Deconstructing The Corona effect

Your average 3-second Google search reveals that ‘COVID-19’ is the very disease whose intractable spread and warped nature have warranted an announcement of ‘Ongoing Global…

Your average 3-second Google search reveals that ‘COVID-19’ is the very disease whose intractable spread and warped nature have warranted an announcement of ‘Ongoing Global Pandemic’ from the unimpeachable World Health Organisation.

However, the COVID-19, or more (in)famously, the Coronavirus, is also a lot more than that.

It’s what you see in every bold headline today, coloured in crimson across all news channels, blaring in panicky voices on radio stations and podcasts, amongst related memes and videos on the various social media, loathed for the downcast red triangles flashing on the stock market networks.

It’s also the ‘thing’ that got your long-awaited sports leagues like NBA and MLS abruptly cancelled, which precipitated the indefinite suspension of the latest seasons of Friday-night binge watches like Survivor and The Bachelorette, and brought preparations for international events such as SXSW, Coachella, Stagecoach, and Tribeca Film festival, among more, to a staggering halt.

Needless to say, the Coronavirus, despite the deceptive etymology of shining crowns and royal glory, is not exactly very, uhm, popular with the people right now.

Hospitals bursting to the brim with growing victims and lessening resources, unassuming items like sanitizers, soap dispensers, masks, and toilet papers(??) disappearing clean off the market shelves due to worsening hoarding tendencies, bustling streets and once-popular spots now devoid of any trace of the human touch, and desperate donation drives popping up on all possible platforms are just some of the many images associated with this malevolent pandemic.

It has left no human on the planet untouched, directly and otherwise. Economies around the globe are tripping over themselves in a bid to get a steady grasp on the situation, entire lifestyles and habits are being altered to match the fear and dread of this virus’ potential, converting every individual to a fear-mongered soul. It has successfully left the mind preoccupied with terrible notions, misinformation, rising fright, and a hopeless emotion towards the unknown tomorrow.

Alas, fear is neither your weapon nor your shield in these trying times. But information is. Studying the specific impact and scale of this virus on the various nooks and crannies of quintessential human life reveals the actual reality of the situation, much different from what the anxiety-inducing reds on your television want you to believe.

And so, we take a brief look at few vital Indian sectors that have been dizzied by the fleeting and life-changing touch of the Corona in the past months:

Pharmaceutical industry:

Bulk drugs and drug intermediates account for $1.5bn or 3% of India’s imports from China, and approximately 85% of active pharmaceutical ingredients (APIs) imported by Indian companies are from China.

This overdependence of India on China for APIs exposes it to raw material supply disruption and price volatility. Mankind Pharma and Granules India are airlifting APIs and other input materials for their manufacturing due to limited land movements and shipping delays from China as inventories are drying up, reported Economic Times.

Another major hindrance to the Indian pharmaceutical industry is its low capacity utilisation. According to a report from the Ministry of Commerce and Industry (MCI), India has a capacity utilisation between 30% and 40% as against a whopping 75% of China.

The outbreak, however, also provides an opportunity to our local manufacturers to grab the share of Chinese competitors. Indian pharma companies currently possess two months’ stock of APIs and intermediates, which in the absence of a major disruption due to the outbreak, could address the issue of shortages. The industry should ideally now seek assured purchase agreements from the Government for the existing manufacturing plants.

Automobile:

The shutdown in China has prohibited import of various components affecting both Indian auto manufacturers and auto component industry. However, current levels of inventory seem to be sufficient for the Indian industry. A persistent shutdown in China could result in an 8-10 per cent contraction in Indian auto manufacturing in 2020.

However, for the fledgling EV industry, the impact of coronavirus may be greater. China is, after all, dominant in the battery supply chain, as it accounts for around three-quarters of battery manufacturing capacity in the world.

Electronic:

China is a major supplier both for the final product as well as the raw material used in the electronics industry.

India’s electronics industry fears supply disruptions, production reduction, and impact on product prices due to heavy dependence on electronics component supply-directly and indirectly-and local manufacturing. The spread of coronavirus could decline sales of top electronic companies and smartphone makers which send major supplies to India.

Tourism:

The coronavirus pandemic is dealing a crippling blow to the Indian travel and tourism industry, especially with the government suspending all visas, with the economic impact being assessed to run into thousands of crores of rupees. This crisis impacts all geographical segments - inbound, outbound, domestic, almost all tourism verticals - leisure, adventure, heritage, MICE, cruise, corporate and niche segments.

The whole tourism value chain across hotels, travel agents, tour operations, destinations, restaurants, family entertainment venues and air, land and sea transportation have been hit.

The cancellation of visas for foreigners as well as the strong advice issued to Indians to refrain from unnecessary travel will have a marked effect.

The situation remains dynamic making it hard to quantify the actual impact on our business and industry at large.

To be perfectly candid, the reality we breathe (pun intended) today is simply bizarre. It’s almost morbidly fascinating to be able to witness a global pandemic of such proportions in our lifetime. The briefs on the fore-mentioned industries give only a slight prologue of what this virus has brought with it, and will continue to bring in the foreseeable future. With crossed fingers and hopeful hearts, remember to exercise caution and give the Coronavirus a hell of a time catching you!