The pandemic has brought the R in R&D (Research & Development) into sharp focus not only for investors, but also for governments and supra-national organisations like the WHO (World Health Organisation). Never before has there been such an incredible focus, both in terms of funding and intellectual prowess, on finding a vaccine for a disease, with over a 100 candidates being fast tracked by a multitude of organisations globally. Financial markets have been reacting on the back of any news on the race to find a vaccine leading to increasing levels of volatility for investors.
Challenges in R&D
The challenges faced by companies working on a coronavirus vaccine are multiple, starting with the structure of the virus which has the potential to mutate; something that has been seen in similar viruses including HIV. Although current clinical trials are focused on the safety of the potential candidates, the real challenge will come during the efficacy large-scale trials which will prove to be an ethical minefield for researchers. The design of these trials may result in some infected patients being dosed with a placebo to see if the drug candidate is effective in those patients who are injected with the potential vaccine. The current leaders in the race are companies engaged on Phase 1 safety trials which have led to some meaningful progress, but there is still a long way to go before the next 2 phases which will involve recruiting thousands of patients over the next months.
The R&D process will not doubt be in the spotlight for investors at the moment, but it is in the manufacturing and distribution stages where the biggest challenges lie in wait. The manufacturing process for vaccines is complex, with multiple ingredients and high touch processes leading to a long lead in production time. The facilities can take 2 to 5 years to build and the scale of the pandemic means that manufactures will be asked to produce viable doses in the billions. In addition, medical equipment manufactures will have to ramp up capacity to produced billions of vials and syringes. The storage and distribution of the vaccine also brings more challenges as the vials need to be stored within a specific temperature range. In addition, the cold chain distribution will prove to be another hurdle with only a few companies having a global capacity. The sheer scale of the delivering a dose to over 7 billion people, potentially for several seasons will require a high level of investment from all stakeholders.
Although, it normally takes 5 to 10 years to bring a vaccine to market, the sheer number of organisations working on multiple candidates could bring that timescale down dramatically.
When or if?
Although, it normally takes 5 to 10 years to bring a vaccine to market, the sheer number of organisations working on multiple candidates could bring that timescale down dramatically. Whilst any progress on the vaccine front is very welcome, it should be framed within the challenges highlighted above. The final hurdle will be patient compliance, with increasing opposition to mandatory vaccination programs which governments will have to contend with. The prospects of a viable, wide scale vaccine in 2020 may be very slim and it more likely that the world will have to adapt to a disease that will become endemic like other viruses such as Herpes simplex and HIV.
In the case of HIV, the progress made since the 1980s has been remarkable at the treatment level, with the widespread use of antiviral medications. Whilst there potentially may be no winners in the race to find a vaccine, there is more scope for optimism in the treatment of the virus once patients have been diagnosed and hospitalised. This augurs well for the long-term as often pandemics come in waves and often last for 2-3 years. The pandemic still has to run its course and investors will have to manage their expectations as well their portfolios accordingly.
This is the first in a three part series with Ketan Patel, manager of the Amity UK Fund, examining the impact of the coronavirus pandemic on the Healthcare industry. The second part will review how the wider Healthcare industry has been impacted at a sector and company level. The final part will attempt to examine how the pandemic could lead to long-term disruption within the wider sector. Check back on our Insights Hub for future articles, or follow Ketan on Twitter at @Kethical for updates.