The pharmaceutical supply chain is growing more complex. As the industry becomes increasingly globalised, the path from production line to patient is often something of a winding road, with a large number of different stakeholders involved along the way.
Most obviously, this can pose challenges when it comes to supply chain integrity and transparency. However, it can also lead to issues with product quality. Since many pharmaceutical products need to be maintained within a very particular temperature range, pharma logistics providers face considerations rarely encountered in other industries.
This is more the case than ever as the industry moves towards biologics and biosimilars. According to a recent report by Research and Markets, the biologics market was valued at $254.9 billion in 2017, and is expected to reach $580.5 billion by 2026 (a CAGR of 9.5%). With around 800 new biologics products in the pipeline, there is no going back to an era of small molecule drugs.
A sensitive subject
Most of the time, biological products are very sensitive to environmental conditions, and require very specific storage and handling procedures, as indicated in their product labelling. Many need to be maintained within a 2–8°C temperature range, but others will require even colder (or cryogenic) storage.
If these temperatures are not maintained, the consequences can be dire. Depending on the product, deterioration can happen fairly rapidly, meaning the product becomes unusable. It might lead, for instance, to an increase in impurities, a separation of layers in liquid products, or change in the dissolution pattern of solid dosage.
Since many of these products are very expensive, temperature excursions can cause severe revenue losses for pharma companies. The Centres for Disease Control and Prevention (CDC) estimates that $300-million worth of vaccines alone are destroyed each year due to improper storage and transportation.
Cold chain logistics, then, is set to dominate industry discussions for years to come. According to Pharmaceutical Commerce, the 2018 market for pharma cold chain logistics stands at $15 billion, and is growing a staggering four times as fast as non-cold chain logistics.
“The rule of thumb for many years now has been that the sales volume of temperature-controlled products grows at twice the rate of pharma overall, and that is continuing for the near term,” said Nick Basta, editor of Pharmaceutical Commerce.
Controlling the costs
The question for pharma companies is how they can best protect these products without breaking the bank. Naturally, it costs more to keep products cold than it does to keep them at uncontrolled ambient temperatures (out of that $15-billion figure, the costs of special packaging/instrumentation are estimated at $4.4 billion). It can, therefore, be seen that there is mounting interest in techniques that will save money – specifically cold chain digitisation.
To date, digitisation – which essentially means harnessing digital technologies – remains underexplored within the industry, and this doesn’t just apply within logistics. According to research by McKinsey, the pharma industry ranks in the bottom third of industries when it comes to its ‘digital quotient’. In fact, a certain aversion to new technologies is evident even within R&D.
Within the supply chain specifically, there is clearly a long way to go.
The need for speed
One obvious contribution of digitisation is GPS/GSM-enabled sensors to monitor temperatures. These are relatively small so can easily be placed on a pallet or box, and can provide live temperature readings throughout the cold chain.
At a minimum, this allows for easy identification of shipments that have fallen outside the required range for long enough to be considered spoiled and be removed from the supply chain at their end destination. Better yet, some sensors are able to provide more timely alerts about temperatures trending out of range and remedial action can be taken to prevent spoilage.
Even armed with real-time alerts, however, a cold chain manager may not be able to obtain the necessary resources fast enough to maintain product quality. It is thus imperative to be proactive rather than reactive along the cold chain. This is where predictive analytics can be hugely valuable.
Using this technology provides the ability to look ahead at the scheduled route of a shipment and identify potential issues before they occur. By plotting the forecasted temperature along the predicted location of a conveyance over time, a digital supply chain solution could highlight risks before the shipment even departs. The sensor can then make recommendations based upon these insights to minimise losses. This might include removing one type of product and shipping the remainder, which will be unaffected by the anticipated conditions. Alternatively, another route with more favourable temperatures may be suggested.
One concrete example of a company using digitisation effectively is Merck KGaA. Harmonised, real-time information is obtained about everything from supply chain performance and stockkeeping units to data collected from the company’s ERP in order to optimise its operations. By placing sensors along the cold chain that gather data about inventory distribution practices and availability for every product, high endto- end visibility is achieved. Machine technologies are then used to help with tracking and planning for different types of products.
This technology enables orders to be processed in the shortest time possible as a result of shifting production or materials to different locations as required. The analytics and algorithms applied to the data provide the ability to forecast more accurately than traditional methods 80% of the time, according to an article by Pharmaceutical Manufacturing.
Signed and sealed
Delivery can also be enhanced through the use of digital technologies. Networks of drones can provide support for last-mile logistics, which is especially valuable within rural locations. Despite a high level of government scrutiny and regulation, these are already beginning to be implemented within the industry.
In a 2017 report by Pharma Logistics IQ, Cathy Robertson of Logistics and Trends LLC described the way in which drones are currently being used in Africa for medical deliveries. Due to the speed of the technology, optimal temperatures for both blood and pharmaceuticals can be maintained all the way to the hospital. They do not even have to land; the supplies fall from low altitudes in small paper parachutes. The drones then return to a home base, where they are prepared for a new mission by swapping their batteries and inserting a SIM card containing a new flight plan into them.
This technology is not only being implemented in developing markets. In the US, NASA partnered with a drone start-up business to deliver to a clinic in Virginia. The entire process took around two hours, beginning with the supplies being separated into smaller packages, before getting transported by the drone and then being lowered to the ground via tether to be received by healthcare professionals.
Drones are also being tested in Europe, which includes the integration of biologistic isothermal packaging for temperature control for in-flight monitoring along a predefined and programmed route, directed by longitude and latitude coordinates.
There are challenges with this technology, such as how to share air space with larger aircraft, as well as issues around security and privacy. However, the potential of drones to enhance efficiencies cannot be underestimated. Robertson describes them as the ‘secret sauce’ within the cold chain.
Turning the tide
With an increasing amount of digitisation within the industry, the role of the pharma supply chain professional is evolving. The skill sets required to successfully implement these technologies are very different to those in a traditional work environment. Successful adaption will demand training and reorganisation, as well as cultural change.
The enhanced capabilities of these new technologies will also ameliorate the need for certain jobs. For example, automation is likely to replace a lot of handling staff and local 3D printing could significantly reduce the need for finished-goods transportation. However, digitisation cannot replace all jobs across the cold chain.
“At the end of the day, algorithms are ultimately written by humans and AI is still a long way from replicating the human nuancing, reasoning, interpretation, intuition, contextual awareness and other qualities of cognitive intelligence,” said Alan Kennedy, of Team-Up Global, in the Pharma Logistics IQ report.
Although relatively new to pharma, these technologies are already being widely used elsewhere. This is why the supply chain today remains relatively inefficient in comparison with those in other sectors. Embracing digitisation provides the opportunity to level the playing field and truly embody industry 4.0.
