The biologics sector and associated logistics market will grow strongly over the over coming years. By Nicholas Manners-Bell, Researcher, Ti Insight
The pharmaceutical sector has long been one of the most influential and profitable sectors in the global economy and will exceed $1.5 trillion in value by 2023. With a rapidly ageing population in the West and increasing levels of wealth in developing countries, the market for pharmaceuticals will only continue to grow.
According to the latest whitepaper from Ti Insight – Biologics are transforming pharma logistics – this growth will be sustained by the logistics sector responsible for delivering medicines and healthcare products from the primary manufacturer to the patient as well as the clinical trials required to develop new drugs. The prospects for ‘big pharma’ and its associated logistics industry are closely linked which explains the increase in cooperation between these two sectors in recent years.
A market in evolution
Much of the world’s pharmaceutical market is comprised of over the counter (OTC) drugs such as aspirin and paracetamol – also known as ‘generics’ or ‘small molecule’ drugs. Generics are made up of Active Pharmaceutical Ingredients (APIs), the component of the drug that carries out the desired effects in the body, and the excipient which protects the API until it has reached the correct point in the body. Whilst most excipients are made in Europe or USA, over the last 10 years China has become the largest supplier in APIs due to its large-scale production capabilities, cheap labour and government incentives. This has given Chinese based manufacturing plants the ability to out-compete rivals on price, also allowing everyday OTC drugs to become very cheap. The low value nature of the product, however, results in small profit margins which has caused ‘big pharma’ companies to turn their attention to newer drugs, known as ‘biologics’ or ‘bio-pharmaceuticals’ which, due to their sophisticated and high value nature, have the potential for much higher profit margins.
Whilst for the past 20 years global collaboration between manufacturers, logistics companies, government purchasing organisations, hospitals, pharmacies and, of course, patients has provided essential drugs reliably and cheaply to high income countries, supply chain models are now evolving. This is due to many factors including new manufacturing techniques and the primacy of customised, specific treatments at a ‘Batch Size 1’ patient level. However, changes are also being forced upon the sector by a better understanding of the risks associated with global supply chains which have been pushed up the corporate agenda by the Covid-19 crisis and political tensions between the West and Russia and China.
The latest free Whitepaper from Ti Insight – Biologics are transforming pharma logistics – will further discuss the potential for a ‘local supply chain’ to become the favoured business model for the growing biopharmaceutical industry as well as ‘big pharma’ as a whole. Download here for free.