The Swine flu effect

(source: internet)

SWINE FLU EFFECT

As we the global economy is about to come out of the menace of recession it is now being hit with a series of swine flu cases that is yet to be contained. The outbreak has the origination from Mexico where about more than 100 people(now the number have changed) has lost their lives. In India till now 163 (BBC)cases of H1N1 flu were reported.
Many have likened the economic impact of swine flu to that of SARS (Severe Acute Respiratory Syndrome) back in November 2002 to July 2003, which delayed the post-dot-com recovery by several months.

What is Swine flu?

Swine flu is a respiratory disease. WHO says it is caused by influenza type A which infects swine, or pigs. The infection is undergoing constant mutation or change and there are several types of swine flu.

How does the swine flu spread?

The flu spread most likely through coughing or sneezing. The symptoms are quite like that of any other flu. These include fever, cough, sore throat, body ache, chill and fatigue.Treatment for swine flu:Till now there is no vaccine for the treatment of swine flu. Oseltamivir and Tamiflu are the generic drugs that can be used for the treatment.

ECONOMIC EFFECT OF SWINE FLU:

1. The major outbreak of swine flu could be increasing the cash strapped Indian government thereby increasing the fiscal deficit.

2. FII outflow will bring the stock market down.

3. Due to the massive capital outflow rupee is likely to depreciate further.

4. Industries could be affected as it will disrupt the supply chain.

5. GDP is expected to take hit due to decline in economic activity.

INDUSTRIES LIKELY TO BE AFFECTED BY THE SWINE FLU:
1. TOURISM INDUSTRIES: Tourism Industry which has already been hit by the global economic slowdown is now scared that if the swine flu is not controlled by the time of tourism peak season i.e.; October, it will take a toll on the tourism industry.
2. AIRLINE: As the swine flu is likely to slow down the movement of people across the country and within the country, it is likely to bring down the occupancy rate of the airline thereby hitting the top line and bottom line.
Other industries will not see a direct impact from the pandemic. But economic slowdown caused by the disease will restrict production and economic activity. This will hit their profitability.

COMPANIES THAT WILL BENEFIT FROM SWINE FLU:
1. CIPLA: Cipla has the capacity to manufacture up to 1.5 million doses of Oseltamivir. It is expected to benefit if any outbreak happens because of the huge production capacity.
　

..........................Q4FY2008....................Q4FY2009
NET SALES........Rs1142.76 crore...........Rs1366.74 crore
NET PROFIT......Rs179.45 crore.............Rs252.92 crore

2. RANBAXY: Ranbaxy has the production capacity that can produce and supply Oseltamivir at very short notice.
　
................................Q4FY2008...............Q4FY2009
NET SALES.............Rs996.72 crore........Rs822.13 crore
NET PROFIT..........Rs103.42 crore.........Rs 777.78 crore