answer to the queries.
Process to manufacture Covaxin ‘tedious but not expensive’
According to medical experts, the process to manufacture a vaccine based on the inactivated virus method is not complex and expensive, though it is “tedious” and “time consuming”.
“The process of manufacturing vaccines like Covaxin includes more steps and is more tedious. For instance, the maker would be required to grow the vero cells (a surface on which virus breeds), infect them and grow the virus, harvest the virus, purify it, inactivate the virus and then again purify,” said K.V. Balasubramaniam, former managing director of the government-run vaccine maker, Indian Immunologicals Limited (IIL).
He added: “As more steps are added into the manufacturing processes, there would be losses at each step. While the cost of manufacturing of an inactivated vaccine, such as Covaxin, will be more than that of live vector vaccines such as Covishield, it should not be more than Rs 40 per dose.”
Balasubramaniam estimated the cost of a single dose of Covishield to be approximately Rs 17.
Dr N.K. Ganguly, former director general, Indian Council of Medical Research (ICMR), said the cost of Covaxin should be equal to that of the company’s rotavirus vaccine.
“Inactivated virus manufacturing processes are manpower-intensive, but require no specialised technology. Its production is slow and cannot be ramped up immediately, as it involves a process of fermentation, which is time consuming,” he added.
While Ganguly refrained from commenting directly on Covaxin’s price, he said “its price should be the same as the rotavirus vaccine” manufactured by Bharat Biotech. “The manufacturing process of the rotavirus vaccine is, in fact, more complex than that of the Covid vaccine,” he added.
The price of the rotavirus vaccine manufacture by the Hyderabad-based vaccine maker is Rs 54 per dose.
The vaccine, Rotovac, is Bharat Biotech’s claim to fame. It was launched at a total cost of Rs 162 for three doses.
What could have made Covaxin expensive?
According to Balasubramaniam, who is also the former chief executive officer of Bharat Serums and Vaccines Limited, the cost of vaccines is influenced by several factors.
He said the first among these is the technology used to develop the vaccine.
“In Covaxin’s case, the technology is fairly well-known. The company repurposed its rabies vaccine units for manufacturing Covid vaccines,” said Balasubramaniam, who is now a business adviser for many life-sciences firms.
Secondly, while a sizeable part of investments usually goes into research and development, followed by clinical trials, “in this case, the cost of clinical trials was not high and was incurred by the ICMR”, he said.
With huge volumes purchased by the government, economies of scale kicks in as vaccine makers have high fixed-cost components. “As the denominator — which is the volume of production — goes up, the cost of vaccines will start coming down,” said Balasubramniam.
The vaccine expert added that the cost also depended on the packaging of doses. “Covaxin comes in a set of 20 doses per vial, whereas SII’s Covishield is manufactured as 10 doses per vial. As the number of doses in a vial increases, cost goes down.”
Zero marketing spends and early approvals given to the company are additional benefits enjoyed by Covaxin, said experts.
“The company doesn’t have to spend much on promotion and there is no marketing cost involved. Plus, the government has been giving them advance payments,” added Balasubramaniam.
He said the distribution cost for the vaccine was also low.
“The company is just dropping the vaccines to the state government warehouses. The government takes care of all other distribution costs.”
Experts highlighted that the company also had the advantage of getting approval for restricted emergency use in India much ahead of time.
“The company was allowed to sell Covaxin in the Indian market several months in advance, since the government gave it accelerated approvals, even before the submission of required efficacy data,” said Balasubramaniam.
Malini Aisola, co-convenor of public health NGO All India Drug Action Network (AIDAN), said “from supporting development and clinical trials, accelerated regulatory approval, and now manufacturing, Bharat Biotech has been given hand-holding at all crucial stages”.
Even if it is assumed that the initial manufacturing yields were low, Balasubramaniam said, it cannot increase the cost so much. “Also, the company had enough time during the clinical evaluation period to work on optimisation of the processes and yields.”
Is Bharat Biotech profiteering?
Experts are divided on the subject.
Medical and public health experts believe that the company is earning high profit margins, whereas business analysts believe it might have incurred high capital expenditure that has not yet been recovered.
For Dr Chandrakant Lahariya, an epidemiologist and vaccine expert, “the cost of Covaxin defies any logic”.
“It is beyond my comprehension how it can be so expensive. The so-called indigenous vaccine is ‘expensive’ and ‘unavailable’, which should not be a case in any public-private partnership,” he said.
Aisola from AIDAN also expressed concern over the prices and said the private sector price for Covaxin is “obscenely high and cannot be justified”.
“In fact it has enabled Bharat Biotech to retain a monopoly on the vaccine from the beginning. Only in the midst of the second wave crisis did the government start hunting for more manufacturing units to make Covaxin.”
While Aisola believes that “there must be an upper limit on the price of each vaccine which can be done through the use of provisions of the Drug Pricing Control Order (DPCO) and emergency laws”, Dr Lahariya said “if the government being co-developer of this vaccine agrees with this price, then it should subsidise the vaccine.
However, two analysts specialising in healthcare and pharma, and working at two different foreign consultancies, noted that Bharat Biotech would know that this is not the right time for profiteering and it could damage their reputation.
“In fact, the early approvals dented their otherwise sober reputation,” said an analyst.
“We need to understand that they might be incurring high cost of production, investments in updating and setting biosafety level (BSL) 3 and BSL 4 facilities (which are needed when manufacturing involves live virus),” the analyst added, refusing to be named. “Overall, their capital expenditure could be high and they could be trying to recover that. We know that the company hasn’t reached out to any private equity firm yet for making investments. Dr Ella might be using his own equities or bank loans.”
The second analyst added that “Pfizer’s cost of capital expenditure (expenditure on building fixed assets like machinery, land and other things) is a big driving force behind its price despite their research and development costs being underwritten by the US government”.
(Edited by Poulomi Banerjee)
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