Logistics & Supply Chain

Digitalization is changing supply chains in the healthcare industry

12.05.2016 -

Health care sets high requirements for logistics service providers. Particularly pharmaceuticals have high product values and strict legal regulations, which must be fulfilled during logistics performance. An unbroken cold chain and demonstrable compliance with qualitative standards are essential criteria in logistics of health-care products. With the increasing complexity of supply chains, safety risks of the products also rise in transport, storage and handling. This builds pressure on logistics service providers to meet customers’ current and future requirements.

Pursuant to official statistics, the value of production, imports and exports of health-care products continuously increased in Germany from 2009 to 2013. As the health-care industry is hardly influenced by the economy but closely connected to demographics and an aging population, a further positive effect on production and foreign trade of health-care products is expected.

Together with rising outsourcing by manufacturers, the importance of logistics service providers along the health-care supply chain will further grow. For that reason logistics service providers have to be prepared for challenges and adapt their service portfolio to specific needs of their customers.

A study of Fraunhofer SCS among 18 participants from logistics service providers and pharmaceutical wholesalers examines the current status of logistics service providers in health care and how their operations will change to meet future challenges.


The dominating mode of goods transportation in the health-care industry is by road. This mode will gain importance, the experts said. Especially in the pharmaceutical sector, the road is attractive, as the transport of pharmaceuticals is characterized by small product packages of high value. Additionally, the road is the only sensible approach to supply private customers and patients with medicines on the last mile, which is by far the most expensive part of distribution.

Airfreight also will gain importance, as it represents a reliable mode of transport for long distances and for sensible goods. The growing middle class of emerging economies increases its demand for pharmaceutical and medical products, which further strengthens the importance of airfreight. In addition, the survey shows that almost half of the logistics service providers use means of transport that are only partly customized to the requirements of health-care products. This means that a large part of the surveyed logistics service providers is not specialized enough to meet more individual needs of customers of the health-care industry.

Statistics show the significance of pharmaceutical products in Germany, as they represent more than half of the value of manufactured health-care products. Logistics service providers with their field of activity in the health-care sector offer their service range especially for pharmaceutical products. For more than 80% of the surveyed service providers, pharmaceuticals are part of the transported, stored and handled product portfolio. Therefore it is not surprising that pharmaceutical companies represent the most important customers and goods recipients of logistics service providers in the health-care industry.

E-Commerce Pushes Importance of Private Recipients

Logistics outsourcing is growing in the health-care industry. The surveyed experts expect a still (strong) rising importance of pharmaceutical companies (67%) as demanders of logistics services in the health-care industry.

Currently, private persons play a rather insignificant role, since they don’t appear as customers of any surveyed logistics service providers and are goods recipients for few logistics service providers. Nevertheless, in the future over 80% of the sample attribute a strong or very strong increase of importance of private persons/patients as customers and goods recipients. This development is particularly pushed by e-commerce and the growing use of mail-order pharmacies, which brings the supply of private persons with medical products into focus for logistics service providers.

Furthermore, the “digitalization” trend will be significant for the health-care supply chain. Digitalization supports medicine supply via telepharmacy. In combination with a pickup function for pharmaceuticals, telepharmaceutical services represent a particularly close competitor to general pharmacies and pharmaceutical wholesalers in the long term.

Effects Of Self-Medication

Furthermore, investigation on future issues in the medical and pharmaceutical sector shows that changes of the legal framework and entrepreneurial and business changes have decisive effects on the work of logistics service providers. (Fig. 2)

Changes as a consequence of medical progress are perceived as less concerning. Therefore changing disease patterns and personalized health care are being ascribed as comparatively less important.

Additionally, increasingly well-informed patients represent only a small challenge in the next 10 years. This is quite surprising as digitalization is triggering the trend of more people tracking their health and bodily functions with the consequence of being better informed about their health status. This development might push the booming self-medication trend and could lead to a growing demand of over-the-counter (OTC) medicines and to increasing use of mail-order pharmacies.

Once more, private persons and patients can be recognized as important actors within the health-care supply chain. Nevertheless, the future influence of changes in the course of medical progress is currently not recognized by the surveyed logistics service providers.

Technological Innovations for Safety Improvements

Logistics service providers cannot do business without communication or monitoring technology. As health-care products are particularly sensitive goods, the use of technologies is an essential monitoring tool for product quality.

Tracking and tracing systems are used by over 80% of the surveyed logistics service providers. Surveillance systems to secure products from spoilage and unauthorized access are comparably less available. However, in the future the surveyed logistics experts expect a strong increase in the importance of new technological innovations in this field (63%).

Tamper-proofed packaging represents a good solution to improve the safety of pharmaceutical products and to fight the booming trade in counterfeit medicines. Nevertheless, innovative packaging systems are currently used by just over half of the participants. Therefore it is surprising that the logistics service providers expect a comparatively small growth in the importance of such systems.

For the majority of the surveyed logistics service providers, health care is an important business area. According to the respondents, the importance of health care will increase in the next 10 years and become an even more important business sector for them. An aging population will demand even more health-care products and services.

Not surprisingly, logistics service providers that already generate more than 50% of their turnover in the field of health care assess the health-care segment as very important for their companies’ business now and in the future. Even logistics service providers that are not focused on health-care logistics and assess the importance of health care as neutral for their companies predict a high importance of health-care logistics for their futures.

Specialized Logistics Service Providers

The market for health-care products offers excellent long-term growth prospects. This strengthens the need for specialized logistics service providers. Especially with larger sales volumes and the increasing complexity of supply chains, ensuring the safety and integrity of every single product is getting more challenging. Furthermore, because of trends like digitalization and e-commerce that become more and more perceptible, manufacturers of the health-care industry pursue a multichannel distribution strategy that leads to changing supply chains.

Private persons and patients come into focus as customers become goods recipients of logistics service providers. This means that courier, express and parcel services have to be prepared for small product packages of high value with special needs like cooling or compliance with hygienic standards. Together with strict legal specifications and monitoring technologies, health-care products must meet high requirements in their transportation, storage and handling when compared with other products.

To set themselves apart, logistics service providers can pursue different strategies, for example, the use of innovative technologies, the optimization of processes or the expansion of services. Logistics service providers already use some of these strategies but must implement them more consistently in the near future.