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China vaccine can’t be most expensive option

/ 04:03 AM January 27, 2021

From cars to electronics, from consumer items to construction materials, everything from China is cheaper, much cheaper. It is not the world’s factory for nothing. In fact, practically everything around us is shipped out of a Chinese port. So why is the China vaccine supposedly the most expensive in our shopping list?

While the Pfizer and Moderna doses use the novel mRNA technology to deliver the vaccine, the China ones rely on the tried and tested traditional method of inactivated vaccine using a dead virus to trigger the immune system. The new technology is a more time-consuming and costly process, while the conventional one is easier.

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Not only is the production cost for the Pfizer (P2,400) and Moderna (P3,900) vaccines higher, but their distribution and storage requirements at subzero temperatures is a real cost that needs to be factored in by developing countries that do not have cold chain facilities—the Philippines in the tropics, for example. Hence, the China vaccine, which can be stored in ordinary refrigerators, cannot be more expensive than these two.

Sinovac is often quoted at P3,600. This is not accurate. When it was first announced in August 2020, the price of 1,000 yuan or P7,400 was given as an estimate and the upper limit. In September 2020, for the experimental vaccination program in the Chinese city of Jiaxing, the cost was down by half to P3,000.

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From a strategic communication perspective, or simply from the vendors of Baclaran, it makes sense to quote a high initial price so that at actual negotiation or when the final pricing is done, it will be a pleasant and happy surprise for the buyer.

The proper comparison is with the AstraZeneca vaccine, which also does not require ultra-cold storage and is priced at merely P610. This is because the pharmaceutical company, in partnership with an academic institution, declared a “no profit pledge”—the P610 is the real cost of the vaccine.

Now, the reasons for making such a significant commitment may be altruism (for Oxford) or for corporate social responsibility (for AstraZeneca). Witness how the stock price of publicly listed AstraZeneca has barely budged compared to the other vaccine makers.

Nearer to us, Indonesia, with more people in more islands sprawled over a bigger area, has rolled out its national vaccination program beginning Jan. 13, with the Sinovac vaccine. Its price? Not more than 200,000 rupiahs or the equivalent of P680 pesos—similar to AstraZeneca.

Even momentarily setting aside China’s soft power push with its vaccine diplomacy, it does not make commercial sense for Chinese companies to price their products at a markup that is five times more (P600 x 5 is P3,000) than those equally available.

In the Philippines, even if there are more than 170 vaccine research teams, government insists on monopolizing the procurement of vaccines. The elements of monopolization are present: Only the government can buy for and supply to its citizens the chosen vaccine, citizens have no right to choose, and the vaccine is at a higher price. Vaccines are not a natural monopoly. In the Middle East and elsewhere, a citizen or a resident can pick from a menu of vaccines, free of charge.

Any vaccine purchase ought to be made on a government-to-government basis to cut out the middlemen or trading companies, and to ensure optimal pricing for bulk purchase. Also, China is supposed to be our close friend and major ally.

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As there are already several vaccine suppliers, with more coming under the auspices of the global vaccine alliance COVAX for low- and middle-income countries, vaccine prices can only go lower. But even if government provides the doses for free like in China or the Middle East today, and whether each vaccinated Filipino is computed at P600 or P3,000, the cost is certainly material because payment is from taxpayers or money borrowed against our health and our future.

The China vaccine uses a cheaper and proven conventional method plus regular storage process; it is priced commercially and very close to the production cost. The vaccine market is not a monopoly, vaccines are no longer a scarce commodity. and there are no other parties involved in the transaction with the Philippines. Thus, the Made in China vaccine we are procuring cannot and must not be the most expensive option.

Geronimo L. Sy is a former assistant secretary of the Department of Justice. He set up the department’s Office of Cybercrime and Office for Competition.

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TAGS: AstraZeneca, China vaccine, COVAX, COVID-19, Sinovac
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