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FedEx Blog

The ABCs of HealthCare

June 13, 2011

The global healthcare industry is estimated to be well over 1 trillion dollars and is growing significantly faster than world GDP.  That alone is reason enough for transportation and logistics providers to sit up and take notice; but, when you add to that an increasingly tightening regulatory environment with higher growth in industry sub-segments which already require more stringent quality control processes, you paint an irresistible target on an already attractive market segment for delivery companies with large custodially-controlled networks.  

The attractiveness for FedEx is further augmented by virtue of the fact that, in an industry already reliant on time definite delivery for time and temperature-sensitive goods, customers’ supply chains are becoming more international.  For a company that boasts the world’s largest all-cargo airline, the healthcare industry is a bull’s-eye match for our global capabilities.
 
Healthcare business is certainly nothing new for FedEx.  After all, we have served the industry reliably for over 35 years.  However, in recent years we have seen shifts in customer needs due to the changing and dynamic nature of the very products themselves, made possible by new technologies and procedures.  Furthermore we have seen a rising trend towards globalization in the industry. Traditionally customers in this sector, particularly those shipping perishable commodities either domestically or abroad, have exhibited two main types of buying behavior.  

The first being a “risk averse” behavior where the cost of the service is completely ancillary to the level of quality assurance and speed to market.  These customers use our services for some commodities, but for others that require a high degree of monitoring or other special handling they have gravitated towards expensive white glove or specialty couriers like our own FedEx Custom Critical.  

The second major type of buying behavior is the “just enough” crowd, and these customers have relied predominantly on freight forwarders or network based delivery companies like ours for the bulk of their needs.  As the products themselves become more specialized, customized and complex, however, the just enough buyers are willing to pay more for additional levels of quality control in order to maintain compliance.  In the same vein, the risk averse buyers are looking for more broad-based and economical solutions to help meet the increasingly expensive demands of serving consumers around the globe, and especially in light of mounting competitive and other cost pressures facing the industry.  The rising price tag of R&D as well as the flood of generic pharmaceuticals and biosimilars into the market as brand drugs and biotech products come off patent will increasingly erode the margins of many of the large players in the industry, and thus more systemic and cost-effective services are desired.
 
This is where FedEx and all of its business units can truly be leveraged as the “one-stop-shop” that customers in this market sector are desperately seeking, and all of these factors made it clear that we needed to put a renewed focus on servicing healthcare in this company.  To that end, over the past 12 to 18 months we have gone back to basics and organized ourselves in order to better serve the needs of this market sector which we have served faithfully for so long.  In my view, this renewed approach is as basic as ABC:
 
A is for “approach.”  Like every successful business strategy, it begins with the creation of the customer.  In order to penetrate and grow market share in this high growth industry, we had to ensure that we had customer-facing experts with the proper degree of healthcare knowledge to go in and have very detailed conversations with folks at pharmaceutical, medical device and biotech companies as well as major hospitals, CROs and diagnostic labs.  We stood up our HealthCare Vertical Sales team comprised of such experts in order to have a more dedicated and concerted approach to customers in this sector, and even recently hired a Technical Fellow responsible for overseeing Cold Chain Management & Quality Assurance for FedEx Express globally to act as an industry advocate within the company.  Furthermore, our HealthCare Vertical Marketing team is coordinating the go-to-market strategies behind the scenes to ensure that we have the right services in place for all of the various customer needs spanning a multitude of industry sub-segments in all of the regions of the world.
 
Cold Chain PyramidB is for “bundle.”  New customer-facing support teams such as the HealthCare Solutions team in FedEx Services and our healthcare-cold chain dedicated Life Sciences & Specialty Services group (LS3) in FedEx Express were stood up in order to effectively utilize and enhance the existing service capabilities of all of the FedEx operating companies in order to build bundled solutions for customers with a variety of transportation and logistics needs.  These teams support Sales in scoping customer requirements and determining the right service capability or mix of capabilities necessary to support those requirements, selecting from FedEx companies with targeted offerings for healthcare like FedEx Custom Critical, FedEx Express or FedEx SupplyChain.  In LS3 they even have dedicated engineers who work to build scalable, customized solutions for customers shipping time and temp-sensitive commodities, leveraging our extensive global air network and substantial cold chain capabilities such as dry ice replenishment or refrigerated storage for in-transit delays.  These teams prove every day that the whole is greater than the sum of its parts.
 
C is for “create.”  FedEx is consistently on the cutting edge of innovation, and the services and technologies we are deploying in the healthcare sector are no different.  Everything from specialized packaging and container options in a variety of temperature ranges to monitoring capabilities like SenseAware and intervention services like Priority Alert have been designed as best-in-class solutions to better serve the unique needs of customers in the industry.  We are constantly pushing the boundaries of what’s possible as we launch new service offerings and expand existing ones to new countries and lanes across the globe.  If a customer has a particular need just about anywhere, chances are good that there’s a FedEx HealthCare Solution for that. 

Please check out our FedEx HealthCare Solutions website for more information about FedEx in the healthcare industry (http://fedex.com/us/healthcare/index.html).



Richard Smith

Vice President of Global Trade Services

As Vice President of Global Trade Services, Richard W. Smith leads all U.S. based international operations for FedEx Express, the largest FedEx operating company, based in Memphis, Tennessee. He is responsible for ensuring global regulatory compliance, providing customers with regulatory assistance, measuring and improving global clearance performance, providing planning and engineering support, developing and implementing U.S. International line haul solutions, maximizing U.S. export freight profitability and designing and executing specialized services for the life sciences industry and other target verticals.

View all Richard Smith’s blog posts

Comments

    Cathy says:

    Great information. Thank you or sharing the ways in which FedEx continues to impress me as a company that truly does it all! I have been a loyal customer for years and new and impressive new technology and advances like this are exciting to me and my company!

    Edwin So says:

    It is inspiring. It gives us a great frame of reference in developing our strategy to champion our selling in HealthCare industry. Thanks and Let’s sell together to WIN.

    Guy says:

    Well stated. No one does the toughest jobs better than FedEx!

    Jennifer M says:

    Good stuff! I know that FedEx will succeed in this endeavor as we continue to be stategic in providing solutions to the needs of our customers especially in the the growing healthcare industry.

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