Lu Rahman speaks to key players in pharmaceutical logistics to find out what the major issues are facing the sector.
Making Waves
The pharma supply chain faces many challenges. Counterfeiting, product damage, temperature control and continuity of supply, are just some of the issues that pose problems. Questions around Brexit in the UK have created further complexities. Pharmaceutical logistics companies face an evolving landscape that requires expertise and acute business acumen.
DHL manages the storage and distribution of products such as vaccines and biologics. It supports pharma manufacturers with seasonal supply forecasting, pandemic planning, temperature monitoring and keeping products safe. Counterfeiting is a growing problem. DHL helps by supplying direct-to-pharmacies or by providing additional labelling, to comply with national serialisation legislation. As the industry continues to experience mergers and acquisitions DHL helps companies integrate their supply chain approaches efficiently and with minimal disruption.
David Pierpoint, managing director UK life sciences & healthcare at DHL Supply Chain, outlines some of the issues facing the sector.
“The industry increasingly has a requirement for temperature-controlled transport, storage and production, which adds an additional layer of complexity. It’s not uncommon for those managing supply chains to need to deal with the requirement for both strictly controlled and low temperatures, across a global network of facilities and transport methods,” he says.
According to the European Union Intellectual Property Office, (EUIPO) fake drugs cost the EU €16.5bn. Pierpoint says: “Counterfeiting of products is a growing problem, intensified by the rise of online commerce. The need to ensure a safe and genuine product has led to a number of companies re-evaluating supply chain processes to prove e-pedigree.”
Adam Johnson is director for Leeds-based Tudor International Freight. Tudor’s service is geared towards protecting the time-sensitivity, confidentiality, integrity and security of vulnerable pharma products, such as medicines and vaccines - through fully traced, temperature-controlled compartments, within single vehicles.
Johnson says: “There are various challenges. One of these is Africa. Six of the world’s fastest-growing economies in 2018 were on this continent. Africa’s population is forecast to have doubled by 2050 and done so again by the end of this century, by which time a third of the world’s people are expected to live there. Although life expectancy is generally increasing, public health remains an issue, so this already provides a significant focus for pharmaceutical manufacturers and their logistics partners. Challenges include transport links and infrastructure, as these are still inadequate and in need of improvement.”
Cost pressure
GEFCO has been providing integrated, end-to-end, logistics solutions across the life sciences and healthcare industry for almost 20 years.
Karin Van Den Brekel, life science & healthcare global manager, sees cost pressure, globalisation and sustainability as the key pressures facing logistics in this space.
“Although other requirements such as sustainability, social issues or risk-mitigation capabilities are increasingly discussed in the media, cost pressure seems to remain the ultimate criterion for customers. Logistics costs are playing an important role in reducing overall costs and represent a share of overall revenue that is as low as 5% on average. As global footprints expand, logistics performance as measured by delivery reliability has deteriorated. This is due to several factors including increasing customer requirements, market turbulence on the supply and demand side, as well as poor transportation infrastructure, which is a problem particularly in emerging markets.”
Regulations
For Johnson, the growing scope of regulation is also impacting the sector. How much of a challenge does this put logistics firms under?
“Companies find themselves subject to an ever-changing and growing set of regulations and compliance requirements that vary between countries and regions. This places pressure on supply chains to comply with regulations without sacrificing efficiency and cost effectiveness, requiring agility to take advantage of regulatory changes,” says Pierpoint.
Brexit
We can’t of course ignore the challenge of Brexit. Johnson is unsure of how much an impact it will have.
“We’re preparing ourselves and advising our customers as best we can, but the government seems to be issuing pronouncements piecemeal and it’s impossible at this stage to distinguish firm intentions from pre-negotiation rhetoric. Worryingly, one thing the government has declared is that it wants no more from the forthcoming talks about the future relationship with the EU, which buys almost half our exports, than a free trade deal of the kind the bloc has with Canada. This is certain to mean the end of frictionless trade between the parties.
“A free trade deal may avoid tariffs but is likely to mean significant new administrative and financial burdens for pharma manufacturers and their logistics providers. These will potentially include additional declarations - which HMRC has estimated will cost UK businesses overall £7.5bn a year - and regulatory costs.”
Acknowledging that Brexit will impact the business, GEFCO has prepared and has created a solution that provides compliance and cost-efficiencies to support the 400 million yearly customs declarations from/to the UK including: additional resources and customs clearance sites, IT solutions, optimised processes and a full range of strategic and operational solutions.
Sustainability
A sign of the times is that for any business sustainability is a key consideration.
The Deutsche Post DHL Group (DPDHL) is working towards Mission 2050, an ambition to reduce logistics-related emissions to zero by the year 2050. Goals include increasing carbon efficiency by 50% by 2025, and certifying 80% of its employees as GoGreen specialists, getting them involved in environmental and climate protection activities.
Tudor Freight is trialling electric vehicles in its UK collections and deliveries and is talking to Leeds council about switching some of its vehicles to electric this year, having already installed charging points.
“We see sustainability as a solid foundation for increasing employee engagement, building closer relationships with suppliers and customers, respecting the environment and making a positive contribution to local communities. In short, accountability is a key driver of our business growth,” says Van Den Brekel.
GEFCO has adopted external global standards, such as the United Nations Global Compact, which sets out 17 principles on human rights, labour, the environment and corruption prevention that correspond to 17 specific objectives on sustainable development.
“At the same time, we are introducing our own policies. For example, our Global Framework Agreement on Corporate Social Responsibility (CSR) promotes best practices in human resources and environmental management, while our Code of Ethics supports human rights, employee health and safety, and environmental protection worldwide,” adds says Van Den Brekel.