Pandemic and the ugly economics of profit
The arrival of Covid- 19 vaccines is a ray of hope for the masses battling the virus or the threat of it that has led to a complete lockdown twice in two years and has taken millions of precious human lives besides having rendered hundreds and thousands jobless across the globe. However, the pandemic has also created a global market worth billions of dollars in sales for few pharma companies that are on their way for making bumper profits in the middle of the world’s largest humanitarian crisis.
In the initial phase, the firms didn’t show any rush to invest in the vaccine projects. Vaccine arrived at needed lots of time and research and still one could question the efficacy as. in the past, vaccines made during or immediately after a pandemic or acute health crisis haven’t proved much profitable. The firms that initiated their work on vaccines for diseases like Zika and SARS saw their fingers burnt.
The poor nations need more vaccines but can’t afford high prices and also the vaccines usually are needed just once or twice. Therefore these companies are more focused with medications that are needed in wealthier countries, especially the ones that require daily dose- that is obviously a better bargain for the pharma companies.
Later some researchers suggested that Covid-19 is a flu and is probably here to stay and requires annual booster jabs. It was only then that the firms started pumping money for the development of the vaccine as it could be profitable for those who come up with the most effective product. Also the market for flu’ jabs is worth several billion dollars a year.
Privatization of the research and development in the field of immunology has opened gates for large firms, and names like Pfizer, AstraZeneca, Moderna, Biocon, Serum Institute of India, Bharat Biotech etc have become household names, and are riding the crest of the COVID-19 wave.
The big question is who is funding these Covid-19 Vaccines? The vaccine development has been funded by private firms, Not for Profit organizations and different governments. The vaccines like Moderna & Novavax have been mostly funded by the government while the vaccine development by companies like Pfizer and AstraZeneca saw huge investment by private firms. Johnson & Johnson saw almost fifty-fifty investment from private as well as the government sector. The Gates & Milinda foundation also donated a huge sum of money to Pfizer to speed up the trial process.
Everyone seems to profit from this pandemic. Firms like Pfizer & Moderna have already indicated that they are selling their vaccine at a profit. While other companies like Johnson & Johnson and AstraZeneca see this pandemic as a good opportunity to improve their reputation (PR) and have decided to sell the vaccines without any profit margin.
Serum Institute in India has decided to keep different prices for the Centre, State and Private entities which has created a big controversy. The government is being blamed for letting the firm make huge profits. The stocks of companies like Moderna have risen more than 1000% since last one year. And the investors are looking to make huge profits.
The production of vaccines like Pfizer & Moderna which use new mRNA technology is more cost effective when we compare it to the traditional vaccines as the production is less capital intensive, simple and doses are small.
The traditional vaccines use a virus protein that needs to be grown over the course of weeks. On the other hand mRNA molecules instruct the body to produce virus proteins by itself and are less complex and can be easily produced via a chemical process (in place of biological process) making mass production at a much faster pace. Even then we see the cost of mRNA vaccines much higher when we compare it to AstraZeneca or Covexin.
The Pharmaceutical firms and their Owners and shareholders are going to make billions in profit. Thanks to the government, first they heavily subsidised the drug development and then later allowed the companies to charge as per their wish sometimes even way above their cost. Once again the Global South is ignored as the governments uphold the companies intellectual property rights and thus baring the poor countries from producing the vaccines at a faster and cheaper rate.
The shareholders of Pfizer include Vanguard Group (7.6%), State Street Global Advisors (5%) and Black Rock (4.9%). These are controlled by very powerful people and are called the “The Giant Three”. They control $20 trillion of the world’s assets. BioNTech which is the partner of Pfizer and is run by husband and wife named Uğur Şahin and Özlem Türeci respectively became billionaires overnight.
In India Serum Institute was already making profit when it gave the vaccine to the government at Rs.150 ($2) per dose. But now it has decided to charge more than double of this price from other state governments and private entities. In India the estimated population above 18 years of age to be vaccinated is approximately 900 million. India alone would consume more than 1.5 billion doses, sky rocketing the finances of the company.
The Moderna vaccine was co-developed by Moderna and US government Scientists working for the National Institute of Health.Still the intellectual property is owned by the company. The US government even allowed the company to keep all the profits. Oxford AstraZeneca vaccine was developed in its Jenner Institute led by Professors Sarah Gilbert and Adrian Hill.
Everyone in the world is presenting the COVID-19 vaccine as a triumph for corporate science. Whereas the truth is only one among the top three (Pfizer, Moderna, AstraZeneca) vaccines was developed by the private sector. Also everyone benefited from the initial research by the Shanghai Public Health Clinical Centre which in the very beginning published the first genomic sequencing of the COVID-19 virus free. These companies also got huge amount of public subsidy, tax rebates etc
The governments and various other organisations have already pre booked billions of doses at fixed prices. So for the next few months the firms will be busy in fulfilling those orders as quickly as possible. Those selling in countries with deeper pockets are expecting returns on their investment. On the other hand AstraZeneca, despite having deals to supply the highest number of doses, will only cover its costs.
Governments have ordered more than 800 million shots of Pfizer vaccine which will fetch the company more than $16 billion. The company is expecting sale of 15 – 30 billion vaccines in 2021. AstraZeneca is expecting a sale of 2 – 3 billion shots in 2021. Also it has given signals that they could increase the price of the vaccine after the pandemic is over. And that is when the investors would start getting their money back. They would charge a royalty of 6% on their sale.
The initial research that sequenced the COVID-19 genome and kick started the race of vaccine development was published freely for everyone with any patents. Just imagine what would happen if all the vaccine research was published without any patent. This meant everyone including the poor countries could produce the vaccines at the cost price and redeem their citizens of the virus. Health crises like this can ever be dealt in isolation. Even if a country like the US or UK is able to vaccinate its citizens and get rid of the virus on their land, the danger of the mutated virus from other countries still persists. In this globalised world we should work with the aim of eradicating this virus completely from the earth
The government should also plan and invest heavily in pandemic strategies just as they do in defence viewing it as a necessary expenditure on the things they hope not to use.
Shubham Kumar is a former student of JNU and is presently pursuing Masters in Peace and Conflict Studies from JMI , Delhi.