- The April 19 announcement by Pfizer and BioNTech that they will substantially increase delivery of their COVID-19 prevention vaccine to the EU in the second quarter of 2021 should help bridge the gap left by lower-than-expected deliveries by AstraZeneca and Johnson & Johnson.
- We therefore maintain our assumption that the EU should be able to vaccinate 70% of its adult population against COVID-19 by late July-early August 2021. This assumes that the EU can significantly ramp up vaccination rates to about 4.7 million jabs per day in June from the current rate of about 2.5 million.
- However, lower-income countries' difficulty accessing sufficient vaccines increases the risk of new, more aggressive virus mutations being imported into the EU from regions with low immunization rates. We therefore expect the EU will maintain some restrictive measures, mainly around international movement, in the near future so as not to jeopardize the effectiveness of its vaccine programs.
The EU has made a slower-than-expected start to its COVID-19 prevention vaccination campaign. Delayed and lower-than-anticipated supplies of the AstraZeneca (AZN) and Johnson & Johnson (J&J) jabs, and distribution issues in various countries, mean it has so far fallen short of its targets. As of April 21, 2021, 105 million COVID-19 vaccine doses had been administered in EU countries, according to the European Centre for Disease Prevention and Control. About 20% of the adult population has received a first dose and about 8% is fully vaccinated with two doses. For the most at risk population--those over 80 years of age--the median for 24 reporting countries vaccinated with at least one dose stood at 73%, and those fully dosed at 50% (see chart 1).
This is below the initial EU target to vaccinate at least 80% of the over-80s as well as all health and social care professionals by the end of March 2021. However, Thierry Breton, European Internal Market Commissioner, said on April 25, 2021, that the EU was confident that it will be able to receive a sufficient number of vaccines to achieve the goal of collective immunity, which means that 70% of the adult population would have been vaccinated by mid-July.
An expected boost in supply in the second quarter should help speed progress. On April 19, 2021, Pfizer Inc. and BioNTech SE announced that the EU had exercised its option under its previous agreement to order 100 million additional doses of their jointly developed Comirnaty vaccine. This brings total doses to 600 million for 27 EU member states to be delivered in 2021, including 250 million in the second quarter alone. As of April 20, 2021, Pfizer-BioNTech had delivered 83 million vaccines to the EU.
This substantial increase in vaccine supply should help to bridge the gap left by lower-than-expected deliveries from AZN (Vaxzevria) and J&J. It will, however, significantly increase the EU's reliance on just one supplier for the success of its vaccination program (see chart 2).
Using some simplified assumptions based on the updated announced supply agreements, our calculations remain broadly in line with our previous estimates (see "EU Could Meet 70% Vaccination Target By Late July If Production Steps Up," published Feb. 11, 2021). We estimate that one-half of the EU's adult population will receive the recommended doses by late June and 70% by late July-early August (see chart 3). However, if there is a delay in delivering or administering the expected volumes, we believe it could take until late August or early September to reach the 70% target.
Given the EU's significant reliance on the Comirnaty vaccine, the ability to reach the target 70% by late July would hinge on Pfizer-BionTech's ability to deliver the promised 250 million doses in Q2. Another risk could be distribution and administration challenges given that the EU will have to ramp up vaccination rates to about 4.7 million jabs per day by June from the current rate of about 2.5 million. A third, no less important risk to the target timeframe, is people's willingness to be vaccinated.
S&P Global Ratings believes there remains high, albeit moderating, uncertainty about the evolution of the coronavirus pandemic and its economic effects. Vaccine production is ramping up and rollouts are gathering pace around the world. Widespread immunization, which will help pave the way for a return to more normal levels of social and economic activity, looks to be achievable by most developed economies by the end of the third quarter. However, some emerging markets may only be able to achieve widespread immunization by year-end or later. We use these assumptions about vaccine timing in assessing the economic and credit implications associated with the pandemic (see our research here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly.
International Efforts Are Necessary To Control The Virus
The World Health Organization established the Access to COVID-19 Tools (ACT) Accelerator in 2020 to enable equitable access to tools to fight COVID-19, including diagnostic methods and vaccines. According to its April 2021 report, nearly 900 million vaccine doses have been administered globally, but over 81% have gone to high- or upper middle-income countries. Low-income countries have received just 0.3%. Low-income countries test less than 5% as much as high-income countries, and the majority of countries still have trouble accessing sufficient oxygen and dexamethasone.
In part reflecting the slow vaccination progress and rapid spread of what appears to be more aggressive virus mutations, infection rates are on the rise again, especially in Latin America and India. On April 25, 2021, India recorded a new daily high of 349,691 coronavirus cases and 2,767 deaths, the worst toll since the start of the pandemic. The EU, the U.K., and the U.S. have pledged to help India combat the epidemic. They are sending testing kits, ventilators, and personal protective equipment. The U.S. also said it would make available sources of raw material urgently needed to manufacture Covishield, the Oxford-AstraZeneca vaccine made by the Serum Institute of India.
In the efforts to accelerate internal immunization, countries in which vaccines are produced are taking steps to restrict exports and channel vaccines to their domestic markets. The Serum Institute was contracted by AZN to manufacture and deliver 550 million doses of its COVID vaccine contracted with COVAX (COVID-19 Global Access; a global initiative of health organizations aimed at equitable access to COVID-19 vaccines) as well as other countries. However, it appears that the Indian government has imposed export control measures that will significantly limit vaccine deliveries outside India for at least a few months.
COVAX reports that it has managed to ship just over 40.5 million COVID-19 vaccines to 118 participating countries as of April 23, 2021. According its forecasts and assuming funding availability, its expects near to 1.7 billion doses to be available to the 92 economies of the Gavi COVAX Advance Market Commitment (AMC) in 2021 (see chart 5). This corresponds to about 26% coverage of AMC populations. It forecasts that it should fulfil the requests for vaccines placed by self-financing participants in the second half of 2021.
After the year-long period of repeated lockdowns restricting movements, EU citizens will be eager to spend their summer holidays abroad, as paradoxically this option seems to be easier to arrange than local holidays under some countries' restrictions. It is therefore possible that we could see many people moving not just across Europe, but also beyond to high-risk countries where inoculation levels are low. This could increase the chances of importing and spreading more aggressive and resilient mutations. The upcoming holiday season could therefore become a significant risk with the potential to jeopardize current vaccination efforts, pushing up hospital admissions and mortality rates again.
Limiting the risk of importing more aggressive and resilient mutations does not appear to be a priority for most EU governments, especially when compared with some Asian countries, where test, track, and isolation policies and procedures are more developed and more strictly policed. One example is Taiwan, which had recordedjust 0.5 COVID deaths per million citizens, compared to 1,963 in Italy or 1,723 in the U.S. as of April 25, 2021. It was able to maintain relative normality during the pandemic. It combined innovative technologies, linking several systems like real access to patients' health records, immigration data, and a GPS-based information system tracking an individual's mobile phone signals. This allowed for efficient testing of a small but critical number of people, instead of mass-testing.
We understand that many epidemiologists are advocating the following measures:
- Widespread and compulsory testing using a combination of polymerase chain reaction (PCR) testing and high quality/sensitivity antigen tests. In addition, the latter should be certified for accuracy, as significant differences exist among currently available tests used in the EU, potentially giving false security to those being tested with a low-sensitivity test, allowing for the infection to spread undetected.
- PCR test sequencing to spot and monitor new mutations and their spread, to prevent new waves. Research shows continued viral evolution of SARS-CoV-2, the virus associated with COVID-19, and careful tracking of its evolution and cooperation between vaccine producers and national and worldwide health-care regulatory bodies will be required. This is especially if gained immunity proves limited, requiring development of booster vaccination programs similar to those for influenza.
- Compulsory quarantine in dedicated hotels/accommodation centers, such as the system implemented in the U.K. Unsupervised quarantine in domestic settings has shown to be less efficient, owing to low rates of compliance.
The scale of future waves and the number of deaths seems to be influenced by how early and over what timescale measures are relaxed, the protection the vaccines offer against infection, and vaccine uptake. Vaccine uptake is likely to be uneven among certain households and socioeconomic groups, potentially giving rise to pockets of infection, as control measures are relaxed.
It is most likely that SARS-CoV-2 will become endemic over the long term. The level and intensity of particular pockets of outbreak will likely depend on the degree of vaccine uptake, and the ability to test, trace, and isolate them.
Given the real risk that new variants could reduce the efficacy of existing vaccines and the extended timeline for immunizing populations in many countries around the world, we think it likely that some restrictive measures, mainly around international movement, will have to remain in place in the EU even after it has achieved the 70% full vaccination rate.
We think that it will take coordinated efforts to establish effective epidemic control measures that need to become routine and well-integrated into health-care and migration systems to help the EU reach the COVID-19 "green zone".
This report does not constitute a rating action.
|Primary Credit Analysts:||Marketa Horkova, London + 44 20 7176 3743;|
|Paul Watters, CFA, London + 44 20 7176 3542;|
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