Coronavirus in the US: COVID-19 outbreak, measures and impact

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The US embassy issued the highest level-4 travel advisory, advising citizens not to travel to China.

The US receives a large number of travellers from China in the form of tourists, who spend billions of dollars in the country. The outbreak is expected to have a major impact on the tourism industry as well as other industries that are dependent on imports from China.

COVID-19 IN USA: Projections and cases by state

The total COVID-19 USA cases crossed 143,000 as of 30 March, while deaths crossed 2,400 making the US the most affected among countries with coronavirus.

USA COVID 19 projections indicate that up to 150 million residents and at least 70 million people are likely to be infected. The forecasts were made by experts such as doctor Brian Monahan as reported by Axios.

The first coronavirus case in the US was confirmed on 21 January 2020 in Washington in a person with a recent travel history to China. First coronavirus death in the US was reported on 29 February. Dr. Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases, has warned that more than 200,000 people could die from the disease.

Human-to-human transmission has been reported too in the US, which is a concern. The first case of community spread in the US was reported on 27 February in Solano County, California, in a person who did not have any travel history to the coronavirus-affected regions.

Community spread was also reported in Oregon and Washington, raising an alarm. Several states have implemented 14-day quarantine for all travellers arriving from neighbouring states to avoid the spread of the disease.

Most-affected states in the US

New York has reported the highest number of coronavirus cases and deaths in the US and also accounts for 40% of deaths in the country. The government announced a disaster declaration for the state and the National Guard has been activated.

New Jersey, California, Washington, Michigan, Kentucky, Guam and Massachusetts are other regions that have witnessed high number of cases. Disaster declaration has been announced in Massachusetts, Michigan, Kentucky and Guam.

Seattle in Washington, however, has witnessed a decline in cases after implementing stringent preventive measures.

COVID-19 measures in the US

The US government announced early measures to avoid imports of the infected, such as imposing travel restrictions, evacuating its citizens from the countries with coronavirus, and approving coronavirus test kits. Manufacturers such as General Motors are producing medical equipment such as ventilators.

Emergency bill passed to combat COVID-19

The US passed an $8.3bn Emergency Coronavirus Response bill on 04 March to combat the spread. States will receive millions of dollars as aid to respond to the coronavirus situation.

The US government declared COVID-19 as a national emergency on 13 March. Further, the US senate approved a $2.2tn bill to aid the US economy and buy emergency medical equipment.

The US government also announced $174m in financial aid to help 64 countries who are most at risk of the coronavirus pandemic. The government will provide $2.9m to India, $1.3m to Sri Lanka, $1.8m to Nepal, $3.4m to Bangladesh and $5m to Afghanistan. The government had previously announced $100m in aid in February.

Nation-wide social distancing implemented

The US government imposed nation-wide social distancing rules banning gatherings of more than ten people, avoiding public places such as restaurants and bars and avoid non-essential travel. The social distancing rules were initially imposed for 15 days but later extended until April 30.

Travel restrictions

The US started public health entry screening at key airports, which handle the majority of travellers from China, on 17 January 2020. The first airports in the list included those at San Francisco, New York, and Los Angeles followed by Atlanta and Chicago.

The US President signed a proclamation on 31 January banning the entry of all individuals from China or those who have transited through China 14 days prior to entry into the US. The ban did not include permanent residents and permanent visa holders, however.

The government also assigned 11 designated airports for all flights carrying persons from China or those who have been to China. These airports are equipped with enhanced public health services to tackle the disease spread.

Evacuations from Diamond Princess cruise ship

The Diamond Princess cruise ship had more than 400 US citizens onboard. The US government evacuated 338 citizens in two charter flights on 17 February.

More than 100 citizens were onboard the cruise ship, some of who tested positive for the virus. They were isolated for 14 days before allowing into the US.

Coronavirus testing in the US

The US passed a bill on 13 March making coronavirus tests free for its residents.

The CDC developed the (RT)-PCR diagnostic panel for testing patient specimens for COVID-19. The test kit is used along with the Applied Biosystems 7500 Fast DX Real-Time PCR Instrument featuring SDS 1.4 software. It was approved for emergency use by the U.S. Food and Drug Administration (FDA) under Emergency Use Authorization (EUA).

The CDC later announced that it would use its existing seasonal influenza surveillance system for testing coronavirus cases in five states including Los Angeles, San Francisco, Seattle, Chicago, and New York. Seasonal flu cases are already being tracked by laboratories in these states.

Persons who test negative for flu are being tested for coronavirus.

Coronavirus impact on the US: Effect of COVID-19

COVID-19 is expected to affect a number of US-based companies with operations in China and other coronavirus-affected countries. Coronavirus impact on the US economy is, however, yet to be fully estimated.

Larry Kudlow, National Economic Council Director, noted that the economic impact of the coronavirus outbreak will be minimal on the US. The U.S. Federal Reserve, however, noted that the outbreak could result in elevated asset values and low-grade corporate debt, which may impact the already shrinking economic growth in the US.

US-based aircraft manufacturer Boeing has announced that fall in demand from airlines would affect new plane deliveries in Q1 2020.

Pharmaceutical and medical device industries, apart from tourism, are also likely to be affected by the outbreak spreading to other countries on which US companies are dependent, such as EU nations and India.

Impact of coronavirus (COVID-19): USA pharmaceutical industry

The Wuhan coronavirus outbreak in China could affect the supply of finished drugs as well as APIs to the US. An estimated 83% of Chinese import lines to the US were human finished dosage forms, while just 7.5% were APIs in 2018. Factory lockdowns in China and logistics delays due to coronavirus measures at ports would mean lower production and delays in shipping of APIs to US manufacturers.

With the coronavirus spreading in the EU, US pharmaceutical companies will have to brace for cost escalations. Pharmaceutical company AstraZeneca has already indicated that COVID-19 is likely to affect its revenue growth in 2020.

COVID-19 impact on API supplies from China, India and EU

Active pharmaceutical ingredients (API) by the US pharmaceutical manufacturers are imported largely from India (18%) and the European Union (EU, 26%), while China accounts for 13%. Domestic manufacturing accounted for 28% of the API supplies in the US as of August 2019.

API imports from Indian manufacturers have been a major cost advantage for US pharmaceutical companies, but the outbreak in China and coronavirus spread to the EU could limit the supplies to the US manufactures thereby increasing the overall costs to US manufacturers and importers.

API imports from India save between 30% and 40% of costs for US and European pharmaceutical companies, according to the US FDA.

Impact on medical devices companies

Another industry that is likely to be temporarily affected is medical devices. China is the biggest exporter of medical devices to the US, with the Chinese import lines accounting for 39.3%. Production slow-downs would mean supply delays and revenue losses to US manufacturers and assemblers.

COVID-19: US drug markers have opportunities

The disease outbreak, however, also has opportunities for US pharmaceutical companies engaged in vaccine and drug development. US-based companies such as Johnson & Johnson, Vir Biotechnology, Novavax and NanoViricides are working on developing coronavirus vaccines.

Biopharmaceutical companies such as Abbvie and Gilead are expected to benefit from higher sales of their existing products Kaletra and Favilavir, respectively.

Coronavirus impact on FDA inspections of Chinese plants

The US FDA performs 500 inspections a year of Chinese pharmaceutical, food and medical device plants. Its planned inspections in China for February 2020 have been postponed due to travel warning advice issued by the US State Department. Most of the surveillance inspections planned in March are for medical products and are planned to be postponed.

The postponements could mean lesser surveillance raising doubts over the product qualities, although the FDA currently sees no reasons to be afraid.

Supply chain disruption

A large number of companies in the US procure parts and components from China. With just 30% of small businesses having resumed production in China post the coronavirus outbreak, manufacturers in the US are scrambling to procure parts that they previously imported from China in order to avoid production disruptions.

Companies such as Apple, Caterpillar, Deere & Co, Komatsu, and Morton Industries are searching to find local suppliers for tools and components. Limited supply and heavy demand have increased the costs of components with domestic components being priced at 30% higher than Chinese components.

Manufacturers are already reeling under supply chain disruptions caused by the US-China trade war, which increased the costs of imports of industrial parts and components. Apple has already announced that the outbreak is expected to impact its revenues.

Impact on US tourism

China accounted for the third-highest volume of overseas visitors to the US in 2018 after the UK and Japan, according to the US Travel Association. Chinese tourists spent approximately $34.6bn in 2018 during their visit to the US. The data also indicates that the trade deficit between the two countries would be 7.2% higher without the inbound travel from China.

Inbound travel from China declined by 2.2% during the first six months of 2019 due to the US-China trade war and is forecast to further decline in 2020 due to the coronavirus outbreak.

The US tourism industry is projected to lose $10.3bn cumulatively in Chinese spending due to coronavirus, half of it being in 2020, according to estimates by Tourism Economics, an Oxford Economics Company. The number of visitors to US from Mainland China alone will drop by 1.6 million, while those from the rest of Asia will add-up to the losses.

The losses to tourism are expected to extend through 2024, since China is the single largest export market for the US, adds the company.

COVID-19: USA hotel industry to feel the effect

The US hotel industry is expected to be affected due to fall in visitors from China. Early estimates by Tourism Economics hint at a 28% drop in visits to the US from China.

Hotel room nights lost in 2020 will be 4.6 million, considering that approximately 65% of Chinese visitors to the US stay in a hotel for an average of 15 nights.

The states of California, New York, Utah and Oregon are expected to be affected the most, since they are the biggest beneficiaries of overseas visitors from China. The top three cities that drew the highest overnight visits from China in 2019 were Los Angeles, New York City, and San Francisco.