Pharma cold chain, a billion dollar global industry

March 27, 2019 Pharma cold chain

Pharmaceutical supply chains have various global regulatory requirements to meet while handling, storing, and distributing environmentally sensitive products. Their focus is to provide cold chain management for temperature sensitive pharmaceuticals to ensure that the quality and efficiency of the product will not be compromised.

The Pharmaceutical Commerce’s annual Biopharma Cold Chain Sourcebook, 2017, estimates that the pharma cold chain logistics will total up to $ 13.4 billion this year, growing at a 5-6% rate. Also, the value of temperature controlled pharmaceuticals being shipped is projected to grow 10.7%, reflecting that the industry has learnt to efficiently manage cold chains.

The critical need to eliminate counterfeit drugs has enabled the industry to maintain a chain of ownership from manufacturing to retail distribution. The World Health Organization (WHO) is estimating that 10% of the drugs that reach consumers are fake or even contain harmful substitutes. There is also an increasing variety of drugs that require temperature control while in transit. These factors have been the driving change in the pharma supply chain.

The Sourcebook estimates that by 2021, pharma cold chain logistics will be worth $16.6 billion. “There has been only moderate growth, if any, in freight transportation costs across the board in recent years,” notes Nick Basta, editor of Pharmaceutical Commerce, “and since freight transportation comprises roughly 70% of cold chain logistics costs, that moderation is a factor in the slower growth rate in cold chain logistics spending by biopharma.”

The global pharma industry today is almost $1.2 trillion, is projected to rise by 41% by 2021. Within that, products that require refrigerated storage and transport are worth around $283 billion, and will rise 70% over the same span.

The drivers are the continuing transition to biological based products, along with the growing requirements for medical shipments. The doubling of pharma cold-chain logistics growth is attributable primarily to the shift to biologics and other specialty pharmaceuticals, many of which require refrigeration. Continued strong growth in insulin products and vaccines is also propelling growth, as is the broader adoption of all these products from developed economies to underdeveloped ones, especially in Asia.

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