Top Trends in pharma logistics for 2019

We spoke to our audience to find out seven trends that will impact pharma logistics in 2019, including:

• New drugs will place strain on traditional supply chain models.
• Acquisitions will add new layers of complexity to supply chains.
• We will see greater use of data analysis and AI to forecast demand.
• Supply Chains will face increased political uncertainty and a rising number of natural disasters.
• Brand Protection will become increasingly important.
• Collaboration becomes more than a “nice to have”.
• Consumer expectations for fast and seamless delivery will rise.

Let us now take a look at each of these trends in detail.

1. New drugs will place strain on traditional supply chain models

   When we ask our Pharma Logistics community what development will cause the greatest disruption to the temperature controlled supply chain, one of the top answers is always precision medicine.

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   As Leslie Bryant of LAB Consulting puts it, the primary logistical concern for 2019 will be “how companies will deliver personalized cell therapies to patients under very tight deadlines”. These tailored forms of medicine, created for specific patient sets, put completely different demands on the supply chain compared to traditional drugs. With small batches, increased time constraints and varying temperature controls, the cold chain must respond in new ways.

   With the number of precision medicine drugs expected to increase by 69% in the next 5 years and the FDA recently preparing themselves to approve a significant number of cell and gene therapies, in 2019 the industry must be ready to become agile to this demand. As Leslie recognizes “navigating the complexities of manufacturing/delivering these therapies will hold the key to ensuring patients have access to treatment”.

2. Acquisitions will add new layers of complexity to supply chains

   Raja Sharif, CEO of FarmaTrust, predicted that in 2019 “there will be significant structural changes in the pharmaceutical industry, not only with tech companies, such as Amazon, making further inroads into the sector but also more consolidations”.

   We have already seen some impressive M&A action this year, with Takeda taking over Shire, Eli Lilly’s purchase of Loxo Therapeutics and Bristol-Myers blockbuster intention to acquire Celgene for $74 bn. At the recent JP Morgan Healthcare conference, heads of pharma hinted that more will be on the way over the course of 2019.

   These acquisitions can add new layers of complexity to supply chains as the companies adjust to new processes, standards or regulatory factors to consider.

   Adam Runsdorf, President of WDSrx, believes that this wave of M&A will power the 3PL industry in 2019. He believes that “as venture money takes over operations, non-core functions will be outsourced to better manage essential operations”. These services will include packaging and labeling, financial services, government reporting, reverse logistics and warehouse and fulfillment.

3. We’ll see greater use of data analysis and AI to forecast demand

   Although artificial intelligence and data analysis has yet to be fully adopted, this may be changing as those early to implement start to see returns. As FuturMaster told us, the early pioneers of technology will be “keen to stake a march on rivals and improve service and delivery times in an increasingly competitive world”.

   An area we believe could show a strong gain in 2019 is demand forecasting. Greater data visibility of demand and shipping patterns will allow for shortfalls to be recognized, shipments to be consolidated and cost efficiencies from increased optimization.

   However, Steve McCarthy, VP of Digital Innovation at Sparta Systems makes an important point that when “there is so much data being produced every day, it can seem like more of a problem than an opportunity”. He recommends that in 2019, organizations need to figure out the right way to use and optimize the data they collect so they can truly benefit from it.

4. Supply Chains will face increased political uncertainty and a rising numbers of natural disasters

   2018 saw a number of political decisions cause disruption across the supply chain. From government shutdowns, to trade disputes and failed negotiations, the pharmaceutical supply chain was left in a reactive state to a number of these challenges.

   In this month already, we have seen even more uncertainty as to the future customs relationship between the UK and Europe, following the British Government’s Brexit deal losing to a large majority. With the UK’s deadline for exit fast approaching, Nick Giuffrida, sales director at FuturMaster believes that “the very least a supply chain professional should be doing is scenario modeling the resilience of their current supply chain against the various options that may occur”.

   Natural disasters have also been on the rise, with fires, floods and hurricanes affecting all regions of the world and both blocking and damaging supply lanes.

   In 2019, risk-based modeling will take on a new level of importance as growing uncertainty demands supply chain managers to plan for the unexpected.

5. Brand Protection will become increasingly important

   Although serialization will soon become standard, the issue of counterfeiting is far from being resolved. The rise of online retailers, and the difficulties in shutting down such operations, is also compounding the risk that a fake version of a product could lead to a real brand crisis.

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   Consumers can be willfully ignorant to the source of the drugs they purchase online and the risks that comes from taking them. However, if a consumer was to fall foul of a counterfeit version of a drug, the resulting press coverage can cause brand damage to the company behind the real product.

   In 2019, it will be vital to manage and monitor brand image for both press coverage and social media. In an era of hyper-vigilant social media analysis, presence comes with its own risks.

6. Collaboration becomes more than a “nice to have”

   Although we know the value of collaboration when increasing efficiency and reducing costs, the process of achieving it can be a difficult task. In 2019, we expect to see greater efforts to collaborate as an industry to standardize and find best practices.

   We have already seen good progress this year, with TEAM-UP announcing promising results from their first pilot delivery and Biophorum sharing best practices for lane validation.

   We will also see how technology can continue to increase collaboration in 2019 as more companies adopt blockchain and IoT. As FuturMaster recognizes “virtually everyone in the supply chain industry still agrees that reliable, accurate data and a single version of the truth, shared by everyone, is one of the most important factors for success in improving results, reducing wastage and cutting costs”. Technology can bridge barriers between stakeholders by giving all parties the same, real-time, accurate view of the cold chain.

7. Consumer expectations for fast and seamless delivery will rise

   Karl Siebrect, CEO of FLEXE, aptly recognizes that “the pharmaceutical industry, like other industries, is experiencing the ramifications of sky-high consumer expectations”. As he puts it “in a world where I can have my Starbucks order delivered to my office, shouldn’t I be able to experience the same level of convenience when ordering my medication?”

   Consumers have gotten used to the increasing availability of same and next-day delivery, beginning to see this type of speed as a standard level of service. Considering the tight restrictions placed upon pharmaceutical logistics, there are greater limitations to contend with than your average Amazon order.

   Progress was made on this front in 2018 though, with Walgreens partnering with FedEx to launch a next-day prescription service and CVS announcing a similar service working alongside the U.S. Postal Service.

   In 2019, we agree with Karl that “pharma companies will continue to seek structural flexibility in their supply chain in order to meet consumer expectations and offer a competitive delivery promise”.

What are your predictions for pharma logistics in 2019?