For a long time, drug makers have been the most hated industry in America. Companies are blamed for gouging prices on lifesaving drugs and enriching themselves through the opioid crisis, among other sins.
Now, with pharmaceutical companies racing to find vaccines to end the coronavirus pandemic, the industry is hoping to redeem itself in the public’s mind.
The primary goal, of course, is to rescue the world from the grips of a vicious virus. But a big fringe benefit is to get public credit — and to use an improved image to fend off government efforts to more heavily regulate the industry.
Consider Johnson & Johnson, one of the world’s largest health care companies.
In recent years, its reputation has been battered by accusations that products like its artificial hips and talcum powder have harmed customers. In 2019, an Oklahoma judge ordered the company to pay $572 million for contributing to the opioid epidemic.
This spring, Johnson & Johnson jumped into the hunt for a Covid-19 vaccine; its candidate is now in the final stage of clinical trials. (On Monday, the company said it had temporarily paused the study after a participant became sick with an unexplained illness.)
Regardless of whether the vaccine ever comes to market, the company is looking to create a surge of positive publicity from its work. Its chief executive, Alex Gorsky, went on the “Today” show this spring and called Johnson & Johnson’s lab workers heroes. The company has produced a slick, self-promotional online video series, “The Road to a Vaccine,” featuring feel-good interviews with the company’s scientists and segments on issues like whether it is safe to send children back to school.
Johnson & Johnson’s efforts to develop a vaccine will show that “J&J is a company full of people with heart and soul who are doing this 24-7, with all their science and know-how,” Dr. Paul Stoffels, the company’s chief scientific officer, said in an interview. While the company’s image at times has been “trashed,” he said, “I hope that we can get to a better reputation.”
That is a widely held sentiment across the pharmaceutical industry. Companies are looking for public makeovers as a political battle over drug price controls looms. Others are seizing the once-in-a-generation opportunity to raise money for future projects from investors and the government.
For an industry demonized by consumers and politicians, the hunt for a vaccine “offers a path to redemption,” said J. Stephen Morrison, a senior vice president at the Center for Strategic and International Studies, a think tank in Washington.
Last fall, a Gallup poll found that drug makers had the worst reputation of any American industry. Americans were twice as likely to rate the industry negatively as positively. Drug companies were even less popular than the federal government.
The pandemic — and the high hopes for a fast, safe, effective vaccine — appears to be changing that perception, at least for now. This spring, other opinion polls showed that Americans’ views of the industry were improving.
When Gallup released the results of this year’s annual survey, conducted in the first half of August, the results confirmed that the pharmaceutical industry’s reputation had gotten a bit better. Now, it is second-to-last, having inched past the U.S. government.
Public opinion matters. The industry is facing a fight in Washington over price controls, which could take a bite out of companies’ profits in the United States. The latest salvo came last month when President Trump issued an executive order that called for capping the costs of some prescription drugs.
The industry’s largest trade group, the Pharmaceutical Research and Manufacturers of America, is fighting back by invoking the industry’s effort to fight the coronavirus. It denounced Mr. Trump’s executive order as “a reckless attack on the very companies working around the clock to beat Covid-19.”
Kim Monk, managing director of Capital Alpha Partners, a policy research firm based in Washington, said that finding a safe and effective vaccine could help drug companies in their campaign to stave off price controls. “You don’t even need to say it,” she said. “It’s part of the strategy.”
To be sure, the race for a coronavirus vaccine is much more than a public relations play. Scientists at pharmaceutical companies take great pride in their work to combat human suffering. And there is immense prestige involved in being among the first to successfully conquer a devastating global pandemic.
There are also potentially enormous profits on the line.
Vaccines are often thought of as the pharmaceutical industry’s sleepy, low-profit backwater, but that is not always the case, said Dr. David Bishai, a professor of health economics at Johns Hopkins University’s school of public health.
Prevnar, a vaccine to prevent pneumococcal disease, which leads to ear and sinus infections, is Pfizer’s top-selling product, responsible for nearly $6 billion in revenue last year.
Merck’s Gardasil, which protects against human papillomavirus, a sexually transmitted disease that can cause cervical cancer, generated close to $4 billion in sales last year, making it the company’s third-best seller.
While drug makers generally do not disclose what they earn on individual drugs, two of the world’s largest pharmaceutical companies, GlaxoSmithKline and Sanofi, have said in securities filings that the profit margins in their vaccine divisions are greater than in their other lines of business.
Ronny Gal, an analyst at Bernstein, estimated that sales from a coronavirus vaccine could be up to $20 billion in the first year alone. And since diseases are rarely eradicated, vaccines “tend to be a very long-term business,” he said.
Two leading drug makers have pledged to not profit from their vaccines. But those promises are laden with caveats.
Johnson & Johnson has said it will sell the vaccine on a “not-for-profit” basis for “emergency pandemic use.” But the company hasn’t explained in detail how it will define “not for profit.” In any case, when the “emergency pandemic” phase of the crisis ends, the company will no longer be bound by its pledge. Jake Sargent, a Johnson & Johnson spokesman, said the end of the emergency phase “will be defined at a future date by global health authorities.”
Another major drug company, AstraZeneca, has made a similar pledge not to profit on its vaccine, which is also in large clinical trials, during the pandemic. But in a contract with one of its manufacturers, AstraZeneca has suggested that it can declare the pandemic to be over as soon as July 2021 — around the time that a successful vaccine is likely to be getting sold worldwide, according to the Financial Times.
“The company has committed to supplying the potential vaccine at no profit during this pandemic period,” said an AstraZeneca spokeswoman, Michele Meixell. “It is too early to determine pricing post-pandemic.”
The Covid-19 vaccine business is likely to be unusually lucrative because much of the risk has been taken out of the equation. The federal government has entered into deals with companies totaling more than $10 billion to develop, manufacture and distribute coronavirus vaccines. Drug companies usually spend small fortunes to market their products. But that will probably not be required to generate public interest in a coronavirus vaccine.
“If you get a vaccine and it gets recommended by the C.D.C., you barely need a sales force,” said Geoffrey Porges, the director of therapeutics research at the investment bank SVB Leerink.
A successful vaccine could be a transformative moment for unproven companies like Moderna and Novavax, which have never previously brought vaccines to market. But even being involved in the race is proving financially fruitful for smaller firms.
The German biotech firm CureVac, which says it hopes to have a successful vaccine by the end of the year, raised $245 million in August when it began trading on the Nasdaq. It is now valued at nearly $10 billion, despite never having brought a product to market.
Ms. Monk of Capital Alpha Partners said drug makers large and small are likely to benefit from any association with fighting the coronavirus. “For an industry that is not viewed favorably by the public,” she said, “this is a real opportunity for them to put on a white hat and save the world.”
With a dose of experience, intuition and resilience, Peruvian winemakers resist the pandemic and self-generate their income
October 20, 2020 9 min read
Opinions expressed by Entrepreneur contributors are their own.
The new reality that we have entered globally for six months due to the COVID-19 pandemic can be likened to a scenario where humans and organizations, like titans and unicorns , not only coexist in a different environment but also They struggle to excel and ensure their survival in the midst of an unstoppable digital transformation and an accelerating fourth industrial revolution.
However, in this context it also does the same to survive an apparently simple business model where a dose of experience, intuition and resilience predominates, which serve to learn from mistakes and to ensure business continuity, in the middle of closing or the transformation of countless establishments.
We are talking about the inevitable shopkeepers or winemakers, who have immense potential to explore so that they can empower themselves and professionalize themselves, since at the moment a large part of them work without major techniques and state-of-the-art tools that can allow them to become professional and more productive. section of the value chain in which they operate.
Despite the fact that the health emergency paralyzed almost all the economic and productive sectors of the country, the traditional wineries or neighborhood stores did not stop for an instant despite the limitations and social restrictions imposed since the beginning of the pandemic to prevent the spread of the virus.
The resilience of shopkeepers and winemakers have left us inspiring lessons to rethink the relationship between survival, thought and action in the midst of a pandemic, since these true “own account” have not only secured a means to self-generate income, but have also formed a great economic force in their respective countries.
The importance of this business model is reflected in various statistics from South American markets, which indicate that the sales of stores or warehouses may have declined significantly in the current situation, but together they make up a great economic force.
According to a study by the consulting firm Fundes , wineries or neighborhood stores represent 40% of grocery sales in Latin America, which makes them a great economic force.
The resilience of shopkeepers and winemakers have left us inspiring lessons to rethink the relationship between survival, thought and action in the midst of a pandemic / Image: Depositphotos.com
To “get up earlier”
The common denominator behind the stories of each winery is the need to self-generate its own economy, in addition to being part of a family inheritance or an opportunity to raise a family, as well as the strength to overcome obstacles and crises with limited resources and minimal support of traditional channels.
In the midst of the social restrictions imposed by the quarantine in Peru , mainly in phase 1, I had the opportunity to talk with several shopkeeper friends -from different geographical locations in Lima-, about their expectations regarding the continuation of their businesses and the adjustments to the supply chain that allow them to continue serving their customers.
Most of the interviewees indicated that they had not stopped since the beginning of the pandemic and their sales continued to maintain almost the same levels, with the difference that now it was necessary to “get up earlier” to go to look for merchandise, given that many production centers of consumer goods were operating at 30% of their capacity, which caused some delays in receiving their orders.
They were also forced to work fewer hours due to the limitations imposed by the health emergency and the “curfew” at night.
In addition, they refer that they feel “privileged and grateful” because despite the sanitary restrictions imposed, they could continue working supplying the population with basic necessities, while other economic activities were paralyzed or are slowly being reactivated, not to mention that in many cases they were forced to close.
The common denominator behind the stories of each winery is the need to self-generate its own economy / Image: Depositphotos.com
Search for “best prices”
Although it is true that all of them are clients of large suppliers of mass consumption brands, those who deliver merchandise in their stores, continue to consider that it is better to go to the wholesale centers to find better prices and have a significant stock of part of their products. In this search, the maxim that they always keep in mind is “you have to know how to buy”, and also “know how to sell”.
One of the resources used to mitigate the impact of declines in sales was selling stationery, bazaar, and cleaning supplies. In addition, a great strength in these times is having a repowering and trained “delivery” that complies with the required health protocols.
The pandemic and quarantine do not seem to have left Peruvian winemakers in panic or anxiety. It was and is the opportunity to demonstrate resilience and put into practice the lessons learned from personal, family or national crises, since Peru lived through years of violence and economic crisis. Likewise, they should and must demonstrate that they are not conformists, that they have quick adaptability, that there is no time for regrets and that, based on reality, achievable goals should be set.
In recent years many of them went through great challenges and abrupt falls, which made them stagger and test the direction of the ship that they had underway.
It has also been difficult for many of them to go from manual to electronic billing systems and stock control with QR code, contactless payment methods, electronic wallets and apps to use their wholesale orders that are very helpful, but they are working in the process of adaptation while others have migrated to changes that are imposed as necessary to remain in force.
A good part of the Peruvian winemakers have gone from being a small shop to a “minimarket” with success stories that have demanded between 10 and 30 years. This has allowed them to build their own home or buy an apartment and live better, as well as provide their children with a better education, access to private health, not having over-indebtedness, among other achievements that show their personal improvement, as a result of their entrepreneurship.
The strategy that they have implemented for this transformation is to offer a sale for convenience and value-added service, where the client can pay more, having as compensation the immediacy, proximity and solutions.
Thus, they remain the option for people of all generations who want to satisfy an immediate need by resorting to the closest winery to their home, or in other cases ordering through social networks or a phone call.
Added to this is also offering specialized or highly segmented products that are chosen based on the consumer knowledge of their customers. Something that may be easier to know, as the phrase “A good cuber eye” says, and without having an integrated CRM program.
As a corollary, it is appropriate to point out that if shopkeepers had more impulse to progress, access to training with educational quality programs on Marketing, Trade Marketing, Visual Mershandising, Canvas, Design Thinking , Lean Startup , Accounting, Administration, among others, we could talk about a whole power to be developed so that it contributes to economic growth and development according to current times.
This development would have to be agile, dynamic, interactive and be put into practice with traceability .
These traditional businesses have always faced the risk of disappearing as a result of innovation and investments by powerful economic groups. Perhaps today is the opportunity for them to envision and strengthen strategic alliances and businesses that consolidate them as lasting business models, as well as traditional and familiar ones.
Intel Casts Off More Memory Chip Business in $9 Billion Deal
Intel moved to further distance itself from its original business, reaching a deal to sell a remaining memory chip unit to SK Hynix of South Korea for $9 billion.
The transaction, announced on Monday, includes Intel’s most important factory in China. But it excludes a proprietary memory technology that the company has been promoting as an important tool for accelerating speeds in cloud data centers.
Intel for decades has been known for supplying the microprocessors that serve as calculating engines in most computers. But Intel was founded in 1968 mainly to make memory chips, which store data in all kinds of electronic devices.
Those components are largely interchangeable and come from multiple suppliers, which compete fiercely on price and subject the market to boom and bust periods. So Intel, starting in the 1980s, began retreating from segments of the memory business to focus efforts on more profitable microprocessor sales.
The deal with SK Hynix focuses on chips known as NAND flash memory, which store data in smartphones, computers and many other products. Intel’s flash memory business has been doing well lately, with revenue up 76 percent in the second quarter owing to factors like pandemic-related spending on personal computers.
But Intel, which has recently suffered from manufacturing problems, has at other times been hurt by drops in flash memory pricing. Robert Swan, Intel’s chief executive, previously signaled that it might seek a partner or acquirer for the unit.
“Memory is never a great business,” said Jim Handy, a market researcher with Objective Analysis. The deal with SK Hynix is “a very natural step” for Intel, he added.
Intel primarily makes flash memory chips at a factory in Dalian, China, though the company also conducts related development work in New Mexico.
The Wall Street Journal reported earlier Monday that the companies were close to a deal. A news release issued in the evening by SK Hynix said it would make an initial $7 billion payment to acquire both the Dalian factory and NAND flash business as well as a related business selling storage drives that use the chips.
Until a final closing of the deal, not expected until March 2025, Intel will continue to make chips at the Dalian factory, the companies said. After the close, SK Hynix will make a final $2 billion payment and receive other assets, including intellectual property needed to make the chips.
The deal does not include rights to a memory technology called 3D XPoint, developed in a joint venture with Micron Technology, which offers higher data transfer speeds than conventional NAND flash. That technology, which Intel markets under the brand name Optane, “is Intel’s crown jewel in the memory sphere,” said Roger Kay, an analyst at Endpoint Technologies Associates.
Intel has spent billions of dollars perfecting the technology, Mr. Handy said, but the latest quarterly results suggest it may no longer be selling the chips at a loss.
CVS Health will hire 15,000 more workers ahead of flu season.
CVS Health announced on Monday that it planned to hire 15,000 workers to prepare for expected increases in coronavirus and flu cases in the United States during the fall and winter months.
More than 10,000 of the new roles will be full-time and part-time licensed pharmacy technicians at CVS Pharmacy locations to help administer Covid-19 tests, process prescriptions and dispense medications.
“Additional team members typically are needed every flu season,” Lisa Bisaccia, chief human resources officer of CVS Health, said in a statement. “However, we’re estimating a much greater need for trained pharmacy technicians this year given the continued presence of Covid-19 in our communities.”
The additional hires may also help the company distribute a Covid-19 vaccine when it becomes available, if federal officials permit pharmacy technicians to administer it.
In March, CVS Health announced plans to fill 50,000 jobs across the country, the “most ambitious hiring drive in the company’s history,” it said at the time. The company has more than 4,000 drive-through coronavirus testing sites across the United States.
Separately, Target said on Monday that it would pay a fourth bonus to its employees who work in stores, distribution centers and staff and employee contact centers, as the pandemic continues and the retailer’s sales have soared this year.
More than 350,000 workers will receive $200 by early November, Target said.
Sapna Maheshwari contributed reporting.
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