Effect of an escalating war in the middle east on CSL ltd (CSL)
A bit of a morbid question, sorry. Is it possible to model an escalating number of (non-fatal) casualties on CSL's revenue? Would an extra 10,000 wounded in a month move the needle?
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Answer
Hi Richard,
The short answer is: probably not meaningfully.
CSL’s relevant products in a conflict scenario would be plasma-derived therapies including albumin, clotting factors and immunoglobulins, which are used in trauma and surgical settings. CSL also manufactures Haemostatics used in bleeding control via CSL Behring.
Behring generates roughly $US11-12bn in annual revenue, so around $US1bn per month. To move the needle by even 1% on a monthly basis you’d need to generate an additional ~$US100m in plasma product demand.
A battlefield casualty requiring plasma products might consume $US500-$US2,000 worth of CSL product in acute treatment. So at the upper end:
- 10,000 wounded x $US2,000 per patient = $US20m in additional demand
- That’s roughly 0.2% of monthly Behring revenue — barely measurable
The more meaningful CSL revenue drivers in a conflict scenario would be:
- Sustained conflict over months driving cumulative demand
- Governments pre-purchasing stockpiles of plasma products and vaccines as a preparedness measure – this is actually the more likely revenue catalyst, as we saw with CSL Seqirus during COVID
- Supply chain disruption to competitors potentially shifting market share to CSL
Ultimately, 10,000 monthly wounded doesn’t move the needle directly. Where CSL could genuinely benefit is in government stockpiling contracts and pandemic preparedness spending, exactly as we saw with the Canada vaccine contract announced this week.
