South Korea’s Covid-19 testing triumph
A woman poses for a picture beside a cherry blossom tree in Seoul on Wednesday © Kim Hong-Ji/Reuters
It is the ultimate collision of coronavirus with traditional Korean culture: drive-through cherry blossom viewing. Citizens of Seoul are rolling though parks in their cars to celebrate the coming of spring after the harsh Korean winter, just as they might roll through McDonald’s to pick up a burger. Drive-through coronavirus testing centres are attracting lots of visitors too — though contributing a swab is hardly as pleasant.
South Korea’s concerted and effective testing regime is admired in the UK and US, where testing has so far been limited. With vaccines at least a year away from the market, testing and isolating cases early remains the only way to slow down the spread of the pandemic.
South Korea’s 600 testing sites have dealt with about 20,000 people a day since early February. Local manufacturers have been pumping out about 100,000 kits a day. That leaves them with a big surplus for export, just as a shortage of testing equipment is being felt around the world. More than 45 countries have requested test kits from South Korean manufacturers.
The minimum global demand for test kits is estimated to be about 700,000 kits a day. As cases rise and countries start expanding testing to people with mild cases, demand could rise up to seven times.
Shares of Seegene, a local molecular diagnostics company that makes most of the testing kits, and rival EDGC, have more than tripled this year. Seegene has more than 1,300 client companies, lowering fixed costs of making the kits. Sales and marketing costs have dropped — customers are clamouring for test kits. Analysts expect Seegene’s operating profit to grow by more than a third this year.
Yet, with Seegene shares now at a record 108 times forward earnings, test-kit makers are becoming a risky investment. Current demand levels are not sustainable. Once the outbreak tapers, there will be a sudden reversal in demand and profits — until the next epidemic.
Valuations are not the only risk. The tests work by trying to match viral material from nasal or oral swabs with the genetic sequence of the novel coronavirus using chemicals, or reagents. These find and attach to the virus if it is present. A global shortage of medical supplies, including reagents, is a big risk for medical authorities.
This will be heightened by second waves of infection. South Korea and China are already experiencing these. Students have come home from overseas as their colleges moved classes online. China said more than 1,500 confirmed cases without symptoms were under observation as of this Monday.
Here in South Korea, young people who are already at home are getting restless after almost two months of social distancing. The smartphone alerts that arrive several times a day warning of new cases in the vicinity no longer feel very alarming. Warmer weather and clear skies are making it harder to stay indoors.
That may explain why unlike most other countries — where the overall infection rates increase with age — the rate of infection for younger age groups are significantly higher in South Korea. The 20- to 29-year-old cohort has the highest infection rate of all groups, making up almost 30 per cent of total confirmed cases, more than double the rate of infection among people in their sixties. Most youngsters only get mild symptoms, which can make them casual about their infected status.
The renewed spread may cause virus mutations along the way. The 1918 flu pandemic, which also started in January, came back in a more contagious and destructive form in August after a short lull. More tests and lockdowns may be needed to stop that from happening again.