Ramba Singh, a Delhi-based medical equipment distributor, is eagerly waiting to free up space in his warehouse, now occupied by over a dozen oxygen concentrators that he bought in March 2021 when India was reeling under the second wave of the Covid-19 pandemic. The Chinese concentrators, which Singh had bought from domestic companies for Rs 25,000 each and rented out for at least Rs 10,000 a day to Covid-19 patients, haven’t been used for over a year. “Since there is no demand, I offered these to small local hospitals at throwaway prices, but they didn’t want them,” says Singh, who plans to donate them to charity since he has already recovered their cost.
Ventilators, oxygen concentrators, personal protective equipment (PPE) kits, oxygen cylinders and many other items that were considered life-savers during the initial days of the pandemic are now gathering dust at hospitals and manufacturing units. These commanded premium prices when Covid-19 was at its peak, but with the infection curve seeing a downward trend after December 2021, these products are no longer in demand.
Challenging times
“These are very challenging times for manufacturers of Covid-19-critical medical devices who had invested in plants and production lines for FFP2 (N95-equivalent) masks, surgical masks , oxygen therapy (ventilators, oxygen concentrators, high nasal flow oxygen equipment), syringes, etc., as demand has ebbed sharply and manufacturers are left with huge capacities of plant and machinery and unsold inventories,” says Rajiv Nath, Forum Coordinator, Association of Indian Medical Device Industry (AiMeD).
Not just Indian companies, even multinational conglomerates like 3M are facing a slump in demand. For over 50 years, 3M’s respirators such as the N95 have been used across industries, during natural disasters, and outbreaks such as the Covid-19 pandemic. “We approximately doubled global capacity of manufacturing respirators to support the frontline workers during the pandemic,” says Ashutosh Shirodkar, Executive Director and Country Business Group Leader-Safety & Industrial Business Group, 3M India, adding that with the pandemic waning, there has been “reduced demand for respirators from the healthcare sector”.
According to AiMeD, nearly one-third of the country’s medical device manufacturing capacity is lying unused. Vivek Tiwari, Founder & CEO of Medikabazaar, a B2B store for hospital supplies, says that during the second wave, manufacturers ramped up production of ventilators, PPE kits and masks to meet demand. “As a result, hospitals and supply-chain partners are still carrying a large number of unused equipment and most of this is lying in the top 20 cities of the country,” he says, adding that before the pandemic, India used to manufacture only 6 million PPE kits per annum, which was ramped up to over 230 million.
“Similarly, capacity for ventilators and surgical masks had gone up by 10 times during the peak of Covid-19,” he says. While there has been a sharp decline in demand with the pandemic receding, the recurring demand for PPE kits, masks, gloves and sanitisers is still higher than pre-Covid-19 levels due to increased awareness and endemic protocols. “But medical equipment and devices like pulse oximeters, thermometers, oxygen concentrators and ventilators have seen a decline in demand.”
Medikabazaar’s operating revenue grew 3.3x to Rs 558.95 crore in FY21 from Rs 168.55 crore in FY20. Being an end-to-end hospital supplies and equipment procurement platform, the company saw a huge surge in Covid-19 protection and treatment-related products and equipment. “We sold close to 1,000 ventilators during Covid-19,” says Tiwari, adding that there have been no orders for ventilators in the past two quarters, while demand for oxygen concentrators was negligible. As for face shields, the company has seen no demand in the past few months.
Setting off losses
Industry experts say that with the pandemic showing signs of receding, the central government lifting provisions of the Disaster Management Act, and state governments easing restrictions, a large number of Covid-19-related supplies, equipment and accessories remain unutilised. Manufacturers are trying to repurpose their products to mitigate financial losses.
AiMeD’s Nath says that those manufacturers who were in existence prior to Covid-19, and were exporting these products “are relatively better off as they have a more sustainable supply chain to cater to”. But those who entered the medical device manufacturing space recently as they saw it as a golden opportunity “are now facing liquidity challenges and scaling down production or shutting operations or selling off their machinery. We are encouraging them to seek QA Certification so that they can export surpluses.”
For instance, in the first wave of Covid-19, Max Ventilator, a manufacturer of medical ventilators and allied medical devices, achieved growth of 100 per cent and in 2021 saw business of Rs 100 crore. But now, the company is looking at other products. “Many of those ventilators were Covid-19-specific machines which is why they have now lost their utility. And probably after the Covid-19 demand has saturated, there won’t be much demand for them. So, we have another three products that are meant for ICUs, but not necessarily for Covid-19, and that could result in 25 per cent growth for the company,” says CEO and Founder Ashok Patel.
Besides these, almost all diagnostic companies came out with some form of Covid-19 test kits or other. Now, some that had invested in Covid-19 test kits are looking at other markets for exports. For example, Mylab Discovery Solutions, which makes Covid-19 test kits along with other diagnostic products, is looking at international markets that have demand for such kits, says MD Hasmukh Rawal. The company had a 30,000 sq. ft facility, and the necessary approvals to manufacture critical molecular diagnostic products before the pandemic. When Covid-19 struck, Mylab “decided to redirect our resources to make Covid-19 test kits”. Now, it is focussing on other diseases. “We have invested around $15 million in our manufacturing facility,” adds Rawal.
According to health industry experts, an estimated 20,000 oxygen concentrators are lying unsold or unused. As a majority of Indians are vaccinated against Covid-19 and the infections are mild, the surplus items, experts say, can have other use cases. “We have close to 25,000 primary health centres (PHCs) in rural areas. The government can consider moving simpler equipment and devices like oxygen concentrators to PHCs and community health centres in rural areas that can act as first-level treatment for the patients,” says Medikabazaar’s Tiwari.
Agrees Dr Rana Mehta, Healthcare Industry Leader and Partner at PwC India: “With the demand for these products going down due to lower incidence of coronavirus cases, these manufacturers need to reinvent these products as the opportunity for growth of hospitals is clearly visible. Repurposing these products for larger healthcare needs is required for the twin purpose of usage of the unused products, and boosting the healthcare sector.” Policy support and special duty waivers to facilitate the export of unused equipment could also help, say experts. Medical device manufacturers stuck with unsold Covid-19 inventory would be hoping that some of these suggestions come good.
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