16 ms·

BioNTech alone could lift German economy by 0.5% this year

251 points by _Microft 5y ago

hosteur 5y ago
We are doing PR pieces for BioNTech now?
_Microft 5y ago
Let alone the economic damage that was prevented by being able to vaccinate people now instead of requiring more severe measures to keep the pandemic in check...
- ptsneves 5y ago
  At first I thought it was the only way that they could even represent such a fraction of Germany's gdp. It seems not. A combination of ability to have profit from purely national resources and the miracle of intelectual property fees. I guess this redefines the concept of unicorn, as this is not market valuation but actual profits.
  - runako 5y ago
    It's practically a religion at HN that early-stage companies that are not currently earning profits are somehow 'lesser' than more-mature profitable companies. However, this misconception is neatly illustrated in BioNTech. BioNTech went public with a market value of ~$3.5B, solidly into unicorn territory, despite losing a tad over $100m the prior two years. Through the typical business lens, this makes sense as they were in investment phase hoping for a potentially large payoff as their product matured. The IPO gave them the capital they needed to realize their vision. Obviously, they are worth a lot more now because that narrative was correct. Should they have been more conservative and only expanded R&D at a pace supported by their revenue?
    - anthony_r 5y ago
      You're right, but this kind of stuff is actually much more rare in "tech". Google, Microsoft, Facebook, Apple were all quite profitable (GAAP) at their IPO time, which was also earlier than today's standards. Look up the old S-1s if you want to verify. It is very common in biotech, though.
      - runako 5y ago
        Yes, companies used to wait until they were making money to go public, but they have more options now. My larger point is the capital stack a company chooses to fund its growth is a function of its particular business and market, along with the investment climate. (For example: companies stay private longer now because there's far more private capital available than in 1980 when Apple went public. There's no one right answer. Amazon would likely be a much smaller company if it had maintained profitability all along. Perhaps would not have produced AWS, which bled oceans of money for a long time. For every Google or Facebook (arguably two of the best business models in history), you can name an Amazon, Netflix, Broadcom, DocuSign, Square, or Tesla. Success comes in different flavors. (Tesla notably spent something like $10B before getting to profitability. This is an artifact of the intersection of their market and their global ambitions. Unlikely they would have had the impact on major auto manufacturers as a much smaller, profitable, boutique firm.)
RcouF1uZ4gsC 5y ago
Great story all around. A company made a product that massively benefited people and is getting a lot of money for it. Even though they are making $18 Billion, it is likely that the vaccine is actually worth trillions due to the number of lives saved and because vaccination is allowing the economies to open up again. You hear a lot of about companies making money from developing and selling stuff that is a net harm to society, but it is good to hear about a company making money from developing and selling something that is a massive benefit to society.
- sho_hn 5y ago
  It's also pretty interesting how the vaccine development was funded, and the timeline: - Dec 2019: €50 million loan from the European Commission/EIB - Jun 2020: Additional €100 million loan from the EIB - Jun 2020: €250 million from a Singaporean holding in a fairly regular investment activity - March 2020: $135 million from the Chinese company Fosun in exchange for shares and a manufacturing license - April 2020: $185 million from Pfizer as part of an equity partnership - Sept 2020: €375 million of taxpayer money from the German gov in
  - runako 5y ago
    There's also the IPO proceeds of ~$350mm IIRC.
  - spywaregorilla 5y ago
    I'm curious what you find interesting about this? Nothing seems especially remarkable here to me.
    - FabHK 5y ago
      Not GP, but what I find uplifting is that sensible institutions (the European Investment Bank) could fund things that turned out to be immensely important before the need was obvious.
      - spywaregorilla 5y ago
DrBazza 5y ago
It's just a shame they didn't offer at cost like AstraZeneca have [1]. [1] https://www.theguardian.com/business/2021/mar/28/astrazeneca-vaccine-deserves-celebration-not-scorn https://www.theguardian.com/business/2021/mar/28/astrazeneca...
- DangerousPie 5y ago
  AZ had to offer the vaccine at cost because they didn't develop it themselves. It was a condition of the license from Oxford University.
  - cmrdporcupine 5y ago
    I have been dosed with both AZ and Pfizer/BioNTech and I almost feel like I should have been paid to take the AZ. Brutal side-effects.
    - colaclanth 5y ago
      I also think I should've been paid for how brutal (and sudden) the effects of covid were on me - And that was something I didn't have any choice in the matter in...
    - jacquesm 5y ago
      Not necessarily a bad thing. If your body reacts strongly to a vaccine that is a sign that your immune system has taken notice. As a reductio-ad-absurdum argument: if you were injected with a saline solution you'd have no side effects (assuming a clean needle!) but also no protection at all.
      - nradov 5y ago
        There doesn't appear to be any real correlation between the severity of vaccine side effects versus long term protection. Those are separate parts of the immune system. https://www.pbs.org/newshour/health/what-covid-vaccine-side-effects-can-and-cant-tell-you-about-your-bodys-immune-response https://www.pbs.org/newshour/health/what-covid-vaccine-side-...
londons_explore 5y ago
Are they really selling vaccines for $19/dose? Seems like bad business when plenty of countries would have paid $1000/dose if they could get the first deliveries and open their economy a few months earlier. And those higher prices could have supported more factories being built to make more doses quicker. Where there backdoor payments to decide who got which doses first?
- DangerousPie 5y ago
  The bottleneck in Covid vaccine production has never really been a lack of money. No matter how much money you throw at the problem, it would still take years to build up the necessary supply chains and get the raw materials you need. This is especially true for mRNA vaccines, which are a new technology that require different ingredients and manufacturing processes.
- lm28469 5y ago
  When people ask for the difference between US and EU business thinking I'll send them that comment. This shit simply doesn't fly in Germany, it's so insane that no one would ever think about pricing life saving drugs that high
  - refurb 5y ago
    Oh really? The first million dollar drug came out of Europe. https://bioengineeringcommunity.nature.com/posts/45406-1-million-price-tag-set-for-glybera-gene-therapy https://bioengineeringcommunity.nature.com/posts/45406-1-mil... “The first gene therapy approved in the Western world is set to go on sale in Germany at a cost close to $1 million per treatment. The record-breaking price tag came to light in November 2014, when Amsterdam-based Uniqure and its marketing partner Chiesi, of Parma, Italy, filed a pricing dossier with German authorities to launch Glybera.”
    - lm28469 5y ago
      I'm not talking about experimental fringe therapies here. We can talk about insulin if you want ;)
inglor_cz 5y ago
BioNTech has a lot of potentially groundbreaking mRNA therapies in its pipeline, some of them against various forms of cancer. https://investors.biontech.de/news-releases/news-release-details/biontech-announces-first-patient-dosed-phase-2-clinical-trial https://investors.biontech.de/news-releases/news-release-det... https://biontech.de/science/individualized-cancer-medicine https://biontech.de/science/individualized-cancer-medicine https://www.nature.com/articles/d41586-019-03072-8 https://www.nature.com/articles/d41586-019-03072-8 I am really looking forward for such solutions, fuck cancer. That said, the economic impact of such cures isn't clear to me. If your population gains, on average, say, a year or two of life, the pay-as-you go pension systems that are already under strain in greying Europe will come under even bigger strain. So it seems that each discovery like that will be balanced by us working longer. Personally, I as a 42 y.o. in Czechia, do not expect to get any meaningful state pension ever. There will be just too many of us.
- oaiey 5y ago
  I am not worried only about better healthcare. Population growth, climate change, waste, .. so many more thing to worry. For me humanity is up for a massive shrinking. Either because we do it or (some decades later) mother earth does it.
  - nyx-aiur 5y ago
    Nothing better than waking up and reading wishes for a mass extinction event on hackernews.
  - programmarchy 5y ago
    What do you make about Elon Musk's prediction that the biggest threat in the future may actually be population collapse [1], rather than overpopulation? [1] https://www.youtube.com/watch?v=44Klhl81K7g https://www.youtube.com/watch?v=44Klhl81K7g
    - te_chris 5y ago
      Worth checking out the book The Great Demographic Reversal
idownvoted 5y ago
The "success" of lobbying on a new scale when supra-national orgs, national governments across the globe enact laws to "nudge" you into getting vaxxed, propped by the whole of the respective countries journalism-landscape. What a "proud" moment for Germany.
thedream 5y ago
Cui bono?
president 5y ago
ITT: Nobody is allowed to say anything even slightly critical of BioNTech lest they get flagged or downvoted to oblivion. You really have to wonder what is going on here.
- 411111111111111 5y ago
  I went through the dead and down voted comments prompted by this but couldn't find any gray/dead entries that I'd consider good. Can you maybe make a few examples of comments that have been unfairly down voted in your opinion?
- cycrutchfield 5y ago
  It’s a massive conspiracy! Somehow bad comments keep getting downvoted into oblivion! Everybody is in on it!
t8e56vd4ih 5y ago
how would you go about calculating whether or not their stock is overpriced or a buy at the moment? i'd assume that any future potential has been probably overly enthusiastically priced in already.
- dt3ft 5y ago
  You can’t. Even if you could, you’d still be speculating.
- oezi 5y ago
  I was amazed to learn that if you bought the stock in Dezember of last year after approval in the EU and US you would look roughly at a 4x gain this year.
  - stanford_labrat 5y ago
    I work(ed) for a mRNA therapeutics company and bought stock in Moderna in Nov 2020. Sold not too shortly after for what I thought was a sweet 150% gain. If I had just held I would be up over 500% right now, kicking myself.
cblconfederate 5y ago
Sell ads plastered over your friends gossip: $86B Extend the life of millions of people: $18B Level of wrongness of priorities: Infinite
- Hamuko 5y ago
  Facebook is at a ridiculous scale though, since they're reporting to have 2.85 billion active users. That's what, like a third of the world population and a bit?
  - _fizz_buzz_ 5y ago
    pfizer/biontech are going to produce something like 3 billion vaccines this year. I think this only underscores OP's point.
    - beambot 5y ago
      Cue the annual Flu & COVID "vaccine as a service" business model, and BioTechs can join the dystopia too!
      - cblconfederate 5y ago
        I'm afraid this company is already cashflow positive and (gasp) profitable, therefore it has been cursed to not enter the unicorn valhalla
- 8ytecoder 5y ago
  Not disagreeing but do keep in mind that "sell ads" include various industries and businesses that contribute to the economy. Even with word of mouth and SEO traffic, 40+% of our total visitors were from ads. It's a legitimate way of reaching your target audience who wouldn't otherwise hear about you. This could make or break some businesses.
  - cblconfederate 5y ago
agent327 5y ago
And what is the actual value to Germany, or to German citizens, that one company makes so much money? Maybe all of the 1323 employees get a bonus? Wow, that will make for some great trickle-down effect there... If anything, the value of this is going to be negative: Germany will have to pay more to things like the EU, NATO, and 3rd-world aid, all of which are defined as a fixed percentage of GDP.
- killingtime74 5y ago
  So magically BioNTech don’t get taxed?
- p1anecrazy 5y ago
  If you read the article, > [BioNTech] now expects to accrue 15.9 billion euros ($18.63 billion) in revenue from the vaccine this year <...> “Since BioNTech procures relatively few preliminary products from abroad, this is almost entirely domestic added value,” Dullien said. “So this has a direct impact on economic growth.”
- oblio 5y ago
  I hate this logic. I'm from a developing country with few independent local companies. We're basically the reductio ad absurdum for your comment. Well, life does not magically become better if most of your local companies fail. Don't root for local companies to fail and don't be exclusively a "trickle down economics" cynic. Companies still pay salaries, still pay taxes, still contribute to the development of related local industries.
  - agent327 5y ago
    I'm honestly not sure how you got to the idea that I want them to fail. The news article is jubilant about a half procent growth to the German GDP because of the corona vaccin. I'm asking what the _value_ of that half procent is. I can totally understand if Germany has built new factories, or had some other economic activity that spread whatever new income is generated over a significant part of the population. But that's not the case here: it's a single company, making a shitload of money, but mostly abroad, from vaccins that are mostly produced abroad as well. That money goes into a very small number of pockets. It may boost the economic indicator called GDP but it does not represent wealth for the average German.
imtringued 5y ago
I'm not sure how to express this economic problem but I personally am no longer surprised that companies with government funding are highly profitable. You may call it tax Seigniorage (I honestly don't know if it already has a name) but it's a more general concept. Income taxes compound based on distance to government spending. A receives money from the government directly and pays 20% tax, A spends all his money. B gets 80% of the initial government money, B spends all his money on C who gets 64%. At a distance of 10 only 10% of the original money is left in the economy. You essentially have to work 10x as hard for the same wage. The fundamental problem is that everyone has a distance of 0 to the government when it comes to tax collection but only A has a distance of 0 when it comes to government spending. So, the fact that BioNTech has a big share of the economy isn't surprising. It's simply that much easier to earn money directly from the government than from the rest of the private economy. What is the solution to this problem? Well, an approximation would be welfare. Consumers now have a distance of 0 to government spending. Of course it's just a hack. A better solution would be to create a "tax coupon" i.e. you pay 3000€ in taxes. Rather than straight up 3000€ the government gets a coupon worth 3000€ of your time. The coupon will have your name written on it. This forces the government to buy your products directly which reduces the distance to the government to 0. Alternatively the government could deposit the coupon at a bank and the coupon money would pass through the economy untaxed. In either case you would always receive your full wage rather than a wage that was diminished by tax compounding the further away you are from government spending. This doesn't apply to governments exclusively. A payment processor gets to charge a fee with a distance of 0 on every transaction meanwhile when the revenue is spent the fees get to compound until they have reached you, meaning it is much easier to earn money off the payment processor than from the rest of the economy. Does the tech/advertising industry perpetuate the same form of inequality? It definitively has a distance of 0 to every single individual and it centralizes the profits but does it extract a fee out of every individual? Is advertising a hidden tax on every purchase? This might be true of everything that is either a basic need (food, shelter) or forced upon every member of society without their consent (i.e. car dependence as a hidden tax on everything). By the way I am not questioning that the governments or companies in question don't produce value. They certainly do. The problem isn't the individuals, it's about the unintended consequences of supposedly simple concepts on a societal scale. Individuals may feel that the rules are fair on an individual level but what if they are thoroughly unjust on a societal scale? If relative poverty is certain then isn't it just the logical consequence of the system we have built?

251 points by _Microft 5y ago

We are doing PR pieces for BioNTech now?

Let alone the economic damage that was prevented by being able to vaccinate people now instead of requiring more severe measures to keep the pandemic in check...

ptsneves 5y ago
At first I thought it was the only way that they could even represent such a fraction of Germany's gdp. It seems not. A combination of ability to have profit from purely national resources and the miracle of intelectual property fees. I guess this redefines the concept of unicorn, as this is not market valuation but actual profits.
- runako 5y ago
  It's practically a religion at HN that early-stage companies that are not currently earning profits are somehow 'lesser' than more-mature profitable companies. However, this misconception is neatly illustrated in BioNTech. BioNTech went public with a market value of ~$3.5B, solidly into unicorn territory, despite losing a tad over $100m the prior two years. Through the typical business lens, this makes sense as they were in investment phase hoping for a potentially large payoff as their product matured. The IPO gave them the capital they needed to realize their vision. Obviously, they are worth a lot more now because that narrative was correct. Should they have been more conservative and only expanded R&D at a pace supported by their revenue?
  - anthony_r 5y ago
    You're right, but this kind of stuff is actually much more rare in "tech". Google, Microsoft, Facebook, Apple were all quite profitable (GAAP) at their IPO time, which was also earlier than today's standards. Look up the old S-1s if you want to verify. It is very common in biotech, though.
    - runako 5y ago
      Yes, companies used to wait until they were making money to go public, but they have more options now. My larger point is the capital stack a company chooses to fund its growth is a function of its particular business and market, along with the investment climate. (For example: companies stay private longer now because there's far more private capital available than in 1980 when Apple went public. There's no one right answer. Amazon would likely be a much smaller company if it had maintained profitability all along. Perhaps would not have produced AWS, which bled oceans of money for a long time. For every Google or Facebook (arguably two of the best business models in history), you can name an Amazon, Netflix, Broadcom, DocuSign, Square, or Tesla. Success comes in different flavors. (Tesla notably spent something like $10B before getting to profitability. This is an artifact of the intersection of their market and their global ambitions. Unlikely they would have had the impact on major auto manufacturers as a much smaller, profitable, boutique firm.)

RcouF1uZ4gsC 5y ago

Great story all around. A company made a product that massively benefited people and is getting a lot of money for it. Even though they are making $18 Billion, it is likely that the vaccine is actually worth trillions due to the number of lives saved and because vaccination is allowing the economies to open up again. You hear a lot of about companies making money from developing and selling stuff that is a net harm to society, but it is good to hear about a company making money from developing and selling something that is a massive benefit to society.

sho_hn 5y ago
It's also pretty interesting how the vaccine development was funded, and the timeline: - Dec 2019: €50 million loan from the European Commission/EIB - Jun 2020: Additional €100 million loan from the EIB - Jun 2020: €250 million from a Singaporean holding in a fairly regular investment activity - March 2020: $135 million from the Chinese company Fosun in exchange for shares and a manufacturing license - April 2020: $185 million from Pfizer as part of an equity partnership - Sept 2020: €375 million of taxpayer money from the German gov in
- runako 5y ago
  There's also the IPO proceeds of ~$350mm IIRC.
- spywaregorilla 5y ago
  I'm curious what you find interesting about this? Nothing seems especially remarkable here to me.
  - FabHK 5y ago
    Not GP, but what I find uplifting is that sensible institutions (the European Investment Bank) could fund things that turned out to be immensely important before the need was obvious.
    - spywaregorilla 5y ago

DrBazza 5y ago

It's just a shame they didn't offer at cost like AstraZeneca have [1]. [1] https://www.theguardian.com/business/2021/mar/28/astrazeneca-vaccine-deserves-celebration-not-scorn https://www.theguardian.com/business/2021/mar/28/astrazeneca...

DangerousPie 5y ago
AZ had to offer the vaccine at cost because they didn't develop it themselves. It was a condition of the license from Oxford University.
- cmrdporcupine 5y ago
  I have been dosed with both AZ and Pfizer/BioNTech and I almost feel like I should have been paid to take the AZ. Brutal side-effects.
  - colaclanth 5y ago
    I also think I should've been paid for how brutal (and sudden) the effects of covid were on me - And that was something I didn't have any choice in the matter in...
  - jacquesm 5y ago
    Not necessarily a bad thing. If your body reacts strongly to a vaccine that is a sign that your immune system has taken notice. As a reductio-ad-absurdum argument: if you were injected with a saline solution you'd have no side effects (assuming a clean needle!) but also no protection at all.
    - nradov 5y ago
      There doesn't appear to be any real correlation between the severity of vaccine side effects versus long term protection. Those are separate parts of the immune system. https://www.pbs.org/newshour/health/what-covid-vaccine-side-effects-can-and-cant-tell-you-about-your-bodys-immune-response https://www.pbs.org/newshour/health/what-covid-vaccine-side-...

londons_explore 5y ago

Are they really selling vaccines for $19/dose? Seems like bad business when plenty of countries would have paid $1000/dose if they could get the first deliveries and open their economy a few months earlier. And those higher prices could have supported more factories being built to make more doses quicker. Where there backdoor payments to decide who got which doses first?

DangerousPie 5y ago
The bottleneck in Covid vaccine production has never really been a lack of money. No matter how much money you throw at the problem, it would still take years to build up the necessary supply chains and get the raw materials you need. This is especially true for mRNA vaccines, which are a new technology that require different ingredients and manufacturing processes.
lm28469 5y ago
When people ask for the difference between US and EU business thinking I'll send them that comment. This shit simply doesn't fly in Germany, it's so insane that no one would ever think about pricing life saving drugs that high
- refurb 5y ago
  Oh really? The first million dollar drug came out of Europe. https://bioengineeringcommunity.nature.com/posts/45406-1-million-price-tag-set-for-glybera-gene-therapy https://bioengineeringcommunity.nature.com/posts/45406-1-mil... “The first gene therapy approved in the Western world is set to go on sale in Germany at a cost close to $1 million per treatment. The record-breaking price tag came to light in November 2014, when Amsterdam-based Uniqure and its marketing partner Chiesi, of Parma, Italy, filed a pricing dossier with German authorities to launch Glybera.”
  - lm28469 5y ago
    I'm not talking about experimental fringe therapies here. We can talk about insulin if you want ;)

inglor_cz 5y ago

BioNTech has a lot of potentially groundbreaking mRNA therapies in its pipeline, some of them against various forms of cancer. https://investors.biontech.de/news-releases/news-release-details/biontech-announces-first-patient-dosed-phase-2-clinical-trial https://investors.biontech.de/news-releases/news-release-det... https://biontech.de/science/individualized-cancer-medicine https://biontech.de/science/individualized-cancer-medicine https://www.nature.com/articles/d41586-019-03072-8 https://www.nature.com/articles/d41586-019-03072-8 I am really looking forward for such solutions, fuck cancer. That said, the economic impact of such cures isn't clear to me. If your population gains, on average, say, a year or two of life, the pay-as-you go pension systems that are already under strain in greying Europe will come under even bigger strain. So it seems that each discovery like that will be balanced by us working longer. Personally, I as a 42 y.o. in Czechia, do not expect to get any meaningful state pension ever. There will be just too many of us.

oaiey 5y ago
I am not worried only about better healthcare. Population growth, climate change, waste, .. so many more thing to worry. For me humanity is up for a massive shrinking. Either because we do it or (some decades later) mother earth does it.
- nyx-aiur 5y ago
  Nothing better than waking up and reading wishes for a mass extinction event on hackernews.
- programmarchy 5y ago
  What do you make about Elon Musk's prediction that the biggest threat in the future may actually be population collapse [1], rather than overpopulation? [1] https://www.youtube.com/watch?v=44Klhl81K7g https://www.youtube.com/watch?v=44Klhl81K7g
  - te_chris 5y ago
    Worth checking out the book The Great Demographic Reversal

idownvoted 5y ago

The "success" of lobbying on a new scale when supra-national orgs, national governments across the globe enact laws to "nudge" you into getting vaxxed, propped by the whole of the respective countries journalism-landscape. What a "proud" moment for Germany.

thedream 5y ago

Cui bono?

president 5y ago

ITT: Nobody is allowed to say anything even slightly critical of BioNTech lest they get flagged or downvoted to oblivion. You really have to wonder what is going on here.

411111111111111 5y ago
I went through the dead and down voted comments prompted by this but couldn't find any gray/dead entries that I'd consider good. Can you maybe make a few examples of comments that have been unfairly down voted in your opinion?
cycrutchfield 5y ago
It’s a massive conspiracy! Somehow bad comments keep getting downvoted into oblivion! Everybody is in on it!

t8e56vd4ih 5y ago

how would you go about calculating whether or not their stock is overpriced or a buy at the moment? i'd assume that any future potential has been probably overly enthusiastically priced in already.

dt3ft 5y ago
You can’t. Even if you could, you’d still be speculating.
oezi 5y ago
I was amazed to learn that if you bought the stock in Dezember of last year after approval in the EU and US you would look roughly at a 4x gain this year.
- stanford_labrat 5y ago
  I work(ed) for a mRNA therapeutics company and bought stock in Moderna in Nov 2020. Sold not too shortly after for what I thought was a sweet 150% gain. If I had just held I would be up over 500% right now, kicking myself.

cblconfederate 5y ago

Sell ads plastered over your friends gossip: $86B Extend the life of millions of people: $18B Level of wrongness of priorities: Infinite

Hamuko 5y ago
Facebook is at a ridiculous scale though, since they're reporting to have 2.85 billion active users. That's what, like a third of the world population and a bit?
- _fizz_buzz_ 5y ago
  pfizer/biontech are going to produce something like 3 billion vaccines this year. I think this only underscores OP's point.
  - beambot 5y ago
    Cue the annual Flu & COVID "vaccine as a service" business model, and BioTechs can join the dystopia too!
    - cblconfederate 5y ago
      I'm afraid this company is already cashflow positive and (gasp) profitable, therefore it has been cursed to not enter the unicorn valhalla
8ytecoder 5y ago
Not disagreeing but do keep in mind that "sell ads" include various industries and businesses that contribute to the economy. Even with word of mouth and SEO traffic, 40+% of our total visitors were from ads. It's a legitimate way of reaching your target audience who wouldn't otherwise hear about you. This could make or break some businesses.
- cblconfederate 5y ago

agent327 5y ago

And what is the actual value to Germany, or to German citizens, that one company makes so much money? Maybe all of the 1323 employees get a bonus? Wow, that will make for some great trickle-down effect there... If anything, the value of this is going to be negative: Germany will have to pay more to things like the EU, NATO, and 3rd-world aid, all of which are defined as a fixed percentage of GDP.

killingtime74 5y ago
So magically BioNTech don’t get taxed?
p1anecrazy 5y ago
If you read the article, > [BioNTech] now expects to accrue 15.9 billion euros ($18.63 billion) in revenue from the vaccine this year <...> “Since BioNTech procures relatively few preliminary products from abroad, this is almost entirely domestic added value,” Dullien said. “So this has a direct impact on economic growth.”
oblio 5y ago
I hate this logic. I'm from a developing country with few independent local companies. We're basically the reductio ad absurdum for your comment. Well, life does not magically become better if most of your local companies fail. Don't root for local companies to fail and don't be exclusively a "trickle down economics" cynic. Companies still pay salaries, still pay taxes, still contribute to the development of related local industries.
- agent327 5y ago
  I'm honestly not sure how you got to the idea that I want them to fail. The news article is jubilant about a half procent growth to the German GDP because of the corona vaccin. I'm asking what the _value_ of that half procent is. I can totally understand if Germany has built new factories, or had some other economic activity that spread whatever new income is generated over a significant part of the population. But that's not the case here: it's a single company, making a shitload of money, but mostly abroad, from vaccins that are mostly produced abroad as well. That money goes into a very small number of pockets. It may boost the economic indicator called GDP but it does not represent wealth for the average German.

imtringued 5y ago

I'm not sure how to express this economic problem but I personally am no longer surprised that companies with government funding are highly profitable. You may call it tax Seigniorage (I honestly don't know if it already has a name) but it's a more general concept. Income taxes compound based on distance to government spending. A receives money from the government directly and pays 20% tax, A spends all his money. B gets 80% of the initial government money, B spends all his money on C who gets 64%. At a distance of 10 only 10% of the original money is left in the economy. You essentially have to work 10x as hard for the same wage. The fundamental problem is that everyone has a distance of 0 to the government when it comes to tax collection but only A has a distance of 0 when it comes to government spending. So, the fact that BioNTech has a big share of the economy isn't surprising. It's simply that much easier to earn money directly from the government than from the rest of the private economy. What is the solution to this problem? Well, an approximation would be welfare. Consumers now have a distance of 0 to government spending. Of course it's just a hack. A better solution would be to create a "tax coupon" i.e. you pay 3000€ in taxes. Rather than straight up 3000€ the government gets a coupon worth 3000€ of your time. The coupon will have your name written on it. This forces the government to buy your products directly which reduces the distance to the government to 0. Alternatively the government could deposit the coupon at a bank and the coupon money would pass through the economy untaxed. In either case you would always receive your full wage rather than a wage that was diminished by tax compounding the further away you are from government spending. This doesn't apply to governments exclusively. A payment processor gets to charge a fee with a distance of 0 on every transaction meanwhile when the revenue is spent the fees get to compound until they have reached you, meaning it is much easier to earn money off the payment processor than from the rest of the economy. Does the tech/advertising industry perpetuate the same form of inequality? It definitively has a distance of 0 to every single individual and it centralizes the profits but does it extract a fee out of every individual? Is advertising a hidden tax on every purchase? This might be true of everything that is either a basic need (food, shelter) or forced upon every member of society without their consent (i.e. car dependence as a hidden tax on everything). By the way I am not questioning that the governments or companies in question don't produce value. They certainly do. The problem isn't the individuals, it's about the unintended consequences of supposedly simple concepts on a societal scale. Individuals may feel that the rules are fair on an individual level but what if they are thoroughly unjust on a societal scale? If relative poverty is certain then isn't it just the logical consequence of the system we have built?