Why UPS Is Acquiring Marken
Logistics giant UPS (NYSE:UPS) announced its plans strengthen its healthcare offerings by acquiring Marken, a U.K based supply chain provider to the life sciences industry. [1] The company did not disclose the financial details of the transaction, but expects the deal to be completed by December 31st, subject to regulatory approval. Post the acquisition, Marken is expected to continue as a wholly owned subsidiary of UPS.
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Importance Of Healthcare Industry To UPS
In the past, UPS has continually stated the importance of the healthcare sector to the company’s top line, and has made efforts to strengthen its offerings for the sector. Last year, the company opened its first medical device facility in New Jersey, which shipped not only high-end drugs but also medical equipment. In its second quarter earnings call, the company hailed healthcare as the biggest revenue contributor in the contract logistics sector. Moreover, the company shed light on the host of measures it had taken to improve its position in the healthcare sector, such as providing specialized global services for healthcare companies performing clinical trials and expanding warehouses for medical device distributors in Europe.((UPS Q2 Earnings Transcript, Seeking Alpha, July 30th 2016)) Additionally, the company has stated that the healthcare sector is a $72 billion opportunity for it. The latest acquisition is a step to consolidate its offerings for this sector.
The global pharmacy sector, currently valued at $1.1 trillion, is expected to grow $1.4 trillion by 2020. [2] With this growth, the need for specialized shipping solutions for drugs and medical equipments is bound to grow. UPS, with its expertise in logistics, is set to gain from this growth.
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Notes:- UPS to Acquire Marken, UPS Pressroom, November 7 2016 [↩]
- Pharmaceutical Cold Chain Logistics is $12.6 billion industry, Pharmaceutical Commerce, April 16 2016 [↩]