FedEx is chasing the GLP-1 boom. Why healthcare logistics means big business
The boom in GLP-1 weight loss drugs and other specialty drugs has created lucrative logistics opportunities in an industry that pays a premium on reliability, visibility and regulatory know-how. The expertise required to properly transport these temperature-sensitive treatments is just part of the reason why FedEx created a dedicated unit to manage what has become a $10 billion-a-year business, representing more than 10% of annual revenue. Earlier this month, the company launched FedEx Life Sciences, building on years of healthcare investments to provide controlled environments, rapid transportation, and continuous end-to-end monitoring from manufacturing facilities to warehouses, laboratories, pharmacies, and patients. The announcement marks FedEx’s latest move to support business-to-business healthcare shipping, one of four B2B sectors the company is prioritizing. Automotive, aerospace and data centers are the other three. Management believes that increased revenue from these important industries can lead to faster growth, stronger margins and more stable demand that is less dependent on ups and downs in consumer spending. Healthcare and life sciences are “a big growth market that FedEx can attack,” Chief Customer Officer Brie Carere told CNBC. He called Club’s FedEx name “incredibly well-positioned,” given the company’s cutting-edge supply chain tracking technology and the air and ground capabilities needed to ensure the safe end-to-end transportation of drugs, biologics and clinical trial materials, called cold chain corridors. Biologics are treatments such as vaccines and gene therapies that are made from living organisms. “This is security, compliance, [and] Carere said the goal is not just to charge a premium for transporting sensitive drugs, but to help pharmaceutical companies reduce overall costs by reducing product loss and preventing compliance issues, which ultimately reduces waste and service costs. Healthcare transportation represents an $80 billion market opportunity growing at a compound annual growth rate (CAGR) of 7% over the next six years, Carere said. Some of the hottest segments, including GLP-1s like Eli Lilly’s, are growing even faster. Mounjaro for diabetes and Zepbound for obesity – about 20% and cell and gene therapies about 25%. This safety, compatibility and temperature regulation inherently comes with a value and a higher price. FedEx Chief Customer Officer Brie Carere FedEx last month announced a $48 million expansion of its temperature-controlled healthcare network, adding dedicated facilities in Europe, Asia and the Americas. “They’re both playing in their own lane a little bit and they’re not necessarily competing for the same type of business,” Deutsche Bank analyst Richa Harnain said. UPS said its healthcare business generates $11.2 billion in revenue in 2025. Another player in the industry is global healthcare provider Cardinal Health, which does some of the logistics and transportation of pharmaceuticals and medical supplies as part of its business, said Cardinal, which is also a Club name, is also a customer and a strategic collaborator. Lora Cecere, founder of Supply Chain Insights, formed a partnership in 2013 to give mutual customers access to dozens of warehouses and distribution centers across the United States. The rise of biologics and personalized medicines, along with an aging population, have “increased exponentially over the last few years” and are leading to the transformation of healthcare supply chains, experts said. Healthcare logistics “is a richer supply chain in terms of profit and margin opportunity,” Cecere told CNBC in an interview. He said “the pharmaceutical industry has the ability to pay” because the industry’s profit margins are the highest of all major manufacturing industries. The high value of biologics and other specialty drugs means the cost of a failed shipment can far outweigh the cost of first-class shipping, he explained. While business-to-consumer (B2C) shipments — think of your online grocery order arriving at your doorstep — the company is moving more into more profitable B2B shipments. These high-margin verticals are at FedEx Express, which accounted for about 86% of total revenue in the company’s fiscal 2026 fourth quarter, which ended May 31 and was reported in late June. FedEx Freight, which became a separate publicly traded company on June 1, will not be included in future results. Although FedEx doesn’t have a clean revenue split between B2C and B2B by segment, CEO Raj Subramanian said during the company’s fiscal 2026 third-quarter earnings in March: “It’s nearly half of our revenue growth.” [was] A narrower focus on these specialized B2B segments is now a key part of the company’s plan to make more money. At its investor day in February, FedEx said it plans to reach $98 billion in revenue by 2029 through premium B2B and B2C volumes. Following the FDXF split, FedEx pegged its current annual revenue at approximately $86 billion. As the science got better, the need for cold chain reliability also increased, Supply Chain Insights founder Lora Cecere said While the company has always had healthcare sales and marketing, the launch of FedEx Life Sciences brings together that operation and engineering and quality teams into a single organization built specifically around pharmaceutical customers. FedEx is adding specialized expertise to its existing global transportation system to better manage patient-critical shipments. “It’s the top priority out of the 18 million packages we flow through every day,” Carere said. “We’re really focused on being the world’s industrial network.” He said cold storage capacity was being added to centers around the world, focusing on major pharmaceutical trade routes rather than building indiscriminately everywhere. For years, FedEx has had a dedicated healthcare warehouse at its global base in Memphis, Tennessee, that includes storage areas in five different temperature ranges. This includes a freezing minus 150 degrees Celsius, equal to minus 238 degrees Fahrenheit — colder than the average temperature of Saturn, a planet 793 million miles from Earth from the Sun. FedEx believes it can manage nearly every phase of pharmaceutical shipping under one roof, from global air transportation and small package delivery to customs clearance and quality control. Global reach has become much more important, Carere said. FedEx’s technology is another competitive advantage, according to Carere, who is also co-CEO of FedEx Services, as the less control FedEx has over sensitive shipments from origin to destination and the lower the risk of something going wrong, the more the carrier can navigate major pharmaceutical trade routes including package delivery, global air transportation and customs clearance. Across the company’s operating units, about 40% of its healthcare customers use FedEx surround, a real-time shipment tracking platform that uses machine learning to predict outages before they occur, he said. According to Cecere of Supply Chain Insights, “predictive analytics capability through artificial intelligence is a great opportunity to be able to deliver safely and securely.” This is important for healthcare companies because if a delay threatens a temperature-sensitive shipment, the package can be rerouted or returned to the sender before the medicine is delivered. FedEx has another real-time tracking tool called SenseAware for shipments that require more advanced tracking and higher security and quality assurance. Deutsche Bank’s Harnain said the two tools are “the kind of technology that healthcare customers, in particular, will appreciate from FedEx.” We see that UPS offers a tracking and management tool that offers visibility and control for small package shipments. We believe FedEx’s premium services provide greater value. At last week’s July Monthly Meeting, Jim Cramer said that as independent companies they can focus on what makes sense for their different businesses, proving that its investments in healthcare can translate into sustainable market share gains and further enhance the company’s growth profile. FedEx shares are up 35% year-over-year since its debut, but that’s not unusual as the stock has found a dedicated investor base. We bought some more FDXF on Friday, thinking the sell-off was overdone (Jim Cramer’s Charitable Trust is long FDX, FDXF, CAH. See here for a full list of stocks.) At the Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a transaction alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trading alert before executing the trade. 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