DHL Life Sciences and Healthcare Sector Week
Life Science and Healthcare Week
Managing Trends in Life Sciences & Healthcare
Pharmaceutical and medical device manufacturers are being hit by the double whammy of cost pressures from governmental and private payers for healthcare services, and their bestselling drugs going off patent.More
At the same time, the cost of developing new and innovative products shows few signs of decreasing; regulatory control of pricing is tightening; and the respective rise of low-cost generics are further hitting operating profits. Added to this are stricter regulatory requirements, notably around temperature control and authentication, further driving up costs and forcing manufacturers to seek more effective and efficient supply chain set-ups.
Similarly for medical devices, the share of diagnostic kits, along with “drug coated” implants that require temperature control, is on the rise. This trend for temperature control in finished products is driving respective trends in clinical trials, in addition to the classic demand for cold chain shipments of tissue and blood samples. What is more, the globalization of manufacturing is stretching supply chains and increasing the need to monitor conditions during transport.
Our customers in the life sciences and healthcare space are telling us that cost is a key concern right now. They are under financial pressure that is driven by, on the one hand, so many products going off patent. With top-level profits down, they’re looking to shore up the bottom line and get their profitability back up. On the other hand, the rising cost of healthcare and the more difficult economic times we are in are driving governments and healthcare providers to cut outlays, by turning to generics, for example.More
These two factors are forcing the pharmaceutical and medical device manufacturers to get more cost conscious and that has logistics implications. Our customers are asking us to support them in finding cost savings and we have a number of solutions to offer, like sharing infrastructure, sharing logistics, and grouping different shipments into a single ocean container or truck.Multi-user warehousing, for instance, is a cost-saving opportunity, particularly in the mature markets of Europe, North America and Japan. By putting several customers together, we can provide the same quality while the costs are shared.
In the emerging markets it’s a slightly different proposition. In the high growth environments of the BRICs along with Mexico and Turkey, it’s more a matter of scarce resources. We’ve had customers tell us they’ll take anything we can offer them in these markets. Here, multi-user warehousing becomes an opportunity to more efficiently use the limited space available that satisfies the specific GDP and GMP compliance requirements.
All of this is leading customers to think in a transformational way about their distribution. In the mature markets, the distribution of product is dominated by wholesalers. But some customers are thinking about transforming that, by working directly with a logistics service provider. We’re already doing this in Australia, Italy, the Benelux countries, and in the UK.
This is even more appealing in the emerging markets, where some pharma or medical device companies might be more inclined to work together with a logistics provider from the initial set-up. The company would continue to own the stock and basically the logistics provider does the warehousing and the distribution on a fee for service basis.
These trends – cost, regulation, and globalization – are also leading to another trend, which is differentiation of the supply chain and the way the sector does logistics.
For generics, cost is the key factor in determining the set-up. For many new products, the cold chain is key. And then there’s the emerging trend of specialty products. Many of the top products now are biologics, and for these you might consider totally different logistics, like a direct distribution. One could even imagine an end of runway concept together with an order to cash capability, for example. The possibilities are endless, if you work with the right partner.
Michael Terhoeven, VP DHL Global Life Sciences & Healthcare Sector Strategy and Development
Angelos P. Orfanos, President Life Sciences & Healthcare DHL
Globalization and Emerging Markets
Of all the trends impacting growth within the life sciences and healthcare sector, globalization and growth in emerging markets is the most far-reaching.More
Because of the rapid growth of the middle class, rising living standards and life expectancy, and the emergence of more sophisticated healthcare systems, “this is where the next billion patients are to be found,” as a recent Gartner study put it.
Healthcare spending in emerging markets – including China, India, Brazil, and many other dynamic areas – accounted for €143 billion in 2011 and is forecast to nearly double by 2016. The majority of that increase is expected to be within the generics field of pharmaceuticals. Based on these growth expectations, pharmaceutical and medical device manufacturers are targeting emerging markets for new sales, manufacturing, research and development, as well as clinical trials.
For these reasons, international and global supply chain set-ups have become particularly important for pharmaceutical and medical device manufacturers, and are continuing to gain in significance.
Globalization is impacting the life sciences and healthcare sector in many ways, as companies struggle to find new products and new markets. Mergers and acquisitions are an important element of this, where you’ll see companies in the mature markets like the U.S., Europe and Japan, acquiring companies in other parts of the world to expand their pipelines and reach.More
The Japanese are moving into Europe and India, for example, and we are seeing American companies acquiring targets in Brazil and China, all looking to compete better on a global scale. Pharmaceutical companies are also looking to get more products on the shelf through product acquisition and licensing agreement in various markets.
As these companies move into markets they don’t necessarily understand or haven’t historically worked in, that makes their supply chains more complex. They’ve got to deal with regulatory and compliance aspects, which may differ significantly from one country to the next. They also have to manage the security and, importantly, the temperature of their products. So globalization for drugs and medical device makers means they need very robust processes themselves and they also need very robust partners who can help them manage aspects like regulation and compliance, temperature control and security.
In working closely with our life science and healthcare customers, we’ve been preparing for globalization in this sector for many years. That has meant building up resources, infrastructure, processes and competent people in those markets ahead of the curve. Today we have 102 life sciences grade supply chain warehouses around the world, 30 life sciences competency centers, four European GDP compliant cross-docks, and 32 clinical trial depots and four regional life sciences hubs.
We enjoy strong support from many of the world’s leading pharmaceutical and medical device manufacturers. They opt for DHL because of our value proposition and professional approach that allows them to harness maximum value from their supply chain. We are in countries they are not, we have people on the ground who understand what to do with life sciences and healthcare products, and we often have the case study and the existing structure to support them.
This is why these customers come to us, and we are seeing such strong rates of growth in our life sciences business in the BRICMT countries – Brazil, Russia, India, China, Mexico, and Turkey.
David Wilson, Senior Vice President Sales Global / Europe, DHL Express
Nigel Wing Vice President, Global Head Life Sciences & Healthcare, DHL Global Forwarding
Specialized Sector Solutions
As a key strategic sector for DHL, we have developed a number of specialized solutions to meet life sciences and healthcare customers’ demanding needsMore
These include innovative cold chain capabilities, such as our new service, called THERMONET. With a global network of GDP-compliant stations supported by certified life sciences specialists and real-time visibility, THERMONET sets a new standard for cold chain air freight transport based on our leading cold chain process management expertise provided by our subsidiary, LifeConEx.
For high value and time sensitive shipments, DHL Medical Express provides a high-priority, time-definite international express service under temperature-controlled conditions. DHL Medical Express will deliver time-sensitive samples, medicines and clinical supplies to key global markets, using dedicated transportation services and advanced tracking technologies.
DHL Recall Solution is another specially tailored service, catering to the medical devices industry. This scalable, customizable, end-to-end recall and fulfillment solution can manage local, regional, global and multilingual recall scenarios, efficiently and effectively.
And, our end-of-runway Integrated Solutions Center, opened in June 2012 at Leipzig airport, allows for very late cut-off times by directly “injecting” shipments into our express network at the European regional hub. Designed, in particular, with life sciences and technology customers in mind, the 15,000sqm facility also acts as a medical device warehouse, complying with the strictest requirements for pharmaceuticals, including processes, security and handling of temperature-sensitive medical products.
Years ago at DHL, we recognised something unique about the life sciences and healthcare sector and started to build the base that we needed to service customers in this sector. This is an industry with very high, quality-driven requirements, due to the uniqueness of their products – products that save lives and need special handling.
From that base, we were able to develop the customized and specialized solutions that enable our customers to enter new markets and deliver high quality products under the right temperature conditions.
We now have close to 1 million square meters of life sciences-grade, temperature controlled warehouse capacity, which makes us the leader in the marketplace with a very specialized capability. We continue to invest in this capability in response to customer demand, including recent investments in India, Mexico, Brazil, and Hungary.Complementing this is our ocean and air freight cold chain services, including LifeConEx, the only end-to-end cold chain management solutions provider for the life sciences industry worldwide. Cold chain capabilities are becoming increasingly important, as more temperature controlled products come on to the market, and regulatory requirements regarding transporting temperature controlled products become tighter. As the world globalizes and active ingredients are sourced from new locations, the cold chain has to be maintained.
We are also introducing a new service called Thermonet that we believe will be a new standard for temperature management. And, we created Medical Express, a specialized solution for integrator and direct to market services, such as direct to pharmacy, and direct to hospital, which has been extended to 70 countries.
Now, what we’re trying to do is drive transformation using these specialized solutions. What I mean by this is our customers are asking us to expand our capabilities, to take that platform and provide services that go deeper into their supply chain, either downstream or upstream.
Another example is our end of runway solution at our Express hub in Leipzig. This is a unique capability that’s built around a runway, so that an order can be pulled out of a warehouse environment at a late hour and packaged and shipped for morning delivery. This is especially interesting for medical device customers.
And our latest addition is a new specialty courier product called Same Day, which is a very high level service that is faster than an integrator or express shipment. We’re very excited about this service, which requires high level knowledge and couriers that are ready at a moment’s notice.
So, we’ve succeeded in building up very specialized services and, as a result, we are the market leader and we have helped our customers to grow because of it. Our success lies in the fact that our customers have found that using DHL will give them the highest probability of success. It’s as simple as that.
Angelos Orfanos, President Life Sciences & HealthcareDHL
Expertise and Community
Our customers trust DHL with their business, including delivering and storing their vital healthcare products, which require rigorous levels of quality and competence in product handling. As regulatory compliance for the transportation and storage of medicines becomes ever-more stringent, we are constantly extending our footprint of Good Manufacturing Practices (GMP) and Good Distribution Practices (GDP) compliant and certified facilities for warehousing and regional distribution of pharmaceutical products.More
Apart from our state-of-the-art facilities, we are also investing in specialist people – such as pharmacists – whose knowledge and experience in the life sciences sector is second-to-none. DHL employs over 60 full-time pharmacists globally, and a significant portion of the sector’s workforce is dedicated to quality assurance. In fact, the DHL life sciences and healthcare expert community includes some 4500 dedicated and trained people around the globe. Our expert community development includes holding regular internal community calls to share information among the team.
These capabilities and expertise are continually developed through collaborative dialogue with customers. One of the more visible ways in which we listen to customers is through our annualDHL Life Sciences and Healthcare Global Conference and Workshops, which just took place this week in Miami.
Good Practice Makes Perfect
For life sciences and healthcare, it’s vital to stay on top of regulatory requirements – at the global, regional, and local levels. We have an ongoing process of reviewing global, regional, and local regulations and distil them into our Yellow Book, which is like a blueprint or core quality standard for our operations. We share this and other best practice knowledge internally among the life sciences and healthcare community, working together across the Group. Customers appreciate this because they can see that we understand the market and have a very clear picture of what we’re doing to address regulatory and compliance issues.More
Depending on our operations, we have to have good distribution practice (GDP), good storage practice (GSP) and good manufacturing practice (GMP) expertise. GDP and GSP cover the majority of our business around segregating and ensuring products arrive at the right location in the right condition at the right time. This includes temperature monitoring and tracking of shipments. GMP covers manufacturing activities, so where we have been requested to perform manufacturing of pharmaceutical products. This may include additional labelling, serialisation and secondary packaging, and that sort of thing.
For example, within DHL, we have been preparing for the EU’s recently updated GDP guidelines by aligning with customers and associations in the consultative process. The updated GDP requirements are detailed in our own GDP guidelines for handling biological, medical devices and pharmaceutical products within contract logistics operations. We have also been investing in sector-specific processes, people, capabilities and GDP-compliant certified infrastructure, including expanding our competency center network to support Thermonet, DHL’s new cold chain standard air freight solution.
Another area where we are staying ahead of the curve is in e-pedigree and serialization. Serialization is where some products will have a unique serial number, which is common for clinical trials products, for instance. That’s typical for a double blind trial, where neither the doctor nor the patient knows whether it’s an active product or a placebo, and the serial number determines this. Serialization is starting to become more significant across the sector now in the fight against counterfeiting.
For example, in Turkey, there are national regulations to meet their requirements around e-pedigree, which entails serializing products on inbound. Every product, box of pharmaceuticals, or pack will be assigned a serial number upon entry into Turkey. We apply the serialization data and upload that data onto a government system. Then, at the time of dispensing, the pharmacist can check the serial number against the government database to ensure that the product has entered through the proper channels. We’re going to see e-pedigree being picked up in the U.S. and in China in the coming years, so our experience with it will give our customers a leg up in adopting the requisite processes.
Thomas Ellmann VP Sector Life Sciences & Chemicals, DHL Global Forwarding, Freight
Jonathan Blamey, VP Global Product & Account Leader DHL Supply Chain
Meeting Tomorrow’s Healthcare Needs
The life sciences and healthcare sector is entering a new age of innovation, characterized by advances in biopharmaceuticals, genetically personalized medicine, targeted and more effective vaccines, and regenerative medicine.More
The life sciences and healthcare sector is entering a new age of innovation, characterized by advances in biopharmaceuticals, genetically personalized medicine, targeted and more effective vaccines, and regenerative medicine. Progress in IT, robotics, mobile technology and nanotechnology will all have significant ramifications on the future of healthcare. More advanced sensors, including implants to track physical health, will lead to better diagnostics.
Future innovations in the life sciences and healthcare sector will mean significant changes in the manufacturing and distribution processes, which will require similar progress in life sciences logistics capabilities. We are already seeing this with regard to specialty drugs and biological products with very specific temperature and supply chain integrity requirements. This will call for new competences from manufacturers and logistics providers alike, such as cryogenic capabilities or specialized facilities.
Logistics will become the enabler for realizing the full potential of new markets and innovations. However, the demand for differentiated supply chains that are also completely transparent and visible in real-time will have to be balanced against cost-effective solutions for logistics. By collaborating closely with life sciences-specialized logistics partners like DHL, companies in this sector will be uniquely prepared to seize the opportunities ahead.
Enter a New Era of Innovation
Throughout this week, we have closely examined the trends and challenges facing the life sciences and healthcare sector, and how DHL is working to better understand and meet our customers’ expectations – whether for pharmaceutical or medical device manufacturers. They are focusing more on cost, as the market shifts from branded drugs to generics. They are eagerly pursuing new growth opportunities in emerging markets. They are raising their compliance profile and, as pharmaceutical products become more sophisticated, they are looking for more regulated temperature and cold chain capabilities throughout the network.More
We are responding and providing answers, by facilitating access to emerging markets through our global network, while finding ways to take out cost and provide better operating platforms. We are growing our network of compliant competence centers from 30 today to more than 50 in the next couple of years. And, we have launched Thermonet, which is a big step in cold chain capabilities for customers, giving them information on the status of their product and its whereabouts.
But, infrastructure is only one part of the equation – just as important in giving us an edge are our people. We need people who understand our customers’ needs and can talk their language. That’s why we keep investing in people in order to retain and grow this in-house experience and expertise.It’s also critical that we keep innovating, to stay ahead of the curve, because life sciences and healthcare is entering a new era of innovation. From biopharmaceuticals to genetic testing kits, to the human micro-biome, the pace of advances in drugs and treatments is astounding. Add to this mix amazing technological feats, like 3D biological printing capabilities, coupled with robotics and nanotechnology, and the future of life sciences and healthcare promises to be eye-opening.
These future innovations will require similar leaps and bounds in life sciences logistics solutions, of which cold chain will play an ever-more critical role. Differentiated supply chains, facilitated by specialized logistics partners like DHL, will become the lever that enables our life sciences and healthcare customers to continue to innovate and deliver life-enhancing products for a healthy future.
Roger Crook, CEO DHL Global Forwarding. Freight and Sector Sponsor