Private labs testing for covid-19 have raked in comfortable to high-profit margins in the last three years despite government caps on tests that labs complained forced them to operate at a loss.
For each Covid-19 test, commercial labs can cash in 12 to 115 dirhams profit margins, considering costs of labor, and materials that decrease as the number of tests increases per day, wrote the Competition Council in a study scrutinizing the Covid-19 test market.
Margins vary according to the size of the laboratory, the number of tests carried out, and the choice of investment adopted by labs.
According to calculations made by the council’s investigation services, the annual net results of private laboratories can vary from more than 126,952 MAD, if the laboratory only provides conventional PCR, to more than 1.7 million in case of simultaneous performance of all types of Covid tests.
The Council concluded that the margins achieved by private laboratories remain high and largely comfortable.
Some private laboratories have achieved even higher margins, opting for less expensive reagents and equipment, sometimes free, granted in the context of purchasing negotiations with certain importers. “This has allowed some private laboratories to benefit from economies of scale”, found the study.
The Competition Council reached this conclusion by carefully examining the cost of producing the tests.
Council investigators found that the cost price of the conventional PCR test is highly dependent on the costs of reagents and consumables at a rate of 38% for a minimum cost price, to 61% for a maximum price.
“The share of the price of the reagent alone varies between 13% for the case of a locally produced reagent, to 37% for the case of an imported reagent”, reads the report.
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