In an exclusive, The Lede finds out what happened behind the scenes in terms of the rapid test kits from China
It was around midnight on April 17 when a man was scurrying at the Indira Gandhi International Airport in Delhi.
He was working fast to send off a consignment to Tamil Nadu.
At this point, another man arrived. He hailed from Delhi. When he saw what was going on, he went livid.
An argument erupted at the airport. As the Delhi man stormed off, furious, the consignment left to the tarmac of Kamaraj International Airport in Chennai.
This argument would set off a chain of dramatic events that would then cause a furore in India – allegations of corruption by the Centre and by states would be bandied about and a million questions would be asked of authorities.
It would also eventually become a thorn in diplomatic relations between India and China.
So what did the two men fight over? The answer: 24,000 rapid antibody test kits or RAT kits from a Chinese manufacturer called Guangzhou Wondfo.
The man who wanted to send the consignment over to Tamil Nadu was employed with the importer of the kits, a Chennai-based firm called Matrix Labs. The angry man from Delhi was employed with Rare Metabolics, a distributor who had exclusive rights over the kits imported by Matrix Labs.
And why did they argue? Because Matrix Labs had committed to yet another distributor called Shan Biotech, a vendor of the Tamil Nadu government, to supply 50,000 RAT kits from Wondfo.
This, according to Rare Metabolics, was a violation of the agreement of exclusivity that both firms had signed.
By around March 25, the Indian Council of Medical Research (ICMR) had approved the RAT kits of the Chinese firm Guangzhou Wondfo.
As per the press note issued by the ICMR on April 27, it had originally attempted to buy the test kits directly from the manufacturer – but due to hurdles such as the quote being in dollars and lack of guarantees for shipments arriving in good condition – the ICMR decided to issue a tender for the kits.
Contrary to what has been reported in other publications, Matrix Labs is not the exclusive distributor for Wondfo in India. At least three other companies distribute Wondfo products – Abbott Pharma, Cadilla and Mylan. There could be others as well.
In the tender, according to the ICMR’s press note, four bids were received – Rs 1204, Rs 1200, Rs 844 and Rs 600. The winner of the contract was Matrix Labs which quoted the least amount per kit, Rs 600.
Persons privy to these firms told The Lede that Matrix Labs, a company with a Rs 30 crore turnover, was unable to put up the money needed to import the products upfront. They turned to Rare Metabolics, a Delhi-based distributor, for support.
“There is no bank support at the moment so this deal had to be done. This is normal in the industry,” stressed a person who works in the sector. “A group of people will get together and put in money, mark up the imports and sell at profit. Many firms don’t have enough cash to put upfront.”
Rare Metabolics is yet to respond to The Lede and therefore we do not have their side of the story. This report will be updated if and when the firm responds.
What did happen though was a partnership. Rare Metabolics would come in with money and Matrix Labs which had the import licence and had won the bid, would bring in the RAT kits.
Once the kits were in India, they would be distributed by Rare Metabolics through at least one sub-contractor, Ghaziabad-based Aark Pharmaceuticals.
But this happy marriage was not to last very long. Chennai-based Shan Biotech entered the picture on behalf of the Tamil Nadu government.
Shan Biotech wanted to purchase 50,000 test kits from Matrix Labs.
Matrix Labs spoke with partner Rare Metabolics. The latter declined, stating that it would supply to ICMR only.
But the employee of Matrix Labs was annoyed – it was his home state asking for test kits. How could they be denied?
Matrix then went right ahead and handed over part of the first tranche of the consignment, comprising 24,000 test kits to Shan Biotech, risking the agreement with Rare Metabolics.
Rare Metabolics decided to go to the Delhi High Court.
And that is where the numbers came tumbling out.
On April 24, the Delhi High Court ordered that the price of each test kit from Wondfo would be capped at Rs 400 from the initial Rs 600.
It also came to light that Matrix Labs had imported the kits at Rs 245. Rare Metabolics, via Aark Pharmaceuticals, then sold it to ICMR at Rs 600.
The total figures, as per the Delhi HC order, are as follows:
Matrix Labs' import cost (for 5 lakh kits): Rs 12.25 crore
Buying price of Rare Metabolics: Rs 21 crore
Buying price by ICMR: Rs 30 crore
Hollers of “war profiteering” abounded. “But this is normal practice, this is how every drug, every product is imported. Every company has to pay salaries and other expenses, don’t they?” asked the source who did not wish to be identified. “Think about the other companies who had bid – they quoted double what Matrix did. Their profit margins would be so much higher if they had won the bid,” he said.
By this time, the ICMR had placed yet another order for two lakh RAT kits, this time from a Chinese manufacturer called Livzon. This order was placed via Gurgaon-based Genes2Me. These kits were ordered on April 07 and priced at Rs 795 per kit, despite a slash in GST to 5%.
Andhra Pradesh purchased kits from a South Korean firm at Rs 730 per kit, Kerala too placed orders at Rs 699 while Karnataka has placed orders for kits at a rate of over Rs 700 apiece. It is not clear which firms the Kerala and Karnataka governments have bought RAT kits from.
Chhattisgarh placed its order from a South Korean firm for Rs 337 a kit after the Centre slashed customs duty and health cess on the equipment.
Neither ICMR, nor the state governments have made any payments for these RAT kits so far.
The RAT kits are very different from the RT-PCR kits and each is used for a different purpose. The RAT kit is a blood test that checks for antibodies – higher antibodies means presence of an infection and vice versa.
The RT-PCR test, on the other hand, isolates the genetic material of the COVID-19 virus and its results are far more trustworthy.
So why do we need RAT kits at all? These are used to find out the magnitude of herd immunity if the disease outbreak goes out of control and to check the magnitude of community spread.
RAT kits are only indicative, as scientists and governments the world over have consistently insisted. They are not to be taken as proof of existence or otherwise of the virus in a person.
The ICMR, on April 27, issued a press release asking states to return the RAT kits.
But many questions remain.
1) What specifically do “faulty kits” and “wide variation” mean in a precise scientific sense?
2) Has ICMR checked whether states have used RAT kits only for surveillance?
3) Has ICMR checked whether state government officials have handled the RAT kits properly?
4) How did National Institute of Virology, Pune approve these kits in the first place?
An email questionnaire sent to the ICMR has not received a response.
The Lede will update this report if and when it arrives.
As the lockdown is all set to be tapered down, experts say it is imperative for states to test on a much wider scale. The RAT kits were meant for exactly that purpose.
With the ICMR recalling these test kits, it also needs to offer an alternative very soon.