Intellectual Thoughts by Sanjay Panda: November 2014

Dengue drug can give Sanofi Multi Billion $ biz

As India deals with increasing number of dengue fever, pharma major  Sanofi  announced that the world's first vaccine against the mosquito-borne viral disease may be available by the second half of 2015.  Sanofi  will file for registration of its vaccine candidate and subject to regulatory approval the world's first dengue vaccine could be available by the late  H1 or early H2  of 2015.

According to the company’s release, analyses had shown a 95.5 per cent protection against severe dengue and an 80.3 per cent reduction in the risk of hospitalisation during the study.
Dengue, a mosquito-borne viral disease, has been estimated to be a billion-dollar burden every year in India, with no specific treatment.  It is a health priority in many countries of Asia & Latin America.  According to WHO, dengue threatens over 2.5 billion people worldwide, including an estimated 500,000 who are hospitalised every year from the disease. Between 2 and 3 of every 100 people who contract dengue end up dying from it.
WHO estimates up to 100 million infections yearly, of which about 6M cases are from India alone.  However a large study published in 2013, for  2010, an estimated third of all dengue infections were in India, and the situation has worsened since. According to Health Ministry data, the number of dengue cases jumped 500 per cent from 12,561 in 2008 to 75,808 in 2013. Both the disease and deaths are, however, suspected to be under-reported, and some experts feel the incidence of dengue in India could be up to 300 times higher.

With no specific treatment available, the management of dengue has been largely preventive, through anti-mosquito activities, or symptomatic, where doctors treat patients for the symptoms. A vaccine, according to the WHO, “would, therefore, represent a major advance in the control of the disease”.

While India itself would be a big opportunity for Sanofi on the vaccine, the opportunities elsewhere are also handsome. Brazil, Australia and Southeast Asian countries are also hugely affected by the disease thus opening up a Multi Billion opportunity for Sanofi.

Cheap Oil, how low it can go???

Since June, Oil prices  has dropped from about $115 for a barrel to $80 or so, a reduction of more than  a quarter and its  being forecasted the prices will likely to fall further as there is no anticipated huge increase  in demand  for the next few quarters.

If prices settle at today’s level, the bill for oil consumers will be about $1 trillion a year lower. That would be a shot in the arm for a stagnating world economy. It would also have big political consequences.  For some governments it would be a rare opportunity & for others a threat.  Countries like India, Indonesia  and few others  find the low prices  reason enough to fast-forward oil sector reforms and decontrol retail prices specially Diesel, by far the most used petroleum product.

If speculators truly are the major cause of the price decline, then it increases the chance of a faster recovery in oil prices.  The other reasons could be the result of unexpected and maybe short-lived developments. War torn Libya somehow pumping 40% more oil.  Saudi Arab’s decision to boost output to protect its market share and hurt American shale producers and see off new developments in the Arctic.

The prices may rebound once U.S. shale producers start decreasing production. Its believed that 33% of U.S. oil production becomes uneconomical at $80 a barrel. In fact, according to analyst at $80 a barrel, oil production would rise only 5%, and at $ 70 production growth will  halt entirely.  Almost similar is the case for Canada’s  sand oil.

Saudi Arabia, which derives 80% of its government revenue from oil and dominates the cartel's actions, needs $95-per barrel oil to remain solvent. Venezuela @ $120, Iran @$140 though  the  production cost  of oil  which could be much lower say  $5 - $30 or so.   These countries aggressive foreign policy, investment decisions, extravagant spending schemes etc are  based on such numbers.  So they will try to somehow push the prices up for their own survival. So cheaper oil is welcome, but it is not trouble-free.