Money9 Edit | Pharma companies should balance affordability and profits

Before the state electricity regulatory commissions came into existence, “reasonable returns” was a prominent part of the discussions that went on in power finance circles and governments. The words indicated a return on invested capital as a rate that would be determined as equitable by the government.

The concept of “reasonable return” can be revived in the light of the Covid pandemic that has wreaked havoc across geographies and economies. The infection, the need for emergency hospitalisation, the panic for medicines, oxygen and vaccines, are creating a climate where many pharmaceutical companies and hospitals are making a killing.

Pfizer, one of the prominent vaccine manufacturers, have declared that the vaccine alone raked in $3.5 billion in revenue in the first three months of this year, which is nearly a quarter of its total revenue. The jab was the company’s biggest source of revenue. In a study by the Reserve Bank of India it was clear that the pharmaceuticals was the only sector in India to make double digit sales growth in all the four quarters – 15.9% (Q1), 16.5% (Q2), 15.9% (Q3) and 20.7% (Q4) – last year.

High growth in sales or profits is central to business. However, in current circumstances, it is repugnant that companies should go after maximising profits as the sole driver of business.

Almost all sectors of the industry are sacrificing business and donating generously for the alleviation of the sufferings of man. Companies making a killing in vaccines, or hospitals making dirty profits by raising bed charges like hotels to take advantage of helplessness might please shareholders but would betray the far bigger cause of social equity. Pharma companies that are manufacturing vaccines, Covid essentials and hospitals that are partying on shortages should take note. Compassion over commerce is the call of the times.