Light at the end of the tunnel? Vaccine breakthroughs.

By most accounts, the news from Pfizer/BioNTech and Moderna that their coronavirus vaccines are around 95% effective gave the world a reason to feel hopeful. Following eight months of lockdowns, travel restrictions and social distancing measures that took their toll on the world economy, there is a genuine sense that we have found a way out.

The news couldn’t come at a better time. Following a quiet summer when restrictions were eased and economies reopened, the onset of autumn brought with it a resurgent coronavirus. There is little doubt we are in the midst of a second wave as positive cases reach new highs in the UK and Europe. Governments have responded by tightening restrictions, most notably England’s national lockdown running from 5 November to 2 December.

Successful trials

From the onset of the coronavirus pandemic in early 2020, dozens of research laboratories have been racing to find a vaccine that will bring a halt to this deadly virus’s advances. With more than 150 potential vaccines in development, it was a matter of when, rather than if, one would prove effective. Among the most promising candidates were the efforts by Pfizer/BioNTech, Moderna and AstraZeneca/Oxford University, and there was some expectation that one would pass phase three trials successfully before the end of the year.

The outcome exceeded expectations. The 95% efficacy achieved by Pfizer/BioNTech and Moderna’s Covid-19 vaccines with no major safety observed during phase three trials was significantly higher than expected. With its effectiveness well above the threshold of 50% set by the US Food and Drug Administration, it provides a glimmer of hope that a breakthrough in the vaccine race has been achieved and life as we know it may return to some sort of normality.
What makes this so significant is that it is said that no vaccine has been developed and proven to be so highly effective in such a short period of time. Russia’s Sputnik V vaccine may dispute this claim, given it is purported to be 92% effective, but it has been tested on a much smaller pool of volunteers and has not completed phase three trials.

What happens next?

It cannot be understated that the Pfizer/BioNTech and Moderna development is positive news that provides the world with a shining light at the end of what feels like a very long tunnel. Its efficacy rate is well above what is required to stop the virus spreading in the population and is higher than the 60-70% efficacy rate that had been predicted. Compare this with the flu vaccine’s 40% efficacy rate.

As always, there are caveats, challenges and unanswered questions that need to be addressed. Pfizer and BioNTech have achieved the two month safety data requirement for US regulatory submission and will seek emergency use authorisation as it awaits full approvals from each country’s regulatory body, which could take months. Duration of protection is a question that currently remains unanswered.

Another tricky issue is that the Pfizer/BioNTech vaccine must be stored at -70C and this creates a significant logistical challenge on top of everything else. This is a temperature well below what any normal domestic freezer can achieve, so Pfizer and BioNTech will be tasked with creating a deep-freeze delivery chain. Pfizer has already developed a suitcase-sized transport box that uses dry ice and can hold 5,000 doses for up to 10 days. Moderna’s vaccine is based on the same technology but can be kept in a refrigerator for up to a month.

What does all of this mean?

To borrow a well-used phrase, it is likely this is the beginning of the end of the pandemic – or we are at least very close to it – but there is still much that needs to happen before anyone will be vaccinated en masse. We expect other pharmaceutical companies to announce the results of their trials over the coming months, but Pfizer/BioNTech and Moderna have set a high hurdle to clear. Given how many people around the world will need to be vaccinated, it is likely we will need more than one vaccine to meet the high demand.

Initially, the vaccine will likely be made available to people in high-risk groups, such as older people as well as hospital and care home workers. Ultimately, the roll out will depend on how it works in different age groups and whether or not other vaccines are also available.

How has this affected markets?

It was no surprise that Pfizer’s announcement on the 9th November caused stock markets around the globe to surge, particularly in the sectors hardest hit by the pandemic. This is potentially an economic game changer as it will likely help people’s lives return to normal and businesses to recommence their usual operations.

Companies in sectors that benefit from life returning to normal performed well following the announcement. This includes business in the travel and leisure sector, as well as oil and mining companies. Banks also saw their share prices rise because a stronger economy means fewer businesses defaulting on loans.

Nevertheless, the digital revolution that the pandemic helped to accelerate is unlikely to be curtailed simply because people will be able to visit shops again. Ecommerce has soared this year and as people have become accustomed to having their groceries delivered and ordering more goods online, this will probably continue to take a bite out of bricks and mortar retail stores.

Therefore, we expect the trend towards the digitisation of the economy to carry on and technology companies in this area will continue to perform well. The healthcare sector has been in the spotlight throughout the pandemic and with the vaccine race looking set to heat up, we can expect focus to remain on ongoing efforts from Pfizer/BioNTech, Moderna and other players that are expected to report in due course.

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