DHL’s Solutions & Innovation department has published its report on “Key Logistics Trends in Life Sciences 2020+“.
Over the past decade the global life sciences sector has experienced healthy growth. The world market for pharmaceuticals, for example, has doubled within a decade. It has reached a value of about USD 1 trillion and is expected to grow by another 3 to 6 per cent per annum until 2016 (IMS 2012a). Strong growth rates until 2020 are also forecast for the market for medical devices.
Logistics has long been considered a basic supporting function within the life sciences sector. However, the importance of logistics is growing for a number of reasons: (1) the increasing relevance of emerging markets and globalization of supply chains, in turn (2) driving increasing regulatory efforts in particular around temperature management and, finally, (3) a changing product portfolio that, on the one hand, allows new direct-to-market approaches notably for specialties and, on the other hand, requires differentiated ‘value-focused’ approaches for value products and generics, where the cost of logistics drives a larger share of total cost.
This white paper is intended to contribute to the endeavor of managing the resulting challenges. Its aim is to systematically identify the most important required actions for life sciences logisticians for the coming years.
Our key findings for life sciences logistics include the following:
1. We expect a shift from undifferentiated logistics structures to more differentiated supply chains, with the mode of transportation, warehousing and depth of distribution tailored to different life sciences product categories.
2. We believe that manufacturers in the life sciences sector will build up direct-distribution channels to the end consumer. They will either develop their own e-commerce operations or distribute their products via third-party platforms.
3. We see pharmaceutical and medical device manufacturers expanding their capabilities to tier-2 and tier-3 cities and sometimes even to rural areas in emerging countries. However, there are likely to be differentiated approaches to depth of
distribution and to implementation strategies.
4. In future, we expect that better visibility in the supply chain will be required not only for product security and integrity, but also because of the need to control and optimize logistics processes (for example, with outsourcing and emergency logistics complementing slower-mode transportation and demand-driven supply chains). At the same time, visibility will enable differentiation and create value (for example, with direct-distribution models, mentioned in 2. above).
5. Finally, we foresee the need for manufacturers in the life sciences sector to keep supply chains flexible to adapt to new regulatory standards and the distribution requirements of innovative products. We expect more temperature-differentiated
supply-chain solutions, as well as infrastructures adaptable for product bundles and more personalized medicines and implants.