More than half of healthcare workers are confident that consumer demand for their products and services will not decline as a result of the coronavirus pandemic, although some warned their businesses were facing serious challenges, according to a survey.
The Voice of the Enterprise survey was conducted by 451 Research LLC, an offering of S&P Global Market Intelligence, between March 10 and March 19 and represents 820 responses.
Of the healthcare employees surveyed, 54.8% said they did not expect a loss or reduction of customer demand, which was higher than any other industry in the survey.
S&P Global Ratings expects the coronavirus' impact on the healthcare sector will be "moderate" versus other industries. However, increased demand has put pressure on companies like Roche Holding AG, which pointed out that the high demand for its coronavirus test will inevitably outstrip supply.
Decreasing profits and scarce supplies
In an open-ended question asking the employees which challenges brought on by the outbreak would be most difficult for their organizations, a couple of employees expressed concern about their company's bottom line.
While the majority — 76.3% — of all respondents expected no change in their companies' spending on parts and materials, 16.1% of healthcare respondents said their organizations were spending more money, which was higher than other industries like finance and retail. The increased spending comes as healthcare facilities across the country are struggling for bed space and to maintain supplies.
Moody's recently downgraded the medical product industry's outlook to "stable" as many hospitals will have to reschedule elective surgeries, which are typically very profitable for both device companies and hospital systems.
Of the healthcare employees, 12.9% of them said their businesses could only last one month if the coronavirus outbreak continues in its current state, which was greater than all other industries. Meanwhile, 29.0% of healthcare respondents said their businesses could last indefinitely.
Client relationships suffering
Other respondents stated that they were worried that "fear-mongering" and "panicking" could negatively affect their business with clients.
Regarding the public reaction to the coronavirus' threat, 28.9% of the healthcare workers surveyed answered that the public was exhibiting a strong overreaction, while 22.2% said there was a slight overreaction. Additionally, 48.8% answered that they were experiencing reduced access to clients due to the outbreak, which was still lower than other surveyed industries such as software and IT services at 74.5% and business services at 65.9%.
The healthcare employees also said their businesses' planned ventures were suffering as a result of the coronavirus outbreak.
In total, only 8% of all survey respondents stated that their companies had delayed, reduced or halted M&As, but 15.2% of healthcare workers answered that the pandemic had affected their organizations' deals. Additionally, 33.3% of healthcare workers said their companies had delayed new product rollouts while only 11.8% of finance employees and 13.6% of manufacturing workers answered the same.
Aimmune Therapeutics Inc. recently announced that the launch of its recently approved peanut allergy drug Palforzia may slow in the near-term, but sales are currently on track due to remote appointments.
Many pharmaceutical companies have had to cut back on clinical trials. Companies like Pfizer Inc. and Provention Bio Inc. have had to pause clinical trials and focus efforts on coronavirus solutions. Medical and healthcare conferences have also been forced to cancel or reschedule as a result of the coronavirus outbreak.
Labor costs and diversification
Healthcare workers were also concerned about how their businesses would stay afloat if their fellow employees became sick.
More than 39% of healthcare employees said they were experiencing a reduction in employee productivity, and 27.9% said they expect to experience a loss within the next three months. In the for-profit hospital industry, Moody's said low employee numbers may lead to higher labor costs, which could lower hospitals' EBITDA.
Healthcare employees also believe their companies' relationships with China are going to be re-evaluated following the crisis as 17.1% of workers said they "strongly agreed" with the statement that their company would be doing less business with China. The percentage of this response for healthcare was higher than most other surveyed industries.
S&P Global Ratings previously reported that some pharmaceutical companies would be experiencing a disruption in their supplies of active pharmaceutical ingredients from China, and this led companies to diversify their supply chains.
However, there is some hope that U.S. hospitals and healthcare providers may get $100 billion in aid from the Senate's coronavirus bill if it passes the House. Additionally, Moody's reported that the pharmaceutical industry's social risk had declined in the wake of the coronavirus as more companies place resources into creating treatments.
Of the healthcare employees surveyed, 20% said they make finished products, 68.9% said they provide services, and 11.1% said they distribute or resell products and goods.
Additional insights from the 451 coronavirus flash survey:
Gaming industry to play on despite COVID-19 impact
US consumers put away their wallets as coronavirus spreads, survey says
Perceptions of business interruption coverage at odds with reality, survey finds
Insurers face impossible dilemma on virus-related business interruption claims