The government plans to invest around ₹550 crore in HLL Biotech Ltd’s complex near Chennai, a senior health ministry official said. HLL Biotech is a subsidiary of state-run HLL Lifecare, in which the government plans to divest its entire stake.
The integrated complex, designated as a ‘project of national importance’, is seen as pivotal to the government’s flagship immunization program, manufacturing vaccines to fight measles, hepatitis B, human rabies, Japanese encephalitis, among others.
First proposed by the United Progressive Alliance, the government had in 2008 appointed Denmark-based NNE Pharmaplan as the independent consultant for the then- ₹600-crore project. The first phase of the project was due to be commissioned as far back as 2010, but has been struggling due to a financial crunch.
The central government has not invested fresh capital into the company as its parent HLL Lifecare, the manufacturer of Moods condoms, is slated for divestment, another health ministry official said. Currently, a proposal for demerger of HLL Biotech as well as another subsidiary of HLL Lifecare, HLL Medipark, is pending approval from the Ministry of Corporate Affairs (MCA).
Once the approval comes through, then the central government plans to invest ₹500-550 crore into HBL (HLL Biotech), out of which around ₹300 crores will be used for repayments to State Bank of India as well as another ₹100 crores for other outstanding payments, the first official said, adding that the approval has to come from the finance ministry, a process that could take up to a year.
Besides the funds infusion, the government also plans to rope in a private company for the management of the vaccine complex and to provide the technology and seeds for producing vaccines, the official said.
“The government may consider selling a small stake in HBL to the private player which manages the complex, but the majority of the stake will be with the government so as to ensure that the country has vaccine security," the official said.
HLL Biotech chief executive officer V. Vijayan did not reply to emailed queries on the matter, while his mobile phone was unreachable.
“I feel the IVC (integrated vaccine complex) project is a white elephant. It would have been more feasible to procure vaccines from existing facilities which have been upgraded to meet WHO standards," Madhavi Yennapu, senior principal scientist at the National Institute of Science, Technology and Development Studies, said.
Two officials from the vaccine industry, who were part of a delegation that visited the facility, said that though the plant is in line with global standards, the massive amounts of capital needed in the facility would drive up the costs of production.
“Most vaccine plants in India are fully depreciated. A new plant would find it very difficult to make vaccines at current prices from old plants," one of the industry officials said.
Another issue with the plant is that the government set up the plant without first choosing the technology, the industry officials said.
“Now, if the government wants to have a private partner to run the plant, it will only have to choose a company that manufactures using the technology that the equipment at the plant can use," the second official said.
A Parliamentary Standing Committee chaired by Amar Singh had, in an August 2010 report, raised concerns over the plant's commissioning due to the “lack of experience/ expertise" of HLL Lifecare.It had also suggested revival of three government facilities--Central Research Institute at Kasauli, the Pasteur Institute of India at Coonoor, and the BCG Vaccine Laboratory at Chennai.
The government had later upgraded the facilities. But as things stand the government is not procuring any vaccines from these plants, according to vaccine experts. Some experts claimed that it was because the government is focussing on the proposed integrated vaccine complex.