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Editorial

The patient is back, and so is the MedTech equipment buyer

The timing of the release of the Buyers Guide from Medical Buyer is very apt. The hospitals and diagnostic centers over the last quarter have recovered from COVID-19 lockdown, dismal occupancy, and abysmally low revenues. With sequentially higher footfalls, resumption in elective surgeries, and higher APROBs, the Indian hospitals expect double-digit revenue growth in FY2022 and better operating profit margins than FY2020 levels. Players are now looking at adding bed capacity within the existing infrastructure, and some of the larger players are actively scouting for inorganic growth opportunities. Owing to a healthy cash generation and strong liquidity position, the interest coverage ratio and net debt/OPBDITA in FY2022 from FY2021 is projected to improve. The RBI’s multiple measures including an on-tap liquidity window, dedicated ECLGS credit lines, etc. are likely to support the liquidity of the players.

Plans to expand, raise funds, conduct IPOs, and acquire companies are being unleashed. For instance, SRL Diagnostics has allocated Rs. 400 crore to expand its labs and collection centers network, Asia Healthcare is raising Rs. 2590 crore, Cloudnine, Medanta, and Park Group are working toward raising Rs. 6300 crore via IPOs, and PharmaEasy after the Thyrocare acquisition has invested in Aknamed in largely a stock deal worth Rs. 308 crore. The online pharmacy’s parent entity, API Holdings, is negotiating a Rs. 1500 crore primary funding round and stitching up a secondary transaction of Rs. 750 crore ahead of its IPO. Having said this, Hyderabad-based Vijaya Diagnostic Centre’s Rs 1895 crore IPO was subscribed just 4.54 times its offer, indicating investors may be becoming somewhat selective.

Other indices are looking healthy. Venture capital investments in healthtech startups have surged from USD 408 million across 63 deals in 2020 to USD 1.36 billion across 41 deals as of August 2021. India’s exports in the medical devices sector have grown from USD 0.98 billion in 2015-16 to USD 2.3 billion in 2019-20 and to USD 2.5 billion in 2021. From April 2000 to March 2021, FDI inflow in the medical and surgical appliances sector stood at USD 2.19 billion. CII expects the MedTech sector to grow from USD 11 billion in 2020 to USD 50 billion by 2025, a CAGR of a whopping 35.4 percent over the next 5 years.

The ball is now in the industry’s court. The buyers are once again back to the table, looking for supplies for their respective hospitals and laboratories. The company that is able to offer equipment with the requisite specifications, at appropriate price points, in conformance with regulatory approvals, is invested in supply chains resilience, and is able to assure extensive distribution and service networks will emerge the winner. With the pandemic uncertainty hanging over the head like the sword of Damocles, to secure every RFP (and tender) that comes your way is key!

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