The Centre recently announced the expansion of the vaccination drive to cover those aged 18-45 years. It also allowed vaccines for the private market, where domestic players will have to supply 50 per cent quantity to the central government, and the balance to state governments or private hospitals. With this, there would be a need for an additional 1.2 billion doses (assuming two jabs per person) from May, as around 600 million of the population have now become eligible.
“Supplies to the private market would help in raising realisations. But we expect competition to be high from domestic and imported vaccines. This should provide a significant upside in the near term. However, we refrain from assigning a multiple to this opportunity as the earnings sustainability remains uncertain, and there would be a likely increase in competition,” an analyst from ICICI Securities said.
Analysts expect certain imported vaccines from US-based companies — Pfizer, Moderna and J&J — to enter the private market. Supplies to the government may continue at around $2 (Rs 150) per dose, while prices in the private market will vary, and could be upwards of Rs 600 per dose, they added. Serum Institute and Bharat Biotech recently announced prices of Covishield at Rs 600 per dose and Covaxin at Rs 1,200 per jab, respectively, for the private market.
With a relaxation in guidelines, approved imported vaccines can be supplied to state governments and the private market too. Dr Reddy’s Labs recently received the emergency use authorisation for Russia’s Sputnik V vaccine, which will be imported and is likely to be launched by May-end. Zydus Cadila, too, expects an approval to its vaccine ZyCov-D by June on successful completion of phase-3 trials.
“For Dr Reddy’s — assuming an average realisation of Rs 600 and 15 per cent ebitda (earnings before interest, taxes, depreciation and amortisation) margin as exclusive marketing partner — it could provide around 22 per cent upside to FY23 estimated earning. While for Zydus Cadila, assuming approval and average realisation is Rs 600 with 25 per cent ebitda margin, the upside could be around 31 per cent in FY23. At peak capacity utilisation, Aurobindo can get around 17 per cent ebitda upside to FY23 estimate, assuming average realisation of $2 per dose and 15 per cent ebitda margin,” the note added.
Aurobindo has developed a vaccine facility for a contract manufacturing organisation, with 480 million doses expected by June. Considering India’s adult population of one billion will account for the largest market for US vaccines, we see 20-25 per cent of US vaccine exports heading to India, a note from Yes Securities said.