The healthcare supply chain market size was valued at USD 1.93 billion in 2019 and is expected to grow at a CAGR of 5.23% during the forecast period, (2020–2029).
The healthcare supply chain includes all activities related to the manufacturing, transportation, and storage of healthcare products. Healthcare is one of the fastest-growing industries but faces a key challenge in the form of the high cost of services. In the era of technology, companies are adopting various methods to reduce the cost of supply chain in healthcare. Some of the steps taken by the companies include automation of manual processes during manufacturing, reduction of waste formed during the manufacturing of products, and establishment of a trade relationship among suppliers, partners, and customers.
Most of the global top ten medical device companies have manufacturing centers in China. As one of the top six manufacturing innovation cities in China, Wuhan leads to complex medical device manufacturing in the domestic market, which accounts for half of the medical laser equipment market. Wuhan was the epicenter of the COVID-19 outbreak, from where the disease quickly spread around the world.
The supply of key materials has been severely disrupted due to the forced quarantine and subsequent lack of labor and raw material. Further, as the link between regional warehouses is not smooth, the allocation of raw materials between regions is not carried out successfully. Such a shortage of raw materials and components adversely impacts the medical device supply chain.
Currently, key pharmaceutical manufacturers, such as Dr. Reddy’s Laboratories, Sun Pharma, and Cipla, are closely monitoring the supply chains and do not expect near-term shortages. However, if the COVID-19 pandemic persists in the long term, the situation could change. Larger pharmaceutical companies have stocks sufficient to last up to 6 months. As per the Investment Information and Credit Rating Agency Ltd. (ICRA), domestic manufacturers have sufficient inventory for one or two months, which could adequately support production till mid-April 2020. The continuation of the COVID-19 outbreak beyond April may adversely impact the production of APIs, possibly leading to a complete halt.
The Indian government is making commendable efforts to ensure the uninterrupted availability of critical APIs, such as cephalosporins, azithromycin, and penicillin, which have a high dependency in the Indian healthcare market, as the Indian domestic pharma industry largely depends on imports, with more than 60% of its API being imported. The COVID-19 outbreak pinpoints the importance of having a risk management framework that focuses on the evaluation of potential issues that arise from the supply chain. The alternate supply chain arrangement could reduce potential disruptions while ensuring adequate stockpiles that provide a buffer against temporary turbulence.
| Study Period | 2020-2032 | CAGR | 5.23% |
| Historical Period | 2020-2022 | Forecast Period | 2024-2032 |
| Base Year | 2023 | Base Year Market Size | USD XX Billion |
| Forecast Year | 2032 | Forecast Year Market Size | USD XX Billion |
| Largest Market | North America | Fastest Growing Market | Europe |
A flourishing healthcare sector and the rising need for better management logistics drive the healthcare supply chain market growth in North America, the largest value shareholder globally. The region’s promptness in adopting new technologies and advancements also augments the market value. The emergence of e-commerce has also provided an impetus to the market, as hospitals and consumers seek faster delivery of products. Companies are under tremendous pressure to deliver superlative logistics performance, which creates a need for outsourcing services.
Growth of North America’s healthcare sector calls for more streamlined processes between producers, manufacturers, online and offline shopping platforms, and consumers, which entail the management of supply, warehousing, inbound and outbound transpiration, and distribution, among others. As per the National Health Expenditure, in 2017, healthcare spending in the U.S. increased by 3.9% to reach USD 3.5 trillion, registering faster growth than 2014–2015, which is further attributable to insurance coverage expansion and the high growth rate of retail prescription drug spending.
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A software application provides a real-time analytical platform that manages the flow of products and information across the supply chain network. It offers better visibility to the organization with cross-functional access and process-based platforms that assist staff in process management. The software manages the flow of healthcare products, including inventory, production, sourcing, and transpiration.
Advancements in industrial-grade digital technology, the rising inclination toward cloud-based supply chain management software, and the need for improved supply chain visibility drive the growth of the software application segment. Globally, organizations are focusing on improving efficiency and reducing the maintenance of manufacturing and material handling solutions through the effective integration of data collected from connected devices and networking equipment for enhanced real-time material movement. Companies across sectors are significantly investing in digitalizing their business models and supply chain management.
There is a rising shift toward cloud-based deployment among SMEs and large enterprises, which can be attributed to the low capital cost and maintenance requirement of cloud deployment. The rising need for infrastructure management and the shifting of workload to a cloud model drive the adoption of cloud-based supply chain management software. Direct IT control, real-time supply chain tracking, faster data processing, and cost-effectiveness bolster the growth of cloud-based deployment.
Supply chain visibility allows businesses to monitor exactly where the current process is underperforming as it provides better transparency of inventory, orders, and shipment information. Moreover, it generates reliable, data-driven insights that can direct improvements in business operations.
On-premise deployment is expected to hold the lion’s share throughout the forecast period for its better sense of control, deeper customization options, and compliance issues better compliance to the rules and regulations. A few heavily regulated industries do not allow the storage of sensitive information on a public cloud. As most cloud-based supply chain management solutions operate in a public cloud environment, such businesses opt for on-premise installation.
The on-premise model offers deep customization options, while the customization options with a cloud-based (SaaS) supply chain management solution are limited. There is a high demand for fully configurable on-premise solutions, such as Arkieva, which typically offer deeper customization processes for businesses with more complex supply chain processes.
The global transpiration network and supply chain are becoming more complex with the rise of fragmented channels, increased product variation, and customer demand for customized solutions. Cloud-based supply chain management enables enterprises to connect, engage, and collaborate with customers, business partners, and supplies. It also helps enterprises build secure and integrated systems for the transportation management system, which gives real-time information. These benefits enhance the growth of the cloud-based supply chain segment.
Cloud technology is becoming popular for deploying and managing resource-intensive inventory management workloads. Cloud providers plan for contingencies related to systems breakdown or failures by scheduling backup servers with data interaction. Such provisions ensure reduced downtime and the continuous availability of business applications. These benefits are expected to drive the uptake of cloud-based inventory management software during the forecast time period.
The COVID-19 pandemic has surged the demand for automated microbiology in clinical testing. The U.S.FDA has permitted the clinical microbiological examination under emergency use authorization (EUA) for accurate and faster results. The outbreak has necessitated an effective clinical examination of respiratory tract infection, further increasing the demand for automated systems significantly. Several market players across Europe have received the U.S.FDA’s emergency use authorization (EUA) and CE mark approval.
