Weekly international investment round up to 21 July 2009
• H1N1 virus becomes fastest moving pandemic of all time
• Some sectors are set to thrive during the outbreak
Swine flu has now become the fastest moving pandemic of all time according to the World Health Organisation (WHO), so much so that it says it has now become pointless to count every case. In its latest report the organisation states that in past pandemics, influenza viruses have needed more than six months to spread as widely as the new virus has spread in less than six weeks.
Any doubt remaining of the just how interlinked our world has become must surely now have been removed, those thinking otherwise aren’t living on an island but on the moon!
Just when the world’s economy is beginning to show signs of getting a little better, Swine Flu - now referred to by its less alarmingly entitled scientific name H1N1 - may start to wheel the patient back into intensive care. Following the first reported cases in Mexico, America and Britain would appear to have become the West’s front-line in the fight against this outbreak. With the US having an estimated 1 million cases and the latest ‘Item Club’ report stating Britain’s GDP will now fall by at least 4.5 per cent this year instead of the pre-pandemic guesstimate of 3.5 per cent, the wider economic implications can not be discounted.
Back in April through my article entitled ‘Healthy, Wealthy and Wise’, I commented how Mexico’s economy was likely to be seriously affected by the outbreak and even if to date the wider pandemic has been characterised by the relative mildness of symptoms and by the overwhelming majority of patients who usually recover, even without medical treatment, within a week of the onset of symptoms the cost in lost production alone through absent employees will be huge.
For investors, the H1N1 pandemic will certainly create winners and losers. During the Asian bird flu scare in 2005 for example airlines, insurers, hotel groups and oil companies experienced stock-price falls while shares in the healthcare sector, drug and cleaning product manufacturers boomed. This time around it may not be so different but adding the credit crunch factor into the mix popular safe-havens such as gold, commodities and treasuries are also likely to prosper.
Clearly those companies which may offer vaccines for the H1N1 strain are in demand. Roche Holdings’ antiviral drug ‘Tamiflu’ is currently the best known but other companies working upon their own vaccines include London based GlaxoSmithKline and AstraZeneca; Paris based Sanofi-Aventis; Baxter of America and Novartis from Switzerland. Shares to piggy bank?
Interestingly, it would appear that most of these manufacturers make the vaccine by injecting chicken eggs with a version of the virus which then provides nutrients for the virus to grow. The amount of the virus which grows within it, referred to as its yield, can then be turned into the vaccine. However, it would appear that the manufacturers are encountering problems producing enough ‘yield’ from each egg which means two things - the final version of their vaccine will be in short supply and millions upon millions of chicken eggs will be needed! Now, wouldn’t it be interesting to know who supplied the drug companies with their eggs?