Who has earned on the quarantine?

The spread of the coronavirus has led to a significant slowdown in economic activity not only in Ukraine but also around the world. In our country, quarantine has led to a significant reduction in business activity, but this does not apply to all market participants.

In particular, to understand how much Ukrainian business has been affected by quarantine, YouControl analysts, counterparty checkup systems, collected and researched data on the opening and closing of companies in March-April this year and compared them with the same period last year.

Therefore, there is a slowdown in the creation of new companies. This indicates a significant decline in business activity. The rate of creation of companies for the period under review decreased by 54.7% compared to the same period last year. If in 2019 the information in the USR showed the emergence of 5,452 new companies, now you can count only 2,471 companies. Up to 50 business closures took place on some days. And this is a more serious blow to the future development of our country’s economy than even the process of closing old businesses.

However, there are a number of industries whose development dynamics can be assessed as a positive trend – registrations of new companies in them are recorded even more than at the same time a year ago. Due to the significant increase in the attention of millions of consumers to their own health and disease prevention, the market for medical services and pharmaceuticals is experiencing a rapid rise.

The leaders in the number of newly created legal entities were:

• production of pharmaceuticals and materials (increased by 600%);
• production of perfumes and cosmetics (100%);
• extraction of mineral raw materials for the chemical industry and production of mineral fertilizers (100%).

The number of pharmaceutical companies in 2020 grew faster, and the number of new pharmaceutical’ wholesalers remained virtually unchanged.

Roman Kornylyuk, a financial analyst at YouControl, is convinced that under the conditions of quality management and balanced strategy companies of the pharmaceutical and medical sector have grounds for significant growth, as during the last crisis companies of IT and agricultural sectors of the Ukrainian economy. Pharmaceutical companies are now experiencing the same positive demand shock, so they have strong advantages over other market players. Ukraine will see in the near future whether they will be able to successfully realize their export potential or not.

Oleksandr Sokolov, CEO of analytical company Pro-Consulting, argues that it is through the sale of medical products that the market is growing, because the retail sale of drugs is controlled by three major operators, and drugs production is a complex business with a high entry barrier.

Offline commerce and catering will survive

Industries that seem to have been receiving a heavy blow will survive and still feel good, said Gleb Vyshlinsky, executive director of the Center for Economic Strategy. This primarily applies to offline commerce and classic public catering. “It will be easier to choose a large number of product categories offline, and cafes and restaurants will continue to meet greater needs than just preparing hot food,” he says.

Online commerce will continue to grow after the end of quarantine. Gleb Vyshlinsky explains this by the fact that many retailers will finally establish omnichannel and many consumers will try online ordering for the first time and they will like it.

The expert’s opinion on investing in IT solutions adds optimism. According to him, companies need to move to modern models of work, so they will invest in the technological transformation of the business.

“Supporting existing businesses that are experiencing serious difficulties during the crisis will help to avoid the most pessimistic scenario of economic decline. Currently, businesses are waiting for a number of decisions from the government to simplify taxation, as well as the emergence of regulations and laws that will fuel business activity. If we don’t direct taxes to support business today, we will have to spend much more on the labor exchange tomorrow, ”said Serhiy Milman, founder, and CEO of YouControl.

Natalia Tolub