From tiny companies, to politicians to Bollywood folk, everyone wanted in on the RAT kits business
Everybody loves a good pandemic, it seems! Just like war.
And with the ineffectual procurement policies by India’s nodal body for dealing with COVID-19 – the Indian Council of Medical Research or ICMR – the attempt at profiteering began in right earnest.
With its grip severely loosened over procurement of rapid antibody testing kits or RAT kits, the ICMR has simply banned all and shut itself in.
But this is a long story and tell it, we must. So let us begin at the beginning once again.
There were a total of three purchase orders for the RAT kits issued by ICMR. The first was in response to a tender issued on March 25 for 10 lakh kits.
A Ghaziabad-based firm called Real-Gene Labs got the order. This firm was a direct importer of the kits of a Singapore based manufacturer called Sensing Self.
The ICMR wanted 10 lakh kits at the rate of Rs 400 as quoted by Real-Gene Labs.
Unfortunately, the order could not be delivered as the manufacturer did not have the capacity to meet it.
Then came the second tender on March 27 – this is the controversial one that closed in a few hours, as reported by The Lede earlier.
This tender was for five lakh testing kits. The lowest bid was for Rs 600 and the purchase order was issued to Aark Pharmaceuticals for the same.
Aark Pharmaceuticals was a sub-distributor for Rare Metabolics. Rare Metabolics had an exclusivity agreement with Matrix Labs who had won the bid to distribute the kit.
The manufacturer was Chinese firm Guangzhou Wondfo.
Now for the third purchase order which was issued on April 08. This was for two lakh kits manufactured by Chinese firm Livzon Biotech.
The order went to Genes2Me, a Gurugram-based firm at a rate of Rs 795 per kit.
This Livzon order arrived in toto – all two lakh kits were flown in to India.
But deliveries, as dictated by the ICMR, did not come within the prescribed one week. Both the PO as well as the tender conditions were that the kits had to arrive within a week.
“Without listening to our side, they mentioned all terms,” said an importer who did not wish to be named. “They did not even think about international flight availability. They thought all companies will honour immediately as soon as they place the order. China companies told us, your Indian government is placing orders late and taking late decisions, we can’t help it,” he said.
However, after the first tranche of 2.76 lakh kits from Wondfo and the full delivery of kits from Livzon arrived, the ICMR decided to recall them from the states and to ban both companies altogether citing “faulty” kits and “wide variations”.
Since then, i.e. April 27, ICMR has not bought a single RAT kit from any company.
But the confusion caused by a total lack of checks and balances in tenders, of haste, of something akin to incompetence derailed the nation’s testing strategy.
Worse, this spread to many state governments and caused chaos.
Worst of all, the ICMR’s lax, ill thought out policies led to the mushrooming of a large number of firms unconnected to the diagnostics industry but greedy to get a little bite of the pie.
Many state governments followed the ICMR suit in issuing similar tenders for RAT kits.
Following a bad precedent was never going to end well.
Take the example of Uttar Pradesh. A tender was issued on April 04 for 10 lakh RAT kits by the UP procurement body.
A total of 17 firms bid for the order.
But guess what? Not a single one of them won the bid. This was because not even one of these firms had stock of the RAT kits. The UP government found out that those who claimed to have stock, did not, in reality have the kits.
Similarly the Bihar government issued notice on April 10 asking firms to bid for 50,000 RAT kits within three days.
The response was overwhelming. 51 firms submitted bids claiming to have varying amounts of existing stock.
The Bihar government ultimately had to cancel all of these because the firms did not, in reality, have any stock.
There are interesting names in the Bihar bid list as well – Metallicz Media for one, sounds more like an entertainment provider than an importer or distributor of pharmaceutical devices. Balaji Agro Tech too does not seem to have much to do with diagnostics. Hitro Energy Solution too seems more like it would be comfortable bidding in the state’s power utility.
“You will not believe how I have been harassed in the past couple of months,” said an industry insider who specialises in RAT kits. He preferred anonymity.
“Politicians have been calling me. All sorts of people have been calling me. Even people from Bollywood are calling me. If I tell you the name you will be shocked but I cannot reveal it. You will think why a Bollywood person wants to import rapid test kits! It is all about money. They say they can get a drug licence easily and they just want contacts with the Chinese or the South Korean manufacturers. Anybody with some money now sees an opportunity in this crisis,” he rued.
The same was on display in Andhra Pradesh when the state placed an order for two lakh rapid test kits manufactured by SD Biosensor, a South Korean firm.
The order which was placed on April 07 arrived 10 days later, on April 17.
A jubilant chief minister YS Jaganmohan Reddy even tested himself with the kit.
The kits were priced at Rs 730 and the distributor that got the order was a Hyderabad-based firm called Sandor Medicaids.
Shortly thereafter on April 17, Chhattisgarh’s health minister, TS Singh Deo tweeted victoriously that they had closed a deal for 75,000 RAT kits from the same manufacturer for Rs 337 per kit, almost half the price of AP’s kits.
A furious Andhra government invoked a clause in its purchase order which stated that if it was found that the same kits were sold cheaper elsewhere, only the cheaper rate would be applicable.
When queried about what exactly had happened, a senior bureaucrat in Andhra told The Lede: “We had initially contacted SD Biosensor. They told us to contact the distributor. So we procured from them. Only one lakh of the RAT kits have come so far and we are using them. Another lakh has to come. The company is saying they will manufacture in India and give it to us. We do not have a firm timeline as to when we will get the rest,” he said.
Tamil Nadu simply followed the ICMR rates and placed orders for the Wondfo kits through an existing vendor. There was no tender issued.
It was a consequence of this order that a fight erupted between the importer of Wondfo kits – Matrix Labs – and his sole distributor Rare Metabolics.
This fight ended in the Delhi High court, with price mark-ups being exposed. The court ordered that the price of the Wondfo kits be brought down to Rs 400 from Rs 600 per kit.
Both the ICMR and the Tamil Nadu government swiftly reduced the price, though payment had not been made thus far. Some days later, the ICMR, taking note of complaints from Rajasthan, Punjab and West Bengal, decided to ban and recall the Wondfo kits.
The ICMR now has on its hand a big problem of influential and wealthy individuals and firms which do not have a remote connection to the field of diagnostics, all jostling for orders.
The larger problem though is of assured supply. With a global glut in RAT kits due to demand abroad, the largest and most reliable producer is China. Even American firms sell RAT kits that are either manufactured in China or whose raw materials are imported from China.
A list of 89 approved suppliers for RAT kits, as on May 01, has been put up on the ICMR website. A quick perusal of this shows that the majority of the importers as well as a majority of the manufacturers are small and incapable of meeting India’s demand.
Another list of disqualified suppliers numbers 88.
Small firms cannot put up the upfront payment needed to procure the kits from abroad, either. This is partly what happened in UP and Bihar, as we have already seen.
The ICMR did not respond to queries about whether it is addressing the problems in procurement strategy and about the reason behind banning the Chinese test kits.
All eyes are on ICMR. The pressure is piling up for the nodal agency to speak up and reassure Indian citizens.