Monday, 13 May 2019

4 Cold Chain Logistics Trends Impacting Pharmaceuticals

When a drone is used for the first time to deliver an organ to a transplant recipient, you know big things are afoot in the pharmaceutical cold chain.

So what else drives growth in this field? And which technologies are coming to the forefront to make this critical industry safer and more efficient? Let's take a look at some answers.

A guest post from Megan Ray Nichols

1. Personalized Medicines

One of the greatest disruptions to medicine in recent memory — and the cold chain that powers the pharma industry — is personalized medicine. Also called "precision medicine," this is the practice of specifically tailoring (and even 3D-printing) medications and gene and cell therapies for use by smaller, more specific sets of patients. According to a 2017 report by the Personalized Medicine Coalition, the next five years will see a 69% increase in the number of precision drugs coming to market.

This is a huge opportunity for cold chain and logistics companies — but it also presents some roadblocks. These are small-batch medications that must be delivered within very tight deadlines. Compared with larger shipments and uniform temperature control requirements, the challenges speak for themselves. Some of these bespoke medications, including monoclonal antibodies, are more fragile than others and more susceptible to environmental hazards. Supply chain and logistics companies must stand ready with more efficient business models and more advanced thermal packaging. 

2. Blockchain and Traceability Requirements

Visibility and transparency are even more important in cold chain logistics than in any other supply chain. Various countries and emerging markets have different track-and-trace requirements, but technology can help cut through the noise and provide a standardized approach to supply chain transparency.

Blockchain presents a way for pharmaceutical companies to comply with increasingly and appropriately stringent government regulations concerning the transportation of pharmaceutical products. For example, the FDA's Drug Supply Chain Security Act lays out expectations for "electronic, interoperable systems" for recording and reporting information on drug shipments, with the goal of rooting out counterfeit products and streamlining the auditing and reporting processes. But these electronic systems require accurate and timely data to be of any use.

With that in mind, it will likely become the norm for logistics companies to employ blockchain and attach a cryptographically unique identifier to pharmaceutical shipments. This blockchain "token" collects information from origin to destination and cannot be altered once recorded. As a result, logistics companies can visualize their entire supply chain in the name of safety and authenticity. 

3. Data Everywhere and the IoT

Adoption of the Internet of Things is ramping up across the medical landscape. According to a DHL report entitled "The Future of Life Sciences and Healthcare Logistics," the health care IoT market will grow to $646 million in value by 2020. Cold chain and logistics companies drive a great deal of this growth.

As the demand for traditional and personalized medicine alike grows, companies must be more vigilant than ever about optimizing their manufacturing processes, insulating themselves against disruptions and forecasting demand. The IoT and Big Data are key allies in these challenges:

As an example, Bayer plans out its antihistamine supply chain roughly nine months in advance using analytics that incorporate information about climate patterns, customer demand and historical and geographical trends for conditions like hay fever. This ensures their products get to where they're needed most and stores don't run out during peak demand.

IoT-enabled manufacturing equipment can collect data all the way from production through to distribution and provide insights that lead to process optimizations. If there's a department creating a bottleneck, an inefficient vendor, or a not-quite-optimally-placed distribution hub, companies can find out about it and make timelier decisions and operational changes.

Pharmaceutical products must be kept at stable temperatures during storage and transit, or risk spoilage. Remote monitoring using the IoT and cloud-based intelligence platforms can track critical metrics for every shipment and every variable-temperature, ambient and freezer storage space, and alert personnel if conditions drop below or rise above optimal levels. It's not just about the 32- to 37-degree model anymore — facilities must be more flexible and we need technologies to support that flexibility.

Predicting demand, ironing out the kinks in manufacturing and having "eyes on" every shipment at every moment brings greater efficiency and safety to the cold chain than was ever possible before the IoT came to the fore. 

4. Mergers, Partnerships and Acquisitions

If there's an overriding mission across just about every industry, it's to reduce the time it takes for a customer to receive their order after they click "buy." The "on-demand" and "same-day" business models have already changed entertainment and eCommerce for good — and they're about to do the same for health care.

In 2018, Amazon, J.P. Morgan and Berkshire Hathaway announced a partnership called "Haven" and declared their intention to disrupt the health care industry. Immediately afterward, CVS, Walmart, Express Scripts and Cardinal Health stocks all plummeted. They lost billions of dollars in value overnight.

This isn't Amazon's only move that looks ready to shake up the cold chain industry. The retail giant also owns Whole Foods and more recently acquired PillPack — an online pharmacy — for a reported $1 billion.

Amazon doesn't have a monopoly on eCommerce, but they do enjoy a huge share of the pie. Just as importantly, their business model ushered in huge changes in customer expectations and omnichannel sales strategies when it comes to online selection and speed of delivery. All of the clues we mentioned seem to suggest that Amazon wants to use its influence to make significant changes to how pharmaceutical products are distributed, too.

When we try to catch a glimpse of the future of the pharmaceutical supply chain, it looks more and more like direct-to-patient and direct-to-hospital delivery will be the order of the day, for diagnostic tools and medical devices as well as for more time-sensitive medication purchases. Supply chain companies aren't going anywhere — indeed, the explosion in popularity of online pharmacies and even subscription-based business models likely means they'll be busier than ever — but wholesalers might slowly be squeezed out of the equation as tech giants like Amazon and others consolidate industry resources and reinvent consumer expectations.

No matter what, the cold chain will keep doing what it does best — getting pharmaceutical products into the hands of people who need them. But how it does so, and the tools it uses, are shaking up before our eyes.

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