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Global annual spend on PPE can hit $50-80bn; China key player: Jefferies

Post-pandemic, the PPE market could still be three times as big as pre-pandemic levels, Jefferies said


Puneet Wadhwa  |  New Delhi 

Medics in protective suits are seen in a containment zone during the ongoing Covid-19 pandemic, in Aligarh, Saturday, May 2, 2020. (PTI Photo)
Before the mass majority feels safe, Jefferies expects 60 billion masks to be consumed annually

With most experts now fearing a second wave of the Covid-19 pandemic to hit the world, the global demand for personal protective equipment (PPE) such as masks, gowns and gloves could see a sharp spike and see the annual spend on PPE hit $50 – 80 billion, which is a five to eightfold increase from pre-pandemic levels, suggests a May 2020 report from Jefferies.

Post-pandemic, the PPE market, the Jefferies note says, could still be three times as big as pre-pandemic levels. PPE prices, in this backdrop, will remain elevated for the foreseeable future, even with a surge in Chinese manufacturing capacity and non-traditional players entering the market. It expects stricter hospital measures to be implemented, which includes PPE inventory level standards where institutions will likely be required to have at least three months of pandemic-level PPE stock available at all times.

A more recent June 29 Jefferies note suggests the PPE categories with the greatest shortages include level 3 isolation gowns; N95 masks (small size); nitrile gloves (small and medium sizes); air purifying respirators; and surgical masks.

“Some hospitals only have three days of PPE supply on hand and many are just keeping up with daily demand. One expert expects that it won't be until the end of 2021 before supplies will be sufficient to meet all stockpiling demand,” the June 29 note said.


Globally, Jefferies pegs the annual market size of PPE rise to around $34 billion post-Covid-19 from $11 billion pre-COVID-19 days. “Prior to Covid-19, we believe the annual global market size for surgical masks was around $7 billion, with China producing 50% of supply. In the current pandemic, this figure could be as big as $33 - 61 billion,” wrote Simon Powell, an equity strategist at Jefferies in a co-authored May 2020 note.

Demand, according to Jefferies, has increased considerably in both hospitals and non-healthcare settings, underpinned by the widespread adoption of masks by the general population. Even after this pandemic is over, Jefferies estimates the overall mask market to still be nearly four times bigger than pre-COVID-19 levels, driven by structurally changed consumer behavior / habits and tightened hospital inventory standards.

China supply key


While many other countries are ramping up production with non-traditional companies entering the market, Jefferies believes China will remain the key exporter for most PPE, including surgical masks, gowns, protective suits, and goggles. On the other hand, Malaysia is likely to continue to dominate in the glove space. The global annual capacity for masks before the pandemic was 13 billion, according to Jefferies, with China owning around 50 per cent of both production and capacity.

“China is playing a key role in producing and exporting many PPE products to Asia and the rest of the world. It is currently the largest exporter in masks, gowns, protective suits, and goggles, and the third-largest exporter of surgical gloves. The US is the largest buyer of PPE produced in China. European countries primarily procure PPEs from Belgium, France and Germany within Europe, or import them from China. Any supply disruptions, or trade restrictions and export bans on China, would have a substantial impact on PPE supplies throughout the world,” the Jefferies note said.

Before the mass majority feels safe, Jefferies expects 60 billion masks to be consumed annually. Post pandemic, they peg the annual consumption of masks at 20 billion in a non-healthcare setting, or a market size of $14 billion. Total mask demand in both a healthcare and non-healthcare setting would be around 36 billion, translating into a market size of $25 billion. The PPE inventory with hospitals alone would result in a market size of anywhere between $10 – 20 billion, according to Jefferies estimates.

First Published: Tue, June 30 2020. 12:02 IST