Healthcare Third-party Logistics Market Size, Share & Trends Analysis Report By Industry (Biopharmaceutical, Pharmaceutical, Medical Device), By Supply Chain, By Service Type, By Region, And Segment Forecasts, 2022 - 2030

Report Overview

The global healthcare third-party logistics market size was valued at USD 191.4 million in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 7.6% from 2022 to 2030. The rising trend of outsourcing logistics and the increasing use of advanced technology by integrating information between manufacturers, suppliers, retailers, and wholesalers have led to the growth of the industry. Also, there is increasing usage of retrieval systems and automated storage that has gained significant traction among pharmaceutical logistics companies. The COVID-19 pandemic has also boosted the demand for third-party logistics (3PL).

During the pandemic, the 3PL players were able to handle the growing demand for healthcare supplies to prevent the pandemic by minimizing supply chain disruptions. They also formed close partnerships with suppliers and added specialized value-based services that helped them generate a good profit. They also collaborated with COVID-19 vaccine providers to supply them across the globe. For instance, in December 2020, FedEx collaborated with UPS for the supply of the COVID-19 vaccine that had received emergency use authorization by the US Food and Drug Administration and was produced by Pfizer-BioNTech.

The 3PL services help lower the company's operating costs, mainly through two methods. First, 3PL firms usually provide comprehensive warehousing and transportation services for their customers. Therefore, for the companies that use 3PL services, the capital and operational costs such as employee training costs, salaries of logistics personnel, and purchases of transportation trucks and warehouse construction get saved. Second, by eliminating unnecessary distributors from the circulation link, third-party logistics providers can significantly reduce information asymmetry and transaction costs. As a result, they can help businesses lower their operational costs.

However, a company gives up some control over the delivery when they choose a 3PL provider. When a company chooses to work with a third-party logistics provider (3PL), they are placing a great deal of faith in the 3PL to adhere to the agreed-upon rules for operations that may have a significant impact on customer satisfaction. Critical data exchanges might not go well. Furthermore, disclosing confidential data to a third party (such as sourcing or order details) may make businesses feel exposed in the event of a data breach.

Industry Insights

The biopharmaceutical segment accounted for the largest revenue share of 62.6% in 2021. The growth of the biopharmaceutical third-party logistics (3PL) market is being driven by factors such as the increasing demand for temperature-controlled logistics services to expanding distribution networks of biopharmaceutical companies to increase their sales and transport biologics in various geographical areas.

The medical devices segment is anticipated to register the fastest CAGR of 11.1% during the forecast period. The rising use of homecare medical devices for the growing geriatric population, increasing focus on personalized medicine by using health trackers and remote patient monitoring devices, and rising supply chain resilience and agility to overcome medical device shortages are the major driving factors.

For instance, in July 2021, the FDA announced a budget of USD 21.6 million for 2022 as a part of its Shortage Prevention and Resilient Supply Chain Program. The main aim of the program is to strengthen the supply chain. Moreover, increasing government initiatives for developing the medical devices industry by building Medtech parks for manufacturers to develop their base for R&D are expected to drive growth.

For instance, in India, MedSpark, one of the first medical device parks in the country, was established in 2020. This will help in the growth of the medical device industry and in turn, will contribute to the growth of the medical device segment during the forecast period.

Supply chain Insights

The non-cold chain segment held the largest revenue share of 80.2% in 2021. This is due to greater scalability, improved visibility, and lower operating expenses, all of which contribute to the growth of a more robust logistics network with higher returns and lower risks. As a result, 3PL has become a crucial component of pharmaceutical companies' business strategies. The growth in the number of SKUs per distributor that do not require temperature-controlled transportation, unlike biologics, is another factor that has fueled the expansion of the non-cold chain segment.

The cold chain supply chain is expected to register the fastest CAGR of 10.5% during the forecast period. This is mainly due to the rise in demand for biologics, a brand-new class of pharmaceuticals that has grown quickly in recent years. Aside from biologics, the healthcare 3PL market has witnessed the emergence of various types of precision medicine such as blood products, biomarker testing, specific vaccines, cellular therapies, and regenerative medicine in the form of stem cells. These drugs require both temperature- and time-controlled distribution.

Service Type Insights

The warehousing and storage segment dominated with the largest revenue share of 43.4% in 2021. The healthcare industry is using 3PL services to lower overhead operating costs and expenditures. Due to an increase in demand, service providers have introduced several value-added services to their menus, such as packaging and warehousing. Additionally, the suppliers have installed barcode scanners and robots for picking and aligning the products from far-off areas to lessen the burden and speed up turnover.

The other services are anticipated to register the fastest CAGR of 8.4% during the forecast period. This segment includes packaging, custom & duty management, procurement services, and a few other value-added services. Packaging is one of the crucial elements of healthcare logistics since the transportation of healthcare products not only depends on the storage facilities but primarily on the packaging of the product.

Regional Insights

North America led with a revenue share of 42.0% in 2021. This high revenue share is mostly due to the region's dominance in pharmaceutical and biologic medications as well as a surge in exports and imports of biopharmaceuticals. The adoption of new technologies is relatively high in the region due to the high cost of healthcare. As a result, healthcare businesses with operations in North America are increasingly depending on 3PL service providers to optimize warehousing and transportation, which is fueling regional growth. The presence of prominent firms in this area is another factor contributing to the dominance of this regional segment.

Asia Pacific is expected to register a CAGR of 9.1% during the forecast period owing to the rising demand for cold storage facilities, increasing adoption rate of technologically advanced facilities, and rise in merger & acquisition activities by industry players. For instance, in February 2021, Asian logistics provider Apex International Corporation was bought by Kuehne+Nagel, one of the top logistics firms that specialize in integrated logistics solutions. The main aim of this acquisition is to assist the company in providing customers with a compelling offering, particularly in e-commerce fulfillment, high technology, and e-mobility.

Key Companies & Market Share Insights

The key players focus on expanding their facilities, collaborations, partnerships, and mergers and acquisitions. These are the key strategic initiatives influencing the industry dynamics. For instance, in July 2021, DHL announced the opening of its first temperature-controlled facility in Hyderabad, India. The facility provides end-to-end product integrity safety and the products are kept at various temperatures up to -20̊ C. Some prominent players in the global healthcare third-party logistics market include:

• Cardinal Health

• DHL International GmbH

• Agility

• SF Express

• Kinesis Medical B.V.

• United Parcel Service of America, Inc.

• Barrett Distribution

• AmerisourceBergen Corporation

• DB Schenker

• FedEx.

• KUEHNE + NAGEL

• Kerry Logistics Network Ltd.

• Freight Logistics Solutions

  Healthcare Third-party Logistics Market Report Scope

Global Healthcare Third-party Logistics Market Segmentation

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global healthcare third-party logistics market report based on industry, supply chain, service type, and region:

• Industry Outlook (Revenue, USD Million, 2018 - 2030)        

  • Biopharmaceutical

  • Pharmaceutical

  • Medical Device

• Supply Chain Outlook (Revenue, USD Million, 2018 - 2030)          

  • Cold Chain Logistics

  • Non-Cold Chain Logistics

• Services Type Outlook (Revenue, USD Million, 2018 - 2030)          

  • Transportation

    • Air Freight

    • Sea Freight

    • Overland

  • Warehousing & Storage

  • Other Services

• Regional Outlook (Revenue, USD Million, 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

    • Italy

    • Spain

  • Asia Pacific

    • China

    • India

    • Japan

    • South Korea

    • Australia

  • Latin America

    • Brazil

    • Mexico

    • Argentina

  • Middle East & Africa

    • South Africa

    • Saudi Arabia

    • UAE