Read parts of this case, then answer two questions. I did not include the entire case text as most of it is not relevant. Just some parts and charts are important. it is not much to read. I attached pictures of the case text and the questions to answer.

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It was 80 degrem Fahrenheit in the shade typical for early August in the city of Pune, India and a fine bead of sweat trickled down the brow of Adar Poonawala, chief executive ofcer (CEO) of the Serum Institute of India (SII). However, Poonawala was in one of the 811's temperature-controlled production facilities; the heat he felt was the result of concern about the pricing decision he needed to make. It was August 6, 2020, and the pricing strategy for the 811's pipelinc COVID-19 vaccine had to be revisited. The SII was the world's largest manufacturer of vaccines. Indeed, it had produced over 1.5 billion doses in 2019.4 Following the characterization of the COVID19 outbreak as a deadly global pandemic on March 11, 2020, the S11 had entered the race to produce a vaccine. Just two weeks earlier, Poonawala had made a public announcement that thanks to a licensing agreement with AstraZeneca, the British-Swiss pharmaceutical giant, the 811 would begin the manufacturing of the Oxford vaccine (one of the world's most promising vaccine candidates) in August 2020.5 If approved, the vaccine would be released for distribution in India as early as December 2020. It would be available at a price of US$135 per dose under the brand name \"Covishield.\"7 Two doses of the vaccine would be required, resulting in a total cost of $26 per person. The price of $13 per dose was much higher than the price of the SII's typical vaccine. Poonawala's father, Cyrus, the founder president of the SI], had boasted that for a dose of the measles8 vaccine, the SI] price was just 50 cents, while Western big-pharma charged $15.9 In the announcement about the agreement with AstraZeneca, Poonawala had explained the rationale behind the $13 price: the SI] had invested $100 million in a new facility capable of producing one billion doses of COVID-19 vaccines annually. '0 Additionally, the SI] had committed to producing 200 million dosm of Covishield ahead of its regulatory approval, at the company's own risk, to ensure the timely delivery of the vaccine. 1' The operating expenses associated with the production of this early batch of vaccines amounted to more than $100 million. Moreover, the prices charged by United States (US) vaccine makers were higher; for example, Pfizer had recently announced a $19.50 per dose supply deal with the US government.12 The cost of treatment with the antiviral drug Remdesvir was estimated to be more than $3,000 per patient. '3 Even the cost of a COVID-19 test was more Page 49 of 62 Page 2 9B20A089 than $20.14 Yet, less than 24 hours earlier, Johnson & Johnson (J&J), a US-based pharmaceutical and consumer healthcare giant, had announced an agreement to supply a COVID-19 vaccine to the US government for a \"not-for-prot\" price of $10 per dose.'5 In another surprising development, ve days previously, Russian authorities had declared that they would be ready to mass-distribute a vaccine by early October 2020.'6 Poonawala needed to rethink the 311's pricing strategy for Covishield, and quickly. SERUM INSTITUTE OF INDIA The SII was founded by Cyrus Poonawala in 1966, a time when his home country of India had to import most of its vaccines at high prices. Based on domestic market requirements, the SH developed the know- how and technology necessary to manufacture several vaccines and related immunological products, such Page 53 of 62 Page 6 9B20A089 as tetanus anti-toxins, at an affordable price.99 Over time, the SI] began to export its vaccines to many low- and middle-income countries, and eventually, to high-income countries. In 2019, the SI] produced and sold more than 1.5 billion doses of vaccines and related biopharrnaceutical products used in over 170 countries. 100 It was estimated that about two-thirds of the world's children had received at least one vaccine manufactured by the SII.1' These vaccines were accredited by the WHO, and they were favoured due to their quality and affordability. 1\" Despite its policy of keeping vaccine prices low, the SI] enjoyed prot margins of over 40 per cent, which were higher than the prot margins of its larger and more diversied, global competitors (see Exhibit 3). The top management of the SI] attributed the high margins to the company's ability to keep overhead costs low, a motivated workforce, as well as advanced automation and production equipment.103 Cyrus also believed that as the SI] was privately held, it could take a long-term view regarding investments, which was harder to do in publicly traded firms. An example of this thinking could be seen in the 811's large, temperature-controlled warehouse, which maintained a considerable stock of a variety of vaccines. While the warehouse increased operating expenses, the ready inventory enabled the SH to respond rapidly to an outbreak. 10"\" A source of reduced expenses was the lack of investment in research concerning new vaccines. Instead, the SI] focused its development efforts on improving production yields and increasing the stability of its vaccines across a range of temperaturesm'5 As the SH did not develop its own vaccines, it worked with off-patent products, while for newer products, it entered into licensing agreements. \""5 Thus, the SI] had entered into agreements regarding COVID19 vaccines with AstraZeneca and Novovax, another leading vaccine developer.1m However, in a departure from this strategy, the SH had also invested in developing its own COVID-19 vaccine through modifying one of its existing, off-patent vaccines"? THE PRICING DECISION Poonawala had announced that the SH would introduce the Covishield vaccine at an initial price of S 13 per dose, with a price reduction occurring over time as the SH realized economies of scale. '09 The initial $13 price had seemed fair, given the higher prices of the Pzer and Moderna vaccines, the Remdesvir drug, and even COVlD-19 testing kits. Yet, the price point was under attack, given the information released by 1&1 and the Russians. Still, the investment in the new plant and the risk and operating expenses incurred through pre-approval productionamounting to more than $200 millionhad to be recovered\"? Should the SI] continue to follow Pzer's two-part pricing model of \"broad access\" during the pandemic followed by \"valuebased\" access during the endemic phase (after the pandemic)? But what if the next generation of vaccines entered the market during the pandemic? How should the launch price take such uncertainty into account? Should the SI] continue with the $13 price after all? Page 7 9B20A089 EXHIBIT 1: KEY CHARACTERISTICS OF COUNTRY SEGMENTS BY INCOME Segment High-income Upper-middle- Lower-middle- Low-income economies income income economies Characteristics | economies economies Gross national income > $12,356 $4,046 to $1,036 to