Pandemic Push for Growing 3PL Industry

Having recently led the launch of LogiCare3PL, Omar Agado, vice president, 3PL Business Strategy and Services at BioCare, talks about what’s next for the growing third-party logistics space.

Labor shortages, inventory issues, and other disruptions in the supply chain saw a major increase in companies utilizing and investing in third-party logistics (3PL) services during the pandemic. As more and more companies began to outsource logistics services and turn to external providers for expertise, efficiency, and protection, the 3PL industry grew at a compound annual growth rate (CAGR) 7.1% from 2020. According to various market reports, it will continue to expand at this rate until 2027.

Omar Agado, vice president, 3PL Business Strategy and Services at BioCare, recently spearheaded the launch of LogiCare3PL, a 3PL offering that focuses on the distribution of therapies for rare, ultra-rare, and orphan diseases. Pharma Commerce sat down with Ogado to talk about the 3PL industry’s current and future fortunes.

Pharma Commerce: Would you say the pandemic kickstarted the 3PL boom?

Omar Agado: In my opinion, the 3PL boom started well before the COVID-19 pandemic. In fact, the pandemic simply supercharged interest in a field that was already seeing significant growth in sectors spanning retail, pharmaceuticals, and medical devices.

When heightened sensitivity surrounding the supply chain was brought on by the pandemic, the market began to revisit certain models and reconsider the ability for 3PLs to provide support. Additionally, the potential efficiency of shipping products directly to customers, including hospitals, outpatient settings, pharmacies and more, was a factor.

While all of this was already in play, the pandemic pushed the space forward and kickstarted a rapid expansion for 3PLs.

What does LogiCare3PL do and was it affected by the pandemic?

LogiCare3PL is focused on supporting specialty drug manufacturers with their core order to cash, warehousing, and distribution needs. We have cGMP facilities in Tempe, AZ and a new location launching later this year in Mississippi. We are dedicated to focusing on the product journey and the intersection between patient, product, and provider.

Luckily, LogiCare3PL was not directly affected by the pandemic. When it comes to the construction of our new facility, while we did experience some back orders and issues with sourcing supplies, we have been amazed by the team’s dedication to helping ensure that it’s ready for its grand opening.

How did LogiCare3PL and its clients deal with the crisis?

While we have not experienced disruption to our direct supply chain, our business development efforts have shifted. Before the pandemic, the number of RFPs, introductory calls and in-person meetings was much higher.

While I don’t think that in-person meetings will ever get back to what they once were, I'm keeping my fingers crossed. Recently, I have started to see in-person activities slowly pick up. In fact, at Asembia's Specialty Pharmacy Summit this year, there was a renewed energy in the room. I am really excited about the next 18 months!

What are clients looking for in a 3PL partner?

Each client is looking for a partner that supports their business holistically and is focused on what’s best for the product and patient journey.

The two biggest complaints against a 3PL partner I hear are: 1) that the partner does not understand their customer’s business and 2) that they are not proactive.

My suggestion is to look for a partner focused on honing their craft. They should be experts in their field and strive to be better every day. It’s not unlike the great sushi chefs who source their ingredients very specifically. The water must be the same, the rice must come from a specific farm and the fish must be sourced and aged exactly right. It’s the care taken to source the best ingredients and ensure high-level production that makes it special.

What are your predictions for the future of the 3PL space?

The 3PL space will continue to grow to meet clients’ evolving commercial strategies. Additionally, we will see more consolidation of new, independent 3PLs that have just entered the pharmaceutical space. Finally, we will see new models and services being offered that have the power to change the traditional definition of a 3PL.

In the US, we might even start using other terms that dictate a logistics provider’s level of service—from 1PL to 5PL. All joking aside, I do believe that we are getting close to achieving a true 6PL. With the technology already available, it will be interesting to see which complex supply chain the 6PL is applied to.