At the start of the pandemic, when the issue began to be discussed in public, it was explained that it was difficult to put the right price on vaccines because it is the result of often considerable expenditure in research and development, and that the quantity of doses that would be sold was then unknown.
Now that pharmaceutical companies’ financial statements are released for the first nine months of 2021, it is possible to assess whether the price paid is acceptable.
Moderna Pharmaceuticals is the ideal case for doing this analysis. First, its activities and results are focused around the Spikevax vaccine against COVID-19. In addition, it is the second best-selling vaccine in Canada and a facility is planned to open in the country.
Moderna’s last three quarterly financial statements (January to September 2021) show that the net profit margin on the sale of vaccines is around 65% while this margin is on average 8% for all Canadian companies. . Concretely, this means that once all her expenses have been paid, when Moderna sells them for $ 1,000, she makes a net profit of $ 650 while the Canadian average is $ 80.
Of course, we have to put everything into perspective, and it is normal for the company to recover the sums spent on several years of research when, for the most part, it recorded net losses. However, even taking into account all these research and other expenses incurred by Moderna since the start of its operations ten years ago, its average profit margin over the decade remains very high, around 43%.
Although it is impossible for us to know the price that Canada pays for its vaccines, the data provided by Statistics Canada at the beginning of the year allow us to estimate the average price of a dose (Moderna and Pfizer associated) at about 37 $. If taxpayers considered a profit margin of 8% to be normal and Moderna, for its part, accepted it considering all its expenses made in previous years, this would mean that the selling price of its vaccine could be around $ 21. .
As Canada has secured more than 100 million doses of Moderna by 2024, such a price drop would translate into savings of $ 1.6 billion for the public purse.
In less than 9 months, Moderna made 7.3 billion US dollars (approximately 9.3 billion Canadian dollars) in profit by selling its overpriced vaccine all over the planet. By paying its fair share of tax, the company would send taxpayers a consolation prize, as some of that loot would go back into state coffers. Unfortunately, the account isn’t there, as Moderna’s effective tax rate is currently 7%.
Going forward, Canadians can expect to have to shoulder a bill of $ 10 billion to $ 20 billion in vaccines by 2024. It is therefore essential for us to know the price that we are paying. Many countries have decided to disclose this information to their taxpayers and the time has probably come for Canada to demonstrate its leadership on transparency.
If Canada is currently negotiating freebies for the installation of Moderna on its territory, one can wonder, in view of the eloquent results of the company, if it still needs incentives to establish there. The firm received US $ 1 billion (C $ 1.27 billion) in grants from the US authorities in 2020-2021, including US $ 473 million (C $ 604 million) in the last 9 months. And with the too high selling price of its vaccines and its under-taxation, we are not far from concluding that it is taking sufficient advantage of the system.
From the end of September 2021, when Moderna is enjoying its very first year of profit, the company has managed to cover its expenses for the previous 10 years, to stabilize its debt level at 2%, and to quadruple its equity. of its shareholders compared to the end of 2020. Despite these exceptional results, it has decided to increase the price of its vaccine by 20%.
Obviously, business is business, and it would be illusory to believe that the greed is less important when the product sold is intended for health. But there are limits to be set. Future generations will have to live with the debt accumulated during the pandemic and we have a duty to ensure that these billionaire pharmaceuticals sell us these vaccines at the right price and pay their fair share of taxes.