Bharat Biotech, the company that put India on the list of the elite club of countries with a vaccine, has told the Union government that 150 rupees per dose is a non-competitive price. The indigenous vaccine manufacturer has invested more than 500 crore rupees on its own in vaccine development and manufacturing capacity, and now the Union government is squeezing its profits by lowering the cost of vaccines.
“The supply price of Covaxin to Govt of India at 150 rupees/dose, is a non-competitive price & clearly not sustainable in the long run. Hence a higher price in private markets is required to offset part of the costs,” the indigenous vaccine producer said.
Earlier, when the Union government and the state government were purchasing the vaccines separately, the vaccine manufacturers could at least make a profit on the sale to the state, to whom they were charging higher prices. But now with 75 per cent procurement by the Union government, they would hardly break even at 150 rupees per dose. The 25 per cent of doses that will go to private players would be only sales where they could make some profits.
The Union government needs to junk this socialist policy of not allowing the indigenous vaccine manufacturers to make profits because this would weaken their capacity to invest in research and development for future ventures.
Imagine if the company goes bankrupt with the adoption of the path suggested by freeloaders, or due to unnecessary intervention from the government that is trying to foot the minimum bill, who will save us if another such pandemic strikes.
The pharmaceutical companies earn their profit from research and development because that is the intellectual capital they have, and there is no point in selling that intellectual capital for free because then they will not have the money to invest in research and hire the best talent.
Previously, Dr Krishan Ella, founder and CEO of Bharat Biotech, said that his company wants to reinvest in R&D to be ready for future pandemics. “As a company, we would like to have the maximum possible price. We would like to recover the costs incurred in clinical trials and other things. We want to reinvest the money into research and development (R&D) and be ready for future pandemics,” he said in an interview.
“We need cash for future R&D.” “I never give dividends in my company. I continue to live simply,” he added.
Dr Ella’s demand for “maximum possible price” is completely justified and he must sell the vaccines at a price that brings a healthy price to the company. At a time India is aiming to become a global superpower, we need companies like Bharat Biotech that can come up with cost-effective solutions to future public health crises.
American companies like Pfizer post around 10 billion dollars of profit even in bad years and this is the reason that they are able to lead the world in medical research. One shot of Pfizer costs around $19.5 (Rs 1423) in the US. If the American government starts making pressure over the company to sell the vaccine at a lower price, or the freeloaders come to power and nationalize the company – as suggested by a few journalists like Sucheta Dala who wanted SII and Bharat Biotech to be nationalized – the company would get rotten like any other PSU.
Bharat Biotech is free to sell the vaccines at whatever price it wishes, if the governments or private individuals want it, they should purchase the vaccine otherwise they are free to explore other options. The Modi government has stood for private property in the last seven years and it should continue to do so instead of listening to freeloaders and their leaders.