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April 2001 Large medical device companies blocking
out their smaller rivals through e-procurement Smaller and medium size healthcare
companies stand and watch e-commerce revolution, while their large
competitors are taking intelligent steps to control the market. The NHS is using e-commerce to revolutionise
its business practices. Small to
medium sized enterprises (SMEs) look set to miss this revolution and suffer
significant lost sales as a result. Changes are occurring at a considerable
pace in the area of e-procurement.
The new way in which hospitals will procure goods, online from their
suppliers, requires a completely new mind set from the healthcare industry.
A recent study carried out for medical
device marketing consultancy Joint Solutions identified that the SME
healthcare sector is being left behind.
Over 75% of companies surveyed had little awareness of how the
introduction of e-procurement within the NHS would affect their
business. Most were taking a
‘wait and see’ approach. Joint Solutions believes this has two
major impacts for small and medium sized healthcare companies. Firstly companies are missing out on
opportunities to strengthen relationships with their customers, and create
competitive barriers to entry. Most significant is that one company
set to dominate the e-procurement market is a consortium* of the world’s
largest medical device companies.
As a result, smaller companies may be forced to pay their major
competitors for access to the NHS market via established e-procurement
channels over which they have no influence. “If companies that supply the NHS are
not prepared to get established in e-procurement, they risk losing huge sales
revenues or even going out of business.
The NHS is moving towards using e-procurement for most of its
purchases. Those suppliers not
involved will be the losers,” stated Simon Tarry, Joint Solutions Managing
Director. “The advantages of an
online supply chain are significant in terms of cost savings, time
efficiencies, information management and customer service.” Fortunately the healthcare
e-procurement market is still in the early stages of development and
independent solution providers are emerging that can connect purchasers and
vendors through simple, proven online solutions. This gives the SME sector a window of opportunity to catch
up to large companies and make its voice heard at a national level. For more information contact: Simon Tarry, Managing Director Joint Solutions Ltd Ph. +44
(0)1428 656 099 Fax. +44
(0)1428 656 088 *
Supporting information.
www.ghx.com is a company formed with the support of Johnson and
Johnson, GE Medical, Baxter International, Abbott Laboratories and Medtronic. GHX is currently carrying out pilot
studies of their online e-procurement system in Germany and the UK. Considering the product lines that are
offered between these multinational suppliers, and the cost and
administrative efficiencies offered through online e-procurement and coordination
of finance functions this strategic manoeuvre by some of the world’s most
powerful medical device companies presents a significant danger to small to
medium size medical device companies.
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