New Study Demonstrates That Lack Of Pandemic Planning Will Affect Bottom Line

Main Category: Bird Flu / Avian Flu
Also Included In: Flu / Cold / SARS;  Pharma Industry / Biotech Industry;  Public Health
Article Date: 18 Jun 2008 - 5:00 PDT

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The Schulich School of Business released the first study to assess the impact of an influenza pandemic on individual companies. Presented today at the World Conference on Disaster Management, the study - Making a case for investing in pandemic preparedness - focuses on how companies can justify investing in pandemic planning using standard business performance metrics. The study highlights that an investment now far outweighs the potential impact that a pandemic could have on individual businesses.

According to world health experts, it's not a matter of "if", but "when" the next influenza pandemic will strike.(1) (2) (3) The cumulative probability of a pandemic over time is expected to be in the range of three to 10 per cent for 2008, 14 to 41 per cent by 2012 and 26 to 65 per cent by 2017.(4)

"The probability that an influenza pandemic can adversely affect a company's employees is greater than the probability that a fire could adversely affect a company's property," says Dr. Amin Mawani, the study's author and Associate Professor in the Health Industry Management Program at the Schulich School of Business at York University in Toronto. "Firms don't hesitate to buy fire insurance, yet seem reluctant to invest in protecting themselves against an influenza pandemic. The study presents a compelling business case for investing in pandemic preparedness."

Given our inter-connected world with global supply chains, an influenza pandemic could result in corporations experiencing severe absenteeism of 30 to 40 per cent among employees.(5) Prolonged absenteeism and supply chain disruptions would have a significant adverse impact on a corporation's revenues and profits. Given the probability of a pandemic occurring and the potential adverse impact, the Schulich report demonstrates that corporate pandemic preparedness, which includes preventative measures such as stockpiles of antiviral medicine to protect employees, makes financial sense when looking at common business metrics such as net present value (NPV), internal rate of return (IRR) and payback.

"The study also suggests that companies cannot afford to miss being prepared for an influenza pandemic, especially when their competitors are getting prepared," adds Mawani. "Competitors who have prepared themselves for a pandemic can have a unique window to steal market share during a pandemic, as well as to make strategic moves that may be harder to reverse later."

Pandemic-prepared suppliers can enjoy a comparative advantage even if a pandemic never occurs, since customers will feel more secure about the reliability of their supplies.

Making a case for investing in pandemic preparedness was funded through a research grant by Roche Canada. A copy of the full Schulich School of Business study is available at http://www.schulich.yorku.ca/pandemic

(1) Jong-wook, L, Opening Remarks - Meeting on Avian Influenza and Pandemic Human Influenza, Geneva, Switzerland, November 2005.

(2) The World Health Report 2007 - A safer future: global public health security in the 21st century, (The World Health Organization, Geneva, Switzerland, August 2007), 50.

(3) The Blue Ribbon Commission on Mega-Catastrophes - A Call to Action, (The Financial Services Roundtable, Washington, D.C., 2007), 13.

(4) Alison McGeer, 2008, slide presentation made at a conference on pandemic planning in Toronto on April 23.

(5) Cooper, Sherry, 2006, The Avian Flu Crisis: An Economic Update, BMO Nesbitt Burns, March 13.

The Schulich School of Business