Delhi High Court has ordered that rapid antibody kits used to test Covid-19 cannot be sold at more than ₹400 per kit, after a dispute of pending payments between two companies Rare Metabolics Life Sciences and Matrix Labs revealed that companies were charging high profits for supplying these kits to the government.

“Profit mark up of 61 per cent which is ₹155 on landed cost price of ₹245 is much on higher side and in any case more than sufficient for the seller, for kits or test to be made available in India for urgent extensive tests through the country, especially in these present extraordinary circumstances of the worldwide pandemic,” HC has observed.

Rare Metabolics and Matrix Labs along with intermediaries had entered into an agreement that Rare Metabolics will be an exclusive distributor of chinese-make Wondfo kits, which will be imported to India for supply.

Indian Council of Medical Research (ICMR) placed an order of five lakh kits at a price of ₹600 through intermediaries of Rare Metabolics, whose names are not in public domain, at a total value of ₹30 crores. Matrix Labs being the importer, obtained a license to import the medical material from the Drug Controller General of India (DCGI).

Cost break-up

Rare Metabolics has paid ₹12.75 crore to Matrix Labs for five lakh kits, which it claims covers all the cost for import -- if per kit costs US$3 (₹225) plus ₹20 as freight cost per kit, a total of ₹245. Rare Metabolics also stated in HC that Matrix has to now supply these goods to an intermediary for ₹21 crore, at an apparent profit of 45 per cent of ₹7.75 crore. The intermediary will receive an amount of ₹30 crore plus Goods and Services Tax from ICMR, for a similar evident profit of ₹9 crore, despite no value addition to the imported medical material.

Close to ₹18.75 crore will be shared by the intermediaries because actual costs paid to supplier or exporter is approximately only ₹11.25 crore, HC has observed.

The companies also stated to HC that ICMR is yet to make payments for first consignment of ₹2.76 lakh kits which were delivered to ICMR on April 17, as the government has stated that payments will be made after kits have met requisite standards of the ICMR. ICMR is currently evaluating these kits on field, it has stated.

Apart from ICMR, Matrix Labs also submitted to HC that it has received an order for supply of 50,000 kits from Tamil Nadu, through an intermediary dealer Shan Biotech and Diagnostics, at ICMR approved rates of ₹600 per test. “Of this order, 24,000 has been supplied and 26,000 are yet to be. Let the same be supplied, the moment kits reach India, directly to Tamil Nadu,” HC has ordered.

“For people to be assured that the pandemic is under control and for governments to ensure and for agencies engaged in the frontline battle to safeguard people’s health, more kits/tests should be urgently made available at the lowest cost, for carrying out extensive tests through out the country.

Public interest must outweigh private gain. The list between the parties should give away to the larger public good,” the order states.

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