Investing amidst COVID-19
I really like what McKinsey & Company had done in this
research article and will greatly suggest you take some time to read it.
https://www.mckinsey.com/industries/pharmaceuticals-and-medical-products/our-insights/on-pins-and-needles-will-covid-19-vaccines-save-the-world#
McKinsey & Company is a US-based management consulting
firm. The company offers a range of advisory services and is recognized as a
credible thought leader.
In summary to their article published on 29 July 2020, all evidence suggests that
COVID-19 vaccines are likely to become available for focused populations
somewhere between 4Q 2020 and 1Q 2021. The initial set of vaccine candidates
will likely be small and supply constrained. Additional candidates could
receive approval and be manufactured on a broader scale and approved for
broader populations in late 2021.
“Aight, I’m outa here”
That is the lay investor’s view when it comes to vaccination
news. I do not blame them for associating the introduction of vaccination spelling
the end of MED’s growth spurt. But do spend the time to digest this:
To be honest, right now I feel very lucky to be in
Singapore. I think the government have managed the situation well and have
largely placed a lid on community cases. The same cannot be said in many parts
of the world, Asia, Europe and US continue to register new infections daily.
In Asia, while India continues to hog the headlines, countries like Indonesia and South Korea are fighting tooth and nail to keep
soaring infections/ reinfections from overwhelming their healthcare systems.
In Europe, many European countries are beginning to see a
resurgence of the virus. The Economist provides a good visual representation of
the situation in Europe (https://www.economist.com/graphic-detail/2020/07/03/tracking-the-coronavirus-across-europe),
please scroll down to view the line graphs of various European countries.
In the US, infection rates continue to remain elevated
albeit seeing a reduction. The New York Times provide a good visual representation of the
infection numbers in various states (https://www.nytimes.com/interactive/2020/us/coronavirus-us-cases.html).
This means that PPE burn rates have not substantially come
down across major populous countries (they cannot begin stockpiling) except in
China. Putting this aside, nations that have managed to put COVID-19 under
control for now are also conducting an ongoing process of building up a strategic
national stockpile of PPE. This further exacerbates the tight demand faced globally.
Do I see sustained demand for PPE well into 2021? Yes, I
certainly do as research has already suggested mass production for broader population
vaccination will likely come in late 2021. Between 4Q 2020 to late 2021, the on
again off again relationship with COVID-19 and stockpiling efforts by various
countries will come together and continue to spur demand for PPE. These twin drivers of demand will also keep prices elevated.
To address the elephant in the room, is Trump going to deliver on the vaccine? It is possible given the amount of resources and momentum behind vaccine research.
But is this vaccine going to be widely available by 1Q 2021? "errr..."
The next article we will talk about stockpiling and hopefully (if time permits), delve into the FY2021 numbers for MED.
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