UPS, Lufthansa seize Asian logistics opportunity

A "long gradual process ... to rationalize pharmaceutical manufacturing" worldwide is driving demand for drug shipping services, says Sanford Bernstein analyst Jack Scannell, according to a Bloomberg report. Site consolidation combined with growth in generics has highlighted infrastructure shortcomings in Asia in general and India in particular.

Where local development efforts are falling short, air carriers are stepping in to feather the nest. United Parcel Service ($UPS) and Deutsche Lufthansa ($DLAKY) are notable among those making investments. Their targets are facilities, cold chain capabilities and aircraft. UPS spending has focused on 5 new facilities in the past year, Reuters reports, and Lufthansa began operating a pharma hub in Hyderabad last May.

"Just about every airline is looking at this space," explains Dan Gagnon of UPS. The carrier is working on "deals to improve its Asian facilities," the report said, and Gagnon anticipates an announcement in about a month.

Market watcher Transport Intelligence expects pharma logistics growth of 12% this year to $63 billion; growth of nearly 8% per year through 2015 is expected to produce an $84 billion market, according to the report. Outsourcing to India and China, as well as Brazil, are the drivers.

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