The risks to vaccination programmes fall into three groups: procurement, deployment, and effectiveness. In the coming few months, deployment issues will be a key limiting factor in most countries. These should be overcome relatively quickly in DMs, but less so in EMs. Procurement problems will also be more acute in emerging economies, especially for those relying on COVAX. Further ahead, mutation and efficacy risks pose the biggest threats to rollouts. We’ll track the progress of rollouts on our coronavirus webpage.
- The risks to vaccination programmes fall into three groups: procurement, deployment, and effectiveness. In the coming few months, deployment issues will be a key limiting factor in most countries. These should be overcome relatively quickly in DMs, but less so in EMs. Procurement problems will also be more acute in emerging economies, especially for those relying on COVAX. Further ahead, mutation and efficacy risks pose the biggest threats to rollouts. We’ll track the progress of rollouts on our coronavirus webpage.
- The success of vaccination programmes will be the single most important factor determining economic performance in the next couple of years. Multiple vaccines have been approved by major economies in recent weeks. (See Chart 1.) Having completed phase-III trials, the Pfizer, Moderna, Oxford/AstraZeneca, and now SinoVac vaccines will be under review for authorisation in many countries. Janssen-J&J and Novavax are in the midst of phase-III trials and are expected to report results in January or February. So far, over 17 million vaccines have been administered around the world. The US and UK have dispensed doses to around 2% of their populations, while the UAE and Israel have done so to 8% and 18% of their populations, respectively. (See Chart 2.) However, even at this early stage, rollouts are facing problems and there will be plenty more hurdles to clear in the coming year. They fall into three groups.
- First, there are procurement challenges. Several emerging economies are yet to place substantial orders with manufacturers. (See Chart 3.) As things stand, their principal access to vaccines will be through COVAX – the multilateral facility designed to supply vaccines to low- and middle-income countries. (See purple bars in Chart 4.) This is a problem because COVAX itself has not placed sufficient orders. And two thirds of the orders it has placed have been for vaccine candidates that are still at the trial stage and so may fail, or at least their approval could be some way off. Reportedly, the facility is also contending with contractual and funding problems. (See here.) These raise the chances of further delays in vaccine procurement for many EMs, even if they do not cause COVAX to fail, as some have suggested.
- Even once vaccines are approved, production constraints will limit the pace of rollouts, including in developed countries. The risks are arguably higher in countries that are more dependent on foreign supply. President Trump’s executive order to ban vaccine exports as well as Brazil’s export limits on syringes are two examples of ‘vaccine nationalism’ which could be adopted elsewhere. Perhaps the greatest supply risk stems from India, given its huge vaccine production capacity and the populist leanings of its government.
- Second, there are difficulties with deployment. One set of challenges relates to practical teething problems that will hold back the initial stages of rollout. For example, inadequate IT systems delayed rollout in the Netherlands. Such issues should not cause much of a problem for long in countries with well-resourced healthcare systems. Again, poorer EMs will suffer more in this regard. And with larger rural populations, many will struggle to muster enough trained and equipped staff to administer vaccines outside urban areas.
Chart 1: Vaccines by Stage in Development & Authorisation Process* (Vaccines with 200mn+ Global Orders)
*Green = approved; Light green = under review or trial completed but not yet reviewed; Yellow = phase-III trials; Orange = pre-Phase-III; Grey = no orders.
- Beyond the front-line logistical challenges, there is the problem of ‘cold chain’ logistics. In the extreme case, the Pfizer vaccine must be transported and stored at -70oC. DMs and parts of Asia have adequate infrastructure to deal with the Pfizer vaccine, and most EMs have not placed orders for it, so this is mainly a problem for Latin America. (See grey bars in Chart 4.) Indeed, the rollout in Mexico has been limited to two states precisely because of limited cold storage capacity. According to a DHL report, for other vaccines that need only be refrigerated, temperature control problems should be fairly limited outside Africa.
- Aside from obstacles to vaccine delivery, there is a risk that public scepticism will limit take-up. Concerns about a hesitant public have already held up the rollout in France. Surveys suggest that people in Russia and South Africa are also highly suspicious of coronavirus vaccines. (See Chart 5.) We could assume that most of those who “somewhat” disagreed with the idea of getting vaccinated come around to it – perhaps because the months go by with no major scare stories, and it dawns on people that they may need a vaccine to travel. In this case, if the survey is anything to go by, there may still be about 30% of people in these countries who may not take a vaccine. But this probably isn’t enough to derail the chances of reaching herd immunity. (See here.) Weak demand for vaccines seems to be a smaller risk elsewhere. If there is a health scare serious enough to cause a vaccine to be withdrawn, though, this could shake confidence in others.
- The third group of risks concerns vaccine effectiveness. For one thing, some vaccines may turn out to have lower efficacy than the high bar set by Pfizer and Moderna. Even with these efficacious vaccines, the duration of immunity and effects on transmissibility are unclear. Shortages may prompt some governments to follow in the UK’s footsteps by widening the ‘dosing interval’ – increasing the time between doses from that used in clinical trials. The claim is that more lives can be saved by giving more people lower, but still-considerable, immunity from one dose than by giving two doses to half as many. If it works, then countries could be able to provide considerable protection for their vulnerable populations twice as quickly.
- Finally, there is the threat that a new virus variant develops resistance to existing vaccines. While most in the scientific community believe that the variant currently spreading in the UK and South Africa will not have built up such a resistance, the risks will rise as rollouts apply selection pressure on the virus. The longer the vaccination process drags on, the higher the chance of vaccine-resistant variants developing. Scientists claim that vaccines should be adaptable to respond to changes in the virus. But this would require renewed restrictions to limit transmission while another round of vaccines is developed and distributed.
- Our base case is that vaccines will be successfully rolled out in advanced economies by the second half of 2021, and in most major EMs by next year. Low- and middle-income EMs are badly placed to embark on their vaccination programmes, meaning that it’ll be at least 2022 before significant progress is made.
Chart 2: Vaccine Doses Administered as a % of Population
Chart 3: Confirmed Bilateral Vaccine Orders Per Capita
Chart 4: Pfizer/BioNTech Dose Orders & Estimated1 COVAX Dose Allocation as a % of Confirmed Orders
Chart 5: “If a Vaccine for Covid-19 Were Available, I Would Get It” (Surveys conducted 17th-20th Dec. 2020)
1On basis that COVAX pop. is 5.8bn and allocation based on pop. share.
Sources: Refinitiv, Vaccine Trackers, OurWorldInData, Duke, Ipsos, CE