I have been a little preoccupied with the evolution of the COVID pandemic specifically because of the rise of what has been dubbed the ‘South Africa’ and ‘UK’ variants. While these may be global catchphrases, they are all too real as I am faced with family and friends down in South Africa who have either passed or are currently ill down there.

It has been scary and it has been tough. At the time of writing, the global death count is over 2.05m. Total case count is rapidly approaching 100m, in line with the expected death toll being in the region of around 2.5%.

However, the distribution of prevalence and deaths paints a very disparate picture. Lets look at the data (thanks to launchandscalefaster.org , Worldometer, WHO | World Health Organization):

Firstly, I have excluded any country or location with a total population of less than 1m people just by way of practicality. This means that the smallest country to make the list is Eswatini. Some data is also incomplete so it may omit countries where the problem may be acute but unreported or reported poorly. For example, I haven’t found comparable data for Spain for active cases and recoveries. As such, when I look at specific lists, they would be excluded. This isn’t a problem as this exercise merely for illustrative and not empirical purposes.

What’s the temperature check?
A common measure is often to look at cases or deaths per 1m population. This is useful to understand how widespread the pandemic is across the general population. On the Cases per 1m cross section, most notable but not surprising is that the US comes out at number 2, barely squeezed out of the top spot by Czech Republic.

Other notable names in the top 15 are: Israel, Switzerland, Belgium, Bahrain, Portugal, the Netherlands and Sweden. The countries have a wide spread prevalence of cases relative to their population sizes.

We can also look at who has the most active cases currently as a measure of prevalence and possibly the impact of the second wave. The top 15 here include France (over 90% still active), Ireland (85%), Lesotho (75%), UK (52%) and the USA at 39%.

Singapore, Saudi Arabia, China and India are among the countries who have reigned in Active cases all below 2% of total cases.

Data on new cases is less reliable as discussed above. However, there have been some wins with countries like New Zealand indicating that their country is now effectively COVID free.

How are we coping with the case load?

Now, lets look at how countries are coping with the case load. I do this by looking at deaths as a percentage of total cases. These range from a high of almost 29% in Yemen where there may well be extenuating circumstances being in an active war zone (Syria is also quite high).

But the top 15 again include notable mentions: Mexico, Egypt, China and Iran. These are countries that are arguably not coping as well. Recovery rates are poorest in : Greece, Belgium, France, Ireland, Lesotho, UK and the USA.

Who has done well? Singapore, Saudi Arabia, Qatar, India and Ghana, all with an above 96% recovery rate.

In aggregate, SA and Canada are both slightly ahead of the world average in terms of number of deaths, slightly better in terms of number of deaths and slightly better on recovered cases (See Figure 1). The status of these numbers is constantly in flux and likely does not capture the full virulence and impact of the new strain. Keep that in mind.

Figure 1:

Source: Moe-Knows.com, cited sources above.

Now what about the response?
Naturally, the respective country’s economic status tends to have a direct bearing on their ability to respond to the crisis. High income countries have been quick off the mark in procuring vaccines and have also lined up significant future orders. However, there have also been substantial commitments from several wealthy countries toward the COVAX initiative with some indicated in the table below .

Figure 2:

Source: Launch and Scale faster, Covax/GAVI

When measured against the respective COVID-19 burden (total cases per million) in each country (Figure 3), you can see that some positive correlation should exist ie: countries with a higher burden should have procured more vaccines.

However, some are hamstrung by fiscal restraints whilst others are hamstrung through inept bureaucracy. I will leave this up to the reader to determine based on their own perceptions of their respective governments.

Figure 3: Vaccine coverage (y-axis) vs. Covid burden (x-axis) – all countries

Source: Launch and Scale faster

Even countries which have thus far fared poorly, such as the US, have thrown resources at the problem and have managed to procure roughly 2 vaccines per person. Bear in mind that some vaccines will require multiple doses. Canada is the clear outlier having procured over 5 times the coverage per person but is currently facing constraints in administering those vaccines.

Some middle income countries aren’t being left behind…
When looking just at Upper middle income countries (South Africa falls into this grouping), a more disparate picture emerges (Figure 4). Firstly, all countries in this category fall below the 100% threshold. However, there are clear leaders and laggards. For example, Peru, Mexico and even Brazil where the disease burden has been very high, have all procured substantial vaccines.

Figure 4:

Source: Launch and Scale faster

South Africa tends to lag its middle income peers and would fall decidedly below the trend. Talks of additional taxes to pay for the vaccine (including a much touted solidarity tax) certainly raise the ire of tax payers not least because it raises the question of where much of the early COVID assistance went as well as why an additional tax should be considered when the well documented profligacy of SA’s fiscal management has seen multiples of the amount required for the vaccine arguably squandered on bailing out failing state owned enterprises. (I’ll stop my gripe here).

Vaccine – mRNA vs. Adenovirus, dosage, efficacy – What gives?
The world of the vaccine is also a diverse one. There are a multitude of technologies and approaches being used. I am no epidemiologist so I will leave out the explanations on the technical differences suffice to say that the predominant technologies being used are the Adenovirus approach and the mRNA approach.

I indicate which vaccines are using each in Table 1 below. What appears to be the case is that there are always a set of trade offs. The key differences are that Adenovirus based vaccines seem to be more ‘stable’ and are easier to transport and store but seem to result in lower efficacy. They also appear to be somewhat cheaper based on initial indications of pricing I could find. That said, it appears as through a 70% and above efficacy is sufficient by vaccine standards.

Table 1:

Source: Moe-Knows.com

The key contenders who are already in production mode with high efficacy seem to be the Oxford/AstraZeneca, Pfizer and Moderna. The standout contender here seems to be the Oxford vaccine/AstraZeneca vaccine, which while having a lower efficacy, appears to be considerably cheaper and more ‘practical’.

The Figure 5 below shows the extent of commitments made by various government toward each vaccine provider thus far and excluded ‘potential’ commitment. The market is also awaiting the results of the JNJ and Sanofi trials which are due later this month or during February.

Figure 5:

Source: Launch and Scale faster

What does all this mean?

It is evident that the path through this pandemic has been rough and uneven. As with many things in life, those countries better prepared financially or procedurally have taken the lead in addressing the response to the pandemic. This ranges from regulatory approvals as well as procuring the vaccines.

Logistical challenges in cold chain management and procurement will mean that certain vaccines (Pfizer and Moderna) are probably best suited to countries with well-developed infrastructure while vaccines that are more stable in higher temperatures will likely be used more extensively by countries where infrastructure is lacking. That said, many countries are approaching this with multiple procurement strategy which is probably best.

It will not all be smooth sailing. The availability of the vaccine is only one dimension. The efficacy of countries’ respective healthcare systems will also determine the ability to effectively roll out the vaccine to the general population. This tells me that the overhang of the pandemic will remain with us for much of 2021. Introduce the risk of variants and it may extend the timeline.

Leaders like Pfizer and Moderna have not been without their own setbacks. Pfizer recently announced the delay in scheduled deliveries to many countries, resulting from a reconfiguration of the year in action facilities primarily in Europe. Moderna has recently announced a series of allergic reactions from one of and a vaccine batches the Southern California.

Importantly for SA, pharmaceutical companies like Aspen have secured production contracts with the likes of Johnson & Johnson which opens the path for domestic production. However, the onus to procure these vaccines still lies with the government.

In the interests of full disclosure, at the time of writing, I hold positions in some pharma and healthcare stocks and in particular, both Pfizer and Moderna. The rationale to these holdings are partially because I see the pandemic having lasting consequences and the need for vaccines to continue as much of the world still needs to be vaccinated.

As the virus mutates this will likely become as common as the ‘flu shot’ and will likely last several years. While Moderna is more of a ‘vaccine’ play, Pfizer also gives me a lower risk and broader portfolio. Pfizer’s current div yield is around 4.25% and in my view is still undervalued in the long term. Moderna is more of a growth play, with no dividend but is a leader in the mRNA space (in fact its share code is MRNA).

Figure 6: Pfizer (left) and Moderna (right)

Source: Trading View

As always, this does not constitute advice. These stocks fit into my view of the world and some of the themes I think and write about and form only part of a wider portfolio strategy and plan. Please consult your own advisors and perform your own due diligence.

There are several ways to play the pandemic trade ranging from WFH themes to telemedicine to plays on specific commodities. For example, I discussed my view on stocks like McKesson (pharma distribution) and Teladoc (telemedicine) – (Figure 7) in my Magic Markets podcast 2021 Preview with the Finance Ghost. Check it out in the hyperlink and if you like this kind of content, subscribe to the podcast as well.

Figure 7: Teledoc (left) and McKesson (right)

Source: Trading View

It’s going to be a long road. For me, the vaccine represents hope of a future which returns to some normalcy. Hope isn’t a strategy but in this instance, the strategies around how we create, deploy and harness hope and present an opportunity.

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