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The Impact of FedEx on the Healthcare and Life Sciences Industries

August 1, 2011

The FedEx strategy to better serve the needs of the healthcare industry were recently summed up in my blog, the “ABCs of HealthCare.”  Broken down, it is the:

  • Targeted vertical Approach with dedicated HealthCare Sales professionals and Sales Support personnel who are knowledgeable about customer needs in the sector
  • The ability to Bundle a variety of services into a comprehensive solution that spans multiple FedEx networks
  • Continuing to Create new products and services which cater specifically to the needs of the industry like SenseAware

This renewed focus is in direct response to several market forces which are driving—and changing—the industry.  Since I am a lawyer by training, I’ll keep it simple and will also break down those market forces as A, B and C:

A is for Access
There is an ever-increasing need to tap into new consumer markets in emerging parts of the world as customers’ supply chains become more global and the need becomes greater.  Buyers and sellers are connected all over the globe in a way that is simply unprecedented in human history, in large part due to the Internet as a medium of exchange.  Access is the key to capitalizing on this and also what is driving it.

B is for Boom
The global healthcare sector is experiencing explosive growth.  This is well over a trillion dollar industry just in terms of the value of healthcare goods alone, and the industry is growing significantly faster than world GDP.  From a U.S. domestic standpoint, it is clearly an area where products with high intellectual property value are being manufactured in the developed world and being exported to the developing world.  Items like medical devices and biotech therapies are being made in the U.S. and there is real demand in the rest of the world for these goods. 

That is not the case for every industry.  On the flip side, products which can be mass-produced more cheaply in the developing world, such as pharmaceuticals that go off patent, are being manufactured there and then flowing into the developed world to drive down the costs of treatment.  This circular growth in the developed and developing world alike is contributing to the boom in the global healthcare goods space.

C is for Complexity
Finally, the very nature of the products themselves is changing, including complex medical devices, customized medicine based on a person’s own physiology, and drugs that use more sophisticated molecules.  The very nature of medicine is evolving; therefore the regulatory environment is becoming more stringent due to concerns about the efficacy and durability of these commodities.  Temperature requirements are becoming tighter, and, while this is relatively easy to manage for inventory at rest, it is exponentially more complex to manage for inventory that is in motion—traversing entire oceans and continents.  This is why having the world’s largest custodially-controlled air cargo network is a huge advantage for FedEx.

This is what I see when I look out at the healthcare and life sciences industry.  However, as I’ve admitted, the only thing I’m a doctor of is a doctor of law.  I’d like to now hand it over to my colleague, Christelle Laot, who is a recent addition to my Life Sciences & Specialty Services organization.  She is our resident Technical Fellow with responsibility for Cold Chain Management & Quality Assurance for the industry.  Christelle has a PhD and spent years as a research scientist for a major pharmaceutical company, so I think she can offer a different perspective on the topic.

——- Christelle Laot ——-

Given my background in the pharmaceutical industry, I have a more critical eye on our transportation network. The key thing to remember is that healthcare shipments contain products or compounds that may change their chemical, physical, and biological properties as external parameters are going beyond stipulated limits.

One of the challenges facing drug manufacturers and researchers is ensuring that none of the product properties degrade while passing through the supply chain. Degradation mechanisms and kinetics, accelerated physical aging, weathering, chain scissions, phase change or crystallization are some consequences of poor management of the external environment.

As the use of temperature sensitive microorganisms, biological agents and human tissues is expanding in biotechnology applications, more scrutiny is being placed on thermal storage conditions during transportation. FedEx verifies that external parameters such as temperature remain within acceptable limits during a shipment’s journey. Temperature is the main focus now, but regulations involving humidity, pressure, vibrations, shocks or radiations are on the horizon. Contingency plans are developed in collaboration with customers prior to shipping, all with the goal of avoiding transport disruptions caused by flight delays or customs clearance problems. Healthcare customers rely on our cold chain technical expertise and compliance knowledge to guarantee homogeneous drug quality for safe and effective medicinal supplies throughout the world.

Another challenge facing the healthcare industry is the pressure placed on pricing for medical drugs and equipment, particularly when patents lose their intellectual property protection. Manufacturing of generics, for instance, often occurs in emerging countries, resulting in cheaper production costs and potentially lower healthcare costs for global end customers.

FedEx is developing temperature-controlled cost-effective transportation solutions in order to meet customer needs and enhance competitiveness. Thermal protective layers or blankets (also referred to as GCRT for global controlled-room temperature) are relatively cheap and green solutions that prevent freight shipments from getting too hot or too cold while waiting on the airport’s tarmac. FedEx even owns the reusable blankets and assigns them as physical assets so customers do not have to focus on the cost and logistics of utilizing this product. This is just one example of efforts by FedEx to provide access to affordable healthcare for an ever growing population.


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

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