INVERTO Insights | June 2024

Welcome to the June edition of INVERTO Insights, our monthly newsletter sharing the latest insights and best practices on current procurement and supply chain issues.

Long-term success relies heavily on the ability to change and innovate - a truth well understood by the healthcare industry. However, progress, especially in meeting new sustainability standards, requires funding. This is where procurement and supply chain management become critical, significantly influencing success or failure.

This month, gain valuable insights into boosting profitability from our MedTech White Paper. In addition, our CSDDD study results and comprehensive publications on EU regulations can help you navigate compliance requirements.

Driving Cost Efficiency and Success in MedTech Through Procurement

Our analysis shows that highly profitable MedTech companies invest an average of 9% of their revenues into R&D, significantly more than less profitable counterparts. This strategic reinvestment is crucial and hinges on freeing up funds, achievable through increased revenues or cost reduction.

Procurement is a key value driver, enabling MedTech companies to deliver prompt and sustainable results that free up funds for further investments. By achieving cost savings of 4-7% in direct categories and 7-11% in indirect categories, procurement influences profitability through supply chain optimization and efficiency improvements. Explore the decisive factors in achieving cost excellence in MedTech procurement here .

Empowering Healthcare for a Sustainable Transition to Net Zero

Healthcare leaders worldwide acknowledge the need for integrating sustainability within their organizations, with numerous companies devising sustainability roadmaps and detailing specific initiatives. The objectives in this sector are notably more ambitious compared to other industries, with many aiming to cut all scope greenhouse gas (GHG) emissions by over 40% by 2030 and to achieve net zero by 2045.

Preventing irreversible damage caused by climate change requires companies to significantly reduce their GHG emissions. The healthcare sector alone emits enough CO2 to rank as the 5th highest emitting country globally, highlighting the urgent need for immediate action to lead the transition to net zero. Success in these efforts depends heavily on robust procurement support. Learn more about how your organization can contribute to a sustainable future.

The Impact of CSDDD on Procurement in Healthcare

In anticipation of the new EU Supply Chain Law, the healthcare sector is demonstrating resolve. Most companies have already taken steps to comply with the recently enacted Corporate Sustainability Due Diligence Directive (CSDDD), according to our survey conducted at the end of 2023. However, many participants from the healthcare sector remain skeptical about the practical implementation. The survey included over 650 decision-makers from Germany and France, including 74 in healthcare companies.

Healthcare companies face challenges such as manpower shortages and supply bottlenecks, making it difficult to align priorities. Despite a focus on financial performance, the industry recognizes the importance of ESG (Environmental, Social, and Governance) issues. While most believe compliance is achievable and have developed measures, many are concerned about implementation due to capacity issues and unclear guidelines. This makes it hard for healthcare companies to develop effective strategies.

For more insights, download our detailed survey results.

The EU's Supply Chain Directive: Ensuring Resilience in Uncertain Times

In April 2024, the European Union launched the Critical Medicines Alliance (CMA) to tackle the vulnerabilities in the supply of essential medicines and Active Pharmaceutical Ingredients (APIs).

This initiative responds to supply shortages brought to light by recent global events such as the US-China trade war, the COVID-19 pandemic, and geopolitical tensions. Although a strategic plan with initial recommendations to bolster the resilience and security of Europe's pharmaceutical supply is expected by the end of 2024, industry players should already be re-evaluating their supply chain strategies and taking proactive measures.

For an in-depth look at the Critical Medicines Alliance (CMA) and its efforts to address pharmaceutical supply vulnerabilities, read our full article here .

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Cover story in the next issue: Game changer for procurement and supply chain management

GenAI is revolutionizing procurement and supply chain management by enabling accurate predictions, increasing process efficiency and supporting real-time decision making. From optimizing inventory levels to automating complex procurement processes, this technology offers companies the opportunity to make their supply chains more resilient and cost-efficient. We show how you can use GenAI to transform your procurement strategy and seize new opportunities. Sign up here .