5 Key Factors Driving the Pharmaceutical Logistics Market
Even before the COVID-19 pandemic hit, the pharmaceutical logistics market was moving into high gear.
Defined by Global Market Monitor as “the logistics of pharmaceuticals, medical and surgical supplies, medical devices and equipment, and other products needed to support doctors, nurses, and other health and dental care providers,” this sector is expected to reach USD 71 billion globally by 2026, with North America dominating the market.
A May 2020 report from Grandview Research predicted a compound annual growth rate (CAGR) of 7.3% from 2020 to 2027 and cited drivers that include increased demand for over-the-counter (OTC) medicines, the “rising importance of fast track assistance in the healthcare sector,” and a trend toward single-source distribution channels to reduce costs.
Of course, that was also during the time the novel coronavirus was in the midst of turning the world on its head.
As the report notes, “The short-term impact of COVID-19 on the market is the crucial factor for pharmaceutical logistics’ fast-paced growth across the globe. Amid the pandemic, governments around the world are emphasizing on healthcare facilities and ample medicinal supply for the patients.”
Although COVID-19 created a shift in priorities, additional factors continue to influence the pharmaceutical logistics market in various ways. Here, we’ll take a look at five that experts say are having an impact.
1. Response to COVID-19
When COVID-19 hit, the healthcare logistics market was sent into overdrive—as was the pharmaceutical sector that’s part of it. In the early days of the pandemic, the healthcare world quickly learned that it didn’t have enough of anything that was direly needed—such as personal protective gear (PPE), ventilators, and more.
As effective treatments became more clear, there was a sudden need for critical medications that many facilities either didn’t have on hand—or had in limited supply. Additionally, medications that had been routinely available from distributors in various parts of the world were suddenly held up in the midst of supply chain disruptions.
2. Need for secure cold-chain solutions and increased monitoring
Research and development for COVID-19 treatments has also boosted the pharmaceutical logistics market, since many of the components needed for this process require secure cold chain solutions.
This is also true of the COVID-19 vaccines that recently entered the market. In both cases, the temperature sensitivities involved have created an urgent need for cold-chain solutions that can provide effective monitoring during transport to ensure safe delivery to their final destinations.
The Grandview Research report highlights the unique monitoring needs driving the pharmaceutical logistics market: “The biotechnology and pharmaceutical supply chains are particularly prone to the risks associated with product adulteration during transport as well as non-compliance with federal regulations, standards, and guidelines.”
To address these concerns, those within the industry are investing in cutting-edge technologies such as telematics to support safety during transportation, which is also contributing to growth. Such technologies include cloud computing that’s linked to Internet of Things (IoT) devices equipped with sensors to enable real-time remote monitoring.
3. Evolving storage and transportation needs
Another factor propelling growth is an increasing demand for sea and air freight pharmaceutical logistics. Such demand is partly due to the comparatively lower costs of sea transportation, as well as this being the preferred mode of transportation by some companies for “sensitive large molecule biologics” and personalized medicines.
The Grandview Research report notes that product temperature sensitivity issues are also driving market growth in the storage segment, which dominated the pharmaceutical logistics market in 2019 with a share of over 65%.
In addition to the related needs of biologics and other temperature-sensitive medications, changes in consumer lifestyles that have increased the demand for temperature-sensitive protein and nutritional supplements are contributing factors, too.
4. Consolidation dynamics
The Grandview Research report also notes that prior to COVID-19, many companies were engaging in mergers and acquisitions to “expand their geographical presence and proprietary knowledge,” which is a dynamic also boosting the demand for pharmaceutical logistics.
Pharmaceutical Contract Development and Manufacturing Organizations (CDMOs) play a role in global consolidation dynamics such as these.
A June 2020 report from ReportLinker offering 2020-2025 predictions for the CDMO market notes that, “As a result of the growing demand for generic medicines and biologics, the capital-intensive nature of the business, and the complex manufacturing requirements, many pharmaceutical companies have identified the potential profitability in contracting with a CMO (contract manufacturing outsourcing) for both clinical and commercial stage manufacturing.”
5. Rise in pharmaceutical sales
Technavio agrees that consolidation is a major driver of the pharmaceutical logistics market—and that pharmaceutical sales are playing a big role, too. In its September 2020 report highlighting industry trends for North America, it cites the rise in pharmaceutical sales as a major factor driving the market.
According to a November 2020 Data Bridge Market Research report, an increased prevalence of chronic diseases is one factor influencing the boost in sales. In the U.S., 6 in 10 adults have one chronic disease, and 1 in 4 adults have two or more chronic diseases.
In addition, one of the largest generations in history—the baby boomer generation—is rapidly aging, placing them at increased risk for being diagnosed with chronic diseases. Perhaps that’s why the number of people with chronic conditions is expected to more than double by 2030, the same year the youngest of the baby boomers will turn 65.
With numbers like those, rising pharmaceutical sales will likely continue to drive the pharmaceutical logistics market for many years to come.
These five major drivers of the pharmaceutical logistics market underscore the unique needs that must be addressed within this sector. The critical nature and nuances of the products involved require specific expertise when it comes to addressing logistics—which means it’s essential to find the right partner to help you do it.
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