CFOs seek clarity on distribution and administration policy, CFO News, ETCFO

Top (L-R): Aneel Gambhir, CFO, Blue Dart Express; Amit Jain, CFO of La-Renon Healthcare; Yogesh Patel, CFO, Mahindra Logistics
As manufacturers are racing up to make coronavirus vaccine, Chief Finance Officers in logistics firms are seeking clarity from the government on its distribution policy.

The industry wants the government to lay down a comprehensive regulation that can give colour with respect to their role in distributing shots. India will require participation and investments from private sector players in inoculating 1.3 billion people, and the businesses will have to plan accordingly to get execution smooth.

The distribution policy is likely to depend on the type of vaccines as this will help the government to decide who to give license to for its market use. For instance, if the government uses vaccines that are required to be stored at below 70-degree Celsius, like the ones being manufactured by Pfizer, then the country will have to build cold chain storage infrastructure according to that.

Otherwise, the ones being manufactured by AstraZeneca can be stored at ambient or fridge level temperatures, and their distribution would require a specific strategy given the volume of doses India would need to inoculate its massive population. It is anticipated that Serum Institute of India, the world’s largest manufacturer of vaccines and which is conducting trials of AstraZeneca’s shots, is likely to get an emergency use license by as early as mid-December.

Last week, Prime Minister Narendra Modi had visited three vaccine centres to check the progress of the shots — Serum Institute of India in Pune, Zydus Cadila’s plant in Ahmedabad, and Bharat Biotech in Hyderabad. Health Minister Harsh Vardhan has said that he expects the vaccine to be ready by March next year.

‘Regulatory Clarity’

“Lack of clarity is the biggest concern among logistics players right now. While manufacturing is progressing fast and pharmaceutical majors are rushing to produce a viable vaccine to defeat the pandemic, the magnitude of our population requires proper planning and a detailed structure in vaccine distribution and logistics,” Blue Dart Express, a logistics firm’s CFO Aneel Gambhir told ETCFO.

(A DHL worker loads dry ice into “Envirotainers” inside an ultra-cold facility that is used for the shipment of vaccines, medical supplies and pharmaceuticals in Chicago, Illinois, U.S., in this handout photo released on November 18, 2020 -Reuters) While the PM discusses distribution and delivering plan of vaccines, CFOs of pharma industry feels that there are uncertainties around number of doses required at what frequency and at what temperature it needs to be stored.The CFO said vaccinating people in tier 2 and tier 3 cities could be a big challenge, though adding his own company is ready to partner the government in its plan to provide doses to millions as and when it gets ready. “We have a wide network with six Boeing 757 freighters that can handle approximately 35 tonnes / 220 CBM (Cubic Metre) payload per flight. Blue Dart already has the operational experience and specialized infrastructure required for handling bio-medical shipments,” he said.

Amit Jain, CFO at an Ahmedabad-based pharma firm La-Renon Healthcare echoed the same viewpoint. “There is uncertainty in terms of the number of doses or shots required and at what frequency. Also, the temperature at which vaccines need to be stored and who will procure them – will it be the government only or a few private players will also be allowed to sell directly or not. A lot of clarity needs to come from the regulatory side,” he said.

Last month, Modi in his meeting with states’ Chief Ministers had said he will soon share the distribution plan for the vaccine. The country has plans to first vaccinate the health care professionals and elderly.

Mahindra Logistics CFO Yogesh Patel expects the vaccine distribution policy to only evolve with time, adding that inoculating a billion-plus population will be a long-exercise.

“The need for speed exists. The sooner we get distribution policy in place, the better it will be for everyone in the industry. At the same time, the regulation will evolve over a period of time as immunization of the 1.3 billion people may take as long as 2-3 years,” Patel told ETCFO.

The CFO indicated his company is ready to play a role in distributing the shots as Mahindra Logistics has good familiarity with the pharma sector as well as a wide geographical reach.

“We offer integrated supply chain solutions to our customers at large, unlike simple transportation service, which does not require inbound or storage services. We are well-positioned with a wide geographical reach. Our network covers more than 17,000 pin codes today of the total 19,000 existing,” the CFO added.

CFOs suggest the government to rope in more and more private players, and use their wide reach as well as infrastructure in administering shots. ‘Administration Challenges’

Administering shots would also require detailed and comprehensive planning, said CFOs. In an interview to The Economic Times last month, Union Health Minister Harsh Vardhan had said national administration policy is in the works. There are reports these shots may be administered in election booths-like facilities.

“Going forward, it will be important to see how the government will administer vaccine shots. Also, the production of related accessories like syringes and needles will have to be looked into quickly and on an agile basis,” said Blue Dart’s Gambhir.

A CFO at a diagnostics company suggested the government should rope in more and more private players, and use their wide reach as well as infrastructure in administering shots. “We have a hub and spoke model (a centralized warehousing and shipment system), similar to a logistics firm’s supply chain. So, our phlebotomist (one who draws blood for tests), can inject vaccines also. We can participate in this whole idea of distribution and administration,” he said requesting anonymity.

This finance executive further said that healthcare is a state subject and it needs to be seen how the administration matter is handled overall. “There is deep thinking required from each of the stakeholders be it the state, the Centre or private players. You can’t reach 1.3 billion people overnight. So who should be a single authority, and how the programme is run should be clear right up front,” he continued.

La-Renon Healthcare’s CFO Amit Jain suggested that the government may also look at collaborating with pharma companies and put a price cap on the dose so as to ensure no company takes the undue advantage. “Rather than calling everyone at a few centres or govt going door to door, people should be allowed to buy – those who can afford it independently and those who can’t can be provided free of cost,” he concluded.

India is the second most affected nation after the US with coronavirus cases crossing nine million. The country crossed its infections peak in mid-September, however, the threat looms large in another wave. The economy officially slipped into its first technical recession in records since 1996, contracting 7.5 per cent in the three months through September, after pandemic disruptions played havoc.

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