2016 BIOPHARMA COLD CHAIN SOURCEBOOK OVERVIEW
This is the seventh edition of the Biopharma Cold Chain Sourcebook. Since its inception, it has been developed to serve two purposes:
To generate quantitative measures of the economic activity related to cold-chain transportation of drugs and biologics, worldwide, and to predict how and where the market will be changing. This edition provides forecasts to 2020.
To help participants in the biopharma cold chain connect conveniently with regulatory information and with suppliers of products and services who can help them do their jobs economically and efficiently.
Our intent is to help manufacturers, regulators and suppliers of specialized products and services to understand the scale and direction of the cold-chain biopharma business, and to have some better basis for planning and managing their role in it. In this year’s update, we have looked more deeply at some of the market drivers, such as clinical trials, active pharmaceutical ingredients (APIs), and non-US markets.
An important note about “cold chain:” while this term has been in common use in the logistics industry (and for other types of shipments, such as food products or certain chemicals), industry experts are gradually changing the focus to “temperature-controlled” or “temperature sensitive” shipping. While a relatively small number of products require refrigerated (2-8°C) or various levels of “frozen” (-20°C or lower), a much greater number of products have labels specifying “controlled room temperature” (15-30°C), commonly referred to as CRT. Historically, CRT products have been shipped via standard trucking or air modes, with perhaps some care taken to avoid obviously out-of-standard conditions (such as in open air during winter). Increasingly, CRT will mean a monitored, regulated logistics process. We address aspects of this in the Sourcebook, but the detailed economic analysis is primarily focused on refrigerated products.
We consider along with drugs the transport of commercial blood products, vaccines and other biologics that need to be kept cold. Blood banks, which collect blood from communities and then give most of it back in a non-commercial way, are out of scope. Likewise cord-blood banks and tissue and organs in general, though we do make note of new stem-cell products which are starting to appear from this source.
Logistics for clinical trials, which generate tens of billions of dollars of economic activity worldwide – we consider separately, not as part of the everyday commercial flow of cold-chain pharma products which is our main focus.
Biotechnology products, blood products and vaccines are derived from living cells and, like living cells, are susceptible to injury from excessive heat and often also to injury from freezing, with the accompanying loss of their therapeutic and financial value. Since the 1980s, when the commercial biotechnology industry introduced its first products, the global market now measures more than $150 billion in value, and the special logistics for maintaining the quality of temperature-sensitive products as they are shipped around the world account for more than 11% of all biopharma logistics spending.
In analyzing the biopharma cold chain market, there are three necessary steps, each of which has been pioneered by the Sourcebook analytics:
What portion of the global pharma and biotech market requires cold-chain storage and transportation?
What transportation modes are employed, depending on whether a shipment is local, national or transnational?
What the general trends in pricing for packaging materials for cold chain shipments, and for logistics services, and then how do these change specifically for life sciences products?
These questions address the mechanics of making meaningful economic summaries and projections of the biopharma cold chain market. A comparable level of detailed analysis is necessary for operational issues: what regulatory requirements need to be met (across more than 25 separate national health-authority regulatory frameworks, as well as technical requirements from such organizations as US Pharmacopeia, the International Air Transport Assn. and the International Standards Organisation). Finally, the analysis takes into consideration the technological trends in the industry: the use of active (powered) shipping containers, or the ability to do real-time tracking of location and physical conditions of shipments as they are being transported, to name two.
Driving forces for cold-chain spending growth
In 2009, five of the top 10 best-selling pharma products in the world were biotechnology-derived large molecules requiring refrigerated storage and handling at 2 – 8 °: Enbrel, Rituxan, Remicade, Avastin and Humira. By 2016 it will be eight of the top 10, with Humira as #1, and 27 of the top 50. Sales growth of such products will be slower than the double-digit growth rates of the past few years but faster than conventional small-molecule drugs, and will be driven by price increases as much as by volume growth and new approvals. Also in the cold chain, vaccine sales are growing around 6% per year. Sales of blood products such as immunoglobulins are growing about 8% per year – again, slower than the double-digit pace of prior years but substantially faster than small molecules.
In 2012, another major driving force is the recovery of the world economy. While biopharma business and trade were relatively less affected by recession than other markets, pharma trade and biopharma R&D were both down in 2009. As of 2012, trade is back on a growth path, but R&D is ticking downward.
Clinical trials logistics
Logistics and packaging suppliers report that clinical trials have grown into a very substantial market for their temperature-assurance products and services, and in this edition of the Sourcebook we are updating our estimate and forecast for the market size – about $2.99 billion in 2014, trending slowly upward to about $3.16 billion in 2018 (based on constant prices, as is the cold-chain forecast).
Clinical logistics includes some handling of refrigerated or frozen drugs and biologics, on the way from the maker to clinical sites, but it also includes temperature-assured handling of other products, and return shipments of patient samples and unused medicines. With approval of profitable and beneficial new products riding on these studies, pharmas have consistently paid for very high levels of service, creating a multibillion-dollar service sector just for the million or so subjects involved in trials at any given time.
The forecast to 2020 is tempered by the industry’s profit pressure, which caused R&D spending to decline in 2009 for possibly the first time ever, and to continue its decline in 2011 after an uptick in 2010.
Like other types of services to the global biopharma industry, logistics and supply chain management are undergoing significant changes. More specialty pharmaceuticals (the high-growth area of the industry, and one where cold-chain transport is very common) is gravitating toward a direct-distribution model, with individualized dosages being sent to patients or specialty clinics. The biopharma industry is handing off more and more of the shipping and distribution process to third-party logistics providers (3PLs), even as regulatory burdens become heavier. Electronic tracking of shipments, including near real-time reporting of location and condition, is becoming a desired option. “Good Distribution Practices” (GDPs) are more and more looking like an extension of Good Manufacturing Practices (GMPs)—the standard of performance in the regulated biopharma industry. The 2014 Sourcebook has updated information on biopharma product introductions and commercial activity, updates and projections on regulatory requirements worldwide, more detailed analysis of transportation costs, and closer analysis of clinical logistics trends. Technology developments in packaging materials, instrumentation and data services are reviewed. Finally there is a comprehensive directory of service providers and carriers, excerpts of relevant government regulations, and data sources in appendices.