Severe Acute Respiratory Syndrome -SARS- Preliminary Implications on the Economy and Disease Overview, Briefing Paper by The Business Development Group.

Business Editors/Health/Medical/Government/Public Policy Writers

MINNEAPOLIS--(BUSINESS WIRE)--April 11, 2003

The purpose of this briefing is to give you a current overview of SARS and a baseline of information about the disease and some economic implications to build upon. As the First World War came to an end, we entered a period of global travel; and with that travel, began the first global pandemic. By the end of the pandemic, over 20 million people lay dead. Since that time, we have experienced a variety of related diseases. Some are as dangerous, some with the potential to do as much damage: Aids, Hantavirus, avian flu, variants of CJD and CWD, West Nile, Ebola, Indian plague, small pox, Legionaries disease and many other varied bacterial and viral infections. On an average, the world is subjected to a new biological threat from Mother Nature every 6 to 10 years. Man-made biological threats can be developed ad hoc: Anthrax and Small Pox.

Severe Acute Respiratory Syndrome or SARS has not received the attention in the US media that it has in other countries perhaps due to the war. Perhaps because we are all complacent, thinking the ability to manage these diseases is commonplace. SARS has not yet been proven to be a mega disease, but it may be on the verge of becoming one. If SARS were to go unchecked in the world and mimics the problems created in China, Hong Kong or Toronto, we could see a significant impact on our economic marketplace.

What is SARS?

SARS is a respiratory illness of unknown cause. In some cases, it is being referred to as Atypical Pneumonia because of its close resemblance to pneumonia. The criteria for SARS are: temperature of 100.5 degrees or more, one or more clinical findings of respiratory illness (i.e. cough, shortness of breath, difficulty breathing, hypoxia, or radiographic findings of either pneumonia or acute respiratory distress syndrome), travel to an area with documented or suspected community transmission of SARS, and/or close contact within 10 days of onset of symptoms with either a person with a respiratory illness who traveled to a SARS area or a person known to be a suspect SARS case.

What is the origin of SARS?

A small group of scientist believes that SARS may have come from farm animals. Bi Shengli, of the Chinese Center for Disease Control and Prevention in Beijing, stated that the earliest victims in Guangdong were chefs or bird vendors in contact with chickens, ducks, pigeons and owls. The current theory is that SARS is a formerly unknown coronavirus, similar to the virus that causes the common cold and mild to moderate upper-respiratory illness in humans. When viewed under a microscope, they have a halo or crown-like appearance. The strain of coronavirus identified is similar to a virus that is far more serious and found in animals where it is associated with respiratory, gastrointestinal, liver and neurological disease. In several cases of SARS, metapneumovirus has been isolated; the role in the pathogenesis in SARS remains unclear. Other potential viruses may still yet be identified.

SARS is believed to have originated in the Guangdong province of China in November of 2002. From there it spread to a single hotel in Hong Kong, called the Metropole, then certain hospital clusters involving seriously ill patients. Guests on the 9th, 11th, & 14th, floors of the Metropole Hotel were exposed. International travelers from these floors spread the disease to another five countries; the disease is now in 19 countries. In February of 2003 it appeared in North America for the first time.

What is the incubation period for SARS?

Typically it is 2 through 10 days. The illness begins generally with an onset of fever of 100.4 degrees or more. The fever is often associated with chills and/or rigors and might be accompanied by other symptoms including headache, malaise and myalgia. After 3 through 7 days, a lower-respiratory phase begins with the onset of a dry, nonproductive cough or dyspnea. In 10% to 20% of cases the respiratory illness is severe enough to require incubation and mechanical support.

What is the mortality rate?

This is an extremely aggressive disease. In countries where it was originally established, 1 in 20 are dying. The CDC estimates the mortality rate at about 3.5%, which is similar to other respiratory diseases. Other organizations such as Health Canada have placed the death rate at 4%. It is too early to tell the actual mortality rate and it will likely be different in each country.

At the present time (4/10/03), there are 2,781 cases worldwide; there have been 111 deaths. One hundred fifty four suspected cases have been reported in the US in 30 states, with no deaths to date. Cases studies before 4/5/03 indicated 94% of the individuals had traveled within 10 days before the onset of illness to the areas listed in the CDC SARS case areas For more information on case areas please go to www.cdc.gov and access the SARS page.

What is the risk of exposure?

SARS appears to be spread primarily by direct contact with moisture droplets or body fluids expelled by a SARS carrier. The World Health Organization (WHO) believes, however, that other factors may be involved. Several hundred residents of a housing complex in Hong Kong are now quarantined; they may have been infected with SARS even though they did not have direct contact with a SARS carrier.

It is also becoming evident, according to the CDC and other health organizations, that some individuals may be more infectious than others. An April 4th teleconference, by the CDC and WHO, referred to the possibility of super carriers (individuals that are able to spread the disease greater than others).

According to Dr. Gerberding of the CDC, in one hospital in Hanoi, 56% of the health care worker population that came in contact with a SARS patient came down with the disease. In Toronto, where the disease has had a significant impact on hospitals and health care, 180 paramedics have been quarantined in their homes, three were hospitalized with symptoms after potential exposure to SARS infected individuals.

There appears to be a dramatic difference in the mortality of the disease depending on when it is detected. The US has experienced no deaths and a number of recoveries based on aggressive disease management, while China has experienced 1,290 reported cases and 55 deaths as of April 10, 2003. Actual numbers could turn out to be much higher.

Dr Gerberding of the CDC believes this is a significant and serious threat to world health and one that needs immediate and vigilant attention. "We recognize this as an epidemic that's evolving differently." In transcripts from the CDC, Dr. Gerberding and Dr James Hughes, of the National Center for Infectious Diseases, have stated their concern about SARS. "The potential for infecting large numbers of people is very great". The WHO said outbreaks in most parts of the world are currently under control but still spreading in China and Hong Kong. Other health organizations remain highly cautious and suggest this virus could still break away.

At the present time, many individuals that have been exposed to SARS have recovered or are in recovery. Early medical attention is critical. If you believe you have SARS you should contact local health authorities immediately and try to limit contact with other individuals if possible until you have been instructed on the best course of action.

Does the coronavirus live outside of the human body?

The virus appears to live about 3 hours outside the human body. Similar viruses have the capacity to live from 1 hour to 6 days outside the body. There are some very limited concerns that if dried, it may become airborne and still remain potent or maybe hosted by animals or in sewage or related environments. The Hong Kong government is currently looking at rat and mouse droppings as a possible source of the virus.

Are there any tests developed to detect SARS?

SARS identification testing is under development. Currently a PCR test is being evaluated. Dr James Hughes has noted two CDC tests that look promising; one is an indirect fluorescent antibody test and the other is an Allose test. Both tests require the disease to have some time to establish itself in the human body.

Is there any known treatment for SARS?

At this time there is no known treatment for SARS; anti-viral drugs, antibiotics and steroids alone have not responded well. An article in the Financial Times on April 2, 2003 indicated that Hong Kong government health officials indicated some success with a treatment of cocktails of anti-viral drugs and steroids to modulate the extreme response by the patient's immune system. Ahang Wenkang, health minister for China believes they have found a combination of Western and Chinese medicine that works but no details are provided. There are vaccines used in animals to manage coronavirus so there may be an opportunity to expand this into human subjects in the future.

Prevention of the disease is based on keeping away from direct contact with potentially infected individuals. Recommendations are to practice basic hygiene, washing hands frequently, and avoid areas where the disease is spreading. The use of surgical masks is having limited impact unless the mask is worn by an infected individual to reduce the droplets spread by the nose or mouth. Masks that are sealed and rated N-95, used in conjunction with eye protection and rubber gloves are suggested for individuals in close contact with infected individuals. It is believed that a variety of disinfectants are successful at destroying the virus; chlorine-based disinfectants are listed in a number of health organization's information articles. There is, however, no disinfectant that is currently registered or approved for SARS by any government organization at this time.

Should I travel overseas?

The CDC and WHO have travel advisories out for much of Asia. Check the CDC website. Toronto is also being noted as a travel caution area. In short, if you don't need to travel at this time, don't. Video conferencing is up for Asia by 50%. According to the Center for Infectious Disease Research & Policy, individuals that are in the US who have not traveled to an infected area have very little risk of becoming infected with SARS. This suggests that staying home may mean staying safe.

Travel advisories are currently recommending restricted travel to: Mainland China (primarily the Guangdong province), Vietnam (primarily Hanoi), Singapore, Hong Kong, Taiwan and some organizations have placed a watch on Toronto, Canada

Could SARS be similar to other respiratory or flu-like diseases?

Nobody knows. In the 1998 - 99 flu season there were, according to the CDC, 20,000 flu associated deaths nationwide with 80 million doses of vaccine given to the public. The vaccine was between 70%-80% effective in preventing the flu among healthy adults. This could suggest that a similar disease, for which no vaccine exists, could have a devastating effect on any population that is not prepared. If SARS turns out to be an airborne disease, it will likely be considered more aggressive and could mimic the flu. Direct-contact diseases tend to spread slower allowing for health controls.

Economic Impact of SARS

SARS currently has the greatest economic impact on Asian countries and businesses closely related to those countries. Among the industries currently being affected: Airlines, Asian and some Canadian (Toronto) convention and tourist business and local retail business, travel-related business and production of materials in China. By example, when Qantas Airlines issued the region's first pneumonia-related profit warning two weeks ago, Merrill Lynch cut their estimates on earning by 19%. Cathay Pacific, which is based in Hong Kong, saw its shares drop by 18% and Singapore Airlines dropped by 14% as a result of SARS concerns by investors. KLM, the Dutch Airline, said that it feared the rapid spread of SARS was having a greater impact on the airline industry than the war in Iraq according to a report in the April 3rd edition of the Financial Times. Goldman Sachs analysis, Noboru Nakajima, believes that the disease will be significant in affecting all travel. Concerns by the cruise line industry of a potential SARS outbreak, has also created a major debate on how to manage the problem if it occurs and how to screen customers to reduce the threat.

Hong Kong is not a large producer of material goods anymore; on a global basis 70% of its revenues are generated by services. Services are driven by manpower. SARS is a tremendous threat to any Hong Kong based business. Already all schools are closed. Parents are staying home and away from restaurants, retail locations, cinema, and entertainment complexes. The HSBC Bank and other banks have shut down locations and canceled meeting and overseas travel. A number of embassies have closed and families sent home.

In an effort to contain the damage done to its travel industry, China claims the disease is now under control. The WHO, on the other hand, has now listed all of Mainland China under a travel advisory. Manufacturing facilities in the Guangdong province are experiencing shortages of employees as workers stay home or are subject to quarantine. Concern by overseas buyers, that production will lag or their customers may reject goods produced in the Guangdong province, is creating a complex series of global discussion on finding supplemental suppliers before the next holiday season. China has become the supplier to the world in a variety of consumer goods and any unchecked spread of SARS in China will impact companies from Nike to Wal-Mart. China with its large electronics industry could also be subject to considerable damage.

If SARS spreads in the Western countries, the cost of health care will rise significantly. SARS is a very intensive disease to manage because it requires isolation of the patient; health care costs expected to increase 2 to 3 fold with a significant outbreak. The loss of workers for up to 30 to 60 days will also impact the productivity of countries and companies. Retail sales could fall significantly as they have in Hong Kong where it was reported by the Hong Kong Retail Management Association and Financial Times that retail sales are down by 50% since the outbreak of SARS with a potential 5% to 10% decline in property value estimated by Merrill Lynch

The Department of Defense is currently supplying support to the CDC in identification of the virus and in identification for means of infection. SARS could have a dire impact on our defense program and the war in Iraq. If troops in Korea became infected, we would see further destabilization of the region. The cost to the government for increased defense spending to make up for infected troops could have a longer-term impact on the recession.

At the present time there is no reason to believe that SARS is related to terrorism, so the positive side is less fear in the population. SARS is too complex and uncontrolled to use as a terrorist weapon. SARS may have more impact in some countries than others. Companies that purchase items from overseas or are related to the overseas travel industry (primarily Asia) could see longer-term financial issues. Companies in some sectors of the health care industry might see increases in revenue especially if they are in manufacturing of products like surgical masks, etc. Grants for funding research into SARS could benefit Universities and some pharmaceutical firms.

Companies, like Disney, could be hurt as consumers stay away from crowds this summer. Travel to Los Angeles and/or Hawaii could be down as visitors shy away from areas where there are large numbers of Asian travelers. If the disease is tracked to certain bird populations, breeders of these birds may be hurt by the additional cost of disinfecting or loss of consumer confidence in purchasing these products due to fear factors. The disease, at this time, is unlikely to have a significant impact outside of China and some Asian countries as long as the WHO is able to maintain the outbreak, but it should be monitored. Companies that are already in difficult shape and somehow related to any key areas mentioned, should be monitored closely as their survival may be directly related to the events of SARS management by world health organizations over the next several years. Events change quickly with biological diseases. Data is often conflicted. You are advised to watch a site like Center for Infectious Disease Research and Policy (www.cidrap.umn.edu/) or other contacts listed below for frequent updates on this disease.

References & Sources(a):

Hong Kong Dept of Health www.info.gov.hk/dh/ap.htm

Singapore Ministry of Health http://app.moh.gov.sg/

Health Canada www.hc-sc.gc.ca/english/protection/warnings/sars/index.html

Center for Infectious Disease Research & Policy www.cidrap.umn.edu/

Center for Disease Control & Prevention www.cdc.gov/ or www.cdc.gov/ncidod/SARS/

World Health Organization www.who.int/en/

Morbidity and Mortality Weekly http://www.cdc.gov/mmwr/

Communicable Disease Surveillance & Response www.who.int/csr/en/

Financial Times www.ft.com

(a) Some site addresses are subject to periodic change.

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