Apr 28 2020
The COVID-19 pandemic has negatively affected many Australian businesses. However, despite mass disruption in its supply chain, the Medical and Surgical Equipment Manufacturing industry in Australia is experiencing a huge surge in demand for industry services.
Local medical and surgical equipment manufacturers are usually unable to solely supply the large domestic market, with imports accounting for nearly three-quarters of domestic demand. However, significant supply chain disruption due to the COVID-19 outbreak has meant that local hospitals and medical facilities have become highly reliant on onshore production of medical equipment. ResMed Holdings Pty Limited (ResMed) and Baxter Healthcare Pty Limited (Baxter) have swiftly adapted to the unprecedented event, and bolstered their manufacturing capabilities to supply Australian hospitals with life-saving equipment.
As part of a total $31 million effort by the Australian Government to create a national stockpile of ventilators, medical device manufacturer ResMed tripled the production capacity of its Sydney-based factory. Utilising its pre-existing CPAP machine design, the company has repurposed them to create basic and advanced ventilators to assist those severely afflicted by COVID-19. The company has already produced and delivered more than 3,000 of the 5,500 units ordered by the government for distribution to affected areas. This result could be good news for ResMed, as total revenue fell by 24.26% from $2.58 billion to $1.96 billion in 2018-19. The acute increase in demand may result in unexpected revenue growth for the company in 2019-20 and provide a robust base for future development once normal trading activities resume.
In March 2020, Baxter also experienced a similar an influx in demand, with requests for 200 Continuous Renal Replacement (CRRT) machines, the equivalent of five years’ worth of orders. The company is also making up saline IV bags on behalf of hospitals that are unable to mix their own compounds, due to most staff being reallocated to assist with COVID-19 preparations. In order to meet this demand, Baxter employed an additional 70 staff, and had considered employing laid off Qantas engineers to help install and maintain the CRRT machines. Along with increased production of equipment, Baxter updated its disease-surveillance software, ICNET, to assist in tracking the outbreak.
The COVID-19 pandemic has undoubtedly had a considerable impact on Australia’s local manufacturing sector, and will likely have a protracted recovery period as similarly forecast for the global economy. However, Baxter and ResMed have demonstrated the capability of operators in the Medical and Surgical Equipment Manufacturing industry to respond appropriately and promptly in a time of crisis. The significant impact of the COVID-19 outbreak on the industry’s supply chain suggests that although Australia typically relies on globalised trade, moving forward local manufacturers are essential for the stability and health of Australia’s economy.
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