GPOs are benefiting from rising corporate profit and demand from downstream markets
Los Angeles, CA (PRWEB) January 29, 2013
Despite obstacles, the Group Purchasing Organizations industry is expanding as a result of the recovering economy. In the five years to 2013, industry revenue is expected to grow at an average annual rate of 1.6% to $4.2 billion. Recovering demand from medical and manufacturing industries increased the demand for group purchasing organizations (GPOs) from efforts to reduce costs related to the purchase of supplies. “GPOs faced rising pricing pressures during the past five years, however, as hospitals and businesses sought to find the GPOs that could provide the lowest prices,” says IBISWorld industry analyst Andrew Krabeepetcharat. “Despite pricing pressures, industry revenue is expected to grow 4.5% in 2013 alone.”
During the past five years, the Group Purchasing Organizations industry has managed growth, despite a number of constraints. The number of industry firms declined at an average annual rate of 0.6% to 827 since 2008. Pricing pressures from the industry’s clients are forcing GPOs to operate at a low profit margin. “Consumers are finding it more difficult to find value in the reduced cost of GPOs from purchasing power due to the fees that GPOs charge,” added Krabeepetcharat. “Thus, larger GPOs with increased purchasing capacity have remained afloat in spite of increasing competition.” Market share concentration in the industry is estimated to be moderate. This concentration is largely driven by dominance in the healthcare market. Furthermore, the healthcare market is heavily concentrated, with the top six GPOs, including major players Premier Inc., MedAssets and Novation, estimated to account for nearly 90.0% of buying power and revenue. Over the next five years, industry concentration is expected to remain at a moderate level as these top companies maintain their position in the market by expanding their offering of value-added services, including consulting, data benchmarking and performance analysis.
The GPO industry is expected to grow further during the next five years as corporate profit and demand from major markets increases. Rising competition from hospitals that develop in-house GPOs will constrain demand, however. At the same time, growing technological innovation in the industry is making GPOs more attractive to hospitals and businesses as the increased demand for data benchmarking and performance analysis, along with more efficient e-procurement services, is expected to provide an opportunity for future growth. For more information, visit IBISWorld’s Group Purchasing Organizations in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes organizations that leverage the purchasing power of groups of businesses to obtain collective discounts from vendors.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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