UPS recently opened two new state-of-the-art healthcare facilities in San Juan, Puerto Rico, and Roermond, the Netherlands, bringing to 25 the number of UPS facilities dedicated to serving the pharmaceutical, biotech and medical device industries. "We have basically created what amounts to a healthcare company within UPS focusing on this market," says Bill Hook, UPS vice president of global strategy for healthcare logistics. "In doing so, we have put in place a culture that focuses on the patient and not the package and on creating innovative, specialized healthcare services and a gold standard of compliance."

One of the challenges for healthcare logistics providers is the high level of regulation that exists, Hook says. "As we are moving product domestically or internationally, we need to be able to comply with all requirements." For example, "an increasing number of products being approved by the FDA are temperature sensitive, so they require a lot more care and oversight," he says. "If we are moving temperature sensitive products from a manufacturing facility in Europe or Asia, we need to be able to monitor that temperature and be able top prove that those products have maintained their integrity."

Concerns around security and counterfeit pharmaceuticals also require special care and oversight, Hook says. UPS "is working with our clients on some of the newer areas like item-level serialization," he says. "We are going to see these products being traced using serial numbers and we working on the technology to do that," he says.

Another trend driving change in the healthcare arena is the move away from institutional settings and toward community and home care, he says. "This creates a more complex supply chain overall," Hook notes. At the same time, governments are looking to control demand for healthcare services. "All stakeholders in healthcare are going to be impacted by reform," he says. "Certainly our clients are looking to us to come up with creative solutions to address what will be a difficult market going forward."

Increasing cost pressures are causing more healthcare companies to look at "shared services solutions," says Hook. These companies have not tended to outsource logistics in the past because of regulatory and control issues, and "because they never had to," he says. "But now they are looking at how they can leverage the kind of specialized network that UPS has developed to bring down healthcare costs and deliver to their customers more effectively. With the realization that we are all going to be dealing in a much more constrained market, UPS is seeing "greater openness to outsourcing," he says. "These companies are asking how they can do things differently; how they can change the game," he says. "That is what the growth in our network is signaling."

As a partner "closely attuned to the needs of our healthcare clients," UPS also is playing a significant role in getting flu vaccines to market, says Hook. "We recognize the importance and priority of these medications and can flex our network accordingly, whether its ground or airfreight. For example, we're moving products from several manufacturers to the market, via door-to-door airfreight using our UPS Temperature True service," he says.