When Will Life Return to Normal?

If we are honest with ourselves, it is a question that almost all of us, as investors and people, are probably wondering right about now. In this case, it took the form of the following note from a young colleague based in locked-down London directed to me and my fellow Health Care analyst as part of the daily, ongoing Research Information Group email discussion that has always comprised much of our meeting, brainstorm, and “water-cooler” time here at Harding Loevner.

Considering the challenges of [vaccine] manufacturing and distribution, what would be your best estimate for when developed economies will return to “normality”? I.e., people in developed economies are allowed—and feel safe enough—to live a life more like 2019. E.g., Sept 2021? Jan 2022? Never?

Two male and one female co-workers meeting up before work and greeting each other with a kiss on the cheek and hug.

As I wrote to this analyst and the rest of the group, my honest answer is: it’s very hard to say at this point. Beyond the manufacturing and distribution challenges he references, the most troubling recent news involves the increasing prevalence of COVID-19 mutations such as the B.1.1.7 variant that first emerged in the UK and the B.1.351 that originated in South Africa. Since mid-January, there has been mounting concern that some of these variants, in addition to being more contagious, might also be more resistant to the vaccines that have already been developed. The latest study results for a pair of vaccines still awaiting approval—one from Novavax and another from our portfolio holding Johnson & Johnson (JNJ)—confirm that at least for the South African variant this is indeed the case, as both vaccines showed reduced efficacy in preventing infection in South Africa, where B.1.351 is dominant. For the Novavax trial, the reduction in infection rates in the UK was 89%, compared to just 60% in South Africa. For JNJ’s vaccine, the reduction in infection rates was 72% in the US versus just 57% in South Africa. In other words, these vaccine candidates are still capable of dramatically reducing severe COVID-19, but aren’t capable of reducing the viral load enough to lower infection rates as dramatically as we had come to expect from Pfizer and Moderna’s vaccines, whose blockbuster phase 3 trial results in late 2020 were for populations not yet exposed to B.1.351. While the follow-up data are still preliminary, expectations for how those vaccines perform against the variant probably now need to be lowered as well.

If you get a vaccine by the summer, you’ll be better protected, but my expectation is that the new and future variants will become the dominant strains in the coming months, and so you won’t be 95% protected, more like somewhere in the 50-60% protection range.

Getting much better distribution and administration of vaccines suddenly becomes more urgent. As health officials have emphasized, the more the virus is contained, the less opportunity that variants will have to replicate and gain a larger foothold in a population. Mask-wearing, handwashing, and social distancing take on similarly elevated importance in this game of viral Whack-a-Mole. It seems overly optimistic, however, to think that the variants won’t soon become more prevalent regardless, including in the US, and that we won’t just as soon need new tools to combat them. One big plus about many of the new vaccines is that they can be modified quickly, increasing manufacturers’ ability to issue booster shots specifically aimed at the variants. But can vaccine updates be issued quickly enough to prevent added waves of infection and forestall still more variants from popping up? Let’s hope.

Based on conference calls I’ve been on with the vaccine manufacturers, and research I’ve read about the nature of the virus, it is surprising, and, frankly, a bit alarming, that so many viable variants are out there this soon. The rationale given now by scientific experts is that uncontrolled spread for too long gave the virus more chances to find better ways of eluding our immune systems. RNA viruses replicate for speed and aren’t good at “checking their work,” so the vast majority of mutations are just mistakes that typically function to weaken the virus and thus immediately go extinct. However, there has always been a small probability that some of these copying errors would confer a benefit on the virus. It is akin to rolling dice and having them come up ones 10 times in a row—if you roll 1 trillion times instead of 100 billion, there’s a decently higher chance of that happening. Still, in the lifecycle of a virus such a pace of snake-eye streaks typically isn’t seen until after we apply more Darwinian pressure and the organism is forced to mutate to survive. It’s disappointing that we’re getting so many variants at this juncture, but it wouldn’t be surprising if the pattern continues. It is also possible we could have another burst of variants to contend with once the virus has finally been brought under control and feels truly cornered.

As a healthy male in my early-40s, I’m less concerned about severe disease and hospitalization once I get vaccinated, but I am concerned about the risk of being a “long hauler,” one of the estimated 10% of COVID-19 patients who experience debilitating symptoms for months or potentially years (or longer—we just don’t know) after the initial infection has run its course. I’ve met two long haulers in the last month and they are both in the 45–55 age range. We have no idea yet, for any of these vaccines, what the reduction in risk of being a long hauler is.

So, as for life returning to “2019”? I don’t think that’s going to happen this year. If you get vaccinated by the summer, you’ll be better protected, but my expectation is that the new and future variants will become the dominant strains in the coming months, and so you won’t be 95% protected, more like somewhere in the 50–60% protection range, although with much higher protection against severe disease. To me, that’s still definitely not enough to return to greeting someone outside my family with a European faux kiss on the cheek.

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