COVID-19: Prices of RT-PCR test kits crash over 80%, but not many are happy

When GeneStore, the French diagnostics company, launched its RT-PCR test kits in India in September, it had priced a kit at Rs 199. It was a dramatic drop from the Rs 1,200 one kit cost in April.

The French company’s ‘GeneStore Détection Expert’ at Rs 199 was the most affordable test kit at the time. GeneStore claims it test kits detects SARS-CoV2 virus in less than one hour with almost-100-percent accuracy.

RT-PCR (Real-time reverse transcription polymerase chain reaction) kits are considered the gold standard for COVID-19 tests due to its high sensitivity, compared to the rapid antigen tests that throw more false results.

GeneStore then set up a facility in Gurugram, India, to deliver over 2 million test kits per month. The company sources raw materials from its manufacturing site in France.

Around March-April, the retail market price of the kits was Rs 1,200. Now, it has fallen by over 80 percent. Recently, the Maharashtra government procured them for Rs 150 per kit, the lowest price so far.

“The RT-PCR test kit component used to be 50 percent of the total cost of RT-PCR testing. Now it has dropped to 10 percent,” said an executive at a test kit manufacturing company, who didn't want to named.

The price for the test has also dropped -- from up to Rs 4,500 in April to anywhere between Rs 1,200 and Rs 2,400 per test now. Experts say it will drop further.

One obvious reason is the number of players. It isn't GeneStore alone. There are about 100 companies, both domestic and overseas, small and big, competing to supply RT-PCR test kits as India ramps up testing for COVID-19, leading to a price war.

Another factor is the huge expansion of capacities undertaken by global raw material suppliers of enzymes and reagents such as Thermo Fisher Scientific, Promega Corporation, NEB, Bio-Rad, Qiagen and Takara Bio. This led to a drop in prices and a glut in the market.

For instance, Japan-based Takara Bio, one of the world’s leading molecular reagent and laboratories, has ramped up production by 50 times during COVID-19. The company now makes certain reagents in India -- at its facility in Delhi.

“What most companies in India do is that they buy the master mix from companies like us and assemble them,” said Harkaran Dhingra, Director, DSS Takara Bio.

“In the beginning, the pandemic was happening in multiple countries -- China, South Korea and Europe. The demand for testing there was much higher than in India. As COVID cases dropped in those countries, the demand shifted to India,” Dhingra said.

Early this month, Maharashtra returned 12.5 lakh RT-PCR test kits purchased from a private company, citing faulty results. The price war is leading to an unintended consequence -- dilution of quality.

Anubhav Anusha, Global CEO and R&D Head of GeneStore, says test kit manufactures can cut corners in two ways -- either by reducing the input of raw materials, maintaining borderline functionality, which is susceptible to higher failure rate, or downgrading the quality of raw materials by going to the low-cost raw material suppliers.

“It’s a challenge to maintain the quality at a low price point. Either you have to say I am willing to make a lesser margin, and still maintain my quality. On the flip side, if I want to make the same margin, at some point, you make compromises on quantity and quality of raw materials,” Anusha said.

“We are not into the price war game. Our focus is on maintaining quality of test kits,” said a spokesperson of Pune-based Mylab, India’s largest RT-PCR test kit maker.

Mylab sells at an average price of Rs 250 per test kit, and has a capacity to produce about 10 million kits.

After GeneStore launched its kit for Rs 199, Anusha had told Moneycontrol that they were able to cut price because of vertical integration and optimisation of raw materials.

“We use a blend of technological and business process optimisation. From a certain standpoint, you can optimise the quantity of reagents without compromising on quality that will reduce your costing and processing time,” Anusha said.

“The second is reverse integration into the manufacturing process of raw materials, two common raw materials - the enzymes and synthetic polynucleotides or synthetic DNA and RNA used in test kits are manufactured at our facility in France. We are able to pass the entire margin benefit directly to the end user, which are laboratories,” she added.

COVID scene in India now

India has the second-highest COVID-19 cases in the world, with 75.5 million confirmed cases, and with 0.8 million active cases, as on October 18. The cumulative total samples tested by India, as on October 18, is 95 million. India has the domestic capacity to produce 1 billion RT-PCR test kits.

From just a few thousand tests in March-April, India now does about 0.86 million tests per day, as on October 18. About 40 percent of these tests are done with RT-PCR kits, and the remaining are rapid antigen tests.