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Prof. Dr. Sebastian Dullien:
Scientific Director of the Institute for Macroeconomics and Business Cycle Research (IMK) in the Hans Böckler Foundation
Photo: Peter Himsel / Hans Böckler Foundation
manager magazin: Mr. Dullien, the thesis that a large part of the German economic growth in 2021 is due to the success of the vaccine developer Biontech has sparked numerous discussions on social media. Did this reaction surprise you? Topics like GDP and GDP growth are actually rather dry subjects.
Sebastian Dullien:
That didn't surprise me, because this development is something special.
I can't remember a company that was considered a start-up just a few years ago having had such a share in the economic development.
There are, of course, other companies that have a similar or even higher share of the country's total economic output.
But with such dynamics, we in Germany have not yet experienced a growth spurt within a year.
An exciting development that you had already forecast in the summer of 2021.
Yes, but at that time it was not yet certain how the license payments from Biontech's contract with the US company Pfizer would be booked.
It has now been clarified via which components this license income flows into German GDP.
For us, of course, this is also a story that can be used to illustrate the gross domestic product.
In order to estimate a company's share of GDP growth, one has to consider several factors. The difference between "share of GDP growth" and "share of GDP" has been discussed in the forums. Which scale says more?
The share of growth depends on how the rest of the economy fares. If for some reason the economy had grown less in 2021, the biontech share might have accounted for the full GDP increase instead of a fifth. But if Biontech had launched the vaccine a year earlier, when the German economy was shrinking, you wouldn't have been able to put that into perspective. That's why it makes more sense in the long run to count a company's share of GDP and not growth. And of course, a large car company like Volkswagen has a larger share of overall economic output than a vaccine manufacturer like Biontech.
Nevertheless, Biontech's turnover has increased from less than half a billion euros in 2020 to more than 16 billion euros in 2021. Such an increase in sales is enormous for a former start-up - and at 16 billion euros, the share of GDP is not exactly small.
Definitely.
In the past, there have already been double-digit billion increases in corporations like VW, but the basic level was already high and it was about the global group turnover.
A lot of value creation does not take place in Germany, but in the countries where the cars are built.
As a result, the share of GDP in this country is also lower than the simple growth in sales would suggest.
At Biontech, was most of the value added domestically?
Yes, only a few preliminary products are required and a large part of the added value lies in the intellectual development of the vaccine. That's often the case with pharmaceutical products, usually the development is very expensive, the production is then no longer relatively expensive. So this is a later return on the development that a company has made in the early stages. Of course, in this pandemic situation in particular, there is a discussion as to whether it would not be better if Biontech were to sell the vaccines more cheaply so that the rest of the world can also participate. However, I think that the price is not the obstacle here, but that poorer countries do not vaccinate so much with the Biontech vaccine, mainly because they often simply lack the infrastructure with the appropriate cold chains.
In the debate about the article, there were also statements that Biontech's success should not be overstated. Biontech's income is "only our own tax money".
That's not true, because there are only a few German sales.
The vast majority of the sum was raised outside of Germany.
It may be that the money comes from publicly funded health systems, but at the same time it is a product that improves the quality of life of many people - because serious illnesses and death from a viral disease are avoided in the vast majority of cases.
In addition, if there is a lot of vaccination in a country, a lockdown can be avoided in most cases.
Some critics also point out that Biontech initially received massive tax incentives for research and development.
I think that's largely unproblematic.
That shows that tax incentives for research work.
And unlike some other corporations, Biontech does not have a so-called "patent box".
This means that Biontech also pays tax on its profits here.
The German treasury has enormously high income, in addition to the trade taxes at the Biontech locations in Mainz and Marburg, the state of Hesse and the federal government have also received quite lavish tax and levy income.
These subsidies were also a really good investment for the public sector.
Do you see other companies that could create such outstanding growth?
Strong growth "from zero to a hundred" is always possible, especially for Internet companies.
In a country like Germany, a strong effect on GDP is also conceivable, as is the case with Biontech.
Will Biontech's rapid growth continue?
If you look at the vaccine manufacturer's sales forecasts for 2022, the figures are not far from the sales figures for 2021. This means that we will certainly not receive such a significant contribution to economic growth from Biontech in the current year, but we will again receive an enormous share of the overall economic output.
I also think this is plausible, because in 2022 not much more vaccine will be used against Covid than in the previous year.
Logically, the growth potential here is limited.
There were also many positive voices in the discussion. Germany needs such new business models because the old industries are weakening, it was said.
I would separate that.
The old, established industries such as automobiles or mechanical and plant engineering are still important and of enormous size.
But biotechnology is of course a growth industry.
And it's positive to see that a company like Biontech was set up in Germany and is enjoying great success around the world.
This shows that the conditions for research and also for start-ups in this country are much better than some prophecies of doom like to portray.
Mr
