A senior immunologist told me privately yesterday that 70% of the Australian population would end up getting swine flu.
The only reason the H1N1 pandemic seems to have faded lately, he says, is that most people are no longer being tested for it when they get sick; in fact the rate of infection is steadily getting worse, to the point where all investors and business people need to take notice and take precautions.
If the immunologist I spoke to is right, it would devastate many businesses and the economy generally, just as they are recovering from the global financial crisis. In fact the impact could be worse than the GFC.
I haven’t seen any specific studies of the impact on the Australian economy, but two UK think-tanks have this week estimated the effect of a 50% infection rate on the British economy: one said it would cause a 5% contraction of GDP, the other 7.5%.
Let’s say a 70% infection rate for Australia is an exaggeration, and assume 50%. The death rate from the H1N1 virus is about one or two in every 1,000 infections. That means at least 10,000 people in this country would die.
An infectious diseases expert, Professor Raina McIntyre, who advises the Government on influenza, said this month the numbers of deaths could reach 20,000.
Health Minister Nicola Roxon quickly described such estimates as ludicrous, saying that the figure would be more like 6,000. Oh, that’s alright then.
Although for most people, H1N1 is like a seasonal flu, that doesn’t mean that it’s mild – like a cold. All influenza attacks are serious and require time off work. If half the population came down with flu, businesses everywhere would have to close and the health system would be overwhelmed.
The problem with H1N1 is that it is extremely contagious and is becoming resistant to Tamiflu and Relenza.
That’s why the clinical trials for a vaccine that began in Adelaide yesterday are so important. But don’t, for a moment, think this will result in a huge windfall for CSL, and that buying its shares is a way to vaccinate your wealth.
There is a global race on for a vaccine – which Australia’s CSL appears to be leading – but it is a low margin, albeit high volume, business because all doses are sold to governments and provided to the population for free.
CSL’s trial is designed to test the optimum size of the dose for H1N1, since the Therapeutic Goods Administration has already accepted that it works.
The Australian Government has already put in an order for 20 million doses, which will be delivered in October when the trial is finished.
The price is still being negotiated, but is expected to be around $6 per dose. That’s $120 million in sales with a small profit margin. In addition, CSL expects to sell about $180 million worth of doses in the United States, but that’s still hardly a big windfall for a company with $5 billion in sales.
Meanwhile GlaxoSmithKline seems to have Europe wrapped up and says it has orders for 195 million doses from 16 countries. It says it will be shipping vaccine doses in September, having begun production in June. (There is some skepticism within CSL about this claim).
GSK also sells Relenza, the post-infection treatment drug invented by Australia’s Biota, which competes with Roche’s Tamiflu, and sales of these two treatment drugs have gone through the roof.
This article first appeared on Business Spectator.
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