Logistics Providers Strive to Fulfill Biopharma Needs – Specialty Companies Offer Advantages, but Get a Bad Rap on Price

Life Science Leader, November 2014

According to clinicaltrials.gov, there are over 92,000 drug or biologic registered studies underway right now. Nearly one-fifth (17 percent) of the drugs currently in development are biologic based therapeutics. Since biological assets are temperature sensitive, the challenges in transport and distribution are quite different than the logistical obstacles faced by traditional, small molecule based drugs.

Both global logistics giants (like FedEx and UPS) and a host of specialty logistics companies (such as Marken, World Courier) focused on the life science industry have fine tuned their offering in order to meet the cold chain needs for biomaterials, such as clinical trial samples, active pharmaceutical ingredients, cell banks, tissue samples and more. 

 With high stakes ranging from legal to financial risk, it's important to ensure that the logistics company engaged for the job is not the weakest link in the cold chain.  Nice Insight asked one hundred respondents who are in charge of the handling and distribution of biological specimens or clinical trials materials their opinions and preferences on shipping partners. When it comes to overall preference, global logistics companies such as FedEx, UPS and DHL are in favor over specialty companies by a relatively slim margin (39 percent vs. 31 percent). Thirty percent of respondents stated they prefer to use a mix of both specialty and global logistic companies. Among the group of respondents who use both types of providers, specialized providers received a little more of their business (55 percent vs. 45 percent). 

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Respondents attribute on-time delivery and flexibility in pick-up and drop off times to both types of providers. However, logistics giants are best known for their convenience and affordability, while specialty providers are associated with temperature control options and white-glove handling. Since participants indicated they are more likely to select a logistics company based on best fit for a project rather than price, the added value services available through specialty providers are likely to win the companies new business. And, based on 47 percent of respondents stating their logistics expenditure will increase over last year — another 50 percent said their expenditure would remain the same, and only three percent thought it would decrease — there is more business to be had.
 
Real-time traceability for shipments (63 percent) along with logistical locations (56 percent) and regulatory expertise (54 percent) are the leading reasons for engaging a third party logistics provider for handling biomaterials. 24/7 customer service topped the list of the most sought after technologies and/or services from logistics providers. Customer service is followed by more specialized services such as pharmaceutical lifecycle management, where storage, distribution and reverse logistics are all handled by the provider — an area where a specialty company has a clear advantage. Depot facilities that offer drug return and destruction services, as well as retest labeling for clinical trials materials are additional areas where biopharma companies desire solutions that specialty companies are best positioned to fulfill.

With high stakes ranging from legal to financial risk, it's important to ensure that the logistics company engaged for the job is not the weakest link in the cold chain.

It’s not surprising that logistics giants are perceived to be more affordable than specialty providers, or that price ranked fourth in importance, after quality, reliability and regulatory knowledge.  Both of these statements, along with 49 percent of respondents stating they “select a logistics provider based on project best fit” when asked about pricing tolerance, support use of a combination of global and specialty providers. Thus, it is interesting and somewhat conflicting to see that price came in as the top reason a buyer would consider switching from their current supplier.

While global companies continue to fine-tune their offering in order to remain top of mind among customers in life sciences market, it will be interesting to see whether these companies are able to develop the same quality of service for life science’s specialized needs and keep their reputation for being more affordable.

 

Nice Insight

Nice Insight, established in 2010, is the research division of That’s Nice, A Science Agency, providing data and analysis from proprietary annual surveys, custom primary qualitative and quantitative research as well as extensive secondary research. Current annual surveys include The Nice Insight Contract Development & Manufacturing (CDMO/CMO), Survey The Nice Insight Contract Research - Preclinical and Clinical (CRO) Survey, The Nice Insight Pharmaceutical Equipment Survey, and The Nice Insight Pharmaceutical Excipients Survey.