Pharma logistics’ post-pandemic landscape

Nicholas Basta

Nationally and internationally, the logistics service providers for life sciences see a new vista

During the near-chaos of 12 months ago, when air fleets were grounded, ocean ports temporarily shuttered and truckers and warehouse operators challenged with sickness and unsafe working conditions, the global pharma supply chain mostly operated satisfactorily. While there had been many reports of shortages of consumer goods, most pharmaceutical shipments were maintained. A less satisfactory condition maintained for medical equipment—especially personal protective equipment (PPE)—but a lot of that was due to skyrocketing demand as the pandemic took hold globally.

Now, as the US and much of the developed world are seeing a decline in infection rates, business analysts are beginning to look around and find that a new pharma supply chain is being created. At the same time, enormous demand for vaccines and medical gear are being experienced by the developing world, especially Southeast Asia and South America—and this will need dedicated support in coming months, if not years.

“In the past, it was hard to get senior management’s attention for the life sciences supply chain. If there is a silver lining in the pandemic response, it is that we’ve experienced a jump start to a more compliant, more secure supply chain,” says Dan Gagnon, global marketing manager for UPS Healthcare. “It now has infrastructure in places it didn’t before, and there will be more end-to-end cold chain solutions.”

Larry St Onge, global president of the Life Sciences/Healthcare Sector for DHL—one of five key markets for the global giant—concurs, noting that the company has expanded its Leipzig facility in Europe, as well as integrating acquisitions in Colombia in the past couple years. “Our biggest investment has been expanding the Medical Express service, which is able to provide cross-border, small-parcel delivery to the point of use. There will be a strong focus on direct-to-patient services in years to come.”

To be sure, the pharma logistics business was showing healthy growth even before the pandemic took hold. Data from Pharmaceutical Commerce’s Biopharma Cold Chain Sourcebook show that overall pharma logistics spending would have reached $90.3 billion in 2020 (based on pre-pandemic estimates) and was due to rise by 4.5% by 2022. Within that, the cold chain sector was due to rise from $17.2 billion in 2020 to $19.1 billion in 2022—an 11% rise.

There have been capacity expansions all over the globe as a result of the pandemic. UPS opened freezer farms, capable of storing Covid-19 vaccines at -70°C/-94°F (a requirement of the Pfizer-BioNTech vaccine) at its Worldport in Louisville, KY; it also undertaking a 440,000-sq. ft. expansion of its Rome logistics facility (due to come online in 2022). Envirotainer, a provider of specialized unit-load devices (ULDs) for pharma air freight, expanded its capacity by over 50% during the year, and now has 41 stations globally to handle movement and servicing of its containers. Producers of parcel-to-pallet-size reusable containers expanded facilities and inventories; these were key items in moving the ultracold Pfizer and Moderna vaccines.

Air carriers, a key part of international pharma shipping (most intranational shipping goes by ground) also stepped up their game, although their business was whipsawed by the plunge in passenger flights globally. (Air cargo divides between that carried by dedicated cargo carriers, and that carried in the cargo bellies of passenger jets). DHL has estimated that over this year and 2022, 10 billion doses of Covid-19 vaccine will need to be delivered, often to developing regions with poor logistics infrastructures. That volume will require an estimated 200,000 pallet shipments and 15 million insulated parcels, as well as 15,000 dedicated flights.

Besides the air cargo companies like DHL, FedEx and UPS, air carriers like American Airlines doubled its capacity to carry ULDs (from, among others, CSafe), and extending its cold-chain network to 30 new stations. UAE’s Etihad Air Cargo, while announcing a 50% increase in pharma shipments during 2020, announced a life-sciences-dedicated service, PharmaLife, in September. The company has been instrumental in delivering millions of doses to date around the Middle East and South Asia.

The Abu Dhabi Dept. of Health (Etihad is headquartered in Abu Dhabi) spearheaded an effort called the HOPE Consortium that brings together freight forwarders Agility, Aramex, Hellmann and Kuehne + Nagel, Bolloré Logistics, CEVA Logistics, DB Schenker, DHL, FedEx Express, MICCO Logistics, RSA Global and UPS to expand the distribution network for vaccines. Abu Dhabi Ports is also a participant, as is the life-sciences container service of Switzerland’s SkyCell. Abu Dhabi Ports has installed a freezer farm with capacity for 11.5 million vaccine doses (at ultracold temperatures); there is additional capacity for 2-8°C (36-46°F) refrigerated pharmaceuticals as well.

GDP training

Woven into these capital investments is the equally important investment in training and expertise across the pharma supply chain. Hard data on this is more difficult to come by; but one measure is the growth of the CEIV Pharma certification program, managed by the International Air Transport Association (IATA). IATA launched CEIV Pharma in 2014 partly as a competitive response to other global transportation modes (specifically, ocean freight) and to unify, as much as possible, operating parameters for life sciences products across air carriers, freight forwarders, airports and other parts of freight movement. There are now over 300 companies, organizations or locations that have some level of CEIV Pharma certification. Most recently, Kuehne+Nagel announced a recertification of its entire PharmaChain organization; DHL announced an expanded number of recertified locations. IATA itself issued a guidance document in November for safe vaccine transport and distribution.

“DHL has life sciences competency centers with dedicated and trained teams that understand the good distribution practices (GDP) standards,” says St Onge. “We can provide high-touch, hands-on service,” he says, summarizing the approach of how many of CEIV Pharma-certified organizations approach their tasks.

Meanwhile, ocean freight shippers haven’t sat on their hands through the pandemic. Proponents note that air cargo capacity constraints will continue into the future, and that ocean freight can meet as many GDP standards as anyone else, even while providing a service that is usually substantially less expensive, on a ton-shipped basis, than air. As an example, In April, Maersk, an ocean shipper, initiated a three-year agreement with Novo Nordisk to provide transportation for the company internationally; it also covers inland logistics.

“Even small deviations on, for example, temperature can mean that an entire container of insulin needs to be discarded,” said Christina Torp Jacobsen, key client manager at Maersk, alluding to Novo’s leading position in diabetes treatment. “This would, of course, mean big financial losses—but more importantly, Novo Nordisk needs to make absolutely sure that patients, who rely on their products, are not exposed to any risks.”

Network visibility

Another transformation difficult to see in hard assets like planes or warehouses, but creating a new operating environment for pharma shipping is the adaption of real-time visibility networks. Such networks, which depend on sensors and dataloggers incorporated into pharma parcels or pallets, along with stationary transceivers and control-tower-type centralized command centers, had been coming along pre-pandemic; the rush to develop, authorize and distribute Covid-19 vaccines—and the high, life-saving value of each in the early days of the pandemic response—drove that adoption far ahead.

Each of the initial vaccine authorizations—Pfizer, Moderna and J&J—brought such real-time systems along with the trucks and planes delivering the vaccines. Companies like Controlant, Cloudleaf, Sendum, CargoSense, Roambee and others saw new business coming their way. Major freight forwarders either rebranded white-label offerings from companies like these, or developed their own. In the past, the onboard dataloggers could register internal temperatures of a shipment, and not much else; more recently, both internal and external temperatures are logged, as well as location. Now, there are capabilities for two-way communications in the field, and a wide range of communication protocols—cellular, satellite, and WAN, as well as Bluetooth Low Energy (BLE) for communication between multiple sensors.

Roambee, for one, touts its ability to “orchestrate” the data feeds of multiple sensor networks (such as from the datalogger as well as the datalogger of a truck, plane or vessel) and then provide guidance on, for example, a soon-to-be-exceeded temperature limit of a shipment. Roambee counts DHL, CEVA and Kuehne+Nagel among its users. Cloudleaf, which has a relationship with Cold Chain Technologies (a packaging provider) offers comparable services.

Adam Crossno, CEO of OnAsset Intelligence, says that this booming field is splitting among companies that provide the platform or network for monitoring a supply chain, and companies (like his) that focus on the devices that provide the “edge” sensing—at the point where a shipment is located, and following it along its path wherever it goes. Some of the network companies provide their own sensors (Roambee, for one, offers a subscription service of its sensors combined with the network monitoring, and there are many providers of sensors and dataloggers for logistics processes).

In OnAsset’s case, the company has just introduced its next-generation datalogger, the Sentry FlightSafe which, among other things, provides 5G telecommunications (as well as other common channels), linkage to tags that can provide additional local data (such as internal and external temperature of a package) and two-way interactivity. “Depending on how the implementation is set up,” says Crossno, “we can control the on-off status of the devices remotely, or send instructions, readable on the device’s screen, for how a shipment is to be handled.” He adds that the OnAsset devices, which are typically acquired on a subscription basis, are reusable and rechargeable—an environmental benefit relative to the more usual practice of using the sensors or dataloggers once and then discarding.

Clinical trial logistics’ new emphasis

One of OnAsset’s clients is Marken, the UPS subsidiary that specializes in clinical trial logistics. In the Covid-19 era, specialist firms like Marken have pitched in to handle commercial deliveries of vaccine (as well as managing vaccine trial logistics). DHL’s Medical Express service is touted for its ability to handle last-mile delivery, across borders, for parcels (many clinical trial shipments are parcel size). “The future of pharma logistics is direct-to-patient,” says St Onge.

One company betting both on the growth of clinical trial logistics, direct-to-patient services and the need for cryogenic services is Cryoport, which started out as a developer of containers, chilled with liquid nitrogen, for the cell-based therapies and diagnostics in the growing cell and gene-therapy (CGT) field. In late 2020, it acquired a large producer of cryogenic equipment, MVE Biological, as well as a clinical trial logistics firm, CryoPDP. More recently, it added another logistics firm, Critical Transport Solutions Australia, to further build out its service offerings in Asia-Pacific. Cryoport straddles both clinical and commercial CGT operations (given that some of the newest CGT treatments involve cells tailored to individual patients; at that level, clinical-research and commercial logistics processes are practically identical).

Jerrell Shelton, Cryoport chairman, notes that the company had some peripheral involvement with Covid-19 vaccine and therapy trials, but its focus is still primarily on the CGT field. “FDA expects significant growth in CGT approvals in the coming years, and we will benefit from that,” he says. “Moreover, medical research is opening up more and more of cellular science—mRNA is just one example—and we see strong growth for its future in pharmaceutical development.”

UPS’ Gagnon has a different twist on the same growth patterns for pharma logistics. “The pandemic has shown the importance of diagnostics, given that so much effort has been put into Covid-19 testing,” he says, “and that application is being driven toward at-home testing. We can see that end-to-end solutions, where the diagnostic or the therapy is being delivered to the point of care, is the future of pharma.”

— Nicholas Basta is Editor Emeritus and Founder, Pharmaceutical Commerce