This spell is in a weird place. On the one hand, it's a damage output powerhouse and is practically guaranteed to restore you to full hit points every round. On the other hand, it has a wide AoE, is centered on the caster, and doesn't distinguish between friend and foe - in other words, you're going to blast your own party unless they are careful to keep their distance.
I wouldn't go with this approach. It's not a matter of tweaking the range and damage - the way the spell is designed sets up bizarre incentives for party tactics and is a recipe for conflict with the other PCs. Instead, I would focus more narrowly on the problems with vampiric touch as it exists:
1. Concentration requirement for a melee spell is a major drawback.
2. The spell does not grant temp hit points. Instead, it restores hit points - which is only useful if you're taking damage - which means your concentration is even more likely to be disrupted.
3. The spell's damage output is abysmal, lower than a cantrip (!), and the healing is even less.
If one removed the concentration requirement, and boosted the damage and/or healing, vampiric touch would work much better. A "gishy" caster could use it as their primary attack, and a regular wizard could use it as an emergency defense against getting beat down in melee - do some damage and keep yourself alive until you can escape or be rescued. And if you want a more ranged-friendly option, you can just give it a range.