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More biologic-based therapies translates into more cold chain activity. As yet, new cellular and genetic therapies are a minute part of the overall market.
The 9th edition of Pharmaceutical Commerce’s Biopharma Cold Chain Sourcebook details a trend that has continued almost since the first edition in 2008: biologics are entering the market at substantially higher rate than small-molecule drugs; combined with the growth of vaccines (which typically are temperature-sensitive products as well), the overall sales volume of temperature-controlled pharma products is growing at twice the rate of the pharma industry as a whole.
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Organizations such as the Healthcare Distribution Alliance report that, for its full-line wholesaler members, 7.6% of their stockkeeping units require refrigeration (2017-8 HDA Factbook). By comparison, HDA also reports that, among specialty distributors, 49% of their warehouse volume is given over to refrigerated or frozen products (2017 Specialty Distribution, Facts, Figures, Trends).
Moreover, the gradually broader adoption of Good Distribution Practices (GDPs) means that more pharma products are being required to demonstrate compliance with the temperature range listed on their labels. Translation: controlled room-temperature products need better management of the environmental conditions under which they are shipped. If refrigerated products represents 7.6% of current pharma volume, then “non-refrigerated” products represent the other 92.4%. Industry sources report that manufacturers are being selective in adding temperature monitoring, insulation and environmental conditioning to their shipments—but the volume of these are increasing.
The Sourcebook, 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 timeframe is five years (2016-2022).
A cautionary note: Unlike, say, the movement of automobiles, consumer electronics or other products, the movement of pharmaceuticals is complex at the front end (where products are manufactured, then packaged and then shipped, at the back end (where they are dispensed at retail pharmacies, hospitals, clinics, direct-to-patient and other channels), and in the middle (where wholesalers handle the bulk of products, but many are handled by manufacturers working directly with third-party logistics providers—3PLs); there are also many intermediate transfers from, say, a 3PL to a wholesaler, or one wholesaler to another. Products are packaged in cases, the cases in pallets, and the pallets are broken down to cases or even individual packages at different points and at different times. Obtaining an absolutely objective view of all of this is next to impossible.
Pharma volumes and logistics
As of 2018, global sales of biotech drugs and biologic products exceed $300 billion in value, and the special logistics for maintaining the quality of such temperature-sensitive products as they are shipped from manufacturers to hospitals, clinics, pharmacies and patients around the world account for more than 17% of all biopharma logistics spending.
Our updated forecast for cold-chain logistics spending in 2018 is that it will be more than $15 billion worldwide, in an $82 billion overall pharma logistics market, of which $10.6 billion will be transportation and $4.4 billion will be specialized tertiary packaging and instrumentation such as insulated boxes, blankets, phase-change materials, shipping containers and various temperature sensors and recorders. By 2022, cold-chain biopharma logistics spending will expand to more than $18 billion. The bulk of this spending is on 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, and some products that must be monitored carefully at room temperature.
The overall $82 billion biopharma logistics market can be further broken down by what is spent for transportation, and what is spent for packaging and instrumentation. For 2018, the breakout for cold-chain and non-cold-chain transport and packaging is shown in the following figure.
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 to include packages smaller than pallets, and shipped internationally by air. Domestic parcel delivery is a combination of air and truck transport.
Cellular and genetic therapies
Extraordinary excitement is being generated around the introduction of cellular and genetic therapies (CGTs), many of which are created from the patient’s own cells. Novartis’ Kymriah (tisagenlecleucel) and Gilead’s Yescarta (axicabtagene ciloleucel) are the first such drugs approved by US FDA, in late 2017. Yescarta, a lymphoma treatment, is engineered from T-cells extracted from the patient’s own blood couriered to a plant in California. After about 17 days of processing, the Yescarta product is couriered in a frozen state to a treatment center where it is stored, then thawed and immediately infused in the patient.
CGTs are a radical departure from conventional manufacturing, in that the manufacturing process is for a single patient, and also that the process is a closed loop, starting and ending with the patient. There are efforts going on to develop “allogenic” therapies (which can use a single source of cells, but can be administered to multiple patients), but as yet this form of CGT is still at the laboratory stage.
Hundreds of trials are being conducted around the world involving CGT approaches; various parts of the pharma industry, medical centers and logistics service providers are gearing up for expanding this form of treatment. As yet, the volumes of product involved is minuscule, but the outlook is very bright.
Clinical trials logistics forecast
The Sourcebook 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 Sourcebook is return logistics that occurs 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.
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 $3.4 billion in 2018, with a small part of the increase due to counting in “early phase 1” trials (about 2% of the total which exceeds 7,000), but mostly due to continued growth in the number and enrollment of trials, as well as pharma R&D. Based on estimates of trial volume, and location, and industry R&D spending overall, our forecast now is for a continued expansion of clinical trials logistics at a rate of 2-3% per year, to about $3.7 billion by 2022.
To the extent possible, Pharmaceutical Commerce’s analysis of the biopharma cold chain 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 as well as logistics providers in the market. 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 Sourcebook with later editions.) On the other hand, our analysis, confirmed by eight years of publishing the Sourcebook, has been validated by numerous consumers of the publication and its data.