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Profiting from Covid-19? Gujarat firm gets edge over others

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Posts on Facebook by a number of Indian netizens are pointing to a possible scam in which a Gujarat based company seems to have been handed over a monopoly for producing Covid-19 testing kits.

The company in question is Cosara Diagonistics promoted by Mohal Kartikeya Sarabhai, whose father Kartikeya Sarabhai has been caught on camera garlanding visiting US President Donald Trump and his wife Melania at Ahmedabad airport (see picture above) in presence of Prime Minister Narendra Modi. 

On March 20, 18 firms got permission from the Indian government to get their testing kits validated by National Institute of Virology. This included the reputed Swiss firm Roche.

A day earlier on March 19, the Gujarat-based firm CoSara Diagonistics had already received an approval to start manufacturing Covid-19 test kits. This firm is a collaboration between a US-based company Co-Diagnostics Inc and the Ahmedabad-based  Ambalal Sarabhai Enterprises Ltd (ASE).

Some of the other 18 firms who were waiting to get their Covid-19 test kits validated said that these would be sold at a price of 400-500 per kit — far cheaper than imported ones that Cosara will offer.

CoSara, on the other hand, refused to publicly divulge the cost of their Covid-19 kits.

“We are not giving the price right now because it is still dependent on various factors. It will be lower than whatever the imported prices are right now. Currently, logistics costs are higher because the cost of materials needed for these kits is increasing day-by-day due to huge global demand. The swing is too high for us to come to a price point until we get the validation from NIV,” Sarabhai told Business Standard.

While its US partner CoDiagnostics will share its research and technology of molecular diagnostics for testing Covid-19, among other diseases, the Indian partner will manufacture the same at its facility in Ranoli, Vadodara.

CoSara’s plant can churn out 10,000 diagnostic tests or kits per day. Moreover, compared to diagnostic results currently taking around two days, the company’s tests can deliver results in 150 minutes.

Then came the sudden turn of events.

On 21st March, a day after the 18 other firms got their permission,   the Health Ministry issued guidelines allowing private labs to conduct Covid-19 tests. The cost of these is capped at a whopping 4500 rupees.

These guidelines have one caveat – Only testing kits approved by the US FDA/European CE can be used.

That means only kits manufactured by Ahmedabad-based CoSara can be used for Covid-19 testing.

So after allowing 18 firms to test their kits for production, the Modi govt. suddenly changed guidelines to favor ONLY one Ahmedabad company (whose testing kit cost is unknown).

Why is a Gujarat-based firm being provided a monopoly on Covid-19 testing kits by suddenly tweaking guidelines overnight?

Why are 18 firms who can produce testing kits for very cheap prices being blocked by these sudden new guidelines? 

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