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“Cold chain” now means cryogenic and ambient shipping, as well as the traditional 2–8° range
The life sciences cold-chain
logistics field, as 2017 begins to wind down, continues to expand and mutate as new technological and regulatory concerns come into play. While large parts of biopharma industry management assume that cold chain logistics is a routine activity (and one whose cost should continually decline), knowledgeable managers know that it is a critical part of successfully distributing the industry’s products—and ultimately the financial success of their undertakings.
Perhaps the most prominent new trend is the early success of some cellular therapy products, notably Novartis’ FDA review-committee approval of its CTL019 (tisagenlecleucel) therapy for a type of lymphoma. It is the first so-called CAR-T cell therapy, which depends on extracting T cells from a patient, reworking the cells’ genetics and then re-infusing to the same patient. CAR-T cell therapy is all the rage in clinical research circles; many more products are in the pipeline. If these therapies prove out commercially, they will translate into a demand not just for cold-chain logistics to patients, but also from patients.
That round-trip logistics activity is very similar to what goes on in a clinical trial: Investigational drugs go out, patient tissue, blood or other biomaterials go back. The clinical trial logistics component of overall cold-chain activity is thriving, drawing some of the major multinational logistics providers into what has heretofore been a focus of specialized courier services for the most part. The competition is intensifying.
A significant part of this work involves sub-zero (°C) shipping or even cryogenics: whereas the large majority of most pharma cold-chain activity has been to prevent sub-zero temperatures, now there are supply chains restricted to those temperatures.
Meanwhile, routine delivery of temperature-sensitive pharma products streams along, with new technologies appearing in packaging materials, phase-change materials (PCMs) and other sources of cold, and the containers for bulk shipments. The industry is getting more comfortable with reusable containers (setting up a reverse logistics process for the empties once a delivery has been made); ocean-going containers are being tailored more closely to life sciences needs; and more active (powered) container designs are appearing.
On the regulatory front, the dominant trend is the rising importance of good distribution practices (GDPs) for CRT shipping—in other words, nearly everything except cold chain shipments. This is proving to be a boost for the use of thermal blanketing (along with, or instead of, an insulated container) to make deliveries. GDPs have already wrought considerable changes in Europe, and the industry practices are gradually taking hold in the US and the rest of the world.
The CEIV Pharma (Center of Excellence for Independent Validators in Pharmaceutical Logistics) program, promulgated by the International Air Transport Assn., is becoming more widely accepted in the pharma logistics community. Although it originated with the airfreight world, it is being applied to warehouses, storage facilities and ground transportation services.
GDPs are also driving more sophisticated use of electronic monitoring and reporting equipment, ranging from throwaway sensors to elaborate global communications networks to track shipments by geography and by environmental conditions. Logistics providers are now capable of providing near-real-time monitoring of shipments, from the warehouse to the loading docks of pharmacies and hospitals.
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All pharmaceutical products, as well as blood, other tissue-derived materials (which are usually regulated in the US as “medical devices”) and clinical trial materials used in drug trials, require close supervision when being transported from place of origin to place of use. Most products can be shipped at what is considered “room temperature;” the approved “label” (a detailed description of how the product is to be dispensed, along with side effects and other data) specifies the temperature range within which the product is safely stored and transported. To varying degrees around the world, regulators inspect storage facilities and review documentation of shipments to ensure that products remain safe and effective.
From roughly the 1990s to today, the regulatory framework around the pharma cold chain has become vastly more detailed; at the same time, the entry of biologically derived products has come to dominate much of the new drug development around the world, and almost by definition, biotech products require cold chain handling. The major pharma companies themselves have internal staffs of packaging and logistics engineers that work out acceptable devices and practices to ensure safe delivery. At the same time, a continually growing number of vendors, in transportation packaging, freight forwarding and transportation, and electronic monitoring of both a package’s internal conditions, and the processes followed by carriers, has arisen to meet the industry’s needs.
Pharmaceutical Commerce analyzes the biopharma cold chain industry annually, and publishes its findings in its Sourcebook. The analysis is based on a large number of government, industry and private-company data and forecasts, both of volumes and costs. This analysis is supplemented with direct contact with many of the leading pharma companies and logistics providers. The analysis is refined as more data become available from year to year (so, to a certain degree, it is not valid to measure the forecasts in an earlier edition of the
with later editions.) On the other hand, our analysis, confirmed by six years of publishing the
, has been validated by numerous consumers of the publication and its data.
, as in the previous editions, is premised primarily on two things: a methodical review of the labels of most common pharmaceutical and biotech products to calculate how much of the overall pharma supply chain is dedicated to cold chain practices; and an analysis of as much data as can be collected on the costs of pharmaceutical logistics in the US and globally. A third element is an evaluation of the pharmaceutical “pipeline”—the pace at which drugs under development will come on the market, and how the market will grow for those and for existing commercial products. The forecast time frame is five years (2016–2020).
Our updated forecast for cold-chain logistics spending in 2017 is that it will be more than $13 billion worldwide, in an $80 billion overall pharma logistics market, of which $9 billion will be transportation and $4 billion will be specialized tertiary packaging and instrumentation, such as insulated boxes, blankets, phase-change materials, active-temperature-control shipping containers, and various temperature sensors and recorders. By 2021, cold-chain biopharma logistics spending will expand to more than $16 billion (Fig. 3).
The bulk of this spending is on refrigerated (2–8 °C) products. The amount of frozen and cryogenic products is small by comparison. There is a trend toward more spending on devices and system for controlled room temperature (CRT) shipping, but to date, most of this involves more careful monitoring of shipping conditions, and greater use of temperature-controlled transport vehicles, and not necessarily extensive use of insulation or other environmental controls. With the expansion of cord-blood stem cell products, and other cellular therapies, there is also a trend to more cryogenics, below -150°C conditions maintained typically with liquid nitrogen.
The overall $80 billion biopharma logistics market can be further broken down by what is spent for transportation, and what is spent for packaging and instrumentation. For 2017, the breakout for cold-chain and non-cold-chain transport and packaging is shown in Fig. 2.
Finally, there is an analysis of logistics by mode—air, truck and ocean shipping. Most intercontinental shipping of cold chain products is by air. “Parcel” is generally regarded as packages smaller than pallets, and shipped internationally by air. Domestic parcel delivery is a combination of air and truck transport (Fig. 3).
Predictions of pharmaceutical shipments are one measure of the market growth; another is the warehousing, storage and transfer capacity going into place at third-party logistics (3PL) providers, air carriers and the depots of clinical trial materials providers. From a logistics industry perspective, the volumes of life sciences products are relatively insignificant, compared to minerals, automotive parts, foodstuffs and other high-volume industries; yet because life sciences can usually command premium-level service, it draws the attention of global players. And while it’s possible to use most temperature-controlled perishables space in the logistics industry for life sciences products, providers are increasingly building dedicated spaces for those products alone.
Near the end of last year, FedEx Supply Chain (formerly Genco) added 1.1 million sq. ft. in Memphis, TN and another 400,000 sq. ft. in Toronto, primarily for healthcare products (only an unspecified portion is refrigerated). The company can provide kitting and relabeling from the facilities, as well as basic logistics services.
Over the summer, Life Science Logistics brought on an additional 132,000 sq. ft. of capacity at its Indianapolis, IN facility, which has quintupled in size over the past two years. About 12% of the new capacity is given over to refrigerated product. LSL has four locations in the US. Its neighbor in Indianapolis, MD Logistics, also brought on more cold-chain capacity at its 173,000-sq.ft. facility; it also operates in Reno, NV.
UPS Healthcare Logistics, which operates more than 60 facilities for healthcare products worldwide, built a second facility near Bogotá, Colombia in the past year, adding 76,000 sq. ft. there, and bringing its global footprint to more than seven million sq. ft. The company also expanded its Express Critical delivery service, which has been in place in the US, to Europe.
Arch-rival DHL Global Forwarding opened a new Life Sciences Center of Excellence in Ireland, the 43rd country with such a facility (some countries have multiple Centers). The 40,000-sq. ft. facility is close to Dublin Airport, and features room-temperature, refrigerated and frozen dedicated capacity, along with repackaging services.
2017 clinical trials logistics forecast
also evaluates logistics spending trends in the clinical trials market. There are both pallet and parcel shipments of clinical trial materials, but no good way to characterize their respective volumes. A factor that is somewhat outside the scope of the
is return logistics that occur during clinical trials—the delivery of, for example, blood or tissue samples from a trial. Our analysis is based primarily on the trend in trial startups, enrollments and locations, along with estimates based on how much of a trial’s budget is dedicated to logistics issues (Fig. 4).
Clinical trial logistics involves shipment of products to be used in trials to study sites which may be dispersed around the globe, as well as shipment of medical samples to centralized analytical laboratories. This year, we are updating our estimate for the market size to about $3.2 billion in 2017, due to continued growth in the number and enrollment of trials, as well as pharma R&D. Based on estimates of trail volume, location and industry R&D spending overall, our forecast now is for a continued expansion of clinical trials logistics at a rate of about 2% per year, to about $3.4 billion by 2021.
In the clinical arena, the two market leaders are World Courier (now a unit of AmerisourceBergen) and Marken (now a unit of UPS). Both have been expanding capacity and technical offerings to the clinical market; last year, World Courier announced the Cocoon, a passive, pallet-size container to handle larger volumes of shipments in one container. World Courier is also stepping into handling commercial (as opposed to clinical) deliveries; a pilot program set up in Australia is being expanded to more of its network.
For its part, Marken moved into a new HQ in Research Triangle Park, NC this summer, noting that the company’s global staffing had expanded 40% over the past three years. The company also opened a Patient Communications Center in Philadelphia, intended to serve “the logistics needs of patients who participate in home-based clinical trials,” according to the company. Most freight forwarders or carriers have 24-hour control towers for their logistics partners, but a provider like Marken extending the service to clinical trial patients represents a deeper integration of logistics and life sciences.
Cold chain regulation
There is a bewildering array of regulations and industry standards in biopharma cold chain transportation; in addition, nearly every nation of any significant size has a Ministry of Health (or equivalent) that publishes its own regulations. The most central regulatory framework, globally, is the Good Distribution Practices issued by the European Union. Many shipping processes within the EU are already influenced by this regulation, and many countries around the world are adopting versions of it. GDP standards are vitally important for cross-border shipments, because customs and health inspectors are charged with ensuring compliance. Within many countries, however, inspection and compliance with GDP standards are less strict; one factor justifying this is that the shipments can be delivered fairly expeditiously to local destinations once they have cleared customs (there are many exceptions to this, of course.) The
reviews GDP standards and other relevant guidance.
CEIV Pharma program of IATA entails audits and reviews of logistics practices, training and facilities, carried out by independent auditors. Compliance with IATA Temperature Control Regulations (TCR), EU GDPs and relevant standards of the US Pharmacopeia, among others, is part of the process. According to IATA literature, some 170 entities have already obtained the CEIV Pharma certification, mostly in the developing world, although the Brussels International Airport and France’s Charles de Gaulle airport have also won certification.
Kuehne + Nagel announced in January that it had obtained CEIV Pharma certification for all 86 airfreight facilities around the world that are part of its KN PharmaChain network. DHL Global Forwarding had seven of its 11 US facilities, plus Bogotá, Colombia, CEIV Pharma-certified as of last spring, and is rolling the program out to more of its global facilities. Delta Cargo obtained CEIV certification earlier this year, saying that it is the first US global passenger carrier to receive this certification.
American Airlines is in the process of obtaining certification for its Philadelphia, PA pharma hub; the company also announced widebody aircraft transit between Puerto Rico and that Philadelphia center, mentioning its pharma logistics specifically as one of the motivations for the expansion. (AA also serves that route with narrow-body aircraft.) Further enhancing its Philadelphia hub, AA opened an expanded life sciences storage facility at London’s Heathrow Airport.
IATA’s goals are ambitious; although its main business is airfreight, it is promoting CEIV Pharma for other supply chain entities, including warehouses and ground transportation.
Logistics service providers and carriers
Although pharma logistics is a relatively minor part of the overall logistics industry, it is generally a premium service that justifies higher prices. This, combined with the competitive pressure from service providers and carriers, has led to significant investment by the leading global firms, as well as expanded services from regional 3PLs and others. Several of the major global air cargo carriers have networks of cold chain “stations” around the globe to process healthcare products specifically. Innovative tracking systems have been developed, both by the logistics providers themselves, as well as by third parties, to monitor shipments, in real time in some cases. Logistics providers and freight forwarders have also set up “control towers” where dedicated staff monitor shipments en route, and can intervene to ensure safe delivery.
Packaging, instrumentation, specialized markets
Like the logistics providers, companies specializing in transportation packaging and instrumentation have brought forth a continuing stream of innovations and new capabilities. There is a clear delineation between “active” containers (those that have internal refrigeration systems, generally powered by batteries), and “passive” containers (those containing a set amount of chilled material to provide cooling). In theory, with proper management of power sources, an active container can keep a cold chain product safe indefinitely—providing insurance that a shipment can be safely delivered even when flight or trucking schedules are upset. Meanwhile, suppliers of passive systems have continually evolved better types of insulation, and innovations in how temperature is maintained within the container, all to extend the duration that the container can sustain. Most active containers need to be returned for reuse (they are expensive as a capital asset, and are generally leased); most passive containers are less expensive and generally single-use (there are numerous exceptions). The overall cost of a shipment is a balance between the cost of the container, the cost to ship the container itself (factoring in how much weight and how much product volume can be contained), and return-logistics or disposal costs.
In the controlled room-temperature arena, Q Sales, one of the leaders in this space, reports that its thermal blanketing products are being boosted by the move toward GDP regulation of CRT shipments; blanketing represents a lower-cost option for shippers than dedicated containers with insulation panels and gel pack refrigerants. Ensuring the temperature control of the shipment necessitates matching the product specs with the temperature environment of the shipment; this is one of the reasons that Q Sales forged a partnership with a company, Riskpulse, that analyzes weather conditions of shipping lanes and performs weather forecasts.
DuPont, makers of the well-known Tyvek sheeting that has temperature- and vapor-control properties, announced a “breathable,” “third-generation” blanketing product early this year. The technology provides temperature protection while minimizing the occurrence of condensation accumulation.
On the instrumentation front, technologies range from simple indicators based on chemical or physical processes and giving a “yes/no” result, to data loggers, to multi-capability environmental monitors for temperature, humidity, vibration and other factors, combined with satellite or cellular communications. These advanced systems integrate with online communications networks, enabling global tracking in near real time.
A comprehensive directory of carriers, logistics service providers, packaging and instrumentation vendors, and consulting organizations follows.