India gets third Covid-19 vaccine as SEC clears Russia's Sputnik V

Final nod from DCGI soon, jab likely at $3/dose

Amid vaccine shortage forcing many inoculation centres to shut down, Russia’s Sputnik V has got the nod of the Subject Expert Committee (SEC) for emergency use. An approval from the Drugs Controller General of India (DCGI) was awaited at the time of going to press. Sputnik V will be the third Covid-19 vaccine in India, besides Covishield and Covaxin.

Dr Reddy’s Laboratories (DRL) had in September 2020 entered a partnership with the Russian Direct Investment Fund (RDIF) for clinical trials and distribution rights of Sputnik V in India. It completed the bridging trials in the country in February.   

For the Indian market, the initial doses of Sputnik V, developed by the Moscow-headquartered Gamaleya National Centre for Epidemiology and Microbiology, are likely to be imported, according to sources. Prices in India would be lower than the $10 per dose globally. "While the exact pricing is under negotiation, it is likely to be around $3 per dose," said a source in the know. Serum Institute and Bharat Biotech vaccines (Covishield and Covaxin) are now procured by the Centre at $2 per dose. 

Sputnik V has claimed an efficacy of 91.6 per cent in the interim analysis of the phase 3 clinical trial, which included data on 19,866 volunteers in Russia. The vaccine needs minus 18 degree Celsius to remain stable. A freeze-dried version of the vaccine is in the works that will be stable in 2 to 8 degrees Celsius. DRL had earlier said it would help in the cold chain logistics for Sputnik V.   

Around 852 million doses capacity has been lined up for Sputnik V by the Russian Direct Investment Fund (RDIF) in manufacturing tieups with Indian players such as Panacea Biotec, Stelis Pharma (Strides arm), Hetero, Gland Pharma and Virchow Group. Serum Institute, already in pact with AstraZeneca and Oxford University for Covishield, could also be  a manufacturing partner of RDIF.

The overall production capacity of Sputnik V in India, both for domestic and overseas markets, is expected to cross 1 billion doses annually. Of this, about 250 million doses are for the Indian market. Players such as Panacea Biotec are making Sputnik V for the global market alone.

DRL did not wish to comment on how many doses were immediately available from its partners.

The approval for emergency use authorization to Sputnik V vaccine led to a 4.8 per cent jump in the stock price of DRL. The street expects a positive impact on revenues and earnings of the company as well. 

Anmol Ganjoo and Shashank Krishnakumar of JM Financial in an earlier report had indicated that the market opportunity remains significant at the time of entry with the company having exclusive distribution rights for the first 250 million doses in India.

The extent of the gains however will depend on pricing. Analysts at Nomura believe that if the pricing is at Rs  375 per dose ($5), the post tax profit could be Rs  675 crore, translating into a value per share of Rs  41. Most brokerages have reduced their earnings estimates given the pricing for competitor drugs are pegged at just under $3 per dose (Rs  210). If the pricing is at around $3 per dose and given the logistic costs involved, the profitability of the vaccines at around 10-12 per cent range might not be significant, according to an analyst at a domestic brokerage.