Case Study Analysis

Dramatic changes in commerce and communications within the healthcare industry have come about because of the rise of the Internet. A new case study analysis by Frost & Sullivan, The Internet's Role in the U.S. Distribution of Medical Devices, discusses these changes and illustrates the need for medical device companies to understand their effects upon the supply chain distribution process. Currently, a small percentage of business-to-business (B2B) transactions occur via the Internet. However, by 2004 approximately 23 percent of total manufacturer revenues are expected to come from Internet transactions. Total e-commerce revenues, including Electronic Data Interchange (EDI), are expected to make up 52 percent of manufacturers' revenues in 2004.

According to prior Frost & Sullivan research, the U.S. medical device industry generated revenues of approximately $40 billion in 1999, and will reach a market size of approximately $57 billion by 2004.

The Internet is proving to be a cost-effective procurement solution that enables even small players to have automated data exchange capabilities.

The Internet has become a viable sales channel for many companies in the medical device industry. Sellers can reach prospective clients and provide information inexpensively, and buyers, in turn, are enabled to comparison shop for the best deals. In addition, Internet technology is less expensive and more scaleable and flexible than EDI systems, and consequently, the market is experiencing rapid growth in e-Commerce transactions.

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