Impact of COVID-19 on Sectors like Healthcare, Media, Banking, Insurance, Manufacturing and Retail

By : |May 18, 2020 0

The ongoing pandemic situation is affecting each one of us immensely. Since the dawn of 2020, all that we come across every day is Coronavirus that is eating our lives globally. Though no one has an idea of what happens next, people are being cautious in every aspect to prevent themselves from the virus. As the pandemic situation continues to become intense, various sectors of the economy are confronting a different kind of threat.

Meanwhile, there is also a good sign arising that vaccine for COVID-19 is under preparation. As of now, coronavirus is spreading asymmetrically around the world and countries are facing different stages of a pandemic. Countries are now debating on the right approach to rebuild the economy. COVID-19 has affected sectors and hurt the revenues, but the majority expect a short-term impact. This could be deep, but a company can come back to its normalcy within a few quarters.

So, let us take a deep dive into understanding COVID-19’s impact on various sectors:

Healthcare and Lifesciences

COVID-19 has created a positive impact on healthcare providers. It has monitored and extended support round-the-clock. Being at the epicentre in this pandemic challenge, the healthcare sector is offering extreme support to the government. It is offering products such as testing equipment, isolation beds for the affected patients, and adequate staff to overcome this challenge. This situation disrupted the supply chain. It has also created an additional burden to the industry due to:

• Investment in the additional workforce, equipment, and resources to ensure 100 per cent safety, treatment for patients.

• Being proactive to deal before the situation worsens.

• A drop in outpatient consultancy and elective surgeries.

There is also a heavy loss in business witnessed in this sector and is probable to continue for the next 3 to 6 months. This effect is deep but can bounce back to its prior growth instantly. Since the cost of this sector is already fixed, there will be a massive impact on cash flows. However, this sector is likely to get benefitted from increased awareness about healthcare and the government provides a favourable look.

Communications, Media & Services

The impact of COVID-19 on media is both an opportunity and a challenge. Mass media is being recognized as one of the powerful sources that create and modify the perception of how we see, take, and experience the world around us. This is accompanied by the technological growth that delivers information to the mass audience in a quick time. The outbreak of such a situation is revolving around social and physical distancing as well as a public alarm; herewith, mass media plays a predominant role and has faced a deep-short term effect.

Following are two facets that media is currently experiencing:

• Due to the social distancing, consumption of media has spiked up and news providers are growing rapidly

• On the other side, valuable content such as live sports and other events are being postponed or cancelled. This has resulted in a loss for advertisers to spend again on the events.

Amidst the critical situation, media plays an indispensable role in delivering the news to the audience, creating awareness on the COVID-19, preventive measures to be taken, and minute-to-minute updates. U.S. relief agency Nilsen predicts that staying in a home situation can lead to a 60% increase in watching the content. This current disruption is unprecedented. Yet, media has accelerated in mobile platforms to deliver the content.

Banking & Securities

A drop in credit growth is, in fact, a drop in the economy. As the COVID-19 continues to grow and intensifying the situation, the banking and securities sector must play a stabilizer role. Coronavirus has brought shocks to both demand and supply making the future of this sector uncertain. The banking sector, being an essential service provider to customers and communities, they are now paying careful attention to services that are available to work only at the infrastructure premises. These include call-centre, trading personnel, and facility services.

COVID-19 has immensely affected the profitability of the bank as this sector is primarily about credit growth. Some of the impacts in this sector are:

• When the economic growth weakens, it leads to a decrease in the demand for credit.

• Reduction in profit due to the interest rate cut.

This type of effect is deep and takes many quarters to materialize. Governments and regulators are expected to take measures to alleviate the negative impact on this sector.

Insurance

Since the coronavirus is new, there is a dilemma whether this would be covered under health policies. However, many health insurers have clarified that they are providing cover for coronavirus. They have also stated that coverage includes pre and post-hospitalization charges, test charges for diagnosis and other expenses that fall under this COVID-19 treatment. This is indeed is an opportunity for many insurers to prove their support and earn the trust of their prospective customers.
Below mentioned are some of the factors that cause a major impact in this sector.

• Cancellation of flights and thus leading to customers not buying travel policies.

• Buying new policies are slowing down and taking more time.

• No new policy for NRIs or people with recent travel history.

Having said the fact, the future of this sector is unpredictable. it is deep and will take many months to gain back its prior growth trend. Since the lockdown imposed by the government, this time is bound to deeply affect this industry. Currently, the industry is focusing on the challenge of increased death claims. The earlier the virus is controlled; the lesser impact could be seen in the insurance sector.

Manufacturing

Amidst the never-ending news about the coronavirus shaking the global economies, affecting all the sectors, industrial experts are working on how the ‘new normal’ is going to be. COVID-19, a major threat to this sector, is a new challenge for manufacturers to strengthen their business by using the digital platform. The manufacturers to overcome this sharp impact with a long recovery period will occupy the next few months or many quarters. Currently, manufacturers across the world are working to ensure their teams are safe and healthy.

A recent survey conducted by National Association of Manufacturers revealed that from Feb 28th to March 9th

• 78.3 % of respondents say that coronavirus will have a financial impact on their business

• 53.1 % expecting a change in their business operations

• 35.5 % say that they are already facing disruption in the supply chain.

Once the pandemic situation weakens and normal sign arises, companies will reconsider on the supply chain and make changes in their operations. This will help to be ready for the next disruption to be assessed.

Retail

With many countries across the world facing lockdown for several days, retailers are determining new ways to increase the demand in e-commerce. COVID-19 has not only affected the revenue hit, but it is also now a major threat to the retail industry. The coronavirus in the economic slowdown is likely to claim widespread job losses.

With increased online competition, the impact of COVID-19 has lessened the chances of survival for some retailers. The spread of pandemic has led to the closure of malls across the world resulting in a huge drop for fashion retailers. Now, what do consumers have to concentrate on?

Consumers are advised to store the essentials by purchasing from the nearby stores with time constraints. However, it is mandatory to maintain social distancing and using a facemask. In this phase, customers are more focused on buying what they need than what they want. This results in lower discretionary spend due to the hit on the economy.

Post COVID-19 situation is going to be a change in businesses without a doubt. However, it is going to take a long time before everything returns to ‘business as usual’.

This article was authored by Chenthil Eswaran, Practice Head of Enterprise Business Applications, Aspire Systems

Read More: Coronavirus may not be the only reason companies will allow work from home

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