A new chapter has opened up in India’s fight against Covid-19 with three big changes in April. Starting May, vaccines are now available for all adults in India. The central government is no longer the only purchaser – the vaccine manufacturers are now free to sell to the state governments and also to private sector (hospitals, companies, etc.). Also, many new vaccines are entering the fray in India apart from the India-made Covishield and Covaxin.

With these three big changes, many new aspects have opened up. There is now much larger demand for vaccines; there are newer vaccine entrants to address this large demand; and there are now different prices for different vaccines and segments. Let us understand these aspects in some detail.

A billion people – and approx. two billion doses

Vaccines were open only for those 45 years and above. This is a population of around 35.6 crore citizens. Out of these, 12.4 crore people received one shot and 2.6 crore received both their shots as of end-April. Since each person will require two shots, this segment of population will require a total of 71.2 crore doses. Since a total of 17.6 crore (12.4 crore single and 5.2 crore doses for double) have been administered, this leaves a demand for 53.6 crore doses.

There are 62.2 crore Indians in the age range of 18-44. This means that they will need 124.4 crore doses. Since very few of these have received these doses (frontline workers, etc. who are counted in the count above), it is practical to assume that all these doses will now be required.

A line of disclaimer in these population numbers. Most of these numbers are estimates made by various experts drawing from the Census of 2011. While most of these numbers are broadly accurate (in an order-of-magnitude sense), they are not intended to be exact.

Putting together these two data sets, this implies that for around 98 crore people, India will need a total of 178 crore shots. See table 1.

Who will supply these vaccines?

India had two approved vaccines: AstraZeneca’s Covishied which is manufactured by Serum Institute and Covaxin of Bharat Biotech. Serum Institute is expected to produce 7 crore vaccines in May while Bharat Biotech is expected to produce 2 crore doses. Serum Institute’s capacity is expected to go up to 10 crore vaccines by June and Bharat Biotech’s to 6 crore by July.

Sputnik vaccines have already started coming in and possibly, Pfizer may come soon too. Doors maybe opened for other vaccines to come in. We have no good indications of how these vaccines will ramp up in India and hence some assumptions have to be made. Table 2 has the details of the assumptions.

None of the numbers in Table 2 are official and hence need to be taken as guesstimates. These numbers may be subject to significant changes. For the two vaccine manufacturers based in India, these production numbers may not represent production only for India; however, for the purposes of this analysis, we assume that these numbers pertain to India. While these are production or import capacities, we take these to also be the sales numbers and the doses that are injected to the citizens. This is a reasonable assumption as the inventory stock is not expected to be very high.

This also assumes a system that is able to handle all the load rising up to 30 crore doses a month – or a crore doses a day. Creating the distribution capacity is as much of a challenge as the availability of vaccines.

With these assumptions, it is possible to draw out a schedule which suggests that India will be able to vaccinate its adult population by the end of this calendar year. It is going to take time to vaccinate all but a pathway to vaccination for all can be seen. Hopefully herd immunity will be achieved significantly before that. We note that this is a possible outcome based on availability and distribution capabilities – it is not guaranteed.

Many vaccines, many segments, many prices

This brings us to the third important development – the freeing up of prices. This means that various vaccines will be sold at various prices to various segments. Now, we have data based on company pronouncements for the two Indian manufacturers on what they plan for charge each segment. We are still in the early stages of the newer vaccines coming in and there is no clarity on the prices that they will charge.

For sake of simplicity, we assume that their prices will be similar to the price of Covaxin. One could argue that there is a semblance of price stability across the three segments that have been defined (central government, state governments, and private sector). Prices may not remain stable through the course of the year and across segments – they could change materially depending on demand-supply dynamics. For the sake of this calculation, we have taken stable prices across segments and time.

It is possible that some vaccine manufacturers and suppliers will focus on only one of these segments. Some may prefer to deal with a large, committed buyer like a central or some state governments, or some may prefer the higher-paying but more difficult to reach private segment. Again, these strategies can change with time and with market realities. If one supplier struggles with supply or there is suddenly a large import in a month or two, that could change the market dynamics with respect to prices and market shares. Again, for the sake of simplicity, we have assumed that of all the production and supply, central government will buy 45% of all the stock, the state governments cumulatively 35% and the private sector will account for 20% of the volumes.

The important point to note here is again that this is one simplified output – the idea is to get a reasonable mid-point estimate of the situation at hand. The actual outcomes can be materially different.

If we put together all the data points that we now have, it is computationally easy to derive the market potential of the various vaccines. We multiply the expected doses sold in a segment with the price for that segment to estimate the revenue for the supplier. Table 3 has all the details.

These numbers are not cast in stone – they can change dramatically based on market realities of prices and quantity supplied to various segments. It is important to note that these calculations are directional in nature and should not be treated as certain in any manner. We should continuously re-evaluate these numbers in light of the evolving realities. It would hence be too simplistic to look at these numbers as they exist currently to come to any specific conclusion about a vaccine or a manufacturer.

Public policy aspects of the vaccination

The above analysis helps us come to a reasonable estimate of the expenditure that various segments can expect to do over the course of the year. Note that this is only the cost of the vaccine: there will be other significant costs of distribution, delivery and administration. This is hence the lower-bound of the costs that these segments would face.

The overall cost of just the vaccine, if these prices and quantities were to hold, is expected to be slightly less than Rs 80,000 crore. The central government will bear around a sixth of this cost, the state governments cumulatively close to a third, and the private sector could end up footing more than half of this bill. Again, this is just the cost of the vaccine – there will be more costs that each segment will have to bear.

If we compare these numbers from the perspective of the economy, it suggests an overall cost of ~35 bps (or 0.35%) of the GDP (which is estimated to be Rs 222 lakh crore in FY2022). From the perspective of the fiscal deficit of both the states and the centre combined, the impact of only the cost of the vaccine is expected to be less than 20 bps of the GDP. The private sector will also see a similar cost – it is possible that a large proportion of the doses at private prices will be taken by people who can afford the cost.

This exercise has been treated as a one-time exercise in vaccination. In case the flu vaccination becomes an annual ritual, there will be important implications on the health sector spending by both the private and the public sector. It is too soon to say if this will be required: we will learn more as we battle ahead with Covid-19. If this is going to be a periodic requirement, questions of inter-generational equity will again arise: should the old be given their annual dosage before all the young have been inoculated? Note also that this exercise is limited to all adults only – if the vaccination is required for those below 18, it could add another 35 crore people (and 70 crore shots) to the demand. We will need to solve for these issues when we come to them.


Given the limited cost implications and the possibility that India could vaccinate its entire adult population within this calendar year, India should charge ahead full throttle on the vaccination drive. Getting the various things need to fall in place: availability of vaccines, the distribution logistics, the ability to handle around one crore vaccinations a day, finding trained staff, etc., these should be the next set of priorities after the three big steps of April.

The views are personal.

1 Comment on “Modelling the vaccine market in India

  1. Pingback: Learnings from the digital Co-WIN app – Akhilesh Tilotia

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