An area that typically served well under patent protection, branded pharmaceuticals serve a niche market which ordinarily had very little competition “but where you still have the ability to command very enviable margins for that product,” Szwast continued. “And matching the supply chain needs of a product that has to stay within a two-degree Celsius temperature range are very different than the needs of matching generic pharmaceuticals. Their supply chains have to be different. So there has to be a lot more healthcare optimization to create value in the healthcare space.”
The globalization of the middle class—which warranted added attention most recently as some question its impact on the economy and job situation—is another factor impacting healthcare. Such a population shift, if it continues, will affect healthcare supply chains and the outsourced production model.
“The middle class is estimated to be about 430 million persons, the majority of them living in the industrialized world,” said Szwast. “But by 2020, it’s projected that it is going to be in excess of 1.2 billion people and two-thirds of that growth comes from China and India alone. Because of globalization in the middle class—because of where the population shift is occurring—the significant opportunity for a lot of these companies is exporting. And a number of them are also realizing opportunity from importing which is one of the things that is underlying the rise of generic drug manufacturing—which outside the U.S. for the U.S. market is among the fastest growing part of the healthcare business today. But that creates challenges for companies whose supply chains were previously based on production of drugs in New Jersey or even in Puerto Rico. Now, they have to source product from India or China—significantly further and a much more complex supply chain,” Szwast explained.
The increased adoption for more healthcare services on a larger base by consumers also goes hand in hand with improved product security and product protection (prevention of product damage or spoilage)—two areas that have become significantly important most currently than in previous years of the UPS “Pain in the (Supply) Chain Survey,” Szwast confirmed. And while most companies surveyed in the report confirmed that they are “cautiously optimistic” (38 percent) on the state of the healthcare industry today, the majority of U.S. companies (83 percent of those surveyed in the UPS report) plan to invest—over the next three to five years—in global market opportunities with technology adoption as the top strategy.
The link between
While resources such as the Health Information and Publications Network (HIPNet) are available to healthcare and garnering more industry discussion, global technology solutions and service providers in the life sciences space also help service providers address such issues as product traceability and streamlined inventory management.
“We’ve used technology to help link our customers up with their supply base,” explained Matt Walker, Executive Vice President, Supply Chain for TAKE Solutions, Princeton, N.J. “We try to be as full service as possible to companies—whether they are conducting clinical activity or are in the process of dealing with their commercialized product and moving that around efficiently. When it comes to healthcare providers, this issue of serialization requires our customers to be very complete and thorough in the tracking of their product all the way through to consumption of that serialized product by the end user.”
Carola Endicott, Senior Vice President of Operations and Services for Littleton, Mass.-based WaveMark Inc., echoed similar sentiments.
“The link that we provide between hospitals and their suppliers is the supply chain intelligence,” said Endicott. “In some ways we don’t really sell an RFID product. We use RFID to drive the efficiencies and automation. RFID is an enabler but what we really sell is savings and piece of mind. Our focus on building the supply chain capabilities of the software and enabling it to be incredibly flexible and able to obtain those cost goals of our customers—that is what is different about WaveMark’s technology.”
As mentioned prior, the changing shift in healthcare service care consequently creates this added need for traceability and inventory tracking. One of the fastest growing areas of care in the U.S. and in the industrialized world is home and hospice care, clinical care and in surgical centers, according to Szwast.