Covid-19 vaccine pricing accounts for last-mile delivery, say firms

The cost of logistics is built into the final price of the vaccine, especially when supplying to the private sector

The two Indian vaccine makers —Bharat Biotech and Serum Institute of India — bear the cost of last-mile delivery of their Covid-19 vaccines, executives said. 

While supplying to the government this means movement from their plants to states’ cold chain points, but for private hospitals, it is delivered at the doorstep.

The cost of logistics is, thus, built into the final price of the vaccine, especially when supplying to the private sector.

A senior executive of Bharat Biotech explained: “When we supply to the government, we dispatch the doses to the state-wise cold chain points. 

Each state would have more than one such point. The government takes it from there and ensures distribution to vaccination centers.” 

According to PTI, the government has invited bids for last-mile delivery of vaccines to remote areas through drones.

However, in case of delivering to private hospitals, the vaccine makers have to send it to the specific hospital itself. “Nothing extra is charged from hospitals. This logistics cost, which is significant, is built into the pricing,” the executive mentioned. 

Cost of logistics is largely determined by the volumes. Supplying a few thousand doses to hospitals thus becomes a challenge, say the vaccine makers.

Pune-based SII too follows the same model, sources confirmed. Bharat Biotech charges private hospitals Rs 1,200 per dose for Covaxin, while SII charges them Rs 600 per dose for Covishield. The cost for the government is much lower at Rs 150 per dose, and the vaccine makers have indicated that this is not sustainable.

Bharat Biotech said on Tuesday that supplying at Rs 150 per dose is not sustainable in the long run. 

It has invested Rs 500 crore from internal accruals for development and production of the vaccine and has to pay royalties on sales to the Indian Council of Medical Research, and its adjuvant supplier Virovax of Kansas.

Vaccine logistics has to take into account a few things — spoilage and integrity of the cold chain. Vaccines do not hold their potency for long and thus have to be transported to the last mile within a certain time frame, maintaining the temperature requirements. As a result, commercial cold chain players are seeing an opportunity.

For Sputnik V, which is now available at private hospitals, Hyderabad’s Rockwell Industries has partnered with Dr Reddy’s Laboratories. Rockwell Industries has got orders for 750 Covid-19 vaccine freezers from hospitals and institutions. It is now set to start exports of these freezers to various countries, including Japan.

Sputnik V requires a temperature range of -18 degrees Celsius to keep the vaccine stable and potent.