Covid-19 impact: Low interest loans likely for vaccine companies

While there has been no commitment from the government on the procurement of vaccines, initial volumes, or distribution plans, there is a likelihood that the low interest loans may be made available to these players only when the time to scale up manufacturing arises.

As Indian vaccine candidates inch closer towards Phase 3 trials in December, talks on the government likely to facilitate low interest loans to these players to help scale up production are gaining ground.

Multiple sources within the vaccine industry in India said while there has been no commitment from the government on the procurement of vaccines, initial volumes, or distribution plans, there is a likelihood that the low interest loans may be made available to these players only when the time to scale up manufacturing arises.

“It seems like the government is waiting to see which candidate emerges successful before any commitment is made.

"We are being told that the expert committee on vaccine administration is drawing up draft plans and approach papers for distribution and access,” said a senior executive at a vaccine company.

A public sector bank official had indicated to Business Standard last month that since vaccine manufacturing was perceived as a cost-effective business, funding would be within reach.

Low-cost funding arrangements are already in the works globally.

Vaccine makers have low debt on their books. This will also give banks enough financing comfort, added the official.

A few days back, the chief executive officer (CEO) of India’s largest vaccine maker expressed concerns over whether the Government of India would have Rs 80,000 crore at its disposal to buy and distribute the vaccine to Indians.

After questioning India’s financial plan to buy and distribute the Covid-19 vaccine, Serum Institute of India CEO Adar Poonawalla realised his misgivings were unfounded.

He took to Twitter to praise Prime Minister Narendra Modi for his speech at the United Nations General Assembly on vaccines, tweeting: “It is clear that all your arrangements for India will take care of all needs for the Indian people.”

But Poonawalla’s ‘Rs 80,000-crore question’ to the Centre on vaccine procurement and distribution is not a misplaced concern.

It may have ruffled feathers, but industry insiders in India’s vaccine manufacturing space claim there has hardly been any communiqué from the government after its first meeting with vaccine makers in New Delhi some weeks back.

The government is reportedly taking feedback from the players on their purported requirements.

Analysts at Bernstein said the Indian government is likely to procure 680 million doses of the vaccine, indicating a spending of $1.9 billion.

If the government chooses to vaccinate the entire population, it will need $6 billion ($1.3 billion to vaccinate 60 per cent for herd immunity, factoring in two doses per individual at $3 per dose).

The analysts estimate that the volumes will be split 55:45 between the government channel and the private market.

A leading vaccine maker said it will await further clarity from the Centre.

Vaccine makers like the Serum Institute of India, Bharat Biotech, and Zydus Cadila are already in expansion mode.

Serum Institute is adding around 400 million doses by the end of this year, taking its total capacity to 1.9 billion doses per annum.

Zydus Cadila is taking its vaccine capacity (for DNA vaccines) to roughly 100 million doses.

Sputnik V tech unsuitable for commercial manufacturing

Hyderabad’s Dr Reddy’s Laboratories has inked a distribution deal with Russian Direct Investment Fund (RDIF) for Sputnik V, but Indian players in talks with RDIF say the technology is not suited for commercial manufacturing.

Speaking to Business Standard, a vaccine maker said it has asked RDIF to develop the technology and come back.

“At present, it can at best make a few thousand doses using the technology it has shown us.

"The Russians need to work on it a bit more. We have not yet signed any manufacturing deal with them,” said the person.

It is also learnt that players like Indian Immunologicals (IIL) have opted out of the talks for manufacturing in India.

The same could not be immediately verified with the company.

According to sources, firms like Serum Institute, Biological E, Zydus Cadila, and IIL were in talks with RDIF.

According to Russian news agency Tass, in the past one month, over 3,000 Muscovites have received the Sputnik V jab.

Photograph: Dado Ruvic/Reuters