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Healthcare Supply Chain Management Market Size, Share & COVID-19 Impact Analysis, By Component (Software, Hardware, and Services), By Delivery Mode (On-premise and Cloud-based), By End-user (Healthcare Providers, Healthcare Manufacturers, and Others), and Regional Forecast, 2022-2029

Region : Global | Format: PDF | Report ID: FBI101051

 

KEY MARKET INSIGHTS

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The healthcare supply chain management market size was valued at USD 2.29 billion in 2021. The market is projected to grow from USD 2.61 billion in 2022 to USD 6.90 billion by 2029, exhibiting a CAGR of 14.9% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with healthcare supply chain management experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a slower growth of 7.0% in 2020 as compared to 2019.


There has been an acute need for effective supply chain management in the healthcare sector due to increasing pressure on healthcare organizations to improve their profitability and tackle their rising supply chain costs. Furthermore, the efforts taken by several organizations to make their supply chain operations more agile and resilient have increased the demand for supply chain management solutions. Additionally, strategic collaborations and acquisitions among key players and hospitals have led to the higher deployment of SCM solutions. For instance, in February 2020, ProShip, Inc. collaborated with JDA software Inc. to expand their portfolio of integrated shipping and supply chain operations along with collaborating for some of their complicated and largest installs.


In response to these positive trends in the market, several companies engaged in providing supply chain management solutions & services and invested considerably in R&D activities. These R&D initiatives have led to the development of software and solutions catering to the specific demands of their clients. Thus, launches of new software and solutions contribute strongly to the growth of the market in the forecast period. Hence, greater demand for supply chain management solutions with a wide range of applications strongly contributes to the market’s growth during the forecast period.



  • For instance, in October 2022, Tecsys Inc. announced the launch of Elite Healthcare Receiving, an extension to its end-to-end Elite Healthcare Supply Chain execution platform.


How did the COVID-19 Pandemic Disrupt the Supply Chain in the Healthcare Sector? 


The COVID-19 pandemic brought significant challenges to supply chain operations across the globe. Multiple lockdowns temporarily stopped the flow of transportation of finished goods and raw materials, thus disrupting the manufacturing process. The healthcare systems also faced difficulty in their management services due to increased demand for medical services during the disruption in their supply chain operations. The market witnessed slow growth due to the lack of resilience in their supply chain operations. Before the pandemic, the organizations focused on cost-effective strategies, which led to a redundant supply chain. Major companies also reported a decline in their revenue for the year 2020.



  • For instance, McKesson Corporation reported an increase of 3.1% in their revenue for the year 2020 compared to 7.8% increase witnessed the previous year.


However, after the COVID-19 restrictions were lifted, the supply chain operations slowly gained traction, enabling the market to witness stable growth similar to pre-pandemic level. The growth was due to the companies’ focus toward adopting several strategies to mitigate supply chain disruptions during emergencies.



  • For instance, Henry Schein, Inc. reported a growth of 22.6% in their revenue for the year 2021 in comparison to the 1.3% growth reported by the company in the financial year 2020.


How has the Adoption of RFID Provided Operational Efficiency in the Healthcare System?   


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Growing Adoption of Radio Frequency Identification (RFID) has Improved Supply Chain Operations 


Radio Frequency Identification (RFID) technology has been in existence for several years now; however, advances in the technology can potentially help companies improve supply chain operations. In healthcare organizations, RFID tags can be used to track and manage pharmaceuticals. The system provides notification to the user regarding expiration dates and stock level of medication. Furthermore, it also helps in tracking machines, equipment, and vehicles, which are critical for any organization by providing their location, thus helping in asset management and maintenance. Real-time tracking of healthcare products provides major opportunities and helps them improve customer service such as increasing efficiency of hospital processes and reducing wastes such as expired products, surplus inventory, and unnecessary staff movements. Therefore, the adoption of RFID tags in pharmaceuticals has increased rapidly due to its adoption in tagging pharmaceutical products, such as prescription drugs and other medical devices, thereby leading to improvement in stock control.


Another notable trend in the market is blockchain technology. The transactions through this technology are proving to be a crucial monitoring technology for tapping into the entire process of medicine and medical products movement. Since all transactions are recorded onto the ledger, and each node within the blockchain maintains a record of the transaction, it is easy to verify the origin of the drug, the seller, and the distributor instantly. For instance, in August 2019, Pfizer and Biogen-led organization Clinical Supply Blockchain Working Group (CSBWG) completed a proof of concept project for a digital inventory and event tracking record in the pharmaceutical & clinical supply chain.


How Does Increasing Applications of Healthcare Supply Chain Management Solutions Drive the Market Growth?


Launch of Advanced Supply Chain Solutions in the Market to Cater to the Growing Demand for the Service


Organizations all over the world have had the opportunity to modify their services with the help of the latest technology, solutions, and tools. Globally, supply chain management has become popular, as organizations have started integrating their key business operations end-to-end.


Advanced software & solutions, such as e-procurement and advanced supply chain planning systems, have been launched. These software solutions have multiple applications throughout the healthcare supply chain management system and can be used at various stages of supply chain management such as procurement, manufacturing, transportation, and storage.



  • In January 2022, Bridge Medical GPO launched the e-Procurement platform at Arab Health 2022. The software platform was developed by JAGGAER, a supply management technology provider. This software allowed healthcare providers in the UAE to adopt best practices in procurement and supply chain management.


Furthermore, various solutions are launched to enhance transparency and make all the processes in an organization more efficient. These solutions help in lowering costs, automating procurement, and help in making supply chain processes effective to help clinicians focus more on patient care outcomes. Thus, by achieving better patient outcomes through streamlining supply chain operations across the healthcare system, these new solutions are contributing positively toward the healthcare supply chain management market growth.


Increasing Adoption of Cloud-based Solutions to Support the Market Growth


Cloud-based systems provide certain advantages such as it helps in reducing capital expenses and operating costs. The technology does not require any hardware or IT infrastructure, thus helping companies streamline supply chain operations by bypassing capital investments. Furthermore, these solutions also help in consolidating multiple systems such as warehouse management system and transport spend management which is critical for supply chain operations. The cloud technology helps healthcare organizations to coordinate and consolidate information with specific solutions to prevent miscommunications and missed savings.


Cloud computing also provides advantages such as cost-effectiveness to Small & Medium-scale Enterprises (SMEs) and on-premise IT systems, which can reduce the total cost of ownership through pay-per-use. Therefore, these advantages associated with this technology have led healthcare systems across the globe to implement cloud-based solutions in their supply chain operations.


The increasing inclination of healthcare organizations toward adopting software solutions to streamline their supply chain operation has led to the growing demand for cloud-based software in the market. Therefore, to cater to the growing demand, major players are working toward launching new cloud-based systems for the management of supply chains in health systems.



  • For instance, in April 2021, Tecsys Inc. announced that Spectrum Health has upgraded its Tecsys environment to accommodate its growing network of supply chain and warehousing demands. The new system includes a SaaS supply chain management platform with warehouse management, distribution management, and delivery management, with robust connectors to Spectrum Health’s Workday ERP.


Thus, the increasing demand for cloud-based solutions for the healthcare supply chain management, along with the introduction of cloud computing software by major market players, is expected to support the market growth.


How Does the Cost Structure Impact the Adoption of these Solutions? 


High Costs Associated with the Supply Chain Management Software to Restrict the Market Growth


Supply chain management software can be expensive whether it is being installed or upgraded. The cost generally depends on the number of applications provided by the software. Furthermore, expensive provider preference items and lack of health IT implementation for supply chain functions along with limited hidden cost transparency also results in high costs. The high costs associated with these solutions act as a limitation to the growth of the market as it limits the adoption rate. Thus, managing these costs is one of the major concerns among healthcare facilities.



  • For instance, according to Healthcare Finance, in November 2019, the unnecessary hospital spending on supply chain products and related procedures and operations amounted to USD 25.7 billion per year.


Furthermore, the installation cost incurred by healthcare organizations is also very high as they have to bear the recurring subscription cost, thus restricting the adoption of such solutions in healthcare organizations.



  • For instance, the software offered by Control Data Inc. (ProcurePort), which is a procurement software ProcurePort costs around USD 199 per month. Also, the cost of Flowtrac software required for the procurement costs around USD 100 per month.


Therefore, the high cost of healthcare supply chain management solutions and services has led to slower adoption of supply chain management services in healthcare organizations, thus impacting its growth.


SEGMENTATION


By Component Analysis


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Growing Adoption of Technologically Advanced Software to Drive Segment Growth


Based on component, the market is segmented into software, services, and hardware.


The software segment dominated the market due to the launch of new applications to make the supply chain management operations more efficient. Furthermore, the rising adoption of technologically advanced software for managing the workflow in healthcare organizations also leads to segment growth.



  • For instance, in March 2022, symplr and Charlesbank Capital Partners entered into an agreement to purchase GreenLight Medical, Inc., a provider of healthcare supply chain management software.


The services segment is reported to grow with a high CAGR during the forecast period. This is due to the growing focus of major organizations toward outsourcing their supply chain services to facilitate efficiency and business growth, which might lead to segment growth. 


The hardware segment has a significant market share due to the growing adoption of hardware systems by healthcare organizations. Therefore, to overcome the demand, organizations are focusing toward introducing new solutions.



  • For instance, in October 2020, Sandoz Inc. announced the first three injectable medicines with Radio Frequency Identification (RFID) tags that are available to the U.S. hospitals through its collaboration with Kit Check, Inc., a leader in automated medication management solutions for hospitals.


By Delivery Mode Analysis


Increasing Launches of Cloud-based Solutions Boost the Growth of the Segment


On the basis of delivery mode, the market is bifurcated into on-premise and cloud-based.


The cloud-based segment accounted for the highest market share. The higher share of the segment is attributed to the associated advantages such as identification, monitoring, and mitigation of supply chain risks, vulnerabilities, and disruptions. Furthermore, the platform enables collaborative information sharing, which also helps in the growth of the segment. The advantages lead to the growing launches by companies enabling growth for the segment.



  • For instance, in June 2020, in India, the Ministry of Health launched CSIR National Healthcare Supply Chain Portal “Aarogyapath” to provide real-time availability of critical medical supplies with the involvement of suppliers, manufacturers, and customers.


The on-premise segment accounted for a comparatively lower share of the global market. However, the increasing focus of companies on the development of on-premise software is projected to support the market growth. Additionally, the advent of cloud-based technology and the organizations opting for cloud-based deployment are supporting the growth of this segment.


By End-user Analysis


Growing Adoption of Supply Chain Management Solutions by Healthcare Providers to Augment Segment Growth  


On the basis of end-user, the market is segmented into healthcare providers, healthcare manufacturers, and others.


The healthcare providers segment held the largest healthcare supply chain management market share due to the rising adoption of cloud-based software solutions by hospitals and other healthcare facilities. This is one of the key drivers that impacted the growth of this segment.



  • In September 2021, Aknamed, a cloud-based healthcare supply chain management platform in India, was purchased by digital pharmacy PharmEasy. It provides a supply chain platform that enables hospitals to simplify, optimize, and monitor procurement and consumption using cloud-based technology.


The healthcare manufacturers segment accounted for a substantial share due to increasing emergence of cloud-based solutions for inventory management, thus leading to the segment’s growth. Additionally, growing adoption of SaaS software among healthcare manufacturers also fueled the segment’s growth during the forecast period.


What are the Factors Influencing the Dominance of North America in the Global Market?


North America Healthcare Supply Chain Management Market Size, 2021 (USD Billion)

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The North American market was valued at USD 1.12 billion in 2021. The presence of major companies providing supply chain management solutions is one of the major focuses of the region’s growth. Furthermore, the increasing adoption of supply chain management solutions by healthcare providers in North America also leads to the region’s growth.



  • For instance, in August 2021, e2open, a connected supply chain software platform, announced a strategic partnership with Vizient, Inc. to facilitate the rapid development of a cloud-based, multi-party collaboration platform that enables end-to-end visibility between participating healthcare providers, distributors, and suppliers.


Europe is projected to grow due to the increasing adoption of tags, RFID, and barcodes for tracking of drugs and other healthcare products. Additionally, increasing government funding for the development of AI-based solutions in a few countries in this region is also projected to support the market growth.



  • For instance, in June 2020, Vamstar, a start-up that connects healthcare buyers and suppliers using artificial intelligence, got project funding from Innovate U.K., the innovation agency, which is part of the U.K. government’s USD 55.5 million fast track funding to drive forward cutting-edge start-ups in response to the coronavirus crisis.


The Asia Pacific region is anticipated to register a comparatively higher CAGR in the forecast period due to the increasing demand for cloud computing. Furthermore, advancements in healthcare IT infrastructure and increasing number of government investments also contribute to the region’s growth.



  • For instance, in August 2021, the Government of Delhi set up a cloud-based integrated health information management system across its hospitals. The funding of USD 18.9 million has been approved by the city government's cabinet; a contract to develop the system has been awarded to IT provider NEC Corporation, India.


The rest of the world is expected to grow rapidly due to factors such as the launch of new software and the adoption of new scanning technologies among healthcare providers and distributors.


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  • For instance, in June 2022, the increased adoption of digital health services in Africa has led many startups to launch healthcare supply chain services to digitize distribution to their customers.


Which are the Major Players Operating in the Global Market?


In terms of the competitive landscape, the market has diverse players, ranging from large to small players. Regarding the present market scenario, Tecsys Inc., Oracle, and McKesson Corporation hold a comparatively dominant share. The dominance can be attributed to their vast product offering and their focus on strategic initiatives such as partnerships and acquisitions.



  • For instance, in May 2020, Oracle partnered with KPMG to launch new solutions in the healthcare industry enabling its clients to move their finance, supply chain, and human resources functions to Oracle cloud.


McKESSON Corporation holds a significant share of the market due to the company’s efforts to invest in analytical programs to mitigate risks. Furthermore, the company has a robust global presence, with operations in more than 14 countries.


Similarly, Tecsys Inc. also marked a presence in the global market by expanding its operations in more than 100 countries. The company is focused on adding new applications to its existing solutions to cater to the demands of its clients. Furthermore, Tecsys In. partnered with other companies to optimize their supply chain operations through their product offerings.



  • For instance, in August 2022, Tecsys Inc. announced that Stanford Health leveraged the Tecsys Elite healthcare supply chain platform to automate and systemize data capture and optimize their operations.


Henry Schein, Inc., Cardinal Health, Global Healthcare Exchange, LLC., and Epicor Software Corporation are a few of the players operating in this market. These companies have slowly established their market presence due to the launch of new and advanced solutions for supply chain management in a healthcare setting.


Global Healthcare Exchange, LLC. is working toward making a substantial presence in the market through multiple product offerings. The company currently has 15,000 supply divisions, of which 600 are integrated global suppliers.



  • For instance, in February 2022, Global Healthcare Exchange, LLC. acquired Syft, a provider of AI-enhanced inventory control and end-to-end supply chain management. This acquisition helped the company to expand its existing portfolio for healthcare supply chain management solutions.


LIST OF KEY COMPANIES PROFILED:



What are the Key Industry Developments in this Market



  • October 2022- Oracle announced that WellSpan Health has opted for Oracle Fusion Cloud Application Suite to unify operations and improve their business visibility. The application will help in integrating its finance, supply chain, and HR processes.

  • May 2022- Global Healthcare Exchange, LLC. announced a collaboration with Healthcare Industry Resiliency Collaborative (HIRC) to create a transparent and resilient supply chain in the healthcare industry.

  • February 2022- Alithya Group Inc. implemented Oracle Cloud Enterprise Resource Planning (ERP) and Human Capital Management (HCM) for Northbay Healthcare to support their core financials and supply chains.

  • May 2021- HealthPartners formed a partnership with Oracle to move their business to the cloud with the help of Oracle Fusion Cloud Applications Suite. The application will help modernize and streamline work, which is essential for the growth of HealthPartners.

  • January 2020- Global Healthcare Exchange, LLC. announced the acquisition of Lumere, enabling healthcare organizations to integrate their supply chain operations and optimize their medication formulary management.


REPORT COVERAGE


An Infographic Representation of Healthcare Supply Chain Management Market

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The global healthcare supply chain management market research report provides detailed market analysis and focuses on key aspects such as the overview of pricing analysis, regulatory scenario by key regions/countries, PESTLE analysis, and PORTER’s five forces. Additionally, it includes an overview of key industry developments such as mergers, acquisitions, and partnerships and the impact of COVID-19 on the global market. Besides these, the report offers insights into market trends and highlights key strategies by market players. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth of the market in recent years.


Report Scope & Segmentation






















































ATTRIBUTE



  DETAILS



Study Period



2018-2029



Base Year



2021



Estimated Year



2022



Forecast Period



2022-2029



Historical Period



2018-2020



Unit



Value (USD billion)



Segmentation



By Component, Delivery Mode, End-user, and Region



By Component




  • Software

  • Hardware

  • Services



By Delivery Mode


 




  • On-premise

  • Cloud-based



By End-user




  • Healthcare Providers

  • Healthcare Manufacturers

  • Others



By Region




  • North America (By Component, By Delivery Mode, By End-user, By Country)

    • U.S. (By Component)

    • Canada (By Component)



  • Europe (By Component, By Delivery Mode, By End-user, By Country/Sub-Region)

    • U.K. (By Component)

    • Germany (By Component)

    • France (By Component)

    • Spain (By Component)

    • Italy (By Component)

    • Scandinavia (By Component)

    • Rest of Europe (By Component)



  • Asia Pacific (By Component, By Delivery Mode, By End-user, By Country/Sub-Region)

    • Japan (By Component)

    • China (By Component)

    • India (By Component)

    • Australia (By Component)

    • Southeast Asia (By Component)

    • Rest of Asia Pacific (By Component)



  • Rest of the World (By Component, By Delivery Mode, By End-user)



Frequently Asked Questions

Fortune Business Insights says that the global market size was USD 2.29 billion in 2021 and is projected to reach USD 6.90 billion by 2029.

Growing at a CAGR of 14.9%, the market will exhibit steady growth during the forecast period (2022-2029).

The software segment is expected to be the leading segment in this market during the forecast period.

The growing awareness regarding the need for supply chain management solutions along with increasing adoption of advanced solutions drives the global market.

Tecsys, Inc., McKesson Corporation, and Oracle are some of the major market players

North America dominated the market in 2021.

Implementation of training programs for providers and manufacturers is expected to drive the adoption of these solutions.

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