Which Companies are Profiting from the Pandemic?

Rosalind Gottfried    

February 3, 2021


With the roll out of COVID 19 vaccinations, and the Biden administration’s pledges to speed their dissemination, it might be imagined that the drug companies are reaping enormous profits.  This would be, in large part, an incorrect presumption.  Because many of the pharmaceutical companies took money to develop the vaccine, there are limits on how much they can charge for the product.  Pfizer, one of the first to bring a successful vaccine to market, did not take government funds for research and development of the vaccine; they did join Operation Warp Speed, at a cost of $1.95 billion to the government to provide the first batch of 100million free to the public.  They will charge the government $39.99 per two dose protocol.  While the vaccine costs $15 per person to produce, there are also shipping, administration, and distribution costs.  They are expected to sell $14bn orth of vaccine in the first year.

Multiple factors will contribute to modest profits from the vaccine.  Competition from other companies will limit the price any one company can charge. Moderna and Merck plan to sell vaccines for profit but AstraZeneca says they will sell 300 million doses at no profit and Johnson and  Johnson has asserted that it will not profit during the emergency pandemic.

The pandemic fat cats are the online retailers and services.   E commerce nearly doubled in May 2020.  Amazon spending was up 60% in May-July compared to the same time the previous year.  E commerce increased 38% and Wal-Mart 6% during the same months.  Before the pandemic, Amazon accounted for 4% of retail sales and that figure increased to 15% by 2020.  Economists project a potential rise to a 25% share by 2025.  Amazon is valued at 1.5 trillion dollars, an increase of a half trillion in 2019.  Predictions suggest that 100,000 brick and mortar stores will close by 2025.

Amazon charges their third party merchants a fee to be on the site and takes a percentage of the price of each item sold.  Average sellers fees typically range from 6-15% of the product but can be significantly higher in some cases.  Additionally, they charge to advertise; a company is compelled to place ads because research shows that their sales will fall if they are not in the top of lists for an item.  Amazon is ranked third in advertising revenue behind Google and Facebook.  In fact, around 50% of consumers go straight to Amazon when doing a product search.

In addition to the charges to third party merchants, Amazon has been known to change policies with little, or no, warning and also provide little clarity.  For example, in March 2019 Amazon allowed only household essentials, medical supplies, and high demand items in their warehouses though they failed to clarify these terms, particularly the latter one.  Merchants complained that the items in their stock deemed acceptable appeared arbitrary and also that when the constraints were lifted many items were lost, unpacked, incorrectly counted, and delivered unpredictably.  This could cause merchant ratings to drop and that not only reduces business but runs the risk of having the merchant dropped from the site.

Amazon is facing an  anti-trust suit  from a consumer law firm that alleges price-fixing of their e-books.It is anticipated that a government anti-trust suit against the company is coming soon. In addition the Federal Trade Commission has ordered Amazon to pay $61 million in stolen pay.

Some accusations have been made that Amazon uses data showing high demand products to develop a private competing brand.  Amazon has denied these accusations but they were mentioned in the House anti-trust hearings last spring.  Though the practices are difficult, most merchants cannot afford to stay in business if they are eliminated from the Amazon site.  Amazon merchant practices were brought into question in the Judiciary hearings as was their propensity to acquire companies which would compete with them or could promote their activity.  For example, Amazon bought Zoox, a company working on self-driving cars, for 1.2 billion dollars; these cars could eventually be used to deliver the Amazon purchases.

Apple is another company that has made huge profits in the Covid-19 era.  Similarly, revenue for Microsoft was 40 billion dollars and 28 billion for Facebook in the last quarter of 2020.  Apple had sales of 111.4 billion dollars in the past three months of 2020.  Part of this was due to the new Iphone 12 and to the holiday season.  Their profit was up by 29 % for the same period from the previous year in spite of some temporary store closures during the shelter at home periods.  Apple shares soared by 84% in 2020.


The U.S. House Judiciary Committee antitrust subcommittee’s report, on competition in Digital markets suggests that policies regarding these online enterprises may soon be subject to anti-trust and business practice legislation restricting their operations.  Google, Amazon, and to a lesser extent, Facebook were prominent in the report’s narrative.  However, so far it has been difficult to restrict the practices and marketing of these entities.

It has been suggested that the taxation of global digital companies should be harnessed to pay for the pandemic and related expenses.  The state of California has seen a coalition promote a bill to increase the corporate tax from 8.84 % to 9.6 %, that would produce 2 billion dollars a year to go for housing the homeless.  Critics suggest that this legislation would produce a flight of businesses from the state which some analysts believe is already under way.  The Bill, however, would increase the taxes on any company earning over 5 million dollars of profit in the state, regardless of where they are located.  Governor Newsom declined to support an increased tax on the wealthy, which was another strategy promoted by some to alleviate the lack of services and revenue in the state.

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