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Is it a fever or a heatstroke? This is a common question in Asia of late, as temperatures have soared above 37 degrees Celsius while Covid infections let rip in a two-month long surge. A significant, albeit shortlived, increase in demand for antivirals and testing kits is on the cards.
Highly contagious Covid variants have been behind a new wave of infections in the region, especially in Japan and South Korea. In the latter, hospitalisation due to Covid has increased sixfold over the past month, according to official data. A heatwave in these countries has been a contributing factor, as the extreme heat has meant more people staying indoors, in air-conditioned spaces with less ventilation.
Pfizer’s Paxlovid and Merck’s Lagevrio are the two oral antiviral treatments that are mostly being prescribed for patients over the age of 60 in South Korea. But the increase in new cases has also meant a rally for shares of local Covid-related companies — with everything from test kit makers to antiviral and mask makers getting a boost.
Japanese drugmaker and Covid vaccine supplier Daiichi Sankyo is up nearly a fifth in the past week. South Korea’s Shin Poong Pharmaceutical has gained more than 50 per cent, while Covid test kit maker Seegene is up by a third, with test kit sales at convenience stores more than doubling this month.
Vaccine and face mask makers are also gaining, with SK Bioscience up around a tenth and KM Corp, which makes products for clean rooms including masks, up nearly a fifth in the past five days.
The timing of the latest infections suggests that the current Covid wave may be yet to peak, with students returning to school near the end of this month. That time of year has historically been the season that respiratory viruses start to spread. The recent surge in sales of test kits and masks — which many people in Asia still use, while others wear them as a safeguard against air pollution — should mean a longer than normal boost to the companies’ top lines.
But these ancillary sectors have come to be known for their volatility over the past four years, closely tracking sudden spikes in Covid cases in the region. Test kit makers in particular have proved to be a poor long term bet, with the sector still down around three quarters from its peak in 2020. Once the back to school season is over, there is no reason this time should be different.
