Agenda: Profiteering is stifling innovation in the healthcare sector

AS the cost of raw materials in the healthcare sector soars, manufacturers across the UK struggle to build much-needed products. Caused by the war in Ukraine coinciding with the aftermath of the pandemic and challenging market forces, the current inflation is to some extent beyond our control.

However, it has become clear that some suppliers are taking advantage of the current climate by charging extortionate prices for basic raw materials. In so doing, these businesses are crippling an already-stressed market, stifling innovation, harming businesses, and devastating the sector.

As a manufacturing business of staff safety alarms for the NHS, we have witnessed this first-hand. In recent months we have been quoted extortionate prices, some exceeding 50 times their original value, an increase far beyond the current rate of inflation. Comparing quotes among various suppliers paints a clear picture of who is taking advantage of the economic situation.

Fortunately for us, we have a robust supply chain in place and strong relationships with local, trusted suppliers. Moreover, at the start of the pandemic, we introduced measures to protect against inevitable rising costs, identifying parts that couldn’t easily be replaced yet were imperative to the continuation of our supply. Securing an initial stock of these items, in addition to instigating a rolling system of buying, building, and replenishing, has proved invaluable now as we continue to combat market challenges.

When it comes to building new products, little can be done to protect against extortionate costs. Unable to anticipate the needs of future goods, and therefore unable to action the steps outlined above, manufacturers are held at ransom should they seek to design new products.

The overt practice of profiteering in the sector is strangling the supply chain, impeding innovation, and consequently limiting the resources available to healthcare professionals – now and in the future. New hospital equipment, life-saving technology and protective systems are all placed on pause as costs multiply.

More and more, manufacturers are bidding for a smaller-than-usual pool of components, worsened by the opportunist profiteering middleman buying what little there is and selling it at an inflated price. Manufacturers must face a choice – spend time and money redesigning the product around components that are easily available at the time or hold out and hope that the situation eases.

There is no simple solution to this issue, but a solid relationship with suppliers is key. Good suppliers will know your budgets, your expectations and how you operate. Great suppliers will work with you to offer solutions like the flexible rolling stock method previously outlined. It is only by working with reliable, local suppliers that we have weathered this storm.

There is also a lot to be said for self-regulation – perhaps it falls upon the manufacturers of supplies to check where large volumes of the parts are going. Perhaps it falls upon us buyers to draw a line in the sand between making money on the market and profiteering from an industry already under significant strain.

Allan Aikman is product manager with Pinpoint, provider of staff safety systems to the NHS.