Pharma & Healthcare Logistics
Development Roadmap for Luxembourg
Introduction:
Implications for LSP’s
Overview on current trends in the pharmaceutical and healthcare (P&H) industry, affecting the sector.
Analysis of the market and its development is necessary:
- to understand the environment, in which Logistics Service Providers (LSP) targeting the P&H industry will
have to operate.
- early detection of trends helping LSP to better adapt to changing business conditions.
- and to maintain their competitiveness.
From LSP’s point of view, targeting the P&H industry, the question arises:
- implications on their business.
Purpose of this presentation is therefore to reveal:
- Implications of the current changes in the P&H industry for logistics, and especially for LSP.
- Analysis of information on the competitive environment regarding opportunities and risks can be used.
- Identifying adaptation needs of companies and to evaluate their positioning in the market,
- which shall help LSP to foresee challenges,
- as well as to take advantage of new market developments.
 Therefore, each section will firstly illustrate opportunities and risks resulting from the conclusions.
 Before deriving implications from the perspective of a European LSP.
 Last section, statements on potential impact and probability.
Opportunities & Risks:
P&H Industry Trends for LSPs
Opportunities
Risks
The general trends in the P&H industry will also affect
to a certain extend the provision of logistics services:
Considerable changes currently undergoing in the P&H
industry also might have negative implications for the
logistics services. Especially important seem the
following:
1.
Increasing global pharmaceutical demand will
likely foster the demand for logistics services
4.
2. Outlooks especially for China, Brazil and India
indicate new opportunities for LSP establishing
supply chains to and from these markets
Furthermore, the increased demand for generics in
developed and emerging countries will rise number of
producers, who have to distribute their products:
Additionally, the diversification of products and
producers might not only have positive, but also have
negative effects on LSP:
5.
Loss of patent protection might force
pharmaceutical companies to further reduce
logistics costs and might put more pressure on
LSP
6.
The increase in temperature-sensitive biotech
drugs and biosimilars might further increase the
requirements by companies and authorities
3. Loss of patent protection of major blockbusters
might increase the number of producers and
therefore the number of supply chains
Another factor is the diversification of product types:
The increase in biotech drugs and the risks
associated with their distribution (e.g. cold chain
ruptures) might lead to increased outsourcing to LSP
with qualified & certified GDP-based sevices.
Europe is losing its importance relative to the
emerging markets, which might lead to a reduction
of logistics activities in this market
Opportunities & Risks:
Main Global Supply Chain Trends for LSPs
Opportunities
Risks
During the next years, the global pharmaceutical
market will change considerably regarding production
and demand:
Also risks associated with the changing P&H
market:
7.
The geographic diversification of production and
demand will probably lead to more trade routes
which have to be served by LSP
since new production locations and new destinations
will be added to current supply chain networks.
Furthermore, the poor infrastructure of
pharmaceutical logistics in emerging markets offers
8.
Opportunities for LSP to establish and enlarge
their business in attractive markets
Since markets in developed countries become less
attractive regarding production and pharmaceutical
spending, logistics infrastructures might not require
expansion. This might lead to:
9.
Erosion of demand for current shipping lanes
Furthermore, in the face of new markets where
healthcare shall be provided to an increasing
population, and where the production and demand
of generics is already well established,
10. LSP might experience rising competition of
domestic LSP
The emerging markets pose many new challenges to
P&H companies, but also to LSP.
=> Therefore, LSP demonstrating the ability to adapt quickly to new P&H markets and trends might gain a
competitive advantage
Opportunities & Risks:
Strategic Logistics Targets of P&H Industries
for LSPs
Opportunities
Risks
Challenges encountered in current P&H logistics,
together with the strategic logistics targets of the
major pharmaceutical companies might provide LSP
with new opportunities. Possible effects are:
Even though the major logistics challenges in
the P&H industry seem to be equally perceived
by different sources, this does not lead to a
general trend regarding out- or insourcing of
logistics activities.
11. The focus on emerging markets might increase
outsourcing of logistics activities to LSP
Due to rising number of markets and diversification of
country-specific market characteristics, which will
result in rising complexity to be handled by
pharmaceutical companies
12. The increasing importance of P&H logistics and
the need to tackle current logistics challenges
with the customer, might lead to more strategic
partnerships
13. LSP demonstrating P&H expert knowledge might
create incentives for P&H companies to reduce
safety buffers and to enhance logistics
outsourcing
14. Counterfeit might lead to the desire to
better control the supply chain and hence
to reduce external participation in the chain
15. Increasing demand for flexibility might
increase the pressure on LSP to provide
redundant transport and storage capacity.
Conclusions
The P&H industry will go through considerable changes during the next years:
 Significant increases of demand by emerging markets
 Reduced growth of developed markets
 New production locations
 Patent expiries by major blockbusters
 Increasing market share of generics and
 Increasingly exigent handling requirements to ensure
e-2-e temperature controlled S/C
 Enhanced capabilities, tools and processes for end-to-end product traceability
 Increased flexibility and efficiency
 Compliance with regulations and industry standards
Pharma & Healthcare Logistics
Development Roadmap for Luxembourg