BUSINESS AND LOGISTICS

produced by DIAMOND, Inc.

Fulfilling the Vision of Sekai-Nittsu(Global Nippon Express)
Platform Strategyfor Pharmaceutical Logistics
Delivering pharmaceuticals from the factory without affecting quality along the way.
Given growing demands for safe and secure pharmaceuticals around the world,
Nippon Express has begun building a supply network for pharmaceutical logistics, with the vision
to become a platformer in pharmaceutical logistics and distribution.

The company’s dedicated pharmaceuticals centers currently under construction will feature indoor truck loading and unloading berths,
along with a number of innovations for maintaining quality.

Pharma 2020
The worldwide pharmaceuticals market is valued
at around 909 billion dollars, while Japan’s market size is valued at around 90.9 billion dollars,
making it the third largest in the world.
In recent years, a growing number of specialty pharmaceuticals and bio pharmaceuticals
targeting rare diseases or intractable diseases
have hit the market. The safety and security ofthese products demand even stricter quality
controls.
In December 2018, Japan’s Ministr y ofHealth, Labor and Welfare released a Japaneseversion of Good Distribution Practices (GDP).
These guidelines define the same standardized
quality control practices as the manufacturing
processes for the distribution stage. The ministry is now considering legalizing these guidelines in the future. This indicates that pharmaceutical distribution is now facing a major
turning point.
With this timing in mind, Nippon Express
decided to embark on a full-fledged entry into
pharmaceutical logistics. The company has established this segment as one of its focus areas inits new management plan beginning this fiscal
year called Nippon Express Group Management
Plan 2023 – Dynamic Growth. It has also begun

company-wide efforts spearheaded by a specialproject team called Pharma 2020.
As part of the project, the company willbuild new pharma logistics facilities in four
locations across Japan; one each in Saitama
Prefecture, Osaka Prefecture, Fukuoka Prefecture and Toyama Prefecture. It will also develop
vehicles designed specifically for transporting
pharmaceuticals in compliance with GDP
standards, and establish a supply network forpharmaceuticals covering the entire country.
Nippon Express’ initial investment alone will
total around 590.9 million dollars. The company expects to commit more than 909.1 million
dollars in total, including future investments.
This amount underpins just how serious Nippon Express is toward this project. Throughthese measures, the company will aim to morethan double its sales in the pharmaceuticals
industry from around 145.5 million dollars infiscal 2018 to around 327.3 million dollars byfiscal 2023.
This project is led by Executive Vice President
Takaaki Ishii. “The project allocates executive
officers to head up the six categories of warehousing, IT, operations, quality, sales and company vehicles. We have made a commitment toour customers to launch full-fledged operations
from January 2021,” he says.

Cooperative Logistics Using an Open
Platform
The design and specifications of the four dedicated pharmaceutical centers across Japan
currently undergoing rapid construction closely
follow the GDP guidelines. For example, thefacilities will feature indoor truck loading andunloading berths completely isolated from theoutside air, ensuring thorough temperature
controls, while giant air showers will remove
any possible contaminants or insects from theoutside packaging boxes. In this manner, thecenters feature a number of innovations formaintaining quality.
In addition, in terms of development of vehicles specifically for transporting pharmaceuticals,
Nippon Express has adopted the same standard
specifications across all vehicles to eliminate differences in performance between vehicles, andthe fleet will be equipped with various functions
for temperature controls and other requirements.
Vehicles used for long-distance transport will
be equipped with a sub-engine to reduce temperature deviation risk in case of engine trouble
during transport.
Instead of modifying existing logistics centersor fleet vehicles, Nippon Express will create allnew ones from scratch following the GDP guide-–1–Takaaki Ishii
Executive Vice President,
Chief Operating Officer andRepresentative Director
Nippon Express Co., Ltd.

BUSINESS AND LOGISTICS

lines because the company has identified the advantages therein.
Nippon Express is also calling on pharmaceutical companies to take part in cooperative
logistics utilizing this logistics infrastructure.
“Conventionally, pharmaceutical companies
have built standalone operational systems
through tie-ups with individual logistics
companies. As management standards in distribution become stricter, it has become costprohibitive when going at distribution alone.
By creating an open platform that ensuresuniform quality conforming to GDP, and having pharmaceutical companies take part init, Nippon Express can return the benefits ofcooperative logistics to each pharmaceuticalcompany,” says Ishii.
Nippon Express envisions a service covering deliveries to pharmaceutical wholesalers
accounting for 97% of Japan’s pharmaceutical
distribution. In the future, Nippon Express islooking at a structure where it will store theinventory of pharmaceutical wholesalers at its
own dedicated centers. Ishii says, “If the shiftof ownership rights from pharmaceutical companies to wholesalers can take place within thesame facility, unnecessary transportation canbe eliminated, and the logistics process madeeven more efficient. This is one of the benefitsof operations that conform to industry-wide
management standards.”

Joint development of individual article
management device with a partner company
Nippon Express’ strategies do not just stop there.
The highlight of the project is Global Cargo
Watcher Advance (GCWA), commercialized byutilizing technology from Intel, a global leader
in semiconductors. This tool enables real-timevisualization of temperature control, which is thegreatest single requirement in the distributionprocess.

“Until now, temperature control referred tomanagement within the confines of the warehouse or trucks. However, using GCWA, we areable to zero in our management from spaces toindividual articles. This ensures higher precision
management of each individual article by monitoring their movements from temperature tohumidity and impacts,” says Ishii.
Conventionally, the temperature control device (logger) was used to perform a post-deliverconfirmation by extracting its data upon its
return. GCWA, however, is capable of real time
online uploads of measurement data and sharing this information with all parties concerned,
making it possible to quickly detect and address
issues such as temperature deviation.
“Intel’s semiconductors are extremely precise,so they are very careful in terms of temperaturechanges and vibrations during transport, anddeveloped dedicated devices for this purpose.
We got Intel interested in using these devices forother industries, which led to our collaboration,”says Ishii.
Furthermore, Nippon Express also plans todevelop a central information service platformthat will consolidate distribution tracking management beyond logistics information to include
order taking/placement, payment and transferof ownership. In other words, it will be an integrated platform of pharmaceutical product information that combines logistics and commercial
distribution information.
In building a platform, Nippon Express will
look at creating an open platform using blockchain technology that can be equally accessed by
the entire pharmaceutical supply chain including
pharmaceutical companies, logistics companies,
wholesalers and medical institutions.
“The distributed ledger technology of blockchain makes it possible to not only further clarify
history and traceability, but it also gives everyone
involved access to information through the entire process. In case a situation arises, we can also

Information service platform using
blockchain technology
Pharmaceutical
Company

Logistics
Company

Pharmaceutical
Wholesaler

Logistics
Information
Temperature monitoring
Transportation tracking
Inventory information, etc.

Distribution
Information

Blockchain
Systemtake immediate action to address the issue at theright stage,” says Ishii.

Rolling out Japanese systems globally
Going forward, Nippon Express will graduallyroll out these systems globally. First, the company is planning to build its pharmaceuticals dedicated gateway facilities in the Europe, Americas,and South Asian blocks, and in the future connect them to its global logistics network in 47
countries around the world.
“To achieve this goal, we will first refine technologies for safety and security, such as temperature control, and establish specifications to beapplied globally,” Ishii says.

1MedicalInstitutions

Order placement/taking
Payment
Ownership transfer, etc.

The research and development of pharmaceuticals from new drugs to generic drugs andbiopharmaceuticals is taking place at an ever-accelerating speed. The supply chain of pharmaceutical products will continue to see increased
globalization going forward.
“The management standard for pharmaceuticals will be standardized on a global scale in
the near future. As the manufacturing and consumption of these products are now borderless,
it is inevitable that a system to account for thehistory of where a drug comes from will become
necessary. For this reason, high quality logistics
and an information platform on distribution andlogistics channels is needed,” says Ishii, emphasizing the importance of an open platform.

231 Inside, the facility is equipped withtemperature controls and specialty
facilities to avoid risks such as insects anddust

2 Protecting products from temperaturefluctuation during transport

3 Indoor truck loading and unloading berth;the whole truck enters the warehouseallowing for safe and secure loading–2–