2021 PPE Outlook: Where is the market headed in light of the vaccine?
The PPE Spike
Many entrepreneurs have seized on opportunities presented by the huge spike in demand for personal protective equipment (PPE) generated by the COVID-19 pandemic. Upwise has had a first-hand perspective on the PPE market both from our clients who have the multi-year track record required for traditional purchase order financing and from providing financing to capable entrepreneurs who are newer to the space through our Graduated PPE Funding Product.
"PPE Market Will Remain Robust"
News of multiple COVID-19 vaccines with efficacy over 90% has given some business owners pause as they contemplate how much to invest in the PPE space, especially those who have only recently begun executing PPE transactions.
However, experts believe that the PPE market will remain robust through 2021 and beyond. President Biden recently gave remarks pointing out that “our darkest days in the battle against Covid are ahead of us, not behind us.”
PPE for Healthcare
The early vaccine rollout has been slow. Analysis of the early stages of COVID-19 vaccination shows that it will take 10 years to reach herd immunity at the current rate of vaccine administration. Even as this rate increases as expected, the market for PPE, especially chemo-rated nitrile exam gloves, will remain strong. COVID-19 has also demonstrated a capacity for mutation and it is unclear whether existing vaccines will be robust to new iterations of the virus.
Business owners will need to continue to provide PPE for their workers and demand from hospitals and other providers does not appear to be set to contract in the near future as healthcare workers continue to cycle through PPE as they treat their patients.
Personal Protective Equipment Demand
Upwise clients who have not yet secured their own production lines have seen their suppliers continually raise their prices per box. This is also a trend that experts do not expect to abet any time soon. Generally speaking, today’s price that is significantly higher than what a business paid a few weeks ago is lower than what a business owner can expect to be charged on the next transaction. This can be jarring for entrepreneurs who are not used to volatile markets, but the rising price-points are justified by increasing demand.
The virus is spreading at its fastest pace since the pandemic began with hospitals and intensive care units becoming filled to capacity. This means more PPE will be used in hospitals and healthcare facilities. The Paycheck Protection Program (PPP) as re-established in the latest COVID-19 relief passed covers PPE-related expenses for businesses protecting their workers, which will also serve to increase demand.
Upwise keeps data on market rates for various products to advise each of our clients as they weigh their options, but so far the decision to come to terms with the rate on offer from manufacturers has rarely been incorrect in hindsight. Our clients that have taken the calculated risk to move forward following a price raise and are able to socialize their customers to accept the realities of the market have seen their revenues grow exponentially. The most active clients on our PPE roster are now concerned with establishing multiple factory lines, increasing market share, buying PPE raw material in bulk, and setting their enterprise up for exit in the next 3-5 years.
To be added to our roster of PPE industry clients that receive access to our network of manufacturers, suppliers, and landed goods databases, or to learn about PPE financing options available to upstart and legacy businesses in the PPE space, email [email protected].
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