Coronavirus Impact on Indian Healthcare Sector: The coronavirus pandemic has sent shockwaves to the health system, societies, and economies around the world. The impact of the coronavirus pandemic is clearly visible in financial markets. But there is still no clarity on the deeper impact that it is having across various sectors.
The healthcare sector is at the epicenter of this unprecedented global pandemic challenge and the pandemic is likely to cost huge to the health sector. Though private hospitals are extending full support to the government in terms of equipment, isolation wards, and workforce, the health industry is bound to face challenges. The pandemic has decreased the surgeries, international patients, and OPD footfall. It will impact the cash flows of hospitals as 80% of the costs are fixed. That apart, the crisis has hit hard the medical devices industry. The situation in China has disrupted the exports of critical raw materials and the export of medical devices.
Coronavirus impact on private healthcare providers
Unlike other sectors, this sector is facing a twin-burden: (a) Investing additional manpower, equipment, consumables, and other resources to ensure 100 percent preparedness for safety in the hospital(s) and eventual treatment of patients, if needed. (b) Experiencing a sharp drop in OP footfalls, elective surgeries, and international patients.
While they have been feeling the burden of Covid-19, private hospitals and nursing homes that constitute more than 60 percent of beds at 8.5-9 lakh, 60 percent of in-patients and 80 percent of doctors in India have been investing heavily in manpower, equipment, consumables and other resources to ensure 100 percent preparedness for safety in the healthcare facilities and eventual treatment of patients, if needed.
The industry has been witnessing a loss of business and this trend is expected to continue for the foreseeable future (at least 3-6 months), and the fact that the sector’s costs are predominantly (around 80 percent) fixed, it is expected that there will be losses and severe impact on cash flows.
The private healthcare sector would need liquidity infusion, indirect and direct tax benefits, and fixed cost subsidies from the government to address the disruption. It is likely that whenever the government announces any fiscal stimulus, this industry will be looked at favorably. The industry is also likely to benefit from increase awareness about healthcare and the more government focus that this endemic is likely to result in.
Coronavirus impact on the medical devices industry
The medical devices industry has also taken a hit. The country imports consumables, disposables and capital equipment including orthopedic implants, gloves, syringes, bandages, computed tomography and magnetic resonance imaging devices from China. Due to the current crisis in China, the medical device manufacturers across India are finding it difficult to source important raw materials and electronic components from Chinese factories. Even though some of the factories in China have restored operation, shortage of some critical electronic parts and raw material still exists. This is adversely affecting the margins and profitability of Indian companies importing medical devices and small components to manufacture finished products. This can also put upward pressure on the prices of medical devices in the short term.
Coronavirus impact on pharmaceuticals
Pharmaceutical drugs made in India are known for quality standards and are exported to developed economies. However, the Indian pharmaceutical industry is facing fierce competition from China as it has more significant cost advantages. The disruptions in the supply of low-cost API from China have decreased the efficiency of the operations of the pharmaceutical industry. The supply-side disruption will cut 10-15% of their revenue. However, the sector will revive soon as the government extends full support. Also, resumption in China’s drug production will alleviate the supply chain as India imports 85% of pharmaceuticals ingredients from China.
Overall, the world is in a dramatic shock, facing a series of challenges. Therefore, the government must make a balance between lives and livelihood to reboot the economy in the right way.