How has coronavirus impacted medical exports?

Ventilators

Ventilators are crucial for the care of critically unwell coronavirus patients. Some countries have a deficit, and some have a surplus – with domestic production and international contributions helping to increase stockpiles.

Domestic production

The coronavirus outbreak has made it clear that there is a global shortage of essential equipment, with the current global demand for additional ventilators being estimated at an extra 880,000 units.¹

To make up this deficit, countries are looking both to their own manufacturers and international allies to cope with their individual shortages. In response, a wide range of companies have already reallocated sections of their factories to produce ventilators.

For example, engineering giants including Airbus, Rolls Royce and Dyson have all answered the UK government’s Ventilator Challenge – a national drive to manufacture an extra 18,000 to 30,000 ventilators to meet the UK’s demand, which includes over 20 companies in total.

General Motors, Ford, Tesla and others have pledged to help in the US. Meanwhile Air Liquide, the only ventilator manufacturer in France, has been tasked with creating 10,000 more ventilators for domestic use, and Draegerwerk AG is providing 10,000 for use in Germany.

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Below, you’ll find the pledges made by various companies on the number of ventilators they are initially looking to produce:

International exports and donations

As well as domestic production, countries are also exporting and donating a proportion of their own stockpiles to international allies or to harder-hit countries.

For example, the German army has provided 60 ventilators to the UK free of charge, as well as 50 to Spain.

At the same time, China has sent 300 ventilators to the UK and 1000 to New York State in the US since March 2020. As a side note, China’s manufacturing capacity is expected to normalise ahead of other nations,² which means that it could be able to plug the gap in equipment shortages in other countries.

Below, you’ll find a map which highlights which countries have some of the largest stockpiles of ventilators, and which countries are in the most desperate need of more.

The countries that are in severe need of ventilators are some of the poorest and most densely populated in the world. For example, South Sudan currently has just four ventilators in a population of 11.7 million. More information on this can be seen in the graphic below.³

It is worth noting that although Yemen and South Sudan have a low number of reported cases at the time of writing (15 April 2020), these figures are likely underreported due to a lack of testing facilities.

Personal protective equipment

Personal protective equipment (PPE) has been one of the key talking points since the pandemic began – and the World Health Organisation (WHO) has stated that current stockpiles are insufficient to deal with the coronavirus outbreak.⁴

Some areas of the world have recognised that they do not have enough, while others have been able to adapt to the changing circumstances rapidly – meaning they have a surplus which can be exported to harder hit regions.

PPE includes gowns, aprons, facemasks, face shields and gloves, and many companies which don’t usually produce PPE have already started manufacturing these products.

For example, Apple has supplied 215,000 type II masks to the UK, Airbus has donated 700,000 IIR masks to the UK, BP has donated 75,000 IRR masks to the UK,⁵ and Under Armour is aiming to produce 10,000 facemasks a week in the US.

In the UK, demand is particularly high for more PPE because the government has had to use up a proportion of its strategic reserves that were being stockpiled in the event of a no-deal Brexit, or possible influenza outbreak.

Below, you’ll find information about the total amount of PPE the UK government has distributed from 25 February 2020 to 15 April 2020 – although no official figure exists for the total amount that will be needed in the coming months.

Facemasks

The best facemasks for medical use are the N95 respirators or fabric masks made from polypropylene, and both are currently in high demand.

Top facemask manufacturers include 3M and Kimberly-Clark Corporation, and these companies are looking to expand their production to meet international shortages. The below graphic charts the performance of Kimberly-Clark and 3M against the S&P 500 and Dow Jones Industrial Average.

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Masks are also being sent from countries with a surplus to countries with a deficit. For example, China has sent 200,000 masks to Italy, along with nine tonnes of other medical supplies and PPE.

Taiwan has also allocated an initial shipment of two million masks for the US, seven million for European countries, one million to diplomatic allies and one million to South East Asian nations. Taiwan is also providing 100,000 facemasks a week to the US, in exchange for 300,000 hazmat suits.

This so-called mask diplomacy – coupled with ventilator and PPE diplomacy – has helped countries to solidify existing relationships, and to establish new ones, which could strengthen trade links in the future.

The below graphic highlights some of the most significant international contributions and donations of both ventilators and pieces of protective equipment:

Effect on the markets

It should be noted that while ventilators, PPE and facemasks are currently being exchanged and exported around the world, the import and export balance is unlikely to shift exchange rates in the forex market – especially considering that many countries are donating to others in need.

However, forex is currently experiencing high volatility – as are a range of other markets including shares – and it is likely this will continue until the outbreak is brought at least under partial control, and economies are able to safely reopen.

It’s also important to remember that while companies are helping to produce ventilators and PPE, there is no guarantee that there will be a positive effect on their share price – and this is also not the reason why many companies have chosen to help.

With the increased market uncertainty brought about by Covid-19, shares could be shifting for any number of reasons, and you should analyse each company on an individual basis.

Footnotes

¹Global Data, 2020
²UNICEF, 2020
³International Rescue Committee, 2020
⁴World Health Organisation, 2020
⁵Department of Health and Social Care, 2020