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UPS Survey: Global Healthcare Executives Drive Supply Chain Transformation
Press Release

Investments Planned in Areas Such as Technology Amid Growing Concerns over Product Protection, Global Regulatory Environment

ATLANTA, USA, Sept. 17, 2013 UPS (NYSE: UPS) - Changing regulatory environments, new customer demands around the globe, challenges around product security and increasingly complex products are driving healthcare executives to make strategic supply chain investments, according to findings from the sixth annual UPS "Pain in the (Supply) Chain" healthcare survey, conducted by TNS. New technology investments and go-to-market models are top of mind as healthcare executives drive business and logistics transformations to meet evolving industry needs.

Over the next five years, 84 percent of global healthcare executives surveyed will invest in new technologies, 78 percent will enter new global markets and 70 percent will implement new distribution channels such as going direct to providers, retailers and even end-patients. In addition, 59 percent will increase reliance on third-party logistics partners. Together, these strategies indicate a move toward transformation in the healthcare supply chain.

Technology investments, in particular, signal growing concerns over product protection, which includes the security of high-value shipments and product spoilage, with large jumps in the number of executives planning to invest over the next three to five years in systems that support e-pedigree/ serialization, temperature control and product security.

For the first time since the survey's inception in 2008, product security surpassed cost management as the second supply chain concern with 53 percent of executives citing it as a top issue. Executives face challenges in product security with the top concern being increasing counterfeit sophistication at 48 percent, followed by poor supply chain visibility, with 40 percent citing it as an issue.

From a future global business challenge standpoint, increasing regulations are the top concern, as reported by 48 percent of those surveyed. Concerns over healthcare reform and legislation closely follow at 46 percent, and 40 percent of executives worldwide are also worried about intellectual property protection.

"Healthcare companies are balancing a number of priorities related to capturing business growth opportunities in new markets, protecting increasingly sophisticated and high-value products and navigating a complex regulatory environment worldwide," said Bill Hook, vice president, global strategy, UPS Healthcare Logistics. "These trends have also been shaping UPS's solutions to ensure we remain the logistics provider of choice for the healthcare industry. As the industry shifts to meet new customer and market demands, executives are investing in transformative supply chain strategies and strategic partnerships that will help them achieve long-term business goals."

Global market expansion a top plan for executives in Europe
When considering plans over the next three to five years, 74% of European executives indicated that they plan to invest in global market expansion and almost 30% plan to expand to China, making it the top market for expansion. In addition, executives are also planning to increase supply chain investments to ramp up efficiencies and competitiveness. In the coming years, 67% will make IT investments and 55% will enter into partnerships with distribution firms.

Top global supply chain pain points
The number one supply chain concern globally continues to be regulatory compliance, cited by 63 percent as a challenge. Navigating country regulations are also the top barrier to global expansion, cited by 47 percent of those surveyed. As noted above, product security is the number two supply chain concern, followed by cost management, with 53 percent and 51 percent of executives respectively citing these as issues.

"Globally, we are seeing consistency in the top supply chain pain points year over year, and we anticipate continued elevation in concern levels over regulatory compliance and product protection as supply chains grow in complexity and length," said, Robin Hooker, director, global strategy, UPS Healthcare Logistics . "The good news is that executives are seeing success in addressing these issues through increasingly sophisticated technology solutions, accessing regulatory expertise and forming strategic partnerships with third-party logistics providers. We've also seen these trends and insights in practice throughout our business model worldwide." 

For more information on the UPS Pain in the (Supply) Chain survey and to download an executive summary, visit www.pressroom.ups.com/healthcare.

UPS (NYSE: UPS) is a global leader in logistics, offering a broad range of solutions including the transportation of packages and freight; the facilitation of international trade, and the deployment of advanced technology to more efficiently manage the world of business. Headquartered in Atlanta, USA, UPS serves more than 220 countries and territories worldwide. The company can be found on the Web at UPS.com and its corporate blog can be found at blog.ups.com. To get UPS news direct, visit pressroom.ups.com/RSS.

Editor's note:
Survey Methodology
The UPS Pain in the (Supply) Chain survey was a blind, in-depth phone survey conducted by TNS on behalf of UPS of approximately 441 healthcare executives in the U.S. and Canada, Western Europe, Asia and Latin America. Qualified respondents were senior-level decision-makers responsible for supply chain and logistics in the pharmaceutical, medical device and biotech industries. Surveys were conducted in February-April 2013.

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