A lion’s share of the self-containment in the US economy can be attributed to the thriving healthcare industry in the region. Featuring in the list of the top five best-performing industries, the US healthcare industry is currently witnessing a steady increase in consumer spend and is well on its way towards eclipsing some of the major industries in terms of spend growth. However, this growth is not bereft of obstacles and will pose numerous challenges for any potential investors.
In this article, SpendEdge’s procurement specialist Tridib Bora, refutes the impossibility of investment in the current scenario and shares his eloquent perspective on the current US healthcare industry.
In the near future, what do you think are the areas in the US Healthcare Industry that might experience a downward sliding growth curve?
Tridib: Considering the current market scenario, the ongoing tug-of-war between superpowers China and the US will have a rippling effect on the healthcare industry. To be more specific, the string of tariffs that are being imposed on US imports from China mainly include a range of medical devices that are extensively used by healthcare practitioners as well as medical device manufacturers. This will result in a significant increase in prices, which will compel US healthcare companies to hike the price of their services. Meanwhile, for the medical device manufacturers, this will imply a significant increase in their manufacturing costs, which they will invariably compensate by hiking the price of the end-product. Adding to their woes, the extremely volatile prices of raw materials such as polypropylene and a range of metals that are used to manufacture medical devices will spur the prices of these devices. Disposable syringes, wearable medical devices, laboratory equipment are some examples of such devices whose prices are highly susceptible to significant hikes.
However, the implementation of the revolutionary “Medicare For All” will make the worst nightmare of the health insurance segment come true. The advent of a single-payer program will curb the significance of private healthcare-insurers with no requirement to pay hefty premiums or out-of-pocket expenses. Considering the USD 1,048 billion value that this sector adds to the overall US healthcare industry, a slowdown in the growth of the healthcare insurance sector will put a lid on one of the major outlets of revenue for the US healthcare industry.
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Based on your observations, would you advise the investors to wait till the US healthcare industry bounces back to its old glory?
Tridib: Definitely not! A market of any shape, size, and stature is typically susceptible to highs and lows but never has a dearth of opportunities to grow and opportunities don’t wait. There is no doubt that implementing the “Medicare For All” act will eschew the US healthcare industry’s spend as it limits the scopes of out-of-pocket expenditures. However, it must be understood that compared with any other high-income countries, the gross value of the US healthcare industry will nearly double. The swelling demography of the aged and rising instances of lifestyle-related diseases such as diabetes and heart diseases will compel people to knock at the door of healthcare professionals, ensuring a steady and an assured source of investment for the US healthcare industry. The recent approval of a record 59 novel pharmaceutical products by the US FDA’s CDER will increase the availability of novel medicines which is expected to drive sales in the US healthcare industry. The patent expiries of branded drugs will encourage the governing bodies to issue their approval for generic drugs. Currently, generic drugs are experiencing higher demand than because of their lower price with the same therapeutic effect. This will further increase the scopes of sales in the US healthcare industry, thereby providing an ideal scenario for investments.
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According to you, what should a survival kit consist of for investors who are willing to explore the US healthcare industry?
Recent procurement market intelligence reports by SpendEdge have enlisted sets of procurement best practices that are typically attuned to the imposing challenges faced in the current US healthcare industry. I consider these recommendations made on procurement as an essential component in the survival kit in the dynamic US healthcare industry. For buyers, the increasing price of medical device is visibly their major concern. While increasing raw materials prices are compelling suppliers to increase the price of the devices, it is prudent of the buyers to select an ideal distribution channel which can open opportunities to save costs. For instance, engaging with suppliers within their geography will empower buyers with a better negotiation power which will usher more scope for discounts while reducing delivery time. Usage of medical components such as disposable syringes entails other auxiliary objects. Procuring all these objects separately will entail a skyrocketing expenditure. Therefore, it is advised that they consolidate their procurement requirements by engaging with suppliers that have a portfolio of diverse products to cater to the buyer’s diverse needs.
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