As we welcome the new year, we realize that the world is not the same as before, and will never be. The way we work, live, socialize, and move about the world will be different too. A stark fact that Covid-19 exposed very early is the deep-rooted problem in the Indian public healthcare system. It brought to the fore the need for equipping hospitals in Tier-II and Tier-III towns with adequate infrastructure through increased budget outlay and greater investments. The Center’s recent announcement of an investment plan of ₹64,000 crore for creating health infrastructure in the country over the next five years is hugely welcome.
The revenue of Indian hospitals and nursing homes is expected to grow a sharp 18–22 percent year-on-year this fiscal year on the back of a low base, Covid-19 treatments in the first quarter amid the second wave of the pandemic, and pent-up demand and recovery in regular treatments. The Indian diagnostics industry too, having seen healthy revenue growth in FY21, with Covid-19 related tests contributing to ~20–25 percent revenues, is estimated to see revenue growth of 20–25 percent in FY22 and ~8–10 percent in FY23. The shift of customer demand from unorganized to organized chains, and the increasing trend of home collections, shall positively impact the volume-mix, and support realizations. Geographical diversification by way of acquisition of regional and smaller diagnostic chains shall result in consolidation and generate synergy benefits in the medium term.
The pandemic has accelerated the convergence of several trends, particularly prioritizing convenience and access to care. The players – the hospitals, and the diagnostic centers, both traditional and new – are now using digital technologies resulting in the creation of a new value proposition across the value chain, and thereby improving both business and health outcomes. And it is the consumer driving transformation of the healthcare landscape – be it capturing of data, use of insight engines, or advanced analytics.
Winners and losers on the stock market are identified; developers that brought pandemic treatments or vaccines to market are reaping the benefits, while in MedTech those making devices, used in orthopedics or cardiovascular procedures, are surging back. The global financing climate remained strong in the first half of 2021, with some record-setting numbers emerging. Biotech flotations raised USD 9 bn, and in MedTech, mergers and deals worth USD 31.5 bn were closed in H1 2021, outstripping the total for all of 2020.
The ambiguity surrounding Omicron continues to dent the morale of the investors. While anything is possible as far as Omicron’s impact is concerned, even if the virus becomes an endemic nuisance, the roller-coaster of restrictions to isolate those infected is turning into a more persistent drag on growth!