Frost and Sullivan provides industry analysis and post-pandemic predictions

The healthcare industry is projected to lose more than $90 billion in potential product revenues this year as a result of the COVID-19 pandemic, according to analysis from Frost and Sullivan.

In the recent HIMSS webinar "Recalibrate Your Healthcare Strategy for the Remainder of 2020 and 2021 Post COVID-19," Reenita Das, a senior vice president and partner at Frost and Sullivan, shared a trend analysis for different sectors of the healthcare industry as well as her top five predictions for 2020.

The overall impact of COVID-19

Das attributes the loss in potential revenue to the delay in new product launches, the slump in elective surgeries and hospital-administered drugs, the lack of infrastructure for telehealth, and the uneven supply of healthcare essentials.

When looking specifically at the decline in elective surgeries, Das said that plastic surgery activity declined by 100%, ENT surgeries declined by 79%, cardiovascular surgeries declined by 53% and neurosurgery surgeries declined by 57% during the pandemic.

"Those are huge numbers if you think about it," she said, "which is a loss of dollars for hospitals today."

She also focused on telehealth, saying that the U.S. still doesn't have the proper infrastructure to handle virtual care at a high level.

"We are lacking well-established telehealth protocols. There are many things within a virtual visit that need improvement," she said.

Better training across the board is one way to improve. Patients need to be trained on how to accurately use remote monitoring devices to track their conditions, and providers need to learn how to effectively hold a virtual care visit, she said.

COVID-19 and individual market segments

Across all the healthcare segments, Frost and Sullivan conservatively projects a loss in revenue for 2020 spanning from a 1% to 45% decline compared to its original estimate for the year.

On the lower side of decline is in-vitro diagnostics, healthcare IT, and pharmaceuticals and biotechnology.

The in-vitro diagnostics market was originally projected to have $78.7 billion in revenue this year. This sector is the only one that could benefit from COVID-19 because of the testing volume.

"This industry could actually gain from the pandemic because of increased testing and we could look at revenue somewhere between $78.2 billion and $79.2 billion this year," Das said.

Despite the possibility for gains, this market still took a hit from the disrupted supply chain and the reduction in tests given in hospitals unrelated to COVID-19, which saw a loss of 57% in the first few months of the pandemic, according to Das.

Healthcare IT's original revenue estimate totaled $162.2 billion before the pandemic. Now, it could fall between $160.2 and $161.4 billion.

"This is the market that is playing a pivotal role in how healthcare will be managed and recovered in the future," Das said.

It has benefited from the adoption of remote patient monitoring and telehealth during the pandemic. However, the lack of infrastructure to support the expanded adoption could impact how well facilities can provide virtual care.

The pharma and biotech segment, which Frost and Sullivan estimated to have $1.334 billion, could now see this year's revenue to be between $1.319 and $1.331 billion.

The pandemic brought some wins for this market, including increased consumption of wellness and preventative drugs and vitamins as well as an improvement to medication adherence.

"This was one of the biggest problems in the past when we saw 30% of prescriptions were not being filled by people who are suffering with chronic disease," Das said. "Today we feel that COVID-19 has brought a seen change compared to the past."

Despite those wins, supply chain disruptions and the decline in clinical trials are challenges for this market, according to Das.

The two markets that Frost and Sullivan estimates will take the biggest hit from the pandemic are medical technologies and medical imaging.

The medical technologies sector was first thought to bring in $437.9 billion, but following the pandemic is now expected to make between $377.1 and $407.5 billion.

The biggest factor in the projected loss is from the cancellation of elective surgeries, according to Das.

There are positives for medical technology companies, however. The increased sale of PPE equipment like ventilators, masks and monitoring equipment, and the increased demand for home health devices could help in recovery.

"We do believe that there is going to be an uptick by the fourth quarter of 2020 and the first quarter of 2021 for this industry which will lead to recovery," Das said.

Medical imaging is expected to take the largest hit, with the original estimate of $32.8 billion falling to between $18.1 and $21.7 billion.

The good news, according to Das, is that 10% to 20% of healthcare stimulus funding will support CT, ultrasound, X-ray and artificial intelligence sales to fight a COVID-19 resurgence.

Frost and Sullivan also expects to see a release of pent-up demand in Q4 as elective surgeries begin to resume.

"So a strong recovery for this industry, but a lot of work has to be done in terms of repositioning and reevaluating … as well as looking at nontraditional, unconventional business models," Das said.

Predictions for 2020

In addition to providing analysis for the healthcare market, Das also released five predictions for 2020.

The first is that virtual consultations will witness greater than 100% growth in the U.S. The implementation of telehealth in the pandemic is the largest driver of this prediction.

"This is a great opportunity for device and diagnostic companies that are hurting to look at partnering with or acquiring telehealth to expand their diagnostic services and monetize this opportunity," Das said.

The second prediction is that ventilator surplus and remote monitoring will redefine the non-hospital and home critical care model. Due to an excess of 100,000 ventilators in the U.S., the shortage of hospital staff and the continued need for care of COVID-19 patients, Frost and Sullivan said that care should be driven into the home and other non-hospital settings.

Resmed has already launched a remote monitoring solution for ventilators through its cloud-based platform for homecare.

The third prediction states that by the end of 2020, the $5 billion point-of-care testing infectious diseases market will drive alternate testing sites, like pharmacies, to become a permanent fixture.

"We believe that the testing market is going to be reinvented with a couple of movers and shakers that are going to change testing to alternate sites, which is more where pharmacies are dispensing drugs, in grocery chains and retail outlets," Das said.

Prediction four is that 33% of global clinical trials will be disrupted, putting $3 billion in new product revenues at risk.

Frost and Sullivan believes this will lead to full virtual trials, which began early this year with Johnson & Johnson and PRA Health's CHIEF trial. It is a fully virtual drug approval trial to test the effectiveness of canagliflozin for the treatment of heart disease.

The final prediction for 2020 is that informatics and AI solutions addressing workflow automation and operational analytics will witness 100% growth.

Once radiology departments scale up their operating capacity later this year, Frost and Sullivan anticipates investments in teleradiology and AI-based solutions.

As companies begin to look past the pandemic, it's time to take the experiences and knowledge acquired and apply them to the future.

"We have gained tremendous amounts of learning during this pandemic," Das said. "So how do we take the learning that we've acquired in wartime and actually adapt it at peacetime? These are the questions that we at Frost and Sullivan are trying to answer for our clients every day."

Twitter: @HackettMallory
Email the writer: mhackett@himss.org