Last month, in a post on supply chain risks, we referenced the growing cold chain logistics trend as one of the many increasing pressures on pharmaceutical supply chains.
Cold chain is less an emerging issue and more a rising tide, however. While it isn’t a new practice by any means, its use has historically been restricted to a much narrower band of drug products. Today, it’s a sizeable chunk of the supply chain, and thanks to the rise of biopharmaceuticals, it’s likely to accelerate its growth.
Biopharmaceuticals Driving Demand for Cold Chain Logistics
Biopharmaceutical drugs have been on the industry’s radar for decades, but it’s only more recently that their impact has begun to be felt in the market. Consider the number of patents issued for biopharmaceuticals, which has climbed from 30 in the 1970s to nearly 35,000…just by 2001, nearly 20 years ago!
Times have certainly changed. Biopharmaceutical products are expected to account for nearly 50% of the value of the top 100 global pharmaceutical products this year.
From a logistics perspective, however, they are more demanding than traditional pharmaceuticals. Many require precise temperature control across the entire supply chain – from manufacturer to patient. That means multiple changes in control – from truckers and carriers, through forwarders and agents, to distributors and pharmacies. And increasingly, these supply chains are serving more remote areas of our globe than ever before – with patient-centric (precision) medicines or gene therapies.
As manufactured drugs have evolved to contain more high-value active ingredients with a shorter shelf life and strict temperature requirements, the need for temperature control and monitoring through that entire supply chain has increased.
Temperature Controlled Logistics
But even drugs that are safe at room temperature may need controls to avoid the spikes that can come with ambient transportation.
The outgrowth of this is that logistics providers are beginning to receive more requests for Controlled Room Temperatures (CRT). This includes the use of insulated containers, refrigerants, thermal blanketing, and temperature-monitoring devices.
Temperature control isn’t just a binary ‘need it or not’ selection these days. The greater range of shipping temperatures required by manufacturers has increased demand not just on the integrity of the entire temperature-controlled supply chain, but also individual product packaging.
The pharmaceutical industry “loses at least $15 billion of product each year to temperature deviations that force cargo disposal. When taking additional costs into consideration, such as labor expenses for damage analysis and product replacement, the annual cost spikes to over $35 billion.”
Cold Chain Logistics Defined
What is cold chain logistics?
A cold chain is a supply chain which is temperature-controlled. While its definition may be simple, cold chain is challenging from a logistics standpoint. In fact, all of the various issues that arise with typical supply chains (we’ve discussed many of them in previous posts on choosing pharmaceutical sourcing models and sourcing challenges for small pharma) not only exist with cold chain logistics – but are often amplified. These include:
- Cost containment and the need to create efficiencies.
- Insufficient resources or capacity limitations.
- Globalization of supply chains (with all the attendant trade, natural disaster, and other supply disruption concerns that comes with suppliers located around the world).
These traditional supply chain risks are magnified because the cargo is more fragile and of much higher value – further emphasizing the importance of avoiding out-of-specs or reworking.
Here are some key cold chain issues drugmakers should have on their radar:
Cold Chain Warehouse Capabilities: Ensuring GMP & GDP Compliance
Because CGMP regulations include the “holding” of products, outsourced warehousing companies that store and ship drugs, medical products, food, some supplements and cosmetics must comply with GMP/GDP standards.
It is critical that – if you plan to use a third-party warehouse for these relevant products – you ensure relevant regulatory standards are met (with some exemptions for a supplement or cosmetic product).
On the wider regulatory front, a number of industry shifts have impacted logistics. Analytical instrumentation can deliver far more sensitive results, allowing for a deeper understanding of the impact of temperature fluctuations. Such improvements in detection limits have resulted in tightening quality standards, placing additional pressures on various aspects of the supply chain. This has been reflected in regulatory changes, as transatlantic efforts to harmonize regulations continues.
“For years, pharmaceutical mandates in most countries required products to be maintained within manufacturer-established guidelines only in storage. But in November 2013, the European Union (EU) guidelines on Good Distribution Practice for medicinal products for human use went into effect, extending temperature requirements to transportation, and expanding coverage to include over-the-counter drugs.
In the EU, about 80 percent of pharma products now require temperature-controlled transportation. Anticipating similar regulations in the United States—and considering the potential for exporting these drugs—many pharmaceutical manufacturers are adopting this approach in the United States, too.”
We’ve been hearing from more and more companies who have raised the issue of cold chain third-party logistics (3PL). The consensus seems to be that companies want to ensure their supply chains are reliable and secure if (or when) they need to make the shift due to regulatory changes.
Globalization: Growing Anxiety Over Lengthy Supply Chains
In a decades-long process, as trade barriers have fallen manufacturing dispersed – largely to Asia. It has been estimated that 80% of drug APIs come from China and India. The same article at outsourcedpharma.com points out the anxiety-inducing shift in supply chain realities:
“The last plant manufacturing aspirin in the U.S. closed in 2002. In Europe, the last plant manufacturing acetaminophen (paracetamol) – contained in 600 over-the-counter medications –shut down in 2008. Because of the lack of transparency mentioned above, we aren’t sure where these every-day drugs in your medicine cabinet are produced – but the best evidence we have suggests the vast majority comes from China.
We do know that birth control pills, HIV/Aids drugs, drugs for bipolar disorder and schizophrenia, more and more cancer drugs, your high blood pressure medicines, antibiotics – all are made in China, sourced with Chinese ingredients.”
Several weeks ago we had spoken with a number of pharma manufacturers in India (who are often themselves cited as a supply-chain concern to many in the U.S.). They were concerned about their own heavy reliance on raw materials from China. Shortly thereafter, the Indian government restricted the export of 26 drugs and their pharma APIs – including Paracetamol – to prevent national shortages in the event of an extended coronavirus pandemic.
Cold Chain: Technology-, Security- & Infrastructure-Intensive
While all logistics have become technology-driven in the hunt for efficiencies (and compliance), this is especially true of temperature-sensitive products. Maintaining strict temperatures demands temperature-controlled facilities and reliable energy sources to maintain the cold chain.
An additional layer of procedures and protocols need to be in place to deal with potential hazards (e.g., ammonia spill containment), above and beyond traditional ambient warehousing management. And as the supply chain from precursors to patients continues to grow, so – too – do the needs for reliable logistics infrastructure.
Improved analytical instrument detection limits have also reshaped our understanding of what we consider ‘out of spec’ – placing additional compliance pressures on the procurement and distribution process.
Cold Chain Logistics Highlights Need for Procurement Expertise
Drugmakers don’t take their complicated supply chains for granted. Many of our clients – from the smallest emerging biotech to global Big Pharma – don’t have the manpower or resources to assess, validate and qualify third-party cold chain logistics providers to operate on their behalf around the world.
With cold chain, tapping expertise is indispensable when planning a shipment. This is especially true of materials that are high value, time- and temperature-sensitive, critical to a clinical trial or a medical emergency, in which a successful transit to market is essential.
While you focus on innovation, a procurement specialist focuses on making the global API market work for you. A procurement partner stays current on consequential issues facing the industry – whether cold chain, serialization or new guidance – and continually strengthens their worldwide network.
There are other reasons a logistics procurement partner can help mitigate supply chain risk – including access to intelligence databases regarding API pricing and importing activities, which assist during price negotiations. Procurement firms with global offices can give you first-in-line access to facilities in India and China.
Want to learn more about the benefits of working with a procurement partner who can anticipate the next frontier in regulatory evolution, including cold chain logistics? Contact LGM Pharma today!