Over the past year, leaders around the globe have held their breath as the pandemic unfolded and drastic measures were tested, from safety mitigation and scientific developments to unprecedented fiscal stimulus. And now, as we emerge from the cloud of 2020, it is likely the current pandemic will soon pass to become an endemic. Even with this transition, the fight is not over. Governments and businesses—including the middle market firms that constitute the real economy—will face a host of new challenges as the economy comes back on line.
Whether it’s decisions about vaccine requirements, including the role of the workplace for annual jabs; accelerating a decade’s worth of lagging productivity-enhancing capital expenditures into the next 24 months; or navigating the major shift toward remote work, the near term will be one of resilience and reinvention. With roughly $90 trillion of global gross domestic product on the line, we are past the point of wait and see; it is time that governments and businesses alike start to evolve as quickly as the virus.
The luxury of a contentious decision
At present, 345 million vaccine doses have been administered globally, new vaccines and therapeutics are being approved, and in the U.S., we just saw our lowest weekly increase (1.5%) in total COVID-19 cases since the start of the pandemic.
At the same time, global cases are rising for the first time in seven weeks, according to officials from the World Health Organization, which is being driven by the Americas (excluding the U.S.), Europe and Southeast Asia. That increase is also due in part to “relaxing of public health measures, continued circulation of variants and people letting down their guard,” according to the WHO.
Domestically, with the approval of Johnson & Johnson’s vaccine alongside those of Moderna and Pfizer/BioNTech, the U.S. is expected to have sufficient doses by the end of May to vaccinate all eligible adults, and will likely be able to vaccinate everyone who wants a jab before then. Given that herd immunity in the U.S. could be achieved in less than 12 weeks, many leaders across government, scientific and labor groups are questioning some states’ decisions to ease restrictions and allow full capacity at businesses.
As the second most populous state in the nation, Texas has been front and center in the reopening discussion, and will likely prove to be a microcosm of the decisions and impacts that will play out across the country and globe as economies struggle with how best to reopen. Experience from the second and third waves indicate that the previous reopenings were followed by sharp increases in cases. Given the unknown protection provided by vaccinations and previous exposure, health officials warn that lifting mask mandates and capacity restrictions will lead to a fourth wave of infections and deaths, and will drag out the pandemic even longer.
And while the future is unclear, it’s important to keep in mind how fortunate we are to even be able to deliberate the merits of reopening economies. In less than a year the world has gone from global lockdown because of a deadly new virus, to making intentional decisions to reopen because of controlled cases and growing immunity due to novel vaccines.
The toll on lives and economies cannot be understated; however, it seems this pandemic could have been significantly worse. The question now is how can we continue to move fast on vaccines and therapies, without rushing to reopen, while also bravely facing a new normal where COVID-19 is controlled as a manageable endemic.
Frustrating resilience of disease
“SARS-CoV-2 is not going away. We are going to live with this virus, we think, forever,” was the chillingly honest commentary from Moderna’s chief executive, Stephane Bancel, at the JP Morgan Healthcare Conference. While the virus is likely here to stay, we should not mistake the inability to eradicate COVID-19 as a failure, or expect that deaths, economic lockdowns and perpetual masking will be the norm.
For better or worse, endemic diseases are woven into the fabric of our lives. We live with them and adapt behaviors, policies and expectations surrounding them. Hepatitis, malaria, HIV and the flu are a few of the most common diseases around the globe, and despite the best efforts of health and scientific communities, they are all frustratingly endemic.
Smallpox, which resulted in an estimated 300 million to 500 million deaths, is the only disease affecting humans that has been successfully eradicated. That lone achievement is due in part to the nature of the virus, not just the existence of vaccinations. According to the American Society for Microbiology, eradication of a disease is facilitated by four criteria which COVID-19 unfortunately does not follow.
|Eradication criteria||SARS-CoV-2 / COVID-19 considerations|
|Disease is easily diagnosable and recognizable||Asymptomatic cases of COVID-19 are common and without proper testing may go undiagnosed or be classified as another disease, including other coronavirus’s that are globally endemic (e.g., the flu).|
|No non-human reservoir or vector to support the spread||SARS-CoV-2 is able to cross phylogenic boundaries between species (e.g., known cases in pets and zoo animals), and the virus most likely originated from bats and was spread in a live animal market. Smallpox in comparison was only transmittable between humans.|
|Disease is geographically restricted|
The global economy makes geographic restriction practically impossible, especially given asymptomatic infections, re-infections by different variants (Brazil’s variant warning to the world), and current vaccines that do not provide full immunity against the disease or its variants. Note: Smallpox was globally distributed, but the cost and time of cross border travel hindered major population movement.
|Vaccine or other transmission-disrupting alternatives exist||The goal of vaccines and disruption measures are to generate herd immunity or reduce transmission until the virus peters out in an affected population. With COVID-19, vaccines have been developed at a record pace, and simple actions such as social distancing, masking and use of sanitizers have proven to significantly limit transmission of the disease. Going forward the primary issue will be rapid vaccine distribution and high levels of adoption across the globe, as well as the continued use of mitigating measures until sufficient herd immunity is achieved.|
Previously in a recent blog post, we discussed the emergence of COVID-19 variants and the challenges that they present combating the pandemic from a vaccination and herd immunity perspective. It is our opinion, and that of many in the scientific community, that the transmission and natural mutation of the virus across hundreds of millions of hosts across the globe is why COVID-19 is destined to become endemic.
On March 8 the journal Nature released a study of the effectiveness of the Pfizer and Moderna vaccines against the U.K. and South Africa variants. According to the authors, “Mutationally, this virus is traveling in a direction that could ultimately lead to escape from our current therapeutic and prophylactic interventions directed to the viral spike. If the rampant spread of the virus continues and more critical mutations accumulate, then we may be condemned to chasing after the evolving SARS-CoV-2 continually, as we have long done for influenza virus. Such considerations require that we stop virus transmission as quickly as is feasible, by redoubling our mitigation measures and by expediting vaccine rollout.”
We refer to this not as a lesson in disease transmission and eradication, but as a reminder that the same challenges of controlling a disease on a global level are also present in our local communities.
Now is the time to double down on efforts to prevent and contain the virus so that so much hard fought ground is not lost. And this is not just a matter of action for states and counties in the U.S., but for all nations as we collectively fight the pandemic. This is a large reason why the efficient and equitable distribution of vaccines across rich and poor nations is critical, and why every effort should be taken to support vaccination roll outs and the further development of vaccines, boosters and therapies. Because as long as there are reservoirs of the virus around the globe, there will be outbreaks of COVID-19, and the specter of 2020 will dampen the global economic recovery and the return to our evolved vision of normal. This is not intended to be disheartening, but it is the reality that legislators, business owners and our communities need to come to grips with as the economy pushes forward with reopening.
An endemic new normal
What will life, ecosystems and the marketplace look like in an endemic new normal? Some governments and businesses have already begun thinking in terms of an endemic future, even if doing so unintentionally. Evaluating existing business models, updating policies and making investments in technology and digital infrastructure are just a few components of this new normal.
The charts below visualize the volume and velocity of published articles referencing an endemic or epidemic, inclusive of references to COVID-19, seasonal and flu; and serves to illustrate the increased prevalence of the endemic conversation taking place in the community, even with the distribution of vaccines in the new year.
And note, it’s not just health care and life sciences businesses thinking about life with COVID-19. Other industries have continued to ruminate about an endemic future.
And businesses have much to ponder. While there are pandemic driven headwinds to address amid the full recovery of the economy, there is overwhelming momentum from a demand, fiscal stimulus and monetary policy perspective. Recovery will look different for each business, but there are some basic factors that should be considered.
Business model evolution
Professional services firms have been serving clients remotely for a year, doctors and patients are embracing telehealth, and ecommerce grew by more than 33% in 2020 according to research firm eMarketer. As reported by Bloomberg, “10 large retailers accounted for 68% of all U.S. e-commerce sales last year,” with Amazon representing more than half of all online sales.
Business owners will need to evaluate new consumer preferences, who their customers were before and during the pandemic, and how those interactions have changed. As the economy reopens and a flood of pent up consumer demand is released, the new challenge for middle market businesses is likely to focus around how they remain relevant and competitive in an increasingly consolidated and technologically advanced economy.
Middle market considerations: Who are your customers and how did your organization interact with them during the pandemic? How do you expect to engage your market in the new digital economy? What investments are necessary to stay ahead of your competitors and disruptors? Has your model moved from B2B to B2C?
Weighing local rules, federal recommendations and community attitudes
As pandemic-driven safety measures are lifted and economies push to reopen, it will be the responsibility of firms to step up and decide how to move forward in the best interest of their customers, employees and bottom line. In response to the easing of mask mandates and occupancy limits by some state and local governments, many large retailers (including Starbucks, Target, Macy’s, Kroger) have decided to maintain their requirements for face coverings and have stated they will continue to follow federal guidelines on social distancing. Unions and employee associations are also likely to push for continued safety measures to keep their members healthy.
Just as the implementation of COVID-19 measures generated disagreement, so too will the lifting of such measures. And it looks increasingly likely that business leaders will be tasked with navigating this uncharted territory, as well as enforcement of their own internal and customer facing policies. As reported by Bloomberg, there has been a hiring spree for security guards, but many have also faced violent confrontations regarding masks and social distancing.
Middle market considerations: Who will be responsible for creating and enforcing company rules and regulations around COVID-19 safety measures? How will you monitor and incorporate local ordinances? How will your policies be communicated in an effective manner? Are there additional costs or is liability coverage needed?
Vaccination passports and health screening
Many governments including the U.S., U.K. and the European Union are contemplating easing travel restrictions, as well as the adoption of vaccine passports or health certificates. Conceptually, such passes would show vaccination, previous infection or a recent negative test. But this is far from perfect science given vaccines and natural antibodies have had varying degrees of effectiveness, and there is limited research about disease transmission from a vaccinated person to an unprotected party.
Some health officials and civil liberty groups have also warned of inherent (while often unintentional) inequality to the process given that most countries do not have sufficient access to vaccines. When we think about the domestic and international K-shaped recovery, the introduction of health passports would likely enhance that disparity. Actual or implied inequality would span political, cultural and religious lines; which in our estimation would lead to less open markets, nationalization of supply chains and a weaker economic recovery.
For business owners the adoption of vaccination certificates or health screening measures can create headaches beyond a human resource and privacy perspective; and could have a chilling effect on the culture of an organization. Whether for health, religious or personal reasons, it is easy to see the downside risk of lines being drawn between the vaccinated haves and have-nots.
Middle market considerations: How will your business navigate health and safety protocols as employees return to the office or re-enter the marketplace? Will reopening procedures apply to employees and customers alike? If travel, networking and customer interaction have historically been important from a performance perspective, how will that be worked into future hiring and evaluation decisions? Has the organization considered what the impact (tangible or reputational) would be to the business if an employee was responsible for transmitting COVID-19 to a fellow employee or customer?
Work from home becomes work from anywhere
Of all the pandemic changes, the shift from the office, to home, to anywhere will prove to be one of the most dramatic and challenging.
For many industries, the talent pool has increased exponentially overnight, and employees finally received the “flexibility” they have been craving. This will theoretically allow firms to more easily recruit the right talent for the job, and moderate labor costs away from traditional high talent and high cost labor hubs. There is also the added risk of employee burnout and a lack of connectivity to the company or peers, which can negatively impact morale, collaboration and innovation.
As a result, business leaders will need to consider how a post-pandemic workforce will interact with each other and a community that is now structurally different and increasingly digital. Communication, collaboration, training and evaluation will all look different going forward, and the need to embrace technology solutions is higher than ever.
Middle market considerations: How will you address recruiting and retention efforts coming out of the pandemic? Have you considered payroll tax and sales nexus implications? What are your company’s long-term cybersecurity needs with a remote workforce and client deck? Does the firm have a disaster recovery plan that addresses physical and digital disruptions? What is the response plan for another pandemic wave or localized outbreak?
There is much to do and to anticipate, but we’ve come so far from a year of despair and uncertainty. Businesses and communities have learned and adapted. It will take that reserve and know how to tackle the next leg of our COVID-19 journey—living and growing despite its endemic challenges.