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As cold-chain hardware vendors tout their new service orientation, the value of data rises
Pharmaceutical Commerce’s 2019 Cold Chain Special Report captures two significant trends in the industry: the shift toward “cold chain as a service” by vendors of packaging and instrumentation, and the steady growth of data—its collection, distribution and analysis—as a key factor in managing shipments and meeting business objectives.
Cold chain as a service, in turn, is driven by a desire to reduce waste and increase reuse in packaging and related materials. “Before, people paid lip service to reuse as an environmental benefit,” says Kevin Lawler, VP sales for Pelican Biothermal. “Now, it’s being emphasized by the higher quality and potential cost savings that a well-run reuse program can provide.”
Conversations up and down the pharma cold chain show a diverse range of outlooks; there are still un-monitored shipments of temperature-sensitive products occurring, and there are still worrisome process upsets. Pelican Biothermal conducted a market study earlier this year among pharma supply-chain managers and logistics providers, finding that “nearly half (44.6%) of respondents report multiple temperature excursions per year, and 16% say temperature excursions are a monthly occurrence. Moreover, the reported excursions aren’t a matter of a degree or two. Two in five excursions (41%) exceed four degrees, and 21% are more than eight degrees.”
Clearly, there’s work to be done on improving the pharma cold chain for everyday commercial shipments; meanwhile, the attention being paid to the nascent field of cellular and genetic therapies (CGTs)—all out of proportion to their commercial significance today—is opening up new vistas of technologies, services and business practices.
Fig.2. Projected sales of cold-chain pharmaceuticals will rise at 2X the rate of the industry overall.[/caption]
Vendors and service providers in the pharma cold chain can rely on a steadily growing market, both in terms of the volumes of products shipped, the destinations to which they are routed, and the regulatory scrutiny they undergo. Pharmaceutical Commerce’s annual Biopharma Cold Chain Sourcebook, published last spring, projected a 6.3% increase in the global value of shipments for 2019 over 2018 (rising to $338 billion), and a 4.7% increase in the expenditures for managing the cold chain for these products, to $15.7 billion. (This figure is highly dependent on transportation costs, whose value has moderated in recent years.) Over the long term, pharma cold chain products are forecast to grow at roughly twice the rate of the industry overall (59% over 2017-2023, vs. 33% for all products). (Fig. 2)
Within the $15.7 billion projected to be spent on pharma cold chain this year, the Sourcebook projects $11.4 billion to be spent on transportation, and $4.3 billion to be spent on packaging and instrumentation. (Fig. 3)
Those billions of dollars have justified rising investment by service providers, as well as attracting interest from private equity investors. Earlier this year, Deutsche Post DHL Group announced a $150-million investment in its North American contract logistics operations for life sciences, adding nine new warehouses, and increasing capacity from 8 million to 9 million sq. ft.
Late last year, Kuehne+Nagel acquired Quick International, an express courier company with extensive life sciences operations, for an undisclosed price (the news release noted that Quick’s net revenue was $200 million).
On the private-equity side, Cold Chain Technologies was acquired by Aurora Capital Partners (no purchase price disclosed), and AeroSafe Global garnered a $31.5-million capital injection from Peloton Equities and other investors. Both are developers of cold chain packaging.
Novo Holdings, the parent of Novo Nordisk and other life sciences companies, took a 24.9% interest in Envirotainer late last year—a case of a key customer (presumably, since many of Nordisk’s products are temperature-sensitive biologics) buying into one of its service providers.
Marken, a clinical trial logistics provider, has acquired four international firms in the past 12 months, in Japan and Eastern Europe; the company itself was acquired by UPS in 2017.
Fig. 3. Spending for cold-chain transportation in 2019 will be $11.4 billion; spending on
packaging will be $4.3 billion, per the Cold Chain Sourcebook.[/caption]
Significant capacity expansions in temperature-controlled storage or processing were announced by PCI Pharma Services, Reed Lane, Eversana—all in the US; meanwhile the British government announced the enlargement of its temperature-controlled storage capacity—a preparation for possible disruptions as the October deadline for Brexit approaches.
“The cold chain was the biggest reason for our investment,” says Scott Cubbler, president of DHL Supply Chain. “The expansion will enable us to reduce transit times for temperature-sensitive products, and to get closer to the patient as direct-to-patient deliveries expand.”
Among contract manufacturing organizations, there is a scramble to acquire capacity and expertise in CGTs. Recent actions include Thermo Fisher acquiring Brammer Bio; Lonza acquiring PharmaCell, and Catalent acquiring Paragon Bioservices. Each of these acquisitions was for more than $1 billion.
Into the cloud
Arguably, the biggest shift going on currently in the pharma cold chain is real-time monitoring and tracking of shipments. The options are bewildering, and continue to multiply: monitoring and communication devices incorporated into containers (especially true of air cargo ULDs); dataloggers and communicators that take advantage of either dedicated gateways at key transit points (airports or seaports), such as that developed by SkyCell, or WiFi, or satellite-based communication networks (especially for sea freight).
In the not-too-distant past, “monitoring” meant a datalogger that recorded temperature, then allowed for the trip record to be downloaded into a database. Now, adding location (tracked via GPS signals) is becoming de rigueur, with humidity, vibration and light not far behind.
SpotSee, one of the providers of both yes/no chemical indicators for simple temperature compliance, and networked communications, has recently partnered with Bosch to develop a BLE (Bluetooth Low Energy) device, which can automatically download its data via a Bluetooth connection; it also provides a cellular device, SpotBot. Angela Kerr, VP of product development, says that the data-collection protocol depends on the application: “You don’t want a complicated electronic device for shipments going directly to a patient, who may or may not have the sophistication to deal with it—that’s where a chemical indicator with a simple yes/no functionality makes sense.” The BLE device is useful in settings like hospitals or pharmacies, and the cellular connection, which in turn communicates to cloud-based network maintained by SpotSee, is for long-distance supply chains.
In the global logistics business, there are dozens of providers of networked communications, including proprietary networks offered by specific freight forwarders. Among the providers, the companies Controlant, Sendum and Overhaul Group are mentioned as ones that have targeted the life sciences industry specifically, with an emphasis on real-time reporting of temperature, location and other environmental conditions. Overhaul recently announced a partnership with CalAmp, a telematics provider. Real-time networks are also a lively area of development for blockchain developers, with the possibility that a blockchain for monitoring life-sciences cold-chain shipments can also provide compliance with the Drug Supply Chain Security Act, for tracking pharma shipment ownership across supply chains.
There is a gradual shift, which seems to be accelerating, toward providing a reusable container for case-size shipments of products. While expanded polystyrene (EPS) or polyurethane (PUR) still remains the basic insulation material for cases, higher performing insulation such as vacuum panels has been a significant competitor, offering extended range for 2-8°C shipments, and/or a better payload-to-volume ratio (because the insulation tends to be thinner). The higher performance comes at a cost, with standard-size cases priced at over $100 each, while basic EPS ones were under $50. Consignees such as clinics or hospitals have complained about the volume of EPS cases to be discarded, and efforts to route those cases to EPS recyclers have been sporadic.
Packaging manufacturers have now stepped up to provide economically viable reverse-logistics solutions, whereby the emptied case can be returned to a local depot for reconditioning, and then sent back into the supply chain. Pelican Biothermal has been on a year-long kick to site 100 such locations all over the world; Cold Chain Technologies has a partnership with a Dutch packaging provider, Topa Packaging (and the company says that expanding this capability is a key reason for agreeing to the private-equity buyout) are some of the examples of this trend.
“Reusable, packaging first became a trend in the clinical trial supply chain, where high performance was important,” says Pelican Biothermal’s Lawler. “Now, as the total cost of ownership of a reusable program becomes clearer, it’s raised interest in commercial distribution.” Pelican Biothermal’s flagship product, the Credo Cube, is now offered as a “Credo on Demand” service, and the service includes preconditioning the phase-change material (PCM) coolant of the packages, and managing the reverse logistics. In effect, Pelican Biothermal and other providers are taking as much of the responsibility for on-spec performance as the shipper is willing to give up.
“Specifying thermal packaging used to be a complex design and manufacturing process; these days, it’s become a service offering,” says Jamie Chasteen, senior product manager at Cold Chain Technologies.
“Our transformation from a product company to a leading-edge, technology-based service company has enabled us to become a partner, rather than a vendor, to our customers,” said Jay McHarg, president of AeroSafe Global, at the time of the private-equity investment.
There is another way to address the environmental consequences of thermal packaging, and a few providers are bringing it forward: the all (recyclable) paper container. At the beginning of this year, Softbox Systems, a UK-based provider with offices worldwide, introduced the Tempcell Eco package, said to be composed primarily of corrugated cardboard (some of the materials are branded as Thermaflute, and the trademark literature describes it as composed in part of cellulosic fibers from “crushed, pulverized or unraveled waste paper”). The company says that the package is 100% curbside recyclable.
Other recent efforts include (for internal use) an all-paper container from Thermo Fisher Scientific; the company is a leading provider of biomaterials for clinical research. Testing has shown that the container (see Fig. 5) performs equivalently to an EPS case, although the operating range is somewhat limited to 24-32 hours. The company says that the package is “an important step forward in our sustainability journey.”
The growth of reusable packaging raises an important question: how to determine that a package is still functionally acceptable? And, how should a package be reconditioned? A working group that started informally, but now has the imprimatur of a technical committee of the International Safe Transit Assn. (ISTA) The group published a guidance document, “Reusable Passive Thermal Packaging System: Best Practice Guideline” in the Pharmaceutical Forum publication of the US Pharmacopeia last spring.* It details agreed-on best practices by the committee participants (who are either from biopharma companies, or from a variety of packaging and container firms, including AeroSafe Global, Cold Chain Technologies, Sonoco ThermoSafe, Topa Thermal, Pelican Biothermal and va-Q-tec).
In general, the guidance recommends evaluating the useful life of the various components of a package (insulation panels, PCMs, etc.), a tracking system to monitor the usage cycles of the package and/or its components, and standard operating procedures for inspecting and reconditioning returned packages.
The USP publication was as a so-called “Stimuli” article—meant to generate industry comment, and it is not clear that USP will perform further consideration. Nor is it clear what ISTA will do with it; evaluation of the commentary on the report is ongoing.
“In general, we recondition packages based on criteria agreed to by us and a client,” notes Pelican Biothermal’s Lawler.
The usual perspective on being green is that it is more expensive, but when it comes to ocean freight, the opposite is true: Not only does ocean freight cut transportation costs by 80% or more, it is inherently greener (lower carbon footprint) than air cargo—and becoming more so.
TOTE Maritime, which operates within US territories, recently took two steps forward in this regard. It has commissioned a new freighter that runs on LNG (as opposed to the dirty bunker oil used in many freighters); it has also commissioned a fleet of reefer containers whose refrigeration is provided by carbon dioxide, rather than the fluorocarbon refrigerants commonly used (Fig. 6). (While CO2 is, of course, the primary greenhouse gas, on a per-molecule basis it is much less harmful than fluorocarbon refrigerants.)
According to numerous citations, ocean freight experiences fewer temperature excursions than air cargo, at least on an end-to-end basis. Even so, container providers such as Klinge Corp. have developed a business providing reefer containers with backup power from an integral generator set, in cases where the electrical power typically provided from the cargo ship to the container breaks down. There has been a trend toward shipping pharmaceuticals by ocean freight; AstraZeneca, for example, is said to transport 70% of its global shipments now by ocean.
Mention of such standards-setting organizations as USP and ISTA highlights the importance of agreed-on industry practices, and the one current standard that has achieved global recognition is CEIV Pharma, originated by the International Air Transport Assn. (IATA). (“CEIV” stands for Center of Excellence for Independent Validators, referring to the auditors that grant the certification.) CEIV Pharma started as something of a defensive action by air cargo interests to raise the level of transportation performance by air, and to reduce the shift to ocean freight.
“There are now 261 facilities or organizations worldwide certified to CEIV Pharma,” notes Ronald Schaefer, assistant director at IATA. “The constant addition of new participants shows us that this program really fills a need in the industry. In fact, we are already at the three-year recertification point, with the vast majority of participants from Day One still fully in the program.’’
CEIV Pharma organizations have created their own network, centered around a website, Pharma.aero; it is separate from IATA, but only CEIV Pharma-certified organizations can join.
An interesting facet of the CEIV Pharma program is that “communities”—essentially, airport hubs that organize the air cargo carriers, ground handlers and freight forwarders operating at the hub—are now able to get a collective CEIV Pharma certification. Over 20 airports, in Europe, Asia and North America (Miami, Dallas-Fort Worth and Edmonton, AB) are participating, creating so-called corridors where a shipment is going from a CEIV Pharma origin to a CEIV Pharma destination.
Kuehne+Nagel has one of the largest global networks of dedicated locations for life sciences and healthcare products available, with over 220 of them certified by an internal standard that K+N brands as PharmaChain. Many of them, in turn, are also certified by the CEIV Pharma program. “CEIV Pharma is valuable for us as an external validation of what we do for this highly specialized industry,” says Reinier Danckaarts, VP product development at K+N. “But, since we’re multimodal—air, ground and sea—we need to go beyond its requirements.” In the past year or so, the company has reorganized its offerings to make the customer’s decisionmaking almost independent of mode. “We want clients to know what they are receiving as a service irrespective of mode.”
K+N made an early and deep commitment to CEIV Pharma by having the entire KN PharmaChain (air) network certified, and Danckaarts says that it shows up occasionally in negotiations and is likely to become more frequent in time. “I would rather have industry demand this—because we want to be judged on an equivalent basis with our competitors—but often the life sciences procurement process focuses on cost to the exclusion of quality or total solution costs,” he says.
While a couple dozen firms compete for providing cases or parcels for temperature-controlled shipping, only a handful compete for the approved unit-load devices (ULDs) used by air carriers to handle pallet-sized shipments. The leader appears to remain Envirotainer, which stated publicly last year that it had nearly 6,000 of its ULDs in circulation around the world. Others include CSafe, va-Q-tec, DoKaSch Temperature Solutions, and the PharmaPort business of Sonoco ThermoSafe. These units are typically leased to pharma companies or their freight forwarders on a per-shipment basis.
Envirotainer has been busy for the past couple years expanding its network of service stations, now at 32; the company also runs a Qualified Envirotainer Program among its freight-forwarder and air carrier clients, with dozens of those companies participating. New offices recently opened include Mumbai, Shanghai and Toronto.
In a like manner, CSafe has been adding to its count of service centers and approved air carriers, opening a center in the Netherlands this year, and getting a handful of air carriers approved to deploy its RAP (multi-pallet) container.
Meanwhile, the providers of passive (non-powered) pallet-size containers have been upgrading their offerings, including the use of preformed shells (rather than a cardboard box with strapping). The active-vs-passive pallet shipping question seem to be settled, at this point, like this: active containers still represent the gold standard for product protection, but at higher operational expense. At the same time, the availability of the containers—when and where shippers need them—creates opportunities for passive pallet containers.
“A common scenario,” says Jamie Chasteen, senior product manager at Cold Chain Technologies, “is a shipper that schedules for having four active containers available at a certain location and day, but then realizes just before the shipment goes out that two more are needed.” Providers of passive pallet containers have an inventory of them ready to go and can also assemble new ones fairly quickly.
The active-vs.-passive debate is an old one, at this point; a newer debate is growing over the use of thermal blanketing, especially for controlled room-temperature (i.e., non-refrigerated) shipments. Thermal blanketing started years ago as a reflective sheet positioned around pallets while they sat on airport tarmacs, to prevent excessive heating by sunlight; they have since evolved into a variety of multilayer materials (with air-bubble layers, fiber insulation, or other combinations) that can provide extensive insulation protection. A couple years ago, Cold Chain Technologies came out with its Enshield design, which incorporated gel packs in sleeves on the blanket.
“Traditional insulating-only thermal blankets can be a good option for wide-stability room temperature products” says Chasteen, “because they can moderate some brief temperature extremes in transit” (which, of course, is what they are intended to do). “We also see a push to PCM-embedded thermal covers that can maintain strict label claim temperatures for those same products. Increasingly shippers are quantifying the costs associated with excursion investigations and looking for solutions.” While failure to maintain label claim may not result in product destruction, it does drive extensive cost and delays to market due to formal excursion investigation and product release processes.
The new PCM-embedded thermal covers are also used for refrigerated and frozen shipments. One modality that is gaining increased interest is ocean freight. Blanketing is valuable during the so called “unplug time” between the port’s reefer pad and being plugged into power on the shipping vessel (and vice versa at the destination port). Chasteen says CCT’s PCM covers can keep 2-8C product inside a reefer within range for as long as 36 hours while unplugged.
Q Products and Services, another blanketing provider, recently added gel packs to its PalletQuilt products; the system can be tailored in various configurations depending on the extent of blanket protection provided: with or without a bottom cover; with or without reflective wraps. The company’s CargoQuilt and PalletQuilt products have been used for, among other things, lining entire ocean-freight containers, or for less-than-truckload shipments that are being cross-docked (and thus exposed to heat), according to Kevin Lynch, sales director.
Other providers include Pelican Biothermal, which is a reseller of blankets from an Australian firm, Wilpak; and Softbox, which acquired a blanket provider, TP3, over a year ago.
The CGT scene
There could be a reckoning coming soon for service providers seeking to assist biopharma companies targeting the new cellular and genetic therapies (CGTs), but at least so far, a veritable gold rush is going on, with firms ramping up their service offerings, warehousing and logistics capacity and consulting expertise. For sure, the new companies in this arena need the help; the supply chain for CGTs is highly complex, and many of the therapy developers are scientists in labs and not supply chain managers.
The fact of the matter is that there are only a handful of CGTs that have been FDA approved—and the patients receiving the therapies (often for rare diseases) number in the 100-1,000 range, and are being treated at a limited number of health centers (as opposed to picking up a drug at the local pharmacy, or getting an infusion at the local hospital).
The Assn. for Regenerative Medicine issues a regularly updated Sector Report, detailing activity in global cellular, genetic and tissue therapies. Its Q2 2019 report tallies 1,069 clinical trials, coming from 932 companies (510 in the US). That intense effort generates significant clinical trial logistics activity, and the expectation is that many of those trials will result in new commercializations—someday.
All of the well-known clinical trial logistics firms—World Courier, Marken, QuickSTAT, Biocair and many others—have been bulking up their depots, centralized tracking stations and human resources. Quick opened a 30,000-sq. ft CGT Center of Excellence in Chicago (with access to O’Hare Airport), providing both logistics management (Fig. 1) and reconditioning of refrigerated and cryogenic containers.
Contract manufacturers (CMOs) are minimally involved in CGTs currently, but that could change if the medical science shifts from using a patient’s own cells (autologous therapy) to modified cells in bulk (allogenic therapy); the latter process would enable CGTs to be manufactured in volume and to be kept in inventory and dispensed as needed. Even so, leading CMOs or 3PLs—PCI Pharma Services, Sharp, Lonza, Catalent and others. But there are wheels within wheels on this scale question. Currently, there is a scramble to build up capacity for so-called viral vectors—an intermediate product used to convey genetic material into cells. Also, Lonza, for one, is developing the Cocoon module, called “CAR-T in a box” to provide onsite manipulation of a patient’s cells.
“Five or so years ago, Big Pharma ran its commercial logistics separately from clinical trials,” notes Robert Coyle, SVP, healthcare strategy at Kuehne+Nagel (Quick’s parent). “Now the processes tend to be more integrated, and as a company we need to respond to that.”
A parallel expansion is occurring with the container and packaging providers for CGTs. CryoPort opened a global logistics center in Amsterdam at the beginning of this year, complementing another one opened in late 2018. The centers maintain the company’s cryogenic and refrigerated containers. Condition-monitoring electronics onboard the containers, combined with the CryoPortal communications network, provides data collection and tracking.
Finally, just as regulations and standards for traditional, commercial-scale cold-chain transport are continually evolving, so are the standards for the nascent CGT field. A group called the Standards Coordinating Body (SCB), an offshoot of the Assn. of Regenerative Medicine, is acting as a clearinghouse for the many standards from such organizations as ISO, USP, the International Soc. for CGT and others. A recent SCB publication lists 36 existing or evolving standards on cellular and tissue logistics and transportation alone. SCB is also actively soliciting expert input on these standards.
*The article is available, following registration at the USP site, here: https://online.usppf.com/usppf/document/GUID-954A72DA-5151-4E6C-A5C0-C14FD48AE815_10101_en-US