Dr Reddy's Laboratories, which has exclusive marketing and distribution rights for the first 250 million doses of Russia's Sputnik V vaccines in India, may get potential upside revenues of $300 million from the contract, estimates an analyst report.
The government's Subject Expert Committee (SEC) of the Central Drugs Standard Control Organisation (CDSCO) has recently recommended Russian Direct Investment Fund (RDIF)'s Sputnik V vaccine for Emergency Use Authorisation (EUA) in India, subject to satisfactory immunogenicity data submission.
"Considering the base case scenario of a pricing cap of USD 2 per dose for the vaccine, we believe the upside potential for revenues is USD 300 million for Dr Reddy's Laboratories for the duration of the contract," say analysts Tushar Manudhane and Bharat Hegde in a Motilal Oswal analyst report.
The company has got permission from the Drug Controller General of India (DCGI) to import the vaccine. Reddy's is also going to tap domestically contract manufactured vaccines as and when companies are allowed to start commercial manufacturing in India. According to RDIF CEO Kirill Dmitriev, the vaccine roll out in small quantities will likely begin as early as May and production on a larger scale will start by July, with plans to produce 500 million doses. RDIF has contracts in place to make 1.7 billion doses of Sputnik V with about 20 manufacturers. Main among them are a Korean consortium of seven manufacturers who will make 650 million doses and Indian manufacturers like Gland Pharma (252 million), Strides Arcolab's Stellis (200 million), Virchow Biotech (200 million), Panacea Biotech and Hetero Drugs (100 million each).
According to sources, Dr Reddy's will be initially depending on imports as final clearance for the vaccine is pending, subject to submission of additional data asked by the regulator. The contracted companies are now readying the facilities. According to an informed pharmaceutical expert who work with biotech companies, most of the contracted companies may require at least 2-3 months to start commercial production. "Except for two of those five companies, the rest currently do not make vaccines, according to my knowledge. Their biosimilar/biotech plants need to be refurbished to make vaccines, then test batches have to be made and data need to be approved by the respective state drug controllers to allow commercial manufacturing," he said. Some of the companies have already started the process since signing of the contract and are making minor production, he added.
RDIF is now negotiating with the Indian government on price of the vaccine and more deals are likely to be announced within a fortnight. While the pricing is capped and distribution is also controlled by the government in India, the opening up of vaccine distribution to the private market may lead to better pricing and margins for companies like Dr Reddy's, say the analysts.
According to reputed medical journal The Lancet, the vaccine is 91.6% effective. Phase 3 trials for the vaccine have been conducted in India, the UAE, Venezuela, and Belarus. Data related to the 'bridge trial' is awaited and expected to be submitted by end April. While Sputnik V is registered in 55 countries, other countries that have administered this vaccine are the UAE, Turkmenistan, Kazakhstan, Algeria, Iran, Palestine, Argentina, and Serbia. Some countries such as Mexico, San Marino, Slovakia, Paraguay, Montenegro, Venezuela, and Bolivia are also going to use the Sputnik V vaccine.