In 2019-20, 418 Indian companies posted revenues of above ₹5,000 crore, according to corporate database Capitaline. For every rupee of revenue, the company that earned the maximum net profit was Serum Institute of India—the vaccine manufacturer that has become pivotal to India’s recovery from this pandemic. On net sales of ₹5,446 crore, Serum earned a net profit of ₹2,251 crore. Or, a net margin of 41.3%.

Companies a notch below on this metric were either in the business of finance (like Citibank and Muthoot Finance) or were monopoly operations (such as Hindustan Zinc and Nuclear Power Corporation). There were 18 pharma companies in thi (serum institute of india stocks) ₹5,000 crore set. The next best was Macleods Pharmaceuticals, with a net margin of 28%.

Serum’s high margins becomes relevant since the company was in prime position to service India’s covid-19 vaccine needs when the pandemic struck. It was the world’s-largest vaccine manufacturer by doses. As early as April 2020, it was a partner in the promising Oxford AstraZeneca covid-19 vaccine candidate, which became Covishield. It had significant financial reserves to expand capacity.

But subsequent choices by the Indian government and Serum squandered that position. Unlike many countries, the Indian government didn’t show urgency to structure and lock up vaccine supplies. Serum waited for the Indian government to commit funds, rather than risk more of its own. Those choices have contributed to a public health debacle. For Serum, it’s still likely to end up as good business, though not as exceptional, or as respectable, as it could have been.

Pandemic Profits

The Poonawalla Group, which owns Serum, also has interests in horse breeding, real estate, finance and aviation. Between 2008-09 and 2015-16, Serum’s revenues grew at a compounded annual rate of 23% to ₹4,630 crore and net profit at 28% to(serum institute of india stocks) ₹2,191 crore. But between 2015-16 and 2019-20, revenue growth fell to 4% and net profit stayed flat, even though profit margins still remained high. The coronavirus pandemic should boost growth significantly.

According to press statements by Adar Poonawalla, CEO of Serum, the company expanded its annual manufacturing capacity from 1.5 billion doses to 2.5 billion, and will increase it to 3 billion by October. In India, the question is how much, and how soon, can it supply to states. So far, in about four months, it has supplied a total of 150 million doses. A May 3 press statement from Serum said it will supply 110 million doses each to the Centre and states in “the next few months".