Pfizer’s announcement that its Covid-19 vaccine is on the right track has sparked optimism in the markets. Specifically, the American pharmaceutical company Pfizer and the German BioNTech announced that their coronavirus vaccine has achieved 90% effectiveness in preventing the disease during trials. According to the firm’s calculations, approximately 50 million doses of this vaccine could be distributed by the end of this year, reaching about 20 million people. Will Pfizer hold the key to economic recovery? We are given the opinions of some manager: Principal Global Investors, M&G, Allianz GI and Erste AM.
“The clearing of the election fog has permitted underlying market fundamentals to come back into focus, resulting in a strong push upwards. Easy financial conditions, driven by historically accommodative monetary policy and reinforced by dovish comments and actions from central banks in the last 10 days are a significant positive, while the most recent vaccine news suggests a ‘return to normality’ should be coming sooner rather than later. Don’t forget, too, that the election outcome is arguably the most favourable scenario for investors. A split congress or even a blue sweep with a very marginal majority implies that neither large tax hikes nor major changes in regulation are likely. All the chips are starting to line up, and market sentiment may be in the early stages of a burst of positive energy.”Seema Shah, Chief Strategist, Principal Global Investors
Randeep Somel, Equity Portfolio Manager at M&G reacts on the pfizer vaccines news and its influece
“Pfizer vaccine result announcement has seen an incredibly strong response from global equity markets, led by a value rally across sectors such as travel and leisure that had been hit hardest by the prospect of renewed national lockdowns. While the potential vaccine still needs to be manufactured and issued – a process that will take some time– yesterday’s news will provide investors with some assurance that a long term solution may be on the way, allowing them to forecast the economic outlook with greater confidence going into 2021.”
According to Allianz positive vaccine data drives surge in cyclical sectors
- This morning we learned that the Covid-19 vaccine being developed by Pfizer and BioNTech has shown to prevent more than 90% of symptomatic infections in a study of thousands of volunteers, the most encouraging scientific advance so far in the battle against the coronavirus, according to Bloomberg.
- With effectiveness for the first vaccines previously expected to be in the range of 60% to 70%, “more than 90% is extraordinary,” according to BioNTech CEO.
- Pfizer expects to get two months of safety follow-up data, a key metric required by US regulators before an emergency authorization is granted, in the third week in November. If those findings raise no problems, Pfizer could apply for an authorization in the US this month. The vaccine is being tested in a two-dose regimen.
- Markets are up over 2.5%, as there is a clear value cyclical tilt to risk assets, with sectors like Energy, Financials and Industrials all up over 4.0%. Meanwhile, yields are climbing, with the 10YR Tsy back to 95bps, and curves steepening sharply.
Erste AM answers some of the most common questions
How is the vaccine efficacy determined?
All currently ongoing Phase 3 studies for Covid vaccines follow the same procedure. The study participants (approx. 45000) are blindly divided into a placebo and a treatment group. Neither the participants nor the scientists know who is in which group. The participants follow their normal daily routine and report to the study centers in case of side effects and in case of a proven Covid infection. If enough Covid infections are detected, an interim analysis (IA) is performed to determine how many of the patients were in the treatment group. In the course of the IA after 94 cases, Pfizer could now determine an efficacy of 90%, which indicates that at least 85 of the patients were in the placebo group and a maximum of 9 in the treatment group – a remarkable success.
How quickly can the vaccine be distributed?
Both the USA and the EU have already ordered the vaccine from Pfizer. Pfizer expects to produce 50 million doses by 2020 and 1.3 billion doses by 2021. It is a two-dose vaccine, so by the end of 2021, about 600 million people can be vaccinated – a little less than the populations of the EU and the U.S. but probably enough to stop the pandemic at least there. Taking the swine flu pandemic as a scenario, it seems quite possible that 5-10% of the population in western countries could be immunized every month. However, two challenges remain: Pfizer’s vaccine has to be stored and transported at -70°C, which requires the establishment of centralized vaccination centers with appropriate equipment. In addition, immunity only sets in 7 days after the last vaccine dose, which is administered 28 days after the first dose. Thus, more than a month passes between the first injection and immunity. The vaccine must also be tested and approved separately for children.
What can still go wrong now?
Even though the level of suffering in society and the economy is currently very high, the child should not be thrown out with the bath water. Due to the long time between injection of the first dose and immunity, it would probably be unwise to start the vaccination campaign before the family reunions at Christmas, as there is a risk of lulling the vaccinated into a false sense of security. However, since medical staff, security forces (police, emergency services, etc.) and residents of hospitals and nursing homes are vaccinated first anyway, this risk is not too high. Nevertheless, social distancing measures will characterize most of 2021. Less risk awareness, the prospect of a vaccine and the already prevailing pandemic fatigue could lead to an increase in the number of cases and ultimately to additional lockdowns.