Growing demand for healthcare necessitates better logistics

Recently, FedEx hosted its “The Future of Global Healthcare Roundtable” which highlighted the rising need for healthcare logistics solutions particularly as the healthcare supply chain becomes longer and more complicated.

According to IMS Health, global spending on medicines is expected to top $1 trillion this year. This is due to greater access to medicines by the growing middle class population as well as economic improvements in developed countries. However, the greatest growth rates are those found in emerging markets. According to Carl Asmus, vice-president of supply chain solutions and market development for FedEx, “Emerging economies, with their growing middle classes coupled with an aging population, are demanding a new level of healthcare akin to that of the developed world. To reach these new customers — often literally halfway around the world — a supply chain must be considerably more sophisticated.”

Indeed, according to Frost and Sullivan, the Asia-Pacific healthcare market is growing at twice the rate of healthcare markets globally.  In particular the need for warehousing and transportation of temperature-sensitive healthcare goods is great.

As such, FedEx is undertaking an expansion project at its Shanghai hub that will provide additional space for health-related products. According to a Chinese publication, the new facility is expected to meet China’s requirements for storage of medical devices, biological materials and pharmaceuticals, and to also meet the distribution needs of international pharmaceutical companies.

FedEx’s current expansion endeavor comes after competitor, UPS, opened its own healthcare facilities in Shanghai and Hangzhou in 2012. DHL also has two Life Sciences and Healthcare Competency Centers in China – Beijing and in Shanghai.

Such facilities require meeting strict regulatory and healthcare needs. For example, it is estimated that 25% of all healthcare products are temperature sensitive and that by 2016, over 50% of the top 50 best-selling drugs will require cold chain transportation. The Asia-Pacific region is expected to play a major role in the global cold chain market. In fact, according to IMARC Group, this region is expected to account for 30% of the global healthcare cold chain logistics market by 2017.

As FedEx noted in its roundtable discussion, increasing life expectancy, population growth and the growing middle class in emerging markets in such regions as Asia-Pacific will result in an increasing need for healthcare logistics solutions.