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Health & wealth

May 22, 2013

The world’s population is ageing at an exponential rate. The number of people aged 60 or more has doubled since 1980 and is expected to reach two billion by 2050. This is a testament to medical advances and healthier lifestyles, but throws up a number of logistical and financial issues. At the same time, pharmaceutical development means there are more solutions than ever to health problems around the globe, leading to greater demand for the transportation of vaccines, drugs, supplies and devices.

“According to the World Health Organization, the global pharmaceuticals market is worth US$300bn [£193bn] per year and is expected to grow another US$100bn [£64bn] within three years,” says Bill Hook, vice president of global healthcare strategy for UPS. “Healthcare logistics services are becoming more essential as the healthcare industry becomes increasingly global and regulations continue to evolve.”

Big gains
By partnering with a global third-party logistics provider (3PL) that offers specialist healthcare services, hospitals, laboratories and pharmaceutical companies can leverage existing global logistics infrastructure rather than invest in their own networks and assets. In this way, such organisations are able to focus on their core business activities while their 3PL partner manages the supply chains. In addition, access to a global, integrated transportation and distribution network, single IT platform and regulatory in-house expertise enables them to expand into new markets, bring products to market faster and improve service, while keeping costs down. 

UPS is a prime example of a 3PL that has made healthcare a top-priority segment for growth. It has a number of solutions tailored to the sector, including those that protect temperature-sensitive products, a key factor in the transportation of medical materials.

UPS Proactive Response allows for real-time updates on a shipment’s location and enables package interception in order to take actions such as re-icing or re-routing of at-risk shipments, while PharmaPort 360 containers ensure that products maintain a 2-8°C range for more than 100 hours.
“In addition to these solutions, our regional facilities offer labelling and kitting services that are specialised for each country’s requirements,” says Hook. “A singular IT platform and tracking service provides a more integrated and global view into a company’s products to ensure product integrity every step of the way.”



Safe handling
Safety and security are vital for healthcare shipment, particularly as the products tend to have high values. Their safe and timely arrival can make a tremendous difference – for the end patient, for clinical trials and for company profitability.
“‘It’s a patient, not a package’ is the philosophy for UPS healthcare employees around the world,” says Hook. “We treat every healthcare shipment as a key priority – whether a medical device, surgical equipment or temperature-sensitive product.”

End-to-end supply-chain visibility is fundamental. With advanced tracking systems, companies can receive real-time updates on the status of their shipments so they can make informed decisions. Most important is the ability to intervene when needed; being able to save a delayed shipment with actions such as re-icing or re-routing is a game-changer.

Rules of the game
There are a vast number of regulations in the shipment of healthcare products, and many are country- or region-specific. However, the bigger players will usually have a regulatory affairs group that maintains FDA licensing, as well as hundreds of geographically specific licences and registrations for specific countries.

“All of our global healthcare facilities are cGDP and cGMP-compliant,” explains Hook. “In total, we hold approximately 1,000 healthcare licences worldwide. Most of our facilities are also designed to protect and store highly sensitive healthcare products, which have their own unique set of requirements
in the supply chain.”

Cost analysis
Despite some concern over the extra time and cost involved in meeting healthcare regulations, for those committed to service excellence, investing for the long term can be very worthwhile. The sector is a strategic fit for many larger logistics operators because it ties in with an existing global supply chain network and measurement processes, an ethos of precision and a tendency towards high standards. The sector is looking ever more towards the BRIC countries (Brazil, Russia, Indian and China). The pre-existence of a supply chain saves start-up costs and taps into grand economies of scale.

“Each year UPS commissions a UPS Pain in the (Supply) Chain survey, conducted by TNS,” says Hook. “This is designed to uncover supply-chain pain points, as well as future growth plans of executives at pharmaceutical, medical device and biotech companies worldwide. According to the 2012 survey, 77% have, over the past 18 months, tapped into new global markets, and 83% expect to do so in the next three to five years, making this one of the top two growth strategies for healthcare companies, along with technology investment. The top four markets that healthcare companies are looking to expand into are China, the USA, Brazil and India. Since we began conducting the survey in 2010, the focus on global expansion has grown every year. As healthcare expands globally and healthcare consumption in emerging markets increases, the demand for healthcare logistics solutions will do likewise. Despite the increased regulations, the healthcare industry has grown, and will continue to expand and evolve in the coming years.”

To prove the point, in the past year UPS has announced facility expansions in five locations in North America and three in the Asia-Pacific region. Whether all of this leaves room for the smaller players is a moot point. While there will always be scope for providers with niche services, the supply-chain requirements of a national hospital or international pharmaceutical giant are unlikely to be met by anything other than the largest suppliers.

 

Left: Post Danmark’s Welfare Distribution solution covers the entire logistical process, including providing the recipient with user instructions

 

 

The health of a nation
In Denmark, the challenges of an ageing population, plus an ever-increasing number of chronic patients, has necessitated a restructure of the country’s welfare sector. This means seeking more efficient ways to ensure a sustainable economy. The market for health-related technology in Denmark is on the rise and such equipment needs logistics and distribution. That people are staying longer in their own homes means a surge in home deliveries.

In May last year, Post Danmark launched a new end-to-end distribution service providing customers such as COLD-patients (Chronic Obstructive Lung Disease) and those suffering heart problems with deliveries of life-saving technology to their homes. The scheme is known as Post Danmark Welfare Distribution.

“We recognised that our nationwide distribution, local presence and trusted brand would give us a unique position for supporting the welfare sector with logistics and distribution,” says Inge Speiermann, head of Innovation at Post Danmark. “We have developed specific services in close collaboration with hospitals, municipalities and patients. We offer a cyclical end-to-end process, from initial order of welfare equipment, warehousing, pick and pack, delivery and set-up; to return pick-up, refurbishment tasks and preparation for the next user. Our specially trained employees ensure that the patient feels comfortable about using the equipment.”

Welfare benefit
Recipients of a delivery will usually receive a computer complete with specifically developed software, enabling the hospital to monitor and communicate with the patient. “We are constantly in dialogue with hospitals, municipalities and our patients to develop and adapt our service further,” says Speiermann. “Last year we initiated a survey where a number of the COLD-patients who had been attended to by our employees were asked how their experience was. The result was positive and gave us vital information.”

The future?
Speiermann believes Post Danmark’s nationwide distribution setup, trusted brand and recognisable uniformed personnel constitute a “perfect vehicle” for distributing welfare solutions to Danish citizens by building upon core competencies of distribution, logistics and trust.

“We believe the service is transferable to other postal operators in countries where demographic developments dictate similar ways of re-thinking the welfare sector,” she says. “We therefore believe that welfare distribution can help the entire postal market to move forward and overcome some of the market challenges we are all facing. In our experience, this new service has encouraged existing customers to ask for additional services. It has given us the platform to reach new types of customers.”

Welfare technology and distribution is an emerging market characterised by a high level of innovation and uncertainty. As such, Post Danmark’s revenue streams from the venture are to date not large, but are expected to rise significantly in the next five years, especially in the light of demographic change and the imperative for developing the way welfare is produced and delivered. The company is working on a broader conceptualisation of services to and around the public sector, and is looking into how it can distribute other welfare services to Danish citizens.

“We have a strong focus on developing the market and our position further,” says Speiermann. “The service has a financial impact as we are helping the municipalities and hospitals across the country to save money and become more efficient, which benefits Danish society as a whole. In profit terms, this service is driven and sold as any of our other products. By introducing this new service to the emerging welfare market, Post Danmark positions itself as a new type of logistics and distribution services provider, enabling us to step up in our customers’ value chain.”

This article was published in the June issue of Postal Technology International magazine

May 22, 2013

 

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