Healthcare Logistics Market Worth US$ 264.7 billion by 2030


Published March 3, 2023

The global healthcare logistics market size is expected to grow from USD 145.2 billion in 2021 to USD 264.7 billion by 2030, at a CAGR of 7.8from 2022 to 2030Healthcare logistics refers to the packaging and transportation of pharmaceuticals, medical devices, surgical and medical supplies, and other healthcare products to hospitals, pharmacies, diagnostic and research laboratories, and other end usersFactors such as the rising prevalence of chronic diseases and expanding aging population are driving the demand for efficient logistics servicesMoreover, technological advances in the healthcare and logistics industries and collaborative partnerships between thirdparty logistics (3PLproviders are other growth drivers for the global healthcare logistics market.

Competitive dynamics in the healthcare industry have changed significantly in recent yearsRising healthcare costs, fierce competition, rationalization, and regulatory changes have added to fewer blockbuster drugs being launched in the marketFactors such as a strict regulatory environment and the offerings of healthcare companies impact patients’ health and wellbeing and drive the healthcare industry.

The increasing cost pressures have made it imperative for vendors to find different ways of assisting both current and new geographies, customers, and marketsAlso, agile and flexible supply chains are essential requirements for several healthcare companiesThey can gain access to logistics capabilities and resources that are not present internally with the help of outsourcingAlso, outsourcing logistics requirements enables healthcare companies to free up their human resources and capital and focus on core business activities, including R&D initiatives, medical supplies, and medication or medical equipment productionThus, outsourcing provides immense opportunities to pharma and other healthcare and life science companies to implement strategic changes for optimal growth.

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COVID19 Impact on the Global Healthcare Logistics Market

With the intensifying pace of globalization in several geographies, supply chains have become largely interconnectedFurthermore, globalization has increased the stages of transportation of goods before it reaches endusersThe COVID19 outbreak has resulted in exceptional disruptions in most economies, regardless of their stage of development or sizeThe mobility restrictions during the pandemic included global lockdowns and closed airspace and bordersThese barriers have placed major stress on the global supply chains, comprising crucial linkages related to medicines and food.

In the face of a global pandemic, the usual ways of working were found wanting and had to be rapidly transformedIt has taken careful consideration and immense effort to bring the COVID19 vaccines to market and provide muchneeded hope to the global population and economiesThe logistics networks required to distribute these complex new products have also been established at record speedsThe uniqueness of both the products and the global circumstances makes this a much more significant endeavor than a mere scaling up of existing infrastructureThe COVID19 was a catalyst for the global healthcare logistics market due to the emerging demand for vaccines.

Global Healthcare Logistics Market Dynamics

DriversRising Demand for Pharmaceuticals & Medical Devices

One of the major growth drivers for the global healthcare logistics market is the growing global demand for pharmaceuticals and medical devicesThe production of pharmaceuticals and medical devices is getting more complex as companies expand their product portfolios to align with the rapidly changing market and meet customer requirementsThe growing prevalence of chronic diseases also accelerates the demand for modern healthcare products and services and improved medical assistance, especially in rural areasSuch demands have also generated safe transportation for pharmaceutical products and medical devicesAdditionally, healthcare manufacturers increasingly demand specialized healthcare logistics services to deliver efficient warehousing, transporting, and distribution services for large volumes of pharmaceuticals and medical devices to hospitals, home care patients, labs, and other healthcare facilitiesThe growing demand for temperaturecontrolled products, especially pharmaceutical products, and the development of numerous advanced human cellderived therapies have necessitated cold chain logistics.

RestraintsFluctuations in Fuel Prices

The fluctuations in fuel prices are one of the major challenges for transport and logistics companies with plans to hike the prices of their services to retain marginsFuel price accounts for about 40%–60of the operational costs of any individual transporter or logistics companyTypically, such fluctuations in fuel prices force logistics companies to either raise their service price or suffer lossesDue to rising fuel prices, pharmaceutical and medical device companies opt for sea freight shipping over shipping services by airways and railwaysAlso, rising fuel prices will trigger cost hikes for products such as medicines, appliances, and household consumablesFor logistics companies such as C.HRobinson, which specializes in truckload transportation (the largest source of the companys adjusted gross profits), fluctuating fuel prices may result in decreased adjusted gross profit marginsSuch fluctuations have also had a positive impact on some companies’ revenueSimilarly, in 2020, the fuel expenses of FedEx Corporation witnessed a decline of 19due to low fuel prices.

OpportunitiesImplementation of Unique Device Identification System

With the increasing pressure from federal organizations, vendors in the healthcare logistics market must adhere to the strict regulations governing the movement of medical devices and data collection through the distribution cycleUnique Device Identification system (UDIwas first implemented in the early 2000s by a global harmonization effort organized by the World Health Organization (WHO). The main purpose of this initiative was to facilitate a confluence in regulatory practices and standards related to the quality, performance, and safety of medical devicesAlso, Medical Device Regulations and guiding principles were published in 2003, which instituted a blueprint for harmonized national regulations of medical devices.

The full implementation of a UDI system will offer a comprehensive range of benefits to players in the healthcare logistics industry, consumers, healthcare providers, FDA, and health care systemsA UDI system offers a standardized identifier that allows healthcare facilities, distributors, and manufacturers to effectively manage medical device recalls and contribute to a secure distribution chain worldwide.

Scope of the Healthcare Logistics

The study categorizes the healthcare logistics market based on product, functionality, and endusers at the regional and global levels.

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By Product Outlook (Sales/Revenue, USD Million, 20172030)

  • Pharmaceuticals
  • Medical Devices

By Functionality Outlook (Sales/Revenue, USD Million, 20172030)

  • Transportation
  • Warehousing
  • Others

By EndUsers Outlook (Sales/Revenue, USD Million, 20172030)

  • Pharmacies
  • Healthcare Facilities
  • Research & Diagnostic Laboratories
  • Others

By Region Outlook (Sales, USD Million, 20172030)

  • North America (US, Canada, Mexico)
  • South America (Brazil, Argentina, Colombia, Peru, Rest of Latin America)
  • Europe (Germany, Italy, France, UK, Spain, Poland, Russia, Slovenia, Slovakia, Hungary, Czech Republic, Belgium, the Netherlands, Norway, Sweden, Denmark, Rest of Europe)
  • Asia Pacific (China, Japan, India, South Korea, Indonesia, Malaysia, Thailand, Vietnam, Myanmar, Cambodia, the Philippines, Singapore, Australia & New Zealand, Rest of Asia Pacific)
  • The Middle East & Africa (Saudi Arabia, UAE, South Africa, Northern Africa, Rest of MEA)

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By product, the pharmaceuticals segment is projected to account for the largest market share

The global healthcare logistics market is divided into pharmaceuticals and medical devices based on productIn 2021, Pharmaceuticals accounted for the largest market and had 60.7of the market shareVaccines and medicines contribute to the sustainability of healthcare systems by generating higher savings by decreasing costs in other parts of healthcare, such as hospital stays and longterm care costsUsually, the developing and the least developed countries have high marginal costs, which inflates the prices of essential drugsThis inflated cost includes import tariffs, valueadded taxes on medicines, distribution costs, port charges, and high margins in the retail and wholesale components of the supply chain.

In addition to the pharmaceutical market, the consumption of medicines worldwide is also increasing, partly attributable to the growing demand for pharmaceutical drugs among the geriatric population and patients with chronic diseases and changes in clinical practiceThe expanding global population also contributes to a significant rise in the consumption of pharmaceuticals due to the prevalence of various diseases among all age groups.

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Asia Pacific accounts for the highest CAGR during the forecast period

Based on the regions, the global healthcare logistics market has been segmented across North America, AsiaPacific, Europe, South America, and the Middle East & AfricaGlobally, Asia Pacific is estimated to hold the highest CAGR in the global healthcare logistics market during the forecast periodThe emerging Asian markets have proven to be of extreme interest to the pharmaceutical industryAt the same time, logistics providers face challenges due to the diverse market conditions, which are highly dependent on the maturity of the market and its political systemFor instance, the pharmaceutical industry in Australia requires different mechanisms than in China or IndiaThe increasing government spending on R&D initiatives and the growing health awareness among consumers, mainly in emerging markets such as India and China, are driving the regional market’s growth.

Additionally, Asian healthcare companies are compelled to cut their transportation costs to compete with the price pressures from the government, generic products competition, customers, and pharmaceutical companies (mostly American and European). Establishing a local manufacturing or packaging site within a market has become a common practice within the Asian pharmaceutical industryThese facilities often help meet the demands of the local markets and the neighboring countriesAnother strategy that is being commonly used is collaborating with a local logistics service provider (LSPfor distribution.

Key Market Players

Major key vendors in the market include AmerisourceBergen, Deutsch Post DHL, FedEx Corporation, CEVA Logistics, Kuehne Nagel, DB Schenker, C.HRobinson, DSV, Farmasoft, XPO Logistics, Cardinal Health, Owens & Minor, Lufthansa Cargo, Cold Chain Technologies, Medline, Oximio, Maersk, Alloga, Bollore Logistics, and PHEONIX Group. Every company follows its business strategy to attain the maximum market share.

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