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Covaxin Pricing: A balancing act

G Naga Sridhar Hyderabad | Updated on April 25, 2021

File photo   -  AFP

States likely to prefer Covishield; Covaxin could be a pricey yet popular vaccine for private distribution

The pricing of Covaxin - the first indigenous Covid-19 vaccine - appears to be a balancing act by Bharat Biotech. This is being done keeping in view the need to cater to the inoculation needs of the country and to sustain its financial viability while providing for future innovation.

The Hyderabad-based vaccine maker has on Saturday fixed the price of the vaccine at Rs 600 per dose to State governments and Rs 1200 for private hospitals. But the company continues to sell the same to the Centre at Rs 150 per dose.

 

Serum Institute (SII) has already announced the price of the only other vaccine available in the country. Covishield will be sold at Rs 400 per dose to the State governments and Rs 600 for the private hospitals.

The price fixation by the vaccine makers is in line with a directive from the Centre that they are free to sell 50 per cent of doses to the States and private hospitals in open market at a price, which has to be declared before May 1, 2021.

Clarity on the price is also needed to facilitate the roll-out of a new vaccine policy, making all those above 18 years of age eligible to get vaccinated from May 1.

Balancing act

It appears that Bharat Biotech is projecting Covaxin as a premier shot in the open market sale as its price for States as well as private players is higher than that of Covishiled. It is now the costliest vaccine for private players at Rs 1200 per dose.

The company, it seems, is targeting to recover what it loses' at Rs 150 per dose to the Centre with a higher pricing for States and private players cashing in on its image as a popular, safer vaccine with lesser side-effects' in some sections of the general public.

Implications

The differential pricing of two vaccines will lead to shifts in demand pattern from the States. The cash-starved State governments are expected to prefer Covishield for obvious reasons while Covaxin can bank on its popularity in the private market with a pricing of Rs 1200 per dose.

With the price fixation of Covaxin, Covishield has now emerged as the most affordable Covid-19 vaccine in the private market. A greater demand for Covishield from the States as well as private hospitals in view of cost dynamics may lead to bottlenecks in its supply down the line as well.

Now, that the battle against pandemic will be a long-term effort, dynamics of vaccination are set to change with other vaccines coming in. Russian Vaccine Sputnik V is to enter the market in May while the Government is in negotiations with other foreign vaccine makers. But Covishiled and Covaxin are likely to be the fulcrum of public vaccination drives in the country.

Profiteering?

The high pricing of Covaxin is bound to trigger criticism on the profiteering aspects. However, it cannot be denied that the investment that went into the making of the vaccine has to be recovered with a return on investments (RoI). Bharat Biotech is understood to have invested about Rs 350 crore in the clinical trials alone which is not inclusive of investments which had gone into creating production capacities.

Serum Institute too said that while the current situation is dire; the virus is constantly mutating while the public remains at risk. “We have to ensure sustainability as we must be able to invest in scaling up and expanding our capacity to fight the pandemic and save lives,” the company said.

Hence, while expecting the companies to be not fully charitable, many hope that the vaccine makers will display sagacity to balance public health needs of a `rich country' like India with a 29 per cent population below the poverty line.

Published on April 25, 2021

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