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Pharma growth drives global cold chain services

London: Pharmaceutical logistics growth will average 7.6% in the coming years, reaching €63bn by 2015, according to a report last week by Transport Intelligence analyst Cathy Roberson.

Biotech and pharmaceutical products represent the highest value per airlifted pound for any cargo, Roberson said. Companies are investing in infrastructure to cater for this growth especially in Asia, she says.

“Just about every airline is looking at this space with interest right now,” Dan Gagnon, UPS’s European health-care logistics director, said in an interview.  “As more competition gets into this space, you need to come up with solutions that are more economical but provide the same level of service.”

UPS, which provides freight service for German drug maker Merck KGaA, has invested in five new pharmaceuticals facilities in the past year and last week purchased drugs logistics company Pieffe Group in Italy.  Lufthansa opened a cold cargo facility in Frankfurt yesterday to a pharmaceutical hub in Hyderabad, India, which started operations in May.

The 12% growth predicted for pharmaceutical airfreight over the next five years outstrips the 4% anticipated in electronics cargo, which has traditionally been the strongest sector for airfreight demand, Roberson said.

“The growth will be driven by emerging markets,” in particular India, China and Brazil, Roberson said in the report.  “Continued outsourcing to these locations, along with changes in government legislation, will drive increases in logistics spending.”

Lufthansa’s cargo unit, whose customers include Ranbaxy, is planning to dedicate six McDonnell Douglas MD-11s by 2015 to handle pharmaceuticals as the five Boeing 777s the airline will start receiving at the end of 2013 free up capacity.  “Far more” than 12% of Lufthansa’s annual growth in India is coming from drug transports, said Karl Ulrich Garnadt, who heads the cargo unit.

“It has been our most successful product in the past few years,” Andreas Otto, Lufthansa Cargo’s head of sales and marketing, told journalists in Frankfurt yesterday, saying that the cool segment now accounts for a little less than 10% of the unit’s revenue.  “The value carried in one container can easily reach more than US$30m.”

UPS, aiming to exceed the market forecasts for pharmaceutical air cargo growth of up to 12%, is currently tying up deals to improve its Asian facilities, Gagnon said.  He expects an announcement in “about a month.”

“Infrastructure for us in India has been quite limited,” Gagnon said.  “For our strategic initiatives, that is an area in which we will be investing.”  UPS already has a cold cargo facility in Singapore.

India’s pharmaceutical exports are expected to grow 23% annually to 2015 as the quantity of generic drugs produced in the country increases, according to a joint study by the Organization of Pharmaceutical Producers of India and Deutsche Post, released in September.

With more than 100 plants, India is home to more US Food and Drug Administration-approved pharmaceutical manufacturing facilities than anywhere else outside the US, reports Bloomberg.

The FDA has had offices in New Delhi since 2008 and Mumbai since 2009 to enable better regulation of drugs produced in India.  “While not all drugs require a controlled temperature environment to maintain their efficacy, vaccines, some medical devices, diagnostic kits and so-called biological medicines, which are made from a living organism as opposed to chemical processes, often do,” the report says.

Seventy percent of drugs expected to dominate the market over the next four years fall into this biological bracket, and will therefore require more stringent temperature control measures in their transport, said Savvas Neophytou, a London-based Panmure Gordon health care analyst.