Global Trends in Pharma Logistics

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Over the past year, PharmaBoardroom has spoken to many of the global leaders in healthcare logistics from regions as diverse as France, Mexico, Luxembourg, and Singapore. As pharmaceutical and biotech products become more complex and the markets they serve become more diverse; these industry leaders have told us how their companies have had to consistently innovate and evolve to meet their clients’ needs

Importance

“As logistics companies, we operate at the center of an eco-system that gathers our customers’ manufacturing facilities, their medical and sales departments, and their customers.”

Daniel Pardo Bejarano, BOMI Mexico

Although less discussed than R&D or patient experience, pharma logistics is a crucial and specialized subsection of the industry that is increasing in importance. As Daniel Pardo Bejarano, CEO of Mexican operations for Italian healthcare logistics specialist BOMI puts it, “as logistics companies, we operate at the center of an eco-system that gathers our customers’ manufacturing facilities, their medical and sales departments, and their customers.” Phau Hui Hoon, Assistant VP for cargo and logistics development at Changi Airport Group in Singapore notes that “Global spending on cold chain pharma shipments is growing at between eight and nine percent per year” and that Changi “sees pharmaceuticals as a high potential niche.”

Complexity

Matthieu Brand - Country Manager - World Courier an AmerisourceBergen company

Matthieu Brand, World Courier France

The complexity of moving pharmaceutical products from A to B has evolved along with the complexity of the products themselves, the increasingly stringent demands of the industry, and evermore expansive legislation and certification. Matthieu Brand, managing director of the French affiliate of World Courier AmerisourceBergen, explains that “in the past, products were generally only shipped at two temperature variables … Then, in the mid-2000s, the regulation governing transport of pharmaceuticals was stiffened to counter the practice of storing at -20°C (-4°F), transporting at -80°C (-112°F), and then storing at -20°C again. Subsequent rules were also tightened to take into account transportation at ambient temperatures when importing medicines from hot to cold climes and vice versa.” Brand’s counterpart for World Courier in Mexico, Carolina Galicia, sees this complexity continuing to increase in the future, as “more products require temperature-sensitive transport than ever before … we expect this need to further gain in importance as biotech treatments already represent around 20 percent of the total products sold within the global pharmaceutical market.”

Cost

“Fast and cheap may not be effective, cheap and effective may not be fast, and fast and effective may not be cheap.”

Tony Wright, Exelsius

This increased sophistication does not, however, come without a cost, and pharma companies must be willing to pay high prices to access top of the line logistics. Tony Wright, CEO of cold-chain management specialists Exelsius, speaking about his company’s operations in Luxembourg, warns that “It is impossible to ensure the best practices if price is the only decision factor when companies choose logistics partners. Fast and cheap may not be effective, cheap and effective may not be fast, and fast and effective may not be cheap.” World Courier’s Brand agrees, arguing that “There is absolutely no margin for error in clinical trial products and the consequences are severe if the patient receives the product at the wrong temperature or at the wrong time because it can invalidate the entire trial. That is why the client is always going to be willing to prioritize quality over cost.”

Customer Demand

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Leonora Lim, DHL Singapore

On the other side of the coin, the companies paying top dollar for logistics services are becoming increasingly demanding and driving change in the industry. Leonora Lim, VP Life Sciences & Healthcare at DHL Customer Solutions & Innovation in Singapore notes that “In terms of evolving needs, cold chain logistics has become extremely prominent; demand for these services is growing consistently.” Laurent Jossart, executive vice president of Luxair Cargo, the main air freight handling agent at Luxembourg airport, recognizes that “In recent years, customers have started to demand a higher quality service. For instance, no-one within the industry thought about using thermal covers before customers began to demand them. Controlling temperature was something rare to encounter among a client’s expectations. However, far from being special requests, they are now common requirements within our cargo services.”

Hubs

“From a logistics standpoint, Singapore serves as a pivotal gateway to the broader region—namely because of its efficiency, established infrastructure, and high caliber talent”

Sugantha Natarajan, DB Schenker Asia Pacific

One solution for meeting the demands of pharma companies in an efficient, cost-effective, and high quality manner, is to create centralized logistics hubs. Thomas Page, UPS’s VP for healthcare and contract logistics in Asia Pacific highlights the benefits of the Singaporean logistics hub centred at Changi Airport by pointing out that when “an additional location is added to the distribution hub, this reflects up to 29 per cent more inventory, leading to obsolescence and an enormous investment on the balance sheet under inventory. Companies are looking to pull this inventory back to a regional hub with proximity to market and lower labeling costs for optimal inventory and flexibility.” DB Schenker’s director of healthcare for Asia Pacific, Sugantha Natarajan, adds that now, “From a logistics standpoint, Singapore serves as a pivotal gateway to the broader region—namely because of its efficiency, established infrastructure, and high caliber talent … many companies establish and stabilize their operations here first, before venturing off into the frontier.”

laurent-jossart-executive-vice-president-luxair-cargo

Laurent Jossart, Luxair Cargo

Like Singapore in Asia, Luxembourgish logistics benefit from their positioning in Europe, as Luxair Cargo’s Laurent Jossart points out: “being positioned in the center of Europe is very beneficial logistically. Luxembourg can serve as a good entry and exit point for Europe. Secondly, the infrastructure developed here in Luxembourg is of very high-quality with all the facilities in place to run a cargo business.” Hendrik Kühne, secretary general of the Luxembourg Pharmaceutical Association (APL) notes that “Some of our members have started to run significant logistics operations from Luxembourg, covering Europe, Africa, and even Asia from their local distribution center here.” Jossart highlights Luxembourg’s common Good Distribution Practice (GDP) as putting the small nation “on the air cargo pharmaceutical map … the initiative certified all the key players within the industry (airlines, freight forwarders, cargo handling and trucking companies).” This means that the entire chain of cargo services is certified; not merely a small part of the process. This is a unique selling point for Luxembourg.”

Writer: Patrick Burton


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