Briefing Paper: Severe Acute Respiratory Syndrome (SARS) Preliminary Implications on the Economy and Disease Overview

SARS Briefing PaperAuthor: Peter Lytle, Managing PartnerThe Business Development Group www.bdgpartners.com Contact information: plytle@bdgpartners.com or 952-473-3831Permission to use granted.4/22/03Briefing Paper: Severe Acute Respiratory Syndrome (SARS) Preliminary Implications on the Economy and Disease Overview The purpose of this briefing is to give the reader a current overview of SARS, a baseline of information about the disease and some economic implications to build upon. As the First World War came to an end, we entered a period of global travel; and with that travel, began the first global pandemic. By the end of the pandemic, over 20 million people lay dead. Since that time, we have experienced a variety of related diseases. Some are as dangerous, some with the potential to do as much damage: Aids, Hantavirus, avian flu, variants of CJD and CWD, West Nile, Ebola, Indian plague, smallpox, Legionaries disease and many other varied bacterial and viral infections. On an average, the world is subjected to a new biological threat from Mother Nature every 6 to 10 years. Man-made biological threats can be developed ad hoc: Anthrax and Smallpox. Severe Acute Respiratory Syndrome or SARS has not received all the attention in the US media that it has in other countries perhaps due to the war. Perhaps because we are all complacent, thinking the ability to manage these diseases is commonplace. SARS has not yet been proven to be a mega disease, but it may be on the verge of becoming one. If SARS were to go unchecked in the world and mimic the problems created in China, Hong Kong or Toronto, we could see a significant impact on our economic marketplace and healthcare system. What is SARS?SARS is a respiratory illness believed to be caused by the coronavirus. In some cases, it is being referred to as Atypical Pneumonia because of its close resemblance to pneumonia. The criteria for SARS are: temperature of 100.5 degrees or more, one or more clinical findings of respiratory illness (i.e. cough, shortness of breath, difficulty breathing, hypoxia, or radiographic findings of either pneumonia or acute respiratory distress syndrome), travel to an area with documented or suspected community transmission of SARS, and/or close contact within 10 days of onset of symptoms with either a person with a respiratory illness who traveled to a SARS area or a person known to be a suspect SARS case. In a limited number of cases individuals also had diarrhea. What is the origin or SARS?A small group of scientists believes that SARS may have come from farm animals. Bi Shengli, of the Chinese Center for Disease Control and Prevention in Beijing, stated that the earliest victims in Guangdong were chefs or bird vendors in contact with chickens, ducks, pigeons and owls. This theory is yet to be proven. The current theory is that SARS is a new coronavirus; similar to the family of coronavirus that causes the common cold and mild to moderate upper-respiratory illness in humans. When viewed under a microscope, they have a halo or crown-like appearance. Some researchers think this strain of coronavirus identified may also be similar to a virus that is far more serious and found in animals where it is associated with respiratory, gastrointestinal, liver and neurological disease, but recent genetic testing has not identified this as the case. In several cases of SARS, metapneumovirs has been isolated; the role in the pathogenesis in SARS remains unclear. Scientists recently sequenced the corona virus found in numerous SARS patients and believe it is new. One of the concerning things about this virus is its ability to mutate rapidly. As one scientist state this is a virus looking for the perfect host or transmission vehicle. The coronavirus identified is currently considered the primary cause of SARS, according to a briefing by World Health Organization on April 17, 2003. Other potential viruses may still yet be identified that may interact with the disease as it progresses however.SARS is believed to have originated in or around the Guangdong province of China in November of 2002 or before. From there it spread to a single hotel in Hong Kong, called the Metropole, then certain hospital clusters involving seriously ill patients. Guests on the 9th, 11th, & 14th, floors of the Metropole Hotel were exposed. International travelers from these floors spread the disease to another five countries; the disease is now in 26 countries. In February of 2003 it appeared in North America for the first time. What is the incubation period for SARS?Typically it is 2 through 10 days. The illness begins generally with an onset of fever of 100.4 or more. The fever is often associated with chills and/or rigors and might be accompanied by other symptoms including headache, malaise and myalgia. After 3 through 7 days, a lower-respiratory phase begins with the onset of a dry, nonproductive cough or dyspnea. In 10% to 20% of cases the respiratory illness is severe enough to require incubation and mechanical support. What is the mortality rate?This is an extremely aggressive disease. In countries where it was originally established, 1 in 20 are believed to be dying. The CDC estimates the mortality rate at about 3.5%, which is similar to other respiratory diseases. Other organizations such as Health Canada have placed the death rate at 4% to 9%. Hospitals in China have experienced up to a 25% mortality rate. It is too early to tell the actual mortality rate and it will likely be different in each country. At the present time (4/21/03), there are 3,947 cases worldwide, there have been 229 deaths and 1,1935 recoveries. Two hundred twenty eight suspected cases have been reported in the US in 35 states, with no deaths to date. Cases studies before 4/5/03 indicated 94% of the individuals had traveled within 10 days before the onset of illness to the areas listed in the CDC SARS case areas. For more information on case areas, please go to www.cdc.gov and access the SARS page.What is the risk of exposure?SARS appears to be spread primarily by direct contact with moisture droplets or body fluids expelled by a SARS carrier. The World Health Organization (WHO) believes, however, that other factors may be involved. Several hundred residents of a housing complex in Hong Kong (Amoy Gardens) some of which are now leaving quarantine and being tracked; may have been infected with SARS even though they did not have direct contact with a SARS carrier. Research into transmission by cockroaches is being conducted in connection with this location. Thirteen labs around the world are currently researching SARS, how it is transmitted and related questions. It is also becoming evident, according to the CDC and other health organizations, that some individuals may be more infectious than others. An April 4th teleconference, by the CDC and WHO, referred to the possibility of super carriers (individuals that are able to spread the disease greater than others).According to Dr. Gerberding of the CDC, in one hospital in Hanoi, 56% of the health care worker population that came in contact with a SARS patient came down with the disease. In Toronto, where the disease has had a significant impact on hospitals and health care, 180 paramedics have been quarantined in their homes, three were hospitalized with symptoms after potential exposure to SARS infected individuals. There appears to be a dramatic difference in the mortality of the disease depending on when it is detected. The US has experienced no deaths and a number of recoveries based on aggressive disease management, while Mainland China has experienced 1,457 reported cases and 65 deaths as of April 16, 2003. Actual numbers will turn out to be much higher. It appears that the government of China has under reported suspected case of SARS to prevent panic and economic damage to their industrial sector.Dr Gerberding of the CDC believes this is a significant and serious threat to world health and one that needs immediate and vigilant attention. We recognize this as an epidemic that's evolving differently. In transcripts from the CDC, Dr. Gerberding and Dr James Hughes, of the National Center for Infectious Diseases, have stated their concern about SARS. The potential for infecting large numbers of people is very great. The WHO said outbreaks in most parts of the world are currently under control but still spreading in China and Hong Kong. Other health organizations remain highly cautious and suggest this virus could still break away. At the present time, many individuals that have been exposed to SARS have recovered or are in recovery. Early medical attention is critical. If you believe you have SARS you should contact local health authorities immediately and try to limit contact with other individuals if possible until you have been instructed on the best course of action. Does the coronavirus live outside of the human body?The virus appears to live about 3 hours outside the human body. Similar viruses have the capacity to live from 1 hour to 6 days outside the body. There are some very limited concerns that if dried, it may become airborne and still remain potent or maybe hosted by animals or in sewage or related environments. Research on other transmission methods is ongoing. Most research to this date indicates a human host is still the primary methods for transmission and the virus does not live well outside of a host. A great deal of attention is being given to Airport transmission. Air passengers may be at some risk. Airplanes do filter air and only passengers in close contact to a SARS carriers or having touched perhaps a lavatory item etc. are believed to be at significant risk. The question is still being studied however and the answers may be months away. At which point a SARS carrier is infectious and can pass the disease on is still under debate. Are there any tests developed to detect SARS?SARS identification testing is under development. Currently a PCR test is being evaluated. Dr James Hughes has noted two CDC tests that look promising; one is an indirect fluorescent antibody test and the other is an Allose test. Both tests require the disease to have some time to establish itself in the human body. Is there any known treatment for SARS?At this time there is no known treatment for SARS; anti-viral drugs, antibiotics and steroids alone have not responded well. An article in the Financial Times on April 2, 2003 indicated that Hong Kong government health officials indicated some success with a treatment of cocktails of anti-viral drugs and steroids to modulate the extreme response by the patient's immune system. Ahang Wenkang, health minister for China believes they have found a combination of Western and Chinese medicine that works but no details are provided. There are vaccines used in animals to manage coronavirus so there may be an opportunity to expand this into human subjects in the future. No specific drugs to date including Ribavirin have demonstrated effectiveness in control of the disease. Mechanical ventilators are being used with acute patients. One concern facing many countries including the US is the lack of this equipment in the event of a major outbreak of SARS. It is estimate the US has fewer than 20,000 of these units available and during the peak of the Flu season most are in use, the question remains which patients would get the access to this equipment. With the genetic code now available for the SARS coronavirus a vaccine can be developed. This is a process that can take years, however and there is a lack of production capabilities for vaccines in the US at the present time. Prevention of the disease is based on keeping away from direct contact with potentially infected individuals. Recommendations are to practice basic hygiene, washing hands frequently, and avoid areas where the disease is spreading. The use of surgical masks is having limited impact unless the mask is worn by an infected individual to reduce the droplets spread by the nose or mouth. Masks that are sealed and rated N-95, used in conjunction with eye protection and rubber gloves are suggested for individuals in close contact with infected individuals. N-95 masks are currently on back order many months by producers and may not be available should a large outbreak occur in the US or Europe. Most masks have a limited period of value (24 hours or less) once used. Improper use of the mask may also not prevent the disease from coming in contact with the mouth or nose. It is believed that a variety of disinfectants are successful at destroying the virus; chlorine-based disinfectants are listed in a number of health organization's information articles. There is, however, no disinfectant that is currently registered or approved for SARS by any government organization at this time. Should I travel overseas?The CDC and WHO have travel advisories out for much of Asia. Check the CDC website. Toronto is also being noted as a travel caution area. In short, if you don't need to travel at this time, don't. Video conferencing is up 50% for Asia. According to the Center for Infectious Disease Research & Policy, individuals that are in the US who have not traveled to an infected area have very little risk of becoming infected with SARS. This suggests that staying home may mean staying safe. In some areas of the US Asian and their business are being avoided. There is no indication that Asians in the US are any more likely to have SARS than anyone who has traveled anywhere would. In fact the Asian community may have a higher awareness of the disease than other cultural groups. Travel advisories are currently recommending restricted travel to: Mainland China (especially the Guangdong province), Vietnam (primarily Hanoi), Singapore, Hong Kong, Taiwan, Shanix and some organizations have placed a watch on Toronto, Canada. If a traveler acquires SARS in some of these countries they may not be admitted to hospitals but instead be directed to isolation clinics if they exist. Do not expect to find housing in hotels during the course of the disease. Most airlines will not allow SARS patient's reservations until the disease is proven to be gone and the patient fully recovered. Some countries are no longer allowing air passengers from case countries to disembark, and it is possible that a traveler could find himself or herself stranded for weeks or months if caught in an epidemic location. Depending on the time line for this disease (3 to 10 years), the original countries where the disease has run its course may become safer to visit or do business in than countries where the disease has yet to penetrate 70% of the population, assuming a vaccine has hot been found. This is called the Jack-in "the-box theory. After the outbreak of food poisoning at Jack in the Box, it cleaned up its act and became one of America's safest eating establishments. Could SARS be similar to other respiratory or flu-like diseases?Nobody knows. In the 1998 " 99 flu season there were, according to the CDC, 20,000 flu associated deaths nationwide with 80 million doses of vaccine given to the public. The vaccine was between 70%-80% effective in preventing the flu among healthy adults. This could suggest that a similar disease, for which no vaccine exists, could have a devastating effect on any population that is not prepared. If SARS turns out to be an airborne disease, it will likely be considered more aggressive and could mimic the flu. Direct-contact diseases tend to spread slower allowing for health controls. The use of quarantine procedures may help control SARS. Most countries are utilizing quarantine procedures with SARS suspects but have not with used it with the flu, suggesting a lower risk rate for healthy individuals in developed countries. Economic Impact of SARSSARS currently has the greatest economic impact on Asian countries and businesses closely related to those countries. Among the industries currently being affected: Airlines, Asian and some Canadian (Toronto) convention and tourist business and local retail business, travel-related business and production of materials in China. By example, when Qantas Airlines issued the region's first pneumonia-related profit warning two weeks ago, Merrill Lynch cut their estimates on earning by 19%. Cathay Pacific, which is based in Hong Kong, saw its shares drop by 18% and Singapore Airlines dropped by 14% as a result of SARS concerns by investors. KLM, the Dutch Airline, said that it feared the rapid spread of SARS was having a greater impact on the airline industry than the war in Iraq according to a report in the April 3rd edition of the Financial Times. As of April 16, 2003 some of the biggest Asian airlines said they had travel drop offs of up to 70% on flights to Hong Kong. Goldman Sachs analysis, Noboru Nakajima, believes that the disease will be significant in affecting all travel. Concerns by the cruise line industry of a potential SARS outbreak, has also created a major debate on how to manage the problem if it occurs and how to screen customers to reduce the threat. Hong Kong is not a large producer of material goods anymore; on a global basis 70% of its revenues are generated by services. Services are driven by manpower. SARS is a tremendous threat to any Hong Kong based business. Already most schools are closed. Parents are staying home and away from restaurants, retail locations, cinema, and entertainment complexes. The HSBC Bank and other banks have shut down locations and canceled meeting and overseas travel. A number of embassies have closed and families sent home. Should SARS reach the US or Europe as it has in Asia, panic and over reaction will likely appear. With the war coming to an end CNN, Fox and other news media may look at SARS as the next big news item and set off a similar panic to that created Hong Kong. In an effort to contain the damage done to its travel industry, China claims the disease is nearing control. The WHO, on the other hand, has now listed all of Mainland China under a travel advisory. Most health organizations believe that China has lost control of the virus. Manufacturing facilities in the Guangdong province are experiencing shortages of employees as non-dormitory workers stay home or are subject to quarantine. Concern by overseas buyers, that production will lag or their customers may reject goods produced in the Guangdong province, is creating a complex series of global discussion on finding supplemental suppliers before the next holiday season. China has become the supplier to the world in a variety of consumer goods and any unchecked spread of SARS in China will impact companies from Nike to Wal-Mart. China with its large electronics industry could also be subject to considerable damage. Wal-Mart has already asked its Asian travelers from case countries to go into a self-quarantine for 10 days before returning to work. Products shipped from China are considered safe due to the time it takes for them to reach US shore and should not be impacted directly according to the WHO. The workers that produce these products and those companies that have offices in China are at the greatest risk according to a recent article in Business Week.If SARS spreads in the Western countries, the cost of health care could rise significantly. SARS is a very intensive disease to manage because it requires isolation of the patient; health care costs could increase 2 to 3 fold with a significant outbreak. The loss of workers for up to 30 to 60 days will also impact the productivity of countries and companies. Retail sales could fall significantly as they have in Hong Kong where it was reported by the Hong Kong Retail Management Association and Financial Times that retail sales are down by 50% since the outbreak of SARS with a potential 5% to 10% decline in property value estimated by Merrill Lynch The Department of Defense is currently supplying support to the CDC in identification of the virus and in identification for means of infection. SARS could have a dire impact on our defense program and the war in Iraq. If troops in Korea became infected, we would see further destabilization of the region. The cost to the government for increased defense spending to make up for infected troops could have a longer-term impact on the recession. At the present time there is no reason to believe that SARS is related to terrorism, so the positive side is less fear in the population. SARS is too complex and uncontrolled to use as a terrorist weapon, if it did come from a lab it would be more likely to have been the result of a lab accident where the virus was being use to create a vaccine. SARS may have more impact in some countries than others. Companies that purchase items from overseas or are related to the overseas travel industry (primarily Asia) could see longer-term financial issues. Companies in some sectors of the health care industry might see increases in revenue especially if they are in manufacturing of products like surgical masks, etc. Grants for funding research into SARS could benefit Universities and some pharmaceutical firms. SARS could help Internet commerce; catalog companies and delivery companies and digital movies grow as customer stay away from the crowds.Companies, like Disney, could be hurt as consumers stay away from crowds this summer. Travel to Los Angeles and/or Hawaii could be down as visitors shy away from areas where there are large numbers of Asian travelers. If the disease is tracked to certain bird populations, breeders of these birds may be hurt by the additional cost of disinfecting or loss of consumer confidence in purchasing these products due to fear factors. The disease, at this time, is unlikely to have a significant impact outside of China and some Asian countries as long as the WHO is able to maintain the outbreak, but it should be monitored. Companies that are already in difficult shape and somehow related to any key areas mentioned, should be monitored closely as their survival may be directly related to the events of SARS management by world health organizations over the next several years. Events change quickly with biological diseases. Data is often conflicted. You are advised to watch a site like Center for Infectious Disease Research and Policy (www.cidrap.umn.edu/) or other contacts listed below for frequent updates on this disease.References & Sources*: Hong Kong Dept of Health www.info.gov.hk/dh/ap.htm Singapore Ministry of Health http://app.moh.gov.sg/ Health Canada www.hc-sc.gc.ca/english/protection/warnings/sars/index.html Center for Infectious Disease Research & Policy www.cidrap.umn.edu/Center for Disease Control & Prevention www.cdc.gov/ or www.cdc.gov/ncidod/SARS/World Health Organization www.who.int/en/Morbidity and Mortality Weekly http://www.cdc.gov/mmwr /Communicable Disease Surveillance & Response www.who.int/csr/en/Financial Times www.ft.comBusiness Week, Time, Newsweek*Some site addresses are subject to periodic change.Nike and Wal-Mart, Jack in the Box are protected trademarks of Nike Corporations, Wal-Mart Corporation, Jack in the Box, Corp.Trademarks apply to all other names and logos Information in this briefing may be subject to change. Data in various sources may be conflicting. Decision concerning SARS or its impact should not be made on this briefing but should come from the reader's own research