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Bharat Biotech defends Covaxin high price in private market, says rate offered by govt 'not sustainable in long run'

Bharat Biotech said as per the direction of the Indian government, less than 10 percent of its total production of Covaxin to date has been supplied to private hospitals, while most of the remaining quantity was supplied to state and central governments. The weighted average price of Covaxin for all supplies realised by Bharat Biotech is less than Rs 250 per dose.

June 15, 2021 / 03:07 PM IST
The NASDAQ-listed Ocugen has rights to commercialise Covaxin in the US.

The NASDAQ-listed Ocugen has rights to commercialise Covaxin in the US.

Bharat Biotech on June 15 defended the pricing of its COVID-19 vaccine Covaxin in the private market. The supply rate 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", the company said.

"Hence a higher price in private markets is required to offset part of the costs," the vaccine maker said.

Bharat Biotech is selling Covaxin at Rs 1200 per dose in the private market.

Bharat Biotech said as per the direction of the Indian government, less than 10 percent of its total production of Covaxin to date has been supplied to private hospitals, while most of the remaining quantity was supplied to state and central governments.

The weighted average price of Covaxin for all supplies realised by Bharat Biotech is less than Rs 250  per dose, the drug maker said.

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COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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The company cited examples of such pricing policies where human papillomavirus vaccine is priced for GAVI supplies at $ 4.5 / dose (Rs 320), but is also available in the private market at Rs 3500 per dose. Rotavirus vaccines are supplied to the Government of India at Rs 60 per dose, but is also available in the private market at Rs 1700 per dose.

"The prices for COVID-19 vaccines internationally have varied between ~ $10 to ~ $37 / dose, ( Rs 730 - Rs 2,700/ dose)," the company noted.

Bharat Biotech said it had supplied more than 40 million doses to date, and added that it has not sought indemnity or protection from lawsuits from the Governement of India for any adverse events from Covaxin.

"Private procurement is only discretionary: Unlike most medicines and therapeutics, vaccines are provided free of cost by the Government of India to all eligible Indian citizens. Thus, the procurement of vaccines by private hospitals is optional and not mandatory, albeit it gives a choice to citizens who are willing to pay for better convenience. In our view, the question of product pricing is only of extraneous interest to all concerned, especially when the same vaccine is made available free of cost," the company said.

Cost of development and manufacturing

Bharat Biotech went on to add that the pricing depends on a series of factors such as the cost of goods and raw materials, product failures, at-risk product development outlays, product overages, capex for manufacturing, sales and distribution expenses, procurement volumes and commitments besides other regular business expenditures.

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

"In return for this valuable support, Bharat Biotech will pay royalties to ICMR and the National Institute of Virology (NIV), based on product sales. Royalties are also payable to Virovax towards the licensure of IMDG agonist molecules," the company said in a statement.

The company is investing in new facilities and repurposing existing ones across several states in India for enhancing the production of Covaxin.

"It is pertinent to mention here that the urgent need to set up a significant number of manufacturing facilities and to divert existing ones for Covaxin, has resulted in reduced production of other vaccines at our facilities, leading to a loss in revenues," the company said.

"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 are also underway at our facilities," it added.

It may well be argued that the low-price realisation for home-grown innovators constraints innovation and product development in India. 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.

The Whole-virion Inactivated Vero Cell vaccines (COVAXIN derives from this technology platform) are highly complex to manufacture since the critical ingredient is based on live viruses which require highly sophisticated, multiple level containment and purification methods.

Such high standards of purification automatically lead to significant process losses and low yields save the outcome of a highly purified and safe vaccine.

Complexity

Bharat Biotech cited that Covaxin manufacturing is highly complex and requires about 10,000 sq meters of area to manufacture around 200 million doses of the vaccine annually. In comparison, the same quantity of live virus vaccines can be manufactured from mere 1,500 sq metres.

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, the company said.

"Every batch of the manufactured product is subjected to more than 200 quality control tests, prior to its release. It is exactly this complexity that has kept away other companies from developing vaccines, especially whole virion inactivated vaccines," the company said.

The company said this was the reason why other manufacturers were not ready to take the SARS CoV2 virus from ICMR-NIV, even though it is also equally available to those who wish to develop and manufacture such a vaccine.

"Companies would need access to cell lines, BSL3 manufacturing and quality control facilities, and several well trained technical teams, to manufacture Covaxin," the company said.
Viswanath Pilla is a business journalist with 14 years of reporting experience. Based in Mumbai, Pilla covers pharma, healthcare and infrastructure sectors for Moneycontrol.
first published: Jun 15, 2021 03:07 pm

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