In focus

The race for a vaccine

Masks play a big role in the post-Covid “new normal”. However, in the absence of a masked superhero coming to our rescue, a vaccine is likely to be the only way back to the old normal. With an estimated 6% of the UK population having been exposed to the disease at the time of writing, a vaccine will be needed to reach the approximate 65% level required to achieve “herd immunity” and to finally curtail the spread of the virus. Despite improved drug efficacy, there is still no dependable cure for Covid-19.

Operation Warp Speed

The good news is that governments around the world are providing exceptional levels of investment in the search for a vaccine. The US government, for instance, has launched Operation Warp Speed, providing billions of dollars to accelerate the development and distribution of a vaccine. The plan acknowledges that some of the eight vaccines it is backing are likely to fail – but this is worth the risk if it ultimately speeds up the availability of any vaccines that do prove to be successful.

In total, there are more than 165 vaccines currently being worked on simultaneously around the world. Six of these are in late stage trials – three in China, two in the US and one in the UK. It would normally take six years to reach this stage, according to Professor Adrian Hill of Oxford University.

The mumps vaccine currently holds the title for the fastest-developed vaccine on record – and that took four years. A more recent comparison would be the five years it took to develop the Ebola inoculation, which became available at the end of 2019. This outcome was celebrated, given that vaccine development and approval can take as long as 10 to 20 years. The record looks likely to be smashed by a coronavirus vaccine, however, with genuine hopes that one may be ready for widespread distribution in early 2021. Government investment has been crucial, but technological development (including cheaper genome sequencing) and Covid-19’s similarity to other coronaviruses (such as MERS and SARS) have all helped to speed up the research process.

Record speed to human trials

Progress on a vaccine for Covid-19 has been rapid compared with other viruses, with human trials starting just 67 days after the outbreak began.

Source: CNN, World Health Organisation, National Institute of Health

The problem remains, however, that while data so far suggests the developing vaccines are “safe” (side effects have mostly been headaches, fatigue and light fever), the only reliable way to test for full vaccine efficacy and safety relies on one critical factor that no amount of emergency funding can buy: time. With clinical trials only beginning in April, not enough time has passed to conclude with enough confidence that any vaccine is fully effective or safe. Even in exceptional circumstances like we find ourselves in today, regulatory bodies are likely to require at least six months of data from late-stage studies before giving full approval to any vaccine.

Even the most promising candidates have experienced bumps on the road. UK pharmaceutical company AstraZeneca was forced to pause its trial in early September after a participant suffered a severe adverse reaction, serving to underline the importance of ensuring that all the usual safety checks are followed in order to prevent an unsafe vaccine from being rushed to market. Consequently, aside from emergency approvals for the most at-risk individuals, such as healthcare workers, regulators are unlikely to approve any vaccine for widespread distribution before the turn of the year.


Once we do have one or more approved vaccines, they need to be distributed to huge numbers of people in order to achieve herd immunity and stop the spread of the disease. This won’t be straightforward due to the complex and highly specialised process involved in vaccine manufacturing, while huge demand is going to outweigh production capacity in the immediate term. Organisations such as the Bill and Melinda Gates Foundation have donated heavily to build manufacturing capacity for the currently unproven vaccines, but other challenges will remain. For example, it is vital that any proven formula is kept stable at a low temperature, and this will naturally slow distribution in undeveloped regions and warmer climates.

Winner takes all?

With six pharmaceutical companies leading the race to develop a Covid-19 injection, the share prices of each have reacted strongly to both positive and negative reports on vaccine progress. This would imply that the successful companies stand to make significant profits on the back of their vaccine, yet in reality they have pledged to make their products available at affordable prices. The UK’s AstraZeneca has gone furthest in this regard by pledging to sell at cost-of production during the pandemic phase. This implies that successful vaccines will not significantly boost company profits in the short term. Consequently, investors should avoid making decisions in response to newsflow on vaccine development.

Vaccine nationalism

Of course, even in the ideal scenario, where we have one or more successful candidates that can be manufactured and distributed in the tens or hundreds of millions in the early months of 2021, this will not necessarily lead to equal distribution across all nations.

The World Health Organisation (WHO) is attempting to persuade high income nations to subsidise less developed countries via its Covax programme, trying to learn lessons from the vaccine nationalism in 2009 that they argue led to disproportionate deaths in Africa and south-east Asia during the swine flu pandemic. The Covax scheme would prioritise equal distribution by limiting participating nations to obtaining vaccines for a maximum of 20% of their populations until other nations have received their share. However, political pressures have tempted richer countries including the UK, Japan, Australia and the US into making bilateral deals to secure doses instead. It remains to be seen whether poorer countries will access a vaccine at the same time as the richest.

A majority of Americans could decline a Covid-19 vaccine

If and when a coronavirus vaccine becomes available, will you get immunised?


Source: Yahoo News/YouGov poll of 1,506 US adults, 28-30 July 2020


The final hurdle to reaching herd immunity is going to be persuading enough of the global population that a vaccine is safe and necessary.

The “vaccine-hesitant” movement has gathered steam in recent months, bolstered by concerns that political pressures from the White House ahead of the November election will obstruct the usual safety checks on vaccines. It has been further enhanced by Operation Warp Speed news flow which explains how millions of vaccines are being manufactured before full clinical trials have been completed. In an era of fake news circulating online, national health services and governments may need to deliver an effective communications campaign in order to reassure their populations that the procedures are safe, with schools, universities and employers likely playing an important role.

The opinions contained herein are those of the author and do not necessarily represent the house view. This document is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Cazenove Capital does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that Cazenove Capital has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Cazenove Capital is part of the Schroder Group and a trading name of Schroder & Co. Registered Office at 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. For your security, communications may be taped and monitored. 

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