December 2, 2021
On November 26th, the World Health Organisation (WHO) identified a new “variant of concern” in the coronavirus outbreak, the so-called Omicron variant, first identified in South Africa. Omicron has raised alarm among epidemiologists due to its 32 mutations in the spike protein, some of which are similar to the highly-transmissible Delta variant, triggering speculation that the new strain may also be more transmissible, more severe, or more resistant to vaccines.
Global markets slumped in response to the news, with the FTSE 100 down 2.5% in November, its worst month since October 2020, as many countries rushed to impose stricter measures, and restricted travel from South Africa and neighbouring countries. The sense of uncertainty was further fuelled by comments from Stephane Bancel, CEO of US drug company Moderna, that the currently available vaccines will prove less effective against Omicron than previous variants.
However, the WHO is keen to emphasise that this remains speculation at the moment. Despite “preliminary evidence of an increased risk of reinfection”, no data is yet available to reach further conclusions. The strain has become dominant in South Africa very quickly, in a few days, rather than months as usual, but it emerged at a time when case numbers in the country were very low, and it is not clear whether this pattern would be repeated in other countries. Studies are now underway to produce more conclusive data on the Omicron variant, but it will be a couple of weeks at least until more is known. On the other hand, anecdotal reports from doctors in South Africa who are observing patients with Omicron have suggested that the symptoms may be milder than previous variants, even if the new strain is more transmissible. In this scenario, Omicron’s high transmissibility could be an advantage, if it eventually becomes dominant over more deadly strains. The existence of this possibility underlines the lack of information available about Omicron’s true potential impact.
Nonetheless, the companies behind the existing vaccines have leapt into action, both to ascertain the effectiveness of their current products against Omicron, and to produce new variant-specific vaccines if required. Pfizer and BioNTech announced that they would be able to develop an Omicron vaccine within six weeks, and begin deliveries within 100 days. Moderna said it could have an Omicron-adapted vaccine available in early 2022, and Johnson&Johnson and AstraZeneca are also running studies. Researchers expect that it will be at least two weeks before firm data on vaccine effectiveness is available.
Similar preparations were made upon the discovery of the Alpha, Beta, and Delta vaccines, but in each case, the new vaccines were not needed, for various reasons. According to the US Center for Disease Control (CDC), when the Delta variant became dominant in the US during the summer, unvaccinated people were 4.5 times more likely to get infected, 10 times more likely to be hospitalised, and 11 times more likely to die, meaning the existing vaccines were judged to be sufficient, and plans for a new vaccine were shelved. Meanwhile, the more vaccine-resistant Beta variant, also identified in South Africa, did not spread widely to other areas of the world in the end.
However, there is an expectation from many quarters that this new strain will be different. The wide range of mutations provide clues for the virus’s behaviour. In a press release, Moderna said that Omicron includes “mutations seen in the Delta variant that are believed to increase transmissibility and mutations seen in the Beta and Delta variants that are believed to promote immune escape. The combination of mutations represents a significant potential risk to accelerate the waning of natural and vaccine-induced immunity.”
Meanwhile, Anthony Fauci, director of the US National Institute of Allergy and Infectious Diseases, said it was “inevitable” that the new strain would eventually spread around the world, “because it has at least the molecular characteristics of being highly transmissible.” For the world’s vaccine-production capacity to adopt a tweaked version for a new strain would require considerable investment, even if the technology exists to develop such a vaccine quickly, and according to Bancel, a wholesale switch to target Omicron would be risky. In practice, the world is just going to have to endure an uncertain two weeks before more concrete results are in. Until then, in the words of Mohit Kumar, managing director of Jefferies investment group, “the market remains subject to headline risk”, and investors are within their rights to be jittery.
