Acquisitions and Organic Growth to Help Company Meet Challenging 2026 Goal, Vice President Daniel Gannon Tells Supply Chain Dive
# UPS Aims to Double Its Medical Logistics Business
Through acquisitions and organic growth, UPS plans to achieve this challenging goal by 2026. Vice President Daniel Gagnon told Supply Chain Dive in an interview.
Published on October 7, 2024
**UPS is enhancing its medical logistics business through internal expansion and external acquisitions, aiming to increase parcel delivery activities in a more profitable and stable sector.**
This strategy aligns with an ambitious goal: the company aims to achieve $20 billion in annual healthcare revenue by 2026, doubling the figure from 2023.
“I won’t hide that this target is somewhat nerve-wracking,” said Daniel Gagnon, UPS Healthcare’s Vice President of Global Strategy and Acquisitions. “It is indeed a very, very big ask.”
However, Gagnon stated that the UPS Healthcare team believes they can achieve the revenue doubling goal by finding an appropriate balance between organic and non-organic growth.
In terms of organic growth, or expanding its network through internal capabilities, UPS has targeted Europe this year. The company opened its first dedicated healthcare facility in Ireland and expanded its flagship facility in the Netherlands with ultra-low temperature storage capacity to meet the demands of complex biopharmaceutical products.
Regarding non-organic growth or acquisitions, recent examples include several suppliers with strong cold chain capabilities across multiple countries.
###### Recent Medical Logistics Acquisitions by UPS
| Acquisition | Capabilities |
| — | — |
| MNX Global Logistics | Radiopharmaceuticals and temperature-controlled logistics |
| Bomi Group | Temperature-controlled facilities in 14 countries |
| Transports Chabas Santé’s healthcare division | Temperature-controlled transportation solutions for pharmaceuticals and medical products in southern France |
| Frigo-Trans* | Temperature-sensitive and time-critical pharmaceutical logistics across Europe |
*The acquisition of Frigo-Trans is expected to be completed in the first quarter of 2025.
While both organic and non-organic growth have their advantages, Gagnon noted that UPS typically relies on non-organic medical growth when rapid expansion or local expertise is needed.
“The EU has 27 countries, each with a different understanding of how things are executed, whether from a regulatory perspective or a customer perspective,” said Gagnon. “Therefore, local knowledge is crucial.”
Acquisitions require additional effort in understanding customers from the previous owners. When UPS acquires new shippers through company purchases, it meets with them to better understand their business priorities—whether expansion or cost reduction—and develops logistics strategies aligned with their goals, according to Gagnon.
This extra effort is worthwhile for UPS because the healthcare sector offers higher profit margins compared to other sectors such as e-commerce. CEO Carol Tome stated at the company’s March investor day that healthcare services have high-profit margins. Increasing medical deliveries can alleviate pressure on per-package revenue from e-commerce shippers like Temu and Shein.
The healthcare industry also provides more stable demand compared to the retail sector, according to Gagnon. Retailers experience a surge in packages during peak holiday seasons but are more susceptible to economic fluctuations.
“The healthcare industry is often very stable,” said Gagnon. “It’s not recession-proof, but it is recession-resistant, so it tends to be less affected by economic changes.”
Other carriers have also been attracted to the healthcare sector and have enhanced their logistics capabilities accordingly. FedEx saw strong demand for its “premium” medical business, which exceeded $500 million in fiscal year 2024, through its FedEx Surround service that offers real-time shipment visibility. DHL launched a new cold chain service in 2023, primarily serving healthcare giants like Siemens and Eli Lilly.
Gagnon mentioned that UPS uses its end-to-end service suite to attract major manufacturers of medical devices and pharmaceuticals. While the needs of top healthcare clients vary, they often seek logistics partners who can provide high levels of visibility and consistent on-time delivery, he added.
One product Gagnon highlighted is UPS Premier, which uses RFID and cellular sensor technology to notify network operators when a package contains urgent or temperature-sensitive materials. It also provides precise location information, such as the exact position of a package on an aircraft during transportation issues like bad weather, enabling timely intervention. This helps ensure potentially life-saving deliveries reach their final recipients under difficult conditions.
“This allows me as an operator to ensure every package gets through to its next destination,” said Gagnon.
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Source: Supply Chain Dive
