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Premier Inc. Reports Will Invest In Suppliers, No Terms Disclosed; Says Sales From Investment Program Not Expected To Materially Impact FY20 Results

)-- Premier Inc. (NASDAQ:PINC), a leading healthcare improvement company, today announced a new program to invest in domestic and geographically diverse manufacturers to ensure a robust and resilient supply chain for

Benzinga · 05/19/2020 14:46

)-- Premier Inc. (NASDAQ:PINC), a leading healthcare improvement company, today announced a new program to invest in domestic and geographically diverse manufacturers to ensure a robust and resilient supply chain for essential medical products.

The program is intended to provide a means for Premier and its members to invest in innovative business models, including partnering with quality manufacturers that can supply shortage products, co-funding the development of affordable products that address specific market needs and creating strategic sourcing contracts to ensure a continuous supply. Initial areas of investment will include domestic suppliers of personal protective equipment (PPE), as well as geographically diverse suppliers of medical commodities currently in shortage as a result of the COVID-19 pandemic.

“One of the major lessons of the COVID-19 pandemic is that the current U.S. supply chain overleverages foreign markets for many vital medical products, which can inhibit our ability to manage through a pandemic or another natural disaster,” said Premier President Michael J. Alkire. “Premier has been sounding this alarm for years, and we have taken steps to insist that manufacturers have contingency plans in place, as well as a diverse supply chain for medical products. Despite this, it’s clear we must do more, which is why we created this program to find creative and meaningful ways to rebuild U.S. manufacturing and create healthy markets for commodity goods.

“We created this program to serve as the med-surg complement to our highly successful ProvideGx program for drugs, which today has greatly improved the supply of critical medications and increased diversity in the supply chain,” continued Alkire.

Medical products that are critical for the daily operations of health systems are predominantly sourced overseas. In the case of PPE, approximately 80 percent of all supplies are sourced from Southeast Asia. The risks of this overreliance came into sharp focus as COVID-19 swept across the globe and these nations closed borders and prevented American access to supplies, triggering widespread shortages of PPE needed to protect healthcare workers and patients.

“While we clearly understand that we need global diversity and domestic sources for supplies, the United States has historically been a high-cost region for manufacturing,” said Alkire. “This program aims to alleviate some of this tension, supporting domestic or other manufacturers with capital and long-term contracts that will allow them to offer competitive price points. It’s truly a win-win strategy – one where we expect to get a broader array of quality products at a fair price, all while rebuilding domestic manufacturing and better insulating ourselves from risk and disruption.”

Revenues from the investment program are not expected to materially impact Premier FY 2020 results.