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-Rajeev Kumar (Editor-in-chief)

Monday, April 26, 2021

For sense on how vaccines are priced (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


An avoidable controversy has been created, alleging that Serum Institute of India is engaging in price-gouging by setting a price of Rs 400 per dose for vaccines sold to state governments and Rs 600 per dose for doses sold to private hospitals for its version of the AstraZeneca vaccine. This is absurd and unfair, right at the outset. Serum Institute is being forced to sell to the central government at a price of Rs 150 per dose, which does not leave it with any surplus for investing in new capacity, vitally needed to supply the billions of doses the world needs to combat the pandemic.


Assuming that 25% of its output for domestic sales would go to private hospitals and another 25% to state governments, the average realised price from domestic sales would be Rs 325 per dose. If private sales are only 10% of the output, realised price would be only Rs 245 per dose. Private hospitals and state governments are facing higher prices because of the ultra-low central procurement price. Vaccine prices are not homogeneous things. They vary depending on assured volumes, upfront payment, duration of the contract, bundling with other products, discounts and rebates. The US, Britain and the EU made huge upfront payments and purchase commitments and obtained lower prices. The Indian government did not make any upfront payments. Serum Institute invested money in additional capacity to produce the AstraZeneca vaccine even before the vaccine successfully completed Phase 3 trials, taking a huge risk, for which the nation, indeed, the world should salute them. It is only now, with vaccine shortage staring the nation starkly in the face, that the government has come forward to fund additional vaccine capacity.


The price for Bharat Biotech’s Covaxin is coming out even higher. Ideally, the Centre should buy out its intellectual property rights, free up the knowhow for the vaccine to be produced by multiple players and increase supplies. Profits are what allows reinvestment to add capacity, even in the vaccine business.

Courtesy - The Economic Times.

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Please Help Sampadkiya Team in maintaining this website

इस वेबसाइट को जारी रखने में यथायोग्य मदद करें -

-Rajeev Kumar (Editor-in-chief)

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