The Pfizer vaccine has likely protected tens of millions of people around the world, if not more, from suffering severe illness or even death from coronavirus infection.
Thanks to billions of euros paid out by the U.S. drugmaker, it may have also saved Germany almost single-handedly from what otherwise would have been a very poor year of growth. One city is even expecting a windfall tax gain that will wipe out its entire debt in one fell swoop.
That’s because its highly successful Comirnaty vaccine was actually invented by a partner in Germany called BioNTech. Its mRNA jab has been an export blockbuster for Europe’s largest economy in 2021, coming just at the time when a global chip crunch throttled shipments of Volkswagen and Mercedes-Benz cars.
“It’s hard to imagine another case in the country’s recent history where the economic contribution of a single company from one year to the next experienced such an enormous leap,” Nils Jannsen, senior researcher at the Kiel Institute for the World Economy, told Fortune.
Part of the reason is that BioNTech accelerated from a standstill to a full-on sprint in just 12 months. Revenue amounted to €482 million ($547 million) in 2020, whereas management forecasted this month that 2021’s turnover will have amounted to €16-€17 billion.
“There are certainly other companies that are larger (than BioNTech), but their contribution is relatively stable from one year to the next,” said Jannsen, who heads the Kiel Institute’s economic forecasting for Germany.
Pfizer payments
Due to supply chain shortages that bedeviled its key auto industry, Germany’s gross domestic product expanded at a meager rate of just 2.7% last year, following a contraction of 4.6% during the pandemic year of 2020.
Not only did output fail to reach pre-crisis levels, it is also expected to be the slowest rate of recovery among all 27 EU member states, not to mention other wealthy nations such as the United States and the U.K.
Yet Germany would have eked out only 2.2% were it not for BioNTech and Pfizer. In other words, nearly a fifth of all economic growth last year stemmed from one product sold by two companies: an effect that economists say is virtually unprecedented.
The peculiar effect was first spotted in the summer by Sebastian Dullien from the Hans Böckler Foundation. As research director at its Macroeconomic Policy Institute, he was interested in understanding when Pfizer’s payments to its German partner would begin to show up in the national balance of payment accounts, due to their enormous size.
BioNTech hasn’t yet reported full accounts for last year, but it recorded a 65-fold surge in receivables to €10.6 billion at the end of September. This represents money still owed to it by other companies. Once Pfizer pays its share of the profits from the vaccine, statisticians classify this as a service export for the German economy.
“You could say that was the single bright spot for the German economy last year, because everything else was so depressing,” Dullien told Fortune.
For example, he estimated the semiconductor shortage subtracted a full percentage point from the domestic activity last year, after passenger car production plunged to its lowest level since 1975.
In addition to the billions of euros in profits received from Pfizer, BioNTech is also directly responsible for distribution of the vaccine in Germany. From an economist’s point of view, the value of these sales fed almost directly into the country’s gross domestic product, since it didn’t require importing vast quantities of expensive raw materials.
“If you look at the carmakers specifically, much of the export value of their vehicles are netted out in the overall GDP calculation since they can rely heavily on parts purchased from abroad,” said the Kiel Institute’s Jannsen.
Pfizer didn’t seem particularly interested in taking credit for the economic boon it provided. The U.S. drugmaker declined to comment when contacted by Fortune, as did BioNTech.
Showered in money
One of those profiting directly from their work is Mainz. The picturesque city on the Rhine that is home to BioNTech’s headquarters will be awash in tax money thanks to the vaccine boom.
Instead of finishing last year with a deficit of €36 million as initially forecast, Mainz now anticipates a surplus of more than €1 billion. That is roughly 20 times higher than what the city might otherwise expect even during an outstanding fiscal year.
“Frankly I think they literally do not know what to do with all that money they are getting from BioNTech, because it is so much relative to their budget,” said Dullien.
Jokingly referred to as a “nouveau riche” city in the media thanks to the windfall gains, city officials said they resisted the temptation to follow the famous example of one German town and blow the money on pedestrian crosswalks made out of Italian marble.
“We quickly agreed to pay off the €1 billion the city owes, so that by the end of this year Mainz will be entirely debt free,” Mayor Michael Ebling told Fortune.
Next on his agenda is reducing the local trade tax to lure more businesses to the city before over the next decade erecting a new biotech hub, focusing on the science of aging. And if there’s money still left over, he wants to expand and improve Mainz’s public transit system.
“Our grand target is to become CO2 neutral,” the mayor said. “So I’d like to offer the people of Mainz a genuine and affordable alternative to driving.”
While the vaccine produced by BioNTech and Pfizer should help accelerate a return to normal in Germany, the flipside is its economic contribution would then abate going forward. For now, BioNTech is only forecasting €13-€17 billion in vaccine sales for this year.
If the virus becomes endemic, due for example to Omicron, and demand tails off, leading BioNTech to only hit the lower end of that range, it may even prove to be a brake on the German economy.
By then, however, BioNTech and Pfizer will have done their job in fighting the pandemic. “Currently we expect a robust recovery of 4% this year,” Jannsen said.
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