Let’s begin by looking at the cost of vaccinating 100 crore Indians when the sole procurer of vaccine is the central government. In that case, the cost to the exchequer would be around Rs 30,000 crore according to one of the scenarios (more on that later). But supply constrains could take 10-12 months or even longer for the vaccines to be available. To avoid a third wave of the pandemic, the 90-94 crore Indian adults, therefore, need their doses at the earliest. Thus, several new scenarios come into play in the costing, supply of doses, and from where to procure them quickly.
The Rs 30,000 crore calculation is for 200 crore doses (of Covaxin and Covishield vaccines) at the rate of Rs 150 a dose that was agreed between the central government and the two vaccine makers — Bharat Biotech (BB) and Serum Institute of India (SII). However, this rate was agreed at a time when cases had not begun rising at an alarming rate, much before the deadly second wave forced the authorities to put the vaccination programme in an overdrive. After April 20, when the second wave started showing its ugly face, the state governments were allowed to procure vaccine doses after the central government widened the vaccination net to include 60 crore adults by lowering the eligibility age to 18 years and above (18-44 years and 45+). Even private hospitals were given the green light to procure and charge for the vaccine doses. Therefore, the cost of vaccination to the central government, the states and the private companies have thrown up an altogether new math.
It is now estimated that the central share could be under Rs 13,000 crore, with the states and private entities sharing the burden of acquiring vaccine doses. On the other hand, the vaccine bill for states and private entities together could touch Rs 28,000 crore due to higher per dose cost cited by the two vaccine makers. The total cost now would be around Rs 40,000 crore, assuming that the suppliers are SII and BB, and that the centre acquires at Rs 150 a dose, states at Rs 400 (from SII) and at Rs 600 (from BB), while the private sector has to pay Rs 1,200 (to BB) and Rs 600 to SII. The same vaccine at multiple price points means mega confusion. Do we now have the vaccine procurement cost? Not quite! Why? Because, on top of the variable price points, at least a dozen state governments have floated their own global tenders in order to directly deal with international vaccine makers like Pfizer, Moderna, Sputnik, Johnson & Johnson, and others in the wake of acute vaccine shortages. Currently, around 20-22 crore vaccine doses are under the global tendering process.
However, only around 30 crore vaccine doses would be available between now and July (in batches). From mid-August till December end, the central health ministry pegs the vaccine supply to shoot up to 216 crore doses. Thus, states may have to play the waiting game for nearly 45 days until early July thereby delaying the vaccination process, in case the central supply is not in adequate numbers. Although India’s vaccine strategy has been criticised for its tardy pace of vaccination due to various reasons including vaccine shortages amid a raging second wave, it has become the second country after the US to have crossed the 20-crore mark in terms of vaccination coverage.
As on May 26, a total of 20,06,62,456 crore doses including 15,71,49,593 first dose and 4,35,12,863 second dose were administered. India achieved this landmark in 130 days compared to the 124 days taken by the US. However, this is not something to revel in given the sheer population size. In fact, at the current pace of the vaccination drive and the supply-side constraints, it could take more than 600 days or around 20 months (up to March 2023) to vaccinate the 100 crore adult Indians. Once vaccination for those under 18 years of age gets introduced, it may take several more months (going by the current rate).
Cost Of The Jab
A report by the economic wing of State Bank of India (SBI) lists the various price points at which a vaccine dose is available outside India, as the central government has now left to the states to procure at least half of jabs. The report, based on prices available with the UNICEF, pegs the cost of a single dose anywhere between $2 and $40. Assuming a minimum per dose price of $5, the states would be required to cough up Rs 46,000 crore; at a maximum price of $40 per dose, the cumulative bill would be Rs 3.7 lakh crore. So there are no exact figures for now, only a range at best. The real numbers are somewhere between Rs 35,000 crore and Rs 3.7 lakh crore. How did we get here?
A large state like Uttar Pradesh has floated a global tender for 4 crore doses to be supplied in batches of 6-8 million doses every month for the next 5-6 months. As the last date approaches, chances are that the response may not meet the requirements. “The tendering process has several factors. Importing medicines or vaccines come with their own set of complexities. International suppliers or the MNCs may not feel as comfortable in dealing with a state administration as they would with the Indian government,” says a legal expert dealing with cross-border trade. This point, in fact, has been reiterated by Maharashtra Health Minister Rajesh Tope. The state’s global tender for 5 crore vaccine doses has yet to get a response and Tope’s explanation is that it could be due to the stringent rule at the central level that the global vaccine manufacturers may be hesitant. Tope has batted for a national vaccination policy where the central government floats a unified global tender, procures the pipeline of vaccine doses, and distributes them to the states.
On the issue of poor response to the global tenders floated by various states, Vinod Paul, said: “The Centre has merely enabled states to try procuring vaccines on their own, on their explicit requests. The states very well knew the production capacity in the country and what the difficulties are in procuring vaccine directly from abroad.” Paul is Member (Health) in NITI Aayog and Chair of the National Expert Group on Vaccine Administration for COVID-19 (NEGVAC). “The fact that global tenders have not given any results only reaffirm what we have been telling the states from day one: that vaccines are in short supply in the world, and it is not easy to procure them at short notice,” he said, adding that the liberalised vaccine policy was a result of the “incessant requests” being made by the states to give states more power. Another state seeing a daily increase in corona cases is Tamil Nadu. It wants to procure at least 5 crore doses via the global tender route. Odisha is also seeking 3.8 crore doses by offering certain relaxations to the global vaccine makers. Kerala is going to procure 3 crore doses via the tendering route. So, there are no direct and clear answers emerging on the economics of vaccine procurement. As more approvals are granted, and more players get a green light for introducing their vaccines, the math will get even more complicated, it seems. Linked to the coronavirus pandemic are also the economics of essential drugs, oxygen manufacturing and distribution and not to forget the PPE kits and related safety gears absolutely mandatory for all stakeholders.
Free Vs Paid Vaccines
Let’s try and de-clutter the pricing of the jab right from the beginning of the vaccination drive. While the central government started out by offering ‘free vaccines” to senior citizens and later to adults over 45 years of age, it switched to ‘paid vaccines’ for the 18-44 age bracket. Amid mounting criticism, most s t a t e g o v e r n m e n t s announced that they would provide ‘free’ vaccines to the 18+ age group, thereby adding to the complexities. India needs 180-188 crore doses (assuming each person gets two shots). But the supply simply cannot match the demand, not now, not even in the next few months. But the two most important questions still stand: How much will it cost? Who is footing the bill?
Till the beginning of April, it was the central government that was procuring the vaccine and sharing it with the states. No state government or private player was allowed to procure vaccine until then. But it all changed overnight. The last week of April saw a slew of state governments announce they would provide free vaccines for their subjects. Maharashtra, which was the worst-hit state in the second wave, announced that it would cost Rs 6,500 crore to vaccinate its 5.71 crore citizens in the 18-44 age group.
Punjab, which too witnessed a heavy case load, estimated that it would cost Rs 1,000 crore to vaccinate its people in the 18-45 age group. Uttar Pradesh, the first state to float a global tender for vaccine, wants to procure 4 crore doses. At $5 for a dose (as per the SBI report), the state may have to shell out Rs 1,460 crore, at $10 per shot the cost could be Rs 2,920 crore, and at $40 for a dose it will cost a whopping Rs 11,680 crore. This is when the UP government, in its budget allocation in February, made a provision of only Rs 50 crore towards the vaccination drive. However, the UP government did make a provision for Rs 12,242 crore for strengthening medical and health infrastructure – including Rs 5,085 crore for the construction of medical colleges in 39 districts and creating diagnostic infrastructure for primary healthcare facilities and Rs 7,157 crore for various health schemes (Rs 5,395 crore for Rashtriya Gramin Swasthya Mission, Rs 1,300 crore for Ayushman Bharat Yojana). “If we construct simple scenarios with different price ranges, i.e., at $5, $10, $20, $30 and $40, with the rupee-dollar exchange rate of 73, and assume that the Centre gives 50 per cent of the vaccines for the states’ population, the vaccine expenditure for the rest 50 per cent for various Indian states would be in the range of Rs 20 crore for Sikkim (if the vaccine is procured at $5 per dose) and Rs 67,000 crore for Uttar Pradesh (if the vaccine is procured at $40 per dose),” writes Soumya Kanti Ghosh, Group Chief Economic Advisor, SBI in the bank’s latest Ecowrap report. But these numbers come with a caveat. “These are extreme scenarios and the cost for each state will lie somewhere in between,” Soumya adds.
So what is the official stand on vaccine availability? “After the US and China, we are third in the list of nations that are vaccinating their respective populations fastest against Covid-19,” said Paul of NITI Aayog in mid-May. “A total of 51.6 crore doses, including 16 crore additional doses of Covid-19 vaccines for states and private hospitals are in the pipeline. We have procured 35.6 crore doses so far,” he said on May 13. India is projected to have access to 216 crore doses between the months of August and December this year, Paul added stating that no import licences would be required for vaccines being procured by various states. “Vaccines approved by WHO and FDA can be brought to the country,” Paul had said.
The Covid Ecosystem
Gennova Biopharma-ceuticals, the biotech arm of Pune-based Emcure Pharmaceuticals is working on India’s first indigenous Covid-19 vaccine using the already established mRNA platform technology. “We are currently conducting phase I trials of the mRNA vaccine candidate HGC019,” says Satish Mehta, CEO and MD, Emcure Pharmaceuticals. Gennova is developing the vaccine in collaboration with researchers from HDT Biotech Corporation, Seattle, USA. Unlike standard viral vaccines, which use either inactivated (or attenuated) virus or viral proteins to cause infection to trigger an immune response, mRNA vaccines carry the molecular instructions to make the protein in the body through a synthetic RNA of the virus.
The host body uses this to produce the viral protein recognized by the immune system, thereby making the body ready to fight against the disease. Also under development is the first indigenous DNA vaccine against Covid-19 called ZyCoV-D, by Zydus Cadila in association with the Department of Biotechnology. It is in the final phase of clinical trials, having shown positive results in the first two phases. As per Union health ministry, both ZyCov-D and HGC019 may initially produce around 5-6 crore doses to be made available after September.
Nilesh Gupta, MD, Lupin says his company intends to play a larger role during the second wave and wants to be in the frontline. “We are ramping up the production of steroids which are used in the treatment of Covid-19. We recently signed a royalty-free, non-exclusive voluntary license with Eli Lilly to manufacture and distribute Baricitinib, which is being used to treat Covid-19,” he says. On the plans to bring in a vaccine to India, Gupta says: “We are particularly keen on bringing in one of the mRNA vaccines to the market as currently there isn’t one available in India.” The company is also pursuing multiple other therapeutics such as Remdesivir and Molnupiravir to help meet the demand. “We are in talks for partnerships abroad to bring Covid-19 vaccines to India, either through imports or a fill-finish of the vaccine bulk drug,” says Gupta.
Earlier in May, the central government released to the states Rs 8,873 crore, the first instalment of the central share of the State Disaster Response Fund (SDRF) for the year 2021-22 ahead of the schedule, with the mandate that the states can use up to 50 per cent of the amount for coronavirus containment measures such as meeting the cost of oxygen generation and storage plants in hospitals, procurement of ventilators, strengthening ambulance services as well as Covid-19 hospitals and Covid-19 care centres. The Centre also advised the states to use the funds for purchasing consumables, thermal scanners, personal protective equipment, testing laboratories, and testing kits. Inox Air Products, the industrial and medical gases business division of the diversified Inox Group, is investing Rs 2,000 crore to augment capacity by 50 per cent, with eight new air separation units across the country over the next 36 months. Another company, Uttam Group said it installed eight oxygen generators donated by France in a record time of six days. “Our core business is in compressed natural gas and hydrogen storage and mobility. We are a leading player in the lightweight composite cylinders. Our medical oxygen business has grown significantly as India rallies to fortify its oxygen infrastructure. We are optimistic about this sector continuing to thrive,” said Karan Bhatia, CEO, Uttam Group.