UPS simplifying healthcare supply chain

by | Aug 22, 2012

Millions of pharmaceutical supplies and medical equipment products are mailed daily, with a significant dependence on United Parcel Service Inc., making the company a key player for many supply chains. In addition to the company ensuring safe delivery of products to companies, the delivery giant also has its own team of pharmacists.

UPS’ company pharmacists fill 4,000 orders a day for insulin pumps and other supplies from customers of Medtronic, one of the leading medical device companies in Minneapolis.

The process of filling the orders involves logging into the Medtronic system, filling the orders with devices stocked on its site and shipping them to patients, according to the Wall Street Journal. The Medtronic system is one example of the increasing reach of companies such as UPS, FedEx and DHL, which are all diving deeper into the supply chain business.

Considering healthcare supply chains are becoming more complicated as a result of an increasing number of vaccinations and medications being sent to emerging markets, ensuring the safety of pharmaceuticals is at an all time high.

“If you’re a medical company, logistics isn’t your core expertise,” said Kevin Sterling, a freight-transportation analyst with BB&T Capital Markets who was quoted by the WSJ. “They’re saying, ‘Let someone else deal with those headaches.'”

According to Jeff Hubauer, general manager of UPS’ insulin delivery business, healthcare companies are beginning to outsource logistics more in order to compete with manufacturers of generic medicines, according to the Journal. Those companies are now looking for ways to cut costs from operations to give them the opportunity to focus on product development instead.

The Wall Street Journal reported that demand for cold-chain services is also expected to increase 16.9 percent to reach $7.5 billion in revenues in 2013, which will be a significant increase from the $6.5 billion reported in 2010, according to Pharmaceutical Commerce, an industry publication.

FedEx HealthCare Solutions saw a double-digit increase in 2010, according to Jenny Robertson, spokeswoman for the delivery company.

Even as freight companies are looking to define niches within the healthcare supply chain, medical technology companies are looking to further define their niches within the global industry. According to a recent report published by analytics firm Axendia and co-sponsored by PwC US, medical technology companies are looking to increase their businesses globally by taking advantage of specific international markets. The companies are developing strategies to explore emerging markets and implementing custom made supply chain strategies.

“Globalization is the byword for medical technology companies these days – and for most companies going ‘global’ means going to emerging markets. However, succeeding in emerging markets is not simply a matter of expanding operations into these countries,” said Wynn Bailey, pharmaceutical and life sciences advisory services partner, PwC. “Leading companies are developing tailored supply chain strategies that are designed to respond to the unique needs and expectations of each particular market, thereby giving them the best chance to succeed in realizing their growth ambition.”

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