The life sciences industry is growing and changing. Recent changes — and the ones that are likely to shape the industry for the foreseeable future — include the increasing importance of emerging markets, biologics, patient-centric approaches and direct-to-patient deliveries. In the latest Precision Report we look at these, and examine how they will impact life sciences shipping.
Deloitte estimates that global health care spending will reach $8.7 trillion by 2020. There are a number of reason for this, but two of the most significant are ageing populations in the developed world and the increasing importance of emerging markets. Although these trends both point to an increase in health care spending, this is uneven across the world. Deloitte found that by 2021, health care spend in the United States will be $11,356 per person; in Pakistan it will be just $53.
Having said that, demand is shifting from mature markets like the US and Europe to emerging markets, such as the BRICS countries, Mexico, Turkey and others. As markets, China, Russia and India have significantly expanded. Due to a growing middle class, eight of the top twenty pharmaceutical markets in the world are now emerging countries. Furthermore, it looks likely that China will be in the top three very soon.
Companies cannot afford to ignore the growing buying power of these countries. However, they present challenges too. Firstly, many of these countries are not simply purchasers of life sciences products — they make and manufacture pharma and medtech products too. They also have different, sometimes more flexible regulatory requirements. Therefore, life sciences companies need to research these markets carefully.
Historically, life sciences shipping meant cold-chain storage mainly for vaccines, blood, tissue samples and the like. Today, as the industry shifts toward specialties like biotechnology, more products require cold-chain refrigeration. This includes everything from biologically based medicines to research and clinical trial materials, drug coated implants and more.
Biologics, such as gene therapies and cell-based therapies are a growing area. It is believed that biologics and biosimilars will make up a quarter of the pharma market by 2020. It also seems likely that patients will become part of the biologics supply chain in the near future. This could include shipping DNA material or blood samples directly to a life sciences manufacturer. After the company makes a treatment unique to the patient, they will ship it directly to them. Personalized treatments will not only be costly, they could also exponentially multiply the number of shipping routes. Furthermore, they will increase the need for temperature-controlled shipping.
Home health care is a growing market for life sciences products due to an aging population in Tier 1 markets, where there is growing emphasis on home care due to escalating health care costs. This means many shipments are now going directly to price- and time-sensitive patients, rather than through traditional distribution channels.
Life sciences companies are also looking at adopting direct-to-patient shipping as competitive advantage. This could improve patient experience and increase brand loyalty. Direct-to-patient shipping upends traditional distribution channels. Smaller shipments to more destinations means a more complex distribution process.
However, a direct-to-patient distribution model could also reduce shipping costs. The 2018 Deloitte report on the life sciences industry concludes that companies could reduce spend by 15 to 20 percent and still improve patient experience.
Life sciences shipping has a number of regulations that make it a complex process. These include the need for compliance with track and trace requirements, cold-chain storage of certain types of materials and the ability to provide documentation of contents, trading partners and the like. These factors drive up cost as well as complexity. In addition, they must comply with labeling standards and packaging requirements.
For example, the new European Union Medical Device Regulations (EU MDR) requires medical device and pharmaceutical manufacturers to change how they label, package, transport and store their products. Furthermore, changes in one country’s regulations could impact global life sciences shipping. It is thought that the China Food and Drug Administration (CFDA) may soon require life science companies to monitors shipments for temperature. As China is such a large market for life sciences companies, it is possible that CFDA requirements will change shipping standards.
Here are 6 key capabilities life science companies need to ensure successful global shipping processes, now and in the future.
Life sciences shipping depends on a network of carriers who can provide specialized handling, such as cold-chain or hospital delivery services. PRECISION’s Multi Carrier Shipping Software offers access to a global network of more than 5,000 carriers. PRECISION Multi-Carrier Shipping allows you to search for carriers by geography and capability. Furthermore, the solution gives you the ability to compare costs, routing options and other criteria so you can make better decisions.
PRECISION Global Trade Management automates export processes, including documentation production and customs reporting. PRECISION ensures that all the documents required to complete a shipment are prepared correctly. This includes documentation for specialist life sciences products as well as dangerous or infectious goods.
When your product contains controlled substances, biological or chemical compounds the ability to ensure that your trading partners are authorized to receive shipments is critical. PRECISION Trade Compliance starts at the beginning of the export sales process. Life sciences shippers can verify trading partners, determine end use, validate the country of destination and so forth. This gives shippers the ability to perform due diligence, streamline trade compliance, create audit-ready electronic reports and mitigate the risks associated with changing global trading environments.
When you send sensitive materials, you need to know what’s happening with your shipments. PRECISION Delivery Exception Management is a centralized portal for multi-carrier and international package tracking. PRECISION allows you to track shipments originating in any system as well as to track every shipment, in every region, in the same way. The system allows you to proactively manage problem shipments by exception, capture proof of delivery, and raise tracers for lost and damaged shipments.
Life sciences organizations are sending more frequent, and smaller shipments. Patients-as-consumers, biologics, and the importance of emerging markets are all pressuring companies to rethink their distribution models. Parcels are replacing pallets, and life sciences shipping has begun to move away from traditional distribution methods. This means life sciences companies need new capabilities to manage their shipping process. Higher volumes of smaller shipments going to more places than ever before also means that companies have an increased need for accurate documentation and better visibility into shipping spend.
Distribution is often overlooked as a source of competitive advantage in life sciences. However, companies with the ability to reach customers efficiently and cost-effectively will have a distinct advantage over those who have yet to move on from from traditional distribution models — and traditional thinking.