Supply chain medicine

With their world turned upside down by enactment of healthcare reform, senior U.S. healthcare executives are divided over whether the new environment offers growth possibilities or challenges to the survival of existing business models, according to a new survey from UPS.

Of the senior supply chain executives surveyed, a third said reform would either open up new markets or create new customers. But 20% doubted the ability of their companies “to afford to operate” in the coming new world; 26% said flatly that reform would hamper their research and development programs, and another 22% said they already had concluded their firms did not have the infrastructure needed to compete in the future.

“Reform as well as other industry factors are placing unprecedented pressure on healthcare companies and stressing their supply chains. Logistically, healthcare companies will have to re-examine their strategy. UPS is in position to help with that process and then to manage this new type of global supply chain.”

The UPS Pain in the (Supply) Chain survey was a blind, in-depth phone survey conducted by Harris Interactive on behalf of UPS of approximately 150 companies in the pharmaceutical, medical device, medical supplies and biotech industries. Qualified respondents were senior-level decision makers responsible for supply chain and logistics. Surveys were conducted in March and April, 2010.

Now in its third year, the survey is conducted by Harris Interactive and is designed to identify the greatest pain points and future trends in the supply chains of companies in the pharmaceutical, medical device and supplies and biotech sectors.

KEY SURVEY FINDINGS
• The top business concern remains what the industry considers an escalation of complex regulations around the world. The top supply chain concern is managing costs.

• Many 2010 survey findings centered around healthcare companies’ global operations and expansion plans, with nearly half (47%) of respondents planning to expand into new or emerging markets in the next 18 months.

• While most companies already are participating in some activity abroad (selling, manufacturing, sourcing and/or clinical trials), 21% of healthcare companies surveyed don’t participate in any of these activities outside the United States.

• The ability to access new global and emerging markets is a growing concern for many healthcare companies with 22% more respondents reporting concerns around this in 2010 versus 2009 findings. Only 32% of this year’s respondents claim success with accessing global markets. Country regulations are the largest barrier to global expansion, cited by 54% of respondents.

• In addition to country regulations being named the largest barrier to global expansion, 60% of companies are “very” or “extremely concerned” with regulatory compliance as a supply chain issue. 58% rank increasing regulations as their top business concern, making this the top overall business concern ahead of such things as intellectual property protection, increasing competition and patent expirations.

• For the third year in a row, managing costs tops the list of healthcare companies’ supply chain concerns. 64% of respondents report being “very” or “extremely concerned” with managing supply chain costs, up from 55% in 2009. At the same time, only 44% of companies report success in addressing cost management.