Covid-19 in Hyderabad

Why Hyderabad Will Emerge Stronger After Covid-19 Pandemic

Hyderabad is one of the world’s most dynamic cities in terms of commercial property and socio-economic parameters. Its expanding economy thrives on two strong pillars — the Information Technology (IT) and Pharmaceuticals sectors. The city has actively embraced technology-driven economic growth and its market has largely burgeoned due to the rapid development in these two sectors, coupled with the city’s strong health care sector. Governmental policy reforms have also significantly improved market transparency in the city, attracting large international tech and pharma giants and e-commerce companies.

The Covid-19 pandemic and the subsequent lockdowns to stem the progress of the virus has brought economic activities to a halt and set the pause button to this growth story. However, the effect of the Coronavirus outbreak on these two sectors – Indian IT and pharma will be quite different from the rest of the Indian industries. In fact, the Covid-19 outbreak and the ensuing world economic crisis can throw open some opportunities for the sectors and help Hyderabad emerge a stronger economy once normalcy resumes.

How Indian IT Sector Will Emerge Stronger Post Covid-19

The Indian IT sector has seen many challenges since its evolution two decades back including the global economic recession in 2008. But things are different this time and the Indian IT sector stands to gain from the changed scenario

The industry has seen resilience in ensuring business continuity in times of crisis even as other countries and businesses have struggled to get their acts together.

The sector’s advantage lies in its strong manpower. As a core outsourcing hub, the Indian IT industry will leverage its core value proposition and offer price-competitive services.

Easy availability of human resources in India, along with the fact that the INR (Indian Rupee) is unlikely to appreciate in the near future, the US IT companies that offshore their businesses to India stand to gain by continuing to enjoy the cost advantage. While the pace and scope of change will be dictated by the magnitude of the pandemic, India’s dominance in the IT services offerings, globally, will not be challenged soon.

Experts believe that there are chances that the Indian IT industry will emerge stronger from the crisis. The sector will witness more investments as companies will look to technology to consolidate and de-risk supply chain and client systems in a post-Corona era.

While the IT-enabled services will be the worst hit by Covid-19 aftermath, some aspects of the IT industry will benefit from the crisis, if not permanently then temporarily.

Cloud Computing Services

The Coronavirus pandemic has forced many companies through a speedy digital transformation of their IT platforms to embrace cloud and mobility trends. Microsoft Azure, Google Cloud and Amazon Web Services, and other companies like Oracle, who have offices quarters in Hyderabad and India will benefit from this evolution even as businesses convert to Cloud computing to enable the workplace for remote working.

Remote Collaboration

Remote working is the new normal for the workplace environment in the post-Corona era. Companies are increasingly using remote collaboration technologies like video conferencing to communicate with employees working remotely during the pandemic. The habit I sure to stay back even as normalcy finds its way back in our lives and livelihood. Many Hyderabad based companies and Microsoft, Google, or Cisco Webex will greatly benefit from this movement.

Ecommerce

More people are staying back at home due to the Covid-19 scare and keeping the online grocery companies very busy. Ecommerce companies supplying groceries had seen a spike in the download of their apps during this time. People will prefer to buy products from the comfort of their homes even after this pandemic dies down and e-commerce will continue to flourish at a faster pace.

How Covid-19 will Impact Indian Pharma Sector

India is a global leader in manufacturing generic drugs and the India Pharm industry has been contributing significantly to the world’s demand for generics in terms of volume. The industry is known to supply safe and quality medicines to the first world countries like the USA, Japan, and the EU.

India accounts for 10% of the world’s pharmaceutical production by volume and 1.5 % by value and its pharmaceuticals exports have steadily increased from $10 billion to $19 billion between 2012 to 2019.

The industry is also a global leader when it comes to producing safer and cheaper vaccines, Indian vaccines cater to 50% of the world’s demand for vaccines.

Quality control and competitive pricing have made Indian drugs and vaccines grow in demand and affordable across the globe.

However, its weakness in depending on China for active pharmaceutical ingredients (API) and its low capacity utilisation was laid bare once the supply chain was disrupted due to the lockdown in China. While it threatened the industry’s manufacturing into a crisis -mode, the situation has also opened up opportunities for future course correction.

Two decades ago, all raw material – APIs and Key Starting Material (KSM) required for drug manufacturing was available in India. With the Chinese products becoming cheaper by the day, the indigenous production of the raw material became totally unviable.  But the Covid-19 crisis has thrown open doors for the production of API and KSM to resume.

The lockdown in China has spiked the API prices and the industry was reeling under pressure to procure these as supply chain and shipping got disrupted. At the current prices of the Chinese products, it is once more viable for Indian pharma companies to manufacture raw material indigenously. Promoting the manufacturing of these APIs and KSM within the country, the Government has also cleared a slew of measures including the setting up of a Rs 3000 crore bulk drug manufacturing project and 20% financial incentive to produce 53 critical bulk drugs. According to industry experts, this Corona crisis has become a boon for the Indian Pharma industry.

Several Indian vaccine manufacturing companies, including 3 Hyderabad based companies like Bharat Biotech, Indian Immunologicals, and Biological E Limited, have come forward to initiate R&D processes to find a vaccine to the Coronavirus. This is great news for the industry.

Bottomline

The future of the large IT companies will not be greatly affected by the Coronavirus pandemic. It will take them a few months to recover and to come back on tracks. Some companies, however, will grow exponentially in the post-Covid-19 era while some smaller ones will find it difficult to continue without Government help and support. The same is true for the Pharma sector.

The healthcare scene in the city has always been upbeat and strong. Its growth will be further consolidated on the back of the new development in the Pharma sector, in the post-Covid-19 pandemic scenario.

The world will wake up to a new business environment when normalcy returns. Customers with a new set of demands and altered preferences will emerge post-Corona. This pandemic has ravaged economies and health care systems across the globe. But the crisis has also thrown open doors of opportunity for businesses in the IT and Pharma sectors in Hyderabad to grow and innovate and evolve in new ways, playing a significant role in continuing the growth story of Hyderabad.

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