Although it is too early to predict the impact of Omicron on Indian healthcare companies, mutating viruses may continue to present short-term opportunities, according to brokerage firm CLSA. During the peak phases of the coronavirus pandemic, tests such as RT-PCR/antibody, IL-6, D-Dimer, CRP, Ferritin and LDH saw increased demand, resulting in significantly higher revenue and better profitability for diagnostics firms such as Dr Lal Pathlabs, according to the foreign brokerage.

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"Rising case impacts mobility and leads to the deferment of elective procedures. This lowers hospital bed occupancy and impacts the overall profitability for hospitals," it said.

The report comes at a time when the first case of coronavirus' Omicron variant has been reported in the US. Much remains unknown about the new COVID-19 variant which was first found on November 8 in South Africa. The Omicron has spread to at least two dozen countries.

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"India-based vaccine manufacturers believe scaling up existing vaccines to make them more effective is possible. Cadila Health is preparing to keep a lab product ready while Bharat Biotech has said it continues to do research on new variants," CLSA further said.

The vaccine should remain a medium-term opportunity as booster doses are developed to overcome the impact of variants, according to the brokerage.

Nearly all of the companies within CLSA's coverage have some exposure to the COVID-19 treatment value chain of products.

Cipla, Cadila, Dr Reddy’s and Glenmark Pharma had the highest contribution from COVID products in the financial year 2020-21 and the first half of the current financial year, it said.

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Dr Lal Pathlabs derived 16 percent of its revenue from COVID tests in FY21, which is expected to decline to eight percent in FY22, and one percent in FY23. However, there could be upside potential if demand for COVID tests increases due to the spread of the Omicron variant, the report said.

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(Edited by : Sandeep Singh)