The coronavirus continues to cast gloom over the global economy. There are over 94,000 cases worldwide. The global death toll stands at 3,270.
#Coronavirus:
-Global cases reach 94,534
-Global death toll rises to 3,270
-Japan to quarantine people arriving from China, South Korea
-South Korea to ban export of masks starting March 6
-Multinational firms like HSBC, UBS, Nestle curb business travelhttps://t.co/SWHamPoIuz pic.twitter.com/8xPKbGPlb5— Bloomberg (@business) March 5, 2020
The virus is highly contagious. Pharmaceutical companies, including Gilead, are working on a treatment that can be distributed in mass quantities. It could take months before a treatment receives full FDA approval.
The Chinese government originally called for people to stay away from work during the early stages of the coronavirus outbreak. It could take a while before businesses and factories return to business as usual. While China becomes temporarily closed to the world, it could potentially impact global trade. Any downturn in global trade could hurt transportation stocks as well as companies that have their supply chains in China.
Chatter has suggested Gilead’s Remdesivir could potentially treat the coronavirus. On the earnings conference call management divulged it is working with health organizations to provide Remdesivir to coronavirus patients for emergency treatment. Though Remdesivir is not approved, its use as an emergency treatment for coronavirus is still positive for Gilead. In 2009 Roche (OTCQX:RHHBY) sold over $3 billion of the influenza treatment Tamiflu during the H1N1 pandemic. The use of Remdesivir as an emergency treatment could potentially provide a new revenue stream for Gilead.
In the meantime, supply chains could be disrupted in China. That could hurt global manufacturing output. Several countries have warned against travel to China, Iran, Italy and South Korea where the coronavirus is more widespread. Countries have warned against taking cruises. Companies have warned against non-essential travel abroad. Waning demand could ripple through the economy, triggering recession. This could be the pain ahead author Ralph Baker predicted in Shock Exchange: How Inner-City Kids From Brooklyn Predicted the Great Recession and the Pain Ahead.
