EM Thematic January 04, 2021 / 09:47 am UTC

India: Vaccine Approvals Pave the Way for Economic Outperformance

By Charu Chanana

India’s fast-track approvals for two vaccine candidates – along with its experience in running large-scale immunization programs – are likely to make it a front-runner in vaccine rollouts in EM Asia. Although concerns regarding efficacy and distribution efficiency remain, we see a case build for economic outperformance amid a boost to confidence and consumption rebound this year. 

India got a leg-up in the race for vaccine with emergency approvals to the jabs developed by AstraZeneca with Oxford University (Covishield) and by local firm Bharat Biotech (Covaxin). Statewide as well as nationwide dry runs have also added further confidence in India’s plans to inoculate about 300 million people on a priority list this year. Both these vaccines can be transported and stored at normal refrigeration temperatures, making it easier to transport to rural areas with lack of infrastructure.

Covishield is being produced locally by the Serum Institute of India, the world’s largest vaccine manufacturer. It has stockpiled 40 million to 50 million doses and plans to produce 300 million doses by July. Covaxin approvals, meanwhile, has raised concerns over its fast-track approval without the third phase of clinical trials. 

India has capitalized on its large vaccine manufacturing capacity by entering into advance purchase agreements with large manufacturers, without spending huge amounts of money to preorder vaccines. This helps to boost confidence in the demand recovery, even as India’s coronavirus caseload remains second only to that of the U.S. with more than 10 million infections. The country has also confirmed the presence of the new strain of the virus, which has led to worries about a possible resurgence of infections.

India’s experience in running large-scale immunization programs will also be valuable in dealing with the pandemic. An election-like distribution system is expected to be followed. For seamless tracking and delivery of vaccine doses, India has developed a digital platform called Co-WIN, which will maintain a database of recipients, cold-chain points and post-vaccination symptoms. The government plan for vaccination will take nine to 12 months to complete.

We believe a fast-track vaccination programme will put India ahead of other EM Asian economies in terms of consumption rebound in 2021. A good monsoon and focus on structural reforms to improve the ease of doing business, as well as the stimulus measures announced, will further underpin a broad recovery.

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Analyst Certification
I, Charu Chanana, the lead analyst certify that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further certify that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.