2020 Cold Chain Forecast — Ushering in the Next Decade of Change

As we cross the threshold into a new decade in 2020, it is time to take stock of the significant changes that transformed the pharmaceutical cold chain industry during the past decade. The years from 2010 through 2019 indelibly altered the landscape of pharmaceutical development and delivery, introducing both life-saving breakthroughs and unprecedented business pressure.

A decade ago, costly biologics and a variety of cell and gene therapies were far outpaced by conventional chemical-based therapy. Traditional pricing models were standard practice. Technology was just trickling into healthcare with the push for electronic, portable health records. Sustainable practices were good to have — not a key decision-making factor.

With global pharmaceutical sales projected to climb to $1.18 tn by 2024¹, it’s a certainty that change will continue into this next decade. The following four predictions are what we see on the immediate and not-so-distant horizon that will continue to transform the pharmaceutical and cold chain industries.

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• Ramping Up for Cell and Gene Therapy

  Cell and gene therapies provide great promise for developing effective patient-specific treatments based on a person’s unique genetic and cellular make up. But these 1:1 therapies come at an incredibly high cost. With more cell and gene therapies expected to be approved in 2020² and beyond we anticipate this sector of the pharmaceutical industry will continue to ramp up — which will add more complexity to cold chain distribution, both inbound and outbound – from and to the patient. Scalability and costs will also become focal points for delivering cell and gene therapies and other specialty therapies. Pharmaceutical manufacturers will seek strategies to scale more quickly and drive down costs, and one potential solution may be the development of therapies with common DNA characteristics no longer tailored to one-to-one, but one to many. In either case, these therapies are extremely sensitive to temperature fluctuation during transit and pharmaceutical manufacturers will demand increased confidence that these costly therapies will arrive on time, intact, and in temp, to their destinations.

• Looming Pricing Reform leads to Cost Pressure and Expanded Outsourcing

  With increased public scrutiny on the price and accessibility of pharmaceuticals worldwide, there will be continued focus on bringing pharmaceutical prices down, which has the potential to dismantle long-standing pricing models for drug developers. With the upcoming 2020 U.S. election, Congress will likely drive pricing reform — which will impact the development of drugs and specialty therapies and likely accelerate the release of generic and biosimilar versions to the market. In an effort to preserve profitability, pharmaceutical companies are expected to continue to expand the use of outsourced partners to drive down costs. Sales and R&D are likely to be the only functions retained in-house, with all other critical operations  in the distribution channel outsourced. Cold chain packaging providers will be asked to provide more operational services on an outsourced basis such as support, conditioning, pick-and-pack and refurbishment — while needing to extend their global reach. Transportation providers (3PLs and Integrators) and contract manufacturers (CMOs and CDMOs) will also be asked to provide additional services such as thermal packaging, refrigeration, and pick-and-pack support. As a result, we expect to see more alliances between packaging, transportation and contract manufacturing providers to leverage best-in-class capabilities to support increasingly cost-conscious global pharmaceutical manufacturing companies.

• Technology Disrupts Cold Chain Distribution

  At the beginning of this decade and prior, healthcare providers entered a transformational phase as they migrated to electronic health records. Technology is now present in the pharmaceutical manufacturing space in the form of automation to improve efficiency and optimization. While slower to advance, technology has recently begun to enter the pharmaceutical cold chain — and it is now gaining more traction as the Internet of Things (IoT) progresses from an intriguing concept to an attainable reality. Pharmaceutical manufacturers are beginning to ask for real-time tracking of ambient and payload temperature, as well as RFID for location tracking and tracing. This will lead to more and more data being collected to assess challenging shipping lanes and distribution modes where temperature excursions and other issues arise. With technology to provide remote temperature management, alerts and global vision, pharmaceutical manufacturers will increasingly leverage this data to make smarter cold chain transportation decisions going forward.

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• Sustainability Driving Cold Chain Decisions

  Not long ago, pharmaceutical manufacturers viewed sustainability advantages offered by packaging and transportation providers as a good thing, but not a deciding factor. As we move into 2020, that is completely shifting. With initiatives such as the United Nations Sustainability Development Goals (SDGs) driving corporate initiatives toward more eco-friendly practices around the world, the pharmaceutical industry is much more focused on reducing their environmental impact. As a result, the use of reusable packaging continues to gain acceptance, and many pharmaceutical manufacturers are now requiring their vendors to demonstrate that their packaging and modes of transportation minimize negative effects on the environment.  Packaging providers are also being asked to provide tools to help pharmaceutical manufacturers measure their actual environmental impact so they can monitor and demonstrate their reductions in carbon footprint and waste.

¹Evaluate Pharma, 12^th Edition, World Preview 2019, Outlook to 2024, June 2019

²FDA Commissioner Scott Gottieb, M.D. and Peter Marks, M.D., Ph.D, Director of the Center for Biologics Evaluation and Research, January 15, 2019