Dr. Reddy’s Laboratories has said while COVID-19 did not majorly impact either its March quarter or 2019-20 performance, there is no denying that the company may face many uncertainties, as a result of the pandemic, in FY-2021.
“If the pandemic continues for another six to eight months as it is expected to, we should be prepared to see increasing delays in treatment of other diseases. Hospitals and nursing homes all over the world have already begun to push back admission of non COVID-19 patients,” the top management said in a communication to its shareholders.
Delays in treating these patients could lead to worsening health conditions, as well as reduced demand for many pharmaceutical products, Chairman K. Satish Reddy and co-chairman and MD G.V. Prasad said in the annual report for 2019-20.
In the short-term, there will see less face-to-face interaction between medical representatives and doctors, thus having some negative impact on pharmaceutical sales.
Stating that the company had been working at rapidly building various digital platforms, they said, “we will be using our digital channels even more actively to enable working from home and to reach out to doctors, customers and vendors.”
The top executives expected the pandemic to seriously affect medical tourism via travel restrictions. In turn, it will reduce consumption of pharmaceutical products across hospitals and selected pharma outlets.
Mr. Reddy and Mr. Prasad sought to highlight how Dr. Reddy’s is at an advantage because of its significant in-house API facilities, at a time when pharmaceutical players worldwide are expected to reduce their dependence on China for raw materials.
“They have been hugely dependent on China for their supply of intermediates and APIs. We believe this will change. There ought to be more backward integration as companies attempt to establish themselves as end-to-end manufacturers. Your company has an advantage, thanks to to its significant cant in-house API facilities,” the letter said.
On the flip side, Dr. Reddy’s expects increased demand for over-the-counter (OTC) medicines. “The COVID-19 outbreak has seen a significant upsurge in buying of OTC medicines, especially relating to immunity enhancement, vitamins, analgesics, and flu and anti-infective medication. This stockpiling is expected to continue in the short-term, and result in demand surges for OTC drugs,” the letter said.
The company said it expects to see higher outlays towards preventive healthcare and for public health emergencies. “While that is good for all nations, and especially India where such spends are woefully inadequate, it is not certain how it will directly benefit pharmaceutical companies, other than hospital equipment suppliers,” they said.
