Representative Image (Image: Reuters)
Given that it had turned a profit only once in the last four years, investors weren’t quite flocking to Snowman Logistics like moths to a flame. In the last two months, however, something changed, and the small-cap company’s share price has more than doubled.
Investors are betting on the company as they expect it to benefit by handling the logistics for COVID-19 vaccines, many of which require freezing temperatures for storage and transport.
Understandably, Snowman Logistics, one of India’s largest cold chain logistics outfits, is hopeful of scripting a strong turnaround in its fortunes. And investors believe it is well positioned to do so.
For instance, the Pfizer vaccine, which has shown more than 95 percent efficacy in phase-3 trials, would need an ultra-cold temperature of -70 degrees Celsius to store the vaccine. The Moderna vaccine would require -20 degrees, Celsius storage. Other vaccines, such as the Serum Institute of India–AstraZeneca, Johnson & Johnson, Novavax, Bharat Biotech, Zydus Cadila, Dr Reddy’s and Sputnik V, among others, would need 2-8 degrees temperature.
Snowman doesn’t want to squander this opportunity. While these are still early days, Snowman is gearing up to handle vaccine logistics. The company is investing Rs 70 crore on two new facilities and expanding existing ones.
“In all our facilities we have kept one chamber vacant and fully ready for pharma storage, plus we have all our trucks calibrated and kept ready. What is more important now is to understand what is the volume and what kind of participation is required from us. That is something we are discussing with manufacturers and government bodies,” Sunil Prabhakaran Nair, CEO of Snowman Logistics, told Moneycontrol.
“With our existing capacity we can handle 100 million doses of vaccine. We are setting up two more facilities and expanding capacities at existing locations that can add 100 million doses, and with our network partners we can store an additional 100 million doses, so all in all we can handle 300 million doses,” Nair said.
It isn’t Snowman alone; with an eye on the upcoming opportunity, executives of several companies that are part of the vaccine value chain, from logistics, airports and hospitals to makers of syringes, needles and vials, have told Moneycontrol that they are in the process of ramping up capacity and gearing up operations to ensure a smooth rollout.
Biggest immunisation drive ever
India will be confronting its single biggest public health challenge as it prepares to launch the largest-ever mass immunisation drive, to vaccinate 1.3 billion people. The government has indicated that it would be procuring 400-500 million COVID-19 vaccine doses by July 2021.
Analysts estimate that it will take a minimum spend of Rs 50,000 crore to sufficiently vaccinate the entire country.
Blue Dart, another logistics major, said it is ramping up infrastructure with pre-existing specialised Temperature Controlled Logistics (TCL) and actively working with various pharmaceutical organisations that are conducting clinical trials to produce a COVID-19 vaccine in India in their pre and post production journey.
Blue Dart said it can handle stringent temperature requirements of up to -80°C.
“Blue Dart has the knowhow of the internal best practices in the life sciences and healthcare logistics business and is a part of a large global logistics network which allows us to use each of our sister Business Units’ strength in providing the best solution to our customer,” said Ketan Kulkarni CMO & Head – Business Development, Blue Dart.
GMR Infrastructure, which operates the Delhi and Hyderabad international airports, said it is ready to handle vaccines through a state-of-the-art time and temperature-sensitive distribution system.
The company said both the Delhi and Hyderabad airports can handle temperatures ranging from 25°C to -20°C, which would be conducive for distribution of most COVID-19 vaccines, in addition the airports are equipped with the latest Cool Dollies or mobile refrigeration units for airside transportation and to maintain the unbroken cool chain.
Government cold logistics
In India, vaccine logistics are largely handled by the government.
India’s National Immunisation Programme (NIP) is one of the largest in the world, but this largely caters to childhood vaccination. There are about 2.5 crore newborns every year in India, and much of the planning, procurement and storage is based on this figure.
According to a study by the INCLEN Trust International -- the vaccine cold chain network in India includes four Government Medical Store Depots (GMSDs) located in Karnal, Chennai, Mumbai and Kolkata, 39 state vaccine stores, 123 divisional vaccine stores, 644 district stores and 22,674 community or primary health centre stores.
About 80 percent of the vaccine is shipped directly from a manufacturer to State and divisional vaccine stores, depending on the airport availability. About 20 percent of the annual need is kept as a buffer in the four Government Medical Store Depots (GMSDs) where stock is maintained for a maximum of three months. These four GMSDs supply the States and Union Territories. From district stores the vaccines reach the last storage point of community and primary health centres. From there, the vaccines go out for inoculation.
“The 2.5 crore pales in front of the humongous scale that we require, even if we have to inoculate 50 percent of the population — this has never been done before,” says Davinder Gill, former CEO of Hilleman Laboratories, which develops vaccines. Gill says the existing cold chain network of 27,000 centres will be able to take care of vaccinating 20-25 percent of the population; beyond that he sees a huge role for the private sector.
But Gill says there are several bottlenecks in expanding the cold chain. “Most of these cold chain companies deal largely with food and some bit of pharma, but not vaccines,” Gill says.
He points out that while a temperature fluctuation of plus or minus 10 degrees for a few hours is acceptable for food, that isn’t the case with vaccines. “Vaccines are highly temperature-sensitive and will lose potency, so stringent temperature monitoring and power backup systems are required,” Gill said.
What healthcare firms are doing
It isn’t logistics companies alone. Hospital chains, diagnostic labs and pharma companies, too, have evinced interest to participate in the logistics and distribution of the vaccine.
Apollo Hospitals, India’s largest private healthcare provider, said in October that it was gearing up its network of pharmacies, clinics and hospitals to deliver 1 million COVID-19 vaccinations per day.
Apollo has a pan-India web of 19 medicine-supply hubs with cold chain facilities, 70 hospitals, 400 plus clinics, 500 corporate health centres and 4,000 pharmacies alongside its omni-channel digital platform Apollo 24|7 to ensure massive administration.
The hospital chain said it is also training 10,000 healthcare workers to be able to administer the COVID-19 vaccine.
Biocon, too, has said it can partner with the government in distribution of vaccines, given its experience of handling cold chain products such as vaccines and biologic drugs.
Vials getting in place
Rishad Dadachanji, Director of the Indo-German joint venture Schott Kaisha, which makes tubular glass vials, has been working long hours for the last several months. Vials are small cylindrical glass bottles used to package vaccines and other liquid formulations.
Schott Kaisha is supplying vials to Serum Institute of India and other vaccine makers, both Indian and foreign, to fill their COVID-19 vaccines. In addition, Dadachanji is overseeing expansion of capacity at Schott Kaisha's existing factories in Gujarat and Daman, which are expected to add 300 million vials within the next 12 months.
The joint venture is investing Rs 105 crore on this expansion, which will take the total capacity to 1.3 billion vials.
“There will be an increase in demand, and we are gearing up to make sure that we are able to supply, because once all the vaccines come out vials will also be in great demand," Dadachanji told Moneycontrol.
Serum Institute will be using one vial to fill 10 doses. The company has declared that it will produce 40 million doses a month of AstraZeneca's COVID-19 vaccine Covishield, which works out to 4 million vials to fill.
Schott Kaisha converts tubular glass produced by German glassmaker Schott into vials, ampoules and syringes. Schott itself has stepped up production in India anticipating a huge demand surge for COVID-19 vaccines. The glassmaker recently inaugurated a new melting tank at its Gujarat-based facility with an approximate investment of 25 million euros. The new tank will help increase the plant’s production capacity by 10,000 tonnes to reach an annual capacity of 40,000 metric tonnes.
US-based Corning and Japan's Nipro Corporation dominate the global production of tubular glass, and have also stepped up production in India. Apart from supplying India, they export the glass as well.
Syringe and needle makers gear up
While vials are needed to fill and store the vaccine, syringes and needles are used to inject the vaccine into the body. The COVID-19 vaccine rollout may lead to an unprecedented surge in demand for syringes and needles.
Hindustan Syringes & Medical Devices (HMD), among the largest manufacturers of auto disable (AD) syringes in the world, is ramping up its annual production capacity of around 700 million syringes to a billion, in the first half of 2021. HMD is investing Rs 100 crore on the expansion. The company plans to allocate 50 percent for the government of India and the rest for exports.
Delhi-based HMD has an order from the government of India to supply 9.4 crore syringes for the COVID-19 vaccine, to be delivered by March. In addition, the company has also received orders from UNICEF under Covax to supply 140 million AD syringes for COVID-19 vaccines. The company said it has begun shipping the syringes.
Rajiv Nath, Managing Director of HMD, told Moneycontrol that he expects the demand for AD syringes for the COVID-19 vaccine in India to be around 1.8 billion pieces over the next two years.
Along with HMD, Rajasthan-based Iscon Surgicals has also won an order to supply around 5.3 crore AD syringes to the government.
Nath says there are around 20 manufacturers in India making syringes and needles, so meeting the demand isn’t going to be a problem.
“The procurement of glass vials, syringes and needles may not be an issue, given India’s domestic manufacturing capabilities, but we need to plan ahead,” says Gill of Hilleman Laboratories.