This approach isn't just altruistic; it's smart business. By offering lower royalty rates in developing nations, pharmaceutical companies can tap into markets that are individually less profitable but collectively represent a significant revenue opportunity. This not only expands their global footprint but also fosters goodwill and a positive reputation among global stakeholders. Over time, as economic conditions in these countries improve, these markets could become more profitable, and the tiered royalty structure can be adjusted accordingly.
There are many checks and balances to consider when setting up these tiered royalty structures, from local politics and international trade agreements to purely practical manufacturing and distribution questions. But the royalties can also be tweaked in many different ways, using criteria such as sales volumes, each nation's average spending power, or the regional prevalence of that specific illness. Pulling the right levers can help the innovator do well (financially) and do good (ethically) at the same time.