The Impact of COVID 19 on Life Science and Healthcare Industry in the US

1. The Impact of COVID-19 on Life Science and
Healthcare industry (LSH) in the US
Prepared by-
Khushboo Pandey

2. Section Break
 The LSH industry as the name suggests is
a combination of industries like:
✔ Pharmaceuticals
✔ Healthcare services
✔ Research and developments (R&D)
✔ Medical Equipment
✔ Other healthcare services (health
insurance etc.)
 In 2019, Healthcare services were the
largest segment of the LSH market,
accounting more than 60% of the total
market. It was followed by
pharmaceutical drugs, medical
equipment, and others.

3. Overview
 COVID-19 has rumpled healthcare capacity in the US, which is considered as the
hotspots for the virus, with 1.32 million confirmed cases and nearly 80,000 deaths till
2nd week of May. New York (most populous city in the US) is the epidemic of the
virus. The state continues to contend with the rapid spread of the virus and surging
hospitalization rates. Nevertheless, New York’s healthcare capacity has remained
strong as local, state, and federal aid has supported the capacity by converting
convention centres, hotels, and even an area of Central Park into temporary hospitals.
 The entire US life science and healthcare system is being shoved directly and
indirectly by the COVID-19 pandemic. Every single person in the country is
experiencing the effects, from patients to clinicians delivering care, from healthcare
providers to scientists pursuing therapeutics and vaccines. The enormousness of this
impact is shifting weekly or even daily basis, across multiple extents, are sum up in
this presentation.

4. Infographic Style
0
2000
4000
6000
8000
10000
12000
Global NA WE A&A LA MEA Others
Chart 1: Healthcare Spending ($ Billion)
NA- North America WE- Western Europe A&A- Asia &Australia LA- Latin
America MEA- Middle East and Africa
 According to the Organization for Economic Co-operation and
Development (OECD), the US spends nearly 17.7% of GDP on healthcare. Whereas,
globally it is just nearly 7% of GDP. In 1980, the per capita healthcare spending was
$2,900; whereas in 2020 it is expected to reach $10,612. It is mainly due to the
current COVID-19 outbreak in the region.
 Further, in the country nearly 50% of healthcare spending in the US takes place in
hospitals, clinics, and other facilities such as residential care homes. Whereas, 25% of
healthcare spending is on personnel and the next largest areas of spending are
pharmaceuticals, health insurance, government administration, and other activities.
 In 2019, the US healthcare industry was $4.55 trillion, which expected to grow at a
CAGR of 2.7% to reach $5.34 trillion in 2024. It is mainly because the healthcare in
the US is about twice as expensive as it is in any other developed country. Also, the
US is the highly coronavirus impacted country. The growing concern over COVID-19
is leading to high spending on healthcare, prices of medical devices, consumables,
and drugs.
 Further, US based IT companies investing highly in digital health technology
solutions such as artificial intelligence (AI), Internet of Medical Things (IoMT), Big
Data analytics, and robotics across select healthcare segments. In addition, cloud-
based PaaS/SaaS platforms will be integral to any healthcare data monetization
model. The transition of these technologies from concepts to real time applications
will drive growth opportunities in the country thus increasing the healthcare industry
size.
2018 2023

5. How COVID-19 is Affecting Life Science & Healthcare Industries in the US
LSH vs Other Industries
Healthcare Products and
Medical Devices
The Pharma Supply Chain
 In the US, The World Health Organisation
(WHO) has warned of a shortage of
protective equipment required to fight the
fast-spreading virus.
 The prices of surgical masks have
increased six–fold, N95 respirators have
tripled in cost, and protective gowns cost
twice the original price for eg., the online
price of a 10-pack of 3M N95 respirator
masks sold for roughly $18.20 in January,
in April 2020, it was $119.99.
 The US is the richest country in the world,
and yet million people are uninsured or do
not have sufficient benefits. The country
has fewer hospital beds, doctors, and
nurses per capita than its economic peers.
 In the US, China and India are the key
pharmaceutical suppliers, mainly for
generic drugs, which accounts for nearly
90% of prescriptions.
 So far, the epidemic does not seem to be
contributing to widespread shortages,
however, fears were fanned when India
announced restrictions on the export of 26
drug ingredients.
 The list includes Paracetamol which is one
of the most commonly used pain-relieving
medicines in the world.
 The life science and healthcare companies are
in direct line of fire of this pandemic.
 Pharmaceutical and life science companies are
spooling up production of test kits and
research and development infrastructure for
vaccine development. Whereas, other
industries such as hospitality and automotive
are taking a big hit.
 The effects of the COVID-19 pandemic in the
US has resulted in a sharp decline in consumer
thoughts and economic conditions, which has
reflected in a 20% fall in employment levels
and 50% drop in car sales volume. The
reduction in prescription medicines volume,
by contrast, has fallen more modestly, by just
over 10% in April over March, reflecting the
pliability of demand for medicines seen in
prior economic downturns and pandemics.

6. How COVID-19 is Driving Life Science & Healthcare Industries in the US
Medical
Equipment
R&DPharmaceuticals
Healthcare
Services
Others
$27.0 billion to restore the
national stockpile of medical
equipment and support
research and development of
COVID-19 vaccines,
therapeutics and diagnostics.
In the above allocation $3.5
billion is included for funding
to the Biomedical Advanced
Research and Development
Authority to fund the
development and
manufacture of biomedical
equipments for treatment.
 To develop a vaccine against
the Nobel coronavirus, US
based pharma company
Johnson & Johnson (J&J) and
the US government team up
in all-out corononavirus
vaccine push. The joint
investment of worth of $1
billion, announced on 30th
March 2020.
 In March 2020, Moderna Inc.
announced that US
government has agreed to pay
nearly $483 million for the
company to develop and test
its Covid-19 vaccine now in
an initial clinical trial.
 Amidst of coronavirus threat,
where other industries share
prices are falling rapidly, the
US based pharmaceutical
companies such as Merck &
Co. Inc. and Pizer Inc. are
performing strong.
 In order to expand the
pharma business in the region
many US based companies
are undergoing through
restructuring. For eg., In May
2020, AbbVie Inc. has
completed the acquisition of
Allergan, Ireland based
pharma company.
 In order to scale up the
pharma production, Moderna
Inc. Is hiring close to 150
more employees, who will
work in 3 shifts, 7 days in a
week.
 In order to drive the
healthcare services smoothly,
$4.3 billion in grants to the
Centers for Disease Control
to facilitate testing and
current federal, state, and
local mitigation efforts.
 $100.0 billion in grants to
hospitals to cover healthcare-
related expenses and lost
revenues.
 According to the American
Hospital Association, the
total number of hospital beds
in the US is to increase to
924,107. Therefore, the
$100.0 billion in hospital
relief will average $108,213
per hospital bed.
 In March 2020, the $2.1 trillion
Coronavirus Aid, Relief and
Economic Security (CARES)
Act provided significant relief to
the US Healthcare sector.
 Health insurance companies
across the US are expanding
coverage and providing greater
access to healthcare services for
their policyholders.
 As part of the Families First
Coronavirus Response Act,
Congress eliminated patient
cost-sharing for COVID-19
diagnostic testing services
provided under employer-
sponsored group health plans.
Furthermore, many health
insurers have waived the
customer cost-sharing and co-
payments for hospitalization and
other costs to treat the virus.

7. Conclusion
 Hospitals of every type (private and public) are paying a heavy price to
COVID-19. Not only are they trying to keep their patients and doctors
healthy despite a shortage of supplies, but many
have cancelled or postponed elective surgeries, such as heart surgery or
even cancer treatments. Those treatment typically account for much of
hospital’s annual revenue, and without all such procedure, hospitals are
laying off staff (temporarily, for now) to keep afloat.
 However, in many parts of the country, particularly New York, Washington,
and California, states have allowed bankrupt hospitals to reopen to fight the
increase cases. Overall, the many measures taken to increase healthcare
capacity in New York, Washington, and California serve as models for
potential severe outbreaks in other parts of the country and emphasize the
impact of growing infection.
 Nonetheless, the ongoing COVID-19 pandemic will leave its strong marks
on US healthcare system long after the immediate threat passes. There is no
uncertainty about that. High risk hospitals are being run out of their
reserves; patients are embracing health care from the socially distant safety
of home, and the White House is eagerly trying to cover its losses occurred
due to the COVID-19 in the United States.

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Reference Links