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Special report: Linking the health care supply chain

by Carol Ko, Staff Writer | December 18, 2013
Photo courtesy of UPS
From the December 2013 issue of HealthCare Business News magazine

Most people may know United Parcel Service Inc. for its retail parcel delivery service, but the big shipping company and others like it are also rapidly carving a niche for themselves in health care logistics.

The company boasts some big-name customers in the pharmaceutical and medical device market, including Minneapolis-based device firm Medtronic Inc. Its range of services includes temperature-controlled shipping and expertise in compliance with regulations established by agencies such as the Food and Drug Administration and the Drug Enforcement Administration.

The firm is looking to expand this segment even further through aggressive acquisitions. This April, the company announced its purchase of the Hungarian health care logistics company Cemelog to strengthen its presence in Eastern and Central Europe — increasingly important health care markets for manufacturers.

The deal, the latest in a string of similar buyouts, is part of a winning strategy that the firm first set in motion in 2006 when it ventured into health care logistics. Today, it runs 42 health care logistics centers worldwide.

But UPS isn’t the only big shipper making inroads in this niche market. Last spring, Germany-based DHL opened health care logistics and life sciences centers filled with cold storage units in Atlanta and Miami for shipping to North and South America.

“The life sciences and healthcare industry has been a key sector that DHL has placed a prominent focus on for several years now,” said David Bang, CEO LifeConEx (owned by DHL). “As this sector has grown, our services portfolio, Certified Life Sciences Stations and group of specialists have grown as well to fulfill our customers’ present and emerging needs.”

And FedEx HealthCare Solutions, which also offers supply-chain management and temperature-controlled shipping, has seen double-digit growth in revenue since starting in 2010.

Third party system
The reason behind the interest from these big three shipping firms is clear: business is booming in the health care logistics space. But contrary to conventional logic, business is growing precisely due to the many challenges looming for the industry, not despite them.

Supply chains are becoming harder to manage due to a number of factors. For one, most device companies are looking beyond saturated markets in Western Europe and the United States toward underserved, developing parts of the world such as Asia, India and South America.

“The growth rate in these emerging markets is very attractive — you definitely need to look outside and see what your strategy is,” says Robin Hooker, director of global strategy healthcare logistics at UPS.

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