By Girish Bakhru & Amish Shah
As of April 16, 2021, India had administered about 120 million doses with a 7DMA (seven-day moving average) of 3.1 million, a decline of about 12% over the previous week due to vaccine shortages. Vaccine manufacturers have highlighted shortage of key raw materials that is holding back production ramp-up. Several states including Maharashtra, Punjab, Rajasthan and a few others have urged the government for more vaccine supplies.
Currently, Serum Institute of India/AstraZeneca’s Covishield contributes about 91% of the total doses administered across 60,000 vaccination sites and is the leading vaccine. A little over 1% of the population, i.e. about 16 million, has been fully vaccinated. In response to the second wave, the government of India has approved Sputnik V and opened doors for foreign vaccines to enter India quickly. Dr Reddy’s will import about 250 million doses of Sputnik V starting this quarter. Cadila will apply for approval of its vaccine in June.
Current capacity of 75 million doses per month set to expand: The current production is about 75 million doses per month of the two vaccines (Covishield and Bharat Biotech’s Covaxin) combined. The Serum Institute of India expects to ramp up production from June to 100-million-plus doses per month and Bharat Biotech to 12 million doses per month from July. We model vaccine capacity increases in the country and do scenario analysis highlighting bull, middle and bear cases.
Strong Sputnik uptake can push from bear case to middle: We model vaccine capacity across vaccines based on capacity guidance issued from companies. We account for approval of four more vaccines including Cadila’s indigenous vaccine and three foreign vaccines: JNJ/Biological E, Novavax/SII and Pfizer/BioNTech. Our Covid market model projection of about 440 million people vaccinated by 2021 is a bear case scenario (see graphics) and mainly relies on three approved vaccines at disposal. We forecast capacity increase to 90 million per month for serum from July in bear case (currently about 70 million per month) and account for about 100 million doses imported by Dr Reddy’s of Sputnik V.
We include minimal contribution from JNJ vaccine (facing clot issues and suspension across many countries) and no contribution from Pfizer (cold chain issues) and Novavax (still in trials) in bear case. In middle case, we expect from July the Serum Institute of India capacity to move to 100 million per month, doubling of Bharat Biotech’s Covaxin capacity and the significant 200 million doses import of Sputnik V. In bull case, we include 120 million per month of Covishield, 12 million per month of Covaxin, and full 250 million doses total import of Sputnik V. All these scenarios are adjusted for doses per vaccine, export share and adjustment factor of 10% for wastage and execution.
On overall net basis, we forecast 34%, 40% and 48% of population getting vaccinated by 2021 in bear, middle and bull scenarios, respectively. We highlight risks to these model assumptions and highlight that this analysis does not take into account contribution from other companies (Gland, Panacea Biotec, Stelis) contracted with RDIF on Sputnik V and/or possibility of tie-ups with companies with capacity (Aurobindo, Haffkine-Biotech) escalating doses available meaningfully in existing or future vaccines. Higher vaccination is an upside risk to our India’s equity strategist Amish Shah’s near-term caution thesis.
Scenario analysis of Covid-19 vaccination: We have attempted to forecast capacities across vaccines on monthly basis for this year. So far, cumulatively, 114 million doses have been administered till mid-April. We have added to this cumulative dose number, monthly available doses based on current capacities across vaccine players. The Serum Institute of India is currently doing 70 million per month and is expected to go above 110 million by June.
Bharat Biotech is currently manufacturing 5 million per month and is expected to go about 12 million per month by July. In all scenarios (bear case, middle case and bull case), we have added capacities from July for two available vaccines and included Sputnik V only via imports from Dr Reddy’s. Cumulative doses are adjusted for export percentages to arrive at doses available for India. JNJ is single dose, so one dose is accounted as one person vaccinated. For all other two doses account for one person vaccinated.
Risk to these assumptions: We have taken vaccine capacity and expansion plans solely as guided by company; not all companies have given clear guidance.
Also, we have not considered any contribution from CDMOs (contract development and manufacturing companies) capacity for Sputnik V as many (Gland/Stelis/Panacea/Virchow) players have entered into such tie-ups.
The percentage of vaccine export and wastage may vary from time to time. We do not have full clarity on how exports will be treated based on capacity increases. Also, our flat adjustment of 10% accounting for wastage etc can be wrong or may change.
Lastly, there is no clarity on the exact timeline for JNJ/Biological E, Cadila, Novavax/SII, Pfizer vaccine approvals and capacities. We cannot ascertain how big the clotting issue in case of the JNJ vaccine is. If it’s very serious, the vaccine may not get approved in India.
Authors are research analysts, BofAS India.Views are personal
(Excerpted from BofA’s ‘India Pharmaceuticals: Vaccinometer 4.0—Capacity-wise vaccination scenarios for India’ report dated 20-04-21)
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