Demand for At-Home Diagnostic Kits is Spiking: Can Suppliers Keep Up?

Updated on May 5, 2023

Survey sheds light on how decision-makers are navigating this surge from
a supply-chain perspective and what action they’re taking to manage risk

With a couple of years of routine COVID-19 self-testing behind them, consumers have opened their comfort zone to at-home testing for a range of conditions – fertility, food sensitivity, and sexually transmitted infections (STI), to name a few. 

Those who source, manufacture, distribute and fulfill orders for at-home test kits agree: they’re surging in popularity. In a recent RRD survey of decision-makers from across the supply chain, nearly all respondents (97%) reported an increase in demand over the last two years. While almost as many (95%) feel ‘fairly confident’ that they can meet this rising demand, an equal percentage say their success will depend increasingly on selecting reliable outsourcing partners.

Overall, the survey findings reveal four current trends:

  • Consumer comfort with at-home testing is increasing, driving market growth
  • The recent economic downturn offers an opportunity to realign supply chains
  • The Amazon Effect – ‘I want it yesterday!’ – is influencing supply-chain decisions
  • Outsourcing partners play a key role in meeting customer expectations

Consumer comfort – and awareness – drive growth

According to respondents, increasing awareness of the importance of preventive care and early diagnosis is driving growth in at-home testing, along with consumers’ preference for privacy and convenience. Demand from health insurance plans is also growing: One in four respondents (25%) report increasing interest from that sector, which apparently has discovered the cost-effectiveness of offering self-test kits to their members versus paying hefty claims to diagnostic labs. 

Just over half (52%) of those surveyed view at-home pregnancy testing as one of their top three market opportunities for 2023, followed by STI (48%) and combination COVID/flu testing (44%). Food sensitivity and fertility (male and female) tied at 43% to fill out the remainder of respondents’ top-three lists, although ovulation and menopause testing each received frequent mention as well. 

Economic uncertainty, inflation are chief concerns – but also offer opportunity

Following two years of supply-chain disruption, it’s surprising that fewer than half the respondents (42%) cite supply chain volatility or transportation delays as their top current challenge. The risks posed by economic downturn and inflation have supplanted that volatility today. In fact, a solid majority (58%) of those surveyed rank inflation and cost control among the top three potential impacts to their supply chain, while nearly half (48%) cite a recession.   

Despite their concerns, most respondents see a silver lining in today’s economic uncertainty. An eye-opening 79% view it as an opportunity to realign their supply chains to shore up weak links and eliminate bottlenecks. As one such strategy, two-thirds (66%) of those surveyed are taking steps to move their sourcing, manufacturing and fulfillment physically closer to their customers and end markets.

Amazon Effect has considerable sway over supply-chain decisions   

Even with supply-chain disruptions easing, decision-makers still feel uneasy about their ability to meet customers’ increasing ‘I want it yesterday’ expectations. More than nine in 10 respondents (93%) cite on-time delivery of kits as a major supply-chain risk, and nearly a third (32%) feel that delivery timelines have more impact on their supply-chain decisions than any other variable.  

Suppliers lean more and more on outsourcing partners 

To meet ever-increasing customer expectations, decision-makers are turning more and more to outsourcing. More than three-quarters (77%) of those surveyed plan to outsource more of their production processes this year, while 91% will increase their outsourcing budget or hold steady at their present spend.

Currently, 79% of respondents outsource a quarter or more of their processes, and three in 10 outsource more than half. As for what drives their organization to outsource, 52% cite the pressure to get product to market faster, while 49% report cost reduction as their chief motive. When considering which processes they’re most likely to outsource, 45% say distribution, 40% mention product manufacturing, and 38% say warehousing/inventory.

One of these priorities – cost reduction  – has recently undergone a step change. It wasn’t long ago that offshoring the bulk of their operations was the smartest, most cost-effective move for decision-makers. Today, however, more and more kit suppliers are exploring reshoring or ‘nearshoring’ their production, distribution and fulfillment processes as a way to build more agile, resilient supply chains and reduce their overall spend.

As consumers gain more control over their own health, acceptance of at-home testing has driven new levels of growth for suppliers – but also greater complexity in fulfillment. Complete channel coverage should be a top priority as they strive to get safe, fully compliant products into the hands of the end-user securely and efficiently. Working with an onshore partner that offers a complete portfolio of end-to-end kit services enables diagnostic device manufacturers, at-home care providers, and insurance plans to keep pace with the rapidly evolving landscape of healthcare.    

Read the full report here:

Ken Gammon 1 1 copy
Ken Gammon

Ken Gammon is the Senior Vice President of Healthcare Solutions at RRD, a leading global provider of marketing, packaging, print, and supply chain solutions. In his role, he leads a team of dedicated professionals, with a focus on solution development, sales, business development, and operational efficiency for RRD's extensive range of Payer, Provider, Pharma, and Medical Device clients.