Covid-19 vaccine manufacturers, private hospitals face revenue loss

With the Centre revising its policy and making Covid-19 vaccines free for ages 18 and above from June 21, vaccine ma­kers and private hospitals face a loss of revenue.

Back-of-the-envelope calculations show that Serum Institute of India (SII) will lose revenues worth Rs 26.25 crore a month, while Bharat Biotech would lose to the tune of Rs 45 crore a month. This is assuming that SII is making 70 million doses of Covishield a month, while Bharat Biotech is making 40 million doses per month of Covaxin.

Both the vaccine makers did not comment on the impact of the Centre’s decision on their revenues.

According to a policy announced mid-April, the Centre had said that it will procure 50 per cent of the total vaccines produced and imported, and the remaining doses would be equally split between state governments and private hospitals. This came into effect from May 1, coinciding with the launch of universal vaccination (for all above 18 years eligible for a Covid vaccine).

Vaccine makers announced prices for state governments and private hospitals. The procurement price for the Centre remained the same, at Rs 150 per dose.

Serum Institute charges Rs 300 per dose from state governments and Rs 600 per dose from private hospitals. Bharat Biotech charges Rs 600 per dose from state governments and Rs 1,200 per dose from private hospitals.

According to the revised policy, now the Centre will procure the vaccines for ages 18 and above, and will provide those to the states. So, the question of states procuring at a rate distinct from the central procurement price does not arise anymore. The private hospitals, however, have been allowed to continue to procure 25 per cent of the vaccines available.

For the vaccine makers, this results in a loss of revenue as the Centre pays Rs 150 per dose to both. For SII, this translates into a loss of Rs 150 per dose for each dose sold to state governments. At present it gives 17.5 million doses per month to states (or 25 per cent of its monthly production of 70 million doses). So, the loss is some Rs 26.25 crore a month since the Centre procures 75 per cent of its production at Rs 150 per dose.

For Bharat Biotech, which also gives 25 per cent of its production to state governments, the loss works out to Rs 45 crore a month roughly as it was charging the states Rs 600 per dose. This is as­suming the company is now producing 40 million doses on an average per month. Bharat Biotech did not confirm its monthly production volume.

Both the firms have said that they are slated to increase the production — SII aims to take it up to 100 million doses a month by July-August, while Bharat Biotech has said that it is in the process of ramping up capacities to 1 billion doses annually by the end of this year or so. It has, however, not given a monthly production break-up.

As for hospitals, the Centre capped the service charge at Rs 150 per shot they administer.

Asking not to be named, a leading private hospital chain said, “We will review the logistics costs of administering vaccines. This is likely to impact the doorstep vaccination drives.” Fortis Health­care said it has taken several initiatives to make vaccination available at residential areas and workplaces. “Unfor­tunately, the cap of service charge at Rs 150 will not cover the additional costs  incurred for such offsite vaccination camps which involve substantial  costs like Ambulance, transport, extra staff and doctor, plus TDS involved  in many cases. We urge the govt to consider a higher charge for off-site vaccination camps to enable expanded  coverage,” the spokesperson said.

Alok Roy, chairman and managing director of Medica Group of Hospitals in eastern India, said the decision to cap service charge is an “ill-thought out” strategy. “The government could have either capped the vaccine prices or subsidised it. That would have had more impact on the end-consumer,” Roy said. He felt this would discourage wider distribution of Covid vaccines, which, in turn, would impact those physically challenged, elderly or with mobility challenges.

At present, Roy said, a dose of Covishield costs around Rs 630-650 after paying for logistics, etc. And the hospital was charging Rs 850 per dose.

Ruchika Chitravanshi contributed to this report