Pfizer and German biotech firm BioNTech’s Monday announcement that their COVID-19 vaccine candidate has shown to be more than 90% effective in preliminary results from an ongoing trial is a much needed win in the fight against the pandemic. It carries significant economic implications regarding the potential unlocking of close to $4 trillion in impaired economic activity in the United States, pulling forward the point at which the full productive capacity, consumption and employment can be utilized. While significant challenges remain with respect to testing, production and distribution of a potential vaccine, we are likely now closer to the end of the pandemic than the beginning. There is light at the end of the tunnel and it is not an oncoming train.
Perhaps more importantly, a vaccine would create the conditions whereby individuals will increasingly feel safe to resume normal social and economic activities, bolstering commercial pursuits across the more devastated sectors of the economy that rely on in-person interaction. Willingness to board an airplane, get on a bus, take the subway or sit next to one another in a restaurant are some of the basic building blocks of the modern economy that the pandemic has decimated. It has been our contention that until there is a vaccine there will be no meaningful recovery. Based on the initial reports from Pfizer’s 44,000-patient clinical trial, we are on the cusp of entering that recovery.
Pfizer and BioNTech are the first major vaccine developers to announce efficacy data from a Phase 3 trial, and the results exceeded the previous consensus in the scientific community that we should expect initial vaccines to be only 50 to 70% effective. While Pfizer’s experimental mRNA vaccine showed efficacy higher than 90%, the results are preliminary and have not yet undergone peer review. Moderna’s vaccine candidate, which started Phase 3 trials in June and is based upon the same underlying technology as Pfizer’s, would appear to be the next most promising candidate.
It is crucial to remember that this vaccine candidate has not received FDA approval, and is far from widespread distribution and delivery. However, Monday’s news is the brightest glimmer of hope we have seen as much of the world is experiencing an explosive spread of the virus. While equity markets erupted following Pfizer’s announcement, the reality is that the fight is nowhere near over and that significant challenges lie ahead to control the virus and restart the economy.
Next steps
The next step for Pfizer is to see this vaccine candidate’s trial through to an Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration (FDA), which Pfizer expects to apply for in the third week of November. In order for the EUA to be approved, outside experts will evaluate the clinical trial data and determine if the vaccine is as safe and effective as Pfizer believes. If that hurdle is cleared and the FDA approves the EUA, that would allow for the vaccine to be administered in the United States to people older than 16, including those with HIV, hepatitis B or hepatitis C. This EUA would not be a full commercial approval, and it would not apply to children under 16 because that age group was not a part of the clinical trial.
If and when an EUA is approved, the true challenge will be the manufacturing and distribution of hundreds of millions of doses of the vaccine in the United States and globally. This is where Pfizer’s efforts will shift from scientific to logistical and even political. This vaccine candidate would be the first of its kind to use an mRNA delivery system, which is significantly different than traditional vaccines and therapies. One of the most notable complexities this presents for Pfizer is that its vaccine needs to be kept at -94 degrees Fahrenheit, requiring fields of special freezers, custom shipping containers, mountains of dry ice, and seamless delivery execution.
This will be no small feat, but Pfizer has been planning for it and working closely with delivery partners since the early days of its research on the vaccine. Distribution will also require the assistance of the United States government and its assets, including the U.S. military. The much thornier issue that Pfizer and the government will need to address is the matter of equitable distribution of limited vaccine supplies. That is a discussion that has not yet begun inside the United States government or its society.
It is important to note that for the U.S. and global economies to return to pre-pandemic levels, we will need global coordination and cooperation to produce and distribute the vaccine. That will involve global finance, production and cooperation with the World Health Organization and the International Monetary Fund and the wealthy economies.
Reality check
Before talking about distribution, it is critical to remember that Pfizer’s vaccine requires two doses, delivered by injection 21 days apart. This means that the number of people that can be vaccinated is half of the total doses produced. Pfizer plans to have 50 million doses available by the end of 2020, with production drastically ramping up to an additional 1.3 billion doses in 2021, or enough to treat 650 million patients.
This would be a staggering accomplishment, and if the 90% efficacy holds true, would go a long way in creating herd immunity in the vaccinated communities. It would also mean that, absent approvals of other vaccines, there will only be enough vaccine doses available to treat about 8% of the 7.8 billion people on earth. Global production and distribution will be a significant challenge over the next two years.
This is where politics, ethics and the reality of economic recovery come into play. The United States has entered into agreements with Pfizer to purchase 600 million doses of the yet-to-be approved vaccine, enough to treat 90% of all Americans. Pfizer has entered into similar agreements with other countries, namely 300 million doses for the European Union, 120 million for Japan, and 30 million for the United Kingdom. Assuming the United States exercised its purchase option for all 600 million doses, it would represent approximately 44% of the global production of the vaccine. What we do not know is how Pfizer will allocate production capacity among its customers, or what the ramp up to full production will look like. It is our expectation that production would increase in speed and efficiency through of the first half of 2021.
If 300 million doses become available over the course of the year for Americans, our leaders will need to make difficult decisions about who will have access to the vaccine and when. Federal and state governments are working with scientific and academic groups to develop guidelines for mass vaccination efforts to maximize efficacy and balance equity. The decisions these groups make will directly affect how quickly businesses and their customers are able to achieve a post-pandemic normal. The National Academies of Sciences, Engineering, and Medicine (NAS) has developed a framework for the equitable allocation of a COVID-19 vaccine, along with a four phase approach that prioritizes the most at-risk and vulnerable portion of our population.
The first figure below highlights an excerpt from the NAS publication, which summarizes who would be included in each of the phases. In the second figure, we have also quantified the approximate U.S. population that fits into each of these phases.
Communities and leaders must remember that if and when approved, a vaccine is not a silver bullet against the pandemic. There is still significant hardship ahead and it will be months before a vaccine is widely available. But the path forward is becoming clearer and this is a critical time for business leaders to plan and position themselves for recovery.
Domestically, companies will need to consider how a phased approach to vaccinating the population will affect not just employees but also their customer base. Where will each of those cohorts fall in the vaccination phase strategy, and when can companies safely and reasonably expect a return to the office or sales register?
Companies with a global presence or that rely heavily on international commerce will also need to take into account what the landscape looks like for vaccinating populations in other countries where they operate. The risk profile and access to vaccines will vary widely between consumer and producer populations and across geographic regions. It will be important for political and business leaders to establish an effective and equitable vaccination approach to support the health, safety and economic wellbeing of the global economy.
