Vaccine euphoria may be headed for a reality check

On a sinking ship, women and children are typically saved first. In a pandemic the opposite is true. After AstraZeneca on Monday became the latest drugmaker to say its vaccine offers high levels of protection from Covid-19, elderly citizens have high hopes of getting their jabs soon. However, younger people will have to wait longer. Investors counting on a rapid recovery may be disappointed.

There’s a sound logic to vaccinating the most vulnerable. Britain’s Joint Committee on Vaccination and Immunisation reckons that if the over-50s, healthcare workers and people with compromised immune systems were inoculated, 99% of Covid-19 deaths would be avoided. That should allow countries which have imposed tough restrictions to protect their healthcare systems to begin opening up their economies.

The imminent arrival of multiple vaccines makes this a real prospect. AstraZeneca said on Monday its treatment, developed with the University of Oxford, could be effective in as many as 90% of patients at the right dosage. Rival jabs developed by Pfizer and Moderna appear to be 95% effective.

However, a swift rollout is still ambitious. In the United Kingdom alone, there are 3.2 million people over 80, who will be among the first in line for a vaccine. Due to the high risk of infection, authorities will be reluctant to offer inoculations in hospitals and doctors’ offices. Some countries are exploring drive-in centres for the double doses, which must be administered one month apart.

Reaching herd immunity, where the virus no longer spreads, means inoculating some 70% of the population, according to the World Health Organization. Sceptical citizens are another impediment. Only 40% of Americans say they will sign up for a first-generation vaccine, according to an index compiled by Axios and Ipsos.

Even if they’re willing, young and able-bodied people may have to wait until 2022 to be vaccinated, according to the WHO. Though some may be willing to live with the risk, others are likely to keep avoiding public transport and mass gatherings. That will put a cap on any recovery in corporate profitability.

Investors are pricing in a faster recovery. Analysts expect companies in the Global MSCI index to report a 17% drop in profits this year, according to data from JPMorgan, but that next year’s earnings will exceed 2019 levels. Despite the good news about vaccines, those expectations may prove overly euphoric. Reuters