2019 Biopharma ColdChain Logistics Survey
What Matters Most — and What it Means for the Future

CONTENTS
2 – Introduction
3 – Understanding Emerging Challenges & Pain Points
4 – Key Finding #1: Concerning Extent of the Temperature Excursion Problem
5 - Key Finding #2: Visibility is Critical
6 - Key Finding #3: Temperature Monitoring isn’t Enough
7 - Key Finding #4: Business Agility Requires Shipping Flexibility
8 - Key Finding #5: Mode Shift in Freight Transportation
9 - Key Finding #6: TCO Matters
10 - Key Finding #7: Growth of Reusable Rental
11 – The Future of Biopharma Logistics: Keys to SuccessINTRODUCTION

Surging Demand for Temperature-Controlled Biopharma Logistics
As strong growth continues across the global pharmaceuticals industry, thesub-category of temperature-controlled products is surging ahead. Sales
volume for these highly sensitive products is growing at twice the rate of
the industry overall, with $318 billion in global sales in 2018 accounting
for more than one-quarter (27%) of total sales volume.1 This exponential
growth also brings surging demand for specialized, temperature-controlled
logistics services to safely, reliably and cost-effectively distribute highvalue, high-sensitivity products. By 2022, 30 of the 50 top global biopharma
products will require cold chain handling.1 Fueled by this demand,biopharma cold chain logistics grew to $15 billion in 2018. With projected
12.7% YOY growth, analysts predict it will reach nearly $17 billion by 2021.1
It’s not difficult to understand the factors behind this growth: The shift
to biologic and biosimilar drugs and precision-medicine treatments
mean the majority of new and high-value drugs will be highly sensitive.
Correspondingly, regulations governing these highly sensitive products
are growing stricter. Finally, the biopharma supply chain has become much
more global, as specialized products must make their way to every cornerof the world, and emerging markets create new shipping demands.

TEMPERATURE-CONTROLLED
BIOPHARMA PRODUCTS
27% of overallbiopharma sales in 2018

2x

FASTER GROWTH
Than the rest of
the industry

By 2022,30 of the top 50

global biopharma products
will require cold chain handling

1

Pharmaceutical Commerce: 2018 Biopharma Cold Chain Sourcebook

2Understanding
Emerging Challenges& Critical Pain Points
The rapid growth in volume andcomplexity of temperature-controlled
biopharma logistics presents new andevolving challenges that touch every
stakeholder — from the manufacturersthat produce the products and the 3PL
partners that help distribute them, to theclinicians and patients that ultimately
depend on them. The IQVIA Institute for
Human Data Science estimates that thebiopharma industry loses approximately$35 billion annually as a result of failuresin temperature-controlled logistics —from lost product, clinical trial loss andreplacement costs, to wasted logistics
costs and the costs of root-cause
analysis.4 Those numbers fail to quantify
the patient safety risks that can (anddo) result from compromised products
reaching unknowing patients.

2

IQVIA Institute for Human Data Science2019 BIOPHARMA SURVEY:

What Matters Most — and What it Means
To better understand these emerging challenges, Pelican Biothermal conducteda broad survey of key opinion leaders across the industry. This report details thecompelling findings, revealing the concerns, trends and technologies that are
top-of-mind for leaders in biopharma production and distribution. The reportdives into these findings, illuminating the key trends driving top concerns — andoffering a forecast of what each finding means for the future of the industry.

3 KEY TRENDS

INCREASING QUALITY
DEMANDS
More sensitive products
bring logistics complexity
and greatly expanded risk.

EXPANDING
DISTRIBUTION RANGE

Products are moving further— and through more climatic
zones — than ever.

OPTIMIZING TOTAL COSTOF OWNERSHIP (TCO)
Relentless competition andmargin pressures demands
better understanding of TCO.

3

TREND 1

Increasing Quality Demands

8% Constantly
8% Frequently(on a daily or weekly basis)(a couple times a month)

21% I don’t know

10% Less than one degree

27% NeverMore sensitive products bring logistics
complexity and greatly expanded risk

7% Over 12 degrees

27% 1-4 degrees

28% Sometimes(a few times a year)

28% Rarely

15% 6-12 degrees(only once or twice a year)

KEY FINDING: Temperature
excursions happen frequently —and they're not always minor.
Awareness of temperature-control
requirements is higher than ever, but oursurvey suggests temperature excursions
continue occurring at concerning
frequencies. Nearly half (44.6%) of
respondents report multiple temperature
excursions per year, and 16% say
temperature excursions are a monthly
occurrence. Moreover, the reported
excursions aren’t a matter of a degree or
two. Two in five excursions (41%) exceed
four degrees, and 21% are more thaneight degrees.

34

https://www.pharmalogisticsiq.com/logistics
Pharmaceutical Commerce: 2018 Biopharma Cold Chain Sourcebook

How frequently do your organization's shipments
experience temperature excursions?

21% 4-8 degrees

You mentioned that your organization's shipments experience temperature
excursions. How many degrees (on average) are the excursions?

DRIVING FACTORS
Biologics & Biosimilars

The entire pharma industry has
begun a massive shift away fromchemically-derived products andtoward biologics and biosimilars.
Analysts agree that the majority of
new drugs coming to market in thenext five to 10 years will be highly
sensitive biologics or biosimilars.

Precision Medicine

Analysts expect the number of precision
medicine drugs — e.g., gene-based
therapies (such as CAR-T cell therapies),blood-derived treatments, and othertailored treatments developed for specificpatients or patient sets — to increase by 69%
in the next five years.5 These products areproduced in small batches, with increased
time and temperature constraints — andoften involve the two-way transfer of highly
sensitive biological material.

Clinical Trials

Behind the development of biologics,
biosimilars and precision-medicine
drugs is the continued growth of theclinical trials segment — where nearly
every element requires temperaturecontrolled services. The demand forclinical trials logistics alone reached$3.4 billion in 2018, and is expected
to rise to $3.7 billion by 2022.6

2020 Forecast: An increasing top-down focus on cold-chain reliability

Sophisticated biopharma products continue to create and expand cold-chain challenges. As the volume andvalue of temperature-controlled biopharma products continues to grow, biopharma C-suites will increasingly
see the importance in rethinking their shipping and logistics strategies. But these emerging challenges cannot
be solved with a simple retrofit of existing cold chain programs. Forward-thinking biopharma manufacturers will
increasingly align themselves with specialized cold-chain logistics partners, leveraging this third-party expertiseto create powerful competitive advantages in both product quality assurance and operational efficiency.
4

TREND 1

Increasing Quality Demands
More sensitive products bring logistics
complexity and greatly expanded risk

64.7%

63.5%
30.5%

27.1%
7.1%

KEY FINDING: Visibility is critical
Biopharma manufacturers invest huge sumsin quality assurance monitoring across their
manufacturing operations. But without alogistics monitoring system in place, they
completely lose quality control acrossthe supply chain. The majority of survey
respondents now see temperature andlocation logging as valuable and necessary.
Nevertheless, about 1 in 4 respondents
still do not use location and temperaturemonitoring — and, more concerningly,
around 10% don’t see the need for suchtracking services.

12.9%

YES NO NO (We don’t have a need for it)

YES NO NO (We don’t have a need for it)

Are you currently using location tracking
for your cold chain shipments?

Are you currently using temperaturemonitoring for your cold chain shipments?

DRIVING FACTORS

Increasing Regulatory Requirements

As the volume and value of temperature-sensitive
biopharma products increases, so does regulatory
attention. Global regulatory agencies are applying
increasing pressure to ensure “ship-to-label”
requirements are met — and requiring proof
that products have been kept within approved
temperature range during transport.

Serialization Requirements

The global adoption of serialization standards inthe biopharma industry — while at different stages
in different parts of the world — intensifies thedemand for in-depth visibility across the supply
chain, including location and temperature.

2020 Forecast: Temperature monitoring will become standard

More sensitive products and stricter regulations require true, end-to-end visibility that will make temperaturemonitoring a must-have for all biopharma manufacturers' cold-chain logistics operations. Forward-thinking
biopharma organizations will increasingly begin leveraging temperature monitoring data to actively recognize
issues and avert temperature excursions, identify excursions and send replacements sooner to minimize delays,
and execute smart investigations into excursion incidents to expose the root cause and avoid future issues.
Finally, continued improvements in temperature logging technologies will deliver near-real time visibility,
helping organizations respond more quickly and even implement proactive strategies.

5

TREND 1

Increasing Quality Demands
More sensitive products bring logistics
complexity and greatly expanded risk

70.2%

61.2%

56.4%

44%

KEY FINDING: Temperaturemonitoring isn’t enough

35.2%

The last few years have seen industry
terminology shifting from “cold chain” to“temperature-controlled” to account for thegrowing controlled room temperature market
and the variety of other temperature-sensitive
products. But as biopharma products grow more
complex and more sensitive, those that truly
understand the products know that temperature
is just one element that can negatively impact
efficacy and safety. Yet only one-third (35.2%)of survey respondents report using humidity
monitoring, and less than a quarter (22.4% and16.7%, respectively) report monitoring vibrationand light. Most concerningly, nearly half of
respondents say they see no need to monitor
these factors which could lead to serious quality,
compliance or even patient safety incidents.

YES NO NO (We don’t

YES NO NO (We don’t

YES NO NO (We don’t

Are you currently using
humidity monitoringtracking for your cold
chain shipments?

Are you currently using
vibration monitoringtracking for your cold
chain shipments?

Are you currently
using light monitoringtracking for your cold
chain shipments?

28.2%

22.4%
40%

have a need for it)

have a need for it)

16.7%

have a need for it)2020 Forecast: Advanced monitoring will become business-critical

Storage and transport specifications for highly sensitive biopharma products will continue to grow more
complex. Moreover, the costs of failure to maintain product specs — from financial and brand damage,to patient safety incidents — will continue to rise. To consistently deliver products in safe and efficacious
condition — and to comply with ever-increasing compliance requirements — biopharma organizations
will be required to gain more complete and precise control of all factors that can negatively impact
their products during transport. Forward-thinking organizations are already extending their supply
chain visibility beyond basic location tracking and temperature monitoring, implementing advanced
monitoring services that deliver real-time data on humidity, light and vibration. As discussed with realtime temperature monitoring data, these organizations will leverage this advanced monitoring to actively
avert excursions and drive continual improvement in quality and efficiency across the supply chain.
6

KEY FINDING: Business agility
requires shipping flexibility
Biopharma is a truly global industry,
with over half of respondents (51.8%)
regularly ship products internationally.
Moreover, just 1 in 6 (16.5%) report thatthey never ship across borders. But inpractice, the biopharma supply chain is
an increasingly complex web of local,
regional and international connections
that require a broad range of transportmodes. Air and ground transportremain the most common, but mostare leveraging a flexible portfolio that
includes increasing sea and rail transport.

Rail

32% 24.7%

SeaInternational

Truck

57.5%

51.8%

Air

Products are moving further - and through moreclimatic zones - than ever

80%

74.1%

Regional

Expanding Distribution Range

82.1%

Domestic

TREND 2

(Frequently or very frequently)(Frequently or very frequently)

How frequently do you ship
to the following locations?

How frequently do you use thefollowing transport modes?

DRIVING FACTORS
Specialization

Specialized production of drugs,
as well as high-value ingredients,
means that many products are now
moving much further — through awider variety of climatic zones — inorder to reach their end customers.

Emerging Markets

The rapid expansion of emerging
markets — Russia, India and China, as
well as smaller markets across Asia andSouth America — demand the creationof new and/or more efficient shipping
lanes. In addition, many of theseemerging markets present the challengeof distributing temperature-sensitive
products to more extreme climates.

Last-Mile Delivery

The increase in highly personalized
treatments is dovetailing with risingconsumer expectations for faster,convenient access. Biopharma
manufacturers must increasingly
figure out how to deliver products
directly to patients’ doorsteps,
solving the “last-mile” challenge.

2020 Forecast: Versatility in temperature-controlled logistics will be critical tocapturing emerging opportunities

While the biopharma market continues healthy growth, gone are the days of the blockbuster drugs with a broad,easy-to-reach target market. Increasing specialization and personalization in treatments, along with expanding
opportunities in emerging global markets, will require biopharma organizations to build agile logistics programs
that can quickly build new solutions to reach niche markets. Forward-thinking organizations will lean on thirdparty partners that can rapidly deliver expert recommendations and build customized solutions — leveraging
thermodynamics expertise and thermal testing to evaluate and qualify packaging and transport solutions thatmeet compliance standards and ensure product safety and efficacy, while optimizing costs.

7

TREND 2

Expanding Distribution Range
Products are moving further - and through moreclimatic zones - than ever

70%

Over 70 percent now use
sea transport, with one-third
saying they use it frequently.
20%

KEY FINDING: Mode shift in
freight transportation
Air transport has long been the gold
standard for transporting highly
sensitive biopharma products, withground transport offering a more costeffective option. But our survey reflects
the growing use of sea transport forinternational shipping of temperaturecontrolled products. Over 70 percent(70.6%) now use sea transport, with
one-third saying they use it frequently.

75%

Industry analysts predict that biopharma ocean
freight will rise from 20% of all payloads toapproximately 75% in the next decade.

DRIVING FACTORS
Rising Costs of Air & Ground

Air freight is approximately 700%
more expensive than ocean freight.
Similarly, ground transport costs
continue to increase, driven by
rapidly rising labor costs in the
ground transport industry.

Sustainability Goals

Biopharma organizations face
increasing pressure — fromconsumers and from regulators— to adopt sustainable businesspractices. Sea transport is emerging
as a preferred option to lower
carbon footprints in comparison tosea and ground transport.

Temperature-Controlled
Packaging Innovations

New advances in insulation allow
shippers to use lower-cost passive
containers to provide critical support
for periods when power is not available— such as during transport between
cold chain locations, or in the caseof a loss of power. This enhances
confidence and reliability for theadded complexity and longer durationcommon in sea transport scenarios.

2020 Forecast: Enabling and expanding sea transport will drive operational advantages
The confluence of key trends — more temperature-sensitive biopharma products entering the market, stricter
regulations, and increasing globalization — will lead biopharma organizations to look for new ways to enable
and expand their use of sea transport to drive cost-efficiencies across their supply chain. To maximize these cost
efficiencies, forward-thinking organizations will increasingly leverage state-of-the-art, reusable passive shipping
containers to enable reliable, long-term temperature and quality control while reducing total costs.

8

TREND 3

Optimizing Total Cost
Of Ownership (TCO)
Relentless competition andmargin pressures demands better
understanding of TCO zones

KEY FINDING: TCO matters
The hypercompetitive and unforgiving
biopharma landscape demands thatorganizations achieve consistency andcontrol without eating into margins.
Increasing cost pressures are leadingorganizations to take a closer look at
defining TCO in their logistics and supply
chain operations. A full 70% of survey
respondents agree that TCO is importantor very important. While a stubborn 10%
are still looking at basic packaging costs
and transport rates, the vast majority
now consider complex contributing
factors that could lead to unanticipatedconsequences that drive additional andrelated costs down the road.

8% Unimportant

2% Very unimportant

19% Neither important
nor unimportant

37% Very important

27% Never

33% Important

How important is the total cost of ownership (TCO) calculation in yourorganization when it pertains to temperature-controlled packaging?

2020 Forecast: Understanding TCO will become key to driving competitive advantages
As biopharma organizations look to boost margins from the bottom up through smarter cost-management strategies,
logistics solutions will become a popular focus for the TCO spotlight. Understanding the various risks — andquantifying the costs — of potential patient safety incidents, product and market share losses, and brand damage
will become essential to evaluating the relative value of everything from packaging solutions to transport modes.
Forward-thinking biopharma organizations will demand cost transparency from third-party service providers — andwill look for partners that can help them build customized supply chain solutions that fully optimize TCO for eachspecific product and market.

9

TREND 3

Optimizing Total Cost
Of Ownership (TCO)
Relentless competition andmargin pressures demands better
understanding of TCO zones

17% I’m not familiar
with reusable shippers

27% Yes - deﬁnitely

5% No - not at all

52% Yes - possibly

KEY FINDING: Reusable rental
is growing
Driven by a better understanding of TCO,
biopharma organizations are increasingly
recognizing the various benefits of usingstate-of-the-art reusable containers toprotect and deliver their highly sensitive
products. Four of five respondents (79%)
say reusable containers — though more
expensive than single-use containers— are worth the investment. Moreover,as reusable containers become a more
attractive option, reusable rental isemerging as an ideal strategy for capturing
the benefits of reusable containers —without all the costs. More than one-third(37.6%) of respondents are already using
reusable rental programs in their coldchain logistics operations, and another
25% are actively exploring this option.

26% No - but we have/
could consider it

18% Yes - weregularly use it

Do you think reusable shippers
are worth the investment?

37% No - we havenever considered it

20% Yes - we haveused it occasionallyin the pastHas your organization ever used areusable shipper rental program?

DRIVING FACTORS
High-Value Products DemandHigher-Quality Containers

The increase in highly sensitive,
high-value biopharma products
increases the demand for moreadvanced materials — such as
vacuum-insulated panels or advanced
PCMs — that are typically only
deployed in reusable containers.

Sustainability Goals

Advances in the production of thematerials used in premium-quality
reusable containers have decreased
the overall costs of these containers. In
addition, improved tracking and reverse
logistics have reduced container loss,
driving up cost-efficiency.

Temperature-Controlled
Packaging Innovations

Consumer and regulatory pressure
to pursue sustainable businesspractices makes the relative ecofriendliness of reusable containers
more appealing.

2020 Forecast: Reusable rental will become a dominant business strategy

As biopharma organizations increasingly shift their focus to core competencies like research &development, many are looking to minimize TCO by leveraging reusable rental programs — capturing thequality-assurance and sustainability benefits without tying up CapEx budgets. Packaging providers willrush to serve this emerging market, but forward-thinking biopharma leaders will demand rental providers
that fully deliver on the “as a service” (aaS) promise. Best-in-class reusable rental providers will offer
comprehensive quality control and servicing of containers, deliver on the potential of Internet of Things(IoT) data monitoring to enhance supply chain visibility, and provide value-added consultative expertise tohelp organizations address emerging and evolving logistics demands.

10THE FUTURE OF BIOPHARMA LOGISTICS:
Keys to Success

The biopharmaceutical industry continues to develop transformative new treatments— from new biologic and biosimilar drugs, to innovative and highly personalized celland gene therapies — that hold the potential to dramatically shift the course of publichealth around the globe. We celebrate the development of these treatments, and weclosely watch how their delivery impacts patients. But the critical step in between —getting these products into the hands of clinicians and patients — remains an immense
challenge that rarely makes headlines.
However, the confluence of increasing demands (more sensitive products and stricter
regulations) with expanding pressures of globalization and market competition is bringing
temperature-controlled biopharma logistics into the spotlight — increasingly recognized
as critical to both biopharma businesses and the patients they ultimately serve. In thislandscape of rising challenges, achieving success will depend on three key factors:

VISIBILITY

Complete supply chain
visibility that drives reliable
distribution, quality assurance
and brand protection

FLEXIBILITY

Flexible logistics solutions
that enable the agility
necessary to capture
evolving opportunities

TCO FOCUS

A relentless focus onunderstanding true TCO
to protect the bottom line
and maximize margins.

11About Us

RETHINK YOUR COLD CHAIN STRATEGY

Learn how Pelican Biothermal can provide innovative and cost-effective temperaturecontrolled logistics solutions that give you greater visibility to protect life-saving
products and the flexibiliy to capture emerging opportunities and grow your business.

pelibiothermal.com
pelicanbiothermal.com
info@pelibiothermal.com
info@pelicanbiothermal.com

Peli BioThermal
Leighton Buzzard, UK
Tel +44 (0)1525 243770

Pelican BioThermal
Headquarters
Plymouth, MN USA
Tel (763) 412-4800

Pelican BioThermal Asia
19 Tukang Innovation Drive
Greenhub #04-01
Singapore 618301
Tel +65 6681 0095

Pharmaceutical companies — and otherorganizations looking to make significant
cost and quality improvements in their cold
chains — are switching to Pelican BioThermal
for single-use and reusable temperaturecontrolled packaging. Our innovative, patented
technologies and consultative services
ensure product quality, mitigate excursion
rates, reduce packaging costs and drive
TCO across your entire supply chain.
Our global network of consultative cold
chain experts provides our customers
with consistent packaging and logistics
experiences wherever they do business.
Our temperature-controlled packaging
solutions meet the complex needs ofthe world’s healthcare organizations
and comply with the strictest GMP,
quality assurance and health andsafety standards. Pelican BioThermal
is a division of Peli Products, Inc.,
which is a portfolio company ofBehrman Capital, a private equity
investment firm based in New Yorkand San Francisco.

©2019 Pelican BioThermal | All rights reserved.