The disruption associated with Covid-19 has become the new ‘normal’ this year. But as news of a potential vaccine hits the headlines, are things looking up? From manufacturing constraints to vaccine scepticism, a global vaccine roll-out comes with its challenges.
How effective is the vaccine?
We have updated our framework to allow for bottom-up assumptions to improve the accuracy of our estimates. News of better-than-expected vaccine efficacy allowed us to upgrade our estimates across major markets. But these results have come later than we expected. As a result, we now expect 1.4 billion people to be vaccinated by the end of 2021.
The publication of Pfizer/Biontech’s initial vaccine efficacy of 94% was a welcome surprise for vaccine watchers. Additionally, we have boosted Pfizer’s manufacturing capacity since the last update. Previously, we estimated 300 million vaccines by the end of 2021, but our latest estimates are now 1.2 billion over the same period.
Likewise, the 95% efficacy rate for the Moderna vaccine confirms that the Pfizer result is not a one off. It uses similar technology but does not require the same deep-freeze temperatures for transportation.
Meanwhile, the Oxford/Astra Zeneca vaccine is showing an average efficacy of 70%. But on a slightly different dose, this figure appears to rise to 90%. Manufacturing capacity constraints and potentially differing efficacy across risk groups may mean that we need multiple vaccines to inoculate multiple populations. While efficacy results are very encouraging, they have actually been a little delayed relative to our previous expectations. This has had a knock on effect on the pre-Christmas rollout, which is likely to be much more limited since our last update.
Take-up ratesWe expect take-up rates to vary drastically across different major markets. This reflects worrying public opinion that shows accelerating vaccine scepticism in the US and some European countries, e.g. France. In the US, in particular, the issue of vaccine safety was highly politicised in advance of the US election. It may be that once public health campaigns kick into gear in more sceptical countries, or vaccines are required for activities like travel, we can stop or reverse those trends. Our framework allows us to adjust figures if public opinion shifts and to understand the impact on overall inoculations.
Rolling out the vaccine
We think about 30% of the G20 population will be inoculated by the end of 2021. This is the result of greater manufacturing and better-than-expected efficacy results. These figures will vary widely, though. Broadly, we expect inoculation rates in emerging markets excluding-China to be much lower than in developed markets.
The UK stands out as the developed market with the single largest effective inoculation rate of 70% of the total population. This is a result of large orders of multiple vaccines and a high expected uptake and roll-out. In the US, the strength of the anti-vaccine movement may mean lower turnout rates than in the UK. The EU is showing some strikingly low uptake rates, which also constrain our estimates. Take-up seems unlikely to be an issue in China. But manufacturing estimates for Chinese-made vaccines vary widely and appear too limited to vaccinate over one billion Chinese people.
Taken together, our vaccine expectations start to gain macroeconomic traction from the second or third quarter of 2021 onwards. Before that time, the effects of the second wave still dominate our economic forecasts. After that time, the vaccine should allow economic activity to become more normal.
Source: Aberdeen Standard Investments (2020)