MedTech industry suffers up to 85% fall in revenue during Apr-Jun 2020
Medical technology industry has suffered a 50-85% drop in revenue in April-June period due to numerous financial and operational challenges across the country in the wake of COVID-19 pandemic, an account given by Medical Technology Association of India (MTaI) shows. MTaI represents leading research-based medical technology companies that have a large footprint in manufacturing, R&D and healthcare worker training in India.
Since March 2020, as India started recording surge in COVID19 infections, elective procedures have been postponed as advised by the Prime Minister himself in the first lockdown speech. Elective surgeries drive a large part of the demand for medical devices and the postponement has severely impacted the revenue streams of the medtech industry.
The estimated revenue downfall in the cardiology category was up to 60% in the first quarter of the financial year. The orthopaedic industry devices encountered an even bigger fall in revenue to an extent of up to 85%. The opthalmology sector also recorded a similar impact as its revenue fell up to 75% of during April-June, 2020. Even the critical care device segment fell to nearly half.
COVID-19 has accentuated the problems of the sector that was already reeling with the impact of price control. The pandemic disrupted the global supply chains, while the cost of freight movement increased by 5-7 folds. These challenges have been further compounded by the falling INR value, high basic customs duty rate and the health cess on imported medical devices which has been imposed since February 2020.
Due to the shrinking margins of the hospitals, the channel and service dealership networks, and sub-dealers are already experiencing significant workforce downsizing. So far the global medtech fraternity have heeded to the government’s request of protecting the jobs of its workforce, even while facing significant financial blows. However if the situation does not improve, these efforts may not be sustainable.
“In the absence of a vaccine or a reliable therapeutic remedy, medical devices are currently shouldering the fight against COVID19. We hope that the government stays cognizant of the unprecedented challenges that the medtech industry is facing in India and we request its immediate intervention to help the sector recover so that it can continue fulfilling its role in ensuring critical care services in the country,” Pavan Choudary, Chairman and Director General of MTaI, says.
For short term relief we seek the following assistance from the government:
- Facilitate resumption of elective procedures in hospitals by issuing safety protocol/SOP for non-COVID procedures. The protocol may include : Segregating hospitals into COVID/non-COVID; Institute Covid testing protocols for non-Covid patients going for surgery; Providing safety guidance to the healthcare professionals before, during and after surgery; and creating a corridor and arranging transportation to move patients for elective surgeries, stuck in containment zones to nearest town/ cities.
- Give Customs duty exemption for medical devices: We request the government to consider giving Basic Customs Duty exemption to the medical device industry to cope with the liquidity challenges during this time.
- Revoke health cess on medical devices: The government should revoke the additional 5% health cess ad valorem on medical devices imposed from April 2020.