Developing Shipping Solutions for Pharmerging Markets
Pharmaceutical markets can be divided into three categories: mature markets, pharmerging markets and underdeveloped markets. The term “pharmerging” is a word that combines pharmaceutical industry and emerging markets. It is used by consultants to describe high-growth pharmaceutical markets, which are generally characterized by a double-digit compound annual growth rate. Within the pharmerging category, China alone accounts for almost half of pharmaceuticals sales, with remaining sales being divided between other BRIC countries (Brazil, India, Russia), and other select pharmerging countries.
- In 2013, China spent about 6% of its gross domestic product on healthcare expenditures, equivalent to US$367 per capita (in comparison, total health expenditures for the United States were 17% of GDP and $9,146 per capita).
- China has been importing more foreign finished pharmaceutical products, with +145% increase in import trade value between 2010 and 2014. In 2014, pharmaceutical products accounted for 0.9% of the total value of imported goods by China, up from 0.5% in 2010.
Each pharmerging market has its own set of challenges, and China has a few unique shipping constraints that limit market access, such as Chinese regulations for transporting dangerous goods (DG).
- Dry ice is often used as an inexpensive coolant to maintain a certain temperature range when transiting healthcare shipments. Since dry ice is considered DG for transportation, any shipment containing dry ice would fall into the DG category and is therefore subject to well-defined rules.
- Per Chinese regulations, DG shipments need to be handled in a completely different operational system, implying that DG shipments cannot share sorting facilities and trucks with other commodities, even at airports.
- FedEx Express did not apply for DG licenses in China, meaning that express shipments labeled as DG are prohibited from pursuing their journeys with FedEx beyond airport tarmacs.
In order to enable market access for foreign DG shipments into China, FedEx Express developed a unique, tailored automated shipping solution for parcels and freight. To contour strict DG laws and regulations, FedEx selected a reliable Chinese contractor which verifies that temperature-sensitive DG shipments are placed in DG licensed storage facilities at airports while waiting for customs clearance. Contracted couriers are then delivering DG shipments to their final destination within the Chinese territory, transmitting milestones to FedEx along the way during the last mile delivery. The DG solution to China is currently offered from the United States and Puerto Rico, but FedEx is looking to expand it from other regions of the world.
The FedEx Express portfolio benefits emerging markets by customizing shipping solutions to specific situations and local needs. Importing safe and effective foreign healthcare products has positive effects to emerging countries, such as improved general health and increased longevity of the population.