As with many other products being used to fight COVID-19, healthcare institutions and consumers are facing substantial disposable hospital supply shortages around the world. Healthcare workers are using far more disposable PPE than before in order to treat patients with the coronavirus, and a significant percentage of the general populace has adopted supplies such as disposable gloves, putting further strain on the global supply. With China being the primary source for disposable hospital supplies, companies and governments have been struggling to acquire enough products amid factory closures and changing trade regulations. Even manufacturers of these supplies are facing challenges – the high demand may be good for business, but it also means that materials are harder to come by as they’re being used at such a high rate.
The coronavirus pandemic will be impacting the global disposable hospital supply market for some time to come. Technavio forecasts growth as high as $39 billion by 2024, with a CAGR of 8%. While the immediate crisis will obviously contribute to this growth during the coming months, the industry will likely continue to feel its effects even after COVID-19 has passed. Hospitals, governments, and other institutions will need to rebuild their stockpiles, and those stockpiles may end up being larger than they were before the pandemic. In addition, consumers may continue habits developed during the pandemic, using masks and other disposable medical supplies more frequently. Demand will slow once the world recovers from the coronavirus, but it will likely remain higher than pre-pandemic levels for some time afterwards.
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Buyers and suppliers struggle with tariffs on disposable hospital supplies
The US tariffs on Chinese goods are creating challenges for both manufacturers and purchasers of disposable hospital supplies, and raising prices on items that are essential to reining in the pandemic. The goal of the tariffs – to encourage US companies to purchase goods and supplies elsewhere – may be straightforward on paper, but is proving difficult in reality.
China is the largest manufacturer and importer of many of these crucial supplies, such as face masks and gloves. According to the WTO, the country supplied a full quarter of the world’s medical face masks in 2019. China is currently one of the countries best set up to produce these supplies. Many of these products are not currently made in the US at all, and those that are have higher costs. While it is possible to set up new production facilities in the US or other parts of the world, these processes can be lengthy and expensive due to FDA regulations. The global COVID-19 pandemic also makes it more challenging to undertake new projects of this scale. This means that for the time being, many US businesses are forced to continue to purchase from China, but at significantly higher costs, making it difficult to keep enough supplies on hand. While some exemptions to the tariffs have been made, a huge number of medical supplies are still subject to them.
Restarting economies puts additional strain on medical supplies
In the US and around the world, businesses are gradually reopening to the public. As the coronavirus is still a threat, this means these businesses need a lot more cleaning supplies than usual, along with medical supplies (or the best equivalents) such as masks and gloves in order to minimize the spread of the virus while interacting with customers. This additional source of demand may be creating more opportunities for suppliers, but it also puts strain on an already struggling supply chain, with a much higher number of customers all competing for disposable hospital supplies and other items.
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Because of this high demand, prices are expected to rise further, benefitting suppliers but putting increased strain on businesses already trying to operate at less than full capacity due to social distancing. Disposable gloves and hospital gowns have become particularly hard to source, while manufacturers of N95 masks are having trouble adding manufacturing capacity due to limited supply of filter material. At this point, a single gap in the supply chain can make dramatic impacts on manufacturers and their customers.
In the long term, the outlook is sunnier for manufacturers of disposable hospital supplies. Businesses that adopt these rigorous health and cleaning procedures now may carry on with them even after the pandemic. Such practices help protect both staff and customers from other viruses and bacteria, and a populace with a global pandemic fresh in their memories may demand higher standards from businesses than they would have in the past. This means that while demand will eventually fall as the world brings COVID-19 under control, it will likely remain higher than it was before the pandemic, creating more sales opportunities for suppliers.
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Environmental concerns may threaten disposable hospital supplies
While this pandemic may leave consumers demanding more cleaning and protective supplies than before, those supplies won’t all be disposable. Heightened use of disposable hospital supplies is creating more waste than before, and both governments and companies will be looking for ways to reduce this waste in the future.
In addition, R&D is already being done into both creating new reusable products and finding ways to reuse items that are normally meant to be discarded after one use. The high demand for these supplies therefore will not necessarily translate directly into continual high sales for manufacturers of disposable hospital supplies, but will instead likely be shared between those manufacturers and the innovators that produce sustainable alternatives.
The global economy is facing a great deal of upheaval, and both challenges and opportunities are abundant in the market right now. Buyers and manufacturers alike will need to monitor consumer demand, government regulations, and supply chain disruptions and adapt to changing circumstances. Strengthening and diversifying the supply chain will be an important priority for many, as will expansion and innovation.
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