The war between the two top biotech companies in Hyderabad, Shanta Biotechnics and Bharat Biotech International, has taken a new turn with both the companies going in for appeal to a Division Bench of the AP High Court against the single judge's order in the case relating to the supply of Hepatitis-B vaccine to the AP government for its Universal Immunisation Programme in the state. The case is listed for admission on Wednesday.

The state government procures the vaccine from WHO pre-qualified companies and Shanta is the only Indian company, which has been certified by WHO in July 2002. The programme is partly funded by the Bill and Melinda Gates Foundation. Till now the vaccine had been imported through the UNICEF from manufacturers approved by WHO only.

The state government's move to procure the vaccine from Shanta had been challenged by Bharat Biotech International, another major manufacturer of recombinant Hepatitis-B vaccine, in the AP High Court, seeking its intervention. Its contention was that the WHO pre-qualification was unjustified and was intended to favour Shanta.

The AP government floated a tender with WHO pre-qualification as the requisite specification and in the tender announcement both Bharat Biotech and Shanta Biotechnics participated in the bid. Bharat Biotech quoted Rs 11.45 per dose of the vaccine against Rs 23 quoted by Shanta Biotechnics. Simultaneously Bharat Biotech went to the court seeking its intervention.

In his order, the single judge observed that when there is a local regulatory agency specification, was there at all a need to go for WHO specification.

While the government was aware that only Shanta had WHO qualification, where was the need to float a tender, and instead they should have negotiated for a cost-effective price. Going for a tender appeared to be arbitrary and irrational.

The court also asked the government to include all those who are qualified for the bid, suggesting to go in for international tender.

Varaprasad Reddy, managing director of Shanta Biotechnics, told Pharmabiz.com that the company had invested more than Rs 2 crore for the upgradation of the plant in order to comply with WHO norms. The plant had undergone rigorous tests by a WHO team and obtained the certificate, whereas Bharat Biotech had failed to qualify for the certificate. According to Reddy, Bharat Biotech had no right to challenge the contract after it failed to get WHO pre-qualification.

As regards the price, Reddy said UNICEF imported the vaccine at 47 cents, equivalent to Rs 24 per dose. Shanta had reduced the price by 12.5 % to around Rs 23 per dose. He said Bharat Biotech had quoted an abnormally low price to embarrass both the government and Shanta Biotechnics. Dr Krishna Ella, Chairman and Managing Director of Bharat Biotech, told Pharmabiz.com that the WHO pre-qualification was a ploy to eliminate local manufacturers. He said BBIL's vaccine had been tested and cleared by India's regulatory authorities and was being used by several Central and State government agencies, including ESI hospitals. If WHO pre-qualification was essential, what was the need for national regulatory agencies. They would become redundant if every state government insisted on WHO certification. He said the prevailing price for a dose of local vaccine was between Rs 10 and Rs.12.

Even Shanta had entered into a contract with the Haryana government recently to supply the vaccine at Rs 10 per dose. Then, why the same company was charging the AP government Rs 23 per dose. Is it not taking advantage of having a monopoly with the WHO pre-qualification? Interestingly, Shanta Biotech has offered the Haryana government the vaccine at Rs 832 per 10ml vial with a discount of 73 per cent (Rs 607. 36) which would be given in the shape of free vials. This makes the effective rate at Rs 224.64 per vial of 10ml, or Rs 22. 46 for a vial of one ml or Rs 11.23 for a dose.

To this, all that Shanta Biotechnics had to say was that the company offered some free doses as it had a policy of giving 10 per cent of its annual production free. Bharat Biotech might have calculated the free doses on the quoted price.

Meanwhile, the state government has applied for continuation of customs duty exemption on imported Hepatitis-B vaccine, auto-disable syringes and disposable syringes. The exemption was granted in the year 2001-02. This is an indication that the government will go in for import of the vaccine, ignoring the local suppliers.

According to a letter from State Welfare Commissioner Nilam Sawhney to T R Rastogi, Joint Secretary, in the Union Finance Ministry, there was an acute shortage of Hepatitis-B vaccine in the country and auto-disable syringes. But there cannot be a shortage of the vaccine as both Shanta and Bharat Biotech have installed capacities of 100 million doses each per year.

According to Sawhney, the government had made efforts to procure the vaccine locally in 2002, but the court ruling had stalled the local procurement. If UNICEF was authorised to procure the vaccine it might ask Shanta, being WHO-qualified, to supply the vaccine. Though it would be paying a higher price to Shanta, it would be still cheaper when compared to the imported vaccine.

Meanwhile, Shanta received another blow from Pfizer with which it has a 15-year marketing agreement. The US multinational buys Hepatitis-B vaccine from Shanta and markets it under its brand name Hepashield. Pfizer has decided to withdraw Hepashield from the market because of falling profit margins and increased competition among local manufacturers. There are six or seven leading manufacturers of Hepatitis-B vaccine in the country and demand for the vaccine has been coming down sharply in the last couple of months. Shanta had supplied Rs 7 crore worth of Hepatitis-B vaccine to Pfizer last year.

However, the company was able to get a big contract from UNICEF to export the vaccine to East European countries. A consignment of 1.5 million doses has already been supplied to the world body.