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Is Serum Institute really making a huge profit and charging discriminatory price from states for Covid-19 vaccine? Read details

Serum Institute had earlier announced that they will charge ₹1000 per dose after selling first 100 million doses at loss at a discounted price to govt of India

Ever since various pharmaceutical companies developed vaccines for Covid-19, several non-NDA parties and left-liberals in India have launched a vested campaign against Indian companies, while batting for foreign companies. Led by the Congress party, this anti-BJP section has been attacking the Indian origin Covaxin made by Bharat Biotech, while asking the govt to approve foreign vaccines, even if they are highly costly compared to Indian companies. The latest target of this left-liberal attack is the Serum Institute of India, the world’s largest vaccine maker, after the company announced prices for COVISHIELD to be charged from state governments and private hospitals.

The company announced the rates today after the central govt had opened up Covid-19 vaccination, allowing vaccine manufacturers to sell 50% of their production to state governments and private hospitals, while the remaining 50% will have to be sold to the central govt. The Centre had directed the companies to declare the price for states and private sector before 1st May, and accordingly, SII announced the prices today, which is ₹400 for state governments and ₹600 for the private sector.

However, it didn’t go down well with the left-liberals, and they started attacking the company, accusing it of making huge profit by setting these prices. The attack was led by Congress MP Rahul Gandhi, who found another industrialist after Ambani and Adani to attack PM Modi with.

The Kerala MP claimed that the vaccines will only help a few industrialists, and the prices will help ‘Modi’s friend’ to earn a huge profit. However, Rahul Gandhi was not the only one to launch an attack on the company and its CEO Adar Poonawalla. A large number of politicians, journalists, radical Islamists and left-liberal activists started attacking the company on the same allegations.

Most of them accused SII of discriminating between states and centre, as they pointed that the company is selling COVISHIELD to the centre at ₹150, therefore it should charge the same amount from states also.

TMC MP Mahua Maitra wanted to know if there is anyone who is a citizen of a state who is not a citizen of India, as the prices are different for the state and centre.

Rana Ayyub even wanted to ask tough questions to Adar Poonawalla, as if he is a public representative.

No huge profit, but end of loss

Although it is correct that at present Serum Institute of India is supplying the vaccine to ₹150 plus tax per dose to the government of India, it is completely incorrect to accuse that it will be making a huge profit by selling at ₹400 per dose to the states. This is because, the company is selling the vaccine at a loss to the centre, and it can’t continue doing that. Today Adar Poonawalla said in an interview with CNBC the company needs to pay 50% of its revenue as royalty to AstraZeneca, and the company is making a loss of approximately ₹150 per dose.

It is important to note that the company is supplying the vaccine to a concessional rate only for a limited period of time, as it has already announced earlier. Adar Poonawalla had earlier announced that the company will supply the first 100 million doses of the vaccine to govt of India at a low rate, and after that, they will selling the same at ₹1,000 per dose in the private market.

“We’ve given a special price of Rs 200 for the first 100 million doses only to Government of India on their request that we want to support common man, vulnerable, poor, healthcare workers. After that we’ll be selling it at Rs 1000 in private markets,” the SII CEO had said in January.

This means, it was already known that the company will increase the price after supplying 100 million doses, and now they are charging a much lower price of ₹600 from the private market instead of ₹1000 they had announced earlier. Only, the company is supplying more than double of its initial commitment at the lower rate. Because, after the initial contract of 100 million doses, the government of India signed another contract last month with the company for the supply of 110 million doses at the concessional rate, and the company is still supplying vaccine under that contract. The company is expected to complete the delivery by July, after which the centre will have to sign a new contract, and the company has made it clear that no more discount will be offered from now.

The SII CEO also said that they had proposed the price of ₹600 for both state governments and private sector, and talked to some states on the issue. But the state govts requested to bring the price down, after which the company decided to charge a lower price of ₹400 from the states. This means, state govts were aware that the prices will be higher than the current price charged from the centre, as they were part of the discussions on it.

Centre will also be charged ₹400

Adar Poonawalla revealed another important point in his interview with CNBC. He said that after the company supplies the fresh batch of 110 million doses to the central govt as per the contract, they will charge ₹400 from the centre for any new purchase order. He said that the price of ₹400 has been set for all governments, and there is no discrimination.

SII was giving concession to Indian govt, and some other countries too, as those governments had placed order with the company for the vaccine even before the trial data of the vaccine was published. The countries had taken a risk by placing order committing to purchase an untested product, and that’s why they were offered a lower rate. But now that the efficacy of the vaccine has been proved, there is no need to offer such discount.  

It is also to be noted that in exchange for the discounted rate, the govt of India has offered an advance of ₹3000 crore for SII. The company needed the fund for expanding its vaccine production capacity, and the central govt provided the fund as a credit against future supply of doses.

Centre’s citizen vs state’s citizen

The argument that SII is discriminating among citizens by charging different prices from centre and states does not make sense at all, as there are no different citizens belonging to the centre and the states, as TMC MP Mahua Maitra and many others seem to believe. The vaccines that the centre is buying, which it will continue to do so, are supplied to state governments only. It is not that PM Narendra Modi or his cabinet is consuming the vaccine themselves. The vaccines are given to Indian citizens in all the states in India.

The centre is vaccinating people over 45 years of age free of cost in all the states, which it will continue to do so. It is not that the Modi govt is vaccinating a different set of people ignoring citizens in Indian states, as the opposition leaders and left liberals are suggesting.

In fact, as Adar Poonawalla said today, the states have been given an option to buy vaccine themselves, they are not compelled to do so. If the states think they can’t afford the vaccine, they can choose to not buy the vaccine, and continue the vaccination program using the doses supplied by the centre.

Charity vs business

By claiming that SII is making profits from selling vaccines, the left liberals want to imply that the company should spend crores of rupees from its pocket to protect the people of India from the Chinese virus. SII has invested a large amount of money to expand its capacities to produce the vaccines, both Covishield and the upcoming vaccine Covavax. In fact, immediately after the Oxford-AstraZeneca vaccine was developed and finalised, the company had started manufacturing and stockpiling it, so that millions of doses are available by the time vaccine is approved after the clinical trial. Had the vaccine proved to be a failure, it would have lost crores of rupees. Although organisations like GAVI and Gates Foundation shared some of the risk, the company invested fund in the vaccine project, which comes at a cost.

No company can sustain by selling a product at cost price, it has to earn a reasonable amount of profit to expand its operations, mitigate risks, spend in R&D etc. Therefore, it is not reasonable to expect SII to supply the vaccine at even cost price, and it impossible that the company will continue to sale at loss. The company had already announced it was offering the discount only for a limited quantity of vaccine, and after that, they will increase the price. SII has supplied double the committed quantity at concession and charging much less than the earlier announced price. They can’t be expected to continue doing charity forever.

Foreign vs Indian company

It is interesting to note that while many people are against SII increasing the price of COVISHIELD, they themselves had argued that those who can afford should be allowed to purchase costly foreign vaccines. Congress leaders had demanded that those who can afford price of ‘Advanced Pfizer and Moderna vaccines’ should not be denied access, and govt should approve their use.

But now when now a similar choice has been made available at much lower rates, the same people objecting. It may be noted that the doses of Pfizer and Moderna costs between ₹2000-₹3000, while the Oxford vaccine is being sold at a much lower rate to the private sector by SII. Although the price may be slightly more than ₹600 to account for logistics, it will still much lower than the rate of foreign vaccines.

It shows that Indian left-liberals only want to bring the Indian industry down, while promoting foreign companies. Not just COVISHIELD, and Covaxin, Indian vaccine manufacturers sell almost all other vaccines at much lower price compared to their global counterparts. On the other hand, pharmaceutical giants like Pfizer are known for overpriced drugs and their greedy nature. It has to be noted that Pfizer wanted Latin American countries to pledge their national assets, including federal bank reserves, military assets, to protect the company from any future liability arising out of adverse reactions of the vaccine or its own negligence, fraud or malice. And the Indian left-liberals are campaigning for such while opposing Indian companies selling vaccines at much lower price.

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Raju Das
Corporate Dropout, Freelance Translator

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