Logistics Becomes The Rising Star In Pharma

Pharmaceutical product development is changing. The need to produce significantly higher potency large molecule biopharmaceutical drugs to improve efficacy and tailor drugs to the individual needs of a patient puts new pressure on transportation and shipping. Why? The reason is that these newer more complex protein based drugs are highly sensitive to temperature changes, and are often required to be shipped under strict temperature control of typically 2° to 8°C.

Recent research says that the global biopharmaceuticals market was worth US$136 billion in 2014 and is expected to experience a healthy growth rate in the future. In addition to higher potency, efficacy and more personalization, other key factors that will contribute to the growth of the biopharmaceuticals industry include higher approval success rates and significantly higher cost of therapy compared to traditional medications.

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These biopharmaceuticals, being protein based, are highly sensitive to temperature changes, so any excursions in their ideal storage or transportation temperature s can disrupt their protein structure and make them ineffective.

Other key trends impacting the supply chain includes factors like the entry of biosimilars or generic versions of biological drugs which have already been launched in the US, Europe and other major healthcare markets; the increase in outsourcing trends of biopharmaceutical manufacturing to offshore locations; and biopharmaceutical manufacturing plants are now concentrated in a few regions, but their end-use markets diversified across the globe.

Trends point to more importance for logistics

All this amounts to placing logistics higher up in priority in the pharmaceutical business. The industry trends highlighted will create huge demand for efficient cold chain logistics services in the biopharmaceuticals industry, as well as for clinical trial materials and vaccines. Research from IMARC Group suggests that the global healthcare cold chain logistics services market will grow to almost US$13.4 billion by 2020, up from its current figure of US$8.5 billion.

With logistics becoming more important – and critical – in the supply chain, the cost of maintaining strict environmental and temperature conditions also becomes a larger element of the cost of the overall cost of supply a drug. In larger organizations, proper cold logistics might add between 30-50 percent additional cost, especially as a result of the new strict shipping conditions being required to address the new trends in drugs as mentioned above.

Hence logistics has become serious business for many pharmaceutical companies, and as a result, company boards have also responded, with logistics executives increasingly being elevated to board positions. One major Israeli pharmaceutical major has done just this.

Potential revenue loss if logistics are not in order

For people involved in logistics operations, this has become a welcome trend – especially since logistics executives have in recent times been struggling to get budgets approved as the cost of cold chain shipping and temperature control rises. In fact in many cases, the lack of proper cold chain monitoring can actually lead to loss of revenue – for example, there have been cases of countries banning companies from shipping their medicines if they are unable to prove that the temperature of the transported medicines has been properly maintained.

This is necessary because of new GDP (Good Distribution Practice) guidelines which are in fact now the law rather than just guidelines. Many board level executives are now beginning to recognize that if they don’t have their cold chain logistics and temperature monitoring in order, then there is potential loss of revenue, especially if an inspector somewhere in the process cannot see full evidence of product integrity.

So while in the past the need to prove a drug’s quality and integrity was often seen as an additional cost or overhead, this is now changing as drugs change. Pharmaceutical companies need to protect revenue, by ensuring that newer, higher cost and highly temperature sensitive drugs can be handled by their logistics in a safe environment and that they can provide proof that the products have travelled safely.