All around the world the coronavirus outbreak has induced the health care system to its absolute limit, with great strains on available resources. This means hospitals have limited supplies for protective wear, as well as, the all-important ventilators.
The most severe forms of COVID-19 exhibits itself into a pneumonia which requires the need for ventilators for COVID-19 patients to stay alive. The biggest problem facing the healthcare system for nations being impacted by the novel coronavirus, is that with the rise of infected cases; there are not enough ventilators.
In the case of the United States, the risk centres (as for most countries) need of ventilators. At its current state, the US has 160k ventilators and around 13k for emergency use. If the spread rate continues at its current pace, in all probability hospitals will not have enough ventilators. A study carried out in 2005 shows that the US would need around 750K ventilators in a pandemic which assimilates that of the Spanish flu in 1918.
The market for ventilators is relatively small compared to the overall industry, as it accounts for some one per cent of the overall global medical device market. In the case of the coronavirus, in severe cases, it develops an inflammation which prevents people to take enough air on their own.
Ventilators function by blowing air through a breathing tube which is placed through to the patient’s windpipe which allows oxygen to flow into the lungs. There are various grades of ventilators that can cater differently to patients depending on their severity in line with medical advice. Understandably, acute cases will need the high grade ventilators. As in the case of Italy, ventilators are in short supply which is leading doctors to prioritise their use of these ventilators.
Using China as a case study, shows that some 17 per cent of the people contracting COVID-19 would require a ventilator of some form. As the contagion rate reaches high numbers and thousands of people require the ventilator, it becomes burdensome to meet requirements.
The world’s largest ventilator makers include Medtronic plc, Philips, Drägerwerk AG and Getinge. These companies are all committing to ramp up production as they are hiring people to help in manufacturing them. Ireland-based Medtronic stated that it would be open sourcing one of the lower end ventilators for less acute cases for others to produce around the world. This type of ventilator requires less components.
The UK government has ordered vacuum producers like Dyson and car manufacturer, Rolls Royce to produce essential equipment. On March 27, US President Trump invoked the Defence Protection Act in order to force companies like General Motors to manufacture ventilators at a faster pace, following his own criticism that GM was not committing enough resources and wanting ‘top dollar’ for the contract.
Both Ventec and GM are joining forces to build ventilators. In the US, there are also Philips, Ford and General Electric working to build ventilators. In the case of Boeing, the company is working to make thousands of masks and using its planes to distribute medical supplies. On a positive note, the United States also committed itself to help other countries, should it have a surplus in ventilators.
This article was issued by Jesmar Halliday, CFA, investment manager at Calamatta Cuschieri. For more information visit www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.