From counterfeit medicine to price reduction, global pharmaceutical logistics is a complex business to say the least. Clinical Trials Insight talks to Leif Kronkvist, vice-president of global life sciences at Agility, about negotiating this challenging landscape.
How have things changed in the logistics industry since your company was founded?
Leif Kronkvist: 1967 was the first year we managed a cold chain transportation of pharmaceuticals out of Basel using airfreight. In the late 1990s, you started to see globalisation and the transportation of pharmaceuticals follow that pattern. Over the years, we went from being a small industry to something much bigger with transportation and production that went all around the world.
In the 2000s, legislation and regulation started to harmonise in response to the growth of new markets. In the EU, we saw the creation of good distribution practice (GDP).
It was an important development. When you have a company that is developing drugs, you need to make sure that the drug is working and that it’s produced in an appropriate environment – including when it is in transit. People need to trust that whatever they get from the doctor or over the counter has the effect the doctor proscribes. That is of central importance to us; we deliver the right medicine to the right location at the right time, and in the right condition.
What are the core challenges of the global pharmaceuticals industry today?
The main challenge for the industry right now is the rapid introduction of new regulation and legislation across the world. It’s very difficult to keep up with, and the implications of ignoring it can be very severe. If you are a company producing and selling in a market and fail to observe a certain change in legislation, then you won’t be able to sell that product any more, or you won’t be able to transport it through certain countries. In November 2013, the GDP regulation changed to include new rules about transporting drugs at between 15 and 25°C. It’s a complex environment.
There are other challenges too. We’re seeing an increase in demand for cold chain equipment, a lack of genuine capacity, a massive threat to intellectual property with counterfeit medicine, and increasing health costs for governments around the world.
That last point is particularly important because it puts pressure on price reductions. Italy and Spain have recently forced cost reductions on manufacturers selling to healthcare providers. This leads to a new pressure on the supply chain: you have to put in much more planning.
How is the shift from airfreight to ocean freight affecting the industry?
One of the biggest trends in the industry right now is the shift from airfreight to ocean freight. There are two obvious disadvantages of this; the first is that it takes quite a long time and the second is that ocean carriers can be quite sensitive about the value of pharmaceuticals that are being brought onto their ships because of the insurance cost.
We’re trying to come up with solutions that prove to the customer that, if they look at the end-to-end supply chain, even if transport is slower, they don’t need to have more capital tied in. It’s really just a question of planning more, predicting more and forecasting better.
Can you take us through your strategy when it comes to planning and forecasting?
We combine three very important areas. We have an operational lead, a commercial lead and a technical lead in every region – whether it’s in the Americas, Asia, Europe or the Middle East. This ensures that we have exactly the same operational procedure everywhere we go; regardless of where we are, depending on the product requirement. It also means we have someone responsible for auditing any kind of transportation we are using in compliance with GDP.
