Bharat Biotech on Tuesday issued a statement explaining why Covaxin remains the most expensive COVID-19 vaccine in India.
Fundamental business reasons ranging from low procurement volumes, high distribution costs and retail margins, among few others, contribute to higher pricing of Covaxin to the private sector, Bharat Biotech said.
The Central government had allowed Serum Institute of India and Bharat Biotech to set their own prices for COVID-19 vaccines for procural by private entities and state governments. Bharat Biotech, which indigenously developed Covaxin with the aid of the Indian Council of Medical Research (ICMR), had priced its vaccine at Rs 600 for state governments and Rs 1,200 for private hospitals.
After widespread public outcry and criticisms from political leaders of various state governments, the company had slashed the rates to Rs 400 for state governments.
Bharat Biotech stated that less than 10 percent of its total production of Covaxin has been supplied to private hospitals, while most of the remaining quantity was supplied to state and Central governments.
“In such a scenario the weighted average price of Covaxin for all supplies realised by Bharat Biotech is less than Rs 250 per dose. Going forward, approximately 75 percent of the capacity will be supplied to State and Central Governments with only 25 percent going to private hospitals,” Bharat Biotech said.
“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,” it said in a statement.
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 and product overages, besides other regular business expenditures, the Hyderabad-based company added.
The statement also said that Bharat Biotech has so far invested over Rs 500 crores at risk from its own resources and the company was also going to pay royalties to ICMR and the National Institute of Virology (NIV), based on product sales.
The company highlighted a loss in revenue as production lowered for other vaccines due to scaling up for Covaxin.
"Companies like 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.
In the absence of a dual pricing system, Indian vaccine and pharmaceutical companies risk being reduced to mere contract manufacturers with intellectual property licensed from other nations, Bharat Biotech added.
First Published: IST