Pharmaceutical pipelines full of temperature-sensitive medicines and the ongoing impact of the COVID-19 pandemic are driving up demand for cold-chain logistics. The negative consequences of shipping medicines at the wrong temperature can be severe [i]. Excursions during transit can reduce a drug’s therapeutic efficacy, potentially putting at risk the lives of patients who rely on them.
To address this, an increasing number of pharmaceutical companies use cold-chain – or temperature-controlled – supply chains to ensure their products are shipped in the correct conditions from factory to wholesaler and on to pharmacy shelves.
According to Andreas Göbel, Managing Director, Hypertrust Patient Data Care, “the biopharmaceutical cold chain logistics services market has doubled in size since 2012 and ranges somewhere between USD16 and USD18 billion today.”
While some drug companies invest in in-house capacity, it is more common to use third party suppliers, says Cathy Morrow Roberson, president of Logistics Trends & Insights.
“Biopharmaceutical cold chain logistics is growing near or at double-digit growth alongside the growth of the global biopharmaceutical market,” she says. “This sector has been a particularly bright spot for the logistics market for a while in terms of revenue and volumes.”
Cold chains heat up
Growing pharma demand for cold chain services has been recognised in the wider logistics sector, according to Morrow Roberson, with more logistics providers investing in life sciences to take advantage: “Leaders continue to be UPS and DHL but I would probably put UPS ahead of DHL now thanks to their acquisition of specialized provider Marken [ii] and focus on life sciences.”
She says that while forwarders are also focused on this market, those logistics companies that own assets are the main benefiters as they have been able to integrate solutions throughout transportation and logistics networks, particularly considering current capacity constraints.
“Providers such as UPS which has made significant investments in its network and its acquisition are doing especially well,” she adds. “Marken has been a smart acquisition and based on earnings reports, it seems to be a primary reason for UPS’ revenue growth in contract logistics.”
She also cites Kuehne + Nagel’s acquisition of Quick International Courier [iii] - a provider of time-critical transportation and logistics solutions focusing on the aviation and pharma industries – as an indication of the pharma cold chain market’s potential.
“We could see logistics providers acquiring more specialized companies to demonstrate and provide capabilities and services that are needed,” she concludes.
Cold chains are also gaining in popularity because they are becoming more reliable. Advances in monitoring technology – both in terms of temperature tracking and data management – have made developing secure supply chains more straightforward.
The internet of things (IoT) concept – in which a network of systems passes data from one operation to the next automatically – is having a significant impact on pharmaceutical cold chains, says Morrow Roberson: “IoT has been in use for a while in regard to tracking and monitoring temperature and other environmental changes. DHL & FedEx’s SenseAware [iv] have taken advantage of IoT and have expanded capabilities as a result. For FedEx, SenseAware capabilities have expanded into other industries.”
"The internet of things (IoT) has been in use for a while in regard to tracking and monitoring temperature and other environmental changes." - Cathy Morrow Roberson, Logistic Trends & Insights
And cold chain innovation is continuing, with DHL and Accenture [v] working on a blockchain project which tracks pharmaceuticals from the point of origin to the consumer, to prevent tampering and errors.
Personalized meds, cell and gene therapy
All medicines are sensitive to temperature changes in transit. However, cell and gene therapies are particularly susceptible to damage caused by fluctuations in environmental conditions.
At present, most cell and gene therapies are transported using dedicated supply chains – the additional cost of maintaining such systems is deemed appropriate given the high value. This is particularly the case for personalized and autologous therapies.
But in the future, demand for cold chain services is likely to increase, according to Göbel from Hypertrust Patient Data Care.
“Personalized medicines are a growth driver for cold chain logistics but not yet on full momentum,” he says. “Many personalized cell and gene products are still in clinical trials, not generating massive amounts of service requests. Looking at the 1000+ treatments in the pipeline to be commercialized within the next 3-10 years, substantial demand growth can be anticipated.”
He adds that markets are still young for personalized cell and gene products, with the fastest growth rates observed in the US and EU and, according to market insiders, also in China.
The ongoing COVID-19 pandemic has had a significant impact on all types of pharmaceutical distribution network, and cold chain is no exception.
Morrow Roberson points to stressed networks due to capacity constraints, locating suppliers, delays at airports and customs.
“At the start of the pandemic, much of the pharma supplies went straight to locations in need like hospitals,” she says. “Now, there seems to be stockpiling which will stress warehouses and the monitoring of these facilities. In addition, the pandemic highlighted the lack of real-time visibility/data – not knowing tier 2, 3 etc. suppliers particularly when perhaps a tier 1 supplier had closed or was at maximum or reduced levels of operations.”
She continues that one telling factor in the US is that the country is so dependent on imports of active pharmaceutical ingredients (APIs) from other countries, typically from India or China, that shortages in medications -- including for COVID-19—inevitably occur.
“Personalized medicines are a growth driver for cold chain logistics but not yet on full momentum" - Andreas Göbel, Managing Director, Hypertrust Patient Data Care
“Trade wars will exacerbate this situation as well as the US’s decision to not work with WHO. Pandemics require countries working together,” she says.
The impact of the pandemic is likely to be ongoing, according to Göbel, who points to accelerating efforts to develop SARS-CoV-2 vaccines: “With the current COVID-19 pandemic and the soon to be commercialized vaccines, the pharmaceutical cold chain market will grow even stronger.”
Demand for cold chains is also likely to increase as pharmaceutical companies seek to tap non-traditional, fast growing regional markets.
Extending cold-chain networks will involve infrastructure investment and training, Morrow Roberson says: “Africa and Latin America are still large regional markets, but infrastructure remains problematic. In Africa, the need for reliable transportation and warehousing is greatest along with trained employees. Both regions face growing populations that are driving the demand.”
For Göbel, the future growth of the cold chain market will drive standardization of data and further technology innovation. He believes pharma companies and logistics providers ought to work on a standardization platform to realize end-to-end trust on the entire data chain of personalized treatments, data captured during transit times being an important part.
“Isolated data silos of different service providers without strong trust in the devices producing the data are not a suitable solution,” he adds. “In contrast, blockchain networks show the right attributes to act as a reliable foundation for a consortium platform.
“Service providers need to move away from API provisioning towards a decentralized data contribution approach with extended data source trust mechanisms. Up to now, the two big consortia for this purpose – PharmaLedger [vi] in EU and MediLedger [vii] in US - have not yet come up with such an initiative in the context of personalized healthcare.”