Medical technology sector is expected to recover to the pre-COVID19 level only by July-December 2021 at best, as companies continue to earn lower than projected revenue due to weak demand and high cost, according to Medical Technology Association of India (MTaI).
Innovation-led global medical device manufacturers suffered upto 85% drop in revenue in most of the segments during April-June 2020. In the July-September quarter, the downfall slowed a little but the future growth looks constrained due to continuing socio-economic challenges posed by the COVID-19 pandemic, compounded by rising import and operational costs, rupee depreciation against US dollar, and un-nuanced policy measures that threaten the viability of MedTech Companies.
The Year 2020 dealt severe blows to the medical technology sector in different ways. First blow came even before COVID-19 which was the 5% ad valorem health cess imposed on imported medical devices. This, coupled with the INR depreciating by almost 7%-8% in March 2020 against the EUR and the USD, meant a very significant hit for the medical technology industry where more than 80% of the products are imported. Then came COVID-19 pandemic along with the nationwide lockdown, and elective surgeries shrunk dramatically. Many healthcare workers migrated to their hometowns.
Hospitals got hit because the impact of apportioning part of the beds for COVID facilities was not clearly foreseen on non-COVID procedures. All this meant capex postponement and stringent monitoring of inventories. The hospitals started shopping for cheaper products and began storing lower inventories of quality products leading to even lower demand.
