Pharmaceutical companies are mostly worried about cost control and increasing regulations in viewof the slowing economy, according to a recent UPS survey on the healthcare industry.
The 2009 survey is the second annual poll sponsored by UPS and, like the first, identifiedthe “managing costs” as the major supply chain concern. Top decision makers at all sized companiesranked this area as their biggest supply chain concern both years, the survey showed.
Product damage, loss and spoilage and meeting customers’ changing demands for service rankedsecond among supply chain concerns after managing costs, with 42% of small to mid-sized companiesreporting they were “highly concerned” with these issues.
While managing costs ranked first among supply chain-specific concerns, regulatory concernstook the spotlight when it came to business concerns among companies of all sizes. Increasingregulations are clearly having a substantial impact on supply chain strategies, the survey furtherrevealed. More than half (56%) of companies with $1 billion+ revenues and nearly one-third (30%) ofthe small to mid-sized company respondents reported they were “highly concerned” about increasingregulations, ranking this as their top business concern.
“There are many market factors driving regulatory concerns, including a heightened focusaround security and product safety, increasing global border controls and more products requiringspecial handling coming into the market,” said Bill Hook, UPS vice president for global strategy,Healthcare Logistics. “Regulatory pressures will only continue to grow with new industrylegislation, making this a critical focus for companies as they design their supply chains to meetevolving needs.”
The top healthcare priorities of the decision makers are, according to the survey,simplifying regulatory requirements, ranked first by 52% of large companies and 31% of small tomid-sized companies, and ensuring product safety and security, ranked first by 33% of allcompanies.
Looking ahead, significant changes in go-to-market strategies are planned by large healthcarecompanies this year while smaller companies are planning far fewer changes. Outsourcing is anotherbig issue with 43% of large companies expecting to increase the amount they outsource in the nexttwo to three years. By contrast, among the two-thirds of small- to mid-sized company respondentswho do not currently outsource any supply chain functions, no more than 3% expect to outsource inthe next one to two years.
“We are seeing a real shift in the marketplace in terms of large healthcare companiesincreasingly embracing outsourcing of supply chain functions ranging from the distribution of drugsand medical devices to customer service and support functions,” said Hook. “With increasedpressures to innovate while cutting costs, many companies are turning to outsourcing as a way togain efficiencies across the supply chain to better focus on core areas like R&D, marketing andacquisitions.”
Conducted by the global market research company Harris Interactive, the UPS “Healthcare Painin the (Supply) Chain” survey was carried out in two phases. It started with telephone interviewsof supply chain decision-makers primarily at small- to mid-sized companies in the pharmaceutical,biotech and medical device industries. The second phase, a correlated online survey, targetedsupply chain decision-makers at large healthcare companies with $1 billion+ in revenue.
