LONDON--(BUSINESS WIRE)--Technavio analysts forecast the global healthcare supply chain management (SCM) market to post a CAGR of close to 10% by 2020, according to their latest report.
The research study covers the present scenario and growth prospects of the global healthcare SCM market for 2016-2020. To calculate the market size, the report considers revenue generated from software licenses, maintenance services, and service revenues.
Technavio ICT analysts highlight the following four factors that are contributing to the growth of the global healthcare SCM market:
- Need to reduce supply chain costs
- Risk management in healthcare
- Market consolidation in healthcare providers
- Need to improve traceability in healthcare SCM systems
Need to reduce supply chain costs
Technavio’s latest report states that rising healthcare costs have compelled the healthcare industry to undergo structural and operational level changes to cut costs and boost overall efficiency. Also, inefficient supply chain management systems for implantable medical devices can lead to a loss of billions of dollars annually. Thus, with the help of SCM, hospitals can save money that may be deployed in hospital administration and capital expenditure.
According to Amit Sharma, a lead IT spending by region and industry analyst for Technavio, “Healthcare product manufacturers and distributors implement SCM solutions to enable electronic ordering and to ensure order accuracy to minimize errors related to healthcare devices procurement processes. Healthcare manufacturers use GS1 standards as a tool to improve healthcare SCM systems for order placement, delivery, and payment of healthcare products through automated systems.”
Risk management in healthcare
SCM and risk management are needed to minimize supply-chain risks for healthcare providers. Pharmaceuticals companies are mitigating analytics supply-chain risks by process redesigning and analytics solutions. With the rapid expansion of supply chain systems and a decentralized base, healthcare providers need to manage their supply chain risks. Instabilities in the supply chain arise as healthcare providers are exposed to risks, such as unstable business cycles, unstable macroeconomic factors, high consumer demands, and natural disasters. Supply-chain risks hamper business performance by affecting business operations and financial stability.
Infor’s Lawson supply chain management for healthcare helps ease tasks such as paperwork and administrative duties and is focused on meeting healthcare organizations’ needs. The software improves the charge-capture process and reduces claim denials and audit risks. Supply order management gives visibility of supplier invoice and payment history, thus allowing anyone in the pipeline to take corrective action.
Market consolidation in healthcare providers
The healthcare market is experiencing several M&A transactions by healthcare providers. In 2015, Pfizer, one of the prominent pharmaceutical company, is set to buy Allergan for a market valuation of USD 113 billion. Teva Pharmaceuticals based in Hungary announced that it will buy generic drug unit of Allergan for USD 40.5 billion. Drugstore operator CVS Health (CVS) is acquiring pharmacy services provider Omnicare (OCR) for USD 12.7 billion.
“Competition in the healthcare sector is accelerating as many large hospitals acquire smaller hospitals. This should help large hospitals to reap the benefits offered by smaller hospitals to provide cost-effective healthcare services,” says Amit.
The report also quotes that in the US healthcare market, consolidation is the key strategy used by large healthcare systems to dominate the market. The Affordable Care Act (ACA) in the US, also known as Obamacare, encourages healthcare providers (such as large hospitals) to merge into a large healthcare system and capture the healthcare service provider market.
Need to improve traceability in healthcare SCM systems
Healthcare providers are improving their inventory management system with the GS1 healthcare data standard for clear traceability of medical devices shipped across supply chains. The implementation of data standards increases patient’s safety by removing counterfeit products and minimizing the chances of human errors in the SCM systems of hospitals. It also increases the accuracy of ordered medical devices and invoicing, and prevents re-labelling of products at any point in the supply chain system.
“Healthcare providers leveraging GS1 standards need to ensure regulatory compliance in their SCM process. Hence, they invest in supply chain execution software and warehouse management system to conform to government regulations for traceability,” says Amit.
Browse Related Reports:
- Global Healthcare IT Outsourcing Market 2015-2019
- SaaS-Based SCM Market 2015-2019
- Global Healthcare Information Systems Market 2015-2019
Purchase these three reports for the price of one by becoming a Technavio subscriber. Subscribing to Technavio’s reports allows you to download any three reports per month for the price of one. Contact enquiry@technavio.com with your requirements and a link to our subscription platform.
About Technavio
Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.
Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.
If you are interested in more information, please contact our media team at media@technavio.com.
