A DV ER TIS E ME N T

Nippon Express: forwarding
the future of pharma
As the global pharmaceutical trade booms, the need for more stringent
quality control throughout its supply chains is increasing. Nippon Express,
the world’s fourth largest logistics provider, is committed to building anIoT-based logistics platform which promises to be a boon for the industry.
Challenges to pharma distribution
The global pharmaceutical market is booming. Global spending on pharma topped
USD 1.2 trillion in 2018, having grown at acompound annual growth rate above 6 percent in the past five years. The figure is set
to reach USD 1.5 trillion by 2023. As medicines crisscross the world, ensuring theirsecure delivery has become ever trickier.
Temperature-sensitive medicines, such as
the new class of biological drugs, need to
be kept in precisely controlled conditions
throughout every step of delivery. Longer
supply chains and extreme temperatures
brought about by climate change are making this task more difficult.
Globalised trade has also heightened therisks of counterfeit medicines. The deplorable practice is estimated to affect as muchas 2.5 per cent of global drug trade and killsome 200,000 people a year. Theft, too, is aconcern. When medicines are lost, companies have had to recall and dispose of thewhole production lot for safety reasons at
tremendous cost.

Preparing for GDP“Currently, the global pharmaceuticallogistics market is facing a sea-change,”says Takaaki Ishii, Chief Operating Officerof Nippon Express, Japan’s top logistics
company.
“A global standard requiring stringent
quality controls over the distribution ofpharmaceuticals is emerging. And we view
this timing as a business chance.”
In December last year, Japan’s healthministry published guidelines for Japanesepharma makers to comply with GDP (GoodDistribution Practices). GDP is already recognised in each region and country. And
that standard requires companies involvedin pharma distribution to maintain pharma integrity.

TempSure is a temperature-managed service fortransporting pharmaceuticals by air.

So far, the largest unresolved challenge forthe pharma industry has been the inability
to go beyond the “spatial management” ofmonitoring goods separately at warehouses and in cargo spaces. What is needed, as
GDP standards require, is “dynamic management” in which the condition of goods

The global pharmaceuticallogistics market is facing
a sea-change.
can be tracked end-to-end in real-timethrough the supply chain.
Recent advances in IoT, however, are making this goal possible. Nippon Express has
partnered with Intel K.K. which has developed a device that can collect and upload
real-time data on freight so owners can checkits status when necessary. These devices arebeing used in the Global Cargo Watcher
Advance (GCWA) (see column) service
launched earlier this year. The service promises to revolutionise pharma distribution with
its tracking and data-recording functions,helping makers achieve GDP-compliance.
While expanding coverage of the GCWA
system, Nippon Express is investing heavily
in infrastructure.
“We are planning a vertical-startup byearmarking JPY 100 billion (USD 890 million) in investments up to 2021 for building the platform, out of a total of JPY 450
billion planned for all our businesses in thecoming five years,” explains Ishii. “We see
this as very significant.”
Of this amount, JPY 50 billion (USD 440million) will be spent constructing four
new pharma logistics facilities to cover
all of Japan. These facilities will complement a state-of-the-art hub facility openedat Narita International Airport in 2017

Watching the cargo in the cloudCentral to Nippon Express’ plans to build a global
logistics platform for pharmaceuticals is a device
slightly larger than a pack of playing cards. Around 10
cm tall, 6.3 cm wide, 1 cm thick, and 45 g in weight,

these electronic tags have sensors which can log
temperature, humidity, light, shock, tilt and location. When cargo affixed with these tags passes
through reader gateways installed in trucks andSensor tag

GatewayServicepath
Update via
cellular communication
systemComprehensivesensor

SPECIALISEDTRUCKS

Chief Operating Officer
Nippon Express

Building a platform

The new pharma logistics facilities will be linked
to a state-of-the-art hub facility opened at Narita
International Airport in 2017 offering strict temperature control for international air cargo.

QUALITY
CONTROLSYSTEM

Takaaki Ishii“We are developing a platform to provide
GDP-compliant logistics which may not beeasily achieved by individual pharma companies on their own,” says Ishii.
His company, Asia’s largest and the world’s
number four logistics provider by revenue, iswell-resourced and experienced for this ambitious task. Its global network, among thelargest in the world, comprises over 70,000
employees across 48 countries. Annual revenues marked a record JPY 2.13 trillion (USD19 billion) for the year ended March 2019.
Although the approximately JPY 27 billion (USD 240 million) revenue last year
from the pharma logistics business only
represents a small slice of the company’s
total, Nippon Express has over the decades
provided a number of vital services in theindustry. These include delivering diagnostic/test pharmaceuticals in dedicatedvehicles and providing storage facilities
overseen by on-site pharmacists. In 2010,
Nippon Express developed its “TempSure”
series of temperature-controlled parcels invarious sizes used for the international airfreight of medicines.

APITemperature

THE NIPPONEXPRESS
SUPPLY NETWORKFOR PHARMACEUTICALS

offering strict temperature control for international air cargo. Another JPY 50 billion
will be spent, among other things, to acquire customised trucks with temperaturecontrolled and cloud-linked cargo holds.

Containing costs“It’s quite costly for pharma companies
to respond individually to stricter quality
controls for the distribution of each of theirproducts,” says Ishii. “But by providing aplatform which can be shared by multiple
companies, we believe we can free our clients from these logistics worries.”
Nippon Express, in fact, has been at theforefront of providing shared-logistics services where industry competitors use the same
warehousing and transport. Such schemes
are in greater demand due to a shortage oftruck drivers and the need to reduce the carbon footprint of transport in Japan.
The experience of shared transport inother sectors, such as in beverages, hasgiven the Japanese forwarder valuableknow-how in setting up operations to keep
sensitive information confidential between
rival companies.
“Our know-how of providing shared logistics services will be effectively adapted
to the pharmaceuticals sector and generateconsiderable savings,” Ishii says.
Keeping prices low would also be welcomed by governments, in Japan and elsewhere, seeking to contain mounting publichealthcare fees.

HumidityLightwarehouses, the data is uploaded to a cloud.
Customers will then be able to “watch” in real-time
where and in what condition their cargo is without
waiting for its arrival.
The company’s Global Cargo Watcher
Advance system uses these tags utilizing Intel technology.
Ray Zhang, Executive Director in IntelK.K., says, “Intel works with leading enterprises to accelerate technology transformation across industries. Intel has
therefore worked closely with Nippon
Express, a leading logistics company,
to increase service levels and provide
leading capabilities to meet customer
demands. GCWA—based on Intel’sConnected Logistics Platform—provides
wider scalability, cost effectiveness, proactive monitoring and strong security.”
Launched this year, GCWA promises to substantially improve logistics

www.nipponexpress.com/ShockSPECIALISEDWAREHOUSESSPECIALISEDORGANISATION

Contributing as a global forwarder
In terms of its overseas strategy, Nippon
Express plans to target both new and generic pharma trade flows globally. After
consolidating its domestic pharma logistic
services in Japan, it will focus on exports ofnew drugs from Europe and North America
to the Japanese market. The company iscurrently setting up gateway readers in its
key international facilities and transporttrucks to extend its GCWA service.
The next stage will be generic drug exports
from India to Europe and North America.
The company says it already has experienceof working with more than half of the top
ten Indian pharma makers, giving it an advantage in the growing export market.
Although the size of the global pharmaceutical logistics market is hard to estimate,even conservative guesses—calculating thatlogistics spending amount to a few per centof the total traded value—make it a market worth hundreds of billions of dollars.
Nippon Express plans to initially triple its
overall revenues in the sector to JPY 76 billion (USD 670 million) by 2023, but thisis still only a fraction of the vast potential
total.
“Developing these new services for pharmaceuticals is key to raising our presence
as a global logistics company,” says Ishii.
“Profitability is important, but equally significant is what kind of social contributions
we choose to make. Contributing to the future of pharma is vital in our vision.”

Tilt

Location

operations for highly sensitive freight (such as pharmaceuticals, semiconductor making equipment,
and precision machinery) which require end-to-end
traceability.
Previously, logging devices on cargo had to be
shipped back to the point of departure for analysis,
delaying the discovery of costly irregularities duringtransport. Moreover, the smaller size and lower unit
costs of the new tags mean they can be affixed
not only on containers or cargo-hold walls, but also
placed in individual parcels. All of these features
enable greater precision in monitoring product conditions and real-time visualisation throughout its
delivery.
Working together with Intel, Nippon Express
hopes to make GCWA the global standard in thelogistics industry.
“I believe the development capabilities sharedby our two companies allow us to continuously
upgrade and advance the service as market needs
evolve, contributing to a global standard,” says Ishii.