Keeping cool: Biologic drugs driving growth of airfreight niche
New transportation regulations coupled with growing demand for vaccines and biologic medications are resulting in robust growth in the airfreight of pharmaceuticals. These products are more temperature-sensitive than products of the past and must have precise temperature control to maintain their efficacy.
The European Union toughened its transport regulations effective Sept. 8, 2013, and other governing agencies are following suit. While this drives up costs, it is also good for airfreight as manufacturers seek to move products as expeditiously as possible to comply with the regulations that require that quality is maintained through the transportation process.
Industry observers expect growth of this airfreight niche to continue for the foreseeable future. While the growth is global, some of the hot spots will likely be in the BRIC (Brazil, Russia, India and China) countries.
“Biological drugs and the process for making them, make them temperature-sensitive in almost all cases,” says Kevin O’Donnell, a partner with Exelsius Cold Chain Management, an international consultancy. “They are just like a carton of milk in your refrigerator. If you leave it out, it begins to degrade. The process starts, and you are not going to stop it. It makes the drug less effective.”
O’Donnell says biologic drugs dominate the growth in health care products. He says by 2016, about half of the world’s top-selling drugs in terms of value will be biologic. One high-value product is Humira, an injectable drug for treatment of rheumatoid arthritis and other diseases. O’Donnell says the product generates US$11 billion (8.1 billion euro) a year.
He says the increased responsibilities involved in the handling of pharmaceuticals has been beneficial for the logistics sector, with about US$4.9 million (3.6 million euros) spent annually on transportation with an annual overall growth rate of 12 percent. Airlines are benefitting from the rapid growth of these products and investing in equipment, facilities and personnel to handle them. More are participating in pharmaceutical handling. Just a few years ago, only a handful of airlines marketed their products to the pharmaceutical industry, O’Donnell says. Now that figure is more than 30 and growing.
Among the carriers making major investments are IAG Cargo and American Airlines.
“There is increasing use of vaccines and preventative health care across not only developing countries, but all countries,” says Alan Dorling, IAG Cargo’s global head of pharmaceuticals and life sciences. “There has been huge increase in the use of insulin for diabetes, particularly type 2 diabetes. It’s a global problem anywhere there is westernized culture with soft food and fizzy drinks. These products require very sensitive management.”
IAG greatly expanded its temperature-controlled network, which it calls Constant Climate, in 2013. In Europe, it added Prague; Vienna; Las Palmas, Spain; Basel, Switzerland; and Zurich. In Latin America, it opened stations in Colombia, Costa Rica, Panama, Venezuela and Guatemala.
Tom Grubb, manager, cold chain strategy for American Airlines Cargo, says that while costs are one important measure of moving critical pharma products, the most important aspect is maintaining quality. Collaboration of all the participants, including manufacturers and freight forwarders, is essential in this effort, he says.
“Even though there are a lot of positive signs in the economy, there are still many cost concerns in the industry, given the nature of moving pharmaceuticals,” Grubb says. “There are many products that require such extreme handling that that kind of flies in the face of trying to save costs.”
American will open its latest controlled room temperature facility at London Heathrow early this year and will likely open at least two more in 2014.
Grubb, who is a member of the International Air Transport Association’s Time and Temperature Task Force, says the entire supply chain must work to “harmonize” the approach to develop comprehensive services. He says the regulatory oversight aspect will become more important and will likely push costs upward.
“We’re not talking about ball bearings here,” he syas. “These are very time-sensitive products.”