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Continued Need for Pharmaceutical Economic Analysis of COVID-19 Induced Effects on Drug Demand

Continued Need for Pharmaceutical Economic Analysis of COVID-19 Induced Effects on Drug Demand

Axtria Blogs have continued to follow the uncertain course of the US economic recovery, like an “accordion” or repeating “W-shape” induced by the COVID-19 pandemic [1-2]. Newly released data and economist predictions now suggest that recovery of the US economy will take years (until 2022), not months, in returning to a pre-coronavirus economic level [3]. Federal Reserve Chair Jerome Powell has likewise cautioned that the US economy needs continued stimulus from Congress to maintain the recovery, something that appears unlikely before the presidential election, given the political stalemate between Democrats and Republicans [4].

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More Evidence of a COVID-19 Induced Accordion Recession Cycle Effect – Why Pharma Companies Should Be Concerned

“VIRUS WIPES OUT 5 YEARS OF ECONOMIC GROWTH” 

The headline on the record drop in US GDP for Q2 2020 at an annual rate of 32.9% and 9.5% from the previous quarter, The New York Times, print published July 31, 2020.

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How Will The Accordion Effect Impact Your Brand Performance In Q4-2020 And Q1-2021?

Will the recovery of local economies from the coronavirus pandemic take the shape of a V, U, Nike Swoosh, or W? The “W” shape is gaining more acceptance from economists as they consider the recession at a national level.1,2 Here we consider the possibility that local economies may go through an "Accordion Effect": a series of W’s as they navigate the next several quarters. Each of them waxing and waning differently; an ensemble of accordions.

On June 27, 2020, CNN reported the somber news that five states: Florida, Georgia, Tennessee, and even significantly low population density states like Utah and Idaho recorded their highest number of coronavirus cases in one day. Global deaths have reached half a million. 125,000 people have died in the United States.

Over the last several months, federal, state, and local governments as well as individual towns have made difficult decisions around applying and relaxing restrictions around social distancing to curb the spread of the pandemic. Leaders have been in the unenviable position of making difficult tradeoffs between sustaining public health and protecting the healthcare system from unmanageable spikes in COVID-19 cases, versus ramifications on the social and economic wellness of the population.

As of today, there is no vaccine or effective treatment for COVID-19. It is not known with certainty when one will be available. The approach of the fall and flu season will likely bring added burdens to the healthcare system with a further surge in COVID-19 cases. The degree to which these impacts happen will differ from geography to geography. A myriad of factors will affect the geographic variation in COVID-19 cases, including differences in policy decisions and the compliance of local populations to those policies and guidelines.

One likely possibility is that different geographies will go through an “Accordion Effect,” experiencing multiple cycles of reopening, reclosing, and reopening again until a vaccine becomes available, and the world starts recovering and moving toward a new equilibrium. The impact on local economies is also likely to oscillate during this uncertain period, as employers make decisions that shift in risk-appetite over time based on how their industry sector is evolving.

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