Laboratory Market During the War

No market in Ukraine grew at such a frantic pace in the previous years before the full-scale invasion of medical laboratories. Thanks to Covid, the laboratory market grew two and a half times. On February 24, everything changed.

Mykola Skavronskyi, Commercial Director of Synevo Medical Laboratory, shared with us the company’s challenges at the beginning of the war and how it coped with them.  

You can watch the full version on the YouTube channel ForHR.

Synevo Company Until February 24

The past two years have been built on incredible growth due to the pandemic. This growth was not linear but with massive peaks and dips. Sometimes even between two weeks, the demand for laboratory services (tests and analyses for COVID-19) could differ by 10 times. Therefore, the whole process, built on a linear uniform business, was adjusted to these peaks and dips. Synevo hired a lot of people and trained them.

The covid peak in the 22nd year was in late January – early February. The company’s revenue dropped by 98% at the height of this high demand.  The main reason for this significant decline was that the company was concerned about the safety of employees. Therefore, laboratories were forced to stop operations in some regions, especially Kyiv, Kharkiv, and Dnipro. 2% of the ordinary income was received thanks to the Lviv laboratory.

On the eve of the invasion, some investment projects for the future were suspended. Everyone understood that investing in a country on the verge of war is risky. Therefore, some investment projects were simply suspended. The operating business was more focused on the scenario that the territories of the Donetsk and Kharkiv regions would be at risk.  The company’s management did not consider the risk of an offensive from the north, Belarus. Therefore, Synevo did not prepare for the fact that it would have to stop the work of laboratories in so many regions. 

We were preparing more in terms of information security. Servers and databases are susceptible to information. We duplicated our clients’ personal data in case a server in Kharkiv or Dnipro was damaged. – Mykola Skavronskyi, Commercial Director of Synevo Laboratory Network in Ukraine 

Problems of the laboratory market

Speaking purely about business, there is a supply problem both in the beginning and now.

The laboratory sector is entirely dependent on foreign suppliers. All reagents, equipment, equipment – everything is imported. We had warehouse stocks that we used, but starting in April-May, we already needed supplies. 

This was physically impossible to do because there was a significant fuel shortage in the country, and our logistics stopped. Therefore, we were forced to limit the production of tests somewhat. This problem still partially exists, although logistics in Ukraine have improved. But this is not a priority market for suppliers, so we are at the tail of these orders.

Sometimes we have to wait for these orders for a very long time, and they may not come in full. 

All this affects the business. After all, our business, if described in simple terms, is retail with logistics elements. That is, we sell the service and transport a lot of biomaterials around the country. There were 9 bases for test production in Ukraine.  Before the invasion, we worked in more than 150 cities. That is, the logistics were extensive.  It was all disrupted.  

A massive problem for Synevo was learning to live according to the income. In the summer, it became clear that we lost half of the previous revenue, but the expenses remained plus or minus at the same level. At the same time, we realized that this war would last for a long time because back in April, our scenarios were based on the fact that the war could end in six months. When you have a strategy designed for six months, you focus more on keeping the entire staff, the whole team. We understand that our specialists are precious.  If you fire people now, you will not find them later; it takes a long time to train them. We have been paying salaries to our employees all the time. Even the February money we paid in advance in the first days of the war. We understood that people would need this money if they left the occupied territories. This is our social responsibility. In total, we have paid more than 70 million hryvnias in salaries across the country. And at the same time, we have paid more than 35 million hryvnias in various taxes and fees, while our income equals zero.

In the summer, we began to lay off people because we realized that the income would no longer be at the same level as before. The main task of investors was not to generate losses. At the time of the war, we employed about 2,800 people; during the summer, we had to lay off about a thousand people. Many people were fired in the PR department, business analytics, marketing, and parts sales because our structure no longer needed many people. Employees of our biomaterial collection points were also optimized. 

How the Swedish Holding Medicover Supports Ukraine 

Medicover is very supportive of Ukraine. This is probably what makes the Swedish mentality very different from other investors. They are very socially oriented and humane. The first thing they did was to inform the staff on the second day of the war that they created teams of our employees at all the crossings from Ukraine to countries such as Moldova, Romania, and Poland. They met their Ukrainian colleagues, brought them to the nearest cities, provided accommodation, and fed them. If Ukrainians wanted to stay to work in our structures in these countries, they could stay. Our employees were also transferred to Germany.  

We were expecting financial assistance, but in addition to it, we received a response regarding employees and their families. If I remember correctly, a total of about a thousand of our employees with children left. They all received assistance.

Resumption of work of laboratories 

The company’s management decided to resume the laboratories’ activities based on the map of military operations. First, they continued their activities in Dnipro, then in Odesa when it became clear that the enemy would not reach these cities. Already in April, the company’s income increased. However, it still did not reach a sufficient level. And only in May, when the Kyiv laboratory started working, the situation improved.

Laboratory diagnostics can be divided into two large groups:

1. A) tests that are important for life (matters of life and death), 
2. B) tests from the category of nice to have – prevention to know the state of your health.

The last group of tests is the largest. It has disappeared because no one will do tests to check a healthy organ just in case there are explosions on the street, rockets whistling, or military aircraft flying.

Even those tests that were very important for health, people postponed or canceled them altogether. It seems that with the beginning of a full-scale war, covid disappeared.* Security issues became a priority. It appears that covid will no longer be a top topic in Ukraine. 

The Most Popular Type of Service During the War

If we analyze our services, the war has somewhat changed the demand. As I have already said, covid has completely gone away, and some expensive and, at the same time, not particularly important tests have gone away. Beyond the basic, types of tests are in the most significant demand. These are blood, urine, biochemistry, and hormones. They have become even more popular. Firstly, they are not very expensive; almost all doctors still need them. These are the basic diagnostics that need to be done, so now we have a trend for cheap and the most necessary tests. 

Hiring Staff in Synevo

Now we are partially recruiting staff. This is primarily because we thought the situation would worsen when we fired people in the summer. So now we have started to recruit people for some functions. The second and most important reason we recruit people is that our employees who have left the country have already found jobs and plan to stay abroad until the end of the war. For some time, they accompanied us remotely. But all the time, it is impossible to do it remotely. Therefore, there is such a replacement with local people. 

Laboratories in Reoccupied Cities

It is necessary to divide our laboratories into bases where analyses are performed and points of reception of biomaterial with laboratories. We are not opening new laboratories. As of now, we have two laboratories that do not work. One of them is in Kharkiv, the other in Kherson. We do not work in Kharkiv because of security issues. Also, many employees left Kharkiv region, so the laboratory in Dnipro also serves Kharkiv.  In Kherson, the laboratory does not work due to technical reasons. It was preserved, not looted, not destroyed. But we are waiting for electricity and water supply. To begin with, the Odesa laboratory will serve the Kherson biomaterial collection points. 

Speaking about the collection points, we have opened several new ones this summer. This is all because these projects were 90% ready before the war. Therefore, it was easier to launch them.

As for those units that are either under occupation or have recently been reoccupied, they are often entirely destroyed. For example, in Borodyanka, we have only the floor left of the unit. There are no walls, no roof, nothing. You can recognize that it was our point only by the tape on the floor, where it says, “Wait here.”  This is the only thing that shows that it used to be our station.

We realized a thing that we could not even imagine before. A working Synevo laboratory signifies stability and a return to pre-war life. And it’s not only about Synevo. This is Nova Poshta, Silpo, PrivatBank. Synevo is part of the standard urban infrastructure. It was very important for people to see that we are working. It means that life is coming back. Both for customers and employees. 

Plans for the future

Speaking about our investors and plans for further development in Ukraine, they are very optimistic. They believe that Ukraine will recover. One of the important markers is that no one still wants to sell their businesses in Ukraine, even during the war. My personal opinion and I hope that investors also share it, is that Ukraine will become a hub in Europe, where it will be simply fashionable and prestigious. If you are not in Ukraine after the war, you are not in Europe. On this wave, a lot of different businesses will come here. 

We must understand the volume of losses in general. If we are talking about Mariupol, I think everyday life will return there after the war in about 10 years, when the infrastructure will be rebuilt. If we are talking about Kharkiv, there are destroyed points there.

A laboratory is still intact and not damaged, although our colleagues have completely destroyed laboratories. When the threat of shelling decreases, we will return to business in Kharkiv. The main task is not to generate losses. If we can do it remotely in Dnipro without launching Kharkiv, we will do it in Dnipro. But when the demand is so great that it will be suitable to open locally, we will open in Kharkiv.