Betting on Panflu

Wall Street makes bets on pandemic bird flu

By Bruce Jaspen
Chicago Tribune

Posted April 30, 2006

Leave it to Wall Street to find an investment opportunity in the potential onset of pandemic bird flu.

Although it's unclear whether bird flu's spread around the world will result in a major U.S. public health threat, some in the investment community are beginning to place bets on potential hot stocks--and potential losers--should an outbreak arise.

A report on avian flu by Citigroup, for example, cast as investment losers air travel stocks and public places like malls, pubs and casinos. On the buy side, the specter of people holing up in their homes for days on end makes home entertainment, media and Internet companies potentially good investments, Citigroup said.

"The markets are anticipating it, and there are already investors making bets on the potential that there will be a pandemic," said Paul Heldman, senior health policy analyst for Citigroup in Washington.

Among potential losers listed in the Citigroup report released in March were airlines like American parent AMR Corp., Continental Airlines Inc. and United parent UAL Corp. Other problematic investments would be hotel companies like Hilton Hotels Corp. and Starwood Hotels & Resorts Worldwide Inc., the report indicated.

"The hardest part of this is to create some probability of if and when," Heldman said. "However, nobody can deny that it is an issue and nobody can deny that it's already having an effect in the stock markets."

To be sure, health-care companies are benefiting from worried governments looking to stockpile antiviral drugs and even vaccines that have not yet been commercially approved for wide use in humans.

One commercially available antiviral drug that is seen as effective in treating avian flu after it infects humans has been a sales boon to its maker. Sales of Roche AG's Tamiflu drug quadrupled last year to $1.6 billion, largely thanks to nearly $800 million in what the company calls "pandemic sales."

I'm not a trader so I don't know how to call this play, but the likelihood of Tamiflu actually being useful in the event of a pandemic flu is slim to none. Good luck with your portfolio, however.