Investors, throughout the Covid crisis, have focused, at various phases in the pandemic, on mask and PPE producers, vaccine developers, pharmaceutical and medical therapeutics. Every great gold rush in history demonstrated that the lion’s share of the spoils were not earned by the gold miners, but rather those who supplied goods, services and logistics for the miners. It was true then, and in this Covid gold rush, it will likely prove true again. Analogous with gold miners, there are a bunch of pharmaceutical companies, some massive, some tiny, all furiously digging for that illusive vaccine; several hint that they are verging on the motherload. As with gold mining companies, numerous claims will prove to be highly overstated, some might be revealed as outright fraud and, like ore bodies laden with so much arsenic that mining proves physically hazardous for the miners and leads to incalculable damage on the environment, some vaccines might be created that will immunize against Covid but create a variety of other ills. All this remains to be determined.
What has not yet become a part of the story is the delivery of the vaccine and the database management required to achieve a successful rollout. While it might seem odd that such a large and essential part of the solution remains absent from investment discussions, it isn’t at all inexplicable; one cannot talk about things that don’t exist. I believe that the lack of attention by the media is deliberate, rather than incidental; the scope and scale of the issues are causing a whole lot of people to lose a whole bunch of sleep. A comprehensive system of delivery, management, database compilation and monitoring during pandemics is needed, one as novel as the virus itself. Never, in the history of the planet, has there been a need for contact tracing that might be multinational in scale. Never before have countries endeavored to build real-time national databases with the clarity of detail required to be a comprehensive and one-stop source of all things Covid, while remaining unassailable to enemies of the state. Yes, there are statewide patient registries of immunization. However, these registries aren’t granular and coordinated. it would be useful, for example, to have a national database that in one quick keystroke entry, can identify if an individual had ever been diagnosed with Covid, has produced Covid antibodies, has been vaccinated, when a booster is required, how many, if any, Covid tests they have taken and what type, their list of potential contacts for cross-referencing in contact tracing, what other vaccines that they might have had, where they are employed and a current travel history. It would be even better for this database to operate in real-time and utilize AI machine learning to sort through the database and come up with subsets useful for medical personnel on a variety of Covid related questions, that will undoubtedly arise, post vaccination. Yes, all the information compiling is intrusive, but this is the world we now find ourselves in.
Great profits have been earned from speculating on Covid vaccine developers to date; no doubt, there will be at least one winner and possibly a number of successful vaccines. But the vaccine, at an assumed cost of $20-$30 or thereabouts per dose, looks to be the least expensive component of the cost-structure to be borne by countries, when rollout occurs. For the purpose of national interest, perhaps with a perspective of managing potential liability (vaccinations occasionally result in long term side-effects that are only determined months or years after inoculation), the global vaccine market might be carved up among several, maybe as high as a dozen, separate producers. If this is the case, the profit potential for any one producer might not be as high as anticipated.
After vaccines have been selected, the NEXT phase of expense commences. Any supply will require temperature controlled storage, prompt delivery, rapid distribution, accurate inventorying. The public assumes simple, common sense logistics issues, such as taking vaccine off a truck, moving it up to a refrigerator in a hospital within a several hour window, so that the vaccine doesn’t spoil, are problems that were resolved more than half a century ago. The medical bureaucracy begs to differ.
South Korea proves to be a sobering case in point. Several months ago, the nation offered a free national influenza inoculation program for the very first time. In the haste to beat a Covid 2nd wave, approximately 5 million doses of influenza vaccine were left unrefrigerated in warehouses, leading to spoilage. Maybe this was a logistics issue, perhaps it was poor database management, possibly there was a lack of coordination between suppliers and administrators of the program, maybe it was sheer and utter stupidity; we may never know. What is clear is that administrators, either too embarrassed to own up to their error, or too preoccupied with other matters, permitted the spoiled vaccine to be used. Now, 72 South Koreans are dead ex-vaccination, thousands suffered severe adverse reactions, speculation about the safety of the vaccines were called into question when the deaths were, almost undoubtedly, resultant from complications due to spoilage. The absence of common sense within unaccountable bureaucracies is staggering and medical industries possess larger bureaucracies than government.
We are all mightily tired of incompetence. If this pandemic has taught us anything, it is that rational thinking seems to be in greater global shortage than vaccine. A developed nation (South Korea), sitting at the top of the world ratings for the effectiveness of their Covid response, badly dropped the ball in rolling out a simple, national, program of free vaccinations for influenza, what does that suggest about the challenges of rolling out a global Covid vaccination program? A best seller some years ago, entitled the “Checklist Manifesto”, wrote about why surgeons should physically document every action, at every stage in an operation, or they would continue to leave sponges in patients on the operating table; that’s how sloppy even the most highly trained humans are. Do we really require written reminders to remove a sponge from a surgical cavity? Evidently, yes, we do.
In the coming year, a brand new business model is about to be created combining big data, logistics and security. Covid vaccines will have to leave a factory, move safely to their destination and be stored at the correct temperature throughout the entire process. Each vaccination will need to be recorded and post injection monitoring will be ongoing and periodically updated into databases. There might need to be booster injections, based upon the ultimate selections made by various governments. And, these vaccinations will not be “one-offs”. As the coronavirus mutates, which it inevitably will, there will almost certainly be a need and requirement for annual or, god help us all, potentially semi-annual vaccinations. Due to the fact that people lie, people forget, people get sloppy with paperwork and deadlines, most details need to be removed from the hands of individuals, or it will get screwed up.
For Covid vaccinations and ongoing management thereafter, a massive database and programming effort will be required to keep up with all of this. Such a program will most certainly need AI assistance and require security safeguards traditionally associated with military tech at the Pentagon. This goes well beyond the typical excel spreadsheet; one doesn’t bring knife to a gunfight. Consider for example, the issues that will arise should one vaccine, the Pfizer product, ultimately prove out. That vaccine requires a -94 degree Fahrenheit storage temperature, or it is useless. Has anyone asked exactly how much Co2 will be needed to make the dry ice necessary to achieve that goal, for the entirety of the vaccination effort, for the US population. Has anyone thought about how many Co2 cannisters will be needed to store that gas? Has anyone thought through the need for the freezer space capable of holding all of that vaccine and dry ice throughout the United States? Has anyone given the slightest thought to the transportation of said vaccines at the -94 degree requirement? And, WHERE will all of the vaccinations be done, when very few neighborhood pharmacies have the temperature sensitive storage capability in place now. What if multiple vaccines are used from several manufacturers, each requiring storage at different temperatures? If that’s the case, can they all be stored in the same containers, shipped in the same containers, or moved at the same times? Will overworked staff forget what is what and put Pfizer vaccine in a regular refrigerator, or non-Pfizer vaccine into the -94 degree Pfizer storage unit, and will that wreck the effectiveness of the other vaccine? Has ANYONE even tested for this possibility? The question is not “what can go wrong here?” The more realistic question should be, “what will go right here?” A need for comprehensive logistics, accurate databases and real-time monitoring of said data has never been more necessary, and will be a major determinant for the success, or failure, of coming global vaccination efforts.
This isn’t just an issue for the United States, it is a nightmare for the entire planet. In my assessment, there are a total of ZERO big tech household names with the software, the AI and the expertise to carry off the creation, administration and the oversight of this coming project. Companies such as SAP, Oracle, IBM, Microsoft etc. will all claim that they can do this job. I beg to differ; this isn’t an excel spreadsheet task, nor is it an IBM “outsource to India and China” project, nor is it an Oracle “let’s take our existing software and make it work, somehow”, project, nor is it an SAP “lets use our glitchy factory automation software and we’ll work through the bugs over time” project. This is bigger than logistics, distribution and databases; solutions must be hyper-secure, require Pentagon-type clearance, be hackproof, will have to work right the first time and utilize machine learning AI features to identify and fix human entry errors on the fly. Finally, with this much detail, this comprehensive a database and with the entirety of the American population to be entered, the Chinese government will move heaven and earth to gain access. So, the IBM, Oracle, Microsoft and SAP outsourcing of data, or utilizing H1-B nationals from China to work on the project, in opaque efforts to do end-runs on security issues, represents a non-starter.
To quote Bonnie Tyler: “I need a hero. He’s gotta be strong and he’s gotta be fast and he’s gotta be fresh from the fight”.
A hero is certainly what we all want for this challenge, but given the issues of security and plain old human stupidity that are bound to screw up the delivery, distribution and monitoring of the vaccine effort, maybe WANT should be subordinate to need; what we need might be an antihero, to save the day. Palantir Technologies announced a $35 million contract to provide the US government Health and Human Services Department (HHS) with their Tiberius software program. This is a database and contract tracing program utilizing AI and machine learning, to assist in the potential rollout of the vaccine. The dollar amount is insignificant, for now, for HHS; its a rounding error. For Palantir, the amount is also insignificant. But, the contract is open-ended, and that $35 million is just the start. Critics of Palantir find fault with the company only in terms of perception and for offering solutions that are too advanced for the customer. Historical pushback for Palantir was based upon a penchant for management to roll out software so far out on the curve that it was a “solution looking for a problem”.
“Houston, we have a problem”.
Tiberius, if it works as intended, will start with HHS but most assuredly won’t end there. The American HMOs, medical researchers and hospitals will eventually all need access to Tiberius; data access will come at a cost. Like-minded western nations will need their own variant on Tiberius; it will need to be siloed for reasons of national security, but prove capable of data sharing for the global effort (ex-China). These represent additional potential contracts. For security reasons, only Palantir personnel with high level clearance will oversee data entry and provide output. I foresee the ultimate value of the HHS contract eventually ramping up well beyond a billion, and that would be an annual number, provided all goes well. Maybe it won’t; if that’s the case, then the business case for Palantir deflates quite rapidly. If it DOES succeed, EBITDA margins would be comparable, once established, with other franchise software programs on the planet.
Meeting this looming challenge for the American public is daunting. One simply cannot rely on government bureaucrats, medical mandarins and profiteering pharma giants to coordinate competently and do what needs to be done. An external manager with the chops, the software and the security clearance to handle the data involved is essential. At this time, if anyone is up to the task and seems specifically organized to accomplish what is required, it is Palantir. Longer term, if Tiberius can leverage the HHS win, to move onto the HMO data business, then all HMO data-driven software, most of it inhouse stuff, almost immediately becomes obsolete due to a lack of compatibility. For now, Palantir is pursuing a new, potentially open ended opportunity without any meaningful competition. Furthermore, Covid is just our immediate pandemic; it is front and center due to the fact that the virus does not discriminate between the developed and the undeveloped world. In the background, tuberculosis kills more persons annually than Covid. TB has also moved steadily into regions of the world that supposedly had won the battle against tuberculosis; the ease of air travel from outbreak centers to uninfected countries has not changed. And if you think that Covid is pernicious, Google “antibiotic resistant TB” and you’ll get cold sweats. The western world has largely forgotten about BCG vaccinations, which are essential against the battle against TB. Tiberius, should it prove to be capable of handling the data requirements for Covid, can readily scale for databases on other viral concerns present around the globe.
Perhaps Covid is the problem that Palantir has been seeking to solve for a long time. Should Palantir software do its part to win this fight, Tiberius offers the potential to become part of modern lexicon. These are large ifs. Lots can go wrong. Much might be overstated. But, Covid represents a novel issue for the medical community, the government and logistics suppliers. A novel virus poses a novel problem and requires a novel solution.
“Can you Google this?”. “Can you Excel me the numbers?” “Does your office have a Bloomberg?” “Can you Tiberius this town for me to see where we are at?”