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Coronavirus destructs most, but some firms are flipping the script

FMCG companies such as Nestle, HUL, ITC, P&G, Godrej Consumer, Dabur, Amul and others are set to gain ground amid sudden rise in demand due to anxiety buying and hoarding of daily essentials

Chitranjan Kumar | March 31, 2020 | Updated 09:58 IST
Coronavirus destructs most, but some firms are flipping the script
Sectors such pharma, FMCG and online retail are looking forward to making big gains amid coronavirus outbreak

At a time when most businesses and brands are staring at huge losses due to coronavirus outbreak, sectors such as pharma, FMCG and e-tail have turned unlikely beneficiaries. In the pharma, demand for medical appliances, including masks and gloves, in particular, has gone through the roof and stocks have run dry in most parts of the country. Similarly, health and hygiene products sales spiked and retail stores ran out of stocks as soon as COVID-19 started spreading.

Masks, PPEs

The shortage of masks, gowns, gloves and other single-use items for medical professionals has resulted in entry of a lot of new players in the segment.

To ensure availability of these personal protective equipments (PPEs), the government has fast-tracked manufacturing permission.

In less than 7 days, 15 firms received the government's go-ahead to produce PPEs: These include Arvind Mills, JCT Mills Phagwara, Amare Safety, Mumbai-based Sure Safety, Delhi-based Sai Synergy, Manchanda, Shree Healthcare, Chennai, among others.

They have been asked to produce surgical gowns, gloves, goggles, hand sanitiser, clinical waste bags, waste bag closure devices, blood and fluid spill kits, mask fit test kits and thermometers.

Interestingly, these PPEs were mostly imported from China since very few companies could produce them profitably in India.

Also Read: Arvind Mills, JCT among 15 domestic firms to qualify for PPE kits manufacturing

Ventilators

Another area where Indian firms have acquired fresh capabilities is medical devices for intensive care, including ventilators, where nearly 85 pc of the requirement was being met through imports. Not just India, most countries battling coronavirus face shortage of ventilators at hospitals. Desperate doctors in Italy have even converted snorkelling masks into 'homemade' ventilators to treat coronavirus patients.

Since the shortage of ventilators is even worse in India, the government has reached out to auto companies including Maruti Suzuki, Tata Motors and Hyundai, to develop the life saving equipment. Indian automobile majors Maruti Suzuki and Mahindra and Mahindra have announced they are gearing up to produce ventilators at their factories.

Also, the Defence Research and Development Organisation (DRDO) is working with Tata and Mahindra and Mahindra to develop 'multi-patient ventilators'. Several patients can be supported by a single multi-patient ventilator. Ventilators typically costs anywhere between Rs 5-12 lakh.

Pharma companies

Since it's a medical crisis, several pharma companies are struggling to meet demand. Sales of drugs such as paracetamol have spiked in recent days as people stock up medicines. In fact the prices of such drugs have increased up to 40%. But, beyond medicines, it's the companies that'll test for coronavirus which are to look out for.

Among them are Pune-based Mylab Discovery Solutions which has got ICMR approval to develop an indigenous coronavirus testing kit for commerical use. Mylab's director Dr Gautam Wankhede says they are able to start supplying because they already have "the raw material and been in the molecular diagnostics manufacturing for the last three to four years."

German company Altona Diagnostics has applied for an import licence from the Drug Controller General of India. They hope to get it soon and start supplies.

Swiss pharmaceutical major Roche, which received the emergency use authorisation for its coronavirus test kit - Cobas SARS-CoV-2 Test - from US Food and Drug Administration, has also got nod to import diagnostic kits in India.

Also Read: 'Project STAY I' offers isolation rooms for COVID-19 patients

Roche's Indian subsidiary - Roche Diagnostics India Pvt Ltd - has received conditional import licence from the Central Drugs Standard Control Organisation (CDSCO) and is in the process of importing the test kits.

FMCG companies

Another sector that's largely in the green is FMCG. The 21-day lockdown triggered panic buying among the middle class, which is likely to reflect in the sales figures of such companies.

Fast-moving consumer goods (FMCG) companies such as Nestle, HUL, ITC, P&G, Godrej Consumer, Dabur, Amul and others are set to gain ground amid sudden rise in demand.

A Nielsen report says that people not only have been stockpiling essential food items like atta (which saw a 25 per cent growth in demand in traditional trade and 16 per cent in e-commerce platforms) and pulses (which grew by 72 per cent in traditional trade), a lot of them also bought indulgence food items such as biscuits, chocolates and salty snacks. While orders for salty snacks grew by 84 per cent online platforms, there was a 31 per cent growth in orders for biscuits.

However, they face production and supply chain challenges to make their product available on the shelf. The lockdown has resulted in shortage of manpower and disruptions in raw materials supply, forcing them to cut down on production. While the inventory with the companies could serve few weeks of demand for long shelf life products, short shelf life products could potentially witness availability challenges.

Buyers have been scrambling to stockpile hygiene products like sanitisers, cleaning wipes, and other disinfectant products. In response, manufacturers such as HUL, ITC and Godrej Consumer are ramping up production. Sanitisers and handwash till recently were premium products, and comprised less than 2 per cent of the stock-keeping units (SKUs) of most FMCG companies. That's completely changed. Orders for hand sanitisers have grown by 1,425 per cent in the last one month, as per a Nielsen study.

Online grocery platforms

Riding on the rise in FMCG's growth, online grocers Grofers and BigBasket are also looking at making gains as consumers flock to shop online. Grofers, says while the number of new users on its platform has increased by 14-15 per cent, the number of orders from the existing users has doubled over the past week. Similarly, BigBasket also claims that there has been a 2x growth in traffic and revenue and there has been a 15-20 per cent increase in basket value. However, increased traffic has led to supply chain disruptions and delivery delays.

Also Read: Coronavirus: 87% increase in social media usage amid lockdown; Indians spend 4 hours on Facebook, WhatsApp

OTT platforms

One of the most interesting fallouts of the lockdown is the impact on over-the-top (OTT) content players such as Netfllix, AltBalaji, Amazon Prime, Hotstar and ZEE5. According to a Hammerkopf  Consumer Survey,  internet browsing saw a 72 per cent spike during the first week of lockdown. As people spend more time at home, they watch more video content online. There has been significant jump in video consumption on connected devices. Adding to it, new viewers are expected to join OTT platforms during the lockdown period. There is also surge in content being watched on television.

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