4 reasons the global healthcare SCM market is growing

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Leading global technology research and advisory company Technavio anticipates the global healthcare supply chain management (SCM) market will post a com...

Leading global technology research and advisory company Technavio anticipates the global healthcare supply chain management (SCM) market will post a compound annual growth rate (CAGR) of 10 percent by 2020.

The analysts highlight the following four factors that are contributing to the growth of the global healthcare SCM market:

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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.

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.

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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.

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 companies, is set to buy Allergan for a market valuation of US$113 billion.

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Teva Pharmaceuticals based in Hungary announced that it will buy generic drug unit of Allergan for US$40.5 billion. Drugstore operator CVS Health (CVS) is acquiring pharmacy services provider Omnicare (OCR) for US$12.7 billion.

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.

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