Shocked and Persuaded


Separating Fact From Fiction

H1N1 One Year (Almost) On

What have we learned from the H1N1 scare?

Well we have learned that fear grips even the most rational of human beings when they are bombarded with scare campaigns not seen since the days following 9-11. I suspect that much of this fear was ginned up by the Pharmaceutical Industrial Complex (PIC). How can I make such a dark accusation? Let us look at the movement of Roche’s share prices before and after H1N1 was discovered. Roche happens to be the predominant maker of H1N1 vaccine commonly called Tamiflu. They are based in Switzerland and trade on the Swiss Exchange. The graph below depicts shares of Roche in current US dollars (i.e. 1 Us Dollar = 0.9437 Swoss Framcs). The perforated lines in the main graph and inset pinpoint the week of April 27th, 2009, which is commonly used as the starting point of the “pandemic”. The inset is simply the aforementioned week to the present blown up to highlight the post-H1N1 trend for Roche’s shareholders.

roche_shares3I am not proclaiming some sort of grand conspiracy, but what I am pointing out is that there clearly was a financial incentive for Roche to perpetuate the global tamiflu campaign given their near monopoly on the vaccine (Note: This is the kind of thing that antitrust advocates have been screaming about for decades).

Roche’s share price had reached lows not seen since November of 2004 in the month prior to the H1N1 outbreak, but curiously enough many investors were prescient in going overweight Roche in the weeks leading up to the outbreak raising the share price from the previously mentioned five year low of $121.81 to 140.04 in the week that preceded the 1,400 suspected cases reported in Mexico (i.e., April 2oth, 2009).  To put it more succinctly shares of Roche have gained 142% between the IPO in May of 2001 and March 5th, 2010 (116 Months). Yet,  they only gained 117% between the IPO and the week prior to the H1N1 outbreak (104 Months). In the  forty-seven weeks since the April 26th, 2009 outbreak shares of Roche have gained 122% rising from $140.04 to 170.52. That is quite a turn of events for a company that seemed to be floundering and it is also quite the investment for those investors I mentioned earlier that went long Roche in the month prior to the “pandemic” as they have accrued an average return of 140%.

There is one more point to dovetail with the apparent windfall profits generated for one business in a time of near global panic and that is the data used to generate said panic.

h1n14The data above describe the total number of H1N1 cases globally as of calendar year 2009-2010. The data represents 28% of the world’s 195 countries, 81 and 94% of the reported Cases and Deaths, 72% of the world’s population, and 58% of the world’s births per annum (h1n1). From this table we see that the phrase “much ado about nothing” – either the Shakespeare comedy or Kenneth Branagh flick – doesn’t do justice to this supposed global scare. The Average-Median Case and Total Death Range was 5,798-52,804 and 132-601, respectively, with totals of 1,326,367 and 16,264. However, the percent of cases that resulted in death globally was 1.10% with an Average-Median range of 2.47-6.83%. I assume this number is one that Roche will take all the credit for and will likewise brush aside the accusation that the panic was at the very least overblown and more likely generated to save a stale and passed-it’s-prime pharmaceutical company.

So some will say and rightly so that I am being completely insensitive to those that lost loved ones during the H1N1 outbreak. I would simply say that I am not insensitive but simply pointing out the fact that a very small sector of the world benefited greatly from your loss (i.e., Roche Shareholders) and that unfortunately people do die, but to say we need to pull out all the stops for such an infinitesimal sector of society is crazy and frankly irresponsible.

Lets look at the data another way so as to put it – and the campaign to eradicate the world of all viruses and sicknesses no matter the cost – in perspective. Globally 0.00026% of the population died from H1N1 and when you consider the world’s exponentially mushrooming population as the balance between births and deaths we see that H1N1 deaths were 0.01258% of births worldwide. These are numbers that border on the non-detectable when compared to pressures such as drought, war, famine, AIDS, malaria, etc. Additionally, it is worth noting the US has lost 4,386 men and women in Iraq since the occupation began, with a similar trend evident in Afghanistan. The former is 0.00143% of the US population, which is a greater than those killed by H1N1 in this country. Just a little perspective as I don’t see any fuss being made over the countless bodies arriving in Delaware every week. As a matter of fact former President Bush/Cheney wouldn’t even let pictures be taken of this type of seen.

The fact is that H1N1 and the inertia involved in fighting it’s spread lined the pockets of Roche shareholders. The general public writ large was stirred into a frenzy by a convergence of private and public forces for myriad reasons, but undoubtedly the private concerns centered on going long Roche in the weeks leading up to the outbreak and sustaining that momentum to the present day. The data does not lie!

What is that famous line “The Plural of anecdote is data”? Well it says here that the data paint an entirely different and markedly less dire picture than tha forwarded by popular media and the Madison Avenue wunderkinds.

Category: Economics, Geopolitics, Healthcare

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2 Responses

  1. Brian says:

    I still tune in to my fav radio show, On Point, and was happy to hear my old buddy ‘Ted from Burlington’ call in. It was a good point, and while I’m horrible at understanding or predicting popular sentiment, I can’t help but think there’s going to be some backlash to the rhetoric. I don’t know if you experience this, but in my neck of the woods, it seems to be almost entirely generational. Above 40 or so, and people are just scared to death over anything that anyone is willing to call socialism, whether valid or not. Younger than that, and the accusation is either meaningless or non-threatening.

    On the point about Roche, I was going to point out that also late April 2009 Roche-454 introduced the new Titanium chemistry for genome sequencing, a significant leap forward in its ability to compete with Illumina/Solexa for genome sequencing business. On the other hand, when you look at their corporate brochures, its almost entirely about H1N1 and Tamiflu, so their recent Biotech advances (454 and Nimblegen) may not influence stock prices all that much.

    Take care,

  2. […] I wonder if Big (What a..) Dick Cheney knew about this one! He couldn’t have otherwise he would have insisted on a more concerted and muscular presence in Afghanistan throughout the War On Terror. Oh well chalk one up to good ol’ fashion Mullah Omar misdirection. Something tells me you will be hearing that Freeport-McMoRan (FCX)out of New Orleans will be getting their grubby nefarious hands involved in this operation given their robust play in the global copper market. Okay you heard it hear folks with FCX’s near monopoly on the global copper market and a large presence in gold we will absolutely see a strong push by them into this nascent opportunity. Just for the record FCX shares are currently trading at $65.26 on the NYSE, traded as high as $87 on January 8th, 11, and April 5th of this year, BUT are far below highs of $114 and 122 on October 10, 2007 and May 19, 2008, respectively. These two dates and the general peak in copper prices happened to coincide with a commercial and residential housing construction boom in China and lead some to believe that we had reached Peak Copper, although the latter has yet to be proven, but it stands to reason we will reach some sort of peak given the finite nature of copper availability, the world’s insatiable appetite for it, and the fact that last I checked creating it out of thin air ain’t an option! I will keep a keen eye on this and I suggest anyone reading this do the same as I demonstrated with an earlier posting on Roche and it’s share skyrocket in the weeks leading …. […]

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