From the perspective of Maslow's hierarchy of needs, economic activity in developed and developing nations was increasingly focusing on ego and self-actualisation needs. COVID-19 seems to have waylaid economic initiatives to serve rather diligently, basic survival and safety needs otherwise called deficiency needs.
These needs if fulfilled, do not contribute to additional excitement in life but if not fulfilled, they undoubtedly create heightened anxiety.
What has come as a rude, shocking reminder is that the ecological system has the power to deliver a devastating impact on the world economy. It is a wake-up call that indeed the economic system however advanced operates within the ecological system.
Viruses, bacteria, plants and animals are inexorably tied to human beings and impact the economic activities in inconceivable ways. With COVID-19 tormenting the homo sapiens around the world, there is tremendous pressure to devise new coping methods, when the existing ones have proved inadequate to resolve the challenge.
Here is a situation where the strengths of certain companies can respond to the imminent biological threat and create a moat for themselves in the process. A moat occurs when some or all of a company's capabilities combine to create sustainable margins.
The emergence of the COVID-19 threat and confluence of a company's capability and behaviour can lead to moats that are exceptionally rare given the challenging circumstances.
Firms such as Gilead who are at an advanced stage of testing a drug for broad-spectrum activity against coronaviruses; Johnson and Johnson's subsidiary Janssen is one of several companies that have partnered with HHS' Biomedical Advanced Research and Development Authority (BARDA), to develop vaccines and drugs for the COVID-19 virus.
HHS has also partnered with French drugmaker Sanofi to develop a vaccine against SARS-CoV-2. Under the partnership, BARDA is providing its expertise and allocating money to fund the vaccine's development, while Sanofi is using its recombinant DNA-based and egg-free vaccine development system to produce a vaccine candidate.
Regeneron is another company that had an existing relationship with BARDA. These two entities are reportedly planning to use part of Regeneron's VelociSuite monoclonal antibody discovery system against the COVID-19 virus.
The technology platform was previously used to develop monoclonal antibodies against the Ebola virus, used in a recent outbreak in the Democratic Republic of the Congo, and the MERS coronavirus. All these moated companies share the traits of a unique mix of capabilities, the ability to capture margins and resilience to survive over competitive product or capability.
Then there are companies with efficiency moats that reduce cost relative to competitors. Efficiency advantages expand their margins and addressable market share.
Efficiency based moats are usually built around scale. Scale based efficiencies are a result of greater throughput driving experience curve cost reductions. In India, Venus Safety and Health, as well as Magnum Medicare who are into personal protective equipment, Shriji Polymers in drug packaging, are in an unenviable position of their products being in high demand.
Efficiency moats exist in companies focusing on disposable protective clothing. Innovation in product development such as the development of microporous films which provides an excellent barrier against the bacterium, virus, protozoan, and parasite, among others are widely used for disease prevention.
Based on material type, the disposable protective clothing market has been segmented into polyethylene, polyurethane, polyester, and others. The polyethylene segment is estimated to register the highest CAGR in terms of value, of the global disposable protective clothing market.
In the wake of COVID -19 outbreak, rising demand among medical professionals regarding healthy medical practices and for non-woven based clothing, offering better protection from contamination are expected to drive the demand for disposable protective clothing in the healthcare/medical industry.
The key market players are 3M Companies, Du Pont de Nemours and Company, Kimberly Clark Corp, International Enviroguard, Derekduck Industries Corp., and Lakeland Industries, Inc.
The demand for protective gear is skyrocketing as protecting people from physical harm while at work has become a paramount safety requirement.
The silver lining is that with careful attention to employee safety, the employers are minimising employees' risk of infection and their own enterprise efficiency risk.
(The author is Chairperson, Centre For Corporate Governance and Citizenship and Professor of Strategy IIM Bangalore.)