Dive Brief:
- DHL Supply Chain plans to invest $150 million to expand its distribution network of medical devices and pharmaceutical supplies by 40%, the company said in a press release.
- The logistics provider will add nine new sites dedicated specifically to healthcare product distribution by the end of the year, bringing its total of such sites to 30 in the U.S.
- The investment will cover new buildings and technology in addition to the expansion of existing operations. DHL will invest in markets located in California, Indiana, North Carolina, Tennessee, Pennsylvania and Virginia.
Dive Insight:
Many 3PLs see life sciences supply chains as lucrative business opportunities, due to the complex regulations and logistics surrounding the transport of medical devices and pharmaceuticals. The cold chain must move quickly yet meticulously to prevent damage to products.
The logistics market for pharmaceutical and medical products is expected to grow annually at a rate of 4.5% from 2018 to 2022, according to a report from Research and Markets. The market is highly fragmented, the report said, driving logistics players to invest in temperature-controlled supply chains and specialized facilities to gain a greater share of the growing pie.
DHL boasts myriad services in the life sciences sector, including temperature-controlled air and ocean freight, warehousing and end-to-end supply chain management services. In fact, life sciences is the fastest growing sector at DHL Supply Chain. The unit accounts for 10% of its business in North America and is growing at 15% annually.
DHL Supply Chain is betting on its $150 million investment to sustain or even increase that growth rate, as competitors like UPS and FedEx also invest in life sciences supply chains. Even Amazon dipped its toes into the medical supply chain business last year.
