Covid-19, vaccines and the economy
Developing a vaccine typically takes a long time. It used to take some 15 years from the time a virus was discovered, with each post-development phase (1, 2 and 3) lasting about two years, then securing regulatory approval taking another year or two. As earlier research on SARS-CoV 1 and MERs-CoV helped gain a lot of time in the initial exploration phase for Covid-19, the first clinical trial started in March.
According to the WHO, at the end of September, there were 11 vaccines in phase 3 of clinical trials, 19 in phase 2 and 35 in phase 1. Altogether, 65 vaccines are already at a relatively advanced stage. A further 142 vaccines are at the experimental stage (pre-clinical trial), in research laboratories.
As a result, there is growing optimism about the probability of a vaccine within the next six months. According to the Good Judgment Project (which brings together a group of ‘superforecasters’, the probability of having 25m doses of a vaccine (approved by the FDA in the US) before the end of March 2021 is 48% vs 5% in mid-May.
The arrival of a vaccine will be a major public health and economic event. Yet we will probably have to live with Covid-19 far beyond then.
In the past, vaccines allowed the eradication of polio, smallpox and rinderpest (cattle). But they do have their limitations. Seasonal flu still kills some 500,000 people each year, even though there is a vaccine. This is quite simply because the flu vaccine is effective in only 30% to 70% of cases, depending on the year. In fact, the FDA will require a rate of effectiveness of just 50% for Covid-19 vaccines.
In some cases, pandemics are treated without a vaccine. This is what happened with AIDS, the latest massive pandemic before Covid-19, which has killed some 36 million people worldwide since the HIV virus was identified in the early 1980s. At the time, much hope was placed in a vaccine, which has proved elusive so far. Nevertheless, the pandemic has been contained for the last 20 odd years, thanks to prevention campaigns and medical treatment. New HIV infections have fallen by 40% since the 1998 peak. As for deaths from AIDS, they have decreased by more than 60% since the 2004 peak.
There will also be technical limitations to the efficacy of vaccines against Covid-19. There is uncertainty with regards to the capacity and durability of the vaccine to eliminate the sickness and its transmission. The reaction of some vulnerable populations (e.g. seniors) will require specific attention. The need for two doses of vaccine per person has also been mentioned (more likely booster shots) as well as the need for yearly repeat vaccinations. Then, not everyone can be vaccinated at the same time and many people will not be willing to be vaccinated. Lastly, remember that testing is not perfect. There are errors, although the error rate is liable to decrease.
We do not yet know what proportion of the population will be required to be vaccinated worldwide to achieve herd immunity. All will depend on the R0. With an R number of 2.5, about 60% of the world population would have to be vaccinated, or 4.7 billion people. This would assume at the very least considerable human and material infrastructure (laboratories, vaccine doses, vials, syringes, etc.). The question is particularly pressing for developing countries.
In sum, a vaccine will not free us completely from Covid-19. The use of vaccines will coexist with medical treatment, some health regulations, physical distancing, hygiene measures and face coverings.
Society as a whole will have to get used to the fact that a new disease is among us, that it poses a serious threat, but that it will be gradually contained over time.
Will the emergence of a vaccine change perspectives? Of course it will. It will boost confidence, financial conditions (risk asset rally) the investment outlook and some demand segments, such as airlines and hotels & tourism. And yet, we will not be ‘free’ from Covid-19, as we said above.