March, 2nd 2020
Virus squeezes medical devices out of market
It is not just critical
medicines that could witness potential shortages due to the coronavirus
outbreak. commonly used medical devices like digital thermometer, infrared
thermometer, nebulizers, blood pressure monitors and Glucometer could face the
same risk soon.
Manufacturers have started
pressing the panic button as they are running out of key raw material the
electronic parts of this item. With no sign of suppliers being replenished
anytime soon, their assembly lines could face closure from March and April
onwards.
At present, a majority of
the demand for infrared thermometer temperature gun is from China itself, which
is facing the worst ever outbreak with cases stilled Rising full stop there
have been hundreds of equipments, particularly for infrared and digital
thermometer from neighboring countries to like Korea, Singapore and Hong Kong,
and even Africa.
As a result, A section of
the industry wants the government to restrict exports of such critical items,
and three layer surgical masks to build a stockpile to tackle the pandemic.
Further, with the
destruction in supply chain, companies are getting impacted due to the increase
in prices of raw material and components and higher cost of shipment with
margins getting squeezed and profitability affected. The worst hit are
companies that import finish the device from China and market them in India
those that assemble items after importing the raw material/components.
The 15 Million Dollar
medical devices market is heavily dependent on around 80% with imaging
equipment like city and MRI scanner. Cardiac stents, Orthopedic implants
syringes, Glucometer and Critical Care equipment concerning a large share.
consumables and disposables light gloves, Crepe bandages IV set blood
transfusion sets and while the digital thermometer rates have doubled to 3-5
dollar. The rate of mask had skyrocketed amid the Surge in demand in the wake
of the outbreak.
A company which has a
major share in digital thermometer and import the finished product said it is
on the verge of zero stock of both thermometer and BP instruments due to
suppliers being indefinitely delayed.
Companies assembling blood
pressure monitors and Glucometer are facing a Glitch too. We are facing
problems in the supply of raw materials for pregnancy kits, thermometer and
Nebulizer and hair stop till April .
India needs to urgently
create a stock price of essential drugs and Critical medical devices for
disaster management. the real impact will be visible only after April.
The big surprise was not
the Global market fell sharply last week on fear of the coronavirus but
that it took so long for them to wake up to the threat. the Wall Street
was full of instant expert in epidemiology
predictive on the basis of widely circulated charts showing the number of new
cases had peaked in China that it
is over.
Global investors had been anaesthetized
by us Bull market that is now 11 year old, in longest in history and also one
of the calmest. in the past decade US Stock Price approached a full 20%
correction Only Twice and suffered even minor deep much less frequently than in
previous Bull market even in significant market tremors were made with new
offering of easy money from the Federal Reserve, so every Divas greeted is
reason to buy. seriously rattled the market.
Until last week Wall
Street was on usually blasé about the coronavirus and had react with far less
alarm that it did during the eighth most recent Global health contigion, going
back to the Asian flu in 1957 full stop when fear of the coronavirus first
appeared in July the buzzword on wall street was melt suggesting great
stock could rise as fast in2020 they
normally for in a meltdown.
The coronavirus was
dismissed as a small could and otherwise clear economic Sky. the global economy
was in and a swing. the rate of a A trade war between the United States and
China appeared to ebbing. even the rise of Bernie Sanders socialist
candidate for the presidency stirred an alarm for investors who surveys show
President Donald Trump an 80- 90% chance of reelection.
The calm was suddenly
broken. Amid report that the coronavirus was reading Asia into Europe and
returning to us market started falling sharply all over the world. by the end
of the week on the measure market had suffered drop off 10 to 15% from their
recent peaks. Compared to its response it has similar instead of the earth
previous global contagion the market reaction had gone suddenly from unusual
calm to unusual alarm.
Before last week the
market had taken comfort from relatively mind economy impact of previous
contagions. typically they were accompanied by a sharp but brief shutdown
lasting around 3 months followed by an equally abrupt recovery. the thinking
was that in 6 months the whole square would be over.
What this episode remind
us however is that while market are often a good monitor of economic condition
this is not a economic events. epidemiologists are still struggling to figure
out the part of this virus and investment community does not know better.
financial analysis are quick to parrot headline commentary like about how the
virus will die when the weather turns were in april, without having any real
insight.
Moreover, analysis for
tracking the average impact of contagion in recent decades and over that period
the size of markets has exploded relative to the economy. in 1980 the total
value of financial markets was about the same as the total Global economic output,
now it is 4 times larger. why the very used to be that tremors in the economy
world rattle the markets it is now possible that tremors in the markets will
disturb economies.
It is increasingly difficult to read the mind of this bloated market beast and that puts the world into entirely uncharted territory. In the post war period, patients have been triggered by central banks tightening interest rates for oil pipe price stocks never to buy a virus. but now the transmission channel has changed. The virus has the potential of inflicting great damage on the markets if the fear psychosis intensifies and the markets have unprecedented potential to inflict damage on the economy.
Assuming markets don't go
into a telescope in the economic impact of the virus there will vary from
Nation two Nation depending on how much stimulates the government can
afford. Investors are confident that Beijing will spend whatever it takes to
keep China's economy moving and that the fed will provide easy money to keep
growth I live in the United States. in the risk category Italy and Japan both
hard hit by the coronavirus and hard pressed to find new stimulus measures.
Whatever the coronavirus
text it is already accelerating the globalization which begin when countries
turn inward after the global financial crisis of 2008 and cross-border flows of
people goods and Money slowed. fear of contagion is likely to defend the
conviction of populist politicians who want to block import and immigrants
anyway.
The train towards localizations
companies looking to produce more locally and Consumers looking to buy from
local brands is likely to pick up speed. the roster of manufacturers who are
moving factories out of China in search of lower wages and less risky business
environments will grow.
The longer the virus lasts
and the further it spreads the bigger this impact will be. hopefully history
repeat itself and like other epidemics this one too peaks and passes quickly
but one thing the coronavirus has already shown is there the market is a fickle
beast and is daily Medical opinion need to be read with cushions.