Concerns Around Intellectual Property Protection, Competition and Healthcare Reform Loom Healthcare executives in the U.S., Europe and Asia are seeing both risks and opportunities as the pace of change in the healthcare industry accelerates globally, according to a new UPS survey. Facing unprecedented demands to reduce costs, keep up with fast-changing regulatory requirements and ramp up innovation in the age of patent expirations and increased competition, executives are making investment plans and looking to protect their intellectual property and market share. A focus on intellectual property protection emerged as a global healthcare industry priority, cited by 43 percent of respondents as a top business concern. Patent expirations also ranked high among pharmaceutical and biotech company concerns, cited by 43 percent of these respondents. The No. 1 business concern for healthcare executives globally is change in healthcare legislation/reform, cited by 52 percent of respondents, followed by increasing regulations at 48 percent. Among U.S. companies, concerns around reform have risen since 2010, with 60 percent reporting concern in 2011 versus 55 percent last year. Changes in healthcare legislation/reform also was cited as the greatest perceived barrier to providing quality and affordable healthcare by 47 percent of respondents. The annual survey, known as the UPS "Pain in the (Supply) Chain" survey, questioned senior-level healthcare supply chain executives at pharmaceutical, biotech and medical device companies in the U.S., Europe and Asia. Now in its fourth year, the survey was conducted by TNS and expanded globally for the first time in 2011. Amidst industry pressures and change, healthcare executives also are focused on investing in their supply chains to increase their competitiveness. Technology investments ranked as the No. 1 strategy, with 86 percent of respondents reporting that they would invest in new technologies over the next three to five years. Tapping into new global markets was the second top strategy for increasing competitiveness, with 81 percent of respondents reporting plans to expand in new areas in the next three to five years. "Change is the only constant in healthcare today and it is happening on a global scale, driven by factors such as cost, regulatory pressures and global expansion," said Bill Hook, vice president, global strategy, UPS Healthcare Logistics. "Going forward, companies have to find new ways to innovate and adapt to rapid market changes and this is where the supply chain plays a pivotal role. UPS helps healthcare companies leverage logistics to do things such as expand into new markets faster, implement greater supply chain efficiencies and improve the customer experience, leading to competitive advantages." Global trends Healthcare companies remain heavily focused on global expansion, with the top five markets for growth cited as the U.S., China, India, Japan and Brazil. Interestingly, companies in Asia are more focused on global expansion than those in the U.S., with 75 percent of healthcare executives in Asia having recently expanded into new global markets to increase their competitiveness versus 58 percent in the U.S. Several other interesting differences arose between regions. When asked about business concerns, only 30 percent of U.S. company respondents had concerns about increasing competition versus 51 percent in Asia. Around the issue of intellectual property protection, 50 percent of companies in Asia reporting concerns versus only 34 percent in Europe. There were other key differences in supply chain concerns as well. Companies in Asia were much more concerned about product security as a supply chain issue, with 71 percent reporting high concern versus 53 percent in the U.S. and 51 percent in Europe. Product damage and spoilage was a much larger issue of concern in Asia and the U.S. than in Europe, with 70 percent and 67 percent of Asian and U.S. companies, respectively, reporting concerns versus only 27 percent in Europe. Supply chain pains With extended supply chains due to globalization and the introduction of more specialized products into the marketplace, concerns over regulatory compliance, product integrity and security all remain at the top of supply chain concerns again this year. Regulatory compliance is the No. 1 supply chain concern cited by 73 percent of respondents. Product security was cited as a concern by 61 percent and product damage / spoilage by 56 percent. Managing supply chain costs came in second overall, with 64 percent of healthcare executives rating this as a top supply chain concern. Comparing year-over-year trends, companies remain highly concerned about the issue of supply chain cost management but report limited success in addressing this issue. Only 42 percent of global executives surveyed in 2011 reported success in supply chain cost management. In the U.S., however, companies appear to be getting better at cost management, with 53 percent of U.S. executives reporting success in this area in 2011 versus 44 percent in 2010. For more information on these findings and to download an executive summary of survey results, visit pressroom.ups.com/healthcare. # # # 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 250 companies in the U.S., Europe and Asia. Qualified respondents were senior-level decision makers responsible for supply chain and logistics in the pharmaceutical, medical device and biotech industries.