Saturday, May 2, 2020

Gangland of testing kit hijackers

29 April 2020


Rahul Gandhi tweeted at 1.22 PM on Monday, 27 April 2020 an article published by Business Today exposing 145% profiteering in coronavirus rapid test kits sold to Indian Council of Medical Research (ICMR) and said “That any human being would try and profiteer from the immeasurable suffering of millions of his brothers and sisters, is beyond belief and comprehension. This scam is an insult to every Indian. I urge the PM to act swiftly to bring the corrupt to justice”.

          SARS CoV-2 Antibody test kits are being imported from China's Wondfo Biotech by India’s Matrix Labs. The original price of the kits is US $ 3 per test. Its landed price, including air freight of Rs 20 to importer is Rs 245 per test. Matrix Labs sold it to distributor Rare Metabolics Life Sciences at Rs 400 per test, charging a profit of Rs 155 per test. The distributor kept a profit of Rs 200 per test in its pocket and supplied the kits to ICMR for Rs 600 each. ICMR placed an order to buy 5 lakh kits on March 27 at Rs 600 plus GST per test.

Rare Metabolics delivered 2.76 lakh kits to ICMR; remaining 2.24 lakh are facing a payment dispute. Rare Metabolics intends to sell 1 million kits; order was placed with Matrix for 5 lakh kits. Matrix Labs has an order to supply 50,000 kits to Tamil Nadu also through dealer Shan Biotech and Diagnostics at Rs 600 per test. Of this, 24,000 have already been supplied; 26,000 more are yet to be delivered.

A legal dispute in Delhi High Court between the distributor and importer unearthed massive profiteering and over-pricing in kits sold to ICMR. Observing that 61 per cent mark-up on such test kits is on the "higher side" but "more than sufficient", the Delhi High Court single bench of Justice Najmi Waziri disallowed a 145% mark-up from landed price of Rs 245 to ICMR's purchase price of Rs 600 per test. Instead, Justice Waziri slashed price for every kit by 33 per cent from Rs 600 to Rs 400 per test. The order was against a petition by Rare Metabolics, the sole distributor of test kits imported by Matrix Labs.

The dispute was over release of the remaining 2.24 lakh kits--of the 5 lakh imported from China--to be sent to ICMR. Importer Matrix Labs had argued that it had only been paid Rs 12.25 crore of the Rs Rs 21 crore import. As per the agreement, the balance amount of Rs. 8.25 crores had to be first paid to the importer before any monies received from ICMR. Rare Metabolics filed a petition before the Delhi High Court seeking release of the remaining 2.24 lakh test kits so that they can be supplied to ICMR as per the agreement. The petitioner argued that under its bi-partite agreement with Matrix Labs, no other company can market them in India. The company also said that it has already paid Rs 12.75 crore, which cover the freight cost for 5 lakh test kits. Rare Metabolics assured that payment due to Matrix Labs will be remitted as soon as it is received.

Dispute arose after Matrix Labs demanded upfront payment, whereas the petitioner maintained that the payment could only be made after ICMR released the funds. The petitioner informed the court that the consignment of 2.76 lakh rapid antibody tests has already been supplied to ICMR for which payment is still awaited. This payment will be made after the tests meet ICMR's standards. ICMR has put the rapid tests on hold after detecting faulty results from the Wondo kits. The Chinese firm has denied that the kits are faulty.

The importing outfit Matrix Labs is located at Chennai’s Lakshmikanthammal Street, Mahalakshmi Nagar, Rajiv Nagar, Poonamallee. The firm was established in 2012 and claims to be a leading In-Vitro diagnostic company, offering Immunology, Microbiology services in India. It also asserts that it’s most lead generating products are Covid-19 detection test kit, Optical Coagulation Analyzer (OCG-102), H-8 Haemoglobin Analyzer, Finecare FIA Meter, i15 Blood Analyzer and fully automated feces analyzer. Matrix Labs currently employs only around 50 employees. One Suresh is the Chief Executive of this firm.

One Suresh is also the director of Chennai based Matrix Labs Private Limited which is owned with him by another 4 persons. They are Seyed Ahamed, Revannath Bhujangrao Patil, Kulandaivel Padmanathan and Benny Joseph. This company was incorporated about six and a half years back, nearly one and a half year after the Matrix firm, in January 2014 with an authorized share capital of only Rs. Five lac and an equal paid up capital of similar amount. The company is involved in Manufacture of medical appliances and instruments and appliances for measuring, checking, testing, navigating and other purposes except optical instruments. The office of Matrix Labs is at 7, Srinivas Nagar, Main Road, Bhaggiyathammal Nagar, Moggappair, Padi, Chennai.

The distributing outfit Rare Metabolics Life-sciences Private Limited is based at New Delhi. It is owned by one Kripa Shankar Gupta and Shobha Data. The company was formed in May 2015 with only Rs One Lac as its authorised capital and Rs One Lac as paid up share capital. Manufacture of basic chemicals is the primary job of this company. The office of the distributing company is at B-8, Bandhu Vihar Apartments, Plot 11 in Sector 10 of Dwarka.

It would be interesting to know that why Kripa Shankar Gupta’s company was appointed the sole distributor for Indian territory to supply the testing kits? Gupta is equipped with a degree of MD in Pharmacology. He claims to have over 15 years of experience with in-depth understanding of Indian pharmaceutical and healthcare System. He has been working for some multinationals for the access of their new drugs to India.

Gupta has ventured into dental field also by establishing rare dentistry to bring the CBCT machines. He also established the advanced CAD /CAM centre for dentistry in North India. Gupta loves to call himself ‘a passionate Medi-preneur with deep understanding of Indian health landscape and ability to innovate new health programs in public and private health’. He co-owns Pegasys Life Sciences Private Limited with one Akhilesh Raj Rastogi. This company has its office in the outskirts of National Capital Region’s (NCR) Indirapuram, which is technically in Ghaziabad, Uttar Pradesh. C-437, Gaur Green Avenue, Abhaykhand-2 is the headquarters of this company which is established with an authorised share capital of Rs One Lac and an equal paid up capital.

Now one very underlining fact about the Chinese company which is the primary source of the imports of these testing kits. Shares of this Guangzhou based company—Wondfo Biotech have gained more than 40% this year after corona pandemic began in Wuhan. Ms. Wang Jihua is the chairman of Wondfo. Her husband Li Wenmei is the president of the company. Wondfo was founded 28 years back, in 1992. Li only has an undergraduate degree from Jilin University. He has an important place on the board of China Narcotics Control Foundation. He is also associated with South China University of Technology.

Li and Wang both have attained the age of 58 and control the assets worth billions of dollars.  Their company Wondfo owns one overseas lab in San Diego with one branch in Chicago. It has another eleven overseas offices with sales network in more than 120 countries with around 2500 employees. There function 42 companies under the corporate umbrella of Wonfo Biotech Company Limited.

It is yet to be seen that what steps the government will take against the plunderers involved in the supply of testing kits.


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