Dan Gagnon Vice President, Global Strategy & Acquisition Integration
"The cold chain logistics healthcare market is due to reach US$20 billion in value by 2024, as the pipeline is loaded with great vaccines, biologics, and innovation."
How was growth for UPS Healthcare in 2022 and early 2023?
UPS has been helping healthcare companies make their operations more precise, productive, scalable, and smart for over 20 years. In 2019, UPS made the decision to invest in a dedicated healthcare vertical. All of our healthcare logistics experts, facilities, cold chain infrastructure, and assets were brought together under one group. This vertical stands at almost US$10 billion today, and focuses primarily on providing end-to-end logistics support for the pharmaceutical, medtech, lab diagnostics, and clinical trial sectors.
The Covid-19 pandemic hit shortly after UPS Healthcare was established. Our clinical trials unit, Marken, worked closely with vaccine manufacturers and managed logistics for 8 of the top 10 clinical trials. Our growth has been continuous since. In November 2022, UPS purchased Bomi Group, a Europe and Latin America-based healthcare logistics provider. This was an extremely important and strategic acquisition for us – it has put UPS Healthcare in a leading position in Italy, Spain and France, added competencies in medtech, and overall benefited our cold chain capabilities expansion in priority markets.
How did the pandemic impact cold chain and refrigerated logistics, and how did UPS navigate it?
Covid-19 accelerated investment in cold chain logistics across the industry. Cold chain logistics are costly and complex, but with Marken running most of the Covid-19 vaccine clinical trials, we knew there was a high chance of mRNA vaccines being approved for use. It allowed us to have conversations with manufacturers about what their logistics needs would be once their vaccines were commercialized. We put investment upfront into that network, which paid off, especially for mRNA vaccines. There is a strong pipeline of biologics and pharmaceuticals that will benefit from that readily available cold chain infrastructure.
Can you highlight some of UPS Healthcare’s latest technological investments?
Our next phase is to become a technology company that happens to be doing healthcare logistics. From a strategy perspective, we are implementing technology that drives and adds value. We have a service called UPS Premier in line for vaccine deliveries. It uses technology in a way that packages communicate with each other. The beauty of this technology is that it foreshadows to the operator where the package is going and how it is moving in real-time: delivery becomes predictive. By the time the control tower sees the package is off-course, one phone call and the recovery phase starts. That technology delivered 99.9% effectiveness, which is key as most of the industry is focused on optimizing end-to-end supply chains.
What are the drivers behind the forecasted growth of the cold chain logistics healthcare market?
The cold chain logistics healthcare market is due to reach US$20 billion in value by 2024, as the pipeline is loaded with great vaccines, biologics, and innovation. A leading component of that growth will certainly be cell and gene therapies, and Marken, our clinical trials arm, has a strategy to become the number one player in cell and gene logistics. Looking at the market, we went from small molecule pills to biologics, to cell and gene, which is a super targeted solution. Only in the last couple of years, there was a huge jump in cell and gene growth with 4,000 products compared with a few hundred a couple of years ago.
Cold chain is still a very fragmented market in logistics. Sustainability – whether it is environmental, social, or economic – is becoming much more important. Customers want to know the carbon footprint of their shipment, so they can make different decisions regarding their scope emissions. Home health is another key trend. The lab industry in the US is pushing diagnostics to the home, as you can now almost run any test you need from home, with that whole lab process being at home in a logistics network.
What will be the key priorities for UPS Healthcare in 2023?
The growth of our cold chain network is key. We are looking to expand in Europe and India, as 63% of all biologics are manufactured there. We are going to invest in supporting diagnostics – either at the clinic or at home – and we will focus on medtech, as that subsegment is expected to grow in the coming years.