By Sunil Garodia
First publised on 2021-06-16 11:38:25
Both Serum Institute and Bharat Biotech, makers of Covishield and Covaxin respectively, have urged the government to raise the price at which it is acquiring the Covid vaccines from them. Their argument is that the average price (reported to be in the range of Rs 200 to Rs 250 per dose excluding taxes) now is not sustainable due to the fact that a lot of costly R&D went into developing the vaccines and they have to upgrade their facilities. They say that at current price, they are just recouping their costs and making a small profit. But, they say, they have to make super profits to recoup R&D costs and for future R&D.
Their arguments are perfectly logical. But that is in the case of any other vaccine. In case of Covid vaccines, these arguments do not hold. For, most other vaccines take years to develop and then several more years to test and market. The Covid vaccines were developed, tested and administered in a record 10 to 11 months. Then, most other vaccines are sold in thousands of doses over a period of several years. Here we are talking about millions of doses in a span of just one year. Also, most other vaccines need extensive marketing which is a costly exercise. Commissions have to be paid at each point in the sales channel. Even doctors have to be 'paid' to prescribe their brand if there are competing vaccines. Companies also have attractive schemes for the trade (like "buy three, get two free" etc) for most other vaccines. Lastly, in all other vaccines, there are expired and unsold products, sometimes to the extent of 5% of sales, which the companies have to take back from the market. The companies are saving all these costs. Further, in the case of Covaxin, the government of India, through ICMR, has contributed funds in R&D.
If the companies say that these costs are not sustainable, the government must sit with them to renegotiate the price. But the pricing of vaccines which are to be procured in millions of doses in a short span of time and for which the government is making advance payment in part cannot be priced in a manner similar to any other vaccine. The companies have to keep this in mind.