Vaccine economy: The bigger picture of primary healthcare
Vaccine economy

Vaccine economy: The bigger picture of primary healthcare

The vaccination of people against the pandemic is one sure way to come out of the economic steadfastness we have seen in the run-up to the opening of the sectors in the post lock-down phase, in most economies of the world, India is no exception. The speed with which vaccination can be implemented has several objective functions, some of them conflicting with each other. Take for example, the additional fiscal burden on one hand and the possible other conflicting priorities at the same time.

The fiscal calculations is made simple by the budget outlook of Rs 35,000 crore set aside by the vaccine distribution and administering cost for this year, which comes to Rs 700 per person for 50 crore of the population, which is the critical mass of people in the target age groups, that are vulnerable. As a base cost this is quite an accurate prediction.

However, supply chain costs have to contend with a time element and wastes cannot be recovered; for example if large parts of the supply chain idle at some point of time, these costs cannot be recovered by additional out-stretched means. If one goes by the relative capacity utilisation of vaccine centers then a majority of the centers are at close to a quarter of the utilisation that it is supposed to be planned on, while a minority of centers are at over-capacity.

This is the classical problem of demand shaping. The core of the problem is that demand must be shaped such that a supply line will operate at its capacity level efficiently, both in terms of economies of scale but also in terms of density. It is like minimising the cost of an additional supply, given that the system is optimised. For a fully optimised supply line, this additional cost is close to zero.

So the vaccine cost is actually the cost of an optimised supply line and it is just not the efficiency of the last mile, but the combined effort of ensuring that demand and supply matches to the optimised capacity for majority of the administering points. This would mean promotional campaigns to ensure that all points of service have adequate number of recipients lining up for the vaccine on time while the supply lines are planned to match it.

At India-wide deployment level, this is no small task, it is the biggest experiment in supply chain planning and execution. India has actually done well in the past in the universal immunisation programmes to inoculate little more than five crore people per year. But that is mostly pregnant women and infant children, which is an even more challenging task. To now cover a more diverse cross section of people with a time bound plan, there is a requirement of supply chain planning of the vaccine that must match demand with supply at every stocking point, which would mean precision planning of logistics together with storage systems working in alignment. Bringing target segments to line up at the vaccine center is as difficult a task as planning the supply line for it.

Actually this is a great opportunity to test and augment the entire capacity of our public health infrastructure and systems, including people capability. If India’s primary health sector is at 2 per cent of the economy, the pandemic and the vaccination drive has the potential of adding a couple of percentage points to it. The question is whether the effort can be made such that the system is upgraded as a sustainable proposition and not taken as a one time push. The former will ensure that we create people capability in every aspect of the supply chains, from cold storage to cold storage distribution points, mobile storage and temperature protocols that end up producing zero waste in the system. These efficiencies would depend on people capabilities alone.

The procurement to planning of vaccine distribution in vaccine supply chains will create the backbone of a new primary health infrastructure where many parts of the system talk to each other to create strong service delivery response that the countrymen will be proud of. It is not fiscal maths or pandemic response, but we should be looking at the bigger picture for a sustainable future.


Procyon Mukherjee is an ex-Chief Procurement Officer at LafargeHolcim India.

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