We have the science to prepare for the next pandemic. Coronavirus may provide the motivation to change how we fight infectious diseases in the future.

Our lives have changed with the coronavirus crisis. But have they changed forever? In Does This Change Everything? European Investment Bank experts examine the implications of the COVID-19 crisis for sectors from education and digitalisation to urban mobility and medicine—and for your everyday life.

To find out what coronavirus means in the area of pandemic preparedness and fighting infectious diseases, we spoke to Shiva Dustdar, head of the Innovation Finance Advisory division at the European Investment Bank, the EU bank.

Do you think the coronavirus will change things in the area of preparing for pandemics?

There are three things I believe will need change to increase our preparedness.

First, we need to enhance our risk assessment frameworks. In hindsight, the world just did not wake up to the alarm bells in the prior SARS pandemics. And I do really hope that this time around, because of the devastating, global impact, we’re going to have a paradigm shift, a real change in the global mindset. I know that sounds like clichés, but I really do see that this is the only way for us to ensure we are better prepared.

You may have heard this expression about the ‘black swan’ that came about during the last financial crisis. This idea of tail-end risk, very unlikely events. Swans are white, so nobody really thinks there is a black swan until you actually see one, and only then you become more conscious of the likelihood of one, and that then gets reflected in your future risk assessment framework. You understand that, on one hand, you had completely underestimated a certain kind of risk, and on the other hand, you can now see how you can mitigate it, how you can become better prepared.

Risk is typically assessed by the likelihood of an event multiplied by the damage it could do. Which part of this equation do you think is changing because of the pandemic: are people more conscious of the possibility of a pandemic sweeping the globe, or do we now better understand the enormous impact of such an event?

I would suggest both. I think back to discussions on pandemics and global health. We have been looking at it through a rather limited, narrow lens. You may have heard the expression “neglected diseases”, “diseases of the poor” – very often when people talked about infectious diseases, diseases like tuberculosis, malaria, HIV, we looked at them mainly affecting developing countries. And, as bad as this may sound, we did not necessarily see how this could affect the entire globe, everyone.

Even though the science tells us viruses do not know borders, do not respect any boundaries we might want to set—by GDP, race, nationality—we still somehow underestimated the risk. And clearly we also underestimated the economic damage.

If you think of cost-benefit analysis that drove decisions in the past on whether countries and companies should invest in global health R&D on infectious diseases, on one hand you would look at a few billions, one billion per vaccine, and this would be over 10-15 years. It always seemed like a lot of money... And on the other side of the equation, nobody really understood how to capture that part, because a lot it was in the developing countries and perhaps you didn’t have a good understanding of how their GDP may be affected. There was a complete underestimation.

So right now, if you’re looking at all the stimulus packages in the world, we’re talking of tens of trillions, so this would be the cost of not having done anything, compared to what prevention might have cost, which would have been maybe in tens of billions. If you look at a portfolio of vaccines, research and development activities of some healthcare preparedness as a preventive tool.

It is staggering. No rational decision maker would refrain from investing in prevention, knowing the cost that would come by inaction. Unfortunately, we now have the data to understand it better. It’s no longer assumptions and worst case scenarios. Unfortunately, we’re living this really bad scenario.

There’s also another element that I should highlight. A timing mismatch. Political decisionmakers go through cycles of 4-5 years before reelections, and then you have research and development activities, especially of vaccines, in normal cases taking 10-15 years. If you think of HIV, we’re still developing these vaccines and constantly having to update and improve these vaccines. So there is a timing mismatch. Very often we see that the political leaders do not have the incentives to invest heavily in prevention, because they may not be the ones to get rewarded when something down the line happens, which is rather unlikely and hard to understand.

You mentioned that you think there are two other aspects that you think are going to change. What are those?

The second point is hopefully a more positive note. We have the science, the technology and the ability to invest in tools to improve preparedness. With the new mindset of the importance of preparedness, I hope we will look at innovation and the R&D landscape with a much more interdisciplinary approach.

As if preparing for a war: you look at all the science and technology you have to prepare for it. We have space technology. We have, of course, the whole of medical science… What we need is a much more integrated approach to investing in these, with a view to integrating all these bodies of knowledge towards greater preparedness.

Can you give an example? How, for example, could space technology come in handy?

Space technology is extremely useful. Think of satellites that can trace, track hotspots of epidemics. It’s a matter of making sure we use observational tools to have a much better global perspective of how epidemics spread, how populations are moving. We’re also using these for climate change data. That’s just one example.

And your third change?

The role of the public sector. Right now, we see the public sector in many liberal economies as coming in to fix the problem. I hope we realize that the whole point of preparedness is that we should prepare in good times. This means we as a civil society should rethink the role of public government, empower them to really invest in the healthcare sector, in people’s education, in digital platforms. Making sure that in good times and bad, public sector is well set up and empowered to make and create markets, that it can be very proactive and empowered, not just come in to fix an issue when the market collapses.

This is an area where many know Mariana Mazzucato, she’s a professor at UCL, and has written quite a lot about it. More recently she had an article in The Guardian, where she made the point quite clear. I think this is an area where we all need to revisit our own thinking on the role of the public sector and, indeed, this might also bring in the role of institutions like the EIB.

Speaking of the EIB, what has been the role of the EIB in the past in pandemic preparedness planning, and what do you hope will be its role in the future?

The EIB has also had the tools and invested in these areas, but perhaps more as a niche, not on a large scale. On one hand, we set up the Infectious Diseases Finance Facility back in 2015 under the Innovfin program, a very important initiative. It got the green light during the Ebola epidemic and was based on the market assessment and consultations with a lot of important players like the Gates Foundation and other large foundations and Member States. The purpose was to see how we could add to the mix of funding via grants with instruments that have a repayable feature: that in the case of a success you get repayment, so you manage to do more with less. This was a very useful tool, and we are now looking to finance a number of coronavirus vaccine projects.

My hope is that, with this new mindset change, instruments like this will not only remain in the new multiannual financial framework, but that we also give them more resources, so that they can do much more than they currently have.

We have also invested in healthcare systems in and outside Europe. But, again, my sense is that with the new mindset, we should look at these investments together with the public sector with a view towards preparedness for pandemics. Hence, I hope there will be many more investment opportunities in this area, where EIB can play an even more important role than it has so far.

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