UPS and Merck expand their distribution and logistics agreement

UPS (NYSE: UPS) and Merck (NYSE:MRK), known as MSD outside the United States and Canada, today announced that the companies have significantly broadened their existing distribution and logistics agreement to include aspects of Merck’s global supply chain around the world. UPS currently manages the distribution, warehousing and transportation of Merck’s medicines and vaccines in North America.

This expanded agreement with UPS allows us to focus on our core business as a global healthcare leader that looks for innovative ways to bring our medicines and vaccines to patients in emerging markets and markets around the world,” said Willie A. Deese, executive vice president and president, Merck Manufacturing Division. “UPS has the proven logistics expertise to deliver Merck’s products with speed, consistency and care to our customers and patients.”

The UPS-Merck collaboration began in 2003 with package transportation and delivery services in the United States. The agreement expanded over time to include North American distribution, warehousing and multi-modal transportation services. UPS will now provide these services in certain markets in Asia and Latin America, including the emerging markets of China and Brazil. UPS also is providing transportation services in Europe.

“The UPS-Merck collaboration brings together the expertise of two companies that are globally strong, customer-focused and committed to driving positive change in the healthcare supply chain,” said Kurt Kuehn, UPS chief financial officer. “UPS is investing deeply to align the broad range of capabilities that we’ve developed to meet the very unique needs of this industry.”

Innovative solutions to better meet customer needs are already underway in China and Brazil where UPS is establishing a distribution center to support Merck’s manufacturing and packaging facilities as a way to help speed delivery of Merck products in those markets. In certain other markets such as the United States and Canada, UPS is managing warehousing operations for Merck products that require strict temperature and environmental controls, including vaccines and specialty pharmaceutical products.

Merck expects to realize long term cost efficiencies as a result of the expanded agreement with UPS. Financial details of the agreement were not disclosed. Meanwhile, Merck does maintain distribution agreements with other logistics and delivery providers.