Prime Minister Narendra Modi is likely to face more international embarrassment over his vaccine policy muddle. His controversial decision ― widely seen as an abdication of responsibility ― to let 29 Indian states individually buy vaccines from global producers, is about to boomerang on India.
Global pharma companies like Pfizer, Moderna and Johnson & Johnson do not feel the need to negotiate separately with each Indian state. They have conveyed their preference to deal with a single entity. In effect, they want the Centre to aggregate the requirements of the Indian states and negotiate on their behalf.
The first indication came when global bids invited by states like Maharashtra did not receive any response. US vaccine maker Moderna told Punjab that it would prefer to talk to the Centre directly, rather than respond to a state tender.
The global bidding system works perfectly in a buyer’s market where a few large buyers are chased by many sellers who compete hard to win contracts. But vaccines are a seller’s market, where over 150 nations are on a desperate buying spree to vaccinate their populations as quickly as possible. There are very few sellers globally, and production capacity to enable rapid mass vaccination is limited. So global vaccine companies have little patience or time to deal with the Indian states. Only direct negotiation with sovereign national governments is being encouraged.
Oddly, and inexplicably, India is the only country where the sovereign state has split itself into 29 entities, and each is separately negotiating to buy vaccines. In sharp contrast, the African countries have formed the African Union Trust, which is collectively negotiating to buy up to 220 million doses from Johnson & Johnson. Even the European Union is negotiating collectively on behalf of 27 EU nations. But PM Modi chose the opposite logic and now, global vaccine companies are forcing him to see sense. India’s foreign minister is in the US to discuss this impasse with US business associations, which have formed a task force to help ‘Atmanirbhar’ India deal with the devastating second wave.
US vaccine companies are still in the process of fulfilling the requirements of their domestic population, including stockpiling inventory. Their capacities will be free only after a few months. So all the big overseas supply commitments made by US pharma majors can be delivered only after July. In the near term, India will have to make do with existing supplies of Covaxin, Covishield and Sputnik V.
There is still very little clarity on how the Centre will make available 2.2 billion vaccine doses in the five months between August and December, as announced recently by V.K. Paul, NITI Aayog member (health).
No one in the government has offered any clarity on how many of the 2.2 billion doses will be domestically produced, and how much imported. The Modi government finds the math burdensome and is fuzzy on the details. The chart issued last month, incredibly, included vaccines that are still at the trial and development stage. Citizens have a right to look at such numbers closely and demand answers, because their lives depend on them.
Some intelligent speculation is possible. Suchitra Ella, co-promoter of Bharat Biotech, told India Today on Thursday that her company would have three vaccine manufacturing facilities, in Hyderabad, Bangalore and Ankleshwar, up and running in some months. They would produce a little over 1 billion doses of Covaxin a year. This translates to roughly 100 million doses a month. One assumes that this scale-up will happen in the next few months.
Union minister Nitin Gadkari said he has been informed that the government will have up to 12 manufacturing facilities to produce Covaxin. Note that the promoter of Bharat Biotech has only spoken of three production facilities, and said nothing about allowing licensed production via technology transfer to another seven or eight entities. Something may be going on between Bharat Biotech and the Centre which we do not know yet. One of the very many other things that we do not know about the pandemic.
The Serum Institute of India has also talked about scaling up production to roughly 120 million doses a month after July. Assuming that at some point, Bharat Biotech and the Serum Institute each start making over 100 million doses a month, we would still need Sputnik V and imports to fill the gap which remains if the year-end target is to be reached. To make available the 2.2 billion doses promised in five months from August to December, we would need a little over 400 million doses a month. We don’t have a clear idea of how many doses of Sputnik will be produced in India.
So India may still have to buy several hundred million doses from US pharma companies to fulfil the commitment of delivering 2.2 billion in five months. This seems like a tall order. We’ll wait and see what news foreign minister Jaishankar brings from the American pharma companies.
But even if Jaishankar manages to get some medium term supply commitment, an acute vaccine shortage over the next two to three months remains an insuperable problem. And this shortage is undoubtedly a direct consequence of Modi’s failure to pre-order in volumes from vaccine manufacturers between November 2020 and January 2021. Modi will never be able to live this down, no matter how his doctors spin it.
This piece was first published on The India Cable and has been republished here.